United States District Court, D. Maryland, Southern Division
V. Charles Donnelly, Plaintiff, Pro se, Solomons, MD.
Deborah A. Steffen, Plaintiff, Pro se, Solomons, MD.
For Branch Banking and Trust Company, Defendant: Brian L Moffet, John Jun Young Lee, LEAD ATTORNEYS, Gordon Feinblatt LLC, Baltimore, MD.
Paul W. Grimm, United States District Judge.
This action arises out of a mortgage loan from Defendant bank on a failed real estate investment, secured by a deed of trust on the investment property and guaranteed by Plaintiffs and their co-investors. Following several extensions of the promissory note, Plaintiffs sought to restructure the note and release some of the investors from the guaranty. According to Plaintiffs, Defendant's agent initially indicated that the loan would be modified as requested and, when Defendant refused to so modify the note, Plaintiffs filed suit alleging, inter alia, negligence and negligent misrepresentation. Defendant now seeks summary judgment on the grounds that it did not owe a tort duty to Plaintiffs and, in any event, documentary evidence
does not show that Defendant's agent ever made any clear statements with respect to the loan modifications. Plaintiffs argue that a duty arose when one of the Plaintiffs executed a deed of trust on his personal share of the investment property in favor of Defendant in connection with an earlier loan modification and that there were clear representations made to Plaintiffs that the loan would be modified. I find that the earlier deed of trust did not create a special relationship giving rise to a duty with respect to any later modifications, but that there is a genuine dispute as to whether Defendant's agent breached a duty to make accurate representations with respect to Plaintiffs' claims for negligent misrepresentation. Accordingly, Defendant's motion is granted in part and denied in part.
When considering a motion for summary judgment, the court must view " the evidence and all reasonable inferences therefrom in favor of the nonmovant." Halpern v. Wake Forest Univ. Health Scis., 669 F.3d 454, 460 (4th Cir. 2012). Plaintiffs V. Charles Donnelly and Deborah A. Steffen are two of the four investors in an unsuccessful real estate venture involving a property located at 14554 Solomons Island Road, in Solomons, Maryland (the " Property" ). Donnelly owns an undivided 10% interest in the Property and the remaining 90% is owned by an entity called Solomons Two, LLC (" Solomons Two" ), in which Donnelly and Steffen are members holding a twenty-five percent interest each, and the remainder is owned by non-party members Christine McNelis and Catherine Erickson-File (collectively, the " Members" ). See Deed, Pls.' Summ. J. Opp'n Ex. 2, ECF No. 56-3; Donnelly Aff. ¶ 3, Pls.' Summ. J. Opp'n Ex. 12, ECF No. 56-3.
The Property was purchased by Solomons Two and Donnelly for $950,000 on July 27, 2006. That same day, Solomons Two took out a loan from Defendant Branch Bank and Trust Co. (" BB& T" ) in the amount of $696,000 (the " Loan" ), evidenced by a promissory note (the " Note" ) which matured on July 27, 2007. Promissory Note, Def.'s Summ. J. Mem. Ex. 1, ECF No. 51-2. The loan was secured by a deed of trust in favor of BB& T on Solomons Two's interest in the Property, Deed of Trust, Def.'s Summ. J. Mem. Ex. 3, ECF No. 51-4, and guaranteed by Donnelly and Steffen personally, see Guaranty Agreement, Def.'s Summ. J. Mem. Ex. 2, ECF No. 51-3. The Guaranty Agreement contains an express jury waiver (the " Jury Waiver" ), which says:
WAIVER OF TRIAL BY JURY, UNLESS EXPRESSLY PROHIBITED BY APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS OR CLAIMS ARISING OUT OF THIS GUARANTY OR THE BORROWER'S NOTE(S), AND THE RELATED LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE RELATIONSHIP BETWEEN THE UNDERSIGNED AND THE BANK OR THE BORROWER AND THE BANK.
Guaranty Agreement 2.
Between 2007 and the end of 2011, the note was extended four times and was set to mature on December 19, 2011. Donnelly Aff. ¶ 4; 2010 Loan Agreement, Def.'s Summ. J. Mem. Ex. 17, ECF No. 51-18. During most of this time, the Loan was
administered for BB& T by Brenda Sucher. Id. ¶ 5.
The events leading up to the last modification of the Loan began in 2011, when " the Solomons Two members were experiencing difficult[ies] with payments of the LLC Note, due to the economy and the high rate of principal BB& T required as payment on the loan." Id. ¶ 5. Donnelly sent a letter to Sucher stating,
Solomons Two monthly commitment to payment of the first mortgage and a line of credit is a tremendous drag on the finances of the present investors. Relief is needed from the current note holders  over the next 12 to 18 months to move the project ahead in terms of marketing and new investors.
Letter from V. Charles Donnelly to Brenda J. Sucher 2 (Nov. 19, 2011), Pls.' Summ. J. Opp'n Ex. 8, ECF No. 56-3. Donnelly went on to explain that Solomons Two was " working on refinancing as new investors step in and request[ed] that BB& T re-evaluate what it can do to assist getting through these tough times for the next year." Id. at 2. Donnelly was referred to " Carol Taylor who [Sucher] described as her boss, the head of BB& T's Asset Resolution Group" in Maryland. Id. Donnelly expressed loyalty to BB& T " because it had always treated us fairly" and Sucher " stated BB& T wanted to keep [Solomons Two] as customers . . . and in a casual manner said 'BB& T has lots of money and we would like to give you some.'" Id.
On December 6, 2011, Donnelly e-mailed the other members of Solomons Two to provide updates on various aspects of their business transactions. Email from Christine McNelis to V. Charles Donnelly et al. (Dec. 6, 2011, 11:26 EST), Pls.' Summ. J. Opp'n Ex. 9, ECF No. 56-3. According to Donnelly, BB& T did not react favorably to his request for a further modification, but eventually discussed " the use of a 'three month bump," in light of Solomons Two's " transition situation" as it tried to get " new investors coming in to Solomons Two which will address the indebtedness on the property." Id. at 2. On December 21, 2011--two days after the Loan was due to be repaid--Taylor e-mailed McNelis and Donnelly saying,
As you are all in continuing negotiations with the investors and we need updated financial information, after the beginning of the year I will go for approval of a 90 day extension to March 2012, with no change in other terms such as rate or payment amount. This would allow for receipt and analysis of the financial information and to see if you arrive at a definitive deal with the investors.
Email from Carol Taylor to Christine McNelis et al. (Dec. 21, 2011, 10:25 EST), Pls.' Summ. J. Opp'n Ex. 10, ECF No. 56-3. Donnelly appeared to be working hard to find additional investors but was struggling to find anybody willing to invest in the Property. See Email from V. Charles Donnelly to Carol Taylor (Jan. 31, 2012, 10:29 EST), Def.'s Summ. J. Mem. Ex. 5, ECF No. 51-6.
It appears that the parties agreed in principle on a short-term extension of the Loan to be executed in February 2012, but shortly before the documents were to be signed, BB& T became concerned that its
loan was not fully secured because Donnelly's personal 10% share of the Property remained unencumbered. BB& T's counsel, Robert Greenberg, informed Donnelly that he would need to execute a second deed of trust on his personal interest in the Property before any modifications would be considered. Id. ¶ 6. Donnelly questioned the need for a new deed of trust in light of the fact that it never had been necessary before, but he was told that " unless [he] did so, the planned Solomons Two Note extension would not occur and there would be no further discussions of financing." Id. Donnelly executed the required deed of trust on February 13, 2012, Donnelly Deed of Trust, Def.'s Summ. J. Mem. Ex. 6, ECF No. 51-7, and the Members agreed to a short-term modification of the Loan as of February 17, 2012, February Note Modification, Def.'s Summ. J. Mem. Ex. 4, ECF No. 51-5. Under the February Note Modification, the Loan would mature on May 19, 2012. Id.
Growing concerns about the possibility of BB& T not renewing the Solomons One Note [relating to a different investment] and two other members of the LLC, McNelis and Erickson-File desperately seeking a release from the project led [Donnelly] in late March, 2012 to sign a contract with the other two members whereby they would transfer their interests in the LLC and the Property to Deborah Steffen for their release from liability. Around that time [Donnelly] was also activ[ely] meeting with private investors and talking with several commercial loan officers and several banks to seek financing on the Solomons Two Property. . . . Also, [he] sensed from Taylor that there was less enthusiasm about extending the Note again.
Donnelly Aff. ¶ 7; see also Agreement, Pls.' Summ. J. Opp'n Ex. 16, ECF No. 56-3 (dated March 27, 2012).
In early May 2012, Donnelly conveyed to BB& T a proposal for a new loan to issue in Donnelly and Steffen's names, including a $100,000 curtailment on the balance of the Loan and a $50,000 escrow account from which BB& T would withdraw monthly payments in the event they were not paid (the " Modification Proposal" ). Donnelly Aff. ¶ 8. According to Donnelly, Taylor " reacted enthusiastically and in surprise. She said it was a substantial offer and would not be turned down," although she rejected Donnelly's request for an eighteen-month loan and " insisted on 12 months." Id. Although additional negotiations ensued and BB& T appeared to have repeated problems receiving documents from Plaintiffs,
[t]hroughout the loan process and until the eve of scheduled settlement for the end of June, 2012, Taylor expressed her belief that this was the equivalent of a win--win situation for all concerned and that BB& T should jump at the chance to avoid any default. In conversations she stated to [Donnelly] and independently to Steffen that this loan was a go and any remaining requirements were secondary to the agreed upon terms.
Donnelly Aff. ¶ 8. Steffen testified that Taylor " said there was no problem with restructuring the loan and having it approved," Steffen Dep. (Def.'s Excerpts) 111:10-11, Def.'s Summ. J. Mem. Ex. 8, ECF No. 51-9, but Plaintiffs never were provided with specific terms, id. at 252:18-1. Plaintiffs also did not pay any application fee in connection with the Modification Proposal. Id. at 237:12-19.
Around the same time, Donnelly was exploring other options for refinancing the Loan. On May 1, 2012, he sent a letter to Prince George's Federal Savings Bank. Letter from V. Charles Donnelly to Hal C. Rich III, President, Prince George's Federal
Savings Bank (May 1, 2012), Def.'s Summ. J. Mem. Ex. 20, ECF No. 51-21. However, there were delays because that bank required an appraisal of the Property by its approved appraisers. Email from V. Charles Donnelly to Catherine Erickson-File & Christine McNelis (May 1, 2012, 19:36 EDT), Def.'s Summ. J. Mem. Ex. 19, ECF No. 51-20. Donnelly also approached Old Line Bank, PNC, and M& T Bank, but none " would even consider a refinance of an empty lot without other investors." Id.
On June 13, 2012, Taylor e-mailed Donnelly saying " that the restructure terms are in for approval. I will be on vacation the week of June 18-22. Attorney will be working on the documents in the meantime. I am shooting for settlement prior to month end 6/30/12." Email from Carol Taylor to V. Charles Donnelly (June 13, 2012, 18:37 EDT), Def.'s Summ. J. Mem. Ex. 9, ECF No. 51-10. On June 26, 2012, she sent him an e-mail saying, " in the final stages of the process here. Being optimistic and looking forward to next steps," and asking for the agreement by which McNelis and Erickson-File would be exiting Solomons Two. Email from Carol Taylor to V. Charles Donnelly (June 26, 2012, 12:36 EDT), Def.'s Summ. J. Mem. Ex. 10, ECF No. 51-11. Donnelly responded that he was skeptical that the deal would be concluded by the end of the week and that he still needed to see BB& T's terms. Email from V. Charles Donnelly to Carol Taylor (June 26, 2012, 13:30 EDT), Def.'s Summ. J. Mem. Ex. 10, ECF No. 51-11.
The next day, June 27, 2012, Taylor left a message on Donnelly's voicemail telling him to " please call immediately," Donnelly Aff. ¶ 10, and sent him an email with the subject line " Call me please very important" and no body text, Email from Carol Taylor to V. Charles Donnelly (June 27, 2012, 14:42 EDT), Pl.'s Summ. J. Opp'n Ex. 19, ECF No. 56-3, and made several other calls trying to get hold of Donnelly, see Email from Christine McNelis to Deborah Steffen & V. Charles Donnelly (June 17, 2012, 14:45 EDT), Pls.' Summ. J. Opp'n Ex. 20, ECF No. 56-3. When Donnelly and Taylor spoke the next day, Taylor " was in a panic and distressed" and informed him that " BB& T would not release ...