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Tall Bridge Asset Backed Fund, L.P. v. Kenworthy

August 31, 2010

TALL BRIDGE ASSET BACKED FUND, L.P., PLAINTIFF-APPELLANT,
v.
SHANE M. KENWORTHY AND INTEGRITY APPRAISAL GROUP, INC., DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-4065-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued August 10, 2010

Before Judges Sabatino and Ashrafi.

This appeal involves the trial court's dismissal of a civil action for lack of in personam jurisdiction over defendants. We affirm.

The record presents the following pertinent facts and procedural history. In August 2009, plaintiff Tall Bridge Asset Backed Fund, L.P., filed a complaint against defendants Shane M. Kenworthy and Integrity Appraisal Group, Inc.,*fn1 in the Law Division in Monmouth County. In essence, plaintiff contended that, in or about August 2007, defendants negligently performed an appraisal of certain residential property in Pennsylvania for plaintiff, ascribing to the premises a value in excess of its actual fair market value. Plaintiff, which extended a bridge loan to a customer in reliance upon the appraisal, claimed that it suffered economic harm after it had to foreclose on the loan and the borrower went bankrupt.

Plaintiff's complaint asserted causes of action for negligence, breach of contract, breach of implied covenant of good faith and fair dealing, and negligent misrepresentation. Defendants moved to dismiss the complaint for lack of in personam jurisdiction. The trial court granted that motion, and this appeal ensued.

Plaintiff is a financial institution that provides bridge loans for the acquisition and development of properties on a short-term basis. It is a limited partnership formed under Delaware law, with its principal place of business since 2006 located in Red Bank, New Jersey.*fn2 As part of its business, plaintiff obtains appraisals for properties that it has been asked to finance in order to determine the correct loan amount and the risks of extending a loan. According to plaintiff, it relies heavily on the accuracy of the appraisals it obtains, for if the appraisals are inflated, that will impede plaintiff's ability to recover what it is owed in instances of foreclosure.

Defendant Shane Kenworthy ("Kenworthy") is a certified residential appraiser who is licensed to perform appraisals of real estate in Pennsylvania by the Commonwealth of Pennsylvania, Department of State, Bureau of Professional & Occupational Affairs. Kenworthy resides in Coatesville, Pennsylvania. He is the president and sole stockholder of Faithful Wellspring, Inc., a Pennsylvania corporation, which does business under the registered trade name of Integrity Appraisal Group, Inc. ("Integrity").

According to the unrefuted assertions in Kenworthy's certification filed in support of the motion to dismiss, neither Kenworthy nor Integrity have any offices or employees in New Jersey. Defendants do not perform, nor are they authorized to perform, appraisals on property situated in New Jersey. They do not have a registered agent in New Jersey, nor do they have a telephone listing in this State. They do not pay New Jersey taxes.

In or around August 2007, plaintiff retained defendants to appraise a certain residential property on Poplar Street in Philadelphia, Pennsylvania. The appraisal was sought after a borrower applied to plaintiff for a bridge loan to purchase and rehabilitate the premises. Plaintiff hired defendants through an agent, Equity Development Corporation ("Equity").*fn3 According to a certification filed by Jason Harkavy--a managing member of Tall Bridge Capital Partners, LLC, which is the general partner in plaintiff's limited partnership--Equity has an ongoing relationship with plaintiff and provides it with loan servicing and project management services.

As requested, defendants performed the appraisal, transmitting a written appraisal report to plaintiff's offices in Red Bank.*fn4 The appraisal opined, based upon a review of comparable sales in Philadelphia, that the property was worth $480,000, a sum that plaintiff now contends was excessive. Plaintiff's Red Bank address appears on the first page of the appraisal report, and several times within it.

Plaintiff extended a loan to the borrower based on defendants' appraisal, but the borrower eventually defaulted. Plaintiff brought a foreclosure action against the borrower, who in turn sought bankruptcy protection. Plaintiff alleges that it suffered economic loss as a result of defendants' inaccurate appraisal, because, according to Harkavy, the subject property's value was "significantly lower than the defendant[s'] appraisal."

After defendants asserted a lack of in personam jurisdiction over them in New Jersey, the parties engaged in limited jurisdictional discovery, which we were advised at oral argument consisted of document production but no depositions. The documents in the record include copies of numerous other appraisals of Pennsylvania property that defendants performed for plaintiff from June 2007 through May 2008. Plaintiff's business address in New Jersey is included on each appraisal. According to Harkavy's ...


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