## Facts

- Patricia Ballance bought a house owned by Jack and Annie Horton.
- Benny D. Rinehart, a licensed real estate appraiser doing business as Rinehart Appraisals, prepared an appraisal describing the home as in “good” or “generally good” condition.
- The appraisal was prepared at the request of Peoples Bank and Trust Company in connection with the transaction.
- Ballance alleged she relied on the appraisal in deciding to purchase the house.
- After closing, Ballance discovered serious structural defects and claimed the appraisal failed to identify them.
- Ballance alleged Rinehart knew or should have known the appraisal would be provided to, and relied on by, potential home buyers.
- In an amended complaint, Ballance alleged the appraisal was also prepared for Jack Horton and that Rinehart knew or should have known Horton could show it to prospective purchasers.
- Ballance sought purely economic damages arising from the allegedly negligent appraisal.

## Issues

1. Whether a real estate appraiser retained by a client owes a duty of reasonable care to a nonclient prospective purchaser who relies on the appraisal and suffers only economic loss.
2. Whether Ballance’s allegations were sufficient to state a negligence claim and survive dismissal under N.C. R. Civ. P. 12(b)(6).

## Decision

- The North Carolina Court of Appeals reversed the trial court’s Rule 12(b)(6) dismissal and remanded.
- The court held an appraiser’s duty in negligence may extend beyond privity to a limited class of third parties the appraiser intends to influence, or knows the client intends will rely, in a particular transaction or type of transaction.
- Construing the pleadings liberally and drawing reasonable inferences for Ballance, the allegations were sufficient to place her within that limited class and to allege breach and economic loss.

## Legal Principles

- On a Rule 12(b)(6) motion, dismissal is proper only when the complaint shows the plaintiff is entitled to no relief under any facts provable in support of the claim; allegations are taken as true and construed favorably to the plaintiff.
- A professional who supplies information in the course of business may be liable for pecuniary loss caused by justified reliance by a limited group of nonclients whom the professional intends to influence, or knows the client intends will rely, for a particular transaction or type of transaction.
- Duty is not extended to an indeterminate class based solely on general foreseeability that others might obtain and rely on the information.
- Purely economic loss may be recoverable in negligence under this information-supplier framework when the plaintiff falls within the intended or known class of users.

## Conclusion

The court held that a real estate appraiser’s negligence duty can reach nonclient purchasers when the appraiser intended, or knew the client intended, that a limited group of prospective buyers would rely on the appraisal for the sale transaction, and it reinstated Ballance’s complaint for further proceedings.


Ballance v. Rinehart, 105 N.C. App. 203, 412 S.E.2d 106 (1992)