Castle v. Barrett-Jackson Auction Company, LLC – 5/10/2012

May 30, 2012

Arizona Court of Appeals Division One Holds that the Purchaser of a Vehicle at Auction Failed to State a Claim for Consumer Fraud Where the Bidder Agreement He Signed Disclaimed that the Auctioneer Made Any Representations Concerning Any Auction Vehicle.

Barrett-Jackson Auction Company, LLC (“Barrett-Jackson”) conducts automobile auctions in Arizona.  On January 22, 2010, Marshal Castle purchased a 1957 Thunderbird Convertible (the “Vehicle”) at one of Barrett-Jackson’s auctions.  Castle later filed a complaint against Barrett-Jackson alleging that Barrett-Jackson had committed consumer fraud.   Barrett-Jackson moved to dismiss the complaint on the grounds that it had not made any representations about the Vehicle.   In support of its motion, Barrett-Jackson submitted copies of its Bidder Agreement with Castle, in which Barrett-Jackson disclaimed that it had made any representations concerning any auction vehicle.  Castle opposed the motion, arguing that Barrett-Jackson’s standardized form document and disclaimers did not relieve it from liability for consumer fraud.  The trial court granted the motion and denied Castle leave to amend his complaint.  Castle timely appealed.

On appeal, the Court of Appeals upheld the dismissal.  Although Arizona law generally invalidates any provision in a contract making it possible for a party thereto to free himself from the consequences of his own fraud in procuring its execution, the Court concluded that the Bidder Agreement did not purport to relieve Barrett-Jackson of liability for its own fraud.  According to the Court, the Bidder Agreement simply evidenced Castle’s agreement that Barrett-Jackson did not make any representations concerning the vehicle.

The Court also rejected Castle’s contention that the Agreement contained provisions that violated his reasonable expectations.  In Arizona, the doctrine of reasonable expectations provides that if the drafting party has reason to believe that the signing party would not accept a particular term, the court may strike that term from the agreement.  The drafter’s reason to believe that the signing party would not have assented to the term may be: (1) shown by the parties’ prior negotiations; (2) inferred from the circumstances of the transaction; (3) inferred from the fact that the term is bizarre or oppressive; (4) inferred from the fact that the term eviscerates the non-standard terms to which the parties explicitly agreed; or (5) inferred if the term eliminates the dominant purpose of the transaction.  Because Castle was unable to point to anything in the record that would indicate that any of these conditions apply, the Court determined that the doctrine of reasonable expectation was inapplicable. 

Judge Orozco authored the opinion; Judges Johnsen and Downie concurred.