First Round. Last fall on this blog and also in the Appraisal Institute's Valuation magazine, I wrote about several entities involved in purchasing foreclosed debt from lenders and then filing lawsuits against appraisers asserting professional liability claims. Those investment entities were Mutual First LLC and First Mutual Group LLC; and in the background, there were Savant Claims Management and Savant LG. The earlier blog article is here.
In a first round of litigation, those entities ultimately filed more than 100 lawsuits against appraisers in Texas, California, Florida and New Jersey. So far, it's been a spectacular failure, showing a lack of due diligence by the investors or their advisers -- diligence that should have uncovered the operators' track record of failure and the court judgments against them by prior unhappy investors in other ventures. I don't follow every case filed by Mutual First and First Mutual Group, but I have looked closely at most of them and I have not seen a single case among the first 100+ in which the investors actually recovered any money from an appraiser. In fact, more than 80 they filed already have been dismissed by the courts in Texas, Florida and New Jersey because of blundering by their "legal team." Many of those cases were dismissed even when the appraiser defendants didn't show up to defend. Meanwhile, here in California, one of their law firms is seeking to withdraw from working on cases because First Mutual Group has failed to pay them. According to court filings by First Mutual Group, the losing investors behind this entity were two British private equity firms: Alternative Capital Strategies LP and ACS General Partner Limited.
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