Fangman v. Genuine Title, LLC
136 A.3d 772
Md.2016Background
- Plaintiffs (the Fangmans) sued Genuine Title and multiple lenders alleging a kickback scheme: cash and marketing materials were paid to mortgage brokers to steer settlement business to Genuine Title, with payments concealed from borrowers.
- Plaintiffs asserted claims under RESPA (12 U.S.C. § 2607), Md. Code Ann., Real Prop. § 14-127 (prohibiting kickbacks), and the Maryland Consumer Protection Act; federal court stayed the § 14-127 claim and certified the question whether § 14-127 implies a private right of action.
- § 14-127 (originally enacted in 1967 as a criminal provision) generally forbids paying/receiving consideration to solicit or arrange settlement business and prescribes misdemeanor penalties; 2010 amendments incorporated references to RESPA disclosures.
- Plaintiffs argued § 14-127 was enacted to protect consumers of settlement services and therefore implies a private civil remedy for harms like overcharges and reduced competition.
- Defendants argued § 14-127 is a criminal/public-welfare prohibition without an express or implied private right; the General Assembly knew RESPA has a private right yet did not add one to § 14-127.
- The Maryland Court of Appeals held § 14-127 does not contain an express or implied private right of action and identified RESPA as providing the private remedy for analogous conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Md. Real Prop. § 14-127 implies a private right of action | § 14-127 protects consumers of settlement services (the plaintiffs), so a private remedy should be implied to redress overcharges and reduced competition | § 14-127 is a criminal/public-welfare prohibition that does not create a private civil remedy; legislature declined to adopt a civil remedy like RESPA | No—§ 14-127 contains no express or implied private right of action |
| Whether plaintiffs are members of a protected class under § 14-127 | Plaintiffs are consumers of settlement services and fall within the class § 14-127 was meant to benefit | § 14-127 confers at most a generalized public benefit, not rights for a specific identifiable class | Plaintiffs may be incidental beneficiaries as consumers, but § 14-127 does not identify a protected class sufficient to imply a remedy |
| Whether legislative history or scheme indicates intent to create/deny a private remedy | Silence does not preclude implication where purpose is consumer protection | Legislative history is silent regarding a civil remedy; original enactment and placement in criminal law indicate a punitive/regulatory purpose | Legislative history is silent on creating a private cause of action and supports a criminal enforcement scheme; no intent to imply a private remedy |
| Whether § 14-127 creates an enforceable tort duty (Statute-or-Ordinance Rule) | Plaintiffs argue the statute should give rise to an actionable duty supporting civil claims | § 14-127 is framed as a general prohibition and does not specify a mandatory duty to a particular class; plaintiffs did not allege negligence | No enforceable common-law duty arises from § 14-127 here; statute does not identify a specific protected class or mandatory duties that would create tort liability |
Key Cases Cited
- Cort v. Ash, 422 U.S. 66 (U.S. 1975) (formulates factors for implying a private cause of action)
- Touche Ross & Co. v. Redington, 442 U.S. 560 (U.S. 1979) (central inquiry is legislative intent to create private cause of action)
- Erie Ins. Co. v. Chops, 322 Md. 79 (Md. 1991) (statute framed for public protection does not imply private cause of action)
- Baker v. Montgomery County, 427 Md. 691 (Md. 2012) (applies Cort factors; general prohibitions and legislative silence weigh against implying remedy)
- Scull v. Groover, Christie & Merritt, P.C., 435 Md. 112 (Md. 2013) (statute benefiting a class may still not imply private remedy when scheme and history disfavour it)
- Blackburn Ltd. P’ship v. Paul, 438 Md. 100 (Md. 2014) (Statute-or-Ordinance Rule can create tort duties when statute protects a specifically identified class)