National Mortg. Warehouse, LLC v. Trikeriotis, CIV.A. CCB-01-3275.

• Decision Date: 15 May 2002
• Docket Number: No. CIV.A. CCB-01-3275.,CIV.A. CCB-01-3275.
• Citation: 201 F.Supp.2d 499
• Parties: NATIONAL MORTGAGE WAREHOUSE, LLC, Plaintiff v. Joyce TRIKERIOTIS Defendant.
• Court: U.S. District Court — District of Maryland

201 F.Supp.2d 499

NATIONAL MORTGAGE WAREHOUSE, LLC, Plaintiff v. Joyce TRIKERIOTIS Defendant.

No. CIV.A. CCB-01-3275.

United States District Court, D. Maryland.

May 15, 2002.

D. Christopher Ohly, Stuart M.G. Seraina, Blank Rome Comisky and McCauley LLP, Baltimore, MD, for Plaintiff.

Francis Joseph Gorman, Christopher C. Bosley, Gorman and Williams PC, Baltimore, MD, for Defendant.

MEMORANDUM

BLAKE, District Judge.

Plaintiff National Mortgage Warehouse, LLC ("NMW") has sued Defendant Joyce Trikeriotis ("Mrs. Trikeriotis") because it believes she was the beneficiary of a fraudulent conveyance committed by her husband, Christopher Trikeriotis ("Mr. Trikeriotis"), while acting in his capacity as an agent for Bankers First Mortgage Company, Inc. ("Bankers First" or "Bankers"). Now pending is Mrs. Trikeriotis's Motion to Dismiss. The motion has been briefed fully, and no hearing is necessary.¹ See Local Rule 105.6. For the reasons that follow, the defendant's motion will be denied.

BACKGROUND

This action arises from a mortgage lending scheme between a local mortgage lender, Bankers First, and a title agent, Title Express, Inc., to defraud national mortgage lenders of millions of dollars by submitting loan documents for nonexistent borrowers and using the funds advanced for private gain. It is undisputed that both Kent Baklor, president of Bankers First, and Christopher Trikeriotis, president of Title Express and general counsel for Bankers First, knowingly participated in the scheme. See United States v. Christopher Trikeriotis, Crim. No. CCB-01-0442 (D.Md. Sept. 21, 2001) (defendant pleads guilty to bank fraud and admits to details of crime in a statement of facts); United States v. Kent Baklor, Crim. No. CCB-01-0336 (D.Md. Aug. 3, 2001) (defendant pleads guilty to bank fraud). NMW, the plaintiff in the motion now pending, was one of two national mortgage lenders defrauded as a result.²

In the action under consideration, NMW asserts that Mr. Trikeriotis transferred a substantial portion of his ill-gotten gains from the mortgage lending scheme to Mrs. Trikeriotis. (See NMW Complaint, ¶ 23.) It further alleges that Mr. Trikeriotis, acting as an agent for Bankers First, caused Mrs. Trikeriotis to be put on Bankers First's payroll, even though she did not work for, or provide goods and services to, Bankers First. (Id. at ¶ 24.) According to the plaintiff, Mrs. Trikeriotis was aware of Mr. Trikeriotis's efforts, and in fact participated in the scheme by filling out an Employee Information Sheet for Bankers First. (Id. at ¶ 25.) NMW further contends that Bankers First paid Mrs. Trikeriotis a yearly salary of $65,000, which was subsequently increased to $125,000. (Id.) Mrs. Trikeriotis allegedly has retained some or all of the money, in addition to using it to pay for the family's home, motor vehicles, and lavish lifestyle. (Id. at ¶¶ 21, 26.) The first four counts of NMW's complaint are brought under Maryland's Uniform Fraudulent Conveyance Act ("MUFCA"), which is codified at Md. Comm. Law Code § 15-201 et. seq. The remaining counts assert claims for violation of the Maryland Spousal Liability Statute, codified at Md. Family Law Art. § 4-301, and subsequent transferee liability pursuant to Md. Com. Law Art. § 15-201, et seq. Mrs. Trikeriotis sets forth a number of arguments contending that the complaint should be dismissed. The court will deny defendant's motion.

STANDARD OF REVIEW

"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992). When ruling on a 12(b)(6) motion, the court must view the complaint in the light most favorable to the plaintiff and accept the plaintiff's factual allegations, as well as all reasonable inferences therefrom, as true. See Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993); Martin, 980 F.2d at 952; Westray v. Porthole, Inc., 586 F.Supp. 834, 836 (D.Md.1984). Consequently, a motion to dismiss under Rule 12(b)(6) may be granted only when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d 324, 325 (4th Cir.1989). In addition, because the court is testing the legal sufficiency of the claims, the court is not bound by the plaintiff's legal conclusions. Randall v. United States, 30 F.3d 518, 522 (4th Cir.1994); Labram v. Havel, 43 F.3d 918, 921 (4th Cir.1995) (affirming Rule 12(b)(6) dismissal with prejudice because plaintiff's alleged facts failed to support her conclusion that the defendant owed her a fiduciary duty at common law); Faulkner Adver., Inc. v. Nissan Motor Corp., 945 F.2d 694, 695 (4th Cir.1991) ("self-serving, inaccurate legal conclusions cannot rescue a factually deficient complaint").

By submitting, among other things, the deposition of Mrs. Trikeriotis, the defendant invites the court to treat the motion to dismiss as a motion for summary judgment. When "matters outside the pleadings are presented to and not excluded by the court, [a 12(b)(6) motion] shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Fed. R.Civ.P. 12(b). "`[R]easonable opportunity' means that all parties must be given `some indication by the court ... that it is treating the 12(b)(6) motion as a motion for summary judgment, with the consequent right in the opposing party to file counter affidavits and pursue reasonable discovery.'" Fare Deals Ltd. v. World Choice Travel.Com, Inc., 180 F.Supp.2d 678, 692 (D.Md.2001) (quoting Gay v. Wall, 761 F.2d 175, 177 (4th Cir.1985) (internal citations omitted)). Where a party knows, however, that materials outside the pleadings are before the court, that party is considered to have notice that the motion to dismiss may be treated as a motion for summary judgment. Fare Deals Ltd., 180 F.Supp.2d at 693. In addition to the notice requirement, the court must also conclude that the nonmoving party has had sufficient opportunity to discover information essential to its opposition. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citing Fed.R.Civ.P. 56(f)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The court will not convert defendant's motion to dismiss into a motion for summary judgment. Although the notice element has been met, the court is not satisfied that NMW has had adequate opportunity for discovery about the alleged conveyances to Mrs. Trikeriotis. Therefore, the additional materials submitted by the defendant will not be considered, and the court will examine the motion before it under the framework of Rule 12(b)(6).

ANALYSIS

I. Failure to Set Forth a Claim for which Relief may be Granted

The court first considers whether NMW's complaint states a claim upon which relief may be granted. See Fed. R.Civ.P 12(b)(6). The defendant argues that it does not because it fails to allege that Mrs. Trikeriotis had fraudulent intent. Fraud by the recipient, however, is not an element of any of the causes of action set forth in the complaint. "To maintain a suit pursuant to MUFCA, the plaintiff needs to allege that a creditor-debtor relationship exists and that the debtor has fraudulently transferred assets." Dixon v. Bennett, 72 Md.App. 620, 531 A.2d 1318, 1320 n. 2 (1987). In Maryland, "a debtor, for a fairly equivalent consideration, whether presently arising or being in satisfaction of an antecedent debt, may transfer in good faith all or a part of his property to one of his creditors." Long v. Dixon, 201 Md. 321, 93 A.2d 758, 759 (1953). Such a conveyance is fraudulent, however, when rendered without fair consideration,³ and by a person or entity who (1) "is or will be rendered insolvent by it,"⁴ (2) is "engaged or is about to engage in a business or transaction for which the property remaining in his hands after the conveyance is an unreasonably small capital,"⁵ (3) "intends or believes that he will incur debts beyond his ability to pay as they mature,"⁶ or (4) has "actual intent, as distinguished from intent presumed in law, to hinder, delay, or defraud present or future creditors."⁷ The intent of Mrs. Trikeriotis, as grantee, is determinative only if the transfers made to her were fair consideration in satisfaction of a bona fide debt. Long, 93 A.2d at 759, 762 (upholding deeds from parents to sons because the deeds were to satisfy a bona fide debt and the sons did not participate in any fraud against the parents' other creditors); see also Wellcraft Marine Corp. v. Roeder, 314 Md. 186, 550 A.2d 377, 380 (1988) (quoting Berger v. HiGear, 257 Md. 470, 263 A.2d 507, 510 (1970)) (voiding a deed from defendant to his sister-in-law because the transfer was not supported by adequate consideration, and the sister-in-law was implicated in the fraud); Braecklein v. McNamara, 147 Md. 17, 127 A. 497, 499 (1925) (quoting Prewit v. Wilson, 103 U.S. 22, 24, 13 Otto 22, 26 L.Ed. 360(1880)) (upholding a deed from husband to wife because it was in satisfaction of a prenuptial agreement, and the wife was not aware of any intent by her husband to defraud his creditors). In other words, contrary to Mrs. Trikeriotis's insistence that she must be shown to have participated in her husband's fraudulent behavior, her intent is essential only if the conveyances to her were made for fair consideration or to satisfy an antecedent obligation.

The complaint alleges the facts necessary to maintain a claim under Md. Com. Law § 15-201, et. seq. NMW asserts that it was a creditor of Bankers First (see NMW...