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Yoder v. The O'Neil Group, LLC

United States District Court, D. Maryland

December 8, 2017




         Presently pending and ready for resolution in this whistleblower retaliation case are a motion for summary judgment filed by Defendants The O'Neil Group, LLC, MSO Legal Partners, LLC, and William O'Neil (collectively, “Defendants”) and a motion for leave to file a surreply filed by Plaintiff Erik Yoder (“Plaintiff”). (ECF Nos. 33; 38). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motions will be denied.

         I. Background

         A. Factual Background [1]

         The O'Neil Group, LLC (“TOG”) was formed in 2011 to perform foreclosure work for MCM Capital Partners, LLC (“MCM”), and its related mortgage loan servicer BSI Financial (“BSI”). (ECF Nos. 33-2 ¶ 1; 36-2, at 8, 10). TOG created a national network of law firms to handle the legal work arising from MCM's purchase of non-performing mortgage debts on behalf of third-party investors. (ECF No. 33-2 ¶ 1). TOG hired the law firms, oversaw their work, and reviewed and approved invoices for the work that were then submitted to the loan servicer BSI. (Id.). The standards for approval or rejection of invoices were provided by BSI to be implemented by Defendants. (Id. ¶ 2). BSI policy was that costs were to be billed as incurred and not marked up. (Id. ¶ 6). In addition, BSI policy limited the payment for title work to $350 for a full report and $175 for a title update - known as the “allowable amount.” (ECF Nos. 33-2 ¶¶ 2, 6; 33-5 ¶ 1; 36-7 ¶ 9). After BSI paid TOG, TOG paid the law firms. (ECF No. 33-2 ¶ 1).

         In late 2013, Defendant O'Neil and Terry Shanahan formed a new entity, MSO Legal Partners, LLC (“MSO”), to handle foreclosure referrals in Maryland from BSI. (ECF Nos. 33-2 ¶ 3; 36-2, at 20, 25). In order to keep costs down, MSO used TOG personnel for its staff. (ECF No. 33-2 ¶ 3). In September 2013, Defendants hired Plaintiff, an experienced foreclosure attorney, to run the foreclosure practice at MSO. (ECF Nos. 33-2 ¶¶ 4, 5; 36-2, at 24; 36-3, at 27-29; 36-5, at 9). While conducting an audit in early June 2014 to be filed in a mortgage foreclosure case (the “Windon case”), Plaintiff asked Defendants' administrative personnel to provide him with the relevant title report and title update invoices. (ECF No. 36-7 ¶¶ 10, 12). Instead of providing the invoices as requested, Sally Shanahan, an administrative employee and Mr. Shanahan's wife, informed Plaintiff that Defendants billed the full allowable amounts of $350 per title report and $175 per title update. (Id. ¶ 12). Kristin Ferraro, another administrative employee, confirmed that information. (Id.). In order to obtain the actual costs for title reports and updates in the Windon case, Plaintiff contacted All Star Title, the company that performed title reports and title updates in Defendants' foreclosure cases. Plaintiff was informed that All Star Title billed $150 per title report until April 2014 when the price increased to $250 per title report. All Star Title billed $15 per title update. (Id.). With that information, Plaintiff realized that Defendants had been billing BSI more than double the actual cost for title reports and over 11 times the actual cost for title updates. (Id.). Mrs. Shanahan later informed Plaintiff that Defendants billed BSI for title work before Defendants received any invoices from All Star, that BSI took 30 days to process and pay bills after receipt, and that Defendants needed payments more quickly in order to pay their own expenses. (Id. ¶ 14).

         On June 12, 2014, Plaintiff sent an email to Mr. O'Neil notifying him of the overbilling of costs and expressing his belief that the practice was unlawful. (ECF Nos. 33-2 ¶ 12; 36-7 ¶ 13; 36-9). That evening, Mr. O'Neil responded stating that he was out of the office until the following week but that “there should not be any mark up of costs . . . . So let's take a look at this to make sure it's right.” (ECF No. 36-10). Plaintiff and Mr. O'Neil had a meeting on June 17 to discuss the billing error. (ECF No. 36-2, at 32). Mr. O'Neil confirmed that Defendants “were supposed to bill the actual amount charged, ” as it had “always been the firm policy, ” and that “[Defendants] would have to refund the money [to BSI].” (Id.). Mr. O'Neil told Plaintiff that an investigation would be done to “figure out how much the refund was supposed to be, ” and that, in regard to the process of creating invoices, “[Defendants] had to change and/or implement a process since [Defendants] didn't appear to have one.” (ECF Nos. 33-2 at 3, 24; 36-2, at 33). That same day, Plaintiff sent an e-mail to Mr. O'Neil to ensure that “within the next two weeks” BSI would be informed that invoices for title work were submitted to them that did not reflect actual costs, that BSI would be offered a refund, and that BSI would agree to “remediate this billing error . . . by correcting or reconciling any and all of the borrower's accounting of debt . . . so that none of the borrowers are charged costs which were not actual.” (ECF No. 36-13).

         On June 18, Plaintiff sent an email to Mr. O'Neil regarding a proposal by Mr. Shanahan to switch auctioneers from their established vendor to an inexperienced vendor. (ECF No. 36-14). Plaintiff disagreed with the proposal and stated that if Defendants were going to switch to an auctioneer that charged higher costs and had less experience that it was appropriate “within the rules of ethics” to obtain the consent of their client BSI. (Id.). Mr. O'Neil became irate and requested that Plaintiff “please refrain from the ethics lectures.” (ECF No. 36-15, at 2). Mr. Shanahan found Plaintiff's statements “accusatory” and they “caused [him] considerable concern such that [he] recommended to Mr. O'Neil that Plaintiff should be asked to resign.” (ECF Nos. 33-2 ¶ 21; 33-3 ¶ 8).

         On June 27, Mr. O'Neil informed Plaintiff that he was not firing him but that, due to the “financial condition of the firm, ” Defendants would not be able to continue paying Plaintiff what they had been and that “[Plaintiff] would be better off looking for another job.” (ECF Nos. 33-2 ¶ 22; 36-2, at 39). Mr. O'Neil told Plaintiff that he would not have to work while he was looking for a job, and Defendants offered to pay Plaintiff's salary, commission, and benefits through the end of July. (ECF Nos. 33-2 ¶ 22; 36-7 ¶ 19). Plaintiff was shocked by this news and walked out of the office. (ECF Nos. 33-2 ¶ 24; 36-7 ¶ 19). Plaintiff did not tell Mr. O'Neil that he was quitting his job. (ECF No. 36-7 ¶ 20). Subsequently, Plaintiff and Mr. O'Neil arranged to meet on June 30 at the office. (ECF No. 36-7 ¶ 21). However, Mr. Shanahan, rather than Mr. O'Neil, was present at the meeting and informed Plaintiff that there was no need for him to come into the office but that he could use the office until the end of July. (ECF Nos. 36-7 ¶ 21; 36-19). Plaintiff subsequently e-mailed Mr. O'Neil regarding the meeting with Mr. Shanahan. (ECF Nos. 33-2, at 11; 36-19, at 2). Mr. O'Neil replied, attaching a resignation letter and stating, “you will need to sign the attached. If you do not want to resign, then I will accommodate your insistence that you be fired. Let me know which of those two options you prefer.” (ECF Nos. 33-2, at 9-10; 36-18; 36-19). Plaintiff refused to sign the resignation letter. (ECF No. 36-7 ¶ 21). Upon that action, Defendants concluded that Plaintiff had quit and that his last day of employment would be considered June 30, 2014. Plaintiff was paid his salary and commission up until June 30. (ECF No. 33-2 ¶ 26).

         B. Procedural Background

         On March 25, 2016, Plaintiff filed a complaint against Defendants alleging unlawful termination of his employment in violation of the employee protection (whistleblower) provision of the Consumer Financial Protection Act of 2010, Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “CFPA”), 12 U.S.C. § 5567. (ECF No. 1). Defendants moved for summary judgment on May 16, 2017. (ECF No. 33). Plaintiff submitted an opposition on June 19 (ECF No. 36), and Defendants replied (ECF No. 37). On July 17, Plaintiff filed the pending motion for leave to file a surreply. (ECF No. 38).

         II. Motion for Leave to File Surreply

         Unless otherwise ordered by the court, surreply memoranda are not permitted to be filed. Local Rule 105.2(a). Surreplies may be permitted when the moving party would be unable to contest matters presented to the court for the first time in the opposing party's reply. Lewis v. Rumsfeld, 154 F.Supp.2d 56, 61 (D.D.C. 2001).

         In his motion for leave to file a surreply, Plaintiff contends that Defendants argue for the first time in their reply that they held a subjective belief that their business faced considerable financial and personnel issues and that their reasons for asking Plaintiff to look for another job should be judged by what Defendants believed at the time to be true. (ECF No. 38 ¶¶ 2-3). Plaintiff also argues that Defendants assert for the first time in their reply that they never focused on the economic impact of losing their client Woods Cove, but instead on the fact that losing that client freed up Mr. Shanahan's time and Plaintiff's services were no longer needed. (Id. ¶¶ 4-5). Defendants did not raise any new issues or legal theories in their reply brief and merely responded to arguments in Plaintiff's opposition that “Defendants did not honestly believe that their business was in decline” when Plaintiff was asked to look for another job (ECF ...

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