18 N.Y.3d 173
NY2011Background
- Attorney General sued The First American Corporation and eAppraiseIT for injunctive, monetary relief, and civil penalties under Executive Law § 63(12) and General Business Law § 349, plus common law claims.
- Allegations centered on appraisal practices and USPAP compliance; WaMu pressured eAppraiseIT to inflate appraisals to enable loan closings.
- Case originated in NY Supreme Court, removed to SDNY, then remanded, with preemption and standing defenses raised.
- Supreme Court (NY) and Appellate Division held FIRREA governs appraisal regulation and does not preempt NY state claims; held GBL § 349 pleadings adequate.
- Court of Appeals certified and addressed whether federal law preempts state law claims, ultimately affirming the Appellate Division’s ruling that preemption does not bar the NY claims.
- Dissent argues FIRREA field preemption should bar the state-law claims against the appraisal practices as conducted by a thrift’s lending operations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does FIRREA/HOLA preempt the NY claims? | AG argues preemption does not bar NY claims. | First American argues FIRREA field preemption bars state-law claims. | Not preempted; NY claims may proceed. |
| Do 12 CFR 560.2(b)/(c) preempt state-law USPAP or deception/fee claims? | Claims fall within preempted categories or conflict with lending regulation. | OTS rules preempt state law in areas like fees, disclosures, and mortgage processing. | Not preempted; claims not fitting listed categories or not sufficiently to defeat here. |
| Does the Attorney General have standing and plead GBL §349 claims adequately? | AG has standing due to consumer protection scope in NY. | Challenges to standing and sufficiency of the state-law claims. | AG adequately pleaded standing and GBL §349 claims. |
Key Cases Cited
- Fidelity Fed. Sav. & Loan Assn. v. De la Cuesta, 458 U.S. 141 (U.S. 1982) (field preemption and broad regulatory occupancy principles)
- California Fed. Sav. & Loan Assn. v. Guerra, 479 U.S. 272 (U.S. 1987) (Supremacy Clause and congressional intent in preemption)
- Medtronic, Inc. v. Lohr, 518 U.S. 470 (U.S. 1996) (Congressional purpose as touchstone for preemption analysis)
- Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (U.S. 1947) (preemption framework under field vs. conflict preemption)
- Matter of People v Applied Card Sys., Inc., 11 N.Y.3d 105 (N.Y. 2008) (state law preemption analysis with interplay of federal standards)
- Bolden v. KB Home, 618 F. Supp. 2d 1196 (C.D. Cal. 2008) (illustrative for preemption scope and real estate appraisal context)