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Beach Community Bank v. Cushman & Wakefield of Georgia, Inc.

United States District Court, S.D. Mississippi, Southern Division

February 13, 2017




         BEFORE THE COURT are Defendants Cushman & Wakefield of Georgia, Inc., and Scott R. Tonneson's Motion for Summary Judgment [55] and Motion to Strike Affidavit of James Turner [74]. These Motions have been fully briefed. Having considered the parties' submissions, the record as a whole, and relevant legal authority, the Court is of the opinion that Defendants' Motion for Summary Judgment [55] should be granted and their Motion to Strike [74] should be denied as moot.

         I. BACKGROUND

         A. Relevant Background

         This case arises out of a real estate appraisal (the “Appraisal” or “2007 Appraisal”) conducted on a proposed subdivision of real property, specifically the Beaver Dam Crossing Subdivision in Stone County, Mississippi. Defendant Cushman & Wakefield of Georgia, Inc.'s (“C&W”), employee Defendant Scott R. Tonneson (“Tonneson”) (collectively “Defendants”) performed the Appraisal on or about June 21, 2007, on behalf of The People's Bank in Biloxi, Mississippi. Compl. [1] at 2.[1]

         On or about February 25, 2008, William Mike Adkinson (“Adkinson”) submitted an application to Beach Community Bank (“Plaintiff”) for a $1 million loan to be secured by the real property that was the subject of Defendants' 2007 Appraisal. Id. at 3. On or about March 30, 2008, Plaintiff's loan committee conditionally approved the loan, contingent in part upon the receipt of an updated appraisal on certain parcels contained within the original appraised real property. Id.

         On April 24, 2008, Defendants updated their 2007 Appraisal and supplied Plaintiff with a “Recertification Letter to [A]ppraisal of Real Property Effectively dated July 21, 2007” (“Recertification” or “2008 Recertification”). Ex. HH [68-34] at 1-4. This 2008 Recertification estimated a value of $1.6 million for the smaller 20.3 acre tract (the “Property”) of “Multi-Family Land, ” Ex. HH [68-34] at 3, which was contained within the ‘large “‘Parent tract' of approximately 314 acres, ” Ex. BB [68-28] at 3. Compl. [1] at 2-3. Plaintiff alleges that, in reliance upon Defendants' valuation of the Property in the 2008 Recertification, it issued a promissory note in the amount of $1 million, secured by the Property, to Adkinson. Id.

         In 2012, Adkinson defaulted on the promissory note. In conducting the foreclosure, Plaintiff secured a new appraisal on November 13, 2012, for the Property from The Appraisal Shop which valued the Property at $86, 000.00. Id. The Property ultimately sold for $65, 000.00. Id. at 3.

         B. Procedural History

         1. Complaint

         On January 8, 2015, Plaintiff filed a Complaint [1] in this Court advancing claims against Defendants for negligence/gross negligence and fraudulent concealment/latent injury. Id. at 4-7. Plaintiff alleges that as a result of Tonneson's negligent and grossly negligent breach of the applicable standards of care in valuing the Property at $1.6 million, when the Property was only worth $86, 000.00, Plaintiff was able to recover merely a “fraction of the promissory note issued to Adkinson” and suffered compensatory and consequential damages. Id. at 4-5. Plaintiff asserts that C&W is liable to Plaintiff “under the doctrine of respondeat superior and/or vicarious liability for the negligence and gross negligence of its employee Tonneson” because he was acting within the course and scope of his employment. Id. According to the Complaint, the “updated [A]ppraisal/[R]ecertification was an affirmative act” performed by Defendants, subsequent to the initial Appraisal, that served to fraudulently conceal Defendant's negligent and grossly negligent acts such that the three-year statute of limitations for Plaintiff's negligence claims for “latent” damages was tolled until the receipt of the November 13, 2012, appraisal, Exh. K [67-7] at 1-2, which valued the property at $86, 000.00. Id. at 5-7.

         2. Defendants' Motion for Summary Judgment

         On July 6, 2016, Defendants filed their Motion for Summary Judgment [55] which maintains that Plaintiff's negligence claims arising out of the 2007 Appraisal and 2008 Recertification are barred by the three-year statute of limitations found at Mississippi Code § 15-1-49. Mot. Summ. J. [55] at 1; Mem. in Supp. [56] at 9-13. Defendants posit that, even taking into consideration Plaintiff's assertion of fraudulent concealment or latent injury, Plaintiff was put on notice as early as June 16, 2009, when Plaintiff obtained an appraisal, Ex. BB [68-28] at 1-4, from R. David Belew (“Belew”), with Appraisal Associates, LLC, which valued the Property at only $71, 000.00, that there might be an issue with Defendants' earlier 2007 Appraisal and/or 2008 Recertification. Mem. in Supp. [56] at 9-13. Thus the three-year statute of limitations began running in June 2009 at the latest. Id.

         Defendants also assert that Plaintiff did not rely upon their 2007 Appraisal or 2008 Recertification in making its loan decisions such that neither could be the proximate cause of any damages. Mot. Summ. J. [55] at 1-3; Mem. in Supp. [56] at 13-15. Alternatively, Defendants seek partial summary judgment as to Plaintiff's claims for the loss of $325, 000.00 of the loan monies, attorneys' fees, and punitive damages. Mot. Summ. J. [55] at 1-3; Mem. in Supp. [56] at 17-20.

         Plaintiff's Response in Opposition [65] argues that Defendants' fraudulent concealment was “so thoroughly done” through the 2008 Recertification that Plaintiff “was greatly misled as to the accurate values and reasonably believed” that Belew was the one who performed a negligent appraisal. Resp. in Opp'n Summ. J. [65] at 20-25. Plaintiff asserts that a genuine issue of material fact exists as to whether Tonneson's “refusals” to again update his Appraisal/Recertification, after Belew's 2009 appraisal was rejected, could be found by a reasonable juror to be “affirmative acts of fraudulent concealment” tolling the statute of limitations. Id.

         Plaintiff's second argument is that Defendants waived their statute of limitations defense pursuant to Mississippi law by actively litigating the matter “for over eighteen months” because the statute of limitations is a substantive defense requiring the application of Mississippi law. Id. at 25-27.

         Defendants' Rebuttal [73] maintains that Tonneson's act of declining to perform any additional appraisals cannot be found to have been an affirmative act designed to prevent the discovery of Plaintiff's claims because

[u]nder even the most charitable definition, declining to perform subsequent appraisals (which Tonnesson replied he did not have time to do) is not an affirmative act. In the first place, Mississippi law is clear that “the affirmative act must in fact be designed to prevent the discovery of the claim”. (sic) Channel v. Loyacono, 954 So.2d 415, 423 (Miss. 2007). Merely declining to do an updated appraisal is a passive act, not an affirmative one, and there is no evidence that it was designed to prevent discovery of a claim, the Plaintiff's bare assertion notwithstanding.

         Rebuttal [73] at 4 (emphasis in the original). Defendants further contend that they have not waived their statute of ...

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