RSD857, LLC v. Wright

Summary

The Appellate Division, First Department, unanimously affirmed an order denying counterclaim defendant John Viscusi's motion to dismiss fraud counterclaims asserted by Albert Wright. The court held that Wright adequately pleaded that Viscusi's appraisal substantially undervalued the property, contained misleading statements, and was reasonably relied upon in agreeing to a short sale. The court rejected Viscusi's remaining arguments.

Holdings

1. Although appraisals are generally not actionable as fraud, an appraisal may support a fraud claim when the grounds supporting the opinion are so flimsy as to indicate that there was no genuine belief behind it. Wright adequately pleaded fraud based on allegations that Viscusi's appraisal was grossly undervalued, materially misleading, erroneous, and unsupported by genuinely comparable sales.
2. Wright adequately pleaded that Viscusi knew the appraisal would reasonably be relied upon by Wright and that Wright reasonably relied on the appraisal in evaluating the property's fair market value and agreeing to the short sale.
3. Wright's alleged failure to exercise ordinary intelligence by independently investigating the property's value did not defeat his fraud claim at the pleading stage.
4. To the extent Wright's fraud allegations were based on information and belief, they sufficiently apprised Viscusi of the alleged wrongs.

Questions Presented

1. Whether Wright adequately pleaded a fraud claim against Viscusi based on an allegedly fraudulent real estate appraisal.
2. Whether Wright adequately pleaded that Viscusi knew the appraisal would be relied upon by Wright and that Wright reasonably relied on it.
3. Whether allegations based on information and belief sufficiently apprised Viscusi of the alleged fraud.

Disposition

affirmed