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Claims for Professional Negligence Require Expert Testimony on the Standard of Care

Author: Nathan Furman

January 8, 2020 11:00am

In Boesiger v. Desert Appraisals, LLC, 444 P.3d 436 (Nev. Jul. 3, 2019), a married couple bought a home and financed the purchase through a mortgage on the property. The mortgage lender contracted with an appraisal company to perform an appraisal. The appraiser valued the property at $340,000, with 3,002 square feet of gross living area. The appraiser’s report noted a discrepancy between the square footage reported by the local property tax assessor’s office, which estimated 3,553 square feet, and the square footage estimated by the appraiser, explaining that the added footage appeared to be based on outdated information from when the home’s garage was used as a model home office.

After buying the home, the couple unsuccessfully attempted to refinance their mortgage. At that time, the couple purportedly became aware of the discrepancy in the home’s square footage. The couple then sued the appraisal company and the individual appraiser, suing them for professional negligence, negligent misrepresentation, breach of the stator duty to disclose a material fact, and breach of contract as third-party beneficiaries. Specifically, the couple alleged that the defendants negligently relied on the incorrect assessor’s data for the property, which led to an overvalued appraisal and caused the couple to buy the home at an inflated price.

Defendants ultimately moved for summary judgment, arguing that plaintiffs’ failure to designate an expert witness to establish the professional standard of care for real estate appraisers was fatal to their claims. In opposition, plaintiffs relied on the purchase and sale agreement, the disputed appraisal, and deposition testimony from the plaintiff wife and the defendant appraiser. Id. at 438.

The trial court granted summary judgment for defendants, concluding that plaintiffs failed to establish the appropriate professional standard of care by failing to designate an expert witness to testify as to industry standards governing professional appraisers. The court concluded that plaintiffs’ claims for negligent misrepresentation and breach of duty to disclose failed in that they were derivative of the professional negligence claim. Finally, the court found that plaintiffs failed to show that they were clearly intended third-party beneficiaries of the appraisal contract between defendants and the mortgage lender, which had ordered the appraisal.

Plaintiffs appealed the summary judgment dismissal and the Nevada Supreme Court affirmed. In arriving at its decision, the appellate court emphasized that trial “[c]ourts should not hesitate to discourage meritless litigation in instances where . . . claims are deficient of evidentiary support and are based on little more than [plaintiffs]’ conclusory allegations and accusations.” Id. at 438.

The Boesiger court then reviewed the elements for a professional negligence claim: “‘(1) [a] duty to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise; (2) breach of that duty; (3) . . . proximate causal connection between the negligent conduct and resulting injury; and (4) actual loss or damage resulting from the professional’s negligence.’” Boesiger, 444 P.3d at 439 (quoting Morgano v. Smith, 110 Nev. 1025,1028 n.2, 879 P.2d 735 (1994)). And generally, “where an alleged harm involves conduct that is not ‘within the common knowledge of laypersons,’ the applicable standard of care ‘must be determined by expert testimony.’” Boesiger, 444 P.3d at 439 (quoting Daniel, Mann, Johnson & Mendenhall v. Hilton Hotels Corp., 98 Nev. 113, 115, 642 P.2d 1086 (1982)).

The appellate court then recognized that while laypersons may be generally familiar with the concept of a home appraisal, there can be little question that the specific standards governing the performance of a real estate appraisal, and the various approaches used within the professional to calculate property values, are not within the common knowledge of the average witness. Boesiger, 444 P.3d at 439. Consequently, expert testimony is typically required to establish the standard of care governing the performance of a real estate appraisal. Id.

Plaintiffs, despite having initially designated an expert witness, argued on appeal that expert testimony was unnecessary to establish the professional standard of care governing real estate appraisals. The appellate court rejected that argument. Id. at 439-440 (“[W]e hold the district court correctly concluded that appellants failed to provide evidence necessary to establish the first element of their claim for professional negligence.”).

Takeaway

When defending a claim for professional negligence, always move for summary judgment if plaintiff fails to obtain an expert opinion on the applicable standard of care.

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