Maya v. Centex Corp..
| Decision Date | 21 September 2011 |
| Docket Number | 10–55662,10–55665,10–55663,10–55664,10–55667,10–55660,10–55668.,Nos. 10–55658,s. 10–55658 |
| Citation | 658 F.3d 1060,2011 Daily Journal D.A.R. 14362,11 Cal. Daily Op. Serv. 12075 |
| Parties | Sylvester MAYA; Ofer Masachi, as individuals and on behalf of all others similarly situated, Plaintiffs–Appellants,v.CENTEX CORPORATION; Centex Homes, a Nevada General Partnership; CTX Mortgage Company, Defendants–Appellees.Remedios Martinez, as an individual and on behalf of all others similarly situated, Plaintiff–Appellant,v.D.R. Horton, Inc.; DHI Mortgage Company GP, Inc., Defendants–Appellees.Edilberto Lumalu; Brian Dietz; Brenda Dietz; Candice McDonald, as individuals and on behalf of all others similarly situated, Plaintiffs–Appellants,v.MDC Holdings, Inc., DBA Richmond American; Richmond American Homes of California, Inc.; HomeAmerican Mortgage Corporation, Defendants–Appellees.Stella Stephens; Timothy Young, as individuals and on behalf of all others similarly situated, Plaintiffs–Appellants,v.Lennar Corporation; Lennar Homes of California, Inc.; Universal American Mortgage Company, Defendants–Appellees.Solomon Kelly; James Molina, as individuals and on behalf of all others similarly situated, Plaintiffs–Appellants,v.Beazer Homes USA, Inc.; Beazer Homes Holdings Corporation; Beazer Mortgage Corporation, Defendants–Appellees.Matthew Nielson; Nicole Nielson, as individuals and on behalf of all others similarly situated, Plaintiffs–Appellants,v.Shea Homes Inc.; J.F. Shea Co., Inc.; Shea Mortgage, Inc., Defendants–Appellees.Gaspare C. Oneto; Paul M. Nakabayashi; Sandra L. Nakabayashi; John Butler; Linda Butler, as individuals and on behalf of all others similarly situated, Plaintiffs–Appellants,v.The Ryland Group, Inc.; Ryland Homes of California, Inc.; Ryland Mortgage Company, Defendants–Appellees.James F. Dodaro, as an individual and on behalf of all others similarly situated, Plaintiff–Appellant,v.Standard Pacific Corp., DBA Standard Pacific Homes; Standard Pacific Mortgage, Inc., Defendants–Appellees,andShea Homes; J.F. Shea Co. Inc.; Shea Mortgage, Inc.; Centex Corporation; Centex Homes, LLP, Erroneously Sued as Center Homes and Center Homes Corporation; CTX Mortgage Company; DHI Mortgage Company GP, Inc.; the Ryland Group, Inc.; Ryland Homes of California, Inc.; Ryland Mortgage Company; Lennar Corporation; Lennar Homes of California, Inc.; Universal American Mortgage Company, Erroneously Sued as Universal Mortgage Company; Eagle Home Mortgage of California, Inc., Erroneously Sued as Eagle Home Mortgage Inc., Real-parties-in-interest. |
| Court | U.S. Court of Appeals — Ninth Circuit |
OPINION TEXT STARTS HERE
Andrea Bierstein (argued), Mitchell Breit, and Jayne Conroy, Hanly Conroy Bierstein Sheridan Fisher & Hayes LLP, New York, NY; Derek Yeats Brandt, Simmons Browder Gianaris Angelides & Barnerd LLC, East Alton, IL; Jae Kim, Richard Dale McCune, Jr., and David Christopher Wright, McCune & Wright, LLP, Redlands, CA, for plaintiffs Sylvester Maya, Ofer Masachi, Remedios Martinez, Edilberto Lumalu, Brian Dietz, Brenda Dietz, Candice McDonald, Stella Stephens, Timothy Young, Solomon Kelly, James Molina, Matthew Nielson, Nicole Nielson, Gaspare C. Oneto, Paul M. Nakabayashi, Sandra L. Nakabayashi, John Butler, Linda Butler and James Dodaro, on behalf of themselves and others similarly situated.Nathaniel Garrett (argued), Darren K. Cottriel, Richard S. Ruben, and Craig Stewart, Jones Day, Irvine, CA, for defendants Lennar Corporation, Lennar Homes of California, Inc., and Universal American Mortgage Company.William P. Donovan, Jr., Anahit Tagvoryan, DLA Piper LLP, Los Angeles, CA, for defendants Center Corporation, Centex Homes, and CTX Mortgage Company.Valentine Shade Hoy, Megan A. Mazza, Jeffrey R. Patterson and Charles L. Pernicka, Allen Matkins Leck Gamble Mallory & Natsis, LLP, San Diego, CA, for defendants D.R. Horton, Inc. and DHI Mortgage Company GP, Inc.Jason Charles Gless, Daniel Adlai Berman, and Keith Evan Smith, Wood Smith, Henning & Berman, Riverside, CA, for defendants MDC Holdings, Inc., Richmond American Homes of California, Inc., and HomeAmerican Mortgage Corporation.Lawrence J. Bracken, II, Phillip J. Eskenazi, Kirk Hornbeck, and Bryan A. Powell, Hunton & Williams, Atlanta, GA, for defendants Beazer Homes USA, Inc., Beazer Homes Holdings Corporation, and Beazer Mortgage Corporation.Donald L. Morrow, Paul, Hastings, Janofsky & Walker LLP, Costa Mesa, CA, for defendants Shea Homes, Inc., J.F. Shea Co., Inc., and Shea Mortgage, Inc.Nancy Nguyen Sims and Perrie M. Weiner, DLA Piper LLP, Los Angeles, CA, for defendants the Ryland Group, Inc., Ryland Homes of California, Inc., and Ryland Mortgage Company.Robert Lennart Green, Stephanie Michelle Lemmon, Katherine Villareal Lizardo, and Brian Plante, Green & Hall, APC, Santa Ana, CA, for defendants Standard Pacific Corp., DBA and Standard Pacific Mortgage, Inc.Appeal from the United States District Court for the Central District of California; Virginia A. Phillips, District Judge, Presiding. D.C. Nos. 5:09–cv–01671–VAP–OP, 5:09–cv–01672–VAP–DTB, 5:09–cv–01669–VAP–OP, 5:09–cv–01668–VAP–DTB, 5:09–cv–01674–VAP–DTB, 5:09–cv–01673–VAP–DTB, 5:09–cv–01670–VAP–DTB, 5:09–cv–01666–VAP–OP,Before: BETTY B. FLETCHER and SIDNEY R. THOMAS, Circuit Judges, and NANCY GERTNER, District Court Judge.*
This case arises against the backdrop of the national housing crisis. Nationwide, foreclosures are increasing, construction and purchase of new homes is decreasing, and home values are plummeting.1 In some ways, the facts presented here echo national trends, but we decide a fairly narrow question: whether individuals who purchased homes in new developments have standing to sue the developers for injuries allegedly caused by the developers' practice of marketing neighboring homes to individuals who presented a high risk of foreclosure and abandonment of their homes, financing those high-risk buyers, concealing that information, and misrepresenting the character of the neighborhoods. The district court held that plaintiffs did not have standing because none of the alleged injuries amounted to a concrete, non-conjectural injury-in-fact, and that there was no sufficiently strong causal connection between any injury and defendants' conduct. It also denied plaintiffs leave to amend their complaints. We reverse and remand for further proceedings.
Plaintiffs are individual homeowners who purchased houses in new developments constructed by one of eight large national home-builders between 2004 and 2006. Each of them made a down payment of twenty-percent or more of the home's purchase price. Defendants are some of the nation's largest housing developers, and include the developers' parent companies and subsidiary mortgage companies. Plaintiffs seek damages, attorneys fees and costs, and the option to rescind their home purchases due to defendants' fraud, negligent misrepresentation, breach of implied covenant of good faith and fair dealing, and violations of California's Business and Professional Code (CBPC). They also seek an injunction prohibiting defendants from continuing to engage in practices violating the CBPC or providing mortgage services or financing to buyers purchasing homes from defendants.
Plaintiffs claim that defendants represented that they were building “stable, family neighborhoods occupied by owners of the homes.” According to the plaintiffs, “[i]mplicit in this marketing scheme was that [d]efendants were making a good-faith effort to sell homes to buyers who they expected could afford to buy the houses and would be stable neighbors.” Nevertheless, defendants marketed the houses to “unqualified buyers who posed an abnormally high risk of foreclosure.” 2 Similarly, plaintiffs claim that defendants represented that they “discourage[ ] speculation ... [and] intended to sell homes only to people who will occupy them,” but sold homes to investors who had no intent to reside in the homes and were more likely to walk away from the homes in times of economic hardship.
Plaintiffs claim that these misrepresentations and omissions were part of a comprehensive scheme to increase defendants' profits. They allege that defendants financed at least 65% of the mortgages on homes in their communities. Plaintiffs contend that by marketing homes to high-risk buyers, and by financing buyers who may not have been able to obtain other financing, defendants created a “buying frenzy” that artificially increased demand and home prices. They maintain that defendants' marketing and lending practices were material information “related both to the value of their houses and the desirability of the properties.” They allege that “[i]f Defendants had made such disclosures, Plaintiffs would not have purchased the houses from Defendants and/or [sic] would not have paid an inflated price for the house.”
Plaintiffs aver that since they purchased their homes, “as was inevitable, ... these unqualified and high-foreclosure-risk buyers began to default on their loans leading to foreclosures and short sales.” Their neighborhoods have allegedly had “a number of foreclosures and short sales that have resulted in a substantial loss of value to the surrounding homes.” They allege that the loss was “much greater than if their houses had been located in a neighborhood where Defendants' scheme ... did not occur.” Plaintiffs further contend that the foreclosures and short sales have “drastically altered” the “desirability” of their properties and neighborhoods, resulting in abandoned houses, multiple families living in one home, transient neighborhoods, and even increased crime.
Plaintiffs' claims fall into two broad categories. They allege injuries that occurred at the time of sale: namely, that they paid more for their homes than they were actually worth at the time, and that they would not have purchased their homes had defendants made the proper disclosures. We will refer to...
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