United States District Court, D. Maryland
Richard D. Bennett United States District Judge
Class Action Complaint in this case alleges that Defendant
First Mortgage Corporation (“FMC”) violated the
Real Estate Settlement Procedures Act (“RESPA”),
12 U.S.C. § 2607(a) and (b), by entering into a kickback
scheme whereby the Defendant received unearned fees from
Genuine Title, LLC for referrals. (ECF No. 1.) Plaintiffs
also seek to pierce the corporate veil to hold Defendant
Health One Credit Union (“Health One”) liable,
and seeks to hold New England Federal Credit Union
(“NEFCU”) liable by way of successor liability.
(Id. ¶¶ 133-181.)
pending are the Defendants' Motions to Dismiss (ECF Nos.
20, 26). This Court has reviewed the parties' submissions
and no hearing is necessary. See Local Rule 105.6
(D. Md. 2016). For the reasons stated below, the
Defendants' Motions to Dismiss (ECF Nos. 20, 26) are
Fangman v. Genuine Title (RDB-14-0081)
alleged kickback scheme in this case involves Genuine Title,
LLC (“Genuine Title”), which has an extensive
history with this Court. In December 2013, Edward and Vickie
Fangman (represented by the same Plaintiffs' counsel in
this case) filed a complaint in the Circuit Court of
Baltimore County against Genuine Title involving essentially
identical allegations as set forth in this case. (See
Fangman v. Genuine Title, LLC, No. RDB-14-0081 (D. Md.),
ECF Nos. 1, 2 (“Fangman”).) The case was
removed to this Court in January 2014. (Fangman, ECF
No. 1.) The Fangmans alleged that Genuine Title, in exchange
for the referral of title services on their mortgage loan,
paid kickbacks to loan brokers and provided “marketing
materials for free or at a drastically-reduced rate
(collectively ‘Free Marketing Materials') for
various loan officers.” (Fangman, Compl.
¶¶ 19-23, ECF No. 2.)
part of discovery in the Fangman action,
Plaintiffs' counsel served a document subpoena on First
Mariner Bank on July 14, 2014. (Fangman, ECF No.
150-3 at 126-30.) That subpoena requested that First Mariner
produce records relating to:
(1) First Mariner's employment of Angela Pobletts;
(2) marketing materials provided or paid for by Genuine
(3) payments, incentives and/or prizes received from Genuine
(4) communications with Genuine Title without any
(5) First Mariner's relationship with Genuine Title.
(Fangman, ECF No. 150-3 at 126-30.)
Title went bankrupt in 2014, and Plaintiffs' counsel,
Smith, Gildea, & Schmidt, LCC began to obtain access from
Genuine Title's receiver to the company's documents
and records, including its computer servers. See
Edmondson v. Eagle National Bank, No. RDB-16-3938, 2018
WL 582514 at *1 (D. Md. Jan. 29, 2018). In early 2015,
Plaintiffs' counsel used these records to identify and
notify affected borrowers and prospective plaintiffs.
Id. By June 2015, Plaintiffs' counsel was
“able to pull data . . . that appears to represent . .
. buyers' names, addresses, telephone numbers, property
addresses, settlement dates, lender and in some cases
mortgage broker information.” (Fangman,
Pls.' Resp. Mem. Protective Order at 7, ECF No. 150-2.)
January 2, 2015, plaintiffs in Fangman filed a First
Amended Complaint naming other financial institutions.
(See Fangman, ECF No. 47.) That First Amended
Complaint alleged violations of (a) RESPA, (b) Maryland's
state-law analog to RESPA, Md. Code, Real Property §
14-127, and (c) the Maryland Consumer Protection Act, Md.
Code, Comm. Law § 13-301. (See
id.) The Fangman plaintiffs further
alleged that Genuine Title and its affiliated marketing
companies provided Free Marketing Materials and/or
“Referring Cash” payments without disclosure on
HUD-1 settlement documents. (Id. ¶ 3.)
in Fangman filed a Second Amended Complaint on May
20, 2015, adding additional parties and clarifying some of
their previous allegations. (See Fangman, ECF No.
138.) In addressing various motions to dismiss, this Court
ruled that equitable tolling may be available under RESPA and
that the Fangman plaintiffs' claims were not
time-barred. Fangman, 2015 WL 8315704, at *7. In so
holding, this Court applied the equitable tolling test from
Grant v. Shapiro, 871 F.Supp.2d 462 (D. Md. 1998)
that provides, “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.” Fangman,
2015 WL 8315704, at *7 (citing Grant, 871 F.Supp.2d
at 470 n.10). This Court applied that test in the
Fangman action in the context of plaintiffs'
counsel's significant investigatory efforts, which by
June 2015 had successfully identified borrowers referred to
Genuine Title between 2006 through 2013. See Fangman v.
Genuine Title, LLC, 2016 WL 6600509, at *2 (D. Md. Nov.
8, 2016). Accordingly, this Court found in December 2015 that
facts had been sufficiently concealed from the
Fangman plaintiffs, who did not know about their
claim until contacted by counsel. Fangman, 2015 WL
8315704, at *7. In terms of due diligence, this Court found:
Plaintiffs' counsel has undergone a large-scale review of
Defendant Genuine Title's computer system. It is only
through this review, aided by early discovery and a
proprietary software system, that potential plaintiffs have
been identified. The Second Amended Complaint, filed by
Plaintiffs' counsel, clearly states that “[a]ll
Plaintiffs learned of the illegal kickbacks less than one
year prior to filing of the [Second Amended] Complaint and
could not have known about the Kickback Scheme until
contacted by undersigned counsel.” Second Am. Compl. at
¶ 94, ECF No. 138. In light of these unique
circumstances, Plaintiffs have demonstrated that equitable
tolling is warranted in this case and that all Plaintiffs,
with the exception of the Eagle National Plaintiffs, brought
their claims within one year of the date they could have
first known of their cause of action through due diligence.
Fangman, 2015 WL 8315704, at *7.
discovery concerning Genuine Title's business practices
and relationship with other lenders, some defendants (e.g.,
Wells Fargo, JP Morgan Chase, and PNC) have struck class
settlements which have been the subject of public filings and
class notices. (See, e.g., Fangman, Final
Approval Order regarding PNC settlement, ECF No. 479 (Aug. 9,
2017); see also NEFCU's Mem. at 7 n.5, ECF No.
Enforcement Actions by the federal Consumer Financial
Protection Bureau (“CFPB”) and Maryland Attorney
the Consumer Financial Protection Bureau (“CFPB”)
and the Maryland Attorney General initiated an enforcement
action in this Court on January 22, 2015 against Wells Fargo
Bank, N.A. and JPMorgan Chase Bank, N.A. predicated on
similar schemes involving Genuine Title. (See CFPB v.
Wells Fargo Bank, N.A., No. RDB-15-0179 (D. Md.)
(“Lender Enforcement Action”).) The
pendency and ultimate settlement of the Lender
Enforcement Action in January 2015 was widely
publicized. Specifically, the CFPB issued a press release on
January 22, 2015, and local and national news media,
including The Baltimore Sun, CNN, and the New
York Times, published stories about the case.
(See NEFCU's Exhibits 1-3, ECF Nos. 20-2 through
CFPB and Attorney General also filed an enforcement action on
April 29, 2015 directly against Genuine Title, its
principals, and affiliates arising out of the same alleged
scheme. (See CFPB v. Genuine Title LLC, No.
RDB-15-1235 (D. Md.) (“Genuine Title Enforcement
Action”)). The CFPB issued a press release on
April 29, 2015 in which the CFPB outlined the enforcement
action against Genuine Title based on the same facts alleged
by the Fangman plaintiffs. On May 1, 2015, the CFPB
and Maryland Attorney General announced a settlement with
Genuine Title, and this Court entered a Stipulated Final
Judgment and Order approving the settlement. (See Genuine
Title Enforcement Action, ECF No. 18.) As with the
Lender Enforcement Action, the Genuine Title
Enforcement Action settlement was also reported by
various news media outlets and other publications in May
2015. (See Dobbins v. Bank of America,
N.A., RDB-17-540 (D. Md.), ECF Nos. 17-3, 17-4.) The
settlement orders in these enforcement actions explicitly
contemplate related litigation by affected consumers
(see, e.g., Genuine Title Enforcement Action,
Genuine Title Order at 5, ECF No. 18), but it is important to
note that neither the Consumer Financial Protection Bureau
nor the Office of the Attorney General of Maryland required
that any financial institutions issue additional formal
notices to the public. Plaintiffs' counsel's oral
argument to the contrary during the related consolidated
hearing is belied by the plain text of the settlement orders,
which did not compel any further public notice. (See
Lender Enforcement Action, JPMorgan Chase Order, ECF No.
10; Lender Enforcement Action, Wells Fargo Order,
ECF No. 11.)
Second Wave of Genuine Title Litigation
counsel, who has been in possession of Genuine Title's
records since 2014 and who processed the data - including
buyers' names - by June 2015, has filed the following
seven class actions against other lenders who, like the
defendants in Fangman, allegedly engaged in kickback
schemes with Genuine Title.
1. Edmondson v. Eagle National Bank, Civil No.
RDB-16-3938 (D. Md.)
2. Dobbins v. Bank of America, N.A., Civil No.