United States District Court, D. Maryland
EDWARD J. AND VICKI FANGMAN, et al., Plaintiffs,
GENUINE TITLE, LLC, et al. Defendants.
Richard D. Bennett United States District Judge.
Edward J. Fangman and Vicki Fangman ("the
Fangmans") and forty-six other Plaintiffs (collectively
"Plaintiffs") have brought this purported class
action lawsuit against Genuine Title, LLC ("Genuine
Title"); Brandon Glickstein, Inc.; Dog Days Marketing,
LLC ("Dog Days Marketing"); Competitive Advantage
Marketing Group, LLC ("Competitive Advantage")
(collectively "Genuine Defendants"); Wells Fargo
Home Mortgage, Inc. and Wells Fargo, N.A. ("Wells
Fargo"); West Town Bank & Trust ("West
Town"); PNC Mortgage and PNC Bank, N.A.
("PNC"); MetLife Home Loans, LLC and MetLife Bank,
N.A. ("MetLife"); Net Equity Financial ("Net
Equity"); Eagle National Bank ("Eagle
National"); E Mortgage Management ("E
Mortgage"); and JP Morgan Chase Bank ("Chase")
(collectively "Lender Defendants") alleging
violations of the anti-kickback provisions of the Real Estate
Settlement Procedures Act ("RESPA"), 12 U.S.C.
§§ 2607(a), (b). Currently pending before this
Court is Plaintiffs' Motion for Class Certification
[SEALED] (ECF No. 320) with respect to the West Town
Class. The parties' submissions have been
reviewed, and a hearing on the pending motion was held before
this Court on October 27, 2016. For the reasons that follow,
and for the reasons stated on the record at this Court's
October 27, 2016 hearing, The West Town Plaintiffs'
Motion for Class Certification [SEALED] (ECF No. 320) is
purported class action lawsuit involves an alleged home
mortgage kickback scheme in which Defendant Genuine Title,
LLC ("Genuine Title"), by itself and through sham
companies, allegedly provided cash payments and marketing
materials to mortgage lenders, including Defendant West Town
Bank & Trust ("West Town"), representatives of
which referred its clients to Genuine Title for settlement
services. Second. Am. Compl., ¶¶ 3-4, ECF No. 138.
Plaintiffs allege violations of the Real Estate Settlement
Procedures Act ("RESPA"), 12 U.S.C. §§
2607(a), (b) (Count I). Id. at ¶¶ 241-54.
of the mortgage lenders named as Defendants in connection
with this alleged kickback scheme ("Lender
Defendants") have entered into mediation with the
Plaintiffs. This Court has preliminarily approved Settlement
Agreements between the Plaintiffs and Defendants JPMorgan
Chase Bank ("Chase") and Wells Fargo Home Mortgage,
Inc. and Wells Fargo, N.A. ("Wells Fargo").
See Orders Granting Preliminary Approval, ECF Nos.
251, 286. This Court has certified "for settlement
purposes" the class of Plaintiffs who obtained mortgages
from Chase (the "Chase Class") and the class of
Plaintiffs who obtained mortgages from Wells Fargo (the
"Wells Fargo Class"). Id. at 1-2.
Plaintiffs have indicated that West Town is the only Lender
Defendant moving forward with litigation in this Court at
this time. See Mem. Supp. Mot. for Class
Certification, p. 2, ECF No. 320-1.
discovery, the West Town Plaintiffs have identified
approximately 400 borrowers who secured federally-related
mortgage loans from West Town and whose loans were referred
to Genuine Title for settlement services. Id. West
Town has confirmed more than 200 of them as borrowers.
Id. at 20. Named Plaintiffs and proposed Class
Representatives Jameson Cooper, Katherine Cooper (the
"Coopers"), and Geraldine Walters
("Walters") are three members of this putative
class (the "West Town Class"). The Coopers
refinanced their home mortgage with West Town in January of
2011. Id. at 13; J. Cooper Dep., Def. Ex. 5, p.
37:1-7, ECF No. 358-6. Their loan was brokered by West Town
broker George Makout2. Broker Agmt, Def. Ex. 10, ECF No.
358-11. Genuine Title is listed as Settlement Agent on the
Cooper's HUD-1 form. Cooper HUD-1, Pl. Ex. 15, ECF No.
320-16. Geraldine Walters obtained a reverse mortgage loan
from West Town in August of 2011. Her mortgage was handled by
West Town broker Curtis Cullison. Walters Dep., Def. Ex. 7,
p. 47:6-9, ECF No. 358-8. Genuine Title is listed as
Settlement Agent on Walters' HUD-1 form. Walters HUD-1,
Def. Ex. 6, ECF No. 358-7.
Plaintiffs have indicated that they were dissatisfied with
their settlement costs, there is no indication that they knew
anything about West Town's alleged kickback scheme with
Genuine Title. Def. Opp'n, p. 5-7, ECF No. 358. The
alleged kickback relationship between Genuine Title and West
Town was not disclosed on the HUD-1 forms. However, Genuine
Title President Jay Zuckerberg has since stated that
"[d]uring its existence, Genuine Title paid for
marketing materials ... on behalf of brokers, managers,
banks, and other lenders ... in exchange for an agreement...
to refer borrowers to Genuine Title for title services."
Zuckerberg Aff., Pl. Ex. 2, ¶ 4, ECF No. 320-3.
Zuckerberg has further indicated that Genuine Title
"pa[id] money to Referrers . . . for each borrower they,
their office, or in some cases, their company referred to
Genuine Title." Id. at ¶ 5. The costs of
these "[a]greement[s] . . . were paid on a monthly basis
based on the number of referred settlements in the previous
month." Id. Zuckerberg indicated that
"Genuine Title would have preferred to compete by
providing lower pricing instead of paying Referring Agreement
Costs and kickbacks, " but this scheme was "more
effective . . . even though it was prohibited by law."
Id. at ¶ 6. Brandon Glickstein, Genuine
Title's Lead Account and Marketing Representative,
confirmed that Genuine Title sent money, through sham
marketing companies, to "loan officers that were getting
direct payment to refer title work to Genuine Title."
Glickstein Dep., Pl. Ex. 8, p. 214:5-215:3, ECF No. 320-9.
wake of Genuine Title's insolvency, a receiver was
appointed to secure Genuine Title's servers and
electronic records. Mem. Supp. Mot. for Class Certification,
p. 4, ECF No. 320-1. Plaintiffs' counsel extracted a
spreadsheet ("TSS Spreadsheet") from Genuine
Title's server, which documented loans referred to
Genuine Title from roughly 2006 through 2013, including
borrower names and referring loans officers. Id.
Additionally, Plaintiffs have obtained more than 40, 000
pages of bank records that document millions of dollars in
payments from Genuine Title and the allegedly
"sham" marketing companies to loan officers, branch
managers, and other employees of the Lender Defendants.
See, e.g., Genuine Title Checks, Pl. Ex. 9, ECF No.
320-10. Similarly, Plaintiffs have uncovered checks from
Genuine Title to third-party marketing companies to provide
marketing materials for loan officers and employees of the
Lender Defendants. See Genuine Title Checks, Pl. Ex.
10, ECF No. 320-11. F&N Mailing Services has produced
sample invoices issued to Genuine Title for production of
marketing materials, sample marketing materials, and an email
from a Genuine Title employee ordering production of the
marketing materials for delivery to a specific loan officer.
See Marketing Docs., Pl. Ex. 11, ECF No. 320-12.
counsel have represented that Defendants used various methods
to hide this alleged kickback scheme, including some
instances in which Genuine Title would issue checks to a
spouse of a Lender Defendant's loan officer, who would in
turn endorse the check to the loan officer for deposit in a
personal bank account. Mem. Supp. Mot. for Class
Certification, p. 7-8, ECF No. 320-1. In other cases,
employees of the Lender Defendants would establish their own
sham entity to receive payments from Genuine Title and the
allegedly sham marketing companies. Id. at 8.
counsel obtained the names of the members of the putative
West Town Class from the TSS Spreadsheet and West Town's
loan records. Id. West Town's records indicate
that the West Town Class members are "disbursed in a
relatively tight geographic area, primarily contained to the
southern Mid-Atlantic states." Id. at 9.
Plaintiffs' counsel have indicated that West Town has the
HUD-ls for the members of the putative West Town Class, which
will reflect the amount they paid for settlement services,
the basis for RESPA's statutory measure of damages.
uncovered by Plaintiffs' counsel at this point in their
investigation has revealed that West Town branch managers
Chris Casa22a and Brent Erickson (through his wife, Jami
Erickson) both received checks from Genuine Title and the
allegedly "sham" marketing companies. See,
e.g., Jami Erickson Checks, Pl. Ex. 19, ECF No. 320-20.
Casa22a and Erickson maintained a joint bank account into
which they deposited some of the checks and, in turn, made
payments to themselves and other loan officers at West
Town's Bel Air branch. See Casa22a/Erickson
Checks, Pl. Ex. 20, ECF No. 320-21. West Town has identified
five West Town loan officers who each referred a high volume
of loans to Genuine Title during the time period alleged in
the kickback scheme-Todd Tabor, Brian Portner, Jason
McCotter, John Shiner, and Brian Brockmeyer-all of whom were
employed at West Town's Bel Air office. See West
Town Interrog., PL Ex. 13, p. 20-25, ECF No. 320-14.
Furthermore, George Makout2, branch manager in West
Town's Ellicott City/Westminster branch, received a
series of payments from Genuine Title through an LLC named
Cambridge Business Services, which he paid to himself and
others, including Jeanne Forney, an employee who referred
more than 100 loans to Genuine Title. See CBS
Checks, PL Ex. 23, ECF No. 320-24.
have identified additional loan officers in West Town's
Reisterstown, Abingdon, and Owings Mills branches who
received checks from Genuine Title. Mem. Supp. Mot. for Class
Certification, p. 11-12, ECF No. 320-1. Based on evidence
they have uncovered thus far, Plaintiffs contend that the
alleged kickback scheme was a "pattern of practice"
that infected other branches in a similar fashion.
Id. at 12. Discovery is ongoing.
allege that the West Town Class members all retained Genuine
Title for settlement and title services and West Town on the
purchase and/or refinance of their residences from 2009 to
2014. However, West Town was not named as a Defendant in this
action until the First Amended Complaint was filed in January
obtain class certification, the Plaintiffs must meet all four
requirements of Rule 23(a) of the Federal Rules of Civil
Procedure and at least one of the requirements of Rule 23(b).
See Gunnells v. Healthplan Servs., Inc., 348 F.3d
417, 423 (4th Cir. 2003). Plaintiffs must first establish the
four requirements of Rule 23(a): numerosity, commonality,
typicality, and adequacy of representation. See Fed.
R. Civ. P. 23(a). With respect to Rule 23(b), the Plaintiffs
in this case seek certification of the proposed class under
Rule 23(b)(3) which requires a finding that common questions
"predominate over any questions affecting only
individual members, and that a class action is superior to
other available methods for fairly and efficiently
adjudicating the controversy." Fed.R.Civ.P. 23(b)(3).
"Plaintiffs bear the burden of showing that a proposed
class satisfies the Rule 23 requirements . . . but they need
not make that showing to a degree of absolute certainty . . .
[i]t is sufficient if each disputed requirement has been
proven by a preponderance of evidence." Messner v.
Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th
Cir. 2012) (citations omitted). "[T]he court should not
turn the class certification proceedings into a dress
rehearsal for the trial on the merits." Id.
class action is an exception to the usual rule that
litigation is conducted by and on behalf of the individual
named parties only." Wal-Mart Stores, Inc. v.
Dukes, 564 U.S. 338, 348 (2011) (internal quotation
marks and citation omitted). "Rule 23 does not set forth
a mere pleading standard ... [a] party seeking class
certification must affirmatively demonstrate his compliance
with the Rule-that is, he must be prepared to prove that
there are in fact sufficiently numerous parties, common
issues of law or fact, etc." Id. at 350. In
ruling on a class certification motion, a court must take a
close look at the facts relevant to the certification
question, even if those facts "tend to overlap with the
merits of the case." Thorn v. Jefferson-Pilot Life
Ins. Co., 445 F.3d 311, 319 (4th Cir. 2006); accord
Gariety v. Grant Thornton, LLP, 368 F.3d 356, 366 (4th
Cir. 2004) ("[W]hile an evaluation of the merits is not
part of a Rule 23 analysis, the factors spelled out in Rule
23 must be addressed through findings, even if they overlap
with issues on the merits.").
Supreme Court has noted that " 'sometimes it may be
necessary for the court to probe behind the pleadings before
coming to rest on the certification question, ' and that
certification is proper only if 'the trial court is
satisfied, after a rigorous analysis, that the prerequisites
of Rule 23(a) have been satisfied.' "
Wal-Mart, 564 U.S. at 350-51 (quoting Gen. Tel.
Co. of the Sw. v. Falcon, 457 U.S. 147, 160 (1982)).
However, "Rule 23 grants courts no license to engage in
free-ranging merits inquiries at the certification
stage." Amgen Inc. v. Connecticut Ret. Plans &
Trust Funds, 133 S.Ct. 1184, 1194-95 (2013). "Rule
23(b)(3) requires a showing that questions common to the
class predominate, not that those questions will be answered,
on the merits, in favor of the class." Id. at
Statute of Limitations Under the Real Estate Settlement
brought pursuant to Section 8 of the Real Estate Settlement
Procedures Act ("RESPA"), 12 U.S.C. § 2607,
must be asserted within one year "from the date of the
occurrence of the violation, which generally refers to the
date of closing for loan origination violations."
Grant v. Shapiro & Burson, LLP, 871 F.Supp.2d
462, 470 (D. Md. 2012) (internal quotation omitted).
Plaintiffs Jameson and Katherine Cooper (the
"Coopers") settled on their West Town home mortgage
loan in January of 2011, and Plaintiff Geraldine Walters
("Walters") settled on her West Town reverse
mortgage in August of 2011. First Am. Compl., ¶¶
H1-112, ECF No. 47. However, the West Town Plaintiffs did not
bring RESPA claims against West Town until the First Amended
Complaint, naming West Town as a Defendant in this action for
the first time, was filed on January 2, 2015. Id.
Accordingly, the named Plaintiffs, and all class members who
closed on their loans prior to January 2, 2014, seek equitable
tolling of RESPA's one-year statute of limitations.
order to toll RESPA's statute of limitations, "a
plaintiff must allege with specificity 'fraudulent
concealment on the part of the defendants' and the
inability of the plaintiff, despite due diligence, to
discover the fraud." Grant, 871 F.Supp.2d at
470, n. 10. (quoting Kerby v. Mortg. Funding Corp.,
992 F.Supp. 787, 792-98 (D. Md. 1998)). Defendant West Town
has previously moved to dismiss the West Town Plaintiffs'
claims on the grounds that they had failed to state a claim
for equitable tolling. See Fangman, et al. v. Genuine
Title, LLC, et al, No. RDB-14-0081, 2015 WL 8315704, at
*7 (D. Md. Dec. 9, 2015). Via Memorandum Opinion dated
December 9, 2015, this Court held that Plaintiffs'
averments were sufficient and that their claims were
"[eligible for [e]quitable [t]oiling." Id.
However, this Court did not decide whether RESPA's
statute of limitations would in fact be tolled.
Town has now renewed its timeliness argument in opposition to
the pending Motion for Class Certification (ECF No. 320).
West Town objects that the named West Town Plaintiffs lack
standing to represent the proposed class because the evidence
in the record before this Court does not support equitable
tolling of the named Plaintiffs' individual claims. Def.
Opp'n, p. 20, ECF No. 358. West Town argues that even if
the named Plaintiffs did have standing, the remaining class
members' entitlement to equitable tolling is an
individualized inquiry incapable of determination on a
class-wide basis. However, for the following reasons, the
named West Town Plaintiffs have provided sufficient
evidence that their individual claims should be equitably
tolled and that the issue of equitable tolling is appropriate
for class-wide adjudication. Accordingly, the proposed West
Town Class's reliance on equitable tolling with respect
to certain class members' claims does not preclude
certification of the class at this time. However, "an
order certifying a class must be reversed if it becomes
apparent, at any time during the pendency of the proceeding,
that class treatment of the action is inappropriate."
Stott v. Haworth, 916 F.2d 134, 139 (4th Cir. 1990).
discussed supra, a plaintiff seeking equitable
tolling must produce sufficient evidence of (1) "
'fraudulent concealment on the part of the
defendants' " and (2) "the inability of the
plaintiff, despite due diligence, to discover the
fraud." Grant, 871 F.Supp.2d at 470, n. 10.
With respect to due diligence, named Plaintiff Walters
indicated in her deposition that she "didn't really
know that people would be giving kickbacks" and only
learned of the alleged kickback scheme after being contacted
by Plaintiffs' counsel. Walters Dep., Pl. Ex. 44, p.
59:2-4, 71:14-72:1, ECF No. 374-8. The Coopers have likewise
indicated that they were unaware of the alleged kickback
scheme until contacted by counsel. K. Cooper Dep., Pl. Ex.
43, p. 28:4-14, 93:21-94:22, ECF No. 374-7; J. Cooper Dep.,
Pl. Ex. 42, p. 69:11-18; 99:7-100:5, ECF No. 374-6. The