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Young v. Rally Appraisal, L.L.C.

Court of Appeals of Iowa

April 3, 2019

DELORIS GRACE YOUNG, by and through her attorney-in-fact Robert A. Young and Joan E. Ambrose, Plaintiffs-Appellants,
v.
RALLY APPRAISAL, L.L.C. and FUHRMEISTER APPRAISAL, L.L.C., Defendants-Appellees.

          Appeal from the Iowa District Court for Johnson County, Chad A. Kepros, Judge.

         A beneficiary of an estate challenges the grant of summary judgment to two appraisal companies on her claim of negligent misrepresentation.

          Max E. Kirk and Eashaan Vajpeyi of Ball, Kirk & Holm, Waterloo, for appellant.

          Mark A. Schultheis and Ethan S. Olson of Nyemaster Goode, P.C., Des Moines, for appellee Fuhrmeister Appraisal, L.L.C.

          Chad M. VonKampen and Graham R. Carl of Simmons Perrine Moyer Bergman PLC, Cedar Rapids, for appellee Rally Appraisal, L.L.C.

          Considered by Tabor, P.J., and Mullins and Bower, JJ.

          TABOR, PRESIDING JUDGE.

         At issue in this case is 59.14 acres of agricultural land just north of the city of North Liberty appraised at $1.24 million. The land belonged to the estate of William Young.[1] A beneficiary of that estate, Deloris Grace Young, appeals the grant of summary judgment in favor of two appraisal companies on her claim of negligent misrepresentation. Because the district court appropriately found no genuine issue of material fact on the element of justifiable reliance, and the appraisers were entitled to judgment as a matter of law, we affirm.

         I. Facts and Prior Proceedings

         Grace and Richard Young raised their three children-William, Robert, and Joan-on a farm just outside of North Liberty. As an adult, William became a real estate developer and purchased nearly sixty acres of farmland adjacent to their home farm. William died in July 2014. His will-prepared before his marriage to Mary-left a life estate in his assets to his parents Grace and Richard, and a remainder interest to his siblings Robert and Joan. In September 2014, Mary filed an election to take her share as his surviving spouse under Iowa Code section 633.238 (2014). Richard died later that same month, leaving Grace as the sole owner of the life estate in her son William's assets.

         The administration of William's estate required negotiations concerning the distribution of assets and assumption of liabilities between Grace and Mary to settle Mary's claim. According to Grace, key to those negotiations was an appraisal of the real estate owned by William at the time of his death.

         As an executor of William's estate, the trust department of U.S. Bank hired Rally Appraisal, L.L.C. to estimate the "fee simple market value" of two parcels of agricultural land totaling 59.14 acres in Johnson County as of the date of William's death. Rally Appraisal inspected the property in November 2014 and delivered its report the following month. The property was "located immediately north of North Liberty. The land to the south has been developed with single family housing and the subject land has residential development potential in the near future." Still, the report listed the "highest and best use of the land" as "agricultural." Using a "sales comparison approach," the report estimated the land's value at $1.24 million.

         William's siblings, Robert and Joan, served as attorneys-in-fact for their elderly mother, Grace.[2] After receiving the Rally report, Joan emailed her brother Robert to suggest seeking "a second opinion on the 60 acres appraisal." She speculated the "comparable properties" used in the Rally appraisal already fed into North Liberty sewer lines, but "the 60 acres is not sewer ready and will not be any time soon." She relayed a conversation she had with a city planner who "could not predict" whether the land would be used for residential purposes within five years but confirmed the development focus was on the east side of town, where a new high school was opening. Joan believed the estimated value was too high, opining "this appraisal is a bit slanted toward a price that is more than five years out and certainly not 'as of' Bill's death date." Joan also communicated her opinion the appraisal was too high to Grace's attorney Joseph Moreland. She informed Moreland William's 2012 financial statement listed the property's value at $600, 000.

         Robert likewise had concerns that two of the "comparables" used in Rally's appraisal were not really "comparable" to the 60 acres at issue. He conveyed his concerns to Jim Larew, the estate's attorney. But the estate decided not to seek another appraisal. So, in February 2015, Robert and Joan asked attorney Moreland to line up a second opinion at their mother's expense. Moreland contacted Fuhrmeister Appraisal, L.L.C. Dan Fuhrmeister reviewed the Rally report and responded:

I have completed some preliminary research. I feel the sales used are realistic and the value is in line. . . . . Development potential looks strong for this property. Based on the information I have seen, I do not feel my value will be ...

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