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Florida First DCA rules that when a lender funds a loan relying on a faulty appraisal, the statute of limitations begins to run at the time of funding rather than the later sale of the property

On September 27, 2017, in Llano Financing Group v. Petit, No, 1D16-3168, the Florida First DCA affirmed a trial court’s order dismissing the plaintiff commercial mortgage lender’s negligence claim against a professional appraiser. The trial court had dismissed the claim on statute of limitations grounds because the appraisal had been submitted by the appraiser more than four years before the lawsuit was filed. The First DCA noted that the legal starting point for a limitations period is the point “when the last element of the cause of action occurs.” Davis v. Monahan, 832 So. 2d 708, 709 (Fla. 2002); see also § 95.031(1), Fla. Stat. (2004). The plaintiff contended that the last element of its causes of action, damages, did not exist until the property was sold at a loss almost ten years after the appraisal. The First DCA disagreed, ruling that the statute of limitations commenced running when the original lender spent more on its new assets (the note and mortgage) than it should have, causing it to hold a note that was under-secured. The First DCA distinguished two prior Florida Supreme Court cases. In Peat, Marwick, Mitchell and Company v. Lane, 565 So. 2d 1323, 1325-26 (Fla. 1990), the Florida Supreme Court held that the limitations period for an accounting malpractice claim began not when an accountant gave bad advice but when the tax court entered judgment showing the advice was bad. Similarly, in Blumberg v. USAA Casualty Insurance Company, 790 So. 2d 1061, 1065 (Fla. 2001), the Florida Supreme Court held that a homeowner’s claim alleging an insurance agent negligently failed to secure coverage did not accrue until the underlying dispute with the insurer was over. The First DCA pointed out that in both of these cases the Supreme Court had determined that what prevented the statute of limitations from running was not uncertainty about the amount of damages, but the uncertainty about whether the defendant was negligent in the first place.

On a separate issue, the Florida First DCA affirmed the trial’s court’s use of the general four-year statute of limitations under Section 95.11(3)(a), Florida Statutes, rather than the two-year statute of limitations for professional negligence under Section 95.11(4)(a). The Court found the two-year statute inapplicable because it is “limited to persons in privity with the professional.” In this case, the plaintiff had acquired the claims related to the loan from an intermediary investment trust that had purchased the mortgage note from the original lender.