Pulte denies Centex is responsible for plummeting home values
Pulte Homes (PHM) said Friday a class-action lawsuit accusing affiliated homebuilder Centex Corp. of crashing neighborhood home values by selling properties to unqualified home buyers is without merit. Unlike most foreclosure cases, this one is not filed by a homeowner facing foreclosure, but by a homeowner who says an influx of foreclosures in the neighborhood killed his property's value. The plaintiff recently filed an appeal after the suit was dismissed. The suit is against Centex, a homebuilding firm acquired by PulteGroup in 2009. Prior to that, Centex operated its own mortgage-lending business, which it phased out prior to the sale of the company. Sylvester Maya from San Bernandino, Calif., filed suit claiming Centex targeted low-income purchasers and sold them homes in his neighborhood, inflating prices. Maya and the other class-action plaintiffs allege Centex's practice led to high foreclosure rates, which, in turn, caused neighboring property values to decline. Two U.S. District Court judges in California have already dismissed the case, a Pulte spokeswoman said Friday. The suit is now at the 9th Circuit Court of Appeals, where justices heard oral arguments Monday. Court records show the case was thrown out by the lower courts because judges found the plaintiffs' lacked standing to bring suit. The lower courts found the plaintiff's injury "was not concrete nor particularized." In addition, the district courts said an upswing in foreclosures is not necessarily a factor that has a long-term impact on home prices. "The judges ruled that it would be impossible for plaintiffs to prove the decreased home prices were caused by the acts of homebuilders rather than a multitude of other factors that affect the housing market such as the collapse of financial institutions, rising unemployment and changes in the credit market," Pulte said in a statement. The District Court for the Central District of California said in court records the "plaintiffs' harm is not fairly traceable to defendants alleged conduct." That court further concluded the plaintiffs "do not have standing to sue for paying an inflated purchase price for their houses or for a subsequent reduction in value of their houses." Write to: Kerri Panchuk.