1305 Ridgewood, LLC v. Athas Capital Group, Inc.

Background

1305 Ridgewood, LLC owns the property located at 1305 Ridgewood in Millbrae, California. Kelvin Vuong is Ridgewood’s managing member. In fall 2020, the plaintiffs engaged Athas Capital Group, Inc. to obtain a loan secured by the property. Athas engaged Endeavor Appraisals, Inc. to conduct a required appraisal. After Endeavor prepared an appraisal report, Athas gave the plaintiffs notice of their right to obtain a copy and emailed Vuong a black-and-white copy on November 25, 2020.

The plaintiffs later requested a color copy of the same report because Vuong wanted to explore financing with other lenders without arranging another appraisal. Athas and Endeavor did not provide one. The plaintiffs asserted claims under the Equal Credit Opportunity Act, a federal law governing credit transactions; California’s Unfair Competition Law; and civil conspiracy.

Standing of Ridgewood

Athas moved to dismiss Ridgewood’s claims for lack of standing. The court found that the loan application listed only Vuong as the prospective borrower. Because Ridgewood was not an “applicant” under the Equal Credit Opportunity Act, the court held that it lacked standing to assert claims based on the alleged failure to provide the appraisal report. The court granted Athas’s motion to dismiss Ridgewood’s claims and dismissed them without leave to amend because the court found that the standing problem could not be cured by amendment.

Equal Credit Opportunity Act claim

Athas moved to dismiss the Equal Credit Opportunity Act claim on the ground that the plaintiffs had not alleged a violation. The court noted that Vuong received notice of his right to obtain an appraisal and received a copy of the appraisal report in black and white. The court held that the statute and its regulations did not require Athas to provide a color copy. It therefore granted Athas’s motion to dismiss the first claim and dismissed it without leave to amend.

California Unfair Competition Law claim

The plaintiffs alleged that the defendants violated the unlawful and unfair prongs of California’s Unfair Competition Law. The court rejected the unlawful theory because the alleged conduct did not violate the Equal Credit Opportunity Act or the California appraisal statute identified by the plaintiffs.

As to the unfair theory, the court found that the complaint alleged Athas converted the report to black and white but alleged no facts showing that Endeavor participated in that conduct. The court also concluded that the allegations did not show that Athas’s conduct was unfair under either of the standards discussed in the opinion. The court granted defendants’ motions to dismiss the second claim and dismissed it without leave to amend.

Civil-conspiracy claim

The plaintiffs alleged that Athas and Endeavor conspired to violate the Equal Credit Opportunity Act and the Unfair Competition Law. The court explained that civil conspiracy is a legal doctrine dependent on an underlying tort or other actionable violation. Because the plaintiffs had not shown a violation of either statute, the court held that the conspiracy claim failed. The court granted defendants’ motions to dismiss the third claim and dismissed it without leave to amend.

Disposition

Judge Saundra Armstrong ordered that defendants’ motions to dismiss were granted and that the action was dismissed without leave to amend. The order terminated Docket Nos. 19 and 30, directed the clerk to close the file, and terminated pending matters.