Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
Zillow moves to permanently dismiss mortgage steering lawsuit
Zillow has filed a motion to dismiss the consumer lawsuit alleging the portal of steering customers to its mortgage business.
The lawsuit—known as Armstrong, but later consolidated with a similar lawsuit named Taylor—was dismissed in July when Judge James Robart of the federal Western District of Washington ruled that the plaintiffs failed to show that Zillow engaged in a conspiracy with real estate teams or engaged in practices that were “likely to mislead a reasonable consumer.”
Robart had left an opening for plaintiffs to refile their complaint if they could amend the “deficiencies” in their argument, which they did in August.
Zillow responded in another motion to throw out the case, that this new complaint does not, in fact, address the plaintiffs original “deficiencies,” specifically saying the plaintiffs failed to provide proper evidence or arguments that Zilliow violated the Real Estate Settlement Procedures Act (RESPA).
The portal has also specifically requested Judge Robart dismiss the lawsuit “with prejudice,” so that the plaintiffs may not refile, “closing the door on further attempts to relitigate the same failed claims,” as the portal said in a post on its Front Porch blog.
Better and ex-CEO face new lawsuit from investors
In the news once again, national online mortgage lender Better Home & Finance (commonly known as Better) and its controversial founder and former CEO Vishal Garg—coupled with now current CFO Loveen Advani—are now facing a federal securities class-action lawsuit from investors in the company.
The suit alleges that Better violated federal securities laws by knowingly misleading investors about the company’s potential monthly loan volume and by downplaying the impact of macroeconomic conditions, which ultimately led to a significant stock decline this spring.
Shareholder Richard Gastwirt filed the suit in the District Court for the Southern District of New York, with his complaint based on a review and analysis of the company’s regulatory filings with the U.S. Securities and Exchange Commission (SEC), press releases and media reports distributed by Better, and other publicly available information about the mortgage lender.
Notably, the case is being handled by attorneys from national class-action firm Hagens Berman, which has gained notoriety through its involvement in antitrust lawsuits against the real estate industry, including one of the original commission lawsuits.
HouseCanary receives court approval for relief in Chapter 11 reorg
Making headlines in a different way after its previously announced Google partnership, HouseCanary recently filed for Chapter 11 bankruptcy.
A hearing on the filing in the U.S. Bankruptcy Court for the District of New Jersey saw the company receive relief supporting the continuation of customer programs, employee obligations and ordinary-course business operations, as well as granted access to debtor-in-possession financing to provide additional liquidity during this process.
Six separate HouseCanary LLCs are all filing for joint administration of their bankruptcy cases. Among the creditors—with the filing listing around $25 million unsecured claims from 30 entities—are Australia-based Marbruck Investments, California-based Sweetwater Capital and Black Knight.
HouseCanary stated that it currently expects that allowed creditor claims will be paid in full through the reorganization process, subject to the Chapter 11 process and court approval.
Seemingly the crux of the issue is a long-running legal dispute with a Rocket subsidiary.
Back in 2016, title insurance company Amrock (formerly known as Title Source, now owned by Rocket) sued HouseCanary over a fizzled deal for automated valuation software. HouseCanary counter-sued, claiming Amrock breached their contract and stole HouseCanary’s trade secrets to build its own software.
The back-and-forth involved a $700 million verdict in HouseCanary’s favor—a verdict that was eventually overturned—and a retrial that still saw the company win another verdict of $175 million earlier this year.
Bloomberg reported that the current bankruptcy filing was intended to “buy time” for the company to collect on those verdicts, which amount to $260 million with interest and other costs.
