IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

(Southern Division) PAUL GRAVES, et al : : Plaintiff, : : v. : Case No.: PMJ-08-CV-207 : FELICITE GANAO, et al. :

Defendants : __________________________________________________________________________

PLAINTIFFS’ NOTICE OF DISMISSAL OF TWO CLAIMS AGAINST DEFENDANT FIRST CLASS TITLE, INC. AND OPPOSITION TO DEFENDANT FIRST CLASS

TITLE, INC.’S MOTION TO DISMISS

COMES NOW, Plaintiffs Paul Graves and Latrina Graves, by and through their

attorneys Stan Brown, Esq. and Brynee K. Baylor, Esq. pursuant to Maryland Rule 2-322,

respectfully request that this Court hereby dismiss two claims against First Class Title, Inc set

forth below and deny, in its entirety, Defendant First Class Title, Inc.’s Motion to Dismiss the

remaining counts of Plaintiffs’ Complaint, and for grounds state:

1. That Plaintiffs hereby voluntarily dismisses the following claims against Defendant

First Class Title, Inc.: The Claim of Breach of Fiduciary Obligation and Claim of breach of Md.

CODE ANN. COMM. LAW, SECTION 13-101.

2. That Plaintiffs, in their Complaint, clearly and particularly state, infer, and allude to

sufficient facts in support of the claim that said Defendant, First Class Title, Inc., did, at all times

pertinent hereto, knowingly aid, abet, and deliberately and willfully act as the actual instrument

of said co-Defendants, in the alleged conduct by those Defendants to defraud Plaintiffs.

Therefore, Plaintiffs, as a matter of law, have sufficiently alleged an equal and joint liability on

the part of said Defendant, First Class Title, Inc., for all said tortious actions allegedly committed

CoStar Realty Information, Inc. et al v. Klein & Heuchan, Inc. et al Doc. 381

Dockets.Justia.com

by co-Defendant, Felicite Ganao, and, as such, has sufficiently stated a claim for intentional

misrepresentation (fraud and deceit) against said Defendant, First Class Title, Inc.

3. That Plaintiffs, in their Complaint, clearly and particularly state, infer, and allude to

sufficient facts in support of the claim that said Defendant, First Class Title, Inc., did, at all times

pertinent hereto, knowingly aid, abet, and deliberately and willfully act as the actual instrument

of said co-Defendant, Felicite Ganao, in the alleged conduct by co-defendants to defraud

Plaintiff. Therefore, Plaintiffs, as a matter of law, have sufficiently alleged an equal and joint

liability on the part of said Defendant, First Class Title, Inc., for all said tortious actions allegedly

committed by co-Defendant, Felicite Ganao, and, as such, has sufficiently stated a claim for

quieting title against said Defendant, First Class Title, Inc.

4. That Plaintiffs, in their Complaint, clearly and particularly state, infer, and allude to

sufficient facts in support of the claim that said Defendant, First Class Title, Inc., did, at all times

pertinent hereto, knowingly aid, abet, and deliberately and willfully act as the actual instrument

of said co-Defendant, Felicite Ganao, in the alleged conduct by her to defraud Plaintiff.

Therefore, Plaintiff, as a matter of law, has sufficiently alleged an equal and joint liability on the

part of said Defendant, First Class Title, Inc., for all said tortious actions allegedly committed by

co-Defendants, and, as such, has sufficiently stated a claim for civil conspiracy to commit fraud

against said Defendant, First Class Title, Inc.

5. That Plaintiffs, in their Complaint, clearly and particularly states, infers, and alludes to

sufficient facts in support of the claim that said Defendant, First Class Title, Inc., did, at all times

pertinent hereto, knowingly aid, abet, and deliberately and willfully act as the actual instrument

of said co-Defendant, Felicite Ganao, in the alleged conduct by Ms. Ganao to defraud Plaintiffs.

Therefore, Plaintiffs, as a matter of law, have sufficiently alleged an equal and joint liability on

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the part of said Defendant, First Class Title, Inc., for all said tortious actions allegedly committed

by co-Defendant, Felicite Ganao, and, as such, has sufficiently stated a claim for violations of the

claims against Defendant First Class Title, Inc.

6. That Plaintiffs, in their Complaint, clearly and particularly state, infer, and allude to

sufficient facts in support of the claim that said Defendant, First Class Title, Inc., did, at all times

pertinent hereto, knowingly aid, abet, and deliberately and willfully act as the actual instrument

of said co-Defendant, Felicite Ganao, in the alleged conduct by Ms. Ganao to defraud Plaintiffs.

Therefore, Plaintiffs, as a matter of law, have sufficiently alleged an equal and joint liability on

the part of said Defendant, First Class Title, Inc., for all said tortious actions allegedly committed

by co-Defendant, Felicite Ganao, and, as such, have sufficiently stated a claim for aiding and

abetting fraud against said Defendant, First Class Title, Inc.

WHEREFORE, and as is more fully explained more fully in accompanying

Memorandum of Law, Plaintiffs move that this Honorable Court hereby deny Defendant First

Class Title, Inc.’s Motion to Dismiss.

Respectfully submitted, Date: March 21, 2008

__/s/______________________ _/s/_______________________ Stan Brown, Esq. Brynee Baylor, Esq. 9500 Arena Drive 1025 Connecticut Avenue Suite 104 Suite 1202 Largo, Maryland 20774 Washington, D.C. 20036 Counsel for Plaintiff Co-Counsel for Plaintiff

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND (Southern Division)

PAUL GRAVES, et al : : Plaintiff, : : v. : Case No.: PMJ-08-CV-207 : FELICITE GANAO, et al. :

Defendants : __________________________________________________________________________

MEMORANDUM IN SUPPORT OF PLAINTIFFS’ OPPOSITION TO DEFENDANT FIRST CLASS TITLE, INC.’S MOTION TO DISMISS

COMES NOW Plaintiffs Paul Graves and Latrina Graves, by and through their attorneys,

Stan Brown, Esq. and Brynee K. Baylor, Esq., pursuant to Maryland Rule 2-322, submit this

Memorandum of Law in support of their opposition to Defendant First Class Title’s Motion to

Dismiss, and for grounds states:

STATEMENT OF FACTS

Plaintiffs owned the subject residential property described as “1400 Golf Course Drive,

Bowie, Maryland 20720.” On or about August 2005, Mr. and Mrs. Graves were facing

foreclosure. They were approached by Mr. Newton Gainer about a “Foreclosure Rescue Scam,”

whereby would reverse the foreclosure and Mr. and Mrs. Graves would transfer the title to their

home, and ultimately Felicite Ganao would transfer the property back to Mr. and Mrs. Graves

within a year.

The Defendant, Felicite Ganao, is a resident of Prince George’s County, Maryland who

entered into a contract to purchase the Plaintiffs’ real property in Prince George’s County,

Maryland. All Defendants have engaged in tortious conduct in the State of Maryland and

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breached their contractual obligations to the Plaintiffs. When the property was transferred to

Felicite Ganao, Mr. and Mrs. Graves did not receive any proceeds/consideration from the

transfer of title. Moreover, Mr. and Mrs. Graves were provided a lease for the aforementioned

property whereby they were required to pay six thousand five hundred dollars ($ 6,500.00) a

month in rent to Felicite Ganao to reside in the property.

Despite her representations, Ms. Ganao was not out to help Mr. and Mrs. Graves regain

title to their home. Instead, Ms. Ganao and his affiliates and/or agents were looking to obtain the

Property and the large amount of equity in it for themselves.

First Class Title, Inc. was aware and actively participated in the “Foreclosure Rescue

Scam,” whereby Mr. and Mrs. Graves retained possession of their home, and paid rent to Ms.

Ganao.

On September 20, 2007, Mr. and Mrs. Graves through undersigned Counsel sent Felicite

Ganao a Rescission Notice, whereby Mr. and Mrs. Graves, pursuant to the Federal Truth in

Lending Act, 15 U.S.C., §§1635 and 1639 and Regulation Z, 12 C.F.R. § 226.23, rescinded the

aforementioned transactions. See Exhibit 1.

At all relevant times, Mr. and Mrs. Graves were informed that even though the title had

been transferred to Ms. Ganao, they were still the owners of the property, that they would reside

in the property, and receive the title back after the expiration of the year. However, instead of

receiving their title back as promised by Ms. Ganao and others, Mr. and Mrs. Graves were served

a Complaint for possession of the Property in the Circuit Court for Prince George’s, Maryland.

A Notice of Lis Pendins dated September 21, 2007 (Case No. CAE07-27391) and instant

Complaint have been filed in Prince George’s County’s Recorder of Deeds and the Circuit Court.

See Exhibit 2.

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The Defendants in this action willfully and intentionally concealed material facts and

information from the Plaintiff herein, and these same Defendants refused to perform and failed to

perform material parts of the contracts by and between the parties hereto. As a part of their

“foreclosure rescue scam” scheme, these Defendants unlawfully induced the Plaintiffs to transfer

title to the property which is the subject of this proceeding and these Defendants materially

breached the terms and conditions of the contracts by and between the parties. Further, and, as

such, Defendant Commercial Lending L.L.C. did at all times pertinent hereto knowingly,

actively and intentionally participated in, and aided and abetted all said fraudulent activities of its

said co-Defendants, including Defendant Felicite Ganao.

All Defendants a) have committed acts of intentional misrepresentation (fraud) against the

Plaintiff, b) have breached their fiduciary duty to the Plaintiff, c) have breached their implied

covenants of good faith & fair dealing, d) have caused a conversion of the Plaintiffs’ money and

real property, e) have been unjustly enriched through a civil conspiracy perpetrated against the

Plaintiff, and f) have violated numerous provisions of the Protection of Homeowners in

Foreclosure Act, Md. Code Ann., Real Property Article, Sections 7-301 through 7-231 (2005),

the TILA, the RESPA , the Maryland Mortgage Lender Law and the Maryland Secondary

Mortgage Loan Law.

STANDARD OF REVIEW

Motion To Dismiss

It is well settled that “[w]hen moving to dismiss, a defendant is asserting that, even if the

allegations of the complaint are true, the plaintiff, as a matter of law, is still not entitled to relief.”

Hrehorvich v. Harbor Hospital Center, 93 Md. App. 772, 784, 614 A.2d 1021 (1992). Thus, in

considering a motion to dismiss for failure to state a claim, the Court examines only the

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sufficiency of the pleading. Id. “The grant of a motion to dismiss is proper only if the

Complaint does not disclose, on its face, a legally sufficient cause of action.” Id., at 785, 614

A.2d 1021.

A Court, therefore, must assume the truth of all well-pleaded relevant facts as alleged in

the Complaint, and all reasonable inferences drawn therefrom. Morris v. Osmose Wood

Preserving, 340 Md. 519, 531, 667 A.2d 624 (1995); Stone v. Chicago Title Ins. Co. of Md., 330

Md. 329, 624 A.2d 496, 498 (1993); Figueiredo-Torres v. Nickel, 321 Md. 642, 584 A.2d 69, 72

(1991); Sharrow v. State Farm Mut. Auto. Ins. Co., 306 Md. 754, 511 A.2d 492, 499-500 (1986);

Flaherty v. Weinberg, 303 Md. 116, 492 A.2d 618, 628 (1985); Tadjer v. Montgomery Co., 300

Md. 539, 479 A.2d 1321, 1322 (1984); Hoffman v. Key Fed. Sav. & Loan, 286 Md. 28, 416

A.2d 1265, 1268 (1979); Arnold v. Carafides, 282 Md. 375, 384 A.2d 729, 733 (1978); Krieger

v. J.E. Greiner Co., 282 Md. 50, 382 A.2d 1069, 1071 (1978); Zion Evangelical Lutheran Church

v. State Highway Admin., 276 Md. 630, 350 A.2d 125, 126 (1976); Schwartz v. Merchants Mort.

Co., 272 Md. 305, 322 A.2d 544, 546 (1974); Desser v. Woods, 266 Md. 696, 296 A.2d 586, 588

(1972). See also, e.g., Heritage Harbor, L.L.C. v. Reynolds, 143 Md. App. 698 A.2d 806, 810

(2002) (“A Court must assume the truth of all relevant facts taken directly from plaintiff’s

Complaint.”)

As recently noted by the Supreme Court in Bell Atlantic Corp. v. Twonbly, “Federal Rule

of Civil Procedure 8(a)(2) requires only a short and plain statement of the claim showing that the

pleader is entitled to relief,” in order to “give the defendant fair notice of what the…claim is and

the grounds upon which relief rests.” 127 S.Ct. 1955, 1964 (2007) quoting Conley, 355 U.S. at

47. The Bell Atlantic opinion further acknowledges that, “a complaint attacked by a Rule

12(b)(6) motion to dismiss does not need detailed factual allegations. Id. Instead, “factual

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allegations must be enough to raise a right to relief above the speculative level…on the

assumption that the allegations in the complaint are true (even if doubted in fact).” Id. At 1965.

ARGUMENT

I. THE ACTION FOR INTENTIONAL MISREPRESENTATION SHALL BE MAINTAINED.

Maryland law recognizes that it is unfair to impart knowledge of a tort when a potential

plaintiff is unable to discover the existence of a claim due to fraud or concealment on the part of

the defendant. Dual Inc. v. Lockheed Martin Corp., 383 Md. 151, 170 (Md. 2004). The

aggrieved party asserting such fraud or concealment must plead affirmatively and with

specificity the supporting facts in its complaint. Doe v. Archdiocese of Washington, 114 Md.

App. 169, 188-89, 689 A.2d 634, 644 (1997).

In their First Verified Complaint the Plaintiffs pled the alleged fraud in the matter as

follows:

94. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company did personally and/or through their agents, employees and their affiliates aid and abet each other and have committed acts of intentional misrepresentation, deceit and fraud in preparing and recording the noted documents. 95. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company prepared and signed the HUD-1 Settlement Statements and obtained the Plaintiffs’ signatures on the HUD-1 Settlement Statements. Defendants made misrepresentations on the HUD-1 Settlement Statements and thereby defrauded Plaintiffs of money due them. 96. The Defendants defrauded the Plaintiffs by stealing their money, title and equity in their residence. The Plaintiffs’ homes were appraised, using inflated appraisals, at or above the purchase prices paid by the Defendant Felicite Ganao, yet the Plaintiffs received minimal or zero consideration for their home at settlement. The Defendants prepared fraudulent documents that allegedly conveyed the Plaintiffs home to the Defendant Felicite

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Ganao without adequate consideration. 97. Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company, lenders and appraisers aided and abetted each other to pay cash to themselves, from rental payments & escrow payments, and from the Plaintiffs’ funds disbursed at the fraudulent settlements. 98. The Plaintiffs had substantial equity in their homes, yet Plaintiffs did not receive any cash, or only nominal cash, at their respective settlements. 99. The Defendant Lenders funded loans to the Defendant Felicite Ganao as part of a scheme to fraudulently take title to the Plaintiffs’ home. The Defendant Lenders and The Defendant Title Insurance Companies & Title Insurance Agents placed inaccurate and false deeds of trust liens on Plaintiffs’ home. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company submitted perjured applications to the Defendant Lenders and to others to obtain the promissory notes and deeds of trust liens on Plaintiffs’ homes. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company recorded inaccurate and false deeds that transferred Plaintiffs’ homes to the Defendant Felicite Ganao. Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company were the mortgage foreclosure consultants, mortgage brokers, settlement agents, lenders and/or appraisers for the subject fraudulent real estate transactions and they had prior knowledge that a) the Defendant Felicite Ganao’s loan applications contained perjured statements, b) that the “deed of trusts” contained factual inaccuracies by the Defendant Felicite Ganao, c) that the “deeds” contained factual inaccuracies by the Defendant Felicite Ganao, d) that the HUD-1 Settlement Statements did not accurately reflect all funds that were disbursed at the respective settlements, e) that the appraisals for the loans from the Lenders to the Straw-purchasers were fraudulently inflated. 100. Subsequent to the respective settlement dates the Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company aided and abetted the Defendant Felicite Ganao to collect improper rental payments, mortgage payments and unauthorized late fees from the Plaintiffs. 101. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and

9

First American Title Insurance Company and their agents, employees and affiliates advised Plaintiffs that the subject fraudulent and incomplete documents would save the Plaintiffs’ home from foreclosure. 102. Despite the Defendant Felicite Ganao’s breach of contracts as stated above, and despite Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company failure to perform any of the required terms and conditions of the alleged closing documents, including the payment of adequate consideration to the Plaintiffs, on several occasions the Defendants threatened to illegally evict the Plaintiffs from their residences without filing the appropriate civil action in landlord & tenant court and/or a docket to foreclose. 103. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company fraudulently induced Plaintiffs to sign the fraudulent “HUD-1 Settlement Statements.” 104. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company slandered Plaintiffs’ title and recorded certain Deeds, Promissory Notes and Deeds of Trusts purporting to transfer the Plaintiffs’ title to their residential property to the Defendant Felicite Ganao. 105. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company through their employees, agents and affiliates fraudulently obtained title to the Plaintiffs’ homes and these Defendants prepared documents to illegally “lease-back” the homes to the Plaintiffs. The Defendant Felicite Ganao did not obtain single-family rental licenses as required by the local County Codes. 106. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company and their employees, agents and affiliates willfully, intentionally and deceitfully concealed and misrepresented facts regarding their intentions with respect to the Plaintiffs’ money, residential property and title, and Plaintiffs relied upon Defendants’ willful, deliberate and deceitful misrepresentations to their detriment.

In this matter, the Plaintiffs have stated with specificity the underlying supporting

facts regarding their cause of action as is required under the law. In Paragraph 60, Plaintiffs

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assert that, “Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title,

Inc., Global Mortgage, Inc. and First American Title Insurance Company prepared and

signed the HUD-1 Settlement Statement and obtained the Plaintiff’s signatures on the HUD-

1 Settlement Statements.”

Additionally, the Plaintiffs state in Paragraph 64 that, “Felicite Ganao, Global

Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc. and First

American Title Insurance Company placed inaccurate and false deeds of trust liens on

Plaintiff’s home.” Further, Plaintiffs alleges that the Defendants “Felicite Ganao, Global

Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc. and First

American Title Insurance Company recorded inaccurate and false deeds that transferred

Plaintiff’s home to the Defendant Straw-purchaser.” These statements denote activities that

were taken by the Defendant that were in furtherance of the fraud alleged in the First

Verified Complaint.

Taken as a whole these statements sufficiently allege with the particularity required

under Maryland law the claim of fraud against Felicite Ganao, Global Mortgage Financial,

Newton Gainer, First Class Title, Inc., Global Mortgage, Inc. and First American Title

Insurance Company. As such, there is a valid basis for asserting the claim of intentional

misrepresentation and this action shall be maintained.

II. BREACH OF CONTRACT ACTION SHALL BE MAINTAINED.

First Class Title, Inc. breached its contractual obligation to Plaintiffs through its

receipt of substantial monies. As a result of the fraudulent transaction, First Class Title,

Inc. had a contractual obligation to Plaintiffs. Specifically, in Plaintiffs’ Complaint, the

contractual obligation was documented:

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74. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company did not provide any services (or provided negligent services) to the Plaintiffs, but received substantial cash from the Plaintiffs’ funds at the respective settlements. 75. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company failed to credit, pay or tender the required consideration to the Plaintiffs as stated in the HUD-1 Settlement Statements and failed to credit, pay or tender the required consideration to the Plaintiffs as stated in the recorded Deeds. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company transferred title to Plaintiffs’ property to themselves or their affiliates pursuant to the fraudulent Deeds. 76. The Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company actions constitute material breaches of the closing documents. The Defendant Felcite Ganao’s actions and the Defendant Appraisers’ actions constitute material breaches of the closing documents, and the subject “Leases” and “Option Contracts” are void since they do not include the Real Property Article required clause: “This not a contract to buy”. As a direct and proximate result of the Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company breaches of these contracts and leases, the Plaintiffs have suffered substantial damages. As consideration for these contracts and leases Plaintiffs paid Defendants substantial cash at the respective settlements. In addition, Plaintiffs paid the Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company improper closing costs, rental payments, mortgage payments and unauthorized late fees subsequent to the respective settlements. See Compl. pp 73 – 76.

Plaintiffs sufficiently pled the action for breach of Contract against First Class

Title, Inc. by setting forth the elements of breach of contract in its Complaint, it appears that in its opposition, First Class Title is attempting to have this Court decide conclusions of

fact and not law. As such, it is improper to dismiss this cause of action since Plaintiffs have

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sufficiently pled this action and Defendant First Class Title, Inc. has failed to provide valid

justification for dismissing the action.

III. THE SEPARATE ACTION OF BREACH OF FIDUCIARY OBLIGATION IS

HEREBY DISMISSED BY PLAINTIFFS AGAINST FIRST CLASS TITLE, INC.

IV. UNJUST ENRICHMENT SHALL BE MAINTAINED.

In Plaintiffs’ Complaint, it was clearly alleged that Defendant First Class Title, Inc.,

“enjoy[ed] a benefit conferred upon them by the Plaintiffs in the form of real property, record

title and/or money belonging to and/or provided by Plaintiffs, but misappropriated by

Defendants. See Compl. at ¶ 91. The Complaint further states, that Defendant First Class Title,

Inc. understood and knew that it was being unjustly enriched at the expense of the Plaintiffs

when it knowingly accepted the fraudulent benefit of the aforesaid real property, record title,

and/or money. See Compl. at ¶ 92. Finally, the Plaintiffs state that First Class Title, Inc. had no

equitable title to the benefit that it received. See Compl. at ¶ 93.

There is no basis for Defendant First Class Title, Inc. to assert that it is entitled to a

dismissal, from this action because it is apparent that the use of newly asserted facts in an effort

to draw conclusions of law is improper and will not lead to a dismissal of those allegations. As

such, the action of unjust enrichment must be maintained since it was sufficiently pled.

V. CIVIL CONSPIRACY TO COMMIT FRAUD SHALL BE MAINTAINED

Since Civil Conspiracy is a tort recognized in conjunction with another tort, in this case,

fraudulent misrepresentation, the state of Maryland will recognize this action. Alexander v.

Evander, 326 Md. 635, 650 A.2d 260 (1994). In paragraphs 95 though 97 of the complaint, the

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Plaintiff states her claim for civil conspiracy to commit and violate state and federal statutes as

follows:

“96. In committing the unlawful and tortious acts outlined above, the Defendants, Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc. and First American Title Insurance Company conspired with one another, their employees, agents, affiliates and others by agreement and understanding. 97. The Defendants, Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc. and First American Title Insurance Company committed the unlawful and tortious acts outlined above in furtherance of the conspiracy and used unlawful and tortious means, as outlined above, to accomplish the aim of keeping for themselves and denying the Plaintiff certain real properties, record title, money and profits which rightfully belong to the Plaintiff. 98. As a direct and proximate result of the conspiracy, the Plaintiff suffered actual legal damages.”

The money, real property and title taken from the Plaintiffs by said Defendant

Commercial Lending was used by all of the Defendants for monetary gain. To gain the money at

stake in the transaction, the Defendants must have coordinated their efforts together. Based on

the financial information available in this transaction and the documents and circumstances that

indicated that caution was necessary before even considering making a loan in this transaction

there is evidence here that the Defendants were working together to further this scheme.

Further, the Defendants have made clear that they intend to sell the Plaintiffs’ real

property and title to third parties. The money, real property and title converted by the

Defendants had significant value at the time of conversion, and the transaction as a whole has

cost the Plaintiffs’ home, and all of the hard work that accompanies home ownership. Therefore,

in light of these circumstances, it is clear that Plaintiffs adequately stated and inferred (and all

inferences to be drawn certainly indicate) in their Complaint that Defendant, First Class Title,

Inc., did actively conspire with Defendants to defraud Plaintiffs of their property.

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VI. PLAINTIFFS’ PHIFA CLAIM SHALL BE MAINTAINED.

Plaintiffs state a claim against First Class Title, Inc. for violation of the Maryland

Protection of Homeowners in Foreclosure Act, MD. REAL PROP. § 7-301, et seq. (“PHIFA”).

PHIFA is an emergency measure enacted to protect the public health and welfare against what

was seen by the legislature as pernicious and dangerous activities in connection with

“foreclosure rescue scams.” PHIFA was enacted in 2005 in emergency legislation by the

Maryland General Assembly. The legislative intent to protect homeowners and declare some

transactions and documents as void against public policy could not be more apparent. The

preamble to final legislation enacted by the legislature explains the need and intent of PHIFA:

FOR the purpose of specifying the form and contents of certain contracts and documents; providing that a homeowner has the right to rescind certain contracts and transactions within a certain time; providing for the manner of giving notice of rescission; requiring a homeowner who rescinds certain contracts or transactions to repay certain funds with interest within a certain time; prohibiting foreclosure consultants and foreclosure purchasers from engaging in certain practices; requiring a homeowner to be provided with copies of certain documents; providing that certain provisions in certain documents are void; prohibiting certain documents from being recorded within a certain period; establishing certain rebuttable presumptions; requiring a certain audit account to be restated under certain circumstances; providing for the enforcement of this Act; providing penalties for violations of this Act; requiring a written notice of a foreclosure sale to contain a certain statement; providing for the effect of a certain order for resale in a foreclosure proceeding; exempting certain persons from certain provisions of this Act; providing for the effect and construction of certain provisions of this Act; requiring a certain notice be sent to certain record owners; requiring the Consumer Protection Division of the Office of the Attorney General to maintain a list of certain nonprofit organizations and to provide certain information to certain homeowners; defining certain terms; making this Act and emergency measure; and generally relating to foreclosure.

MD LEGIS 509 (2005)(S.B. 761)[emphasis supplied].

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PHIFA sets forth specific requirements and prohibits delineated activities in connection

with, among other things, “foreclosure reconveyances.” As set forth in the Complaint, the

Plaintiffs’ transactions involved foreclosure reconveyances under the PHIFA

Plaintiffs allege that First Class Title, Inc. violated the PHIFA by signing fraudulent

deeds to the Plaintiffs’ residences during the settlement. See Compl. ¶ 102-103. Defendant

First Class Title, Inc. argues that it is exempt from the reach of PHIFA because it is a title

insurance agent/producer. See First Class Title, Inc.’s Memorandum at p. 9. The PHIFA

provides a limited exception from its coverage for “[a] title insurance producer licensed in the

State, while performing services in accordance with the person’s license.” Md. Real Prop. § 7-

302(a)(6)[emphasis supplied]. No exception is available for a licensed insurance producer while

not performing services in accordance with their license. The Insurance Article states as follows:

A title insurance producer may not convert or misappropriate money received or held in escrow or trust while: (1) acting as a title insurance producer; or (2) providing any escrow, closing, or settlement services. Md. Insur. 10-121(a).

Moreover, even if First Class Title, Inc. was a title insurance producer acting in accordance with

its license, it would still not qualify for the exception to PHIFA that it claims, as the company

was engaging in activities designed to transfer title of homes in foreclosure to its associates and

co-conspirators. The PHIFA statute clearly provides that it applies to persons who would

otherwise qualify for an exception in certain circumstances found here:

[the PHIFA] does apply to an individual who:

(1)Is functioning in a position listed under subsection (a) of this section; and (2) Is engaging in activities or providing services designed or intended to transfer title to a residence in foreclosure directly or indirectly to that individual, or an agent or affiliate of that individual.

MD. REAL PROP. § 7-306(b).

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In this case, First Class Title, Inc. is subject to PHIFA because it was engaging in

activities “designed or intended to transfer title to a residence in foreclosure directly or indirectly

to that individual, or an agent or affiliate of that individual.” Id. Specifically, First Class was

transferring title indirectly to its co-conspirators in the scam to deprive the Plaintiffs of title to

their home and all of the equity in their home. See Compl. at p. 37. Therefore, First Class Title,

Inc. does not qualify for any exception to liability under PHIFA, and Plaintiffs’ claim against

Tomlin for violations of the same statute should not be dismissed.

VII. AIDING AND ABETTING SHALL BE MAINTAINED.

As stated by Plaintiffs in their First Verified Complaint, p. 36, ¶ 125 through 134:

“At all times relevant hereto, Defendants by and through their affiliates, divisions,

enterprises, representatives, employees and agents, knowingly and willfully aided and abetted the

fraudulent “foreclosure rescue scam” scheme described above.

Defendants’ actions were taken with full knowledge and acceptance of the fraudulent

“foreclosure rescue scam,” which enabled Defendants to take security interests in Plaintiff’s

property and collect other fees and income.

The Defendant, First Class Title, Inc. aided and abetted the scheme to defraud Plaintiffs by

providing substantial assistance to each Defendant. This substantial assistance included, among

other things: (a) First Class Title, Inc. promoting and encouraging minimal underwriting standards;

(b) failing to conduct adequate due diligence before securing mortgages on Plaintiffs’ property; and

(c) recording mortgages on Plaintiffs’ property with the knowledge that Defendant Straw-

purchasers had obtained titles and deeds by fraudulent means.

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Defendants obtained constructive and actual knowledge of the fraudulent “foreclosure rescue

scam” described above through, among other things:

As a direct and proximate result of said aiding and abetting, Plaintiff suffered serious injuries.

Without Defendants’ substantial assistance, involvement, and participation, the fraudulent

“foreclosure rescue scam” would not have been possible. The Defendants’ aiding and abetting

renders void and unenforceable any security interest that Defendants purported to transfer to the

Defendant Straw-purchaser and/or Defendant Lenders.

In Maryland courts have long relied on the “justifiable reliance” standard in determining

whether a lender, based on the qualities of a particular applicant and the circumstances of the

particular case, had a duty to investigate a loan applicant’s representations. In re Sharp, 2007

Bankr. 3349, 3361 (Md. Sept. 27, 2007). Generally, the justifiable reliance standard does not

impose a duty to investigate unless there are circumstances indicating that an investigation is

appropriate and reliance is unwarranted. Field v. Mans, 516 U.S. 59, 71, 116 S.Ct. 437 (1995)

(citing Restate. (2d) of Torts (1976).

“Where, however, the lender is sophisticated, the sums involved are significant, there is no

history upon which the lender can rely and the only information that the lender has comes from

the borrower, the lender cannot later be heard to complain that it was duped.” Sharp, supra, at

3362; see also, e.g., In re Merrick, 347 B.R. 182, 187-88 (Bankr.M.D.La.2006) [commenting

that the fact that the lender, which is “in the business of making mortgage loans” and “easily

could have inspected the state court succession record”, and yet put its “reliance solely on the

debtor’s representations concerning her ownership of the property to be mortgaged, without

verifying her ownership of the property, is astounding.”]

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If a party knowingly aids and abets another in a fraudulent activity, then the one who has

aided and abetted stands just as guilty, just as liable, as the one who, in a more “hands on” and

direct manner, engaged in said fraudulent conduct. Duke v. Feldman, 245 Md. 454, 226 A.2d

345, 347 (1967). The aider and abetter becomes liable as a principal. Id. This is not a point

open to debate or discussion, but is a matter of long-settled law. Id. As such, the elements of an

action for tortious aiding and abetting in Maryland are as follows:

“1) Independent tortious conduct by the direct perpetrator of the tort; 2) Substantial assistance, aid, or encour- agement to the principal tortfeasor; and, 3) Actual knowledge of the aider and abettor of the wrongful conduct and his or her role in furthering such conduct. See Alleco, Inc. v. Harry and Jeanette Weinberg Foundation, Inc., 340 Md. 176, 665 A.2d 1038,

1049-50 (1995).

It is long-settled in Maryland that “a person may be held as liable as a principal for a tort if

he, by any means, encouraged, incited, aided or abetted the act of the direct perpetrator of the

tort.” Duke v. Feldman, supra. As aptly stated in Purdum v. Edwards, 155 Md. 178, 141 A. 550,

554 (1927) [in upholding aider and abettor liability in a deceit action]:

“[W]hen several participate, they may do so in different ways at different times, and in very unequal proportions. One may plan, another may procure the men to execute, others may be the actual instruments in accomplishing the mischief, but the legal blame will rest upon all as joint actors.” See also, e.g.,“1 Cooley, Law of Torts 244 (3d ed. 1906) [‘All who actively participate in any

manner in the commission of a tort, or who … aid or abet its commission, are jointly and

severally liable therefore.’]; Prosser, Law of Torts 292 (4th ed. 1971) [‘[A]ll those who … lend

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aid to the wrongdoer are equally liable with him.’]; Restatement (2nd) of Torts, section 876(b).”

Alleco, Inc., supra.

As such, regarding the said fraudulent conduct committed by Defendants and as directly

aided and abetted by Defendant, First Class Title, Inc. Thus, Plaintiffs in their Complaint do, in

fact, clearly and particularly allege that said Defendant, First Class Title, Inc. defrauded the

Plaintiff by directly and knowingly aiding and abetting the other Defendants theft and conversion

of Plaintiffs’ money, title and equity in their property. The assets and opportunities taken by

Defendants were intentionally taken without the agreement of the Plaintiffs, without consent,

permission, justification or consideration, and constituted a conversion of the Plaintiffs’ money,

residential property and title. The money, real property and title taken from the Plaintiffs by the

actions of said Defendant First Class Title, Inc. was converted to the use of all said Defendants,

and the Defendants have made clear that they intend to sell the Plaintiffs’ real property and title

to third parties. Further, the said money, real property and title converted by the Defendants had

significant value at the time of conversion.

As such, and again, in regard to Defendant First Class Title’s motion to dismiss it is settled

that “[w]hen moving to dismiss, a defendant is asserting that, even if the allegations of the

complaint are true, the plaintiff, as a matter of law, is still not entitled to relief.” Hrehorvich v.

Harbor Hospital Center, supra. Thus, in considering a motion to dismiss for failure to state a

claim, the Court examines only the sufficiency of the pleading. Id. “The grant of a motion to

dismiss is proper only if the Complaint does not disclose, on its face, a legally sufficient cause of

action.” Id., at 785, 614 A.2d 1021. A Court, therefore, must assume the truth of all well-

pleaded relevant facts as alleged in the Complaint, and all reasonable inferences drawn

therefrom. Morris v. Osmose Wood Preserving, supra. See, e.g., Heritage Harbor, L.L.C. v.

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Reynolds, supra. (“A Court must assume the truth of all relevant facts taken directly from

plaintiff’s Complaint.”) Therefore, as it is clear that Plaintiffs have clearly and particularly

alleged in their Complaint that Defendant, First Class Title, Inc., aided and abetted Ms. Ganao,

and Mr. Gainer, et al. in their fraudulent activities, and how, in fact, said Defendant First Class

Title, Inc. aided and abetted said activities, then said Defendant’s motion to dismiss must be

denied.

VIII. PLAINTIFFS HAVE CLEARLY SET FORTH A CLAIM FOR SLANDER OF TITLE.

In their Complaint, Plaintiffs clearly state that,

137. Upon information and belief, the Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company published and recorded “promissory notes,” “deeds” and/or “Deeds of Trust” and such ‘promissory notes,” “deeds” and “Deeds of Trust” were false and encumbered Plaintiffs’ property. 138. The Defendants published and recorded deeds in the name of the Defendant Felicite Ganao, and such deeds were false and encumbered Plaintiffs’ property. 139. Defendants acted with malice and reckless disregard for the truth upon recording the false promissory notes, deeds and deeds of trust in the name of the Defendant Felicite Ganao, when Defendants knew the deeds purported to remove Plaintiffs’ names from the titles for the subject property and Defendants knew the promissory notes and deeds of trust falsely attached liens on the Plaintiffs’ property. 140. The false promissory notes, deeds and deeds of trust induced others not to deal with Plaintiffs concerning the property, and as a result the Plaintiffs were unable to refinance the subject property. 141. Plaintiffs’ credit reports have been damaged and Plaintiffs lost title to their homes due to the false deeds and the false deeds of trust. See Compl. at p. 39 [emphasis added].

It is evident that Plaintiffs sufficiently pled a valid claim of action for slander of title.

Not only did Plaintiffs set forth the claim, but they also setforth the facts to support their cause of

action against Defendants, including First Class Title. It is apparent that Defendant First Class

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Title, Inc. is grasping at straws in an attempt to have this Court dismiss the claims. As such,

Plaintiffs’ claim of slander of title must be maintained.

IX. PLAINTIFF’S RESPA CLAIMS WERE WELL PLED AND SHALL BE

MAINTAINED. Plaintiffs Complaint was filed before any discovery was conducted. As such, it is

unreasonable to suggest that Plaintiffs should delineate every specific fact of every claim of

action that is being asserted. Had Plaintiffs in every action been able to do that, there would be

no need for discovery. Plaintiffs sufficiently pled the cause of action for RESPA violations

based on their information or belief. As set forth below, the pleading properly set forth

Plaintiffs’ allegations:

Each Defendant violated RESPA with respect to the Plaintiffs’ loan transactions by: (a) giving or accepting kickbacks or other things of value to each Defendant and others in violation of 12 U.S.C. section 2607(a) and 24 C.F.R. section 3500.14(c); and (b) giving a portion, split, or percentage of charges made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed, in violation of 12 U.S.C. Section 2607(a) and 24 C.F.R. Section 3500.14(c). See Compl. Count Sixteen.

“The grant of a motion to dismiss is proper only if the Complaint does not disclose, on its face, a

legally sufficient cause of action.” Id., at 785, 614 A.2d 1021. In the cause of action, Plaintiffs

have sufficiently disclosed a cause of action against Defendant First Class Title, Inc. and to grant

a Motion to Dismiss prior to the completion of discovery would be premature.

X. PLAINTIFFS HAVE SUFFICIENTLY PLED A CAUSE OF ACTION FOR

GROSS NEGLIGENCE AGAINST FIRST CLASS TITLE, INC.

Defendant First Class Title, Inc.’s argument asserting that Plaintiffs have not properly

proffered a claim of action of gross negligence against First Class Title, Inc. fails even under the

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case law offered by First Class Title, Inc. in support of its position. In Plaintiffs Complaint, it is

properly stated that,

125. Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company had duties to exercise due diligence to determine that the real estate settlement transactions being conducted by Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company, were not illegal in violation of the Maryland HPIFA Act, the Md. Consumer Protection Act and the federal Truth in Lending Act. 126. Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company had duties to inquire into the nature of the real estate transactions between the Plaintiffs and the Defendant Felicite Ganao due to the fact that a) the property was docketed for foreclosure under the HPIFA Act, b) the settlements did not occur at the offices of the title agents, c) the property was being sold to straw-purchasers. 127. Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company owed a duty to the Plaintiffs as a result of the fees paid to such Defendants on behalf of the Plaintiffs. 128. Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company breached their duties when they failed to conduct due diligence inquiries into the real estate settlement transactions between the Plaintiffs and the Defendant Straw-purchasers to determine the legitimacy of the transactions, failed to determine whether the HUD-1 forms they prepared accurately reflected the disbursements of funds in the settlements they were conducting, failed to ascertain that the sale-leaseback transactions were in violation of State and federal laws despite knowledge the Plaintiffs homes were docketed for foreclosure, failed to refuse to settle the transactions although they were on actual and/or constructive notice of the irregularities that were obvious and apparent in the transactions, and Defendants willfully ignored the illegalities inherent in the transactions. 129. Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and

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First American Title Insurance Company breaches of duty proximately caused damages to the Plaintiffs, including the loss of title to their homes, the equity taken from their homes, and other fees and costs misappropriated during the settlement transactions. 130. Defendants Felicite Ganao, Global Mortgage Financial, Newton Gainer, First Class Title, Inc., Global Mortgage, Inc., and First American Title Insurance Company acted in wanton or reckless disregard for the rights of the Plaintiffs. See Compl. at Count Seventeen [Emphasis Added].

Once again, Defendant First Class Title, Inc. attempted to draw factual conclusions in an

attempt to support its motion to dismiss when this act is improper. In its Motion to Dismiss,

Defendant First Class Title, Inc. offered the proposition that the state of Maryland’s law is sound

on the issue that, “a wrongdoer is guilty of gross negligence or acts wantonly and willfully only

if he acts if such rights did not exits.” Tatum v. Gigliotti, 80 Md. App. 559, 569 A.2d 354, 359

(1989). The claims set forth in Plaintiffs Complaint and above, once proven, will clearly rise to

the level of willful and wanton behavior. As such, this action must be maintained.

XI. DEFENDANT FIRST CLASS TITLE, INC. IS DISMISSED FROM

PLAINTIFF’S CLAIM OF VIOLATION OF MARYLAND CODE, COMMERCIAL LAW § 13-101(1).

XII. PUNITIVE DAMAGES CLAIMS SHALL BE MAINTAINED.

Punitive damages are not a reward to the Plaintiff, but are assessed for reasons of public

policy. Cheeks v. J.B.G. Properties, Inc. 28 Md. App. 29, 39, 344 A.2d 180 (1975). The Court

of Appeals held that, “punitive damages may be awarded only when there is an element of fraud,

malice, evil intent or oppression which enters into and forms a part of the wrongful act. General

Motors Corp. v. Piskor, 277 Md. 165, 174-76, 352 A.2d 810 (1976). Since actions of intentional

tort are still viable in this matter, Plaintiffs’ rights to maintain a claim to punitive damages shall

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be maintained. As such, Plaintiffs shall be permitted to maintain their damages claim for

punitive damages against Defendants.

CONCLUSION

WHEREFORE, for all of the reasons aforesaid, Plaintiffs Paul and Latrina Graves move

that this Honorable Court hereby deny First Classs Title, Inc.’s Motion to Dismiss.

Respectfully submitted, _/s/______________________ _/s/______________________ Stan Brown, Esq. Brynee Baylor, Esq. 9500 Arena Drive 1025 Connecticut Avenue Suite 104 Suite 1202 Largo, Maryland 20774 Washington, D.C. 20036 Counsel for Plaintiff Co-Counsel for Plaintiff

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

(Southern Division) PAUL GRAVES, et al : : Plaintiff, : : v. : Case No.: PMJ-08-CV-207 : FELICITE GANAO, et al. :

Defendants : __________________________________________________________________________

ORDER UPON CONSIDERATION of Plaintiffs’ Opposition To First Title’s Motion To Dismiss,

it is this _______ day of _____________, 2008, by the US District Court for the District of

Mayland,

ORDERED, that Commercial First Title’s Motion To Dismiss be and is hereby denied.

______________________________________ JUDGE Copies to: Brynee K. Baylor, Esquire Baylor & Jackson, PLLC 1025 Connecticut Avenue, N.W. Suite 1202 Washington, D.C. 20036 Co-Counsel for Plaintiff Stan Brown, Esq. P.G. Circuit Court bar no. BRO197 9500 Arena Drive Suite 104 Largo, Maryland 20774 Co-Counsel for Plaintiff

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Felicite Ganao 16509 Eastview Lane Bowie, MD 20716 Global Mortgage Financial 5620 Saint Barnabas Road #360 Oxon Hill, MD 20745 Defendant Newton Gainer 5620 Saint Barnabas Road #360 Oxon Hill, MD 20745 Defendant Louis J. Rizzo, Jr., Esq. REGER RIZZO KAVULICH & DARNALL LLP 111 South Calvert St., Suite 2350 Baltimore, MD 21202 Counsel for Defendant Global Mortgage, Inc.

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CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 21st day of March, 2008, a copy of the foregoing

Motion was mailed, first-class and postage prepaid, to:

Felicite Ganao 16509 Eastview Lane Bowie, MD 20716 Global Mortgage Financial 5620 Saint Barnabas Road #360 Oxon Hill, MD 20745 Defendant Newton Gainer 5620 Saint Barnabas Road #360 Oxon Hill, MD 20745 Defendant Louis J. Rizzo, Jr., Esq. REGER RIZZO KAVULICH & DARNALL LLP 111 South Calvert St., Suite 2350 Baltimore, MD 21202 Counsel for Defendant Global Mortgage, Inc. ________/s/____________ Brynee K. Baylor.

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