Southwest Non-Profit Housing v. Nowak (CA1 3/31/14)

We blogged Sage v. Blagg Appraisal so we’ll blog this, which Sage probably inspired in part (though the opinion indicates that the plaintiff also relied on dicta from a Washington case).

There were two cases below but the Court of Appeals consolidates them because they involve three instances of the same fact pattern:: Southwest contracted to sell a house to a buyer for a specific amount; the buyer’s lender then got an appraisal that came in below that amount; so the lender balked and the deal fell through. Southwest’s solution was, among other things, to sue the appraiser for negligence. The appraisers argued in varying ways that they had no duty to Southwest. The trial court agreed, as does the Court of Appeals.

Under the Restatement an appraiser has a duty, basically, to his client and people he should know will get the appraisal and be influenced by it. Since Southwest had already agreed to a price there was no basis to find that the appraiser influenced it or intended to do so.

Two of the appraisers also argued successfully that under the language of their contract with the lenders Southwest was not a party who was intended to get their appraisal anyway, so they could not have intended to influence it.

The Restatement section, by the way, is 552 of Torts (Second). One wonders what the outcome would have been if these judges had been willing to read it as expansively as their brethren read the same section in Sage.

Sage was five years ago. Its frankly a shock to see that we’ve been doing this blog that long; we had expected to turn it into a reality TV series long before this.

(link to opinion)