in claim under ACFA, “[i]f appellants actually knew that statements in the ad regarding gross sales and net profit were false, then they could not have relied on the truth of the representations and would not have been damaged by them,”
How later courts described this case
- in claim under ACFA, “[i]f appellants actually knew that statements in the ad regarding gross sales and net profit were false, then they could not have relied on the truth of the representations and would not have been damaged by them,”
- statutory consumer fraud and common law deceit
- the right to rely is not a necessary element in a private action under the Consumer Fraud Act
- consumer fraud requires someone to have “been damaged by the prohibited 15 practice”
Written by the judges who cited it.
The opinion
HOWARD, Judge,
specially concurring.
This case illustrates the incorrectness of Sellinger v. Freeway Mobile Home Sales, supra. In Sellinger the court stated that anyone who has been damaged by the practices declared to be unlawful may assert a claim by reason of such acts. The unlawful practices are set forth in A.R.S. Sec. 44-1522;
“A. The act, use, or employment by any person of any deception, deceptive act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has in fact been misled, deceived, or damaged thereby, is declared to be an unlawful practice. * * * ” (Emphasis added)
Under the statute “reliance” is not necessary. I cannot agree with the majority’s conclusion that reliance on the unlawful acts is a prerequisite for damages. If reliance is still necessary when suit is brought for an unlawful practice under the Act, then why hold that there is a claim for relief under the Act? The Act would be superfluous. The result of Sellinger is that the nine elements of common law fraud need not be shown in Arizona in cases involving sales since there need no longer be any “reliance”. Unquestionably, Sellinger affects all fraud actions in cases involving sales when one looks at the definitions in A.R.S. Sec. 44-1521, as amended. I doubt that the legislature meant to change the common law action for fraud when it enacted the Consumer Fraud Act.
The Arizona Supreme Court should overrule Sellinger. The Act names only the Attorney General as the person who enforces its provisions. A.R.S. Sec. 44-1524, et seq. Because the Attorney General has been specifically named as the enforcer of the Act, the long-standing maxim that the designation of a particular mode means the exclusion of all others, applies. United *271 States v. Arredondo, 31 U.S. (6 Pet.) 691, 725 , 8 L.Ed. 547 (1832). Sellinger ignores this rule and infers a right of action from A.R.S. Sec. 44-1533 which provides:
“The provisions of this article shall not bar any claim against any person who has acquired any monies or property, real or personal, by means of any practice declared to be unlawful by the provisions of this article.”
Such an inference is unsupportable. A.R.S. Sec. 44-1533 does not act as a grant of any rights. It merely preserves the common law action for fraud in the private individual. Sellinger states that Rice v. Snarlin, Inc., 131 Ill.App.2d 434 , 266 N.E.2d 183 (1970) held that language similar to A.R.S. Sec. 44-1533 created a private cause of action in favor of the consumer. First of all, if the Illinois court did rely on such a statute to create a cause of action, it would clearly be wrong. Second, the court did not so hold. A reading of the Illinois case shows that the Illinois Act is substantially different from the Arizona Act.
Sellinger also relies on Wyandotte Transportation Co. v. United States, 389 U.S. 191 , 88 S.Ct. 379 , 19 L.Ed.2d 407 (1967). This case is not on point. The issue in Wyan-dotte was whether the United States government, which already had a claim for relief under the Rivers and Harbors Act of 1899, could also recover damages for negligence. The court held that it could, even though the statute also provided for a criminal penalty. The use of Wyandotte for the proposition that a violation of a penal statute can be the basis of a civil action is puzzling. The court in Sellinger says that the Act is remedial and not penal but then cites Wyandotte for the proposition that civil actions can be based upon penal statutes. Aside from this seeming contradiction, the principle should not be applicable here. The most a penal statute can do is define a standard of conduct. See Restatement (Second) of Torts, Sec. 286 (1965). Courts can decide that the violation of the standard of conduct will provide the basis of a civil action for damages. What is the standard of conduct involved in A.R.S. Sec. 44-1522? It is pure and simple fraud, for which the consumer already has a claim for relief under common law fraud. The use of Wyandotte is completely superfluous unless the court in Sellinger meant that the elements of common law fraud such as knowledge of falsity and reliance no longer apply in Arizona to sales. 1
The legislature has specifically stated in the Consumer Fraud Act how the Act is to be enforced. Before the elements of common law fraud are discarded, I would want a clear mandate from the legislature. A.R.S. Sec. 44-1533 shows that the legislature did not intend that there be a private cause of action under the Consumer Fraud Act. Sellinger is nothing more than a complete rewriting, rather than an interpretation, of the Act by the court.
I am constrained to hold that reliance is no longer an element of fraud in Arizona in cases involving sales and that the trial court erred in granting summary judgment.
. For the broad definition of “sale” see A.R.S. Sec. 44-1521(5).