Wheeler et al v. Leonard et al

Filing 51

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 3/22/10. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND MELONY WHEELER, et al. v. : : : : GREGORY LEONARD, et al. : MEMORANDUM OPINION Presently pending and ready for resolution are: (1) a Civil Action No. DKC 2008-0774

motion to compel discovery and for sanctions by Coldwell Banker Residential Brokerage ("Coldwell Banker") (Paper 24), (2) a

motion to shorten time for Plaintiffs to respond to Coldwell Banker's motion to compel (Paper 25), (3) a motion for summary judgment by Coldwell Banker and Brian Taylor (Paper 26), (4) a motion Coldwell for summary judgment 27), on (5) its a counterclaim supplemental filed motion by for

Banker

(Paper

sanctions by Coldwell Banker and Brian Taylor (Paper 38), and (6) a motion to strike exhibits 3 and 4 to Plaintiffs'

memorandum in opposition to Coldwell Baker and Brian Taylor's motion for summary judgment (Paper 40). briefed and the Local motions court Rule for now rules, no The issues have been hearing the being deemed reasons, granted,

necessary. Defendants'

105.6. summary

For

following will be

judgment

Defendants' motion to strike exhibits 3 and 4 to Plaintiffs'

response

in

opposition

to

Defendants'

motion

for

summary

judgment will be denied,

Defendant Coldwell Banker's motion to

compel discovery and for sanctions will be denied, Defendant Coldwell Banker's motion to shorten time for Plaintiffs to

respond to Defendant's motion to compel and for sanctions will be denied, and Defendants' supplemental motion for sanctions

will be denied. I. Background

The following facts are either undisputed or viewed in the light This most case favorable arises to the a non-moving estate parties, Plaintiffs. between

from

real

transaction

Plaintiffs Ramona and Elwood Scott (the "Scotts") and Gregory and Stephanie Leonard (the "Sellers"). Melony Wheeler

("Wheeler"), the Scotts' daughter, asserts that she served as the Scotts' "project manager" in the transaction. Coldwell Banker is a real estate brokerage firm. Defendant Defendant

Brian Taylor ("Taylor") is a real estate agent for Coldwell Banker. On or about January 3, 2006, Defendants listed on the

Metropolitan Regional Information System ("MRIS") a lot for sale at 12308 Firth of Tae Drive, in Fort Washington, MD (the

"Property"). universally

(Paper 26, Attach. 5, at 1). accepted system for listing 2

The MRIS is the for sale.

properties

Real estate agents are required to input certain information in a MRIS listing. The MRIS listing for the Property contained

disclosures, including: "Sewer/Septic ­ Public H/U Available" and "Water --- Public H/U Available." not make any changes to the (Id.). Defendants did and "Water"

"Sewer/Septic"

disclosures during the time when the Property was listed on MRIS. (Paper 26, Attach 7). Plaintiffs allege that Wheeler was approached by the

Sellers on October 2, 2006, and that Stephanie Leonard inquired as to whether Wheeler knew any investors to buy a building lot Leonard owned. According to Plaintiffs, the Sellers stated,

"the lot was ready to be built on and all permits and plans were approved by the County" and called it a "finished lot with no problems whatsoever." (Id. at ¶ 5). Plaintiffs also allege

that the Sellers reported that "permits were approved by the county and the only thing necessary was the approval of the house plans." (Id. at 6-7).

On or about October 17, 2006, the Scotts and the Sellers executed a Maryland Unimproved Land Contract of Sale (the

"Contract") for the Property. was not a party to the

(Paper 27, Attach. 3). Coldwell Banker

Wheeler was the

contract.

Sellers' broker in the sale of the Property, and Taylor was their real estate agent. After the Scotts bought the Property, 3

Plaintiffs

discovered

that

the

Property

did

not

have

a

connection to public water and sewer utilities. On December in the 14, 2007, the Scotts for and

(Paper 2 ¶ 8). Wheeler George's filed a

complaint

Circuit

Court

Prince

County,

Maryland (Case No. CAL07-33048).

(Paper 2).

The complaint

named as Defendants Gregory Leonard, Stephanie Leonard, Coldwell Banker, and Brian Taylor.1 The complaint asserted that

Defendants failed to disclose that there was no sewer and water connection to the Property and that the Scotts would need to obtain an easement from a bordering lot owner with access to the public utilities. violations of the (Paper 2 ¶¶ 7-9). Real Estate The complaint alleged Procedures Act

Settlement

("RESPA") in three counts for (1) fraud, (2) conspiracy, and (3) unfair and deceptive trade practices. (Paper 2 ¶¶ 10-17).

On March 26, 2008, Defendants removed the case to this court on the ground of federal question jurisdiction under 28 U.S.C. § 1331. Banker and a (Paper filed a 1). motion to On to April 24, 2009, Defendant and for to

Coldwell sanctions respond.

compel time

discovery for

motion

shorten

Plaintiffs

(Papers 24 and 25).

On May 18, 2009, Defendants filed

On December 2, 2008, Plaintiffs' complaint was dismissed without prejudice as to Defendants Gregory and Stephanie Leonard because Plaintiffs failed to effect service of process within the time provided. (Paper 20). 4

1

a

motion a

for

summary for 27).

judgment summary On June

and

Defendant on

Coldwell

Banker

filed (Papers

motion 26 and

judgment 18,

its

counterclaim. filed a

2009, and

Defendants on June 3

supplemental Defendants

motion filed a

for

sanctions, to

25, and

2009, 4 to

motion

strike

exhibits

Plaintiffs' memorandum in opposition to Defendants' motion for summary judgment. II. A. (Papers 38 and 40).

Motion for Summary Judgment Standard of Review have moved for summary judgment pursuant to

Defendants

Federal Rule of Civil Procedure 56.

It is well established that

a motion for summary judgment will be granted only if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See

Fed.R.Civ.P 56(f); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). other words, if there clearly exists factual issues In

"that

properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party," summary judgment is inappropriate. Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 250 (1986); JKC Holding Co. LLC v. Washington Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).

5

When ruling on a motion for summary judgment, the court must construe the facts alleged in the light most favorable to the party opposing the motion. See Scott v. Harris, 127 S.Ct. A party who bears

1769, 1774 (2007); Emmett, 532 F.3d at 297.

the burden of proof on a particular claim must factually support each element of his or her claim. 323. Celotex Corp., 477 U.S. at

"[A] complete failure of proof concerning an essential

element . . . necessarily renders all other facts immaterial." Id. Thus, on those issues on which the nonmoving party will

have the burden of proof, it is his or her responsibility to confront the motion for summary judgment with an affidavit or other similar evidence in order to show the existence of a

genuine issue for trial. Corp., 477 U.S. at 324. will not suffice F.3d to 307,

See Anderson, 477 U.S. at 254; Celotex "A mere scintilla of proof, however, summary Cir. judgment." 2003). Peters must v. be

prevent 314

Jenney,

327

(4th

There

"sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 477 U.S. at 249.

"If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." (citations omitted). Id. at 249-50.

6

B.

Analysis complaint has three counts: (1) fraud, (2) Each

Plaintiffs'

conspiracy, and (3) unfair and deceptive trade practices. count will be analyzed separately for summary judgment. 1. Fraud

Defendants argue that Plaintiffs' fraud claim in count I of their complaint cannot survive summary judgment. Defendants

maintain that, even though the question of whether Taylor made any misrepresentation in the MRIS listing regarding the

Property's connection to public water and sewer services is in dispute, the fraud claim must fail because Plaintiffs cannot establish that Taylor knew any representation he made regarding the Property was false. (Paper 26, Attach. 1, at 8).

Defendants also argue that, assuming Taylor's representation on the MRIS listing was false, he did not commit fraud because he was entitled the under Maryland law to to rely him by on information the Sellers.

concerning (Id. at 9).

Property

provided

Plaintiffs counter that the MRIS listing for the Property was inaccurate that and there that "[t]he to MRIS listing than should just a have mere

indicated

needed

[sic]

more

`connection,' but that there was a need for either an easement or an extension of the water/sewer line." 7 (Paper 34, Attach. 1,

at 3-4). false

Plaintiffs contend that Taylor "intentionally made a as to the that sewer/water the Property access might to need the an As

representation because he

Property"

knew

easement to access water and sewer utilities.

(Id. at 4).

evidence of that point, Plaintiffs present an affidavit of Janet Jackson, an owner of land that abuts the Property. Jackson

attests that Taylor called her and asked whether she would be "willing to give an easement for sewer and water" if he was able to get a contract on the Property. To prevail on a claim (Paper 34, Attach. 3, at 1). fraud, a plaintiff must

for

establish: (1) that the defendant made a false representation to the plaintiff, (2) that its falsity was either known to the defendant or that the representation was made with reckless indifference as to its truth, (3) that the misrepresentation was made for the purpose of defrauding the plaintiff, (4) that the plaintiff relied on the misrepresentation and had the right to rely on it, and (5) that the plaintiff suffered compensable injury resulting from the misrepresentation. Maryland Environmental Trust v. Gaynor, 370 Md. 89, 97 (2002). A plaintiff must prove fraud by clear and convincing evidence. Id. To succeed on their claim for fraud, Plaintiffs have to show that Taylor made a false representation regarding the

Property and intended for Plaintiffs to rely on it and that 8

Taylor knew the representation was false when he made it. undisputed that Taylor made a representation to

It is

Plaintiffs

regarding the availability of utilities for the Property when he selected the "Public H/U Available" option for the "Water" and "Sewer/Septic" fields on the MRIS listing. Plaintiffs and

Defendants dispute whether Taylor's representation was in fact false. Defendants assert that "Public H/U Available" disclosure

meant that a county public utilities hook-up was available but that the actual connection to the County had not yet been made. (Paper 26, Attach. 1, at 9). Plaintiffs believe that that the

MRIS listing was incorrect and that "there should have been some indication [that an easement might be necessary for water and sewer access] on the MRIS listing." 2). Even if Taylor's representation was false or incomplete, Plaintiffs have not established fraud because they have not (Paper 34, Attach. 1, at

shown that Taylor knew his representation was false when he made it. See Martens v. Chevrolet, Inc. v. Seney, 292 Md. 328

(1982)(holding that a claim for fraud requires scienter on the part of the defendant). Plaintiffs present evidence to show

that Taylor knew that the Property might require an easement to access water and sewer utilities, but this evidence does not establish that Taylor knew that the disclosures in the MRIS 9

listing were insufficient, either when he listed the Property or any time thereafter. Additionally, Plaintiffs have not

presented any evidence that Taylor's MRIS representations were made with intent to defraud Plaintiffs. Therefore, summary

judgment will be granted in favor of Defendants on count I of Plaintiffs' complaint. 2. Conspiracy

Defendants argue that Plaintiffs' conspiracy claim in count II of their complaint cannot survive summary judgment because Plaintiffs have not established an "underlying tort to make the alleged conspiracy actionable." (Paper 26, Attach. 1 at 12).

Additionally, Defendants argue that Taylor and Coldwell Banker cannot qualify as co-conspirators because of the "intracorporate conspiracy doctrine recognized in the Fourth Circuit." (Id.).

Plaintiffs' opposition to Defendants' motion only states: That the original Complaint in this matter included Defendant CBRB as a conspirator instead of including a count of Respondeat Superior, as the Defendant Taylor was an independent contractor real estate agent for Defendant CBRB. The original Complaint was filed by a prior attorney. Undersigned counsel will be filing a Motion to file an Amended Complaint in this matter following this opposition. (Paper 34, Attach. 1, at 4). amended complaint. Plaintiffs have not filed an

10

Under Maryland law, a civil conspiracy is defined as: "[A] combination of two or more persons by an agreement or understanding to accomplish an unlawful act or to use unlawful means to accomplish an act not in itself illegal, with the further requirement that the act or the means employed must result in damages to the plaintiff." Hoffman v. Stamper, 385 Md. 1, 24 (2005)(quoting Green v. Wash. Sub. San. Comm'n, 259 Md. 206, 221 (1970)). The plaintiff must prove an unlawful agreement, the commission of an overt act in furtherance of the agreement, and that as a result, the plaintiff suffered actual injury. Id. at 25. The unlawful agreement is not actionable by itself; rather, the "[t]ort actually lies in the act causing the harm" to the plaintiff. Id. Thus, civil conspiracy is not "capable of independently sustaining an award of damages in the absence of other tortious injury to the plaintiff." Id. (internal citations and quotations omitted). Mackey v. Compass Mktg., Inc., 391 Md. While 117, 128-29

(2006)(internal

citations

omitted).

circumstantial

evidence may be used to establish the first element, Daughtery v. Kessler, 264 Md. 281, 286 (1972), Plaintiffs have not

presented evidence of any agreement among Defendants to defraud them. Additionally, Plaintiffs have not shown that Defendants For the reasons set

committed an unlawful or tortious act.

forth below, Plaintiffs' unfair and deceptive trade practices claim will not withstand summary judgment. Without proving that

Defendants committed a tort, "civil conspiracy is not `capable of independently sustaining an award of damages.'" 11 Mackey, 391

Md. at 128 (2006).

Therefore, summary judgment will be granted

in favor of Defendants on count II of Plaintiffs' complaint. 3. Unfair and Deceptive Trade Practices

Defendants argue that Plaintiffs' claim in count III of their complaint cannot survive summary judgment because the

Maryland Consumer Protection Act ("MCPA"), including the section relating to unfair and deceptive trade practices, expressly

exempts real estate professionals and brokers from its reach. (Paper 26, Attach. 1, at 13). are entitled to attorneys' Defendants also argue that they under the MCPA because the

fees

statute provides, "If it appears to the satisfaction of the court, at any time, that an action is brought in bad faith or is of a frivolous nature, the court may order the offending party to pay the other party reasonable attorney's fees." 14)(citing Md. Code Ann., Com. Law. § 13-408(c)). Plaintiffs concede that they "do not oppose the Defendants' Motion based upon the Maryland Consumer Protection Act as it does not apply to real estate salespersons and brokers." 34, Attach. 1, at 4-5). Under Maryland law, claims relating to unfair and deceptive trade practices are governed by the MCPA, Md. Code Ann., Com. Law § 13-101, et seq. The MCPA expressly exempts real estate Section 13-104(1) of the MCPA 12 (Paper (Id. at

professionals from its reach.

provides: "This title does not apply to: (1) The professional services of a . . . real estate broker, associate real estate broker, or real estate salesperson . . . ." Plaintiffs allege

in their complaint that Taylor is a real estate agent working for Coldwell Banker. 13-104(1), Plaintiffs (Paper 2 ¶¶ 4, 8). do not have a Thus, under Section against Coldwell

claim

Banker or Taylor for unfair and deceptive trade practices under the Maryland Code. Therefore, summary judgment will be granted

in favor of Defendants on count III of Plaintiffs' complaint. Furthermore, because Plaintiffs have maintained a frivolous MCPA claim against Defendants despite the MCPA's clear instruction that the statute does not apply to real estate brokers and

salespersons, Defendants will be awarded reasonable attorneys' fees incurred in defending count III of Plaintiffs' complaint.2 III. Defendant Coldwell Banker's Motion for Summary Judgment on its Counterclaim Defendant should between be Coldwell on Banker its argues that summary the judgment Contract that

granted Scotts

counterclaim Sellers

because

the

and

the

expressly

provided

Coldwell Banker would be indemnified in a case like this one.

In granting summary judgment in favor of Defendants, the court did not rely on exhibits 3 and 4 to Plaintiffs' response in opposition to Defendants' motion for summary judgment. Therefore, Defendants' motion to strike Plaintiffs' exhibits 3 and 4 will be denied. 13

2

(Paper 27, Attach. 1, at 4). Defendant's motion. The stated: Contract included

Plaintiffs have not responded to

an

indemnification

clause

that

In any action or proceeding between Buyer and Seller based, in whole or in part, upon the performance or non-performance of the terms and conditions of this Contract, including, but not limited to, breach of contract, negligence, misrepresentation or fraud, the prevailing party in such action or proceeding shall be entitled to receive attorneys' fees from the other party as determined by the court or arbitrator. In any action or proceeding between Buyer and Seller and/or between Seller and Broker(s) and/or Buyer and Broker(s) resulting in Broker(s) being made a party to such action or proceeding, including but not limited to, any litigation, arbitration, or complaint and claim before the Maryland Real Estate Commission, whether as defendant, crossdefendant, third-party defendant or respondent, Buyer and Seller jointly and severally, agree to indemnify and hold Broker(s) harmless from and against any and all liability, loss, cost, damages or expenses (including filing fees, court costs, service of process fees, transcript fees and attorneys' fees) incurred by Broker(s) in such action or proceeding, providing [sic] that such action does not result in a judgment against Broker(s). (Paper 27, Attach. 3, at ¶ 28). Furthermore, the Contract

provided: This Paragraph 28 shall apply to any and all such action(s) or proceeding(s) against Broker(s) including those action(s) or proceeding(s) based, in whole or in part, 14

upon any alleged act(s) or omission(s) by Broker(s) including, but not limited to, any alleged act of misrepresentation, fraud, non-disclosure, negligence, violation of any statutory or common law duty, or breach of fiduciary duty by Broker(s). (Id.). The complaint names Coldwell Banker as a party to the

proceeding, and alleges counts of fraud, conspiracy, and unfair and deceptive trade practices. As stated above, summary

judgment will be granted to Defendants on all three counts of Plaintiffs' complaint, and Coldwell Banker will be the

prevailing party.

Therefore, summary judgment will be granted

to Defendant Coldwell Banker on its counterclaim and Coldwell Banker will be entitled to indemnification from Plaintiffs

pursuant to Paragraph 28 of the Contract, including, but not limited to, attorneys' fees incurred as a result of the

proceeding.3

Because summary judgment will be granted in favor of Defendant Coldwell Banker on its counterclaim and attorneys' fees will be awarded to Defendant, Defendant's motion to compel and for sanctions will be denied as moot. Likewise, Defendant's motion to shorten time for Plaintiffs to respond to Defendant Coldwell Banker's motion to compel and for sanctions will be denied as moot. Additionally, because Defendant Coldwell Banker will be awarded attorneys' fees, it appears unnecessary to award attorneys' fees as requested by Defendants' subsidiary supplemental motions for sanctions when Coldwell Banker and Brian Taylor were represented by the same attorney. Therefore, Defendants' supplemental motion for sanctions will be denied. 15

3

IV.

Conclusion For the foregoing reasons, Defendants' motions for summary

judgment will be granted, Defendants' motion to strike exhibits 3 and 4 to Plaintiffs' response in opposition to Defendants' motion for summary judgment will be denied, Defendant Coldwell Banker's motion to compel discovery and for sanctions will be denied as moot, Defendant Coldwell Banker's motion to shorten time for Plaintiffs to respond to Defendant's motion to compel and for sanctions will be denied as moot, and Defendants' A separate

supplemental motion for sanctions will be denied. Order will follow.

/s/ DEBORAH K. CHASANOW United States District Judge

16