Flagstar Bank, F.S.B. v. Airline Union's Mortgage Co.
128 Ohio St. 3d 529
| Ohio | 2011Background
- Appellee Reinhold, a property appraiser, performed three appraisals for properties securing three mortgage loans in 2001-2002; Flagstar Bank acquired the loans and later incurred deficiencies after foreclosures or insurance gaps.
- Flagstar sued in 2008 against AUM and Reinhold for professional negligence, alleging the appraisals were materially inaccurate.
- Reinhold moved for summary judgment arguing the claims were time-barred under R.C. 2305.09(D) four-year statute of limitations; Flagstar urged a discovery or delayed-damages rule.
- Trial court adopted discovery-rule reasoning; First District affirmed; the Supreme Court granted certified-conflict jurisdiction to resolve accrual timing for professional-negligence claims against a property appraiser.
- The Court held that under R.C. 2305.09(D), the cause of action accrues on the date the negligent act is committed, beginning the four-year limit at that time, thus barring Flagstar’s timely claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does a professional-negligence claim against a property appraiser accrue? | Flagstar argues accrual should be later under discovery or delayed-damages theories. | Reinhold argues accrual occurs at the time of the negligent act. | Accrual occurs on the negligent act date; four-year period starts then. |
| Is the discovery rule available for professional negligence against appraisers? | Flagstar relies on discovery-based timing. | Investors REIT One rejects discovery rule for professional negligence. | Discovery rule not available; investors rule governs. |
| Is the delayed-damages rule applicable to professional negligence claims? | Flagstar claims damages were delayed until foreclosure/deficiency. | Delayed-damages rule should apply to bring accrual later. | Delayed-damages rule not applicable; accrual at act date per Investors REIT One. |
| Is R.C. 2305.09(D) constitutional as applied to this claim? | Foreclosing remedy would violate right to remedy. | Statute provides a reasonable four-year period. | Statute constitutional; open-remedy clause satisfied; accrual rule upheld. |
Key Cases Cited
- Investors REIT One v. Jacobs, 46 Ohio St.3d 176 (1989) (discovery rule not available for professional-negligence claims; accrual when act is committed)
- Grant Thornton v. Windsor House, 57 Ohio St.3d 158 (1991) (affirms Investors REIT One approach for professional negligence)
- O'Stricker v. Jim Walter Corp., 4 Ohio St.3d 84 (1983) (discovery rule framework; accrual concepts cited)
- Kunz v. Buckeye Union Ins. Co., 1 Ohio St.3d 79 (1982) (tort accrual concepts; early injury considerations)
- Doe v. Archdiocese of Cincinnati, 109 Ohio St.3d 491 (2006) (remedies and gate-keeping function of limitations; context for liberal construction)