DECISION ORDER ON MOTION The Court held oral argument via Microsoft Teams on January 28, 2021 on this pre answer motion by defendant to dismiss all claims asserted against it in the Complaint (NYSCEF Doc. No. 4) pursuant to CPLR 3211(a)(1),(3) and (7) based on documentary evidence, lack of standing to sue, and failure to state a cause of action. In accordance with the decision on the record on January 28, the Court dismissed the Third Cause of Action alleging discriminatory practices, the Fourth Cause of Action alleging deceptive acts and practices, the Fifth Cause of Action alleging unjust enrichment, and the Sixth Cause of Action alleging breach of contract. The Court reserved decision on the First and Second Causes of Action alleging negligence and gross negligence, respectively, to allow for the review of certain cases cited by counsel during the argument. While the Court well understands plaintiff’s predicament and continues to urge plaintiff to negotiate with its lender, based on the case law cited by the parties in their papers and at argument, this Court is compelled to dismiss the First and Second Causes of Action. Plaintiff in this action, MAve Hotel Investors LLC (“MAve”), is the owner of a hotel in Manhattan and a borrower of funds pursuant to an agreement with nonparty LNR Partners, LLC (“LNR”), a special loan servicer to Wells Fargo Bank, N.A., a master loan servicer to U.S. Bank National Association, the current holder of plaintiff’s loan. LNR retained defendant TS Worldwide, LLC d/b/a HVS Consulting & Valuation Division of TS Worldwide, LLC (“HVS”) to conduct an appraisal of the property to assist LNR in determining whether MAve needed additional security to maintain the loan-to-value ratio for the loan. MAve commenced this action against HVS, alleging that HVS had undervalued the property based on unfounded assumptions the appraiser had made, without supporting evidence, based on the use of the property in part as a residence for homeless guests. As the courts have repeatedly held: “The existence of a legal duty is, of course, an essential element of any negligence claim.” Friedman v. Anderson, 23 AD3d 163, 165 (1st Dep’t 2005), citing Shante D.. City of New York, 190 AD2d 356, 361 (1st Dep’t 1993), affd. 83 NY2d 948 (1994). As this Court found on the record, HVS does not owe MAve any contractual duty under the contract between HVS and the lender LNR because MAve is neither a party to that contract nor a third-party beneficiary. The sole purpose of the appraisal was to provide information to LNR in its evaluation of the security that MAve had provided for the loan. Nor is there a common law duty. HVS in its motion cited two cases lending strong support for this conclusion. In Rotunno v. Stiles, 7 AD3d 504 (2d Dep’t 2004), the court held that the defendant appraiser evaluating a property for a nonparty lender during a purchase and sale did not owe a duty to the plaintiff loan applicant purchaser. Similarly, in Edelman v. O’Toole Ewald Art Assoc, Inc., 28 AD3d 250, 251 (1st Dep’t 2006), the court held that an appraiser retained by an insurer to evaluate damage to a painting in connection with a claim by the insured plaintiff did not owe a duty to the insured, as there was no “linkage” between the appraiser and the insured. The same rationale applies in this case. Because HVS was hired by the lender LNR to complete an appraisal to assist LNR, HVS owes no duty to the borrower MAve. The cases cited by MAve do not provide otherwise. MAve’s reliance on Glanzer v. Shepard, 233 NY 236, 238-239 (1922), is misplaced, as there the defendant’s certification of the weight of the beans was “the end and aim of the transaction” for the purchase and sale of beans at a price based on weight. In contrast here, the appraisal was not the end and aim of the loan transaction but simply provided information to the lender in determining whether additional security was needed on the loan. The various other cases cited by MAve, such as Chemical Bank v. National Union Fire Ins. Co of Pittsburgh, PA., 74 AD2d 786 (1st Dep’t 1980), Rodin Props Shore Mall v. Ullman, 264 AD2d 367 (1st Dep’t 1999), and Guildhall Ins. Co., Ltd. v. O’Boyle, 688 F. Supp 910 (SDNY 1988), are all distinguishable on the ground that the plaintiff in each of those cases had retained or was directly relying on the defendant’s appraisal in determining how to proceed with the transaction. In contrast here, plaintiff MAve did not retain the appraiser. The appraiser was retained by the nonparty lender LNR for LNR’s own purposes, and it was LNR who was directly relying on the appraisal to make decisions about security related to the loan. Accordingly, for the reasons stated on the record on January 28, 2021, as supplemented herein, it is hereby ORDERED that plaintiff’s motion to dismiss is granted in its entirety, and the Clerk is directed to enter judgment dismissing this action with prejudice. CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION X GRANTED DENIED GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE Dated: January 29, 2021
