Belen Loan Investors, LLC v. Myers, Baumgardner, Los Luna Highlands

FILED BY CLERK
IN THE COURT OF APPEALS DEC 21 2012
STATE OF ARIZONA
COURT OF APPEALS
DIVISION TWO
DIVISION TWO

BELEN LOAN INVESTORS, LLC, an )
Arizona limited liability company, and ) 2 CA-CV 2011-0153
LOS LUNAS INVESTORS, LLC, an ) DEPARTMENT B
Arizona limited liability company, )
) OPINION
Plaintiffs/Appellants, )
)
v. )
)
JAMES S. BRADLEY and KAREN )
BRADLEY, husband and wife, and KB )
REAL ESTATE APPRAISERS, INC., )
an Arizona corporation, )
)
Defendants/Appellees. )
)

APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY

Cause Nos. C20102051 and C20107903 (Consolidated)

Honorable Kyle Bryson, Judge

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED

Heurlin Sherlock Laird
By Brian A. Laird Tucson
Attorneys for Plaintiffs/Appellants

O’Connor & Campbell, PC
By J. Daniel Campbell,
Susan Luse, and Mike Roberts Phoenix
Attorneys for Defendants/Appellees Bradley
and KB Real Estate Appraisers, Inc.

E S P I N O S A, Judge.
¶1 Belen Loan Investors, LLC and Los Lunas Investors, LLC (collectively,

“BLI”) challenge the trial court’s dismissal of their complaint for failure to state a claim

against James and Karen Bradley and KB Real Estate Appraisers, Inc. (collectively,

“Bradley”) for negligent misrepresentation and conspiring in or aiding the tortious

conduct of others. BLI further challenges the court’s denial of its motion to file a second

amended complaint. For the reasons detailed in this opinion, we reverse and remand.

Factual Background and Procedural History

¶2 When reviewing a dismissal for failure to state a claim pursuant to

Rule 12(b)(6), Ariz. R. Civ. P., we assume the truth of all well-pleaded factual

allegations.1 Coleman v. City of Mesa, 230 Ariz. 352, ¶ 9, 284 P.3d 863, 867 (2012).

Around September 2006, BLI loaned Los Lunas Highlands, LLC and Belen 368, LLC

(collectively, “borrowers”) $2,600,000 and $2,950,000, respectively, for the purchase and

development of various unimproved residential lots in Valencia County, New Mexico, in

exchange for two promissory notes, security interest in the property, and the personal

guarantee of Michael Myers, an officer of The Myers Group and agent affiliated with the

borrowers. According to BLI, the borrowers made false representations of the property

value to induce BLI to provide excess loan funds which then were transferred to the

1
Although BLI describes the facts as set forth in its second amended complaint,
that complaint never was accepted by the court and we disregard it.
2
borrowers’ personal profit sharing plans. The borrowers hired Bradley, an Arizona

appraiser, to provide appraisals for Myers’s use in obtaining the loans.2

¶3 When the borrowers defaulted on their loans, BLI initiated a judicial

foreclosure action in New Mexico and sued Myers, the borrowers, and their associated

entities, corporate officers, and trustees for various causes of action in the instant case.3

Joining in a motion filed by another defendant, Bradley moved to dismiss BLI’s claims

against him for conspiring in or aiding the tortious conduct of others and negligent

misrepresentation, which were based on allegations that he intentionally or negligently

had provided “falsely inflated appraisals” upon which BLI relied to fund “excessive

loans.”4 Bradley asserted BLI had failed to state a claim upon which relief could be

granted. See Ariz. R. Civ. P. 12(b)(6).

¶4 The trial court dismissed both claims against Bradley on the ground he

owed BLI no duty. The court determined that Sage v. Blagg Appraisal Co., 221 Ariz. 33,

2
Although BLI’s complaint refers to “appraisals” obtained in reference to both the
Belen and Los Lunas loans, it identifies with particularity only those appraisal values
pertaining to the sixty-seven-acre Los Lunas property. See Strategic Dev. & Constr., Inc.
v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, ¶ 14, 226 P.3d 1046, 1050 (App. 2010)
(in reviewing Rule 12(b)(6) motion, court may consider intrinsic documents central to
complaint). Neither party raised this issue below or on appeal, and we do not address it.
3
BLI’s first complaint was dismissed for failure to state a claim and insufficient
service of process, and its first amended complaint incorporated additional claims and
defendants.
4
Specifically, BLI asserted that in one instance the borrowers had influenced
Bradley to nearly triple a valuation from $1,680,000 in the draft appraisal report to
$4,500,000 in the final report—although that property had been sold only a year earlier
for $360,000—and claimed that Bradley had failed to obtain information about any
available comparable sales when he prepared his appraisals.
3
209 P.3d 169 (App. 2009), “specifically limited [an appraiser’s duty to third parties] to

the ‘traditional home-purchase transaction,’” see id. ¶ 14, and concluded that because the

instant case involved “speculative large-tract real estate investments,” BLI was “not in

the narrow class of persons entitled to rely on the appraisal[s],” citing Kuehn v. Stanley,

208 Ariz. 124, 91 P.3d 346 (App. 2004), and Hoffman v. Greenberg, 159 Ariz. 377, 767

P.2d 725 (App. 1988). The court denied BLI’s motion for reconsideration on the same

grounds, and denied its motion to amend the complaint because one amendment had been

allowed previously and BLI’s new proposal did not remedy the deficiency. We have

jurisdiction over BLI’s appeal pursuant to A.R.S. § 12-2101(A)(1).5 See also Ariz. R.

Civ. P. 54(b) (allowing appeal of judgment disposing of fewer than all claims or

defendants).

5
The appeal is limited to the December 9, 2011, final judgment and related rulings
dismissing all claims against Bradley. Other defendants have been dismissed from the
action, and only two claims against Scott Baumgardner remain in the trial court.
Although not a party to this appeal, Baumgardner has filed an answering brief asserting
BLI’s notice of appeal could be construed as pertaining to the court’s dismissal of certain
claims against him and arguing our appellate ruling might allow BLI to move for their
reinstatement. Notwithstanding Baumgardner’s concerns, the trial court’s partial ruling
in his favor is not ripe for appeal; therefore, even if he is correct and BLI intends to
challenge the court’s dismissal of his claims, we lack jurisdiction to consider such
arguments. See Ariz. R. Civ. P. 54(b) (no appealable judgment where order lacks
specific determination that judgment should be entered and no just reason for delay); see
also Fields v. Oates, 230 Ariz. 411, ¶ 12, 286 P.3d 160, 163 (App. 2012) (“A judgment
on less than all claims without Rule 54(b) certification is subject to modification at any
time prior to adjudication of all claims.”).
4
 Standard of Review

¶5 Initially, we must determine the proper standard for our review. Rule 12(b)

provides that if “matters outside the pleading” are presented to the court on a motion to

dismiss for failure to state a claim, and are not excluded, the motion shall be treated as a

motion for summary judgment. See Coleman, 230 Ariz. 352, ¶ 9, 284 P.3d at 867; see

also Ariz. R. Civ. P. 56(b). But, if extraneous matters neither add to nor subtract from

the deficiency of the pleading, the motion need not be converted. Strategic Dev. &

Constr., Inc. v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, ¶ 8, 226 P.3d 1046, 1049

(App. 2010), citing Brosie v. Stockton, 105 Ariz. 574, 576, 468 P.2d 933, 935 (1970) (no

conversion when extraneous material not necessary to final outcome). We note at the

outset there is conflicting authority regarding when Rule 12(b) conversion is proper.

¶6 The parties submitted several documents in connection with the motions to

dismiss, including, inter alia, Bradley’s appraisals and draft appraisals, New Mexico

litigation documents, loan instruments, an expert witness affidavit, correspondence

between the parties, an historical account of Bradley’s appraisal contracts with Myers,

and Bradley’s answers to interrogatories. All documents except Bradley’s appraisals, the

New Mexico judgment, and the loan documents were extrinsic to the complaint because

they were not attached to it and did not qualify for any exception to the conversion rule.

See Strategic Dev. & Constr., Inc., 224 Ariz. 60, ¶¶ 10, 13-14, 226 P.3d at 1049, 1050

(document central to complaint may be considered intrinsic to complaint if attached to

complaint, sufficiently referenced in complaint, or official public record), citing Alt.

5
Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001)

(undisputedly authentic document central to complaint may be intrinsic to complaint).

Bradley asserted at oral argument before this court that we have discretion to deem the

motion converted based on the many extrinsic documents presented, although he

conceded the trial court properly could have considered the terms of the appraisals alone,

without treating the motion as one for summary judgment. See Cullen v. Koty-Leavitt

Ins. Agency, Inc., 216 Ariz. 509, ¶¶ 8, 17, 168 P.3d 917, 921, 924 (App. 2007) (Cullen I)

(court’s consideration of contract intrinsic to complaint did not convert motion to dismiss

into motion for summary judgment), vacated in part on other grounds sub nom. Cullen v.

Auto-Owners Ins. Co., 218 Ariz. 417, 189 P.3d 344 (2008) (Cullen II).

¶7 The minute entry does not indicate the extrinsic documents were excluded,

and, indeed, the trial court issued its in-chambers ruling “having considered arguments of

counsel[] and having reviewed the file.” We are persuaded, however, that the extraneous

materials were neither considered in the court’s ruling nor necessary to support its

rationale for dismissal. Compare Coleman, 230 Ariz. 352, ¶ 9, 284 P.3d at 867

(Rule 12(b)(6) motion not converted when court considers complaint’s exhibits or public

records regarding matters referenced in complaint because such documents not extrinsic

to complaint), and Strategic Dev. & Constr., Inc., 224 Ariz. 60, ¶ 8, 226 P.3d at 1049

(Rule 56 treatment not required when court does not rely on proffered extraneous

materials), with Smith v. CIGNA HealthPlan of Ariz., 203 Ariz. 173, ¶ 8, 52 P.3d 205,

208 (App. 2002) (motion converted when extrinsic matters presented and considered in

6
ruling).6 BLI’s proffered exhibits were not admitted at the motions hearing, and the court

did not refer to any extraneous materials in dismissing BLI’s claims against Bradley.

Because the court did not rely on the extrinsic documents in ruling on Bradley’s Rule

12(b)(6) motion, instead basing its dismissal on the allegations in the complaint and the

legal arguments of the parties, we conclude the motion was not converted.7 See Strategic

6
But see Unique Equip. Co. v. TRW Vehicle Safety Sys., Inc., 197 Ariz. 50, ¶ 4 &
n.1, ¶ 28, 3 P.3d 970, 972 & n.1, 981 (App. 1999) (court deemed to have considered
extrinsic documents based on statement “arguments in [defendant]’s reply were
persuasive,” where reply had referred to extrinsic documents); Canyon del Rio Investors,
L.L.C. v. City of Flagstaff, 227 Ariz. 336, ¶ 15, 258 P.3d 154, 158 (App. 2011)
(Rule 12(b)(6) motion converted where court did not strike extrinsic documents attached
to motion and response).
7
At oral argument, BLI asserted its motion to dismiss should not be converted on
appeal because the parties lacked notice of possible conversion and had no “reasonable
opportunity to present all [pertinent] material.” Ariz. R. Civ. P. 12(b). But BLI’s
interpretation of Rule 12(b) is contrary to our case law. The “reasonable opportunity”
requirement inherent in Rule 12(b) is satisfied when a party had the opportunity to file a
written response or reply. See Canyon del Rio Investors, L.L.C., 227 Ariz. 336, ¶ 15, 258
P.3d at 158 (Rule 12(b) dismissal deemed summary judgment on appeal, even absent
notice and express opportunity for parties to present additional relevant material to trial
court); Yollin v. City of Glendale, 219 Ariz. 24, ¶ 6, 191 P.3d 1040, 1043 (App. 2008)
(same); Unique Equip. Co., 197 Ariz. 50, ¶ 4, 3 P.3d at 972 (motion converted on appeal
when both parties submitted documents and argued facts outside pleadings and trial court
considered them); Max of Switz., Inc. v. Allright Corp. of Del., 187 Ariz. 496, 498, 930
P.2d 1010, 1012 (App. 1997) (trial court not required to notify parties of conversion;
plaintiff’s motion to dismiss suffices as “‘reasonable opportunity’ to present all pertinent
material”), quoting Ariz. R. Civ. P. 12(b); Cella Barr Assocs., Inc., 177 Ariz. at 483, 868
P.2d at 1066 (motion converted on appeal though no notice given to parties); Franzi v.
Koedyker, 157 Ariz. 401, 407-08, 758 P.2d 1303, 1309-10 (App. 1985) (motion
converted on appeal despite lack of notice to parties where both sides submitted
evidentiary material to court and neither requested further opportunity to present
evidence). In this case, BLI had the opportunity to oppose the motion to dismiss and did
attach extrinsic documents to its response. But even were we to determine BLI lacked an
opportunity to address extrinsic matters, such a finding would not defeat conversion but
only suggest remand for further proceedings. See Young v. Rose, 230 Ariz. 433, ¶¶ 2, 33,
7
Dev. & Constr., Inc., 224 Ariz. 60, ¶ 8, 226 P.3d at 1049. Accordingly, we review de

novo the grant of a dismissal under Rule 12(b)(6) and will not affirm the dismissal unless

satisfied that “‘as a matter of law . . . plaintiffs would not be entitled to relief under any

interpretation of the facts susceptible of proof.’” Coleman, 230 Ariz. 352, ¶ 8, 284 P.3d

at 867, quoting Fid. Sec. Life Ins. Co. v. State Dep’t of Ins., 191 Ariz. 222, ¶ 4, 954 P.2d

580, 582 (1998).

Duty to Third Parties

¶8 To state a claim for relief for negligent misrepresentation, a plaintiff must

allege, among other elements, that the defendant owed the plaintiff a duty of care. See

Hoffman, 159 Ariz. at 380, 767 P.2d at 728. We address de novo the purely legal issue of

whether the trial court correctly ruled that Bradley owed BLI no such duty as a matter of

law. See Vasquez v. State, 220 Ariz. 304, ¶ 22, 206 P.3d 753, 760 (App. 2008).

¶9 BLI argues the trial court misinterpreted our holding in Sage, 221 Ariz. 33,

¶ 1, 209 P.3d at 169, and consequently erred. BLI asserts that, contrary to the court’s

analysis, an appraiser owes a professional duty to any third party the appraiser “knows

will receive the appraisal for purposes of influencing the specific transaction.” See id.

¶ 22. BLI acknowledges Bradley was hired by Myers to prepare appraisals for Myers’s

use but maintains that, because Bradley knew Myers would provide appraisals to BLI,

Bradley could be held liable to BLI for negligent misrepresentation. See id. ¶ 8. Bradley

286 P.3d 518, 519, 524 (App. 2012) (dismissal converted on appeal but vacated and
remanded for opportunity to present relevant material). In any event, we need not resolve
this question because we find the motion was not converted.
8
counters that it owed no duty to BLI because the appraisals were intended specifically for

Myers’s use alone and that the Sage holding is inapplicable because that case is factually

distinguishable from the situation at hand.

¶10 Section 552, Restatement (Second) of Torts (1977), outlines the extent of

an appraiser’s duty to a third party who justifiably relies on false information supplied by

the professional. See Hoffman, 159 Ariz. at 379, 767 P.2d at 727 (applying Restatement

§ 552 in case of negligent misrepresentation); see also Aztlan Lodge No. 1, Free &

Accepted Masons of Prescott v. Ruffner, 155 Ariz. 163, 165, 745 P.2d 611, 613 (App.

1987) (“Arizona courts will look to the Restatement in the absence of Arizona authority

to the contrary.”). An appraiser’s liability is limited to loss suffered “by the person or

one of a limited group of persons for whose benefit and guidance [the appraiser] intends

to supply the information or knows that the recipient intends to supply it” and extends

only to those transactions “that he intends the information to influence or knows that the

recipient so intends.” Restatement § 552(2). Further, the appraiser need not know the

identity of the third-party recipient at the time he supplies the information, as long as the

third party falls within a distinct group or class of persons the appraiser intends to reach

and influence with the information. Restatement § 552 cmt. h.

¶11 On the other hand, the appraiser has no duty to a third party who is merely

a member of the larger class who “might reasonably be expected sooner or later to have

access to the information and foreseeably to take some action in reliance upon it.” Id.;

see Gipson v. Kasey, 214 Ariz. 141, ¶ 15, 150 P.3d 228, 231 (2007) (foreseeability not

9
factor in determination of duty); Standard Chartered PLC v. Price Waterhouse, 190 Ariz.

6, 29, 945 P.2d 317, 340 (App. 1996) (same). Likewise, if the circumstances show that

an appraiser and the named recipient of information regard the identity of the recipient as

“important and material” and that the appraiser “understands that his liability is to be

restricted to the named person” only, the appraiser owes a duty toward the named

individual alone. Restatement § 552 cmt. h; see Hoffman, 159 Ariz. at 379-80, 767 P.2d

at 727-28.

¶12 This court clarified § 552 in Sage, holding that “an appraiser retained by a

lender to appraise a home in connection with the granting of a purchase-money mortgage

may be liable to the prospective buyer for failure to exercise reasonable care in

performing the appraisal.” 221 Ariz. 33, ¶ 1, 209 P.3d at 169. In that case, an appraiser

prepared a report for a mortgage lender at the request of a homebuyer. Id. ¶ 3. Even

though the homebuyer was not the appraiser’s named client, we found the appraiser owed

her a duty of care because he knew that she had the right to request a copy of the

appraisal report from the lender, that the lender was obligated by law to provide her with

a copy upon request, and that her contract entitled her to forego the sale if the appraisal

was unfavorable. Id. ¶¶ 2-3, 14; see 15 U.S.C. § 1691(e) (creditor shall furnish to

borrower appraisal report used in connection with residential real property purchase

loan). The buyer in fact had received the report prior to closing and ultimately paid for

the appraisal. Sage, 221 Ariz. 33, ¶¶ 2, 3, 209 P.3d at 170. Finally, both the Uniform

Residential Appraisal Report, a form used in the transaction, and the Uniform Standards

10
of Professional Appraisal Practice disclosed to the parties that the homebuyer was likely

to rely on the report in purchasing her home. Id. ¶ 24. In accordance with the

Restatement, we concluded that, to be held to owe a duty of reasonable care to a third-

party homebuyer, an appraiser need not know for certain that the appraisal will be

furnished to the homebuyer, but need know only that the recipient of the report “intends

to furnish the statement” to the homebuyer. Id. ¶ 22.

¶13 In Sage, we distinguished earlier decisions in which we had declined to

recognize any duty owed by an appraiser to a third party. 221 Ariz. 33, ¶¶ 10-14 & n.4,

209 P.3d at 171-72 & 171 n.4. For example, in Kuehn an appraiser was hired by a lender

to determine the value of a residential parcel “for use by [the lender] for a mortgage

finance transaction only.” 208 Ariz. 124, ¶ 13, 91 P.3d at 350. That the appraiser owed

the home purchasers no duty was evidenced by the type of appraisal: a “short form” for

lending purposes, which was not prepared for the guidance of the homebuyers. Id. ¶ 14.

Additionally, the buyers had not relied on the appraisal to close the sale, as they already

were contractually bound to purchase the property before they received it. Id. ¶ 13.

Although it was foreseeable that interested parties including the purchasers might rely on

the information in the appraisal, the borrowers were not part of the “‘limited group of

persons’” protected by the Restatement, and the appraiser consequently owed them no

duty. Id. ¶ 15, quoting Restatement § 552(2)(a).

¶14 Likewise, in Hoffman we held that an appraiser hired by the seller of

parcels of vacant land owed no duty to the third-party purchaser of the property. 159

11
Ariz. at 380, 767 P.2d at 728. The seller had refused to inform the appraiser how he

intended to use his report, and the report itself stated “[t]he function of this report is to aid

our client” and it “may [not] be used for any purpose other than its intended use.” Id. at

378-79, 767 P.2d at 726-27 (second alteration in Hoffman). Although it may have been

reasonably foreseeable that the owner might show an appraisal to prospective buyers, we

declined to measure liability by the reasonable-foreseeability standard. Id. at 379-80, 767

P.2d at 727-28.

¶15 Given the contours of an appraiser’s duty as outlined in these cases, we

agree with BLI that the trial court incorrectly interpreted Sage, insofar as it appears to

have concluded Sage imposes more stringent limits on an appraiser’s duty to third parties

than does the Restatement. Rather, Sage applied the broad framework of liability for

negligent misrepresentation set forth in Restatement § 552 specifically to residential

mortgage appraisals but did not foreclose imposing such liability in other factual contexts

that qualify under the Restatement. 221 Ariz. 33, ¶ 15, 209 P.3d at 172; see, e.g., St.

Joseph’s Hosp. & Med. Ctr. v. Reserve Life Ins. Co., 154 Ariz. 307, 313, 742 P.2d 808,

814 (1987) (insurer owed duty to hospital for statements concerning extent of patient

coverage); Standard Chartered PLC, 190 Ariz. at 28-31, 945 P.2d at 339-42 (finding

third-party bank that relied on report of borrower’s solvency had presented prima facie

case for negligent misrepresentation against auditor). An appraiser has a duty to “the

person or one of a limited group of persons for whose benefit and guidance [the

appraiser] intends to supply the information or knows that the recipient intends to supply

12
it” in those transactions “that he intends the information to influence or knows that the

recipient so intends.” Restatement § 552(2); Standard Chartered PLC, 190 Ariz. at 29,

945 P.2d at 340. In other words, the type of transaction is one factor of many and alone

is not dispositive of whether a duty might exist.

¶16 Just as in Sage, Kuehn, and Hoffman, to ascertain whether a duty exists, the

circumstances and relationships between the parties will determine whether BLI was an

entity “for whose benefit and guidance [Bradley] intend[ed] to supply the information or

kn[ew] that [Myers] intend[ed] to supply it.” See Restatement § 552(2)(a); see generally

Gipson, 214 Ariz. 141, ¶¶ 18-20, 150 P.3d at 231-32 (duty of care may arise out of

relationship between parties). In sum, if Bradley intended to supply his appraisals to

BLI, or knew Myers intended to supply them to BLI specifically or to a limited class of

persons including BLI, Myers owed a duty to BLI. See Standard Chartered PLC, 190

Ariz. at 31-32, 945 P.2d at 342-43; Restatement § 552(2)(a). Alternatively, if Bradley

and Myers regarded the recipient’s identity as “important and material” and, thus,

Bradley understood that his liability was to be restricted to Myers alone, he owed no duty

to BLI. See Restatement § 552 cmt. h.

Motion to Dismiss

¶17 With the above scope of duty in mind, we next consider whether BLI’s

complaint sufficiently alleged a claim for relief based on negligent misrepresentation

because if it did not, we would uphold the trial court’s ruling on this alternative ground.

See In re Estate of Lamparella, 210 Ariz. 246, ¶ 18, 109 P.3d 959, 963 (App. 2005)

13
(affirming ruling if correct for any reason). “Arizona follows a notice pleading

standard,” Cullen II, 218 Ariz. 417, ¶ 6, 189 P.3d at 346, under which a complaint “shall

contain . . . [a] short and plain statement of the claim showing that the pleader is entitled

to relief.” Ariz. R. Civ. P. 8(a)(2). In determining whether BLI stated a claim upon

which relief can be granted, we look only to the well-pleaded factual allegations in the

complaint,8 “and indulge all reasonable inferences from those facts.” Coleman, 230 Ariz.

352, ¶ 9, 284 P.3d at 867.

¶18 Bradley asserts that BLI’s complaint failed to state a claim upon which

relief can be granted because it contained conclusory allegations. See id. (“mere

conclusory allegations” insufficient to defeat 12(b)(6) motion). “[A] complaint that states

only legal conclusions, without any supporting factual allegations, does not satisfy [the

Rule 8] notice pleading standard,” but the inclusion of a legal conclusion will not

invalidate a complaint. Cullen II, 218 Ariz. 417, ¶ 7, 189 P.3d at 346. A complaint

should be liberally construed to permit a case to be “‘tried on the proofs rather than the

pleadings.’” Long v. Ariz. Portland Cement Co., 89 Ariz. 366, 369, 362 P.2d 741, 743-44

(1961) (general allegation of “conspiracy,” a legal conclusion, sufficient where reading of

entire complaint indicated plaintiff’s intent to prove existence of arrangement that stifled

competition), quoting Conley v. Gibson, 355 U.S. 41, 46 (1957), abrogated by Bell Atl.

Corp. v. Twombly, 550 U.S. 544 (2007).

8
In our review, we also consider the language within the appraisals, as they are
intrinsic to the complaint. See Strategic Dev. & Constr., Inc., 224 Ariz. 60, ¶¶ 10, 14,
226 P.3d at 1049, 1050.
14
¶19 In its first amended complaint, BLI broadly alleged that Bradley owed an

unqualified “duty to provide unbiased valuations.” But it also contended more

specifically that Bradley, a certified general appraiser, “intentionally and/or negligently

provided falsely inflated appraisals” for Myers’s use in the business transaction. BLI

further asserted that Bradley “knew that the appraisals were to be relied upon by lenders,

including [BLI],” “agreed that [BLI] . . . had a right to rely on the appraisals,” and

“intended that [BLI] should rely on the representations” therein. See Sage, 221 Ariz. 33,

¶¶ 13-14, 209 P.3d at 172 (appraiser’s knowledge report would be provided to third party

sufficient to impose duty); Hoffman, 159 Ariz. at 378-79, 767 P.2d at 726-27 (imposition

of duty rests on appraiser’s intent that report be used by certain individuals). And BLI

alleged that Bradley failed to exercise reasonable care in communicating the

representations to BLI by neglecting to obtain comparable sales data and using

“incomplete or inappropriate valuation methodology.” Finally, BLI asserted it had

justifiably relied on the false information and was damaged thereby. We conclude BLI’s

complaint alleged sufficient facts to put Bradley on notice of the specific nature of the

claim. See Cullen II, 218 Ariz. 417, ¶ 6, 189 P.3d at 346; see also State ex rel. Corbin v.

Pickrell, 136 Ariz. 589, 594, 596-97, 667 P.2d 1304, 1309, 1311-12 (1983) (complaint

survives Rule 12(b)(6) motion when it alleges elements of claim); Standard Chartered

PLC, 190 Ariz. at 31-32, 945 P.2d at 342-43 (setting out elements of negligent

misrepresentation).

15
¶20 Bradley contends BLI’s acknowledgement that the appraisals were

prepared for Myers’s use constitutes an admission they were not intended for BLI’s use,

thereby undermining his negligent misrepresentation claim. He echoes the express

language in at least one appraisal that “[t]he intended user of this report is The Myers

group” and that its purpose was to aid Myers in developing an opinion of the “as is” and

“as if complete” values of the property. BLI’s acknowledgement, however, does not

preclude finding a duty based on Bradley’s alleged knowledge that Myers would give the

reports to third-party BLI, despite the provision that they were “not intended to be used,

transferred or relied upon by any person other than those noted.” Cf. Lamparella, 210

Ariz. 246, ¶ 21, 109 P.3d at 963 (parties’ intentions determined not only by contract

language but by surrounding circumstances). Notwithstanding the limitations in the

appraisals, the complaint, if proven, might entitle BLI to relief on the theory that Bradley

intended to supply false appraisals to BLI or knew Myers intended to do so.

¶21 Taken as a whole, the allegations in the complaint allege sufficient facts to

state a claim upon which relief can be granted and effectively put Bradley on notice of

the nature and basis of BLI’s negligent misrepresentation claim against him.9 See

9
The remaining elements of negligent misrepresentation are not at issue in this
appeal. In their appellate briefs, the parties engage in an extensive discussion about
whether BLI’s reliance on the appraisal reports was justified. We disregard these
arguments as having no bearing on the legal question of whether Bradley owed BLI a
duty. See St. Joseph’s Hosp. & Med. Ctr., 154 Ariz. at 316, 742 P.2d at 817 (whether
reliance justified question for jury distinct from legal determination of duty).
Additionally, the record indicates that although justifiable reliance was argued briefly in
the trial court, the court’s dismissal of BLI’s claims against Bradley was primarily based
on its finding that Bradley owed BLI no duty; therefore, we do not address the reliance
16
Cullen II, 218 Ariz. 417, ¶ 6, 189 P.3d at 346 (complaint adequate if it alleges sufficient

facts to put opposing party on notice of nature of claim). We thus conclude the complaint

contained enough factual detail to survive a motion to dismiss under Rule 12(b)(6). See

Pickrell, 136 Ariz. at 594, 667 P.2d at 1309 (motion to dismiss should not be granted

“‘unless it appears certain that the plaintiff would not be entitled to relief under any state

of facts susceptible of proof under the claim stated’”), quoting Sun World Corp. v.

Pennysaver, Inc., 130 Ariz. 585, 586, 637 P.2d 1088, 1089 (App. 1981).

Other Issues

¶22 BLI also challenges the trial court’s dismissal of its claim that Bradley

aided or abetted the torts of others. BLI does not make specific arguments with regard to

the dismissal of that claim, suggesting we should consider the same arguments it raised

with respect to duty and find the court erred in dismissing the aiding or abetting torts

claim. But the elements of each claim are distinct, and “issues not clearly raised and

argued in a party’s appellate brief are waived.” Schabel v. Deer Valley Unified Sch. Dist.

No. 97, 186 Ariz. 161, 167, 920 P.2d 41, 47 (App. 1996). We therefore do not address

this argument further and will not disturb the trial court’s dismissal of that claim.

¶23 Finally, BLI asserts the trial court erred in denying its second motion to

amend the complaint. Because we already have determined BLI’s first amended

complaint survives Bradley’s motion to dismiss, BLI’s argument is moot. See Contempo-

issue. See Winters v. Ariz. Bd. of Educ., 207 Ariz. 173, ¶ 13, 83 P.3d 1114, 1118 (App.
2004) (argument waived when not raised with specificity and addressed in trial court).
17
Tempe Mobile Home Owners Ass’n v. Steinert, 144 Ariz. 227, 229, 696 P.2d 1376, 1378

(App. 1985) (appellate court will not address issues rendered moot by resolution of other

claims).

Disposition

¶24 Based upon the foregoing, the trial court’s dismissal of the negligent

misrepresentation claim alleged against James and Karen Bradley and KB Real Estate

Appraisers, Inc. is reversed. The court’s dismissal of the aiding or abetting tort claim and

its denial of BLI’s motion to amend its complaint are affirmed, and the case is remanded

for further proceedings consistent with this opinion.

/s/ Philip G. Espinosa
PHILIP G. ESPINOSA, Judge

CONCURRING:

/s/ Garye L. Vásquez
GARYE L. VÁSQUEZ, Presiding Judge

/s/ Virginia C. Kelly
VIRGINIA C. KELLY, Judge

18