Mortgage Daily

Published On: July 20, 2018

A valuation affiliate of Quicken Loans Inc. is accusing HouseCanary of using fraud to obtain a more than $700 million verdict in an ongoing lawsuit.

In March,
a Bexar County District Court jury in Texas awarded HouseCanary a $706.2 million judgment against Quicken Loans-affiliate Amrock Inc.

At issue was valuation technology that was allegedly misappropriated by Amrock. The two had originally began doing business together in January 2015.

The lawsuit was originally filed by Amrock, which previously operated as Title Source. HouseCanary won the award on a counter claim.

But on Friday, Amrock issued an announcement citing “explosive new evidence that could have far-reaching implications for one of the largest intellectual property cases in United States history.”

According to Detroit-based Amrock,
HouseCanary has been engaged in extensive litigation fraud.

Amrock, which
claims to be “the largest independent provider of title insurance, property valuations and settlement services nationwide,” says it had started an investigation into HouseCanary’s alleged actions.

In response, HouseCanary last week filed an emergency motion asking the judge to stop Amrock’s investigation.

Amrock says it then made a publicly filed opposition Friday
forcefully responding to HouseCanary’s claims and revealing some of the evidence it says it has uncovered so far.

“Within hours, HouseCanary withdrew its motion and asked the court to cancel the scheduled public hearing, rather than airing these facts in open court,” Amrock said.

Amrock’s outside counsel Randy Mastro called the withdrawal of an emergency injunction “telling.” He noted that the evidence was gathered from multiple whistleblowers who previously worked for HouseCanary.

Amrock said it received an unsolicited whistleblower email after the verdict was announced earlier this year. The former HouseCanary employee claimed that HouseCanary was colluding with Amrock employees at trial.

“In addition, the individual wrote that Amrock had been ‘lied to repeatedly,’ that ‘HouseCanary never had any proprietary anything,’ and ‘it[‘]s all a lie,'” today’s news release said.

A corroborating declaration from another former HouseCanary employee was subsequently obtained by the company, the press release questioning HouseCanary’s ability to build an accurate automated valuation model.

HouseCanary allegedly offered the former employees lucrative consulting contracts in an alleged attempt to have them speak favorably of the company.

Another attorney for Amrock, Manny Pelaez, said in the statement that HouseCanary has been in full retreat since Amrock’s latest filing.

“Today’s stunning new revelation of potential fraud on the part of HouseCanary not only casts doubt upon the legitimacy of the entire trial and verdict, it further validates that HouseCanary is a struggling company that embraced a litigation strategy as a mechanism for recouping five years of financial losses — losses that came as a result of its failure to produce a working product to Amrock as required by its contract,” Amrock said.

HouseCanary didn’t immediately respond to a request for a statement.

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