Belen Loan Investors v. Bradley (CA1 12/21/12)

This case holds that the rule of Sage v. Blagg Appraisal also applies outside the context of home-buying.

Developers hired Bradley to appraise some raw land and used the appraisal to get a development loan from BLI. When they went broke BLI sued, among others, the appraiser, arguing that the appraisal was excessive. Bradley moved to dismiss on the theory that he had no duty to BLI. The trial court granted it. The Court of Appeals reverses.

First the court takes three pages to determine the standard of review. The parties below had submitted a bunch of documents in connection with the motion. Based on the trial judge’s cryptic (but typical) minute entry of what documents he had and hadn’t reviewed, “we are persuaded,” the court says, that the trial judge didn’t use anything extraneous to the pleadings, that the motion therefore wasn’t converted from a Rule 12 to a Rule 56, and that the court can rule de novo. As usual with this phrase, it means that the court has persuaded itself for reasons obscure. (Rule 12 conversion used to be a fairly simple subject until repeated attention from appellate courts turned it into a quagmire, made made worse by the fact that most trial judges have no clue. You have to prompt the trial judge to make this clear – if making it clear is an advantage to you.)

The court then rules that the trial court incorrectly restricted Sage, under which “if Bradley intended to supply his appraisals to BLI, or knew Myers intended to supply them to BLI specifically or to a limited class of persons including BLI, Myers owed a duty to BLI.” We’ll leave it for those in this area of law to argue about whether that’s actually the rule of Sage.

The court then concludes that, giving BLI’s Complaint the benefit of every doubt, it did adequately plead negligent misrepresentation. Usefully, the court mentions something that people don’t seem to remember any more: a “complaint that states only legal conclusions, without any supporting factual allegations, does not satisfy the notice pleading standard.” Those paragraphs in your Complaint that state conclusions of law may make you or your client feel better about the righteousness of your position but are meaningless surplusage.

(link to opinion)