A recent lawsuit alleges that a Concord, California company, Disclosure Source, gave kickback payments to realty firm PMZ in exchange for PMZ secretly using Disclosure Source for natural-hazard reports in home sale transactions. PMZ, located in Modesto, California, is the leading property firm in Stanislaus County and one of the largest real estate companies in the United States. Disclosure Source generates reports detailing whether properties are at risk for damage from floods, forest fires and earthquakes. According to the lawsuit, PMZ concealed the kickbacks by routing clients to what appeared to be another firm, but in reality, was a PMZ shell company.
Three former PMZ clients used PMZ’s services to sell homes in 2009 and 2010. In theory, thousands of PMZ’s former clients (or more) could potentially join this lawsuit. But first, Contra Costa Superior Court Judge Barry Goode, who specializes in complex civil litigation, needs to deem the case worthy of class action status. PMZ is doubtful that this will happen, and believes that it will prevail in the long run, although Judge Goode has denied a preliminary motion to dismiss. The motion to dismiss was filed on grounds that the claim ran afoul of the four-year statute of limitations, as nearly five years had passed between the underlying incident and the filing of the suit.
In his tentative ruling, Judge Goode stated that when a fiduciary earns secret profits, this can constitute constructive fraud. If the allegations against PMZ are ultimately determined to be true, Judge Goode says there will be ample basis to conclude that the defendants committed fraud. The judge also noted that former clients say that they did not discover the alleged kickback scheme until recently, because the purported conspirators actively concealed their relationship.
However, the case is plagued with troubling standing issues. First, Judge Goode has already released five PMZ agents as defendants from the lawsuit. According to PMZ, none of the plaintiffs used Valley NHD (PMZ’s alleged Shell company) when selling homes.
Philadelphia Business Lawyers at Sidkoff, Pincus & Green Have Extensive Experience Litigating Issues of Fraud and Misrepresentation
If your business is facing allegations of fraud or misrepresentation the experienced Philadelphia business lawyers at Sidkoff, Pincus & Green have the experience needed to achieve a successful outcome in your case. With offices conveniently located in Philadelphia, we serve clients throughout Southeastern Pennsylvania and South Jersey. Schedule a consultation today by calling us at 215-574-0600 or by filling out our online contact form.