[No. 58679-3-I. Division One. July 16, 2007.]
[1] Judgment Summary Judgment Burden on Nonmoving Party Averment of Specific Facts Necessity. Once a party moving for a summary judgment under CR 56 establishes the absence of any genuine issue of material fact and an entitlement to judgment as a matter of law, the burden shifts to the nonmoving party to set forth specific facts giving rise to a genuine issue of material fact for trial. [2] Judgment Summary Judgment Determination Interpretation of Facts. When deciding a motion for summary judgment, a court must consider the facts submitted and the reasonable inferences from those facts in the light most favorable to the nonmoving party. [3] Judgment Summary Judgment Review Standard of Review. An appellate court reviews the facts and law with respect to a summary judgment de novo. [4] Negligence Misrepresentation Elements of Tort In General. One who, in the course of his or her business, profession, or employment, supplies false information for the guidance of others in their business transactions and fails to exercise reasonable care in obtaining or communicating the information can be liable for a pecuniary loss caused by justifiable reliance on the information. [5] Vendor and Purchaser Appraiser Duty of Care Purchaser of Property Lack of Privity Effect. An appraiser hired by a bank may owe a duty of care to a prospective purchaser of residential real property despite a lack of privity between the appraiser and the purchaser. [6] Negligence Misrepresentation Elements of Tort Reliance Necessity. A claim of negligent misrepresentation will not lie absent justifiable reliance on the alleged misrepresentation. [7] Vendor and Purchaser Appraiser Duty of Care Purchaser of Property Negligent Misrepresentation Reliance Necessity. An appraiser hired by a bank to appraise the value of residential real property cannot be liable to a purchaser of the property if the purchaser did not justifiably rely on the appraisal report in deciding to purchase the property. There was no justifiable reliance if the purchaser did not see the appraisal report before purchasing the property. [8] Judgment Summary Judgment Burden on Nonmoving Party Averment of Specific Facts Deposition Testimony Self-Serving Affidavit. When a party's own clear answers to unambiguous deposition questions negate the existence of any genuine issue of material fact, the party cannot thereafter establish the existence of a factual dispute on the basis of an affidavit that merely contradicts, without explanation, the previously given clear testimony. [9] Consumer Protection Action for Damages Elements. The elements of a private action for damages under the Consumer Protection Act (chapter 19.86 RCW) are (1) an unfair or deceptive act or practice, (2) occurring in trade or commerce, (3) affecting the public interest, (4) injury to the plaintiff's business or property, and (5) causation. [10] Consumer Protection Action for Damages Unfair or Deceptive Conduct What Constitutes Matter of Material Importance. A practice is not "deceptive" under the Consumer Protection Act (chapter 19.86 RCW) unless it misleads or misrepresents something of material importance. [11] Consumer Protection Statutory Provisions Purposes. Under RCW 19.86.920, the purpose of the Consumer Protection Act (chapter 19.86 RCW) is to complement the body of federal law governing restraints of trade, unfair competition, and unfair, deceptive, and fraudulent acts or practices in order to protect the public and foster fair and honest competition. [12] Consumer Protection Professional Practice Entrepreneurial Aspects What Constitutes. The Consumer Protection Act (chapter 19.86 RCW) applies only to the entrepreneurial or commercial aspects of a professional practice, not to the substantive quality of the services provided. Entrepreneurial aspects include how the cost of services is determined, billed, and collected and the way a professional obtains, retains, and dismisses clients. Claims directed at the competence of and strategies employed by a professional amount to allegations of negligence and are exempt from the act. [13] Consumer Protection Professional Practice Scope Malpractice Appraiser's Report. A complaint targeted at an alleged inadequacy in an appraisal report but that does not implicate an entrepreneurial aspect of the appraiser's business states a claim in negligence and is not actionable as a violation of the Consumer Protection Act (chapter 19.86 RCW). [14] Property Appraisal Duty to Third Parties Fiduciary Duty Contractual Relationship Necessity. An appraiser does not owe a fiduciary duty to a person who is not a party to the appraisal contract. [15] Contracts Third Party Beneficiaries Elements Intent Necessity. The parties to a contract must intend that the promisor assume a direct obligation to a third party at the time the agreement is made in order for the third party to qualify as a third party beneficiary of the contract. The test of intent is an objective one. The key is whether performance of the contract would necessarily and directly benefit the party claiming to be a third party beneficiary. [16] Vendor and Purchaser Appraiser Hired by Lender Purchaser as Third Party Beneficiary Factors. A purchaser of residential real property is not a third party beneficiary of a contract between the purchaser's lending bank and an appraiser of the property, even if the appraisal report identifies the purchaser as a potential borrower, if (1) nothing in the report indicates that the appraiser and the bank intended for the appraiser to assume a direct obligation to the purchaser and (2) the purchaser would not necessarily benefit from the terms of the contract between the appraiser and the bank. Nature of Action: The purchasers of residential real property sought damages from their bank's appraiser for breach of contract, negligence, and violation of the Consumer Protection Act based on a claim that the appraiser failed to note in the appraisal report a sagging portion of the ceiling in the house that failed shortly after they moved into the house. Superior Court: The Superior Court for Snohomish County, No. 02-2-10085-4, David A. Kurtz, J., on July 14, 2006, entered summary judgment in favor of the appraiser. Court of Appeals: Holding that the negligence actions failed for want of justifiable reliance and that the record did not support the breach of contract or Consumer Protection Act causes of action, the court affirms the judgment. Shawn G. Hart-, for appellants. Gregory S. Petrie- (of Krutch Lindell), for respondents. Ά1 BECKER, J. An appraiser may be liable to a home purchaser for negligent misrepresentations in an appraisal report if the purchaser can demonstrate reliance on the report. Because appellants failed to establish reliance, their claims against the appraiser were properly dismissed on summary judgment. Ά2 The Ramos family purchased a home in Lynnwood in 2001. Before making an offer, they noticed that a three-foot portion of the hallway ceiling was sagging. They questioned their real estate agent about this defect and the agent stated that it was likely a "PUD [public utility district] package," Ά3 Their purchase of the property was conditioned on a satisfactory home inspection. The main deficiencies identified in the report of the inspector selected by the Ramoses were that the dishwasher was not working and the roof was in "very poor condition with decay under the trees and missing shakes on the south faces and east face." Ά4 After the inspection, the Ramoses waived the contingencies and proceeded with the purchase. To finance the home, they applied for a loan through Washington Mutual Bank. The bank hired Debbie Arnold from Arnold Appraisal Services to appraise the property. Arnold conducted a visual inspection of both the inside and exterior of the home in order to estimate the market value of the property. Arnold noted that some moss had collected on the roof, but she did not report noticing any apparent defects either inside or outside the home. She submitted her appraisal report to Washington Mutual on October 5, 2001. During the appraisal process, Arnold did not communicate with the Ramos family and she did not send a copy of the appraisal to them. Karina Ramos-Gunn testified during her deposition that she did not have any contact with Arnold and had not seen the appraisal report. Ά5 The sale of the home closed on October 15, 2001. Several days after the Ramos family moved in, the roof began leaking during a storm. Water damaged the roof and ceiling and caused mold growth. The ceiling started crumbling and material containing asbestos fell into the house, causing respiratory illness in Karina and the two children. Inspection of the hole in the roof led to discovery of a nest of carpenter ants. The Ramoses began to make costly repairs on the home to make it habitable. They filed a claim under their homeowner's insurance policy. A letter from their insurance provider indicates that their claim for water damage was paid for, but their claim for mold damage was rejected in July 2002. Ά6 The Ramoses filed this lawsuit in Snohomish County Superior Court in January 2003 against several defendants. Their action against Debbie Arnold and her appraisal company alleged breach of contract, negligence in conducting the appraisal, and violation of the Consumer Protection Act, chapter 19.86 RCW. The Ramoses claimed that Arnold was negligent by failing to note the sagging portion of the ceiling in her appraisal report. Arnold moved for summary judgment in June 2006. Arnold contended that summary judgment was appropriate because the Ramoses were actually aware of the sagging ceiling before purchasing the home. In a declaration, Arnold stated that she did not notice the sagging ceiling while conducting the appraisal inspection. She also argued that the Ramoses could not show that they had relied on the report. Ά7 In response, the Ramoses claimed that "Debbie Arnold did not inspect the interior of the residence and stated in her report that she did, or in the alternative, she inspected the interior and failed to identify major defects affecting the value of the residence." I wanted to know the effect of the condition of the Residence on the value of the residence, so prior to making the decision to take out the home loan with Washington Mutual Bank, I reviewed the contents of the appraisal with Mike McPherson, loan officer of Washington Mutual Bank. I relied on the appraisal to know the value of the Residence and the appraisal did not discuss the condition of the sagging ceiling or effect of the sagging ceiling or several other conditions on the value of the Residence. This statement contradicted her deposition testimony in 2003: [MR. PETRIE]: So, your claim is that shethe appraiserdid not inspect the interior of the house, but represented in her appraisal that she did; correct? MR. HART: I'm going to object [KARINA RAMOS-GUNN]: I don't know; I haven't seen it. Q. (BY MR. PETRIE) You haven't seen the appraisal? [KARINA RAMOS-GUNN]: No, I have not. Ά8 The court granted summary judgment on July 14, 2006. This appeal followed. Ά10 The Ramoses argue that they have set forth evidence raising a material issue of fact as to all the elements of negligenceduty, breach, causation, and damages. Arnold responds that in the absence of contractual privity, a claim by a home purchaser against an appraiser must prove the elements of negligent representation, including reliance. (1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. (2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. Ά12 Although the court concluded that the appraiser owed Schaaf a duty of care, the court affirmed the trial court's dismissal of the case on summary judgment because Schaaf had not demonstrated justifiable reliance on the appraisal report. "As Schaaf already knew before he bought the house that it needed a new roof, he simply cannot blame the appraiser for failing to report the roof needed repair." Schaaf, 127 Wn.2d at 30. Lack of reliance on the appraisal report barred Schaaf's claim. Ά13 Under Schaaf, if the Ramoses did not see the appraisal report before they purchased the home, they could not have relied on it. Karina's declaration states that she "reviewed the contents" CONSUMER PROTECTION ACT Ά15 The Ramoses contend that Arnold committed an unfair or deceptive act by failing "to include major defects in the residence in the appraisal report which kept the paperwork 'clean' on the residence, prevented further investigation, and caused the Ramoses to enter into the purchase and sale agreement for the residence." CONTRACT CLAIM Ά20 Affirmed. BAKER and DWYER, JJ., concur.