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LPS Files Motion to Dismiss Nevada AG Fraud Charges

JAN 31, 2012 10:47am ET
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Lender Processing Services has filed a motion to dismiss charges made by Nevada Attorney General Catherine Cortez Masto against the company and two subsidiaries for fraudulent business practices.

The lawsuit, filed in December in Clark County's Eighth Judicial District Court, accuses Jacksonville, Fla.-based LPS and its subsidiaries Default Solutions and DocX of violating the Nevada Deceptive Trade Practices Act.

The AG's complaint said LPS forged signatures and fraudulently notarized up to 4,000 documents a day in an effort to quickly process foreclosures on behalf of mortgage servicers. The AG claims LPS also demanded kickbacks from foreclosure law firms and called those payments “attorney's fees” on invoices given to consumers and submitted in courts.

Masto alleges the company improperly controlled the work of foreclosure attorneys, forcing them to churn out documents quickly in an assembly-line sweatshop environment.

However, LPS said in its motion to dismiss that the AG's complaint contains significant legal defects that require the court to dismiss the complaint with prejudice. Additionally, LPS said that the complaint fails to allege that any document executed by subsidiaries of LPS was incorrect, contained errors, or caused any borrower financial harm.

“Plaintiff's claims are a collection of suppositions, legal conclusions and inflammatory labels that entirely fail to link the alleged conduct with any transaction in this state that could give rise to a claim under Chapter 598. Simply put, the Complaint should be dismissed with prejudice,” LPS said in the motion to dismiss.

According to the motion, the AG's complaint does not apply to allegedly deceptive mortgage foreclosures or any related documents, but rather to sales of goods and services. LPS added that allegations of “robo-signing” and “surrogate signing” are not illegal activities under Nevada statutory and common law and should not be the basis of a consumer fraud claim.

The motion also said that the plaintiff's allegations do not show any contents of documents that were false, but only defective documents in their execution.

“Notwithstanding defects in execution, recorded documents affecting real property are effective as to the parties in such documents, and, in the case of assignments, the affected parties are the assignor and assignee,” the motion said. “Accordingly, borrowers are neither parties to an assignment nor third party beneficiaries, and, therefore, as a matter of law cannot be harmed by any defects in execution, particularly in the absence of any allegation that such borrowers were not in default.”

Hugh Harris, president and CEO of LPS, said the analytic and technology provider is going to continue to fight these allegations in court until the case is dismissed.

“Although we have to defend ourselves against allegations that we believe are untrue, we remain committed to working with the Attorney General's office to resolve these matters,” Harris said.

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