United States: Fox Litigation Team Wins Precedential Property Appraisal Claim
Last Updated: May 24 2016

A team of Fox Rothschild LLP litigation attorneys secured a significant victory for property appraisers in a published decision that will strictly limit the time to bring professional negligence claims.

Minnesota courts follow the "some damage" rule on professional negligence claims, holding that the statute of limitations begins to run as soon as the plaintiff has suffered some damage and could bring a claim that could survive a motion to dismiss. In the recent decision in Veit v. ProSource Technologies et al., the Fox Rothschild team, led by Aaron Mills Scott, Patrick M. Fenlon and Peter D. Stiteler, successfully argued that when the "some damage" rule is applied to appraisals, the six-year statute of limitations begins to run as soon as the appraisal is completed.

In the case, a property appraisal was completed in 2006 for the purpose of valuing it for charitable donation. Upon competition of the appraisal, the owner donated the property as planned. Several years later, the IRS took the position that the appraisal was not "qualified" and that it could not support the owner's claimed charitable contribution tax deduction. The IRS imposed additional tax, penalties and interest.

By the time the owner commenced an action asserting claims stemming from the allegedly negligent appraisal, more than six years had elapsed since the appraisal was completed and delivered. The Fox team moved for summary judgment on the grounds that the claim was barred by the statute of limitations. The district court granted that motion, agreeing that "some damage" occurred when the appraisal was completed—even if the exact amount of that damages was not yet fully known—and thus the action was commenced too late.

On appeal to the Minnesota Court of Appeals, the three-judge panel upheld the district court's dismissal. In doing so, the appellate court expressly held, for the first time in a published Minnesota decision, that the statute of limitations on a claim alleging that a property appraisal was negligently prepared begins to run at the time the appraisal is completed.

The ruling provides greater certainty for appraisers in Minnesota and their insurers that they should not face lawsuits for appraisals completed more than six years ago.

Scott, a partner with the firm, focuses his practice on disputes arising from complex contracts and commercial transactions, as well as professional negligence, trademark, and brand protection matters.

Fenlon, a partner with the firm, is a business litigator whose practice centers on insurance coverage litigation, class-action and multiparty lawsuits and business disputes involving breach of contract, unfair competition and other business torts.

Stiteler, an associate with the firm, advises clients in a wide range of complex business and commercial disputes.

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