Vales v. Preciado

• Decision Date: 09 August 2011
• Docket Number: Civil Action No. DKC 05–3110.
• Citation: 809 F.Supp.2d 422
• Parties: Roger VALES, et al. v. Alma PRECIADO, et al.
• Court: U.S. District Court — District of Massachusetts

809 F.Supp.2d 422

Roger VALES, et al.

v.Alma PRECIADO, et al.

Civil Action No. DKC 05–3110.

United States District Court, D. Maryland.

Aug. 9, 2011.

Marvin Liss, Law Office of Marvin Liss, Washington, DC, Robert M. Somer, Hilton and Somer LLC, Fairfax, VA, for Roger Vales, et al.

Alma Preciado, Silver Spring, MD, pro se.

Dorita Lemos Down, Bethesda, MD, pro se.William Camp, Jr., Washington, DC, pro se.Gloria Wilson Shelton, State of Maryland Office of the Attorney General, Baltimore, MD, Marvin Liss, Law Office of Marvin Liss, Washington, DC, Robert M. Somer, Hilton and Somer LLC, Fairfax, VA, for Alma Preciado, et al.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for resolution are two motions filed by Plaintiffs/Counterdefendants Roger and Lourdes Vales: a motion for summary on Defendant/Counterplaintiff Alma Preciado's counterclaims (ECF No. 244) and a partial motion for summary judgment on the Valeses' claims against Defendants (ECF No. 245). The court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, the motion for summary judgment on Preciados' counterclaim will be granted, while the partial motion for summary judgment against Defendants will be denied.

I. BackgroundA. Factual Background

The following facts are uncontroverted.¹

This case traces its beginnings to 2005, when Plaintiff Lourdes Vales received a one million dollar lump sum retirement payment. Early that year, Defendant Alma Preciado approached Lourdes and her husband, Plaintiff Roger Vales, with a proposal to use part of their retirement money to fund a loan. Preciado operated a mortgage brokerage business as a sole proprietorship called Metropolitan Financial Services (“Metropolitan”) with which the Valeses had previously invested on two prior occasions. Both of those prior investments were secured with real property.

The loan Preciado proposed in January 2005 was similar to those the Valeses had previously funded. Preciado solicited $350,000 on behalf of Harry Down and Defendant Dorita Lemos Down, two parties Preciado told the Valeses he knew very well. Preciado further “vouched for their financial strength and integrity.”

In March 2005, Preciado presented the Valeses with a loan application signed by Dorita Down. The loan application indicated that the $350,000 loan was to be fully secured by a piece of property in Bethesda, Maryland valued in excess of $800,000 (“the Bethesda Property”). The borrower was listed as Dorita Lemos Down, who reportedly drew an income of $14,500 a month as President of Pidegro, LLC. The Valeses later learned that Dorita Lemos Down was not on the title to the Bethesda Property, but Preciado assured the Valeses that Harry Down—the real landowner-would sign the Note and Deed of Trust at the time of closing. Based on those assurances, the Valeses agreed to fund the loan.

On April 5, 2005, the Valeses met with Preciado at Metropolitan's offices to review the Promissory Note, Deed of Trust, and HUD–1 Settlement Statement. Those documents reflected that a loan secured by the Bethesda Property was to be made to Harry Down and Dorita Lemos Down, with BMS Title serving as settlement agent. The documents also indicated that Metropolitan would serve as Trustee for the Deed of Trust on the Bethesda Property. Apparently satisfied that everything was in order, the Valeses provided Preciado with a check for $350,000, which was not to be released until (1) all the necessary documents were executed by Harry Down and Dorita Lemos Down and (2) the Deed of Trust had been recorded to secure fully the loan. The Valeses then returned to their home in Florida, with assurances from Preciado that she would send them the fully executed loan documents after settlement.

The Valeses never received the promised loan documents. Wondering whether the transaction had moved forward, the Valeses contacted their bank and learned that the $350,000 check had cleared. Dorita Lemos Down negotiated the check and deposited it in a bank account held by Pidegro, LLC. Pidegro, LLC was an entity whose members included Down, Preciado, and Defendant William Camp.

The Valeses then reached out to Preciado, who initially said she would speak with BMS Title and forward the completed loan documents. The Valeses still did not receive any loan documents and Preciado began ignoring their phone calls. Alarmed, the Valeses returned to Maryland, where they learned that there was no perfected security interest on the Bethesda Property and BMS Title had never conducted any $350,000 loan settlement. Even so, Metropolitan received a $19,975.33 check for “settlement charges.”

The Valeses subsequently confronted Preciado, who admitted that Harry Down, the sole owner of the Bethesda Property, was not part of and did not know of the loan transaction. Nevertheless, Preciado gave the $350,000 loan proceeds to Dorita Down, despite the fact that the loan documents were never executed and the Deed of Trust was never executed or recorded. She assured the Valeses that she would place a security interest against her own real estate. Unfortunately, the Valeses later learned that Preciado had no real estate and no security interest would be forthcoming; all property was titled her in son's name.

The Valeses now suggest that the loan was actually a scheme to fund Pidegro, LLC rather than a legitimate loan to the Downses. They insist that they never would have funded the loan had they known of Preciado's business involvement with Pidegro, LLC or that Harry Down was not actually involved in the loan transaction. B. Procedural Background

This case has a long procedural history that is more fully described in previous opinions. It began when Preciado, on behalf of herself and Metropolitan and for the claimed benefit of the Valeses, filed a complaint in the Circuit Court for Montgomery County against Dorita Lemos Down, Harry Down, Camp, Pidegro, LLC, and Harry Down. The defendants in that action removed the case to this court based on diversity jurisdiction. See Preciado v. Vales, No. DKC 05–2339. On November 16, 2006, the Valeses filed suit in this court against Preciado; Dorita Lemos Down; Camp; Pidegro, LLC; and Pidegro, Ltd. alleging fraud in connection with the loan transaction. See Vales, et al. v. Preciado, et al., No. DKC 05–3110. The cases were consolidated on April 6, 2006. Preciado filed an amended counterclaim against the Valeses on July 28, 2006 asserting malicious prosecution and defamation. The Valeses have also twice amended their complaint.

On July 24, 2008, Preciado was indicted in the Circuit Court for Montgomery County on four counts: embezzlement, perjury, theft of over $500, and fraudulent practices. See State v. Preciado, No. 08–7015–00118–3. She pled guilty to one count of embezzlement (fraudulent misappropriation by a fiduciary) on June 12, 2009. In connection with the guilty plea, the state court entered a judgment of restitution against Preciado for $350,000, payable to the Valeses.

Just days before her criminal indictment, on July 21, Preciado filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the District of Maryland. See In re Preciado, No. 08–19367. The Valeses then initiated an adversary case in the bankruptcy court on October 20, 2008, which sought a determination that Preciado owed the Valeses $350,000 in non-dischargeable debt. See Vales v. Preciado, No. 08–00764. Judge Lipp concluded that the debt was non-dischargeable and entered her own order of judgment for $350,000 plus costs and prejudgment interest, retroactive to April 5, 2000.

The Valeses have now filed two motions for summary judgment, both on October 18, 2010. In the first, they seek summary judgment on Preciado's counterclaims. (ECF No. 244). In the first page of the second motion, the Valeses request summary judgment on Counts I, II, III, VI, and VII of their own complaint. (ECF No. 245). The supporting memorandum, however, seeks summary judgment against only Preciado and only on two counts: count III (constructive fraud) and count VI (breach of fiduciary duty). The memorandum also reserves the issue of punitive damages. In response to both motions, the court received a letter from Dorita Lemos Down.² (ECF No. 249). No other opposition or reply was filed.³ (ECF No. 250).

II. Standard of Review

The Valeses have moved for summary judgment (twice) pursuant to Federal Rule of Civil Procedure 56. A court may enter summary judgment only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir.2008). Summary judgment is inappropriate if any material factual issue “may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); JKC Holding Co. LLC v. Washington Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir.2001).

“A party opposing a properly supported motion for summary judgment ‘may not rest upon the mere allegations or denials of [his] pleadings,’ but rather must ‘set forth specific facts showing that there is a genuine issue for trial.’ ” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.2003) (quoting former Fed.R.Civ.P. 56(e)). “A mere scintilla of proof ... will not suffice to prevent summary judgment.” Peters v. Jenney, 327 F.3d 307, 314 (4th Cir.2003). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Liberty Lobby, 477 U.S. at 249–50, 106 S.Ct. 2505. (citations omitted). At the same time, the court must construe the facts that are presented in the light most favorable to the party opposing the motion. See Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007); Emmett, 532...