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Lento v. RBS Citizens, N.A.

United States District Court, D. Massachusetts

March 27, 2015



GEORGE A. O'TOOLE, Jr., District Judge.

The magistrate judge to whom this matter was referred has recommended that the defendants' motion for summary judgment (dkt. no. 28) be granted. The plaintiff has filed an objection to the Report and Recommendation ("R&R").

The plaintiff's objections to the R&R are simply reargument of the points made in his original opposition to the defendants' motion. I agree with the magistrate judge's thorough disposition of the issues raised. Having carefully reviewed the pleadings, the parties' submissions, the R&R, and the plaintiff's objections, I ADOPT the magistrate judge's recommendation in its entirety. The defendants' motion for summary judgment (dkt. no. 28) is GRANTED. Judgment shall enter accordingly.

In light of this ruling, the defendants' motion to strike the plaintiff's expert witness (dkt. no. 26) is deemed MOOT.




The plaintiff, William Lento, is a real estate appraiser in Barnstable, Massachusetts. On June 9, 2011, RBS Citizens, N.A. ("Citizens") placed him on a "Do Not Use" ("DNU") list for the second time, and refused to use his appraisals for real estate loans. Citizens contends that it did so because it was dissatisfied with Lento's work. Lento, on the other hand, takes strong exception to any challenges to the quality of his work, and contends that he was placed on the DNU list because "he would not cede to the demands of Citizens' sales force to pump up home values." (Compl. at 1). He commenced this action against Citizens[1] and the Chief Appraiser in its Collateral Risk Management Group, Kenneth Cote, alleging "tortious interference with prospective economic advantage" (Count I), civil conspiracy (Count II), and violation of Mass. Gen. Laws ch. 93A, § 11 (Count III).

This matter is before the court on the Defendants' Motion for Summary Judgment (Docket No. 28) pursuant to which the defendants are seeking dismissal of all of the counts of the Complaint. After careful review, this court finds that even a most generous reading of the record fails to support Lento's factual allegations as to Citizens' motivation.[2] Moreover, he has failed to state any claims as a matter of law. Therefore, and for the reasons detailed herein, this court recommends to the District Judge to whom this case is assigned that the Motion for Summary Judgment be ALLOWED.


The following facts are undisputed unless otherwise indicated.


Citizens bank offers its customers a variety of banking and financial products, including mortgage and home equity loans that are secured by the borrower's residence. (DF ¶ 1). As part of its underwriting and due diligence in deciding whether to grant a loan, Citizens commissions an appraisal of the property being used to secure the loan. (DF ¶ 2). Prior to 2010, Citizens contracted directly with appraisers who applied to the bank and were approved to do the appraisal work. (DF ¶ 4). Citizens assigned work randomly within the sub-group of appraisers on the list who worked in the location of any given property. (DF ¶ 4). Citizen did not guarantee any appraiser any work, and the appraiser was not obligated to accept any request for appraisal work. (DF ¶ 5).

In the wake of the subprime mortgage crisis, a number of laws and regulations were enacted to help assure the independence of appraisers. (See DF ¶ 6).[4] As alleged in the Complaint, federal and state laws were enacted, and standards were adopted, to ensure that appraisers remained independent and that lenders did not improperly exert their influence over the appraised values. See, e.g., Mass. Gen. Laws ch. 255F, § 15(k) (it is unlawful to "make any payment, threat or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property"); see also Compl. ¶¶ 9-19. Among the conduct that was prohibited was removing an appraiser from a list of qualified appraisers in order to influence an appraisal, or linking an appraiser's employment to the results of an appraisal. (See Compl. ¶¶ 14, 18). For example, pursuant to 12 C.F.R. § 226.42(c)(1)(i)(D), it is a violation of the Truth in Lending Act to exclude "a person that prepares a valuation from consideration for future engagement because the person reports a value for the consumer's principal dwelling that does not meet or exceed a predetermined threshold."

In light of these enhanced regulations, and in furtherance of the efforts to ensure appraiser independence, in 2010 Citizens, like many other financial institutions, stopped contracting directly with appraisers. (DF ¶ 6; Compl. ¶ 19). Instead, Citizens began to use the services of appraisal management companies ("AMCs"), which are independent and unaffiliated entities that maintain a network of appraisers. (DF ¶ 6). These companies, which were "designed to bolster the integrity of the process and the independence of the appraiser[, ]" were responsible for selecting the appraiser, and for supervising and reviewing their work. (DF ¶ 7).

In addition to using the AMCs, at the time at issue in this litigation Citizens maintained its own quality review procedures, which included the review and assessment of appraisals by loan underwriters during the loan application process, and the use of an Appraisal Review Group consisting of approximately seven employees of Citizens. (DF ¶ 8). According to Citizens, if a homeowner took exception to an appraisal, the homeowner typically would complain to the loan officer. The loan officer, in turn, would decide whether to forward the complaint to the Appraisal Review Group. (DF ¶ 9). The Appraisal Review Group would then review the appraisal for accuracy and thoroughness. (DF ¶ 10). This might include a discussion with the appraiser to address questions involving methodology or comparable sales, for example. (DF ¶ 11). It was not, and is not, unusual for a homeowner to object to the value determined by the appraiser. (DF ¶ 9). According to Lento, he received complaints from borrowers approximately 20-30% of the time. (DF ¶ 9).

According to Citizens' policy, when a member of the Appraisal Review Group had a problem with an appraisal, s/he would add the appraiser to an "issues tracking" spreadsheet, along with a description of the perceived problem. (DF ¶ 12). This spreadsheet was, in turn, reviewed periodically by the Appraisal Review Group's team leaders, to determine if the appraiser should be put on the "Do Not Use" list. (DF ¶ 12).[5] The DNU list was then transmitted to the AMCs with whom Citizens was doing business, so that the AMC would not assign someone on the list to do Citizens' work. (DF ¶ 13). Citizens "neither require[d] nor encourage[d]" any AMC to cease to use the appraiser for non-Citizens appraisals. (DF ¶ 13). Similarly, the AMCs had their own appraisal review procedures and DNU lists, as did other banks and financial institutions. In fact, Fannie Mae even makes its list publicly available. (DF ¶ 14). At the time Citizens decided to put Lento on its DNU list, it had no information whether or not he was, or had ever been, on the DNU list of any other financial organization. There is no evidence that Lento is considered as problem appraiser in the industry, and he appears to have a successful appraisal business working for various lenders (See DR ¶ 37; PF ¶¶ 23-25, 28-30).

The First DNU Placement

Lento became an approved appraiser for Citizens sometime prior to 2008. (DF ¶ 18). he was placed on the Do Not Use list on January 28, 2009 (Def. Ex. F), and notified of that placement on March 13, 2009 by the defendant Kenneth Cote, (Def. Ex. G). After inquiry by Lento as to the basis for his exclusion, Citizens, through Cote, sent a letter on April 3, 2009, detailing problems with three appraisals Lento had conducted. (Def. Ex. H). Further discussion between Lento and Cote resulted in Lento being reinstated on May 6, 2009. (Def. Ex. I). Since Lento contends that these alleged problems with his work were just a pretense for his being placed on the DNU list "because he would not sue an improperly high comparable value for a Citizens employee's appraisal[, ]" namely Mary Beth Eddy, some detail is necessary. (See PR ¶ 19).

In January, 2009, Lento performed an appraisal on the home of Mary Beth Eddy of West Barnstable. (DF ¶ 21; PF ¶ 38). She was apparently an employee of RBS Worldplay, which was then a wholly owned subsidiary of Citizens Financial Group or, perhaps, RBS Citizens, N.A. (PF ¶ 38; DR ¶ 38). It is Lento's contention that citizens believed that Eddy was an employee of Citizens, which Citizens denies, but I find that this dispute is not material to any issues in this case. (See DF ¶ 31; PR ¶ 31). For purposes of the motion for summary judgment, I will assume that the Bank believed her to be an employee.

Eddy was present while Lento was doing the appraisal of her home, and she informed him that she worked for Citizens and that her husband was an attorney (which apparently was not true). (PF ¶ 40; Pl. Ex. 9 at 33). She stressed to Lento that it was important for him "to come in as high as possible" so that she would get her loan approved. (PF ¶ 40). Lento originally set a value of $635, 000, which Eddy apparently thought was too low. (PF ¶¶ 41-42). She did not approve of the comparable he had sued because they did not take into account factors that Eddy thought were important, including that fact that they were not on the north side of Route 6A, and did not have an ocean view like she did. (Pl. Ex. 9 at 32-34).

Eddy sent Lento's appraisal to her real estate agent, who had previously listed the house for more than $1 million. (Pl. Ex. 9 at 36). The agent, in turn, suggested several comparable which Eddy forwarded to her loan officer, Steve Olsen, complaining that Lento's appraisal was "way too low." (Pl. Ex. 9 at 37-41; PF ¶ 43).

Olsen sent Eddy's complaint to Thomas Goron, an Appraisal Review Analyst at Citizens, who contacted Lento about Eddy's concerns. (See Compl. ¶ 27, Pl. Ex. 13; PF ¶¶ 44-45). Specifically, Goron wrote to Lento:

Bill, the borrower is disputing the appraisal and I need some assistance, would you please review the following statements from the borrower and provide us with feedback? The borrower had an appraisal on her property completed over the last year. She had a friend who is an appraiser review the current Citizens appraisal and came up with some points why they don't agree with the appraisal.

(Pl. Ex. 13).[6] Goron followed with a list of points he wanted addressed. (Pl. Ex. 13). Lento did consider the comments, and revised his appraisal on January 21, 2009, increasing his appraised value to $650, 000.00. (Def. Ex. B at 84; DF ¶ 23). Lento also provided his feedback to Goron on that date by email. (Pl. Ex. 13).

Specifically, Goron questioned the fact that one comparable Lento used was listed as having been sold on April 30, 2008 but had, in fact, been sold on November 19, 2008. (Pl. Ex. 13; DF ¶ 21). The date of sale was significant for several reasons. As an initial matter, more recent sales are generally considered more reliable. (See DF ¶ 22). Moreover, because of the rapidly declining real estate market in 2008, Lento had applied a significant downward adjustment to the comparable sale in question because he believed that the sale had taken place in April, not November 2008. (See DF ¶ 22). Thus, when he corrected his appraisal due to the admittedly erroneous date, Lento changed his downward ...

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