STUART, Justice.
Riverstone Development Co., Inc. ("Riverstone Development"), sued Garrett & Associates Appraisals, Inc. ("G & A Appraisals"), in the Madison Circuit Court, asserting negligence, wantonness, and conspiracy claims stemming from a July 2010 appraisal G & A Appraisals conducted on waterfront property Riverstone Development owned on Lake Guntersville. During the course of the eventual trial on those claims, the trial court entered a judgment as a matter of law in favor of G & A Appraisals on the negligence claim, and, at the conclusion of the trial, the jury returned a verdict in favor of G & A Appraisals on the wantonness and conspiracy claims. Riverstone Development appeals, arguing that the judgment as a matter of law was improperly entered on the negligence claim and that it is entitled to a new trial based on juror misconduct. We affirm.
In 2005, Southern Heritage, LLC, a company owned by Frank McRight and Michael Lastovic, completed a series of land transactions resulting in its owning approximately 170 acres of property abutting Lake Guntersville. As part of those transactions, Southern Heritage also obtained a right-of-way easement from a neighboring landowner providing access to the property from County Road 88 via an existing roadway.
Sometime in the summer of 2006, Southern Heritage began borrowing money from First American Bank in Huntsville to start developing the property, with the ultimate goal of creating a subdivision to be known as Pinnacle Cove. Southern Heritage used the borrowed funds to begin initial development work, such as building exploratory roads, drafting plats, and obtaining permits from the Army Corps of Engineers and the Tennessee Valley Authority that would allow it to build boathouses along the shore of Lake Guntersville. By February 2007, Southern Heritage had borrowed approximately $1.5 million from First American, which loan was secured by a mortgage on the Pinnacle Cove property, and McRight subsequently testified at trial that First American had indicated that it would also provide the additional financing necessary to complete the project, which McRight estimated would have cost approximately $4 million.
Southern Heritage originally hoped to have initial development work completed by approximately September 2007 so that it could begin selling lots. However, in March 2007, First American notified Southern Heritage that it would not continue to fund the development until 50 percent of the lots were "pre sold." McRight subsequently testified that this condition was tantamount to pulling all future funding because Southern Heritage did not anticipate selling 50 percent of the lots in Pinnacle Cove until approximately two years after it began selling lots. Southern Heritage thereafter attempted to obtain financing from other sources but
Shortly after First American indicated that it would no longer provide financing, McRight and Lastovic created a new company, Riverstone Development, to take over ownership of the Pinnacle Cove property, because Southern Heritage owned other property in addition to that tract. For approximately the next two years, McRight, Lastovic, Southern Heritage, and/or Riverstone Development (hereinafter referred to collectively as "the developing parties") continued to pay interest on the loan held by First American. Sometime in the summer of 2009, RBC Bank, which had purchased First American and taken over Southern Heritage's loan, informed the developing parties that it would not renew the loan unless the payment terms were modified and additional collateral and guarantees were provided. The developing parties ultimately concluded that they could not agree to those changes, and the loan accordingly went into default status when the developing parties stopped making payments.
In March 2010, RBC Bank contracted Phil Fowler, a state-certified appraiser, to prepare an appraisal of the Pinnacle Cove property. Fowler had previously appraised the property on multiple occasions, assigning it an appraised value of $2.115 million in 2007 and an appraised value of $1.765 million in February 2009. The March 2010 appraisal Fowler submitted to RBC Bank estimated the value of the property to be $1.7 million. That same month, Riverstone Development, which now owed approximately $1.6 million on the loan, approached RBC Bank and offered to provide a deed in lieu of foreclosure — essentially selling the Pinnacle Cove property to RBC Bank for the amount owed — but that offer was rejected.
In June 2010, RBC Bank contracted G & A Appraisals to conduct a new appraisal of the Pinnacle Cove property. This appraisal was conducted by Thomas Garrett and Leigh Stephens, both state-certified appraisers, and their July 2010 appraisal report placed the value of the Pinnacle Cove property at $340,000. Several months later, RBC Bank foreclosed on the Pinnacle Cove property, eventually purchasing it at the foreclosure sale for $300,000, leaving a deficiency balance of approximately $1.3 million.
Riverstone Development and Southern Heritage initiated the instant action on July 30, 2012, when they sued G & A Appraisals, Garrett, and Stephens, asserting negligence, wantonness, and conspiracy claims. The gravamen of their claims was that Garrett and Stephens had either performed their appraisal of the Pinnacle Cove property so unskillfully as to constitute negligence and/or wantonness or, in the alternative, that they had conspired with RBC Bank to intentionally appraise the property at lower than market value. In either case, Riverstone Development and Southern Heritage argued, they were injured when RBC Bank used the $340,000 appraisal as the basis of its $300,000 bid at the foreclosure sale, thus leaving them
Eventually, Southern Heritage, Garrett, and Stephens were voluntarily dismissed from the case, leaving only Riverstone Development as the plaintiff and G & A Appraisals as the defendant.
On appeal, Riverstone Development argues that the trial court erred (1) by entering the judgment as a matter of law in favor of G & A Appraisals on the negligence claim and (2) by denying Riverstone Development's motion for a new trial on juror-misconduct grounds. We first review the judgment as a matter of law entered on Riverstone Development's negligence claim.
In Blue Circle Cement Inc. v. Phillips, 989 So.2d 1025, 1029 (Ala.2007), we explained the standard of review applicable to a trial court's ruling on a motion for a judgment as a matter of law:
(Quoting Webb Wheel Prods., Inc. v. Hanvey, 922 So.2d 865, 870 (Ala.2005).) Thus, in order for its negligence claim to proceed to the jury in this case, Riverstone Development was required to present substantial evidence indicating (1) that G & A Appraisals owed it a duty; (2) that G & A Appraisals breached that duty; (3) that Riverstone Development suffered a loss; and (4) that G & A Appraisals' breach was the actual and proximate cause of that loss. QORE, Inc. v. Bradford Bldg. Co., 25 So.3d 1116, 1123 (Ala.2009). When it orally entered the judgment as a matter of law on Riverstone Development's negligence claim at the close of Riverstone Development's case, the trial court explained that, "based on the presentation of evidence, I don't find that [Riverstone Development] established that the standard of care was breached in this case or that any alleged breach of the standard of care proximately caused the damages complained of in this case." For the reasons that follow, we agree that Riverstone Development
As an initial matter, we note that the individuals accused of negligence and whose negligence is attributed to G & A Appraisals — Garrett and Stephens — are licensed professional real-estate appraisers. The general rule in Alabama is that, when negligence is asserted against a professional, a witness also qualified in that profession must present expert testimony establishing both a breach of the standard of care and causation. See, e.g., Collins Co. v. City of Decatur, 533 So.2d 1127, 1134 (Ala.1988) (applying professional-negligence rule to architects and engineers). Alabama courts have not yet considered whether this rule applies to real-estate appraisers as well; however, other courts that have considered the issue have decided that it does. For example, in Hice v. Lott, 223 P.3d 139, 143-44 (Colo.App.2009), the Colorado Court of Appeals concluded that real-estate appraisers practice a profession involving knowledge or skill and that, accordingly, claims against them asserting professional negligence must generally be supported by expert testimony. In making that determination, the Hice court noted that real-estate appraisers are licensed and regulated by Colorado law, are subject to rules and regulations set forth by a state board, and are subject to discipline for misconduct or violation of those rules and regulations. Id. Real-estate appraisers in Alabama operate in a similar environment — they are licensed and regulated by the Alabama Real Estate Appraisers Board, which maintains rules and regulations governing the profession and which has the ability to discipline license holders who do not operate in accordance with those rules and regulations. See Rule 780-X-1-.01 et seq., Ala. Admin. Code (Real Estate Appraisers Bd.). We accordingly similarly conclude that realestate appraisers are engaged in a profession requiring specialized knowledge and skill and that the professional-negligence
In this case, no expert witness definitively declared in testimony that Garrett and/or Stephens — and thus, by extension G & A Appraisals — breached the standard of care; however, Riverstone Development argues that Stephens's own testimony constituted expert testimony demonstrating her breach of the standard of care in one respect and that her breach of the standard of care in another respect is so obvious that no expert testimony is necessary. Riverstone Development first argues that Stephens effectively acknowledged that she breached the standard of care when she testified that she was "protecting the bank" when she performed the July 2010 appraisal of the Pinnacle Cove property, even though, Riverstone Development argues, the undisputed evidence indicated that real-estate appraisers must always perform their work with impartiality, objectivity, and independence.
At trial, both Stephens and Fowler, a real-estate appraiser testifying as an expert witness on behalf of Riverstone Development, gave expert testimony indicating that licensed real-estate appraisers in Alabama are required to abide by the Uniform Standards for Professional Appraisal Practice ("USPAP"). They both further agreed that one of those standards mandated that a real-estate appraiser must always be "impartial, objective, and independent." At trial, counsel for Riverstone Development questioned Stephens regarding this standard and a statement she had made in her deposition regarding her view that it was her duty to "protect the bank":
We are not convinced that Stephens's testimony constitutes substantial evidence of a breach of the standard of care. Riverstone Development views Stephens's statement that she was "protecting the bank" as tantamount to a statement that she was "favoring the bank"; however, we do not believe that a fair-minded person in the exercise of impartial judgment could make that conclusion when considering the whole of Stephens's testimony. In Giles v. Brookwood Health Services, Inc., 5 So.3d 533, 550 (Ala.2008), this Court cautioned against the practice of relying on isolated excerpts of deposition testimony to argue in favor of a proposition the testimony as a whole does not support, explaining:
It is clear, when examining Stephens's testimony as a whole, that she was not stating that she "favored" the bank when she stated that she was "protecting" it; rather, she was merely articulating the fact that lenders pay to have appraisals performed in order to protect themselves from making undersecured loans. See, e.g., Graham v. Bank of America, N.A., 226 Cal.App.4th 594, 607, 172 Cal.Rptr.3d 218, 229 (2014) ("An appraisal is performed in the usual course and scope of the loan process to protect the lender's interest to determine if the property provides adequate security for the loan." (emphasis omitted and emphasis added)), and Gomez v. Wells Fargo Bank, N.A., 676 F.3d 655, 661 (8th Cir.2012) ("[T]he primary purpose of an appraisal is to protect the lender's interests by ensuring the value of the collateral is sufficient to secure the loan." (emphasis added)). No fair-minded person in the exercise of impartial judgment could consider the whole of Stephens's testimony and conclude that Stephens's statement that she was "protecting the bank" indicates that she was not "impartial, objective, and independent" as required by USPAP.
Riverstone Development next argues that Stephens — and by extension G & A Appraisals — was negligent inasmuch as she overlooked the fact that Riverstone Development owned a permanent easement providing access to the Pinnacle Cove property when she was preparing the appraisal report for G & A Appraisals and that no expert testimony was necessary to establish a breach of the standard of care in that respect because her want of skill and/or lack of care is so apparent that it can be understood by any layperson. See, e.g., Wachovia Bank, N.A. v. Jones, Morrison & Womack, P.C., 42 So.3d 667, 680-81 (Ala.2009) (explaining exception to professional-negligence rule when the professional's error is so obvious that neglect would be clear to average layperson). However, although Stephens did acknowledge that she was unaware of the easement held by Riverstone Development, we do not agree that that evidence alone is sufficient to merit the submission of the negligence claim to the jury.
With regard to the possibility of realestate appraisers making mistakes in the performance of their duties, Riverstone Development's expert Fowler testified that "a simple mistake may not constitute gross negligence [but] a series of mistakes may." Furthermore, Fowler agreed with G & A Appraisals' attorney that, under USPAP, "you can't have an error of omission or commission that significantly affects the appraisal."
Thus, the expert testimony heard at trial — from both Fowler and Stephens — indicated that an appraiser's error could be a breach of the standard of care if it affected the appraisal's final value; however, there was no expert testimony indicating that in this case Stephens's failure to identify the specified easement had an effect on the final estimated value arrived at in the July 2010 appraisal. In fact, Stephens specifically refuted that idea, and, when questioned by G & A Appraisals' attorney at trial, Fowler emphasized that he was not making any judgment regarding the effect on the July 2010 appraisal of not taking the easement into account:
Thus, there was no expert testimony presented at trial indicating that the error Stephens made by overlooking the easement had an effect on the final value for the Pinnacle Cove property listed in the appraisal. Riverstone Development argues that no expert testimony is needed because the error is obvious to any layperson; however, although it might be true that a layperson can understand the concept of a professional's overlooking a relevant fact, we disagree that a layperson has the expertise in this situation to understand whether and how a real-estate appraiser's overlooking an easement might impact that appraiser's conclusions as to the valuation of a property. As the trial court stated when granting G & A Appraisals' motion for a judgment as a matter of law:
Moreover, we note that this is not a case where there was no expert testimony given regarding an alleged breach of the standard of care and the plaintiff on appeal is arguing that no expert testimony was needed because the negligence is obvious to any layperson. Rather, in this case there was expert testimony establishing an industry standard with regard to real-estate appraisal errors — that an appraisal error might be considered a breach of the standard of care only if that error affects the appraised value of the property — but the plaintiff now argues that a jury should nevertheless have been allowed to find that the appraisal error was a "common-sense" error constituting negligence without any regard to the standard set forth by the experts and without any regard to whether there was evidence indicating that the error affected the appraised value of the property. Accepting this argument would undermine the purpose of the rule requiring expert testimony in professional-negligence cases, and we decline to do so. The judgment as a matter of law entered on Riverstone Development's negligence claim is due to be affirmed.
We next turn to Riverstone Development's juror-misconduct argument. Specifically, Riverstone Development alleges that it is entitled to a new trial because one of the jurors, A.L., failed to acknowledge during voir dire that he had previously been a defendant in a civil lawsuit.
Ex parte Dixon, 55 So.3d 1257, 1259 (Ala. 2010). Thus, Riverstone Development bore the burden of proof in establishing that probable prejudice arose from A.L.'s failure to truthfully respond to a question on voir dire, and the trial court's conclusion that Riverstone Development failed to meet that burden is subject to great deference under the exceeds-its-discretion standard.
Riverstone Development argues that it was prejudiced in this case because juror A.L. failed to respond to the following question posed by Riverstone Development's attorney during voir dire:
Three prospective jurors in the pool responded affirmatively and were subjected to further questioning; A.L., however, made no response. Riverstone Development thereafter learned — presumably at some time after judgment had been entered on the jury's verdict — that A.L. had in fact been a defendant in three collection actions apparently stemming from A.L.'s status as a guarantor on three student loans that had gone unpaid. In conjunction with its motion for a new trial, Riverstone Development submitted to the trial court copies of three consent judgments that had been entered against A.L. in December 2013, totaling $18,789, $27,525, and $41,132, respectively. Riverstone Development now argues that "[a] person saddled with judgments in that amount would likely be biased against plaintiffs, or sympathetic to defendants, or both" and that the trial court exceeded its discretion in failing to recognize what Riverstone Development says was probable prejudice and to grant its motion for a new trial. (Riverstone Development's brief, at p. 44.)
G & A Appraisals, however, emphasizes that "not every failure to respond properly to questions propounded during voir dire `automatically entitles [the complaining party] to a new trial or reversal of the cause on appeal.'" Ex parte Dobyne, 805 So.2d 763, 771-72 (Ala.2001) (quoting Freeman v. Hall, 286 Ala. 161, 166, 238 So.2d 330, 335 (1970)). G & A Appraisals further argues that Riverstone Development failed to establish the existence of probable prejudice inasmuch as Riverstone Development's attorneys failed to testify that they would have struck A.L. had they known of the judgments entered against him. In Ex parte Dobyne, this Court explained:
805 So.2d at 772-73 (emphasis added). It is undisputed that counsel for Riverstone Development did not submit sworn testimony indicating that A.L. would have been challenged had the true facts been known; thus, G & A Appraisals is correct that probable prejudice was not established in that manner. However, Riverstone Development correctly notes that probable prejudice may also be established "by the obvious tendency of the true facts to bias the juror," id., and it accordingly argues that it is obvious in this case that A.L. would be biased against Riverstone Development and in favor of G & A Appraisals because A.L. had recently stood in the same defendant role that G & A Appraisals was in when he was sued by a company seeking a judgment against him. It is apparent, however, that the trial court did not accept this argument, and, when considering the relevant facts at the heart of both A.L.'s dispute and the instant dispute — and not just the singular fact that A.L. and G & A Appraisals were both defendants in civil actions — we cannot say that the trial court exceeded its discretion in concluding that there was no probable prejudice.
The parties both state that the judgments entered against A.L. were the result of loan guarantees he had made, presumably on student loans, inasmuch as the plaintiff bringing the claims against him was the National Collegiate Student Loan Trust. In the instant case, Riverstone Development sought a judgment against G & A Appraisals based on negligence, wantonness, and conspiracy claims. Riverstone Development's corporate representative at trial was McRight, who, like A.L., had been sued in a separate case as a result of guarantees he had made on a loan, specifically the $1.5 million loan made by First American to Southern Heritage. Thus, the trial court might have fairly concluded that it was equally likely that A.L. would be prejudiced in favor of McRight, and by extension Riverstone Development, inasmuch as both had been defendants in lawsuits seeking to collect on loan guarantees they had made.
We further note that even if the trial court could infer, in the absence of direct testimony from Riverstone Development's attorneys, that those attorneys would have viewed A.L. in a negative light had they had knowledge of the judgments entered against him, it would still require another inference — that the negative effect of the judgments would outweigh the attorneys' otherwise favorable impression of A.L. — in order for the trial court to conclude that probable prejudice existed.
Following the entry of a judgment as a matter of law in favor of G & S Appraisals and a jury trial resulting in a judgment entered in G & A Appraisals' favor, Riverstone Development appealed, arguing that the trial court erred by entering a judgment as a matter of law on its negligence claim, thereby removing that claim from the jury's consideration, and that the trial court also erred by denying a postjudgment motion for a new trial on the ground of juror misconduct. As explained above, however, the trial court's decision to enter a judgment as a matter of law on the negligence claim is supported by the law in light of the evidence adduced by Riverstone Development during the presentation of its case, and the trial court also acted within its discretion in denying the motion for a new trial inasmuch as there was a basis for it to conclude that Riverstone Development was not probably prejudiced by A.L.'s lack of disclosure during voir dire. Accordingly, the judgment entered by the trial court is affirmed.
AFFIRMED.
PARKER, SHAW, and WISE, JJ., concur.
MOORE, C.J., concurs in the result.
