Terrel L. Shields
Elite Member
- Joined
- May 2, 2002
- Professional Status
- Certified General Appraiser
- State
- Arkansas
For those who missed posts last summer over a lawsuit I in. I was sued accused of providing a fraudulent appraisal for property I appraised 6 days after it sold. The sales price was $232,000. The appraised price was $232,000. They say I inflated the appraisal and that the amount was exactly the same amount of the Sellers mortgage which was also with the same bank..I don't know wasn't any of my business and the seller was (I found out later) a cousin to the buyer. Go figure. I did not set foot on the property until 4 days after the sale. The bank had forgot to order the appraisal and when they called me to see when I would be done, found out that I had never been notified to do it. They closed on the loan anyway, and loaned a total of $258,000, the extra going to do some necesary repairs. I did this in Oct. of 1996. About a year later the father of the other plaintiff bought an adjacent farm which I did not appraise, but both parties are suing me. The lawsuit was filed in Federal Court May 28, 2002 and alledges fraud and RICO violations.
Well, the game is coming down to the wire. The ding dongs who were suing a bank, a poultry company, and yours truly, were basically rejected in Federal Court. However, they will be allowed to amend their suit to pursue a very limited course of action with regards to anti-Trust fraud.
They can still appeal, but I don't see what they will appeal. The judge ruled, basically, that the plaintiffs had plenty of time to pursue these claims during the foreclosure and subsequent bankruptcy they had previously filed. He stated that wire/mail fraud could not be held against my appraisal as they had not made the case nor did it appear that the report had been transmitted by mail or wire.
Further, the Judge argued that prior rulings do set a time limit, something even the defendants had not made or were apparently aware of (Agency Holding Corp vs Malley-Duff and Associates, Inc. 483 U. S. 143, 156 (1987). There is a federal court ruling that limited RICO provisions to a term of four years. My appraisal was performed Oct. 30, 1996. The action was filed May 28, 2002. A timely appeal would have been required by Oct. 30, 2000.
The bank's lawyers argued that the plaintiff's common law fraud claims were compulsory in the state court foreclosure action, and the plaintiff responded that their causes for action were "fraudulently concealed" until after foreclosure. The court ruled that such arguement was unsubstantiated. And as we know, the written appraisal was available to the borrowers through the bank and was not concealed.
The judge also mused over the allegation that the appraisal value had somehow been orally conveyed on an unspecified date by unidentified Bank officials prior to the sale and that this value was then later reported by me in writing. The judge obviously was not swayed by this allegation as he carefully noted the time line (Date of Sale was 6 days earlier than the date of report because the client had neglected to order the appraisal until they closed the sale.)
The judge also notes that the plaintiffs failed to show at least 2 "predicate acts of racketeering activity" and such acts must "do so twice and with particularity each time". A single fraudulent act does not constitute a pattern of racketeering.
Further, the Judge noted that 2 persons named as plaintiffs were never "presented.. any fraudulent representations or documentations." i.e.- I didn't even appraise this property! Further, the judge points out that the plaintiffs did not argue that the contract they signed was fraudulent. Plaintiff's failed to show that the Bank and the Poultry Company had a "tying contract" (i.e.- the loan and the contract were somehow an unreasonable restraint upon trade.) The borrowers could have financed with any bank they wished, or could have changed to any contract grower they wished.
Lastly, the court ruled that the pliantiffs' complaint does not reference an investment contract. The note was not a security, and not an investment vehicle. And throwing their own words back at them, noted that the plaintiffs did not "invest in a common enterprise", but rather purchased real estate and the profitability of the operation would be a function of their own efforts and not the "entrepreneurial or managerial efforts of others", a requirement under law to consider it as a security.
The court summed up by saying they were "inclined to agree wiht defendants' contentions that plaintiffs have not pled fraud with particularity, and that they should have asserted these claims in state court foreclosure actions.." But they allowed the plaintiffs the opportunity to "plead fraud with particularity and to plead facts supportive of their contention that these claims were not and could not have been "discovered" until "after foreclosure actions" as argued by the plaintiffs."
They have 10 days to amend the complaint and resubmit it. I am betting they will but the suit has been pared down to the bone and will likely never achieve Class Action Status. If the lawyers do not think they can take this to CA Status or appeal the RICO dismissal, I suspect they will be ready to fold up their tents. There is no money to be made without other class action members.
Anyone with better legal mind could explain "particularity" to me, my abrev. Blacks did not help much. I am reading this between the lines, but I assume they mean that the plaintiff needs to explain exactly what misrepresentation occured and what document was fraudulent....i.e.- do they have another appraisal which disputes mine? Documents spirited away from my file cabinets where I was directed by some sinister force in the bank to appraise the property for X amount?
On the face of it, the notion that the bank and the company, both privately owned by the Peterson family, would defraud someone is nonsense. First, if the chicken company made it hard for the grower, the bank suffered with a foreclosure...and if the terms of the note was too harsh, the bank was only reducing the growers ability to maintain the property...The integrator wants a good healthy chicken grown with the lowest cost, as they pay for all the feed, birds, medication, etc., not the grower. Do that and the bank benefits. Both lose when a grower goes under.
I hope this is the beginning of the end of the suit, but I am still pessimistic until my lawyer says so....and the next day about 4 file cabinets of old appraisals are going to a secure incinerator and get destroyed totally.
Well, the game is coming down to the wire. The ding dongs who were suing a bank, a poultry company, and yours truly, were basically rejected in Federal Court. However, they will be allowed to amend their suit to pursue a very limited course of action with regards to anti-Trust fraud.
They can still appeal, but I don't see what they will appeal. The judge ruled, basically, that the plaintiffs had plenty of time to pursue these claims during the foreclosure and subsequent bankruptcy they had previously filed. He stated that wire/mail fraud could not be held against my appraisal as they had not made the case nor did it appear that the report had been transmitted by mail or wire.
Further, the Judge argued that prior rulings do set a time limit, something even the defendants had not made or were apparently aware of (Agency Holding Corp vs Malley-Duff and Associates, Inc. 483 U. S. 143, 156 (1987). There is a federal court ruling that limited RICO provisions to a term of four years. My appraisal was performed Oct. 30, 1996. The action was filed May 28, 2002. A timely appeal would have been required by Oct. 30, 2000.
The bank's lawyers argued that the plaintiff's common law fraud claims were compulsory in the state court foreclosure action, and the plaintiff responded that their causes for action were "fraudulently concealed" until after foreclosure. The court ruled that such arguement was unsubstantiated. And as we know, the written appraisal was available to the borrowers through the bank and was not concealed.
The judge also mused over the allegation that the appraisal value had somehow been orally conveyed on an unspecified date by unidentified Bank officials prior to the sale and that this value was then later reported by me in writing. The judge obviously was not swayed by this allegation as he carefully noted the time line (Date of Sale was 6 days earlier than the date of report because the client had neglected to order the appraisal until they closed the sale.)
The judge also notes that the plaintiffs failed to show at least 2 "predicate acts of racketeering activity" and such acts must "do so twice and with particularity each time". A single fraudulent act does not constitute a pattern of racketeering.
Further, the Judge noted that 2 persons named as plaintiffs were never "presented.. any fraudulent representations or documentations." i.e.- I didn't even appraise this property! Further, the judge points out that the plaintiffs did not argue that the contract they signed was fraudulent. Plaintiff's failed to show that the Bank and the Poultry Company had a "tying contract" (i.e.- the loan and the contract were somehow an unreasonable restraint upon trade.) The borrowers could have financed with any bank they wished, or could have changed to any contract grower they wished.
Lastly, the court ruled that the pliantiffs' complaint does not reference an investment contract. The note was not a security, and not an investment vehicle. And throwing their own words back at them, noted that the plaintiffs did not "invest in a common enterprise", but rather purchased real estate and the profitability of the operation would be a function of their own efforts and not the "entrepreneurial or managerial efforts of others", a requirement under law to consider it as a security.
The court summed up by saying they were "inclined to agree wiht defendants' contentions that plaintiffs have not pled fraud with particularity, and that they should have asserted these claims in state court foreclosure actions.." But they allowed the plaintiffs the opportunity to "plead fraud with particularity and to plead facts supportive of their contention that these claims were not and could not have been "discovered" until "after foreclosure actions" as argued by the plaintiffs."
They have 10 days to amend the complaint and resubmit it. I am betting they will but the suit has been pared down to the bone and will likely never achieve Class Action Status. If the lawyers do not think they can take this to CA Status or appeal the RICO dismissal, I suspect they will be ready to fold up their tents. There is no money to be made without other class action members.
Anyone with better legal mind could explain "particularity" to me, my abrev. Blacks did not help much. I am reading this between the lines, but I assume they mean that the plaintiff needs to explain exactly what misrepresentation occured and what document was fraudulent....i.e.- do they have another appraisal which disputes mine? Documents spirited away from my file cabinets where I was directed by some sinister force in the bank to appraise the property for X amount?
On the face of it, the notion that the bank and the company, both privately owned by the Peterson family, would defraud someone is nonsense. First, if the chicken company made it hard for the grower, the bank suffered with a foreclosure...and if the terms of the note was too harsh, the bank was only reducing the growers ability to maintain the property...The integrator wants a good healthy chicken grown with the lowest cost, as they pay for all the feed, birds, medication, etc., not the grower. Do that and the bank benefits. Both lose when a grower goes under.
I hope this is the beginning of the end of the suit, but I am still pessimistic until my lawyer says so....and the next day about 4 file cabinets of old appraisals are going to a secure incinerator and get destroyed totally.
