Baehr et al v. The Creig Northrop Team, P.C. et al
Filing
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MEMORANDUM OPINION. Signed by Judge Richard D. Bennett on 12/7/2018. (jnls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
PATRICK BAEHR, et al.,
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Plaintiffs,
Civil Action No. RDB-13-0933
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v.
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THE CREIG NORTHROP TEAM,
P.C., et al.,
Defendants.
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MEMORANDUM OPINION
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The Plaintiffs Patrick and Christine Baehr, individually and on behalf of a class of
consumers, bring this single-count class action1 against the Defendants The Creig Northrop
Team, P.C. (“The Northrop Team”), Creighton Edward Northrop, III (“Creig Northrop”),
Lakeview Title Company (“Lakeview”), and Lindell Eagan (“Eagan”) (collectively, the
“Defendants”), alleging that the Defendants violated the Real Estate Settlement Procedures
Act of 1974, as amended, 12 U.S.C. § 2601, et seq. (“RESPA”) through an illegal kickback
scheme whereby The Northrop Team received unearned fees from Lakeview Title in
exchange for referring clients to Lakeview Title for settlement. Currently pending before this
Court is the Defendants’ Joint Motion for Summary Judgment, arguing that the Plaintiffs do
not have standing to bring their claim, and that their claim is barred by RESPA’s one year
statute of limitations and equitable tolling does not apply. (ECF No. 158.)
As noted infra Note 10, this case has been previously assigned to four other Judges of this Court. It was
assigned to the undersigned on November 30, 2017 and discovery was ultimately completed giving rise to the
filing of dispositive motions.
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This Court reviewed the parties’ submissions and held a motions hearing on
November 20, 2018. For the following reasons, Defendants’ Joint Motion for Summary
Judgment (ECF No. 158) is GRANTED and Judgment is ENTERED in favor of
Defendants.2
BACKGROUND
In ruling on a motion for summary judgment, this Court reviews the facts and all
reasonable inferences in the light most favorable to the non-moving party. Scott v. Harris,
550 U.S. 372, 378 (2007); Hardwick ex rel. Hardwick v. Heyward, 711 F.3d 426, 433 (4th Cir.
2013). As explained below, in 2008 the named Plaintiffs Patrick and Christine Baehr (the
“Plaintiffs” or “Baehrs”) retained Long & Foster Real Estate, Inc. (“Long & Foster”) as their
real estate broker to assist them in finding a new home. Maija Dykstra, at the time a Long &
Foster agent and member of the Defendant The Creig Northrop Team, P.C. (“The
Northrop Team”), led by the Defendant Creighton Edward Northrop, III (“Creig
Northrop”), referred the Plaintiffs to the Defendant Lakeview Title Company (“Lakeview
Title”), run by its President Defendant Lindell Eagan (“Eagan”), for settlement. The Baehrs
closed on the purchase of this home on July 25, 2008.
On March 27, 2013, more than four and a half years after they settled on their home,
the Plaintiffs filed the instant suit on behalf of themselves and a putative class, claiming that
the Defendants violated Section 8(a) of RESPA by using a “sham” marketing agreement
between The Northrop Team and Lakeview Title to disguise an illegal kickback scheme
whereby The Northrop Team received unearned fees by referring the Plaintiffs and the
Accordingly, Plaintiffs’ Motion to Revise Judgment and for Leave to file a Second Amended Complaint
(ECF No. 160) and Plaintiffs’ Motion to Modify the Class (ECF No. 228) are MOOT.
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putative class to Lakeview Title for settlement. This Court begins with a brief overview of
RESPA before detailing the factual and procedural background of this case.
I.
The Real Estate Settlement Procedures Act (“RESPA”)
Congress enacted the Real Estate Settlement Procedures Act of 1974, as amended, 12
U.S.C. § 2601, et seq. (“RESPA”) after it found that substantial reforms in the real estate
settlement process were “needed to insure that consumers throughout the Nation are
provided with greater and more timely information on the nature and costs of the settlement
process and are protected from unnecessarily high settlement charges caused by certain
abusive practices that have developed in some areas of the country.” 12 U.S.C. § 2601(a).
Accordingly, Congress enacted RESPA to effect “certain changes” that would result “in the
elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of
certain settlement services.”3 Id. at § 2601(b)(2).
One of RESPA’s prohibitions is that “[n]o person shall give and no person shall
accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral
or otherwise, that business incident to or a part of a real estate settlement service involving a
federally related mortgage loan shall be referred to any person.” Id. at § 2607(a). RESPA then
provides for a specific set of remedies, including that “[a]ny person or persons who violate
the prohibitions or limitations of this section shall be jointly and severally liable to the
person or persons charged for the settlement service involved in the violation in an amount
equal to three times the amount of any charge paid for such settlement service.” Id. at §
The other purposes of RESPA include effecting certain changes to result in: “more effective advance
disclosure to home buyers and sellers of settlement costs,” “a reduction in the amounts home buyers are
required to place in escrow accounts established to insure the payment of real estate taxes and insurance,” and
“significant reform and modernization of local recordkeeping of land title information.” 12 U.S.C. § 2601(b).
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2607(d)(2). RESPA does not provide, however, an individual with a private right to
injunctive relief. See id. at § 2607(d)(4) (“The Bureau, the Secretary, or the attorney general or
the insurance commissioner of any State may bring an action to enjoin violations of this
section.”); see also Minter v. Wells Fargo Bank, N.A., 593 F. Supp. 2d 788, 796 (D. Md. 2009)
(“[T]his Court finds that there is no private right to injunctive relief under RESPA.”)
II.
The Marketing Agreement between The Northrop Team and Lakeview
Title
On April 10, 2008, Creig Northrop and The Northrop Team entered into a
Marketing and Services Agreement. (ECF No. 210-10.) The Agreement provided that,
among other things, Northrop agreed to designate Lakeview Title as its “exclusive preferred
settlement and title company” and “to provide certain marketing services.” (Id. at ¶ 2.1.) In
exchange, Lakeview would pay The Northrop Team a flat fee of $6,000 per month, “not
predicated on the volume of applications received by Lakeview from Northrop customers
for settlement and title services.” (Id. at 14.) Finally, the parties agreed “that the terms of the
transaction described herein is of a confidential nature and shall not be disclosed except to
consultants, advisors and Affiliates, or as required by law. Neither the parties shall make any
public disclosure of the specific terms of this Agreement, except as required by law.” (Id. at ¶
9.21.)
III.
The Named Plaintiffs’ purchase of their home with Long & Foster and
The Northrop Team
The Named Plaintiffs Patrick and Christine Baehr’s RESPA claim stems from their
purchase of a home in Glenwood, Maryland (“Glenwood home”) on July 25, 2008. (ECF
No. 158-3.) In April of 2008, the Baehrs entered into an Exclusive Right to Represent Buyer
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Agreement with Long & Foster to assist them in selling their previous home and finding a
new home. (ECF No. 158-8.) The Defendant Creig Northrop is a licensed real estate agent
who provides real estate brokerage services under Long & Foster’s real estate brokerage
license.4 Creig Northrop also runs The Northrop Team, a real estate agent team, along with
his wife Carla Northrop. Maija Dykstra, a Northrop Team Member at the time, was the
Long & Foster real estate agent who assisted the Baehrs in the selling and purchase of their
home. (P. Baehr Dep., ECF No. 158-4 at 94.)5
When the Baehrs began working with The Northrop Team, they received
promotional materials for various companies, including Lakeview Title, and a folder of
various forms to be signed. (ECF No. 158-12.) Among the forms to be signed were an
Understanding Whom Real Estate Agents Represent Form and an Affiliated Business
Arrangement (“ABA”) Disclosure Statement. (Id. at 8-9; ECF No. 210-31.) The ABA
Disclosure Statement, given to the Baehrs by Dykstra, was a Long & Foster form which
gave clients “notice that Long & Foster Real Estate, Inc. (‘Long & Foster’) has business
relationships (e.g., direct or indirect ownership interests, joint ventures and/or contractual
relationships including marketing agreements and/or office leases) with the following
mortgage, title, closing, and insurance service providers.”6 (ECF No. 210-31.) Under closing
Under Maryland state law, all real estate agents must be licensed and affiliated with a licensed real estate
brokerage for the purpose of providing real estate brokerage services. See Md. Code. Ann., Bus. Occ. & Prof.,
§ 17-310(b) (salespersons must be affiliated with a real estate brokerage that is headed by a broker, and offer
real estate brokerage services through that brokerage).
5 “P. Baehr Dep.” refers to the deposition testimony of Plaintiff Patrick Baehr while “C. Baehr Dep.” refers
to the deposition testimony of Plaintiff Christine Baehr.
6 As explained in more detail below, RESPA permits affiliated business arrangements so long as certain
conditions are met, including disclosure of the existence of such an arrangement to the person being referred.
12 U.S.C. § 2607(c). RESPA defines an ABA as “an arrangement in which (A) a person who is in a position
to refer business incident to or a part of a real estate settlement service involving a federally related mortgage
loan, or an associate of such person, has either an affiliate relationship with or a direct or beneficial ownership
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and title insurance companies, the Long & Foster Disclosure Statement listed twelve
companies and their affiliates in which Long & Foster had a business relationship.7 (Id.)
Maija Dykstra assisted the Baehrs in finding and ultimately making an offer for the
purchase of the Glenwood home for $835,000. (P. Baehr Dep., ECF No. 158-4 at 110;
HUD-1, ECF No. 158-3.) From previous experience purchasing a home, the Baehrs
understood that once a purchase price was agreed upon, they needed a settlement company
and title insurance to complete the purchase.8 (ECF No. 158-4 at 132; C. Baehr Dep., ECF
No. 158-14 at 80, 82.) Both Patrick and Christine Baehr testified that while working with
Long & Foster and The Northrop Team, they knew and understood that they could choose
their own settlement and title company. (ECF No. 158-4 at 137; ECF No. 158-14 at 82.)
Despite knowing that they were free to choose their own company, however, the Baehrs did
not take any action to find their own settlement and title company. (ECF No. 158-4 at 134,
137.) Rather, Patrick Baehr testified that he expected his Northrop Team Member, Dykstra,
to find him a settlement company. (Id. at 138.)
interest of more than 1 percent in a provider of settlement services; and (B) either of such persons directly or
indirectly refers such business to that provider or affirmatively influences the selection of that provider.” Id. at
§ 2602(7).
7 Specifically, the form stated that Long & Foster had business relationships with the following companies to
close a purchase or sale and/or for title insurance:
RGS Title and/or its affiliate Mid-States Title of Virginia, LLC
Brennan Title Company and/or its affiliate Positive Title, LLC
MBH Settlement Group LC and/or its affiliate Eastern Title LLC
Saga Title Group, LLC
Settlement Professionals, LLC
Bon Air Title and/or its affiliate Bon Air/Long & Foster Title Agency, LLC
Shaheen & Shaheen and/or its affiliate Long & Foster Great American Title, LLC
Shaffer Title & Escrow Inc. and/or its affiliate Long & Foster Shaffer Title Services, LLC
Homestead Settlement Services, LLC and/or its affiliate Mid-States Title of Roanoke, LLC
Mid States Title of Southwest Virginia, LLC
Trump & Trump and/or its affiliate Long 7 Foster of WV Title Insurance Agency, LLC
Long & Foster Settlement Services, LLC
8 Specifically, in 2000 the Baehrs purchased a home for around $310,000 and paid $375 to the title company
Residential Title & Escrow Company. (ECF No. 158-4 at 229, 230.)
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Thereafter in July of 2008, the month the Baehrs closed on their home, Dykstra
informed the Baehrs that Lakeview Title would handle their settlement. (P. Baehr Dep., ECF
No. 158-4 at 138; C. Baehr Dep., ECF No. 158-14 at 98.) Specifically, Patrick Baehr testified
that Dykstra stated “we do all of our settlements at Lakeview.” (ECF No. 158-4 at 139.) It is
undisputed that when Dykstra informed the Baehrs that “we do all of our settlements at
Lakeview,” the Baehrs did not ask a single question regarding why a Northrop Team
Member, associated with Long & Foster, would refer all settlements to Lakeview Title. They
also did not ask whether Dykstra, Long & Foster, or The Northrop Team had an affiliation
or some form of an agreement with Lakeview Title. (P. Baehr Dep., ECF No. 158-4 at 13841.) This was despite the fact that Lakeview Title was not one of the twelve closing or title
insurance companies listed on Long & Foster’s ABA Disclosure Statement and that
Lakeview Title was not the title company the Baehrs used when settling on their previous
home. (ECF Nos 210-31; ECF No. 158-4 at 229, 230.)
Rather, the Baehrs elected to proceed with Lakeview Title handling their settlement
without objection. Subsequently, on July 25, 2008, the Baehrs obtained title insurance from
and settled on the Glenwood home with Lakeview Title. (HUD-1, ECF No. 158-3.) Patrick
Baehr testified that despite feeling comfortable and having the opportunity to ask questions
during the closing process, he did not recall asking any questions. (ECF No. 158-4 at 16768.) The Baehrs’ HUD-19 for the purchase of their home then listed the following fees,
among others, paid from borrower’s funds at settlement:
Contract sales price:
$835,000.00
The HUD-1 Settlement Statement is a standard form indicating fees charged to a borrower by a mortgage
lender or broker.
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Administrative Fee to Long & Foster:
Title Examination to Lakeview Title Company:
Title insurance binder to Lakeview Title Company:
Title Insurance to Chicago Title Insurance Company:
Recording Services to Lakeview Title Company:
$395.00
$375.00
$50.00
$2,990.00
$50.00
(HUD-1, ECF No. 158-3.) As Chicago Title Insurance Company was the title underwriter,
that amount was also sent to Lakeview Title. (ECF No. 158-1 at 11 n. 11.)
After the settlement process, Patrick Baehr testified that he was satisfied with the
services that Lakeview Title provided. (P. Baehr Dep., ECF No. 158-4 at 164; C. Baehr Dep.,
ECF No. 158-14 at 128.) Accordingly, he believed that Lakeview Title deserved to be
compensated in connection with the settlement services and did not object to paying
Lakeview Title or Chicago Title Insurance Company’s fee. Satisfied with their srvices, over
the next four and a half years, the Baehrs did not contact Dykstra, Creig Northrop, anyone
on the Northrop Team, Lakeview, or Long & Foster about whether The Northrop Team
may have had a marketing agreement or other arrangement with Lakeview Title, or whether
The Northrop Team may have received anything of value from Lakeview Title in connection
with the Baehrs’ purchase of the Glenwood home. (P. Baehr Dep., ECF No. 158-4 at 206.)
IV.
Four and a half years later, the Plaintiffs file the instant action
On March 15, 2013, four and a half years after the Baehrs purchased their home, the
Baehrs received a letter from their current counsel. (ECF No. 158-16.) The letter indicated
that counsel was “investigating whether you and other persons similarly situated may have a
legal claim based on illegal kickbacks paid for the referral of your business to a title company
that settled your purchase. . . . I believe that you may be entitled to financial recovery under
RESPA.” (Id.) Subsequently, the Baehrs received a written engagement letter to pursue the
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instant claim. (ECF No. 158-17.) On March 27, 2013, they filed the instant action, alleging
that the Defendants violated Section 2607(a) of RESPA.10 (Compl., ECF No. 1.)
The Plaintiffs’ Complaint named six Defendants: The Northrop Team, Creig
Northrop, Carla Northrop, Lakeview Title, Lindell Eagan, and Long & Foster. (Id.) The
Complaint alleged that Creig Northrop, Carla Northrop, and The Northrop Team—acting
as agents on behalf of Long & Foster—referred the Plaintiffs and members of the Class
exclusively to Defendant Lakeview Title Company for real estate settlement services as a quid
pro quo for compensation by Lakeview Title and Lindell Eagan, President of Lakeview. The
Plaintiffs alleged that the Defendants concealed this quid pro quo or kickback relationship first
through a “sham” employment agreement between Carla Northrop and Lakeview Title from
around 2001 through 2008, and then through the Marketing and Services Agreement
described above from 2008 through 2013.
With respect to the Marketing Agreement, the Plaintiffs’ Complaint alleged that
rather than Creig Northrop and The Northrop Team receiving a flat fee for marketing
services of $6,000 per month from Lakeview Title, the payments they received actually
fluctuated from $6,000 to $12,000 based on how many clients The Northrop Team referred
to Lakeview.11 Therefore, the Plaintiffs alleged that the Marketing Agreement was a sham,
designed to hide illegal kickback fees under Section 8(a) of RESPA.
Since this case was initially assigned to Judge Bredar on March 27, 2013, it has been subsequently
reassigned to Judge Nickerson that same day, to Judge Quarles on May 6, 2013, to Judge Motz on January 27,
2016, to Judge Russell on October 13, 2016, and finally to the undersigned on November 30, 2017.
11 As explained below, the Plaintiffs now assert that discovery has shown that the kickback The Northrop
Team received for referrals to Lakeview Title was 50% of the title insurance premium. In the Baehrs’ case,
that was around $1,495. (Pls’ Opp., ECF No. 210 at ¶ 18.)
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V.
This Court’s previous rulings
On May 13, 2013, the Defendants filed two Motions to Dismiss the Plaintiffs’
Complaint on various grounds. (ECF Nos. 23, 26.) Subsequently, the Plaintiffs filed a
Motion to Amend the Complaint and Motion for Class Certification. (ECF Nos. 36, 44.) On
January 29, 2014, the Honorable Judge William D. Quarles, Jr. ruled on the Motions. (ECF
Nos. 57, 58; Baehr v. Creig Northrop Team, P.C., 2014 WL 346635 (D. Md. Jan. 29, 2014).) The
relevant rulings are explained below.12
a. The Plaintiffs adequately alleged that equitable tolling applied to
their RESPA claim
The Defendants moved to dismiss the Complaint on the ground that the Plaintiffs’
claim was barred by RESPA’s statute of limitations. Baehr, 2014 WL 346635, at *4. As this
Court explained, a claim brought pursuant to Section 8 of REPSA, 12 U.S.C. § 2607, is
subject to a one-year statute of limitations, which may be equitably tolled. Id. (citing 12
U.S.C. § 2614). Because the Plaintiffs closed on their home on July 25, 2008 but did not file
their Complaint until March 27, 2013, their claim fell well outside the one-year statute of
limitations. Id. To determine whether the Plaintiffs adequately pled that their claim was
entitled to equitable tolling, this Court applied the following standard:
To invoke the doctrine of equitable tolling, the Plaintiffs must show that “(1)
the party pleading the statute of limitations fraudulently concealed facts that
are the basis of the plaintiff’s claim, and (2) the plaintiff failed to discover
those facts within the statutory period, despite (3) the exercise of due
diligence.”
In addition to the rulings described below, this Court also held that the Plaintiffs adequately pled a claim
against Lindell Eagan.
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Id. (citing Minter v. Wells Fargo Bank, N.A., 675 F .Supp. 2d 591, 596 (D. Md. 2009)).13
Applying this standard, this Court held that the Plaintiffs sufficiently alleged “that the
Defendants engaged in affirmative acts to conceal the kickback scheme.” 2014 WL 346635,
at *5. Specifically, the Plaintiffs alleged that the Defendants concealed the fact that the
Northrop Defendants were receiving illegal referral fees by disguising the kickback payments
in the sham employment and marketing agreements. Id. Moreover, this Court explained that
whether the Defendants were required to disclose the “employment or affiliation agreements
is irrelevant in determining whether the Defendants fraudulently concealed violations of
RESPA by entering into sham agreements. The issue is not whether the agreements were
disclosed, but whether they were created as shams to hide payments in violation of RESPA.”
Id. at *5 n. 9. Briefly addressing due diligence, this Court reasoned that reasonable inquiry
would not have revealed the RESPA claim because anyone who inquired into the
agreements would have discovered only the seemingly valid employment or marketing
agreements. Id. at *5.
b. The Plaintiffs failed to state a claim against Carla Northrop and
Long & Foster
The Defendants also moved to dismiss Long & Foster and Carla Northrop for failure
to state a claim. Baehr, 2014 WL 346635, at *5-6. As to Long & Foster, this Court held that
the Plaintiffs’ allegations concerning an agency relationship between the Northrop
Defendants and Long & Foster were mere legal conclusions and failed to allege “the basis,
nature, or extent of the relationship.” Id. at *6. As to Carla Northrop, this Court held that
This standard for equitable tolling pre-dated the Supreme Court’s current equitable tolling standard
announced in Menominee Indian Tribe of Wisconsin v. United States, ––– U.S. ––––, 136 S. Ct. 750 (2016).
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the proposed Amended Complaint failed to allege that Carla Northrop in fact gave or
accepted a kick back in 2008 when the Baehrs purchased their home. Id. at *5. Therefore,
this Court dismissed both Long & Foster and Carla Northrop.14
c. Class certification was appropriate, but on narrower grounds than
requested
Turning to the Plaintiffs’ Motion for Class Certification, the Plaintiffs sought to
certify the following class:
All Maryland residents who retained Long & Foster Real Estate, Inc.,
Creighton Northrop, III, and the Creig Northrop Team, P.C. to represent
them in the purchase of a primary residence between January 1, 2000 to
present and settled on the purchase of their primary residence at Lakeview
Title Company, Inc.
(ECF No. 44.)
Analyzing the factors in Federal Rule of Civil Procedure 23(a), this Court held that
the Plaintiffs had met the numerosity and commonality requirements. Baehr, 2014 WL
346635, at *8. As to typicality, however, this Court held that the Baehrs’ claim was not
typical with potential class members’ claims originating between 2000 and 2007, when the
Defendants were allegedly operating their kickback scheme through Carla Northrop’s
employment with Lakeview Title. Id. at *8-9. Therefore, this Court redefined the class to
only include those class members who purchased homes beginning in 2008. Id. at *9. This
Although nothing in this Court’s Order indicates that the dismissals were with prejudice, the parties
assumed—and in a subsequent Opinion this Court indicated—that the dismissals were with prejudice. See
Baehr v. Creig Northrop Team, P.C., 2014 WL 3725906, at *4 (D. Md. July 24, 2014) (“The Plaintiffs seek to
amend the Court’s dismissal of the claim against Long & Foster to be without prejudice.”) Subsequently, on
February 13 and 14, 2014, the Plaintiffs filed Motions to file a Second Amended Complaint and to
Alter/Amend Judgment, seeking to (1) amend this Court’s dismissal of the claim against Long & Foster to be
without prejudice and (2) filed a second amended complaint to add specific factual allegations against Long &
Foster. (ECF Nos. 65, 66.) Judge Quarles denied both Motions, again holding that Plaintiffs failed to state a
claim against Long & Foster. (ECF Nos. 84, 85; Baehr v. Creig Northrop Team, P.C., 2014 WL 3725906 (D. Md.
July 24, 2014).)
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Court then held that the adequacy prong was met, as well as the predominance and
superiority requirements of Rule 23(b). Id. at *9-11.
Therefore, this Court certified the following amended class:
All Maryland residents who retained Long & Foster Real Estate, Inc.,
Creighton Northrop, III, and the Creig Northrop Team, P.C. to represent
them in the purchase of a primary residence between January 1, 2008 to the
present and settled on the purchase of their primary residence at Lakeview
Title Company, Inc.
Id. at *11; ECF No. 58. Defining the class in this time period precluded the Plaintiffs from
proceeding with their claim that Defendants’ RESPA violations began before 2008 through
Carla Northrop’s “sham” employment agreement with Lakeview Title. Subsequently, the
Plaintiffs filed the Operative Amended Complaint. (ECF No. 89.)
VI.
The Defendants’ Joint Motion for Summary Judgment
On June 9, 2015, the Defendants filed a Joint Motion for Summary Judgment. (ECF
No. 158.) The Motion argues that the Defendants are entitled to judgment as a matter of law
on two grounds: (1) Plaintiffs do not have Article III standing to bring their Section 8(a)
RESPA claim because they do not satisfied the injury in fact requirement; and (2) discovery
has shown that the Plaintiffs failed to file this action within RESPA’s one year statute of
limitations, and their claim is not entitled to equitable tolling.
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 56(c), a court must grant summary judgment
“if the pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law.” Anderson v. Liberty Lobby, Inc.,
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477 U.S. 242, 247 (1986). A material fact is one that “might affect the outcome of the suit
under the governing law.” Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013)
(quoting Anderson, 477 U.S. at 248). The party seeking summary judgment bears the initial
burden of demonstrating the absence of a genuine dispute of material fact, Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986), and the court must take all facts and inferences in the light
most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
The party opposing summary judgment must, however, “do more than simply show
that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also In re Apex Express Corp., 190 F.3d 624,
633 (4th Cir. 1999). The non-movant “‘may not rest upon the mere allegations or denials of
[his] pleadings,’ but rather must ‘set forth specific facts showing that there is a genuine issue
for trial.’” Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003)
(alteration in original) (quoting Fed. R. Civ. P. 56(e)); see also Adickes v. S. H. Kress & Co., 398
U.S. 144, 160 (1970). A court should enter summary judgment when a party fails to make a
showing sufficient to establish elements essential to a party’s case, and on which the party
will bear the burden of proof at trial. Celotex Corp., 477 U.S. at 322-23.
ANALYSIS
The Plaintiffs argue that the Defendants violated Section 8(a) of RESPA by using the
“sham” Marketing and Services Agreement between The Northrop Team and Lakeview
Title to disguise an illegal kickback scheme whereby The Northrop Team received unearned
fees from Lakeview Title in exchange for referring the class of Plaintiffs to Lakeview Title
for settlement. Specifically, the Plaintiffs assert that half of the “Title Insurance” Fee on
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every Plaintiffs’ HUD, in the Baehrs’ case the Title Insurance fee of $2,990.00, was
channeled back to The Northrop Team in exchange for the referral to Lakeview. In their
Joint Motion for Summary Judgment, the Defendants argue that they are entitled to
judgment as a matter of law on Plaintiffs’ claim because the Plaintiffs do not have standing
under Article III of the Constitution, and discovery has shown that their claim is not entitled
to equitable tolling.
I.
The Plaintiffs do not have Article III Standing
Federal jurisdiction under Article III of the United States Constitution is limited to
“Cases” and “Controversies.” U.S. CONST. ART. III, § 2. “One element of the case-orcontroversy requirement is that plaintiffs must establish that they have standing to sue.”
Clapper v. Amnesty Int’l USA, __ U.S. __, 133 S. Ct. 1138 (2013). The “irreducible minimum
requirements” of standing that a plaintiff bears the burden of establishing are (1) an injury in
fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is
likely to be redressed by a favorable judicial decision. Spokeo, Inc. v. Robinson, 136 S. Ct. 1540,
1547 (2016) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130 (1992));
David v. Alphin, 704 F.3d 327, 333 (4th Cir. 2013).
It has been long settled “that Congress cannot erase Article III’s standing
requirements by statutorily granting the right to sue to a plaintiff who would not otherwise
have standing.” Raines v. Byrd, 521 U.S. 818, 820, 117 S. Ct. 2312 (1997). The United States
Supreme Court most recently reaffirmed this principle in Spokeo, Inc. v. Robinson, __ U.S. __,
136 S. Ct. 1540 (2016) when explaining that “Congress’ role in identifying and elevating
intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact
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requirement whenever a statute grants a person a statutory right and purports to authorize
that person to sue to vindicate that right.” 136 S. Ct. at 1549. Rather, a plaintiff must still
establish “‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and
‘actual or imminent, not conjectural or hypothetical.’” Id. at 1548 (citing Lujan, 504 U.S. at
560). In other words, “a bare procedural violation, divorced from any concrete harm” does
not satisfy the injury-in-fact requirement. Id. at 1549.
The Plaintiffs do not dispute that the $2,990.00 they paid for Title Insurance to
Chicago Title Insurance Company—which they assert was in some part channeled back to
the Northrop Defendants—was a reasonable fee to pay for title insurance, and therefore
they were not overcharged for services. Rather, the Plaintiffs argue that they have standing
to bring their RESPA claim because they were “deprived of impartial and fair competition
between settlement services.” (Am. Compl., ECF No. 89 at ¶ 23; P. Baehr Dep., ECF No.
158-4 at 248.) In response, the Defendants argue that Section 8(a) of RESPA does not
protect “impartial and fair competition” in this context and Plaintiffs did not suffer a
concrete harm under Article III.
In arguing that being deprived of “impartial and fair competition” is sufficient to
establish Article III standing in this case, the Plaintiffs rely on this Court’s rulings in Robinson
v. Fountainhead Title Group Corp., 447 F. Supp. 2d 478 (D. Md. 2006) and Fangman v. Genuine
Title, LLC, No. RDB-14-0081, 2015 WL 8315704 (D. Md. Dec. 9, 2015). First of all, both of
these cases pre-date the Supreme Court’s ruling in Spokeo. Secondly, both are distinguishable
from the facts of this case because they involved allegations of overcharging and the creation
16
of sham companies or a controlled or affiliated business agreement to assist in the kickback
scheme.
In Robinson, the plaintiff alleged that the defendants Fountainhead Title Group
Corporation, Long & Foster, and Mid-States Title Insurance Agency, Inc. established a sham
limited liability company, Assurance Title, LLC, to appear on closing documents for
allegedly completing title services. 447 F. Supp. 2d at 485. The plaintiff alleged that in reality,
Fountainhead completed the title services and the fee the borrowers paid Assurance were
channeled to Long & Foster and Mid-States pursuant to an agreement to refer closing and
settlement services to Fountainhead. Id. at 485-86. The defendants moved to dismiss,
arguing that the plaintiff was required to allege an “overcharge” in order to have standing
under Section 8(a) of RESPA. Id. at 486. This Court denied the motion, holding that the
plaintiff had standing first because the plaintiff had in fact alleged an overcharge. Id. at 488.
Second, this Court relied on RESPA’s legislative history with respect to concerns regarding
controlled business arrangements to conclude that “in addition to the overcharges alleged,
the alleged § 8(a) violation presents the possibility for other harm, including a lack of
impartiality in the referral and a reduction of competition between settlement service
provides.” Id. at 488-89.
Similarly in Fangman v. Genuine Title, LLC, No. RDB-14-0081, 2015 WL 8315704 (D.
Md. Dec. 9, 2015), the plaintiffs alleged that the defendant Genuine Title, LLC, by itself and
through sham companies, provided cash payments and marketing materials to mortgage
brokers who then referred their client to Genuine Title for settlement services. 2015 WL
8315704, at *1. The plaintiffs claimed that the cash payments were concealed from them and
17
not disclosed on their HUD-1s, and Genuine Title failed to disclose their affiliated business
relationships. Id. at *3. When the defendants moved to dismiss for lack of standing, this
Court held that the plaintiffs satisfied the actual injury requirement when they alleged that
“as a result of Defendants’ kickback scheme, they ‘were deprived of kickback free settlement
services and process’ and that ‘[b]ut for’ the kickback scheme, their settlement fees ‘would
have been much lower.’” Id. at *5.
Unlike in Robinson and Fangman, it is undisputed from the fully developed record and
oral argument at the hearing of November 20, 2018 that the $2,990.00 figure the Plaintiffs
allege was in some part channeled back to the Northrop Defendants was a reasonable fee to
pay for title insurance. Accordingly, there is no genuine dispute of material fact that the
Plaintiffs were not in any way overcharged for services due to the alleged kickback scheme.
Therefore, while RESPA was enacted, in part, to result “in the elimination of kickbacks or
referral fees that tend to increase unnecessarily the costs of certain settlement services,”
Plaintiffs have not shown that the costs of settlement services were unnecessarily increased.
12 U.S.C. § 2601(b).
Moreover, it is undisputed that the Defendants did not create a sham company to
orchestrate the alleged scheme and there was not a controlled or affiliated business
agreement between The Northrop Team and Lakeview Title. The Plaintiffs repeatedly
emphasize that Lakeview Title was not one of the twelve closing and title insurance
companies listed on Long & Foster’s ABA Disclosure Statement. However, that was a form
prepared by Long & Foster, not The Northrop Team, in which the Defendants assert Long
& Foster voluntarily disclosed “business relationships” it had with twelve closing or title
18
insurance companies. (ECF No. 210-31; Defs.’ Rep., ECF No. 212 at 21.) Second, under
RESPA, neither Long & Foster nor The Northrop Team had an affiliated business
arrangement with Lakeview Title that required disclosure. RESPA defines an affiliated
business arrangement as:
An arrangement in which (A) a person who is in a position to refer business
incident to or a part of a real estate settlement service involving a federally
related mortgage loan, or an associate of such person, has either an affiliate
relationship with or a direct or beneficial ownership interest of more than 1
percent in a provider of settlement services; and (B) either of such persons
directly or indirectly refers such business to that provider or affirmatively
influences the selection of that provider.
12 U.S.C. § 2602(7). RESPA’s controlling regulations then define “affiliate relationship” as
The relationship among business entities where one entity has effective
control over the other by virtue of a partnership or other agreement or is
under common control with the other by a third entity or where an entity is a
corporation related to another corporation as parent to subsidiary by an
identity of stock ownership.
12 C.F.R. § 1024.15(c). The Plaintiffs do not direct this Court to any evidence that The
Northrop Team, or Long & Foster, had an affiliated business arrangement under RESPA
with Lakeview Title that required disclosure.15 Accordingly, to the extent this Court in
Robinson and Fangman relied on RESPA’s concerns regarding controlled or affiliated business
arrangements, and therefore credited a deprivation of impartiality and fair competition as a
potential injury, those interests are not at issue here.
Looking at the undisputed facts, Plaintiffs knew at the time they put an offer in for
the Glenwood home that they could choose their own settlement and title company. Rather
Rather, the Plaintiffs direct this Court to an email sent to “executives@northropteam.com” which included
an internal memo that referred to Lakeview Title as an “affiliate.” (ECF No. 210-32.) This internal reference
to Lakeview Title as an “affiliate,” however, is insufficient to establish a genuine issue of material fact that
The Northrop Team had “either an affiliate relationship with” as defined by 12 C.F.R. § 1025.14(c) above, or
“a direct or beneficial ownership interest of more than 1 percent in” Lakeview Title. 12 U.S.C. § 2602(7).
15
19
than shop for their own company, however, they elected to continue with Lakeview Title
even after Maija Dykstra told them that “we do all of our settlements at Lakeview.”
Therefore, despite the currently alleged interest in “fair and impartial competition between
settlement services,” the Plaintiffs took no action at the time to find their own settlement
company or inquire further into the settlement company recommended to them. Moreover,
the Plaintiffs do not claim that they were at all dissatisfied with the services Lakeview Title
provided. Finally, the Plaintiffs also do not claim that the fees paid to Lakeview Title,
including portions that are alleged to have been channeled to The Northrop Team, were
unreasonable or undeserved. Plaintiffs chose to follow the referral to Lakeview Title, were
satisfied with the services they received, and paid a reasonable fee. In light of all of these
undisputed facts, the Plaintiffs cannot now allege that they satisfy Article III’s injury in fact
requirement because they were deprived of “impartial and fair competition between
settlement services.”
Finally, although not asserted in the Amended Complaint, the Plaintiffs also argue in
their Response to the Motion for Summary Judgment that they were injured because “they
paid for a service—the impartial advice and advocacy of their fiduciaries—that they did not
receive.” (Pls.’ Resp., ECF No. 210 at 33.) This theory, however, also contradicts the
undisputed facts for several reasons. First, Patrick Baehr testified that he and his wife did not
discuss with anyone on The Northrop Team the topic of finding a settlement and title
company. This was consistent with the Exclusive Right to Represent Buyer Agreement with
Long & Foster providing that the Baehrs retained Long & Foster “in the acquisition of real
property,” including “any purchase, option, exchange or lease of property or an agreement
20
to do so,” and not for any “other professional service.” (ECF No. 158-8.) Accordingly,
finding a settlement company was not a service the Plaintiffs actively solicited or bargained
for from Long & Foster or The Northrop Team. Second, before choosing to continue with
Lakeview Title, Maija Dykstra indicated that a relationship of some nature existed between
The Northrop Team and Lakeview Title when she stated “we do all of our settlements at
Lakeview.” Still, the Plaintiffs did not inquire into why The Northrop Team always referred
settlements to Lakeview Title or in any way inquired into the referral. Finally, by electing to
proceed with Lakeview Title, the Plaintiffs received settlement services they were satisfied
with and thought deserved to be compensated. Therefore, the Plaintiffs cannot now assert
that they relied on, or were injured by a deprivation of, “impartial advice and advocacy” with
respect to the Lakeview Title referral.16
For all of these reasons, there is no genuine dispute of material fact that the Plaintiffs
assert only “a bare procedural violation, divorced from any concrete harm” and do not
satisfy the injury-in-fact requirement of Article III Standing. Accordingly, Plaintiffs do not
The Plaintiffs also argue that they “did not receive a title fee discount that they were entitled to” and under
a theory of unjust enrichment, the Plaintiffs are entitled to the amount that the Defendants were unjustly
enriched by with the referral to Lakeview. (Pls’ Resp., ECF No. 210 at 33-34.) Beginning with the former
theory, the Plaintiffs rely on Gussin v. Shockey, 725 F. Supp. 271, 275 (D. Md. 1989), aff’d, 933 F.2d 1001 (4th
Cir. 1991). In that case, however, this Court granted summary judgment for the plaintiffs on their claim that
the defendant violated implied fiduciaries duties as the plaintiffs’ agent when he “advised them to pay prices
for horses that included a secret benefit for himself and that was in excess of the price for which he could have
purchased the horses for the [plaintiffs].” 725 F. Supp. at 275 (emphasis added). Here, even if the Plaintiffs had
shown that The Northrop Team owed the Plaintiffs a fiduciary duty with respect to referral of settlement
services, there is no allegation of overcharging. As to the former theory under unjust enrichment, this theory
again relies on the underlying argument that the Plaintiffs paid The Northrop Team for “impartial advice and
advocacy” with respect to obtaining settlement services, which this Court rejects as explained above.
Moreover, unjust enrichment is an independent cause of action which is not permitted under RESPA. See, e.g.,
Minter v. Wells Fargo Bank, N.A., 593 F. Supp. 2d 788 (D. Md. 2009); Eslick v. Cenlar, Central Loan
Administration and Reporting, No. 2:17-cv-381, 2017 WL 4836541 (E.D. Va. Oct. 3, 2017).
16
21
have standing to bring their claim, and for this reason alone the Defendants’ Joint Motion
for Summary Judgment is GRANTED.
II.
Alternatively, Plaintiffs’ claim is barred by RESPA’s statute of
limitations
Claims brought pursuant to Section 8 of REPSA, 12 U.S.C. § 2607, are subject to a
one year statute of limitations. Specifically, claims brought under Section 8 must be asserted
within one year “from the date of the occurrence of the violation.” 12 U.S.C. § 2614. In this
case, the date of the occurrence of the violation refers to the date the Plaintiffs closed on
their home, July 25, 2008. Fangman v. Genuine Title, LLC, No. CV RDB-14-0081, 2016 WL
6600509, at *4 (D. Md. Nov. 8, 2016) (quoting Grant v. Shapiro & Burson, LLP, 871 F. Supp.
2d 462, 470 (D. Md. 2012)). Because the Named Plaintiffs did not file suit until March 27,
2013, their claim falls outside of the one year statute of limitations.
As this Court has consistently held, however, claims brought under RESPA may be
equitably tolled. Fangman v. Genuine Title, LLC, No. CV RDB-14-0008, 2015 WL 8315704, at
*7 (D. Md. Dec. 9, 2015) (citing United States v. Kwai Fun Wong, ––– U.S. ––––, 135 S. Ct.
1625, 1630, 191 L.Ed.2d 533 (2015); Grant v. Shapiro & Burson, LLP, et al., 871 F. Supp. 2d
462, 470 n.10 (D. Md. 2012)); Bezek v. First Mariner Bank, 293 F. Supp. 3d 528, 534 (D. Md.
2018). In Menominee Indian Tribe of Wisconsin v. United States, ––– U.S. ––––, 136 S. Ct. 750
(2016), a unanimous United States Supreme Court held that equitable tolling requires the
plaintiff to establish two elements: “(1) that he has been pursuing his rights diligently, and (2)
that some extraordinary circumstance stood in his way and prevented timely filing.” 136 S.
Ct. at 755 (quoting Holland v. Florida, 560 U.S. 631, 649, 130 S. Ct. 2549 (2010)); see also
Cunningham v. Commissioner of Internal Revenue, No. 17-1433, 716 F. App’x 182 (4th Cir. Jan. 18,
22
2018). The Supreme Court emphasized these two requirements as distinct elements, “not
merely factors of indeterminate or commensurable weight.” 136 S. Ct. at 756 (citing Pace v.
DiGuglielmo, 544 U.S. 408, 418, 125 S. Ct. 1807 (2005)). Accordingly, an insufficient showing
of either diligence or extraordinary circumstances is fatal to a claim for equitable tolling. See
Lawrence v. Florida, 549 U.S. 327, 127 S. Ct. 1079 (2007) (holding that equitable tolling did not
apply solely because the petitioner “fell far short of showing extraordinary circumstances”).
The extraordinary circumstance element “is met only where the circumstances that
caused a litigant’s delay are both extraordinary and beyond its control.” Menominee, 136 S. Ct.
at 756 (emphasis in original). In other words, the circumstances must combine to render
“critical information . . . undiscoverable.” Gould v. U.S. H.H.S, 905 F.2d 738, 745–46 (4th
Cir. 1990) (en banc). While courts have consistently held that fraudulent concealment by the
defendant is a circumstance that may justify equitable tolling, see e.g., Supermarket of Marlinton,
Inc. v. Meadow Gold Dairies, Inc., 71 F.3d 119, 122 (4th Cir. 1995); Grant v. Shapiro & Burson,
LLP, 871 F.Supp.2d 462, 470 n.10 (D. Md. 2012), a RESPA violation in and of itself, is not a
“self-concealing” wrong. Minter v. Wells Fargo Bank, N.A., 924 F. Supp. 2d 627, 642 (D. Md.
2013).
As to due diligence, the Supreme Court has held that “the diligence prong . . . covers
those affairs within the litigant’s control.” Menominee Indian Tribe of Wisconsin v. United States, –
–– U.S. ––––, 136 S. Ct. 750, 756 (2016). This element requires “reasonable diligence,” not
“maximum feasible diligence.” Holland v. Florida, 560 U.S. 631, 653, 130 S. Ct. 2549 (2010).
In Go Computer, Inc. v. Microsoft Corp., 508 F.3d 170 (4th Cir. 2007), the United States Court of
Appeals for the Fourth Circuit explained that in the context of fraud:
23
To be sure, a diligent plaintiff need not engage in ceaseless inquiry when
reasonable inquiry does not expose grounds for suit. But nothing
in Supermarket of Marlinton[, 71 F.3d 119 (4th Cir. 1995)] excuses a negligent
plaintiff from the diligence requirement—not even if a fraud is allegedly welldisguised. Fraud by its nature is something perpetrators take pains to disguise,
and plaintiffs’ notion that allegedly concealed fraud excuses the need for any
diligence on plaintiffs’ part would permit statutory periods to be tolled
indefinitely, even when plaintiffs could reasonably be expected to bring suit.
508 F.3d at 179.17
The Fourth Circuit has emphasized that “equitable tolling is appropriate ‘in those rare
instances where—due to circumstances external to the party’s own conduct—it would be
unconscionable to enforce the limitation period against the party and gross injustice would
result.’” Cunningham, 716 F. App’x 182 at 184 (internal quotation marks omitted)
(quoting Whiteside v. United States, 775 F.3d 180, 184 (4th Cir. 2014) (en banc)). Accordingly,
federal courts employ equitable tolling “sparingly,” Irwin v. Dep’t of Veterans Affairs, 498 U.S.
89, 96, 111 S. Ct. 453, 112 L.Ed.2d 435 (1990), as “a rare remedy to be applied in unusual
circumstances.” Wallace v. Kato, 549 U.S. 384, 396, 127 S. Ct. 1091 (2007).
The Plaintiffs assert that the Defendants violated Section 8(a) of RESPA by
orchestrating a scheme whereby The Northrop Defendants received approximately half of
the Title Insurance fee listed on each of the Plaintiffs’ HUD-1 in unearned fees for referring
the Plaintiffs to Lakeview Title for settlement. The Plaintiffs argue that their claim is entitled
to equitable tolling because the Defendants fraudulently concealed this kickback scheme
through the Marketing and Services Agreement which The Northrop Team did not disclose
Although Go Computer was decided in the context of the statute of limitations for federal antitrust claims,
like RESPA, that statute of limitations bars any action “unless commenced within four years after the cause
of action accrued,” which is not when a plaintiff discovers an injury, but “when a defendant commits an act that
injures a plaintiff’s business.” 508 F.3d at 173 (citations omitted) (emphasis added).
17
24
to the Plaintiffs. Moreover, the Plaintiffs assert that even if the Defendants had disclosed the
Agreement, the Plaintiffs would have only discovered a seemingly valid arrangement
between The Northrop Team and Lakeview Title. Under these circumstances, the Plaintiffs
argue they exercised reasonable diligence and therefore their claim is entitled to equitable
tolling. As explained below, while, like this Court noted in Bezek v. First Mariner Bank, 293 F.
Supp. 3d 528, 540 (D. Md. 2018), the class of Plaintiffs “may have some interest in
accountability and financial compensation, Congress firmly expressed an interest in
providing certainty to the real estate market when it set the RESPA statute of limitations at
one year,” and the Plaintiffs have not established that their claim is entitled to equitable
tolling.
On the issue of whether the Defendants concealed the Marketing Agreement,
Defendants present this Court with ample testimony that both The Northrop Team and
Lakeview Employees were aware of the Marketing Agreement. Defendant Lindell Eagan,
Corporate Designee for Lakeview Title Company, testified that Lakeview Title freely
admitted to having a Marketing Agreement with The Northrop Team, although it was not
practice to disclose the terms of the agreement. (ECF No. 158-18 at 157.) Kevin Yungman, a
closing attorney for Lakeview from 2005 through September of 2014, testified that “it was
common knowledge that Lakeview had some type of relationship with The Northrop Team”
and he had “dozens” of communications with persons outside of the Northrop Team or
Lakeview regarding the Marketing Agreements. (ECF No. 158-19 at 179, 181.) The
Defendants also cite to several other Lakeview and Northrop employees who knew about
the marketing relationship between The Northrop Team and Lakeview Title. (Barbara Cohn
25
Dep., ECF No. 158-21 at 36; Tracy Cotty Dep., ECF No. 158-23 at 44-45.) Moreover, the
Defendants challenge the Plaintiffs’ argument that the Defendants actively concealed the
kickback scheme through the Marketing Agreement when the Plaintiffs never inquired into,
or were aware of, the Marketing Agreement itself. (Defs.’ Rep., ECF No. 212 at 15.)
Even assuming, however, that the Defendants did fraudulently conceal the kickback
scheme, there is no genuine issue of material fact that the Plaintiffs failed to exercise
reasonable diligence to discover their claim. The month the Beahrs closed on their home,
they knew that they could choose their own settlement and title company. Despite knowing
this, and the fact that they now claim that “impartial and fair competition between
settlement services” was an important interest to them, the Plaintiffs did not take any action
to find their own settlement and title company. Rather, before the Plaintiffs closed on their
home, Dykstra informed them that Lakeview Title would handle their settlement. Moreover,
she stated “we do all of our settlements at Lakeview.” (ECF No. 158-4 at 139.)
Notwithstanding the apparent existence of a business relationship between The
Northrop Team and Lakeview Title, the Plaintiffs did not at all inquire about a potential
relationship between Lakeview and The Northrop Team. Rather, they elected to use
Lakeview without objection or further inquiry. Accordingly, in light of a potential
relationship between Lakeview and The Northrop Team—which the Plaintiffs repeatedly
emphasize was not disclosed to the Plaintiffs on Long & Foster’s ABA Disclosure
Statement—the Plaintiffs took no steps to investigate the propriety of such a relationship.
Even after closing on their homes, the named Plaintiffs and other members of the class went
more than four and a half years satisfied with the services they received from Long & Foster,
26
The Northrop Team, and Lakeview Title, and content with the fees they paid each party.
Had they inquired into that relationship, Lindell Eagan, along with multiple Lakeview and
The Northrop Team employees, testified that Lakeview and the other parties freely admitted
to having the Marketing Agreement. (Eagan Dep., ECF No. 158-18 at 157; Yungman Dep.,
ECF No. 158-19 at 179-81.)
The Plaintiffs then argue, however, that the relevant inquiry is not whether the
Plaintiffs were aware of a relationship between Lakeview Title and The Northrop Team or
the Marketing Agreement, but whether they were aware of the kickbacks. On this note, the
Plaintiffs assert that “[t]he Marketing Agreement was designed to look legitimate, so it would
not have caused a reasonable person to inquire further, even if the Plaintiffs had known
about it.” (ECF No. 210 at 16.) This assertion contradicts, however, the Plaintiffs’ argument
that the Marketing Agreement was clearly a sham for the kickbacks.
The Plaintiffs argue that “the Marketing Agreement itself reveals that it was created
solely to conceal the kickbacks.” (Pls.’ Resp., ECF No. 210 at 20.) They emphasize the fact
that the Marketing Agreement begins with the requirement that The Northrop Team refer
its clients exclusively to Lakeview, “but then later disclaims any relationship between these
referrals and the monthly payments.” (Id. (citing ECF No. 210-10 at ¶¶ 2.1, 6.1).) Moreover,
the Plaintiffs assert that the Marketing Agreement only provided for “unspecified ‘marketing
services.’” (Id. at ¶ 7 (citing ECF No. 210 at ¶ 2.1).) Specifically, the Plaintiffs emphasize that
the Marketing Agreement “made no requirements concerning the placement, circulation,
volume, size, or medium of the supported advertising.” (Id. at ¶ 8.) Rather, the only
requirement the Marketing Agreement did include was that The Northrop Team website
27
provide a link to Lakeview, which the Plaintiffs assert was not done until well after this
action was filed. (Id.) Accordingly, on the one hand, the Plaintiffs argue that had the
Plaintiffs discovered the Marketing Agreement, they would not have had reason to inquire
further, but on the other hand, argue that the Marketing Agreement was clearly a sham on its
face for the above reasons.
The Plaintiffs also argue that the Plaintiffs were entitled to relax their guard because
The Northrop Defendants were their fiduciaries, and therefore “the Plaintiffs were
permitted to rely on their fiduciaries and not undertake additional inquiry until something
excited them to inquire.” (Pls.’ Resp., ECF No. 210 at 26-28.) This Court cannot ignore,
however, that when Patrick Baehr was asked during his deposition whether he believed that
the Defendants did anything to affirmatively prevent him from discovering his RESPA claim
or otherwise concealed his RESPA claim, he responded “no.” (ECF No. 158-4 at 214.) In
response to “what efforts did you make to discover your claim after you closed on your
home in 2008?” he testified “none.” (Id. at 206.) Accordingly, even if there were merit to the
Plaintiffs’ claim that, in this context, the Plaintiffs could “relax [their] guard and rely upon
the representations by the other in whom they have placed their confidence” with respect to
the Lakeview Title referral, (Pls.’ Resp., ECF No. 210 at 27 (citing Brown v. Neuberger, Quinn,
Gielen, Rubin & Gibber, P.A., 731 F. Supp. 2d 443 (D. Md. 2010), aff’d, 495 F. App’x 350 (4th
Cir. 2012)),18 the Plaintiffs—through the undisputed record and Patrick Baehrs’ own
testimony—exercised no diligence whatsoever despite the apparent existence of a business
Both Brown and the other case the Plaintiffs cite to, Frederick Road Ltd. Partnership v. Brown & Sturm, 360 Md.
76, 99 (Md. 2000), involved Maryland state law’s “continuation of events theory,” which specifically permits a
statute of limitations to be tolled during the existence of a fiduciary or confidential relationship. Brown, 731 F.
Supp. 2d at 451 (citing MacBridge v. Pishvaian, 402 Md. 572, 937 A.2d 233 (Md. 2007)); Frederick Road Ltd.
Partnership, 360 Md. at 96-97 (citing W., B. & A. Elec. R.R. Co. v. Moss, 130 Md. 198, 100 A. 86 (Md. 1917)).
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28
relationship between The Northrop Team and Lakeview Title.
When enacting RESPA, Congress specifically provided that the statute of limitations
period would begin to run on “the date of the occurrence of the violation.” 12 U.S.C. §
2614. Courts cannot “toll indefinitely the limitations period for claims under RESPA until a
lawyer can find the right plaintiff to join a lawsuit and notify other putative plaintiffs”
because doing so “would effectively write the statute of limitations out of RESPA.”
Cunningham v. M&T Bank Corp., 814 F.3d 156, 164 (3d Cir. 2016). Plaintiffs have not
demonstrated that their case presents the “rare instance” where enforcing RESPA’s statute
of limitations would be unconscionable. Therefore, even if the Plaintiffs had standing to
bring their claim, the claim would be barred by the statute of limitations and equitable tolling
does not apply.
CONCLUSION
For the reasons stated above, Defendants’ Joint Motion for Summary Judgment
(ECF No. 158) is GRANTED and Judgment is ENTERED in favor of Defendants.
A separate order follows.
Dated: December 7, 2018
/s/
Richard D. Bennett
United States District Judge
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