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Zielinski v. Professional Appraisal Associates

December 02, 1999

DONNA ZIELINSKI AND JAMES SMETHERS, PLAINTIFFS-APPELLANTS,
v.
PROFESSIONAL APPRAISAL ASSOCIATES, *FN1 DEFENDANT-RESPONDENT. AND HOWARD N. FOSBRE; JOAN C. FOSBRE; JESSICA MAHON; WEICHERT REALTORS, INC; MICHAEL KUHN; AMC PROPERTY EVALUATIONS, INC., A/K/A HOUSEMASTER OF AMERICA, INC.; ESTATE OF WM. FITZGERALD; CHATHAM SAVINGS AND LOAN; JAMES WEICHERT, INDIVIDUALLY AND AS PRINCIPAL OF CHATHAM SAVINGS AND LOAN ASSOCIATION AND WEICHERT REALTORS, INC. DEFENDANTS.



Before Judges Stern, Wefing and Steinberg.

The opinion of the court was delivered by: Steinberg, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted: November 4, 1999

On appeal from the Superior Court of New Jersey, Law Division, Somerset County.

Plaintiffs Donna Zielinski and James Smethers appeal from the grant of summary judgment in favor of defendant Professional Appraisal Associates. We affirm.

On February 1, 1993, Zielinski made an offer to purchase a combination residential and rental property from Howard and Joan Fosbre. She hired Housemaster of America, Inc. (Housemaster) to perform a home inspection of the property. Housemaster conducted the inspection on February 2, 1993 in the presence of Zielinski and Smethers. On February 2, 1993, Housemaster gave a written report to Zielinski detailing the results of the inspection. Notwithstanding the fact that Housemaster's report noted a number of defects in the property, Zielinski, as buyer, signed the agreement of sale. *fn2

The agreement of sale provided that if a home inspection revealed the presence of any structural defects or environmental contaminants, or that the electrical, plumbing, heating, sewer/septic, well, and central air-conditioning systems were not in working order or needed major replacements or repairs, the sellers would be given five calendar days to notify the buyer whether they agreed at their own expense to correct the condition. If they did not agree to correct the condition, the buyer was given the right to cancel the contract. Apparently, Zielinski agreed to consummate the transaction. It is not clear from the record whether the agreement was signed before or after Zielinski received the report. In any event, however, she was given the right to terminate the transaction within five days after signing the agreement.

On February 3, 1993, Zielinski applied for a mortgage for ninety percent of the contract price with Chatham Savings and Loan Association (Chatham). Chatham hired PAA, at Zielinski's expense, to perform an independent real estate appraisal of the property. According to Chatham, the appraisal was for its use in connection with the bank's evaluation of the property as collateral for the loan. PAA issued its appraisal report on March 18, 1993. The report identified Chatham as the client. The third paragraph of the appraisal set forth its purpose and provided as follows:

The purpose of this appraisal is to estimate the market value (emphasis added) of the subject property. The function of the appraisal is to assist the identified lender or assignee in the underwriting of the risk associated with a residential mortgage loan.

The appraisal contained a certification of the appraiser which provided, in pertinent part, as follows:

The Appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil or structures, which would render it more or less valuable. The Appraiser assumes no responsibility for such conditions, or for engineering which might be required to discover such factors.

Closing took place on April 28, 1993. According to Zielinski, although PAA's appraisal noted that the condition of the property was "average" and that "no repairs [were] needed", the property suffered from a number of noticeable substantial defects, and she filed suit against numerous parties, including PAA.

Concluding that Zielinski was not a foreseeable user of PAA's report, and that PAA was hired by Chatham, the motion Judge concluded that PAA owed no legal or contractual duty to her. Because of those facts, coupled with the fact that PAA's report was an appraisal report rather than an engineering report, he granted PAA's motion for summary judgment. The motion Judge was also persuaded by the fact that the Housemaster's report placed Zielinski on notice of the deficiencies in the property yet she elected to proceed to closing. Moreover, the motion Judge was influenced by the fact that Zielinski never received the PAA report and could not reasonably have relied upon it.

On this appeal, plaintiffs raise the following arguments: (1) PAA is liable for "egregiously" negligent services since their interests were obviously affected; and (2) there were a number of fact sensitive issues ...


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