Zillow is again filing to dismiss a lawsuit accusing the company of a kickback scheme that steered borrowers to its mortgage lending business.
Plaintiffs submitted a
"We remain confident in our position and will continue to vigorously defend ourselves in court," the company said in a press release.
The amended complaint abandoned Racketeer Influenced and Corrupt Organizations Act allegations previously included, as a result of U.S. District Judge James Robart's recommendations, to focus on the RESPA claims. Steve Berman of Hagens Berman Sobol Shapiro LLP, which represents the plaintiffs, told National Mortgage News in August he was "100% confident" the case will not be dismissed.
Zillow said this complaint fails because preapproval letters, a key piece in the lawsuit, are not a RESPA-covered settlement service, as they're a free and optional resource for buyers. Plaintiffs were not required to use Zillow Home Loans and never paid for a preapproval, according to the release.
"In fact, most of them don't even allege their agents referred them to Zillow Home Loans for a preapproval at all," the company said. "And one claims she actively negotiated her Zillow Home Loans fees before closing, which is exactly the kind of buyer choice this lawsuit claims doesn't exist."
The filing also said that even if elements of a RESPA claim were met, Zillow is protected by a statutory safe harbor that allows payments and referrals made in accordance with cooperative brokerage arrangements.
The amended complaint should be dismissed with prejudice because the plaintiffs have failed to plead properly after repeated opportunities, evidenced by their focus on deleting, rather than adding, allegations, according to Zillow's filing.
Case background
The lawsuit, originally filed last September by homebuyer Alucard Taylor, first claimed Zillow's Preferred Agent referral program deceived buyers and helped maintain high fees. It accused the company of not disclosing the referral fee it collects from Preferred Agents and said buyers must sign touring agreements advertising buyer-agent services as free, despite the agent receiving a commission.
It was combined in December with another lawsuit, which claimed Zillow pressured agents to steer borrowers to Zillow Home Loans for preapproval by rewarding them with better leads. Plaintiffs said this increased costs for buyers.
Judge Robart dismissed the case in July because it lacked statutory standing and the plaintiffs failed to identify any deceptive conduct given Zillow's terms of use and disclosure.
