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Donnelly v. Branch Banking & Trust Co.

United States District Court, D. Maryland, Southern Division

June 28, 2016

V. CHARLES DONNELLY, et al., Plaintiffs,


          Paul W. Grimm United States District Judge.

         This action arises out of a mortgage loan from Defendant Branch Banking and Trust Company ("BB&T") on a failed real estate investment, secured by a deed of trust on the investment property and guaranteed by Plaintiffs V. Charles Donnelly and Deborah A. Steffen and their co-investors. After continuing the previously scheduled trial and re-opening limited discovery, the case is currently set for trial to begin on Monday, July 11, 2016. See ECF No. 87. Donnelly has filed a letter requesting permission to file a motion to continue the trial yet again, Pl.'s Cont. Mot., ECF No. 93, which I have treated as a motion for a continuance of the trial, see ECF No. 94.[1] Because I have already continued the trial once and Donnelly has failed to provide sufficient justification for why I should continue the trial yet again, Donnelly's motion for a continuance of the trial is denied. At my direction, Plaintiffs have also filed supplemental briefing requesting that I reinstate their negligence claim against BB&T, which I previously dismissed on BB&T's motion for summary judgment, in light of documents that BB&T failed to produce initially and only produced after my summary judgment ruling. Pls.' Neg. Mot., ECF No. 86.[2] Because Plaintiffs have failed to demonstrate how the production of these new documents creates a tort duty after the execution of the February 2012 extension, Plaintiffs' motion to reinstate their negligence claim is denied.[3]

         I. BACKGROUND

         I incorporate by reference the factual background discussed in my March 3, 2015, memorandum opinion, Summary Judg. Mem., ECF No. 62. This case was previously set for trial to begin on Tuesday, January 19, 2016. See Dec. 10, 2015, Letter Order, ECF No. 75. On January 14, 2016, Donnelly filed a motion to compel discovery, for sanctions, to re-open discovery, and to continue the trial and request a hearing. See ECF No. 79. On January 15, 2016, I held a conference call with the parties regarding Donnelly's motion. See Jan. 15, 2016, Letter Order, ECF No. 81. I granted Donnelly's motion for a continuance and ordered BB&T "to produce by February 1, 2016, any documents not already produced to Plaintiffs relating to (1) the draft loan extension and forbearance agreement produced by BB&T on January 6, 2016, and (2) the February 2012 extension agreement and Donnelly's execution of a deed of trust regarding his 10% ownership of Solomons Two with respect thereto." Id. I also permitted Plaintiffs to provide supplemental briefing on whether my dismissal of the negligence claim, see Summary Judg. Mem., ECF No. 62, "should be revisited in light of (i) the recent document productions, (ii) any future documents produced pursuant to this letter order, and (iii) the deposition(s) taken pursuant to this letter order." Id.


         A. Motion for a Continuance of Trial

         Donnelly has filed a motion for a continuance of trial on the basis of a Maryland Court of Special Appeals order remanding a related case to the Circuit Court for Calvert County to hear Donnelly's motion to revise judgment on the basis of alleged discovery wrongdoing on the part of BB&T. See Pl.'s Cont. Mot. Donnelly admits that this state court action is based on my January 15, 2016, Letter Order, which directed BB&T to produce additional documents relating to Plaintiffs' claims. BB&T now has produced these documents, its former employee, Carol Taylor, was deposed regarding the recently produced documents, and I have ordered separate briefing in response to Donnelly's discovery fraud allegations.[4] But these allegations do not relate to the substance of Donnelly's negligent misrepresentation claim, which is scheduled for trial starting on July 11, 2016. Further, because I find that there is no basis to reinstate Plaintiffs' negligence claims based upon the belatedly produced documents, there is no need to postpone the trial a second time, particularly because Plaintiffs can use the produced documents and the deposition of Carol Taylor in presenting their negligent misrepresentation claim. The postponement request therefore is denied.

         B. Motion for Reinstatement of the Negligence Claim

         1. March 3, 2015, Memorandum Opinion

         Because Plaintiffs seek reinstatement of their negligence claim, which I previously dismissed, I will reproduce my reasoning from my March 3, 2015, memorandum opinion below:

It is "a longstanding principle of Maryland law that the relationship of a bank to its customer in a loan transaction is ordinarily a contractual relationship between a debtor and a creditor and is not fiduciary in nature." Parker v. Columbia Bank, 604 A.2d 521, 532 (Md. Ct. Spec. App. 1992). "‘The mere negligent breach of a contract, absent a duty or obligation imposed by law independent of that arising out of the contract itself, is not enough to sustain an action sounding in tort.'" Jacques v. First Nat'l Bank of Md., 515 A.2d 756, 759 (Md. 1986) (quoting Heckrotte v. Riddle, 168 A.2d 879, 882 (Md. 1961)). Where, as here, "the failure to exercise due care creates a risk of economic loss only, courts have generally required an intimate nexus between the parties as a condition to the imposition of tort liability. This intimate nexus is satisfied by contractual privity or its equivalent." Id. at 759-60.
The Maryland Court of Special Appeals has recognized four "special circumstances" that can give rise to a tort duty between a bank and its customer where
the lender "(1) took on any extra services on behalf of [the borrowers] other than furnishing the money for construction of a home; (2) received any greater economic benefit from the transaction other than the normal mortgage; (3) exercised extensive control over the construction; or (4) was asked by [the borrowers] if there were any lien actions pending."
Parker, 604 A.2d at 533 (quoting Tokarz v. Frontier Fed. Sav. & Loan Ass'n, 656 P.2d 1089, 1094 (Wash.Ct.App. 1982) ...

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