Court Opinion

ID: 4243442
Source: CourtListenerOpinion
Date Created: 2018-02-08 17:10:15.723528+00
Date Added: 2024-06-11T14:44:21.905165
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

RESOLVE FUNDING, LLC,
Plaintiff,

v. § c.A. No. Sl7c-09-003 RFS

BUCKLEY PROPERTY SERVICES,
LLC and PAM GREER BUCKLEY,
Defendants.

MEMORANDUM OPINION
Upon Defendants’ Motion to Dismiss. Denied.

Date Submitted: December 13, 2017
Date Decided: February 7, 2018

David B. Anthony, Esq. and Sean A. Meluney, Esq., Berger Harris LLP, 1105 N. Market
Street, Suite 1100, Wilmington, Delaware 19801, Attorneys for Plaintiff.
Michael F. Duggan, Esq. and Brett T. Norton, Esq., Marks, O’Neill, O’Brien, Doherty &

Kelly, P.C., 300 Delaware Avenue, Suite 900, Wilmington, Delaware 19801, Attorneys for
Defendants.

STOKES, J.

I. INTRODUCTION

This matter is presently before the Court on the motion of Defendants, Buckley Property
Services, LLC and Pam Greer Buckley (collectively “Buckley”), for dismissal pursuant to Superior
Court Civil Rules 9(b) and l2(b)(6). The Plaintiff, Resolve Funding, LLC (“Resolve”), opposes
the Motion. F or the following reasons, Defendants’ Motion to Dismiss is DENIED.

II. FACTS

In June 2015, Best Point, LLC (“Best Point”) applied to Resolve for a loan to purchase 205
Pepper Vine Point, Dagsboro, Delaware 19939. Resolve sought a valuation of the property to
determine whether to approve the loan. Resolve engaged Buckley, a property appraisal company
specializing in residential properties located in Sussex County, to appraise the property. On June
23, 2015, Buckley delivered the appraisal to Resolve. Buckley represented that it had done the
following during the appraisal process: (1) performed a complete visual inspection of the interior
and exterior areas of the property, (2) performed the appraisal in accordance with the requirements
of the Uniform Standards of Professional Appraisal Practice (“USPAP”), (3) developed an opinion
of the market value of the property, (4) used a reliable sale comparison approach for the valuation,
(5) researched, verified, analyzed, and reported prior comparable sales, (6) selected and used
comparable sales that were locationally, physically, and functionally similar to the property, (7)
reported adjustments to the comparable sales that reflect the market’s reaction to the difference
between the property and the comparable sales, and (8) took into consideration the factors that
have an impact on value. Buckley asserted that with certain minor improvementsl the market

value of the property in June 2015 was $1,950,00.00.

 

l According to Buckley, the repairs remaining at the time of valuation were expected to cost approximately
$90,000.00. Approximately $225,000.00 had already been spent on repairs at this time. The “as-is value” of the
property was listed at $1,750,000.00. A “liquidation value” of $1,675,000,00 was also given.

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Resolve approved Best Point’s loan in the amount of $1,118,250.00. Best Point executed
and delivered the mortgage to Resolve on July 23, 2015. In January 2016, Resolve retained a real
estate broker in order to list the property for sale, as foreclosure appeared imminent. At that time,
the real estate broker estimated that the value of the property was around $l,000,000.00. On
February 5, 2016, Resolve instituted a foreclosure proceeding against Best Point. Ultimately, a
default judgment was entered in favor of Resolve for $1,610,508.84. Resolve executed the
judgment On February 24, 2017, Resolve was the highest bidder at the Sheriff’ s sale. The
property was listed on March 9, 2017. On July, 20, 2017, the property sold for $649,000.00.

On September l, 2017, Resolve filed the Complaint in this action. It alleges one count of
negligence and one count of negligent misrepresentation against Buckley. This Motion to Dismiss
is Buckley’s first responsive pleading.

III. PARTIES’ CONTENTIONS

Buckley first argues that Resolve has not pleaded facts in the Complaint sufficient to
survive Rule 9(b) scrutiny. Rule 9(b) states, “In all avennents. . .of negligence . .the circumstances
constituting...negligence...shall be stated with particularity.”2 In Buckley’s view, Resolve has
only made conclusory statements which are not supported by fact, and which fail to support the
claim of negligence According to Buckley, the facts show that Resolve “entered into a lending
market it did not understand, made underwriting mistakes, and accepted a bad borrower.”3 As part
of this argument, Buckley asserts that the appraisal was not a price guaranty and the fluctuations
in the real estate market are normal and expected. Essentially, Buckley believes that Resolve is

attempting to recover for negligence when, in reality, it simply made a bad deal.

 

2 Super. Ct. Civ. R. 9(b).
3 Defs.’ Mot. Dismiss 12.

In addition, Buckley argues that Resolve did not allege facts to support two of the elements
of negligent misrepresentation: reasonable reliance and causation. In support of this assertion
Buckley restates the arguments in the paragraph above. In short, Buckley argues that Resolve has
not pleaded the elements of either count with particularity, so the Motion to Dismiss should be
granted.

Conversely, Resolve argues that the Complaint meets the pleading requirements laid out in
Rules 9(b) and 12(b)(6).4 Resolve first points out that it did not allege that the appraisal was a
price guaranty, but that Buckley failed to provide an accurate appraisal of the property that
conformed with commercially reasonable standards Resolve further highlights that the appraisal
clearly states it is subject to the USPAP and that failure to meet those standards could incur civil
liability.

Resolve also details how each element of negligence is alleged in the Complaint. First,
Resolve argues that Buckley owed a duty of care as a result of the appraiser-client relationship
between the parties. Second, Resolve states that Buckley breached this duty in failing to confomi
to the standards laid out in USPAP. The following facts are given as support: (1) the value of the
property was grossly overstated, (2) Buckley failed to perform a proper inspection of the property,
which is evidenced by the misstatement in the appraisal that many of the repairs had already been
completed, (3) Buckley failed to be fully educated on the intricacies of the Dagsboro real estate
market, and (4) Buckley failed to use and analyze accurate sales comparisons, but rather focused
on the comparatively more expensive markets of Lewes, Rehoboth Beach, Dewey Beach, Fenwick
Island, and Ocean View. Third, Resolve asserts that it approved Best Point’s loan in reliance on

the appraisal and the representations made therein. As a result, the loan was severely under-

 

secured, which left Resolve with an unrecoverable default judgment This unrecoverable default
judgment is the basis for the damages element of a negligence claim. Thus, Resolve argues that
the Complaint pleaded all four elements of negligence with particularity; therefore, the Motion to
Dismiss should be denied.

Furthermore, Resolve asserts that it met the pleading requirements for the negligent
misrepresentation claim. Resolve states that the plaintiff need only “plead that defendant had a
pecuniary duty to provide accurate information, defendant supplied false information, defendant
failed to exercise reasonable care in obtaining or communicating the information, and he suffered
a pecuniary loss caused by justifiable reliance.”5 According to Resolve, the first element is met
because the parties entered into an appraiser-client relationship which required Buckley to provide
a fair and accurate evaluation of the property. However, in Resolve’s view, the appraisal
inaccurately valued the property because Buckley failed to take the necessary steps to ensure that
the appraisal Was in line with the USPAP standards, satisfying the second and third elements of
the claim. Finally, Resolve states that it suffered a large pecuniary loss as a result of the under-
secured loan and resultant unenforceable default judgment. Resolve argues that all elements of
the negligent misrepresentation claim have been alleged with particularity; thus, the Motion to
Dismiss should be denied.

IV. STANDARD OF REVIEW

The standard of review to be applied in a motion to dismiss pursuant to Rule 12(b)(6) and
Rule 9 is discussed in Doe 30 ’S Mother v. Bradley:

When considering a motion to dismiss, the Court must read the complaint

generously, accept all of the well-pled allegations contained therein as true, and

draw all reasonable inferences in the light most favorable to the non-moving party.

A complaint is well-pled if it puts the opposing party on notice of the claim being
brought against it. “Dismissal is inappropriate unless the ‘plaintiff would not be

 

5 Pl.’s Answering Br. Opp’n Defs.’ Mot. Dismiss 18.

entitled to recover under any reasonably conceivable set of circumstances

susceptible of proof.”’ When the complaint includes claims of negli gence, the Court

must take into account Delaware Superior Court Civil Rule 9(b), which requires the

plaintiff to plead allegations of negligence with particularityl The underlying

purpose of Rule 9(b) is to ensure that the defendant is notified of the “acts or
omissions by which it is alleged that a duty has been violated in order to enable the
preparation of a defense.” “To satisfy this purpose, ‘it is usually necessary to allege

only sufficient facts out of which a duty is implied and a general averment of failure

to discharge that duty.”’6

V. ANALYSIS

The Court must determine whether the Complaint placed Buckley on notice of the claims
brought and provided Buckley with sufficient facts surrounding the negligence claims to mount a
defense. Taking all of the facts pled in the Complaint as true and drawing all inferences in the
light most favorable to Resolve, it is clear that Resolve has stated a claim upon which relief can be
granted. Additionally, the allegations of negligence and negligent misrepresentation have been
pleaded with particularity.

A detailed factual background is provided in the Complaint. The Complaint sets out that
Buckley and Resolve entered into an appraiser-client relationship and that Buckley was to perform
an evaluation of the Dagsboro property. Next, Resolve details the ways in which the duty that
arose from the appraiser-client relationship was breached. Some of the factual allegations include:
Buckley’s failure to comply with commercially reasonable standards, failure to provide an accurate
market valuation for the property, failure to use and analyze appropriate comparable sales, failure
to conduct a proper inspection of the property, failure to be fully informed on the intricacies of the

local market, failure to use reasonable care in preparation of the appraisal, and failure to conform

with uniform professional standards set out in the USPAP and by statute.7 Resolve’s final

 

6 Doe 30 ’s Mother v. Bradley, 58 A.3d 429, 444 (Del. Super. Ct. 2012) (internal citations omitted).
7 The Court notes that the Complaint cites 24 Del. C. § 2912 as the applicable statutory provision; however, this
appears to be in error. The applicable provisions are found in Chapter 40 of Title 24 of the Delaware Code.

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averment is that it relied upon the negligently prepared appraisal when it approved Best Point’s
loan. As a result, Resolve suffered significant financial losses.

ln Brown v. lnterbay Funding, LLC, the Court lists the elements necessary to establish a
claim for professional negligence: “plaintiffs must demonstrate that: (1) a defendant owed
plaintiff a duty of care; (2) the defendant breached that duty; and (3) the defendant’s breach was
the proximate cause of plaintiffs’ injury.”8 From the facts detailed above, it appears that all three
elements have been pleaded with particularity. Thus, the facts given in the Complaint satisfy the
purpose of Rule 9(b), to show the defendant what duty was owed and the ways in which it was
breached. Count I of the Complaint survives.

Furthermore, the Complaint adequately laid out the claim for negligent misrepresentation
The elements of a negligent misrepresentation claim are discussed in Outa’oor Technologies, Inc.
v. Allfz`rst Financial, Inc. The Court wrote:

In order to sustain a claim for negligent misrepresentation under Delaware law,

plaintiffs must prove (1) a pecuniary duty to provide accurate information, (2) the

supplying of false information, (3) failure to exercise reasonable care in obtaining

or communicating information, and (4) a pecuniary loss caused by justifiable

reliance upon the false information If plaintiffs fail to prove any of the four

required elements, their claim for negligent misrepresentation must fail.9

Taking all of the facts pleaded in the Complaint as true, Resolve has met the Rule l2(b)(6)
and Rule 9(b) burdens.10 It is clear that the parties entered into a business relationship and that
Buckley had a pecuniary duty to provide accurate information in the appraisal. Moreover,

assuming that Resolves contentions are correct, Buckley supplied false information in the appraisal

because it did not exercise reasonable care in evaluating the property. Finally, Resolve suffered a

 

x Brown v. Interbay Funa'ing, LLC, 417 F. Supp. 2d 573, 579 (D. Del. 2006).

9 Outdoor Technologies, Inc. v. Allfirst Fimmcial, Inc., 2000 WL 141275, at *4 (Del. Super. Ct. Jan. 24, 2000).

10 Given that Rule 9(b) sets out a higher standard than Rule 12(b)(6), it logically follows that an allegation satisfying
Rule 9(b) also satisfies Rule 12(b)(6).

pecuniary loss as a result of its reliance on the appraisal Thus, Resolve has pleaded the claim of
negligent misrepresentation with particularity, so Count II of the Complaint survives.
VI. CONCLUSION
The Complaint properly states claims for which relief can be granted and alleges the counts
of negligence and negligent misrepresentation With particularity. Therefore, Defendants’ Motion
to Dismiss is DENIED.

IT IS SO ORDERED.