Bradley Petry v. Prosperity Mortgage Company, 758 F.3d 543

Background

Bradley and Stacey Petry bought a Baltimore home financed by Prosperity Mortgage; at closing Prosperity was named as the lender and charged $1,290 in fees (processing, underwriting, application). Four days later Prosperity sold the loan to Wells Fargo.
Prosperity was a joint-venture mortgage company, half-owned by Long & Foster affiliates and half by Wells Fargo Ventures; it used a Wells Fargo warehouse line of credit, funded loans in its own name, then sold loans (often to Wells Fargo).
The Petrys sued on behalf of a class, alleging Prosperity acted as a mortgage broker (procured loans for Wells Fargo) while presenting itself as the lender and thus unlawfully charged “finder’s fees” under the Maryland Finder’s Fee Act, seeking refunds and treble statutory damages.
The district court certified a class, considered the statutory definition of “finder’s fee,” and concluded that routine fees for actual processing/underwriting are not finder’s fees unless padded to disguise a broker fee; plaintiffs conceded they had no evidence of padding and the court entered judgment for defendants.
On appeal, the Fourth Circuit affirmed, holding that because Prosperity was named as the lender in the loan documents it could not be a “mortgage broker” under the statutory definitions and therefore could not have charged a statutory finder’s fee.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether fees Prosperity charged were "finder’s fees" under Maryland Finder’s Fee Act	Petry: Prosperity functioned as a broker that procured loans for Wells Fargo, so all fees it charged were broker finder’s fees subject to the Act	Defendants: Prosperity was the named lender in loan documents and therefore not a “mortgage broker” under the statute; fees for actual lending services are not finder’s fees absent padding	Held: Prosperity named as lender is excluded from statutory definition of mortgage broker; fees were not finder’s fees as a matter of law
Whether the district court erred by treating only excessive/redundant fees as finder’s fees	Petry: Statute’s definition does not limit finder’s fees to excess or redundancy; any broker fees qualify	Defendants: Practical reading excludes routine fees for work performed; only disguised or padded fees could be unlawful broker fees	Held: Court need not adopt petitioner’s reading because statutory definition plainly excludes entities named as lender; affirmed district court outcome
Whether Long & Foster and Wells Fargo could be liable as aiders/abettors or coconspirators	Petry: Co-defendants aided Prosperity’s alleged broker-lender scheme and are liable	Defendants: Maryland law does not extend aiding/abetting for statutes that don’t expressly provide it; defendants challenged capacity to commit underlying tort	Held: Court did not reach or decide these theories because underlying Finder’s Fee Act claim failed; earlier district court rulings declined aiding/abetting and conspiracy claims
Whether class certification should stand (conditional cross-appeal)	Petry: class certification appropriate under Rule 23	Defendants: challenged certification conditionally if they lost on merits	Held: Court affirmed judgment for defendants and denied conditional cross-appeal as moot; did not decide class-certification challenge on merits

Key Cases Cited

Sweeney v. Sav. First Mortg., LLC, 879 A.2d 1037 (Md. 2005) (Finder’s Fee Act applies only to mortgage brokers and the fees they charge)
Taylor v. NationsBank, N.A., 776 A.2d 645 (Md. 2001) (courts will not add or delete words to clear statutory language)
Alleco Inc. v. Harry & Jeanette Weinberg Found., Inc., 665 A.2d 1038 (Md. 1995) (conspiracy and aiding-and-abetting liability require proof of an underlying wrong)
Shenker v. Laureate Educ., Inc., 983 A.2d 408 (Md. 2009) (discussing limits on parties’ capacity to commit certain wrongs)
Petry v. Wells Fargo Bank, N.A., 597 F. Supp. 2d 558 (D. Md. 2009) (district court opinion addressing aiding-and-abetting and dismissal issues)