Summary:
This case involved a valuation duel between Ms. Sweeney and Ditech over a 1999 Horton Mirage II 24' x 52' mobile home, which all parties agreed was personal property.
At the valuation hearing. Ms. Sweeney testified both as to her belief that the property suffered from “extensive water damage” and general disrepair, having a value of $10,000-$11,000. Ms. Sweeney based this on the county tax value of $9,850.
Ditech presented Mr. Joseph Cordoni, who testified that based on a physical inspection of the mobile home and the National Appraisal System (“NAS”), finding the trailer to be in fair condition and deducting $6,331.00 for the removed wheels and estimated repair costs. Mr. Cordoni then added $7,474.00 for additional accessories, for a resulting value of $19,600.00.
The bankruptcy court considered whether these accessories, were “accessions” to the property. Pursuant to N.C.G.S. § 25-9-102(a)(1), accessions are “goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.” For something to be considered an accession it must now be an integral part of the property to which it is attached and cannot be conveniently be detached. Applying this test, the bankruptcy court held that vinyl siding, bath tubs, water heaters, the fireplace, shutters, ceiling fans and central air conditioning were accession. The stove, refrigerator, washer, dryer and skirting were not. (While Ditech did have a security interest under the note against these, it presented no evidence of perfection of a lien.)
Relying on McDuffie v. West (In re West), Case No. 5:15-CV- 557-FL (E.D.N.C. July 15, 2016). The bankruptcy court held that the testimony from Ms. Sweeney was “based solely on a tax assessment prepared by a third-party is not an opinion ‘rationally based on the [homeowner’s] perception,’ thus running afoul of Federal Rule of Evidence 701.” Id. 8. While the value from Mr. Cordoni was derived from “a rational formulaic manner based on particular collateral conditions”, the bankruptcy court was not required to give his estimation “blind obedience.” As the bankruptcy court found that “Mr. Cordoni showed a distinct lack of independence and based his testimony primarily from the secured creditor’s point of view”, it ultimately adjusted his valuation not only by excluding the non-accession but with a further reduction for additional repairs.
The final value was found to be $14,700.00.
Commentary:
After a long and thorough opinion, at the end this is a very close to a Solomonic result, as splitting the difference between the values provided by Ms. Sweeney and Mr. Cordoni would have been $15,300.00.
If an when Mr. Cordoni again is used as an appraiser, this opinion, with its holding that he has not shown sufficient independence, should be used to contest his qualification as an expert.
For a copy of the opinion, please see:
Sweeney- Accession to Property and Mobile Home Valuation
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