Verdict on Lehman Bros vs. Passarelli & Potts

[William K]

I'll take one last stab at this. It does no good to rationalize this with appraiser-logic and parse value, and value dates. Once negligence is established, the flood gates are open, and loss that occurs after the point of negligence - and more (punitive damages) - can be part of the damages. Anyone here famaliar with lawsuits against, say, uh, tobacco companies, car companies? Plaintiffs who lost 72 cents ask for billions. Didn't some doctor in Alabama get $7 mil when they painted his Benz the wrong color? (do you think that resembled the change in value of the car)?

Steven,
I completely agree with your comment (Bold) however in this case negligence is the "incorrect" valuation of the subject, and support/proof of negligence of the "incorrect" valuation is another valuation performed as of a different effective date!?
I can understand if the 2nd valuation was as of the effective date of the original appraisal report with a different lesser value and damages (actual or punitive) to be greater than the actual difference but this is not the case.

Your example is not apples to apples in that the proof of negligence in the car analogy is the wrong paint color- straight forward, now damages may be debated but negligence (wrong color) is not.

In this case how is negligence proved if they didn't value the subject as of the date in the original appraisal to prove negligence?

 

[Ken B]

Steven,
I completely agree with your comment (Bold) however in this case negligence is the "incorrect" valuation of the subject, and support/proof of negligence of the "incorrect" valuation is another valuation performed as of a different effective date!?
I can understand if the 2nd valuation was as of the effective date of the original appraisal report with a different lesser value and damages (actual or punitive) to be greater than the actual difference but this is not the case.

Your example is not apples to apples in that the proof of negligence in the car analogy is the wrong paint color- straight forward, now damages may be debated but negligence (wrong color) is not.

In this case how is negligence proved if they didn't value the subject as of the date in the original appraisal to prove negligence?

The "2nd valuation date" is used to determine value for calculation of damages. Nowhere in the document provided does it state that the effective date of the "2nd valuation" was used to compare value with the reports used to fund the loans in order to establish negligence.

That is what Mr. Santora has been trying, unsuccessfully, to explain. The value of the "2nd appraisal" was not used to establish negligence. Only to provide a reference to calculate damages. These are two entirely different issues.

Without a copy of the transcript of the trial where the appraiser was found negligent, we do not know if a retrospective appraisal was provided with an effective date comparable to those appraisals in question.

The document provided discusses the appeal, not the trial.

Someone stated a copy of the transcript of the original trial was available. If the person can provide a link to the source, perhaps the confusion about this issue can be resolved.

 

[Fred]

Your example is not apples to apples

I know.

In this case how is negligence proved if they didn't value the subject as of the date in the original appraisal to prove negligence?

I am not sure.

 

[Fred]

Scope of Work/Fannie Form/Intended Use

Steven ..........once a residential mortgage lending appraisal is executed on a fannie form - be it for VA, FHA, fannie, the Liability already exists. Portability similar to "any VA approved lender" .......for fannie assignments ......does not INCREASE the existent liability. :icon_idea:

So, my point was simply that as portability increases, liability increases. Just because you are already signing onto one bad deal, doesn't make it a good idea to voluntarily sign on to another one.

 

[timd354]

This is a very interesting thread as we have people here arguing over the correctness of findings in a court case where they have not even read any of the pleadings, transcripts, or seen any of the evidence presented in the case.....kind of funny if you think about it.

Additionally, we have a principal of the defendant appraisal firm in this case implying that a $0 verdict somehow vindicates her in this case. Funny thing is when you read the actual order, one can see that the jury, after actually listening to the testimony given and the evidence presented found her firm guilty of on a claim of negligence and a claim of negligent misrepresentation. The jury further found that the defendants' misconduct caused actual damages to the platintiffs in the amoiunt of $4,456,682.10. The judge, in his ruling, agreed with these verdicts. The judgment was only reduced to $0 zero because the plaintiffs had already recouped their damages from other defendants through settlement agreements, etc. Thus, the jury found and the court agreed that the defendants were guilty of serious misconduct which caused over $4 million dollars in damages. The only reason that the defendants are not be held liable for the damages caused by their misconduct (as determined by an impartial jury and judge) is that other guilty parties had already paid the cost of the damages. This order is not exactly a ringing endorsement of the conduct of that appraisal firm and it is amusing that one of the principlas of the defendant appraisal firm is on here talking about the order and how the judge is wrong in allowing her firm to limit its liability in this case.

Now, I am not saying that the court and the jury were correct in this case, but if I was one of the defendants, I would not be talking too much about this ruling. I would just be glad that I am not on the hook for a $4 million+ judgment and I would be hoping that the other parties that settled this case and paid out some serious money do not try to sue me for a portion of the damages which they paid.

 

[Mike Kennedy]

But doesn't that absolve the appraiser from the additional damages created by the lender's decision to fund an amount based upon a value which was not credible? The appraiser is not being held responsible for damages due to a declining market. The appraiser is being held responsible for damages resulting from a decision to fund a loan based upon an appraised value which was grossly above market value around the time of funding.

Perhaps the loans would not have gone bad if the lender had funded them at a reasonable LTV based upon the results of a credible appraisal. Shouldn't the appraiser be responsible for the consequences of his actions?

As of the Effective Date of his/her Value Opinion - the Lender had the choice to fund with LTV reflecting the Risk - or not to fund; the Lender also had the right to solicit and obtain a second or third OPINION. <<

If that opinion was a result of PROVEN flawed methodology, intentional commission and advocacy, or grossly negligent omission and incompetence of the appraiser - he/she absolutely should be held accountable for the consequences - as of the original EDA.