Kuehn v. Stanley
In Kuehn v. Stanley, 208 Ariz. 124, 91 P.3d 346 (App. 2004) plaintiffs were a married couple who sued an appraiser retained by a lender in connection with a real property transaction.
Plaintiffs agreed to pay $ 282,000 for the property; the appraiser arrived at precisely that number as the property's value. Kuehn, 208 Ariz. at 126, PP 2-3, 91 P.3d at 348.
The lender provided the plaintiffs with a copy of the report prior to closing. Id. at P 3. Before they received the appraisal, however, the plaintiffs were "already contractually bound" to complete the transaction. Id. at 128, P 13, 91 P.3d at 350.
The plaintiffs alleged that after closing, they learned the property was worth only $ 245,000. Id. at 126, P 3, 91 P.3d at 348.
Citing Restatement 552, the court affirmed summary judgment in favor of the appraiser. The court concluded the plaintiffs could not establish they relied on the appraisal in purchasing the property, but also observed that they failed to show the appraiser owed them a duty. Id. at 128-29, PP 13-14, 91 P.3d at 350-51. In reaching this conclusion, the court noted that the appraisal's stated purpose was "for use by the lender for a mortgage finance transaction only" and that it was a "short form" appraisal intended to be "a quick estimate for lending purposes." Id.
The court held that because the lender's use of the appraisal was not related to the plaintiffs' use of it, the appraiser did not provide the appraisal "for the guidance of" the plaintiffs as required by Restatement 552(1). Id. at 129, P 14, 91 P.3d at 351.
In Kuehn v. Stanley, an appraiser was hired by a lender to determine the value of a residential parcel "for use by the lender for a mortgage finance transaction only." 208 Ariz. 124,13, 91 P.3d at 350.
That the appraiser owed the home purchasers no duty was evidenced by the type of appraisal: a "short form" for lending purposes, which was not prepared for the guidance of the homebuyers. Id.14.
Additionally, the buyers had not relied on the appraisal to close the sale, as they already were contractually bound to purchase the property before they received it. Id.13.
Although it was foreseeable that interested parties including the purchasers might rely on the information in the appraisal, the borrowers were not part of the "'limited group of persons'" protected by the Restatement, and the appraiser consequently owed them no duty. Id.15, quoting Restatement 552(2)(a).