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Federal Deposit Insurance Corporation v. Prill

United States District Court, D. Minnesota

February 14, 2014

Federal Deposit Insurance Corporation as Receiver for Brickwell Community Bank, Plaintiff,
v.
John M. Prill and Commercial Appraisal & Consulting Group, LLC d/b/a Commercial Appraisal & Consulting Group, Defendant.

Michael R. Carey, C.J. Schoenwetter, Patrick L. Arneson, Richard G. Morgan, Bowman & Brooke LLP, Minneapolis, Minnesota, for Plaintiff.

Timothy W. Waldeck, Lindsey J. Woodrow, Waldeck Law Firm P.A., Minneapolis, Minnesota, for Defendants.

MEMORANDUM OPINION AND ORDER

RICHARD H. KYLE, District Judge.

INTRODUCTION

This dispute arises out of an allegedly negligent appraisal of a commercial property located at 225 North Main Street, Stillwater, Minnesota ("the 225 Property"). Defendant John M. Prill and his company Defendant Commercial Appraisal & Consulting Group ("CACG") performed the appraisal for Brickwell Community Bank ("Brickwell") as part of Brickwell's evaluation of collateral for a potential loan. Plaintiff Federal Deposit Insurance Corporation ("FDIC"), acting as receiver for Brickwell, which closed in 2009, commenced this action against Defendants on Brickwell's behalf. The parties now move for summary judgment; for the reasons set forth below, the FDIC's Motion will be denied and Defendants' Motion will be granted in part and denied in part.

BACKGROUND

The following facts are recited in the light most favorable to Plaintiff, [1] except where otherwise stated.

In early 2007, Mainstream Development Partners, LLC ("Mainstream") approached Brickwell about a $1.1 million, one-year line of credit ("the Loan") to fund a development project in downtown Stillwater. Mainstream intended to raze the building currently on the 225 Property and construct a new development. As the primary collateral for the Loan, Mainstream pledged a second mortgage on the 225 Property, which was already subject to a $1.5 million mortgage held by Northstar Bank. Brickwell hired Prill to appraise the 225 Property.

Prill was given information about the proposed building and land by Mainstream. He alleges Mainstream told him that a nearby, non-adjacent 51, 360 square-foot parking lot ("the City Lot"), which was not part of the pledged collateral, was being donated by the City of Stillwater and should be included in the appraisal as land for the project. Prill valued the 225 Property and City Lot together at $4.1 million. Brickwell, however, had not intended the City Lot to be included in the appraised property and did not realize- until much too late-that it was. The FDIC contends the 225 Property alone was worth only $1.1 million, not $4.1 million as Brickwell believed.

In the transmittal letter sent to Brickwell with the appraisal, Prill summarized his appraisal report as follows:

In accordance with your request, we have completed an appraisal of the above referenced property [Maple Island Creamery Development Land, 225 North Main Street, Stillwater] for the purpose of estimating the current market value of the property's fee simple interest. We have made an inspection of the subject property, as well as the land, market sale, and rental comparison properties.
The following describes our application of standard appraisal methods, contains data gathered in our investigation, and demonstrates our analysis in estimating the market value of the subject property. Care has been exercised in verifying the factual data presented in this report, and it is assumed to be reliable. This appraisal is made subject to certain assumptions and limiting conditions contained herein.
It is our opinion that the value of the subject property " As Is " as of January 15, 2007, the effective date of the appraisal, based on an exposure time of one year, is:
FOUR MILLION ONE HUNDRED THOUSAND DOLLARS $4, 100, 000
We have no personal interest with respect to the subject matter of this appraisal report or the parties involved.
This appraisal has been made in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice ["USPAP"] and the Financial ...

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