Ballance v. Rinehart

412 S.E.2d 106, 105 N.C. App. 203, 1992 N.C. App. LEXIS 25
CourtCourt of Appeals of North Carolina
DecidedJanuary 21, 1992
DocketNo. 911SC831
StatusPublished
Cited by15 cases

This text of 412 S.E.2d 106 (Ballance v. Rinehart) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ballance v. Rinehart, 412 S.E.2d 106, 105 N.C. App. 203, 1992 N.C. App. LEXIS 25 (N.C. Ct. App. 1992).

Opinion

GREENE, Judge.

Plaintiff appeals from an order entered 11 June 1991, dismissing plaintiffs complaint for failure to state a claim upon which relief can be granted, N.C.G.S. § 1A-1, Rule 12(b)(6) (1990).

Plaintiff instituted this action on 11 February 1991 seeking damages for economic loss allegedly caused by defendant’s negligent performance of a real estate appraisal. In her complaint, plaintiff alleges that she purchased a house owned by Jack and Annie Horton after relying on a real estate appraisal prepared by defendant in which defendant stated that the house was in good condition. Plaintiff further alleges that soon after the purchase, she discovered that the house had serious structural defects and that defendant breached his duty of ordinary care by failing to discover the defects. Plaintiff alleges that defendant knew or should have known at the time that he rendered the appraisal report that, although the appraisal report was prepared for Peoples Bank and Trust Company (Peoples Bank), other persons, particularly potential home buyers, would rely on the report as verification of the condition and value of the property. On 15 February 1991, defendant moved to dismiss plaintiff’s complaint pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. Plaintiff filed an amended complaint on 16 May 1991, which added to plaintiffs original complaint the allegations that the appraisal report was also prepared for Jack Horton and that “defendant knew or should have known [205]*205that [owner] Jack Horton could potentially show the appraisal to potential buyers of the home.” On 11 June 1991, the trial court entered an order in open court granting defendant’s motion and dismissing plaintiffs complaint.

The dispositive issue is whether a licensed real estate appraiser who performs an appraisal of real property at the request of a client owes a prospective purchaser of such property who relies on the appraisal a duty to use reasonable care in the preparation of the appraisal.

A claim should be dismissed under N.C.G.S. § 1A-1, Rule 12(b)(6) (1990), where “it appears that the plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim.” Garvin v. City of Fayetteville, 102 N.C. App. 121, 123, 401 S.E.2d 133, 134 (1991). “[T]his will occur when there is a want of law to support a claim of the sort made, an absence of facts sufficient to make a good claim, or the disclosure of some fact which will necessarily defeat the [plaintiff’s] claim.” Id. at 123, 401 S.E.2d at 135. The complaint must be liberally construed in analyzing its sufficiency under this rule. Dixon v. Stuart, 85 N.C. App. 338, 340, 354 S.E.2d 757, 758 (1987).

Plaintiff argues that the trial court’s dismissal of her claim is improper since this Court has previously recognized the right of a home buyer, in the absence of contractual privity with the appraiser, to recover damages for economic loss proximately caused by negligence in the performance of a real estate appraisal. Plaintiff cites in support thereof Alva v. Cloninger, 51 N.C. App. 602, 277 S.E.2d 535 (1981), where this Court reversed a directed verdict for defendant real estate appraiser on plaintiff home buyer’s claim for negligent misrepresentation. Like plaintiff in the instant case, the plaintiff in Alva alleged that he had suffered economic loss by relying on defendant’s appraisal which indicated that the home purchased by plaintiff was in good condition when in fact the house contained serious defects. In reversing the directed verdict for the defendant, we held that “there was evidence from which a jury could have concluded that defendant [appraiser] should have reasonably foreseen and expected that plaintiffs would rely on the appraisal report” performed by defendant. Alva, 51 N.C. App. at 610-11, 277 S.E.2d at 540.

[206]*206The facts in Alva, however, are quite different from those in the instant case. Specifically, although the defendant in Alva prepared the appraisal report at the request of NCNB Mortgage Corporation (NCNB), the following additional facts formed the basis of our holding: NCNB was the lending institution from whom plaintiff was in the process of obtaining the purchase money for the house; plaintiff was listed by name as the borrower on defendant’s work order; plaintiff himself paid the appraisal fee; and defendant had transacted enough similar business with the lending institution that he should have been aware of the importance of his appraisals to borrowers for whom the appraisals were indirectly performed. Plaintiff in the instant case alleges simply, without specifying the original purpose for which the appraisal at issue was performed, that defendant provided the appraisal, as requested, to his clients, and that plaintiff ultimately saw it and relied on it.

Defendant contends that the present case is controlled not by Alva but by Raritan River Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200, 367 S.E.2d 609 (1988). In Raritan, Intercontinental Metals Corporation (IMC) retained the defendants, a firm of certified public accountants and individual partners working for the firm, to provide an audit report on IMC’s financial status. The plaintiffs, Raritan River Steel Company (Raritan) and Sidbec-Dosco, extended credit to IMC on the basis of what they contended was an incorrect overstatement of IMC’s net worth contained in the audit report prepared by the defendants. The plaintiffs sought to hold the defendants liable for losses resulting from the extension of credit to IMC.

In assessing the scope of an accountant’s liability for negligent misrepresentation to persons other than the client for whom the financial audit was prepared, our Supreme Court adopted the approach set forth in the Restatement (Second) of Torts § 552 (1977) (§552), which provides:

Information Negligently Supplied for the Guidance of Others.
(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.
[207]*207(2) . . . [T]he 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.

Restatement (Second) of Torts § 552 (1977). The Raritan

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Bluebook (online)
412 S.E.2d 106, 105 N.C. App. 203, 1992 N.C. App. LEXIS 25, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ballance-v-rinehart-ncctapp-1992.