New York Lawsuit Against First American Can Proceed, State High Court Says

First American Corp. lost a bid to dismiss a lawsuit filed by New York’s attorney general after the state’s highest court ruled federal law doesn’t bar the claims.

As attorney general, Andrew Cuomo, now New York’s governor, sued the company’s EAppraiseIT unit in November 2007, saying it gave into demands for higher appraisals to secure more business from Washington Mutual Inc. (WAMUQ) WaMu filed for bankruptcy in September 2008 after its banking unit was taken over by regulators and sold to JPMorgan Chase & Co. (JPM)

First American moved to dismiss the complaint, arguing that federal laws including the Home Owners’ Local Act and the Financial Institutions Reform, Recovery and Enforcement Act prevented Cuomo from pursuing the claims. A lower court and an appeals court both denied the motion, sending the case to the Court of Appeals, which today struck down the bid.

The Financial Institutions Reform, Recovery and Enforcement Act “explicitly envisioned a cooperative effort between federal and state authorities to ensure that real estate appraisal reports comport with” industry standards, Judge Carmen B. Ciparick wrote for the majority.

First American reincorporated in June 2010 under the name CoreLogic Inc. (CLGX) as part of the separation of First American Financial and CoreLogic into independent, publicly traded companies.

‘Exclusively Federal’

“We believe appraisal management services for federal savings associations was an area of exclusively federal control in 2006 and 2007 and that the state agencies may not make the claims asserted in the complaint,” Alyson Austin, a spokeswoman for Santa Ana, California-based CoreLogic, said in a statement. “The decision only concerns jurisdiction and the court made no determination on the merits of the attorney general’s claims.”

The attorney general’s office recently dropped all damages claims against EAppraiseIT and CoreLogic after four years of investigation and pretrial evidence sharing, “thereby conceding that no consumers were harmed,” Austin said.

“Today’s decision is an important recognition of the state’s role in protecting New Yorkers from fraud and abusive practices in the appraisal industry,” Danny Kanner, a spokesman for Eric Schneiderman, the state’s current attorney general, said in an e-mailed statement.

The case is New York v. First American Corp. (FAF), 406796/2007, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at

To contact the editor responsible for this story: Michael Hytha at

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