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Duty

Generally, claims against appraisers are pursued by buyers, borrowers and/or lenders. In order for a particular claimant to pursue a claim against an appraiser, that claimant must first establish that the appraiser owed a duty of care to that claimant.

In its 2007 decision of Gipson v. Kasey, the Arizona Supreme Court concluded that “foreseeability” (i.e. whether it was foreseeable that the claimant would use or rely on the appraisal) is no longer a factor to be considered when determining whether a duty exists. Two factors should be analyzed: (1) the relationship between the parties; and, more importantly, (2) public policy.

At least in cases involving an alleged negligent misrepresentation (as opposed to an intentional or fraudulent misrepresentation), Arizona courts follow the Restatement (Second) of Torts § 552, which allows a claim for negligent misrepresentation against “[o]ne who, in the course of his business . . . supplies false information for the guidance of others in their business transactions.”

In relevant part, Restatement § 552 provides:

(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

(2) . . . the liability stated in Subsection (1) is limited to loss suffered

(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and

(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.

In Sage v. Blagg Appraisal Co., the Arizona Court of Appeals ruled, for the first time in a reported decision, that an appraiser hired by the lender owed a duty to the buyer/borrower in a purchase money loan transaction.

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