Insurer suing Bakersfield appraiser

An insurance underwriter is suing a Bakersfield appraiser who worked with Crisp, Cole & Associates, accusing Kirksey J. "Mark" Newton Jr. of failing to disclose key facts that would have disqualified him for a policy had they been known.

Lloyd's of London filed a lawsuit against Newton, owner of San Joaquin Appraisals Inc., on June 16 alleging he misled the company on his application for errors and omissions coverage. The lawsuit seeks permission to rescind the policy, which it said was granted under false pretenses.

Jerome N. Lerch, attorney for Lloyd's of London, did not return calls Tuesday seeking comment.

There's more than an insurance policy at stake. If Lloyd's loses, it could be on the hook for millions of dollars because a defunct subprime lender is suing Newton and others over several appraisals done for Crisp, Cole & Associates, a now closed real estate company the FBI is investigating for mortgage fraud.

The former Fremont Investment & Loan -- which went bankrupt and is now Fremont Reorganization Corp. -- said fake employment information and fudged appraisals were submitted with loan applications it funded in 2005 and 2006. The company is seeking $4.2 million, plus $40 million in punitive damages.

Newton could not be reached for comment Tuesday. His attorney, Mark A. Wasser, declined to comment.

On the insurance application, the lawsuit contends, Newton was asked directly if he had ever been notified of any investigation or review by a regulatory body, or if he knew of any incident related to his work that was or would be the subject of litigation.

In an application for a policy for 2008, Newton checked yes to the regulatory question, and in a separate letter disclosed that he'd been told the state Office of Real Estate Appraisers was reviewing one appraisal from May 2007, but he had not heard anything more about it, according to the lawsuit.

That policy lapsed Jan. 4, 2009, the insurer said. In March, Newton applied for another policy. He again checked yes to the regulatory question, but did not enclose a letter of explanation, according to the lawsuit.

When someone reviewing the application called on the matter, Newton said the disclosure was a reference to the earlier matter, and Newton was granted a new policy, the lawsuit said.

Newton did not disclose a pending accusation from state regulators seeking to revoke or suspend his license, the lawsuit states. Newton is fighting those charges.

The appraiser led the company to believe he was subject only to a "minor investigation involving only one appraisal," the lawsuit contends, when in fact the FBI raided the offices of Crisp & Cole and San Joaquin in September 2007, and Fremont had filed a civil complaint naming Newton in January 2009.

Fremont's attorney, James Petros, declined to comment on the insurance lawsuit.

Meanwhile, Fremont's lawsuit is pending. A hearing is scheduled for Oct. 5.