SPECIALIZED COMMERCIAL LENDING INC v. MURPHY BLOSSMAN APPRAISAL SERVICES III ABC | FindLaw

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MURPHY'S LAW

SPECIALIZED COMMERCIAL LENDING INC v. MURPHY BLOSSMAN APPRAISAL SERVICES III ABC

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Court of Appeal of Louisiana,First Circuit.

SPECIALIZED COMMERCIAL LENDING, INC. v. MURPHY-BLOSSMAN APPRAISAL (MAI, APPRAISAL INSTITUTE, AI ) SERVICES, L.L.C., Rick Murphy, A.R. Blossman, III, and ABC Insurance Company.

No. 2007 CA 0100.

Decided: November 02, 2007

Before WHIPPLE, GUIDRY, and HUGHES, JJ. Andrew A. Braun, Daniel G. Rauh, New Orleans, LA, for Plaintiff/First Appellant Specialized Commercial Lending, L.L.C. David S. Daly, Metairie, LA, for Defendant/Second Appellant Chicago Insurance Company. Joseph G. Glass, William J. Guste, IV, Metairie, LA, for Defendant/Appellee Murphy-Blossman Appraisal Services, L.L.C. Michael P. Bienvenu, Baton Rouge, LA, Counsel for Defendant/Appellee Richard L. Murphy. Robert S. Stassi, New Orleans, LA, for Defendant/Appellee A.R. Blossman, III. Brian B. Brown, Mandeville, LA, In Proper Person for Third Party Defendants/Appellees, Brian B. Brown, Brian B. Brown Construction, Inc., and Bacmar Enterprises, Inc. Angela P. Miles, Mandeville, LA, In Proper Person for Third Party Defendant/Appellee, Angela P. Miles.

 This is an appeal from a judgment in favor of a lender and against a real estate appraisal company for the loss of collateral resulting from the latter's failure to verify that homes were being constructed as represented, for which loan funds were advanced.   For the reasons that follow, we affirm the trial court judgment in part and reverse in part.

AI, MAI, APPRAISAL INSTITUTE.

Comments

[Commercial Appraiser CRE BLOG, 310.337.1973]

1.

FACTS AND PROCEDURAL HISTORY

Between 1998 and 1999, Brian B. Brown and companies he controlled, Brian B. Brown Construction, Inc. and Bacmar Enterprises, Inc. (hereinafter collectively as “Brown”), began borrowing money from Specialized Commercial Lending, L.L.C. (“Specialized”) for the purchase of lots and construction of residences thereon, as a business venture for sale of the homes after construction.   Specialized financed the construction of some fifty homes by Brown.   Between October and December of 2000, Specialized advanced funds, secured by mortgage on the immovable properties at issue, to Brown for the construction of ten houses that were never built.   During this time, the firm of Murphy-Blossman Appraisal Services, L.L.C. (“Murphy-Blossman”) was hired to complete verifications and/or certifications that relevant phases of construction of the houses had been completed, which were prerequisite to payment of four separate construction “draws” or loan disbursements on each of the ten houses.   As part of the verification/certification process, Murphy-Blossman was required to visually inspect construction in progress and then submit written verification in conjunction with Brown's draw requests that certain construction phases had been completed.   Upon receipt of a verification/certification from Murphy-Blossman, Specialized disbursed loan funds to Brown.   Murphy-Blossman submitted written verification and  certification to Specialized that construction phases for each of the ten homes at issue had been completed, when in fact no work had been done.   The only explanation offered by Murphy-Blossman for the incorrect documentation was that Murphy-Blossman office manager Lisa Torres failed to properly locate the subject properties during her visual inspections and was misled to view other homes under construction rather than the ten lots that were vacant.

[Commercial Appraiser CRE BLOG, 310.337.1973]

2.

SPECIALIZED COMMERCIAL LENDING, INC. v. MURPHY-BLOSSMAN APPRAISAL (MAI, APPRAISAL INSTITUTE, AI ) SERVICES, L.L.C., Rick Murphy, A.R. Blossman, III, and ABC