Wetmore v. MacDonald, Page, Schatz, Fletcher & Company, LLC. No. 06-2103, applies Maine common law and reverses a grant dismissal under FRCP 12(b)(6) in favor of an appraiser accused of professional negligence, breach of contract and negligent misrepresentation based on an appraisal of a business in which Wetmore was a shareholder for less than half its actual value. The corporation was closely held and the agreement provided that if the shareholders couldn’t agree, sales of shares would be based, in part on valuations by the defendant.
The court concludes that the real issue is whether the actions of the defendant, as alleged in the complaint, caused him to “caused him to receive less than fair market value for his shares.” The court rejects the view that because the plaintiff could have rejected an offer (due to the nature of the contract and bargaining between the parties), he was the one who caused it. But, the First holds that under Maine law, so long as the plaintiff can show that the defendant “contributed substantially” to the harm, then he can prevail. The court looks to the agreement to sell the business and finds that the appraisal constituted a “floor,” and then bench-slaps the District Court saying:
To say that a negligently-arrived-at valuation that set an artificially low floor would not have a substantial effect on a shareholder in Wetmore’s position ignores the logic of cause and effect.
Moreover, the court points out that the plaintiff would be relying on the defendant to set a fair bidding price. Finally, the court notes that the injuries were foreseeable as “it is entirely foreseeable that a shareholder who receives an improperly low bid based on a negligently-reached valuation will suffer a loss based on the undervaluation of his or her shares..”
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