First Mariner Bank secured a 14-day restraining order against a Connecticut-based law firm that has been sending letters to the bank’s customers, stating that the bank is facing litigation and regulatory action for fraudulent lending practices.
Judge James K. Bredar said on Thursday that he would enter the temporary restraining order against the letters due to “the high probability that they contain falsehoods” that could cause irrevocable harm to the bank.
“It’s not too much to suggest that [the] scurrilous allegations…could trigger a run on the bank,” Bredar said in U.S. District Court in Baltimore.
First Mariner filed suit last month against the sender, The Resolution Law Group, for false advertising, defamation, unfair competition and injurious falsehood.
Resolution’s letter to First Mariner mortgage holders carries the heading “Litigation Notification” and only mentions the law firm by name in the small print at the bottom. The letter appears to be a class-action notice, telling customers they need to call a toll-free number to “opt-in” as a potential national litigant.
The letter also says First Mariner would be sued for “improper lender actions,” and that the customer could be entitled to reduced mortgage rates, monthly payments or monetary damages.
James Astrachan, of Astrachan Gunst Thomas & Rubin PC of Baltimore, represented First Mariner at Thursday’s hearing. He said Resolution seemed less interested in suing First Mariner than in soliciting business for its mortgage restructuring services.
“There is something that really smells with this,” Astrachan said.
John L. Calhoun, a Baltimore attorney representing Resolution, pointed to First Mariner’s longstanding financial woes. The first quarter of 2012 was the first time in five years in which the bank posted a profit, and it was delisted from Nasdaq last year.
“If it’s anything that smells, it’s First Mariner that smells …,” Calhoun said. “It’s the kind of bank a person of average intelligence would avoid.”
“I have an account there, your honor, and I object,” Astrachan said as Calhoun finished the sentence.
Calhoun referenced a 2009 cease-and-desist order between the bank and federal and state regulators over First Mariner’s lending practices. First Mariner, while not admitting any wrongdoing, paid more than $1 million to settle allegations it had overcharged black, Hispanic and female borrowers for residential mortgage loans.
“If you read Mr. Astrachan’s filings, it seems like we’re talking about the virginal Our Lady of Guadalupe, not First Mariner Bank,” Calhoun said.
Bredar referred to Calhoun’s arguments as “filibustering” that did not support Resolution’s allegations of fraudulent behavior by the bank. He said he had initially planned a narrower scope to the order, which would have blocked the Connecticut firm from, among other things, referring to First Mariner as a defendant.
When First Mariner’s lawsuit was filed in April, there was no pending litigation against the bank as the letter claimed. On May 3, Resolution filed a suit in state court in Brooklyn, N.Y., against 50 defendants, one of which is First Mariner. The lawsuit includes 40 Maryland plaintiffs in the class, some with mortgages from First Mariner.
Astrachan asked Bredar to consider the timing of the lawsuit and the fact the solicitation letters referred to litigation as if it were already underway, a claim First Mariner called “patently false” in its false advertising suit.
“It’s no surprise after they get sued that they’d run out and cover themselves by filing a lawsuit,” Astrachan said.
Calhoun denied the allegation.
“It’s not filed in any way, shape or form as a result of this action,” he said.
A hearing was set for May 30 to extend or end the temporary restraining order.