A guy I know from Tennessee once told me you can’t hide a sick mule. A $400,000 appraisal followed by a $60,000 sale may not prove the mule was sick…er, the appraisal was negligent, but it is sounds bad. In any case, the lower court found that the mule is sick – negligent misrepresentation. Those two words tend to have the same legal effect as "game over."
The facts are sketchy, but there seem to be issues with hypothetical conditions -“as is” value, when it is both subject to repairs and the appraised (supposedly highest and best) use is not the current use.
The whole deal smells fishy – Corporate insider pay $389,000 financed by own company and company then sells $300,000 mortgage for $200,000.
Maybe its me, but $400,000 for 100-year old fixer-upper house that is supposed going into a “hotel” plan???

Anyone heard a story like that before?
Terry, the court is not opening the door to third-party liability. It is just applying the you-can't-hide-a-sick-mule standard. They are sustaining the appraiser liability because of the negligent misrepresentation, but says a carefully prepared, but inaccurate appraisal, is not "negligent" misrepresentation.
“Finally, we caution that we do not intend our holding to expose a professional appraiser to liability for an appraisal of the “as is” market value of a parcel of real estate of real property that is materially inaccurate, but nonetheless had been formulated with due care.
So the case is a good precedent for the 'not-an-exact-science' defense. B)