Edmondson v. Eagle National Bank et al
Filing
77
MEMORANDUM OPINION. Signed by Judge Stephanie A. Gallagher on 5/21/2020. (krs, Deputy Clerk)
Case 1:16-cv-03938-SAG Document 77 Filed 05/21/20 Page 1 of 17
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MARY EDMONDSON, et al.,
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Plaintiffs,
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v.
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Civil Case No. SAG-16-3938
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EAGLE NATIONAL BANK, et al.,
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Defendants.
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MEMORANDUM OPINION
THIS MATTER concerns a Motion to Certify a class action pursuant to Rule 23 of the
Federal Rules of Civil Procedure. ECF 57. In the Amended Complaint, Mary Edmondson,
Chemene Clark, and Janet Clark (collectively, “Plaintiffs”),1 seek to represent a class of borrowers
that “currently have or had a federally related mortgage loan” serviced by Eagle National Bank or
Eagle Nationwide Mortgage Company (collectively, with Eagle National Bancorp, Inc., ESSA
Bank & Trust, and ESSA Bancorp, Inc., “Defendants”). ECF 55. Defendants opposed the Motion
to Certify the class, ECF 63, and Plaintiffs filed a Reply, ECF 70. Additionally, Defendants filed
a sur-reply. ECF 73.2 A telephonic hearing was held on May 14, 2020. For the reasons that follow,
Plaintiffs’ Motion, ECF 57, will be GRANTED.
I.
FACTUAL BACKGROUND
The three named Plaintiffs seek to represent a class of borrowers that (1) serviced a loan
with one of the Defendants, and (2) received title and settlement services in connection with the
1
Janet Clark has withdrawn as a putative class representative due to ongoing health issues. See ECF 63 at 1 n.1.
Based on the new arguments raised in Plaintiffs’ Reply, ECF 70, Defendants’ Motion for leave to file a sur-reply,
ECF 73, is GRANTED, and the corresponding attachments have been considered by the Court. See Khoury v. Meserve,
268 F. Supp. 2d 600, 605–06 (D. Md. 2003).
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closing of the loan from Genuine Title, LLC. ECF 55 ¶ 74. Plaintiff Edmondson alleges that in
2010, she obtained a residential mortgage loan from Eagle Nationwide Mortgage Company
(“Eagle Nationwide”), in order to refinance her home. Id. ¶ 61. Based on a referral from Eagle
Nationwide, Edmondson paid Genuine Title for title and settlement services, and her loan settled
on August 19, 2010. Id. ¶ 62. Similarly, in or about January, 2009, Plaintiffs Chemene and Janet
Clark obtained a residential mortgage loan from Eagle Nationwide for the purpose of refinancing
their home. Id. ¶ 67. The Clarks were, likewise, referred to Genuine Title, and their loan settled on
January 30, 2009. Id. ¶ 68. Edmondson and the Clarks allege that Eagle Nationwide referred them
to Genuine Title because of an illegal kickback scheme perpetrated by these and other entities. Id.
¶ 2. Specifically, Plaintiffs assert that a portion of the respective payments they made to Genuine
Title was split with the Defendants, in violation of the Real Estate Settlement Procedures Act
(“RESPA”). Id.
Plaintiffs provide further details about the alleged kickback scheme in their Amended
Complaint. For instance, they allege that Brandon Glickstein — who previously worked for
Genuine Title — formed two “sham” companies in order to facilitate the scheme. Id. ¶ 24 (referring
to “Brandon Glickstein, Inc.” and “Competitive Advantage Media Group, LLC” as sham
companies). According to Plaintiffs, Brandon Glickstein, Inc., and Competitive Advantage served
as conduits by which Genuine Title would pay Defendants in exchange for referring borrowers to
Genuine Title. Id. ¶ 27. In addition to providing cash payments, Genuine Title would compensate
Defendants with either free or heavily discounted marketing materials and services, in exchange
for their consistent referrals. E.g., id. ¶ 29.
Prior to the instant Amended Complaint, United States District Judge Richard D. Bennett
granted Defendants’ Motion to Dismiss this action. ECF 26; 2018 WL 582514 (D. Md. Jan. 29,
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2018). Judge Bennett found that Plaintiffs’ RESPA claim was barred by that law’s one-year statute
of limitations, and further concluded that equitable tolling could not salvage the claim. Id. at 17–
18; 2018 WL 582514, at *8. However, the United States Court of Appeals for the Fourth Circuit
reversed on appeal. Edmondson v. Eagle National Bank, 922 F.3d 535, 558 (4th Cir. 2019).
Primarily, the Fourth Circuit found that Plaintiffs had sufficiently alleged that Defendants engaged
in affirmative acts of concealment, and thus, that the one-year statute of limitations might be tolled
based on a theory of fraudulent concealment. Id. at 551–58. The panel remanded for further
proceedings, and Plaintiffs filed the instant Amended Complaint.
The parties have conducted class certification discovery. As part of this process, Plaintiffs
deposed Gary Klopp, ECF 57-11, who managed one of Defendant Eagle Nationwide Mortgage
Company’s branches, and Jay Zuckerberg, ECF 57-3,Genuine Title’s President.
II.
LEGAL STANDARD
The “class action is ‘an exception to the usual rule that litigation is conducted by and on
behalf of the individual named parties only.’” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348
(2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700–01 (1979)). Class actions are subject to
Federal Rule of Civil Procedure 23(a), which requires that (1) the alleged class is so numerous that
joinder of all members is impracticable; (2) there are questions of law or fact common to the class;
(3) the representatives’ claims are typical of the claims of the class; and (4) the representatives will
fairly and adequately protect the interests of the class. The party seeking certification carries the
burden of demonstrating that it has complied with Rule 23. EQT Prod. Co. v. Adair, 764 F.3d 347,
357 (4th Cir. 2014).
The four requirements of Rule 23(a) — numerosity, commonality, typicality, and adequate
representation — limit the class claims to those fairly encompassed by the named plaintiff’s
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claims. Dukes, 564 U.S. at 349. Courts evaluating class certification “must rigorously apply the
requirements of Rule 23.” Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331, 345
(4th Cir. 1998). Although the court’s analysis must be “rigorous” and “may entail some overlap
with the merits of the plaintiff’s underlying claim, Rule 23 grants no license to engage in freeranging merits inquiries at the certification stage.” Amgen Inc. v. Ct. Retirement Plans and Trust
Funds, 568 U.S. 455, 465–66 (2013) (citations omitted). The merits may be considered only to the
extent that they are relevant to determining whether the Rule 23 prerequisites for class certification
are satisfied. Id. at 466.
III.
ANALYSIS
A.
Standing
Before considering the Motion to Certify, the Court will first address the Article III
standing of the lead Plaintiffs, which Defendants have challenged, ECF 63 at 11–16. “Standing”
is a doctrine rooted in the traditional understanding of an Article III “case or controversy.” Spokeo,
Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). Standing consists of three elements: “the plaintiff
must have (1) suffered 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.” Id. (quoting Lujan
v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)). The burden is on the plaintiff to establish these
elements. Id.
1. Edmondson
Injury in fact, primarily at issue with respect to Edmondson, is the “first and foremost” of
standing’s three elements. Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 103 (1998).
To establish injury in fact, “a plaintiff must show that he or she suffered ‘an invasion of a legally
protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or
hypothetical.’” Spokeo, 136 S. Ct. at 1548 (quoting Lujan, 504 U.S. at 560). Importantly, “[i]n a
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class action matter, we analyze standing based on the allegations of personal injury made by the
named plaintiffs.” Dreher v. Experian Info. Solutions, Inc., 856 F.3d 337, 343 (4th Cir. 2017); see
also Baehr v. Creig Northrop Team, P.C., 953 F.3d 244, 252 (4th Cir. 2020) (“The strictures of
Article III standing are no less important in the context of class actions.”).
While Plaintiffs have undoubtedly alleged a particularized injury, Defendants contend that
the alleged harm resulting from a violation of RESPA is insufficiently “concrete” to confer Article
III standing. ECF 63 at 12. Indeed, after Spokeo, a plaintiff may not satisfy the strictures of Article
III by alleging “a bare procedural violation, divorced from any concrete harm.” 136 S. Ct. at 1549.
Nevertheless, recent case law illustrates that Plaintiffs here have alleged more than a bare
procedural violation.
Edmondson has not suffered concrete harm, according to Defendants, because she was not
charged excessive fees for title and settlement services. ECF 63 at 11–14. Defendants’ expert
witness, William L. Yerman, opined that Genuine Title not only charged Edmondson an
appropriate amount, but also that she paid fees “well below the market rate charged at that time by
other title companies.” ECF 63-37. Plaintiffs, for their part, vigorously contest the accuracy and
reliability of Yerman’s expert report. See ECF 70 at 4–8.
The Fourth Circuit addressed standing, in the context of RESPA, earlier this year in Baehr
v. Creig Northrop Team, 953 F.3d 244 (4th Cir. 2020). The facts of Baehr are eerily similar to
those confronted here. In that case, two homeowners alleged that Lakeview Title Company paid
kickbacks to real estate agents at Creig Northrop, in exchange for the brokers referring borrowers
to Lakeview for title and settlement services. Id. at 247. The homeowners alleged that the
defendants had violated RESPA, and sought to represent a class of borrowers who were
purportedly “victims” of the kickback scheme. Id. at 249–50. However, the defendants argued that
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the plaintiffs lacked Article III standing, and the district court agreed. Id. at 251. Specifically, the
district court concluded that the homeowners had not suffered “a concrete injury as necessary to
establish injury-in-fact” because they were not overcharged for settlement services. Id.
The Fourth Circuit affirmed. Notably, in identifying the concrete harm that they allegedly
had suffered, the Baehr plaintiffs did not argue that they had been overcharged for settlement
services. Id. at 254. Rather, they relied on “the deprivation of impartial and fair competition
between settlement services providers” as the basis of their injury. Id. at 253. The Fourth Circuit
invoked the Supreme Court’s recent decision in Spokeo, and explained that a statutory cause of
action does not automatically satisfy Article III. Id. (“A statutory cause of action is not a
replacement for concrete injury… a plaintiff suffers a concrete injury if she shows the harm
stemming from the defendant’s statutory violation is the type of harm Congress sought to prevent
when it enacted the statute”). And, according to the panel, the harm that Congress aimed to
alleviate with RESPA was not interference with the market for settlement services, but rather “the
increased costs that ‘tend’ to result” from such interference. Id. at 254 (quoting 12 U.S.C. §
2601(b)(2)). Accordingly, “the deprivation of impartial and fair competition between settlement
services providers—untethered from any evidence that the deprivation thereof increased
settlement costs—is not a concrete injury under RESPA.” Id.
Unlike the homeowners in Baehr, here, Plaintiffs have not alleged “a statutory violation
divorced from any real world effect,” id. (quoting Dreher v. Experian Info. Sols., 856 F.3d 337,
346 (4th Cir. 2017). Edmondson not only alleges that she was overcharged for title and settlement
services, but has also provided evidence in an effort to corroborate her contention. For instance,
per Edmondson’s HUD-1 documents, a different company charged her $175 for title and
settlement services related to a 2009 home refinancing, ECF 70-8, while Genuine Title charged
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$440 for identical services the following year, see ECF 57-27. In addition, whereas the Baehr
plaintiffs “were satisfied” with their homebuying experience, and with the settlement services they
had received, 953 F.3d at 249, Edmondson asserts that Defendants’ services were materially
impaired by the kickback arrangement. See, e.g., ECF 70-9 (alleging that Eagle Nationwide branch
manager Adam Mandelberg “did not have [her] best interest” in mind).
The Court expresses no view at this time as to whether Edmondson or any of the putative
class members were overcharged for services rendered. Indeed, Defendants’ expert concluded that,
based on a sample of HUD-1 statements, Genuine Title charged Edmondson a fee that was below
the market rate for comparable title and settlement services. On the other hand, Plaintiffs offered
data from the Department of Housing and Urban Development, indicating that Edmondson’s $440
charge was significantly above the average fee for comparable services in the state of Maryland.
ECF 70 at 7–8, ECF 70-4 (referring to the mean and median amounts for title services by state).
At this stage of the proceedings, Edmondson has proffered enough evidence about being
overcharged — in conjunction with a purportedly diminished quality of service — to meet the
requirements of Article III standing.3
2. Chemene Clark
Defendants contend that Plaintiff Chemene Clark lacks standing to pursue her claims,
because she filed for Chapter 7 bankruptcy in 2012. ECF 63 at 15 (citing Richman v. Garza, 1997
WL 360644, at *1 (4th Cir. July 1, 1997)). In response, Plaintiffs have proposed the substitution
of an entirely new class representative. See ECF 70 at 2–4. However, as both sides acknowledged
3
As more factual development occurs, it may become clear that Plaintiffs were not overcharged for title and settlement
services. Accordingly, Defendants are welcome to continue challenging Plaintiffs’ Article III standing as this litigation
proceeds, particularly at the summary judgment stage. See Overbey v. Mayor of Baltimore, 930 F.3d 215, 227 (4th
Cir. 2019) (explaining that the elements of standing must be supported “with the manner and degree of evidence
required at the successive stages of the litigation.”).
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at the hearing, since the Court has concluded that Edmondson has Article III standing, substitution
of a class member is not required at this time.4
B.
Class Certification5
Plaintiffs have moved to certify a class under Rule 23(b)(3), in which “the court finds that
the questions of law or fact common to class members predominate over any questions affecting
only individual members.” Fed. R. Civ. P. 23(b)(3). As a result, Rule 23(b)(3) class actions “must
meet predominance and superiority requirements not imposed on other kinds of class actions.”
Gunnells v. Healthplan Servcs., Inc., 348 F.3d 417, 424 (4th Cir. 2003). Importantly, “In a class
action brought under Rule 23(b)(3), the ‘commonality’ requirement of Rule 23(a)(2) is ‘subsumed
under, or superseded by, the more stringent Rule 23(b)(3) requirement that questions common to
the class predominate over other questions.’” Lienhart v. Dryvit Sys., Inc., 255 F.3d 138, 146 n.4
(4th Cir. 2001) (quoting Amchem Prods., 521 U.S. at 609). Thus, the Court will analyze
predominance and commonality together. See, e.g., Romeo v. Antero Resources Corp., 2020 WL
1430468, at *8 (N.D. W. Va. Mar. 23, 2020) (“[T]he Court will consider commonality in its
discussion of predominance”).
1. Rule 23(b)(3)
Predominance of Common Questions
Defendants contend that common issues do not predominate in this matter, primarily
because Plaintiffs’ reliance on equitable tolling will require the Court to conduct “fact-intensive,
individualized inquir[ies].” See ECF 63 at 23. In the appeal of Judge Bennett’s Order, the Fourth
4
Certainly, the Court would entertain a Motion to substitute a new class member if it becomes necessary at a later
date.
Defendants do not challenge Rule 23(a)’s numerosity requirement. In any event, Plaintiffs’ counsel have identified
3,472 loans that fall within the proposed class definition. ECF 57-1 at 22.
5
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Circuit articulated the proper standard that courts should employ when deciding whether to
equitably toll a statute of limitations based on fraudulent concealment. Edmondson, 922 F.3d at
548. “A plaintiff must demonstrate: (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.” Id. (quoting
Supermarket of Marlinton, Inc. v. Meadow Gold Dairies, Inc., 71 F.3d 119, 122 (4th Cir. 1995)).
On the merits, Defendants argue that equitable tolling should not apply here, because Plaintiffs
would have, with reasonable diligence, uncovered the facts substantiating their claim long before
they filed suit. Specifically, the underlying kickback scheme was the subject of two lawsuits and
at least two joint enforcement actions by the Consumer Financial Protection Bureau (“CFPB”) and
by Maryland’s Attorney General, all of which led to widely available media reports and other
public information. ECF 63 at 20–21. Whether Plaintiffs have demonstrated their equitable tolling
defense to statute of limitations is a question for another day. Pertinent here, however, the Court
is not persuaded by Defendants’ assertions that ultimate resolution of this question will require
individualized inquiries, such that class certification is inappropriate.
Defendants rely considerably on Thorn v. Jefferson-Pilot Ins. Co., 445 F.3d 311 (4th Cir.
2006), which, similarly, considered the extent to which common questions predominated in
assessing the defense to a statute of limitations. In that case, Jefferson-Pilot Insurance Company
had charged higher premiums to African-Americans in certain states, as compared with white
policyholders receiving similar benefits. Id. at 315. A group of African-American policyholders
filed a class action complaint, alleging that the company violated the civil rights statute, 42 U.S.C.
§ 1981. Id. When the plaintiffs moved to certify a class under Rule 23, Jefferson-Pilot argued that
certification was inappropriate. Since individual members of the class could have had exposure to
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information that would have given them actual or constructive notice of Jefferson-Pilot’s “dualrate practices,” the argument goes, the district court would need to conduct countless hearings to
evaluate whether each class member had such knowledge. Id. at 316. The district court denied
class certification largely for this reason, and the Fourth Circuit affirmed on appeal.
The Fourth Circuit rejected each of the plaintiffs’ arguments regarding questions that could
be answered on a class-wide basis. For instance, the plaintiffs suggested that the “homogeneity of
the class” would allow a court to answer whether members of the class were exposed to sufficient
information so as to defeat their defense to the statute of limitations. See id. at 323. According to
the panel, however, this contention was belied by the breadth of the purported class. See id. (stating
the record revealed that the class included “1.4 million African-Americans of all ages and both
sexes, who are spread out geographically over four states and temporally over 62 years”). As a
result, there was no indication that these millions of individuals would have had exposure to the
same sample of media reports and other information.
The Thorn Court contrasted that case with In re Monumental Life Ins. Co., 365 F.3d 408
(5th Cir. 2004). In Monumental, a group of plaintiffs also alleged that insurance companies had
maintained racially discriminatory dual-rate policies. Id. at 412 (accusing the defendants “of
placing blacks in industrial policies offering the same benefits as do policies sold to whites, but at
a higher premium”). Much like the defendants in Thorn, the insurance companies argued that
individualized hearings would be necessary to determine whether each class member had exposure
to media reporting, and thus, whether each person had constructive notice of facts giving rise to a
civil rights claim. Id. at 421. The Court disagreed, and found that the issue was determinable on a
class-wide basis, mainly because the defendants had not demonstrated that media coverage
differed substantially throughout the country. See id. (“Had defendants provided evidence—or
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even alleged—that media treatment of this issue was more prevalent in some regions of the country
than in others, the district court’s observation that individualized hearings are required… might be
sustainable.”).
The present case is much more akin to Monumental than it is to Thorn. Defendants argue
that members of the putative class may have, or should have, encountered information in the public
domain related to litigation and enforcement actions surrounding the underlying Genuine Title
kickback scheme. Regardless of the answer to this question, the Court does not believe that
individualized hearings will be necessary to reach a decision. Following the guidance supplied by
the Fourth Circuit, this Court can assess, on a class-wide basis, whether the information and media
reporting related to prior litigation and enforcement proceedings would have prompted a
reasonable person to uncover the facts substantiating Plaintiffs’ RESPA claims. See Edmondson,
922 F.3d at 555 (explaining that “the fraudulent concealment doctrine requires reasonable
diligence”). This case does not involve nearly the same temporal or geographic reach that the
Fourth Circuit addressed in Thorn. In contrast to a case spanning multiple states and 62 years of
time, here, there is a comparatively modest ecosystem of media reporting about the Genuine Title
litigation and enforcement actions. Assessing the fraudulent concealment defense to statute of
limitations, and whether Plaintiffs were on notice about facts giving rise to a claim, can be
answered on a class-wide basis.6
Defendants further argue that determining the applicability of RESPA in the first instance
is also an individualized question, because of exceptions codified in the statute. ECF 63 at 31–32.
By the terms of 12 U.S.C. § 2606(a), RESPA does not apply to federally related mortgage loans
6
Certainly, the Court reserves the right to decertify the class action if later factual development reveals that individual
questions predominate over common questions. See Minter v. Wells Fargo Bank, N.A., 2013 WL 1795564, at *3 (D.
Md. Apr. 26, 2013) (“When the Court certified the Tolling Class it noted it was possible that proving equitable tolling
might become unmanageable and thus warrant the Court’s exercise of discretion to decertify the class.”).
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involving the extension of credit “primarily for business, commercial, or agricultural purposes.”
While it is possible that some putative class members’ loans will fall within a relevant exemption,
the Court is not persuaded that this number will exceed a negligible percentage of loans
encompassed by the class definition. For instance, based on Genuine Title’s loan processing data,
Plaintiffs have identified 3,472 loans that fall within their proposed class definition. See ECF 579. The vast majority of these loans are either VA refinance loans or FHA loans, both of which
impose limitations that would render RESPA’s exemptions inapplicable. See, e.g., ECF 70-10
(describing restrictions for VA refinance loans).
Defendants suggest that a federal court denied class certification under “identical
circumstances” in Loughlin v. Amerisave Mortgage Corp., 2018 WL 1896409, at *24 (N.D. Ga.
Feb. 7, 2018). ECF 63 at 33. While Loughlin does state that applying RESPA’s statutory
exemptions could require “loan-by-loan review,” the Judge found that a number of other
individualized questions defeated predominance under the circumstances of that case. For instance,
the Loughlin plaintiffs did not dispute that damage calculation would involve personalized analysis
about whether each class member had already received some form of reimbursement. See id. at
*25 (explaining that some class members had received redress “via CFPB’s distribution of redress
funds paid by the Defendants.”) Therefore, “Given the quantity and quality of individualized
inquiries that [would] arise in this case,” the Court found that the predominance requirement was
not satisfied. Id.
Whereas it was undisputed in Loughlin that certain class members had received redress,
which would necessarily need to be factored into any damage calculation in a personalized manner,
here, by contrast, Defendants merely hypothesize, with no support, that some loans may fall within
a RESPA exemption. Plaintiffs have proffered enough evidence at this stage to show that only a
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miniscule amount of loans could fall outside of RESPA’s statutory boundaries. Moreover, if it
becomes necessary, the parties can discern which class members’ loans fall within a RESPA
exemption through the ordinary discovery process (with a survey, for example) without the need
for court-sponsored individualized hearings. In any event, this issue regarding RESPA exemptions
does not predominate over the numerous, imperative questions that are answerable on a class-wide
basis.
As noted above, the question of whether Plaintiffs can establish their fraudulent
concealment defense to the statute of limitations is a common question that predominates over
individual questions. Nevertheless, Plaintiffs have identified several other common questions that
are essential to resolving this litigation. Namely, Plaintiffs allege that the title and settlement
services provided to all class members were tainted by an unlawful referral agreement between
Defendants and Genuine Title. Indeed, Genuine Title’s president, Jay Zuckerberg, conceded at
deposition that Genuine Title had paid fees to mortgage originators for customer referrals. See
ECF 57-3 at 26: 13–20 (answering “yes” to question about paying fees for referrals). Accordingly,
determining whether an unlawful arrangement existed, and to what extent it caused harm to
Defendants’ customers, will resolve the central issue in the class’s RESPA claims “in one stroke.”
See Bond v. Marriott Int’l, Inc., 296 F.R.D. 403, 407 (D. Md. 2014).
Furthermore, answering this larger question about an unlawful kickback scheme, and
potential violations of RESPA, is predicated on answering numerous factual questions that are
common to the entire class’s claims. For instance, according to Plaintiffs, the HUD-1 documents
for all putative class members omit the amount of money that Genuine Title paid to the mortgage
originators. Additionally, Plaintiffs allege that branch managers for Defendants signed and
executed sham title service agreements, in furtherance of the scheme. These and other factual
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questions are answerable on a class-wide basis, and will be relevant not only in assessing
substantive RESPA liability, but also in determining the applicability of the fraudulent
concealment defense to statute of limitations. Plaintiffs’ claims rest on a theory of a common
pattern or practice, i.e., the same series of actions orchestrated by Defendants and Genuine Title
over a period of several years, that violates RESPA and entitles the putative class to relief.
Superiority
Finally, the Court finds that the class action vehicle is “superior to other methods” of
adjudicating this controversy. See Fed. R. Civ. P. 23(b)(3). Based upon the common questions that
predominate, as explained above, a class action is more efficient than allowing potentially
thousands of individual claims arising from this purported kickback arrangement. Defendants’
suggestion that statutory damages obviates the necessity of a class action is without merit. See ECF
63 at 26–27.
2. Rule 23(a)
Typicality
The “typicality” requirement in Rule 23 “goes to the heart of a representative parties’
ability to represent a class.” Deiter v. Microsoft Corp., 436 F.3d 461, 466 (4th Cir. 2006). For that
reason, the “plaintiff’s claim cannot be so different from the claims of absent class members that
their claims will not be advanced by plaintiff’s proof of his own individual claim.” Id. For example,
the Fourth Circuit found that typicality was lacking in Broussard v. Meineke Discount Muffler
Shops, Inc., 155 F.3d 331 (4th Cir. 1998). In that case, owners of Meineke Discount Muffler
franchises sued the franchisor for breaching trademark agreements. Id. at 334. On appeal, the
defendants argued that the class had been erroneously certified in district court. Id. The Fourth
Circuit agreed, and found several deficiencies indicating a lack of “typicality.” For instance,
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according to the panel, the plaintiffs could not advance “a single collective breach of contract
action” because class members had signed very different agreements with the franchisor. Id. at
340. The agreements not only varied “from year to year and from franchisee to franchisee,” but
also contained “materially different contract language.” See id. The clauses in certain contracts,
the Court explained, bolstered the plaintiffs’ arguments, while clauses in other contracts
undermined their claims entirely. See id. Here, by contrast, Defendants have not shown that the
class representatives’ mortgage agreements differ meaningfully from other class members’
contracts. In any event, minor discrepancies in the arrangement between borrower and mortgagor
will not significantly alter the Court’s analysis regarding potential violations of RESPA. For
example, Defendants refer to the fact that Edmondson’s transaction consisted of refinancing,
which may diverge from the transaction that other class members entered into with one of the
Defendants. See ECF 63 at 31–32. However, for purposes of typicality, the kickback scheme
described by Plaintiffs would be violative of RESPA (if proven), regardless of whether an
individual class member had engaged in first-time financing or refinancing. The key element of
Edmondson’s claim — an arrangement to pay Defendants for customer referrals — is typical of
the purported class members’ claims.
Adequate Representation
Finally, Plaintiffs must illustrate that they will “fairly and adequately protect the interests
of the class.” Fed. R. Civ. P. 23(a)(4). Defendants invoke nonbinding case law in an attempt to
show that Edmondson is an inadequate class representative. For example, Defendants argue that
Edmondson has “displayed a fundamental lack of knowledge” about the case, because she did not
know it was filed in federal court. ECF 63 at 30. A trivial mistake of this nature does not seriously
cast doubt on Edmondson’s interest in or competency to litigate this matter. See Gunnells, 348
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F.3d at 430 (explaining that a plaintiff “need not have extensive knowledge of the facts of the case
in order to be an adequate representative”).
In In re Goldchip Funding Co., 61 F.R.D. 592 (M.D. Pa. 1974), as cited by Defendants, a
District Judge found that the plaintiffs were not adequate representatives. However, the Court
primarily expressed concerns that neither plaintiff had attended any of the three hearings held
throughout litigation. Id. at 595. By contrast, Defendants here merely claim that Edmondson and
her attorneys have had “infrequent contact.” ECF 63 at 30. However, the Court is not aware of any
communication issues between Edmondson and counsel, let alone any issues that have undermined
either Edmondson’s or counsels’ ability to litigate this case thus far. Indeed, the Court notes that
Edmondson attended the telephonic hearing for this class certification Motion.
C.
Class Definition
Finally, Defendants contend that if a class is certified, it should be for the time period of
October 2009 to January 2011. ECF 63 at 34. However, several witnesses testified at deposition
regarding an arrangement for kickbacks that started several years prior to 2009. For instance,
Genuine Title’s president, Jay Zuckerberg, testified that he had an agreement with Gary Klopp for
referrals in as early as 2005. See ECF 76-1 at 32: 12–16. Gary Klopp, similarly, testified at
deposition about receiving “$400 per loan” starting in 2006 and “from that point forward.” See
ECF 76-2 at 126:4 – 128:6.
On the other hand, Plaintiffs have not rebutted Defendants’ contention that Eagle
Nationwide terminated its employees, including Klopp, on January 31, 2011. Therefore, the Court
amends the relevant dates in Plaintiffs’ proposed class definition, and hereby certifies a class of
the following individuals:
All individuals in the United States who were borrowers on a federally related
mortgage loan (as defined under the Real Estate Settlement Procedures Act, 12
16
Case 1:16-cv-03938-SAG Document 77 Filed 05/21/20 Page 17 of 17
U.S.C. § 2602) from, brokered or originated by, Eagle National Bank or Eagle
Nationwide Mortgage Company for which Genuine Title provided a settlement
service, as identified in Section 1100 on the HUD-1, between January 1, 2007, and
January 31, 2011. Exempted from this class is any person who, during the period
of January 1, 2007 through January 31, 2011, was an employee, officer, member
and/or agent of Defendants Eagle National Bank, Eagle Nationwide Mortgage
Company, ESSA Bank & Trust, Genuine Title LLC, Brandon Glickstein, Inc.,
and/or Competitive Advantage Media Group LLC.
IV.
CONCLUSION
For the reasons set forth above, Plaintiffs’ Motion to Certify a class action, ECF 57, is
GRANTED. Defendants’ Motion for leave to file a sur-reply, ECF 73, is GRANTED. A separate
Order follows.
Dated: May 21, 2020
/s/
Stephanie A. Gallagher
United States District Judge
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