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There have been over a half dozen lawsuits against real estate appraisers alleging discrimination within the last four years. Several have settled quietly for high-five or low six-figure sums. And one very public lawsuit, Connolly and Mott v. Lanham et al in Maryland, is still ongoing—with the appraiser countersuing the plaintiffs for defamation (For more, read Appraiser Countersues Black Plaintiffs Who Alleged Discrimination and click here to donate to Shane Lanham’s GoFundMe litigation defense fund).
In a historic court ruling, the appraisal profession now has a legal precedent for an appraiser winning in court against charges of appraisal discrimination. In the case of Daviola-Turner v. Henley Appraisals LLC et al, Judge Walter Rice of the U.S. District Court for the Southern District of Ohio granted Henley’s Motion to Dismiss and effectively dismissed the Turner’s appraisal discrimination case against Henley.
Here are the details on this important case.
Background
One of the unique things about this case is that the plaintiffs, Carlos Turner and Diana Davoli-Turner, allege that Kevin Henley, owner of Henley Appraisals LLC, not only discriminated against Carlos Turner because he is an African American, but that Henley also discriminated against Diana Davoli-Turner because she is a Canadian citizen. Plaintiffs make an argument that Henley, and U.S. Bank, undervalued the Turner’s home because of Daviola-Turner’s national origin—i.e. because she is a Canadian with permanent residency in the United States.
The allegation of anti-Canadian sentiment is a new one on the appraisal discrimination landscape!
The Turners first purchased their home for $442,000 in November 2020 and they argue they made substantial improvements to the property, including finishing the basement at a cost of over $30,000.
Then in March 2022, the Turners inquired with their current lender about doing a cash-out refinance on their home, seeking to pull out $60,000 in home equity. Their original lender then had the home appraised and that appraisal returned with a value of $520,000. However, the Turners failed to lock in their rate and began shopping for better rates and terms. After observing an advertisement from U.S. Bank for low interest rates, the Turners applied with U.S. Bank and began trying to complete the refinance transaction with U.S. Bank.
After encountering several denials from U.S. Bank based on, among other things, what U.S. Bank called a “history of delinquency,” U.S. Bank ordered a driveby appraisal that valued the home at $485,000, and ultimately Henley was hired to do a full appraisal of the property which returned a valuation of $470,000.
In their complaint, the Turners allege that Henley believed that “they did not belong in Springboro, a predominantly white city” and that because of his discriminatory beliefs, he did not select similar homes throughout the neighborhood and was biased in how he selected his comparables.
After a denied request for a Reconsideration of Value and a great deal of negotiating, the Turners eventually received a home equity line of credit of $34,363 with a variable interest rate, which the Turners now say is over 10 percent interest.
Non-Profit Involvement
In a similar fashion to many other discrimination cases against appraisers, the Turners were joined in this lawsuit by Miami Valley Fair Housing Center, a non-profit dedicated to fair housing in Dayton, Ohio. After consulting with MVFHC, the Turners decided to “whitewash” their home, which they define as when “a black homeowner removes markers of black identity, such as family photographs, from their home and enlists a white person to stand in as the homeowner when an appraiser is present, thereby making it seem to the appraiser that the house is owned by white people.”
This subsequent appraisal was conducted in May 2023, over a year after Henley’s appraisal, and returned with an appraised value of $655,000. This, along with the first appraisal the Turners received at $520,000, prove that Henley’s appraisal was “grossly inconsistent with appraisal guidelines and principles and that their excuses for devaluing the Turner Plaintiffs’ home were invalid and pretextual,” the Turners argue.
Case Against Dismissed Henley
Over a year after the Turner’s litigation was initially filed, Judge Walter H. Rice, one of the longest-tenured federal judges in Ohio who was first appointed in 1980 by Jimmy Carter, granted Henley’s motion to dismiss the Turner’s claim for insufficient evidence.
Rice ultimately ruled that the Turners’ accusations against Henley are “conclusory” rather than factual. In the legal sense, a conclusory allegation is one that asserts a claim or accusation without providing sufficient supporting facts or evidence to make it plausible or actionable in court.
A portion of Rice’s decision is worth quoting at length (emphasis added):
While the Henley appraisal resulted in a valuation $185,000 lower than the one conducted a year later…Plaintiffs conclude that this must mean that the valuation is unreasonable, they lack sufficient factual allegations to adequately plead this claim. Plaintiffs here include no such allegations about similarly situated homeowners who were also appraised by Henley. While there is no requirement that Plaintiffs must provide allegations that detail disparate impact or direct evidence of the discrimination, the Court is not required to blindly ignore the obvious alternative theory: that Henley honestly thought the property was worth the amount that he appraised it for. Merely stating that Henley discriminated against the Turners, is insufficient as a matter of law under Rule 8(a).
Rice reasons that because the Turners lack a factual basis upon which to plead their discrimination allegations against Henley, that all of their causes of action must also be dismissed.
In a somewhat surprising turn of events, Rice allowed the Turner’s case against U.S. Bank to continue. Here, Rice allows that all of the Turner’s arguments that are based on the Henley appraisal being discriminatory are “unsustainable,” but writes that the Turner’s second argument, that U.S. Bank’s “own process was discriminatory, may yet provide a well-pleaded claim.” This claim is related more specifically to U.S. Bank’s denial of the Turner’s initial application, as well as their decisions around extending credit to the Turners. On this basis, the Turner’s lawsuit against U.S. Bank is continuing.
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Appraiser Experience
When Working RE reached out to Henley for a comment, his view of the situation was direct.
“Basically, the borrower did not like their value. They did not like the appraisal, which was reviewed. They did not like another appraisal by an appraiser for the bank. We are in a time where if a borrower does not like the appraised value, they can just go out and sue appraisers and lenders,” Henley observes.
To his credit, Henley had secured his E&O with an insurance program that offered sufficient appraisal discrimination coverage. “Luckily, my insurance policy (OREP Insurance) includes racial discrimination coverage. I hope other appraisers do not have to face such erroneous and frivolous lawsuits or accusations. And if they do, I hope they have adequate coverage,” Henley reports.
The coverage distinction noted by Henley is particularly important—since many appraiser E&O policies either exclude discrimination claims outright, or contain inadequate discrimination coverage limits. Some of OREP’s main competitors only provide $50,000 or $100,000 of Discrimination Claim Coverage. (OREP’s base policy includes $200,000, with up to $500,000 available upon request.)
“My insurance company (OREP) did a fantastic job organizing my defense,” Henley says. “The representation knew there was no basis for such an outrageous claim. I definitely appreciate OREP for standing by their policy on racial discrimination lawsuits. If other appraisers question how good their insurance company may be, I can speak firsthand—OREP went to task immediately and retained a great firm who are experts in this type of litigation,” Henley shares.
Despite his victory in court, Henley says his business was still affected negatively because some of his clients passed judgement before all the facts came out. “Appraisers need to be aware certain lenders will remove you from their Appraiser Roster without having a final verdict. I probably lost 30-50 percent in income because some lenders don’t follow the saying: ‘Innocent until proven guilty.’ That’s a shame because, as you know, I have been appraising over 25 years and have been on some of their lists for over 20 years. I appreciate that my number one client kept me in business,” Henley says.
Non-Profit Funding
The involvement of the non-profit MVFHC in this case is indicative of a larger strategy wherein non-profits are routinely joining, and possibly financing, the litigation against appraisers. While Connolly and the late Mott, the plaintiffs in the ongoing Maryland suit (and countersuit) were not joined in the case by a non-profit, many observers have raised questions about who is paying for the litigation.
Connolly and the late Mott are represented by Relman Colfax, a leading fair housing law firm that has billed over $500,000 of work to The Appraisal Foundation (TAF) to advise on USPAP revisions. According to court records, Relman Colfax has billed 5,411 hours to the case at an average hourly rate of $583, with total expenditures reaching $3.15 million.
The suggestion that non-profits have been funding the litigation against appraisers is not unfounded. Tenisha Tate-Austin and Paul Austin in Marin County, California were backed by the Fair Housing Advocates of Northern California. And a separate, widely publicized settlement for $75,000 against an Oakland appraiser in April 2025 was also joined by the same non-profit.
Industry insiders have suggested that one possible repercussion of the fact that HUD is expected to dismiss many of the HUD discrimination complaints that have been hanging in limbo over appraisers’ heads for the last three years, is that interested parties on the left (non-profits in many cases) may finance litigation on what they perceive to be the strongest cases. When a regulatory solution fails, private litigation can solve it, the argument goes.
Funding Cuts
This private litigation strategy is complicated by the fact that the Trump administration has plans to cut the Department of Housing and Urban Development (HUD) funding by $33 billion—nearly 40 percent of the total. HUD is currently a significant source of funds for non-profits dedicated to fair housing. Such drastic cuts, if effected, might potentially end Section 8 and other housing assistance programs, not to mention drying up resources that non-profits rely on to finance private litigation.
As part of Trump’s initial flurry of Executive Orders, a notable one for the appraisal profession is one that targeted DEI programs and funding specifically, including the following mandate:
“Terminate, to the maximum extent allowed by law, all…equity-related’ grants or contracts.” AND “Directs the OMB director to “[t]erminate all ‘diversity,’ ‘equity,’ ‘equitable decision-making,’ ‘equitable deployment of financial and technical assistance,’ ‘advancing equity,’ and like mandates, requirements, programs, or activities.”
In response to the current Administration’s executive orders and plans to cut HUD’s funding, the National Fair Housing Alliance (NFHA), which is the organization that has been purchasing billboards portraying appraisers as discriminatory, together with the National Urban League and the Aids Foundation of Chicago, has filed suit against Donald Trump and the Administration, arguing that because of the Executive Order, they are “at significant risk of losing federal funds that they use to help people of color, women, LGBTQ people, and/or people with disabilities.”
While the NFHA acknowledges in its own court filing that only 27 percent of its funding comes from federal grants, the organization would still have sufficient resources to continue operating even if those funds were entirely eliminated. However, losing federal support would likely compel the NFHA to make difficult decisions about how to allocate its remaining resources and which initiatives to prioritize.
Landmark Victory
To our knowledge, this marks the first time an appraiser has achieved full vindication in court against discrimination allegations—a landmark victory. It’s a major win for the appraiser involved and a positive milestone for the entire profession.
Many stakeholders in the appraisal profession are watching carefully for the conclusion of the Lanham case in Baltimore to see what happens on that front. (Click here to donate to Shane Lanham’s GoFundMe litigation defense fund.) It will be interesting to see how further litigation on this issue develops.
Stay safe out there!
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About the Author
Isaac Peck is the Publisher of Working RE magazine and the President of OREP Insurance, a leading provider of E&O insurance for real estate professionals. OREP serves over 10,000 appraisers with comprehensive E&O coverage, competitive rates, and 14 hours of CE at no charge for OREP Members (CE not approved in IL, MN, GA). Visit OREP.org to learn more. Reach Isaac at isaac@orep.org or (888) 347-5273. CA License #4116465.
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by Steven R Smith
The court decision is not a precedent level case. It must go to theCurt of Apprals and be won there for it to be a precedent, and then only in that judicial district.
If it goes there and then to the State Supreme court, then it has precedent in that state. If it goes to the US Supreme court, and is won in favor of the appraiser, then, and only this is it a precedent for all appraisers.
I know of no professioal liability cases that have made itinto the Supreme Court.
-by Vince Slupski
As I’ve said before, the scandal isn’t that appraisers perform racially biased appraisals, an allegation that has yet to be proven. The scandal is that after 30 years of licensing and all the education, continuing education, state supervision, and appraisal review, we have a situation where someone pays $442,000 for a house, spends $30,000 on the basement, and gets appraisals for $470,000, $485,000, $520,000, and $655,000 shortly thereafter. What does this say about the validity and reliability of residential appraisal?
-by Mary T Thompson
This is great news and a HUGE victory for the Appraisal profession. Let’s spread this far and wide. I have also contributed to Shane’s defense and I surely hope he wins big time! I have recently retired and one reason was the landscape of people wanting to sue for bias whenever the value was not what they wanted. I was close to retirement anyway, but I bumped it up a year. Good luck everyone out there and I hope these lawsuits decrease significantly going forward.
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