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Correa v. Pecos Valley Development Corp.
Citations: 617 P.2d 767; 126 Ariz. 601; 1980 Ariz. App. LEXIS 572Docket: 2 CA-CIV 3220
Court: Court of Appeals of Arizona; July 8, 1980; Arizona; State Appellate Court
In the case of Correa v. Pecos Valley Development Corporation, the plaintiffs Joe M. Correa, Richard L. Correa, and Socorro C. Correa filed a lawsuit against the defendants, including Pecos Valley Development Corporation and the Papago Butte Water Delivery District of Pinal County No. 4, alleging consumer fraud, breach of contract, and tort, alongside a claim of breach of statutory duty against the water delivery district. The defendants counterclaimed for $202.91 in taxes, which resulted in a judgment in their favor for that amount, along with attorneys' fees and costs. The court granted a directed verdict in favor of the defendants after the plaintiffs presented their case, leading to the appeal. The plaintiffs argued that there was sufficient evidence to warrant a jury trial and challenged the exclusion of certain evidence as well as the award of attorneys' fees. The background involves the Correa family purchasing 'mini-farms' in a remote area of Pinal County, with representations made by the developer regarding an irrigation system that was to be provided. The case centered on the alleged inadequacies of this irrigation system and water supply. The appellate court emphasized that, in evaluating the directed verdict, it must assume the truth of all competent evidence presented by the plaintiffs and view it in the light most favorable to them. It also noted that the absence of a motion for a new trial by the plaintiffs did not prevent consideration of the evidence's sufficiency. The court referenced statutory provisions related to consumer fraud as part of the plaintiffs' claims against the developer. Merchandise includes real estate under A.R.S. Sec. 44-1521(5). A private cause of action for statutory fraud requires a false promise or misrepresentation related to the sale or advertisement of merchandise, resulting in consumer injury. Injury occurs when a consumer relies on a misrepresentation, regardless of the reasonableness of that reliance. The developers of Papago Butte Ranchos claimed sufficient water for farming through promotional materials that depicted the land as ideal for agricultural use, including raising livestock and growing crops. They advertised a modern irrigation system providing water to every tract, although this system was still under development. The statute A.R.S. Sec. 44-1522 differentiates between concealing present facts and making false promises about future events. If a promise is made without intent to fulfill it, fraud can be claimed. Testimony indicated that only 16 of 180 lot owners could irrigate simultaneously, allowing for irrigation only every 5.5 days, which is insufficient for crops like alfalfa that require more frequent watering. Evidence also suggested that the developers may have prioritized their retained lands for irrigation over those of the lot owners, raising questions about their knowledge and intent, warranting a jury's determination. For the breach of contract claim, appellants must demonstrate the existence of a contract, its breach, and resulting damages, with specific contract terms that clarify obligations. In Savoca Masonry Company, Inc. v. Holmes and Son Construction Company, Inc., the court addressed the absence of an irrigation system reference in the contract between the parties, while the HUD Report, which was required to inform purchasers of subdivided real estate, indicated that such a system would be installed. The contract explicitly referenced the HUD Report, highlighting the intent for purchasers to rely on its information when making purchasing decisions. Despite the parol evidence rule, the court recognized that written statements made by the developer and delivered to the purchaser at contract execution were significant. The court emphasized that the incorporation of the HUD Report into the contract was essential to protect the purchaser’s reliance on the information provided. Testimony indicated that the irrigation system was inadequate, creating a factual issue for jury deliberation on the breach of contract claim. Additionally, Joe Correa alleged that his irrigation water was tortiously cut off due to non-payment, arguing he had prepaid for 18 irrigations, each equivalent to 1 acre foot of water. Testimony from the water master revealed discrepancies in how irrigation was measured, indicating that one 12-hour irrigation did not equate to one acre foot of water, and he lacked knowledge of the gallon equivalency for an acre foot. The method of measuring water use had shifted from acre feet to an hourly basis, complicating the determination of water usage and payments. Testimony during the relevant period indicates a factual dispute regarding the number of acre-feet of irrigation used by Joe Correa before his water outlet was capped, necessitating a jury trial on the first three counts of the complaint. The court reversed and remanded for a new trial, emphasizing the jury's role in evaluating conflicting evidence and witness credibility. On the fourth count, which involved seeking damages for unauthorized water delivery by the Water Delivery District, the court found the directed verdict in favor of the district appropriate, despite the incorrect reasoning, noting that any recovery for illegal acts should benefit all landowners within the district. The landowners’ suit was improperly brought against the district rather than in the district's name against the third party. Additionally, the trial court's exclusion of testimony from other landowners regarding irrigation issues was deemed overly restrictive, as such testimony was relevant to establishing intent in a consumer fraud claim. The court ruled that appellants should have been allowed to present this evidence without needing to initially demonstrate a violation of the consumer fraud statute. Furthermore, the documentary evidence related to this issue should also have been admitted. Lastly, the award of attorneys' fees to Pecos Valley Development Corporation for success on Count Two was reversed in light of the overall reversal of that count. The judgment was affirmed in part, reversed in part, and remanded for a new trial. Judge Howard concurred, expressing belief in the occurrence of common law fraud but dissenting on the existence of a private cause of action for consumer fraud.