Fannie Mae v. Anthony Laruffa
702 F. App'x 505
| 9th Cir. | 2017Background
- Dispute over fair market value of a residential apartment complex in Tucson, Arizona following a trustee sale; Fannie Mae (plaintiff) sought a valuation and related relief.
- Expert appraiser Craig Johnson produced a $5.1 million valuation; district court credited Johnson and used $5.1 million as the starting point.
- Defendants LaRuffa and Grassia challenged the use and reliability of Johnson’s appraisal and certain testimony and exhibits.
- District court added $350,000 for improvements LaRuffa claimed to have made, then inexplicably doubled that figure to add $700,000, yielding a $5.8 million final valuation.
- Defendants appealed the crediting of Johnson’s appraisal and evidentiary rulings; Fannie Mae cross-appealed the district court’s doubling of the improvement amount.
- Ninth Circuit: reviewed factual valuation for clear error, affirmed some rulings, reversed the unexplained doubling of the $350,000, and remanded for recalculation or explanation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court properly started valuation at Johnson’s $5.1M appraisal | Johnson’s $5.1M appraisal is reliable and ties to sale date | Appraisal dated earlier, not connected to trustee sale date; unreliable | Affirmed — court found Johnson credible and tied valuation to sale date |
| Whether Johnson’s testimony met Daubert reliability requirements | Johnson is a qualified appraiser using accepted methodologies | Expert testimony was unreliable under Daubert | Affirmed — methodologies and qualifications sufficient; no Daubert error |
| Whether Johnson could rely on a third-party (Aquaterra) report | Reliance on other reports is permissible for experts | Reliance improperly substituted for independent analysis | Affirmed — experts may rely on others; Aquaterra input was minor and reasonably relied upon |
| Whether district court lawfully increased improvements from $350K to $700K | Fannie Mae argued district court’s addition to valuation was proper | Defendants contested any unexplained doubling as unsupported | Reversed — doubling lacked explanation/support; remanded to recalculate or justify the addition |
Key Cases Cited
- In re Arnold & Baker Farms, 85 F.3d 1415 (9th Cir. 1996) (standard for reviewing valuation findings)
- Retz v. Samson (In re Retz), 606 F.3d 1189 (9th Cir. 2010) (clear-error standard explained)
- Easley v. Cromartie, 532 U.S. 234 (U.S. 2001) (defining when a factual finding is clearly erroneous)
- United States v. U.S. Gypsum Co., 333 U.S. 364 (U.S. 1948) (quoted standard for appellate review of facts)
- Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (U.S. 1993) (trial court gatekeeping duty for expert testimony)
- Paddack v. Dave Christensen, Inc., 745 F.2d 1254 (9th Cir. 1984) (experts may rely on otherwise hearsay materials to explain opinions)
- Life Inv’rs Ins. Co. of Am. v. Horizon Res. Bethany, Ltd., 898 P.2d 478 (Ariz. Ct. App. 1995) (post-sale valuations admissible to test expert assumptions)