MARY E. EDMONSON, Plaintiff - Appellant,
EAGLE NATIONAL BANK; EAGLE NATIONWIDE MORTGAGE COMPANY; EAGLE NATIONAL BANCORP, INCORPORATED; ESSA BANCORP, INCORPORATED; ESSA BANK & TRUST, Defendants - Appellees. RENITA JAMES, Plaintiff - Appellant,
ACRE MORTGAGE & FINANCIAL, INC., Defendant-Appellee. D'ALAN E. BAUGH; PENNY FRAZIER, Plaintiffs - Appellants,
THE FEDERAL SAVINGS BANK, TRACIE PARKER DOBBINS; GLADYS PARKER, Plaintiffs - Appellants,
BANK OF AMERICA, N.A., Defendant - Appellee. JILL BEZEK; MICHELLE HARRIS Plaintiffs - Appellants,
FIRST MARINER BANK Defendant - Appellee.
Argued: December 11, 2018
Appeals from the United States District Court for the
District of Maryland at Baltimore. Richard D. Bennett,
District Judge. (1:16-cv-03938-RDB; 1:17-cv-00540-RDB;
1:17-cv-01734-RDB; 1:17-cv-01735-RDB; 1:17-cv-02902-RDB)
William James Murphy, ZUCKERMAN SPAEDER LLP, Baltimore,
Maryland, for Appellants.
Thomas Becker, FOX ROTHSCHILD LLP, Philadelphia,
Pennsylvania, for Appellees. Brian David Schmalzbach,
MCGUIREWOODS LLP, Richmond, Virginia, for Appellee Bank of
America National Association.
V. Smith, Adam B. Abelson, ZUCKERMAN SPAEDER LLP, Baltimore,
Maryland; Michael Paul Smith, SMITH, GILDEA & SCHMIDT,
LLC, Towson, Maryland; Timothy F. Maloney, JOSEPH, GREENWALD
& LAAKE, P.A., Greenbelt, Maryland, for Appellants.
J. Krueger, FOX ROTHSCHILD LLP, Philadelphia, Pennsylvania;
Brian Moffet, MILES & STOCKBRIDGE P.C., Baltimore,
Maryland, for Appellees Eagle Nation Bank, Eagle Nationwide
Mortgage Company, Eagle National Bancorp, Incorporated, Essa
Bancorp, Incorporated, and Essa Bank & Trust. Bradley R.
Kutrow, MCGUIRE WOODS LLP, Charlotte, North Carolina, for
Appellee Bank of America National Association. Ari Karen,
OFFIT KURMAN, PA, Baltimore, Maryland, for Appellees Acre
Mortgage & Financial, Inc, and The Federal Savings Bank.
Michael E. Blumenfeld, NELSON MULLINS RILEY & SCARBOROUGH
LLP, Baltimore, Maryland, for Appellee First Mariner Bank.
KEENAN, WYNN, and HARRIS, Circuit Judges.
the five Plaintiffs in this matter brought a putative class
action alleging that between 2009 and 2014 certain lenders
participated in "kickback schemes" prohibited by
the Real Estate Settlement Procedures Act
("RESPA"), 12 U.S.C. § 2601 et seq.
But the district court dismissed their claims because the
first of the five class actions at issue in this appeal was
not filed until June 23, 2016, well after the expiration of
RESPA's one-year statute of limitations. We, however,
hold that, under the allegations set forth in their
complaints, Plaintiffs are entitled to relief from the
limitations period under the fraudulent concealment tolling
doctrine. Accordingly, we reverse the district court's
dismissal of Plaintiffs' actions.
the district court dismissed Plaintiffs' actions under
Federal Rule of Civil Procedure 12(b)(6), we take the
non-conclusory factual allegations in Plaintiffs'
complaints as true and draw all reasonable inferences
therefrom in Plaintiffs' favor. In re GNC Corp.,
789 F.3d 505, 512 (4th Cir. 2015).
2009 and 2014, Defendants-several banks and mortgage
companies (each, a "Lender," and collectively, the
"Lenders")-originated or serviced residential
mortgages obtained by Plaintiffs. Mortgage brokers and loan
officers employed by the Lenders referred Plaintiffs to
Genuine Title, LLC ("Genuine Title") to procure
title insurance and obtain escrow and settlement services.
Plaintiffs allege that Genuine Title provided the Lenders
with several forms of "unearned fees and kickbacks"
to induce those referrals, J.A. 8, in violation of RESPA,
which forbids, among other things, any person from
"giv[ing or] accept[ing] any fee, kickback, or thing of
value pursuant to any agreement or understanding . . . [as]
part of a real estate settlement service involving a
federally related mortgage loan," 12 U.S.C. §
scheme's most basic form, Genuine Title transferred more
than $4, 000, 000 to an entity named Brandon Glickstein, Inc.
("BGI"), which purportedly provided
"advertising and marketing" services. J.A. 13-14.
Brandon Glickstein, who founded BGI, had previously served as
"Genuine Title's lead marketing and account
representative." J.A. 13. Using the funds it received
from Genuine Title, BGI made millions of dollars in direct
cash payments to the Lenders' brokers and loan officers
who made referrals to Genuine Title. Brokers and loan
officers who referred more customers to Genuine Title
received larger payments from BGI.
further allege that Glickstein founded a second company,
Competitive Advantage Media Group, LLC ("Competitive
Advantage"), that made in-kind payments to the
Lenders' brokers and loan officers. In particular,
Competitive Advantage provided "free or discounted
leads, postage, and/or marketing materials and services
and/or credits for mortgage brokers and lenders"
associated with the Lenders. J.A. 14. Genuine Title allegedly
paid for some or all of the promotional materials Competitive
Advantage provided to the Lenders' brokers and loan
According to the complaint, the amount that Genuine Title
paid Competitive Advantage for the promotional materials
Competitive Advantage provided to the Lenders' brokers or
loan officers varied with the number of referrals the broker
or loan officer made to Genuine Title. "For example, if
a [r]eferring [b]roker who used [Competitive Advantage] for
his or her marketing materials referred five (5) mortgages
that closed with Genuine Title in one month, and the
agreement with Genuine Title was that each closing was valued
at $200, Genuine Title would pay [Competitive Advantage] $1,
000 the next month to be applied to the [r]eferring
[b]roker's marketing materials produced by [Competitive
Advantage]." J.A. 15.
Plaintiffs allege that Genuine Title entered into agreements
pursuant to which a broker or loan officer associated with a
Lender that refused to lend to a prospective borrower because
the borrower failed to meet the Lender's underwriting
standards would refer the borrower to another Lender that
frequently worked with Genuine Title. That second
Lender's broker or loan officer would refer the borrower
to Genuine Title for title services. Under these agreements,
Genuine Title would provide a cash or in-kind kickback to (1)
the broker or loan officer of the Lender that referred the
borrower to the second Lender and (2) the second Lender's
broker or loan officer, who ultimately originated or serviced
the borrower's mortgage and who referred the borrower to
Genuine Title. Again, the payments to the brokers or loan
officers employed by the two Lenders varied with the volume
of referrals. Neither Genuine Title nor the Lenders disclosed
the alleged kickbacks to Plaintiffs.
Although the complaint alleges violations between 2009 and
2014, the first of the five class actions at issue in this
appeal was not filed until June 23, 2016, well after the
expiration of RESPA's one-year statute of limitations.
Plaintiffs' complaints assert that Plaintiffs are
entitled to relief from the limitations period, however,
because the Lenders fraudulently concealed the alleged
end, Plaintiffs allege that BGI and Competitive Advantage
were "sham" entities and that "the use of [BGI
and Competitive Advantage] was intended to conceal, and did
conceal, the Kickback Scheme from borrowers, including
Plaintiff, Class Members, and regulators." J.A. 13. In
support of the allegation that BGI and Competitive Advantage
were "sham[s]," the complaints allege, for example,
that "[t]he Resident Agent for [Competitive Advantage]
at the time of organization was Jonathan S. Bach, Esq., the
in-house attorney for Genuine Title" and that, at that
time, "the address for [Competitive Advantage] was the
same physical address [as] Genuine Title." J.A. 14.
complaints further allege that some of the brokers or loan
officers employed by the Lenders "created shell
companies to receive the [cash] payments" from BGI,
whereas other brokers and loan officers used previously
existing entities for the sole purpose of receiving the
payments. J.A. 16. According to the complaints, the
"[p]ayments were made and received in this way to
conceal, and did conceal, the Kickback Scheme from borrowers,
including Plaintiff and other Class Members, and
regulators." Id. Once investigators began
examining the payments from BGI to the Lenders' brokers
and loan officers, "Genuine Title drafted sham Title
Services Agreements for [r]eferring [b]rokers with the intent
to disguise and conceal [cash] payments as legitimate fees
for alleged title services provided by [r]eferring [b]rokers,
and Genuine Title back-dated said agreements." J.A.
16-17. In support of the allegation that the Title Service
Agreements were "sham[s]," the complaints allege
that the cash payments from BGI to the Lenders' referring
brokers and loan officers "were not made in accordance
with the fee schedule in the Title Services Agreements and
the [r]eferring [b]rokers performed no services for Genuine
Title." J.A. 17.
complaints further alleged that the Lenders concealed the
kickbacks by not reporting the payments from BGI on HUD-1
Settlement Statements and other settlement documents the Lenders
provided to Plaintiffs, notwithstanding that federal
regulations require that HUD-1 Settlement Statements
"include any amounts received for origination services,
including administrative and processing services, performed
by or on behalf of the loan originator," 12 C.F.R.
§ 1024, App. A, and provide a good faith estimate of
"all charges that all loan originators involved in [the]
transaction will receive," id. § 1024,
complicating Plaintiffs' request for relief from
RESPA's limitation period based on fraudulent
concealment, however, is that Genuine Title, its officers,
and brokers and loan officers employed by lenders not named
as defendants in this case previously have faced legal
actions premised on similar conduct. In 2013, for example,
Edward and Vickie Fangman filed a complaint alleging that
Genuine Title provided kickbacks to mortgage brokers and loan
officers affiliated with several mortgage lenders and brokers
in exchange for referrals. See Fangman v. Genuine
Title, No. RDB-14-0081 (D. Md. 2014). Counsel for the
Fangman plaintiffs-the law firms Smith, Gildea &
Schmidt, LLC, and Joseph, Greenwald & Lake,
P.A.-represented some of the Plaintiffs in the present
Title filed for bankruptcy in 2014. Thereafter, Genuine
Title's bankruptcy receiver provided counsel for the
Fangman plaintiffs with access to Genuine
Title's documents, records, and computer servers. From
these records, Fangman counsel identified and
located prospective class members as well as several
additional lenders that allegedly received kickbacks from
Genuine Title. Counsel then contacted these members and filed
two Amended Complaints, naming several lenders as additional
defendants, including, for a short time, two of the
defendants in the instant case: Eagle National Bank and Bank
of America, N.A.
Plaintiffs, the Fangman plaintiffs sought relief
from RESPA's one-year limitations period under the
doctrine of fraudulent concealment. The district court in
Fangman held the plaintiffs' allegations of
fraudulent concealment-which track those asserted by
Plaintiffs in the instant case-were sufficient to satisfy
Federal Rules of Civil Procedure 9(b) and 12(b)(6). See
J. v. Genuine Title, LLC, No. RDB-14-0081, 2015 WL
8315704, at *7 (D. Md. Dec. 9, 2015).
reaching that conclusion, the court first held that the
Fangman defendants engaged in affirmative acts of
concealment, including by concealing the business
relationship between Genuine Title and the defendant lenders,
failing to disclose the referral payments on the
borrowers' HUD-1 Settlement Statements, and entering into
sham Title Services Agreements. The court further held the
Fangman Plaintiffs adequately alleged that they did
not and "could not have reasonably known of their cause
of action until contacted by [their] attorneys."
Id. "Rather than sleeping on their rights, [the
Fangman] 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 court
held. Id. The district court
subsequently ruled that the evidence the Fangman
plaintiffs adduced in discovery was sufficient to satisfy
their burden to prove their entitlement to tolling based on
fraudulent concealment. See Fangman v. Genuine Title,
LLC, No. RDB-14-0081, 2016 WL 6600509, at *4-7 (D. Md.
Nov. 8, 2016).
on January 22, 2015, the Consumer Financial Protection Bureau
and the Maryland Attorney General initiated enforcement
proceedings against Wells Fargo Bank, N.A. ("Wells
Fargo") and JPMorgan Chase Bank, N.A. ("J.P.
Morgan"), alleging those two financial institutions
engaged in a similar kickback scheme with Genuine Title.
Wells Fargo and J.P. Morgan entered into a settlement
agreement with the enforcement agencies, agreeing to pay
approximately $35 million dollars. That agreement received
press coverage in, among other media outlets, The Wall
Street Journal, The Baltimore Sun, and The
on April 29, 2015, the Consumer Financial Protection Bureau
and the Maryland Attorney General brought a separate
enforcement action against Genuine Title, alleging that
Genuine Title, its principal, and affiliates engaged in cash
payments and other kickbacks in exchange for referrals.
Although the case settled, and the settlement orders
contemplated additional private litigation by consumers,
neither the Consumer Financial Protection Bureau nor the
Maryland Attorney General required any of the financial
institutions named in the enforcement actions to issue any
formal notices to the public.
the pendency of the Fangman litigation and the
federal and state enforcement proceedings, Plaintiffs'
counsel further analyzed the materials provided by Genuine
Title's bankruptcy receiver and identified additional
borrowers potentially impacted by Genuine Title's alleged
kickbacks to lenders and brokers. Based on that analysis,
Plaintiffs filed the five putative class actions at issue in
this appeal. Each putative class action names as defendant a
separate financial institution or corporate family of
financial institutions, which employed brokers and loan
officers that allegedly received kickbacks from Genuine
the defendants in Fangman, the Lenders moved to
dismiss on grounds that Plaintiffs failed to file their
actions within RESPA's one-year limitations period and
were not entitled to rely on the doctrine of fraudulent
concealment to obtain relief from the limitations period.
Unlike in Fangman, however, the district court
refused to toll the limitations period based on fraudulent
concealment and, therefore, dismissed ...