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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND 1
KEVIN L. JOHNSON, et al. Plaintiffs v. KEVIN WHEELER, et al. Defendants * * * * * * * * *

Civil No. PJM 06-2196

OPINION I.
As home mortgage foreclosures have increased in recent years, so have so-called "foreclosure rescue scams." 2 Typically, a homeowner facing foreclosure is identified by a rescuer through foreclosure notices published in the newspapers or at government offices. The rescuer contacts the homeowner by phone, personal visit, card or flyer, and offers to stop the foreclosure by promising a fresh start through a variety of devices. As the date for the foreclosure approaches and the urgency of the matter becomes greater, the rescuer or some entity with which he is linked agrees to arrange for the pay-off of the mortgage indebtedness and to see to the transfer of title to the

1

Suit was originally filed in the Circuit Court for Prince George's County and was removed here by Defendants.
2

See generally STEVE TRIPOLI & ELIZABETH RENUART, NATIONAL CONSUMER LAW CENTER, DREAMS FORECLOSED: THE RAMPANT THEFT OF AMERICANS' HOMES THROUGH EQUITYSTRIPPING FORECLOSURE "RESCUE" SCAMS (2005). -1-

property to an investor pre-arranged by the rescuer, often with a leaseback of the property to the homeowner for a period of time, occasionally giving him the right to repurchase the property after the lease ends. The rescuer imposes heavy fees or other charges for his services, in effect stripping some if not all of the homeowner's equity, and does all this with little or no advance notice to the homeowner, who is usually unrepresented by counsel. Kevin and Lolita Johnson believe that they were the victims of such a scam and have sued various parties to their transaction on a number of theories. Defendants, who will be described presently, have filed various Motions to Dismiss the Complaint. upon.
3

Oral argument has been held on the Motions which the Court now proceeds to rule

3

The Court has before it the following Motions: Motion to Dismiss Plaintiff's Complaint by American Home Mortgage Corporation [Paper No. 25]; Motion to Dismiss or in the Alternative for Summary Judgment by Answer Title & Escrow, LLC [Paper No. 27]; Motion to Dismiss by KG Management, LLC, Kevin Wheeler, Wheeler Realty, LLC [Paper No. 32]; Amended Motion to Dismiss or in the Alternative for Summary Judgment by American Home Mortgage Corporation [Paper No. 56]; Motion to Dismiss by Patrick M. Jackson and Benita M. Jackson [Paper No. 57]; Motion to Join in Motion to Dismiss of Various Co-Defendants by Terrell L. Sheppard and TLS Management, Inc. [Paper No. 62]; and Kevin J. Johnson and Lolita R. Johnson have filed their own Motion to Dismiss Answer Title's Counterclaim [Paper No. 39]. -2-

II. According to their Complaint, the Johnsons were the fee simple owners of the property at 5804 Barnes Drive, Clinton, Maryland, which was subject to a Deed of Trust in favor of EMC Mortgage Corporation. On or about February 14, 2006, they received a letter from a law firm informing them that it had been retained to pursue a foreclosure action against the property, presumably because the Johnsons were in arrears with respect to their mortgage payments. The foreclosure sale was scheduled for March 22, 2006. Shortly after receiving the letter, the Johnsons were "cold-called" by Terrell Sheppard of TLS Management, Inc., who represented that he was a "mortgage broker" who could secure refinancing for them and help save their home from foreclosure. In the weeks leading up to the foreclosure sale, the Johnsons heard nothing from Sheppard, but "days before the foreclosure sale" Sheppard contacted them again and advised that he was not in fact able to arrange the refinancing. Instead he referred the Johnsons to Kevin Wheeler of Wheeler Realty, LLC, a firm based in Fort Washington, Maryland, who he indicated could prevent the foreclosure by arranging for a sale and leaseback of their home. The Johnsons promptly made contact with Wheeler, who they understood would be acting as their agent to sell the property. Some time before the scheduled foreclosure sale, Wheeler arranged for Patrick M. and Benita M. Jackson to purchase the property from the Johnsons for the price of $450,000.
4

Settlement was held almost immediately thereafter, i.e. on March 17, 2006,

apparently at the office of Wheeler Realty in Fort Washington. Glenda Wheeler, Esquire

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