There is a well-established principle that statements of “opinion” are distinct from representations of fact for purposes of establishing the elements of a claim for civil fraud. It is based upon the general premise that a representation must be proven to be true or false factually, and an opinion is merely a subjective expression that cannot be found to be either “true” or “false.”
As explained in Rubin v Sabharwal, 171 AD3d 580 (1st Dep’t 2019), courts often characterize statements about the value of an item to be “nonactionable opinion”: “The alleged misrepresentations—that the items were of ‘museum quality,’ of ‘highest quality,’ and ‘generational’—ultimately go to the value of the jewelry, which constitutes ‘“nonactionable opinion that provide[s] no basis for a fraud claim’” (MAFG Art Fund, LLC v Gagosian, 123 AD3d 458, 459 [1st Dept 2014], lv denied 25 NY3d 901 [2015]; see also Augsbury v Adams, 135 AD2d 941, 942 [3d Dept 1987]).”
For some more background on these principles, see my posts, “Court Distinguishes Nonactionable ‘Puffery’ and ‘Hyperbole’ From Concrete Factual Misrepresentations of Fraud;” “SDNY Dismisses Fraud Claims in Context of Promised Employment Opportunities.”
These principles have particular relevance to potential claims regarding professional opinions relating to the value of real property and the purchase of real property. See,e.g., “First Department Reinstates Fraud Claims Against Attorney for Alleged False Opinion Letter to Non-Client Lender.”
The new decision by the New York Appellate Division, First Department, in RSD857, LLC v Wright, 2025 NY Slip Op 06833 (1st Dep’t Decided Dec. 9, 2025) explains the circumstances under which an appraiser, or for that matter, any expert, can actually be held liable under a fraud cause of action for its opinion.
Appraisals and Expert Opinions
New York courts apply the principle that appraisals generally cannot support fraud claims because they represent professional opinions rather than statements of fact. In Wells Fargo Bank, N.A. v. Alessi, 133 A.D.3d 1216 (4th Dep’t 2015) the Fourth Department held that “it is well settled that appraisals are generally not actionable under a theory of fraud or fraudulent inducement because such representations of value are matters of opinion upon which there can be no basis for detrimental reliance.” This rule reflects the fundamental distinction in fraud law between actionable misrepresentations of fact and non-actionable expressions of opinion or judgment.
Further, in connection with appraisals, the rationale underlying this general rule recognizes that real estate valuation inherently involves professional judgment, market interpretation, and subjective analysis. New York courts acknowledge that appraisers possess wide discretion in their valuation methods and sources of information:
“‘[A]ppraisal is not an exact science and … the determination of an appraiser is to be upheld as long as the appraiser proceeds in good faith and without bias or fraud’ (Olympia & York 2 Broadway Co. v. Produce Exch. Realty Trust, 93 A.D.2d 465, 468, 462 N.Y.S.2d 456; Winter Management Corp. v. Barton Mark Perlbinder, 179 A.D.2d 518, 579 N.Y.S.2d 867). Appraisers have broad discretion as to their methods and as to their sources of information (Rice v. Ritz Associates, 88 A.D.2d 513, 514, 450 N.Y.S.2d 7, aff’d 58 N.Y.2d 923, 460 N.Y.S.2d 510, 447 N.E.2d 58).”
Perlbinder v Jakubovitz, 239 AD2d 294, 294 [1st Dept 1997].
Despite the general protection for professional opinions, courts recognize that expert opinions can cross the line into fraud when they lack any reasonable professional foundation. As the Court of Appeals in Ultramares Corporation v. Touche, 255 N.Y. 170 (1931) explained: “Our holding does not emancipate accountants from the consequences of fraud. It does not relieve them if their audit has been so negligent as to justify a finding that they had no genuine belief in its adequacy, for this again is fraud.”
This principle was further developed in Ambassador Factors v. Kandel & Co., 215 A.D.2d 305 (1st Dep’t 1995), where the First Department clarified that “an opinion, especially an opinion by an expert, may be found to be fraudulent if the grounds supporting it are so flimsy as to lead to the conclusion that there was no genuine belief back [sic] of it.”
Recent Wright Decision
In Wright, the owner of real property sought to assert claims against a real estate appraiser who provided him with an opinion on the value of his real property, allegedly causing him to agree to an undervalued short sale of the property. The owner alleged that the valuation was supported by statements that were “false and misleading and misrepresented material facts,” and therefore asserted claims of fraud against the appraiser. The lower court denied the appraiser’s motion to dismiss the fraud claims, and the First Department affirmed.
The First Department described the applicable law as follows:
Although appraisals are generally not actionable under a theory of fraud (see Wells Fargo Bank, N.A. v Alessi, 133 AD3d 1216, 1217 [4th Dept 2015]), “an opinion, especially an opinion by an expert, may be found to be fraudulent if the grounds supporting it are so flimsy as to lead to the conclusion that there was no genuine belief back of it'” (Ambassador Factors v Kandel & Co., 215 AD2d 305, 308 [1st Dept 1995] [internal quotation marks omitted]; see also Ultramares Corp. v Touche, 255 NY 170, 186 [1931]).
The First Department then laid out what it found were the significant allegations concerning the content of the appraisal and the support that the owner offered:
Wright, the prior property owner, alleges that in January 2019, Viscusi, a real estate appraiser, significantly undervalued the property at $825,000, by, among other things, failing to account for its value as a development site and using “comparable” sales based on properties that were not at all comparable. Wright also alleges that the appraisal was a significant factor in convincing him to ultimately agree to a short sale of the property in October 2019. Wright’s allegations that Viscusi’s valuation of the property at $825,000, and that “statements used to support this valuation” were “false and misleading and misrepresented material facts,” were supported by the forensic analysis performed by appraiser Michael Pavlakos annexed to Wright’s pleading (see Houbigant, Inc. v Deloitte & Touche, 303 AD2d 92, 99 [1st Dept 2003]; Ambassador Factors, 215 AD2d at 308). Specifically, Pavlakos determined that Viscusi’s appraisal egregiously undervalued the property by millions of dollars, contained numerous errors, was misleading, and not credible.
Thus, the underlying claim that the appraisal was based upon “flimsy” grounds was supported by another professional appraiser’s opinion citing the extreme nature of the undervaluation. This was obviously key because a mere difference of opinion would not have substantiated the basis of fraud.
The First Department then addressed another significant issue—the owner’s specific reliance on the appraiser’s report and why the appraiser had a legal duty to the owner:
Moreover, Wright adequately pleaded that Viscusi was aware that his misrepresentations would reasonably be relied upon by Wright (see Houbigant, 303 AD2d at 100). Viscusi’s appraisal explicitly stated that its intended recipient was Wright, and that its intended use was for Wright, as “lender/client,” to evaluate the property as to its fair market value. Wright sufficiently pleaded that he reasonably relied on Viscusi’s appraisal for this purpose (see Remediation Capital Funding LLC v Noto, 147 AD3d 469, 470-471 [1st Dept 2017]).
Commentary
While ordinarily courts do not allow claims for fraud to be based upon mere professional opinions, for which there can be legitimate disagreement, when the opinions go beyond the realm of reason, and are shown to be indefensibly bare and groundless, courts are willing to recognize a fair inference of fraud.