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Eldridge v. Gorenter.com, L.L.C.

Court of Appeals of Arizona, First Division, Department A

July 9, 2013

HERNDON EUGENE ELDRIDGE, a single man, Plaintiff/Counterdefendant/ Appellee,
v.
GORENTER.COM, L.L.C., an Arizona limited liability company, Defendant/Counterclaimant/ Appellant.

Not for Publication -Rule 28, Arizona Rules of Civil Appellate Procedure

Appeal from the Superior Court in Maricopa County Cause No. CV2011-001642 The Honorable Hugh E. Hegyi, Judge

Jennings Strouss & Salmon, PLC, By John G. Sestak, Jr. Attorneys for Plaintiff/Appellee

Mack Watson & Stratman, PLC, By Daxton R. Watson Michael H. Orcutt Attorneys for Defendant/Appellant

MEMORANDUM DECISION

KENT E. CATTANI, Judge

¶1 GoRenter.com, L.L.C., appeals from the superior court's judgment awarding damages, attorney's fees, and costs to Herndon Eugene Eldridge. For reasons that follow, we affirm.

FACTS AND PROCEDURAL BACKGROUND[1]

¶2 In 2004, Eldridge purchased a four-unit apartment complex in Phoenix. Initially, Eldridge managed the property, but he decided to hire GoRenter to manage the complex in 2010. At an initial meeting with GoRenter's representative, Shawnn Battershaw, Eldridge discussed GoRenter's tenant-screening process and Eldridge's expectation that GoRenter obtain the first month's rent and a security deposit equivalent to the first month's rent, but never less than $500, prior to the tenants receiving keys to the properties. The parties also discussed the importance of not leasing to a tenant with a criminal history.

¶3 At the conclusion of this meeting, Eldridge and GoRenter entered into a property management agreement (the "Agreement") under which GoRenter agreed to manage, lease, secure tenants, maintain, collect rents, and otherwise have full operational control of the apartment units. Paragraph 3 of the Agreement provided in particular as follows: "In order to secure a suitable tenant, [GoRenter] will conduct a reasonable and customary tenant screening process which will include: (1) credit report; (2) criminal background report; (3) employment verification; (4) rental database (eviction) search; and (5) current landlord/residence check."

¶4 Within weeks after entering into the Agreement, GoRenter leased and secured tenants for the two unoccupied units. Tenant One leased Unit 101 on July 27, 2010, with the lease commencing on July 28, 2010. Tenant Two leased Unit 102 on August 24, 2010, with the lease commencing that same date. Prior to leasing these two units, GoRenter performed, to some degree, the five tasks mentioned in Paragraph 3 of the Agreement but, according to Eldridge, failed to properly scrutinize the prospective tenants' background information before leasing the units.

¶5 GoRenter's credit search indicated that both tenants had negative credit histories with various collection and delinquency matters. GoRenter's background search revealed that Tenant One had civil traffic violations, which were later dismissed; and Tenant Two had two theft-related convictions within the previous ten years. GoRenter's background search regarding Tenant One did not reveal any criminal convictions, although Tenant One admitted a felony drug conviction on her tenant application.

¶6 GoRenter's eviction search did not yield any relevant records, although a later public record search by Eldridge revealed that both tenants had previous forcible detainer/eviction proceedings in Maricopa County.

¶7 GoRenter's first accounting statement did not specify whether GoRenter had obtained the required security deposits from Tenant One and Tenant Two. When asked about the security deposit for Tenant One, Battershaw initially indicated that he was not sure if the security deposit had been collected, but he noted that GoRenter generally required such a deposit. Battershaw subsequently stated that Tenant One had paid a $500 security deposit. Signed addendums to the lease agreements, however, indicated that portions of the required security deposits were not received prior to lease commencement.

¶8 Within 60 days, both tenants failed to pay rent and caused significant damage to the units. Both ...


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