Judge dismisses part of Marin County couple’s lawsuit in racial bias home appraisal claim

A federal judge has dismissed one of seven claims in a lawsuit by a Marin County couple who attracted national attention with allegations that a real estate appraiser dramatically undervalued their home because of the owners’ race. But their claims of racial discrimination remain to be addressed.

“The only claim dismissed by the recent order is the claim for negligent misrepresentation. All claims that were not dismissed in the first order will proceed,” Liza Cristol-Deman, an attorney for the couple and the nonprofit that filed the suit, told the Business Journal in an email.

Cristol-Deman said the case is now in the discovery phase. A settlement conference scheduled for Sept. 14.

In the ruling Monday on the one claim that was dismissed, U.S. District Judge Maxine Chesney wrote that the homeowners, Paul and Tenisha Tate-Austin, hadn’t “reasonably relied” on the alleged misrepresentation of the property value, because the couple sought a second opinion.

“Rather, plaintiffs allege the Austins were ‘shocked’ by the report, did not use it, and, instead, contacted their broker to request a ‘second appraisal from a different appraiser,’” the judge wrote in the three-page ruling.

“Contrary to the plaintiffs’ contention, however, the need for an appraisal is not ‘sufficient ... to fulfill the element of reliance,’” Chesney continued.

The couple contended that the first appraisal team “negligently misrepresented ‘that they were providing an unbiased appraisal’” of the house, according to court documents. But Chesney noted in the ruling that one of the five tests in California case law for such misrepresentation is “resulting damage.”

The lawsuit, filed in December by a regional fair housing group, named Janette Miller, a San Rafael appraiser. It said she lessened the value of a Black Marin County couple’s home appraisal by 50%, along with her company and AMC Links LLC, the Lehi, Utah, firm that hired the appraisers.

In January, the defendants asked the court to dismiss the claims. In April, Chesney ruled that the negligent-misrepresentation claim and one on unfair competition were open to be dismissed. But Chesney declined to dismiss the claims related to racial bias. The judge allowed the plaintiffs the opportunity to address the two claims she identified that could be dismissed.

An amended complaint was filed on May 6. On June 27, the defendants asked the court to dismiss the negligent-misrepresentation claim. So far, there’s nothing in the court record to address the other claim about unfair competition.

“While we would have preferred that the negligence claim would have moved forward, we don’t think that the negligence claim will have much of an impact on the case overall,” said Caroline Peattie, executive director of Fair Housing Advocates of Northern California, also a plaintiff in the lawsuit along with the homeowners.

The plaintiffs stated in the lawsuit that Miller’s appraisal of the home was based on the couple’s race and neighborhood.

The Marin City couple renovated their Pacheco Street home bought for $550,000 in December 2016 near Sausalito and refinanced it in 2020, according to the regional fair housing advocacy organization. The Austins got a valuation for $995,000 by the Marin County appraiser through the firm Miller & Perotti, which performed the inspection.

When the Austins suspected the appraisal was low, they ordered a second one by a different firm. For that appraisal, they cleared all evidence of their race in the house staging and called on a white friend to be home when the appraiser came by. The lawsuit stated the estimate came in at $1.48 million.

Correction, Aug. 25, 2022: An earlier version of this story incorrectly characterized the judge’s action Aug. 22. The judge dismissed only one of seven claims for relief.

Update, Aug. 25, 2022: A comment from Caroline Peattie, executive director of Fair Housing Advocates of Northern California, was added to the story.

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