Mathews v. Cassidy Turley Maryland, Inc., 80 A.3d 269

Background

In 2004 Mathews sold rental properties and invested about $2.3 million of proceeds in five DBSI "TIC" (tenant-in-common) fractional interests marketed by Weiss and Cassidy Turley; purchases required DBSI (or affiliate) as mandatory manager and replacement required unanimous or majority owner action plus indemnity.
DBSI promised fixed returns and managed leasing/subtenants; investors were largely passive and lacked direct control.
DBSI defaulted in 2008 and filed Chapter 11; a court-appointed examiner produced a voluminous report describing conflicts, related‑party transactions, misleading marketing, and potential fraud.
Mathews sued Weiss and Cassidy Turley in 2010 asserting Maryland Securities Act claims (including unregistered sale and fraud), common‑law fraud, negligent misrepresentation, negligence, and breach of contract.
At summary judgment the circuit court held the TICs were not securities and granted judgment on statute-of-limitations grounds; it excluded the bankruptcy examiner’s report preliminarily. Mathews appealed; the Court granted certiorari.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether DBSI TICs are "securities" under the Maryland Securities Act (investment contract)	Mathews: TICs function as investment contracts—money invested in common enterprise with profits dependent on manager (DBSI) efforts	Cassidy Turley: TICs are property interests, not securities; investors retained meaningful property control	Held: TICs are investment contracts and therefore securities under the Howey test (passive investors, profits from manager's efforts)
Whether Securities Act claims are time‑barred	Mathews: limitations tolled by discovery rule and by fraudulent concealment (CJ § 5‑203); suit timely after Securities Division contact in 2009	Cassidy Turley: statutory limitations and repose provisions in CA § 11‑703(f) bar claims; discovery rule should not extend them	Held: Claims alleging registration/registration‑related violations are time‑barred (statutory repose); fraud/misrepresentation claims cannot be disposed on summary judgment because tolling for fraudulent concealment may apply — remanded for factual determination
Whether common‑law tort claims are time‑barred	Mathews: Poffenberger discovery rule and/or CJ § 5‑203 tolling apply	Cassidy Turley: Mathews should have discovered claims earlier; suit filed after CJ § 5‑101 period	Held: Summary judgment on common‑law claims was premature; fraudulent concealment tolling is a factual issue for trial — remanded
Admissibility/use of the DBSI bankruptcy examiner’s report	Mathews: report admissible as public record or under residual exception; experts may rely on it under Rule 5‑703	Cassidy Turley: report is hearsay and not a public agency report; untrustworthy if admitted wholesale	Held: Examiner’s report is not a "public record" under Rule 5‑803(8); may be admissible under Rule 5‑803(24) (residual exception) or as a reasonable basis for expert opinion under Rule 5‑703; circuit court correctly reserved ruling pending specific proffer

Key Cases Cited

SEC v. Howey, 328 U.S. 293 (defining "investment contract" under federal securities law)
United Housing Found., Inc. v. Forman, 421 U.S. 837 (discussing Howey touchstone: expectation of profits from managerial efforts of others)
SEC v. Glenn W. Turner Enterprises, Inc., 474 F.2d 476 (9th Cir.) (interpreting "solely" to require managerial efforts of others to be the undeniably significant ones)
Poffenberger v. Risser, 290 Md. 631 (Md. 1981) (Maryland discovery rule for accrual of tort claims)
Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (interpreting federal securities limitations and limiting tolling beyond statutory discovery rule)
Anderson v. United States, 427 Md. 99 (Md. 2012) (distinguishing statutes of limitations vs. repose; tolling analysis)
Ellsworth v. Sherne Lingerie, Inc., 303 Md. 581 (Md. 1985) (treatment of public‑records hearsay exception and trustworthiness)