Alert October 19, 2010

Federal Court Dismisses Lawsuit Challenging Unacceptable Vendor List

A federal judge in the Western District of Washington recently dismissed with prejudice a lawsuit filed by an appraisal company against Countrywide, Bank of America and various affiliated entities, including LandSafe Appraisal Services, Inc. Plaintiff argued that defendants used an unacceptable vendor list to blacklist appraisers who refused to inflate appraisal values. Plaintiff alleged violations of RICO, and brought state law claims for breach of the duty of fair procedures and tortious interference with economic relationships. The Court found that plaintiff failed to plead a cognizable RICO enterprise or plead its mail and wire fraud claims with the requisite particularity, noting that plaintiff’s allegations did not establish why maintenance of an unacceptable vendor list is fraudulent. The Court also rejected plaintiff’s theory that the duty of fair procedures applies to appraisers and appraisal management companies, as Countrywide was not a gate-keeper organization as defined under state law. That is, the Court found that neither Countrywide, as the lender, nor LandSafe, as an appraisal management company, wielded such substantial power in the appraisal field that their actions could prevent plaintiff from pursuing employment. The Court also rejected plaintiff’s tortious interference claim, holding that plaintiff had not sufficiently shown Countrywide’s knowledge of the alleged relationships. Goodwin Procter partners David Permut and Brooks Brown represented defendants. Click here for Capitol West Appraisals, LLC v. Countrywide Financial Corp., et al., U.S.D.C. W.D. Wash., No. C08-1520RAJ (September 29, 2010).