Tuesday, March 30, 2010

Appraiser Blacklist Class Action Updates: Rels Valuation and Landsafe

A law firm press release almost always coincides with the filing of a new class action complaint.  It generally serves as publicity for the law firm and as a way to attract assistance from potential class members and other potential cases.  And, then most times, you don't hear much about the case for a very long time.  When the plaintiffs' class action firm Hagens Berman Sobol Shapiro LLP filed class actions with appraisers as putative class members against two large lenders and their affiliated AMCs, the filing of each lawsuit was accompanied by a press release -- release about Landsafe lawsuit and release about Rels Valuation lawsuit.  Since then, there hasn't been very much news.

The allegations in each lawsuit are very similar: that two lender-owned AMCs allegedly colluded with their affiliated lenders to pressure appraisers to deliver inflated valuations and allegedly punished appraisers who did not cooperate by blacklisting them.  Blacklisting, of course, AMCs is a serious issue for appraisers and many affected appraisers feel they have been unfairly blacklisted based on low quality of review appraisals or other wrong information.  Here is an update on the status of each case -- both cases are on a very slow path toward resolution.

Sound Appraisal v. Wells Fargo Bank and Valuation Information Technology (dba Rels Valuation).  This case was filed on April 14, 2009 in the United States Disitrict Court for the Northern District of California as a class action on behalf of appraisers affected by Rels Valuation's alleged blacklisting practices.  A class action like this has five main phases:
(1) Filing of the complaint and motions to dismiss attacking the sufficiency of the allegations in the complaint -- in other words, if the plaintiff's allegations are presumed to be true, are the allegations enough to support the legal claims?
(2) Discovery and litigation about class certification -- is the lawsuit appropriate for a class action?  Are the alleged claims and damages of the proposed class members similar enough to be litigated together in a class action? If not, then the case becomes an ordinary individual plaintiff lawsuit by the plaintiffs named in the complaint. In my view, it will be challenging for the plaintiffs to certify a class in either of these actions because the potential class member appraisers likely have very different factual histories, different potential claims, and different types and amounts of alleged damage.  Often a decision on class certification is appealed in the middle of the case, but usually without success. 
(3) If a class is certified, discovery proceeds with regard to the allegations and defenses at issue.  In these cases, there would likely be many depositions of appraisers and appraisal managers.  Motions for summary judgment will likely be filed by the defendants at or near the conclusion of discovery.
(4) Settlement or trial.  (5) Appeal.

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Thursday, March 25, 2010

Appraiser Blacklist Case Update: Horton v. National City and eAppraiseIT

Many appraisers call and write us with regard to the hardships caused by being blacklisted by a lender.  Some appraisers want to know if filing a lawsuit would fix their problem -- either with a court order or monetary damages.  As an insurance provider, we're in the defense business, helping our insureds avoid risk and loss and defending them when they are sued for something covered by their policy.  However, as an attorney who is familiar with the appraisal practices at issue and who has litigated defamation and interference claims, I generally tell appraisers that litigating a blacklist problem against a lender or AMC is a long, potentially expensive path with a small likelihood of immediate personal benefit for the appraiser.  This kind of litigation isn't long and expensive just because the defendants fight hard, but also because there are many valid privileges and defenses that apply to alleged defamation.  I offer these views with sympathy for appraisers who have had their businesses injured or destroyed by sometimes unfair and unsupported blacklisting practices.  The alternative paths that appraisers might choose to obtain relief include regulatory/administrative complaint processes and putting effort into the adoption of appropriate state regulations as more states pass laws giving regulatory authority over AMCs to appraisal boards.
The case of Horton v. National City and eAppraiseIT demonstrates just how long a path it can be when an appraiser files suit against a lender and an AMC.  I've tried to be neutral in describing the history of the case -- I don't know whether the claims have merit or not.  The plaintiff Nancy Horton is a certified residential appraiser in Illinois.  She appraised for National City for 11 years.  According to her complaint, most of her work was for National City during that period and she did an average of 390 appraisals per year for National City during the last several years.  However, in late 2005, National City placed Ms. Horton on its blacklist or "do not use list" on the basis of several reviews by an unidentified appraiser.   She alleges that the blacklisting was wrongful and that it violated National City's own rules adopted pursuant to unspecified federal regulations.  She further alleges that the review appraiser's statements (or statements attributed to the review appraiser) regarding deficiencies in her appraisal reports were false and that her efforts to rebut the review findings went without any meaningful consideration or reply by National City.

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