A federal judge on Wednesday dismissed several claims made in a discrimination lawsuit filed earlier this year by a North Carolina couple against Wells Fargo N.A. and an appraisal company, while leaving key parts intact.
The lawsuit was filed by Brigid & Joseph Washington in U.S. District for the Middle District of North Carolina, and names Wells Fargo, Accurate Appraisal Service, and appraiser Bryan Klosterman as defendants.
In her order issued Wednesday, U.S. District Court Judge Catherine C. Eagles granted part of Wells Fargo’s motion to dismiss the case, while also denying another part of that motion.
She also dismissed three parts of the plaintiffs’ claims, including those of fraud civil conspiracy and unjust enrichment. While also dismissing a claim that the bank violated the Equal Credit Opportunity Act, the judge’s order allows the plaintiffs to refile an amended complaint within 10 days “if appropriate.”
She also dismissed the plaintiffs’ Chapter 75 claim — which alleges Wells Fargo committed an unfair or deceptive trade practice — but only “to the extent it is based on fraud” and not “to the extent it is based on racial discrimination in violation of federal law.”
While dismissing several of the plaintiffs’ claims, the order allows the main claims of racial discrimination to proceed.
The lawsuit claims that, in June 2020, the Washingtons, who are black, sought to refinance their mortgage with Wells Fargo to decrease the mortgage term and stop paying private mortgage insurance. Wells Fargo estimated the value of their home at $525,000, but it also required an estimate from an in-person appraisal, the suit claims.
Klosterman and another employee from Accurate Appraisal conducted the appraisal.
Brigid Washington confirmed she was the homeowner during the appraisal, and the home contained photos “that identified the owners of the home to be black,” the lawsuit states.
According to the complaint, “‘The appraisal team was curt, abrupt, and dismissive toward’ Mrs. Washington, and ‘[t]he appraisers spent approximately 10 minutes at the’ home. Defendant Klosterman assessed the value of the home by identifying recent sales in the area, but ‘improperly limit[ed] the geographical area’ and ‘relied on less expensive homes from another neighborhood’ instead of ‘comparative homes’ in the plaintiffs’ neighborhood. And ‘contrary to professional appraisal standards,’ the ‘team did not assign any value to the heated and finished basement area, or the unfinished basement area.’”
Accurate Appraisal valued the home at $480,000, $45,000 less than Wells Fargo’s previous estimate, the complaint states. Although property values in the area had increased over the past several years, the appraisal was lower than an October 2018 appraisal ordered by Wells Fargo showing the property was worth $490,000.
Because of the appraisal, Wells Fargo refused to remove the requirement that the plaintiffs pay for mortgage insurance, and it later refused to reconsider or get another appraisal, the complaint states.
“Wells Fargo did not provide any substantive response to [the plaintiffs’] communications about the discriminatory and flawed nature of the appraisal,” the lawsuit states.
A short time later, the Washingtons applied to refinance their mortgage with another company “and did not disclose their race throughout the process. The appraisal obtained during that process valued the home at $540,000,” the complaint states.
In filing the lawsuit, the couple claimed discrimination by the defendants under the Equal Credit Opportunity Act, the Fair Housing Act, and the U.S. equal rights law. They also assert state law claims for fraud, unfair and deceptive trade practices, civil conspiracy, and unjust enrichment.
Wells Fargo and Accurate Appraisal did not immediately respond to a request for comment.
The judge’s order set Feb. 15 for both sides to exchange pretrial disclosures.
