Maya v. Centex Corporation

Plaintiff should be given the opportunity to amend a complaint in order to establish a “causal connection” between Defendant’s actions and the alleged injury before the court dismisses for lack of constitutional standing.

Individual homeowners (“Homeowners”) brought suit against some of the biggest housing developers in the country (“Developers”) for fraud, misrepresentation, and breach of good faith. Homeowners allege that Developers marketed homes in Homeowners’ neighborhoods in a way which implied they would make a good faith effort to sell to well-qualified buyers when, in reality, high risk home-buyers were targeted. Homeowners claim that they overpaid for their properties, their properties have decreased in value as a result of foreclosures in their neighborhoods, and they would not have purchased their homes in the first place if Developers had disclosed their marketing scheme. The district court dismissed Homeowners’ claims for lack of constitutional standing and failure to state a claim under 12(b)(6), holding that Developers’ alleged bad dealings and subsequent decrease in Homeowner’s properties was “conjectural” and “speculative” only because the homes had not yet been sold. The Ninth Circuit found that the district court’s conclusion that lack of constitutional standing allowed for dismissal under 12(b)(6) was erroneous. The Court held that “particularized allegations of fact” in an amended complaint may be considered by the court in a constitutional standing ruling, unlike a 12(b)(6) motion, which limits the court’s review to the facts in the complaint. Therefore, the Court held that although Homeowners had failed to plead “a sufficient causal connection between any decreased value” and Developer’s actions in their complaint, they should be given the opportunity to include expert testimony in an amended complaint in order to establish a “causal connection.” REVERSED and REMANDED.