William Aubrey MARSHALL, Plaintiff-Appellant, v. JAMES B. NUTTER & COMPANY, Defendant-Appellee.
No. 13-1940.
United States Court of Appeals, Fourth Circuit.
July 10, 2014.
Argued: May 14, 2014.
537
frain from reaching the additional issues presented on appeal regarding whether the plaintiffs’ common law claims properly were dismissed under
Based on the issues we have identified that cannot be resolved on the present record, we are unable to perform a “discriminating analysis of the particular question posed, in terms of the history of its management by the political branches, of its susceptibility to judicial handling ..., and of the possible consequences of judicial action.” Baker, 369 U.S. at 211-12, 82 S.Ct. 691. Accordingly, we vacate the district court‘s dismissal of all four plaintiffs’ common law tort claims, and instruct the district court to reexamine the justiciability of the ATS claims and the common law tort claims before proceeding further in the case.
III.
For these reasons, we vacate the district court‘s judgment and, consequently, the court‘s award of costs, and remand all the plaintiffs’ claims for further proceedings in accordance with the principles expressed in this opinion.
VACATED AND REMANDED.
Before NIEMEYER and WYNN, Circuit Judges, and ROBERT J. CONRAD, JR., United States District Judge for the Western District of North Carolina, sitting by designation.
Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Judge WYNN and Judge CONRAD joined.
NIEMEYER, Circuit Judge:
William Marshall, a resident of Baltimore, Maryland, who borrowed $252,000 from Savings First Mortgage, LLC, in a reverse mortgage transaction, commenced this action against James B. Nutter & Company, which purchased the mortgage from Savings First, alleging that Nutter was liable for conspiring with Savings First to violate the Maryland Finder‘s Fee Act. Marshall alleged that Savings First
The district court held that Nutter could not be a violator of
We agree and affirm.
I
Following Savings First‘s solicitation, Marshall entered into a reverse mortgage transaction on September 11, 2008. A reverse mortgage loan provides cash payments to the borrower based on the equity that the borrower has in his house. At the closing, Marshall executed a $252,000 note payable to Savings First and a deed of trust on his house on Payson Street in Baltimore to secure the note. Under the reverse mortgage, the amount of the note covered the payment of Marshall‘s prior mortgage, a cash payment to him at closing of $6,639, and the payment of future cash advances. It also covered the costs and fees of the transaction, including the payment to Savings First of a “loan origination fee” of $3,360 and a “correspondent fee” of $305.56. All closing documents designated Savings First as the lender.
During the closing, Savings First assigned the mortgage to Nutter, which “table funded” the loan. Table funding is a term of art referring to “a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds.”
Marshall commenced this class action against Nutter in the Circuit Court for Baltimore City on September 22, 2010, alleging that Nutter had “conspired with mortgage brokers” to violate a provision of the Maryland Finder‘s Fee Act that prohibits a mortgage broker from charging “a finder‘s fee in any transaction in which the mortgage broker ... is the lender.”
After removing the action to federal court and conducting discovery, Nutter filed a motion for summary judgment on Marshall‘s conspiracy claim, which the district court granted. In doing so, the court relied on Shenker, which held that “a defendant may not be adjudged liable for civil conspiracy unless that defendant was legally capable of committing the underlying tort alleged.” 983 A.2d at 428. The district court concluded that “only mortgage brokers are ‘legally capable’ of violating the Maryland Finder‘s Fee Act” and therefore that Nutter, which the complaint alleged was a “funding lender” and not a mortgage broker, could not be held liable for conspiring to violate the Act.
From the district court‘s final judgment dated July 22, 2013, Marshall filed this appeal.2
II
Marshall contends that the district court “misinterpret[ed] and misappli[ed] [the] Maryland Court of Appeals’ decision in Shenker” to conclude “that there [can] be no civil conspiracy liability by a non-broker for violation of the [Finder‘s Fee Act].” He asserts that the district court‘s ruling “undermines the very nature of conspiracy as a means of imposing vicarious liability upon parties for all acts committed pursuant to an agreement to commit a tort or violate a statute.” He urges us to hold instead that Nutter did not need to act as a mortgage broker to be legally capable of violating the Finder‘s Fee Act and that the district court therefore erred in entering judgment in Nutter‘s favor.
Nutter contends, on the basis of Shenker, that “a civil conspiracy claim requires proof that the defendant was ‘legally capable’ of committing the wrongdoing underlying the conspiracy.” It argues that, because
Thus, the sole question presented is whether, under Maryland law, a non-broker may be held liable for conspiring with a mortgage broker to violate
We begin by noting that the Finder‘s Fee Act itself does not prohibit conspiracy to collect unlawful finder‘s fees, nor does it provide a cause of action to recover for conspiracy to violate the Act‘s terms. Instead, the remedy section states simply that “[a]ny mortgage broker who violates any provision of this subtitle shall forfeit to the borrower the greater of: (1) [t]hree
Under Maryland law, civil conspiracy is defined as the “combination of two or more persons by an agreement or understanding to accomplish an unlawful act or to use unlawful means to accomplish an act not in itself illegal, with the further requirement that the act or the means employed must result in damages to the plaintiff.” Hoffman v. Stamper, 385 Md. 1, 867 A.2d 276, 290 (2005) (quoting Green v. Wash. Suburban Sanitary Comm‘n, 259 Md. 206, 269 A.2d 815, 824 (1970)) (internal quotation marks omitted). In addition to proving an agreement, “the plaintiff must also prove the commission of an overt act, in furtherance of the agreement, that caused the plaintiff to suffer actual injury.” Id. The agreement itself is not actionable under Maryland law “but rather is in the nature of an aggravating factor” with respect to the underlying tortious conduct. Id. Indeed, the Maryland Court of Appeals has consistently maintained that “conspiracy is not a separate tort capable of independently sustaining an award of damages in the absence of other tortious injury to the plaintiff.” Alleco Inc. v. Harry & Jeanette Weinberg Found., Inc., 340 Md. 176, 665 A.2d 1038, 1045 (1995) (quoting Alexander & Alexander Inc. v. B. Dixon Evander & Assocs., 336 Md. 635, 650 A.2d 260, 265 n. 8 (1994)) (internal quotation marks omitted). As the Alleco court explained:
There is no doubt of the right of a plaintiff to maintain an action on the case against several, for conspiring to do, and actually doing, some unlawful act to his damage.... It is not, therefore, for simply conspiring to do the unlawful act that the action lies. It is for doing the act itself, and the resulting actual damage to the plaintiff, that afford the ground of the action.
Id. (quoting Kimball v. Harman, 34 Md. 407, 409-11 (1871)) (internal quotation marks and citation omitted); see also id. (“No action in tort lies for conspiracy to do something unless the acts actually done, if done by one person, would constitute a tort‘“) (quoting Domchick v. Greenbelt Consumer Servs., Inc., 200 Md. 36, 87 A.2d 831, 834 (1952)). Thus, civil conspiracy requires an agreement, and an overt act in furtherance of the agreed-to unlawful conduct that causes injury, as well as the legal capacity of the conspirators to complete the unlawful conduct.
Building on this understanding of civil conspiracy, the Maryland Court of Appeals held in 2009 that “a defendant may not be adjudged liable for civil conspiracy unless that defendant was legally capable of committing the underlying tort alleged.” Shenker, 983 A.2d at 428. In Shenker, shareholders of Laureate Education, Inc., alleged that the members of the company‘s board of directors had breached their fiduciary duties when negotiating the price that the shareholders would receive in a “cash out merger,” a type of merger where minority shareholders are forced to take cash for their shares, thus freezing them out of the merger. The shareholders also sued several third-party investors who had joined two defendant board members in acquiring the company, alleging that the third-party investors were liable for conspiring with the board members in their breach of their fiduciary duties. In dismissing the civil conspiracy claim against the third-party investors, the Shenker court explained:
“[T]ort liability arising from a conspiracy presupposes that the coconspirator is
legally capable of committing a tort, that is, that [the coconspirator] owes a duty to the plaintiff recognized by law and is potentially subject to liability for breach of that duty.” ... “[A] cause of action for civil conspiracy may therefore not arise if the alleged conspirator, though allegedly a participant in the agreement underlying the injury, was not personally bound by the duty violated by the wrongdoing.”
Id. at 428-29 (quoting Bahari v. Countrywide Home Loans, No. 05-2085, 2005 WL 3505604, at *6 (D.Md. Dec. 16, 2005); BEP, Inc. v. Atkinson, 174 F.Supp.2d 400, 409 (D.Md.2001)). Consequently, the Shenker court concluded that “in Maryland, liability for civil conspiracy based on the underlying tort of breach of fiduciary duty (were it recognized) would require proof that the defendant, although not committing personally the underlying tort, was legally capable of committing the underlying tort.” Id. at 429. Thus, the court held that the shareholders’ civil conspiracy claim against the third-party investors had been properly dismissed because the investors owed no fiduciary duties to the shareholders and therefore could not be legally liable for civil conspiracy. Id.
We conclude that the district court correctly applied Shenker to Marshall‘s civil conspiracy claim against Nutter. Marshall sought to hold Nutter liable for conspiring with Savings First and other mortgage brokers to violate
To avoid this fairly straightforward conclusion, Marshall contends that the district court improperly limited “conspiracy claims solely to direct perpetrators of the underlying wrong.” (Emphasis added). This argument, however, misconstrues the district court‘s ruling. The district court did not hold that Nutter had to be a direct perpetrator of
Marshall also argues that the district court misapplied Shenker because lenders like Nutter are in fact “legally capable” of violating the Finder‘s Fee Act. He contends, in this regard, that the “[Finder‘s Fee Act] regulates lenders, and there is nothing standing in the way of a lender such as Nutter acting as a ‘mortgage broker.’ Thus, Nutter is ‘legally capable’ of violating the Act.” But the fact that Nutter could hypothetically act as a mortgage broker in some transaction and then be bound by
We thus affirm the district court‘s judgment dismissing Marshall‘s claim that Nutter conspired to violate
AFFIRMED
Bradley D. PETRY, Individually and on behalf of a Class of persons similarly situated; Stacey M. Miller, Individually and on behalf of a Class of persons similarly situated, Plaintiffs-Appellants,
v.
PROSPERITY MORTGAGE COMPANY; Wells Fargo Bank, N.A.; Walker Jackson Mortgage Corporation, formerly doing business as Prosperity Mortgage Corporation; Wells Fargo Ventures, LLC; The Long & Foster Companies, Inc.; Long & Foster Real Estate, Inc., Defendants-Appellees.
Mortgage Bankers Association, Amicus Supporting Appellees.
Bradley D. Petry, Individually and on behalf of a Class of persons similarly situated; Stacey M. Petry, f/k/a Stacey M. Miller, Individually and on behalf of a Class of persons similarly situated, Plaintiffs-Appellees,
v.
Prosperity Mortgage Company; Wells Fargo Ventures, LLC; Wells Fargo Bank, N.A.; Long & Foster Real Estate, Incorporated; Walker Jackson Mortgage Corporation, formerly doing business as Prosperity Mortgage Corporation; The Long & Foster Companies, Incorporated, Defendants-Appellants.
Mortgage Bankers Association, Amicus Supporting Appellants.
Nos. 13-1869, 13-1924.
United States Court of Appeals, Fourth Circuit.
Argued: May 14, 2014.
Decided: July 10, 2014.