401 North Charles LLC v. Sonabank
Filing
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MEMORANDUM OPINION. Signed by Judge Richard D. Bennett on 12/13/2018. (kw2s, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
401 NORTH CHARLES, LLC,
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Plaintiff,
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v.
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SONABANK,
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Defendant.
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Civil Action No. RDB-17-0872
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MEMORANDUM OPINION
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This case arises from Plaintiff 401 North Charles LLC’s (“North Charles” or
“Plaintiff”) allegations that Defendant Sonabank breached the terms of a promissory note,
deed of trust, and other loan documents. (Compl., ECF No. 1.) Currently pending before this
Court is Plaintiff’s Motion for Leave to Amend the Complaint, which seeks to add four new
Plaintiffs and four new claims. (ECF No. 34.) The parties’ submissions have been reviewed,
and no hearing is necessary. See Local Rule 105.6 (D. Md. 2018). For the reasons stated below,
Plaintiff’s Motion for Leave to Amend the Complaint (ECF No. 34) is DENIED.
BACKGROUND
The facts of this case have been discussed previously in a Memorandum Order of this
Court. (ECF No. 13.) This Memorandum Opinion provides a brief summary of the facts as
alleged in the Complaint. (ECF No. 1.) Plaintiff claims that Defendant Sonabank breached
the terms of a promissory note, deed of trust, and other loan documents by charging North
Charles arbitrarily inflated late fees and refusing to accept satisfaction of the loan amount. On
April 7, 2006, Plaintiff obtained a loan (the “Loan”) from Sonabank’s predecessor, Greater
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Atlantic Bank, to purchase property located at 401 North Charles Street, Baltimore, Maryland
(the “property”). (Id. at ¶ 6.) A Secured Term Promissory Note (the “Note”) in the principal
amount of $1,200,000.00 made by North Charles in favor of Greater Atlantic Bank sets forth
Plaintiff’s payment obligations. (Id. at ¶ 7.) Plaintiff’s commitments under the Note were
secured by, among other things, a Deed of Trust in favor of Greater Atlantic Bank on the
Property. (Id. at ¶ 8.) In 2009, Sonabank purportedly acquired rights to the Loan, the Note,
and the Deed of Trust and other related documents (collectively, the “Loan Documents”). (Id.
at ¶ 9.)
In 2016, North Charles sought to refinance the Loan with another lender. (Id. at ¶ 11.)
As part of any refinancing agreement, all amounts owed under the Note to Sonabank would
be paid; in turn, Sonabank would release its liens under the Deed of Trust and other security
interests, encumbrances, and obligations related to the Loan and the Loan Documents. (Id.)
North Charles alleges that each time it attempted to close on refinancing efforts with a thirdparty lender, Sonabank demanded “late fees” in various arbitrary amounts, ranging as high as
a “late charge balance” of $99,844.52. (Id. at ¶ 14.)
North Charles further alleges that
Sonabank, despite North Charles’s requests, refused to explain how it calculated the late fees
or provide authority for charging them under the Loan provisions. (Id. at ¶ 15.) Sonabank
allegedly refused to permit satisfaction of the Loan and release of its claimed lien on the
Property without requiring payment of the late charge balance. (Id. at ¶ 20.)
North Charles claims that the late charge is unlawful and are not permitted by the Loan
Documents. (Id. at ¶¶ 21-22.) The Original Complaint list two Counts sounding in breach of
contract. Under Count I, North Charles demands that Sonabank specifically perform its
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contractual obligations by releasing the Deed of Trust and any other liens it holds against
Plaintiff’s property in exchange for satisfaction of the loan balance, excluding the late charge
balance. (Id. at ¶¶ 23-30.) Under Count II, North Charles demands $75,000.00 in damages
together with interest, costs, and attorneys’ fees, and such other relief as this Court deems
proper. (Id. at ¶¶ 31-37.)
On February 26, 2018 this Court issued a Memorandum Order (ECF No. 13) denying
Defendant’s Motion to Dismiss (ECF No. 5) and Motion for Leave to File Supplemental
Memorandum of Law (ECF No. 10.) On June 15, 2018, in accordance with the briefing
schedule set forth in an Order of this Court (ECF No. 33), Plaintiff filed the pending Motion
for Leave to Amend the Complaint, seeking to add four additional plaintiffs and to assert four
new claims. (ECF No. 34).
STANDARD OF REVIEW
A plaintiff may amend his or her complaint once as a matter of course before a
responsive pleading is served, or within twenty-one days of service of a responsive pleading
or motion under Federal Rule of Civil Procedure 12(b), (e), or (f), whichever is earlier. Fed. R.
Civ. P. 15(a). While Rule 15(a) requires that leave “shall be freely given when justice so
requires,” id., a district court may deny leave to amend “when the amendment would be
prejudicial to the opposing party, the moving party has acted in bad faith, or the amendment
would be futile.” Equal Rights Center v. Niles Bolton Assocs., 602 F.3d 597, 603 (4th Cir. 2010).
“Whether an amendment is prejudicial will often be determined by the nature of the
amendment and its timing.” Laber v. Harvey, 438 F.3d 404, 427 (4th Cir. 2006). An amendment
is futile “when the proposed amendment is clearly insufficient or frivolous on its face.” Johnson
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v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir. 1986). As this Court has repeatedly explained,
an amendment is insufficient or frivolous if it would not survive a motion to dismiss. See, e.g.,
Whitaker v. Ciena Corp., RDB-18-0044, 2018 WL 3608777, at *3 (D. Md. July 27, 2018) (citing
Tawaab v. Virginia Linen Service, Inc., 729 F. Supp. 2d 757, 770 (D. Md. 2010).
Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a
complaint if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
The purpose of Rule 12(b)(6) is “to test the sufficiency of a complaint and not to resolve
contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Presley
v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). While a complaint need not include
“detailed factual allegations,” it must set forth “enough factual matter (taken as true) to
suggest” a cognizable cause of action, “even if . . . [the] actual proof of those facts is
improbable and . . . recovery is very remote and unlikely.” Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555-56 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A plaintiff cannot rely on
bald accusations or mere speculation. Twombly, 550 U.S. at 555.
In reviewing a Rule 12(b)(6) motion, a court “‘must accept as true all of the factual
allegations contained in the complaint’” and must “‘draw all reasonable inferences [from those
facts] in favor of the plaintiff.’” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435,
440 (4th Cir. 2011) (citations omitted); Hall v. DirectTV, LLC, 846 F.3d 757, 765 (4th Cir.
2017). However, a court is not required to accept legal conclusions drawn from those facts.
Iqbal, 556 U.S. at 678. “A court decides whether [the pleading] standard is met by separating
the legal conclusions from the factual allegations, assuming the truth of only the factual
allegations, and then determining whether those allegations allow the court to reasonably
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infer” that the plaintiff is entitled to the legal remedy sought. A Society Without A Name v.
Virginia, 655 F.3d 342, 346 (4th Cir. 2011), cert. denied, 566 U.S. 937 (2012).
ANALYSIS
Plaintiff’s proposed First Amended Complaint (ECF No. 34-2) (“PFAC”) would
transform the nature of this lawsuit. The PFAC would add four new plaintiffs: Eugene C.
Curran, Jr. (“Curran”), the alleged sole LLC member of North Charles, and three limited
liability companies of which he is also the sole member, Victory Management, LLC; Victory
Realty, LLC; and Victory Capital, LLC, (the “Victory Entities”) (collectively with North
Charles and Curran, the “Plaintiffs”). (Pl.’s Mem. 2, ECF No. 34-1; PFAC ¶¶ 2, 4-6.) The
PFAC would also add four additional claims to the breach of contract claim (Count I): tortious
interference with contractual relationships (Count II); tortious interference with prospective
advantage (Count III); injurious falsehood (Count IV); and malicious use of process (Count
V). (Pl.’s Mem. 2; PFAC ¶¶ 69-103.) Finally, the PFAC would remove the request for specific
performance and instead request damages resulting from Sonabank’s failure to perform its
contractual obligations. (Pl.’s Mem. 2.)
Defendant objects to most of the proposed
amendments as futile, arguing that Plaintiff has strained unsuccessfully to stretch North
Charles’s contract claim into a host of frivolous claims involving various new parties.1 (ECF
No. 35.)
I.
Plaintiff’s Request to Add Curran as a Party to Count I.
Sonabank does not oppose North Charles’s proposed amendments to Count I (breach of contract) “insofar
as North Charles seeks to clarify that its earlier claim for specific performance is now moot, and it now seeks
only monetary damages under this claim.” (Def.’s Resp. 3-4.) Although this amendment is unopposed, it will
not be permitted. This Court has determined that the PFAC is futile, and this litigation will not be advanced
by amending the Complaint to retract only one form of requested relief.
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The PFAC would add Curran as a party to North Charles’ breach of contract claim
(Count I) against Sonabank arising from its alleged breach of its contract with North Charles.
Defendant argues that Curran does not have standing to bring a breach of contract claim
against it because his status as a member of 401 North Charles, LLC does not render him a
party to the Note, which sets forth the obligations of the parties and was attached to Plaintiff’s
Original Complaint.2 (Def.’s Mot. at 9, ECF No. 35; Promissory Note, ECF No. 1-2.)
Generally, only a party to a contract may enforce that contract. Copiers Typewriter
Calculators, Inc. v. Toshiba Corp., 576 F. Supp. 312, 322 (D. Md. 1983). Individual members of
an LLC are not parties to the LLC’s contracts and cannot bring actions to enforce them. See
Hosack v. Utopian Wireless Corp., et al., DKC-11-0420, 2011 WL 1743297, at *4 (D. Md. May 6,
2011) (holding that the member of an LLC was not a party to the LLC’s contracts); Baron
Financial Corp. v. Natanzon, 471 F. Supp. 2d 535, 540 (D. Md. 2006) (explaining that members
of an LLC cannot bring tortious interference claims because they are not parties to the LLC’s
contracts). In this case, the Note clearly indicates that it binds 401 North Charles, LLC, not
Curran. (ECF No. 1-2, at 1.) Although it appears to be signed by Curran, he has done so only
as a “member” of North Charles, LLC. (ECF No. 1-2, at 3.) Accordingly, Curran cannot
bring his own breach of contract claim under Count I3 and his Amendment is futile.
When the allegations of a Complaint contradict attached documents, the documents prevail. See Makowski v.
Bovis Lend Lease, Inc., RDB-10-1844, 2011 WL 1045635, at *2 (D. Md. March 17, 2011) (citing Fare Deals, Ltd.
v. World Choice Travel.com, lnc., 780 F. Supp. 2d 678, 683 (D. Md. 2001) (“When the bare allegations of the
complaint conflict with any exhibits or other documents, whether attached or adopted by reference, the
exhibits or documents prevail.”)).
3 Curran’s alleged status as a guarantor also does not permit him to enforce the Note. See Wincopia Farms, LP
v. G&G, LLC, WDQ-11-1159, 2011 WL 6440004, at *3 (D. Md. Dec. 15, 2011) (“Under Maryland law, a
guaranty is a contractual agreement, independent from the promissory note. Accordingly, the guarantor is
not a party to the principal obligation.”), aff’d sub nom. In re Wincopia Farms, LP, 499 F. App’x 233 (4th Cir.
2012) (quotations and citations omitted). To the extent that a guarantor has standing to pursue a wrong
“against itself,” this Court finds that Plaintiff has failed to allege this sort of wrong. See Wincopia Farms, LP v.
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II.
Plaintiff’s Request to Add Claims of Tortious Interference with Contractual
Relationships (Counts II) and Tortious Interference with Prospective
Advantage (Count III).
In addition to the contract claim (Count I), the PFAC would add two tort claims against
Sonabank: tortious interference with contractual relationships (Count II) and tortious
interference with prospective advantage (Count III). Under Count II, North Charles, Victory
Realty, LLC, and Curran allege that Sonabank refused to accept satisfaction of all amounts
owed to it, thwarting their efforts to refinance with another bank and obtain assets to purchase
real property located at 3455 Wilkens Avenue, Baltimore, Maryland 21229, part of the St.
Agnes Hospital Campus (“St. Agnes”), from Tsunami II, LLC. (PFAC at ¶¶ 37, 76.) In Count
III, North Charles, Victory Capital, LLC, Victory Realty, LLC, and Curran allege that
Sonabank’s failure to perform its contractual duties sent shockwaves into a host of other
business pursuits, hurting potential business ventures in New Jersey and India. (PFAC at ¶¶
82-93.) Sonabank’s breach of contract allegedly caused the breakdown of the St. Agnes deal,
prevented Plaintiffs from obtaining refinancing, thwarted Curran’s efforts to become partner
in an expansion of the Do-it-Best hardware store franchise in India, and prevented him from
buying out an investment owner of real property in Stone Harbor, New Jersey. (Id. at ¶¶ 46,
50, 82-93.) Under Count III, Plaintiffs also allege that Sonabank engaged in tortious conduct
separate and distinct from breaching its contracts: Sonabank allegedly published “false and
wrongful information” and “wrongfully fil[ed] a foreclosure action” which caused it
reputational harm and interfered with its business prospects. (Id. at ¶¶ 83-84.)
These
allegations are repeated and elaborated upon in Count IV (injurious falsehood) and Count V
G&G, LLC, 2011 WL 6440004, at *3 n.8.
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(malicious use of process) which are brought only on behalf of Curran.
Below, this Court addresses the reasons why each Plaintiff fails to state a claim under
Counts II and III. Despite these separate analyses, however, Counts II and III are ultimately
futile because Maryland law generally prohibits a contracting party to pursue tort damages
stemming from a breach of contract. Furthermore, a single member of an LLC may not bring
a host of tort claims on his own behalf, and behalf of other LLCs of which he happens to be
a member, to rectify a breach of contract against an LLC.
A. North Charles’s Claims under Counts II and III are futile.
North Charles’s tort claims under Count II are futile because they stem purely from
Sonabank’s alleged breach of contract. To the extent that Count III also relies on Sonabank’s
alleged breach of contract, this claim is also futile. Under Maryland law, “a breach of contract
does not typically give rise to an action in tort.” Hartz v. Liberty Mut. Ins. Co., 269 F.3d 474, 476
(4th Cir. 2001). Stated another way, “where the essence of a relationship is contractual and
the essence of the claimed dereliction by a defendant is failure to perform the contract, a cause
of action arising from such dereliction is not available in tort but is available only in contract.”
Parks v. CAI Wireless Sys. Inc., 85 F. Supp. 2d 549, 556 (D. Md. 2000). This general rule is
reflected in the economic loss doctrine, which “prohibits a plaintiff from recovering tort
damages for what in fact is a breach of contract.” Cash & Carry America, Inc. v. Roof Solutions,
Inc., 223 Md. App. 451, 466, 117 A.3d 52, 60 (2015).
Plaintiff objects to the application of this familiar rule, referring this Court to Jacques v.
First Nat’l Bank, 307 Md. 527, 515 A.2d 756 (1986), which determined that a bank owed to its
customer a duty of reasonable care in the processing and determination of a home mortgage
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loan. Jacques, 515 A.2d at 756. The case arose from a home loan application filed by Robert
and Margaret Jacques (the “Jacques”) with First National Bank (the “Bank”) after the pair had
entered into a residential sales contract that required them to obtain outside financing in the
amount of $112,000.00. Id. at 756. The contract further required the Jacques to accept
whatever loan they could obtain at an agreed rate of interest. Id. at 763. After filing their
application, the Bank contacted the Jacques and notified them that they only qualified for a
$41,000.00 loan. Id. at 757. The Jacques then turned to another bank, which offered a
$100,000.00 loan after receiving the same application information submitted to the Bank. Id.
Due to a sudden and dramatic escalation in interest rates, however, the Jacques were forced
to settle on the Bank’s $41,000.00 loan and secure personal loans by other means. Id. The
Jacques filed suit against the Bank, and a jury found that it was negligent. Id. at 758. The Bank
appealed, arguing that it did not owe a duty of care to the Jacques in processing the loan
application. Id.
To determine whether the Jacques were permitted to bring a tort claim against the
Bank, the Court of Appeals closely examined the special relationship between the parties. The
Court observed that the sales contract’s financing requirements, which were integrated into
the Jacques’ loan application, were “rather extraordinary” and left the Jacques “particularly
vulnerable and dependent upon the Bank’s exercise of due care.” Id. at 762. In discussing the
Jacques’ reliance on the Bank to obtain financing for their new home, the Court alluded to
attorney-client and doctor-patient relationships. Id. at 763. With these observations, the Court
determined that the Bank owed a duty of care to these particularly vulnerable prospective
homeowners. Id. at 756. The Court took pains to prevent the misapplication of its new rule
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by explicitly cabining its holding to the “particular facts of this case.” Id.
In the roughly thirty years that have elapsed since Jacques was decided, numerous
opinions have recognized that its rule is narrow. See, e.g., Lawyers Title Ins. Corp. v. Rex Title
Corp., 282 F.3d 292, 294 (4th Cir. 2002) (describing Jacques as a “narrow exception” to
Maryland’s general rule that has not been applied to litigation between sophisticated parties);
Architectural Systems, Inc. Gilbane Bldg., Co., 974 F.2d 1330, 1992 WL 214446, at *5 (4th Cir. Sept.
8, 1992) (distinguishing Jacques as involving “particularly vulnerable” plaintiffs uniquely
dependent on a bank); Spaulding v. Wells Fargo Bank, N.A., 920 F. Supp. 2d 614 (D. Md. 2012)
(recognizing that the Court of Appeals in Jacques took “painstaking care to carve out a narrow
exception to the general rule that Maryland does not recognize negligence actions that arise
solely out of a contractual relationship”); G&M Oil Co. v. Glenfed Financial Corp., 782 F. Supp.
1078, 1083 (D. Md. 1989) (distinguishing Jacques as relying on special factors, like the
vulnerability of the plaintiff-homeowners).
In this case, North Charles’s tort claims are futile because it relies on the same alleged
conduct to support both its breach of contract claim and its tort claims. The special
circumstances of Jacques, which permitted tort claims arising from a breach of contract, are not
present here. Unlike the Jacques, who were ordinary homebuyers seeking a fair mortgage loan
from a bank, North Charles represents that it is a corporate entity pursuing international
business ventures. It has not alleged that it approached Sonabank in a “particularly vulnerable”
position like the Jacques, who had informed the Bank that they were bound by contract to
proceed to settlement with whatever loan they could obtain at a specified interest rate. As
permitting North Charles to pursue contract claims arising from Defendant’s breach of
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contract would violate Maryland law, its tort claims are futile.
This does not end the inquiry, however, because in Count III North Charles has also
alleged that Sonabank committed tortious interference by publishing false information about
Sonabank and knowingly instituting wrongful foreclosure actions against it. As this Court has
recognized, plaintiffs may pursue tort actions arising from a Defendant’s breach of duties that
are “independent of that arising out of the contract itself.” Tribalco, LLC v. Hue Technology, Inc.,
JFM-11-935, 2011 WL 3821074 (D. Md. Aug. 26, 2011) (quoting Pease v. Wachovia SBA Lending,
Inc., 416 Md. 211, 6 A.3d 867, 889 (2010). North Charles’s allegation that Sonabank committed
tortious interference with prospective advantage by publishing “false and wrongful
information” (PFAC ¶ 83) under Count III implicates a duty independent of those Sonabank
owed under its contracts. See Tribalco, 2011 WL 3821074 at *7 (finding that the economic loss
doctrine barred tort claims arising from a breach of contract, but did not bar Tribalco’s tort
claims arising from the Defendant’s disparaging remarks made to Tribalco’s partners).
Nevertheless, North Charles has failed to state a claim for tortious interference with
prospective advantage. Under Maryland law, tortious interference with prospective advantage
requires (1) intentional and willful acts; (2) calculated to cause damage to the plaintiffs in their
lawful business; (3) done with the unlawful purpose to cause such damage and loss, without
right or justifiable cause on the part of the defendants (which constitutes malice); and (4) actual
damage and loss. Putsche v. Alley Cat Allies, Inc., 2018 WL 784615, at *14-15 (D. Md. Feb. 2,
2018) (citing Audio Visual Assocs., Inc. v. Sharp Elecs. Corp., 210 F.3d 254, 261 (4th Cir. 2000).
The wrongful or unlawful conduct this tort requires includes “common law torts and violence
or intimidation, defamation, injurious falsehood or other fraud, violation of criminal law, and
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the institution or threat of groundless civil suits or criminal prosecutions in bad faith.” Putsche,
2018 WL 784615, at *15 (citing Alexander & Alexander, Inc. v. B. Dixon Evander & Assocs., Inc.,
650 A.2d 260, 271 (Md. 1994).
To allege tortious interference with prospective advantage, North Charles claims that
Sonabank “published to persons in Borrower’s business community false and wrongful
information that harmed and degraded Borrower’s credit reputation. These actions by
Sonabank proximately caused lasting harm to Borrower’s reputation and relations with the
investment community in which Borrower does business.” (Compl. ¶ 83.) North Charles also
alleges that Sonabank, “knowing the harm this would inflict on Borrower . . . exacerbated
[Sonabank’s business problems] by wrongfully filing a foreclosure action.” (Id. at ¶ 84.) These
allegations are expanded upon in Count IV (injurious falsehood) and Count V (malicious
prosecution).
The allegations supporting these claims are insufficient to state a claim for tortious
interference with prospective advantage because North Charles has not alleged that Sonabank
made the publications or instituted a foreclosure action in a calculated effort to damage North
Charles’s businesses.4 Although North Charles has made additional allegations concerning the
alleged false publications and wrongful foreclosure action in Counts IV and V, these
allegations do not save North Charles’s claims. In a conclusory fashion, Plaintiffs allege in
Additionally, the PFAC does not seem to allege that North Charles had other business prospects which
could be thwarted by Sonabank. For example, the St. Agnes property was allegedly pursued by Curran and
Victory Realty, LLC (PFAC at ¶¶ 37-45); the Do-it-Best partnership was Curran’s opportunity (Id. at ¶¶ 4649); and Curran had a chance to acquire the Stone Harbor property (Id. at ¶¶ 50-51). Although the PFAC
alleges that “Borrower” had “prospective business advantages and economic interests,” it does not allude to
any other business engaged in by 401 North Charles, LLC besides purchasing property located at 401 North
Charles Street. (Id. at ¶ 10.)
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Counts IV and V (brought only on behalf of Curran, and not on behalf of North Charles) that
Sonabank “acted with malice” and that its actions were “willful, malicious, and intended to
injure” Curran.5 (PFAC ¶¶ 96, 98, 103.) These “threadbare recitals of the elements of a cause
of action,” made on behalf of a different Plaintiff, do not save North Charles’s claims. Ashcroft
v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009).
B. Curran’s Claims under Count II are futile.
Defendant argues that Curran has failed to state a claim for tortious interference with
contractual relationships because Curran was not a party to the St. Agnes contract and the St.
Agnes contract was never breached. To state a claim for tortious interference with contractual
relationships, Defendant must allege: (1) the existence of a contract between plaintiff and a
third party; (2) defendant’s knowledge of that contract; (3) defendant’s intentional interference
with that contract; (4) breach of that contract by the third party; and (5) resulting damages to
the plaintiff.” 180s, Inc. v. Gordani U.S.A., Inc., 602 F. Supp. 2d 635, 639 (D. Md. 2009) (quoting
Ultrasound Imaging Corp. v. Am. Soc’y of Breast Surgeons, 358 F. Supp. 2d 475, 479 (D. Md. 2005).
Curran’s claim of tortious interference with contractual relationships fails because
Curran did not have a contract with Tsunami II, LLC. Curran’s claim is premised on an alleged
interference with a contract to obtain the St. Agnes property. (PFAC ¶ 78.) The PFAC
suggests that Curran personally entered into this contract with Tsunami II, LLC. (Id. at ¶ 41.)
Under Counts IV and V, the PFAC confusingly refers to the injured party as “Plaintiffs,” “Borrower,”
“Plaintiff(s),” and “Plaintiff.” Yet, the headings accompanying Counts IV and V suggest that the claims are
only brought by Curran. To the extent that Plaintiffs are alleging that Sonabank acted with malice toward
Curran and all of his affiliated corporate entities named in the PFAC, including North Charles, this Court
finds this conclusory allegation unsupported by any factual assertions. Accordingly, such an allegation would
not survive a motion to dismiss and is futile.
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Curran, however, was not a party to this contract.6 The contract document is titled “Purchase
and Sale Agreement between Tsunami II, LLC as seller and Victory Realty, LLC as purchaser.”
(ECF No. 35-3, at 2.) The contract reiterates that the parties to the contract are Tsunami II,
LLC and Victory Realty, LLC. (Id. at 3.) Furthermore, Although Curran’s signature line on
the contract notes that he is a “Managing Member” of Victory Realty, LLC, this title does not
render him a party to the contract. See Hosack, 2011 WL 1743297, at *4 (D. Md. May 6, 2011)
(“Even though Geist signed the agreement [as a Managing Member] he is not a party to it.”)
In Reply, Curran does not contend that he was a party to the contract. Rather, he
argues that he has sufficiently alleged that he was “an intended beneficiary to the contract
between Victory Realty, LLC and Tsunami II, LLC.” (Pl.’s Reply 7-8.) Curran is a third-party
beneficiary to the contract if the contract was “intended for his benefit and it clearly appears
that the parties intended to recognize him . . . as the primary party in interest and as privy to
the promise.” CR-RSC Tower I, LLC v. RSC Tower I, LLC, 429 Md. 387, 457, 56 A.3d 170, 212
(Md. 2012) (quoting 120 W. Fayette St., LLLP v. Mayor of Balt., 426 Md. 14, 35, 43 A.3d 355,
368 (Md. 2012). It is not enough to allege that the contract “merely operates to [Curran’s]
benefit.” 120 W. Fayette St., LLLP, 43 A.3d at 368. The crucial inquiry in determining whether
Curran is a third-party beneficiary to the contract is “whether the pertinent provisions in the
contract were inserted . . . to benefit him.” See Allen v. Bank of Am., N.A., 933 F. Supp. 2d 716,
726 (D. Md. 2013) (quoting CR-RSC Tower I, LLC, 56 A.3d at 212).
This Court may consider this document as it is incorporated in and integral to the PFAC. Goines v. Valley
Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016) (“A court may properly consider documents that are
“explicitly incorporated into the complaint by reference and those attached to the complaint as exhibits.”).
Plaintiff has not challenged this document’s authenticity.
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To show that he has sufficiently alleged his status as an intended third-party beneficiary
to the contract, Curran does not direct this court to a pertinent contractual provision or to a
specific allegation in the PFAC. Rather, Curran directs this court “generally” to paragraphs
69 through 81 of the PFAC. (Pl.’s Reply 8.) These paragraphs and the remaining portions of
the PFAC do not give rise to an inference that Curran was an intended third-party beneficiary
to the contract. The PFAC alleges that Curran was personally involved in negotiating the
contract with Tsunami II, LLC, but there is no indication that the parties to the contract
specifically intended to benefit Curran or inserted provisions in the contract for his unique
advantage. Accordingly, Curran’s claims under Count II are futile because the PFAC does not
include sufficient factual allegations to support his third-party beneficiary theory.
Curran’s claims under Count II fails for another reason: he has not alleged that a third
party (in this case, Tsunami II, LLC) breached the contract. As previously explained, to
properly allege a claim of tortious interference with contractual relationships, Curran must
allege breach of contract by a third party. 180s, Inc., 602 F. Supp. 2d. at 639 (quoting Ultrasound
Imaging Corp., 358 F. Supp. 2d at 479. Curran, however, has only alleged that he was “forced
to terminate the purchase contract [for the St. Agnes property] in order to protect his deposit.”
(PFAC ¶ 41.) With this allegation, Curran appears to assert that he—not a third party—
breached and/or terminated the contract to protect his interests. In Reply, Curran argues that
he has nevertheless properly alleged a breach of contract because he was “left no alternative
but to terminate the contract to protect his interests and mitigate his damages.” (Pl.’s Reply
9.) Curran has not provided legal support for the contention that his allegedly justified breach
of contract satisfies the elements of this tort, which has traditionally required a third party to
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breach the contract. See, e.g., Mixter v. Farmer, 215 Md. App. 536, 548, 81 A.3d 631, 638 (Md.
Ct. Spec. App. 2013) (“A claim for tortious interference with contract requires that the
defendant know of an existing contract and engage in improper conduct to induce a third
party’s breach of that contract.”) (citing Orfanos v. Athenian Inc., 66 Md. App. 507, 520-21, 505
A.2d 131 (1986)). Accordingly, Curran’s claims under Count II are futile.
C. Curran’s Claims under Count III are futile.
Sonabank argues that Curran has failed to state a claim for tortious interference with
prospective advantage because he has not alleged that his dealings with North Charles were
intended or calculated to cause damage to his business. (Def.’s Resp. 12-13.) Sonabank
additionally argues that his alleged injuries were merely an “incidental effect” of Sonabank’s
dispute with North Charles and that Sonabank’s actions did not proximately cause Curran’s
alleged injuries. (Id. at 13-14.) Under Maryland law, tortious interference with prospective
advantage requires (1) intentional and willful acts; (2) calculated to cause damage to the
plaintiffs in their lawful business; (3) done with the unlawful purpose to cause such damage
and loss, without right or justifiable cause on the part of the defendants (which constitutes
malice); and (4) actual damage and loss. Putsche v. Alley Cat Allies, Inc., PWG-17-255, 2018 WL
784615, at *14-15 (D. Md. Feb. 2, 2018) (citing Audio Visual Assocs., Inc. v. Sharp Elecs. Corp.,
210 F.3d 254, 261 (4th Cir. 2000). “To establish causation in a wrongful interference action,
the plaintiff must prove that the defendant’s wrongful or unlawful act caused the destruction
of the business relationship which was the target of the interference.” View Point Medical
Systems, LLC v. Athena Health, Inc., 9 F. Supp. 3d 588, 615 (D. Md. 2014) (quoting Med. Mut.
Liability Soc. v. B. Fixon Evander & Assocs., 339 Md. 41, 54, 660 A.2d 433, 439 (1995).
16
Curran has failed to properly allege that Sonabank’s conduct targeted him or was
intended to thwart his business prospects in India and New Jersey. The PFAC does not even
allege that Sonabank had knowledge of Curran’s alleged opportunities with Do-it-Best or the
Stone Harbor property. Instead, the PFAC does little more than allege that Sonabank was
aware that “Borrower” (a term the PFAC uses to refer to both North Charles and Curran) was
“in the ongoing business of buying, investing and developing businesses and land for the
purpose of profiting from such investments.” (PFAC ¶ 85.) This does not suggest, however,
that Sonabank was aware of any particular business dealing Curran was pursuing or sought to
thwart his economic opportunities by breaching its contract with North Charles. Accordingly,
Curran’s claims under Count III would not survive a motion to dismiss and are futile.7
D. The Victory Entities’ Claims under Counts II and III are futile.
The Victory Entities’ Claims under Counts II and III fail for similar reasons. As
previously discussed, Victory Realty, LLC has not stated a claim for tortious interference with
contractual relationships (Count II) because the PFAC alleges that Curran—and not a third
party, as the law requires—withdrew from the St. Agnes contract. As to the claim of tortious
interference with prospective advantage (Count III), the PFAC does not adequately allege that
Sonabank’s dealings with North Charles “targeted” the business dealings of the Victory
Entities. View Point Medical Systems, LLC, 9 F. Supp. 3d 588, 615 (D. Md. 2014) (quoting Med.
Because this Court finds that the PFAC’s allegations do not sufficiently allege that Sonabank targeted
Curran’s business dealings, this memorandum opinion will not analyze at length Defendant’s argument that
Curran has failed to establish proximate cause under Claim III. This Court, however, finds these arguments
persuasive: it does not seem plausible that, based on the allegations of the Complaint, Curran’s loss of
business in New Jersey and India was the “natural, proximate, and direct” effect of Sonabank’s alleged breach
of contract with North Charles in Maryland. Lyon v. Campbell, 120 Md. App. 412, 431, 707 A.2d 850, 860
(1998) (quoting Medical Mut. v. Evander, 339 Md. 41, 54-55, 660 A.2d 433, 439-40 (1995).
7
17
Mut. Liability Soc., 660 A.2d at 439).
III.
Plaintiff’s Request to add Claims of Injurious Falsehood (Count IV) and
Malicious Use of Process (Count V).
Under the PFAC, Curran brings a claim of injurious falsehood (Count IV) and
malicious use of process (Count V). Under Count IV, Curran alleges that Sonabank published
false information about “Borrower’s title to the relevant property” and “slandered and libeled
Borrower’s credit record.” (PFAC at ¶ 95.) Under Count V, Curran alleges that Sonabank
initiated foreclosure proceedings for “an illegal and improper purpose to satisfy its illegitimate
effort to obtain unlawful fees from Borrower.” (Id. at ¶ 100.) The use of the term “Borrower,”
a collective term used by the PFAC to refer to North Charles and Curran, conceals the fact
that the property at issue in this case is alleged to belong to North Charles (not Curran) and
that the foreclosure action was pursued against North Charles (not Curran). Curran’s status
as an LLC member does not permit him to pursue an injurious falsehood claim stemming
from representations made about North Charles’s title or credit record. See, e.g., Norman v.
Borison, 192 Md. App. 405, 421-23, 994 A.2d 1019, 1028-29 (Md. Ct. Spec. App. 2010) (holding
that the owner of an LLC does not have standing to pursue defamation claim stemming from
defamatory statements made about the LLC). Curran also cannot pursue malicious use of
process claims as a result of Sonabank’s foreclosure action against North Charles, because
Curran was not a party to that proceeding. See, e.g., Gittens v. Thieblot Ryan, P.A., RDB-12-1652,
2013 WL 2103668, at *4 (D. Md. 2013) (explaining that malicious use of process claims require
an allegation that the underlying lawsuit terminated in favor of the plaintiff (quoting Fontell v.
Hassett, No. 10-cv-01472-AW, 2011 WL 4632579, at *5 (D. Md. Oct. 3, 2011)). Accordingly,
Counts IV and V would not survive a motion to dismiss and are futile.
18
CONCLUSION
For the reasons stated above, Plaintiff’s Motion to Amend the Complaint (ECF No.
34) is DENIED.
A separate Order follows.
Dated: December 13, 2018
______/s/__________________
Richard D. Bennett
United States District Judge
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