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American Financial Resources Inc. v. Smouse

United States District Court, D. Utah

December 28, 2018

AMERICAN FINANCIAL RESOURCES, INC., Plaintiff,
v.
VALLI D. SMOUSE d/b/a SMOUSE APPRAISAL SERVICE and LEXINGTON INSURANCE COMPANY, Defendants.

          OPINION

          John Michael Vazquez, U.S.D.J.

         This case concerns Defendant's allegedly improper appraisal of a property located in Moab, Utah. D.E. 1. Currently pending before this Court is a motion to dismiss or transfer, D.E. 10, filed by Defendant Valli D. Smouse d/b/a Smouse Appraisal Service.[1] Defendant seeks dismissal for lack of personal jurisdiction, or in the alternative, transfer pursuant to 28 U.S.C. § 1631. The Court has reviewed the motion, the filings in support and in opposition, and the record.[2] The Court considered the motions without oral argument pursuant to Fed.R.Civ.P. 78(b) and L. Civ. R. 78.1(b). For the reasons stated below, Defendant's motion to transfer is granted, Defendant's motion to dismiss is denied, and the case is transferred to the District of Utah.

         I. FACTUAL BACKGROUND

         Plaintiff American Financial Resources, Inc. is a New Jersey originator, broker, and servicer of mortgage loans that bought (and later sold) a residential mortgage on a property in Moab, Utah. Compl. ¶¶ 1, 13, 15. Defendant, an individual residing in Moab, Utah and doing business as Smouse Appraisal Service, appraised the property at the request of Primary Residential Mortgage, Inc. (“Primary”), a residential mortgage originator located in Utah. Id. ¶ 7; D.E. 1-1 (“Appraisal”); D.E. 12 at 3.

         The Appraisal contained two general types of information: specific information regarding the appraised property and “comparator” information which detailed the prices of similar properties in the Moab area. Appraisal at 1-7. Based on Defendant's visit to the home and analysis of the comparators, Defendant appraised the property at $287, 000. Compl. ¶ 8.

         Paragraph 21 of the Appraisal included the following language:

The lender/client may disclose or distribute this appraisal report to: the borrower; another lender at the request of the borrower; the mortgagee or its successors and assigns; mortgage insurers; government sponsored enterprises; other secondary market participants; data collection or reporting services; professional appraisal organizations; any department agency, or instrumentality of the United States and any state, the District of Columbia or other jurisdictions; without having to obtain the appraiser's or supervisory appraiser's (if applicable) consent.

Appraisal at 7. The Appraisal defined “lender/client” as Primary. Id. at 1. The property ultimately sold for the appraised price, and the purchasers took out a mortgage with Primary to cover approximately 95% of the purchase price. Compl. ¶ 13.

         The property's $272, 650 Fannie Mae-eligible mortgage was eventually bought by Plaintiff. Id. ¶¶ 1, 13, 15. Plaintiff then sold the mortgage to Seneca Mortgage Servicing, LLC (“Seneca”), a company incorporated in Delaware with its principle place of business in Massachusetts. Id. ¶ 16. On May 20, 2016, Seneca received a letter from Fannie Mae identifying a “significant defect” in the Appraisal's compliance with Fannie Mae's appraisal guidelines. D.E. 1-2 at 1. Based on this letter, Fannie Mae “determined that repurchase of the subject loan [by Plaintiff] [was] the appropriate remedy.” Id. at 1.

         On July 14, 2016, Defendant updated her appraisal. Compl. ¶ 19. The Complaint does not allege how Defendant found out about the May 20, 2016 letter or to whom Defendant provided the updated appraisal.[3] However, according to the Complaint, by July 19, 2016 Fannie Mae received a copy of the updated appraisal. Compl. ¶ 19; see also D.E. 1-3. Several months later, in November 2016, Fannie Mae issued a second notice that a “significant defect” remained, requiring Plaintiff to repurchase the loan. Compl. ¶ 20; see also D.E. 1-3.

         On March 8, 2017, Plaintiff contacted Defendant regarding the continued deficiencies in the Appraisal. Compl. ¶¶ 21-24. After a series of communications with Defendant's representatives failed to resolve Plaintiffs demand of $121, 251.27, Plaintiff initiated this action. Id. ¶¶ 25-47.

         II. PROCEDURAL HISTORY

         Plaintiff filed its Complaint on November 22, 2017, alleging breach of contract and unjust enrichment. Id. Defendant moves to dismiss the Complaint for lack of personal jurisdiction and improper venue pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(3). D.E. 10. As to personal jurisdiction, Defendant first argues that she has no continuous or systematic contacts with the state of New Jersey sufficient to establish general jurisdiction. Def. Br. at 6-7, 9-10. Second, Defendant argues that the Court lacks specific jurisdiction because she never purposefully availed herself to the state of New Jersey and that any contacts with New Jersey related to this action are merely random, fortuitous, or attenuated. Id. at 7-9. In the alternative, Defendant argues that venue is improper and the Court should transfer this action under 28 U.S.C. § 1631. Id. at 11-12.

         In response to Defendant's motion, Plaintiff concedes that this Court lacks general personal jurisdiction but argues that the Court may exercise specific jurisdiction over Defendant. Pl. Opp'n at 4. Specifically, Plaintiff argues that under Paragraph 21 of the Appraisal, Defendant knew that her Appraisal could be disclosed to mortgagees, assigns, and insurers, including Plaintiff. Id. at 5. Thus, Plaintiff ...


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