The Appellate Division, Fourth Department recently decided a case we thought might be interesting to appraisers: Nothnagle Home Securities Corp. v Bruckner, Tillet, Rosse, Cahill & Associates and Patrick W. Cahill, NY Slip Op 01342 (February 13, 2015).
The case involved a negligence and breach of contract action brought by homeowners against the appraisal company, alleging that the defendants had negligently appraised a parcel of real property: they had misclassified of the structure on the property as a modular home rather than a manufactured home. As a result of the misclassification, plaintiffs were required to indemnify the United States Department of Urban Development (HUD) for the loss HUD suffered when the purchaser of that property defaulted on a federally insured loan that plaintiff made to the purchaser thereof in reliance on the faulty appraisal.
The defendants filed a motion for summary judgment, which was granted in part by the lower court, dismissing the breach of contract action.
The Appellate Division dismissed the case in entirety, finding that the matter was barred by the statute of limitations, which requires that any action brought for negligence be commenced within three years from the date the cause accrues. Here, plaintiff’s cause of action accrued on August 19, 2004, when plaintiff’s received the appraisal containing the misclassification. Plaintiffs did not commence their action until six years later, resulting in a time barred action.
The full decision can be read here.