|Survey Company May Be Liable for Flood Damage Due to Negligent Report|
Appeals court held that a homebuyer who relied on a survey by a company regarding location of the home in a flood zone could sue the company for negligence when the homebuyer relied on the company’s survey report that the home was not in a flood zone, when in fact it was and the home was later flooded.
Negligence; Reliance; Flood Insurance
|C A S E S U M M A R Y|
Dobsa owned a home in Mississippi. Countrywide was the mortgage lender. Prior to financing, Countrywide hired Landsafe to determine whether Dobsa’s home was located in a flood zone. Dobsa paid for that survey. Landsafe stated that the home was not in a flood zone, so Dobsa did not require flood insurance. When Hurricane Katrina hit, the home was severely damaged by flooding and it was learned that the home was actually in a flood zone. Dobsa sued Landsafe for negligence. The district court dismissed the suit. Dobsa appealed.
Reversed and remanded. Under Mississippi law, lack of contractual privity between Dobson and Landsafe did not preclude Landsafe’s liability for negligence based on its incorrect statement about the flood zone status of the home. Liability depended upon whether it was reasonably foreseeable that Dobsa would receive and rely on Landsafe’s report. It is to be determined at trial whether Landsafe could have reasonable foreseen that Dobsa would rely on its determination.
Paul v. Landsafe Flood Determination, Inc., 550 F.3d 511 (5th Cir., 2008)
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