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Powers v. Guaranty RV, Inc. - 6/12/2012

Arizona Court of Appeals Division One Holds That Seller is Liable Under Arizona Consumer Fraud Act for Transmitting Other’s Misrepresentation to Buyer Despite Seller’s Ignorance That Representation Was False.


Salesman sent Buyer a proposal for the sale of a motor home with certain specifications.  Buyer requested an assurance that the motor home engine would not overheat in use.  The salesman provided Buyer with an email from a manufacturer discussing testing of the cooling system equipment for the motor home.

Buyer purchased the motor home.  The engine overheated on its initial drive, and repeatedly thereafter.  Buyer filed a lawsuit alleging breach of warranty, fraudulent inducement, consumer fraud, violation of the Oregon Lemon Law, and violation of the Magnuson-Moss Warranty Act.  The matter was presented to the court for a bench trial on the claims of fraudulent inducement and consumer fraud against the motor home dealer. 

Following trial, the court ruled in favor of the dealer on all counts, finding that the email from the manufacturer was misleading but that the dealer had not intended to make a representation when it passed along the email to Buyer.  Buyer filed a motion for new trial, which the trial court granted in part.  The court ruled that, under the Arizona Consumer Fraud Act, a person is “strictly liable for a misrepresentation involved in a sale.”  Dealer appealed.

The Arizona Court of Appeals affirmed. 

The Consumer Fraud Act (“CFA” or the “Act”) prohibits, inter alia, the use of any misrepresentation in connection with the sale or advertisement of merchandise.  A.R.S. § 44-1522(A).  The Act also prohibits the omission of any material fact, with intent that other rely on such omission, in connection with an advertisement or sale of merchandise.  Id.  The CFA does not impose a “strict liability” standard; however, ignorance of the falsity of a representation is not a defense. 

Because the dealer voluntarily provided the misleading email representation from the manufacturer to Buyer, it was liable for Buyer’s damages.  That the dealer was merely the “messenger” and not the original source of the misrepresentation was not a defense.  Nor could the dealer escape liability based on its disclaimer of any representations in the purchase agreement.  In view of the CFA’s broad, remedial purpose, the dealer could not contractually disclaim all liability under the Act for misrepresentations it conveyed to Buyer.

Judge Hall authored the opinion; Presiding Judge Orozco and Judge Gemmill concurred.

Posted by: Mark Hummels

Posted On: 6/18/2012