WASHINGTON, D.C. (CN) - Two homebuilding companies have sued the attorneys general in Nevada and Arizona, accusing them of improperly hiring a union-backed law firm to investigate predatory mortgage lending practices against the company.
In two separate complaints filed in federal court, Pulte Homes and Lennar Corp. say Catherine Cortez Masto of Nevada and Arizona's Terry Goddard hired Cohen Milstein Sellers & Toll, which they say violates their due process rights because the firm also represents the Laborers' International Union of North America.
The union had claimed that during the housing boom, the builders induced homebuyers into purchasing overpriced homes with unaffordable mortgages.
The union is "waging an extensive campaign against Pulte ... designed to damage Pulte's business and harm its shareholders," according to the lawsuit filed by Pulte. "The purpose of this campaign against Pulte and other homebuilders is to coerce Pulte and other homebuilders into forcing their subcontractors to sign union agreements.
"The rules of professional conduct prohibit Cohen Milstein from representing the matter while also representing (the union) in matters adverse to Pulte," according to the same complaint.
The home builders also complain that the two attorneys general retained the firm on a contingency fee basis that gives them an illegal profit interest in the outcome of the investigation.
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