Looking for a bit of legal I work for an "incorporated"
company. We have a gemologist also working for us that does
appraisals. The appraisals are written on our company letterhead and
the gemologist signs them. One person in our company says that if
there is any litigation because of the appraisal, the "corporation"
is the one that is liable and that the gemologist who signed and
sealed the document, but who is not an owner or officer of the
corporation could not be held liable. The gemologist is concerned
that they could personally be held liable if there was a dispute.
Does anyone have any comments or knowledge about the law in these
cases?
Of course the appraiser is liable, just as a lawyer would be. That’s
why appraisers don’t give opinions at parties, when people whip out
their papers and say, what do you think of this? And it’s a red blob
of something and the room is really dark. Why? Because a “reasonable
person” would rely upon the advice of the appraiser, believing them
to be qualified to speak on the subject.
Liability is a basic part of the appraiser’s training and the
appraiser at your store should know the answer to that question
already.
The topic is covered in training from ISA, ASA and I’m sure in the
USPAP course as well.
USPAP = Uniform Standards for Professional Appraisal Practice
ISA = International Society of Appraisers
ASA = American Society of Appraisers
I think both could be potentially liable, which is why it is so
important that appraisers and their employers use proper appraisal
practice. Check out Cos Altobelli’s book The Practical Guide to
Jewelry Appraisal for a great appraisal resource.
Jenny Sweaney
Mardon Jewelers
3640 Main Street
Riverside, CA 92501
951-682-2325 www.mardonjewelers.com
As with many laws, I am sure that there are differences state to
state, nut it is my wunderstanding, as a Gemologist, that both the
company and the signer of the document can be held liable. Make sure
that the company’s atternies go over the appraisal documents to make
sure that they remove as much liability as possible. While this won’t
stop lawsuits, it can offer some protection in the eyes of a judge.
Unfortunatly, gemology is an imperfect science, and things do slip
by. Tell your gemologist to talk to the company’s lawyer about your
state’s perticular laws, and perhaps suggest a personal liability
umbrella from his insurer.
To the best of my understanding, if an appraiser goes into a jewelry
store to conduct appraisals even though he or she are independent,
both parties are liable. This is the case since they have an implied
partnership. As to the individual owners it depends on the type of
corporation they are. In smaller C type corporations for instance
for a loan most of the time the owners have to guarantee the loan
unless the company has clear assets as collateral. Anyone can be
sued.
The answer to your question is a complex one but here is how it
generally works If a gemologist works for a stone and writes
appraisals on the stores letterhead, and signs with their name, and
the store collects the fees then the appraiser is acting as an agent
for the company. You have many issues here. One are we talking about
1st or 3rd party liability? Each state has a different type of 3rd
party liability States are either what is known as Privity, Foreseen,
or Foreseeable This will vary state to state There is always a 1st
party liability to the client Generally here is how it works If there
is fraud involved than the appraiser will usually be gone after as
well If it is just simple negligence then it is usually just the
stores burden
since the appraiser is acting as their agent. My biggest suggestion
for your gemologist is to get formal qualified appraisal training,
use proper theory and methodology, have proper written cover
documents, and have the store get an appraiser liability insurance
policy known as E & O. If your store is insured through Jewelers
Mutual they offer this. Tell you gemologist to act with due
diligence, get the policy, and sleep well at night. Remember every
different appraisal function will have different liability and
parties you are liable too as well as the state laws being different.
If your gemologist is concerned about a specific appraisal they can
call me and discuss it confidentially.