Norman v. Borison

• Decision Date: 22 April 2011
• Docket Number: No. 70,Sept. Term,2010.,70
• Citation: 17 A.3d 697,418 Md. 630,39 Media L. Rep. 1673
• Parties: Stephen P. NORMANv.Scott C. BORISON, et al.
• Court: Maryland Court of Appeals

418 Md. 630

17 A.3d 697

39 Media L. Rep. 1673

Stephen P. NORMAN

v.Scott C. BORISON, et al.

No. 70

Sept. Term

2010.

Court of Appeals of Maryland.

April 22, 2011.

Stephen P. Norman (The Norman Law Firm, Ocean View, Delaware; Gary E. Bair of Bennett & Bair, LLC, Greenbelt, MD), on brief, for petitioner.Laura K. McAfee (Robert Brager and Sarah E. Albert of Beveridge & Diamond, P.C., Baltimore, MD), on brief, for respondents.Stephan Y. Brennan (Kathleen Howard Meredith of Iliff, Meredith, Wildberger & Brennan, P.C., Pasadena, MD), on brief, for respondents.Jessica Weber, Esquire, Francis D. Murnaghan Appellate Advocacy Fellow, Baltimore, MD, for Amici Curiae brief of Public Justice Center, American Civil Liberties Union of Maryland, Casa De Maryland, Legal Aid Bureau, Inc., and Public Citizen.Kevin M. Goldberg, Esquire, Fletcher, Heald & Hildreth, PLC, Gregg P. Leslie, Esquire, The Reporters Committee for Freedom of the Press, Arlington, VA, for Amici Curiae brief of the Reporters Committee for Freedom of the Press, Maryland D.C. Delaware Broadcasters Association, Maryland–Delaware–District of Columbia Press Association and Society of Professional Journalists in Support of Respondents.Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, MURPHY, ADKINS and JOHN C. ELDRIDGE (Retired, specially assigned), JJ.HARRELL, J.

Alexander Chaudhry (“Chaudhry”), Ali Farahpour (“Farahpour”), and Petitioner, Stephen Norman (“Norman”), owned equal shares in the Maryland-registered limited liability company, Sussex Title (“Sussex”).¹ Respondents here, all lawyers, filed on behalf of their clients a proposed class action lawsuit against multiple defendants-companies, including Sussex, for their alleged participation in “the single largest mortgage scam in Maryland history....” ² Respondents did not name Norman as a defendant in any version of their original or amended complaints in any court, although, in their second amended complaint in the federal court, Norman was mentioned by name in certain allegations. Norman claims that Respondents defamed him by republishing the pleadings (which contained allegedly defamatory statements) to the press and on the internet, and by making verbal comments to the press about the lawsuit.³

For reasons to be explained, we hold that, on the circumstances of this case, an absolute privilege adheres to Respondents' republication of the pleadings in the mortgage scam case, as well as to their public comments about that case. Thus, we affirm the judgment of the Court of Special Appeals, which, by its reported opinion, affirmed the trial court's dismissal of Norman's defamation action. See Norman v. Borison, 192 Md.App. 405, 994 A.2d 1019 (2010).

I.

A. The “Mortgage Rescue” Scam.

As attributed to Respondent Philip Robinson, the mortgage rescue scam asserted in the underlying litigation was described as involving real-estate professionals (principally the Metropolitan Money Store enterprise) that:

[T]arget[ed] homeowners who have thousands of dollars of equity in their homes, but who cannot keep up with their mortgage payments. These “professionals” promise[d] to rescue the homeowners from foreclosure by giving them a new mortgage with payments that they can afford. In reality, though, the scammers s[old] the property to a “straw buyer,” who then t[ook] out a new, larger mortgage—a mortgage with fees that equal[ed] or exceed[ed] the amount of equity in the property. The lenders, title companies, and others involved in the transactions then split the “fees” (that is, the stripped equity) amongst themselves. The homeowners, who could not afford their original mortgage payments, ha[d] no hope of repaying the new, higher mortgage.

Without settlement companies like Sussex, who closed the transactions between lenders, sellers, and “straw buyers,” the scam could not have succeeded.

B. The Complaint in the Circuit Court for Prince George's County.

On 18 June 2007, Respondents filed a “class action suit on behalf of several hundred homeowners,” ⁴ in the Circuit Court for Prince George's County, “alleging that the Metropolitan Money Store, along with several other companies and real estate professionals, engaged in mortgage fraud.” Norman, 192 Md.App. at 411, 994 A.2d at 1022–23. Without identifying which Sussex owners or employees participated individually and actually in the mortgage rescue scam, Respondents averred broadly that Sussex, a “title company,” “ aided and abetted the scam by closing ... transactions in exchange for ... repeat business and fees ....”

Norman posits, for purposes of his later defamation action, that Respondents provided to the press a copy of the complaint on the same day it was filed, but before it was filed. He infers this occurred because, on the filing day, a Baltimore Sun reporter telephoned Chaudhry and read verbatim to Chaudhry passages from the complaint. Norman highlights further that “[the Circuit Court for] Prince George's County ... does not maintain an [online] case management system that would allow [the reporter] to monitor filings or obtain copies of filed documents [online].” Respondents do not contest this claim.

The day following filing of the proposed class action suit, 19 June 2007, The Baltimore Sun published an article about the scam lawsuit. In particular, the article explained that the complaint named at least six defendants, including Sussex. The article quoted Respondent Peter Holland as saying, without reference to any particular individual or company, “[w]e're talking about bad people.” In the final paragraphs, the article, quoting from the complaint, reiterated that the defendants' “sole motive was to enrich their extravagant lifestyles at the expense of hardworking Marylanders....”

Less than a month later, on 12 July 2007, The Washington Post published an article regarding the lawsuit. It mentioned, in passing, that apparently Sussex was not answering its phones at its offices. It quoted Respondent Philip Robinson as stating that the defendants' “sole motive seemed to be to enrich their lavish lifestyles as opposed to saving the homes of the vulnerable homeowners from foreclosure.” ⁵

C. The Initial Complaint in the United States District Court for the District of Maryland (“federal district court”).

On 24 July 2007, Respondents dismissed voluntarily their action in the Circuit Court for Prince George's County and re-filed their claim in federal district court. According to the federal complaint, by July 2007, “it became apparent that the fraud ... extended across three different jurisdictions [ i.e., interstate]....” The initial federal complaint asserted the same allegations as the previous State action, and added Chaudhry—a part owner of Sussex—as a named defendant. Norman was not sued or named in the initial federal complaint in any capacity.

The next day, The Baltimore Sun published an article about the federal litigation relating to the mortgage rescue scam. It included Respondent Scott Borison's statement that, “[a]s we kept investigating the case, it became clear that there were also federal charges to be asserted.... Metropolitan Money Store was out stealing the equity in people's homes and on top of that, getting it tax free.” June Arney, Federal Court Gets Home–Equity Suit; Md. Case Grows into Class Action Seeking Recovery of Homes Swindled from Owners, Balt. Sun, 25 July 2007, at 3D. The article mentioned that Sussex was named as a defendant, and included a comment attributed to Chaudhry claiming that Sussex was a victim equally of Metropolitan Money Store's scam.

D. The First Amended Complaint in the Federal District Court.

Respondents, on 21 January 2008, amended their initial filing, removing Sussex as a defendant, which had filed for bankruptcy protection. The first amended complaint also added Farahpour as a defendant, as well as Wilbur Ballesteros (“Ballesteros”),⁶ a former employee of Sussex. (“This matter involves the single largest mortgage scam in ... Mid–Atlantic history ... and involved the willful participation of so-called real estate professionals—including ... licensed settlement agents Sussex Title, LLC ... and its part owners and employees, Alexander Chaudhry, ... Ali Farahpour ... [and] Wilbur Ballesteros....”). The first amended complaint, however, did not name Norman as an involved third party or defendant.

In the vast majority of instances where the complaint refers to the “owners and employees of Sussex,” it included a qualifying descriptor. For example, the complaint states that “[t]o finance the foreclosure reversal transactions, the owners and/or employees of Sussex ... Chaudhry, Farahpour and Ballesteros arranged and settled federally related mortgage loans....” ⁷ In most other occasions, the first amended complaint refers to the Sussex-related participants as “Sussex, Chaudhry, Farahpour and Ballesteros....” ⁸

E. The Second Amended Complaint in the Federal District Court.

On 29 September 2008, a federal trial judge dismissed the first amended complaint, but gave Respondents leave to re-file. See Proctor v. Metro. Money Store Corp., 579 F.Supp.2d 724, 727 (D.Md.2008). In seeking dismissal, Chaudhry and Farahpour argued that “[Respondents] have failed to state a claim ... because they have failed to make specific factual allegations as to how either of these individuals participated in the alleged scheme.” Proctor, 579 F.Supp.2d at 742. In other words, by grouping together Chaudhry, Farahpour, and Ballesteros in their first amended complaint, Respondents suggested that “all [of the defendants] delivered one check, recorded one deed, instructed one buyer to sign a document, and received one fax.” Proctor, 579 F.Supp.2d at 743 (internal quotation marks and citations omitted). The federal district court held that this repeated grouping “must be read as an allegation that one of the three [defendants] did each act” and, therefore, is deficient speculation under Bell Atlantic Corp. v. Twombly, 550...