Tuesday, February 21, 2012

Update: Gibson v. Credit Suisse, Cushman & Wakefield and a New Case -- Blixseth v. Cushman & Wakefield

We've written here previously about what is the biggest case against appraisers in terms of alleged damages.  That case is Gibson, et al. v. Credit Suisse, Cushman & Wakefield, et al.  The case is a reflection for appraisers about what is happening in the courts to their profession -- liabilities being pushed on them as the result of an epidemic of buyer's and lender's remorse, appraisal reviews being used as a tool against appraisers who delivered appraisals in the bubble years, appraisers testifying against each other for profit.  The Gibson case is merely the billion dollar version of hundreds of smaller actions against other appraisers, both residential and commercial.

Cushman & Wakefield has been trying to get the case dismissed for the last 18 months with motions to dismiss based on principles no different than would be asserted by a residential appraiser in a much smaller action. 
The latest report here from the Magistrate Judge with recommendations for a ruling on Cushman & Wakefield's motion to dismiss the plaintiffs' third amended complaint isn't going to give the appraisers at that firm any feeling of relief.  The Magistrate Judge has suggested that most claims go forward toward trial, including the critical negligence claims.  To be sure, the ruling hints at skepticism about the merits of the claims but the problem for Cushman & Wakefield is unpredictably if the case heads toward a possible jury trial in Idaho. 

The bad news does not stop there for Cushman & Wakefield.  On February 14, Tim Blixseth, the developer of one of the resorts at issue in the Gibson case, filed a new, separate lawsuit in federal court in Colorado.  This case alleges fraud, negligence and other claims relating to the appraisal work performed by Cushman & Wakefield for a $375 million loan by Credit Suisse secured by the Yellowstone Club. Blixseth's complaint, like the plaintiffs' complaint in the Gibson case, is a wide-ranging diatribe.  If I summarized the factual and legal allegations, it would only make them sound more sensible than they are.  Thus, I won't. 

We have recently written several pieces about statutes of limitations relating to claims against appraisers.  One is available on readimember.org (registration limited and required) and another will be published in the 1st Quarter issue of Valuation.  I expect the new case filed against Cushman & Wakefield will see substantial legal argument about statutes of limitations -- given that the appraisal work at issue and its alleged deficiencies have been public and the subject of other litigation for several years now.  The developer Blixseth may be too late to the party with this latest filing.