how on topic could this be...............i butchered it trying to get it to fit...VERY LONG BUT VERY PERTINANT....
<edited><summary of actual ruling>
MARTHA H. WEST TRUST v. MARKET VALUE OF ATLANTA, INC.;
MARTHA H. WEST TRUST v. DANIEL FRIES & ASSOCIATES, INC.
A03A1420, A03A1421.
COURT OF APPEALS OF GEORGIA, THIRD DIVISION
2003 Ga. App. LEXIS 846; 2003 Fulton County D. Rep. 2137
July 1, 2003, Decided
NOTICE: [*1] THIS OPINION IS UNCORRECTED AND SUBJECT TO REVISION BY THE COURT.
DISPOSITION: Judgments affirmed.
CASE SUMMARY:
PROCEDURAL POSTURE: Plaintiff buyers sued defendants, the seller and the appraisers, claiming that the seller fraudulently induced them to purchase property and that the appraisers were professionally negligent in grossly over-inflating the value of the property in their appraisals. The trial court (Georgia) granted summary judgment in favor of the appraisers. The buyers
appealed.
OVERVIEW: The seller and one of the buyers had been business partners. In
consideration of the buyer's payment of partnership debts, the seller gave him a second mortgage interest on a condominium and later agreed to let him purchase the property based on its fair market value as determined by the lower of two appraisals. When obtaining the appraisals, the seller told the appraisers he wanted appraisals to get an idea of a sale price or fair market value for the property if he decided to sell. Neither appraiser was informed that the seller was in the process of selling the property. The appraisals specified that they were not to be shared with anyone, except as specified in the report, absent the prior written consent of the appraisers. In affirming the trial court's grant of summary judgment, the appellate court found that the appraisers were not manifestly aware of the use to which the information was to be put and did not intend that it be so used. Despite the fact mortgagees were listed among the class of persons to whom the report could have been distributed, the appraisers were clearly unaware that one occupying such status would rely on the appraisal in purchasing the property.
OUTCOME: The judgment of the trial court was affirmed.
JUDGES: PHIPPS, Judge. Blackburn, P. J., and Ellington, J., concur.
OPINIONBY: PHIPPS
OPINION:
PHIPPS, Judge.
Clayton and Martha West, as co-trustees of the Martha H. West Trust,
bought a condominium from James and Joanne Ryan, after James Ryan had the property appraised by Market Value of Atlanta, Inc. (Market Value) and by Daniel Fries & Associates, Inc. (Fries). The Wests brought this suit, claiming that James Ryan had fraudulently induced them to purchase the property. The Wests charge Market Value and Fries with professional negligence in grossly over-inflating the value of the property in their appraisals. In Case Number A03A1420, the Wests appeal the trial court's grant of summary judgment to Market Value. In Case Number A03A1421, the Wests appeal the grant of summary judgment to Fries. Under the authority of Robert & Co. Assoc. v. Rhodes-Haverty Partnership, n1 we affirm in both cases.
Clayton West and James Ryan had been business partners. In consideration of West's payment of partnership debts, Ryan gave West a $ 120,000 second mortgage interest on a condominium known as 201 Dunwoody Chase in Atlanta. Ryan later agreed to let West purchase the condominium based on its fair market value as determined by the lower of two appraisals to be performed on the property.
Ryan obtained the appraisals from Market Value and Fries. It is undisputed
that Ryan first contacted Market Value and said he was thinking about
selling the condominium and wanted to "get an idea of a possible sale price for his property if he decided to sell it." According to Fries, Ryan requested it to perform an appraisal "because he was considering selling the property and desired information regarding its fair market value." But the Wests
presented evidence that Ryan's attorney also contacted Fries and told the company that the appraisal was going to be used to determine the price at which the property would be sold. It is undisputed that neither Market Value nor Fries was informed that Ryan was actually in the process of selling the condominium to the Wests or anyone else. Market Value and Fries [*3] appraised the property at $260,000 and $ 275,000, respectively. Each appraisal report contained a provision requiring the appraiser to give its prior written consent before Ryan could distribute the report (including conclusions about property value) to anyone other than various specified entities, one of which was "the borrower's [i.e., Ryan's] mortgagee or its successors and assigns."
West and Ryan agreed upon a purchase price for the condominium based on Market Value's $ 260,000 appraisal. The Wests subsequently spent $15,000 making improvements to the property and then attempted to sell the condominium for $295,000. When no offers were forthcoming, the Wests' real estate agent informed them that the condominium had a fair market value of only around $ 235,000. The property eventually sold for $ 228,000.
The Wests then brought this suit against the Ryans, Market Value, and
Fries. The Wests alleged that Ryan had fraudulently induced the appraisers to grossly over-inflate the value of the properties. Based on this allegation, the Wests filed a claim against the appraisers for professional negligence.
In moving for summary judgment, Fries argued, among other things, that it
did not owe any duty to the Wests, and that no causal connection between its conduct and the Wests' injury had been established because the Wests indisputably relied on Market Value's appraisal in determining the purchase price for the property.
In granting summary judgment to Fries, the court ruled that the Wests did
not rely on Fries' appraisal and that Fries did not breach any standard of care
in performing the appraisal.
In moving for summary judgment, Market Value also argued that it owed no
duty to the Wests. In awarding summary judgment to Market Value, the court found that the undisputed evidence shows that Market Value did not owe the Wests any duty of care or breach any standard of care in performing the appraisal.
In Robert & Co., n6 the question was whether an engineer who had issued a report on the condition of a [*6] building was liable to one who had
purchased the building in reliance on the report. The Supreme Court found the best rule for resolution of this type dispute to be the one enunciated in the Restatement of Torts 2d, § 552 (1977). As stated in Robert & Co., Under this standard, [HN4] one who supplies information during the course of his . . . profession . . . has a duty of reasonable care and competence to parties who rely upon the information in circumstances in which the maker was manifestly aware of the use to which the information was to be put and intended that it be so used. This liability is limited to a foreseeable person or limited class of persons for whom the information was intended, either directly or indirectly. In making a determination of whether the reliance by the third party is justifiable, we will look to the purpose for which the report or representation was made. If it can be shown that the representation was made for the purpose of inducing third parties to rely and act upon the reliance, then liability to the third party can attach. If such cannot be shown there will be no liability in the absence of privity, wilfulness or physical harm or property damage. The [*7] additional duty that this rule imposes may be, of course, limited by appropriate disclaimers which would alert those not in privity with the supplier of information that they may rely upon it only at their peril. n7
(a) Here, the evidence, construed most favorably to the Wests, shows that
Market Value was told that Ryan was going to use the appraisal to determine
the sales price for the property. Therefore, purchasers such as the Wests
clearly were not known third parties whose reliance was the desired result of the representation. It is true that Clayton West was a "mortgagee" by virtue of the fact that he held a second mortgage on the property and that Market Value authorized Ryan to distribute the appraisal to a limited class of persons which included mortgagees. Clearly, however, Market Value was not actually aware [*9] that one occupying the status of a mortgagee would rely upon the appraisal in purchasing the property. Therefore, in the words of Robert & Co., Market Value was not "manifestly aware of the use to which the information was to be put" and did not "intend[] that it be so used." For this reason, Market Value was entitled to summary judgment.
Fries was entitled to summary judgment, if for no other reason than
because it is undisputed that the Wests and Ryans relied on Market Value's
lower appraisal rather than the appraisal provided by Fries in establishing the purchase price for the property.
© The remaining issues in this appeal relate to whether Market Value
and Fries were negligent in performing the appraisals and are moot.
Judgments affirmed. Blackburn, P. J., and Ellington, J., concur.
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