Document 99
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N. Joseph Kravec,Ir. (Ailnitted.Pro Hac Vice) SPBCTERSPECTER EVANS 2 &MANOGUB,P.C. The 26u Floor Koppgrsluilding J Pittsburgh, Pennsylv 15279 ernia Tel: (412)642-2300 4 Fax: (412)642-2309 E-mail: [email protected] 5 Michael D. Bram (L674L6) 6 BRAUNIj,WGROUP,P.C. 123M Santa Monica Blvd-, Suit 109 .| Los Angeles,CA 90025 Tel: (310)442-7755 8 Fax: (3lO)!42-7756 E-mail: service@braunlawgror{p.com
I
ka Spiro(67641) 1 0 J. Mark Moore (18A473) SPIROMOSS BARNESS,LLP WestObnnpic 1 l 11377 Blvd., Fifl! Floor los Angeles, 90064-1683 CA 12 Tel: Ql0)235-2468 Fax: Q10)235-2456 1 3 E-mail: [email protected] [email protected]
9
T g Jaast indner gpielbrr (221926) I,AW OFFICES OFJANET LINDNERSPIELBERG 12400 WilshireBlvd-,Suite400 LosAngeles, 90025 CA Tel: (310) 392-8801 Fax: (310) 278-5938 E-mail:[email protected]
L4 15
Attorneys Plaintifs for
L6 t7 l8
UMTED STATESIIISTRICT COTJRT NORTEERNDISTRICT OF CALIF'OR}IIA SAII JOSEDTVISION
1 9 SCHOII4 on behalfofther:selves andall 20 2l 22
v. otherssimilarly situated Plaintifs.
FELTONA. SPEARS,JR and SIDNEY
CASE NO.: 5:0&CV-00868 (RMW) CLASSACTION
WASHINGTON MUTUAL, INC., a z) Washingtoncorporation;WASHINGTON MUTUAIBANI<' FA (a/k/a WASHINGTON MUTUAI, BANK); FIRST AMERICAN EAPPRAISEII, a Delaware 25 corporation;andLENDER'S SERVIC$ INC..
PLAINTIFTS' MEMORAI\DUM IN OPPOSITION TO LSI APPRAISAL. LLC'S MOTIONTODISMISS
26
)1
Defendants.
28
PljINTIFFlv llEl[ORAttOuM lN OPpOSmOI TO tSt APPMTSATLLC rcnON tO ONS!|FX] CASE NO,: 6!08"Clr{088a {RMW}
Case 5:08-cv-00868-RMW
Document 99
Filed 06/25/2008
Page 2 of 33
1 2
J
TABLE OF COITTENTS INTRODUCTION OFREVIBW STANDARD ARGUMENT I 2 2
4
l
6
LSTSLACK OF STANDINGARGIIMENT IS A RED IIERRING, . . . . . . . ., . . 2 A. Plaintift HaveArticle Itr StandingSinceThey Have Sutreredan Injury in Fact asAlleged in the FAC andas Evidenced LSI Being Listed on Plaintiffs by Appraisaf. Plaintift HaveArticle Itr StandingSinceLSI Actively Participated a Conspiracy in With WMB andEA. LSI's Roleinthe ConspiracyWithWMBandEA Makesthe JurisdictionalIssueso Intertwinedwith the Substantive Issuethal Dismissalat This StageWould belnappropriate In the Alternafiveto DenyingLSf s Motion to Dismiss for lack of SubiectMater JurisdictionOutrieht Plaintitrs Rqu6st JurisdictionalDiscoveryto-R6spond t oL S I ' s l a i m s . C
8 9
B.
..,.., 2
10 11 t2
D. C.
..........
10
t4
lf,
........11
t6
1'1
PLAINI]FFS IIAVE PROPERLYALLEGED CAUSESOF ACTION FOR ISI'S SPECIFICAND CONSPIRATORIALCONDUCT RESULTING IN DAMAGES TO PI-AINTTFTS, REQTnRTNG DENTALOF LSrS RULE 12(BXO MOTTON. . 12 A B. ISI wasDirectly Involved Plaintiffs' in Appraisals. ISI's Areumentthat California doesnot Recognize a Claim Bied on Neglige,nt Appraisalis Msplaied" as Plaintiffs arenot Alleeine a NeelisentAoDraisal Claim, They arealednda Nedig-ntor'I;tNrtional Misrepresentation Claim. LSl'sa(oDamages'TheoryisMeritl*s....... Plaintift haveStafedComizable I{ESPA Cf ims Under Sections 8(a) and (b). 1. 2. 3. ........... 12
18 19 20
)1
........13 ..... 16 . . . . . . 18
22 23
z1
C. D.
)< 26
)1
Plaintiffs haveallegeda violation of RESPASection8 (a). . . . . . . 19 Plaintiffs haveAlleged a Cognizable Section8(b) Clain. . . . . . . . 20 The RESPAStafuteof Limitations doesnot Bar PlaintiffScholl's RESPAClaims.,..,... 2l
28
(RMW) CASE 5:(a-CV{t888 ilo.:
N'TNTFFS' UETiORAXDUU OPFOSflONTO ISI AFPMIgAL LLC rcIOX IN
TO DIIIUTS
Case 5:08-cv-00868-RMW
Document 99
Filed 06/25/2008
Page 3 of 33
I 2
E. F.
Plaintitrs' CLRA Ciaim is not BarredBecarsea "Real EstateTrarsaction" waslrvolved Plaintiffs ProperlyAllege a Contact Existswith LSL Plaintiffs Propoly Allege a Cause Action for Quasiof Contact in the Alte,raative a Breachof Contract to
21 22
NA
J
G. 4 5 6 7 8 9
1U
CONCLUSION
25
11 t2 13 L4
lf
16
1,7
18 1.9 20 2l
23 24 25 26 27 28
u
PLAINTIFFS UEIIORAIDTJU OPPOSITIOII ISI APPRAFAI- LLC' TDI|oN TO DEUIIX} IN TO (R \ry) CASE NO.: 5:084\tdl888
Case 5:08-cv-00868-RMW
Document 99
Filed 06/25/2008
Page 4 of 33
1
a
TABLE OFAUTHORITIES
CASES: (Cal.1995) AllianceMortg.Co.v.Rothwell,900P.2d601 F.2d793(9thCit.1989) Ltd.o877 Am. W.Airlines,Inc. v. GPAGroup, PAGENOS. .......14 . . . . . . 11
J
4
AppliedEquipmentCorp.v.LittonSaudiAtabiaLill.,S69P.2d454(Cal1994)...5,6,7,8,9,1I 6
1
Armstrongv.Davis,275F.3d849(9thcir.2001).. 1074(9thCi.1983).. Augustinev.U.S.,7MF.2d (1991) . . Ca1.App.3d447 Barryv.Raskov,232 Batesv.UnitedParcel Serviee, Inc.o5lLF.3d974(9th Cir. ?AAD .
......3 ...... 10
8 9
. . .. .. . .. L4 , . .. . .. . 3,5 .........14 ...........21 ......13 .......... 20
. 1 0 B i l y v . A r t h u r Y o u n g & C o . , 8 3 4 P . 2 d 7 4 5 ( C i l ..1 9 9 2 )
1t
Brileyv.StateofCal.,S&F.2d849(9thCir.1,977)..
3d1025(gthcir.2008).. 12 CalifurniaDept.ofSocialSenicesv.Lewift,S23F
IJ
Capellv.PulteMongageL.L.C.,20ATU.S.Dist.LEXIS 82570. Cammpangv. Int'l langshoremen's& Warehousernen's Union, 269F.3d1042(9thCir.2001)...
15
Dayv.AltaBatesMed.Ctr.,98Cal.App.4th243QA04.
.......10 ........24 . . . . . 2l .,.. 10 .. . . .. .. . .. . 9 ....16, 18 .......21 . . . . . . .. 9 ...........21 . . . . . 17, 18 . . . . . 24 ........ 9 ...7,8,9
16
1'7 ld
Erwin v. City of Angels Camp,City Com.cil & Planning Commission, 1992 U.S.App. LE)(IS 33810(9th Cir.1992) Farrv.U.S.,990F.2d451(9thcir. 1993) ..
1 9 Forsythev.SunLife Financial,Inc.,4L7F.Snpp.2d @.Mass. l00 2000 . 2A Gayv.Broder,109Ca1.App.3d66(1980) 2l
G i b s o n v . U . S . , 7 8 L F . 2 d 1 3 3 4 ( 9 1h c i 0.. . t 98 r
22 Henryv. CircusCiraa Casinos, 1nc.,223 F.RD.54i @.Nev.20M)
ZJ
Holmberyv.Annbrecht,327U.S.392(1946) Hughes HoIt, L40Yt- 38 (VrSup.Cr 1981). . v.
u
25 In re De Lawentiis Entertainnent Group,1nc.,963F.2d 1269(9th Cir. 1992) , . 26 In re FranHin Mut. FundsFeeLitigation" 388 F.Supp.2d @.N.J. 2005) . 45l 27 In re Westem StatesWholesale Natural GasAntitrust Litig., 2008 WL
486607(D.Nev.2008)..
28
Ilt PLAI{TIFFS MErcRANDTJM OPPOSTTNN Lg APPRAISALLICTSUOT()II TO DtsIIISS I}I TO CASE NO.! 5r08q/.08884 (RMW)
Case 5:08-cv-00868-RMW
Document 99
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WL 1302984(N.D.Caf.2007) t Jefersonv. ChaseHomeFinanee,LLC,20OT
z
J
.........22 ........... ............5 . . . . 24 . . . . . . 12 ...... 14 2
Jiangv.Lee'sHappyHowe,2008WL706529(N-D.Cal.2008) v. Alaska,Inc., Kivalina RelocationPlanning Committee TreckCominco 227FRD.523(D.A1aska2004)... Learodryer v. SeouBanko7T Cal.App.4th723 (2000) . Leev. City of LosAngeles,250F3d668 (9thCir. 2001) . . . Lowesy.Hill&Co.RealEstate,2A06WL4635l7(N.D.Ca1.2006). Lujan v. Defenders ofWildlife,s04U.S. 555(1992)
4 5 6
. . . . 3, 8 ....15, 16 .....,. 20
8 Luriv.FirstFederalBankofCalifumia,20ilWL1656602(CaI.Afp.2001) 9 Moorev.RadianGroup,1zc.,[email protected]) . 10 Neu-Visiaw Sports,Inc.v. Soren/McAdamlBartells,86 Cal.App.4th303 (2000) 11
1t
-tJ
. . , .. . 14 ...... . 16
Newberryv. Befort,28Kn-4pp.2d807 Q00L)
Nryarkv HeartFederalSavings 1089(1991). .. . . . L4o &LoanAss'n,231 Cal.App.3d 15,16,18 P a t t o n v . C o x , 2 7 6 F . 3 d 4 9 3 ( 9 6 c0 0 2 ). . 2 tu
L4
Inc.,61.CalApp.3d,879(L976) Peoplev.BestlineProducts,
l)
.........23 .......6 . . . . . . 6, 11 ...... 3 ............ 4 ....,..,,24 ...... .. 14,15
l6 1,7 18 t9 20 21 22
)1
ai
1188 QwestComnwicationsCorp.v. Weisz,278F.Snpp.2d (S.D.CaI.2003) SafeAir for Everyonev. Meyo,373 F3d 1035(9th Cir.2004) Savage GlendaleUnionHigh Sch.,343 F.3d 1036(9th Cir.2003) . . . . v. Shershery.SuperiorCourt,l54CalApp.4th149Lp007) Soderb*gv.McKinney,44 Cat.App.4th 1,760{1,996)
ThomhillPublishtngCo.v. GeneralTel. (9thCir. 1,97\ . rc,11 &ElectronicsCorp.,594F.2-d730 y, Tlentacosta FrontierPacificAircrartIndustries, Inc.,8l3F.2d 1553(9thCir.198A ........ Tylerv. Cuoma,236F.3dl124(9thcb.2000).. WellsFargo & Co. v. WellsFargo E4tress Co., 556F.2d.406(gth Cir.l97, llilliam Inglis & Sons Baking Co. y. IIII ContinentalBaking Co., 6 6 8 F . 2 d 1 0 i 4 ( 9 t h C i r . 1 9 .8 1 ) .. 10
.. -. . 3,5,10 . . . . . - Ll, 12 .......6 ...........6
25
26 W y a x v . U n i o n M o r t g a g e C o . , 5 9 8 P . 2 d , 4 5 ( C a 1 . 1 9 7 9 )
,'1 )9,
WylerSummitParxtershipv. Tumer Broad.casting System, Inc.o135F.3d 658
(9thcir.1998)..
......23,2s
lV
PLAI{TIFFS UEUORANN,uN OPPTION TO L.$ APPRAEAT" LLC UOTTON DIAIOSS TO CASE NO,: 6:0841h0888 (Rl'lwl
Case 5:08-cv-00868-RMW
Document 99
Filed 06/25/2008
Page 6 of 33
Rule 977(a) .. Ruls 1 Califomia of Court 2
J
.....15 .......15 .......19
12C.F.R9202.\4 12U.S.c.92607(a)
l2u.s.c.$2607o)
)
.......20
.......15 ...........19 ......19 ..........8 ...........21 . , . .. ... .. .. 22 .......2,12,13,23,25
15U.S.c.$1691(e)
6 24C.F.R$3500.14O) 7 24CJ.R3s00.14(d) 8 28U.S.C.9r407. I C a lC i v . C o d e $ 5 4 . 17
g 1 0 Cal. Civ.Code l76l(b) 1 1 F e d . R C i v . P2 ( b X O l. L2 13 l4 15 t6
18 19 20 2l 22
.A
25 26 27 28
v
PtaiNllFFs,uEt{oRAtrouulxoPFos,flot To rgappRAEA. LLa uoTlol{ To DJSldEg CASENO.rs:0841r{11888 EUW)
Case 5:08-cv-00868-RMW
Document 99
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I 2
J ll
INTRODUCTION Defendant the Lender'sSenrice,Inc.on/k/a LSI AppraisalLLC (hereafter'I-Sf), bases vast in majority ofits argument supportofits Motion to Dismissonit's counsel's overreaching unsupported that'L,SI had absolutelyno ltryolvementor conaectionto" Plaintift' appraisals. LSI's assertion ,9ee Notice ofMotion: Motion to Dismiss:And Menormdum in SuppodofMotion to Dismiss(T-SI Br.'),
5
6 pp. 6-8 , It is on this fatally flawed presumption that it hsd absolutelyno involvementin Plaintitrs' that Plaintiffs lack stmdingto suq thatall ofPlaintiffs statutoryandcommonlaw appraisats LSI argues 8 9 claimsshouldbe dismi5gd rcgartlless ofstaading andthat all ofthe blameshouldbe caston its coconspiralors Defendants Washington Mutual Bank,FA flilMB') andFirst AmericaneAppraiselT
1 0 CEA'). 11 Howwer, LSI's counsel'sassertion LSI hadno role in Plaintiffs' appraisals the alleged thaf or
L2 conspiracy deinonstratively is falseandis beliedby 1) PlaintiffScholl's appraisal reportreferenced in
IJ
the FACI which specificallyidentifies ISI EA and WMB asptrties to the appraisal;2) ISI's own affiantwho doesnot dnythatLSI received, reviewed" affectedPlaindffs' appraisals; LSI's own and 3)
l4
i 5 affant who does denythatLSI conspired WMB md EA to inflate appraisal not with valuesasPlaintiffs 1 6 allege;4) California law which holds everymenrberof a conspiracy liable for the torts committedby 1 7 co-conspintorregardl*s ofwhich conspirator commitsthe tort directly and5) ?laintitrs' allegations 1 8 ofLSI's participationin the conspiracywhich only mustbe accepted true,but arealsosupported not as 1 9 by evidencediscovered the New York Attomey Generalwhich is also sited in Plaintiffs' FAC. by
'A
I.SI Because wasdirectly involved in Plaintitrs' appraisals, because and Plaintiffs' allegeI5I barmed Plaintitrs andacb mmber of the Classdirectly aadlor by virtue of its participation in the alleged conspiracy, ofLSI's '1r'e dida't do it" arguments all mustbe rejected.
2l
)t
Likewisq LSI's renaaining arguments California law doesnot recognizea cause that ofaction 24 for a 'begligent appraisal"and thal Plaintiffs havenot beendameged the actionsof the alleged by
23
25 conspiracy wroughtwilh mis-charactedzafions are ofPlaidiffs' allegations Calilomia law. For all and 26 of thesereasons, Defendant LSI's ltlelion 1slismiss mustbe denied" 27 28
'FAC" tefersto Plaintiffs' First Ame,nded Complaintfor Damages, Equitablq Deglaffiory and$unctive Relief filed on March 28, 2A08@ocketNo. l4). t
I PLAINnFFS uEIiORAlrlDlJltIx OFPOSTrON Lg AFFRAFAT.LLC llorot'l TO CISE NO.: 5:0&cV{08@ (RMW} to DtsIaSS
Case 5:08-cv-00868-RMW
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I
STAIIDARD OFREVIEW underRule 12(b)(Qthe issueis As this Courthassuccinctlystaisd,"[o]n a motion to clismiss
J i
which arepresumed not whatplaintiffhas or will be ableto provg but whetherthe allegations, true,are sufficie,nt''tostafea cognizable clarm. Jiang v. Lee's HappyHouse,2008WL 706529,*1 (N.D. Ca., each Mar. 14,2008)(Seeborgmj.)(citationomitted).Herq Plaintift' FAC not onlysufficienrtly alleges oftheir calses of action,but thoseallegationsare also supported the appraisalreportsand othr by docume,nts inmrporatedby reference their FAC. JVa84Employer-Teamster in Joint CouncilPension
l
6
8 9 10
TrustFund v. An. W Holding Corp., 320F.3d 920, 925n.2 (9th Cir. 2003)(acourtmay mnsider on a motion to dismissdocuments by incorporated reference plaintiffs complaint). in ARGIJMEIIT LSTS LACK OF'STAI\IDING ARGUME}TT IS A RED MRRING LSI's entire Article Itr standingargumentis premisedon the inconect, ulsupported factual assertionby its cou::seltnat *L$ had absolutelyno involve,ment wilh or connectionto" eithff of Plaintift' appraisals, the flawedlegal assertion LSI cannotbe held liable for harmsaused and that !y
1 1 I. L2
IJ
1 5 its co-conspiralors.LSI Br., pp. 6-8. ISI's contentions belied b),: l) Plaintiff Scholl's appraisal are 1,6 reportreferenoed the FAC which identifiesIfI asoneofthe appraiser's by clientsfor her appraisal; 2)
1,7
theallegationsinPlaintiffs'FACwhichprovideswidenceofLSI'swillingparticipationinaconspiracy
1 8 to unlawfully irflate appraisal values;3) LSI's own affrant who failed to delryLSI's involvementin
t9 Plaintitrs appraisalsor LSI's involvementin the allegedconspiracy and 4) Califomia law which 2A imposestort liability on a coconspiratorfor harm causedby any member of the conspiracy. As
t1
Plaintiffshaveshorrnevidence linking LSIto oneof?lainriffs appraisals to thealleged and conspiracy,
22 this Court shouldeither denyISI's motion to dimiss for lack of Article Itr jurisdiction outrigh! or 23 permit Plaijntiffsdiscoveryto provePlaintitrs haveArticle Itr standing. 24
)\
A-
Plalndlfs Eave Article III Srending SinceThey Have Suffered an Injury ln Fact as Alleged i:n the FAC and as Evidenced by LSI Belng Listed on Plaintiffs Aprrairal
26
LSI contends Plaintift lackstanding bringtheirclqimsin federal to courtunder ArticleItr of 27 theUnitedStales Consfitution- Br.,pp.G8. 'To sa.tisfu I^SI plaint'rffs the constitutional standing bear 28 burden showing meet (1) of they three requirements: theysuffered rdury h tact;Q) theinjury is an 2
PIANTIFFE MEI'ORANInJM OPPGTTION I,'8IAFPREAL LLC MONON DG}i[F[I TO IN TO CASE NO.r 5t08-CN/.dte68 (RUIY)
Case 5:08-cv-00868-RMW
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to 1 fairly ftaceable the challe,nged to actionofdefendant;and(3) it is 'likely,' asopposed 'speculativg' Tylerv.Cuomo,236F.3d[l24,lL3l-32(gth 2 thatthei{urywillberedrmsedbyafrvorabledecision-"
J
Cir. 2000), citing Lujan v. Defendersof Wldlife, 504 U.S. 555, 56U61 (L992). "ln a classaction, standingissatisfiedifaJleastonenanedplgintifFmeeBtherequire,monts.'Batesv,UnitedParcel Davis,275F3d 849,860 (9th Senice,1nc.,511F.3d 974,985(gfl Cir. 20A7),citmgArmstrongv. whetherPlaintif Cir.2001). LSI challenges injuries are taceable to LSInsoonduc! but doesnot
4 5 6 7 8 9
to appear challenge Plaintiffs bavesufferedaninjury-in-factor tlat the i{ury will beredressed tbai by a favorabledecision IfI Br., pp. 2, 7.2 LSI wasdirectly involved in Plaintiff Scholl's appraisal is evidenced ISI being listed on as by
1 0 the appraisal report as one of the partiesto the appraisal. SeeAffidavit of Joseph Kravec,Jr. in N. 1 1 SupportofPlaintiffs' Memorandum Oppositionto Defendants' in Motionsto Dismiss,Exh. 2 ('Scholl Report'), p. 7 (identi$ing the email address [email protected] as the t3 'LENDER/CLIENT's- address).Althougb I5I is clearly idendtredas one of the partiesto Plaintitr L4 Scholl's appraisal report LSI's cou:rsel ignoresthis fact andimteadmakesthebald assertion '1.SI that
1',t
1 5 hasneitherprepared reviewedanappraisal nor reportfor eitherMs. Scholl or for [herproperty]," and 1 6 that {tlhe undisputed facts- asdemonstrated the text ofthe appraisals by themselve andby theRice L7 Affdavit - demonsbare LSI had absolutelyno lnvolvementwith or connectionto theappraisals thar 1 8 at issuein this suit " LSI Br., pp. 4 8 (intemalquotationandcitation omitted)(empbasis added).It is
solelyontheseerroneous 1,9 based asssrtions ISI argues Plaintiffs lack standing.LSI Br., pp.6-8. that that To zupportthe erroneous contention '1.SI hadabsolutely involvemerf or connection that no to' Plaintitrs' appraisals,ISl's cour:sel reliesontheAfrdavit ofKaflleen M. Ricein Support[sic] Motion 6, 10-15.3 Howwer, Ms. Rice'sAffdavit purports
20 2l
(ticeAff'),!ffi 22 to DisnrissAmendedComplaint
23 2 Wtrilenot challenged I5I, it is noteworthy Plaintitrsdo allegean injury fairly by tbat baceable Defendants' to conduct is likely to beredressed a favorable thal by decision required as for the ?laintiffs and the Class*sre dFmaged 25 Article Itr standing. Specifically, FAC alleges by Defendants' in thattheyneverreseived appraisal arrangement the service whichtheywerecharged for 26 by Defendants...- T 87. .{1s minimum, canberedrssed retuming monies FAC, this by the Plaintift paidDefendants theappraisal for service never tley received fromthem. 27 3 By submining jurisdiction, converrted motionto dismiss evidence disprove to LSI )9. its into afactualoballengetojurisdiction SafeAirforEveryonev.Meyer,373F.3dl035, 1039(9thCir.2004).
z+
3
PLA$rIFFS' llElrORAt{Du[! lN OPPOSTI1ON Lg AI'FRAF|A|, [eS m CnSE NO.: 6:(|8a1t{@68 (Flldw) UOr10NTO IISm]S
Case 5:08-cv-00868-RMW
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little utterly failing to aclnowledge or completely deny LSI's 1 to say much, but actually de,nies
a
in involveme,nt wilh Plaintiffs' appnisalsor to ad&essthe relevantfactsasserted Plaintitrs' FAC. In
that 3 fact, Ms. Rice's Afrdavit contradictsISI's counsel'sassertion it hadno involvementwith Ms.
4
Scholl's appraisal. Ms. Rice attestsshe hed a searchconducted"for any and all appraisalreportsrelating" to
6
any repoils relatedto Plaintiffs andtheirpropertie, but fails to stateiftle search uncovered appraisal Ms. Plaintiffs or their homes. Rice Aff., t[ 3. Basedon this searcb, Rice's carefullywordedaffidavit
8 9
states onlythatLSlhadnot"completed" or'lrepared"anappraisalreportforeitherPlaintiff RiceAff. LSI dutiesrelatingto sgtaining tfil6, 9-15. This is not surprisingbecause handles'1headministrative
the 1 0 the appraisal:enteringthe order,assigning orderto an individual lthird-partyl appraiser, racking 1 1 the statusofthe order,checkingthe quality ofthe appraisal beforedelivery,andfinally deliveringthe
LZ IJ
'lrepares" or it appraisal.' ISI Br., p. 3. LSI nevercontends othervdse for "completes"appraisals it WMB or anyotherbanl astlis is therole of the third-partyappraisers hires,soMs. Rice's denialof Regardless who 'lrepared" or 'tompleted" the appraisals, of both Ms. Rice andISI's counsel
1,4 theseartivities asto Plaintiffs is irrelevant. Id 15
1 6 fail to evenmentionthe &ct LSI is listed on PlaintiffScholl's appraisal reportasoneofthe partiesto 1 7 theappraisator to explainhow beinglistedasapartyonthe appraisal does meanI.SI wassomehow not 1 8 "involved" with the appraisal.aIndee4 Ms. Rice nwer deniesthat LSI receiveda copy of Plaintiff 1 9 Scholl's appraisal, LSI revieweda copyofPlaintiffScholl's appraisal, that LSI altercdPlaintitr that or 20 Scholl'sappraisalasisallegedintheFAC. FAC,IJT6-9,37-39,4243. ThisappliesequallytoPlaintitr 2l
,))
Spears because Rice merely states Ms. tbat LSI hadnot 'lrrepared" m appraisal him sither. Rir. for Aff.,{6. LSI being listed on the Scholl Report asa party to the appraisal report andMs, Rice's failure
23
t<
Plaintiffs arethereforeobligatedto ftrnish widencenecessary est blish subjectmatterjurisdiction to v. Savage GlendaleUnionHigh Sch.,343 F.3d 1036,1039n 2 (9th Cir.2003).Here,Plaintiffs have 26 providedthisCourtwithevidencedirectlylinkingISItoPlaintiffScholl'sappraisalreport.,SeeScholl Report p.6.
27 28
The Scho[ Reportcomesasno surpriseto LSI asit was aftached Plaintiffs' originally to filed complaintwith this Court. DocketNo. l,Exhibi't 2. 4
PLAIINFFIY UEUORANDUIT OPPOSMOT I5 IPPRAtsAL LLC'S UONONTO DISUFS IN TO
a
(R[.liY] C{SENO.r &08-CV{088s
Case 5:08-cv-00868-RMW
Document 99
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I
to denythatl5lreceive4reviewe4oralteredeitlerPlaintitrs'appraisalreportscompletelyunderrnines that'f-SI hasneitherprepared reviewed an appraisal nor report for either ISI's cormsel'sassertions no Ms. Schollor for fterproperty]," andthat *LSI hadabsolutoly lnvolvement witl or connectionto at added). As zucb,rhis Court neednot the appraisals issuein tlis suit."'LSfs Br., p. 4, 8 (empbasis ISI's counsel'soverreac,hing, msupportedclaimstbat LSI hadnothingto do with Plaintiffs' coasider because Plaintiffs haveprovidedspecificcontra4revidence See, . appraisals e.g.,Kivalina Relocation v. Planning Committee TreckCominco Alaska,1nc.,227F 3-D.523, 528-529(D-Alaska20M)(a court
J A
5 6
8 9
nesdnot consider party's concluso,ry a statements contradicted bythe recordevide,nce). Accordingly, Plaintiffs havestandingto pursuean action againstLSI asthey havefirmishedspesifc evidercethat
1 0 LSIwasdirectlyinvolved PlaintiffScholl's in apprisal. SeeTyler,236F.3dat l13l-L132; Bates,5ll
ll 1'
F.3d at 985 (only onenamedplaintiffin a classaotionmust satisrysunding requirements). B. Plaintifrs Have Article III Standing Since LSI Actively Participated in a Consniracy WitI WMB and EA.
IJ
14
Not only has I.SI not denied its direct involvement in receiving reviewing and altering
1 5 Plaintiffs' appraisal reports,LSI hasalsonot denied w?spartandparcel the alleged it to conspiracywith 16 WMB andEA to provideunlawful andincredibleappraisals. LSI Br., generally seealsoRice Aff., ,See 1 7 ge,nerally.The Scholl Reportis evidence both LSI's involvemntwith Plaintiff Scholl's appraisal of 1 8 and LSI's conryiracy with WMB and EA Scholl Report p. 7 (identifying a1lthree allegedco1 9 conspiralors,I"Sl WMB andEd asthe appra:iser's "CLIBNTS" for PlaintiffScholl's appraisal).The 20 Scholl Reportcorroborafes otherevidence LSI's involvementasallegedin Plaintiffs' FAC. FAC, of 2l
LSI that ![43. Lrtead ofdenying its participationin theunlawful conspiracy, argues Plaintiffs cannot 22 'tely on the conspiracytheory of liability .- to establishstarding." LSI Br., p, I (intenraiquotation
23 omited). Just as ISI's counselwas wrong in stating"thaf LSI had absolutelyno involvrnentor
a,
connection Plainfift' appraisals, to" L$'s counsel wrongrhata conspirator is carnotbeheldlialle for
25 thetortscommittedby its co-consptranrs,See AppliedEquipmentCorporationv-Litton SaudiArabia 26 Limited, 869P.2d 454, 5L0-51 (Cal. 1994). I 27 ,e
In Applied Equipment CorporationoCalifomia's Supreme Court establishedtbal under personswho, altlougfu not actually committing a tort Califomia law, liability is imposed ooon
PLANTIFFSUEIIORANDT!{!!I OPFSMOI TO Lg APFRAAAL LLCA UOTIOI\I DII}UEII TO CASE NO,: 6:@41rqE8a GUWI
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share 1 the,n:selves, with tle inmediate torlfeasona commonplanor designin its perpetration."Applkd 510-5ll (citing Wyattv UnionMortgage Co.,598P.2d45 (CaL 2 EquipmentCorporation,S69P.2d,ar
J
1014,1053 &SonsBakingCo.v.fITContinenmlBakingCo.,668F.2d 1979)). SeealsoWilliamlnglis (9th Cir.1981)('coconspiratorsare jointly and severally liable for all demagescausedby the conspnact'), Peoplev. BestlinePro&rcts,Inc.,61 Cat.App.3d879,9L7-92A(1976xholdingthal all partiosto a conspiracy commit a UCL violation areresponsible all actscommittedpursuantto to for the conspiracy, matterwho actuallyperfoms the acts), Accordingly, '"by participafingin a civil no
4 5 6
I 9
efectively adoptsashis ot her ownthetorts ofother coconspirators conspiracy, coconspirator a within Inthis way, a cocolspiratorincurstort liability coequal theambitofthe conspiracy. with theimmediate
1 0 todfeason." AppliedEquipmentCorporation,869P.2dat 511 (citationomitted). Thus,asArticle Itr 1l stnnding is p'roper against a prinary tortfeasor, it is equally pmper againstthe todfeasor's co-
12 conspiralors evenif they did not penonally defraudthe plaintiff See,e.g., QwestCommunications
IJ
Corp. v. Weisz,278F.Supp2d 1188, 1192 (S.D.Ca1. 2OO3Xdenying allegedco-conspira.tor an
L4 defendant'smotion to dismissbasedon the defendant's thoory tbai he was not a direct party to the 1 5 allegedlyftadulent transactionbeca:se the chief flmction of the conspiracytheory "is to extend 1 6 liability beyondthe principalswho actuallycommittedthe tort'). 17
Here,Plaintiffs allege WMB enteredinto a conspiracy with EA and LSI - the two appraisal
('AMCs') who provided all of WMB's appraisals t 8 manrgemrft companies during the allegedclass purpose 1 9 period- forthe arpress ofinflating theappra.ised valuesofhomesassociated homemortgage to
20 loans.FAC, t[![6-9. Plaintitrs allegeWMB u:rlawfi:lly conholledtheappraisal process, instucted md
of 2L I,SI andEA to hire appraisers WMB's choosingandto otlerwise manufacturer appraisals with the
22 valuesWMB wantedratherthanthetruevalueoftheproperty. Id,flT3549. I,SI actedin conceat v/ith
)a
WMB to fiuther the conspiracy using WMB's '?roven Appraisers"and by alteringappraisals by it
24 receivedfrom otherqrise independent in appraisers violation of federalandstatelaws. /d., ,!lT35-39. 25
I"SI's actionin alteringappraisals otherniise and proc*s allowingWMB to controltheappraisal
26 wasdonein furtleranceof the conspiracy allow WMB to increase valueof its portfolio of home to the
lorns which it bundledandsoldon the financialmarketfor substantial 27 mortgage profit. 1d.,n16,9,33-
28 56. LSI's andEA's acquiescence WMB's demancls to forhigher appraisals, well astieir subsequent as
6
PLA rlFFg MEMRANDIfi IN OPPG'TNON UII APPMISAL LT,C'gMNOJ{ TO D|SNtr|s TO (RUW) CnSE NO.: 5:mOAFg@
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unlawful tamperingwith the appraisalprocessin furtheranceof the conspiracn are the car:seof Plaintitrs' injwies. 1d.,1ff16-9,37-39, The conspiracy LSI's actionsto firther the conspiracy 43. and
J
theypaidWMB to pmcurea lawful andcredibleappraisals whiohthey haveinjuredPlaiotiffs because
4 didnotreoeive..Id.,TlJ7,9,81,87,98, 110,L16,723,127. 104, Theconspiracy,andeachparticipants'
ofborrowerspayingmillions ofdollars to the actionsin firtherancetherein,hasresdted in thousancls for 6 tbreecompanies unlawftl andincredibleappraisals, includingPlaintift. Id.,{l65. LSI acknowledges roleby statingil managed process its ofordoing andobtainingappraisals the
8 for WMB from third-pany appraiseq trandlingvirtually all of the administrafivedutiesrelating to 9 obtaining*rc appraisalandby failing to denythat it participared the allegedconspiracywithWMB. in 1 0 ISI Br., p. 3. The ftct LSI, EA and WMB areall iisted aspartiesto Plaintiff Scholl's appraisalonly 1l
confirmsPlaintitrs' allegations LSI andEA actedin tandem thal with WMB despite beingcompetitors.
p.7.5 12 SohollReport,
13
EventhougftCalifomia law is cleartlat a conspirator beheld liable for its co-conspiraton' can
14 torts, and Plaintift haveallegeddamages resulting from the conspiracy, I.SI asserts that Article Itr 1 5 standing cannotbeformdagainst aparticipantin a conspiracy.LSIBr.,p.8. LSI's legalassertion here, l 6 muchlike its frctual assertion LSI had'ho involvement''witl Plaintitrs' appraisels, norhingbut that is t 7 a gameof hide-the-ballfrom this Courl JustasLSI's counselfailed to mention it was listed on the l8
Scholl Report as a party to the appraisal,LSI's counsel fails 1qnxentienthe existenceof Applied
t 9 Equipment Corporationettenthottg$.i1 2coftslling Califomia Supreme is CourtdecisiononCalifonria 20 law that has been cited ovr 4400 times by courts and in legal articles. SeeApplied Equipment 2L Corporation,citi:rg references.Insteadofrelying on authoritybindiag on this Cour! LSI's counsel
),
in argues its self-seatedvacuumthis Court shouldfollow the unpublished opinion in In re Westetn
23 StatesWholesale Naatral GasAntitnat Litig,,[email protected])for thenotionthat a co24
5 As I5I acknowledges,'an appraiser prohibitedfrom disclosingtheir appraisal is report'to otherthantle client andpersorsspecificallyauthorized the client."' LSI's Br., p. 3 quoting anyone by 26 USPAPEthicsRule, Confidentiality. LSI's possession ofPlaintitrs' appraisal reportswould therefore be evidenceof one of three things; l) That LSI was the appraiser's'ttent'' as listed in the Schoil n Repod;2) thd oneofthe appraiser'sotler clients,i.e. WMB, EA (thetwo allegedco-conspiraton)or 28 Plaintiff Schollgavepen:rissionfor the reportto be givrl to LSI, which Plaintiff Scholl did not; or 3) ISI is eitherpermitting or facilitating unethicalbehaviorby its appraisers.
25
7
PLAINFFA' MEMRANDIJUIN OPFGITIONTO I.E APPRATSAILLC'A rclroN TO DEIIIISS (Rnfiry') CASE NO.: dr(EV{xl8$
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)
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by conspiraxor carmotbe held liable for i{uries caused a conspiracy.LSI Br., p. 8. Howewr, In re to Western Statesis utterly inapposite Plaintift' actionhere. involved Minnesotaplaintiffs who were transfqred to the fisfict Cowt In re Western Stares of Nevadapursuantto 28 U.S.C. $ 1407,pursuing an antitust action againstmultiple natural gas for IureWestemStates,2003 WL486607 at*1. The oompanies anallegd pricefixing conspiracy.
4
f,
6 In re W6ten Stalesplaintiffs allegedtwo causes actionarisingunderMinnesota'santittrst statute. of 7 I 9 10 defendants moved to dismissone of the two countswhich voided a Id. T\e In le Western,lraras and contractsubjectto an antitrustconspiracy, alloweda partywho madea direct payor.ent thereonto recovertheir money. Id. To bring a claimunde!theMinn$ota statutory ofaction thedefendants caxse movedto dismiss,
1 1 theplaintiffs in-Iz re Western States to meeta specificjuisdictional requirement had ofrhat Minnesota L2 staful- i.a, having been a parly to a voided contract and having made a paynent thereon. Id.
IJ
Howwer, the vast majoity of theIn re Western States did defendants not enterinto anycontac8 with
t4 any of the plaintiffs in the action- Id. at*2. Accordingly the In re Western Statescourt suggested it
.t)
would disnriss tbal ciluseofaction asto defendants nevercontracted who with anyofthe plaintiffs, but
1.6 did not dismissthe claims at tbaxtime to allow jurisdictional discoveryto detenninewhetherfacts jurisdiction existed-Id. at*8,811. Seealso SegnonI.D,infra. L7 sufficient to establish 18 In re Westem that Slates' suggestion the piaintiffs theremight not have stnndingnndg! sns
hes 1 9 sectiononMinnesota'santitruststatute absolutely relevance Plaintifib' actionhere. Plaintitrs no to
tn
hereneedonlysatisfrArticleltrstanding forCalifomiastatelsr slaims,not the statutoryjrrisdictional
2L requirmentunder Mirn*ota's antitust stabte. Lujan,504 U.S. at 56G61. As Califomia law 22 specificallypermitsa plaintiff to pursuean actionagainstanymernberof a conspiracy regardless of 23 whelherthe conspirafor a directpartyto theplaintiffs transaction, was Plaintift haveproperlyalleged
z+
aninjury-in-facttied to LSI's pa*icipation in theconspiracy.See AppliedEquipment Corporution,869
25 P.2dat 511. Indeed ISI's relimce ot In re Western Statesis completelymisplaced because court the 26 thereacknowledged absent qpecificstanding the that requirement underMinnesota'santitruststatutq 27 aparty directlyor indirecily iqiuredby anrmlawfirl conspiracy pursueanactionagainst ofthe may any
7?
co-conspirators regardless ofthe existence directcontractbetween ofa thepartix. In reWestern States, I
FI.ANIFFA UEUORAI{DUII OPPOSITIOI UI APPRAEAL LLC UOTION Dts![ss N TO TO C4SE NO.: 5rlt81{0888 (RU!V)
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Article ID s&ndinghere. 2AAgWL 486607al *6, n. 5. Thrq In re Western Statesastlally supports Plaintiffs cannotestablish standing overI-SI throughclassallegationqciting ISI alsosuggests F,Supp.2d Forqziev. Sunlift InreFranldinMut. FandsFeeLitigation,3S8 451,46'1. @.N,J.2005); F.Supp.2d 118-1 (D.Mas 19 s.2006); Henryv. CircusCircasCasinos,Inc., Financial, 1nc.,417 100, alrd 5 6
.,
3
223 F.RD. 541, 543-5M @.Nev. 2004). SeeI.Sf s Br., p. 8. Thesecases likewise inapposite are to Ptaintitrs' action here because they do not deal wifi 3 slaim that the plaintiffs were injured by the operation a conspirary. See of Inre FranldinMut. Funds, 388F.Supp.2da1462(in a shareholder and dedvativeaction without allegationsof a conspirary,the coud dismissed without prejudiceclaims
r
mutual fundswhom the plaintiffs hadnot investedin); Forsythe,417F.Supp.2d 9 againstdefendant af
l0
118-1 (in a securities litigarion without allegations conspiracy, courtformdtheplaintiffs had 19 ofa the
l 1 no standing sueonbehalfofmutual firndstheydid not own);Circts Cirats Casinos, to Inc,223F &D. 1 2 zt 542 (m an FLSA actionwithout allegationsof a conspiraryagainsta company,the company'sa
parfiershipso joint ventures, Court dismissed but the 1 3 parentcorporatio&its subsidiarie,s, md the all
t4 acfualcompany employee the workedfor), t5
At most,LSI's cited authoritiesstandfor the propositionrhat evenin the classaction context
1 6 a plaintiffmust haveanfujury tracable to the defendanl See Forsythe,ALT F.Supp.2d I 1,8-1,19; at In t 7 re Franklin Mut., 388F.Supp.2d 461;Circus Circrs Casinos,223 at F.RD. at 543-544.Unlike ISI's 1 8 citedcases, Plaintiffs herehavesufferedaninjury-in-facttraceable LSI both by LSI's beinglisted on to t 9 PlaintiffScholl's appraisal reportasoneofthe partiesto thatreport andbyvirtue ofLSI's participation
in the conspiracyto inflale appraisal valuesfor all ofWMB's homemortgage loans. ^See SchollReporl
2L p.7 i seealsoApplied EquipmentCorporation,869P,2d. 51l. dfue nnlike any ofI^SI's cited cases, u1
,,)
underPlaintiffs' tleory herefle perpetration ofthe conspiracy caused samehamrto eachand has the
23 everymember ofPlaintiffs' class regardless ofwhich AMC hiredtle appraiser performtheappraisal. to
u
t{
FAc' ll,lJ 3G39,4j,-!,4,52-54. 8, As Plaintiffs havealleged:1) an idury-in-fact beingthat theypaid Defe,ndants lawful and for
26 credibleappraisals which theyneverreceived; thatthe irg'uryis traceable LSI's misconduct 2) to either 27 directly asevidenced PlaintiffScholl's appraisal in repott,or indirectly tbroughits participationin the 28 conspiracywith WMB and EA; and 3) Plaintitrs' injury will be redressed a favorabledecision" by
9
PLAII{TIFFSUEIfi)RAN TM OPPOSnONTO lst AppRAtsAL ttC'A MOnOI TO D0S!U}9 n CASE NO.: 6:@.C\t'0@84 (RM!V)
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1 Plaintiffs haveArticle III standingover LSL Tyler,supra,236 F.3d,af 1l3l-32. 2
J
C.
LS['s RoIe in t]e Conspiracy With WMB and EA Makes t]e Jurlsdicfonal Issue so InterMned with tle Substantivelssue that Dismissal at This StageWould be InaDDroDriate.
4
:
linking LSI to Plaintiff Even if Plaintiffs did not showstandingthroughthe specificevidence liability over all menrbers conspirary,which of Scholl's appraisal Califomia law establishiag and ofa
they have,a ruling on subjectmafterjurisdictionover I.SI is premature 6 course because question tle of
7 jnrisdiction over LSI overlapswith tbe medts of Plahtift'
acton Augustinev. U.5.,704F.2d1074,
8 1077(gthck.1983).'rilhereftejurisdictionaliszueandsubstantiveissuesaresointertvrinedtlattle 9 questionof jurisdiction is dependent the resolution of factual issuesgoing to the meritg fte on
shouldawaita determination 10 jurisdictional determination ofthe relevant&cts on eithera motion going
1 1 to the msrits or at tial." Augtatine,704 F.zd ax 1077 citing Thornhill Publishing Co. v. General
17
Telephone 730, 733-735(gth Cir. 1979). Corp., 594F.?.d, Unlike a faotualchallenge subjectmatterjurisdictionthat is ftrdependentofthe meritsofan to
I.'
t4 actioq whenjurisdiotion and the merits of an actionoverlap,"tbe court musq of course,employthe
tl
standard appficable a motionfor summaryjudgmentFarry. U.5.,990F.2d451,,454n to ," 1(9thCir, 1993). Plaintitrs,asthe nonmovingparty,needonly"set fofth specificfrctq beyond[their] plead:ings,
t6
1 7 to showtlat agonuineissueofmaferialfactsexist.- Trentacostav. Frontier PacificAircrafi Indwtries, 1 8 Inc.,8l3F2d,l553, 1559(9thCir.1987). LSlcanprevail"onlyifthematerialjurisdictionatfactsare t9 not in disputeand the moving party is entitled to prevail as a matter of law." Casurnpang Int'l v. 20 Iongshoremzn's Warehousemen's & Unian,269F.3d 1M2, 1060-61(9th Cir.200l)(citation omitted).
)1
Accordingly,a courtmustallow discovery takeplaceat leastto the extentnecessary detrmine to to its
22 own jurisdiction. Augustine, 204 F,2d ot 1079:'see also Thomhill, 594 F2d at 735 (lvhere the 23 jmistlictional issueand the substantive issuesare so intermeshed the questionofjurisdiction is tbat
dependent decisionon the merits,aparty is entitledto havethejurisdictional issuesubmitted the on to
25 jury, ratherthanhavingthe courtresolvefactualissues'). 26
AsshowninSectionLB,supra,Platntifsallegetlatl5lparticipatedinaconspiracywithWMB
27 andEA to stificially hflate thevaluesof homeloansby covertlyproviding unlawfido incredible,frlse
)9,
appraisals Plaintiffs insteadofthe lawftl, credibleappraisals which theypaid- FAC, TT6-9,35to for 10
FLANNFFg UEIIORANBIJII OPPGTIOI{ TO UI APPRAISAIT N ['T9 (RM!V, CdSE NO,: 8:084tdm88 iIOTTON DETISI TO
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a
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go allegations to theheartofthe meritsofPlaintiffs' cleimsthatthey 56,82,87. Plaintiffs' conspiracy actionsin providing unlaq.firlandincredible wereiqiuredby virtue eachoffhe allegedco-conspiraton thal LSI conspiredwith WMB or EA to inflate home appraisals.-Id. Proving Plaintiffs' allegations
4 eprraisal values would likewise prove Plaintiffs have standingto sue [SI. Applied Equipment
Corporation,869,P.2daf 5 I 05 11 (by panicipatingin a civil conspiracy, coconspirator a effectively
6 adoptsashis or her own the torts of othercoconspirators within the ambit of the conspiracy.In this 7 way,acoconspiratorincurstortliabilitycoequalwiththeimmediatetortfeasors');Weisz,278F.Slpp.2d
d,t192.
9
Where,ashere, the issuesofjurisdiction and the medts of Plaintiffs' action are completely
1 0 intermeshed thattheguestion so ofjurisdiction is dependent themedtsofPlaintiffs' actio&Plaintiffs on 1 1 are"entitled to havethejurisdictional iszuesubmitted thejury, ralherthanhavingfte oourtresolve to L2 factualissues," Thomhill,594F.2d at735, Therefore,it is premature this Courtto rule on LSI's for
TJ 1A
jurisdictional challenge prior to discoverybeingtaken" D. In the Alternative to Denying LS['s Motion to Dismissfor Lack of Subject Matter Jurisdlcdon Outttght Plaintlffs Requesl Jurisdicdonal Discovery to Respondto LSI's Cleims
15 t6
Plaintiffs haveestablished standing overLSI because Plaintiffs' iajuries stemdirectly from the
l 7 conspiracy betweenLSI, WMB, and EA and thereforeeachmenrberof the conspiracy be held can 1 8 jointly andsevemllyliable for PlaintifFs'tqjuries. ,See SectionLB., szpra. Shouldthis Courtconcludg 1 9 howwer, that thejurisdictional questiondoesnot overlapwith the meritsof Piaintift' claims,andis
still willing to enterfain LSI's challenge subjectmattsrjurisdiction, Plaintiffs reguestjurisdictional to
)1
discoveryto showwhetherjurisdiction is properover LSI SaePlaintiff's Notice of Motion; Motion In theNinth Circuit '\rhere pertinentfatts bearingonthequestion ofjurisdiction arein dispute, discoveryshouldbe allowed." Anu W. Airlines, Inc. v. GPA Group, Ltd.,877 F.zd 793, 801 (9th
22 andSup'porting Memorandum JurisdictionalDiscovery. for 23
u
25 Ctr.l989)(citingWellsFargo & Co. v. WellsFargo F.xpress Co.,556Fzd406,430-31,n 24 (9Ih
'arhen it is cleartbai firther 26 Ci,1,977)). Refusalto grantjurisdictional discoveryis only appropriate
27 discoverywouldnot demonstraJe sufficie,nt constitutea basisforjurisdiction" WellsFargo & facts to 28 Co.,556 F2d at 43U3I, n- 24.
l1
PL'TNITFFII' MEI'OFANDUU OPFGrflON TO!E ',PPRAtsAI- LLG rcNON TO USttrSI IN CA{tE NO.: &@-GV{@88 (RMIw}
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that Here,Plaintift disputeLSI's counsel's unsupported conte,ntion LSI had'no involvement which is LSI's entire basis for its chailengeto Article Itr or comection to- Plaintitrs' appraisals,
J
LSI report SchollReport p. 7. Additionallg standingbecause is listed on PlaintiffScholl's appraisal LSI's own affiant refrained from attestingthal I,SI l'tad not received,reviewe4 or altercd either FAC,IIIJ6-9,37-39;compareRiceAtr,{!f 6,9-15. As Plaintitrs'appraisalsasisallegedintheFAC. facts suffcient to constitutea basisfor it is not clear that further discoverywould not deinonstrale juridiction and in fact sugge$s Plaintitrs can establishjurisdictio4 this Court should allow
4
)
6
jurisdictional discovery, Well*Fargo & Co., 556F.2d at 430-31, 24, n. 9 10 1l
L2 IJ
II.
PLAINTITT'S EAVE PROPERLY ALLEGED CAUSES OF ACTION tr'OR LSI'S SPECIFIC AND CONSPIRATORIAL CONDUCT RESULTNIG IN I}AMAGES TO PLATNTItr'trS,REQUIRING DEI{IAL OF LSI'S RULE 12(BXO MOTION. .[ LSI was I]irecUy Involved in Plaintilfs' Aporaisals.
LSI movesto dimiss, pursuant Rule 12(b)(6),severalof Plaintiffs' causes actionunder to of thesamemistakenpremisetbatLSlhadabsolutelynoinvolvementwithPlaintiffs'sappraisals.,SeeI-SI
t4 Br., p. 10 (RBSPA"UCL, and CLRA), p. 12 @ESPA claims),p. 13 (UCL clains). Basedon LSI's 1 5 misguidedassertions, movesto dismissbasedon the ida Plaintiffs lack Article Itr standingand LSI
l6 t7 l8 thatLSI couldnothavebarmedthe,mbecauseLSlneitherlrepared orreviewed'Plaintiffs' appraisats. LSIBr.,p. 11. I5I citesto nothingto disputePlaintiffs' claimsthat theywereharmedby LSI's involvement
t 9 in the allegedconspiracy v/ith WMB andEd or to denythaf I5I was directly involved in reviewing, 20 preparing completing changing or otherwiseaffectingPlaintiffs' appraisals.6 Ptaint'rffs, however, 21, 22 23 24
)q
26 27 28
ISI's oounsel makesthe sameunsuppoded assertion thal I.SI had no role in Ptaintiffs' in its Rule 12(bXO argumentsas they did for IsI's motion based on Rule 12(bxl). appraisals However, LSI's counseldoesnot, and canno! cite to Ms. Rice's afrdavit to supportrhis assertion becauseo ISI's counselis well aware,I.SI camot rely on evide,nce as outsidethe pladings on a Rule 12(b)(Qmotion to dismisswithout convertingit into a motion for summaryjutgrrLenit- v. City of I"ee (9th Cir.2001). Evenifthis Courtwasto consider Rice's affdavit, LosAngeles,250 F.3d668,688 Ms. shedoesnot denyl-Sl's involverrentinPlaintiffs appraisals outsideofthe documents'lreparation"and "completion" and doesnot denyISI's involvementin the allegedconspiracy. Rice Aff., tltl 6, 10, 12, 15. However,shouldthis Court feel LSI's mgumentthat I5I had no role whaisoeverin Plaintitrs' appraisals supported Ms. Rice's affrdavit,Plaintiffs seekleaveto file a Rule 56(0 affidavit which is by will be materiallysimilar to Plaintitrs' Motion for JurisdictionalDiscoveryfor the evidence Plaintift believewill prove LSI di4 in-fact, affect Plaintiffs' appraisals either directly or throughthe alleged t2
fl.lTNflFFA' IIEITORA}.IDIIII OPFOSITIOI{ l.sl APPR^tsAL LLES UOTION DISMFS TO IN TO (Rlrlwl CASE NO.: &@{V{o888
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l inkingLSIto PlaintiffScholl's evidence appraiml, asPlaintiffs md have 1 have shown specific Fopsrly
z
as alleged several caus6 of actionfor beinggivencounterfeit appraisals part of their real estate
as in 3 settlement Accordingly, this Courtmusttaketheallegations Plaintitrs'complaint tue LSf s as
t+
for its reasons Motionto Dismiss lack for Rule12OXOMotionto Dimiss mustbedenisd thesame of standing should denied- ArgrmrentsA-8, supra. be L Sea
B. LSIos flat Californla doesnot Recognizea Claim Basedon Negligent is Misplaced, asPlaintifrs are not aNegligent Claim,
5 6
I
rhat Following LSI's flawed argume,nt Plaintiffs haveno standingand cannotothemiisestate
it 9 a claim against because desperately it wantsthis Courtto believeLSI hadabsolutely involve,me,nt no LSI l 0 in Plaintitrs' appraisals, proceeds arguethat slll sf plaiitift' to slaims (including their fedeml
l 1 RESPAclaim)mustbedismissedbecause Calilomia law does recognize neglige,nt not appraisal olaims. t2 I.SI Br., pp. 9-10. The overridingproblemwitl LSI's argumentis thaf Plaintitrs arenot alleging a 1 3 negligentappraisal claim. Nowherein the FAC do Plaintift suggest they aresuingDef, darfs, that t4 or ISI in particular,basedon receiving'begligent appraisals." l5
Plaintift areallegingDefendmts,includingISI intentionallyandknowingly conspiredsosell
l 6 Plaintitrsandborrowers couterfeit appraisals violatedUSPAPandfederallaw while passing that them 1 7 off asreal, credibleappraisals which they cor:ld rely on FAC, ![t[ 6-9, 36-39,4+56; seealso Scholl l 8 Report,p. 7, t[ 23 (The borrowor... may rely on this appraisalreport aspart ofany mortgageffnance t 9 transaction involvesanyoneor moreoftheseparties); Decl, of Stephen Rummage Support that M. in 20 of Defeardant WMB's Motion to Dismiss Plaintift' FAC, Exh. G ('Spean Report), p. 7 (same). 2l
Plaintiffs havealleged Defe'ndants, includingLSI, perpetnaled scheme purpose this with the orpress of
22 profiting offof unknowingbonowers.FAC, TT6-7. To this end Plaintiffs haveallegedDefendants 23 misrepresented the appraisals that werelapfirl and credible- not that the appraisals vere negtigently 24 performed.FAC,ffi7,56. While LSI pointsout that Califomia law doesnot ordinarilype'r:nita cause 25 ofaction ag"instabank for anqgligentlyperformedappmisal, providefor Califomia law certainlydoes 26 a causeof actionbasedon a misrqtresentation Plaintiffs havealleged. as
28
California Dept.ofSocialSewices Leaviu,s23F.3d1025, (gthCir. 2008). conspiracy. v. 1034 13
PLANnFFE '|EIIORANDUI!lN OPPOdnONTO tsl APPRAFAT_ LLC @nON m DTSUISA CASE NO.: 5:08.G1/.c0488 (RMW)
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In Nynarkv. Heart Federal Savings& Loan Ass'a 231 Cal.App.3d 1089(1991),which I5I
2 relies heavily on herq the court held tbat a lsnder may not owe a borrornerany duty of care in
4
{
with the preparationof an appraisalusedonly for the lendo's own pu4roses.Howwer, connection '"thatprinciple doesnot extndto shielda lenderor other,ntityfrom liability for making a negligent misrepresenation concemingthe substance an appraisaJ." of Lowq v, Eill & Co.Real E$ate,20A6
*8 6 WL 463517, (N.D.Cal.2\\Qkiting Bily v. Arthw Young& Co.,834 P.zd 745 (Cal. 1992). Especially ashere,anappraisaltleliveredto thebonower,rhetexprcssly it stares wasprepared the for
8 borower andlender,andthatboth theborrowerandlendercanrely on it in their mortgage tra:rsaction 9 Scholl Report p. 7; Spears Report,p. 7. 10
Califomiacourtsdisinguishnegligent appraisal from misepresentation cases cases because "an
1 1 appraiser aprofessional is assumed havesuperiorknowledge to onthe subjectofpropertyvaluationand 72 thus may be liable for an eroneous opinion of value rvherethe appraisalis intentionallyin error to 13 induceabuyeror lenderto enterinto atrarsaction,or because negligentevaluation ofa ofpropertythat L4 is below the industry standardof care.- Nan-Tuions Sports,Inc. v, Soren/lvr[cAdam"/Bartells, 86
Cal.App.4th303, 310 n. 3 (Cal.App.2000). Accordingly, Calihmia cor:rtsroutinely find that where
t 6 a misrepresentation madein connection is with an appraisal repor! eitherdirectly from the appraiser t 7 or when procured by a lender, an intenaledbenefciary can pursue a causeof action for any l 8 misrepresentation made.See,e.g.,Soderberg McKinnqt, 44 Cat.App.4th1760,1768-69(Cal.App, v. 1 9 199Q(anappraiserretained amortgage by brokermaybeheldliable to investors amisrepresentafion for 20 ntherqort);Alliance Mortg. Co.v.Rothwell,900 601,613-614 (Cat.l995xholdingalendercan P.zd 2l
')t
bring a ca:rse action against31gal estate of broker and appraiser mirepresenting the value ofa for prop*ry);Barryv.Raskov,232Ca7.App.3d,447,454455 (CalApp. 199l)(holdingthatamortgageloan
23 broker canbe heid liable for the ftaud or negligenceofan indepeNdnt propertyappraiser hires to it
|,^ ,{
securingproperly);Lowesv-Hill & Co.ReolEstate,206'$lL M3517 at * 8. appraise Here,Plaintiffs' appraisal eachidentiff Plaintiffs asthe appraiser's clients,Scho1l Report pp.
26 8-9; Spears Reporgpp. 8-17. Artditionally, Plaintiffs' appraisals statethat they andWMB 'hay rely 27 on this appraisal report aspart of any mortgagefinancetransaction invoives any one or more of that 28 tiese parties." Scholl Reporl p. 7; Spars Report p. 7,123. Where,a.s here,Plaintifs alege I^SI
l4
UEIIORAN nn N OPPCSITION tg APPRAFA| LLC'S UOIrONiO D0SGS PLAINTTFF$ TO C49E NO.r s:08.CV4f488 (RMY|I
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a
appraisals lawfully, andcredibln andthat misrpresentedthatthe werebeingperformed independently, Plaintiffs couldrely on themin decidingwheth,r bonow moneyfrom WMB, liability canbe found to See,e.g.,SoderbergM Cat.App.4that 1768-69.7 for LSI's miseprese,ntationThe tlree casesLSI cites in making its 'hegligent appraisal' argumentare irrelevant and inapposite Plaintift' artion hera ISI reliesmostheavily onNymark,supra, Besides to beinga ruling
3 4
6
onsummaryjudgment not aruling on thepler,dtngs, and Nymar* only involvedanegligence clainr,and not anegligentrnisrqr*entfron Nymark 23l Cal-App.3d 1096.T\e Nymarkcourtonlyconsidered at 'lwhethera lenderhasa duty ofcare to a borower in appraising borrower'scollateralto detnnine the if it is adequate securityfor a loar-- Id aI1095-96.Not only does fail on "if1arurft to speak IfI's duty
8 9
10 as an appraiser, not as a bank, but Plaintiffs hereclearly allegethe appraisals and were procuredfor 1l Plaintiffs'benefit aswell asthebanks.FAC,'lf||[SchollReporqp.T; SpearsRepo4p.T. Additionally,
1.2 thelender,WMB, did not procuretheappraisals its onrnbenefitin 6scidingwhetherto lendmoney for 13 rather,WMB pmoned theappra.isals partofits conspiracy as with EA andLSI to inflale valu* ofhome L4 mortgages facilitate tle saleof mortgage-backed securiti*.F.|C,ffi and 15 6,22a4.
I,SI alsocitesanrmpublished, non-citablesta.te decisiorq court appellate Zuri v. First Federal
(CaLApp.2001).E 1 6 Bank of Caldornia,20}LWL 1.656602 Sincea Califomia courtcouldnot rely on iq L7 this Conrt should likewise not do so. Regardless, hni, agu\ involved a negligentappraisal claim. 1 8 Lari,200L WL 1.656602 at*4. The courtheld theplaintiffcould not shte a negligentappraisal claim 1 9 against appraissr she the bcause wasnot the appraiser's clien! andtherefore dut5r no ofcarewasowed 20 2l laher. Id at I 5. Again, Plaintiffs allegethe'ywere indeed,the appraisers' clientsasis illushaled on
22
7 LSI goesso far to avoid the fact that Plaintitrs were the appraisers' clients that it states, 23 '?laintiffs werenot evenpe,r:mitted seethe resultsof the appra.isal to report" ISI Br., p. 10. This is 24 conbadictednot only by the FAC and Plaintitrs' appraisatreportq but also by federal law which rnandates lendinginstitutionsprovideappraisal thai reportsto borrowersanytime creditis secured by ,)\ a lien on a dwelling. 12 C.F-R- 2A2.14; U.S.C.$ 1691(e). 15 S 8 The opinion states its outsettlat "Califomia Rulesofcoufi, rule 977(a),prohibitscourts at andpartiesfrom citing orrelying on opinionsnot certifed forpubficationor orderod publishod, except 27 asspecifid by Rule 977(b). This opinion hasnot beetrcertified for publicationor ordered published for purposes ofRule 977." Apparently,LSI thbks it is Apropriate to nonetheless thedecisionnow. ,9, cite
26
15
PI.AINTIFFIY MEUORAI{OIJU OPPTTOX TO L.SAPPRTEAL LLC UIITIONTO DISIIISS II{
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Ukewise, 1 theirappraisalreports.FAC,lll[25.,59,64;Scho[Report,pp.8-9;SpearsRepor!pp.8-i7.
)
they the appraisers havea duty ofcarebecause
3 statedquiteplainlythat Plaintiffs mayrely on themin theirreal estate rransartions.FAC,fl25; Scholl
4
5
Report,p. 7, !f 23; Spars Reporqp. 7,\23.
Givrn tbat both the facts and claims involved are
that such a casesomehowrequiresdisnissal of completelydiffere,ntfrom Lurt, LSI's suggestion Plaintiffs' claims- noneofwhich areremotelypredicated a negligentappraisal is nonsense. on Finalln LSI itselfpoints outthat G4yv. Broder,l09 Cal.App.3d66 (1980)heldthatno clairns for nqgligentappraisals could exists 'lrhere appraisal negligentlysetthe value of the properfylower rhar thesales pricesuchthatplaintiffwas rmable secure to financingAom Veterans Administrationand
6 7 8 v
1 0 forcedto obtainaltemativeffnanciag." LSI Br., p. 9. Plaintiffs' allegations legaltheori* bearno and l1 resmblance to G4y,andthus Gayis not binding on this Court here. 12 LSI closesits 'begligent appraisal"argument with by asserting Plaintiffs car:notavoidthe thaf "standard oflaf' n Nymarkby "'rer,asinrga claim for negligentappraisal a claim underRESPA the as
l3 t4 l5 l6
UCI CLRA or for breachofcontract or rmjustenricbment."LSIBr.,p. 10. Thatmight be tue ifthis caserere aboutnegligentappraisals, it isn't. LSI cannotavoid defendingits legal conductby but
repeatedly castingPlaintitrs' caseasa'hegliged appraisal"case. As Abralam Lincoln is reputedto 1 7 havesaid *calling' a tail a leg don't makeit a leg." SeeNewberryv. Befort,28Kan-dpp.2d8|7,873 1 8 (2001). The sameholds tue here. t9 20
)1
C.
LSIts 6No Damages'Theory is Meritless.
LSI makesseveral'bo damages" arguments.e Firs! like its co-conspirators, attemptsto LSI e In makingthe arguments, blatantlymis-characterizes LSI Plaintiffs' pleading purportedly citing Paragraph ofthe FAC for the notion that Plaintiffs haveallegedthat "[i]n orderto protectits 21 interest and as a condition of enteringinto ihog6l6qns,WMB requiredthe zubjectpropertiesto be appraised-"Plaintiffs allegeno guef thing andLSI lnows thG. In fact, Plaintifs allegethe opposite. Plaintiffs' allegethat 'tistorically banksretaind ownershipofthe loan andmortgage"andthus their interestmasto ensure tle propoty was'lroperly appnisedandthat the loanamountreflectedthe that value." FAC, tf21. Plaintift noxt allegethat in rece,nt years,tlal taditional model haschanged./d. Now, lenders WMB sell their loansto inveshnent like banksandgovernmsnt sponsored entitieqwhich 'allowing public asmortgage-backed thenpool securitizeandsell the loars to the general securities, lenderssuchasWMB to profit from the volumeandvalue of the loansit has The largethe aggregate value of the loans,the more profit for the lender." Id. Thus,bankslike WMB no longer assume risk ofa bad loan,andbark profit now directly correlates thevolume andvalueofloans the to t6
n affrFFa'f{E [o&qt|Drr[r oPF(x[rox 7o LalaPFPA]sAL nr Ltc ltoloti 70 Dtsuss CA,SE NO.r&r,84V.00868 (RflW)
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thaf focuson the fact ftrarPlaintift sougbtandobtainedloansfrom WMB. LSI assefts '?laintiffs do
in between loan the 2 not allegehow, ifal all, thevaluesstated theappraisal reportsmadeanydtfferences
J
amounts werepromisedandthe loan ernounts that theyultimateiyreceived." ISI's Br, p. 10. This is
it because is not thetheoryofPlaindffs' case.Plaintiffs arcnot clriming thal they 4 not alleged" however,
5 did not receivethe loansthey wanted- They areclaiming tbat they paid for and expected receive to
6
but, lawful, credibleappraisals; instea4theywereprovidedwith counterfeit, that sbamappraisals were neithrlawfirl nor credible. FAC, T 82. Thefeestheywerecharged thesecounterfeitappraisals for are
8 their damages. Id.,n 87. 9
Likewisq LSI argues Plaintiffs *do not allegetheypaid anythingotherthanthe fair market that
1 0 value of the propertiestheypurchased-"ISI Br., p. 10. Again, this is a nonsequitm.Plaintiffs' case 1 l is predicaled the feestheypaid for counterfeitappraisals. on anylost valueoftle properti* they on not 1 2 obtainedafter theypaid thoseimproperappraisalfees. Plaintift arenot requircdto allegethat they
obtainedmore or lws valuablepropsties rhantheythoughttheywerebuying.
14
rhat ?laintiffs do not claim that theyusedthe appraisal LSI alsoargues reportsin connection
l 5 with the loantramactions,"citing a Vermontcasefor thepropositionthat Plaintiffs mustshowthatthe
proximately causedthem damages. LSI Br., p. 11. However,tle cited Vermont casq l 6 appraisals
t 7 Hughesv.Holt,l40 Vt. 38(Vt Sup.Ct.1981),is not authorityin this case, which alleges Calilornia state 1 8 law claimsanda RESPAclaim. t9
Moreover,the factsunderlyingthetheoryof the plaintiffs' clshnsin Hughes,which aroseout
20 of their purchase a housewhich wasinfestedwith termit$, makesit inapposite.Hughes,L4OYI of 21 at 38. Plaintiffs arenot claiming consequential damages the result ofa negligentappraiaal. see as 22 SectionTI.B.sapra. Plaintiffs areclaimingtheywereunlawfirlly andunfairly charged a real estate for 23 appraisal whentheywerenotprovidedforone. FAC, ![ 8l-82, 87. F:urrher,the Hughesdecisionarose
after a jury verdiot and the opinion was basedon the widence presented the case. Someof the in
,{
26 generated, ratherthanthelikelihood ofrepapnent. As such, WMB haslittle incentiveto obtainsredible
appra.isals md'everyincentive to offerthehigfuest amormts ofproprtyvalues possible, loan supporting theloanswith biase4 artificiallyinflatod, falseappraisals-1d.,ffi23-24. In effectPlaintitrsallegethat WMB providedthe ap'praisers to 'lrotect its interesf'- asLSI misleadinglysuglgests Plaintiffs' not is 28 allegation- but ratherto facilitate its efforts to insrease profits by selling loansto others. its
)7
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NIINNFFA 'IEI[oRAI{DU!' INOPP@MON TO I..SI ATPRAF|iIL LUYS iIOTNN IO DT}N (RUWI CJSE NO.! &s841l{}t8s
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reasons Court found the plaintiffs could not stalea claim againstthe appraiser their demages tle for that the appraisal reportwas confide'ntial hadnot beenprovidedto the and weretlat the factsshowed plaintiffs andthuscouldnot havebeenrelieduponby them,an4 in fact theyhadalreadyexecutd the purchase saleagexlatelatbeforc appraisal and was done.Hughesat40-41. This is in starkcontra.st the reportswhich statequiteclearlythattheyoouldrely to Plaintiffs herewhowereprovidedwith appraisal
2 3 4
6
rhat on themin decidingwhetherto borrow moneyfrom WMB, andmisrepresented the,y werelawfir1 and preparedin acoordance with USPAP when they were not but rather were cratd a part of
8 9
TU
Defentlants'allegedconspiracy. FAC,'1ff29,59-61,64.66,68-69;SchollReporqp.T;SpeanRepo{ p.7. Finally, I-SI actuallytackles Plaintiffs' dqmage thmry directly, claimingrhatPlaintift cannot
1 l predicatedamages the appraisalfeestheypaid because did not prepareor review the reports on LSI L2 and"moreover,tley werenot prepaed for Plaintiffs' benefit. I-SI Br,, p. 11. Here,again,it relieson 13 Nymark andGqt (discussed SectionIJ-B.,supra),asifthe statements thosecases in in aboutthefacts 74 ofthose cases somehowoverridePlaintiffs' allegations aboutthe factsoff&rs case, FAC, flfl 21-23, 15 29,59-61,&66,6869. 16
Despitethe n/isbirl lhinking ofI^SI andits co-defendants, mereinclusionof an"intended the
T7 usd'statement thecomierfeit appraisrlsat issuedoes s66s[6y immrrnize in x.6l themfrom beingsued 1 8 by Plaintiffs basedon the fees'trfairly charged Plaintiffs for suchcounterfeitappraisals.Perhaps to 1,9 after discovery,Defendants be ableto establisb someof the factsallegedby Plaintiffs lack will tlat
tn
evidentiarysuppor! for now, howwer, P1aintift' aliegations mustbe accepted true.r0 as D. Plaintiffs have Stated CognlzableRESPA Claims Under Sestions8(al and O).
2l
))
I^SI falsely asserts that Plaintifls do not have standing'nder RESPA"doing so by: (l) mis-
r0 LSI's closingsalvo,thet Plaintiffs do not allegetbat fees'\il/ere fictitious costs'but rather 'iwhatthe feesbougfut only thal themwerer/ofthless" is truly a distinotionwithout substance. Br., LSI p. 11. Ye, unlawful, counterfeitappraisals apparorfly were completed,aad mislading appraisal 25 r4orts which frJselyasserted theywereprepared accordance USPAPwereprovidetl The that in with 26 fact remainsthat Plaintiffs did not get what they paid for, wbat they were led to believethey were payingfor, and what thoy reasonably theywere payingfor. Tho fact that phoneyappraisal expeotod zt reportslvere prepared, consistentwith Defendants'conspiracyto use suchappraisals justify the to valuesof the loans WMB was reselling,hardly meansPlaintitrs havenot beendamaged paying by 28 moneyfor real appraisals whetrreal appraisals werenot provided.
a)l
23
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PLAIIfl1FFYUEIUORANDUN OPPS ITONTO UI APFRAF& LLC rcIlON TO DEIfils N CASE NO.! 5:@4V{@68 {Rlilw}
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characterizing RESPAviolations allegedin the Complaint- implying tharthe RESPAviolations the
(2) 2 alleged weresimplyfor overcharges; falselysuggesting Plaintitrsdid notpleadspecificeno,rgh tbat
J
received aresultofthe illegal referralarrangement; as factsregarrling amountofmoneyDefendants the and(3) inaccurately statingtbalPtaintiffsRESPAclaimsarebarredbythestafirte oflimitations. LSI's Br.,p. 12. As morefullyexptainedinPlaintiffs' OppositiontoWMB's andEA's Motions to Disnrisg
^
6
8(a)andO) against Plaintiffs haveallegedcognizable RESPAclaimsunderSections WMB, EA, and I5I. JeePlaintiffs'CombinedMemoranduminOppositiontoDefendantsWashingtonMutualBank's
I 9
1U
andFint AmericaneAppraiselT'sMotions to DismissFirst AmendedComplain! pp. 1-10. 1. Plaintiffs have allegeda violation of RESPA SecdonI (a).
Section8(a) of RESPAmakesit illegal for anyoneto give or accptany'1!ing ofvalue" for
1 1 a referralofsettlementservices.12U.S.C.$ 2607(a). Plaintiffs haveallegedthe exchange ofathing 12 ofvalue" in connection with the so-called sendces - i.e. WMB entered a conspiracy appraisal here into 1 3 with LSI to provide WMB with counterfeit sham appraisals exchangefor WMB referring its in
business LSI. FAC,'11{ 84. Plaintiffs also allegeWMB demmdedtbaf EA pay those L4 appraisal to 6,
1 5 appraisers providedthe counterfeit,shamappraisals 20% incentivefee for doing so. /d, 'lJ85. who a 1 6 Consequently, has beenpaid millions of dollar-sdiretly from WMB's borrowers,including LSI L 7 Plahtitrs, for providing counterfeit,shamappraisals 1d.,ffi7,59,64. . t8
WMB receiveda'lhing of valuq" the cormterfeitshamappraisals, exchange referring for in
1,9 businesstoI.SLSee24C.F.k3500.1a(dxdefining'lhingofvalue"tobeany'"thingl'rrhichwould 20 include a counterfeit,shamappraisal). Thus, WMB's agreenxent LSI to give WMB's future with 2 1 aryqiraisal seryicesbusinessin exchange LSI's provision of phony appraisals preciselywhat for is 22 SectionS(a)ofRESPAprohibits.24C.F.RS3500.14(b),subsection(c)(explaining"[w]he,nathing 23 ofvalue is receivedrepeatedly is connected anyway with tle volume or valueofthe business and in
rhrt it is madepursuantto an agreement refere4 the receipt of the thing of value is evide'nce or
25 understanding the referralof business').11 for 26
'.,
rr LSI argues without anyauthority- thatthe RESPASection8(a) claim camot go forward RESPAdoesnot probibit compe,nsation services for actuallyperformed. LSI Br., p. 12, The 28 because haq argument no relevance herebecalsePlaintiffs consisteatly allegedthe appraisal services werenot t9
PIAI{IIFFE UEIIoRANDUM OPPO$NONTO UtI AFPRASAI, LLG,SM6NOT TO DI}rcS IN CASE NO.: 6:08d{N1888 (Rltwl
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Plaintifrs have allegeda cogdzable Section8@) claim, PlaintiB also allegeda violation of RESPASection8 (b) which probibits anypartiesfrom giving or receivingany portion of any chargemade for settlement sereicesother than for services actuallyperformed 12 U.S.C. $ 2607(b). Plaintitrs allegethey, and membersof the Class,were services charged uneamed because appraisal an fee no wereprovided"FAC, !l 82. Here,the uneamed fee,onceagain,refersto the entireamountofthe apFaisal seniicecharged Plaintiffs.lzld.,ffi59, to 64.
4 5 6
8 9
LSI cites only Moore v. Radian.Group, 1nc.,233 F.Sup.2d819 @.D.Tex. 2002) for the irrelevantpropositionthal damages underRESPAarelimited to the amountof anyovercharge.r3 I,SI
1 0 Br., p. 12. Here,Plaintiffs bavenot allegedan overcbarge; ra:her,Plainti$ havealiegedthey were 1 1 charged senrices wgrenot provided- FAC, 1[82. Therefore, amountofdamagesasplead for tlat the
t2
L3 L4 15 i6
by Plaintitrs is the firll amounttheypaid for the counterfeigshamappra.isals. ld.,ffi59,64,87.
performed. FAC, T 85. ,See a/so Plaintiffs' CombinedMemorandumin Oppositionto Defendants' WashingtonMutual Bank's and First American eAppraiselT'sMotions to Dsmiss First Amended Conplainlpp. G9. '2
A more detailed desctiption of this argumentis provided in Plaintiffs' Combined Memoratrdum in Opposition to Defendants Washington Mutual Bank'e and First American 19 eAppraisell's Motions to DismissFirst AmendedComplaintat pages6-9,
18
2A 2l 22 23 24 25 26
J'7
28
t3 Morgover,Moore hasno precedential valuehere,andhasbeencriticizedby moretbanone cowt See v. Pettrey Enterprise TitleAgency,Inc,,241 F.RD.268 (NorthemDist. Ofohio,2006) ( A nr:mberofcourts haveaddrcsedthe issue. Earlier courtstendedto limit dmages to the amountof an overcharge, permitting Section8 actionsonly in instances thus wherean overcharge occurred-More recentoourtshaverejectedthesedecisions held tbat dsmages ABA claimsincludeall charge aad for paid to the shamABA The Court
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