Berkshire Bank, a commercial bank based in Manhattan, sued First American Appraisal and Consulting Services LLC., claiming the company overvalued a proposed condominium development in Brooklyn, New York.
First American pegged the market value of the proposed project at $47 million, at least 33 percent more than its legitimate value, according to the lawsuit filed today in New York state Supreme Court in Manhattan.
Berkshire, a subsidiary of New York-based Berkshire Bancorp Inc., relied on the appraisal to make a $13.8 million loan in 2007 to Westshore 480 Development LLC, the owner of the property, the suit says. Westshore defaulted on the loan, resulting in a foreclosure sale March 25 that left a deficiency of $6 million, Berkshire said.
Berkshire is suing for negligence, professional malpractice, and breach of contract and seeking $6 million in damages from the company, which was dissolved, and from its successor parent CoreLogic Inc., according to the suit. The valuation overstated the square footage of the property and the maximum buildable area, the suit claims. The proposed condominium site is at 4302 Westshore Avenue in Brooklyn.
Bob Visini, a spokesman for CoreLogic, said the company doesn’t comment on pending litigation.
First American Appraisal is a defunct company formerly known as KTR Valuation and Consulting Services, LLC, which was owned by First American Corp., according to the suit.
Santa Ana, California-based First American reincorporated June 1 under the name CoreLogic Inc., as part of the separation of First American Financial Corp. and CoreLogic into independent, publicly traded companies, according to a company statement.
Berkshire Bancorp Inc., headquartered in New York, is the bank holding company of Berkshire Bank, according to data compiled by Bloomberg.
Berkshire shares fell 15 cents to $4.85 at 3:14 p.m. today in Nasdaq Stock Market trading. The stock has declined 19.2 percent this year.
The case is Berkshire Bank v. First American Appraisal, 650803/2010, New York state Supreme Court (Manhattan).