Cohen & Company v. Breen, 2014 Ohio App. LEXIS 3847 (Sept. 11, 2014)
Few appraisers are unfamiliar with this scenario. An appraiser comes into a case to perform valuation work. His or her engagement letter clearly states the terms of the engagement, including fees and the type of work to be done. The appraiser performs, the case moves along, resulting in a settlement or trial, but the client has not kept up with the requisite payments. Once the case is over, the appraiser is left to fight the client over outstanding fees.
In a recent Ohio case, the fees totaled over $160,000 by the time an accounting firm concluded extensive valuation and tracing work on a client’s divorce case involving numerous companies that owned real estate. At the time of settlement, the client had paid the initial retainer of $10,000 and an additional $12,000 to the appraiser. The accounting firm’s efforts to recover the outstanding balance went nowhere. The client seemed to take the position that, once the litigation was over, he was “done,” including done with paying for professional services rendered.
The appraiser felt compelled to sue the client, who, in turn, launched allegations against the appraiser claiming the latter’s performance at trial amounted to a breach of the promises in the engagement letter. The valuation work did not meet the accounting profession’s standards set down in the AICPA’s SSVS No. 1, the client, a layperson, said. When he was unable to find an expert on professional standards to prove his allegation, he had to withdraw his counterclaim. He nonetheless used every opportunity at trial to throw the appraiser’s work product into doubt. Ultimately, the fee dispute case wound up on appeal where the spotlight once again was less on the client’s delinquency than on the appraiser’s valuation methodology and overall performance in the long-concluded divorce case.
To find out how the trial and appeals court handled the situation, click here.