The U.S. District Court of the Central District of California has granted Lender Processing Services Inc.'s (LPS) motion to dismiss certain claims by the Federal Deposit Insurance Corp. (FDIC) regarding appraisals the company's LSI Appraisal LLC subsidiary provided to Washington Mutual that the FDIC alleges were noncompliant.
In the spring, the FDIC, as WaMu's receiver, filed a complaint alleging that LPS and LSI breached their contract with WaMu by providing appraisals that failed to meet federal and state law, regulatory guidelines and other industry standards, including provisions of the Uniform Standards of Professional Appraisal Practice. The alleged appraisal defects have led to losses of more than $154 million, the FDIC claims.
On Nov. 2, the district court issued an order limiting the FDIC's claims of breach of the contract, according to a recent LPS filing with the Securities and Exchange Commission. The court dismissed the FDIC's claims of gross negligence, alter ego, single-business enterprise and joint-venture claims.
"With respect to the limited remaining breach-of-contract claim, the company maintains that the appraisal outsourcing services agreement between LSI and WaMu clearly specifies a $10,000 per-claim limitation of liability," LPS' filing says. "The company is confident that it will ultimately prevail on any remaining breach-of-contract claim."