Ultimate Title, LLC v. Ladd

ULTIMATE TITLE, LLC v. RUSSELL J. LADD, SR., et al.

No. 1202

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2016

July 11, 2018

Circuit Court for Baltimore City

Case No. 24-C-15-000549

UNREPORTED

Meredith, Arthur, Leahy, JJ.

Opinion by Leahy, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

This appeal follows a three-day bench trial in the Circuit Court of Baltimore City on appellee Russell Ladd Sr.'s ("Ladd Sr.") claim that his real property was transferred fraudulently to a purchaser, appellee K1 Auto Sales, LLC ("K1"). K1 filed third-party claims for contribution and/or indemnification against both the title company, Ultimate Title, LLC ("Ultimate Title"), and the property owner's son, Russell Ladd Jr. ("Ladd Jr."), who posed as his father at the settlement. Ladd Jr. did not respond to K1's complaint and the circuit court entered an order of default against him. After trial, the circuit court found, inter alia, that Ladd Jr. forged his father's signature on the sales contract and that Ultimate Title breached the duty it owed to K1. The court ordered that the deed transferring the property to K1 was null and void, ab initio, and entered judgment jointly and severally against Ladd Jr. and Ultimate Title for the amount of money K1 spent purchasing and renovating the property. Ultimate Title noted its timely appeal to this court, presenting the following questions for our consideration:

1. "Did the Circuit Court err by denying Ultimate Title's preliminary motion asserting Ladd Sr. was not the real party in interest to file the action and did not have standing?"

2. "Did the Circuit Court err by holding Ultimate Title was liable for negligence when Ultimate Title reasonably relied on a notary public?"

3. "Did the Circuit Court err by holding Ultimate Title failed to meet its burden to prove K1 Auto failed to mitigate damages?"

4. "Did the circuit Court err by granting K1 Auto's preliminary motion to strike Ultimate Title's expert witness?"

We affirm the circuit court's decision on all four issues. We hold that Ultimate Title forfeited the issue that Ladd Sr. was not a real party in interest because it failed to raise theissue below. Next, we conclude that Ultimate Title failed to demonstrate clear error in the circuit court's finding that Ultimate Title breached its standard of care to K1. Third, we agree with the circuit court that that Ultimate Title never adduced any evidence to demonstrate what reasonable steps K1 should have taken to mitigate damages. Finally, we perceive no abuse of discretion in the trial court's decision to strike Ultimate Title's expert witness.

BACKGROUND

The circuit court tried the case on April 6-8, 2016. The court heard testimony from K1's expert witness, Mr. Robert Lennon,¹ as well as eight fact witnesses: Ladd Sr. and his daughter; David Atkinson and George Bell, K1's co-owners; Ms. Alana Rider, who notarized the forged sale contract; Marion Jones, owner of Ultimate Title and Dawn Torres, a senior processor at Ultimate Title; and Christopher Staiti, Ultimate Title's corporate designee. The following is a summary of the testimony and documentary evidence presented.

A. The Property

James C. Ladd and his wife, Lucille Ladd, were the parents of Ladd Sr. and the grandparents of Ladd Jr. Mr. and Mrs. Ladd held title to real property located at 416 South Stricker Street, Baltimore, Maryland 21223 ("Property") as tenants by the entireties. Jamessurvived Lucy, but then he passed away in 1999 and the Property became an asset of James's estate ("Estate"). The First and Final Administration Account designated the Property to be conveyed to Ladd Sr., who served as the personal representative of the Estate. But Ladd Sr. never actually deeded the Property to himself.

Beginning in 2000, Ladd Sr. lived on the Property part-time until 2010, at which point he moved out and his son, Ladd Jr., moved in and began to occupy the Property rent-free as his father continued to pay taxes on the Property. Despite this favorable financial arrangement, Ladd Jr. barred his father from the Property.²

In October 2013, Ladd Jr. approached his father about selling the Property and agreed to relay the amounts of any offers to Ladd Sr. Sometime in December 2013, Ladd Jr. contacted David Atkinson at K1 about whether he and his business partner, George Bell, were interested in purchasing the Property for cash, a Mercedes, and some other vehicles that K1 owned. Atkinson and Bell were interested in acquiring property for K1 Auto as a tangible asset to borrow against, and they knew Ladd Jr. from their business of buying and selling used cars.

Initially, Ladd Sr. agreed to sell the Property for $50,000, but K1 balked at that price. Ladd Jr. again contacted his father in October 2013, this time asking if he would agree to sell the Property for $30,000. During that conversation, Ladd Jr. asked how much of the proceeds he could keep if he could secure a $30,000 offer for the Property. Ladd Sr.responded by assuring his son that he would not give him a "dime" of the sale proceeds. Ladd Sr. agreed to sell the Property for $30,000 and waited for his son to deliver a sales contract. But unbeknownst to Ladd Sr., K1 had again refused to meet his asking price.

Several more months would pass before Ladd Sr. heard any updates on the sale of the Property. Then, on Father's Day, June 16, 2014, Ladd Sr.'s daughter asked him whether her brother had sold the Property, which led them both to check the land records online and learn that the Property had been transferred to K1. Ladd Sr. immediately called K1 and spoke to Atkinson and told him that he had not authorized the sale and never saw a contract for the sale. Ladd Sr. then hung up, according to his testimony, because Atkinson kept talking over him. Atkinson testified that the focus of this conversation with Ladd Sr. was Ladd Sr. demanding the sale's proceeds and Atkinson telling him to speak to his son because K1 had paid for the Property. Ladd Sr. hired an attorney to investigate the matter and eventually confirmed that someone forged his signature and deeded the Property to K1.

B. The Fraudulent Sale

On March 31, 2014—a few months before the Father's Day phone call—settlement on the sale of the Property occurred. Ultimate Title and its corporate designee, Mr. Chris Staiti, prepared the transferring documents, and Ultimate Title oversaw the closing. Evidence adduced at trial revealed that Ladd Jr. had agreed, purportedly on his father's behalf, to sell the Property to K1. Ladd Jr. created a gmail account, retired.busdriver151@gmail.com, which he used to communicate with Ultimate Title, posing as his father.

Ultimate Title scheduled the settlement as a "split settlement," because Ladd Jr. (posing as Ladd Sr. through retired.busdriver151) claimed that Ultimate Title's Maryland offices were too far for Ladd Sr. to travel to from his home in Delaware. On the day of closing, Ultimate Title emailed retired.busdriver151 the closing documents, including an Affidavit of Residence, the deed transferring the Property to K1, an agreement to reimburse Ultimate Title for closing fees, a limited power of attorney for correcting typographical errors, a notice to K1 regarding ground rent, a judgment affidavit, and an owner's affidavit. Ladd Jr. attended the closing with all these documents purportedly signed by Ladd Sr. and notarized by Alana Rider.

Ms. Rider testified at trial that Ladd Jr. signed the documents in Baltimore County. She knew Ladd Jr. through her boyfriend but did not know he was a junior and did not verify his name on his driver's license. The deed included a certification that it was prepared by, or under the supervision of an attorney, and was signed by Chris Staiti, Esq, who later served as Ultimate Title's corporate designee during discovery and was designated as Ultimate Title's expert witness before trial.³

Marion Jones, owner of Ultimate Title, conducted the settlement at closing of the Property and witnessed Ladd Jr. sign the remaining settlement documents. Jones had Ladd Jr. produce his license, but ultimately admitted at trial that she never realized that he was junior and not senior. Although it was supposed to be a split settlement, and Ladd Sr. purportedly could not attend, Ms. Jones testified that she believed the man at the settlementwas the actual seller of the Property.

At trial, K1's expert Mr. Lennon testified that, "the documents and the settlement procedures that Ultimate [Title] used were inconsistent with the standard of care that should have been followed . . . in a transaction like this." Mr. Lennon opined that Ultimate Title should have either required Ladd Sr.'s appearance or arranged a procedure with a firm in Delaware, where Ladd Sr. lived, to verify that Ladd Sr. was signing the documents. He added, "I can't understand why he was able to go to Baltimore County, get documents notarized on the date of the settlement, but was unable to go to settlement in Edgewater which is between Delaware and Baltimore County." Additionally, Mr. Lennon did not believe there was any reason for Ladd Jr. to be at the closing since he had no "legal authority to act on behalf of the seller or the estate."

Atkinson and Bell testified that they did not question Ladd Jr.'s role in the closing, although they knew that Ladd Jr. was not, in fact, Ladd Sr. Atkinson averred that Ladd Jr. had assured him that he had the authority to move forward with the sale, and that he and Mr. Bell relied on Ultimate Title's expertise.

Atkinson and Bell signed a note on the same day as the settlement, payable to "Russel J. Ladd, Sr." in the amount of $8,247.91. But the note indicated that payments were to be made at 376 Marley Neck Rd., Glen Burnie, MD 21060, which was to be Ladd Jr.'s place of business...