Commercial Division Blog

Posted: October 30, 2020 / Categories Commercial, Statute of Limitations/Laches, Professional Malpractice

Malpractice Claim Against Appraiser Accrued When Plaintiff Ultimately Received Appraisal, Not on Earlier Date When Appraisal Was Given to Lender

On October 14, 2020, the Second Department issued a decision in ShareStates Invs., LLC v Creagh & Assoc., Inc., 2020 NY Slip Op. 05792, holding that a malpractice claim against an appraiser did not accrue when the appraiser issued the appraisal, but rather when the client received the appraisal, explaining:

The three-year statute of limitations in CPLR 214(6) has been held to apply to malpractice by real estate appraisers. Although the plaintiff also asserted causes of action to recover damages for negligent misrepresentation and breach of contract, the gravamen of the plaintiff's allegations against the defendants is that the defendants failed to fulfill their professional duty in preparing the appraisal report. Thus, the negligent misrepresentation and breach of contract causes of action are merely incidental to the professional malpractice cause of action, and all of the plaintiff's causes of action are subject to the three-year statute of limitations applicable to professional malpractice.

CPLR 203(a) provides that the time within which an action must be commenced shall be computed from the time the cause of action accrued to the time the claim is interposed. For the purpose of determining the timeliness of a professional malpractice action, the action accrues when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court. In most cases, this accrual time is measured from the day an actionable injury occurs, even if the aggrieved party is then ignorant of the wrong or injury.

Here, the appraisal report was prepared for and delivered to a nonparty lender by the defendants on February 12, 2015, before the plaintiff entered into any transactions with the borrower. The Supreme Court found that the plaintiff's action accrued on that date. However, the plaintiff did not receive the appraisal on that date. The plaintiff was not merely ignorant of the alleged wrong on February 12, 2015, but all of the facts necessary to the plaintiff's action had not occurred on that date, and the plaintiff could not then have obtained relief in court. The plaintiff had not yet relied upon the skill and advice of the defendants. The defendants failed to establish that the plaintiff received the appraisal more than three years before it commenced this action. The date when the appraisal was received by the plaintiff was not established by the defendants and, therefore, the defendants failed to meet their initial burden of establishing, prima facie, that the time in which to sue had expired.

(Internal citations omitted).

We both bring and defend professional malpractice claims and other claims relating to the duties of professionals such as lawyers, accountants and architects to their clients. Contact us if you have questions regarding such claims or appeals of such claims.