NEW YORK -(Dow Jones)- First American Corp. (FAF) and its home-appraisal unit have asked a federal judge to dismiss a lawsuit by New York Attorney General Andrew Cuomo for allegedly colluding with Washington Mutual Inc. (WM) to use a list of preferred appraisers to inflate mortgage appraisals.

In a motion filed late Monday, the Santa Ana, Calif., company and its eAppraiseIT unit asked U.S. District Laura Taylor Swain in Manhattan to dismiss the attorney general's complaint, saying he lacks authority to pursue a case because all federal savings and loan activities are regulated by the U.S. Office of Thrift Supervision.

"Mr. Cuomo has strayed into territory over which he has neither regulatory authority nor oversight responsibility," the motion said.

Cuomo has alleged that First American caved in to pressure from Washington Mutual, eAppraiseIT's largest client, to use a list of so-called "proven appraisers" who allegedly provided inflated appraisal values.

The lawsuit is seeking to stop the practice and disgorgement of fees that First American and eAppraiseIT received for the allegedly inflated appraisals. The case was originally filed in New York State Supreme Court earlier this month and then moved to federal court in Manhattan.

Washington Mutual, which isn't a defendant in Cuomo's suit, has previously said it was "surprised and disappointed" by the allegations and has suspended its relationship with eAppraiseIT until it can further investigate the situation.

A spokesman for Cuomo didn't immediately return a phone call seeking comment Tuesday.

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By Chad Bray Of DOW JONES NEWSWIRES

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