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Homebuyers urge justices to revive kickback claim against Md. firms

The Supreme Court is seen in Washington, early Monday, June 15, 2020. (AP Photo/J. Scott Applewhite)

The Supreme Court is seen in Washington, early Monday, June 15, 2020. A lawyer for more than 1,000 homebuyers has asked the U.S. Supreme Court to revive a class-action lawsuit around an undisclosed kickback scheme between a Maryland real estate agency and title company. (AP Photo/J. Scott Applewhite)

Counsel for more than 1,000 homebuyers has urged the U.S. Supreme Court to revive their longstanding class-action lawsuit alleging they were harmed by an undisclosed kickback scheme between their Clarksville-based real estate agency and a Columbia title company.

In papers filed with the justices, the homebuyers are pressing the high court to review and overturn a lower court decision that they lack standing to sue because they suffered no “concrete” financial injury due to Lakeview Title Company Inc.’s alleged backdoor payments to The Creig Northrop Team PC for steering its customers to the title company.

The two companies have denied the homebuyers’ allegations of wrongdoing.

Both the U.S. District Court in Baltimore and the 4th U.S. Circuit Court of Appeals have ruled the homebuyers had not shown they were overcharged or paid an unreasonable fee to either Northrop or Lakeview.

In their petition for Supreme Court review, the homebuyers said the federal Real Estate Settlement Procedures Act does not require customers to prove they were overcharged in order to bring suit. Instead, the law presumes that a kickback scheme “inherently” injures customers because it “tends to increase prices and denies impartial and fair competition among settlement services providers for customers,” Gregory T. Lawrence, the homebuyers’ attorney, wrote in the petition filed last month.

The “prohibited, undisclosed compensation” Northrop allegedly received from Lakeview to steer customers resulted in the “denial of impartial advice” from the real estate agency, which the homebuyers had a statutory right to receive under RESPA, Lawrence added.

Northrop was also “unjustly enriched” – and the homebuyers injured — by the kickback the company allegedly received without passing the windfall to its clients, wrote Lawrence, of Lawrence Law LLC in Baltimore.

“By accepting kickbacks for referrals, the Northrop respondents caused the petitioners and all 1,088 class members to suffer two injuries,” Lawrence added. “They were overcharged because they did not receive a discount or rebate in the amount of the kickbacks, and by paying for a service – the impartial advice and advocacy of their fiduciaries, the Northrop respondents – which they did not receive.”

Northrop and Lakeview have waived their right to respond to the homebuyers’ petition for Supreme Court review unless the justices specifically ask for the companies’ response. The companies are represented at the high court by Jay N. Varon, of Foley & Lardner LLP in Washington.

The high court is scheduled to consider and possibly vote on the homebuyers’ review request Sept. 29. The case is docketed at the Supreme Court as Patrick Baehr et ux. v. The Creig Northrop Team et al., No. 20-174.

The homebuyers allege that Carla Northrop — Creig’s wife and a vice president of both the Northrop Team and Columbia-based Lakeview — served as the linchpin of the plan. The Northrop Team used Carla’s position, as well as a subsequent “sham” marketing agreement, to disguise kickbacks of $1.3 million Lakewood paid Northrop for funneling title work to it, alleges the lawsuit initially filed in March 2013.

According to the complaint, Carla was given a no-show position on Lakeview’s payroll as early as 2000.

The scheme was hatched on or about Aug. 29, 2001, when Creig and Carla Northrop met in person with Lakeview executives, the lawsuit claims.

That meeting was memorialized in a letter by participants stating that Carla would serve as an “independent representative” and receive half the title insurance premium received by Lakeview for business generated from any member of the Northrop team, according to the complaint. The homeowners’ trial attorneys said they received the letter via a Public Information Act request filed with the Maryland Insurance Administration.

U.S. District Judge Richard D. Bennett granted summary judgment for the companies in December 2018, saying the homebuyers had asserted “only a bare procedural violation (of RESPA), divorced from any concrete harm.”

The 4th U.S. Circuit Court of Appeals agreed in a published 3-0 decision last March, prompting the homebuyers’ request for Supreme Court review.

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