Camelback v. Cbre

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

CAMELBACK PLAZA WEST, L.L.C., Plaintiff/Appellant,

v.

CBRE, INC., Defendant/Appellee.

No. 1 CA-CV 16-0144
FILED 5-4-2017

Appeal from the Superior Court in Maricopa County
No. CV2014-008962
The Honorable Karen A. Mullins, Judge

AFFIRMED

COUNSEL

William A. Miller PLLC, Scottsdale
By William A. Miller
Counsel for Plaintiff/Appellant

Berk Law Group PC, Scottsdale
By Kent S. Berk, Daphne J. Reaume
Counsel for Defendant/Appellee
 CAMELBACK v. CBRE
Decision of the Court

MEMORANDUM DECISION

Judge Patricia Starr1 delivered the decision of the Court, in which Presiding
Judge Samuel A. Thumma and Chief Judge Michael J. Brown joined.

S T A R R, Judge:

¶1 Plaintiff Camelback Plaza West, L.L.C. (“Camelback”)
appeals the superior court’s summary judgment in favor of defendant
CBRE, Inc. on Camelback’s claims of negligent misrepresentation and
intentional interference with business expectancy. For the following
reasons, we affirm.

FACTS AND PROCEDURAL HISTORY2

¶2 In April 2011, Camelback defaulted on a loan made by Desert
Schools Federal Credit Union (“Desert Schools”) and secured by
commercial property known as the Camelback Plaza (“Property”). In June
2012, the parties entered a settlement agreement pursuant to which Desert
Schools would accept $5,989,680.24 to release its security interest in the
Property, provided Camelback paid cash or refinanced by August 15, 2012
(later extended to August 29, 2012).

¶3 Camelback obtained a letter of interest from Commercial
Financial Services LLC (“CFS Global”) to refinance the loan, based on a
loan-to-value ratio not to exceed 75%. In early July 2012, CFS Global
retained CBRE, a global multi-service real estate company to appraise the
Property. The written engagement agreement for the appraisal, dated and
countersigned by CFS Global on July 3, 2012, was between CFS Global and
CBRE. The agreement identified the “intended user” as CFS Global and the

1 The Honorable Patricia Starr, Judge of the Arizona Superior Court,
has been authorized to sit in this matter pursuant to Article VI, section 3 of
the Arizona Constitution.

2 We view the facts and inferences drawn therefrom in the light most
favorable to Camelback, the party against whom summary judgment was
entered. See, e.g., Weitz Co. L.L.C. v. Heth, 235 Ariz. 405, 408, ¶ 2 (2014);
Brookover v. Roberts Enters., Inc., 215 Ariz. 52, 55, ¶ 8 (App. 2007).

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“intended use” as “internal decision making purposes.” The agreement
included the following specific limitations:

Reliance on any reports produced by CBRE under this
Agreement is extended solely to [CFS Global] signing below
and to any other Intended Users identified in this Agreement.
Other parties or entities who obtain a copy of the report may
not rely upon any opinions or conclusions contained in the
report unless such party or entity has expressly been
identified by CBRE as an Intended User.

No intended user, other than CFS Global, was identified in the agreement.
CBRE assigned Todd Lamb to perform the appraisal. Michael Lynch, a
director with CFS Global, introduced Lamb to Joan Clancy, Camelback’s
manager. Clancy explained to Lamb that Camelback was seeking take-out
financing to replace the loan from Desert Schools.

¶4 On July 24, 2012, Chris Ackel, a real estate agent who worked
in CBRE’s commercial real estate services division, tendered to Desert
Schools a letter of intent on behalf of Fenway Properties (“Fenway”)
offering to purchase the Property for $2 million. Desert Schools did not
accept the offer and it expired by its terms two days later.

¶5 Lamb transmitted a written Self Contained Appraisal Report
prepared for CFS Global to Lynch on August 4, 2012, opining the Property
had an as-is valuation of $4.15 million as of July 11, 2012. The report defined
its intended use and user as:

The intended use and user of our report is specifically named
in our report as agreed upon in our contract for services
and/or reliance language found in the report. No other use or
user of the report is permitted by any other party for any other
purpose. Dissemination of this report by any party to
nonclient, non intended users does not extend reliance to any
other party and CBRE will not be responsible for
unauthorized use of the report, its conclusions or contents
used partially or in its entirety.

Lynch forwarded the appraisal to Clancy, who was surprised by the
valuation because the Property had appraised at $5.23 million in October
2010; Clancy was expecting the Property to appraise at no less than $6.7
million. Over the next few days, Lynch objected to the appraisal several
times, forwarding to Lamb additional documentation and “comps” for the
Property, much of which had been provided by Clancy. On August 14,

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2012, Lamb agreed to amend the valuation opinion to $4.2 million, but
Lynch continued to object. Lynch advised Lamb that Clancy was “very
upset” and was “pushing me to order another appraisal.” Lamb twice
suggested that Lynch contact two local real estate brokers for confirmation
of the appraised value. On August 17, 2012, Lynch requested that Lamb
review two additional comps provided by Clancy, and Lamb agreed to do
so.

¶6 On August 18, 2012, Lynch told Clancy that, based on an as-
is valuation of $4.15 million and a 75% loan-to-value ratio, the maximum
amount Camelback potentially could borrow was $3.1 million. Camelback
did not obtain funds to refinance the loan, and Desert Schools sold the
Property at a trustee’s sale on August 29, 2012.

¶7 Camelback then brought this action alleging that CBRE (1)
negligently misrepresented the appraised value of the Property and (2)
intentionally interfered with Camelback’s business expectancy with CFS
Global so Fenway could purchase the Property.3 CBRE moved for
summary judgment. After full briefing and oral argument, the superior
court granted the motion, concluding the negligent misrepresentation claim
failed because CBRE owed Camelback no duty, Camelback could not
establish reliance, and Camelback failed to show any interference based on
the CBRE appraisal. The court entered a final judgment, see Ariz. R. Civ. P.
54(c), and Camelback timely appealed. We have jurisdiction pursuant to
Arizona Revised Statutes (“A.R.S.”) § 12-2101(A)(1).4

DISCUSSION

¶8 Entry of summary judgment is proper “if the moving party
shows there is no genuine dispute as to any material fact and the moving
party is entitled to judgment as a matter of law.” Ariz. R. Civ. P. 56(a). For
the factual aspect of this inquiry, summary judgment is proper “if the facts

3 Camelback also asserted a common law negligence claim, but does
not challenge the superior court’s decision to construe that claim as a
negligent misrepresentation claim. See Standard Chartered PLC v. Price
Waterhouse, 190 Ariz. 6, 30 (App. 1996) (gravamen of a negligence claim
against a provider of professional information is negligent
misrepresentation).

4 We cite the current version of applicable statutes when no revisions
material to this decision have since occurred.

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produced in support of the claim or defense have so little probative value,
given the quantum of evidence required, that reasonable people could not
agree with the conclusion advanced by the proponent of the claim or
defense.” Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990). We review de novo
whether there are any genuine issues of material fact and whether the
superior court properly applied the law. Parkway Bank & Tr. Co. v. Zivkovic,
232 Ariz. 286, 289, ¶ 10 (App. 2013).

I. Negligent Misrepresentation

¶9 Restatement (Second) of Torts § 552 (1977) (“Restatement”)
“outlines the extent of an appraiser’s duty to a third party who justifiably
relies on false information supplied by the professional.” Belen Loan Inv’rs,
LLC v. Bradley, 231 Ariz. 448, 453, ¶ 10 (App. 2012). It provides:

One who, in the course of his business, profession or
employment, or in any other transaction in which he has a
pecuniary interest, supplies false information for the
guidance of others in their business transactions, is subject to
liability for pecuniary loss caused to them by their justifiable
reliance upon the information, if he fails to exercise
reasonable care or competence in obtaining or
communicating the information.

Restatement § 552(1); see also KB Home Tucson, Inc. v. Charter Oak Fire Ins.
Co., 236 Ariz. 326, 333, ¶ 30 n.7 (App. 2014) (stating elements of negligent
misrepresentation claim). However, an appraiser’s liability under § 552(1)
is limited to loss suffered

(a) by the person or one of a limited group of persons for
whose benefit and guidance he intends to supply the
information or knows that the recipient intends to supply it;
and
(b) through reliance upon it in a transaction that he intends
the information to influence or knows that the recipient so
intends or in a substantially similar transaction.

Restatement § 552(2).

¶10 The superior court granted summary judgment on two bases:
CBRE did not owe Camelback a duty of care, and there were no material
disputes of fact on the element of justifiable reliance. See Kuehn v. Stanley,
208 Ariz. 124, 128-29, ¶¶ 12-15 (App. 2004); Sw. Non-Profit Hous. Corp. v.

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Nowak, 234 Ariz. 387, 394-95, ¶¶ 27-30 (App. 2014). Because we conclude
the duty issue is dispositive, we do not address justifiable reliance.

¶11 “In applying § 552, intent to influence is a threshold issue.”
Nowak, 234 Ariz. at 392, ¶ 17 (internal quotation and citation omitted). Put
simply, an appraiser owes a duty to a third party if the appraiser either (1)
intended to “reach and influence” the third party or (2) knew the recipient
of the appraisal so intended. Restatement § 552 cmt. h; see also Nowak, 234
Ariz. at 391, ¶ 12; Belen Loan, 231 Ariz. at 455, ¶ 16.

¶12 “[W]hether a duty exists, is a matter of law for the court to
decide.” Gipson v. Kasey, 214 Ariz. 141, 143, ¶ 9 (2007). Camelback,
however, argues disputed facts on the question of “intent to influence”
preclude summary judgment. Camelback relies on Diggs v. Ariz.
Cardiologists, Ltd., 198 Ariz. 198, 200, ¶ 11 (App. 2000), in which we
explained that the existence of a duty may depend on preliminary fact
questions if those facts are in dispute. But in light of Gipson, the continued
viability of Diggs’ holding that existence of a duty may depend on
preliminary questions of fact is questionable. In Gipson, our Supreme Court
plainly stated that “[t]he issue of duty is not a factual matter; it is a legal
matter to be determined before the case-specific facts are considered.” 214
Ariz. at 145, ¶ 21. Moreover, for several reasons, Camelback has not shown
that disputed issues of material fact undercut the superior court’s finding
that CBRE owed it no duty under a negligent misrepresentation theory.

¶13 First, there is no evidence CBRE intended to influence
Camelback. See Restatement § 552 cmt. h (rule “subjects the negligent
supplier of misinformation to liability only to those persons for whose
benefit and guidance it is supplied.”). Neither the assignment agreement
nor the appraisal report identified Camelback as an intended user. To the
contrary, both expressly prohibited reliance by third parties. See Nowak, 234
Ariz. at 394, ¶ 24.

¶14 Second, even assuming Lamb could foresee (or even knew)
that Lynch would forward the appraisal to Clancy, see Belen Loan, 231 Ariz.
at 456, ¶ 20, “foreseeability alone has been deemed insufficient to create a
duty on the part of the information provider,” Nowak, 234 Ariz. at 392, ¶ 17
n.4 (citations omitted). The operative issue is whether Camelback was the
“person” for whose guidance the appraisal was supplied. See Restatement
§ 552 cmt. h. In forwarding the appraisal, CFS Global could not have
intended to influence Camelback because Camelback was already
contractually bound by the settlement agreement with Desert Schools. See
Kuehn, 208 Ariz. at 128-29, ¶¶ 14-15 (appraiser owed no duty to homebuyers

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who were contractually bound before they received the appraisal); Nowak,
234 Ariz. at 392, ¶ 17 & n.4 (similar); cf. Sage v. Blagg Appraisal Co., 221 Ariz.
33, 36, ¶ 14 (App. 2009) (appraiser owed a duty where contract allowed
homebuyer to cancel if the property did not appraise above the purchase
price); Belen Loan, 231 Ariz. at 451, ¶ 3 (lender who funded excessive loans
based on inflated appraisals stated a claim against the appraiser).
Accordingly, the superior court did not err in granting summary judgment
because CBRE owed Camelback no duty.

II. Intentional Interference with Business Expectancy

¶15 Camelback argues the superior court erred in concluding that
CBRE could not have interfered with a business expectancy because the
Fenway offer expired a week before Lamb completed the appraisal.

¶16 The elements for tortious interference with business
expectancy are (1) the existence of a valid business expectancy, (2) the
interferer’s knowledge of the relationship or expectancy, (3) the interferer’s
intentional interference inducing or causing a breach or termination of the
expectancy, and (4) resultant damage to the party whose expectancy has
been disrupted. Dube v. Likins, 216 Ariz. 406, 412, ¶ 14 (App. 2007). The
interference must be both intentional and improper as to motive or means.
Neonatology Assoc., Ltd. v. Phx. Perinatal Assocs., Inc., 216 Ariz. 185, 187, ¶ 8
(App. 2007) (citing Safeway Ins. Co. v. Guerrero, 210 Ariz. 5, 11, ¶ 20 (2005)).
“Intentional” focuses on the mental state of the actor; “improper” weighs
“the social importance of the interest the defendant seeks to advance
against the interest invaded.” Safeway, 210 Ariz. at 11, ¶ 21. The issue of
motive or the propriety of an action may be resolved as a matter of law
when there is no reasonable inference to the contrary in the record.
Neonatology, 216 Ariz. at 188, ¶ 9.

¶17 Camelback contends the evidence that Ackel was pursuing
the Property on behalf of Fenway while Lamb worked on the appraisal
supports an inference that CBRE was intentionally interfering with
Camelback’s business expectancy in selling the Property to Fenway. We
agree with CBRE that this inference does not raise a material dispute of fact
on interference. See Orme Sch., 166 Ariz. at 311 (stating that summary
judgment should not be denied on the speculation a dispute over irrelevant
or immaterial facts might “blossom” into a controversy in the middle of
trial). Camelback claimed that Lamb “seriously undervalued” the Property
so Fenway could purchase it “for pennies on the dollar.” But the Fenway
offer had expired by the time Lamb provided the appraisal to Lynch.
Moreover, the record does not suggest or provide any basis for a reasonable

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inference that Fenway or Ackel knew of the value that later appeared in the
appraisal when the Fenway offer was made and expired. See Neonatology,
216 Ariz. at 188, ¶ 9. On this basis, the superior court properly concluded
CBRE did not interfere with Camelback’s business expectancy.

CONCLUSION

¶18 For the foregoing reasons, we affirm. We award costs to
CBRE, upon compliance with ARCAP 21.

AMY M. WOOD • Clerk of the Court
FILED: AA

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