SECOND DIVISION ANDREWS, P. J., MCFADDEN and RAY, JJ.
NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. http://www.gaappeals.us/rules/
June 12, 2014
In the Court of Appeals of Georgia A14A0584. ADAMS et al. v. DEWITT et al.
ANDREWS, Presiding Judge.
This appeal arises out of an action for negligent misrepresentation Anthony D.
Adams, Sr. and North Beach, LLC (“North Beach”) commenced against F. Andrew
DeWitt and his real estate appraisal firm, Cook & DeWitt, Inc. The trial court granted
the defendants’ motion for summary judgment, and Adams and North Beach now
appeal, arguing that the trial court erred in concluding that the defendants did not owe
them a duty of care and that they could not establish reasonable reliance on a
misrepresentation of fact. We agree with the trial court that the defendants did not
owe Adams and North Beach a duty of care under the circumstances, and we
therefore affirm. In an appeal from the grant of a motion for summary judgment, we review the
law and evidence de novo. Aubain-Gray v. Hobby Lobby Stores, 323 Ga. App. 672
(747 SE2d 684) (2013). A motion for summary judgment should be granted when the
evidence, construed in the nonmovant’s favor, shows that no genuine issue of
material fact remains and the movant is entitled to judgment as a matter of law.
OCGA § 9-11-56 (c); Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991).
So viewed, the evidence shows that in 2008, a loan officer at First National
Bank (“FNB”) contacted Adams’s son, Steve Adams, and asked him if Adams would
be interested in looking at a property under development on Tybee Island, consisting
of 25 residential lots. The property was owned at the time by The Woods at North
Beach, LLC (“The Woods”). Due to a disagreement among its members, The Woods
did not wish to continue developing the property, and FNB was trying to help The
Woods find someone to take over the property and to assume responsibility for a loan
The Woods had obtained from FNB. Steve told Adams about the property, and
Adams viewed the property with Steve and the FNB loan officer.
Shortly after learning of the property, Adams formed North Beach, and he is
its sole member. On March 28, 2008, North Beach purchased a promissory note and
deed to secure debt The Woods had executed in FNB’s favor. FNB made a short term
2 loan to North Beach of $3,183,700 to finance the purchase. Adams personally
guaranteed the loan. At the time of this transaction, Adams and FNB understood that
North Beach would foreclose on the property, purchase it in foreclosure, and then
obtain a new development loan from FNB.1 Following the second loan, Adams
intended to further develop and then sell the lots and had an understanding with Steve
that he would purchase 15 lots.
By letter dated April 4, 2008, FNB engaged DeWitt to perform an appraisal of
the property. FNB’s engagement letter described the function of the appraisal as
follows: “Bank will rely upon this appraisal for internal use, including but not limited
to, rendering a decision relative to a financial transaction.” Pursuant to the
engagement letter, DeWitt appraised the property and prepared an appraisal report
showing an “as is” valuation of $5,000,000 as of May 1, 2008.2 The report stated:
“This report is intended for use by . . . [FNB]. Use of this report by others is not
intended by the appraiser. This report is intended only for use in providing data upon
1 The FNB loan officer testified that Adams chose to acquire the property through this unusual two-step process in an effort to wipe out a second mortgage on the property. 2 DeWitt performed a second appraisal of the property in 2009, which reflected a significantly lower “as is” value of the property. Adams admitted that he did not rely on the 2009 appraisal, and it is not at issue in this appeal.
3 which the client may analyze the property as collateral for a mortgage loan. This
report is not intended for any other use.” The report also stated: “It is our
understanding [that] this appraisal will be utilized by the client as the basis for
decision making purposes regarding the underwriting criteria for a mortgage loan.”
An executive summary in the report mistakenly identified Steve Adams as the
borrower.3 In a cover letter accompanying the appraisal, DeWitt stated that the
appraisal was subject to specific limiting conditions, including the following:
1. No environmental site assessment (ESA) was provided to the appraiser. The site is assumed to be free of any contamination of any kind including any fill which may or may not exist. 2. This development was built over an abandoned landfill. This valuation assumes that all environmental issues have been or will be resolved.
North Beach initiated foreclosure proceedings and ultimately purchased the
property at a foreclosure sale on May 6, 2008. On the same day, FNB loaned North
Beach up to $4 million to repay the first loan and develop the property. The
settlement statement for the second loan indicates that North Beach was required to
reimburse FNB for the cost of the appraisal. North Beach never completed the
3 DeWitt recalled speaking with Steve during the appraisal process but could not remember what they discussed. Steve testified that he spoke with DeWitt but could not remember if it was in connection with the 2008 or 2009 appraisal and could not recall what they talked about.
4 planned development work on the property. Adams testified that work ceased due to
buried trash on the site and the cost of the clean up work the City of Tybee Island
wanted North Beach to perform.
Adams could not recall when he first saw the DeWitt appraisal but stated that
he was “fairly sure” he read it before the second loan closed. Adams stated that
DeWitt did not give him the report and that he “believed” he picked it up at FNB.
DeWitt stated in an affidavit that he knew nothing about North Beach and
never met Adams until after Adams and North Beach filed their lawsuit against him.
He did not intend for North Beach or Adams to use or rely upon his appraisal. DeWitt
stated that he never gave the appraisal to anyone other than the employee at FNB who
ordered it and that he was not aware that any representative of the bank was going to
give a copy of it to Adams.
1. Adams and North Beach argue that the trial court erred in concluding that
DeWitt did not owe them a duty of care. We disagree.
Adams and North Beach allege in their complaint that DeWitt breached the
professional standard of care applicable to real estate appraisers in preparing his
appraisal and that they relied on representations in the appraisal to their detriment
5 when they proceeded to foreclose on and purchase the property. They allege that
Cook & DeWitt is vicariously liable for DeWitt’s negligence.
In Robert & Co. Assoc. v. Rhodes-Haverty Partnership, the Supreme Court of
Georgia established a rule governing the viability of a negligent misrepresentation
claim against a professional in the absence of privity4 and involving economic loss
only:
[O]ne who supplies information during the course of his business, profession, [or] employment . . .
Free access — add to your briefcase to read the full text and ask questions with AI
SECOND DIVISION ANDREWS, P. J., MCFADDEN and RAY, JJ.
NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. http://www.gaappeals.us/rules/
June 12, 2014
In the Court of Appeals of Georgia A14A0584. ADAMS et al. v. DEWITT et al.
ANDREWS, Presiding Judge.
This appeal arises out of an action for negligent misrepresentation Anthony D.
Adams, Sr. and North Beach, LLC (“North Beach”) commenced against F. Andrew
DeWitt and his real estate appraisal firm, Cook & DeWitt, Inc. The trial court granted
the defendants’ motion for summary judgment, and Adams and North Beach now
appeal, arguing that the trial court erred in concluding that the defendants did not owe
them a duty of care and that they could not establish reasonable reliance on a
misrepresentation of fact. We agree with the trial court that the defendants did not
owe Adams and North Beach a duty of care under the circumstances, and we
therefore affirm. In an appeal from the grant of a motion for summary judgment, we review the
law and evidence de novo. Aubain-Gray v. Hobby Lobby Stores, 323 Ga. App. 672
(747 SE2d 684) (2013). A motion for summary judgment should be granted when the
evidence, construed in the nonmovant’s favor, shows that no genuine issue of
material fact remains and the movant is entitled to judgment as a matter of law.
OCGA § 9-11-56 (c); Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991).
So viewed, the evidence shows that in 2008, a loan officer at First National
Bank (“FNB”) contacted Adams’s son, Steve Adams, and asked him if Adams would
be interested in looking at a property under development on Tybee Island, consisting
of 25 residential lots. The property was owned at the time by The Woods at North
Beach, LLC (“The Woods”). Due to a disagreement among its members, The Woods
did not wish to continue developing the property, and FNB was trying to help The
Woods find someone to take over the property and to assume responsibility for a loan
The Woods had obtained from FNB. Steve told Adams about the property, and
Adams viewed the property with Steve and the FNB loan officer.
Shortly after learning of the property, Adams formed North Beach, and he is
its sole member. On March 28, 2008, North Beach purchased a promissory note and
deed to secure debt The Woods had executed in FNB’s favor. FNB made a short term
2 loan to North Beach of $3,183,700 to finance the purchase. Adams personally
guaranteed the loan. At the time of this transaction, Adams and FNB understood that
North Beach would foreclose on the property, purchase it in foreclosure, and then
obtain a new development loan from FNB.1 Following the second loan, Adams
intended to further develop and then sell the lots and had an understanding with Steve
that he would purchase 15 lots.
By letter dated April 4, 2008, FNB engaged DeWitt to perform an appraisal of
the property. FNB’s engagement letter described the function of the appraisal as
follows: “Bank will rely upon this appraisal for internal use, including but not limited
to, rendering a decision relative to a financial transaction.” Pursuant to the
engagement letter, DeWitt appraised the property and prepared an appraisal report
showing an “as is” valuation of $5,000,000 as of May 1, 2008.2 The report stated:
“This report is intended for use by . . . [FNB]. Use of this report by others is not
intended by the appraiser. This report is intended only for use in providing data upon
1 The FNB loan officer testified that Adams chose to acquire the property through this unusual two-step process in an effort to wipe out a second mortgage on the property. 2 DeWitt performed a second appraisal of the property in 2009, which reflected a significantly lower “as is” value of the property. Adams admitted that he did not rely on the 2009 appraisal, and it is not at issue in this appeal.
3 which the client may analyze the property as collateral for a mortgage loan. This
report is not intended for any other use.” The report also stated: “It is our
understanding [that] this appraisal will be utilized by the client as the basis for
decision making purposes regarding the underwriting criteria for a mortgage loan.”
An executive summary in the report mistakenly identified Steve Adams as the
borrower.3 In a cover letter accompanying the appraisal, DeWitt stated that the
appraisal was subject to specific limiting conditions, including the following:
1. No environmental site assessment (ESA) was provided to the appraiser. The site is assumed to be free of any contamination of any kind including any fill which may or may not exist. 2. This development was built over an abandoned landfill. This valuation assumes that all environmental issues have been or will be resolved.
North Beach initiated foreclosure proceedings and ultimately purchased the
property at a foreclosure sale on May 6, 2008. On the same day, FNB loaned North
Beach up to $4 million to repay the first loan and develop the property. The
settlement statement for the second loan indicates that North Beach was required to
reimburse FNB for the cost of the appraisal. North Beach never completed the
3 DeWitt recalled speaking with Steve during the appraisal process but could not remember what they discussed. Steve testified that he spoke with DeWitt but could not remember if it was in connection with the 2008 or 2009 appraisal and could not recall what they talked about.
4 planned development work on the property. Adams testified that work ceased due to
buried trash on the site and the cost of the clean up work the City of Tybee Island
wanted North Beach to perform.
Adams could not recall when he first saw the DeWitt appraisal but stated that
he was “fairly sure” he read it before the second loan closed. Adams stated that
DeWitt did not give him the report and that he “believed” he picked it up at FNB.
DeWitt stated in an affidavit that he knew nothing about North Beach and
never met Adams until after Adams and North Beach filed their lawsuit against him.
He did not intend for North Beach or Adams to use or rely upon his appraisal. DeWitt
stated that he never gave the appraisal to anyone other than the employee at FNB who
ordered it and that he was not aware that any representative of the bank was going to
give a copy of it to Adams.
1. Adams and North Beach argue that the trial court erred in concluding that
DeWitt did not owe them a duty of care. We disagree.
Adams and North Beach allege in their complaint that DeWitt breached the
professional standard of care applicable to real estate appraisers in preparing his
appraisal and that they relied on representations in the appraisal to their detriment
5 when they proceeded to foreclose on and purchase the property. They allege that
Cook & DeWitt is vicariously liable for DeWitt’s negligence.
In Robert & Co. Assoc. v. Rhodes-Haverty Partnership, the Supreme Court of
Georgia established a rule governing the viability of a negligent misrepresentation
claim against a professional in the absence of privity4 and involving economic loss
only:
[O]ne who supplies information during the course of his business, profession, [or] employment . . . has a duty of reasonable care and competence to parties who rely upon the information in circumstances in which the maker was manifestly aware of the use to which the information was to be put and intended that it be so used. This liability is limited to a foreseeable person or limited class of persons for whom the information was intended, either directly or indirectly. In making a determination of whether the reliance by the third party is justifiable, we will look to the purpose for which the report or representation was made. If it can be shown that the representation was made for the purpose of inducing third parties to rely and act upon the reliance, then liability to the third party can attach. . . . The additional duty that this rule imposes may be, of course, limited by appropriate disclaimers which would alert those not in privity with the supplier of information that they may rely upon it only at their peril.
250 Ga. 680, 681-682 (300 SE2d 503) (1983). In its subsequent decision in Badische
Corp. v. Caylor, the Supreme Court clarified that the rule in Robert & Co. did not
4 Adams and North Beach do not contend, and we do not find, that privity existed simply because North Beach ultimately reimbursed FNB for the cost of the appraisal.
6 “expand[] professional liability for negligence to an unlimited class of persons whose
presence is merely ‘foreseeable,’” but rather extended liability only “to those persons,
or the limited class of persons who the professional is actually aware will rely upon
the information he prepared. “ (Footnote omitted.) 257 Ga. 131, 133 (356 SE2d 198)
(1987); see also Martha H. West Trust v. Market Value of Atlanta, 262 Ga. App. 90,
93 (2) (584 SE2d 688) (2003) (appraiser who appraised property for seller was not
liable in negligence to purchaser when the appraiser knew appraisal would be used
to determine sales price but was not aware seller was actually in process of selling
property and appraisal contained provision prohibiting its distribution without
appraiser’s consent).
The evidence in this case establishes that DeWitt knew a borrower existed, but
it cannot support an inference that DeWitt actually was aware that the borrower
received the appraisal much less actually relied on it. Adams admitted that DeWitt did
not give him the appraisal. DeWitt did not know of North Beach and had not met
Adams at the time he performed the appraisal, and he was not aware that anyone at
FNB intended to give Adams the appraisal. The evidence also fails to raise an
inference that DeWitt intended for the borrower to rely on his appraisal. Even if
DeWitt knew that his appraisal could affect the borrower by, for example, influencing
7 the amount of credit extended, “[t]hat is not evidence . . . that [DeWitt] did the
appraisal[] for the purpose of inducing the [borrower] to justifiably rely and act upon
the appraisal[].” Wingate Land, LLC v. ValueFirst, Inc., 314 Ga. App. 24, 26 (722
SE2d 868) (2012). DeWitt stated that he did not intend for North Beach or Adams to
use or rely upon his appraisal. The appraisal report, on its face, negates any such
intention, stating expressly: “This report is intended for use by . . . [FNB]. Use of this
report by others is not intended by the appraiser. This report is intended only for use
in providing data upon which the client may analyze the property as collateral for a
mortgage loan. This report is not intended for any other use.” Such language
constitutes an “appropriate disclaimer[] which would alert those not in privity with
[DeWitt] that they may rely upon [his appraisal] only at their peril.” Robert & Co.,
supra, 250 Ga. at 682.
In conclusion, the trial court did not err in concluding that DeWitt owed no
professional duty to North Beach or Adams under the rule established in Robert &
Co., supra.
2. Given our holding above in Division 1, we need not address Adams and
North Beach’s argument that issues of material fact remain regarding their reasonable
reliance on misrepresentations of fact.
8 Judgment affirmed. McFadden and Ray, JJ., concur.