Macoviak v. Chase Home Mortgage Corp.

Citations: 40 Mass. App. Ct. 755; 667 N.E.2d 900; 1996 Mass. App. LEXIS 741Docket: No. 95-P-1438

Court: Massachusetts Appeals Court; July 22, 1996; Massachusetts; State Appellate Court

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John A. Macoviak appeals a Superior Court's summary judgment favoring defendants Chase Home Mortgage Corporation, Mortgage Max, Inc., and Fidelity Appraisal Group, Inc. The appeal considers evidence favorably for the plaintiff. On March 16, 1990, Macoviak signed a purchase agreement for a property in Ipswich, priced at $765,000, with a financing contingency for $535,000. He applied for $573,700 through Mortgage Max, which informed him it would seek financing from Chase and that an appraisal would be necessary. Macoviak paid for the appraisal, which Fidelity conducted, reporting the property value at $765,000, matching the purchase price. Chase rejected this report, requesting additional comparable sales from the same town. Fidelity justified using comparables from nearby communities, explaining limited sales in Ipswich. Chase later approved the loan based on the plaintiff's creditworthiness and the original appraisal. Macoviak purchased the property for $765,000, financing $573,700 through Chase. Ten months later, he attempted to sell the property at the purchase price but received no offers, even after lowering the price to $575,000.

The plaintiff acquired a retroactive appraisal report indicating the property value was $625,000 at the time of purchase. He filed a complaint alleging negligence (including gross negligence), fraud, and violations of G. L. c. 93A against all defendants based on their handling of Fidelity's appraisal report. Defendants sought summary judgment, arguing that G. L. c. 184, § 17C barred the negligence claims and that the plaintiff could not substantiate claims of fraud or a violation of c. 93A. The plaintiff countered with expert affidavits criticizing the appraisal's reliability. A Superior Court judge granted summary judgment for the defendants, determining the negligence claims were based on the appraisal's contents, which G. L. c. 184, § 17C protects against liability. The judge also found no genuine issue of material fact for the fraud and c. 93A claims. On appeal, the plaintiff contended the judge misinterpreted G. L. c. 184, § 17C, arguing it does not shield appraisers and lenders from liability for deficient appraisals and that genuine issues of material fact existed regarding fraud and c. 93A violations. G. L. c. 184, § 17C imposes a disclosure obligation on lenders regarding appraisal reports but explicitly limits borrowers' rights concerning the report's contents, emphasizing that the appraisal's purpose is to inform the lender of the property's value for securing the loan, not to guarantee resale value to the borrower.

The plaintiff's negligence claims are grounded in Fidelity's conduct during the appraisal preparation rather than the report's contents. However, the court concludes, as did the motion judge, that the appraisal report's content and the opinion regarding the property's value are central to the claim, necessitating dismissal under G. L. c. 184, § 17C. Regarding the fraud and G. L. c. 93A claims, the judge did not rule them barred by G. L. c. 184, § 17C, but found the plaintiff failed to demonstrate a genuine issue of material fact regarding fraudulent conduct. 

To succeed on a fraud claim, the plaintiff needed to prove that Fidelity knowingly made a false representation intended to induce reliance, which he did not do. The expert's affidavit indicated negligence but did not establish willfulness required for fraud. As for the c. 93A claim, it was deemed meritless because it was based solely on the failed fraud claim. Consequently, the plaintiff lacked a reasonable expectation of proving either fraud or a c. 93A violation, leading to the dismissal of claims against Chase and Mortgage Max, with evidence presented that Mortgage Max acted as Chase's agent. The plaintiff also voluntarily dismissed his claim regarding an implied covenant of good faith and fair dealing. G. L. c. 184, § 17C stipulates the obligations of mortgagees concerning appraisal reports and limits liability for their disclosure.