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Alaface v. National Investment Co.9/1/1994
GRANT, Presiding Judge
This appeal concerns an action to recover damages that allegedly resulted from misrepresentations made in the sale of a subdivision lot. We hold that (1) appellants' consumer fraud claim is barred by the statute of limitations; (2) the Arizona subdivision reporting statutes apply to appellee, but appellants' remedy under the statutes is limited to rescission; (3) appellee is not liable for the alleged misrepresentations by appellants' agent but it may be liable under a negligent misrepresentation by omission and negligence per se theory; (4) appellants and appellee did not have a fiduciary relationship; (5) appellee is not liable under common law fraud; (6) appellee is not entitled to an award of attorneys' fees under the purchase contract.
I. FACTS AND PROCEDURAL HISTORY
In early May 1985, appellants Domenico and Beatrice Alaface ("the Alafaces") contacted Barbara Martin, a sales agent for Prescott Hills Realty and MG Construction Company, in response to an advertisement she had placed regarding lots for sale in the Diamond Valley subdivision in Prescott. The Alafaces were interested in buying a lot on which they could build a house. They received a form letter from Martin regarding cabins to be constructed. The letter represented that water service was available to all of the Diamond Valley lots that Martin had for sale.
When the Alafaces met with Martin, she told them that anyone who bought a lot in Diamond Valley had to contract with MG Construction to build a house on the lot. The broker and owner of Prescott Hills Realty, Michael G. Thowson, was also the owner of MG Construction Company. While meeting with the Alafaces, Martin confirmed the representation that water service was available to Diamond Valley lots through a water company.
Because the Alafaces wanted a flat lot, they did not like any of the lots Martin had for sale. In talking with Thomas J. McGilvra, who was also a sales agent with Prescott Hills Realty, Martin learned that National Investment Company ("NIC") owned a lot in Diamond Valley (lot 657) that might meet the Alafaces' requirements and that NIC might be interested in selling the lot. McGilvra and Martin looked at lot 657 together, and Martin then showed it to the Alafaces, who liked the lot. McGilvra then asked Joe Clark, the president of NIC, whether lot 657 was for sale. Clark told McGilvra NIC would sell the lot for $9,500 cash. NIC had acquired the lot through a tax sale and foreclosure .
On May 28, 1985, the Alafaces executed a real estate purchase contract prepared by Martin, offering to purchase lot 657 for $9,500. The Alafaces' offer was contingent upon a favorable "perc" test and "a cabin construction contract with MG Construction Co. within 10 days." The contract provided that 100 percent of the broker's commission would go to Prescott Hills Realty.
McGilvra called Clark and read him the terms of the Alafaces' offer to purchase lot 657 and explained the contingency that the buyers did not want to buy the lot unless they could get a construction contract. Clark accepted the offer and agreed to pay McGilvra a commission. NIC did not sign the purchase contract nor did NIC receive a copy of the contract, but both NIC and the Alafaces executed escrow instructions. Although these instructions contained no contingencies, the Alafaces signed a construction contract with MG Construction on July 8, 1985, gave written instructions to the title company to remove the contingencies from the May 28, 1985, contract, and instructed the title company to close the sale. The sale closed July 9, 1985.
In November 1985, when the Alafaces' cabin was substantially completed
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