JPMorgan Chase Not Liable for AMC Appraiser Fees
JPMorgan Chase absolved…
In a June 27 ruling, the U.S. Bankruptcy Court for the Middle District of Florida permanently absolved JPMorgan Chase of all liabilities for fees due to appraisers as a result of the closure and bankruptcy of Evaluation Solutions, an appraisal management company that provided services to JPMorgan Chase.
The court’s decision resulted from an action brought by the bankruptcy trustee, Summit Financial Resources, and by JPMorgan Chase that requested the court approve a settlement to be paid from the assets of the bankruptcy estate to Summit for a loan made to Evaluation Solutions. The loan had been collateralized by receivables due to Evaluation Solutions for appraisals conducted for JPMorgan Chase.
Evaluation Solutions subsequently defaulted on the loan, and Summit foreclosed on its interest in the funds due from JP Morgan Chase. When Evaluation Solutions filed for Chapter 7 Bankruptcy, the funds due from JPMorgan Chase became the property of the bankruptcy estate, and the court’s approval was needed for the repayment of the Summit loan by JPMorgan Chase.
The settlement agreement also requested the entry of a Bar Order that “would permanently enjoin any and all third parties who are creditors of the Debtors from initiating or continuing claims against Chase for services performed at the request of Debtors for the benefit of Chase.”
Several valuation firms that were owed money for completed appraisals and other valuation products at the time of the Evaluation Solutions bankruptcy, and thus also are creditors, objected to the approval of the settlement agreement.
The valuation firms claimed that federal law requires institutions regulated by the Office of the Comptroller of the Currency to obtain valuations “directly” or through an “agent.” Since JPMorgan Chase did not order the valuations directly from appraisers, but instead utilized a third-party, Evaluation Solutions was an “agent” of JPMorgan Chase and as such JPMorgan Chase ultimately was liable for the unpaid services. They also argued that they should not be precluded from making claims directly against JPMorgan Chase for breach of contract.
In approving the settlement agreement and the entry of the Bar Order, the court stated, “There is no evidence before the Court that Chase exercised, or had the right to exercise, control over Evaluation Solutions.”
Further, the court found that the Master Service Agreement between JPMorgan Chase and Evaluation Solutions “expressly disclaims any right to control and explicitly sets forth that Evaluation Solutions would at all times remain an independent contractor. Evaluation Solutions was solely responsible for selecting and sourcing the appraisers utilized, and was solely responsible for making all payments due appraisers.”
The court also opined that the appraisal firms’ breach of contact claims against JPMorgan Chase were unlikely to succeed; that the agreement was fair and equitable; and that without the Bar Order, “Chase would deposit the money into the Court registry, file an action to determine who is entitled to it, and protracted and costly litigation would then ensue.”
Appraisers owed money from Evaluation Solutions remain creditors and further actions by the bankruptcy trustee and court will determine whether or not there will be any distributions from the Evaluation Solutions bankruptcy estate to individual appraisers or valuation firms.
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So the appraisers get screwed again. by WAMU/CHASE I personally lost $5,000 and I know some appraisers that were owed over $100,000 by ES. I guess the judges must have had stock in Chase or were promised seats on the Board of Directors. Big Business wins again.