Court throws out Bruce Makowsky’s $60-million lawsuit against Zillow

A federal district judge in Los Angeles has dismissed developer Bruce Makowsky’s lawsuit against Zillow that claimed that the Seattle-based real estate company had harmed his Bel-Air mansion’s reputation by falsely showing it sold for less than its asking price multiple times.

The handbag tycoon was seeking $60 million in damages against the online real estate marketplace. But U.S. District Judge Otis D. Wright II ruled Tuesday that Zillow, as a publisher, is granted immunity from Makowsky’s negligence claim under the Communications Decency Act.

The controversy began last February, when an unknown user with a Chinese IP address bypassed Zillow’s security measures and toyed with the sale price displayed on the property’s listing.

Dubbed Billionaire, the mega-mansion was on the market for $150 million, and Zillow showed that it had sold for $110 million. It didn’t. Over the next week, it showed other false sale prices of $90.54 million and $94.3 million.

Though untrue at the time, the sale prices were strangely prophetic. Later that year, the opulent estate actually did sell for $94 million.

At the time, the story made headlines because of the home’s over-the-top opulence. The four-story stunner spans 38,000 square feet with 12 bedrooms, 21 bathrooms, three kitchens, 130 pieces of art, a 40-seat movie theater, a four-lane Louis Vuitton bowling alley, two wine cellars stocked with Champagne, a candy room and an 85-foot infinity pool with a swim-up bar.

As a bonus, it also included a $30-million fleet of exotic vehicles including a Bugatti, an Allard, a Rolls-Royce and a Hobie Cat sailboat. A decommissioned helicopter used in the 1980s action series “Airwolf” was also included in the deal.

Makowsky’s attorney Ronald Richards alerted Zillow’s legal team of the sham sale prices, and after removing the information and banning the user, they explained in an email that Zillow displays pages for roughly 110 million homes in the U.S. and allows users to change information about the home — such as a recent remodel or added square footage — when necessary.

The feature allows any homeowner to claim their home on the website by answering questions about the property to verify their identity. Since not all claims are manually reviewed, however, users can attempt to claim a home multiple times, figure out which information is needed to verify their identity and side-step the security measure.

Later that month, a limited liability company tied to Makowsky filed the lawsuit against Zillow, claiming that the company published false information and permanently damaged the property’s perception as an elite listing worth more than $100 million.

The suit also alleged that Zillow, which has an estimated 36 million monthly visitors, had no safeguards in place to stop trolls or criminals from claiming the property and posting false information. Makowsky said that after the false sale was posted, multiple colleagues called to congratulate him.

Makowsky himself had lowered the property’s price dramatically over the years, first listing the home for $250 million before trimming the tag to $188 million and, most recently, $150 million. He told The Times he was just trying to be realistic.

Zillow filed to dismiss the suit April 19, citing a section of the Communications Decency Act that protects web operators from being responsible for information published by users.

Section 230 of the 1996 law has previously been cited to protect online platforms such as Facebook and YouTube from being held liable for the content their users post. The law has been of particular help to tech companies that host third-party content because they find it difficult to verify whether each item they publish is legitimate.

“We are pleased the court dismissed the claims in this lawsuit. Zillow strives for accuracy in the data published on our site, and that is why we encourage homeowners to contact us to update their home facts,” Zillow spokesperson Viet Shelton said in a statement.

Richards, Makowky’s attorney, told The Times that he intends to appeal.

“Under the ruling, if upheld on appeal, companies have no obligation whatsoever to take any actions to protect the public from fraudsters and con men using their websites to commit identity theft, fraud and other crimes so long as they didn’t post the harmful information themselves,” he said.

“It’s hard to believe that Congress intended to provide blanket immunity to companies that host sites and impose no obligation on them whatsoever to screen their users, no matter how many millions of property damage these criminal users cause nor how many persons are injured.”