In what serves more as a reminder than as groundbreaking new
law, a recent decision of the Court of Appeals of California, Sixth
Appellate District, held that a borrower was not entitled to rely
on Phase I and Phase II environmental site assessment reports
prepared by a consultant to the borrower's lender, and
therefore had no claim against the consulting firm that was
allegedly negligent in its preparation of the reports.
In Mao v. Piers Environmental Services, Inc.
coo(H041214, February 8, 2017), the court cited uncontroverted
evidence that the consultant's contract to perform the site
assessments was with the lender, not the borrower; that the reports
were provided to the lender for purposes of its due diligence; and
that the borrower hired the consultant for the first time only
after the site assessment reports had been prepared for the
lender. In short, the court found that the evidence
established no privity of contract between the consultant and the
borrower
