Legal Alert - Utah Court of Appeals Limits Third-Party Beneficiary Contract Claims Against Appraisers, but Recognizes Tort Based Third-Party Claims
by David E. Leta
In Lilley v. JPMorgan Chase, et al, 748 UT Adv. Rpt. 48, 213 Utah App. 285, Nov. 20, 2013, the Utah Court of Appeals affirmed an order of the District Court dismissing the Plaintiffs’ breach of contract action against an appraiser who had prepared an appraisal report for the Plaintiffs’ lender in connection with a construction-to-permanent financing loan for a single family, owner occupied home. The appraisal was ordered by the lender prior to approving and funding the loan. After Plaintiffs’ defaulted on the loan, they sued the lender and the appraiser alleging that the appraiser breached his contract and was negligent in preparing an inflated appraisal, which, in turn, induced them to borrow too much for the construction of the residence.