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Pulte, Lennar Fight State Investigations

WASHINGTON (CN) - Pulte Homes and Lennar Corporation say the Attorneys General of Arizona and Nevada unfairly hired labor union lawyers to investigate the home-building giants' trade practices. In separate federal complaints, the builders, which reported combined revenue of about $10 billion in 2008, say the states have conflicts of interest and violated due process by hiring outside counsel on contingency fees.

Both complaints accuse the Laborers' International Union of North America (LIUNA) of waging war against Pulte, Lennar and other homebuilders to coerce them into forcing subcontractors to sign union agreements.

They say the labor union initiates bogus litigation against homebuilders and recruits dissatisfied homebuyers to file mortgage complaints.

"LIUNA has also sought to utilize state attorneys general in its campaign to pressure Pulte and other homebuilders into forcing their subcontractors to sign union agreements," Pulte says in its 23-page complaint.

Pulte says Arizona Attorney General Terry Goddard hired independent lawyers from Zuckerman Spaeder LLP and Berger & Montague PC to conduct the state's investigation. Pulte says the state hired the lawyers though it knew they had been "retained by a labor union to develop mortgage cases on behalf of injured homeowners."

On Sep. 29, 2009, just over 2 months after Arizona hired the lawyers, Pulte says the attorneys left their firms to work for Cohen Milstein Sellers & Toll, which represents LIUNA.

Pulte says it sent a letter to the Goddard's office, complaining that Cohen Milstein would have access to confidential information that the state collected for its investigation, but the state refused to remove the firm from the investigation.

"The lawyers at Cohen Milstein have been delegated substantial discretion in making decisions regarding the direction, scope, timing, and process of the Nevada Attorney General's Office's investigation," Pulte says.

It claims that Cohen Milstein - and presumably LIUNA - have access to 42,000 pages of confidential information submitted for the investigation.

Pulte claims that Nevada Attorney General Catherine Cortez-Masto followed suit and retained the same lawyers for her investigation of both Pulte and Lennar.

Both Pulte and Lennar say the states hire the firm on a contingency fee, its fees to be determined by the penalties assessed against the two companies. Both companies say "Nevada and Arizona state law prohibits the Attorneys General from retaining outside counsel on a contingency fee basis."

Both Pulte and Lennar say the Nevada Attorney General violated due process. Pulte also sued the Arizona Attorney General.

Both companies seek a declaration that the states violated their constitutional rights to due process. Pulte seeks an injunction preventing Cohen Milstein from sharing confidential information with LIUNA.

Pulte is represented by Andrew Sandler with Buckley Sandler. Lennar is represented by Mitchel Kider with Weiner Brodsky.

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