Hoffman v. Stamper

Decision Date04 February 2005
Docket NumberNo. 33,33
PartiesArthur J. HOFFMAN, et al. v. Toyome STAMPER, et al.
CourtMaryland Court of Appeals

James E. Carbine (James E. Carbine, Baltimore), Robert L. Byer, Pittsburgh, PA (Daniel J. Tobin, Kirkpatrick & Lockhart LLP, Washington, DC, David R. Fine, Kirkpatrick & Lockhart LLP, Harrisburg, PA, on brief), for petitioners.

Melvin J. Sykes (Andre R. Weitzman, Cheryl L. Hystad, Baltimore, on brief), for respondents.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA, GREENE, JJ.

WILNER, J.

In an amended complaint filed in the Circuit Court for Baltimore City, nine plaintiffs claimed that, through an elaborate "flipping" scheme, the defendants had conspired to defraud them, and did defraud them, into purchasing dilapidated residential properties in Baltimore City at inflated prices.1 The participants in this alleged conspiratorial scheme were (1) the "flippers," Robert Beeman, Suzanne Beeman, and a corporation controlled by the Beemans, A Home of Your Own, Inc. (AHOYO), (2) the lenders, Irwin Mortgage Corporation (then known as Inland Mortgage Corporation) and one of Irwin's loan officers, Joyce Wood, and (3) the appraiser, Arthur Hoffman.2 Each of the nine plaintiffs charged all of the defendants with conspiracy to defraud, fraud, violations of the State Consumer Protection Act (CPA), and negligent misrepresentation, and Irwin and Wood were charged as well with general negligence. Compensatory and punitive damages were sought by each plaintiff against each defendant.

After disposition by the court of various motions, a jury found each of the defendants liable to each of the plaintiffs for fraud, conspiracy to defraud, and violations of the CPA. The jury awarded each plaintiff, as against all of the defendants, differing amounts of economic damages and $145,000 for non-economic (emotional) damages, for an aggregate total of $1,434,020.3 In addition, it awarded each plaintiff $200,000 in punitive damages against the Beemans and AHOYO. Through a partial judgment in their favor, the court had previously withdrawn from the jury the punitive damage claims against Irwin, Wood, and Hoffman. Their liability, joint and several, was only for the compensatory damages. In post-trial proceedings, the court awarded attorneys' fees and expenses under the CPA against all defendants in the aggregate amount of $195,591, subject to a dollar-for-dollar credit for attorneys' fees and expenses received by plaintiffs' counsel under their contingent fee agreement.

Everyone except Robert Beeman and AHOYO appealed, although Suzanne Beeman later withdrew her appeal. The Court of Special Appeals affirmed the judgments for compensatory damages, but, after concluding that there was sufficient evidence to show that Irwin, Wood, and Hoffman participated in the fraudulent scheme and made misrepresentations of their own with actual knowledge of the fraud and the falsity of those representations, it reversed the partial judgment in their favor with respect to punitive damages and remanded for further proceedings on those claims. See Hoffman v. Stamper, 155 Md.App. 247, 843 A.2d 153 (2004)

.

On the premise that an award of attorneys' fees under the CPA must take into account all of the circumstances, including the amount of recovery, and because, on remand, there was the prospect of a punitive damage award being entered against Irwin, Wood, and Hoffman, the intermediate appellate court also vacated the award of attorneys' fees and remanded that as well for reconsideration. As "guidance" for the trial court, the Court of Special Appeals observed that an award of attorneys' fees under the CPA would not duplicate fees paid by the plaintiffs under a contingent fee agreement but would simply reimburse them for all or part of those fees.

We granted petitions for certiorari filed by Irwin, Wood, and Hoffman to consider the following questions:

(1) Was there sufficient evidence of culpability on Hoffman's part to sustain the verdicts for conspiracy, fraud, and violation of the CPA;

(2) In affirming the judgment for compensatory damages, did the Court of Special Appeals err in holding that, in an action based on fraud, non-economic damages may be awarded in the absence of any physical injury;

(3) Did the trial court err in instructing the jury that damages in an action based on fraud need be proved only by a preponderance of the evidence and, if so, did the Court of Special Appeals err in holding that Irwin and Wood waived their objection to such an instruction;

(4) Did the Court of Special Appeals err in reversing the judgment for Irwin, Wood, and Hoffman as to punitive damages and, if not, did it err in remanding for only a partial new trial on punitive damages rather than an entire new trial on all issues; and

(5) Did the Court of Special Appeals err in vacating the award of attorneys' fees and remanding that issue for further reconsideration? We shall answer some of these questions in the affirmative and some in the negative and shall therefore affirm in part and reverse in part the judgment of the Court of Special Appeals. For convenience, we shall refer to the Beemans and AHOYO collectively as "Beeman," unless the context requires otherwise. Robert Beeman was the principal culprit. Irwin's culpability is a vicarious one, resting on the conduct of its employee, Wood.

BACKGROUND

The basis of the plaintiffs' case, in a nutshell, was that Beeman (1) bought dilapidated properties in Baltimore City at low prices, (2) then searched for unsophisticated, low-income buyers with poor credit histories, (3) promised them that he could sell them a renovated home for a down payment of only $500, (4) got those buyers to sign contracts of sale at significantly inflated prices upon a promise to make extensive repairs, many of which were never made, (5) arranged for the buyers to finance the purchases with 100% FHA loans obtained through Wood, and (6) obtained those loans for the buyers in part by conspiring with Wood to have Hoffman prepare erroneous appraisals showing the value of the homes to be at or above the grossly inflated contract price and in part by engaging in practices that clearly violated Department of Housing and Urban Development (HUD) regulations and requirements regarding the FHA program in order to consummate the transactions. All nine plaintiffs — two of whom (Brower and Spencer) purchased one house together — testified that, after taking possession, they experienced major problems with their homes, some of which were uninhabitable. Six of the nine eventually lost their homes to foreclosure.

The transactions at issue in this case were as follows:4

Beeman Purchase Sale Price Property Buyer Price to Buyer ------------------------------------------------------------------------------ 17 N. Kresson St. Jerry McFadden $14,500 (4/23/97) $52,000 (5/9/97) ------------------------------------------------------------------------------ 612 E. 41 St. Carl Haley $20,000 (6/25/97) $57,200 (5/28/97) ------------------------------------------------------------------------------ 610 N. Belnord Ave. Gertrude Green $12,500 (6/18/97) $44,000 (7/30/97) ------------------------------------------------------------------------------ 5601 Force Rd. Denise Brower & $24,000 (8/7/97) $65,900 (7/21/97) Forrest Spencer ------------------------------------------------------------------------------ 406 Oldham St. Francine Henderson $17,550 (3/27/97) $58,000 (2/17/97) $65,000 (9/9/97) ------------------------------------------------------------------------------ 3132 Piedmont Ave. Eva Elder $29,551 (9/5/97) $51,000 (8/12/97) ------------------------------------------------------------------------------ 6521 Lenhert St. Toyome Stamper $41,790 (9/5/97) $87,250 (8/14/97) ------------------------------------------------------------------------------ 1127 Carroll St. Inez Coward $ 7,550 (9/29/97) $58,000 (12/19/97) The trial lasted three weeks, during which a great deal of documentary and testimonial evidence, some of it conflicting, was presented. We must view that evidence in a light most favorable to the part(ies) who prevailed on the issues to which it relates and shall recite the facts accordingly.

Beeman began his business of buying distressed houses in Baltimore City at low prices and selling them to unsophisticated buyers at inflated prices in 1996. Initially, he arranged financing for the buyers through conventional mortgage loans, but those loans financed only 60% to 80% of the purchase price. At some point in 1997, he met Wood, who was a loan officer for Irwin and dealt in FHA insured loans. Wood received a commission on loans generated by her and looked upon Beeman (and others in his line of business) as customers and a source of commission income for her. She educated Beeman about the FHA program. Mortgage loans approved under that program are insured by HUD. If a loan goes into default, the lender, or current holder of the mortgage, forecloses, buys the property at the foreclosure sale for the balance due on the loan, transfers the property to HUD, and is reimbursed by HUD for 100% of the unpaid balance of the loan. Because of the greatly reduced risk of loss under that arrangement, lenders are willing to lend up to 100% of the appraised value of the property.

Most of Beeman's prospective buyers had both poor credit and insufficient funds to meet their share of the closing costs. At their initial meeting, Wood advised Beeman that, under the HUD program, a seller could not contribute more than six percent of the loan amount (which, with a 100% loan, was equivalent to the purchase price), and that if the seller contributed more, the purchase price would be reduced accordingly. Included in the six percent cap were a seller's contributions to the buyer's share of closing costs and payments made to clear up the buyer's credit problems.5 To maximize his profit, of course,...

To continue reading

Request your trial
312 cases
  • Antonio v. Sec. Serv. Of Am. LLC
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • 31 Marzo 2010
    ...that emotional distress damages are generally not recoverable for injury to property. (Doc. No. 315 at 40) (citing Hoffman v. Stamper, 385 Md. 1, 36, 867 A.2d 276 (2005).) Damages for injury to property can only be recovered when the “act occasioning the injury is inspired by fraud, malice,......
  • CR–RSC Tower I, LLC v. RSC Tower I, LLC, 115
    • United States
    • Court of Appeals of Maryland
    • 27 Noviembre 2012
    ...could find the existence of the elements of the cause of action by a preponderance of the evidence.”) (citing Hoffman v. Stamper, 385 Md. 1, 16, 867 A.2d 276, 285 (2005)).Third–Party Beneficiary Status Tenants assert there is ample evidence within the “four corners of the ground leases” to ......
  • Wheeling v. Selene Fin. LP
    • United States
    • Court of Special Appeals of Maryland
    • 30 Abril 2021
    ...We described the history and rationale of the physical injury requirement in Vance , which we again summarized in Hoffman v. Stamper , 385 Md. 1, 33–38, 867 A.2d 276 (2005). It is useful to briefly repeat the history and the evolution of this Court's standard here.In Vance , we observed tha......
  • Neal v. United States
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • 8 Febrero 2022
    ...‘is used to represent that the injury for which recovery is sought is capable of objective determination.’ " Hoffman v. Stamper , 385 Md. 1, 34, 867 A.2d 276, 296 (2005) (quoting Vance , 286 Md. at 500, 408 A.2d at 732 ). The Court in Hoffman explained: "In that regard, we observed that it ......
  • Request a trial to view additional results
2 books & journal articles
  • The Standard for Determining "unfair Acts or Practices" Under State Unfair Trade Practices Acts
    • United States
    • Connecticut Bar Association Connecticut Bar Journal No. 80, 2005
    • Invalid date
    ...finding violation of Florida Consumer Protection Act); Regency Nissan, Inc. v. Taylor, 391 S.E.2d 467, 470 (Ga. 1990); Hoffman v. Stamper, 867 A.2d 276,279 (Md. 2005); Gollwitzer v. Theodoro, 675 S. W. 2d 109, 111 (Mo. Ct. App. 1984); Snow v. American Horse Ass'n, Inc., 686 A.2d 1168 (N.H. ......
  • State Consumer Protection Laws
    • United States
    • ABA Antitrust Library Consumer Protection Law Developments (Second) - Volume II
    • 2 Febrero 2016
    ...“but for” causation. 1558 Maryland’s federal district court has required that the 2004) aff’d in part, rev’d in part on other grounds , 867 A.2d 276 (Md. 2005). 1554. Golt , 517 A.2d at 332; Green v. H & R Block, Inc., 735 A.2d 1039, 1059 (Md. 1999); accord Luskin’s , 726 A.2d at 359. The i......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT