Fields et al v. Walpole, Esq. et al
Filing
95
MEMORANDUM OPINION (c/m to Linda Sadr 5/16/13 sat). Signed by Chief Judge Deborah K. Chasanow on 5/16/13. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
WILLIE FIELDS, et al.,
:
v.
:
Civil Action No. DKC 11-1000
:
FORREST WALPOLE, ESQ., et al.
:
MEMORANDUM OPINION
I.
Background
Plaintiffs claim they are the victims of an alleged “ponzi
scheme” implemented by Defendants Linda Sadr, Forrest Walpole,
Maximum
Impact
Title
(“M.I.
Title”),
Financial Services (“M.I. Financial”).
and
Maximum
Impact
The background facts are
set out in further detail in the Memorandum Opinion of July 6,
2011, resolving Defendant Walpole’s motion to dismiss.
(ECF No.
22).
In their original and amended complaints, Plaintiffs Melvin
and Renee Hamilton, Marcia and Willie Fields, and Carlton Powell
brought six claims against Defendants Linda Sadr, M.I. Title,
and M.I. Financial.
M.I.
Financial
(ECF Nos. 2 & 47).
failed
to
respond
to
the
When M.I. Title and
original
complaint
within the requisite time period, Plaintiffs moved for entry of
default.
(ECF Nos. 17 & 18).
The clerk entered default against
those Defendants as to the original complaint on June 28, 2011.
(ECF
No.
19).
Plaintiffs
filed
an
included Linda Sadr as a Defendant.
amended
complaint
that
When Ms. Sadr failed to
respond, default was entered against her on March 6, 2012.
(ECF
No. 60).
In
a
Memorandum
Opinion
filed
September
12,
2012,
the
viability of the claims against the defaulted defendants were
discussed
and
negligence
Protection
all
(Count
Act
claims
I),
against
violation
(“MCPA”)
(Count
Defendant
of
II),
the
Sadr
Maryland
unjust
remain:
Consumer
enrichment
(Count
III), negligent misrepresentation (Count IV), fraud (Count V),
and
violation
Against
the
of
the
entities,
Maryland
only
Finder’s
claims
violation of the MCPA remain.1
of
Fee
Act
unjust
(Count
enrichment
VI).
and
All claims against Mr. Walpole
were ultimately dismissed by agreement.
(ECF Nos. 88 & 89).
During a teleconference on November 27, 2012, Plaintiffs
requested a bench trial to enter judgment against the defaulted
Defendants.
pretrial
On April 22, 2013, Plaintiffs filed a proposed
order
memorializing
this
request
and
outlining
the
damages they sought and the evidence they intended to introduce
to support those claims.
(ECF No. 90).
A bench trial on
damages was held on May 13, 2013.
1
The opinion noted that Counts I, IV, V, and VI against
Maximum Impact Title and Maximum Impact Financial would be
dismissed.
They will therefore be dismissed in the order
accompanying this opinion.
2
II.
Standard of Review
Under
Federal
Rule
of
Civil
Procedure
55(a),
“[w]hen
a
party against whom a judgment for affirmative relief is sought
has failed to plead or otherwise defend, and that failure is
shown
by
affidavit
party’s default.”
or
otherwise,
the
clerk
must
enter
the
Where a default has been previously entered
by the clerk and the complaint does not specify a certain amount
of damages, the court may enter a default judgment upon the
plaintiff’s
application
and
notice
pursuant to Fed. R.Civ.P. 55(b)(2).
to
the
defaulting
party,
A defendant’s default does
not automatically entitle the plaintiff to entry of a default
judgment; rather, that decision is left to the discretion of the
court.
See Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001).
“Upon [entry of] default, the well-pled allegations in a
complaint as to liability are taken as true, but the allegations
as
to
Federal
damages
Rule
are
of
not.”
Civil
Lawbaugh,
Procedure
359
54(c)
F.Supp.2d
limits
the
at
422.
type
of
judgment that may be entered based on a party’s default: “A
default judgment must not differ in kind from, or exceed in
amount,
what
is
demanded
in
the
pleadings.”
Thus,
where
a
complaint specifies the amount of damages sought, the plaintiff
is
limited
to
entry
of
a
default
judgment
in
that
amount.
“[C]ourts have generally held that a default judgment cannot
award additional damages . . . because the defendant could not
3
reasonably
amount.”
have
expected
that
his
damages
would
exceed
that
In re Genesys Data Techs., Inc., 204 F.3d 124, 132 (4th
Cir. 2000).
Where a complaint does not specify an amount, “the
court is required to make an independent determination of the
sum to be awarded.”
Adkins v. Teseo, 180 F.Supp.2d 15, 17
(D.D.C. 2001) (citing S.E.C. v. Mgmt. Dynamics, Inc., 515 F.2d
801, 814 (2d Cir. 1975); Au Bon Pain Corp. v. Artect, Inc., 653
F.2d 61, 65 (2d Cir. 1981)).
III. Analysis
The
finding
negligence,
of
liability
negligent
on
Plaintiffs’
misrepresentation,
claims
fraud,
of
unjust
enrichment, and violations of the MCPA allow them to recover the
equity that they lost in the refinancing of their mortgages as
compensatory economic damages.
Plaintiffs also seeks to recover
non-economic pain and suffering damages from Ms. Sadr on their
tort claims.
Plaintiffs presented no evidence of fees charged
by Ms. Sadr to act as their mortgage broker.
Therefore they
cannot recover damages for violations of the Finder’s Fee Act.
Ms.
Sadr,
M.I.
Title,
and
M.I.
Financial
are
jointly
and
severally liable for damages resulting from Plaintiffs’ claims
of unjust enrichment and violations of the MCPA.
Compensatory
economic
damages
sought
under
the
various
claims largely overlap, seeking recovery for the equity lost by
participating
in
Defendants’
scheme.
4
The
“one
wrong,
one
recovery” rule precludes a party from recovering twice for one
injury.
United States v. Rachel, 289 F.Supp.2d 688, 697 (D.Md.
2003).
A.
Economic Damages
Plaintiffs seek economic damages in amounts equivalent to
the equity they lost when they refinanced their homes pursuant
to Defendants’ scheme.
To support this request, they submit
documentary
their
evidence
of
home
refinancing
transactions,
including the HUD-1 settlement statement from the closing that
outlines the settlement figures.
statement,
the
represents
the
mortgages.
forms
list
proceeds
a
of
These sums were:
At the bottom of each HUD-1
“Cash
the
to
Borrower”
refinancing
of
amount
that
Plaintiffs’
for the Hamiltons, $135,856.32;
for the Fields, $97,142.90; and for Mr. Powell, $143,393.18.
(Pls. Exs. 1, 6, 11).
Plaintiffs also produced evidence showing
that they did receive some small portion of these proceeds:
$300 for the Hamiltons; $5,770.84 for the Fields; and $6,684.62
for Mr. Powell.
(Pls. Exs. 2, 8, 12).
The difference between
these amounts is the total compensatory economic damages that
each Plaintiff seeks:
$135,556.32 for the Hamiltons; $91,372.06
for the Fields; and $136,708.56 for Mr. Powell.
(ECF No. 90, at
2-3).
“To recover compensatory damages, the amount must be proved
with reasonable certainty and may not be based upon speculation
5
or conjecture.”
Brock Bridge Ltd. P’ship v. Dev. Facilitators,
Inc., 114 Md.App. 144, 157 (1997).
Plaintiffs’ HUD-1 documents
and additional evidence showing the amounts that they received
from the refinancing of their mortgages support their claims
that they suffered economic loss in the amounts that they seek.
B.
Pre-judgment Interest
Additionally,
these damages.
Plaintiffs
seek
pre-judgment
interest
on
In a case based on diversity jurisdiction, pre-
judgment interest is a matter of state law.
Hitachi Credit Am.
Corp. v. Signet Bank, 166 F.3d 614, 633 (4th Cir. 1999).
Under
Maryland law, pre-judgment interest is allowable when:
the obligation to pay and the amount due had
become certain, definite, and liquidated by
a specific date prior to judgment so that
the effect of the debtor's withholding
payment was to deprive the creditor of the
use of a fixed amount as of a known date.
First
Va.
Bank
v.
Settles,
322
Md.
555,
564
(1991).
Pre-
judgment interest shall be calculated at the legal rate of six
percent per annum.
Md. Const. Art. III, § 57 (“The Legal Rate
of Interest shall be Six per cent. per annum; unless otherwise
provided by the General Assembly.”).
Here,
Plaintiffs
are
entitled
to
pre-judgment
interest
because their compensatory damages were fixed as of the date of
closing.
Such
interest
is
calculated
from
the
date
of
the
closing of Plaintiffs’ refinance until the entry of judgment.
6
The Hamiltons closed their refinance on January 12, 2006; the
Fields on October 20, 2006; and Mr. Powell on May 25, 2006.
(Pls. Exs. 1, 6, 11).
Accordingly, the Hamiltons are entitled
to $59,741.34 in pre-judgment interest; the Fields, $36,048.16;
and Mr. Powell, $57,260.29.
C.
Non-Economic Damages
Plaintiffs
distress.
them
also
seek
non-economic
damages
for
emotional
Generally, they assert that Defendants’ fraud caused
stress
including
that
manifested
headaches,
sleeplessness.
itself
increased
in
a
variety
ways,
pressure,
blood
of
and
At the hearing on May 13, 2013, Mr. Hamilton
testified that at the time he realized that his home would enter
foreclosure,
in
sleeplessness.
headaches.
isolation
2008,
he
began
experiencing
paranoia
and
He also observed his wife’s sleeplessness and
The Hamiltons also testified to the extreme social
caused
by
the
scheme.
They
were
forced
to
move
multiple times, always into smaller homes and apartments; they
lived out of boxes for fear of foreclosure.
Once they realized
their home would go into foreclosure, they never had social
guests at their home, and they constantly lied to friends and
family to prevent them from seeing their deteriorating living
situation.
Ms. Fields testified that she was not sleeping and visited
her doctor because she was afraid that she was exhibiting signs
7
of Alzheimer’s disease.
to stress.
Her doctor attributed her memory loss
Mr. Fields also noted experiencing headaches and
sleeplessness.
Both
Mr.
and
Ms.
Fields
attributed
the
dissolution of their marriage to the stress they endured at this
time.
Finally, Mr. Powell noted that his blood pressure rose
considerably, and that he was required to increase his dosage of
blood pressure medicine.
He also noted that he experienced
headaches from the stress associated with trying to save his
home from foreclosure.
He worked all overtime that he could get
to generate extra income to help pay his inflated mortgage bill.
Mr. Powell testified that relationships with his friends and
family have deteriorated because he works too much to see them.
All of the Plaintiffs testified that they had not had any of
these
problems
before
they
experienced
the
stress
of
the
financial hardship caused by Defendants’ fraud.
Maryland
permits
“recovery
of
damages
for
emotional
distress if there was at least a consequential physical injury,”
in the sense that “‘the injury for which recovery is sought is
capable of objective determination.’”
Hoffman v. Stamper, 385
Md. 1, 34 (2005) (quoting Vance v. Vance, 286 Md. 490, 498
(1979)).
This
physical
manifestation
requirement
allows
recovery for “such things as depression, inability to work or
perform routine household chores, loss of appetite, insomnia,
nightmares,
loss
of
weight,
8
extreme
nervousness
and
irritability,
withdrawal
from
socialization,
fainting,
chest
pains, headaches, and upset stomachs,” id. at 34–35, but does
not permit recovery “based on the plaintiff simply saying, ‘This
made me feel bad; this upset me,’” id. at 34.
Three
principles
govern
the
determination
of
whether
a
physical injury is capable of objective determination:
First, . . . the evidence must contain more
than mere conclusory statements, such as “He
was afraid,” . . . . The evidence must be
detailed enough to give the jury a basis
upon which to quantify the injury.
Second,
a claim of emotional injury is less likely
to succeed if the victim is the sole source
of all evidence of emotional injury . . .
There is no reason why the victim’s own
testimony may not be sufficient, as long as
it otherwise provides the jury with enough
information to render his or her injuries
capable of objective determination.
Third,
although minor emotional injuries may be
less likely to produce the kind of evidence
that renders an injury capable of objective
determination, that does not mean that an
emotional
injury
must
reach
a
certain
threshold
level
of
severity
before
it
becomes compensable.
There is no severity
prong of the Vance test. Our focus thus is
properly on the evidence of mental anguish
produced.
Exxon Mobil Corp. v. Albright, --- Md. ---, 2013 WL 673738, at
*17 (Feb. 26, 2013) (quoting Hunt v. Mercy Med. Ctr., 121 Md.
App. 516, 531 (1998)).
arising
from
stress
In the context of physical injuries
related
to
mortgage
fraud,
the
Maryland
Court of Appeals has indicated that a plaintiff’s testimony that
“whenever he began thinking about his problems, he would get
9
headaches
and
would
vomit”
could
be
sufficient
to
show
an
objectively ascertainable consequential physical injury from the
fraud.
Hoffman, 385 Md. at 33-38.
Likewise
suffered
anxiety;
here,
headaches,
Plaintiffs’
sleepless
understandably
testimony
nights,
so.
Thus,
reflected
social
that
all
isolation,
and
although
Plaintiffs’
testimony was the sole source of evidence of their injuries, and
no amount of money can truly compensate them for their trials,
damages for emotional distress are appropriate.
Each person
suffered stress for many months as they faced the loss of their
homes.
Damages of pain and suffering will be awarded to each
Plaintiff in the amount of $25,000.
IV.
Conclusion
A separate Judgment will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
10
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