National Mortgage Warehouse v. Bankers First Mort., s. CIV.A. CCB-00-2881, CIV.A. CCB-01-057.
| Decision Date | 08 March 2002 |
| Docket Number | Nos. CIV.A. CCB-00-2881, CIV.A. CCB-01-057.,s. CIV.A. CCB-00-2881, CIV.A. CCB-01-057. |
| Citation | 190 F.Supp.2d 774 |
| Parties | NATIONAL MORTGAGE WAREHOUSE, LLC, Plaintiff v. BANKERS FIRST MORTGAGE CO., INC., et. al. Defendants. Sovereign Bank, Plaintiff v. Bankers First Mortgage Co., Inc., et. al. Defendants. |
| Court | U.S. District Court — District of Maryland |
Andrew Radding, David Bryan Applefeld, Adelberg Rudow Dorf and Hendler LLC, Baltimore, MD, for Christopher Trikeriotis.
Herbert Better, Zuckerman Spaeder LLP, Baltimore, MD, Andrew Radding, David Bryan Applefeld, Adelberg Rudow Dorf and Hendler LLC, Baltimore, MD, for Eisenberg, Levy & Kotik.
Timothy Burgess, Severn, MD, pro se.
James A Dunbar, Mark D Maneche, Venable Baetjer and Howard LLP, Baltimore, MD, for Security Title Guarantee Corp. of Baltimore.
Francis Joseph Gorman, Gorman & Williams, Baltimore, MD, for Joyce Trikeriotis.
Sidney G. Leech, Goodell DeVries Leech and Dann LLP, Baltimore, MD, for Bruce M. Gordon.
Harvey Greenberg, Towson, MD, for Leonard J. Resnick.
Plaintiff Sovereign Bank ("Sovereign"), has sued, inter alia, Defendant Security Title Guarantee Corporation of Baltimore ("Security Title") based on the alleged misconduct of Security Title's issuing agent, Title Express, through its president, Christopher Trikeriotis. Security Title has moved for summary judgment on plaintiff's claims. The motion has been briefed fully, including supplemental memoranda, and no hearing is necessary. See Local Rule 105.6. For the reasons that follow, the defendant's motion will be granted.
This action arises from a mortgage lending scheme between a local mortgage lender, Bankers First Mortgage Company, Inc. ("Bankers"), 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 their private gains. 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. (Def. Reply, Exh. A, Depo. of K. Baklor, p. 116.) See also United States v. Christopher Trikeriotis, Crim. No. CCB-01-0442 (D.Md.2001) (). Sovereign Bank, the plaintiff in the motion now pending, was one of two national mortgage lenders defrauded as a result.
Sovereign Bank extended a line of credit to Bankers First for the purpose of funding residential mortgages. (See Pl. Exh. 1, Aff. of J. Fasoldt, ¶¶ 2-4.) For each loan it wanted funded, Bankers was required to prepare a package of supporting documents and send it to Greenshield, Sovereign's assignor, for processing. (Id. at ¶ 7.) The loan package included information about the borrower, a copy of the mortgage, a copy of the promissory note, a signed promissory note from Bankers First securing the requested loan advance, and, at times, a closing protection letter from Security Title offering to insure Bankers from any loss resulting from negligence or malfeasance by Title Express in closing the loan. (Id. at ¶¶ 8, 13, 15; see, e.g., Pl. Exh. 1(E), "`Kirkendall' Loan Document Package.") After reviewing the information and approving the request, Greenshield would deliver to Sovereign a "Transmittal Schedule & Wire Advance Request," indicating where the money should be wired, in what amount, and information concerning the investor who would eventually purchase the loan from Sovereign. (Id. at ¶ 9.) Sovereign would then wire the funds to Title Express' escrow account so Trikeriotis could close the loan by obtaining the necessary signatures and disbursing the money to the residential loan borrower. (Id. at ¶ 10.) Bankers First was expected to repay Sovereign within 90 days of finding a third party investor willing to purchase the loan. (Id. at ¶¶ 9-11.)
From July 2000 to August 2000, Title Express and Bankers First created and submitted twelve loan packages for nonexistent borrowers and kept for themselves the money Sovereign wired in response. (See, e.g., Pl.Ex. E, "`Kirkendall' Loan Document Package.") Sovereign has sued them to recoup its losses, which totaled $1,523,557.00.1 (Complaint, p. 12, "Relief Requested.") This court entered judgment in favor of Sovereign and against Title Express and Trikeriotis, jointly and severally, on January 15, 2002.
In 1997, defendant Security Title, a title insurance underwriter, entered into a customary Agency Agreement with Title America, Inc., through its president, Christopher Trikeriotis. (Def. Exh. 2, Aff. of R. Schapiro, ¶ 3.) Title America subsequently became Title Express. (Id.)
Sovereign does not allege that Security Title was ever knowingly or directly involved in the fraudulent scheme. It does, however, contend that since ten of the twelve fictitious loan packages included a copy of a Security Title closing protection letter dated July 12, 1999, Security Title is liable for its loss. (Pl. Exh. 1, Aff. of J. Fasoldt, ¶ 15; Pl. Exh. 4, "Closing protection Letter.") Sovereign sets forth two theories under which Security Title may be held liable. First, Sovereign argues that Trikeriotis was the actual and/ or apparent agent of Security Title, and therefore Security Title is responsible for his misconduct in settling the fictitious loans (the "Agency Claim"). Plaintiff further contends that the 1999 Security Title closing protection letter enclosed in ten of the twelve fraudulent loan packages insured it from any loss resulting from Trikeriotis' negligence or misconduct in relation to the loans (the "Insurance Claim"). (See Complaint, pp. 10-12, ¶¶ 56-70.) For the following reasons, the court rejects both of Sovereign's claims.
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment
shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
The Supreme Court has clarified that this does not mean any factual dispute will defeat the motion:
By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original).
"The party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials of [its] pleading, but must set forth specific facts showing that there is a genuine issue for trial." Rivanna Trawlers Unlimited v. Thompson Trawlers, Inc., 840 F.2d 236, 240 (4th Cir.1988). The court must "view the facts and draw reasonable inferences in a light most favorable to the nonmoving party," Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir.1994), but it also must abide by its affirmative obligation to ensure that factually unsupported claims and defenses do not proceed to trial. Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).
In Count VII of its complaint, Sovereign asserts that Trikeriotis had the actual and/ or apparent authority to act for Security Title in issuing title insurance, acting as escrow agent, and conducting closings with regard to the fraudulent transactions. "Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." RESTATEMENT (SECOND) OF AGENCY § 1 (1958), quoted in Green v. H & R Block, 355 Md. 488, 735 A.2d 1039, 1047 (1999). The plaintiff has the burden of proving "the existence of the principal-agent relationship, including its nature and its extent." Id. at 1048 (citing Hofherr v. Dart Industries, Inc., 853 F.2d 259, 262 (4th Cir.1988)). While the question of agency is a factual one that must ordinarily be decided by the jury, "if the party alleging the existence of a principal-agent relationship fails to produce sufficient evidence to allow a reasonable fact finder to conclude that such a relationship exists, then summary judgment [is] proper on the agency issue." Id.
The existence of an actual agency relationship may be established by written agreement or inference. Patten v. Board of Liquor, 107 Md.App. 224, 667 A.2d 940, 947 (1995). In examining that evidence, the court considers three important characteristics: "(1) the agent's power to alter the legal relations of the principal; (2) the agent's duty to act primarily for the benefit of the principal; and (3) the principal's right to control the agent." Green, 735 A.2d at 1048. Sovereign proffers the July 12, 1999 closing protection letter as evidence that Trikeriotis was authorized by Security Title to conduct closings and act as escrow agent with respect to the twelve fraudulent...
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