Free Memorandum in Opposition - District Court of California - California

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1 Joseph Kravec,Jr. (AdmittedPro Hac Vice) N. SPECTERSPECTER EVANS &MANOGUE.P.C. Buiiding The 266 Floor Koprpers J 1521 9 Pittsburgb,Pennsylvania Tel: (4lDe2-2300 A Fax: (412)6424309 E-mail jlkj@ssemcglq

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Micbael D. Brarm(1614L6) 6 BRAUNLAW GROIjP, P.C. 12304SantaMonica Blvd-, Suite 109 7 Los Angeleso 90025 CA Tel: QLq 442-7755 8 Fax: (310)442-7756 E-maiI: [email protected] ka Spim (6764i) JanetUndner Spielberg(221926)

l 0 J. MarkMoore (LBA473)
SPIROMOSSBARNBSS,Il,P 1 l 11377West Olympic Blvd-, Fiih Floor Ins Angeles,CA 90064-1683 72 Tel: (3L0)XSA68

Fa:<: Qrc)85-2456

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E-mail [email protected] Attomeys Plaintiffs for

LAWOFFICES OFJANET UNDNERSPIEIBERG 12400 WilshireBlvd.,Suite400 LosAngeles, 90025 CA 392-8801 Tel: (310) Fax: (310) 278-5938 E-mail ibp:[email protected]

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IJMTED STATES DISTRICT COURT NORTHT'.RNDISTRICT OI' CALIFORI\IA SANJOSE DTWSION

FELTON SPEARS" andSIDNEY A JR 1 9 SGIOLL, onbebalfof themselves all and others similarlysituated 20 Plaintitrs. 21 22
v. WASHINGTON MUTUAL, INC., A

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CASE NO.: 5:0&CV-00868 (RMIV) CLASS ACTION PLAIN:IIFF'S' COMBIITED MEMORANDI'M IN OPPOSITION TO DETENDAIITS WASEINGTON MUTUAL BAIIICS AND FIRST AMERICAIT EAPPRAISEIT'S MOTIONS TO DISl}trSS FIRST AMENDED COMPLAIITT

23 Washingtoncorporation;WASHINGTON
MUTUALBAN&FA(alWa WASHINGTON MUTUd BANK); FIRST AMBRICAN EAPPRAISEII, a Delaware 25 corporation;andLENDER'S SERVICE, INC.,
z+

26
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Defendants.

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PI.AIIITIFFgCOMBIT{ED UEIIORANDUU OPPOSTNON DEFEIIDANF WASHI}ToTON TO O{ UUTTIAL BANKSAND HNSTAffERICAIIEAPPRAISEIT IIONOIA TO DlguFs FIFSTA E DEDcouPlA[T; CASE NO.:8:@V.00868 (RMUtl

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TABLE OFCONTENTS
PAGE

INTRODUCTION OFREVIEW STANDARD ARGIIMENT

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COGNZABLERESPA CI,AIMSLINDER PI"AINTtrFS'IIAVE STATED sEcTroN 8(A)AND (B). . . .
Plaintiffs ProperlyAlleged a Violation of Section8(a) Claim

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8 9 10 l1

1.

Plaintiffs allegeEA andI5lprovidedWMB with "a rhing ofvalue" in the form of cormterfeitappraisals aodtharWMB pmvided EA aadLSI with "a thing of business. value" in the form of WMB's appraisal Plaintiffs' properly allegethat WMB referredits business EA andLSI in sxshange the appraisal to for counterfeit,shamappraisals6

t2 l3 t4 15 16 l7 18 19 20 2l 22 23 24
?{

B.

Plaintiffs HaveSufficiently Alleged Section Claim.. 8(b) a 1. 2, Plaintitrs allegethey werechargedfor sendces thal n w e r e o tp r o v i d e d .". . . Plaintift arenot requiredto allegethet sharges v/ers ptoviders. splitbetween service Settlement ,...

........... ..,...... .......

7 8 9

C.

Plaintitrs' 1 Year Statuteof I imitatisns vrasTolled Until the New York Attomey General'sRevelationofthe Conspiracy wasMadePr:b1ic . . . . . . . . . . . 11 .........12 13

tr.

PI,AINTIFFS' CLAMS ARE NOT PREEMPTEDUNDER TIIE HOME o w N E R S ' , L O A N A C T ( a { O U , ' ., .) A B.

The RegulaloryFrameworkof HOLA DoesNot SupportPreernption This in C a s e. . ....... The UCL andCLRA areIaws of GsnralApplicabilityNot Subject to Preemption Under IIOIA , ......... 1. Plaintitrs' UCL andCLRA Claims do not impose require,rre,nts regardingtie processing oril$nationof or mortgages Plaintiffs' UCL andCLRA Claimsdo not imoose r e q u i r e n r ern tg a r d i no a n e l a t efd e. . . . : . . . lg r es e Plaintitrs' UCL and CLRA Qlaimsde ne1i66sss disclosures adveriising.. and .

... 15

......1E ,........... ....... 18 19 2A

2. 3.

26 27 28
C.

Plaintiffs' UCL andCLRA Claim fits squarely within the parametrs of$s60.2(c) .. .........

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BREACHOFCONTRACT Pi.AINNFFSHAVE STATM COGNIZABLE ,. -,....... CI.AIMSAGAINSTWMBA}.TDEA" Witl Plaintift HadA Conbactual Relationshio WMB AndEA For TheirAppraisals AllegeThatTheyHadAn Agreement'iVith Pkinti& Adequately An A WMB To Procure Agreement EA to Prepare Credible With And AroraisalIn Comnliance All LeealReouire,ments TbalAs With And Eaintifs Received Paid A'ResultOf Deddants' Conspiracy ForAFalge, ShmAppraisal FORDISMISSING DEFENDAT.{TS NO PROVIDE GOODGROUNDS PLAINTIFFS' UCL AND CLRACI.{IMS A B. ThetPlaintiffsIack Standing Sue FoTUCL To WMB'sArgument Violations Fails Plaintift' CLRAClaimIs Pro'perlyPleaded 1. Argument Without ls WMB's '!Goods'or 'Services" Mrit.. Plaintift Alege BothMisrepresentations Onigsions and Plaintift HaveAllEged D'mgges FromDefendants' Resulting Misoonduot

2T

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6 7 IV. 8 9 10 1l 12 l3 L4
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26 29 29 35

C. D. v.

PT.ATNTIFFS'QUASI-COMRACT/UNJUSTENRICHMENTCLATMTS PROPERLY PLE'{DED

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1,|

CONCLUSION

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u
25 26 27 28

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& Torts ed1 ProsserKeeton, (5th 1984) 130 $

.........22

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8 9 10 IL
1a

13
1A

15 t6 L7 18 19
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2l 22 23 24 25 26 27
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vlt

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,

TABLE OT'AUTHORITIES
CASES: v, Anerican Builder's Association Au-Yang,226 App.3d 170(1990) Caf. PAGENOS. .......,.. .........34 -...... 33,34 17 24

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Augastinev.FIACreditSenn.,N.A.,4S5F. Supp.2d 1172(8.D.CaL.2007) Berryv.AmericanExpr*sPublishing, Inc.,147Cal.App. 4t'224(2007) (S-D.N.Y.2006) Binettiv. . Wash. Banh446F.S*0.2d217 Mut.

6

.. ... ......

(CD.Cal.1990) .........22 Bloomv.UniversalCitySardias,.Izc., 1990U.S.Di$.LEXIS9955 8 9 Brilqtv.$aeof CaL,5&F.2d849(9d"Ct.L977) Busbyv. JRIIBWRealty, Inc.,513 F.3d 1314(1lth Cir. 2008). . . ..... 12 . . . . . . . . . 9, 11

1 0 Cal. Med,Ass'n, Inc, u Aetna U,S.Healthcare, 2 9 4 C a l . A p p . 4 ' 1 5(1 0 0 1 ) ..........40 11 Cariasv. Letax Financial Mortg. Corp,,20A8WL 397339(N-D.Caf.2008). . ........ 5 T2 Chamberlan Ford Motor Cotnpany,N.C 03-2628CW (N.D. Cal., Aug. 6,2003) . . . . . . . . . . 15 v.
1?

l4 l5 L6
LI

Cipollonev. Liggett Group,Inc., 505U.S. 504(1992) C o h e n v . J P M o r g a n C h a s e & C o . , a a 1 . , 4 9 8 F . 3 d 1 1 1 ( 2 ' d C.i r . 2 0 0 7 ) . . . . . . . . . . ColwellConpanyv.Hubert,24SCalApp.2d,56T(1967)..

. . . . . 15 1 0 ,1 1

.......23 16

Cuevasv.Atl.os 5ews.,2008U.S.Dist LE)ilS 9614(N.D.Cd.2008) ....... RealtylFinancial Engalla Permanente v. Medical Group, Inc.,15Cal.4th95l (1997). EnreachTech.,Inc, v. Embedded Intemet Solutions,Inc., 403F.Supp.2d968(N.D.Ca1.2005) Erwin v. City of Angels Camp,City Council& Planning Commission, 1 9 9 2 U . S . A p p . L E X I S 3 3 8 1 0 ( 9 ' C i r . , D e c . 1 4 ,.1 9 9 2 ) . Ewerty. eBay, 1nc.,2008 9M162 (N.D. Cal.March31,2008) . . WL Falk v. GeneralMotors Corp.,496 F.Supp.2d1088(N.D. Ca1.2007) Fenningv.Glenfed, Inc.,40Ca7.App.4th1285,47 Cal.Rpt.2d715(1995) Fidelity Federal Sav,& Loan Ass'n v. de la Cuesa, 4 5 8 U . S1 4 1 , 1 0 2 5 . & . 3 0 7 4 , 7 3 L . 8 d . 2 d 6 6 4 ( 1 9 8 2 ) . . . ...,,..27 ...........39 .........

18 19
)i

2l 22 23 24 25

lZ

. . . . . . . . 39 . . . . 38, 39 .........16 ........... ........... L4 39

26 FirstNatiorwide Perry,llCal.App.4h 1657 Savingsv. 0992). 27 Flanaganv.Germania,F.A.,872F.2.d,Z3l(8thCir.1989) .. 28
lll

..... 15

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1 Fun-DamentalToo,Ltd. v. UniversalMusic Group,Inc., 2
J t

1 . L 1 9 9 7 U . S . D i s tD ( S 9 5 9 7 @ . D . P a "9 9 7 ) .

..........22 . . .. ... .. 23 ...... ............ 11 39

Inc, Corp., GarlockSealingTechnologies, v. NAK SealingTechnologies 148Cal. App.4tl937Qw7) (9thcir.2003).. Geraciv.HomestreaBank34TF.3dTLg Ghirardov.Antoniali,l44h390996) .0 19 G i b s o n v . u . S . , 7 8 1 E 2 d t 3 3 4 p ' I 0 b .8 6 ) Gibson WorldSavings Ioan Assn.,103 & Cal.App. 4th 1.291. . . v. (1950 . Graddonv. Ktight,I38Cal.App.2d577

5 6 7

...........12 . 13,14, L6 . ...... 23

9

Haehlv. Wash. Md. Bank,F.A.,277 F. Supp.2d933(S.D.Ind. 2003) . .

. . . . . . . . . . . . 19 . . . . . . . . . . 11 .. . ... 2s

1 0 Heimmennanv. First (Jnian MortgageCotporation,30s F.3d 1257Of'Ci,2002) 1l Helus v. EquitableLife AssurailceSocietyof the UnitedStates, . 309F. Supp.2dll70 (N"D.Cal.200r'.) .

Hernandav. Hilhop FinanclalMortgage, lnc.,2007WL3101250,(N.D. CalOcL22,2007).. . 33
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t4 15 t6 l7 18 t9 20
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Hillsborough Comty, FL v, Atxomated Medical Laboratories,Inc., 471U.S. 707(198t . . . . . . . 18 Hirschv. BankofArnerica,l|T App.4e708(2003) Cal. . Bank,38Cal.App. 4th274(1995) HiEv. First Intelstate Holmbergv.Arnbrecht,327u.S.392,39+396(1946). (N.D. I11. In re Ameriqtest MortgageCo.,2007$/L 1202544 Aptil23,200n InreOcwenLoanSenicing,ILC,491F.3d63S(7thCir.2007) ... ....... 39

. . .. . .. . 32 ........12 . . . . . 33,34 .......... 15

*41 In Re:Mersarp /2c., 2008U.S. Dist LE)(IS 4A473 (S.D.Tac.,May. 16,2008) . . . . . . . 10, 11 Jefersonv. Chnse HomeFin,2007 U.S.Dist LE)(LS 94652CN.D. Cat.200n . . . . . .15-17,32-34 (N.D. Jiangv.Lee'sHappyHouse,20A8WL706529Ca",Mar. 14,2008) ........... 4

22 23 24 25 26 27 28

K a h r e r v . A m e r i q u e s t M o r t g . C o . , 4 1 8 F . S u p p . 2 d 7 4 8 ( W . D . P a . 2 0 0 6 ) . .. . . . . . . . 5 Kajitaniv. DowneySav. LoanAssa F.A.,[email protected]). . . . . . . . . . . 17 and MortgageCo.,2005WL 1910927 (N.D. CaLAug. 10,2005) Knoxv. Ameriquest Korynenbeb nagstar Banh F.5.8.,242Mch. App.21,617 N.W.2d706 v. Lambros Metropolitan Insurance v. Life Company,ll1 Cal. App,46$ Q003) Lane v. Residential Funding Corporation,323F.3d 739 (9th Cir. 2003) . . . . . 33 . . . . . . . . . 15 .,,... 25

..... II

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Cal. ANp.46723 (2000) 1 Lectrodryerv. SeouIBanlc,TT
.,

. . . . . . . . . . . . 39 . . .. . 7,29 . . . . . , 38 ....... 13

668 Cir. 2001). . Leet. Cityof LosAngeles,2i}F.3d (9'h LiMandri v. Julkins. 52 Cal. App. 4& 326 (1997)

4 5

Cal.2000 Lowesv. Hill&Co. RealEstate,2006 WL463517(N.D. Marla v. AcwenLoan Sewicing,2008WL344210 (N-D. Cal. Feb. 6,2008)

. . . . . . . . . 36 ........31,32 . . .. . . . 39 .....17,20,32,35 ,..... 39

6 Mazwy. eBayInc.,2008WL618988(N.D.Cal.2008) 123 McBridev.Boughton, CalApp.4th379 Q0M) Inc.,lA2CaLApp.4tul457(2000 . 8 McKellv.WashinglonMutual, 9 (2003). Melchiorv. NewLine Productions, Inc,,106 Cal.App.4th,779

1 0 Mendozav.Rast Pro&rceCo.,Inc,I4l Cal.App.th 1395QA0q l1 Neu-Yisions Sports,Inc. v. Soren/McAdadBartells,36 Cal. App. 4fr 303 (2000) (9th 320F.3d920 Cir.2003)

. . , . .. .. 7,27 . . . . . 13 .. .. . 4 . . . . . 13,35,36

t 2 No. 84 Employer-Teamster Joint CouncilPensionTrustFund v, Am. W.Holding Corp., 1,3 t4 15 t6
Roolrardv.Msicoach,680F.2dl257(9thci.1982).. Nymarkv.Hean Fed.Sn. &LoanAss'n,231 Cat.App. 3d 1089(1991) .

Peoplea rel. Sepulveda Highland Fed. Savings& Loan, i4 Cal.App.4th1692(1993) . . . 17, 18 v. Peninv. United8taes,444u.S. 31 (L979) .. . . . 10 .........17 11

L7 18 t9
Siegelv. AmericanSavings& Loan Assn., 210Cal.App.3d953,258calRp[.746(1989)

S c h u e a v . B a n c O n e M o n g a g e C o r p . , 2 9 2 F . 3 d 1 0 0 4 ( 9 m C. i r . 2 A A D . . . . . . . . . . . . .

......15, 17 . . . . . . . L4,16,20,21 . . . . . 21 .......11 . . . . . . . . . . . 15 ......... 24

20 Silvas E*TradeMortg. Corp.,5l4F.3d 1001(9rhCir.2008) . . . . v. 2L Slaughterv. VanCleve,2OO7 Dist. LE)(LS90947(CD. Cad.. U.S. 2007) 22 S n i l q v . C i t i b a n l c , 5 1 7 u . S . 7 3 5 ( 1 9 9 6 ) 23 Smithv. Wells FargoBank,N.A.,135Cal.App.4th1463(2005)
z1

SwxetMilling&GrainCo.v.Anderson,3gCaL2d773(1952) .

25 IheMissingLinkv.EBAY, 1nc.,2008WL1994886(N-D.Caf.May5,2008) 26 Van (1988) deKanpv.BankofAmerica,2M App.3d819 Cal. 27 VanSlykev. CapitalAnzBank,503F.Supp.2d1353 (N.D.CaJ2007).. 28 Welehv.Centac Horne EquityCo.,323F.Supp.2d1087(D.Kan.2004) . .

........29 ..27

.........

..........34 ............ 5

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IITTRODUCTION (the that in Plaintitrs'FirstAmendedComplaintlalleges essence Plahtiffs andotherborrowers and agreed providePlaintitrswith lawful, independent for to "Class') paid Defendants andDefendants with their homeloans from Defe, rdant $ashington Mutual reportsin connection credibleap'praisal Bant<,FA('IMMB'),butPlaintiftandtheClassnwcactrallyreceivedthem. FAC[[7,25,29,33, ('AMCs), r:e., Companies 56, 81-82. hstea4 WMB conspiredwith two Appraisal ManagNnetf (EA') andknder's Servicq[rc. (TSI), to providePlaintiffs First AmericaneAppraiselT Defendants

4 5 6

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to with appraisal reports on WMB loa:rs that appeared Plaindffs and the Class to be credible, witl theUniform StandrdsofProfesional Appraisal appraisal reportsdonein compliance independent

1 0 PracticeCUSPAP') as required by stateand federal law, but in rcality were covertly crafted by that 1 1 Defendan8to be falsg counterfeitor shamappraisals wereunlawfirl andhadno value, FAC, fi[ reportsby artificially inflating home 12 6-8, 33-56. Specifioal1y, WMB badEA andLSI falsi$ appraisal
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in reportssothai WMB could suppodmeking refereirces appraisal valuesand/oreliminatingnegative

marketandto 14 highervalueloanswhich IilMB couldthenprofit fom by sellingthemon the secudties
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unbeknownst third parties. FAC, '||lll6, 38-39,443, 5L-52. By so doing the EA andLSI appraisals,

1 6 to Plaintiffs and the Class,violated USPAP, were renderednot gredibleor independent, were and
ofno real value. FAC, ![[ 81-82,96. 1 7 simply false,shamappraisals

l8

The allegations ofPlaintiffs' FAC arewell supported-Indeed,Ptraintiffs'quotein their FAC

l 9 from severalof EA's e-mails obtainedby the New York Attorney General'sinvestigation,which 2A evidenceDefendants'false appraisalconspiracy, FAC TT 39, 4743, 45, 47, 53-55. Morover,
(IIUD-l) which show 21. Plaintiffs' FAC references ownappraisal their reportsandSetfleme,nt Stateolents
))

with Plaintitrs' appraisals that Plaintiffs were ctarged for Defendants' Defendants'involve,ment and

23 purportodappraisal services, which wereneveractuallyprovided Plaintift. FAC,nT59,64. Indee4 to 24 Plaintitrs' FAC allegestbat Defsndants'conspiracyand the truth abouttheir appraisals being false, 25 countrfeit,shamaprpraisals unlinownto Plaintift andconcealed Defendants was until November by 26 27
I This refen to Plaintitrs' First AmendedComplaintfor Damages, EquitableDeclaratorymd 28 Irg'unotive 28, 2008@ocketNo. la) @erehafter'TAC'). Relief, filed March 1
COMBINED PLAI}'TIFFS' GM)RANDIJU IN OFPG'TIOII TO DEFE}IDAII'AWASHIM}TOI{ IJUTL T BSTKS AXD FNSTiIIEMCAII EAPPRA'SEIT TdIlOiIS TO (RU!V) Dauss FtRsI arE{DED cOliPLA$[i CA,SE NO.: 5:@a1r{@

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1, 2007when the New York Attomey Generalmadehis investigationof Defendants'false appraisal

public. FAC ![ 70. 2 conspiracy
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and Plaintiffs assert olaimsarisingfromDefendants'misconduct conspiracyunder Section8 of Act the Real EstaJe SettlNnent Practices Act (RESPA ), the Califomia Consumer Legal Remedies C'CLRA'), the Califomia Unfair CompetitionIaw ('UCL'), and for breachof contractand quasicontract. FAC, ffi 9, 78-127. WlvID andEA seekto dimiss ali of Plaintiffs' individual claims,and justi$ dismissalof assert variousgroundsfor dismi5sal.None oftlese profferedgrounds,however, Plaintiffs claims al this preliminary stageof the proceedings. First, Plaintiffs haveallegeda cognizable RESPA Section8(b) claim againstWMB andEA

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1 0 because Plaintift allegeDefendants failedto provideanyservicefor themoneyPlaintiffs paid asapart t1 t2 of their settlementservicesfor an appraisal. FAC, Tfl 81-82. Likewise, Plaintiffs have allegeda cognizabie RESPA,Section 8(a)claim against Defendansbecause Plaintiffs allegeWMB providedEA

1 3 and I^SIwith appraisal referralsin exchange a'1hing of value" to WMB (not Plaintiffs), i.a, the for 14 provision of false,counterfeit shamapplsisalg.FAC, u'ilJ 84-87. That WMB andEA wish to dispute 15 whethertheyprovideda service Plaintiffs or athing ofvalue to WMB for referralsto EA is irrelevant to 7 6 on a motion to dismissasthe Courtmustacceptastrue Plaintiffs' well-pled allegations which sup'port L7 their REPA claims. 18 Defendants Second, impropedyattempttocouchPlaintiffs'claimsasanegligentappraisalcase

19 forwhich no liability erdsts undrCalifomialaw. However,plainlffi'slaims areactuallybased solely onDefendants' misrepresentations fraldulent conduct connectionwiththeir appraisal and in reportsfor
)1

which Defendants liable underCalifomia law. are Tbirid, DefendantsassertPlaintiffs' claims are preemptedby tle Home Ownersl-oan Act

22

23 CTIOLA'). But, HOI"A doc not preemptanolherfederalstaJute suchasRESPd nor doesit preempt 24 Plaintitrs' sta:te contractlaw slaims,nor doesit premptstateconsumer fraud claimsunderthe CLRA 25 or UCL sincetley arelaws generallyapplicableto all businesses de ae1impinge on any learding and 26 activity covered byHOLA. hdeed Plaintitrs do not complainaboutDefendants' right to charge fee a
for anappraisal thereasonableness or ofany suchfee. Rather, Plaintift simplycomplainthattheypaid

28 for a lawful, credibleappraisal theyneverreceived-This claim underthe CLRA or UClwould be tbal
2
(:oIIBINED UEIIOI|AIIDUUINOPFOSTNON OEFENTIANTg PT.flNTTFF!' TO IIIASHII{GTON UUTTIAL AANKTS Al{O FIRST AMEflCIN EAP?MTgET9 UOTTONS TO Drgura}s FIRST AMENDED (RUW) COUPTATT;CASE NO,: 5:084.v{A@

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paid for md not providedwasanappraisal something 1 no differentwhetherthe goodor service else. or Hence, nothingaboutPlaintift' clains impingeon specificlendingactivitis contolled by HOLA and
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thus thereis no preemrption. claim theyhadno contact with Plahtitrs for an appraisal, thereis no Fourtl, Defendanls that

4

5 breach of any appraisalcontrast with Plahtiffs md Plaintift sutrerd no damages. Of course,
120 6 paragraph of tle FAC expressly allegesthat WMB ngreed procuroa lawfirl, credibleappraisal to

7 for Plaintiffs, WMB asPlaintiG' agert contracted tleir behalfwith EA to provide that appraisal, on
EA gqer.edwhil purportedto be anappraisal report andWMB deliveredit to Plaintift andcharged
v

themforit FAC,{ 120. Theappraisal repodsandtheHI,ID-1sforPlaintiffs confirrntheseallegations.

l 0 ' Ptaintitrs firrther allegethaf, unbelnownstto then:"the appraisalreportsDefendants prepad were l 1 false, shamreportsthat bad no value. FAC,\ 122. That WMB and EA would prefer to deny its
1)

contmctualobligationsto Plaintiffs, iE conductbreachingthose contacts and Plaintiffs' tlamages

13 therefromis againirrelevanton a motionto dismisssincePlaintitrs' well-pled allegations mustbe that
1'

take,tr true establishali of the elements their breachof contractclaim. as of Fiff3, WMB's contention Plaintiffs donothaveUCL standing thar because theypurportedly did not allegedamages belied by Plaintifls' numerous is allegations that they paid for a lawfrl. sredible

15 t6

that t 7 appraisal they neverreceived.FAC, Tn7, 56, 61, 66. That federallaw may haverequiredWMB

1 8 to obtainanappraisal unavailingsincefederallaw doesnot requie WMB to charge the appraisal is for
1 9 andcertainlydoes rquire WMB to obtainot chargeforthefalsq shamappraisals not actuallyprovided
ti

to Plaintiffs. Sixth, EA is incorect as a matterof law when it claims appraisal servic* arenot a -good or

21

22 service" under the CLRA Moreover, courts have expresslyfound that zuch servicesprovided or 23 obtainedby a lenderin connection with the overall loan mr:saction areffnancialservices covered by 24 the CLR d Thus, WMB's contentiontlat appraisalservicesare really an extensionof credit not 25 coveredby the CLRA is alsowmng. Defendaoe' additioml contentions Plaintitrs do not allege that 26 a misrepresenadon omissionor darnages their CLRA claims aremeritless. Ptaintiffs plainly or for 27 allege thaXDefendantschargedthem for appraisalreports that were purportedly credible, lawfu1 28

PLAII'MFTS'COUENE UEIIORANINruN OPrcMON TODEFE DANTAI|'AS| SION MU'UAL BAT{ICS AI{O FIRSTATIERICAI{ EAPPMTSEITS IIOTIONS TO oEUIsS FIRST AIiENDEDCOIPLA$Ii CASE NO.: 6:@.0/.008@ (RMW]

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that 1,7, appraisals, whear fact theywerefalse,shamappraisals haveno valueat all. FAC, T1J 56, 59, in 61,U,66. below, WMB's andEA's motions For thesereasons asfurtherd*cribed in the Argume,nt and

4 to dismissPlaintiffs' FAC restonimproperandincorrectassertions offact andlaw andtherefore should
)

be deniedin their entirety. STANDARD OFREVIEW As rhis Courtbassuccinctlystafed" "loln a motion to dismissunderRule 12(b)(6)the issueis

6 7

8 not whatplaintiffha,sor will beableto prove,but whethertheallegations, which arepresurned true,ae
a claim.Jiangv, Lee'sEappyHouse,2008WL7M529,*1(ND. Ca, 9 sufficient''tosfate crgnizable

1 0 Mar. 14,2008xseeborgm.j.)(citationomitted). Here,PlaintiB'FACnotonlysufficientlyalleges eash 1l
of their causesof action,but thoseallegationsare also supported the appraisal by repods and otler

1 2 documerrts incorporated refere,nce their F AC. No. 84Employer-Teamster by in Joint CouncilPension 1 3 Trwt Fundv. Am. W.Holding Corp.,32AF3d920,925n.2 (9th Cir.2003)(acourtmayconsider on t4 a motion to dimiss documents incoryorated reference plaintiffs conpiaint). by in
ARGT]MENT

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PLAINTIIT'S' EAVE STATED COGMZABLE RESPA CL{MS 8(A)AND(B).

UI\DER SECTION

18 t9 20
)1

WMB and EA arguethat Plaintifs cannot asserta claim under the Real Bstale Settle,ment Procedurs Act C".BSPA ), 12 U.S.C. $ 2601 et seq,basedupon the mistakenidea thar what they actuallyprovidedto Plaintift and otherborrowerswere appraisals.However,what they providedto shamaprprl6isslg. detailed Plaintiffs andotherborrowers at wereo best,counterfeit, As below,WMB, EA and LSI fraudulentlyconspiredto re'nder appraisals would reflect WMB's desiredloan amount, that irutead of the tue market vaJueof the properly. Plaintift were chargedand paid for legitimate

22
z5

24 25 26 27 28

appraisals part of their real estatesettlerneNf.As a result of Defeardants' as conspiratorialconducl Plaintiffs neverreceivedwhat theypaid for. Defendants violatedRESPASection8 (a) by eagineering a quid pro quo in which WMB referredits busiaess EA andISI and"in exchange doing so,EA to for and I5I pmvided WMB with counterfeit,sham apprraisals which WMB deliveredto and charged

4
PLANIIFFS @MBIXED I{EITORAIIDUM OPFOSITION BEFEI{DAITTS IN TO WAHINSTON UUTIIATBANKAAND HET AIiERICANEAPPRATSETS OTOTOI,S TO (RMW) USUr;g F|lsr$,BDE COUPLANT;CASE NO.: 6:@4r/408S

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1 Plaintitrs. Defendants violued RESPASection8 (b) by fsiling to providePlaintiffs with a settlement 2 servicefor which Plaintiffs were charged.
5 4

^A.

Plaintiffs Prooerly Alleged a Yioladon of Section8(a) Claim 1. Plainfiflr allegeEA and LSI provided WMB witl 6a thing of value'in the form of counterfeit appraisalsand that WMB proriided EA and LSI with 'a thlng of value'in the form of WMB?s appraisal business.

6
1

RESPA Section8(a)provides: (a)Business refe,rrals. personshallgive andno person No shallaccept fee,kickback, any ar thing ofvalue pursuaot an agreement understanding, or othenrise,that to oral or business incidentto or partofa realestate settlement serviceinvolving a lit'erally relared mortgage loar sballbe referredto anyperson- (Emphasis added). WMB andEA tryto escape liability for Plaintiffs' Section8(a)claimbased their erronous on assertions that: (1) WMB receivedno '1ting ofvalue" for referringbusiness EA aadLSI ${eIB Br., pp. 6-7), to and(2) Plaintitrs did not claim akickbaokwasinvolved. WMB Br.,6-7; EA Br., p.5.2 Neitherofthese argune,nts withstandscrutiny.

8 9 10 1l 12 1,3 14

Theterm "lhing ofvalue" is broadlydefned and"includes,without limitafion, monies,rhings,

prograrn,... service ofall typesaf special disoountq...theop?ortunitytopartioipaXe amoney-making in or free rates." 24 C.F-R-3500.14(8. '"The term 'palment' is usedtbrouglout [the regulations]as l6 qmonym.ous the giving or receivingany 'th;ng ofvalue' anddoesnot requiretaasfer ofmoney." witl 15

t7

18
19 20 21 22 23 24

Kahrerv.AneriquestMortg.Ca, 418F.Supp.2d,748,755n.9 (W.D.Pa.2006)(quoting 24CJ.R-g 3500.14(d)), "An agreemflt or understanding the referral of busines insidnt ta or part of a for settlemelrt serviceneednot be written or verbalizedbut may be esablishedby a practice,pattern,or ofconduct " Catriasv. course LenoxFinancial Mortg. Corp.,2008WL397339,*3 (N.D.Cal.2008xslip copy)(quoting C.F3- $ 3500.14(e).*Whena rhing ofvalue is received 24 repeatedly is comected and in anywaywith thevolumeor valueofthe business referred,thereceiptsfths thing ofvalue is wide,lrce

2 EA fails to cite a singlecasezupportingits argument' Moreover, BA's relianceon Welchv. Hone Equity Co,,323 F.Supp.2d 1087,1097-1098 (D.Kan. 2004) for the propositionthat a Centex 26 Seotion8ft) claim cannotbemadefor charges madefor services perfomredfaitlftlly or accurately, not is misplaced.Plaintiffs do not baseeithertheir 8(a)or 8(b) claimson this partioularpremise,andEA fails to cite anyotherauthoritywhythis Courtshoulddisniss Plaintiffs' RESPAclaimsagainst EA's it. 28 Brief,pp.4-6.

25

5
PIA{TIFFS' CO@IIIED IIEIIORAI{DUM OPFOSNOI.I DEFENDANTA IO IN WAAHIIqTONUT.IIUAL AANKSAIID HBT ANERFAN EAPPRAFETS UOTIONS TO Dts ES FIRIITAffENDEDCOIIPT-AIN?| CASE NO; 5:08.C!{!}88 (RMWI

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or for 1 that it is madepursuant anagreement understanding tle re&rral ofbusiness.".Id. Thefact tbat to
)
J

in the transferoftle thing ofvalue doesnot resultin an increase anycharge madeby thepersongiving whetherthe actis prohibited"'24 C.F.R.$ 3500.14GX2). ths rling ofvalue is irelevant in determining of Here, Plaintiffs allegetle exchange a "lhing of value- in comection with the counterfeit

.+

a 5 appraisal service.Specifically,WMB enteredinto conspiraiorial agreeme,ntwithEA ISI forthem and for 6 to provide WMB with counterfeit,shamappraisals exchange WMB refemingall or most of its in ap'praisalbusin*sto them.FAC, !fif 6,33,35,84. Consequently, andLSI havebeenpaidmillions EA 8 of rlollars directly tom WMB's borrowers for providing countsrfei! sham appraisals, Id., n 7. thar 9 Additioratly, Plaintiffs allegeWMB de,manded EA andI-SI paythoseappraisers providedthe who a I O counterGit shamappraisals 20Yo incentivefeefor doing so.1d,ffi85,94. WMB, received a'1ting ofvalue" - i.e. counterGit shemappraisals in excbange referringmore appraisal for business EA to '1hing of value" to be any'lhingl' which would include 1 7 andISL ,lee24 C.F.R 3500.14(dxdefinine a
It
IJ

countorfeit shemappraisal).Thus,WMB's agreements EA andISI to give therr all of WMB's with

14 appraisalservices business exchange EA and LSI providing shamappraisals preciselywbat in for is
lf

(e) Section8(a)ofRESPA probibits.24 C.F3- $ 3500.140), subsection (explaining"IMhena thirg of

1 6 vaiue is receivedrepeatedlyand is connected any way with the volume or value of the business in 1 7 referrd tle receipt of the thing of value is evidencerhat it is made pursuantto an agreemem or 1 8 understanding the referral ofbusiness'). for 19 20 2L
))

L

Plalntlffs' properly allegetlat IYMB referred its appraisal buslness1oEA and LSI in erchangefor the counterfeit sham appraisals.

WMB arguestlal Plaintifs fail to allegethat referralswere madeand thereforethey cannot maintainaviolation ofSection 8(a). WMB claimsrhat:(1) therecannotbeareferralbetween settlement

23 serviceprovidersbecause (2) appraisals not settlement are services; therecannotbe a referralbecause 24 borrowershaveno freedomto selectthe appraisers; therecannotbe a refemal (3) because appraisers the 25 ae acthg asagentsfor WMB. WMB's Brief, p. 7, pp. 7-8, p. 8 n. 3. 26
Contraryto WMB's assertion, however,appraisalservicesare considered typical settle,ment

27 servicessubjectto RESPA ^fee12 U.S.C. $ 3500.2(specificallyproviding that a Settlement sreice 28 includesthe 'tendering ofcredit reportsandappraisals')
6
PI,INTIFFy @U TIEDdEfiORANDUM @PC6MON To DEFENDANTS IN II|SI{INGTOI'I UUTUALAANKS ANDFIRST AIIERqAN EAFPMISE!?S ITOTIONS TO oErfiss FRsrAlrEl{DED coMpr.flNl CASE NO.: [email protected]@ (Rt[w)

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1

themselves is simplyinelevant-Id.,pp,1 -8. the Thalborrowersarenot freeto select app'raisers

2 Agai4 the unambiguous language RESPAbeliesthe falsity ofDefendrnts' proposition:"a referral in 3 alsooccus \rhenevra personpayingfor a settlement serviceor business incident theretois roquired 4 to use(se$ 3500.2,'lequired use') a particularprovider of a settlernent serviceor business incident
thereto.'24 C.F.R $ 3500.14(f).A'tequired use"is "a situarion which apersonmustuseaparticular in

6 provider ofa settlemerfservicein order to haveaccess somedistinct serviceor pmperty, and the to
personwill pay for the settlement serviceofthe particularprovideror will pay a charge attributable, in

8 *ihole or in part to the settlement service." 24 C-F.R $ 3500.2. Here,Plaintiffs wererequiredto use 9 the appra.isers WMB's choosing i.a EA or I5I, andPlaintiffs paidfor thato'service." of FAC, TT6, 33, l 0 35, 59, 64; see also Affidavit of JosephN. Kravec, Jr. in Support of Plaintift' Memorandumin
("ItavecAff.'), Exh-1 ('SchollHUD'),p.2,Line803; 1 1 OppositiontoDefendants'MotionstoDismiss,

12 Declarationof Stephen Rummage Supportof DefendantWashingtonMutual Bank's Motion to M. in 13 DismissPlaintiffs' First Ame,nded Complaint('Rr:mmagsDec.'), Exb-F (Spears HUD'), p.2.,Lne 14 803. l5
Last WMB attempts evade obviousSection8(a)referralviolafion by simFlymakingthe to the providedtheir serr.ices WMB, not to borowers." Wl\[B's Brief, t 6 falseassertion '1heappraisers that to

L7 p. 8 l- 3. WMB's assertion plainly wrong by the faceof Plaintiffs' appraisal is reportsandthe factsas 1 8 allegedin the FAC.3 19
zv

2l 22 23 24 25 26 27
tR

3WIUB hasattempted insertfactsinto their Rule 12@XQmotionby asserting to LSI andEA ae process.WMB's Briel p. 9. This is a factnot in Plaintifs' FAC and actingasits agents the appraisal in judp.e,lrt. cannotbe considercd the courtwithout convertingWMB's motion into onefor summary by Leev. City of Los Angeles,25o F.3d 668,688 (9th Cir. ZAlq(litingRJlJe 12@)(6)). Accordingly, shouldthis Court believeWMB's agencyargumenthas any relevmce to Plaintiffs' RESPA or other slaims,Plaintiffs are entitledto take discoveryto determine whetheror not the telationshipbetween WMB andEA a:rdLSI is, kuly, a fduciary relationship.If it is, Plaintitrs believeEA andLSI thenowe Plaintiffs andotherborrowemthe sarre fduciary obligationsit owesWMB by virnre of WMB acting asPlaintiffs' agentfor theseappraisal tansactions. See Argument$ IlI, infra.; seealsoMendoza Rast v. ProduceCo.,lnc.,140 Cal.App.4th1395,1404-05(Cal.App. 2006)('1f an agentis authorized the by principal to employa subagentthe subage,nt owesthe samedutiesto theprincipal asdoesthe agent'). Thus,if I.SI andEA areindeedWMB's agents, virtue of being sub-agents Plaintiffs' agen! they by of owe the samefiduciary obligationsto Plaintiffs asthey do to any other principlq and Plaintiffs will amendtheir comDlaint reflect these&cts. to

PLANTIFFACOMBIXED IIEIIORAIIDUUIII OFFCAjIIONTO DtsUIaAHRSTAMEI{DED CO!!PI-AD{r;GASE NO: 6:08V{08@

(R}tWl

MUTUE!BAI{KS At{D NRATAIIERIcAN EAPFR'IFEITA UOTTONS TO

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1

FAC,ffi3, 59,64. Plaintiffs allegethey hired WMB to act astheir agentto procureappraisals.

forboth WMB's andPlaintiffs' benefiL 2 Seealso |fr" infra Plaintiffs paid WMB to procureappraisals
5 4

FAC, nT 59, 64; Scholl HUD, p. 2, Line 803; SpeanHUD, p. 2, Line 803. WMB, actingasPlaintitrs' both for Plaintiffs' andWMB's benefit.FAC, tlll 6, 35, agent hired EA andLSI to procureappraisals

with Plaintitrs' allegationgboth WMB and Plaintift are ide,ntifiedin Plaintiffs' 5 59, 64. Consistent 6 ap'praisal rpofls alrthe appraiser's clients for whom the repodswere prepared. Kravec Aff., Exb. 2 (Scholl Reporf)" pp.7-9; Rummage Dec, Exh. G ('Spean Report'), pp. 8-17. Moreover,eachof 8 Plaintitrs' appraisal reportsstatethat both Plaintiffs andWMB may rely on the appraisals the home in 9 mortgage trarsactions. FAC, tl 25; SchollReport,p.7,\23; Spears Repor! p.l,n23. Plaintiffs'

were by 1 0 app:a.isals purchased Plaintiffs fhroughtheir agentWMB for Plaintiffs' benefit andnot simply 1l forWMB's benefiL Moreover,WMB citesno regulatoryor anycaseauthorityfor its lofty proposition

12 that a minimrm of tbree parties are required in order to make out a RESPA Section8(a) referral
violation, To the contary, Section24 C.F.R 3500.14G)(1) provides:"A business entity (whetho or

14 not in a:r affliate relationship)may not pay any otherbusin*s e,lrtityor the enrployees any other of 1 5 business entity for tle referralof settlement ssrvicebusiness." 16
Plaintift hereallegedEA andLSI providedWMB with a *thing ofvalud'- thecounterfeit, sham

t 7 appraisal reports- andin exchange WMB providedEA andLSI with thousmdsof appraisal referrals.
pre,mised 1 8 FAC, Tll 6-9, 33, 35. Plaintiffs' complaintis squarely uponthis illegal referral arrangement

1.9 betweenWMB andEA andLSI [d.,Ifl 6,84. Basedon thesewell-zupported allegations the FAC of 20 tlere areno legitimategrounds- legal or logical - for Defendants'contentiontlat Plaintitrs' RBSPA 2t Section8(a) claim shouldbe dismissed22
z)

B.

Plaintilfs Have Sultrclently dleged a Sectlon8{b) Clain

WMB and EA also 2ssertthat Plaintiffs failed to rrrakeout a claim rmder Section 8(b).

24 Specifically,EA's defense on the &ulty prenrisethai Plaintifs fail to allegetley were charged lies an 25 lmeamed fee"@A's Brie{, p, 5), while WMB's defense ir the equallyfaulry prerrisethat evenif lies 26 Plaintift allegethey paid an 'lrnearned fee," they cannotbring a Section8(b) claim unlessit is an 27 'lndivided, uneamed fee." WMB's Briei, pp. 12. Both of theseassertions specious. are 28
Seotion8(b) ofRESPA provides: 8
PLANNFFA'COIdBINED IIETTORAI,IDIJII OPPOSTIoNTO DEFENIIINTS IN WASHINGITON UUIruAL BAN|CS AND FIF!'T AITERC6NEAPPRrcS}EII.S UOTION9 TO Dlsulss FIFSTAUB{DEDcol(Pl-{Flri CASE NO: 5:0&a1,{(E@ (RMWI

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I 2
3

No Splitting Charges: personshaltgive andno personshallaccept portion, any of madeor receivedfor the renderingof a real split, or prcentage any charge setflement senrice connection in with a fi:ansaction involving a federally estate relaledmortgage loan ottrer than for servicesashally performed. tlat 12U.S.C.$ 2607(b)(Enphasisadded).UnderRESPA,'?ay'r::ents areuneamed feesoccuri4 but where:..(3) onesetfleme,nt serviceprovidercharges consumer feewhere a arenot limited to, cases the no, nominal or dr4 icativework is done." RBSPAPo1icy2001-1: Clarificationofstatrrent ofPolicy

4
J

6 199-1 Regading LenderPayments MortgageBrokers,and Guidance to ConcemingUneamedFees 8 I Defendants attemptto obfi:scate issuesby suggesting caseis aboutovercharges the this while 10 11 iporing theplain ianguage ofthe complaintwhich alleges that"Platndfs andthe Classzeya"recetved the appralsalsemice whbh thqlt werechargeil by Defendants havebeenclamaged and thereby.' for FAC, ![82 (emphasis added).]rdee4 Plaintift paid to haveaoappraisal in reportprepared connection with their loaas.1d,nn59,64. WMB hired EA andlorLSI to providethe appraisals Plaintiffs paid for.
L1

UnderSection 8(b),66FedReg.53052, 53053(Oct 18,200l)(codified 24 C.F.R $ 3500). at 1. Plaintiffs allege f.heywere charged for servicesthat were not provided.

t2
I.f

Id.,nn 6,33,35. EA or I5l in furtherance oftheir conspiracy with WMB, provideda counterfeit sham
lf

16 T7 18 19
ZU

appraisalthat is ofno value ai all,1d.,ffi38-39, Indee{ a counterfeit shamappraisalis no more tle (which Plaintiffs paid to receive)as counterfeitmoneyis the oquivalentof a truq credibleappra.isal equivalent oftue greenbacks. Thus,accepting Plaintiffs' allegations tue Plaintiffs haveadequately as stateda RI'SPA Section8(b) violation based their allegations theypaid hundreds dollarsfor on that of ge,nuine, credibleappraisals part oftheir settlemxent as senrices, which theydid not actuailyreceive..Id. , 1182.4

2l 22
z3 z+

25 26 27 28

4Defendants' citedcase areinapposite sincetheyrelate thereasonableness feescharged to ofthe and/orpossibleovercbarges. Thee cases implicate a diffrent type ofRESPA Section8(b) violation thar alleged lhsn theanalysis byPlaintiffs - requiringa differentanalysis requiredfor thet5peofRES?A Setion 8(b) violation pied here. SeeBusbyv. JRHBWRealty,Inc., 573F.3d 1,31,4, 1324(|lth Ctr. (stafingSection8(b)'allows for fwo typesofviolations: first, wherea settlement 2008) serviceprovider chrges the consumer feewhereno, nominal,or dtrplicativework is done,2001SOP,66 Fed.Reg.at a 53057;and second, wherethe fee chargedis in excessof the reasomblevalue of goodsor facilities provided or tle servicesactually performed.'). Busb, the most resentCircuit Court decisionwhich includesa comprehe,tsive analysis ofthe currentstateofthe law regarding variouspossibleRESPA tle Section8(b) violations,wasnot citedby Defe,ndants. 9
PLAINIIFFg @UBINED dEI'ORANOT'IIIN OFPCI$flOTI DEFENDATAWASHTSTONUJIUAL AANKA ANDFIRST TO AUESICAN EAPPRIIS JrA WTT'I DE$ES FNST AUE},IDED @!,PLAINT! GqSE NO.: 5:O8AV{0888 (RMYg} TO

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[+

,'
J i

2.

Plaintilfs are not required to allegetlat chargeswere split between settlementservics provlders.

a In advocating behalfofits positionthafPlaintitrs cannotsustain Section8@)claim - a claim on they allegingthaf Plaintiffs werecharged se,rrdces did not receive- WMB citesa numberof 7t and for stanclmg the propositionthaf Plaintiffs must allegethe fee was"splif,' or "shmed" 86 Circuit cases for

)

underSection8(b). WMB's Briei pp. 9-10. ('The text of Section8@),aptly entitled 6 to be actionable 'Splitting charges,' 1 pmhibits a persononly from glimgorreceiving'anyportion, split, unambiguously offees charged comectionwith thesettlement in ofcertainmortgage-related 8 orpercentage' transactions 9 'other than for servicsactuallyperformed')(emphasis odginal). Significantly,what is completely in from WMB's analysisis anyreferences the 2001-1Statement Policy by HUD aaAressing to 1 0 absent of of 1 1 this particularcomponent a Section8(b) claim. WMB's inteqpretation not only beliedby HUD's G t2 policy state,men!but also by the most recsnt casesinterpreting RESPA including WMB's own
IJ

authority. SeeCohenv.EMorganChase&CO.,eta1.,498F.3d111,125(2dCir.2\|1)(holdmga

14 Section8(b) claim doesnot requirea split in feesto be actionable). 15
The basicla:rguage the stafirteusedin the alte,r:rative of must be construed give eachte;nn to

444U.5.37,42 (1979)(words statuteareinterpreted taking the L6 meaning,Penin v. UnitedStates, in as

t 7 ordinary, conternporary, common meaning). Indee4 RESPA Section 8(b) says "any portion...or 1 8 percentage ofany charge madeor received." AII or 100%ofa chargeis certainlyincludedwithin the t 9 ambit of"anyportion or percentage."If Congress intendedthe requirement a "split" it would not of 20 haveusedthe tems "any portion or percentagd'in additionto the word 'split'' because the stafute then 21, would simply be redundant.Id. Yery recently, the SecondCtcuit addressed exact question, this 22 concluding therewasno requirement feesbesplit amongst tlat that settleme,nt serviceproidert. Cohen, 23 498 F.3d at 12+25 (finding the statuteambiguousan4 for that reason,deferring to the agency 24 interpretation expresedinHltD's 2001Statement ofPolicn holding'We nowhold thatHUD's Policy 25 Statement reasonably interprets$8(b)comprehensively probibit uneamed to fe.es, whetler reflectedin 26 a chargedivided amongmultiple partiesor an undividedchargefrom a singlelender,asin this case'); 27 seealso Iu Re: Merscorp Inc., 2008U.S. Dist. I-EXS 40473r'41 (S.D. Tex., May. 16, 2008xCourt 28 concludes Section8(b)'s language that appliesto undividedcharges).
l0
PTANTFFS'COITBII{ED !'EIAONTTDU}IIII OPFNON TO DEFEI{DANN' $'AS}IINCITON MJNNT BA IiS AND HRATAIIERICAN EAPPRAtsEITS UOITONS TO DISUESnREr AUE DEDcol|Pr.Al,tTi CASE NO.: 5:@V{(@ (R[rW]

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1

Althoughthe Ninth Circuit hasyet to address issueofwhether Section8(b) claimsfor no or the

providers,theNinth also 2 nominalservices requireallegalions thecharg* weresplit between thal service
J

Circuit hasacknowledged theRESPAStatement that ofPolicy 2001-1by HUD is entitledto substantial

1006,1009(9thCir.2002);Lanev. 4 defere,nce. Sclrueav.BancOneMortgageCorp.,292F.3d1004, ResidentialhmdingCorporariono323F.3dT39,T42:743,744 N6(9thCir.2003);Geraciv.Homestreet (9thci,2003). Moreover,theSupre,meCourtoftleUnitedStafesmandates 6 8an1c,347F.3d749,751 are deference Snzileyv.Citibank,Sl7U.S.735,739 (1996) 7 that agenryinterpretations to be accorded .

I

judgmentsof agencies (*It is our practiceto defer to the reasonable with regardto fhe meaningof

9 ambiguous termsin statutes they arecbarged that witb edmini*ednd). This 2001Statemenr ofPolicy 1 0 shouldbe affordedthe fuIl forceoflaw . Heirwnennan First UnionMortgage Caryoration,3Os v, F.3d 1 1 1257,1261 (llth Cir. 20O2)(tsecause power to issue interpretationsis expresslydelegated the in L2 RESPA the 2001SOPcaries the frrll force of law. As a result we give deference the 2001SOP'). to t3
The questiouasto whetherRESPArequiresthe splifting ofchargesfor unearned claimsis fee

in L4 squarelyaddressed HUD's 2001Statement ofPolicy

t5 16 t7 18

SinceRESPAwasenactedHUD hasinrerpreted Section8ft) asprohibiting any.person from giving or acceptingany uneamedfees,i.e., chargesor paymentsfor real estate sefilementservicesother than for goodsor facilities provided or servicesperformedPaymentsthat are uneamed for se:ttlement bccur h, but are not'limited to, seryices cases where: ... ; or (3) one settlementserviceprovider chargesa consumera fee where non lsmlnal, or duplicative work is done, or the fee is in excessof the reasonable value ofgoods or faoilities providedor the services actuallyperformed.

1 9 2001 Statement Policn 53057. @mphasisadded). Thae is no require,ment the settlement of that 20 serviceproviderssplit their feesin orderto allegea claim for a Section8(b) violation whenPlaintitrs 2L haveallegedthat the serviceprovider charged fee for a servicethat wasnot provided- Accordingly, a 22 Plaintiffs neednot allegeWMB split feeswith the otherDefendants b'ringa section8(b) claim. See to 23 Busby, 51,3 F.3d al L325-26(providing an indepfl analysisof what constitutes unearned feesunder
)A

Section8(b) of RESPA); Cohen, 498 F.3d 1I 1 at l2+L25 (holding "that HUD's Policy Statemeirt

25 rcasonablyinterprets$8(b) comprehensively prohibit uneamedfees,whetherreflectedin a charge to 26 divided amongmultiple partiesor an undivided chargefrom a singlelenda, asin this cx); In Re: 27 Merscorplnc,2008 U.S. Dist LE)(I,S4.0473,*41 (S.D. Tex. 2008)(concluding Section8(b)'s that 28 language applix to undivi
1t
PLANNFFS COITBII{ED UEITORAXDUII OFFOSINON DEFENDANTA IX ICI WAgIIII{GTOTMJTUALBANKg ANDFIisI A!{EF!CJI,IEAPPRTISEI?S MONOII8TO DEUIIIg FUIST A{ENDEDCOMPLAINTi CASE NO.: ir08CV{}0888 (RMWI

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1

Plaintiffs haveallegedthey werechargedfor a seryicetlai wasnot provided - a proper claim

2 underSection8(b). Altlough ftgrs is conflictingarthority regarding vfiether ornot afeeha-qtobe split
J

betweensettlement servicepmviders,tlere is authority demonstrating that tle 96 Circuit rpsatdly defersto HUD's 2001Shfsne,ntofPolicy - thesameState,ment ofPolicy in which HUD unequivocally states thereis no fee-spiittingrequirement.Plaiffitrs claim of a violation of Section8 (b) shouldbe sustainedC. PlainfiIfs' I Year Statute of Limitations was Tolled Until the New York Attorney General's Revelaffon of the ConsDlracywas Made Public

+ ) 6

6

9

RESPAstatuteof limitations argument limited to PlaintiffScholl sincePlaintiff Defendants' is

10 Spears clearlyfiled his RESPAclaim within the oneyearRESPAstafuteof limitations.WMB's Brie{ 1 l p. 5. Plaintitr Scho1l's RESPA claims,however,were tolled until Defendants'conspiracy falsiff to 12 appraisals was first madepublic by the New York Attorney Generalin November,2007 asPlaintift havealleged-FAC, fln 67-70. Jekingthesoallegatielsastue asrhis Courtmuston amotion to dismiss 14 and applyinguluitable tolling to PlaintiffScholl's RESPA ciaims in liglt of Defendants'fraudulent conspiracy, statutorytime periodwould not beginto run until Plaintitrs eitherbecame the awareof the 1,6 agrement, hadreasonto becomeawareof the agreement. or Holmbergv. Annbrecht,327 IJ.S. 392, 1 7 39+396 (l94Q(udess Congress statesotherwise,{uitable tolling shouldbe readinto everyHeral 1 8 stafute limitations);Erwin v. City afAngels Canp, City Comcil & Planning Contnission 1992U.S. of (9thCir.,Dec.14,199\ (fhestatuteoflimitationsperiodistolledifaplairrtiff'has L9 App.LF)flS 33810 20 beeninjured by fraud or concealmrfand remains in ignoranceof it without any fault or want of 2l diligenceon..fterl part' Brileyv. Snte of Ca1.,564 F.2d 849,855(9th Cir. 1974. 'The statutorytime 22 period doesnot begin to run until discoveryof the mjwy.' Id; accord Gibsonv. U.S.,781 F,2d 1334,
z3

134445 (gth Cir. 1980. Plaintiff Scholl presents detailedallegationsshowingshe and all other meurbers the Class of

24

25 wereneithrawarcofDefendads' concealed conspiraoy agreemen!nor hadreason be awareofthe to
prior to Novenrber1, 2007- the datein which the New York Attorney Generalannormced 26 conspiracy

27 his intent to suetle appraisers the practicesforming the foundationofPlaintitrs' complaint.FAC, for 28 ffi 67-70. Theseallegations must be accepted fue on a motion fo dismiss. Accordingln Plaintitr as
12
FLANNFFS' @NBINED MEUORANDT'IUOPPG NOT TO DEFENDANTg N I{A$IIN6TON TIUTI,ALEAXKST AME|RICAI{ AXD FIRST EAPPMISBTA iiONONg TO DFtlsl FIRST A!|EI{DEDcoMra.A$Iri C{qSE NO.: 5:0841r{XE@ (RU!Y)

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wasfiled onFebruary 2008,waswell within RESPA'soneyearstatute 1 Scholl'sinitial complainttha.t 8,
)

oflimitations onceeguitabletolt;trg is properlyapplied. II. PLAINTIF'FS' CLAIMS ARE NOT PREEMPTED T]NDER TITE HOME OWIIERS' LOAI\IACT ('HOLA') WMB belins ib preemptionarguaent from a falseprendse, its erroneous i.e., assumption that thecollateralofa loan aslong asthe lender*doesnot exceed scope the ofits conventional asa msre role

4 5

6 underCalifomia law a lendercannotbeheld liable to a borrowerfor anappraisal lenderprocures on the

8 lenderofmoney." WMB Br., p. 12,citing Nymarkv. Hart Fed. Sav.& LoanAss'n, 231.CaJ.AW. 3d 9 1089,1096(1991). EA makesa similar claim ai page13ofits brief. Of cnrrse,Nymarkaddresses only l 0 a claim of simplenegligence performinganappraisal.Id. Here,however,Plaintiffs arenot alleging in 1 1 negligentperformance, raf.her their appraisals that but weremisrepresented fraudulentlyperformed and 1 2 by WMB and EA as part of their conspiracy. FAC fi 6-9, 51. Under Califomia 1aw,le,nders and
appraisers alike areheid liable for their misrep'resentations fraud in connection and with an appraisal.

L4 SeeLowes v. Hill & Co. Real Estate,2006 WL 463517"{'8 (N.D. Cal. 2006)(finding that Nymark's 1 5 principle that a bank doesnot owe a duty of careto a borrowerfor a negligenflyperformedappraisal 1 6 "doesnot erfendto shielda lenderorotherentityftom liabilifyfor malcing nqgtigent a misrepresenta.tion 1.7 concerning zubstance the ofthe appraisal');Neu-Visions Sports,Inc.v. Soren/McAdamlBartells,86 CaL 1 8 App. 4th 303,310n.3 (2000)(an appraiser liable'lrhen theappraisal intentionallyin enor to induce is is 1 9 abuyeror lenderto snterinto a transactior,orbecause ofanegligentevaluafion ofpropertythatis below 20 the industryslandardof careJ. 2L
Like tlis enoneousprcmise,the remainderof WMB's and EA's presmption arguments are

22 inapplicablehere. 23
A. The Regulatory tr'ramework of EOLA Dos Not Support Preemntion ln Thls Case

u

Federallychartered savingsassociations regulaledby Home Owners'loan Act 12U.S.C. are

25 $$ 1461, et. seq. ('HOLN) which srealedthe Office of Tbriff SupervisionC'OTS') (12 U.S.C. 26 $1462a(a)) authorized to issueregulations prescribing operation and it the offedralsavings associations 27 accordingto the'best practices ofthrift institutionsin the United States." Gibsonv. WorldSavings& 28 Laan Assn.,103 App. 4thI29l,I297 (Cal.Ct. App.2002). CaI.
IJ

PLAI{TIFFE COUtsNED METRANDIjU N OPPGITIOI{ TO

DFutsanRST AUENDED coKPLA[fii CASENO.:6:08-6t{(888 (RffIt4

TruN'AL BAI{ICS AI{D FIfiEIT AUERCAII EAPFRAtsEITA !lOTIOlIS TO

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In 1996 the OTS issued12CER$560.2Q002)tn addrxspreemptionin thecoatextofle.r:ding operarions statingthatthe'1OTS hereby occupies entirefeld oflending regulationfor federalsavings the associations," therebypermitting federalsavingsassociations extnddedit 'kithout regardto state to laws purportingto regulateor otherwiseaffect their credit activities. . . .' ($ 560.2(a)). The Section

J

($ 5 providesillustrative examples tho tlpes of $ate laws that arepreempted 560.2(b)andthosethx of

6 arenot ($ 560.2(c)).Gibson,I03CaJ. App. 4th 1291,1298. 7 I 9 10 11 t2
IJ

The OTSalsoprovidedthe following analysis which a Courtmay deteirnine by whethera state law is properlypreernpted underHOLA. Whenanalyzingthe stafusof stalelaws under$560.2,the first stpwill be to determine whetler thetypeof law in question listedin paragraph If so,the analysis is will end @). (b), there;the law is preemptedIfthe law is not covered paragraph the nextquestion by is whetherthe law affectslending. Ifit does,the4 in accordance paragraph the (a), with presumption arises thaf the law is pree,mptedThis presumption bereversed can only if ihe law-canclearlybe shownto fit wittri'nthe connies of p:aragraph (c). Sitvas E*TradeMortg. Corp.,51.4 v. F.3d 1001(9th Cir. 2008),quotingOTS,Final Rule, 61 Fed-Reg. (Sept 30, 1990. 509s1,50966-67 Whiie thereis no disputethal Congrass delegated broadpower to the OTS - it did not "psmit the [OTS] to preernptthe applicationof all stateand local laws to suchinstitutions. Nothing in the language [the Home Owners' Inan Act] remotely suggests of that Congress hended to permit the locallaws... not directlyrelatedtosavings loanpractices."Fidelity Fedelal Sav. and [OTS] to displace & LoanAss'nv. de la Cuesn,458U.S. 141,1.72,102 Ct 3014,73L.E;d,.26664 (1982XO'Coonor, S. J,, concurring).

L4

t6 17 l8 t9

21. 22
z5

Indeed the OTS has specificallycarvedout certain5pes of statelaws that arenot subjectto pree,r:rption- C.F.R $ 560.2(c)provides!in pertinentpar! tbaf: 12 State laws of the followins tvoes are not DreemDted the extr:t tbat thev only to incide,ntally affectthelendingoparadons ederalsivings associations areoth'erwse off or (a) mnsistentwith thepurposes ofparzgraph ofthis section:( I ) Contract commersial and law; ... (4) tort law;... and(O any other law that OTS,uponreview, finds ([) furthersa vital stateinterest;md (ii) eitherhasonly an incidentaleffect on lendingoderations or is not otherwisecontary io the purposesexpressed paragraph of +Iis-section" (a) in The gravamenof Plaintiffs' case is tbat Defemdants failed to pef,form appraisalsin an independe'14 objective, imprtial and unbiasedmannerand insteaddeliveredfalse, incredible and L4
PT.AIMIFFS' CDUBII{ED UEIIOFANDIIUN OPPNI1OII TO DEFEIIDANT9 WASIIIIIGTON UIJTII/IL BANK{' ANDFIRST AUENT$N EAFPMISETA rcNONS TO OI IssI FIRSrA&EIDED 6MPLA$IT| Ci/ASEItlO,: 83a4v{di88 (RMl t,

24 25 26 27 28

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to 1 unlawfirl Eppraisals Plaintiffs. FAC, Tn 1,7. PlahtifB and the Classneverreceivedtle appraisat
)
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by thereby,FAC,t[[7,56,61, servicefor which theywerecharged DefNdatrts havebeendamaged and enoneously contend,aboutappraisalfees. 66, 82. This caseis noq asDefendants Plaintift allegetharDefendants'conductviolates RealEstateSettlement the Procedures 12 Acq prongsofCalthmia's Business 2607(RESPA ), theunlawflrl,unfair andfraudule,nt U.S.C.section and

4

6 Professions Code SectionL7200,et seq.(the "UCL"); the Consr:mer Legal Remedies Act, Cal. Civ. 7 Code$$ !750, et. se4.(CLRA'); andis in a breachofcontact or quasicontraol FAC, u 9. 8 As apreliminarymatter,threeoftheseclaimsareclearlynotsubjecttoprernptionTheRESPA

9 claim is a self-standingfedsral claim while the contact and quasi contract claims are specifically 1 0 excludedfrom preemptioot Indee4 the clearmandaieof $560.2(c)to exemptcontoact claims from 1 1 preemptionis supported the ove,nrhelningweiglt of caselwt . Seee.g.J$erson v. Chase by Home L2 .Ftn.,2007U.S. Dist. LEXIS 94652,313l CN"D. Caf.2007)Qtis well accepted "a statedintent to that
1?

preenrytrequirenrents prohibitions imposed by state law does not reasonablyextend to those or

l4 volrmtarily assumed a contract'); Cipollonev. Ligett Group,1zc.,505 U.S. 504 al p. 526(1992); in 1 5 Smithv.Wells FargoBonlt,NA,l35 Cal.App.4th 1463,L484(20A,(NBAandanOCCregulationdid t 6 not preenrpta UCL cause action"basedon the predicateactofa systernatic of brearhofits contractual L 7 disclosureobligations,"because ofa obligationundera state'sgenerallaws "enforcement contractual 1 8 on contasts only incidentatlyaffec8, at mos! a nationalbank's" powers) In re Ocuten laan Servicing, ; 1 9 LLC,49lF.3d'638,il3-64QthCir,2007)(breachofcontract claimssqurelywithinexemptionunder 20 $560.2(c));Flanagan v. Germania,FA., 872 F.zd 231,234 (9th Cir. 1989) (claim for tortuous 2 L interfereoce contract premptedby with not HOLA); Jlagelv.American Savings &Loan Assn,2lD Cal. 22 App. 3d 953, 258 Cal.Rptr.76,748-53 (1989)(suit basedon a variety of state-lawclaims,including
)2

ur:fair competitio4 breachof contrac! andbreachof agencyduty, pennitted againstfederallender);

24 Konynenbeltv. FlagstarBank,F.S.B.,242Micb" App.21,617N.W.2d 706,7t2-L4Mcb-App.2000) 25 (IIOLA doesnot preemptconmon-law tort and contractclaims). Defendants're,maining preemption 26 argument predicated a flawedpremise- that Plaintiffs seek'1o useCalifornialaw to regulaJe is on the 27 28 5 'StaJe lawsthaiarenotpreempted-,.. contract (1) ,..lavl' 12CFRg560,2(c)Q). 15
PLAr{NFFS COUBNED INOPPOSNON DEFEI{DAI{T3 TO WA9HINOTON IIUTT'AI AAIITA ATD FIFT AdERICANEAFPRAISEIT'S llOff)! (Rliwl DE!!Ii9 EBT AIIEI{DE"ETOEANDIJM @UPLNNT: CASE NO.:5:08{t ql@ To

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and on I marrner $/hich WMB obtainedreal estateappraisals the feestha it passed to borrowersfor in purposefullymischaracterize gravame,ofthe FAC the 2 thoseappraisals."WMB Br., p. 15. Defendants
J

peg of in a vein atte,mpt bring it underthe auspices $560.2(b).Their effort to fit a square into a round to

4 hole, however, is unsupported law or logic and shouldbe rejected by
f

B.

TheUCL andCLRAarelawsofGeneralApplicabi[tyNotSubjecttoPreemption Under IIOLA

6 7 I prempts Section560.2(a) staielaws 'purportingto regulaleor otherq/ise affectcreditactivities offederalsavings associatiols.As lawsofgeneralapplicability,neithertheUClnorthe CLRAregutate

9 or otherqrise affect sredit activities.6It is black lettr lavr thaf laws of ge,neral applicabilityshoutdnot 1 0 be pree,rrpted"Silvasv. Estrade Mong. Corporation,42l F. Supp.2d 1315, 1320(S,D. Cal. 2000. ',l1 MwingthatHOLAdosnotpretrptUCLorCLRA clsimswlgrsths 3pedicaJedactswereviolations legaldutieswith qlhich everybusiness 1 2 ofthe general mustcomply." Id,,crt'ngGibsonv. WorldSwings

1 3 & Loan Assn., L03 CaI. App. Ath 129L, (CaL Ct. App. 2002). OnIy claims tlal are specific to a t4 defendant'slending activities" as distinguishedfom legal duties applicalle to all businesses, are l 5 premptedbyHOLA.Fenningv.Glenfed, Inc.,4ACil.App.4th1285,47 Cal.Rpt 2d715(1995)
lo

(fraudciaim not pree,mpted because fraudulentdeception nothingto do with thetbrift's lending the had practices); Cuevasv. Atlas Realty/Financial5ews.,2008 U.S. Dist. LEXIS 9674,7-8 (N.D. Cal.

1R

2008)(claimsdirectedto legal requirements thaf are applicableto all businesses, such as truthfirlly

1 9 -66e1ializing in writing what is agreed orally by contacting partiesarenot subjectto preemption); to 20 Jeferson v. Chase HomeFin , 2007U.S.Dist IJ,frS 94652,28-29(N.D. CaL2007)('lawsof genaal 2L application,which merelyrequireall businesss (includingbanks)to refrain from misrqrcelrtations 22 and abideby contrac8 a:rdrepresentations customrs not impair a bank's ability to exerciseiE to do 23 24 25 26 27 28
6 The underlyingpurposeof fhe CLRA is *to protectconsumers againstunfair aad deceptive practices to provideefficient andeconomical business procedures secure and to suchprotection' Civ. Code $1760. Similarly the pu1pose the UCL is to "safeguardtle public againstthe greationor of perpetuation ofmonopofiesandto fosterand encoumge competitio4 by prohibiting unfair, dishones! deceptivgdesfuctivg ftudulent anddiscriminatorypractices which fair andhonat competitionis by desroyed or preve,nted." Bus. & Prof. Code 917000. Within the context of the UCL, 'lmfair competitionshallmeanandinoludeanyrmlawful, unlbir or ftaudulentbusiness or practice.'?d. act 16
PLA NFR} @UB|NE IIEUORAXDIruN OPPOSIIIoNTO DEFE}IDAIIISWASHINSTON IUTUAT BANK AND FIBT AffERCAN EAPPRAAEITS IT'NOIS TO Dtslllsg FIRSTAIENDED@MPLAINTi CASE NO,: 5:0!t6.rdr88 (R!dfi,l

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not ofa I lendingpowers.Theyonly "incidenrallyaffect" theexercise Bank'spowrs... andaretherefore

2 preempted'),
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undertook obtainanrndependent, to which theyfailedto do Here,Defe,ndants credibleapprisal,

to 4 despiterepresenting Plaintiffs andthe Classthat they ha& FAC, !H 7, 5941,,64-66. The duty to is 5 refiain from misrepresentafion a generalresponsibility imposed on all business. Roolard v, a 6 Mqicoach,680 F.2d 1257,1263(9th Cir. 1982)(nospecialrelationshipneedbe provento establish not lendergandto tle extet 7 dutybrefrain frommakingamisrepresentation). does specificallytarget It 8 it basany effect on lendingactivities,it is at most incidental. Sea e.g,,Kajitani v. DowneySav.And

*[email protected])(slipcopy)(ffndingfederalHOLAprcenxption 9 LoanAssn,F.A.,2008WL2l64660, 10 doesnot apply to misrepresentalions lenders). In fact, WMB has not articulaled any way that by to would interferewith its nationwide 1 1 enforcing$ate laws prolu'bitingmisrepresrfation consumers in lending any more than 12 operationor "obstruc! imfair or condition'' its ability to eogage real estate of l 3 those lawsimpairtheoperation anybusiness. Jefersonv.ChaseHomeFin,2007U.S.Dist. LE)(IS L4 [email protected]);Peopleexrel. Squlvedav.HighlandFed Savings &Loan,L|Cal.App.4thL692, preempted actionsunder 1 5 1708,- LI (1993)(neitho theHOLA nor the OTS'sregulations L7 expressly the 1 6 either the statecommon law or fhe statutoryaction for udair businesspractices. Nor were they
1',7

impliedly preempted, because their effect on the operafions the savingsassociation of was insidental

l 8 ratherthm direct); Siegelv. American Savings& Loan Assn, 2l0 Cal. App. 3d 953, 958-964(1989) 1 9 (rejectingboth express implied preemptionof UCL andnume,rous and commonlaw slaims);Binetti v.
.A

Wash. Mut. Ban$4e p3*0.2d217,218-19 (S.D.N.Y.200Q(rejectingHOlApreerrytion ofbreach

protection statutesclaims on balk's practice of 21, of contract,unjust enriclment, and stale consumer

22 chargingofpost-closinginter*t paynents,holding the "impact on lendingoperations ineidentalto is
z)
.A

thestatute'splinlrrl ptrpose); McKell v. Washington Mutual, Inc.o142Caf.App. 4th,L457,1435-87 (2006)( refusedto fird HOLA preemptionffnding thal plaintitrs were using the UCL 'to enforce generally duties imposedon all businesses operatingin Califomia" i.e., the dutic to refrain from

,<

practices.') 26 fraudulentandunfair business

27

Comistentwith theseholdings,the Ninth Ctcuit con-firmed pree,nptionis inappropriafe that

28 $rhenstatelaws aremerelyused enforcegenerallegaldutieswilh which everybusiness to mustcomply.
17
PL'rl{IlFFs' CoUENED EUORAI{DTIII III OPPGINOT TO DEFENIAIITI' VIASTSNoTOX UJTUALBAXKA Al{D F!iI}T AIIERI:AN EAPPRAFEITS UONONTS TO D{l@ FngT AIIENDEDcouPLA[Ti CASE NO.r &0&CV{}888 (RI$WI

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Silvas, 514 F3d ar 1006. 'To infer preenrption whenever an agsncy deals with a problem

is to to 2 comprehensively virtually tantamount sayingthat whenevera federalagencydecides stq into
t

with the fuemla fie1d,its regulations be exclusive, Sucha rule, of coursqwould be inconsistent will

Peoplev.HighlandFed.Sav.&Loan, 4 slatebalance embodiedinour SupremacyClausejuriqprudence." 5 14 Cal. App. 4th 1692, LTIA-UIL (Cat. Ct. App. 1993), cl.t'mg Hilkborough Countyv. Automated

Inc,,47LU.S. 707,717(1985). 6 MedicalLaboratorie.ss, 7 Recognizing, as they must, that the CLRA and UCL are laws of general applicability,

by 8 Defendanfs, instead, arguethat Plaintifs are using theUCL andCLRA asa means which to impose 9 require,r:rents Defendants, areothrwisespecificallycoveredby HOLA- WMB Br., p, 15; EA on that Defe,ndans contend theFAC's allegations that seekto imposerequirements on 1 0 Br., p. 10. Specffically, (2) 1 1 WMA regarding:(l) theprocessing origimting mortgages; loanrelaledfees;and(3) advertising or L2 anddisclosures.
IJ 1A

In eachinstance, Defendants attenrpt fit the allegations theFAC into oneofthe illushative to of examplesof statelaws that are preempted under $560.2(b). A plain aod fair readingof the FAC,

t 5 however,demonstatesthat Plaintiffs' cntralallegation- the credibility of the appraisal- doesnot
l 6 impingeon any of the lendingactivitiesdessdbed under9560.20). 17 l8 19
1. Plafudlfs' UCL and CLRA Clalms do not impose requirements regarding the procssing or originadon of mortgager

Defendanfs contend thepmcess fhx ofobtaining appraisals anintegralprt of'processingor is

20 orieinatingmortgages'andfhereforecoveredby $560.2(b). While thereare a numberof eventsthat 2T involve theprocessing originationof a mortgage, third partyindependent and a appraisafin which the 22 lendershouldhaveno involve,mentis not oneofthem. SeeWerEv. Washington Bank,2008WL Mut. 23 1882843,'r5 (E-D.Cal. 2008)(slip copy[remandingto sfafecourt statecommonls6r efulpg agqinst
practices 24 WMB andEA for Defendants' appraisal d*pite the defendants argument HOLA controls that practices giving federatcourtjr:risdiction). Indeed, 25 the field oflendersappraisal Defendants to cite fail

26 27 28
18
PLAffNFF9 @IISXE dEIIORAXTN'U OPPO TNOI!TO DEFENDANII'WES{NE7OI{ !i1''UAL AANlc!' A'{D FIRgTAIIER]CANI |x ETPFRAEETA !'OTTO'{3TO DMFS FIRST (RMW) AMENDED COMPLAINT| CASE No; 5:084t{XE@

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of a single casein which the appraisalprocesshas been adjudicatedto fit within the parameters

2 $560.2(b).?
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I

2.

Plalntiffs' UCL and CLRA Ctaims do not lmpose requirements regardtng Ioan rela&d fee

loan relatedfeesunder$560.2(bX5), case this Wlile appraisalles may indeedbe considered to 6 doesnot see,k impinge on anyright WMB hasto chargesuchfees. Indce4 Plaintiffs take no issue with the fee, how it was levied, or how much was charged. This caseis aboutthe credibility of the

8 undolying appraisal how muchwascharged it, The OTSmadeit clearthat the UCL would be not for 9 preempted "to the exteirtthal iXis beingusodto regulaletheinrpositionofloan-relared thatare only fees 1 0 partoftheAssooiations'lendingprograms..." OTSNo.P-99-3(Mach10, 1999)atp. TheOTS' 16. 1 1 rationale was equally clear - that lawsuits basedon *chrrigfngloan-relatedfees, could subjectthe
to within Califomia aswell asin otherstates....As suob, violatesthe 12 Associations differentstandards it associations cotrduct 1 3 objectiveofallowing federalsavings to their lendingoperafions accordance in with

t4 uniform standarcls operalion." OTSNo. P-99-3(March 10, 1999) alp. 17. Here,theFAC doesnot of
I)

implicateanyloanrelatedcharges. Moreover,a primaryobjectiveofPlaintiffs' suit is remunsration for

t 6 frilure to performa credibleappra.isalFAC, Prayer.Nothing in vfuatPlaintiffs seekto achieve would
amongassosialions, any disparityin their obtigations l 7 createdifferentstandarcls nor bxed on the states By l 8 in which theyoperate.s failing to performanindepende,nt it appraisal, is t ntamountto not doingone

t9 at all. FAC '[ 82. Representing anindependent that appraisal performed, was whenit wasnot is a classic 20
? Defendants' relianc on Haehl y. Wash. e Mut. Banh F,A.,277 F. Slpp. 2d 933, 940 (S.D.Ind 2003) is misplaced"There,the Court held in favor of preemption,concludingthat plaintifls' tort law 22 claimssougblto regulalethe feesthat the Defendant Bank could charge customen. Haehl a1277F its Sttpp2d 940,942. The FAC doesnot contestthe Appraisalfeg nor WMB's right to charge fee. the 23 Rather,the FAC alleges underlyingappraisal not performed the lawfutly andtherefore credible was not nwer performed). FAC, t[ 82. 24 (r'.e.
)1

EDefendarts'relianceon Haehl ismisplaced. There,the Court pree,mpted statelaw holding a that"by chargingareconve)ance rhatallegedlywasneitherbonafide nor reasonable, fee plaintiffs seek 26 to imposerequirements Indiana stafelayr on the tSpesof loan-related of feesthat a federal savings association may charge,"Haehl at 942. Il the caseaf bar, howeyer,Plaintifls are not oontesting the 27 appraisal nor WMA's right to charge Ge. The soleissueis thecredibility ofthe appraisal fee, the itself.
t{

28

19
PT-ANTIFFg COUBI!{ED MEIIORANDII' II{ OPPOSTTON DEFEN