ROGER R. VALES, et al., Plaintiffs,
ALMA PRECIADO, et al., Defendants.
REPORT AND RECOMMENDATION
CHARLES B. DAY, Magistrate Judge.
This Report and Recommendation addresses the issue of damages arising from the Court's entry of default against Defendant Alma Preciado on November 10, 2011 (ECF 272). Pursuant to 28 U.S.C. § 636, Local Rules 301 and 302, the Honorable Deborah K. Chasanow referred this matter to me for "making a Report and Recommendation concerning damages."
The claims as to Ms. Preciado were severed from the remaining claims brought by Roger R. Vales and Lourdes Vales as Plaintiffs, against Dorita Lemos Down, William Camp, Jr., and Pidegro, LLC. These remaining claims were tried before me with the consent of the parties. The entry of default against Defendant Preciado is applicable to the following claims:
Under Cross-Claims filed by Co-Defendant Dorita Down (ECF 94):
Count I for Contribution and Indemnification
Under Plaintiffs' Third Amended Complaint (ECF 181):
Count III - Constructive Fraud
Count IV - Intentional Misrepresentation
Count V - Unjust Enrichment
Count VI - Breach of Fiduciary Duty
Following the trial involving the remaining parties, the undersigned finds that Defendants Preciado and Down were co-conspirators in committing fraud and deceit upon Plaintiffs. An oral decision was issued on May 28, 2013. In summary, Plaintiffs presented evidence of damages arising from Defendant Preciado's fraudulent activities as their "settlement agent." The evidence consisted of Mr. Vales' presentation of a check to Defendant Preciado in the amount of $350, 000.00 with instructions that it should not be released to Defendant Down until all of the necessary loan documents were executed. The principle expectation of Plaintiffs was that the signature of Mrs. Down's husband, Harry Down, would be affixed to the loan documents thereby using Mr. Down's home as security for the loan. Defendant Preciado fraudulently acquired Plaintiffs' funds with no intention of fulfilling her obligations while acting as Plaintiffs' agent. Said monies were actually used to finance the activities of Pidegro, LLC, a company in which Defendants Preciado and Down were stakeholders.
I. Calculation of Damages
A. Tort Theories of Recovery.
I believe Plaintiffs are entitled to recover monies from Defendant Preciado under a tort theory of compensation. With respect to the claims against Defendant Down, Plaintiffs have elected to pursue "benefit-of-the-bargain" type damages under a "flexibility theory" as permitted under the case of Goldstein v. Miles , 159 Md.App. 403, 859 A.2d 313 (2004). While I have found that Defendant Preciado was a co-conspirator, there is no indication that Plaintiffs were expecting the "benefit-of-the-bargain" from her. Defendant Preciado was never the intended beneficiary of the loan, and was not the signatory on any of the loan documents. ...