Verdict on Lehman Bros vs. Passarelli & Potts

[PropertyEconomics]

The properties in question originally sold in the range of $740K. A year later, more or less, they are valued at $260K. During a period when the market, in general, was appreciating at a rate in the range of 24% annually, these particular properties "lost" 65% of their value. I don't know what that tells you, but it apparently told the jury something pretty important.

Which is why I said Ken .. analysis as of the effective date of valuation would have been much more effective IF there were indications the appraiser was wrong. Mixing issues is fine if you wish to .. but they are separate issues ... 1) What date is the appraiser held liable to? 2) Was the original appraisal conclusion wrong?

 

[Ken B]

It seems the case would have been much stronger if they had shown the appraiser was wrong in the first place ... as of the date of valuation.

PE, I will agree with you on this point. However, lacking a transcipt of the proceedings, I don't think we know if the expert witness provided a value as of the effective date of the appraisals in question, or not. There may have very well been multiple valuation dates provided by the expert witness. The only thing we know is that the court decided upon values effective 02/05 for calculation of damages for the reasons previously noted.

 

[PropertyEconomics]

PE, I will agree with you on this point. However, lacking a transcipt of the proceedings, I don't think we know if the expert witness provided a value as of the effective date of the appraisals in question, or not. There may have very well been multiple valuation dates provided by the expert witness. The only thing we know is that the court decided upon values effective 02/05 for calculation of damages for the reasons previously noted.

You mean the faulty reasons previously noted.
Read the transcript from the trial .. it is available.

And it still begs the question that I have asked as to how long an appraisers liablity extends.

 

[Ken B]

The following is a factual statement and nothing more: In Florida, the Statute of Limitations for fraud is four years.

 

[PropertyEconomics]

The following is a factual statement and nothing more: In Florida, the Statute of Limitations for fraud is four years.

AND AGAIN it doesnt answer the question.

 

[Ken B]

AND AGAIN it doesnt answer the question.

Perhaps you can rephrase the question. But someone else will need to provide the answer. It is already going to be a late nighter.

 

[DonRico]

As an appraiser, the only date I can be responsible for is the Date of Valuation, the Effective Date of my Appraisal.

Influences beyond my control may have profound effect on my Estimate. The day after my Effective Date, an asteroid hits the subject's neighborhood. To hold me liable for market changes after that date flies in the face of all logic.

 

[Ken B]

As an appraiser, the only date I can be responsible for is the Date of Valuation, the Effective Date of my Appraisal.

Influences beyond my control may have profound effect on my Estimate. The day after my Effective Date, an asteroid hits the subject's neighborhood. To hold me liable for market changes after that date flies in the face of all logic.

Assuming that it was unforeseeable as of the effective date of the appraisal that an asteriod was going to impact the neighborhood, you are reasonably correct. However, if the morning newspaper on the date of your appraisal reported that the neighborhood was going to be demolished by an object from outerspace within the next 48 hours and you did not consider that in your report, you would be negligent.

The court did not hold the appraiser responsible for changes in value after the effective date of his appraisals. The court found the appraiser was negligent with regard to his original reports. The court used value reported by an expert witness as of a later date to calculate damages. In an appreciating market, this was advantageous to the appraiser and prevented the plaintiff from realizing unearned rewards.

 

[PropertyEconomics]

Assuming that it was unforeseeable as of the effective date of the appraisal that an asteriod was going to impact the neighborhood, you are reasonably correct. However, if the morning newspaper on the date of your appraisal reported that the neighborhood was going to be demolished by an object from outerspace within the next 48 hours and you did not consider that in your report, you would be negligent.

The court did not hold the appraiser responsible for changes in value after the effective date of his appraisals. The court found the appraiser was negligent with regard to his original reports. The court used value reported by an expert witness as of a later date to calculate damages. In an appreciating market, this was advantageous to the appraiser and prevented the plaintiff from realizing unearned rewards.

Why is it you cant see the flaw in what the court did. "The court used value reported by an expert witness AS OF A LATER DATE TO CALCULATE DAMAGES" !!!

Why do you keep bringing this unreasonable logic into your posts. It was NOT an appreciating market was it? What basis does this have for anything?

Personal issues aside Mr Brown .. had this been you .. you would be arguing so hard that you are only responsible for valuation as of the effective date of your report that it would make our head spin.
I personally believe the expert witness date of valuation to be in error ... and I have read what the court said ... it still does not change my mind as to any reasonable human being would conclude the valuation date of the expert was in error. Even the court recognized the declining market.
My very strong suspicion is that the court did not have any analysis by the expert as to value as of the effective date and thusly they were stuck with the Feb 05 valuation. That is a shame but it appears that may well be what has happened.

 

[Fred]

As an appraiser, the only date I can be responsible for is the Date of Valuation, the Effective Date of my Appraisal.

Influences beyond my control may have profound effect on my Estimate. The day after my Effective Date, an asteroid hits the subject's neighborhood. To hold me liable for market changes after that date flies in the face of all logic.

But this wasn't an asteroid. The finder of fact determined it was negligence.