By: Steve Lash (Legal Affairs Writer), Published August 5, 2014 – The Daily Record
Lawyers for Maryland homebuyers have filed a second federal class-action lawsuit alleging an undisclosed illegal kickback scheme between The Creig Northrop Team P.C. and Lakeview Title Company Inc.
From left, G. Russell Donaldson and Gregory T. Lawrence. (The Daily Record/Maximilian Franz)
While the first class action covers clients from 2008 forward, the action filed Friday in U.S. District Court in Baltimore seeks to push that date back to August 2001.
It cites a letter between the two companies that one lawyer for the class called a “smoking gun” — evidence of the alleged agreement to kick back as much as half the title insurance premiums Lakeview received from the Northrop Team’s clients.
The plaintiffs have brought the claim under the federal Real Estate Settlement Procedures Act, which prohibits giving or accepting gifts for referrals of settlement services.
The Clarksville-based Northrop Team and Lakeview Title deny the allegations.
In January, U.S. District Judge William D. Quarles Jr. permitted the first lawsuit to proceed as a class action. However, Quarles limited the class to homebuyers who used the Northrop Team and Lakeview since Jan. 1, 2008, the year that that Lakeview and the Northrop Team entered an exclusive marketing agreement that allegedly served as a kickback conduit. Even so, the plaintiffs’ attorneys estimated the class size at 1,500 to 2,200 people.
The second suit seeks class-action status for clients who used the Northrop Team between 2001 and 2008 and, like the first, seeks damages of $11.2 million, which “shall be” tripled to $33.6 million under RESPA.
Both lawsuits 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, the lawsuits allege.
According to the complaints, Carla was given a no-show position on Lakeview’s payroll as early as 2000.
In the first lawsuit, though, Quarles focused on the marketing agreement, which designated Lakeview as the exclusive settlement and title company of the Northrop Team in exchange for monthly payments of $6,000, according to the lawsuit. Lakeview, however, paid the Northrop Team up to $12,000 per month despite “no actual record or measure of any real joint marketing or services,” the lawsuit stated.
Friday’s filing alleges the scheme was in fact hatched seven years earlier, on or about Aug. 29, 2001, when Creig and Carla Northrop met in person with Lakeview executives.
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.
Gregory T. Lawrence, an attorney for the plaintiffs, said he received the letter via a Public Information Act request filed with the Maryland Insurance Administration.
The letter is “a smoking gun” because it confirms that “the scheme was devised at a 2001 meeting between the Northrops and Lakeview executives,” said Lawrence, of Conti Fenn & Lawrence LLC in Baltimore.
Lawrence said the letter prompted him and co-counsel G. Russell Donaldson, of The Law Offices of G. Russell Donaldson P.C., to file the second lawsuit seeking certification of a class of homebuyers who settled after Aug. 29, 2001.
The complaint alleges that Lakeview paid Northrop about $775,000 via Carla Northrop’s “sham employment relationship” through 2007, and the following year Lakeview and Northrop began funneling the illegal kickbacks through the “sham marketing agreement.”
Nancy Wade and Janice Rulli, the named plaintiffs in the second case, closed on their Ellicott City home in April 2003.
Timothy G. Casey, an attorney for the Northrop Team, and Andrew C. White, who represents Lakeview, did not return telephone and email messages seeking comment Monday.
Casey is a Rockville solo practitioner and White is with Silverman, Thompson, Slutkin & White LLC in Baltimore.