A motion from the Appraisal Institute (AI) to dismiss a former employee’s wrongful termination lawsuit was denied by a judge in Illinois, who rejected AI’s assertion that plaintiff Alissa Akins failed to state a claim.

Akins alleges she was fired because she discovered and reported to executives that AI had erroneously graded student licensing exams. This gave some students a passing grade when they actually failed, and vice versa.

AI argued that Akins “failed to plead fraud with the specificity required under [law]” because the complaint fails to show that “anyone at [AI] knew of errors” or that “anyone was damaged because of purported reliance on errors.”

But Judge Jeremy Daniel of the U.S. District Court for the Northern District of Illinois ruled that Akins did exactly that. She stated in the complaint that she was punitively fired after reporting the alleged issue to her supervisor and claiming that AI had engaged in fraudulent conduct.

“We are pleased with the court’s decision,” Jordan Matyas, an attorney for Akins, wrote in an email to HousingWire. “On behalf of our client, we will continue to pursue justice for her wrongful termination. Our client remains committed to working with state regulators as they examine the actions of AI.

“This ruling is not a decision on the truth or merits of the allegations, and there has been no discovery in the case,” a spokesperson for AI told HousingWire in an email. “We continue to maintain the allegations are absolutely without merit and misrepresent our processes. In fact, our education and examination procedures are rigorous and designed to uphold the integrity of the appraisal profession.”

AI has until Aug. 7 to respond to the complaint. Akins believes AI’s conduct violates state whistleblower laws and involves a retaliatory discharge.

Akins filed the complaint on March 31. In it, she said that different states have different minimum passing grades on licensing exams, but they were not correctly applied to some student tests. She added that she believes the alleged misconduct could go as far back as 2008.

She said she told this to AI CEO John Udelhofen, who allegedly responding by saying that the trade group has a “don’t ask don’t tell type of policy.” AI vice president Craig Steinley then canceled a scheduled work trip for Akins, which she believes was punishment.

Udelhofen told Akins in a text that he was working on an “employment separation package” for her and added that Steinley “will make it hell for you as long as you stay,” according to the allegations.

Akins’s lawsuit isn’t the only one AI is facing. Former CEO Cindy Chance has also sued the company for wrongful termination. Chance believes she was fired for trying to address the appraisal industry’s relationship with appraisal management companies (AMCs).

In a story published by The New York Times in May, Chance accused Steinley of sexual harassment. Steinley ceased making public appearances shortly after, and AI fired Steinley shortly thereafter.

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