The Second Department decided Matter of Klein v County of Suffolk, ____ AD3d ____, 2010 NY Slip Op 01413 on February 27, 2019.  Klein concerned a claimant’s request to obtain all appraisals that the County may have had prepared for the subject property.  The order appealed from directed the County to produce “all appraisals, and not limited only to those submitted.”  The County acquired an easement over a portion of the claimant’s property located on Fire Island as part of a federally funded construction project to reduce hurricane and storm damage to the Fire Island Inlet.  The County’s experts developed certain appraisals relating to the acquired property, which were submitted by the State to the federal government for the purpose of reimbursing the County the amount actually paid for the real estate interest it acquired.

          The discovery request was made by claimant’s service on the County of interrogatories and demand for production of documents including disclosure of all appraisals submitted by the County to the federal government.  The Appellate Division held that the trial Court should not have sua sposite directed the County to produce all appraisals, rather than only those appraisals which were submitted to the federal government in connection with the subject property.  It was not a surprising decision as the law regarding prior appraisals is well established.

          Prior appraisals can be used to impeach an appraiser on cross-examination.  But before we focus this, one should also be aware of The Appraisal Foundation’s requirements regarding appraisal report retention.  The Appraisal Standards Board has adopted Uniform Standards of Professional Appraisal Practice (USPAP).  USPAP was adopted to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers.  USPAP addresses the ethical and performance obligations of appraisers through definitions, rules, standards, standards rules and statements.  USPAP also provides advisory opinions. 

          USPAP requires an appraiser to maintain a work file for each appraisal.  The work file must contain the name of the client and related information; true copies of any written reports, documented on any type of media; summaries of oral reports or testimony, or a transcript of testimony; and all other data, information, and documentation necessary to support the appraiser’s opinions and conclusions.

          The appraiser must retain the work file for a period of at least five (5) years after preparation or at least two (2) years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires last.  This is a mandatory part of USPAP’s ethics rule.  Thus, the failure to maintain copies of prior reports can be shown to violate the appraiser’s ethics rule which alone may result in substantial impeachment.  Courts have made negative inferences when an appraiser fails to comply with the USPAP obligations.  See Matter of Rockland Sewer Dist. No. 1, 37 Misc3d 1222(A) (Sup. Ct. Rock 2012) afd. 120 AD3d 703 (2d Dept 2013), Lv. den. 24 NY3d 917 (2015).

          Once it has been determined that a prior opinion of value exists it must be produced for use on cross-examination.  It doesn’t matter what label has been put on the prior report, “draft”, “attorney’s work product”, “confidential”, etc.  If prepared by the witness, it qualifies as a prior appraisal.

          It is well established law in New York that a prior appraisal prepared by an expert witness testifying at trial may be introduced into evidence to impeach the credibility of that witness’s testimony.  Hicksville v Properties, Inc. v Board of Assessors, 116AD2d 717, 718 (1968) (“where an unfilled appraisal report was prepared by a party’s trial expert and is consistent with his trial testimony, the unfilled report may be introduced into evidence for impeachment purposes and used to cross-examine the witness”) citing Swartout v State of New York, 44 AD2d 766, 354 NYS2d 254; Matter of City of New York (Brooklyn Bridge Southwest Urban Renewal Project), 50 Misc 2d 478, 480, 270 NYS2d 703. 

          The First Department held in CMRC Ltd.  v State of New York, 270 AD2d 27 (2000), “The motion court improvidently exercised its discretion when it ordered the State to turn over an appraisal report dated November 22, 1995.  The report, which was prepared in contemplation of the settlement of an eminent domain proceeding, “enjoy[s] the conditional immunity from disclosure which is conferred on material prepared by litigation by CPLR 3101(d)” (Schad v State of New York, 240 AD2d 483, 484).  To the extent that the report might become relevant and discoverable for the purpose of impeaching the State’s appraisal expert at trial, disclosure at this juncture is premature.  We note that if the State chooses to call the expert to testify, a reasonable adjournment will sufficiently protect Claimant’s right to cross-examination, but we also note the possibility that the State may choose not to call the expert as a witness.  In sum, we cannot agree with the dissent that the cloak of immunity protecting the State’s appraisal report may presently be removed merely because, at some point in the future, the material sought may become discoverable.”

          Citing CMRC, Ltd. v State of New York, supra, as authority, the Third Department held in Matter of Niagara Mohawk Power v Town of Moreau, 8 AD3d 779(2004), “while it is true that materials prepared for litigation by an appraiser who is not called as a witness are protected from disclosure as attorney work product (See, Xerox Corp. v Town of Webster, 206 AD2d 935 (1994); See also CPLR 3101 (d), here Petitioners established that Lagassa’s prior appraisal relied upon and incorporated information contained in Thompson’s prior appraisals of the subject hydroelectric power facilities.  As such, these prior appraisals are relevant for the purpose of impeaching Lagassa on cross-examination and, thus, are subject to disclosure (See CMRC, Ltd. v State of New York, 270 AD2d 27 (2000).”

          Thus, it can be shown that prior appraisals must be maintained by the appraiser. And once that appraiser has testified, any conditional immunity a prior report had disappeared.  An appraiser can be substantially impeached by the prior appraisal.  See Gerosa v State of New York, 180 AD2d 552 (1st Dept., 1992).

Posted in Cross Examination, Impeachment of Appraiser, Prior Appraisals, Uncategorized
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