Case 2:12-cv-00893-GMN-NJK Document 87 Filed 09/15/14 Page 1 of 15
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`UNITED STATES DISTRICT COURT
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`DISTRICT OF NEVADA
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`Case No.: 2:12-cv-00893-GMN-NJK
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`ORDER
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`Martin S. Rood,
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`Plaintiff,
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`vs.
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`Arthur F. Nelson; Don Foster Scoggins; Jack
`P. Gillespie; and Appraisers of Las Vegas,
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`Defendants.
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`Pending before the Court is a Motion for Summary Judgment, (ECF No. 40), filed by
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`Plaintiff Martin S. Rood on August 20, 2013, and a Counter Motion for Summary Judgment,
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`(ECF No. 48), filed by Defendant Jack P. Gillespie on September 18, 2013. Plaintiff
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`subsequently filed his Response to Defendant Gillespie’s Motion, (ECF No. 50), on October
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`15, 2013, and Defendant Gillespie filed his Reply, (ECF. No. 55), on November 1, 2013.
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`I.
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`BACKGROUND
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`On May 25, 2012, Plaintiff filed the instant action against Defendants Arthur F. Nelson,
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`Don Foster Scoggins, Jack P. Gillespie, and Appraisers of Las Vegas (“ALV”) (collectively,
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`“Defendants”), alleging claims for negligence and professional malpractice arising out of a real
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`estate appraisal (“the Appraisal”) prepared by Defendants in August 2006 for two contiguous
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`parcels of property located in Las Vegas, Nevada (“the Property”). (Am. Compl., ECF No. 17.)
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`Plaintiff alleges that the Appraisal was commissioned in 2006 by Gary Ryno, principal
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`of Hallock Ryno Investments, Inc. (“HRI”), and was subsequently featured within a Specific
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`Offering Circular distributed by HRI to solicit investors for shares of HRI’s interest in the
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`$1,600,000 mortgage loan HRI had issued to the owner of the Property, Cielo Vista, LLC.
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`(Rood Aff., 2:¶¶4-6, Ex. A to Pl.’s Mot., ECF No. 40-1.) Plaintiff alleges that he relied on the
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`Case 2:12-cv-00893-GMN-NJK Document 87 Filed 09/15/14 Page 2 of 15
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`Appraisal’s conclusion that the property had a value of $5,490,000 when he invested
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`$800,000.00 to acquire a 50% interest in the Cielo Vista loan in 2007. (Id. at 2:¶¶6-8.)
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`The publicly recorded documents submitted to the Court indicate that in June 2009 the
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`property was sold at a Trustee’s Sale after Cielo Vista, LLC defaulted on the loan. (See
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`Trustee’s Deed Upon Sale, Ex. H to Pl.’s Mot., ECF No. 40-5.) At that time, Plaintiff
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`maintained his 50% interest; HRI owned a 32.8125% interest; and the remaining investors,
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`including Gary Ryno, owned interests between 1.5% and 3.1%. (Id.) At the Trustee’s Sale,
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`Plaintiff, HRI, and the remaining investors purchased the property for $1,200,000 in
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`satisfaction of the loan. (Id.)
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`Plaintiff alleges that HRI was subsequently “taken over by a receiver.” (Rood Aff. at
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`3:¶¶12-13.) In June 2010, the court-appointed receiver conveyed HRI’s interest by quitclaim
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`deed to Regal Financial Bank for no monetary consideration. (See Quitclaim Deed, Ex. I to
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`Pl.’s Mot., ECF No. 40-5.) Plaintiff alleges that he recovered only $153,000 of his $800,000
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`investment when Regal Financial Bank sold the property for $330,000 in February 2012. (Rood
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`Aff. at 3:¶14.)
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`Plaintiff alleges that the actual value of the property as of the date of the Appraisal was
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`$2,260,000, and claims that if he had known this at the time, he would not have invested in the
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`Cielo Vista Loan. (Id. at 3:¶¶10-11.)
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`On December 30, 2013, the Court ordered that default be entered as to Defendants
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`Nelson and Scoggins, as both failed to answer, respond, or otherwise appear in this action after
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`process was properly served upon them. (ECF No. 57.) At that time, the Court declined to
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`order that default be entered as to Defendant ALV based on uncertainty as to whether Plaintiff
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`had properly effected service. (Id.) To date, Defendant ALV has not made any filings or
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`appearances in this action.
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`/ / /
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`Case 2:12-cv-00893-GMN-NJK Document 87 Filed 09/15/14 Page 3 of 15
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`II.
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`LEGAL STANDARD
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`The Federal Rules of Civil Procedure provide for summary adjudication when the
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`pleadings, depositions, answers to interrogatories, and admissions on file, together with the
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`affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant
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`is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those that
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`may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
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`(1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable
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`jury to return a verdict for the nonmoving party. See id. “Summary judgment is inappropriate if
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`reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict
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`in the nonmoving party’s favor.” Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th
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`Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103–04 (9th Cir. 1999)). A
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`principal purpose of summary judgment is “to isolate and dispose of factually unsupported
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`claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).
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`In determining summary judgment, a court applies a burden-shifting analysis. “When
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`the party moving for summary judgment would bear the burden of proof at trial, it must come
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`forward with evidence which would entitle it to a directed verdict if the evidence went
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`uncontroverted at trial. In such a case, the moving party has the initial burden of establishing
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`the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp.
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`Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted).
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`In contrast, when the nonmoving party bears the burden of proving the claim or defense,
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`the moving party can meet its burden in two ways: (1) by presenting evidence to negate an
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`essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving
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`party failed to make a showing sufficient to establish an element essential to that party’s case
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`on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–
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`24. If the moving party fails to meet its initial burden, summary judgment must be denied and
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`Case 2:12-cv-00893-GMN-NJK Document 87 Filed 09/15/14 Page 4 of 15
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`the court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co.,
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`398 U.S. 144, 159–60 (1970).
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`If the moving party satisfies its initial burden, the burden then shifts to the opposing
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`party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v.
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`Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute,
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`the opposing party need not establish a material issue of fact conclusively in its favor. It is
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`sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the
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`parties’ differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors
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`Ass’n, 809 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid
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`summary judgment by relying solely on conclusory allegations that are unsupported by factual
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`data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go
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`beyond the assertions and allegations of the pleadings and set forth specific facts by producing
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`competent evidence that shows a genuine issue for trial. See Celotex Corp., 477 U.S. at 324.
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`At summary judgment, a court’s function is not to weigh the evidence and determine the
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`truth but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249.
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`The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn
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`in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is
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`not significantly probative, summary judgment may be granted. See id. at 249–50.
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`III. DISCUSSION
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`As an initial matter, the Court finds it necessary to construe Plaintiff’s first claim for
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`relief pursuant to Nevada law. While the Amended Complaint describes this as a claim for
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`“negligence,” (Am. Compl. 4:20, ECF No. 17), Plaintiff’s Motion discusses the elements of
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`both professional negligence and the separate but related tort of negligent misrepresentation.
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`(See Pl.’s Mot. 9:2-10:2, ECF No. 40.) An examination of Nevada precedent reveals that
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`negligent misrepresentation is the proper vehicle for claims, such as Plaintiff’s, seeking
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`Case 2:12-cv-00893-GMN-NJK Document 87 Filed 09/15/14 Page 5 of 15
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`recovery for damages caused by reliance on a false appraisal whose creator failed to exercise
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`reasonable care. See Goodrich & Pennington Mortgage Fund, Inc. v. J.R. Woolard, Inc., 101
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`P.3d 792, 793-95 (Nev. 2004). Accordingly, the Court will construe Plaintiff’s first cause of
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`action as seeking recovery under a theory of negligent misrepresentation.
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`A. Defendant Gillespie’s Motion for Summary Judgment
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`Defendant Gillespie argues that summary judgment in his favor is warranted because:
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`(1) Plaintiff’s claims are barred by the applicable statute of limitations; (2) Plaintiff has failed
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`to produce evidence demonstrating that his reliance on the Appraisal was foreseeable; and (3)
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`that the economic loss doctrine bars recovery under the causes of action set forth in the
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`Amended Complaint. The Court will address each of these arguments in turn.
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`1. Statute of Limitations
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`Defendant first argues that this action is barred by the relevant statute of limitations,
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`because six years elapsed between the time Plaintiff first viewed the Appraisal and the filing of
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`the instant action. (Def.’s Mot. 8:16-28, ECF No. 47.) Indeed, claims for negligent
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`misrepresentation are subject to a three-year statute of limitations under Nevada law. Kancilia
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`v. Claymore & Dirk Ltd. P'ship, 2014 WL 3731862, at *1 (Nev. 2014) (citing Nevada State
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`Bank v. Jamison Family P'ship, 801 P.2d 1377, 1382 (Nev. 1990)). Similarly, as Plaintiff’s
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`claim for professional malpractice is based on alleged mistakes in the Appraisal, a three-year
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`limitation period applies to this claim as well. See Millspaugh v. Millspaugh, 611 P.2d 201, 202
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`(Nev. 1980) (holding that a three-year limitations period applies to all actions grounded in fraud
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`or mistake under Nevada law).
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`However, Defendant Gillespie fails to consider that the statute of limitations regarding
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`these claims began running, not at the moment that Plaintiff first set eyes upon the Appraisal,
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`but instead “upon [Plaintiff’s] discovery of the facts constituting the fraud or mistake.” See
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`Nev. Rev. Stat. § 11.190(3)(d). Plaintiff claims, and Defendant Gillespie does not dispute, that
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`Plaintiff did not become aware of the mistakes in the Appraisal until the Property was sold on
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`June 17, 2009. Because Plaintiff filed this action on May 25, 2012, less than three years after
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`he discovered the facts giving rise to his claims, this case was properly filed within the
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`limitation period. Accordingly, the Court finds that summary judgment is not warranted on this
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`ground.
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`2. Foreseeability of Reliance
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`Next, Defendant Gillespie argues that he is entitled to summary judgment because
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`Plaintiff’s reliance on the Appraisal was not foreseeable. Under Nevada law, a plaintiff may
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`recover for negligent misrepresentation only if he is “the person or one of a limited group of
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`persons for whose benefit and guidance [the defendant] intend[ed] to supply the information or
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`kn[ew] that the [original] recipient intend[ed] to supply it.” Copper Sands Homeowners Ass'n.
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`Inc. v. Copper Sands Realty, LLC, 2:10-cv-00510, 2012 WL 987996, at *4 (D. Nev. Mar. 20,
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`2012); Restatement (Second) of Torts § 552 (1977). Defendant Gillespie claims that at the time
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`he finished his work for the Appraisal on August 28, 2006, Gary Ryno had not mentioned that
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`the Appraisal would be sent to potential investors. Gillespie further alleges that on October 11,
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`2006, Defendant Scoggins gave consent for the Appraisal to be used “as part of a real estate
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`securities offering” without Gillespie’s knowledge or consent. (Def.’s Mot. 9:12-16, ECF No.
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`48.) Notably, Defendant Gillespie fails to indicate what he believed the purpose and intended
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`use of the Appraisal were prior to this “unilateral change.”
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`Nevertheless, Defendant Gillespie’s self-serving narrative is belied by Gary Ryno’s
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`August 15, 2006, letter that initially commissioned the Appraisal. This letter states that the
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`Appraisal would be “used in [HRI]’s Specific Offering Circular.” (Ex. E to Pl.’s Mot. 42-43,
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`ECF No. 40-3.) Despite this clarity, Defendant Gillespie still manages to feign surprise that the
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`Appraisal was subsequently included in HRI’s Specific Offering Circular, which was
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`distributed on November 28, 2006. (Ex. D to Pl.’s Mot., ECF No. 40-1.) Plaintiff received the
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`very same Specific Offering Circular, which solicited the investment at the center of this
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`dispute.
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`Therefore, the Court finds that Defendant Gillespie’s contention that the purpose of the
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`Appraisal was changed without his knowledge on October 11, 2006, lacks support and is
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`contradicted by the evidence on the record. Because Ryno’s commissioning letter stated the
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`intended use of the Appraisal clearly and accurately, Plaintiff was among the foreseeable
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`“limited group of persons for whose benefit and guidance” the Appraisal was produced. Copper
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`Sands Homeowners Ass'n. Inc., 2012 WL 987996, at *4. Therefore, Defendant Gillespie has
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`not shown that he is entitled to summary judgment on this ground.
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`3. Economic Loss Doctrine
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`Finally, Defendant Gillespie argues that the economic loss doctrine prohibits Plaintiff
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`from recovering in this case. This doctrine “bars unintentional tort actions when the plaintiff
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`seeks to recover purely economic losses.” Terracon Consultants W., Inc. v. Mandalay Resort
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`Grp., 206 P.3d 81, 86 (Nev. 2009). Defendant Gillespie’s argument is misplaced, however, as
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`the Nevada Supreme Court has repeatedly stated that this doctrine does not apply to claims for
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`negligent misrepresentation. See, e.g., Id. at 87-88 (“[N]egligent misrepresentation is a special
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`financial harm claim for which tort recovery is permitted because without such liability the law
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`would not exert significant financial pressures to avoid such negligence.”). Accordingly, the
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`Court finds that summary judgment is not warranted based on the economic loss doctrine.
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`Thus, Defendant Gillespie has failed to meet his burden to demonstrate that Plaintiff has
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`not sufficiently supported an essential element of his claims or that judgment is otherwise
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`warranted as a matter of law. Therefore, the Court will deny Defendant Gillespie’s Motion for
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`Summary Judgment. (ECF No. 48).
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`B. Plaintiff’s Motion for Summary Judgment
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`In his Motion, Plaintiff argues that he has provided substantial evidence to support all
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`essential elements of his negligent misrepresentation claim and that Defendants have failed to
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`raise any genuine disputes of material fact. Plaintiff requests that summary judgment be
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`entered against all Defendants in this action. Prior to assessing whether summary judgment is
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`warranted, however, the Court must determine whether Plaintiff’s Motion can properly be
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`considered as to Defendants ALV, Scoggins, and Nelson, given that the Court has questioned
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`the service of process upon the first and the latter two are in default.
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`1. Applicability of Plaintiff’s Motion to Defendants ALV, Scoggins, and Nelson
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`“[I]n the absence of proper service of process, the district court has no power to render
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`any judgment against the defendant’s person or property unless the defendant has . . . waived
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`the lack of process.” S.E.C. v. Ross, 504 F.3d 1130, 1138-39 (9th Cir. 2007) (citing Mason v.
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`Genisco Tech. Corp., 960 F.2d 849, 851 (9th Cir. 1992)). Previously, the Court was reluctant
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`to enter default against Defendant ALV, as Plaintiff had not provided evidence that the
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`Amended Complaint had been served upon this defendant. (ECF No. 57.) However, upon
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`further examination, the Court finds that Plaintiff has effected proper service upon Defendant
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`ALV in this action.
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`Pursuant to the Federal Rules of Civil Procedure, corporations “may be served either (1)
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`in accordance with the law of the state in which the district court is located, or (2) by delivering
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`a copy of the summons and the complaint to an officer, a managing or general agent, or to any
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`other agent authorized by appointment or by law to receive service of process.” Chan v. Soc'y
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`Expeditions, Inc., 39 F.3d 1398, 1404 (9th Cir. 1994) (internal citations omitted). Nevada Rule
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`of Civil Procedure 4(d)(1) provides that a plaintiff who cannot serve a Nevada corporation’s
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`registered agent or officer for any reason may effect proper service by “delivering to the
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`secretary of state, or the deputy secretary of state, a copy of [the] summons attached to a copy
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`of the complaint, and by posting a copy of said process in the office of the clerk of the court in
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`which such action is brought or pending . . . .” Nev. R. Civ. P. 4(d)(1). However, this method
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`of service is not valid unless the plaintiff provides “an affidavit setting forth the facts showing
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`that personal service on or notice to the [registered agent or corporate officers] cannot be had in
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`the manner provided in this subsection within the state.” Id.
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`In this case, Plaintiff’s counsel filed a declaration on June 5, 2012, indicating that neither
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`the registered agent nor any corporate officer of Defendant ALV could be located for service.
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`(ECF No. 6.) Plaintiff subsequently filed a certification from the Office of the Nevada
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`Secretary of State, dated July 9, 2012, acknowledging receipt of the summons and complaint on
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`behalf of Defendant ALV. (ECF No. 11.) Plaintiff also included an affidavit stating that the
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`process was posted in the clerk’s office of this Court. (Id.) Thus, the Court finds that Plaintiff
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`satisfied the requirements of Nevada Rule of Civil Procedure 4(d)(1), and therefore effected
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`proper service of process upon Defendant ALV on July 9, 2012.
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`The Court’s prior reluctance to enter default against Defendant ALV arose from the fact
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`that Plaintiff has not provided proof of service regarding the Amended Complaint. (ECF No.
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`57.) Be that as it may, “No service is required on a party who is in default for failing to appear.
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`But a pleading that asserts a new claim for relief against such a party must be served on that
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`party under Rule 4.” Fed. R. Civ. P. 5(a)(2). This rule does not require a finding by a court that
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`a party has been adjudicated as “in default,” but is instead triggered immediately upon a party’s
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`failure to appear. See Anunciation v. W. Capital Fin. Servs. Corp., 97 F.3d 1458, 1996 WL
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`534049, at *3 (9th Cir. Sept. 19, 1996); Varnes v. Local 91, Glass Bottle Blowers Ass'n of U.S.
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`& Canada, 674 F.2d 1365, 1368 (11th Cir. 1982).
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`Under the Federal Rules of Civil Procedure, “A defendant must serve an answer within
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`21 days after being served with the summons and complaint.” Fed. R. Civ. P. 12. As service
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`occurred on July 9, 2012, Defendant ALV had through July 30, 2012, to answer or otherwise
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`respond to the Complaint. When Defendant ALV failed to answer Plaintiff’s complaint, file a
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`responsive motion, or otherwise appear by that date, it became a “party in default” under Rule
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`5(a)(2). Therefore, because the claims for relief in the Amended Complaint are identical to
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`those asserted in the original Complaint, (compare Am. Compl. 4-6, ECF No. 17 with Compl.
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`4-6, ECF No. 1), Plaintiff had no obligation to serve the Amended Complaint upon Defendant
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`ALV when it was filed with the Court on August 21, 2012. See Fed. R. Civ. P. 5(a)(2).
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`Accordingly, because Plaintiff properly served process upon Defendant ALV, the Court will
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`assess whether summary judgment against this defendant is warranted pursuant to Plaintiff’s
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`Motion.
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`Additionally, the Court finds that consideration of Plaintiff’s Motion as to Defendants
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`Scoggins and Nelson is appropriate. Though default was entered against these defendants on
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`December 31, 2013, numerous district courts have recognized that, “Nothing in Federal Rule of
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`Civil Procedure 56 appears to prevent a party from seeking summary judgment against a party
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`in default.” Am. S. Ins. Co. v. Hayslett, No. 4:09-cv-1850, 2011 WL 3444219, at *2 (E.D. Mo.
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`Aug. 8, 2011); Allstate Ins. Co. v. Davis, No. 5:08-cv-39 2008 WL 2428871, at *1 (E.D. Ark.
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`June 12, 2008). In fact, a district court may grant a motion for summary judgment against a
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`defendant in default even if, as in the instant case, the movant was excused from serving the
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`motion pursuant to Rule 5(a)(2). See Nautilus Ins. Co. v. Roberts, 1:12-cv-22, 2013 WL
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`1411503, at *2 n.1 (E.D. Mo. Apr. 8, 2013); Davis, 2008 WL 2428871, at *1. Therefore, the
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`Court will determine whether summary judgment is warranted as to Defendants Scoggins and
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`Nelson pursuant to Plaintiff’s motion.
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`2. Substance of Plaintiff’s Motion
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`In recognizing the tort of negligent misrepresentation, the Nevada Supreme Court
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`adopted the construction contained within Second Restatement of Torts, Section 552. See, e.g.,
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`Stremmel Motors, Inc. v. First Nat’l Bank of Nev., 575 P.2d 938, 940 (Nev. 1978). A claim for
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`negligent misrepresentation requires: (a) that a defendant made a false representation; (b) that
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`the representation was made in the course of the defendant’s business or in any action in which
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`Case 2:12-cv-00893-GMN-NJK Document 87 Filed 09/15/14 Page 11 of 15
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`he has a pecuniary interest; (c) the representation was for the guidance of others in their
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`business transactions; (d) the representation was justifiably relied upon; (e) that such reliance
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`resulted in pecuniary loss to the relying party; and (f) that the defendant failed to exercise
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`reasonable care or competence in obtaining or communicating the information. G.K. Las Vegas
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`Limited Partnership v. Simon Property Group, Inc., 460 F. Supp. 2d 1246, 1262 (D. Nev.
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`2006).
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`a. False Representation
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`Notably, while Defendant Gillespie’s response to Plaintiff’s Motion strongly emphasizes
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`that he believes he did not owe a duty to Plaintiff, Defendant Gillespie makes no attempt to
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`argue that the Appraisal was not a “false representation” of the Property’s value. In his Motion,
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`Plaintiff states that the Appraisal misrepresented the value of the Property by: focusing on sales
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`within the “downtown core” instead of parcels that were comparable to the Property; failing to
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`address the topography of the Property; and not considering the uses of surrounding parcels
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`including “several funeral homes, cemeteries and homeless shelters.” (Pl.’s Mot. 6:13-18, ECF
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`No. 40.)
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`A report submitted by Plaintiff’s expert, Tio DiFederico, supports Plaintiff’s contentions
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`that Defendants falsely represented the value of the Property. After carrying out a thorough
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`analysis of Defendants’ appraisal and performing an appraisal of his own, DiFederico observed,
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`“The [Defendants] . . . focused on sales located in the downtown core, which were
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`commanding substantially higher unit prices than those like the subject on the fringe of the
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`downtown boundaries.” (Ex. G to Pl.’s Mot. 14, ECF No. 40-5.) Similarly, DiFederico asserted
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`that the Appraisal made comparisons only to parcels with level topography, failing to account
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`for the “steep slope” on the Property. (Id.) Perhaps DiFederico’s most compelling point of
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`analysis is his observation that the Appraisal failed to explain how the property increased from
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`a value of $1,200,000 on March 29, 2005, to $5,490,000 on August 19, 2006. (Id.) Indeed, the
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`Appraisal implicitly claimed that the Property increased in value by 357.5% over a period of
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`less than seventeen months. Therefore, through the analysis contained in DiFederico’s report
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`as well as the implicit discrepancies in the Appraisal, Plaintiff has provided sufficient evidence
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`from which a reasonable jury could conclude that Defendants falsely represented the value of
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`the Property. Because Defendant Gillespie makes no attempt to argue that the Appraisal was
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`not a false representation and the record contains no evidence to this effect, the Court finds that
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`summary judgment is warranted as to this element.
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`b. Course of Defendants’ Business
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`It is undisputed on the record that the Appraisal was conducted as part of Defendants’
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`business as certified general appraisers in Nevada. (See, e.g., Ex. E to Pl.’s Mot. 4-5, ECF No.
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`40); (Def.’s Mot. 3:17-20.) Thus, summary judgment is warranted as to this element of
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`Plaintiff’s negligent misrepresentation claim.
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`c. For the Guidance of Others in Their Business Transactions
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`As discussed previously, Ryno’s commissioning letter demonstrates that the Appraisal
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`was intended to be used to solicit investors for the Cielo Vista loan from the outset. Therefore,
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`pursuant to the analysis in Section III, Part A, Subsection 2, supra, the Court finds that the
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`Appraisal was performed to guide others in their business transactions, and will grant summary
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`judgment as to this element.
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`d. Justifiable Reliance
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`Justifiable reliance, under Nevada law, requires a showing by a plaintiff that the alleged
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`false representation played a material and substantial part in leading the plaintiff to adopt his or
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`her particular choice. Rivera v. Phillip Morris, Inc., 395 F.3d 1142, 1155 (9th Cir. 2005)
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`(plaintiff was required to show she actually read or heard the alleged misrepresentation to
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`establish the justifiable reliance element in a fraud claim) (citing Nevada Power Co. v.
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`Monsanto Co., 891 F. Supp. 1406, 1414 (D. Nev. 1995)). The HRI Specific Offering Circular
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`Case 2:12-cv-00893-GMN-NJK Document 87 Filed 09/15/14 Page 13 of 15
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`was sent to residents of Washington, where Plaintiff has lived at all times relevant to this case.
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`(Ex. D to Pl.’s Mot. 19, ECF No. 40-1.) This circular prominently featured the Defendants’
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`conclusion as to the Property’s value, and included the full Appraisal report. (Id. at 20.)
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`Plaintiff claims that he chose to invest in the Cielo Vista loan because he believed the value of
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`the Property was $5,490,000 as stated in the Appraisal. There is no evidence on the record
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`indicating that Plaintiff accessed any other source of information regarding the value of the
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`Property. Concordantly, given the length and thoroughness of the Appraisal, the Court finds
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`that the falsity of Defendants’ valuation would not have been apparent to an individual of
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`normal competence without expert assistance. Furthermore, Defendant Gillespie does not
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`argue that Plaintiff’s reliance upon the appraisal was not justified. Thus, Plaintiff has satisfied
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`his evidentiary burden, and summary judgment is warranted as to this element.
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`e. Pecuniary Loss
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`Plaintiff asserts, and Defendant Gillespie does not dispute, that Plaintiff invested
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`$800,000 for a 50% share in the underlying loan with the understanding that his investment
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`represented 29% of the Property’s value. (Ex. A to Pl.’s Mot. 3:21-22, ECF No. 40-1.) It is
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`also undisputed that Plaintiff was ultimately able to recover only $153,000 after the Trustee’s
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`sale. (Id. at 3:17-19.) Therefore, Plaintiff has established that his reliance on the Appraisal
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`caused a pecuniary loss of $647,000, and the Court will grant Plaintiff’s Motion for Summary
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`Judgment as to this element.
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`f. Failure to Exercise Reasonable Care or Competence
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`Numerous courts in other jurisdictions have held that appraisers owe a duty to adhere to
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`the standards set forth in the Uniform Standards of Professional Appraisal Practice (“USPAP”).
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`See, e.g., F.D.I.C. v. Masarsky, 968 F. Supp. 2d 915, 926-30 (N.D. Ill. 2013); F.D.I.C. v. Hoyle,
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`10-cv-4245, 2012 WL 4049808, at *5 (E.D.N.Y. Aug. 2, 2012). Nevada has expressly adopted
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`the USPAP as the standard to which licensed appraisers must adhere. Nev. Admin. Code §
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`645c.400. Indeed, the first criterion used by the Nevada Commission of Appraisers to
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`determine whether an appraiser is “guilty of unprofessional conduct” is whether he has “failed
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`to prepare an appraisal in compliance with the USPAP.” Nev. Admin. Code § 645c.405. Thus,
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`the Court finds that under Nevada law, appraisers owe a duty to adhere to the standards set
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`forth in the USPAP.
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`Tio DiFederico’s report identifies several ways in which the Appraisal failed to comply
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`with the USPAP. (See Ex. G to Pl.’s Mot. 7-13, ECF No. 40-5.) Among the noted failures are
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`the Appraisal’s comparisons to values of parcels in a dissimilar area, the lack of consideration
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`given to the Property’s topography, the omission of the uses of surrounding properties, and the
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`utilization of a market value definition without an attributed source. (Id.) Thus, Plaintiff has
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`provided sufficient evidence to support his contention that Defendants failed to exercise
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`reasonable care that is not disputed by Defendant Gillespie. Therefore, summary judgment is
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`warranted as to this element of Plaintiff’s negligent misrepresentation claim.
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`Because Plaintiff has provided sufficient evidentiary support for every element of his
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`negligent misrepresentation claim and Defendants have failed to raise any genuine disputes of
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`material fact, the Court will grant Plaintiff’s Motion for Summary Judgment. Additionally, as
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`Plaintiff acknowledges that both of his claims seek recovery for the same injury, (Pl.’s Reply
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`6:7-10, ECF No. 50), granting summary judgment as to the negligent misrepresentation claim
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`renders the professional negligence claim moot. See, e.g., Elyousef v. O'Reilly & Ferrario,
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`LLC, 245 P.3d 547, 549 (Nev. 2010) (holding that “a plaintiff can recover only once for a
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`single injury even if the plaintiff asserts multiple legal theories”).
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`IV. CONCLUSION
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`IT IS HEREBY ORDERED that Defendant Gillespie’s Motion for Summary Judgment
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`(ECF No. 48) is DENIED.
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`IT IS FURTHER ORDERED that Plaintiff’s Motion