California Business Litigation Blog

While this lawsuit is newsworthy, the allegations against residential developer KB Homes are echoes of previous lawsuits.

Most recently, this lawsuit filed in Federal Court in Phoenix claims the builder conspired with Countrywide Financial to inflate appraisals for home sales in Arizona and Nevada. The lawsuit estimates the average appraisal was inflated by $20,000 for over 14,000 homes built by KB in Nevada and Arizona.

More homeowners are expected to join the lawsuit filed on behalf of all who purchased KB homes in Arizona and Nevada since 2006 and used Countrywide as the lender.

Historically, KB (formerly known as Kaufman Broad) owned its own mortgage company, KB Home Mortgage Company. In 2005 the US Department of Housing and Urban Development (HUD) fined KB $3.2 million for poor mortgage underwriting practices. By that time, KB had sold its mortgage company to Countrywide Financial.

About a month later (August 2005) the US Federal Trade Commission (FTC) fined KB $2 million for violation of a 1979 FTC agreement related to arbitration clauses in its contracts.

In 2008 this blog posted “KB Home and Countrywide Sued Over “Inflated” Appraisals” related to similar and identical issues involving California homeowners.

California Attorney General Edmund G. Brown Jr. filed a lawsuit against Countrywide in June of 2008 (amended in July 2008) alleging shocking loan practices. Brown stated "In one case the company approved an adjustable rate mortgage to an 85-year-old disabled veteran with such a low credit score and high debt that he defaulted in less than six months."

R.I.P. Countrywide: In January, 2008 Bank of America bought Countrywide for $4 billion in stock. In April, 2009 Bank of America announced the end of the Countrywide name. It will now simply be called Bank of America Home Loans.

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Posted In: Business Litigation , Real Estate

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Earlier this week, the following lawsuit was filed in San Diego Superior Court “PEOPLE OF THE STATE OF CALIFORNIA VS. SEAN MCCONVILLE” by the California Attorney General’s office.

The lawsuit alleges that brothers Sean and Michael McConville and their companies Property Tax Reassessment and Property Tax Adjustment Services targeted tens of thousands of California property owners in an effort to fraudulently obtain $179.00 from each while promising to lower their property taxes through reassessment.

Click on images below to view actual letter:

The problems were numerous. According to the lawsuit the McConville brothers’ companies mailed out letters that implied a connection to a government agency, looked like bills, offered services for $179.00 that are available at little or no cost directly from all county assessors, and allegedly failed to deliver services when paid.

According to Attorney General Jerry Brown “These scam-artists ripped off thousands of homeowners for property reassessment services readily available free of charge.” He continued “This lawsuit seeks to end the deception and blocks these companies from continuing to scam homeowners.”

Brown’s suit seeks an end to the scam and at least $2.5 million in civil penalties.
The Ventura County District Attorney’s Office charged one of the brothers last week, Sean McConville, with 20 felony counts for criminal conduct stemming from his property tax reassessment operations.

And this was not the McConville brothers first brush with the law. On April 16, 2008 the California Department of Corporations filed enforcement actions against the brothers and ALG capital. Those documents are available HERE.

Homeowners who believe they have been victimized by this or any other property tax scam should contact the California Attorney General’s Office at: 1-800-952-5225 or their local County District Attorney.

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Posted In: Business Litigation , False Advertising , Real Estate

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Deborah and Lonnie Bolden, and David and Dolores Contreras filed a lawsuit this week claiming that KB Home and a unit of Countrywide inflated appraisals, defrauding them out of tens of thousands of dollars.

The Boldens say they paid $70,000 more for their home than neighbors who used different appraisers. The lawsuit alleges that Countrywide and KB "conspired with affiliated appraisers to generate fraudulent" appraisal reports.

The Boldens' attorney, tells of a neighbor who had used their own appraiser and got KB to reduce the price of their home by $61,000. He also said that to keep houses at their contracted price, KB exaggerated appraisals during a falling market in 2005 and 2006.

The lawsuit seeks restitution, compensatory and punitive damages and class-action status for all California KB Home customers who bought homes from August 2005 to July 2006 and used Countrywide financing.

KB Home issued a statement saying "we believe that our full and complete investigation will show these allegations to be without merit."

This comes on the heels of a Whistleblower lawsuit filed against Countrywide KB Home Loans (joint venture) by former Regional VP Mark Zachary. In the lawsuit Zachary claims to have been fired after reporting that employees were using false income amounts and inflated appraisals to facilitate the closing of home loans.

Continue reading "KB Home and Countrywide Sued Over “Inflated” Appraisals" »

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The Walt Disney Co., the world's largest theme-park operator, has been sued by three people who allege that the company's ban on Segway personal transporters at its theme parks is in violation of federal disability laws.

No one seems to be claiming that they were denied access to Walt Disney World or any other Disney Theme Park. The allegations seem to be that they (disabled guests who can stand but not walk long distances) could not use their Segways.

While not commenting on the lawsuit, Disney Spokesperson Jacquee Polak stated "Our primary concern is the safety of all our guests and our cast members. We have a long history of being a leader in creating accessible experiences for our guests with disabilities."

Depending on model and equipment, most Segways weigh between 110 and 120 pounds. Add the weight of a small rider at 140 pounds and you have a total weight of 250 pounds and above.

Imagine the injuries to Disney guests if a Segway traveling at a speed 10 to 12 mph accidently hit one or more guests.

Disney welcomes the use of manual and electric wheelchairs and 4 wheel power chairs by disabled guests. Disney even has them available for rental.

With the utmost respect for all people with disabilities, I agree with Disney on this issue. The safety of Disney guests is more important than the wishes of a few who want to see Disneyland on a Segway. Wheelchairs and powerchairs are far more safe in crowded venues.

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Posted In: Business Litigation , Employment Law , Real Estate

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Because it’s Halloween here is a short entry about a creeping vine. Apparently this case arose after a woman brought suit against her neighbor for allowing a vine to grow on her property which damaged her roof. According to his attorney James A. Murphy, In December 2006 Superior Court Judge Loren E. McMaster tentatively ruled that one count of intentional infliction of emotional distress be dismissed. He outlined his reasoning in an order, and merely summarized the reasoning in a poem, which appeared at the end of his ruling.

In a letter sent to the judge by Commission on Judicial Performance Staff Counsel Charlene M. Drummer dated Aug. 15, 2007, the commission notified McMaster of its decision to authorize an inquiry into whether action is warranted for his recital of a poem in a tentative ruling.

Judge McMaster complied with the commission’s Sept. 4, 2007 deadline to respond and a determination by the commission remains pending. Murphy, contends that the commission’s letter was not an accurate description of what had taken place and does not think further action by the commission is warranted.

Here is the poem:

Defendant planted a creeping vine
That crept and crawled and soon entwined
Itself in plaintiff’s roof, and made a mess
Causing plaintiff to suffer great distress
This lawsuit follows but leaves unsaid
Why plaintiff didn’t whack the vine instead

I believe, with very few exceptions (and this is NOT one of them) judges handle their difficult jobs extremely well and fairly. It has been my observation that most complaints about judges are made by lawyers who had not fully prepared for motions, hearings and/or trials.

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We regularly receive requests to explain the process of litigation, which we always communicate (using dialog NOT monologue) to prospective clients during our initial consultation. We hope you will find our lawsuit synopsis helpful. Feel free to forward it to others and remember to contact us with any questions about any business or employment lawsuit.

The litigation process generally involves four (4) phases. The length of each phase varies with the legal and factual complexities of each case.

The initial phase takes place before anything is filed in court. The attorney meets with the client to determine the facts of the claim being advanced by the client or the client's defense to a claim brought by another. In either case, it is essential that the client meet with the attorney at the earliest opportunity as valuable rights may be lost by delay. Once the attorney meets with the client, the attorney will review any documents relevant to the matter, research the applicable law and possibly speak to witnesses in order to chart a course which is in the best interest of the client.

The next phase involves the filing of an initial pleading in court. Typically, this is the filing of a Complaint or an Answer to a Complaint. The discovery process begins, which may include serving the other side with written questions, called Interrogatories, obtaining evidence which may be in the possession of the adversary or some other party and taking depositions, the oral questioning of parties and witnesses.

Once this phase has been completed, the case is ready to be tried. A trial may be in front of a Jury or a Judge and can vary in length depending upon the number of witnesses and quantity of exhibits offered. Under our system of jurisprudence, the plaintiff has the burden of proof. The plaintiff's case goes first. The defendant then has an opportunity to respond to the plaintiff's case with witnesses and evidence to support the defense. If the defendant has brought a Cross-Complaint, it is tried in the same manner. Otherwise, the plaintiff has an opportunity to put on a rebuttal case to counter the evidence offered by the defendant and, on occasion, a defendant may offer a sur-rebuttal to reply to the evidence offered by plaintiff in the rebuttal case.

The final phase of litigation involves the post-trial matters including motions to vacate or correct the judgment, appeals and efforts to collect on the judgment.

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Posted In: Business Litigation , Contract Litigation , Employment Law , False Advertising , Internet , Real Estate

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In Madden vs. Del Taco, Patrick Madden claimed he fell from his wheelchair and was injured when he attempted to pass a concrete trash barrel on a ramp leading to an entrance to a Del Taco restaurant. The obstruction had forced him to navigate his wheelchair to enter the restaurant. Unfortunately, the walkway was too narrow with the addition of the trash barrel and Plaintiff’s wheelchair went off the curb. Madden fell over and out of the chair, injuring himself as a result. Del Taco moved for summary judgment and, in so doing, claimed that the trash barrel was merely a temporary obstruction which was moved to a wider portion of the ramp immediately following the incident. In addition, the store had another entrance which presented no obstructions. Based upon this showing, the trial court granted summary judgment in favor of Del Taco.

The Court of Appeal reversed. It found the presence of the trash container to be a prima facie violation of the Americans with Disabilities Act (ADA) which provides that no individual may be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages or accommodations of any place of public accommodation. Such a violation was also a violation of the Unruh Act (Civil Code § 54) which guarantees individuals with disabilities to have the same right as the general public to the full and free use of public places.

The Court of Appeal observed the requirements of ADA extend beyond the initial construction or alterations of existing structures. Indeed, it imposes a duty to remove any barrier to access, where removal is readily achievable. The ADA does not make any distinction between temporary or permanent obstructions to access hence, the placement of a concrete trash barrel, even if temporary, is a prima facie violation of ADA and the Unruh Act where a disabled person is hindered in his or her access to the premises.

Continue reading "As Del Taco and Other Public Establishments Have Learned Obstructions, Even Temporary Ones May Give Rise to ADA and Unruh Act Liabliity" »

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Posted In: Education , Employment Law , Real Estate , School District Law

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In a case that closely mirrors a 2004 California lawsuit, New Hampshire has a law requiring anyone or any business running real estate ads on the web for New Hampshire homes to be a real estate broker. An internet listing service ZeroBrokerFees.com sued the New Hampshire Real Estate Commission and the state attorney general last year challenging the constitutionality of the law.

The Real Estate Commission failed in their attempt to have the suit dismissed. U.S. District Court Magistrate Judge James Muirhead ruled on Tuesday March 13 that the lawsuit presents important free speech questions that can and should be resolved in court.

ZeroBrokerFees.com argued that it provides advertising services similar to newspapers that publish Real Estate ads online and in print.

In late 2004, California lost a similar case when Sacramento U.S. District Court Judge Morrison C. England Jr. ruled that ForSaleByOwner.com did not need a RE Broker’s license to publish paid ads listing properties for sale any more than any print publication.

In my opinion, it seems that a great deal of taxpayer money is being wasted making sure that internet companies enjoy the same free speech rights as newspapers.

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Posted In: Internet , Real Estate

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