Lawley v. Northam, 1:10-cv-01074

Property at 5809 Worcester Highway in Maryland sold around Sept. 5, 2008 from Northam/Immell to Dona Willoughby; Lawleys would occupy as tenants.
Hileman Real Estate, Inc. and Debora Hileman allegedly learned of defects during rental period from 2003–2008.
Defects alleged include high nitrates in water, asbestos concerns, mold in basement, and water intrusion issues.
Sellers provided a disclosure statement; it did not list asbestos, mold, or potability issues; Lawleys relied on it.
Lawleys allege non-disclosures and seek damages, rescission, unjust enrichment, and declaratory relief; Willoughby assigned claims to Lawleys.
Court denied in part and granted in part the Hilemans’ partial summary judgment; issues focus on duty of broker to disclose to non-purchasers/occupants and related equitable claims against brokers.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Duty of disclosure by seller’s broker to non-purchasers/occupants	Lawleys—brokers owe duties to occupants.	Hilemans—no duty to Lawleys as non-purchasers; privity required.	Yes; Hilemans owed duty to disclose material defects to Lawleys.
Existence of tort duty under Maryland statute/ethics rules	Statutory framework protects the public; duty extends to occupants.	Duty limited by privity and role as seller’s agent.	Statutory framework creates broader duty to disclose for brokers.
Viability of rescission against non-signatory broker	Fraud supports rescission against all who facilitated transaction.	Rescission limited to parties to contract; broker not necessary party.	Rescission claim viable against Hilemans; Lawleys’ standing as assignees remains unresolved for Willoughby’s rights.
Unjust enrichment against non-owner broker	Disgorgement of broker’s commission and related benefits.	No direct benefit conferred on broker by Lawleys; no enforceable claim.	Unjust enrichment claim dismissed as to Hilemans for Lawleys.
Declaratory judgment viability and standing	Lawleys seek declarations regarding rights and duties in transaction.	Equitable relief inappropriate absent direct stake/standing.	Declaratory relief denied for Lawleys; issues reserved as to Willoughby.

Gross v. Sussex Incorp., 332 Md. 247, 630 A.2d 1156 (Md. 1993) (real estate broker duties under licensing statute and ethics)
Lopata v. Miller, 122 Md. App. 76, 712 A.2d 24 (Md. Ct. Spec. App. 1998) (limits on broker duty to disclose defects; reliance on knowledge)
Allen v. Dackman, 413 Md. 132, 991 A.2d 1216 (Md. 2010) (lead paint statute creates tort duty to occupants)
Matthews v. Amberwood Associates, 351 Md. 544, 719 A.2d 119 (Md. 1998) (landlord duty to abate dangerous conditions under foreseeability/control)
Gordon v. Burr, 506 F.2d 1080, 1084-85 (2d Cir. 1974) (fraud/recission considerations in non-privity contexts)
Pinter v. Dahl, 486 U.S. 622 (1988) (fraud-based rescission may reach non-contractual defendants)
Washington Homes, Inc. v. Interstate Land Dev. Co., Inc., 281 Md. 712, 382 A.2d 555 (Md. 1978) (availability of rescission where fraud defeats contract objectives)
Benjamin v. Erk, 138 Md. App. 459, 771 A.2d 1106 (Md. Ct. App. 2001) (incidental damages in equitable rescission context)
Johns Hopkins Univ. v. Hutton, 297 F. Supp. 1165 (D. Md. 1968) (equitable remedies and non-privity considerations in securities/contract contexts)
Maslow v. Vanguri, 168 Md. App. 298, 896 A.2d 408 (Md. Ct. App. 2006) (rescission and fraud-based relief in Maryland)