                                                                          FILED
                                                              United States Court of Appeals
                                                                      Tenth Circuit

                                                                        June 5, 2008
                     UNITED STATES COURT OF APPEALS
                                                                  Elisabeth A. Shumaker
                            FOR THE TENTH CIRCUIT                     Clerk of Court



    JACK DEBOER,

                Plaintiff-Appellant,
                                                        No. 07-3279
    v.                                          (D.C. No. 06-CV-02285-JWL)
                                                          (D. Kan.)
    AMERICAN APPRAISAL
    ASSOCIATES, INC.,

                Defendant-Appellee.


                             ORDER AND JUDGMENT *


Before LUCERO and PORFILIO, Circuit Judges, and BRORBY, Senior Circuit
Judge.



         Defendant American Appraisal Associates, Inc. prepared a fair market

value-continued use (FMV-CU) appraisal for Brackett, Inc., a Kansas company.

After the appraisal was completed, plaintiff Jack DeBoer guaranteed a loan for

Brackett. Slightly over one year later, Brackett declared bankruptcy.



*
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Subsequently, Mr. DeBoer brought a diversity action against American Appraisal

asserting that it made negligent and fraudulent misrepresentations in the appraisal

and that he relied on the appraisal in guaranteeing the loan. The district court

granted summary judgment in favor of American Appraisal, concluding, as a

matter of law, that no rational trier of fact could find that Mr. DeBoer reasonably

and justifiably relied on the appraisal. Rejecting Mr. DeBoer’s argument that the

district court erred in granting summary judgment, we affirm.

      American Appraisal is an international appraisal company, which offers

services to evaluate real estate and personal and intellectual property. In July

1990, it appraised Brackett, a manufacturer of machines used to bind and create

pads for office supplies, through (1) a FMV-CU appraisal, which assumes

continued use of assets in a business; (2) an orderly liquidation value (OLV)

appraisal, which assumes the assets will be sold; and (3) an insurance appraisal,

which establishes the replacement cost of the assets. The FMV-CU appraisal

valued Brackett’s engineering drawings, its biggest asset, at $1,015,000, and the

OLV and insurance appraisals valued the drawings at zero.

      In February 2003, Michael Murray, president and owner of Brackett, asked

American Appraisal to perform another FMV-CU appraisal because Brackett was

seeking financing and because he had been advised he needed to update the 1990

appraisal. Even after American Appraisal informed him that it was unusual to use




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a FMV-CU appraisal to obtain bank financing, Mr. Murray asked for that type of

appraisal anyway.

      American Appraisal performed the FMV-CU appraisal and concluded that

the FMV-CU value of Brackett’s total assets was $1,345,100. This value was

based on the assumptions of continued use of the assets in the business and that

earnings would be adequate to justify continued ownership of the assets

appraised. The appraisal valued the engineering drawings at $785,000 with a

notation of “INFORMATION PER CLIENT,” thereby slightly increasing

Mr. Murray’s projection that their value was $750,000. Although American

Appraisal understood that the appraisal would provide a basis for financing, the

appraisal report stated that a FMV-CU appraisal “is not commonly accepted by

the lending community as appropriate collateral value to support financing

arrangements” and that American Appraisal did not endorse using the report for

that purpose. Aplt. App. at 40. Also, the report stated that the “fair market value

does not represent the amount that might be realized from piecemeal disposition

of the assets in the open market or from their use for an alternative purpose.” Id.

at 45; see also id. at 41 (“An estimate of fair market value arrived at on the

premise of continued use does not represent the amount that might be realized

from piecemeal disposition of the assets in the marketplace or from an alternative

use of the assets.”). Furthermore, the report stated that “[n]o one should rely on

[the] report as a substitute for their own due diligence.” Id. at 62.

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       Mr. Murray discussed his financial difficulties with Mr. DeBoer, a

businessman and an advisory board member for Brackett, in late 2002 and early

2003 and informed him that Brackett needed a loan. In May 2003, Mr. DeBoer

guaranteed a $595,000 bank loan for Brackett. In doing so, he relied on the

appraisal report as represented by Mr. Murray, but did not see or read the report.

Also, Mr. DeBoer did not independently investigate Brackett’s financial

condition. He admitted he did not conduct “due diligence the way [he] would in a

business that [he] was buying or investing in.” Id. at 161. Instead, he relied only

on Mr. Murray’s statements (1) that Brackett had $800,000 of profitable sales

booked, but needed cash to manufacture those sales; (2) that American Appraisal

valued Brackett at $1.3 million; and (3) that Brackett’s parts sales were $80,000

per month. Mr. DeBoer believed that if Bracket “went upside down” it would be

worth $1.3 million. Id. at 165.

       In July 2004, Brackett filed for Chapter 11 bankruptcy. Subsequently,

Mr. DeBoer commenced this diversity action against American Appraisal

asserting negligent and fraudulent misrepresentation in the appraisal. American

Appraisal moved for summary judgment arguing that Mr. DeBoer did not

justifiably rely on the appraisal. 1


1
     American Appraisal also argued in its summary judgment motion that it
owed no legal duty to Mr. DeBoer. The district court rejected this argument.
American Appraisal has not appealed that ruling. See Hutchinson v. Pfeil,
                                                                     (continued...)

                                         -4-
      The district court granted summary judgment as a matter of law because

“no rational trier of fact could find that Mr. DeBoer could have reasonably and

justifiably relied on the appraisal” to justify his decision to guarantee Brackett’s

loan “in light of its various assumptions, limitations, and disclaimers.” Id. at 333;

see also id. at 339. Recognizing that Mr. DeBoer indirectly relied on the

appraisal by relying on Mr. Murray’s statements concerning the appraisal, the

court first found that Mr. DeBoer did not rely on the appraisal itself; that

Mr. Murray only conveyed to Mr. DeBoer aspects of the appraisal that were

favorable to Brackett without informing him of the appraisal’s assumptions,

limitations, or disclaimers; and that Mr. DeBoer cannot improve his position by

avoiding the contents of the appraisal and by relying only on the representations

of Mr. Murray. Next, the court pointed to statements in the appraisal that an

FMV-CU appraisal is generally not acceptable to support financing arrangements,

that American Appraisal did not endorse use of the appraisal for that purpose, and

that Brackett’s appraised value based on FMV-CU did not represent the amount

that might be realized on piecemeal sale of the assets or for alternative use of the

assets. Additionally, the court noted that the appraisal was based on the

assumption that earnings would be sufficient to justify continued ownership of the



1
 (...continued)
208 F.3d 1180, 1186 (10th Cir. 2000) (requiring party to file cross appeal to
challenge adverse ruling).

                                          -5-
assets appraised, that American Appraisal did not investigate Brackett’s earning

capacity and instead assumed sufficient prospective earnings, that the value of the

engineering drawings were listed as “INFORMATION PER CLIENT,” and that

the appraisal stated that anyone relying on the report should do their own due

diligence. In summary, the court concluded that “the appraisal was so laden with

qualifications and disclaimers that no reasonable financier would have accepted it

as appropriate to support a $595,000 loan guarantee without conducting any

further investigation.” Id. at 340-41.

      Mr. DeBoer appealed. He argues that the district court erred in granting

summary judgment because there are genuine issues of material fact whether his

reliance on the appraisal was justified and reasonable.

      We review the district court’s grant of summary judgment de novo.

Fischer v. Forestwood Co., No. 06-4121, ___ F.3d ___, 2008 WL 2009866, at *2

(10th Cir. May 12, 2008). Summary judgment is appropriate “if the pleadings,

the discovery and disclosure materials on file, and any affidavits show that there

is no genuine issue as to any material fact and that the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(c). “In conducting our analysis,

we view all of the facts in the light most favorable to the non-movant and draw all

reasonable inferences from the record in the non-movant’s favor.” Fischer, 2008

WL 2009866, at *2. “While we view the record in the light most favorable to the




                                          -6-
non-moving party, that party must still identify sufficient evidence requiring

submission to the jury to survive summary judgment.” Id. (quotation omitted).

      Applying these standards, we have carefully reviewed the parties’ briefs,

Mr. DeBoer’s appendix, the district court’s memorandum and order, and the

applicable law. We agree with the district court that there are no issues of fact to

submit to the jury and the evidence “is so one-sided that [American Appraisal]

must prevail as a matter of law.” Simpson v. Univ. of Colo. Boulder, 500 F.3d

1170, 1179 (10th Cir. 2007) (quotations omitted). Accordingly, we affirm for

substantially the same reasons set forth in the district court’s memorandum and

order filed August 17, 2007. Aplt. App. at 323. That memorandum and order

thoroughly and accurately describes the proper legal standards and articulates the

reasons for the court’s conclusions.

      The judgment of the district court is AFFIRMED.


                                                     Entered for the Court



                                                     Wade Brorby
                                                     Senior Circuit Judge




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