Law of Cards: Recent Case Clarifies Duty of Care Owed By Memorabilia Appraisers

Law of Cards: Recent Case Clarifies Duty of Care Owed By Memorabilia Appraisers

A court decision out of Florida last week may be of interest to sports memorabilia collectors. In Blumstein v. Sports Immortals, Inc., a court of appeals held that appraisers owe a duty of care when they conduct appraisals of sports memorabilia. If an appraiser fails to meet this standard of care (i.e., they are negligent in their appraisal) and if the appraiser's actions directly damage the plaintiff, the appraiser could face a lawsuit.

Legal translation – if an appraiser screws up an evaluation of your memorabilia and you are directly hurt by it, you can sue the appraiser.

I think you'll agree that this ruling follows common sense. In the actual case, a memorabilia collection was going to be used as collateral for a loan, but only if the collection appraised for more than $300,000. Sports Immortals was consulted for that appraisal and they concluded the collection was worth more than $300,000. Because of this, the loan was made.

Of note, the appraisal found that a “58 x 43 montage of the first inductees in the Baseball Hall of Fame" with “photos, baseball cards and signatures of Babe Ruth, Grover Alexander, Connie Mack, Tris Speaker, George Sisler, Walter Johnson, Ty Cobb, Nap Lajoie, Honus Wagner, Cy Young & Eddie Collins" was potentially worth between $350,000 and $400,000 at auction.

Of course, the parties wouldn't be in court unless the loan was defaulted. When the collateral was re-appraised for sale to recoup the value of the loan, a second group of appraisers contradicted the first appraisal because, in their opinion, the autographs on the montage were not authentic. In fact, Leland's Auction House would not place the montage up for auction and only offered a couple thousand dollars for other items from the collection.

So, if the second appraisers were right, the first evaluation could have been off by more than $300,000.

Yikes.

In view of these facts, the court of appeals found that the complaint adequately pleaded a cause of action, and the case could proceed.

Legal translation – Because the complaint stated that Sports Immortals did not meet the standard of conduct of other appraisers, and because the complaint stated that the plaintiff was hurt by Sports Immortals allegedly deficient appraisal, the case could go forward.

It is important to note this order does not mean that Sports Immortals loses or will lose the case. It doesn't even mean that if the company is found liable, how much it will need to pay. The ruling is really limited to stating only that cases like this can go forward.

Does this case mean it is now open season on memorabilia appraisers? For two reasons, no. First, this case holding does not require appraisers to always be right. It just requires appraisers to abide by a proper standard of care, which reputable appraisers already do. If an appraiser incorrectly values memorabilia but did everything by the books, it would likely prevail in this type of lawsuit.

Even in this case, if Sports Immortals is found to have taken the proper standard of care in its appraisal, it will win.

Second, this case requires a direct injury. If an appraiser values your collection at $100,000 and a year later another appraiser values your collection at $100, it doesn't mean you should go and get a lawyer. If, during that year, all your collection did was sit in the closet, damages would be very hard to prove and you'd lose.

If this case changes anything, it will be that appraisers will be more diligent in their appraisals. Or, if dealing with merchandise of uncertain origins, they will likely withhold their opinion. Both of these can only be good for collectors and the industry.

The information provided in Paul Lesko's “Law of Cards" column is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in the sports industry. This information is not intended to create any legal relationship between Paul Lesko, the Simmons Browder Gianaris Angelides & Barnerd LLC or any attorney and the user. Neither the transmission nor receipt of these website materials will create an attorney-client relationship between the author and the readers.

The views expressed in the “Law of Cards" column are solely those of the author and are not affiliated with the Simmons Law Firm. You should not act or rely on any information in the “Law of Cards" column without seeking the advice of an attorney. The determination of whether you need legal services and your choice of a lawyer are very important matters that should not be based on websites or advertisements.

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Paul Lesko is a shareholder at Simmons Hanly Conroy and the chair of its Intellectual Property Department (http://www.simmonsfirm.com). Don’t hold the fact that Paul is a lawyer against him, he’s also a rabid baseball and college basketball fan, and an avid baseball card collector. Paul can be found on Twitter @Paul_Lesko and Google+.

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