Norman v. Borison

WRIGHT, Judge. Appellant, Stephen Norman (“Norman”), filed suit in the Circuit Court for Montgomery County alleging that he was defamed by statements made by appellees 1 in connection with a lawsuit currently pending before the United States District Court for the District of Maryland. Appellees filed motions to dismiss, and after conducting a hearing, the circuit court dismissed all counts of the lawsuit. Norman noted this appeal, presenting the following questions for our consideration: 2 ⁴¹⁰ I. Did the trial court erroneously dismiss appellant’s claims since appellant was repeatedly personally referred to in the appellees’ second amended federal complaint, and the defamation of a small unique company may give rise to personal claims for defamation when the facts alleged are such that a reasonable person could understand that the defamatory comments referred to appellant or when there are allegations that persons familiar with the situation understood the comments referred to appellant?

II

Did the trial court err in finding absolute privilege extends to all pleadings in a suit when the pleadings are published to the press and on the internet, entities and forums not connected to the underlying judicial proceeding?

III

Was the publication of a previously filed, but not yet available to the public, judicial complaint to the press and on the internet by the attorneys who drafted the underlying pleading protected by the fair reporting privilege when there was no judicial action in the case and the attorneys self reported the pleadings they drafted without solicitation from the press in a matter in which they had a substantial financial interest, and where there are allegations the publication was committed with malice?

IV

Did the appellant sufficiently allege falsity when falsity was either specifically alleged in all counts, was alleged by reference to the averments in prior paragraphs, or by including allegations that the defamatory remarks in all counts were made with malice? We conclude that appellant does not have standing to sue for defamation, and that the absolute privilege extends to the allegedly defamatory statements, thereby answering “no” to ⁴¹¹ questions I and II. We therefore affirm the judgment of the circuit court and need not address questions III and IV. FACTUAL & PROCEDURAL BACKGROUND The Parties Norman was the owner, operator and attorney for Sussex Title, LLC 3 (“Sussex”) (formerly known as CAP Title, LLC) from November 2001 to December 18, 2008.

Alexander Chaudhry and Ali Farahpour are Norman’s former business partners in Sussex. Appellees are attorneys who filed a class action lawsuit against various companies alleging mortgage fraud. Appellees, Scott Borison and Janet Legg, are attorneys with the Legg Law Firm, LLC. Appellee, Phillip Robinson, is the executive director of Civil Justice, Inc., a non-profit legal services organization affiliated with the University of Maryland School of Law.

Appellee, Peter Holland, is an attorney with the Holland Law Firm, P.C. Benjamin Carney is an attorney formerly employed at the Holland Law Firm, P.C. Carney was not working for the Holland Law Firm when appellant filed his defamation case against appellees. The Class Action Litigation On June 18, 2007, appellees filed a class action suit on behalf of several hundred homeowners, alleging that the Metropolitan Money Store, along with several other companies and real estate professionals, engaged in mortgage fraud. The action also alleged wire fraud, mail fraud, and Racketeer Influenced and Corrupt Organization Act (“RICO”) 4 claims. The suit was originally filed in the Circuit Court for Prince George’s County on June 18, 2007.

Sussex was named as a Defendant; however, neither Norman nor any other owner or employee of Sussex was named as a defendant nor identified by name in ⁴¹² the body of the complaint. On July 24, 2007, appellees voluntarily dismissed the case and filed a new class action in the United States District Court for the District of Maryland, captioned Proctor, et al. v. Metropolitan Money Store, et al. The Federal Complaint again named Sussex, and also Chaudhry as a defendant, but Norman was not named as a defendant or identified by name elsewhere in the complaint. On January 21, 2008, appellees filed a first amended complaint, adding Farahpour and Wilbur Ballesteros as defendants and dropping Sussex, which had recently filed for bankruptcy protection. 5 Ballesteros was a Sussex employee who acted as the settlement agent and notary public in the class transactions facilitated by Sussex. Norman was not named as a defendant or identified by name in the first amended complaint; however, the complaint contained allegations that “anyone at Sussex” could have discovered the scheme, including “the respective principals” and the “owners and employees” of Sussex.

The first amended complaint was ultimately dismissed with leave to re-file in light of the new pleading standards in federal court established by Bell Atl. Corp. v. Twombly, 550 U.S. 544 , 127 S.Ct. 1955 , 167 L.Ed.2d 929 (2007). Proctor v. Metro. Money Store Corp., 579 F.Supp.2d 724, 730-31, 745 (D.Md.2008).

On November 14, 2008, appellees filed a second amended complaint. It named Chaudhry and Farahpour as defendants, but did not name Ballesteros, Sussex, or Norman as defendants. However, for the first time, Norman was mentioned by name as an owner of Sussex. The references to Norman in the second complaint are as follows: 18. ...

The payments to Ballesteros were items paid out of the share of monthly proceeds to Farahpour, Chaudhry and Norman. 29. Sussex is an entity owned and controlled by Farahpour, Chaudhry, and a third person, Steven Norman ⁴¹³ [sic]. It had offices in the same location as Money Tree Funding. Sussex changed its name from CapTitle and filed for bankruptcy in the U.S. Bankruptcy Court of Maryland in late 2007.

Based on testimony of Norman in connection with the bankruptcy case, Sussex was operated for the financial benefit of the three owners since Ali Farahpour would review the company’s records and make an equal monthly distribution to each of the three based on the money received by the company during the given month after payment of expenses and leave some amount of reserve for future expenses. 61. Wilbur Ballesteros was paid a salary out of Chaudhry, Farahpour and Norman’s share of revenues generated by the operation of Sussex as well as a bonus per settlement in which he was involved. 102. The HUD-ls for the Proctor Family’s January 24, 2006 transaction shows that the remaining equity of more than $164,372.59 was all going to the Proctors, but Jackson, McCall and Mr. Fordham, Metropolitan and F & F and their affiliates actually illegally took more than $100,000 of the Proctor Family’s money, as shown by a disbursement sheet. Jackson, McCall, Mr. Fordham, Metropolitan and F & F were only able to obtain these funds through the complicity and cooperation of Sussex.

The loans obtained on the Proctor Property stripped away the equity in that Property, and increased the mortgages on the Property by close to $117,000. Upon information and belief, the fees and other charges collected by Sussex in connection with this transaction were disbursed at the direction of Farahpour to Farahpour, Chaudhry and Norman. 134. The loans were closed and settled by Sussex. Sussex’s role included the preparation of loan documents, a deed and disbursement checks by Chaudhry, the obtention of signatures to the various documents by Ballesteros.

For the Simon Property, the scheme ⁴¹⁴ stripped away the equity in that Property, and increased the mortgages on the Property by close to $100,000. Upon information and belief, the fees and other charges collected by Sussex in connection with this transaction were disbursed at the direction of Farahpour to Farahpour, Chaudhry and Norman. 141. As set forth above, Ballesteros, being paid by Chaudhry and Farahpour, participated by obtaining signatures to deeds and loan documents for loans made to straw purchasers. Chaudhry prepared ([or] had prepared under his supervision) Deeds and Deeds of Trust, signed checks and authorized disbursement of funds.

Farahpour participated through the use of his entity Money Tree Funding by dividing up the funds received from these transactions to himself, Chaudhry and Norman. After appellees filed the class action suit, Norman’s business partners filed a claim against the class representatives in the United States District Court for the District of Maryland, alleging that they were the masterminds behind the enterprise. Proctor v. Metro. Money Store Corp., 645 F.Supp.2d 464, 490-92 (D.Md.2009).

The claim was dismissed. Id. at 492 . Norman’s business partners also sought dismissal of the second amended complaint which the federal court likewise denied. Id.

Chaudhry then filed a Rule 11 6 motion, alleging ⁴¹⁵ that counsel (i) failed to conduct a reasonable inquiry into the facts before filing the complaints, and (ii) advanced “false factual claims” despite knowing that the allegations were not true. The court rejected these claims, finding them “totally devoid of merit” and concluding that there was “significant documentary evidence to support the allegations.” The Defamation Action On June 18, 2007, Chaudhry received a phone call from a reporter at the Baltimore Sun newspaper (“Sun”). The reporter indicated that Sussex had been named as a defendant in a class action suit filed in circuit court. 7 On June 19, 2007, the Sun published an article describing the lawsuit. Robinson was quoted in the article as stating: “It’s statewide, and it’s at least a couple hundred people.... ” The article also stated that Robinson said that state as well as federal agencies, including the FBI, were investigating.

Holland was quoted in the article as stating: “We’re talking about bad people ... [a] mortgage foreclosure rescue scam is worse than predatory lending. They know equity is in the house and they come at you like vultures,” and “[tjhey’re stealing not only the equity, but title and possession, too.” The article did not specifically mention Norman. On July 12, 2007, the Washington Post newspaper (“Post”) published an article concerning the class action suit filed in circuit court. Robinson was quoted in the article as stating: “The sole motive seemed to be to enrich their lavish lifestyles as opposed to saving the homes of vulnerable homeowners from foreclosure.” The Post article was republished in full in the Maryland Daily Record newspaper on July 13, 2007.

Again, the article did not specifically mention Norman. On or about July 13, 2007, the Post ombudsman contacted Norman to speak on behalf of Sussex. On July 14, 2007, the Post quoted Norman as indicating that Sussex reported the ⁴¹⁶ scam to the FBI months ago, and that Sussex had also been a victim of the fraud. On July 24, 2007, appellees dismissed the circuit court action in order to file the action in the United States District Court.

On July 25, 2007, the Sun published a second article. The article identified Sussex as a named defendant in the complaint. Chaudhry was quoted, on behalf of Sussex, as denying the charges and claiming “that a fraud was perpetrated on the company.” Robinson and Borison were also quoted in the article. Borison was quoted as stating: “As we kept investigating the case, it became clear that there were also federal charges to be asserted____ Metropolitan Money Store was out stealing the equity in people’s homes and on top of that, getting it tax free.” The article did not contain any statements that specifically mentioned Norman.

At some point, Borison and the Legg Law Firm created a website on the World Wide Web, 8 www.metromoneystore.com. ⁴¹⁷ The website lists the other appellees and provides links to their law firms. Appellees published PDF 9 versions of the original federal complaint, the first amended complaint, the second amended complaint, and a federal indictment on the site. The indictment does not name Norman, Norman’s former partners, or Sussex. 10 Although Norman is identified by name in the second amended complaint, to which the site provides access, Norman is not mentioned anywhere else on the site. ⁴¹⁶ "The best known category of communication over the Internet is the World Wide Web, which allows users to search for and retrieve information stored in remote computers, as well as, in some cases, to communicate back to designated sites. In concrete terms, the Web consists of a vast number of documents stored in different computers all over the world.

Some of these documents are simply files containing information. However, more elaborate documents, commonly known as Web "pages,” are also prevalent. Each has its own address — "rather like a telephone number.” Web pages frequently contain information and sometimes allow the viewer to communicate with the page's (or "site's”) author. They generally also contain "links” to other (generally) related sites.

Typically, the links are either blue or underlined text — sometimes images. Navigating the Web is relatively straightforward. A user may either type the address of a known page or enter one or more keywords into a commercial "search engine” in an effort to locate sites on a subject of interest. A particular Web page may contain information sought by the “surfer,” or, through its links, it may be an avenue to other documents located anywhere on the Internet.

Users generally explore a given Web page, or move to another, by clicking a computer "mouse” on one of the page's icons or links. Access to most Web pages is freely available, but some allow access only to those who ⁴¹⁷ have purchased the right from a commercial provider. The Web is thus comparable, from a reader’s viewpoint, to both a vast library including millions of readily available and indexed publications and a sprawling mall offering goods and services.” (Footnote omitted). On June 18, 2008, Norman, Sussex, Chaudhry, and Farahpour filed a complaint for defamation in the Circuit Court for Montgomery County.

In November 2008, the defamation complaint came to the attention of the federal court during a hearing on Chaudhry and Farahpour’s Rule 11 motion against appellees concerning the class action litigation. The court stated: “I find that the litigation brought by Messrs. Chaudhry and Farahpour in the Circuit Court for Montgomery County is patently intended to interfere with the jurisdiction of this court and to chill attorneys before this court and I simply will not tolerate it.” Thereafter, Chaudhry and Farahpour dismissed their defamation claims in the circuit court. On January 5, 2009, Norman filed a second amended complaint in the circuit court.

The complaint consisted of fourteen counts for defamation, negligence, civil conspiracy, and injurious falsehood. The complaint alleged that appellees ⁴¹⁸ defamed Norman by circulating copies of the state and federal complaints to a newspaper reporter, the internet, and by speaking to a reporter. The complaint also singled out certain statements by individual appellees. Appellees moved to dismiss the complaint.

On February 19, 2009, the court held a hearing on appellees’ motion to dismiss and took the matter under advisement. On February 20, 2009, the court issued an order dismissing Norman’s complaint with prejudice. The order first noted that “[o]verall, there is no allegation in any of the counts of any ‘falsity,’ a required element of defamation.” The order then dismissed the following counts based on absolute privilege: 1) Count I (Publishing the state complaint to the Baltimore Sun); 2) Count III (Publishing the state complaint to the Washington Post); 3) Count V (Publishing the federal complaint to the Baltimore Sun); 4) Count VII (Publishing the federal complaint on the internet); 5) Count VIII (Publishing the first amended complaint on the internet); 6) Count IX (Publishing the second amended complaint on the internet); 7. Count X (Appellee Borison’s reply to Chaudhry’s Rule 11 Motion); and 8) Count XI (Appellee Borison’s opposition to notice of sale claims by the estate).

With regard to the above eight counts, the order stated that “Maryland law makes no distinction between internet press and written press.... Additionally [Norman] has no standing because he is not a named party to the aforementioned suit.” The court dismissed the following counts because Norman “has no standing to allege the [ ] causes of action:” ⁴¹⁹ 1) Count II (Appellee Holland’s 6/19/07 defamation to the Sun); 2) Count IV (Appellee Robinson’s 7/12/07 defamation to the Post); and 3) Count VI (Defendant Borison’s 7/25/07 defamation to the Sun). The court dismissed Count XII (Negligence) for failure to state a cause of action under Maryland law. Count XIII (Injurious falsehood) and Count XIV (Civil conspiracy) were dismissed as duplicitous.

Norman appeals from the order, but does not challenge dismissal of Counts IV, XII, XIII or XIV. DISCUSSION Standard of Review Under Maryland Rule 2-322(b)(2), a party may seek dismissal of a complaint if the complaint fails to state a claim upon which relief ean be granted. The standard for reviewing the grant of a motion to dismiss is whether the circuit court was legally correct. Sprenger v. Pub.

Serv. Comm’n of Md., 400 Md. 1, 21 , 926 A.2d 238 (2007) (citations omitted). In reviewing the grant of a motion to dismiss, the appellate court “must determine whether the complaint, on its face, discloses a legally sufficient cause of action.” Pittway Corp. v. Collins, 409 Md. 218, 234 , 973 A.2d 771 (2009) (emphasis in original). The Court must “presume[ ] the truth of all well-pleaded facts in the [c]omplaint, along with any reasonable inferences derived therefrom in a light most favorable to plaintiffs.” Id.

(citation omitted). Also, “[i]t is well established in Maryland that, in an appeal from a final judgment, the appellate court may affirm the court’s decision on any ground adequately shown by the record.” State v. Rush, 174 Md.App. 259, 289 , 921 A.2d 334 (2007) (citations omitted), affd in relevant part, 403 Md. 68 , 939 A.2d 689 (2008). ⁴²⁰ I. Standing Standing is a threshold issue; a party may proceed only if he demonstrates that he has a real and justiciable interest that is capable of being resolved through litigation. Mayor & City Council of Ocean City v. Purnell-Jarvis Ltd., 86 Md.App. 390, 403 , 586 A.2d 816 (1991). In order to have standing, a party must demonstrate an “injury-in-fact,” or “an actual legal stake in the matter being adjudicated.” Hand v. Mfrs. & Traders Trust Co., 405 Md. 375, 399 , 952 A.2d 240 (2008) (citation omitted).

Appellees argue that Norman does not have standing to maintain suit for defamation because he has not identified any false and defamatory statements made against him. Norman counters that he has standing because the defamatory remarks made by appellees directly named and referred to him by virtue of his position with Sussex. Norman