Larocca v. Creig Northrop Team, P.C., 0766

Decision Date25 June 2014
Docket NumberSept. Term, 2013.,No. 0766,0766
Citation94 A.3d 197,217 Md.App. 536
PartiesFrank LAROCCA, et al. v. The CREIG NORTHROP TEAM, P.C., et al.
CourtCourt of Special Appeals of Maryland

OPINION TEXT STARTS HERE

Hannah Kon & Gregory T. Lawrence (Anthony M. Conti, Eric D. Massof, Anwar L. Graves, Conti, Fenn & Lawrence LLC, Baltimore, MD) (G. Russell Donaldson, Rachael Breen, Law Office of G. Russell Donaldson, PC, Crofton, MD), for Appellant.

Timothy G. Casey, Rockville, MD, Mark D. Maneche (Kayleigh A. Toth, Pessin, Katz Law, PA, Towson, MD), Daniel J. Tobin (Ballard, Spahr, LLP, Bethesda, MD) (Russell J. Pope, Michael S. Barranco, Treanor, Pope, & Hughes PA, Towson, MD) (Quincy M. Crawford, DLA Piper LLP, Baltimore, MD), for Appellee.

Panel: ZARNOCH, HOTTEN, LEAHY, JJ.*

HOTTEN, J.

Appellants, three married couples, obtained financing to purchase new homes through appellees, several realtors, mortgage agencies, banks and their employees. Appellants filed a class action lawsuit in the Circuit Court for Howard County, asserting a number of claims related to an alleged mortgage fraud scheme. The circuit court granted summary judgment as to all counts in appellants' original complaint on statute of limitations grounds. It also denied class certification on grounds of insufficient numbers, and granted a motion to strike appellants' second amended complaint because of prejudice to appellees. Appellants appealed, presenting the following questions for our consideration:

1. Did the [c]ircuit [c]ourt err in ruling that claims concerning mortgage fraud and forged leases were time-barred because inquiry notice was triggered by inconspicuous reference to “gross rental income” surreptitiously inserted on one page out of hundreds initialed and signed by [a]ppellants?

2. Did the [c]ircuit [c]ourt err in ruling that advertising a fake loan program that secretly involved forged leases and other acts of deception did not violate the SMLL because the false and misleading information putatively concerned underwriting guidelines, not loan terms?

3. Did the [c]ircuit [c]ourt err in ruling that, for SMLL claims based on advertising the fake loan program that purported to be a package of secondary and primary mortgages, borrowers could only collect treble damages based on the interest and charges collected under the secondary mortgage, but not the primary mortgage?

4. Did the [c]ircuit [c]ourt err in ruling that the individual loan officers who made the secondary mortgages were not “lenders” despite that the statutory definition of lenders includes individuals who make loans?

5. Did the [c]ircuit [c]ourt err in denying class certification based solely on concluding that the proposed class was not numerous enough because of counting transactions, not persons, and estimates of class size were only approximations that did not take into account the collapse of the housing market and other variables?

6. Did the [c]ircuit [c]ourt err in ruling that the filing of the [s]econd [a]mended [c]omplaint was unfairly prejudicial, despite that it was filed more than 30 days before trial, in accordance with the [c]ircuit [c]ourt's [s]cheduling [o]rder, and the new claims would be barred by res judicata if not brought in this action?

7. Did the [c]ircuit [c]ourt err in ruling that compensation paid to Carla Northrop by Lakeview Title Company, Inc. (“Lakeview”) was not relevant to claims concerning real estate transactions brokered by Ms. Northrop's broker and settled at Lakeview?

For the reasons that follow, we shall affirm in part and reverse in part the judgment of the circuit court.

FACTUAL AND PROCEDURAL HISTORY
The Parties

This case involves six appellants and eleven appellees. Appellants consist of three married couples: Frank and Catherine LaRocca, Kenneth and Angela Pfeifer, and Mehdi Nafisi and Forough Iranpour. All are residents of Maryland who owned a primary residence and contacted appellees regarding purchasing a new primary residence. Since there are eleven appellees, they have been divided into three groups. The “Realtor Appellees are the Creig Northrop Team, P.C., (“the Northrop Team”); Crieghton Northrop (“Mr. Northrop”); Carla Northrop (“Ms. Northrop”); and Long & Foster Real Estate, Inc. (“Long & Foster”). The “Banking Appellees are Wells Fargo Bank, N.A. (Wells Fargo); Prosperity Mortgage (“Prosperity”), PNC Mortgage, a division of PNC Bank (“PNC”), formerly National City Mortgage; Michelle Mathews (“Ms. Matthews”), a loan officer for Prosperity who worked in the Northrop Team's offices; and Suzanne Scales Windesheim (“Ms. Windesheim”), a loan officer for PNC. The Title Appellees are Lakeview Title (“Lakeview”), a licensee of Long & Foster, and Lindell Eagan, an employee of Long & Foster.

Factual Background

While the dates differ, appellants generally shared the same experience in obtaining financing and purchasing their new homes through the Northrop Team. During 2006 and 2007, appellants contacted the Northrop Team regarding purchasing new homes. Through discussions with Ms. Matthews, appellants were led to believe that the Northrop Team would make available to them a “Bridge Loan Program.” Under the Bridge Loan Program, appellants would obtain financing using the equity in their old homes, while at the same time receiving a primary purchase money mortgage for their new home, that was non-contingent upon the sale of the old home. Unbeknownst to appellants, the purported Bridge Loan Program did not exist and likely violated the underwriting policies of the lenders. Appellants allege that the Realtor Appellees concealed the lack of a Bridge Loan Program by using forgeries and other misrepresentations to obtain fraudulent financing. Appellants each entered into a non-contingency contract to purchase a new home and obtained a home equity line of credit (“HELOC”) through PNC. At each appellants' closing for the HELOC, they reviewed and signed a number of documents, including a Uniform Residential Loan Application, referred to as Form 1003. The Laroccas and the Pfeifers closed on their HELOCs in 2006 and the Nafisis/Iranpours closed on theirs in 2007. The parties understood that under the loan program, they would be paying for three mortgages until the old homes were sold. They completed the mortgage process, sold their old homes, and paid off the HELOCs in July 2006, for the Laroccas, June 2007, for the Pfeifers, and September 2007 for the Nafisis/Iranpours. In mid–2010 and mid–2011, appellants were individually contacted by counsel, informing them that another case 1 had revealed a possible fraudulent mortgage scheme. Appellants allege that they were unaware that the Bridge Loan Program was not legitimate.

Appellants filed the instant case as a class action lawsuit in December 2011, with appellants as the named plaintiffs and proposed class representatives. In their complaint, they asserted that in order to effectuate the Bridge Loan Program, appellees acted to conceal from others that appellants still owned their old homes. Appellants claim that appellees made misrepresentations regarding appellants' income and the status of the old homes so that appellants could qualify for loans they were unqualified for. As a result of appellees' fraudulent actions, their old homes were on the market for a considerably longer period of time than they normally would have been, which resulted in appellants paying three mortgages for a longer period of time and incurring more fees. Appellants also contend that the Realtor Appellees pressured them into selling their old homes below market value.

Procedural Background

Appellants' class action complaint included eleven counts against the Realtor and Banking Appellees. Appellees moved to dismiss the complaint, asserting statute of limitations as a defense. The court denied the motion, ordering discovery to continue so that it could be determined whether limitations barred the action. During discovery, appellants issued a subpoena requesting compensation documents from Lakeview. Since Lakeview was not a party to the action at that time, the Realtor Appellees moved for a protective order. The court granted the order after reviewing the documents in camera and reasoning that they were not related to any of the counts alleged in appellants' complaint. Following discovery, appellees moved for summary judgment on all counts, again arguing the statute of limitations defense. Before the court ruled on the motion for summary judgment, appellants filed a second amended complaint, adding a new count and three new appellees, the Title Appellees and Ms. Northrop. Following a hearing on the motion for summary judgment, the court granted the motion, finding that as a matter of law, the statute of limitations began accruing at the parties' respective HELOC closings in 2006 and 2007 and therefore, the limitations period had run by the time the complaint was filed in December 2011. The court also denied appellants' motion for class certification and granted appellees' motion to strike the second amended complaint. Appellants noted a timely appeal against all appellees.

Additional facts shall be provided, infra, to the extent they prove relevant in addressing the issues presented.

STANDARD OF REVIEW

Summary judgment is proper where the circuit court determines that there are no genuine disputes as to any material fact and that the moving party is entitled to judgment as matter of law. SeeMd. Rule 2–501. Disputes concerning contract interpretation are questions of law and frequently regarded as appropriate for summary judgment. See Sandler v. Executive Mgmt. Plus, 203 Md.App. 399, 423, 38 A.3d 478 (2012) (noting that contract interpretation is a question of law). See also Bank of Montreal v. Signet Bank, 193 F.3d 818, 835 (4th Cir.1999).

We review a circuit court's grant of summary judgment de novo. Mitchell v. Baltimore Sun Co., 164 Md.App. 497, 506, 883 A.2d 1008 (2005). In reviewing the grant of a motion for summary judgment, appellate...

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