Willemsen v. Mitrosilis CA4/3
178 Cal. Rptr. 3d 735
Cal. Ct. App.2014Background
- Willemsen contracted (Feb 27, 2007) to buy 4.83 acres in San Bernardino; purchase agreement included various inspection and financing contingencies.
- By July 2007 Farmers & Merchants Bank retained AppraisalPacific to appraise the property for underwriting; appraisal (July 25, 2007) was addressed to and stated its intended user was the bank.
- Escrow closed August 15, 2007; Willemsen alleged he relied on the appraisal and later discovered undisclosed problems (fault line, planned road) that reduced value.
- Willemsen sued (including negligent misrepresentation against AppraisalPacific and its appraisers), claiming the appraisal overstated value and was intended for his reliance.
- AppraisalPacific moved for summary judgment asserting the appraisal was prepared for the bank (not Willemsen), Willemsen could not show justifiable reliance or that the appraisers intended to influence his purchase decision.
- Trial court granted summary judgment for AppraisalPacific and denied Willemsen leave to amend to add a third-party-beneficiary breach-of-contract claim; appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appraiser liable for negligent misrepresentation to buyer | Willemsen: appraisal was prepared knowing he was borrower and would rely on it for financing and purchase decision | AppraisalPacific: appraisal was commissioned and intended solely for bank underwriting; buyer was only an incidental recipient; no intent to influence buyer | Judgment for defendants — buyer not within class of intended beneficiaries; no triable issue that appraiser intended to influence Willemsen |
| Whether Willemsen justifiably relied on appraisal to decide to purchase | Willemsen: he relied because financing contingency made appraisal the critical factor; appraisal named him and referenced purchase agreement | AppraisalPacific: buyer had inspection/contingency rights and could have obtained his own appraisal; reliance not justifiable as appraisal limited to bank use | Reliance not legally sufficient to create triable issue; appraisal’s stated intended user defeats inference of intent to influence buyer |
| Whether summary judgment appropriate given Bily/Restatement §552 standard | Willemsen: Bily supports liability where supplier knows third parties will rely; appraiser knew borrower and purchase context | AppraisalPacific: Bily requires manifestation of intent to supply info for the specific transaction or class; here intent was to influence lender underwriting only | Court applied Bily and related cases, concluding no manifestation of intent to influence buyer, so summary judgment proper |
| Whether leave to amend to add third-party-beneficiary breach claim should be granted | Willemsen: seeks leave (citing Soderberg) to plead third-party beneficiary based on facts already alleged | AppraisalPacific: untimely, procedurally improper, and amendment would be futile because appraisal was for bank’s benefit only | Denial affirmed — Willemsen failed to show a reasonable possibility to plead a viable third-party beneficiary claim |
Key Cases Cited
- Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal.App.3d 1089 (borrower cannot generally sue lender for appraisal relied on to determine adequacy of collateral)
- Bily v. Arthur Young & Co., 3 Cal.4th 370 (adopts Restatement §552 approach: liability for negligent misrepresentation limited to those the supplier intended to influence)
- Soderberg v. McKinney, 44 Cal.App.4th 1760 (appraiser liable where report was prepared knowing a specific class of investors would rely; leaves room to amend to plead third-party beneficiary)
- Mariani v. Price Waterhouse, 70 Cal.App.4th 685 (applies Bily to reject negligent misrepresentation where no showing auditor intended to influence plaintiffs)
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (summary judgment standard and burdens)
- Graham v. Bank of America, N.A., 226 Cal.App.4th 594 (discusses reliance/fraud context and limitations on third-party claims against lenders/appraisers)