Iowa Court of Appeals Affirms Reasonable Reliance Requirement in Appraiser Negligence Case

Young by and through Young v. Rally Appraisal, L.L.C., No. 18-0942, Court of Appeals of Iowa (April 3, 2019)

On April 3, 2019, the Iowa Court of Appeals issued an opinion affirming the reasonable reliance requirement under the Second Restatement of Torts § 552 in an appraiser negligence case.  The Court affirmed summary judgment granted against a beneficiary of an estate who relied upon an appraisal as part of a settlement of the estate.  Before entering into the settlement agreement, the beneficiary’s representatives authored e-mails harboring strong opinions about the deficiencies of the appraisal but nevertheless entered into the settlement agreement in reliance upon the appraisal.  The beneficiary’s representatives were aware that the property was not in proximity to public infrastructure and expressed opinions that the sales comparisons used in the appraisal were improper.  The Iowa Court of Appeals recognized that although justifiable reliance under § 522 is ordinarily a question of fact, the element can be negated as a matter of law when circumstances exist under which reliance cannot be justified.  The Court found that the beneficiary’s representatives “complained about the horse having just one eye, but bought it just the same.”

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