Barbara Waldrup v. Countrywide Financial Corporation
2:13-cv-08833
C.D. Cal.Jul 23, 2014Background
- Barbara Waldrup (Texas) sued Countrywide entities, Bank of America, and LandSafe claiming LandSafe appraisals procured for Countrywide loans (2004 purchase and 2007 refinance) were improper; she paid $400 and $320 for those appraisals.
- Alleged scheme: Countrywide loosened appraisal standards and used LandSafe as a captive appraiser to produce appraisals that facilitated loan originations. Allegations derived largely from a qui tam complaint by a former LandSafe employee (unsealed 2012).
- FAC asserts claims for UCL (Cal. Bus. & Prof. Code §§ 17200), RICO (18 U.S.C. § 1962(c), (d)), common-law fraud, and unjust enrichment on behalf of a nationwide class of borrowers who obtained LandSafe appraisals for Countrywide loans (2003–2008).
- Court previously held initial complaint stated UCL and unjust enrichment claims but failed to plead fraud and RICO with particularity; plaintiff amended and pursued a theory that defendants misrepresented the nature/independence of the appraisals (fraud by inducement to purchase appraisals).
- Defendants moved to dismiss the FAC; the court evaluated pleading particularity under Rule 9(b), pleading of damages and reliance for fraud/RICO, and whether UCL/unjust enrichment still survived given the FAC’s concessions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequacy of fraud/RICO pleadings under Rule 9(b) | Waldrup alleges defendants misrepresented that appraisals were independent and prepared per standards; FAC fixes prior theory-splitting. | FAC still lacks particularized facts (who, when, how) about the misrepresentations to Waldrup and facts tying her appraisals to the scheme. | Dismissed: FAC fails Rule 9(b); allegations remain too generalized and rely on third-party qui tam material rather than particularized personal-level facts. |
| Damages element for fraud and RICO | Waldrup contends she paid for an independent objective appraisal and thus suffered injury even if valuation was accurate. | Defendants argue no damages shown because an accurate appraisal delivers the product paid for; procedural flaws unconnected to a valuation error do not show loss. | Dismissed: plaintiff did not plausibly allege she suffered consequential damages from inaccurate or worthless appraisals; concession that valuation accuracy is irrelevant undermined damages theory. |
| Reliance requirement for fraud | Waldrup asserts she was induced to obtain/pay for appraisals by Countrywide’s representations that she was required to use LandSafe and pay specified fees. | Defendants say FAC is vague about how/when those representations were made and lacks facts showing justifiable reliance. | Dismissed: FAC insufficiently pleads the specific misrepresentations and why reliance was justified. |
| UCL and unjust enrichment viability | Waldrup previously alleged appraisals were inflated/worthless and sought restitution; amended FAC emphasizes manipulated process but disclaims valuation inaccuracy. | Defendants argue UCL/unjust enrichment depend on underlying fraud and on showing she paid for worthless services. | Dismissed: without allegations that appraisals were inaccurate or worthless, unjust enrichment and UCL claims fail; dismissal without prejudice and leave to amend. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (setting the plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (clarifying that legal conclusions are not entitled to assumption of truth and explaining context-specific plausibility analysis)
- Vess v. Ciba-Geigy Corp. U.S.A., 317 F.3d 1097 (Rule 9(b) applies where claims sound in fraud and requires particularity)
- Robinson Helicopter Co. v. Dana Corp., 34 Cal.4th 979 (elements of fraud in California include resulting damage)
- Small v. Fritz Companies, Inc., 30 Cal.4th 167 (fraud requires consequential damages; misrepresentation alone insufficient)