Iglesias v. Pentagon Title & Escrow, LLC

EYLER, DEBORAH S., J. We have before us two related appeals arising from an incident of identity fraud. In July of 2006, Maria Iglesias, the appellant, a first-time home buyer, engaged the services of a loan officer, Jose Ramirez, in an effort to purchase a condominium. The deal ultimately fell through. Shortly thereafter, Iglesias began working with another loan officer to obtain financing to purchase a different condominium.

She did not qualify for financing, however, because a credit search revealed she recently had purchased a house in Montgomery County encumbered by two mortgage loans in her name. This came as a complete shock to her, as she had no knowledge of such a purchase. ⁶²⁸ A criminal investigation ensued. It revealed that Ramirez and others associated with him had perpetrated a fraud by which two properties were purchased in Iglesias’s name. In each transaction, without Iglesias’s knowledge, a sales contract was signed; financing was obtained; and a real estate settlement was consummated under the strength of a forged power of attorney (“POA”).

In July of 2009, in the Circuit Court for Montgomery County, Iglesias filed two separate actions for negligence and for declaratory judgment against various parties involved in each real estate transaction (“First Action” and “Second Action” respectively). All of the issues in these appeals arise out of Iglesias’s second amended complaint (“SAC”) in each action. In the SAC in her First Action, Iglesias set forth one count of negligence against Pentagon Title & Escrow, LLC (“Pentagon”), the company that conducted the real estate settlements; one count of negligence against Christina Shin, an attorney and Pentagon member who acted as the settlement agent in both transactions; and one count of negligence against JP Morgan Chase Bank, N.A. (“Chase”), the lender.

Iglesias’s SAC in the Second Action was identical, except that the lender was WMC Mortgage Company (“WMC”). Iglesias subsequently dismissed her claim against WMC. 1 Pentagon and Shin are appellees in both appeals. Chase is an appellee in only one appeal. By order dated February 1, 2010, the First Action, the Second Action, and a third case against Pentagon involving a different plaintiff and lender were consolidated.

Pursuant to the consolidation order, filings still were to be made in each ⁶²⁹ individual case. The third case subsequently was severed from Iglesias’s cases and is not before us in the instant appeals. In the First Action, Chase moved to dismiss the SAC for failure to state a claim for which relief could be granted, arguing that it did not owe a duty of care to Iglesias and that she had failed to allege facts that could support findings of proximate causation and damages. After a hearing, Chase’s motion was granted with prejudice.

In the First and Second Actions, Iglesias .moved for entry of an order of default against Shin, which Shin opposed. Iglesias also moved for partial summary judgment against Pentagon and Shin on the issue of liability. Pentagon and Shin moved to dismiss the SAC for failure to state a claim for which relief could be granted or, alternatively, for summary judgment. Like Chase, they argued that they did not owe a duty of care to Iglesias.

Shin also maintained that the action against her was time-barred. After hearing argument of counsel, the circuit court granted summary judgment in favor of Shin on limitations and further granted summary judgment in favor of Pentagon and Shin on the issue of duty. The court denied Iglesias’s motions for partial summary judgment and her motion for default. Iglesias appeals the judgments in favor of Pentagon, Chase, and Shin, posing four questions for review, which we have combined and restated as follows: I. Did the circuit court err in ruling in the First Action that, under the well-pleaded facts alleged in her SAC, Chase did not owe Iglesias a legal duty to verify that she was a party to the transaction?

II

Did the circuit court err in granting summary judgment in the First and Second Actions in favor of Pentagon and Shin based on the ground that they did not owe Iglesias a legal duty to look behind a facially valid POA? ⁶³⁰ III. In the First and Second Actions, did the circuit court abuse its discretion by denying Iglesias’s motion for order of default against Shin and by ruling that Iglesias’s action against Shin was barred by limitations? For the reasons to follow, we shall affirm the judgments of the circuit court. FACTS AND PROCEEDINGS 2 In July of 2006, Iglesias was renting an apartment in Washington, D.C., and was in the market to purchase her first home.

She responded to an advertisement for a condominium for sale in Hyattsville. The owner, identified to Iglesias as “Oscar,” referred her inquiry to his agent, Albert Gomez. Gomez in turn referred Iglesias to Ramirez, who, as already discussed, purported to be a loan officer. Upon Ramirez’s request, Iglesias provided him with a number of personal financial records.

Supposedly, with that information in hand, he pursued financing on her behalf. Iglesias subsequently made an offer to purchase Oscar’s condominium, which he accepted. Settlement was scheduled for September 12, 2006. At some point, however, Ramirez advised Iglesias that there was a problem with the financing and settlement was postponed to a later date.

In the interim between September 12, 2006, and the postponed settlement date, Oscar told Iglesias that he “no longer wished to sell” the condominium she had contracted to purchase, but that he had another condominium for sale if she was interested. At that point, Iglesias became “uneasy about the transaction” and ended negotiations. Sometime later that month, Iglesias used the services of a new loan officer to assist in obtaining financing with which to purchase a different condominium. It was then that she discovered that she was a record owner of a house located at ⁶³¹ 13114 English Turn Drive in Silver Spring (“English Turn Property”).

Later, Iglesias learned that she also was a record owner of a house located at 19067 Sawyer Terrace in German-town (“Sawyer Terrace Property”). Both properties were encumbered by deeds of trust (“DOT”) supported by loans solely in Iglesias’s name. Six months later, in March of 2007, Iglesias reported to the police that she believed she had been the victim of identity theft. In the course of the ensuing police investigation, the settlement files from each transaction were seized from Pentagon’s offices in Rockville.

These documents revealed that the central players in both transactions were the same. Gomez, a real estate agent with Remax Home Centre, acted as the buyer’s agent and prepared the residential contract of sale; Kenneth C. Sanchez, of First Advantage Mortgage Company (“First Advantage”), acted as the loan officer 3 ; and settlement occurred at Pentagon’s office. In addition, at each settlement, the subject property was conveyed to Iglesias and another individual as joint tenants, but only Iglesias was obligated on the loans associated with the DOTs. Thus, Iglesias shared ownership of both properties but did not share liability for the loans for the properties.

Finally, in each case, settlement proceeded on the strength of a POA notarized by Myriam Rodriguez purporting to authorize an individual to act on Iglesias’s behalf to consummate the real estate transaction. 4 The sales contract for the English Turn Property was executed on July 27, 2006. It reflected that one Raymond Ekpedeme was the seller and that Iglesias was the buyer. The contract price was $897,500 and settlement was scheduled for August 4, 2006. ⁶³² On July 31, 2006, Jennifer Lee, a Pentagon employee, received an email from Sanchez, who, as mentioned above, was the loan officer. He stated that “[tjhere is a new buyer on this property because the last buyer fell through at the last minute.” He asked Lee to “change the buyer and the loan amounts on the title as well as the mortgagee info.” He identified Iglesias as the new buyer and said she would be financing the $897,500 purchase price with two mortgage loans, one for $650,000 and one for $247,500.

His email ended by stating, “there is still going to be a power of attorney Jose Ramirez and he will be going on title____I also am looking to close this deal on [W]ednesday late afternoon.” Three days later, on August 3, 2006, settlement went forward in Pentagon’s office with Shin acting as the settlement agent. Ekpedeme and Ramirez were present. Iglesias was not. Ramirez gave Shin a “Special Power of Attorney” (“Ramirez POA”).

It stated in pertinent part: KNOW ALL MEN BY THESE PRESENTS, that I, MARIA IGLESIAS, of Montgomery County, Maryland do hereby appoint JOSE R. RAMIREZ, as my true and lawful attorney-in-fact for me and in my name, place, and stead to secure, acknowledge, sign, seal, and deliver, and cause to be recorded any and all contracts, checks, deeds, deeds of trust, notes, mortgages, and other writing which may be necessary or desirable for me to execute for the PURCHASE of the following described property, located in PRINCE GEORGE’S County,[ 5 ] Maryland and more particularly described as: Address: 13114 English Turn Drive, Silver Spring, MD 20904 (Emphasis in original.) The Ramirez POA further provided that it would terminate automatically on August 31, 2006. It was dated by hand August 3, 2006 (the same day as settle ⁶³³ ment) and was signed “Maria Iglesias.” Finally, it was notarized by Rodriguez. At settlement, Shin asked to see Ramirez’s photographic identification. After his identity was so confirmed, Ramirez, acting under the force of the POA, executed loan documents; signed a Truth in Lending Act disclosure; initialed and acknowledged receipt of the HUD-1 settlement sheet; signed an affidavit attesting that he and Iglesias were first-time home-buyers; and signed an “Affidavit of Purchaser Regarding Exemption From Recordation Tax” attesting that he and Iglesias intended to use the English Turn property as their primary residence.

Ekpedeme executed a Deed conveying the property in fee simple to Iglesias and Ramirez as joint tenants. The HUD-1 settlement sheet for the English Turn Property shows an $897,500 purchase price fully financed with Iglesias alone being obligated on a first loan of $650,000 and a second loan of $247,285. 6 Chase was the lender on both. 7 The proceeds of the loans were used to pay off an existing first mortgage of $655,910.09 and an existing second mortgage of $174,760.21. After closing costs, Ekpedeme netted $6,885.90. Iglesias owed $3,000 at closing.

It appears that that amount was paid by a check signed by one Luis Canales. A Uniform Residential Loan Application prepared by Sanchez and executed by Ramirez on behalf of Iglesias stated that she had been approved for a conventional, adjustable rate mortgage (“ARM”) of $650,000, with a starting interest rate of seven percent. 8 The loan application further represented that the English Turn Property would be Iglesias’s primary resi ⁶³⁴ dence and that she would own the property jointly with Ramirez. It stated that Iglesias had been employed for more than five years by East West Financial, LLC, as a senior consultant, with a gross monthly income of $17,800. A “Request for Verification of Employment” form, purportedly signed by Iglesias’s employer, Kenneth C. Sanchez, 9 the President of East West Financial, LLC, was attached.

On August 14, 2006, the Deed and associated DOTs for the English Turn Property were recorded in the Land Records of Montgomery County (“Land Records”). Twenty-eight days later, on August 31, 2006, settlement on the Sawyer Terrace Property took place, also at Pentagon’s office. The sales contract reflected that it was executed between Hugo and Marina Fochi, the sellers, and Iglesias, the buyer, on August 10, 2006. At settlement, the listing agent, Andres Franzetti, appeared and acted as attorney-in-fact for the Fochis.

Luis Canales, the same person who had paid the $3,000 Iglesias owed at the closing on the English Turn Property, appeared on behalf of himself and Iglesias and gave Pentagon a “Special Power of Attorney” (“Canales POA”). It stated in pertinent part: KNOW ALL MEN BY THESE PRESENTS, that I, MARIA IGLESIAS, of Montgomery County, Maryland do hereby appoint LUIS CANALES, as my true and lawful attorney-in-fact for me and in my name, place and stead to secure, acknowledge, sign, seal, and deliver, and cause to be recorded any and all contracts, checks, deeds, deeds of trust, notes, mortgages, and other writing which may be necessary or desirable for me to execute for the PURCHASE of the following described property, located in MONTGOMERY County, Maryland and more particularly described as: Address: 19067 Sawyer Terrace, Germantown, MD 20874 ⁶³⁵ (Emphasis in original.) The POA further provided that it would terminate automatically on September 25, 2006. It was dated by hand August 29, 2006 (two days before settlement) and was signed “Maria Iglesias.” Finally, it was notarized by Rodriguez. Shin asked to see Canales’s photographic ID, which he produced.

Thereafter, Canales, acting under the force of the POA, executed loan documents; signed a Truth in Lending Act disclosure; initialed and acknowledged receipt of the HUD-1 settlement sheet; and signed an “Occupancy Statement” attesting that he and Iglesias would occupy the subject property as their principal residence. Franzetti, as attorney-in-fact for the Fochis, executed a Deed conveying the Sawyer Terrace Property in fee simple to Iglesias and Canales as joint tenants. The HUD-1 settlement sheet showed a purchase price of $440,000 that was fully financed. Iglesias alone was obligated on a first loan of $352,000 and a second loan of $87,038.05. 10 WMC was the lender on both. 11 The proceeds of the loans were used to pay off an existing mortgage of $304,332.08.

After closing costs, the Fochis netted $94,204.49. Iglesias owed $4,149.81 at closing. This sum was paid by two checks signed by Canales. A Uniform Residential Loan Application prepared by Sanchez and executed by Canales on behalf of Iglesias stated that Iglesias had been approved for a conventional, fixed rate mortgage of $352,000, with an interest rate of seven and a quarter percent. 12 The loan application further represented that the Sawyer Terrace Property would be Iglesias’s primary ⁶³⁶ residence and that she would own the property jointly with Canales.

It further stated that Iglesias had been employed for more than three years by Efrain Drywall as a “Sub Contractor Finisher,” with a gross monthly income of $9,500. On September 29, 2006, the Deed and associated DOTs for the Sawyer Terrace Property were recorded in the Land Records. As discussed above, in July of 2009, Iglesias filed suit in the First Action and the Second Action. In her SAC in each action, she alleged that the real estate transactions were consummated without her knowledge or consent; that she did not sign the POAs; and that, until September of 2006, she was unaware that the transactions even had occurred.

In Count I of the SAC in each action, Iglesias alleged that Pentagon owed her a “duty of reasonable diligence and professional competence” in conducting the settlement. She alleged that Pentagon had breached its duty of care to her by failing to conduct “even a marginally diligent investigation” to determine if she were a true party to the transaction. She further alleged that the breach proximately caused damages in that it “adversely affected [her] credit.” In Count III of the SAC in each action, Iglesias made the same allegations of negligence against Shin. She further alleged that, pursuant to Md.Code (2007 RepLVol., 2011 Supp.), section 4A-301.1 of the Corporations and Associations Article (“CA”), Shin was personally liable for her negligent acts. 13 Finally, in Count II of the SAC in the First Action, Iglesias alleged that Chase, as the lender on both DOTs on the ⁶³⁷ English Turn Property, owed her a “duty of reasonable diligence and professional competence ... in providing funds to finance the sale” and that it breached that duty by “fail[ing] to make a diligent inquiry into the validity of the [Ramirez POA] upon which [Chase] financed the sale and encumbered [Iglesias]’s credit.” On all counts, Iglesias sought damages in the amount of the full purchase price of the subject properties.

(She did not allege that she would revoke her ownership interest in either property.) We shall include additional facts in our discussion of the issues. DISCUSSION I & II Existence of a Legal Duty Because, as we shall discuss, Iglesias’s first two questions presented turn on the issue of the existence, nature, and extent of any legal duty of care owed to Iglesias by Chase, Pentagon, and/or Shin, we consider these issues together. The circuit court granted a motion to dismiss with respect to Chase and a motion for summary judgment with respect to Pentagon and Shin. Accordingly, we are guided by differing standards of review and concerned with differing facts in assessing the claims of error.

A. Legal Background “Duty is a foundational element in a claim of negligence.” Pace v. State, 425 Md. 145, 155 , 38 A.3d 418 (2012). Whether a legal duty exists is a question of law. Doe v. Pharmacia & Upjohn Co., Inc., 388 Md. 407, 414 , 879 A.2d 1088 (2005). “There is no precise formula for determining the existence of a duty of care between two parties.” Griesi v. Atlantic Gen. Hosp.

Corp., 360 Md. 1, 12 , 756 A.2d 548 (2000). The determination “begs the essential question—whether the plaintiffs interests are entitled to legal protection against the defendant’s conduct.” Prosser and Keeton on The Law of ⁶³⁸ Torts, § 53, at 357 (5th ed. 1984). In deciding the issue of duty, Maryland courts have adopted “an analytical approach that encompasses at least two major assessments: examining the nature of the legal relationship between the parties and the likely harm that results from a party’s failure to exercise reasonable care within that relationship.” Griesi, 360 Md. at 12 , 756 A.2d 548 . In the seminal case of Jacques v. First National Bank, 307 Md. 527 , 515 A.2d 756 (1986), the Court explained: Where the failure to exercise due care creates a risk of economic loss only, courts have generally required an intimate nexus between the parties as a condition to the imposition of tort liability.

This intimate nexus is satisfied by contractual privity or its equivalent. By contrast, where the risk created is one of personal injury, no such direct relationship need be shown, and the principal determinant of duty becomes foreseeability. 307 Md. at 534-35 , 515 A.2d 756 (footnote and citations omitted.) In Jacques , the plaintiffs, a married couple, entered into a residential sales contract to purchase a house. Under the contract, the Jacqueses were to make a cash down payment and obtain financing for the balance of the contract price. The contract was contingent upon the Jacqueses obtaining financing through a conventional 30-year loan bearing a fixed interest rate of 12-1/4% or less, and secured by a deed of trust.

In a handwritten addendum to the contract, however, the Jacqueses agreed to “increase the down payment to whatever amount is necessary to qualify for a mortgage loan.” Id. at 529 , 515 A.2d 756 . The Jacqueses submitted an application to First National Bank (“the Bank”) seeking a loan in accordance with the terms of the sales contract. They attached a copy of the contract and its addendum. By letter, the Bank acknowledged receipt of the application, locked in a rate of 11-7/8% for 90 days, and agreed to process the application.

Several weeks later, the Bank informed the Jacqueses that they only ⁶³⁹ qualified for a loan in an amount significantly less than the amount to be financed. Despite the Jacqueses’s protests, the Bank refused to revisit its determination in that regard and also refused to issue an “outright refusal” of the loan application. Id. at 530 , 515 A.2d 756 . As required by the addendum to the sales contract, the Jacqueses accepted the loan the Bank was willing to give them and otherwise financed the purchase with personal loans from family members and an additional short-term personal loan from the Bank.

They then sued the Bank for, among other things, negligence in the processing of their loan application. The case was tried to a jury, which returned a verdict in favor of the Jacqueses, awarding them $10,000 in compensatory damages. Unhappy with the amount of the verdict, the Jacqueses noted an appeal, arguing that the trial court had erred in instructing the jurors on their (the Jacqueses’) duty to mitigate their damages. The Bank cross-appealed, arguing that it did not owe any duty of care to the Jacqueses, as a matter of law.

This Court reversed the judgment, holding that the Bank had no legal duty to use due care in evaluating an application for a loan. Jacques v. First National Bank, 62 Md.App. 54 , 488 A.2d 210 (1985). The Court of Appeals granted certiorari and reversed. As noted above, the Jacques Court enunciated the principle that, when conduct creates the risk of economic loss (as opposed to the risk of personal injury), a tort duty of care will be found to exist when, and only when, there is an “intimate nexus” between the parties.

Jacques, 307 Md. at 534 , 515 A.2d 756 . A showing of “contractual privity or its equivalent” satisfies the “intimate nexus” requirement. Id. at 534-35 , 515 A.2d 756 . To elucidate this principle, the Court turned to two seminal decisions of the New York Court of Appeals (both authored by Justice Cardozo) bearing on the meaning of “intimate nexus.” In the first, Glanzer v. Shepard, 233 N.Y. 236 , 135 N.E. 275 (1922), the court held that a public bean weigher could be liable in negligence to the purchaser of beans even though the ⁶⁴⁰ bean weigher was in contractual privity only with the seller of beans.

The Glanzer court reasoned that the purchaser was the “intended beneficiary” of the contract between the bean seller and the public weigher. 307 Md. at 535 , 515 A.2d 756 . In contrast, in Ultramares Corp. v. Touche, 255 N.Y. 170 , 174 N.E. 441 (1931), the New York court held that “public accountants who carelessly prepared and certified a balance sheet for a corporation could not be held liable in negligence to a factor who made loans to the corporation in reliance upon the balance sheet.” Jacques, 307 Md. at 536 , 515 A.2d 756 . In Ultramares, the court distinguished Glanzer , emphasizing the absence of any “ ‘contractual relation, or even one approaching it, at the root of any duty that was owing from the defendants ... to the indeterminate class of persons who ... might deal with the [corporation] in reliance on the audit.’ ” Id. (quoting Ultramares, 255 N.Y. at 183 , 174 N.E. 441 (alteration in Jacques)).

The Jacques Court reasoned, based on Glanzer and Ultramares , that, with respect to a legal duty in tort, there exists “an inverse correlation ... between the nature of the risk on the one hand, and the relationship of the parties on the other---- [A]s the magnitude of the risk decreases, a closer relationship between the parties must be shown to support a tort duty.” Id. at 537, 515 A.2d 756 . Turning to the Jacqueses’ claim, which plainly involved only economic loss, the Court had no difficulty in concluding that the Jacqueses were in contractual privity with the Bank. The Bank had expressly promised the Jacqueses that it would lock in a particular interest rate for 90 days and process their application; and in consideration for these promises the Jacqueses had paid the Bank appraisal and credit report fees. The Court concluded that it was implicit in the Bank’s promise to process the Jacqueses’ application that it would do so with reasonable care.

Addressing the ultimate question, “whether a concomitant tort duty should be recognized under these circumstances,” the Court observed that, given the “rather extraordinary financing provisions” in the Jacqueses’ sales contract (which were known to the Bank and incorporated into the loan application), the Jacqueses were “particularly vulner ⁶⁴¹ able and dependant upon the Bank’s exercise of due care.” 307 Md. at 540 , 515 A.2d 756 . This vulnerability, coupled with the “public nature” of the banking industry, led the Court to conclude that a tort duty should be recognized. Id. at 542 , 515 A.2d 756 . Because the Court held that the Jacqueses were in contractual privity with the Bank, it did not have occasion to consider the nature of “equivalent” relationships that might otherwise satisfy the “intimate nexus” requirement and give rise to a tort duty.

The Court of Appeals has since addressed that issue in a series of decisions. In Weisman v. Connors, 312 Md. 428 , 540 A.2d 783 (1988), the Court held that statements by a prospective employer to a prospective employee in precontractual negotiations can give rise to a duty on the prospective employer’s part to use only accurate statements about the company and the position. The Weisman Court emphasized that “the circumstances under which the two men [in that case] came together in precontractual negotiations created a sufficiently close nexus or relationship as to impose a duty” largely because the potential employer’s goal was to persuade the potential employee to leave his current position to take the new job. Id. at 448 , 540 A.2d 783 .

The Court observed that the face-to-face encounter between the parties “more closely resemble[d] the intimacy of the Glanzer parties than the remoteness of the Ultramares relationship.” Id. at 449, 540 A.2d 783 . Twelve years later, in Walpert, Smullian & Blumenthal, P.A. v. Katz, 361 Md. 645 , 762 A.2d 582 (2000), the Court held that an accounting firm engaged by a company to perform audits and prepare financial statements owed a duty of care to individuals who made loans to the company in reliance upon the financial statements. The president of the company in question—Magnetics, Inc.—was the plaintiffs’ son. Before making the loans, the plaintiffs met face-to-face with their son and members of the accounting firm to discuss the financial status of Magnetics.

Magnetics later failed after accounting irregularities surfaced, causing its principal lender to call its loan. The plaintiffs filed suit, alleging that the accounting ⁶⁴² firm negligently overstated, by a factor of ten, Magnetics’s inventory. In analyzing whether the accounting firm owed a duty of care to the plaintiffs, the Court summarized the policy rationale underlying the principle that “contractual privity or its equivalent” must be shown: [T]he reason for the requirement is to limit the defendant’s risk exposure to an actually foreseeable extent, thus permitting a defendant to control the risk to which the defendant is exposed. It was that concern that was being addressed by the Jacques Court when it juxtaposed Glanzer and Ultramares and stressed doubly that the Jacqueses were not strangers to the loan transaction and that the Bank promised the Jacqueses to process their loan application and to lock in a certain rate of interest for a period of time.

Jacques, at 537, 515 A.2d at 761 . Concerning the promises, the Court pointed out that they were an inducement to the Jacqueses and provided the Bank with a business advantage when the Jacqueses acted in conformance with them. See id. 361 Md. at 671-72 , 762 A.2d 582 (footnote omitted). The Walpert Court emphasized that, in Glanzer , “the plaintiffs’ identity, or at least the class in which they belonged, and that they were going to use, and therefore rely on, the information [i.e., the weight of the beans], was actually known to the defendant”; by contrast, in Ultramares , “other than as a member of the public, the defendant had no relationship at all with the plaintiff that provided the defendant with any information bearing on its liability for negligence.” Id. at 687, 762 A.2d 582 .

Ultimately, the Walpert Court concluded that the accounting firm’s knowledge that the plaintiffs were relying upon the financial statements-derived from its face-to-face encounter with them-brought it within the rationale of Glanzer and served as the “equivalent of privity.” 14 ⁶⁴³ In Simmons v. Lennon, 139 Md.App. 15 , 773 A.2d 1064 (2001), this Court addressed the circumstances in which, absent actual privity of contract, the equivalent of privity may be found to support a tort duty of care. We distilled from the holdings in Walpert, Weisman, and other cases that [t]he common denominator of the Maryland cases, where no contractual privity existed but nevertheless a tort was found, is that in each case the relationship of the litigants was close enough that the defendant knew that the plaintiff was likely to take some action based on what the defendant said or did. Id. at 40-41 , 773 A.2d 1064 . In Simmons , like in the instant case, the negligence claim arose from a fraud scheme.

There, a secretary and an outside bookkeeper for an attorney, Simmons, conspired to defraud him. The secretary forged Simmons’s name on numerous checks drawn on his escrow accounts and the bookkeeper doctored Simmons’s accounts to hide the fraud. One of the forged checks was made payable to Michael Lennon as part of the purchase price of a used car Lennon sold to Simmons’s secretary. Lennon previously had been romantically involved with the secretary, but had broken off their relationship after she forged his signature on credit card applications and used the fraudulently obtained credit cards to make purchases totaling $17,000.

Lennon, a retired police officer, also worked for Simmons on a semi-regular basis as a private-process server. He thus was familiar with Simmons’s signature. ⁶⁴⁴ Because Simmons relied on his bookkeeper to alert him to any discrepancies in his accounts, he did not discover the forgery scheme for more than two years. Ultimately, he sued Lennon for conversion and negligence. In support of his negligence claim, Simmons alleged that Lennon owed him a duty to report the forged check.

The case was tried to a jury. The trial court granted judgment in favor of Lennon on the negligence count on the basis that he (Lennon) owed no legally cognizable duty to Simmons. We affirmed the judgment on appeal. We focused on whether, as a matter of law, there could be “the equivalent” of contractual privity between Simmons and Lennon.

We concluded that there were no facts to show that Simmons ever had “relied” on Lennon to discover forgeries or to otherwise monitor checks drawn from his escrow accounts. Id. at 41 , 773 A.2d 1064 . We also considered Simmons’s arguments that the injury was foreseeable to Lennon when Lennon negotiated the forged check. We concluded, given that the drawer bank, not the drawer, ordinarily is responsible when it accepts a forged check, that it would not have been foreseeable to Lennon that Simmons would not have discovered the forgery in a timely manner.

B. Chase’s Motion to Dismiss “The existence of a duty is a matter of law to be determined by the court and, therefore, is an appropriate issue to be disposed of on motion for dismissal.” Bobo v. State, 346 Md. 706, 716 , 697 A.2d 1371 (1997). In reviewing the circuit court’s grant of a motion to dismiss, “ ‘our task is confined to determining whether the trial court was legally correct in its decision to dismiss.’ ” Washington Suburban Sanitary Comm’n v. Phillips, 413 Md. 606, 618 , 994 A.2d 411 (2010) (quoting McDaniel v. Am. Honda Fin. Corp., 400 Md. 75, 83 , 926 A.2d 757 (2007)). “A motion to dismiss for failure to state a claim tests the sufficiency of the pleadings.” Afamefune v. Suburban Hosp., Inc., 385 Md. 677 , 681-82 n. 4, 870 A.2d 592 (2005). “A defendant asserts in such a motion that, despite the truth of the allegations, the plaintiff is barred from ⁶⁴⁵ recovery as a matter of law.” Porterfield v. Mascari II, Inc., 374 Md. 402, 414 , 823 A.2d 590 (2003).

In ruling on such a motion, the court must “assume the truth of all well-pled facts in the complaint as well as the reasonable inferences that may be drawn from those relevant and material facts.” Id. Thus, we begin by setting forth the relevant factual allegations in the SAC in the First Action. Iglesias alleged that Chase was the lender on both DOTs associated with the English Turn Property and that, on August 3, 2006, under the authority of the Ramirez POA, Ramirez executed the DOTs and associated Notes in her name. She further alleged that she “did not authorize Mr. Ramirez to sign in that capacity, did not agree to be obligated on the debt, and was unaware of the documents until approximately September, 2006.” She alleged that Chase “owed [her] a duty of reasonable diligence and professional competence ... in providing funds to finance the sale of the [English Turn Property].” She asserted that Chase “had never met with or spoken to” her, and that Chase breached a duty of care to her when it “failed to make a diligent inquiry into the validity of the [Ramirez POA] upon which they financed the sale and encumbered [Iglesias]’s credit.” Chase moved to dismiss the SAC, 15 arguing that Iglesias failed to adequately plead duty, proximate causation, and damages.

After hearing argument, the circuit court ruled as follows: Well, I mean it is a very interesting issue, but I keep coming back to the fact that there’s no privity of contract between these two parties. And what I’m being asked to do, perhaps properly, is to consider that there is a broader responsibility in light of the manner in which business is presently done nowadays regarding these mortgage transactions for the bank to investigate the applicant and make ⁶⁴⁶ sure, in fact, that the applicant is who the applicant represents that they are. I’m just not prepared at this time to impose that duty upon the bank. This is a third party who was not known to the bank and it seems to me to add that extra layer to a financial transaction is not supported by any case law that I see.

It’s—I don’t know how far their duty extends, what they would be expected to do. They certainly have a downside, as well, to lending the money -without ascertaining it. But I’m just reluctant to impose a duty, to protect members of the public from identify theft, on the part of a bank. There are certainly safeguards that are in place and there are other organizations within the settlement transaction who would be in a position to determine, as I understand it, whether or not the applicant was who, in fact, they represented they were or whether the power they represented that they had was, in fact, validly granted.

I just don’t think in the first instance that this power, or this responsibility devolves upon the bank. I’m going to grant the motion to dismiss as to [ ] Chase without leave to amend. Chase makes a threshold argument that, because Iglesias does not argue in her opening brief that the court erred in granting the motion to dismiss on the alternative grounds of proximate causation and damages, she has no basis to argue that the court erred in granting the motion on the issue of duty. Therefore, she has waived her right to challenge the grant of the motion to dismiss on appeal.

In her reply brief, Iglesias responds that the court granted the motion to dismiss based entirely on a ruling that Chase owed no duty to Iglesias as a matter of law. We agree with Iglesias on this point. Aside from a passing reference to the “elements” of negligence, in the hearing on the motion to dismiss, Chase’s counsel devoted its entire argument to the issue of duty. Iglesias’s counsel responded in kind.

As recounted, supra, the court granted the motion to dismiss, announcing its ruling from the ⁶⁴⁷ bench. More than four months later, on September 2, 2010, the court entered an order dismissing the SAC against Chase. The order signed by the court was the draft order submitted by Chase with its motion. It provided, in pertinent part, that Chase’s “Motion to Dismiss the [SAC] be, and the same hereby is, GRANTED for the reasons stated therein.... ” It is abundantly clear from the court’s oral ruling, however, that its decision to grant the motion to dismiss was premised entirely upon its conclusion that Chase did not owe Iglesias a legal duty of care.

Accordingly, we turn to the merits of Iglesias’s claim of error on that point. Iglesias contends, based on “broad principles,” that Chase owed her a legal duty to “take reasonable steps” to ensure that the applicant in the loan transaction in this case was who she represented herself to be. Relying upon Jacques, she argues that banks are held to a “high degree of integrity and responsiveness to their public calling,” 307 Md. at 542 , 515 A.2d 756 , and that “Maryland courts have not been reluctant to impose upon banks a duty of care with respect to those with whom the banks deal.” Chase responds that the cases Iglesias cites are readily distinguishable on their facts. It argues, also in reliance upon Jacques and its progeny, that the cases establish that “communication within some degree of personal relationship” is necessary before an “intimate nexus” giving rise to a tort duty may be found.

It further argues, citing the Jacques Court’s “inverse correlation” analysis, that when, as here, Chase was disbursing loan proceeds, not receiving money, the risk of economic loss was “quite low,” thus making the “intimacy” requirement “correspondingly high.” Because it is undisputed that Iglesias’s claim is for economic loss only, we focus our inquiry on the nature of her relationship with Chase. There were several points of contact between Chase and the individuals purporting to act on behalf of Iglesias. First, a mortgage loan application was submitted to Chase representing facts about Iglesias’s employment, income, assets, and liabilities. Based on these representations, Chase approved the application and agreed to extend two loans totaling $897,000 to a person it presumed to be Iglesias.

The ⁶⁴⁸ loans were to be secured by two DOTs on the English Turn Property. Then, on August 3, 2006, after Ramirez executed the loan documents securing the two DOTs under the authority of a forged POA, Chase disbursed the mortgage loan funds. We do not understand Iglesias to be arguing, nor do the allegations in her SAC in the First Action support the argument, that Chase had a duty to verify her identity at such time as it received or approved the loan application. Rather, she appears to be arguing only that Chase owed her a duty of care to verify that she was the true party to the transaction after it learned that settlement would proceed without her personally appearing.

As the circuit court recognized, by virtue of the fraud that gave rise to all of Iglesias’s claims, she was not an actual party to the loan transaction. She alleges that she had no knowledge of the transaction resulting in the two loans and DOTs in her name for the English Turn Property until September of 2006 and that she and Chase representatives never met or spoke. Thus, it is apparent on the facts alleged that Chase and Iglesias were not in actual contractual privity. We only are concerned, then, with whether the equivalent of privity reasonably could be found to exist on the facts alleged.

Iglesias suggests that, when, as here, representatives of a lending bank think the bank is in contractual privity with a borrower, and the bank acts on that basis, the equivalent of privity exists. She asks us to adopt the reasoning of the Supreme Court of Alabama to that effect. See Patrick v. Union State Bank, 681 So.2d 1364 (Ala.1996) (holding that when an imposter fraudulently opened a bank account in the plaintiffs name, the bank owed the plaintiff a duty of care based on its belief that it had a business relationship with her). She also contends that several Maryland cases support her assertion that banks are held to a high standard of conduct and generally owe a duty of care in their transactions with customers and non-customers alike.

We begin by discussing the Maryland precedents. ⁶⁴⁹ We agree with Chase that two of the cases Iglesias cites have no bearing on this issue as they did not decide the question of duty. In the first case, Saxon Mort. Servs. v. Harrison, 186 Md.App. 228 , 973 A.2d 841 (2009), after a fire caused damage to their property, the owners submitted a claim to their insurer. The declaration page of the insurance policy listed Saxon Mortgage Services as the “first mortgagee and/or loss payee.” Id. at 236 , 973 A.2d 841 .

After adjusting the claim, the insurer issued a check for $140,000, made payable to order of the owners of the property and Saxon and a second mortgagee “as their interests may appear.” Id. The check was hand-delivered to one of the property owners, who, in turn, endorsed it to an attorney with a law firm. The law firm subsequently deposited the check in its account at Middleburg Bank (“the Bank”), which accepted it for deposit. While Saxon had neither endorsed the check nor authorized any person to endorse it on its behalf, the word “Saxon” was handwritten on the back of the check.

The Bank did not contact Saxon or the insurer to confirm the validity of the purported endorsement and the check ultimately was paid. Saxon sued the Bank for conversion and negligence. After a jury trial, the court granted the Bank’s motion for judgment on the negligence claim on the ground that Saxon failed to adduce sufficient evidence of the standard of care. On appeal from that ruling, we opined: In order to succeed on its claim for negligence ...,