Norman v. Borison

• Decision Date: 07 May 2010
• Docket Number: No. 0054 Sept.Term,2009.,0054 Sept.Term
• Citation: 192 Md.App. 405,994 A.2d 1019
• Parties: Stephen P. NORMANv.Scott C. BORISON, et al.
• Court: Court of Special Appeals of Maryland

192 Md.App. 405

994 A.2d 1019

Stephen P. NORMANv.Scott C. BORISON, et al.

No. 0054 Sept.Term, 2009.

Court of Special Appeals of Maryland.

May 7, 2010.

COPYRIGHT MATERIAL OMITTED

Cynthia Young, Annapolis, MD, for Appellant.

Stephen Y. Brennan, Pasadena, MD, Laura K. McAfee, Baltimore, MD, Michael J. Sepanik, Washington, DC (Carr Maloney, PC, Robert Brager, Sarah E. Albert, Kathleen H. Meredith, Iliff, Meredith, Wildberger & Brennan, PC, on the briefs), for Appellee.

Panel: WOODWARD, WRIGHT and FREDERICK J. SHARER (Retired, Specially Assigned), JJ.

WRIGHT, Judge.

Appellant, Stephen Norman (“Norman”), filed suit in the Circuit Court for Montgomery County alleging that he was defamed by statements made by appellees ¹ in connection with a lawsuit currently pending before the United States District Court for the District of Maryland. Appellees filed motions to dismiss, and after conducting a hearing, the circuit court dismissed all counts of the lawsuit. Norman noted this appeal, presenting the following questions for our consideration: ²

I. Did the trial court erroneously dismiss appellant's claims since appellant was repeatedly personally referred to in the appellees' second amended federal complaint, and the defamation of a small unique company may give rise to personal claims for defamation when the facts alleged are such that a reasonable person could understand that the defamatory comments referred to appellant or when there are allegations that persons familiar with the situation understood the comments referred to appellant?

II. Did the trial court err in finding absolute privilege extends to all pleadings in a suit when the pleadings are published to the press and on the internet, entities and forums not connected to the underlying judicial proceeding?

III. Was the publication of a previously filed, but not yet available to the public, judicial complaint to the press and on the internet by the attorneys who drafted the underlying pleading protected by the fair reporting privilege when there was no judicial action in the case and the attorneys self reported the pleadings they drafted without solicitation from the press in a matter in which they had a substantial financial interest, and where there are allegations the publication was committed with malice?

IV. Did the appellant sufficiently allege falsity when falsity was either specifically alleged in all counts, was alleged by reference to the averments in prior paragraphs, or by including allegations that the defamatory remarks in all counts were made with malice?

We conclude that appellant does not have standing to sue for defamation, and that the absolute privilege extends to the allegedly defamatory statements, thereby answering “no” to questions I and II. We therefore affirm the judgment of the circuit court and need not address questions III and IV.

FACTUAL & PROCEDURAL BACKGROUND

The Parties

Norman was the owner, operator and attorney for Sussex Title, LLC ³ (“Sussex”) (formerly known as CAP Title, LLC) from November 2001 to December 18, 2008. Alexander Chaudhry and Ali Farahpour are Norman's former business partners in Sussex. Appellees are attorneys who filed a class action lawsuit against various companies alleging mortgage fraud. Appellees, Scott Borison and Janet Legg, are attorneys with the Legg Law Firm, LLC. Appellee, Phillip Robinson, is the executive director of Civil Justice, Inc., a non-profit legal services organization affiliated with the University of Maryland School of Law. Appellee, Peter Holland, is an attorney with the Holland Law Firm, P.C. Benjamin Carney is an attorney formerly employed at the Holland Law Firm, P.C. Carney was not working for the Holland Law Firm when appellant filed his defamation case against appellees.

The Class Action Litigation

On June 18, 2007, appellees filed a class action suit on behalf of several hundred homeowners, alleging that the Metropolitan Money Store, along with several other companies and real estate professionals, engaged in mortgage fraud. The action also alleged wire fraud, mail fraud, and Racketeer Influenced and Corrupt Organization Act (“RICO”) ⁴ claims. The suit was originally filed in the Circuit Court for Prince George's County on June 18, 2007. Sussex was named as a Defendant; however, neither Norman nor any other owner or employee of Sussex was named as a defendant by name in the body of the complaint. On July 24, 2007, appellees voluntarily dismissed the case and filed a new class action in the United States District Court for the District of Maryland, captioned Proctor, et al. v. Metropolitan Money Store, et al. The Federal Complaint again named Sussex, and also Chaudhry as a defendant, but Norman was not named as a defendant or identified by name elsewhere in the complaint.

On January 21, 2008, appellees filed a first amended complaint, adding Farahpour and Wilbur Ballesteros as defendants and dropping Sussex, which had recently filed for bankruptcy protection.⁵ Ballesteros was a Sussex employee who acted as the settlement agent and notary public in the class transactions facilitated by Sussex. Norman was not named as a defendant or identified by name in the first amended complaint; however, the complaint contained allegations that “anyone at Sussex” could have discovered the scheme, including “the respective principals” and the “owners and employees” of Sussex. The first amended complaint was ultimately dismissed with leave to re-file in light of the new pleading standards in federal court established by Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Proctor v. Metro. Money Store Corp., 579 F.Supp.2d 724, 730-31, 745 (D.Md.2008).

On November 14, 2008, appellees filed a second amended complaint. It named Chaudhry and Farahpour as defendants, but did not name Ballesteros, Sussex, or Norman as defendants. However, for the first time, Norman was mentioned by name as an owner of Sussex. The references to Norman in the second complaint are as follows:

18. ... The payments to Ballesteros were items paid out of the share of monthly proceeds to Farahpour, Chaudhry and Norman.

29. Sussex is an entity owned and controlled by Farahpour, Chaudhry, and a third person, Steven Norman

[sic]. It had offices in the same location as Money Tree Funding. Sussex changed its name from CapTitle and filed for bankruptcy in the U.S. Bankruptcy Court of Maryland in late 2007. Based on testimony of Norman in connection with the bankruptcy case, Sussex was operated for the financial benefit of the three owners since Ali Farahpour would review the company's records and make an equal monthly distribution to each of the three based on the money received by the company during the given month after payment of expenses and leave some amount of reserve for future expenses.

61. Wilbur Ballesteros was paid a salary out of Chaudhry, Farahpour and Norman's share of revenues generated by the operation of Sussex as well as a bonus per settlement in which he was involved.

102. The HUD-1s for the Proctor Family's January 24, 2006 transaction shows that the remaining equity of more than $164,372.59 was all going to the Proctors, but Jackson, McCall and Mr. Fordham, Metropolitan and F & F and their affiliates actually illegally took more than $100,000 of the Proctor Family's money, as shown by a disbursement sheet. Jackson, McCall, Mr. Fordham, Metropolitan and F & F were only able to obtain these funds through the complicity and cooperation of Sussex. The loans obtained on the Proctor Property stripped away the equity in that Property, and increased the mortgages on the Property by close to $117,000. Upon information and belief, the fees and other charges collected by Sussex in connection with this transaction were disbursed at the direction of Farahpour to Farahpour, Chaudhry and Norman.

134. The loans were closed and settled by Sussex. Sussex's role included the preparation of loan documents, a deed and disbursement checks by Chaudhry, the obtention of signatures to the various documents by Ballesteros. For the Simon Property, the scheme

stripped away the equity in that Property, and increased the mortgages on the Property by close to $100,000. Upon information and belief, the fees and other charges collected by Sussex in connection with this transaction were disbursed at the direction of Farahpour to Farahpour, Chaudhry and Norman.

141. As set forth above, Ballesteros, being paid by Chaudhry and Farahpour, participated by obtaining signatures to deeds and loan documents for loans made to straw purchasers. Chaudhry prepared ([or] had prepared under his supervision) Deeds and Deeds of Trust, signed checks and authorized disbursement of funds. Farahpour participated through the use of his entity Money Tree Funding by dividing up the funds received from these transactions to himself, Chaudhry and Norman.

After appellees filed the class action suit, Norman's business partners filed a claim against the class representatives in the United States District Court for the District of Maryland, alleging that they were the masterminds behind the enterprise. Proctor v. Metro. Money Store Corp., 645 F.Supp.2d 464, 490-92 (D.Md.2009). The claim was dismissed. Id. at 492. Norman's business partners also sought dismissal of the second amended complaint which the federal court likewise denied. Id. Chaudhry then filed a Rule 11 ⁶ motion, alleging that counsel (i) failed to conduct a reasonable inquiry into the facts before filing the complaints, and (ii) advanced “false factual claims” despite knowing that the allegations were not true. The court rejected these claims, finding them “totally devoid of merit” and concluding that there was “significant documentary evidence to support the allegations.”

The Defamation Action

On June 18, 2007, Chaudhry received a phone call from a reporter at the Baltimore Sun newspaper (“Sun”). The reporter indicated that Sussex had been named as a defendant in a class action...