Fidelity First Home Mortgage Co. v. Williams

EYLER, DEBORAH, S., J. In the Circuit Court for Prince George’s County, Charlene Williams, the appellee, sued Fidelity First Home Mortgage Company, Inc. (“Fidelity First”), the appellant, a mortgage broker; and two former Fidelity First employees, James Fox and James Dan. She alleged, inter alia, that Fox and Dan engaged in a fraudulent foreclosure rescue scheme that caused her to lose title to and be deprived of the equity in her home. She further alleged that, as Fox’s employer, Fidelity First was vicariously liable for fraud, breach of fiduciary duty, and violations of the Protection of Homeowners in Foreclosure Act ¹⁸⁴ (“PHIFA”), Md.Code (2003 Repl.Vol., 2006 Supp.), sections 7-301-7-321 of the Real Property-Article (“RP”). 1 She also alleged that Fidelity First negligently supervised and/or retained Fox. 2 The case was tried to a jury for three days. On the first day of trial, Williams voluntarily dismissed her claims against Fox and Dan, proceeding solely against Fidelity First.

The court denied Fidelity First’s motions for judgment at the close of Williams’s ease and at the close of all the evidence. The jury returned a verdict in favor of Williams on all counts, awarding her $70,000 in compensatory damages and $150,000 in punitive damages. Judgment was entered for $220,000. Fidelity First timely moved for judgment notwithstanding the verdict (“JNOV”), and Williams moved for treble damages and attorneys’ fees and costs.

After a hearing, the court denied the JNOV motion and the motion for treble damages, but awarded Williams $80,034.50 in fees and $3,902.90 in costs. Fidelity First noted an appeal, presenting five questions for our review, which we have reordered and rephrased: I. Was the evidence legally sufficient to prove by a preponderance of the evidence that Fidelity First negligently hired and/or retained Fox?

II

Was the evidence legally sufficient to prove by a preponderance of the evidence that Fox was acting within the scope of his employment when he engaged in fraud, breaches of fiduciary duty, and violations of PHIFA? ¹⁸⁵ III. Did the trial court err in allowing the jury to award punitive damages against Fidelity First solely on the basis of respondeat superior?

IV

Did the trial court err in allowing the jury to hold Fidelity First vicariously liable for Fox’s violations of PHIFA? V. Did the trial court err or abuse its discretion in its award of attorneys’ fees? For the reasons to follow, we conclude that the evidence was legally sufficient to support the verdicts and that there was no error or abuse of discretion by the court. Accordingly, we shall affirm the judgments of the circuit court.

FACTS AND PROCEEDINGS Fidelity First, a Maryland corporation, is a licensed mortgage broker with its principal place of business on Bestgate Road in Annapolis. Daniel Eubanks is its president and sole owner. At all relevant times, Fidelity First employed between eleven to fifteen loan officers, also known as loan originators. The loan officers were in direct contact with potential borrowers.

They assisted potential borrowers in completing loan applications and collecting the necessary documentation to support their applications. They also evaluated each potential borrower’s eligibility for a mortgage loan. In addition, the loan officers engaged in solicitation efforts to find potential borrowers and persuade them to refinance their mortgages through Fidelity First. Each loan application went through two levels of review before being sent to a lender.

First, a loan processor with Fidelity First reviewed it. Second, Eubanks personally reviewed it. For each loan it closed with a lender Fidelity First received an origination fee. The fee was split between Fidelity First and the loan officer under a “tiered” commission schedule that took into account the amount of the origination fee and the ¹⁸⁶ loan officer’s production record.

Ordinarily, commissions ranged between 35% and 50%. On August 25, 2003, Fidelity First hired James Dan as a loan officer. About five months later, on January 20, 2004, James Fox also was hired as a loan officer. The two men’s desks were near each other and they became friends.

According to Fox, Dan was his “mentor” at Fidelity First. By his own admission, Dan was not a good “producer,” meaning that he did not successfully close many loans. He also was an active alcoholic. In October of 2004, he missed work because of his alcohol problem. .

At the end of 2004, he stopped coming to work entirely and was terminated from employment. After Dan completed an alcohol rehabilitation program, Eubanks agreed to rehire him. Dan continued to be a poor producer, however. On July 15, 2005, Eubanks told Dan that he needed to produce loans that brought in $15,000 in origination fees in the next 30 days or he would be fired.

Forty-six days later, on August 31, 2005, Dan was terminated for “lack of production, forging pay history, [and] ordering own title.” Unlike Dan, Fox quickly became an excellent producer and was rewarded with higher commission rates, maxing out at 55%. Fox also was caught forging documents, however, on at least three occasions. The first instance happened in December of 2004 and resulted in a reprimand. The second forgery occurred in July of 2005.

It involved a loan application on which Fox was assisting Dan. This was the forgery mentioned as one of the reasons for Dan’s termination. Fox’s employment file reflects that he was given a “final warning” for this incident. Eight months later, in March of 2006, an underwriter for a lender discovered that a CPA letter in support of a loan application completed by Fox had been fabricated. 3 As a result, the loan did not close.

Fidelity First suspended Fox for one week for this transgression, but did not terminate him. ¹⁸⁷ The foreclosure rescue scheme central to this case began about a year after Dan’s termination from Fidelity First and while Fox still was employed there. Between April of 2006 and July of 2007, Fox, and, in some cases, Dan, were involved in at least eight foreclosure rescue transactions. The transactions followed the same basic pattern. Fox identified distressed homeowners who were unable to qualify for traditional mortgage refinancing due to poor credit, but who owned equity in their homes.

He and sometimes Dan advised these homeowners that they could assist them in refinancing their mortgages by using Fox’s or Dan’s own credit. The homeowners were convinced that they could avoid losing their homes to foreclosure by selling their homes to Fox, Dan, or a straw buyer, but remaining in the properties as tenants. This purportedly would allow the homeowners to rehabilitate their credit ratings and eventually buy back their houses at a more favorable mortgage loan interest rate. (As we shall explain, however, the homeowners may or may not have understood that they were selling their homes.) Fox and Dan promised to pay the mortgages on the properties for six months to a year, at which time the homeowners would be able to reacquire title to their properties.

To facilitate the property purchases, Fox, Dan, or a straw buyer would apply for and obtain mortgage loans in their own names. In at least three of the transactions, Fidelity First was the mortgage broker. The loan applications contained materially false representations with respect to the borrower’s income, assets, and intent to occupy the home. In each transaction, the borrower represented that he or she would make a cash down payment, and the mortgage loans only covered a portion of the purchase price.

In fact, as we shall discuss in more detail with respect to the Williams transaction, the seller’s own proceeds from the sale of the property were used to cover the cash down payment. Fox and Dan pocketed the remaining proceeds. The first two fraudulent transactions were carried out in April and June of 2006. In each transaction, Fox applied for and received a mortgage loan in his own name to use to ¹⁸⁸ purchase the distressed homeowner’s property.

Neither of these loans originated through Fidelity First. 4 In each transaction, Fox, without the seller’s knowledge, used the seller’s own proceeds from the sale to cover his down payment and retained the remainder of the proceeds for himself. Ultimately, Fox did not pay on the mortgage loans and they went into default. Charlene Williams was the homeowner in the third transaction, which took place in August of 2006. Williams grew up in the property, a house located at 1435 Eastern Avenue in Capital Heights.

Her parents had owned the house free and clear. In 2003, Williams purchased the house from her father, 5 who was the sole owner. Williams obtained a mortgage loan in the principal amount of $103,000. Her monthly payments were approximately $725 per month.

In 2005, Williams, who worked as a cashier at a grocery store, began having financial problems and ceased making her mortgage payments. Her lender initiated a foreclosure proceeding against her. On September 29, 2005, Williams filed for Chapter 13 bankruptcy, resulting in a stay of the foreclosure proceeding. In February of 2006, Williams received a solicitation letter from Fidelity First.

The letter stated, in pertinent part: Our files indicate that you have an outstanding mortgage balance and that you have recently been dismissed from a Chapter 7 Bankruptcy.[ 6 ] You have been pre-approved for a lower interest rate and/or debt consolidation. This could ¹⁸⁹ mean a savings of up to $500 or more per month. Please call your customer service representative toll free at 1-866-266-2544 between 10AM and 8 PM EST for your monthly savings or go to our website at www.fidelityfirst.net. Sincerely, Shawn Murphy Director of Customer Service Fidelity First Shawn Murphy was not an employee of Fidelity First.

In fact, she was a fictitious person named after one of Eubanks’s friends from college. Eubanks assigned different names to the different types of solicitation letters that Fidelity First sent to potential borrowers. When a potential borrower called in response to a solicitation, the person receiving the call could identify the type of solicitation the potential borrower had received based upon the name of the customer service agent the potential borrower requested. This allowed Fidelity First to direct the call to the appropriate loan officer and to keep track of which types of solicitations were generating business.

On or about February 21, 2006, Williams called Fidelity First in response to the solicitation letter. She subsequently received a return call from Fox. After obtaining some information from her, Fox informed Williams that he could assist her in refinancing the mortgage on her property. Around April of 2006, Fox went to Williams’s house.

He told her he would arrange for an appraisal of her property. Subsequently, Fox and Dan asked Williams to meet them at the federal district court in Greenbelt. She did so. On April 14, 2006, the bankruptcy court entered an order “authorizing Williams] to refinance a loan secured by [the] property” so long as “all debts secured by present liens upon the property” would be paid from the settlement proceeds.

On May 11, 2006, Williams executed a written sales contract to sell the property to Dan for $225,000. Williams does not recall signing this document, although she acknowledged the signature on the contract appears to be hers. ¹⁹⁰ The next day, Dan applied for a mortgage loan with First National Bank of Arizona (“First National”). Fox was the loan officer on the application and Fidelity First was the mortgage broker. On his application, Dan made numerous misrepresentations about the amount of his annual income, his savings, and real property he claimed to own.

He also misrepresented that he had been employed as a “producing manager” at “Investor’s 1st Mortgage, LLC” for nearly three and one-half years and was currently earning $9,500 per month. 7 Dan’s loan application was approved by Jim Leonard, a loan processor for Fidelity First. As discussed, the file also would have been reviewed by Eubanks in the ordinary course of business, although Eubanks denied having reviewed this particular file. On May 17, 2006, the property was appraised for $235,000. Williams’s outstanding mortgage balance was approximately $108,000.

On August 4, 2006, settlement was held at Everclear Title Company (“Everclear”), in its office in Annapolis. Appearing at the settlement were Fox, Dan, Williams, and Maxwell Cohen, a settlement attorney employed by Everclear. During settlement, Williams signed a deed conveying the property to Dan. Dan and Williams also signed a contingent deed reconveying the property to Williams.

Cohen represented that he would hold that deed in escrow for a period of three years. According to the HUD-1 Settlement Statement, Dan financed the $225,000 purchase price and $11,620.71 in settlement charges with a mortgage loan of $180,000 from First National; a seller’s credit of $13,500; and $44,420.07 in cash. Dan presented Everclear with a personal check in that amount. As we shall explain, he used Williams’s proceeds from the transaction to cover the down payment. ¹⁹¹ Also as documented in the HUD-1, the total money brought to the settlement by Dan (the mortgage loan, seller’s credit, and cash) were used to pay $11,145.58 in Williams’s settlement charges; to satisfy her first and second mortgage loans of $108,874.28 and $2,669.52 respectively; and to satisfy a $3,726.74 personal loan and $5,735 in credit card debt.

An additional $16,754.45 was paid to the bankruptcy trustee to satisfy Williams’s remaining debts. With the addition of $500 in earnest money previously paid by Dan, Williams was to receive $63,893.79 in net proceeds from the sale. Everclear issued a check to her in that amount. Fox and/or Dan retained the check following settlement.

Fidelity First received $5,128.11 in total fees from the transaction, including a $3,600 origination fee, which it split evenly with Fox. Soon after settlement, Williams, Dan, and Fox traveled to a Provident Bank in Clinton, where Williams maintained an account. Williams endorsed the $63,893.79 check over to Dan and he cashed it. He gave Williams $3,000 of this amount.

Dan and Fox had told Williams that the remaining $60,893.79 would be “escrowed” to cover her mortgage payments. (Of course, the mortgage no longer was in Williams’s name as she had just sold the property to Dan.) In fact, Dan deposited the remaining proceeds into his own personal checking account. The $44,420.07 check representing Dan’s down payment was drawn on this account. In October of 2006, Everclear delivered to Fox a second check made out to Williams in the amount of $11,804.62, representing a refund for overpayments made to her creditors out of the settlement proceeds.

Fox called Williams and arranged to meet her at a Bank of America in Annapolis where he maintained a personal checking account. At that location, Williams endorsed the check over to Fox. He gave her $3,000 in cash and told her the remaining amount would be deposited into her “escrow” account. Instead, the check was deposited into Fox’s personal checking account. ¹⁹² In each of the three months following settlement, Fox arranged to meet with Williams to facilitate the payment of the mortgage on the Property.

Williams thought, incorrectly, that the mortgage loan still was in her name and that she was paying the loan with the money Fox and Dan were holding in escrow for her. In fact the mortgage was in Dan’s name and Williams was, essentially, making rental payments. Fox would meet Williams at a BJ’s Warehouse in Bowie. He would bring cash in the amount of Dan’s monthly mortgage payment ($857.33).

Fox and Williams would enter BJ’s and purchase a money order in that amount, which Williams put in her name. They then would mail the money order to the mortgage company. Fox later would mail Williams a “receipt” for the mortgage payment. In December of 2006 and January of 2007, Fox told Williams he would pay the monthly mortgage payments directly on her behalf.

He mailed her receipts for the mortgage payments for those months. Thereafter, Fox ceased all contact with Williams. She called Dan to inquire about the status of her mortgage payments. Dan advised her that Fox was busy planning his wedding.

Thereafter, Dan continued to pay the mortgage for several months and then ceased paying. Williams first discovered that she no longer owned the property in 2007 when she was served with an eviction notice. She investigated and found that she was “a tenant in [her] own home.” She also learned that Dan’s mortgage was in foreclosure. She tried to contact the mortgage lender, but its representatives would not speak to her because her name was not on the loan.

In August of 2009, in the Circuit Court for Prince George’s County, Williams filed an eight-count complaint naming Fox, Dan, and Fidelity First as defendants. In December of 2009, Fox and Dan were indicted in federal court for wire fraud and conspiracy to commit wire fraud. The following month, Williams filed an eleven-count amended ¹⁹³ complaint. 8 As relevant here, she alleged that Fidelity First was vicariously liable for fraud, breach of fiduciary duty, violations of PHIFA, promissory estoppel, unjust enrichment, and intentional infliction of emotional distress. She alleged that Fidelity First was directly liable for negligently hiring, supervising, and/or retaining Fox.

She sought $500,000 in compensatory damages; $500,000 in punitive damages; and attorneys’s fees and treble damages under PHIFA. In June of 2010, Dan pleaded guilty in his federal criminal case on an agreed statement of facts. In October of 2010, Fox did the same. The statements of facts, which was admitted into evidence in the trial in this case, set forth the details of eight foreclosure rescue transactions.

Fox was a participant in all eight, while Dan participated as the purchaser in three of the transactions, including the Williams transaction. The trial in this case commenced on February 7, 2011. That day, Williams voluntarily dismissed her claims against Fox and Dan. Her case against Fidelity First was tried for three days.

Williams testified and called four witnesses. Calvin Wink, an assistant commissioner of enforcement in consumer services for the Financial Regulation division of the Department of Labor, Licensing and Regulation (“DLLR”), testified that, in 2007, Williams filed a complaint with his office. He commenced an investigation and subpoenaed records from Fidelity First. The records revealed, inter alia, that Fox and Dan had made material misstatements on the HUD-1 in the Williams transaction; and that Dan had made material misstatements on his mortgage loan application.

During the investigation, Wink spoke to Eubanks on one occasion by phone. Eubanks told Wink that Fox and Dan perpetrated the scheme without his knowledge and that he (Eubanks) was an “absentee owner.” Wink also testified about PHIFA, explaining that it had been enacted in 2005 to ¹⁹⁴ protect homeowners in foreclosure from exactly the type of fraudulent rescue scheme perpetrated against Williams. Fox and Dan each testified about their employment history at Fidelity First and their involvement in the foreclosure rescue scheme. Fox further testified about the culture at Fidelity First, explaining that loan officers were under considerable pressure to produce and that failure to produce would lead to termination.

He described a “motivational” contest that Eubanks sponsored known as “steak and beans.” At the end of each month, Eubanks would take the loan officers to Ruth’s Chris steakhouse. The loan officers with high production numbers got to order steak, while the loan officers with low production numbers could only order beans. Eubanks also encouraged his loan officers to go “dumpster diving” outside of the offices of large lenders to find the “leads” that these lenders had thrown out. Fox testified that Eubanks would post a picture of a “goose egg” above the desks of loan officers who failed to earn any commissions the prior month.

Finally, Williams called Eubanks as a witness in her case-in-chief. He acknowledged that Fox was not terminated from Fidelity First even though he was caught engaging in forgery on three separate occasions. Eubanks testified that he treated forgeries differently depending on the “severity” of the forgery. He explained that Dan was fired primarily for engaging in forgery.

He could not explain, however, why Dan’s employment file listed “lack of production” as the first ground for Dan’s termination or why Fox was not also fired given that he and Dan both were involved in the forgery that immediately preceded Dan’s termination. Eubanks further testified that Fox had told him about his (Fox’s) involvement in the foreclosure rescue transactions, which Fox referred to as “contract for deed,” and had asked Eubanks to invest in his business. Fox explained that he was helping people to stay in their homes. Eubanks declined to participate, however, because he “did not want to be a landlord.” ¹⁹⁵ As to his knowledge about irregularities in these transactions, Eubanks explained that, about one month after settlement in the Williams transaction, a title company located next door to Fidelity First conducted a settlement of another of the Fox transactions.

The owner of the title company knew Eubanks and contacted him. The owner told Eubanks that it appeared that Fox and Dan were using the seller’s proceeds to cover the down payment on the property and that the seller had endorsed over the proceeds of the sale to Fox and/or Dan following settlement. Immediately thereafter, Eubanks testified that he told Fox he “did not want anything to do with any more of these files whatsoever in [his] office.” Nevertheless, after this admonition, Fox originated loans for two more foreclosure rescue transactions through Fidelity First. In the first such transaction, Fox was the borrower and the loan officer.

On the loan application, he misrepresented his salary with Fidelity First. Eubanks acknowledged that that loan application was processed and approved by Fidelity First, but that the discrepancy was not caught. In the second transaction, Fox originated a loan for his stepfather to purchase a home from a distressed homeowner. At the close of Williams’s case, Fidelity First moved for judgment on all counts. 9 With respect to the counts for fraud, breach of fiduciary duty, and violations of PHIFA, counsel for Fidelity First argued that there was no evidence that Fidelity First was aware of or authorized the fraudulent foreclosure rescue scheme and that the evidence was legally insufficient to support a reasonable inference that this “side transaction” was carried out by Fox within the scope of his employment with Fidelity First.

With respect to negligent supervision and retention, defense counsel argued that there was no evidence of any prior conduct by Fox of this nature, i.e., foreclosure rescue schemes. As to the alleged violations of PHIFA, defense counsel maintained that PHIFA was inapplicable as a ¹⁹⁶ matter of law because the property was not “in foreclosure” when the August 4, 2006 transaction occurred and that Fidelity First could not be held vicariously liable for any violations of the statute in any event. Finally, defense counsel argued that punitive damages could not be awarded on the basis of vicarious liability. The court denied the motion for judgment.

Fidelity First recalled Eubanks in its case-in-chief. He testified that, until the Williams transaction occurred, he had no knowledge that Fox and/or Dan was engaging in fraud or stripping equity from the homes they were purchasing. He explained that the Williams transaction was the first of the foreclosure rescue transactions in which the loan originated through Fidelity First and that, following that transaction, Fox originated two more loans through Fidelity First as part of the scheme. Neither of the subsequent transactions involved Dan, however, and for that reason, they “were not on [Eubanks’] radar.” At the close of all the evidence, defense counsel renewed his motion for judgment on the same grounds.

It was denied. The jurors deliberated and, on February 9, 2011, returned a verdict in favor of Williams on all counts. They found by clear and convincing evidence that Fidelity First “acting through one or more of its agents, committed fraud against [Williams].” They found by a preponderance of the evidence that Fidelity First, “acting through one or more of its agents,” breached a fiduciary duty owing to Williams and violated PHIFA; and that it had negligently supervised or retained Fox. They awarded Williams $70,000 in compensatory damages.

The jurors further found by clear and convincing evidence that the actions of Fidelity First’s agents “met the standard for punitive damages as defined by the Court in its instructions,”, ie., the actions were committed with actual malice, and awarded Williams $150,000 in punitive damages. On February 22, 2011, the court entered judgment in favor of Williams. That same day, Fidelity First moved for JNOV. It argued, as it had in its motion for judgment, that Williams had failed to adduce legally sufficient evidence to support the ¹⁹⁷ jury’s verdicts on the fraud, breach of fiduciary duty, and PHIFA counts because the evidence showed that Fidelity First’s agent, Fox, was acting outside of the scope of his employment when he operated his foreclosure rescue scheme and stripped the equity from Williams’s property.

It further challenged the award of punitive damages as to the fraud and breach of fiduciary duty counts on the basis that Williams failed to prove that Fidelity First, as opposed to Fox, acted with actual malice. Also on February 22, 2011, Williams moved for an award of treble damages and an award of attorneys’ fees and costs, both pursuant to PHIFA. On May 9, 2011, the court heard argument on the post-trial motions and ruled from the bench. It denied the motion for JNOV and the motion for treble damages.

It granted Williams $83,937.40 in attorneys’ fees and costs. On May 24, 2011, judgment was entered in favor of Williams in that amount. On May 31, 2011, Fidelity First noted this appeal. We shall include additional facts as relevant to our discussion of the issues.

STANDARD OF REVIEW We review a challenge to the sufficiency of the evidence de novo. Polk v. State, 378 Md. 1, 7-8 , 835 A.2d 575 (2003) . “In a civil jury trial, if there is any evidence adduced, however slight, from which reasonable jurors could find in favor of the plaintiff on the claims presented, the trial court should deny the defendant’s motion for judgment at the close of the evidence and submit the claims to the jury for decision.” Hoffman v. Stamper, 155 Md.App. 247, 288 , 843 A.2d 153 (2004) , rev’d in part on other grounds, 385 Md. 1 , 867 A.2d 276 (2005) . A defendant may move for JNOV following an adverse jury verdict on the same grounds previously advanced. See Md. Rule 2-532; Jacobs v. Flynn, 131 Md.App. 342, 353 , 749 A.2d 174 (2000). “We will find error in a denial of a motion for judgment or JNOV if the evidence does not rise above speculation, hypothesis, and conjecture, and does not ¹⁹⁸ lead to the jury’s conclusion with reasonable certainty.” Scapa Dryer Fabrics, Inc. v. Saville, 418 Md. 496, 503 , 16 A.3d 159 (2011) (citations omitted).

DISCUSSION I. Negligent Supervision or Retention In Evans v. Morsell, 284 Md. 160, 166 , 395 A.2d 480 (1978), the Court of Appeals first recognized that an employer may owe a duty to members of the general public arising from its role in hiring, supervising, and retaining its employees. Quoting with approval an opinion of the Court of Appeals for the District of Columbia, the Court opined: “One dealing with the public is bound to use reasonable care to select employees competent and fit for the work assigned to them and to refrain from retaining the services of an unfit employee. When an employer neglects this duty and as a result injury is occasioned to a third person, the employer may be liable even though the injury was brought about by the willful act of the employee beyond the scope of his employment.” Id. (quoting Fleming v. Bronfin, 80 A.2d 915, 917 (D.C.1951)).

The Court further explained that “[wjhere an employee is expected to come into contact with the public ... the employer must make some reasonable inquiry before hiring or retaining the employee to ascertain his fitness, or the employer must otherwise have some basis for believing that he can rely on the employee.” Id. at 166-67, 395 A.2d 480 . The nature and extent of the employer’s duty of reasonable inquiry varies based upon the facts of each case. Id. at 167 , 395 A.2d 480 . As in any action for negligence, a plaintiff asserting a cause of action for negligent supervision or retention must prove duty, breach, causation, and damages.

Cramer v. Hous. Opportunities Comm’n, 304 Md. 705, 712-14 , 501 A.2d 35 (1985). In the instant case, only the breach of the duty of reasonable inquiry is in dispute. Fidelity First contends the ¹⁹⁹ evidence at trial was legally insufficient to prove a breach because Williams failed to elicit evidence that Fidelity First “knew, or should have known, of the Fox-Dan partnership, or that it knew or should have known that Fox engaged in a foreclosure rescue scam.” 10 Williams responds that no such proof was required and that the evidence at trial showing that Eubanks knew that Fox had a history of forging documents was legally sufficient proof of a breach of the duty of care.

We summarize the evidence bearing on this issue in the light most favorable to Williams, as the non-moving party. Eubanks hired Fox in January of 2004. At that time, Fox had some “investment experience,” but “no formal training per se as far as loan applications” or anything of that nature. There was evidence from which reasonable jurors could infer that Eubanks tolerated and even encouraged forgery in the pursuit of closing more loans.

As discussed, Fox routinely engaged in forgeries. He described this as a “learned behavior.” He testified that he often would create false asset statements for loan applicants by using his own financial records and “cut[ting] and past[ing]” a loan applicant’s name and other identifying information onto the document. “WiteOut,” according to Fox, was a loan officer’s “best friend.” He was caught forging documents on three occasions, including a complete fabrication of a CPA letter. The first two instances occurred prior to his initial contact with Williams and the third occurred after his first contact with her, but before he submitted the Dan loan application. He was reprimanded for the first two transgressions and was suspended for a week for the third.

Fox also testified that, on one occasion, Eubanks asked him to “fix [a] pay stub” so as to “enhance” the loan applicant’s income in order to close a loan. Eubanks made this request ²⁰⁰ on the same day that he reprimanded Fox for creating the forged CPA letter. Eubanks also was aware that Fox was engaging in “contract for deed” transactions with distressed homeowners because Fox repeatedly asked Eubanks to “invest” and told him he could guarantee him 20 percent equity. As mentioned, Eu-banks declined to participate.

Williams received the Fidelity First solicitation letter in February of 2006, which, as discussed, was shortly before Fox was reprimanded for forgery for a third time. She called Fidelity First in response to that letter, provided some information, and later received a return call from Fox. Fox was the loan officer on Dan’s loan in the Williams transaction. That loan application contained material misstatements with regard to Dan’s income and assets.

Fox also fraudulently misrepresented to Williams the nature of the transaction, leading her to believe she was refinancing her mortgage, rather than selling her home to Dan. Fox, in his role as loan officer, was in regular contact with the general public. Fidelity First was on notice that Fox was willing to forge documents in order to close loans and earn commissions. Despite this knowledge and even though, pursuant to its own internal policies, forgery was a termination event, Fox was retained as an employee after three known instances of forgery.

His job duties were not restricted in any way to limit his contact with the public. There was no evidence that Fox’s loan applications were the subject of greater scrutiny after he was caught forging documents. This was evident from the fact that the loan application Fox submitted on behalf of Dan, which contained numerous material alterations, was approved by the processing department and by Eubanks. On this evidence, we have no difficulty in concluding that a reasonable juror could find by a preponderance of the evidence that Fidelity First was negligent in supervising and retaining Fox as an employee.

On this basis alone, we would affirm the award of compensatory damages in favor of Williams. ²⁰¹ II. Respondeat Superior Fidelity First argues that the evidence at trial was legally insufficient to sustain the verdict in favor of Williams on her claims for fraud, breach of fiduciary duty, and violations of PHIFA. 11 Fidelity First does not seriously dispute that the evidence was legally sufficient to prove that Fox and Dan engaged in fraud, breached fiduciary duties owing to Williams, 12 and violated PHIFA. It maintains, however, that this evidence did not support a reasonable inference that Fox was acting within the “scope of his employment” at the time of the tortious conduct. It asserts that while Fox’s initial contact with Williams arose out his role as a loan officer, after Fox determined that Williams would not qualify for a refinance loan and decided, instead, to persuade her to participate in a foreclosure rescue transaction using Dan’s credit, he ceased acting within the scope of his employment with Fidelity First.

It emphasizes that it did not as a matter of course engage in foreclosure consultation and did not perform foreclosure rescue transactions. It also points out that Williams met with Fox outside of the office—at her home, at the local mall, at the federal district court and at Everclear; and that Fox and Dan also met outside of Fidelity First’s offices to complete documents for the transaction. Williams responds that the evidence that she was solicited by Fidelity First to refinance her mortgage; that she came ²⁰² into contact with Fox via this solicitation; that Fox acted as the loan officer on Dan’s loan; that Eubanks approved Dan’s loan application; and that Fidelity First received an origination fee arising out of the transaction all demonstrate that the foreclosure rescue scheme was in furtherance of Fidelity First’s business. She emphasizes that Eubanks was aware of Fox’s history of forgery and of his new “side business” as evidence that the perpetration of the fraud was reasonably foreseeable.

Under the well-established rule of respondeat superior, an employer ordinarily is liable for the torts committed by its employees while acting within the scope of employment. In Sawyer v. Humphries, 322 Md. 247, 255 , 587 A.2d 467 (1991), the Court of Appeals summarized the legal principles governing the scope of employment inquiry, opining that [t]he general test set forth in