Opinion ID: 170014
Heading Depth: 3
Heading Rank: 3

Heading: Year 6 APOV Predictions:

Text: In its Assessment of Building Vacancy, Healthcare Realty provided figures for the Net Rental Income in the first five years of the project as a function of the amount of the building rented. App. 510. In the two lines representing 94.5% and 95.6% occupancy, the ABV assumes that net rental income would increase about 2.5% annually for the first five years. Mysteriously, the Year 6 calculation in the APOA assumed an increase of approximately 7.9% over the net rental income reported for Year 5 in the ABV. Neither document explicitly notes this underlying change; the assumption is buried in the arithmetic. This assumption of a sudden increase in income allowed Healthcare Realty to estimate a surplus, rather than a deficit, for the project in Year 6. If Healthcare Realty had continued to apply the 2.5% increase for the sixth year, it would have predicted a shortfall of more than $70,000. The Hospital claims that Healthcare Realty's unexplained prediction of a bubble was without foundation and therefore negligent, or even fraudulent. The district court dismissed this claim on the ground that the two charts were projections and calculated opinions, rather than statements of existing or cognizable fact. App. 737. However, as discussed above, under Wyoming law, when an expert projects figures based on underlying data, he must use reasonable care and competence in selecting the data. Memorial Hospital claims that in fact, Healthcare Realty's estimates of the rental rates were tied to the [Consumer Price Index] Aplt's Br. at 12, which would make the 7.9% estimated increase false. Indeed, in a later memorandum concerning the 10-year lease of one of the building's tenants, Healthcare Realty explicitly predicted the revenue from that lease to increase at CPI annually. App. 648. A reasonable jury could infer from this record that Healthcare Realty estimated the Year 6 increase in the building's revenue at one amount while reporting it as another, and thus conveyed false information. At oral argument, Healthcare Realty said that it typically expects a jump in rate increases sometime between the fifth and eighth year because the first leases in a new building must be low in order to attract tenants, and those leases are five to eight years long. If this claim makes its way into the record and proves to be true, it might rebut the Hospital's allegation that the 7.9% increase was a negligent misrepresentation. But that is an issue to be established at trial. On this record, a reasonable jury could infer that the 7.9% increase was false and chosen without reasonable care, so material issues of fact on this point preclude summary judgment.