Plaintiffs in a decade-long suit accusing Rocket Mortgage of purposefully inflating appraisals are protesting the recent decertification of their class action.
Class members filed a petition asking the U.S. Court of Appeals for the 4th Circuit to reconsider its decision, questioning its rationale and a recent change in the panel of judges involved.
In late January, the appeals court ruled that not all class members could prove Rocket's practice of providing suggested home values to appraisers
In a 19-page petition filed Feb. 6, plaintiffs argue the court's decision conflicts with the Supreme Court's interpretation of injury for Article III standing, as established in TransUnion LLC v. Ramirez.
The filing says the appeals court, instead of adhering to the previous view that "out-of-pocket injuries are injuries in fact," now requires "additional harm beyond that."
The plaintiffs claim the change in opinion stems from a new judge on the appeals panel.
"Last time, Judge Wynn was the third member of the panel, and he wrote the opinion. This time, he could not make the oral argument and was replaced by Judge Bell, a district judge sitting by designation, who then cast the deciding vote," the petition reads.
The judge swap not only changed the outcome of the case — which has been bouncing between federal district and appeals courts — but also cast a "cloud over the meaning of this Circuit's case law moving forward," the filing says. Law360 first reported on the filed petition.
"At best, the opinion will create unnecessary confusion over the extent to which out-of-pocket harm continues to be enough for Article III, or whether more is required," the filing reads. "This Court should grant rehearing to clear up the confusion and reassert the law of this Circuit: Financial harm is enough for Article III — full stop."
A Rocket Mortgage spokesperson said the company "will never stop fighting for justice."
"This case has been in front of the Fourth Court of Appeals three times, and even the U.S. Supreme Court," the spokesperson added. "After more than 13 years of standing up for the truth, we have been vindicated by this ruling. It shows that the court system can work if you have the fortitude to stand up for what's right,"
The original suit, filed in 2012 in a West Virginia federal district court, argued that Rocket Mortgage and its title insurance company, Amrock, put pressure on appraisers to inflate values in order to obtain higher loan amounts. Over 2,700 loans were part of the class action.
Rocket was accused of providing suggested home values on appraisal request forms.
Plaintiffs claim they were not informed of this practice, which was "compromising the appraisal process" and rendered valuations "unreliable and worthless." Pre-2009 it was common for lenders to share how homeowners valued their properties with appraisers, the appeals court wrote. This practice has since changed.
The suit has been ping-ponging back and forth between the federal district and appeals courts in part due to the Supreme Court's decision in TransUnion LLC v. Ramirez, which established that class members must prove they suffered concrete harm.
The Supreme Court ruling influenced the 4th Circuit's recent decision to decertify the suit and reverse the damages award.
"Based on TransUnion, we conclude that the plaintiffs have not established that the class members, as borrowers, suffered a concrete harm as a result of the defendants' transmission to appraisers of their home value estimates, and therefore we reverse the district court's judgment to the extent that it certified the class and awarded its members damages," the Fourth Circuit court wrote in its Jan. 24 ruling.
Rocket Mortgage is also involved in other more
The lender is disputing claims from the Department of Housing and Urban Development and the Department of Justice that it should be held responsible for the actions of third-party appraisers.
