§ 7.2.1

• Jurisdiction: Arizona

§ 7.2.1 In General

Misrepresentation and nondisclosure claims are commonly defended on the basis that the plaintiff cannot meet some element of the tort. For example, a defense might be based on evidence that the statement or omission is not material,²⁰⁵³ is inactionable opinion²⁰⁵⁴ or puffery,²⁰⁵⁵ was not justifiably relied upon,²⁰⁵⁶ or was not the cause of the plaintiff's loss.²⁰⁵⁷ A defense might also be based on the plaintiff's failure to plead fraud with sufficient particularity.²⁰⁵⁸

Other defenses are affirmative defenses on which the defendant carries the burden of proof.²⁰⁵⁹ These include waiver,²⁰⁶⁰ estoppel,²⁰⁶¹ ratification,²⁰⁶² election of remedies,²⁰⁶³ failure to mitigate,²⁰⁶⁴ illegality,²⁰⁶⁵ unclean hands,²⁰⁶⁶ laches,²⁰⁶⁷ and the economic loss rule.²⁰⁶⁸ The comparative fault of the parties and nonparties may also reduce the plaintiff's recovery.²⁰⁶⁹

Contracts commonly recite that the parties are not relying upon any representations other than those expressed in the signed agreement. Many plaintiffs are met with the defense that reliance on oral representations outside the contract is barred by these clauses.²⁰⁷⁰ The courts have usually rejected such defenses, refusing both in cases of negligent and intentional fraud to allow a party to shield fraud with an integration clause.²⁰⁷¹

The statute of limitations for common-law fraud is three years from discovery of the fraud.²⁰⁷² For negligent misrepresentation the limitations period is two years from discovery of the misrepresentation.²⁰⁷³ Under the common-law discovery rule, a cause of action accrues when the plaintiff knows or by the exercise of reasonable diligence should have discovered the right to sue.²⁰⁷⁴ This requires evidence that the plaintiff had reason to know both that fraud and damage occurred.²⁰⁷⁵

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Notes:

^[2053] Compare Haisch v. Allstate Ins. Co., 197 Ariz. 606, 610-11 ¶¶ 16-17, 5 P.3d 940, 944-45 (Ct. App. 2000) (finding omission immaterial as a matter of law), with Miller, 1 Ariz. App. at 559, 405 P.2d at 578 (rejecting claim that statements were mere puffery). See generally Restatement (Second) of Torts § 538 cmt. e (1977) ("The court may withdraw the case from the jury if the fact misrepresented is so obviously unimportant that the jury could not reasonably find that a reasonable man would have been influenced by it."); Keeton et al., supra note 897, § 108, at 753 ("There are misstatements which are so trivial, or so far unrelated to anything of real importance in the transaction, that the plaintiff will not be heard to say that they substantially affected his decision.").

^[2054] See, e.g., Page Inv. Co. v. Staley, 105 Ariz. 562, 564-65, 468 P.2d 589, 591-92 (1970) (concluding that an assertion that property was worth $7,500 an acre was inactionable opinion); Hall v. Romero, 141 Ariz. 120, 123, 685 P.2d 757, 760 (Ct. App. 1984) (stating that trial judge could have found that statement that "I'm sure you'll never find a better, more secure investment" was inactionable opinion) (internal quotation marks omitted).

^[2055] See Zowine v. Prussin, No. CV-14-00892-PHX-GMS, 2016 WL 558550, at *6 (D. Ariz. Feb. 12, 2016) ("Prussin's alleged assurance that Duke's Dream's breeding fees would produce a 'guaranteed' profit amounts to mere puffery, not an actionable statement of fact."); Global Collections Corp. v. Maxim Limousine Servs., LLC, No. 1 CA-CV 10-0426, 2011 WL 2119002, at *3 ¶ 15 (Ariz. Ct. App. May 24, 2011) (statement that there would be a "substantial increase in revenues from the advertising" was at most puffery, not a representation of fact).

^[2056] See, e.g., Linder v. Brown & Herrick, 189 Ariz. 398, 404-05, 943 P.2d 758, 764-65 (Ct. App. 1997); Jones v. Chiado Corp., 137 Ariz. 298, 299-300, 670 P.2d 403, 404-05 (Ct. App. 1983); Peery v. Hansen, 120 Ariz. 266, 269, 585 P.2d 574, 577 (Ct. App. 1978); Herz & Lewis, Inc. v. Union Bank, 22 Ariz. App. 437, 440-41, 528 P.2d 188, 191-92 (1974) (holding that misrepresented information was too stale to be justifiably relied upon).

^[2057] See, e.g., Standard Chartered PLC v. Price Waterhouse, 190 Ariz. 6, 32-34, 945 P.2d 317, 343-45 (Ct. App. 1996).

^[2058] Royston v. Waychoff, 2020 WL 4529621, at *1 ¶¶ 1-3, *2 ¶ 5 (Ariz. Ct. App. Aug. 6, 2020) (affirming dismissal for failure to plead fraud with the particularity required by Ariz. R. Civ. P. 9(b)); Marceaux v. Baker, No. 1 CA-CV 18-0542, 2019 WL 5701736, at *3 ¶¶ 11, 14, *4 ¶¶ 20, 22, *5 ¶¶ 25, 27 (Ariz. Ct. App. Nov. 5, 2019) (same).

^[2059] See,...