Case Title: Mathews v. Cassidy Turley Md., Inc.

Citation: 

Docket Number: 51/12

State: maryland

Court: Maryland Supreme Court

Date: 2013-11-26T00:00:00Z

Document:
William H. Mathews v. Cassidy Turley Maryland, Inc, et al.
No. 51, September Term 2012
Maryland Securities Act - Definition of Security - Investment Contract.  The definition
of “security” in the Maryland Securities Act, Maryland Code, Corporations & Associations
Article, §11-101(r), includes an “investment contract,” which is understood to mean a
contract, transaction, or scheme by which a person invests money in a common enterprise
with the expectation of receiving profits derived from the entrepreneurial or managerial
efforts of others.  A tenant-in-common (“TIC”) interest in commercial real estate that is sold
to multiple investors under a contract that requires retention of an affiliate of the seller to
manage the property and that otherwise restricts the investors’ control over management of
the investment is a “security” under the Act. 
Maryland Securities Act - Cause of Action for Registration Violations - Limitations. 
The limitations period for bringing a private cause of action under the Maryland Securities
Act for violation of registration provisions of the Act is not subject to tolling under the
judicially-created discovery rule of Poffenberger v. Risser, 290 Md. 631, 431 A.2d 677
(1981), or under the fraudulent concealment provision of Maryland Code, Courts & Judicial
Proceedings Article, §5-203.
Maryland Securities Act - Cause of Action for Violation of Anti-Fraud Provisions -
Limitations.  The limitations period for bringing a private cause of action under the
Maryland Securities Act for violation of the anti-fraud provisions of the Act is not subject
to tolling under the judicially-created discovery rule of Poffenberger v. Risser, 290 Md. 631,
431 A.2d 677 (1981), but may be tolled under the fraudulent concealment provision of
Maryland Code, Courts & Judicial Proceedings Article, §5-203.
Limitations - Tolling of Common Law Causes of Action - Fraudulent Concealment.  The
period of limitations ordinarily applicable to a common law tort claim or breach of contract
claim may be tolled under the fraudulent concealment provision of Maryland Code, Courts
& Judicial Proceedings Article, §5-203, if affirmative fraudulent conduct of the defendant
prevented the plaintiff from discovering the cause of action through the exercise of due
diligence.
Summary Judgment - Appellate Review.  When a circuit court grants summary judgment
in favor of a defendant solely on the basis of limitations, an appellate court will not consider
affirming that ruling on an alternative ground for which the circuit court had discretion to
deny, or to defer a ruling on, a motion for summary judgment.  In this case, the defendants’
alternative ground for summary judgment – the absence of allegedly necessary expert
testimony to establish the duty of care of a real estate broker – would require the Circuit
Court to assess the nature of the duty alleged in the plaintiff’s common law claims and the
evidence proffered to establish a breach of that duty.  In those circumstances, the Circuit
Court had discretion to deny, or to defer consideration of, the motion for summary judgment
pending a fuller development of the facts.  Accordingly, the Court of Appeals declines to
consider on appeal the alternative ground for summary judgment that the Circuit Court did
not adopt.
Evidence - Hearsay - Exception for Public Records and Reports - Catch-All Exception -
Basis of Expert Testimony.  A bankruptcy examiner’s report filed in a bankruptcy
proceeding concerning the seller of the investment that is the subject of a civil action in a
circuit court is not admissible in the circuit court proceeding under an exception to the
hearsay rule for “public records and reports” set forth in Maryland Rule 5-803(8) because a
bankruptcy examiner is not a public officer or agency.  However, the report – or portions of
it – may be admissible under a catch-all exception to the hearsay rule, Maryland Rule 5-
803(24), if the trial court finds that criteria of that rule are satisfied.  In addition, the report
– or portions of it – may be admissible for a limited purpose if reasonably relied upon by an
expert witness to form an expert opinion admissible in the action under Maryland Rule 5-
703. 
IN THE COURT OF APPEALS
OF MARYLAND
No. 51
September Term, 2012
                                                                  
WILLIAM H. MATHEWS
v.
CASSIDY TURLEY MARYLAND, INC. ET AL.
                                                                  
  
       Barbera, C.J.    
Harrell      
Battaglia   
Greene      
Adkins      
McDonald
*Bell            
           
      JJ.
                                                                  
Opinion by McDonald, J.
                                                                  
Filed: November 26, 2013
*Bell, C.J., now retired, participated in the
hearing and conference of this case while an
active member of this Court; after being recalled
pursuant to the Constitution, Article IV, Section
3A, he also participated in the decision and
adoption of this opinion.
It is sometimes the case that an individual bent on avoiding taxes exchanges the
certainty of the tax liability for a risky, and perhaps fraudulent, investment that proves more
costly in the long run.  The instant litigation arises out of such a situation. We are asked to
decide the nature of the investment – was it a “security” for purposes of application of the
Maryland Securities Act? – and whether the long run was too long – are the claims barred
by limitations?  We also consider the potential use at trial of a bankruptcy examiner’s report
concerning the promoter of the investment scheme.
We hold that an investment that combined a tenant-in-common interest in commercial
real estate with a mandatory management contract with the affiliate of the seller and only a
limited ability for the buyers to effect a change of management of the property is an
“investment contract” and therefore a security for purposes of the Maryland Securities Act. 
We affirm the Circuit Court’s determination that the buyer’s claims under the Securities Act
are barred by limitations insofar as they relate to registration under the Act.  We reverse the
court’s determination that the buyer’s claims under the Act that relate to alleged fraud and
misrepresentation by the defendants are barred by limitations and remand for further
consideration whether the limitations period as to those claims was tolled by affirmative
fraudulent conduct of the defendants.  For a similar reason, we also reverse and remand for
reconsideration the Circuit Court’s judgment that the buyer’s common law tort claims are
time-barred as a matter of law.  We decline to affirm the award of summary judgment on an
alternative ground that the Circuit Court did not adopt.  Finally, we affirm the Circuit Court’s
decision to reserve judgment on the admissibility and use of a bankruptcy examiner’s report
until it had additional information concerning the proposed use of the report in the context
of the trial.   
Background
Factual Background
Except as otherwise indicated below, the following facts are undisputed in the record
of this case, although the parties have some differences as to immaterial details and as to the
inferences that may be drawn from these facts.
Mr. Mathews Seeks an Investment
In 2003, Petitioner William H. Mathews, a retired school teacher and librarian, had
owned and managed his rental properties for more than 40 years.  At that time, he owned
eleven rental properties near the campus of Towson University; he rented those properties
primarily to students and faculty at the university.  In response to anticipated deleterious
changes in local zoning laws, Mr. Mathews decided to sell the properties.  Ultimately, he was
referred to Stephen Weiss, a real estate professional.  Mr. Weiss was then employed by W.
C. Pinkard & Co., the predecessor in interest to Respondent Cassidy Turley Maryland, Inc.
(“Cassidy Turley”).   Mr. Mathews retained Cassidy Turley to market the properties, and in
1
August 2004 the properties were sold to Bob Ward Companies for approximately $4 million. 
Mr. Mathews paid approximately $176,000 to Cassidy Turley as a commission.  
 For simplicity we use “Cassidy Turley” to refer to both W. C. Pinkard and Cassidy
1
Turley, as well as related entities.
2
In order to receive more favorable tax treatment of the proceeds of the sale, Mr.
Mathews sought to re-invest the proceeds in other real estate shortly after the sale.  With Mr.
Weiss’ advice, Mr. Mathews ultimately used much of the proceeds to purchase five fractional
interests in various commercial office buildings located throughout the United States.   These
2
fractional interests were called “Tenants in Common Interests” (“TICs”).  Mr. Weiss
provided Mr. Mathews with binders containing various documents that described the
particular TICs under consideration. 
TICs
Each of the TICs in question was created by a company called DBSI, Inc., located
near Boise, Idaho, or an affiliated company.  The structure of the TICs are set forth in various
written agreements and other materials.  DBSI would purchase real estate, typically an office
building, and divide it into TICs that it would then sell to investors.  Investors in the TICs
were required, as a condition of the purchase, to agree to retain DBSI  as property manager,
3
4
 In particular, Mr. Mathews used $2.3 million of the net proceeds to purchase
2
interests in five office buildings for prices ranging from $400,000 to $545,000.  Unrelated
to these transactions or Mr. Weiss, he also paid $525,000 of the proceeds to purchase a
property in White Hall, Maryland.  Mr. Mathews understood that each of the properties
apparently qualified as a “like-kind exchange property” for purposes of §1031 of the Internal
Revenue Code, 26 U.S.C. §1031, and that the transactions thus permitted him to defer
payment of capital gains taxes on the sale of those rental properties.  The TICs were among
several options that Mr. Weiss had presented to Mr. Mathews as “1031 exchange properties.”
 The provision referred to an affiliate of DBSI.  For simplicity, we use “DBSI” to
3
include all related entities.
 This arrangement was created through a “NNN Plus Lease Agreement” or “Master
4
(continued...)
3
in return for which DBSI promised a specified annual rate of return on the investment.  DBSI
would locate sub-tenants who would occupy the property and pay the rent that produced a
revenue stream.  Under the property management agreement, replacement of DBSI as
property manager required a majority vote of all TIC owners of a given piece of property, as
well as indemnification of DBSI against any and all claims, actions, costs, damages,
liabilities, deficiencies or expenses relating to the property.  In the event that DBSI was
terminated as property manager, a unanimous vote by the TIC owners was required to
appoint a new manager.  Under the terms of a TIC agreement, there was no provision for
direct control of the property by the TIC owners.
Mr. Mathews received steady payments with respect to his TICs over the next few
years and sold one of them.   However, in 2008, things changed.
5
DBSI Bankruptcy; Examiner’s Report
In 2008, Mr. Mathews learned that DBSI would be suspending payments for certain
of the TICs.  Mr. Mathews then contacted Mr. Weiss, who, according to Mr. Mathews,
 (...continued)
4
Lease Agreement” under which the investors leased the property to the DBSI affiliate, which
would sublease the property; the investors would receive the pre-arranged set return in the
form of “rent” paid by the affiliate, which would recover its management fee from revenues
generated by the properties in excess of the promised rent that the affiliate paid the TIC
investors.
 He sold one of the TICs in 2006 for approximately $551,500 and received cash
5
distributions totaling approximately $583,200 between 2004 and 2011.
4
assured him that payments would resume and that he should not worry.   In November 2008,
6
DBSI filed a voluntary petition for bankruptcy under Chapter 11 of the bankruptcy code.  
7
All of the properties underlying Mr. Mathews’ TICs became the subject of foreclosure
proceedings.  
The bankruptcy court appointed an attorney from a prominent Washington, D.C., law
firm as an examiner to conduct an investigation into DBSI.  In re: DBSI, Inc., No. l:08 -bk-
12687 (D. Del. filed November 10, 2008).  The examiner’s report describes a downward
spiral fueled by related party transactions, conflicts of interest, growing debt disguised as
equity, limited sources of revenue, complex and sloppy accounting, and the misleading of
investors.  Among other things, the report describes the structure and marketing of the DBSI
TICs.  The bankruptcy court ultimately made findings similar to those of the examiner in
concluding that many of DBSI’s transactions were “either constructively or actually
fraudulent” and that it would be futile to attempt to unravel many of the related party
transactions.
Licensing and Registration Status
At the time Mr. Mathews purchased his TICs, Cassidy Turley was licensed by the
Maryland Real Estate Commission as a real estate broker.  Neither Mr. Weiss nor Cassidy
 Respondents denied this assertion in their answer, but did not address it in the
6
evidentiary materials submitted with their motion for summary judgment.
 A bankruptcy reorganization under Chapter 11 of the bankruptcy code allows “viable
7
but financially troubled business to remain in business to preserve their ‘going concern
value.’” J.T. Ferriell & E.J. Janger, Understanding Bankruptcy (3d ed. 2013) at 709. 
5
Turley was licensed under the Maryland Securities Act to act as an investment adviser,
investment adviser representative, securities broker-dealer, or agent.
Investigations of DBSI
Following the collapse of DBSI, the Securities Division of the Maryland Attorney
General’s Office undertook an investigation of the offer and sale of DBSI TICs in Maryland. 
In April 2009, the Securities Division contacted Mr. Mathews as part of that investigation. 
No action was ultimately taken by the Securities Division against DBSI or Cassidy Turley, 
although Cassidy Turley did refund to Mr. Mathews the fees and commissions it was paid
in connection with his TIC transactions.  Federal authorities were also conducting a parallel
investigation.8
Procedural Background
Complaint
On March 23, 2010, Mr. Mathews filed a complaint in the Circuit Court for Baltimore
County against Mr. Weiss and Cassidy Turley.   Mr. Mathews’ complaint alleged that
9
 We can take judicial notice that, following oral argument in this case earlier this
8
year, the principals of DBSI were indicted by a federal grand jury in Idaho on charges of
conspiracy, securities fraud, mail fraud, wire fraud, and related offenses arising out of the
operation of DBSI, including the sale of TIC interests.  United States v. Douglas L. Swenson,
et al., Case No. 1:2013-cr-00091-BLW (D. Idaho, filed April 10, 2013).
 Mr. Mathews later filed a First Amended Complaint that made some amendments
9
not pertinent to this appeal, but did not change the nature of the claims asserted.  In
particular, in the First Amended Complaint, Mr. Mathews substituted several Cassidy Turley
entities for the original corporate defendants, corrected certain details in the original
complaint, added an allegation that Mr. Weiss had erroneously claimed knowledge and
(continued...)
6
Cassidy Turley owed Mr. Mathews legal and fiduciary duties to disclose material facts and
to act with the care and skill of a “professional financial adviser.”  It alleged that Cassidy
Turley had misled Mr. Mathews concerning the suitability of the TIC investment for his
financial situation, the safety of the investment, and the soundness of DBSI.  It also alleged
that Cassidy Turley had failed to inform him of other material information, including its lack
of research into the investment, its receipt of a commission from the sale of the TICs, and the
risks associated with the investment.  It alleged that Cassidy Turley actively concealed its
alleged wrongdoing from him and lulled him into relying upon it, even after the DBSI
bankruptcy, until he was contacted by the Securities Division.  
The complaint included common law tort claims for fraud, constructive fraud,
negligent misrepresentation, and negligence, as well as a claim for breach of contract.  It also
included a claim under the Maryland Securities Act, Maryland Code, Corporations &
Associations Article, (“CA”) §11-703.  
 (...continued)
9
experience concerning “§1031 transactions,” and made other minor changes.  After some
initial skirmishing by the parties about whether the filing of the First Amended Complaint
should be permitted, the Circuit Court accepted the amended pleading at the December 2011
motions hearing.  For simplicity, we will refer to “the complaint” in the remainder of this
opinion to include the First Amended Complaint.
The Cassidy Turley entities and Mr. Weiss are represented by the same counsel and
have presented a joint defense.  For ease of reference in the remainder of this opinion, we
will use “Cassidy Turley” to refer to the Respondents collectively.
7
The parties conducted discovery.  After the completion of discovery, they filed cross-
motions for summary judgment, as well as motions in limine related to evidence anticipated
to be offered at trial.
Rulings on Pretrial Motions
At the pre-trial motions hearing on December 5, 2011, the Circuit Court, among other
things, granted a motion in limine that precluded Mr. Mathews from mentioning or
introducing into evidence at trial the bankruptcy examiner’s report on the basis that it was
inadmissible hearsay, although the court held open the possibility that it would reconsider
that ruling at trial.  Later in the hearing, the Circuit Court granted summary judgment in
favor of Cassidy Turley as to all counts.  With respect to the alleged violations of the
Maryland Securities Act, the court ruled that the TICs were not securities as defined by the
Maryland Securities Act.  The court also held that, even if the TICs were securities, Mr.
Mathews’ claims under the Securities Act were barred by limitations, as were his common
law claims.  Specifically, the court ruled that Mr. Mathews’ Maryland Securities Act claims
were time-barred because the limitations period governing those claims could not legally be
tolled and that Mr. Mathews’ common law fraud claims were time-barred because he should
have discovered the injury early enough that tolling would not have been sufficient to bring
his filing within the limitations period.  
Cassidy Turley had also sought summary judgment on the common law claims on the
ground that Mr. Mathews did not plan to present expert opinion testimony on the scope of
8
duty of a real estate broker and that, without such testimony, Mr. Mathews could not prove
his common law tort claims as a matter of law.  The court declined to grant summary
judgment for that reason.
Appeal
Mr. Mathews filed a timely notice of appeal, and Cassidy Turley filed a cross-appeal. 
Prior to briefing and argument in the Court of Special Appeals, Mr. Mathews filed a petition
for a writ of certiorari, which we granted.
Discussion
The parties have asked us to resolve five issues, which we describe as follows:
1.
Are the DBSI TICs “securities”?
2 .
Are Mr. Mathews’ claims under the Maryland Securities
Act barred by limitations?
3.
Are Mr. Mathews’ common law tort claims barred by
limitations?
4.
Should the Circuit Court have also awarded summary
judgment in favor of Cassidy Turley because Mr.
Mathews did not intend to present expert testimony on
the standard of care of a real estate broker?
5.
Would the DBSI bankruptcy examiner’s report be
admissible in evidence at a trial under the hearsay
exception for public records and reports?  May it be
relied upon by securities law experts who may testify at
trial?
We address each of these issues in turn after reviewing briefly the relevant standards of
appellate review.
9
Standard of Review
Under the Maryland Rules, a circuit court may grant summary judgment if there is no
dispute as to material fact and the moving party is entitled to judgment as a matter of law. 
Maryland Rule 2-501(f).  The court is to consider the record in the light most favorable to
the non-moving party and consider any reasonable inferences that may be drawn from the
undisputed facts against the moving party.  Because the circuit court’s decision turns on a
question of law, not a dispute of fact, an appellate court is to review whether the circuit court
was legally correct in awarding summary judgment without according any special deference
to the circuit court’s conclusions.  Ross v. Housing Authority of Baltimore City, 430 Md. 648,
666-67, 63 A.3d 1 (2013).
If an appellate court comes to a different conclusion on the pertinent question of law
and reverses a grant of summary judgment by a trial court, the appellate court will not
ordinarily seek to sustain the grant of summary judgment on a different ground.  See Geisz
v. GBMC, 313 Md. 301, 314 n.5, 545 A.2d 658 (1988).  Such action would interfere with the
discretion that a trial court normally enjoys to deny, or to defer until trial, consideration of
the merits of summary judgment on certain issues.  Hensley v. Prince George’s County, 305
Md. 320, 333, 503 A.2d 1333 (1986).  Of course, that rationale would not pertain if the
circuit court would have no discretion as to the particular issue.
With respect to the admissibility of evidence, such as the bankruptcy examiner’s
report, the standard of appellate review depends on the basis for admission or exclusion of
10
a particular item of evidence.  Some matters, such as the weighing of the relevance of
proffered evidence as against unfair prejudice or other considerations, are left to the “sound
discretion” of the trial court.  Hall v. UMMS, 398 Md. 67, 82, 919 A.2d 1177 (2007).  Such
decisions will be reversed only for abuse of discretion.  Other evidentiary rulings are based
on a “pure legal question.”  Id.  In those circumstances, an appellate court considers the legal
question without deference to the decision of the trial court.
Whether a DBSI TIC is a security under the Maryland Securities Act
Maryland Securities Act
The Maryland Securities Act, which is codified at Maryland Code, Corporations &
Associations Article (“CA”) §11-101 et seq., regulates the offer and sale of securities in
Maryland, as well as the individuals who advise on and effect such transactions.  In
particular, any security offered for sale must be registered pursuant to the Act, unless the
particular security is excepted from the registration requirement by statute or regulation.  CA
§11-501.  Subject to certain exceptions, securities broker-dealers (popularly known as
brokerage firms)  and their agents (popularly known as stockbrokers) must be registered
under the Act.  CA §§11-401(a), 11-402(a).  Similarly, firms and financial advisers that fit
the statute’s definitions of “investment adviser” and “investment adviser representative” are
also subject to a registration requirement.  CA §§11-401(b), 11-402(b).   
10
 Subject to certain exceptions, “investment adviser” is defined as follows: 
10
(1)
“investment adviser” means a person who, for
(continued...)
11
The statute contains several anti-fraud provisions.  Pertinent to the allegations in this
case, CA §11-301 broadly prohibits fraud in the offer or sale of securities ; CA §11-302
11
 (...continued)
10
compensation:
(i)
Engages in the business of advising others, either
directly or through publications or writings, as to the value of
securities or as to the advisability of investing in, purchasing, or
selling securities, or who, for compensation and as part of a
regular business, issues or promulgates analyses or reports
concerning securities; or 
(ii)
(1)
Provides or offers to provide, directly or
indirectly, financial and investment counseling or advice, on a
group or individual basis;
(2)
Gathers information relating to investments,
establishes financial goals and objectives, processes and
analyzes the information gathered, and recommends a financial
plan; or 
(3)
Holds out as an investment adviser in any
way, including indicating by advertisement, card, or 
CA § 11-101(h)(1).  Various entities and professionals are excluded from the category by
statute or regulation.  CA §11-101(h)(2).
 The statute provides:
11
It is unlawful for any person, in connection with the
offer, sale, or purchase of any security directly or indirectly to:
(1)
Employ any device, scheme, or artifice to defraud;
(2)
Make any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
(continued...)
12
similarly prohibits fraud and misrepresentation in connection with advisory activities.    
12
The Act creates the position of Maryland Securities Commissioner (“Commissioner”)
and the Maryland Securities Division within the Office of the Attorney General and charges
them with various regulatory duties under the Act.  CA §11-201 et seq.  The Commissioner
 (...continued)
11
made, in the light of the circumstances under which they are
made, no misleading; or 
(3)
Engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit on any
person.  
CA §11-301.
 The statute provides, in pertinent part:
12
(a)  It is unlawful for a person who receives, directly or
indirectly, any consideration from another person for advising
the other person as to the value of securities or their purchase
and sale ... to:
(1) Employ any device, scheme, or artifice to defraud the
other person;
(2) Engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit on the other
person;
......
(c) In the solicitation of or in dealings with advisory clients, it
is unlawful for any person knowingly to make any untrue
statement of a material fact, or omit to state a material fact in
order to make the statements made, in light of the circumstances
under which they are made, not misleading.
CA §11-302(a), (c).
13
is to adopt regulations implementing the Act and to coordinate with federal and state
securities officials in other jurisdictions in the interpretation and enforcement of the
securities laws.  CA §11-203(a), (b).  The Commissioner may investigate alleged violations
of the Act and institute administrative and judicial actions to enforce the provisions of the
Act.  CA §11-701 through §11-702.  
The Act also provides a private cause of action to enforce various provisions of the
Act.  CA §11-703.   In particular, under CA §11-703(a)(1)(i), a purchaser of a security has
a cause of action against the seller for a registration violation, a misleading statement
concerning the significance of registration, or a failure to comply with a regulation
concerning approval of advertising.  Under CA §11-703(a)(1)(ii), a purchaser has a cause of
action against the seller for untrue statements – or omissions –  of material fact in connection
with the offer or sale of a security.  Under CA §11-703(a)(2), a seller of a security has a
cause of action for false statements – or omissions – of material fact by the buyer.  CA §11-
703(a)(3) creates a cause of action against persons acting as investment advisers or
investment adviser representatives for registration violations and fraud. 
The General Assembly has directed that the Maryland Securities Act be construed to
carry out the general purpose of encouraging uniformity in state laws regulating securities
and investment professionals  and “to coordinate the interpretation and administration of this
title with the related federal regulation.”  CA §11-804.  This is no doubt related to the shared
14
lineage of the Act with the federal securities laws and securities laws of many other states13
and the need to coordinate regulation of an industry that conducts business nationwide.
Securities Count of the Complaint
Count VI of the complaint asserts a cause of action under the Maryland Securities Act,
although it is not precise in describing the violation or violations that it alleges.  That count
cites to the Act generally, refers to the “unlawful offer and sale of the unregistered DBSI TIC
securities,” and alleges that the “Defendants engaged in a scheme, device and/or artifice to
defraud Mathews....”  The count does not specify a particular subsection or paragraph of CA
§11-703 and, indeed, appears to combine more than one type of violation.  In any event, a
predicate question as to the viability of this cause of action is whether the DBSI TICs are
securities.
The Circuit Court granted summary judgment in favor of Respondents on Count VI
stating, in an oral ruling, that “I’m not convinced that the interests that were sold and
purchased by Mr. Mathews were securities.”  The court did not elaborate and conceded that
 The Maryland Securities Act was based upon the Uniform Securities Act of 1956,
13
as are the securities statutes of a number of other states.  See Report of Committee to Study
the Administration of the Blue Sky Laws of Maryland – to the Legislative Council and the
General Assembly of Maryland (October 11, 1961); Sargent, State Disclosure Regulation 
and the Allocation of Regulatory Responsibilities, 46 Md. L. Rev. 1027, 1030 (1987); Miller,
A Prospectus on the Maryland Securities Act, 23 Md. L. Rev. 289 (1963).  That model law
was designed in many respects to mimic or coordinate with related provisions of the federal
securities laws.  See Uniform Securities Act with Official Comments and Draftsmen’s
Commentary, reprinted in L. Loss & E.M. Covett, Blue Sky Law (1958), Appendix I.  The
federal Securities Act of 1933 itself had built upon concepts developed in earlier state
securities laws.  See 2 Hazen, The Law of Securities Regulation (5th ed. 2005 & 2012 Supp.)
at 28-29.
15
its “degree of confidence” in that ruling was not as great as with respect to other rulings it
was making.  
“Security”
The Maryland Securities Act defines “security” by listing examples: 
(r)(1) “Security” means any:
(i) 
Note; 
(ii) 
Stock; 
(iii) 
Treasury stock; 
(iv) 
Bond; 
(v) 
Debenture; 
(vi) 
Evidence of indebtedness; 
(vii) 
Certificate of interest or participation in any
profit-sharing agreement; 
(viii) Collateral-trust certificate; 
(ix)
Preorganization certificate or subscription; 
(x) 
Transferable share; 
(xi) 
Investment contract; 
(xii) 
Voting-trust certificate; 
(xiii) Certificate of deposit for a security; 
(xiv)
Certificate of interest or participation in an
oil, gas, or mining title or lease or in payments out of production
under the title or lease; 
(xv)
In general, any interest or instrument
commonly known as a “security”; or 
(xvi)
Certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee of, or
warrant or right to subscribe to or purchase any of the preceding.
    (2) “Security” does not include any insurance or
endowment policy or annuity contract under which an insurance
company promises to pay money either in a lump sum,
periodically for life, or some other specified period.
16
CA §11-101(r).  The definition of “security” in CA §11-101 closely matches that in federal
law.  
14
Of the examples set out in the statutory definition of “security,” Mr. Mathews
identifies  the DBSI TIC as an “investment contract” – a species of security that also appears
in the federal definition.  See CA§11-101(r)(xi); 15 U.S.C. §77b (a)(1).   Given the mandate
15
in the Act to coordinate with related federal regulation and the lack of other precedent in
Maryland, the interpretation of an identical phrase in the federal securities laws is persuasive
as to construction of the Maryland statute.  See Caucus v. Maryland Securities
Commissioner, 320 Md. 313, 324-40, 577 A.2d 783 (1990) (following Supreme Court
precedent under federal securities law in determining whether promissory notes fit the
definition of “security” in the Maryland Securities Act). 
This Court has not previously addressed the meaning of “investment contract” in the
Maryland Securities Act.  Early in the last decade, the Court of Special Appeals had occasion
to do so, in the context of a different type of investment.  In Ak’s Daks Communications v.
Maryland Securities Division, 138 Md. App. 314, 771 A.2d 487, cert. denied, 365 Md. 473
(2001), the intermediate appellate court considered whether an interest in a limited liability
company (which offered two-way radio services), coupled with a contract with the promoters
to manage the LLC, was an “investment contract” for purposes of the Maryland Securities
 See Securities Act of 1933, §2(a)(1), 15 U.S.C. §77b (a)(1).
14
 Mr. Mathews has not suggested that a TIC interest fits into any other category and
15
therefore we have not considered any of the other listed examples of securities.
17
Act.  The court appropriately looked to the Supreme Court decision in SEC v. Howey, 328
U.S. 293 (1946), the foundational federal case construing “investment contract” under the
federal securities law.16
In Howey, the Supreme Court held that “an investment contract for purposes of the
[federal] Securities Act means a contract, transaction or scheme whereby a person invests his
money in a common enterprise and is led to expect profits solely from the efforts of the
promoter or a third party, it being immaterial whether the shares in the enterprise are
evidenced by formal certificates or by nominal interests in the physical assets employed in
the enterprise.”  328 U.S. at 298-99.  The Court observed that the traditional understanding
of investment contract involved disregarding form in favor of substance and an emphasis on
“economic reality.”  Id. at 298.  It is immaterial, therefore, “whether there is a sale of
property with or without intrinsic value.”  Id. at 301.  “It embodies a flexible rather than a
static principle, one that is capable of adaptation to meet the countless and variable schemes
devised by those who seek the use of the money of others on the promise of profits.”  Id. at
299.
Subsequent Supreme Court decisions have re-affirmed the Howey definition of
“investment contract” for purposes of the federal securities laws.   A significant number of
17
 Notably, the Howey Court derived its definition of “investment contract” for
16
purposes of federal law from earlier state court decisions construing state securities laws. 
See SEC v. Edwards, 540 U.S. 389, 393-94 (2004).  
 See United Housing Found., Inc. v. Forman, 421 U.S. 837, 852 (1975); Int’l Bhd.
17
(continued...)
18
state courts that have construed the same phrase in state securities laws have also adopted the
Howey definition of “investment contract.”  See Annotation, What constitutes an “investment
contract” within the meaning of state blue sky laws, 47 ALR 3d 1375.  Given the mandate
of CA §11-804 to promote uniformity in the securities laws, it is appropriate to apply the
Howey test as part of Maryland securities law.
As indicated above, in its original statement of the Howey standard, the Supreme
Court stated that an investor’s expectation of profits derives “solely from the efforts of the
promoter or a third party.” 328 U.S. at 299  (emphasis added).   But neither federal nor state
courts have interpreted that articulation to exclude the exertion of any efforts by the
investors. 
In SEC v. Glenn W. Turner Enterprises, Inc., 474 F.2d 476 (9th Cir. 1973), the Ninth
Circuit explained the need for a flexible interpretation.  The investment in Turner required
that “the investor, or purchaser, must himself exert some efforts if he is to realize a return on
his initial cash outlay.” 474 F.2d at 482.  Therefore, any profit to that investor would not be,
strictly speaking, “solely” due to the efforts of the promoter or a third party.  If the Supreme
Court’s use of the term “solely” was taken literally, such an investment would not be an
“investment contract.”  In rejecting the result that would necessarily follow from applying
a strict interpretation, the Ninth Circuit stated:  
 (...continued)
17
of Teamsters v. Daniel, 439 U.S. 551, 558 n.11 (1979); Reves v. Ernst & Young, 494 U.S. 56,
64 (1990).
19
Adherence to such an interpretation could result in a
mechanical, unduly restrictive view of what is and what is not
an investment contract.  It would be easy to evade by adding a
requirement that the buyer contribute a modicum of effort.  Thus
the fact that the investors here were required to exert some
efforts if a return were to be achieved should not automatically
preclude a finding that the Plan or Adventure is an investment
contract.  To do so would not serve the purpose of the
legislation.  Rather we adopt a more realistic test, whether the
efforts made by those other than the investor are the undeniably
significant ones, those essential managerial efforts which affect
the failure or success of the enterprise.
Id. at 482 (emphasis added).  This interpretation of the Howey standard has been nearly
universally adopted by the federal circuits  as well as by at least six states.
18
19
In United Housing Found., Inc. v. Forman, 421 U.S. 837 (1975), the Supreme Court
acknowledged the Ninth Circuit’s Turner decision but, noting that the issue of what
constitutes “solely from the efforts of others” was not actually at issue in the case before it,
expressly declined to comment on the correctness of that interpretation.  Id. at 852 n.16. 
 See SEC v. Aqua-Sonic Prods. Corp., 687 F.2d 577, 582 (2d Cir. 1982); Lino v. City
18
Investing Co., 487 F.2d 689, 692-93 (3d Cir. 1973); Rivanna Trawlers Unlimited v.
Thompson Trawlers, Inc., 840 F.2d 236, 240 n.4 (4th Cir.1988); Long v. Shultz Cattle Co.,
881 F.2d 129, 133 (5th Cir. 1989); SEC v. Professional Assocs., 731 F.2d 349, 357 (6th
Cir.1984); Kim v. Cochenour, 687 F.2d 210, 213 n.7 (7th Cir.1982); Miller v. Cent.
Chinchilla Grp., Inc., 494 F.2d 414, 416-17 (8th Cir. 1974); Baurer v. Planning Group Inc.,
669 F.2d 770, 779 (D.C.Cir.1981); Aldrich v. McCulloch Properties, Inc., 627 F.2d 1036,
1040 n. 3 (10th Cir.1980)
 See State v. Gertsch, 49 P.3d 392, 393 (Idaho 2002); State ex rel. Miller v. Pace,
19
677 N.W.2d 761, 767 (Iowa 2004); Scholarship Counselors, Inc. v. Waddle, 507 S.W.2d 138,
142 (Ky. 1974); Tschetter v. Berven, 621 N.W.2d 372 (S.D. 2001); Searsy v. Commercial
Trading Corp., 560 S.W.2d 637, 641 (Tex. 1977); Cellular Eng’g v. O'Neill, 820 P.2d 941,
946 (Wash. 1991).
20
Nonetheless, the Court observed that “[t]he touchstone is the presence of an investment in
a common venture premised on a reasonable expectation of profits to be derived from the
entrepreneurial or managerial efforts of others” – a formulation in which the word “solely”
does not appear.  Id. at 852.  The Court then went on to hold that the interests in the case
before it were not investment contracts because those interests offered no possibility for
profit.  Id. at 854-55.   Although the Court declined to comment on Turner and the issue was
20
irrelevant to the decision of that case, a number of state courts have read the Court’s
“touchstone” formulation as an indication that the Court does not exclude the possibility that
an investment contract may contemplate some effort by investors.   The Court of Special
21
Appeals expressed such an understanding in Ak’s Daks in applying the Howey test for
purposes of the Maryland Securities Act  and we take this occasion to affirm that
22
understanding. 
 Forman concerned shares of stock in a cooperative housing project that entitled
20
purchasers to lease an apartment in the project and that could not be transferred to a non-
tenant.
 See Bahre v. Pearl, 595 A.2d 1027, 1031 (Me. 1991); State v. Duncan, 593 P.2d
21
1026, 1032-33 (Mont. 1979); Majors v. S.C. Secs. Comm’n, 644 S.E.2d 710, 717-18 (S.C.
2007); Northern Terminals v. Leno, 392 A.2d 419, 421 (Vt. 1978).  
As the Court of Special Appeals has noted, in cases subsequent to Forman, the
Supreme Court has sometimes quoted Howey, including its use of the term “solely” and
sometimes restated the test without that word.  Ak’s Daks Communications, 138 Md. App.
at 329 n.6.
 138 Md. App. at 328-29.
22
21
Cassidy Turley does not dispute that the Howey test defines “investment contract”
under the Maryland Securities Act.  Rather, it argues that the application of the Howey test
to the DBSI TICs leads to a conclusion that the TICs were not securities.
Application of the Howey Test to the DBSI TICs
The Howey test essentially involves three elements:  (1) an investment of money; (2)
in a common enterprise; (3) with an expectation of profits derived from the efforts of others. 
There appears to be no dispute as to the first two elements.  Mr. Mathews undeniably made
an investment of money.  And Cassidy Turley does not appear to contest that it was part of
a “common enterprise.”   The sole point of contention is whether Mr. Mathews and his
23
fellow investors had an expectation of profits derived from the efforts of others.
It is undisputed that Mr. Mathews was to receive a specified annual income stream 
derived from profits obtained by DBSI’s rental of the TIC properties.  What is in dispute is
whether the anticipated profits would be based significantly on the efforts of the promoter
or a third party.  
 Thus, we need not, for purposes of this case, enter into the debate among the federal
23
courts of appeals concerning the different conceptions of the common enterprise element that
have come to be known as “horizontal commonality,” “broad vertical commonality,” and
“strict vertical commonality” – a debate that the Supreme Court has declined so far to referee. 
See Mordaunt v. Incomco, 469 U.S. 1115 (1985) (White, J., dissenting from denial of
certiorari).  In any event, whether one requires a pooling of investor money (horizontal
commonality), a link between the fortunes of the investor and the efforts of the promoter
(broad vertical commonality), or a link between the fortunes of the investor and the fortunes
of the promoter (strict vertical commonality), all would appear to be satisfied in this instance. 
See generally 1 Hazen, The Law of Securities Regulation (5th ed. 2005 & 2012 Supp.) at 75-
78. 
22
The DBSI TICs were sold with a pre-existing agreement that laid out the operation
and management of the investment.  Individual investors, like Mr. Mathews, had no authority
to manage the investment.  Under the pre-existing management agreement with DBSI – in
the form of a sublease – DBSI would locate sub-tenants and undertake the management of
the property.  The TIC purchasers were largely passive investors.  Only by acting collectively
could the TIC investors remove DBSI and put in place new management.  That collective
action was contingent on a unanimous decision to install a new manager and an obligation
to indemnify DBSI.   In the case of the TIC investments, the efforts made by those other
24
than the investor – in the case of these TICs, DBSI, the manager – are no less dominant,
significant, and essential to the failure or success of the enterprise than are the efforts of a
corporation’s management.  The third requirement of the Howey test is satisfied.25
 The end result was an investment vehicle that resembled a corporation, stitched
24
together by contract and property law, and the TIC interests resembled shares in that
corporation. As the Supreme Court has observed, economic characteristics traditionally
associated with stock distinguish it as a security.  Reves v. Ernst & Young, 494 U.S. 56, 62
(1990).  Here the economic characteristics of the TICs resemble those of stock in a
corporation. 
 The Supreme Court of Colorado reached a similar conclusion in Lowery v. Ford Hill
25
Inv. Co., 556 P.2d 1201, 1203 (Colo. 1976).  That case involved a sale of real estate
conditioned on an agreement to an “exclusive management and rental contract.”  A contract
that could be terminated by a two-thirds vote of all the individual unit owners.  The court
held this investment to be a security.  A useful comparison can also be made with Fargo
Partners v. Dain Corp., 540 F.2d 912, 914-15 (8th Cir. 1976) (investment found not to be
a security where a manager exercised control but property was directly owned by one
investor that could terminate the manager at will); see also Schultz v. Dain Corp., 568 F.2d
612, 615 (8th Cir. 1981) (same). 
23
As the requirements of the Howey test are satisfied, the TIC investment is a security
for purposes of the Maryland Securities Act.   
26
Whether Mr. Mathews’ claims are barred by statutes of limitations
The Circuit Court granted summary judgment as to all counts of the complaint on the
basis of limitations.  Mr. Mathews has appealed that determination.  The court devoted most
of its analysis to the claim under the Securities Act, as have the parties on appeal, perhaps
because the Securities Act has its own statute of limitations while the common law claims
are governed by the general limitations provision.  Accordingly, we address the application
of limitations to the statutory and common law claims separately.
Claim under the Maryland Securities Act 
Count VI of the complaint seeks relief pursuant to the Maryland Securities Act.  The
section of the Maryland Securities Act that establishes a private cause of action sets forth
specific periods of limitations for the various types of claims that might be brought under the
 Other authorities applying a similar definition of “security” have reached the same
26
conclusion.  For example, the National Association of Securities Dealers (“NASD”), the self-
regulatory organization now known as the Financial Industry Regulatory Authority
(“FINRA”), issued a Notice to Members in 2005 noting that TICs that are structured and sold
by an entity that also manages the property “generally would constitute investment contracts
and thus securities under the federal securities laws.”  NASD, Notice to Members 05-18
(March 2005) at 3.  At least one other state supreme court has reached that conclusion with
respect to TICs issued by DBSI similar to those at issue in this case.  Redding v. Montana
First Judicial District Court, 281 P.3d 189 (Mont. 2012) (DBSI TICs were investment
contracts under Securities Act of Montana).
24
Act.  CA §11-703(f).   None of the periods set forth in the statute is longer than three years
27
from the date of sale of a security or the rendering of investment advice.  It appears that the
Circuit Court simply held that any claim that Mr. Mathews had under the Securities Act
accrued in October 2004 when he purchased the DBSI TICs (i.e., there was no basis for
tolling accrual of a claim), noted that he filed his initial complaint in March 2010, and found
that the interval between the two dates exceeded three years.
 The statute provides, in pertinent part:  
27
(f)(1) A person may not sue under subsections (a)(1) and
(2) of this section after the earlier to occur of 3 years after the
contract of sale or purchase or the time specified in paragraph
(2) of this subsection.
(2)
An action may not be maintained:
(i)
To enforce any liability created under
subsection (a)(1)(i) of this section, unless brought within one
year after the violation on which it is based; or 
(ii)
To enforce any liability created under
subsection (a)(1)(ii) or (2) of this section, unless brought within
one year after the discovery of the untrue statement or omission,
or after the discovery should have been made by the exercise of
reasonable diligence.
(3)
A person may not sue under subsection (a)(3) of
this section more than 3 years after the date of the advisory
contract or the rendering of investment advice, or the expiration
of 2 years after the discovery of the facts constituting the
violation, whichever first occurs.
CA §11-703(f)(1)-(3).
25
Mr. Mathews argues that his complaint was timely filed because the accrual of his
claims under the Maryland Securities Act was delayed.  He relies on a judicially-created
“discovery rule,” under which a cause of action accrues when the wrong is discovered or
when with due diligence it should have been discovered.  Poffenberger v. Risser, 290 Md.
631, 634, 431 A.2d 677 (1981).  In addition, he argues that a statute that delays accrual of
causes of action when a plaintiff remains ignorant of a cause of action due to a defendant’s
“fraudulent concealment” should be applied to find his claims timely.  That statute provides:
If the knowledge of a cause of action is kept from a party by the
fraud of an adverse party, the cause of action shall be deemed to
accrue at the time when the party discovered, or by the exercise
of ordinary diligence should have discovered the fraud.
Maryland Code, Courts & Judicial Proceedings Article (“CJ”), §5-203.  Mr. Mathews asserts
that Cassidy Turley fraudulently concealed critical information and that he was not on notice
of his claims under the Maryland Securities Act until he met with representatives of the
Maryland Securities Commissioner in April 2009.  
Cassidy Turley argues, in turn, that the limitations scheme of the Securities Act
includes statutes of repose that cannot be tolled by the discovery rule or CJ §5-203.  This
Court recently discussed the distinction between statutes of limitation and statutes of repose
in Anderson v. United States, 427 Md. 99, 46 A.3d 426 (2012).  Although the phrases “statute
of limitations” and “statute of repose” are often used interchangeably, one practical
difference between the two is that a statute of repose is not subject to tolling rules such as the
discovery rule or CJ §5-203.  427 Md. at 121.  The chief feature of a statute of repose is that
26
it runs from a date that is unrelated to the date of injury, whereas a statute of limitations
always runs from the time the wrong is complete and actionable – and injury is always the
final element of a wrong.  Id. at 119.  As a result, a statute of repose can sometimes foreclose
a remedy before an injury has even occurred and before any action could have been brought. 
In Anderson, the Court considered the appropriate characterization  of CJ §5-
28
109(a)(1), which provides that a medical malpractice action must be brought “within the
earlier of” five years from the time of injury or three years from the date the injury was
discovered.  The Court acknowledged the overlapping features of statutes of limitation and
statutes of repose and chose not to rely on any single feature of the statute.  427 Md. at 123. 
It noted that the Legislature had elected to measure the periods set forth in CJ §5-109(a)(1)
from the time of injury, as opposed to some date unrelated to the injury, and that the period
was explicitly subject to tolling for fraudulent concealment and minority – factors at odds
with a conclusion that it was a statute of repose.  Id. at 125-26.  The Court concluded that,
despite prior disparate characterizations of the statute, CJ §5-109(a)(1) was more
appropriately classified as a statute of limitations.  Id. at 127.
Like CJ §5-109(a)(1), the limitations provisions for private causes of action under the
Maryland Securities Act are phrased in terms of the “the earlier to occur” of two alternative
time periods.  Our task in this case is easier than in Anderson in that there is no need to settle
 While the label applied would not normally matter, the classification of the statute
28
as one of limitations or one of repose in that case was necessary to determine whether a
federal or state period of limitations controlled a claim under the Federal Tort Claims Act. 
427 Md. at 102-3.
27
on a precise classification of the provisions in the Securities Act as statutes of repose or
statutes of limitations in order to apply them; our task is more difficult in that there are
different provisions to apply, depending on the nature of the violation alleged.
Our application of the relevant limitations periods under the Securities Act to Mr.
Mathews’ complaint is hampered by the fact that the single count of the complaint under the
Maryland Securities Act appears to combine several different claims, in that it alleges
generally both fraud and lack of registration.  Mr. Mathews’ pre-trial statement, and
submissions to the court in connection with cross-motions for summary judgment, are
somewhat more specific in explaining that he means to assert “multiple violations of the
Maryland Securities Act.”  There appear to be four theories of recovery for which the Act
provides a cause of action in CA §11-703(a) : 
29
(1)
that Cassidy Turley sold an unregistered security (CA
§11-703(a)(1)(i));
(2)
that Cassidy Turley acted as a securities broker-dealer
without being registered under the Act (CA §11-
703(a)(1)(i)); 
(3)
that Cassidy Turley made misrepresentations or
omissions of material fact in connection with the sale of
a security (CA §11-703(a)(1)(ii)); and
(4)
that Cassidy Turley acted as an investment adviser
without being registered under the Act and made material
misrepresentations in that capacity (CA §11-703(a)(3)).
 A related cause of action imposes liability on certain other persons who materially
29
aid the violation.  CA §11-703(c).
28
The Act sets forth, in CA §11-703(f), the period of time within which each of these causes
of action must be asserted.  We consider the application of those limitations periods, and
whether the tolling rules apply, with respect to each of these causes of action. 
1.  Sale of unregistered security
First, it appears that Mr. Mathews alleges that Cassidy Turley was involved in the
offer and sale of an unregistered security – i.e., the DBSI TICs – in violation of CA §11-
501.   The private cause of action for such a violation is found in CA §11-703(a)(1)(i). 
30
Under CA §11-703(f)(1) & (2)(i), such a cause of action may not be brought “after the earlier
to occur” of (1) three years after the contract of sale or purchase or (2) one year after the
violation.  As the sale occurred in October 2004, the latest possible date for filing such a
cause of action under this provision might well be October 2005, and certainly no later than
October 2007. 
CA §11-703(a)(1) creates liability only in favor of a purchaser of a security, not in
favor of one to whom a security is merely offered.  Moreover, the statute provides a remedy
only when a sale has been completed.  CA §11-703(b)(1).  The fact that a discovery provision
was inserted in the other limitations provisions in CA §11-703(f), but not in the provision
related to registration violations, suggests that discovery was not expected to be an issue and
 There does not appear to be any dispute that the TICs had not been registered as
30
securities.  Rather, as indicated earlier in this opinion, the dispute is whether they were
“securities” subject to the registration requirement of the Act.
29
it is therefore inappropriate to apply the judicially-created discovery rule in this context.  
31
Given that a reasonably prudent buyer could determine at the time of sale from publicly
available information whether a security is registered, tolling under the fraudulent
concealment provision of CJ §5-203 is not appropriate.  The overall scheme with respect to
registration violations thus operates as a statute of repose with respect to registration
violations.  Courts have reached a similar conclusion with respect to a limitations provision
related to registration violations in the federal securities law.  See, e.g., Sagehorn v. Engle,
141 Cal. App. 4th 452, 461, 46 Cal. Rptr. 3d 131, 136 (2006); see also Blatt v. Merrill Lynch,
Pierce, Fenner & Smith Inc., 916 F. Supp. 1343, 1353 (D.N.J. 1996); Lubin v. Sybedon
Corp., 688 F. Supp. 1425, 1451 (S.D. Cal. 1988).  
To the extent that Mr. Mathews asserts a claim for sale of unregistered securities, that
claim is time-barred.
 As noted earlier, the Maryland Securities Act was based upon the Uniform
31
Securities Act of 1956.  See footnote 13 above.  Like the Uniform Act, the Maryland Act, at
its inception, included a period of limitations for private actions that expired “two years after
the contract of sale.”  Maryland Code, Article 32A, §34 (1957, 1963 Supp.).  Although the
official comments to the Uniform Act are silent on this question, the drafters published a
commentary that includes some guidance as to its application.  L. Loss & E. Cowett, Blue
Sky Law (1958).  That commentary confirms that it was not intended to incorporate a
discovery rule.  Id. at 394.  A statutory discovery rule – similar to that in the federal securities
law – was later added to the Act with respect to other types of violations.  Chapter 732, Laws
of Maryland 1968.  A current version of that discovery rule appears in CA §11-703(f)(2)(ii),
which is discussed below in relation to the claim of fraud in the offer or sale of a security. 
30
2.  Transacting business as securities broker-dealer or agent without being registered
The complaint states that neither Cassidy Turley nor DBSI were licensed to offer and
sell securities, apparently alleging a violation of CA §§11-401(a) and 11-402(a).  Such a
cause of action also falls under CA §11-703(a)(1)(i).   Accordingly, it would be subject to
32
the same limitations provision as the claim for sale of an unregistered security.  For the
reasons set forth in the previous section, the period of limitations related to such a claim
expired prior to the filing of the complaint, and neither the discovery rule nor CJ §5-203 tolls
the period within which a suit had to be brought.  Such a claim is also time-barred.
3.  Fraud in the offer or sale of a security
The complaint alleges that, in soliciting Mr. Mathews to purchase the DBSI TICs,
Cassidy Turley “engaged in a scheme, device, and/or artifice to defraud Mathews” in
violation of the Act and further that the violations were “evidenced by repeated
misstatements of fact and/or omissions of fact” by Cassidy Turley.  This appears to assert a
claim under CA §11-703(a)(1)(ii) & (c), which provides a cause of action for the buyer of
a security against the seller – and any “broker-dealer or agent who materially aids” the seller
– for fraud or misrepresentation in the offer or sale of the security.33
 Again there appears to be no dispute that Cassidy Turley was not registered as a
32
securities broker-dealer, nor was Mr. Weiss registered as an agent of a broker-dealer.  Rather,
the issue is whether the investment that they helped Mr. Mathews purchase qualifies as a
security such that they would be subject to the Act’s registration requirement for facilitating
the sale.
 The statute provides:
33
(continued...)
31
Under CA §11-703(f)(1) & (2)(ii), such a cause of action may not be brought “after
the earlier to occur” of (1) three years after the contract of sale or purchase or (2) one year
after “discovery of the untrue statement or omission, or after the discovery should have been
made by the exercise of reasonable diligence.”  There is a discovery rule built into this period
of limitations, but that discovery rule is limited in application to three years after the contract
of sale or purchase, as the statute expires upon the “earlier to occur” of the alternative time
periods.  The scheme is indistinguishable from a one year statute of limitations running from
the time of sale with a statutory discovery rule that may toll its expiration for up to two years.
 It would be inconsistent with this scheme to apply the judicially-created discovery
rule to allow for equitable tolling beyond three years.  The Supreme Court reached a similar
conclusion when it interpreted a similar limitations provision governing civil actions under
the federal securities law.   Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S.
 (...continued)
33
(a)(1) A person is civilly liable to the person buying a
security from him if he:
. . . .
(ii) Offers or sells the security by means of any
untrue statement of a material fact or any omission to state a
material fact necessary in order to make the statements made, in
light of the circumstances under which they are made, not
misleading, the buyer not knowing of the untruth or omission,
and if he does not sustain the burden of proof that he did not
know, and in the exercise of reasonable care could not have
known, of the untruth or omission.
Subsection (c) further provides joint and several liability for individuals who materially aid
in violations. 
32
350, 363-64 (1991).  The Court was concerned with whether the statute should be tolled due
to the plaintiff’s failure to discover the injury.  The Court reasoned that indefinite tolling until
discovery was inconsistent with the clear intent of the statute because it would render
meaningless the legislative choice to include a more limited discovery rule.  
The limitations scheme became part of the Maryland Securities Act in a 1968
amendment.   At that time, this Court had not yet enunciated the broad discovery rule that
34
it later adopted in Poffenberger v. Risser, 290 Md. 631, 431 A.2d 677 (1981).  Subsequent
to Poffenberger, however, the Legislature amended the limitations provisions of CA §11-
703(f) – in particular, to add a limitations provision for causes of action related to investment
advisers, as discussed below  – but did not modify the limited discovery rule for actions
35
alleging fraud in the offer or sale of securities.  Given that the Legislature chose to retain a
limited discovery rule for securities fraud actions even after Poffenberger’s adoption of a
broad one indicates a legislative intent to retain a limited discovery rule for actions under the
Securities Act.  Moreover, application of the more open-ended judicially-created discovery
rule in this context would render the more limited statutory discovery rule meaningless – an
outcome that counsels against application of the Poffenberger discovery rule here.  GEICO
v. Ins. Com’r, 332 Md. 124, 132, 630 A.2d 713, 717 (1993) (interpretations that would render
 Chapter 732, Laws of Maryland 1968. 
34
 That amendment created a new limitations scheme for suits against investment
35
advisers – a scheme that contains its own limited discovery provision, much like that found
in CA §11-703(f)(1)-(2).  See Chapter 805, Laws of Maryland 1989.
33
legislative language “meaningless, surplusage, superfluous or nugatory” are disfavored).  We
therefore conclude that the Poffenberger discovery rule does not toll a cause of action for
securities fraud under CA §11-703(a).
Tolling on the basis of a defendant’s fraudulent concealment, pursuant to CJ §5-203,
may still apply, however.  Tolling under that provision arises from affirmative misconduct
by the defendant, not just the exercise of due diligence by the plaintiff.  The predecessor of
CJ §5-203 pre-dates the Maryland Securities Act by nearly a century and the General
Assembly presumably contemplated that it would apply to actions under the Securities Act,
particularly those involving allegations of fraud.   Cf. Geisz v. Greater Baltimore Medical
36
Center, 313 Md. 301, 321-22, 545 A.2d 658 (1988) (CJ §5-203 may toll limitations as to both
statutory and common law claims); see also Morley v. Cohen, 610 F. Supp. 798, 820 (D. Md.
1985).  There is no suggestion otherwise in the history of the Maryland Securities Act.  
37
Thus, the running of limitations for fraud in the offer or sale of securities may be tolled
  Chapter 357, Laws of Maryland 1868. 
36
 The drafters of the Uniform Securities Act of 1956, on which the Maryland
37
Securities Act was originally based, indicated that a “general law” that provided for tolling
based on a defendant’s fraudulent concealment of a violation would apply to cases under a
state securities law.  L. Loss & E. Cowett, Blue Sky Law (1958) at 139.  The Supreme
Court’s Lampf decision has been interpreted to preclude tolling of the federal period of
limitations on the basis of fraudulent concealment, although some commentators argue that
such tolling may still be appropriate.  See Lampf, 501 U.S. at 374-79 (Kennedy, J.,
dissenting); 3 Hazen, The Law of Securities Regulation (5th ed. 2005 & 2012 Supp.)
§12.16[6]-[7].
34
pursuant to CJ §5-203 if the plaintiff’s acquisition of knowledge is hindered by fraudulent
concealment by the defendant.  This is inevitably a fact-intensive inquiry. 
The Circuit Court apparently determined that, on the undisputed facts, Mr. Mathews
was sufficiently on notice of a potential claim such that the discovery rule would not toll
accrual of a cause of action.   Although Mr. Mathews relied upon CJ §5-203 in his
38
submissions and briefly argued it at the motions hearing, it is not clear that the Circuit Court
considered tolling on the basis of fraudulent concealment separately from the issue of tolling
under the discovery rule.
With respect to tolling under CJ §5-203, Mr. Mathews argues that he viewed Mr.
Weiss and Cassidy Turley as his trusted advisers with respect to the TIC investment, that he
 The court stated:
38
...  There was nothing hidden about this. [Mr. Mathews]
knew exactly what he was buying....  It’s not a situation where
something was sold to him and he had no ability ... to investigate
it, to look at it, to see what it really was.  So the discovery rule,
it seems to me, even if it were applicable under the Maryland
Securities Act, would not be applicable in this particular factual
situation. ... 
[W]hat prevented [Mr. Mathews] from investigating the
financial condition of DBSI? ... He chose not to because he was
happy.  He was getting his seven and a half percent or seven
percent a year...  He was happy with his investments.  And it’s
only when things went bad that he determines ... I was misled ...
there was a fraud.  Well, the discovery rule doesn’t apply to
that....[C]ertainly, [Mr. Mathews], it seems to me, could have
determined that there were misrepresentations if, in fact, there
were.
35
relied upon them to vet the financial stability of DBSI and the appropriateness of the TIC
investment for a person in his circumstances, and that they concealed material information
from him that would have undermined that reliance.  There appears to be a genuine dispute
of material fact on this issue.
Mr. Mathews asserts that Mr. Weiss and Cassidy Turley fraudulently concealed the
fact that they were acting as an agent for DBSI in connection with the transaction and
received a fee, in the amount of approximately $93,000 from DBSI, out of the proceeds of
the transaction.  He asserts that these facts were concealed from him until he met with the
Securities Division in 2009 and Cassidy Turley refunded fees to him.  In an affidavit and
deposition testimony, Mr. Mathews described a perfunctory review of the materials in Mr.
Weiss’ presence, execution of the transactional documents at Mr. Weiss’ behest, and shock
at the revelation that the person he perceived as his adviser was being paid by the other party
to the transaction.   
Cassidy Turley contends that Mr. Mathews knew, or should have known, based on his
experience as an investor in real estate, that Cassidy Turley would be receiving a fee from
DBSI.  Cassidy-Turley also asserts that Mr. Mathews evaluated the transaction himself and
was well-equipped to do so.  It points to Mr. Mathews’s receipt of binders with transaction
documents, as well as descriptions of the particular properties, prior to the purchase; to
statements in the transaction documents in which the purchaser affirms that the purchaser has
36
performed due diligence and consulted with independent advisers; and to Mr. Mathews’
experience in owning and managing rental properties near Towson University.  
 At one point in the motions hearing, the Circuit Court appeared to make a credibility
determination as to some of the contentions concerning fraudulent concealment.   To the
39
extent that determination was a factor in the court’s consideration of tolling under CJ §5-203,
it was inappropriate in the context of summary judgment. Whether a plaintiff’s failure to
discover a cause of action was attributable to fraudulent concealment by the defendant is
ordinarily a question of fact to be determined by the factfinder, typically a jury.  Frederick
Road Ltd. Partnership v. Brown & Sturm, 360 Md. 76, 96-100, 756 A.2d 963 (2000);
O’Hara v. Kovens, 305 Md. 280, 294-95, 503 A.2d 1313 (1986).   In any event, the court did
not explicitly consider whether the undisputed facts negated tolling under CJ §5-203. 
Accordingly, we reverse the award of summary judgment as to the count under the Securities
Act to the extent it asserted a claim for fraud. 
 In discussing the possibility that Mr. Mathews was affirmatively misled by Cassidy
39
Turley as to the nature of the transaction and the broker’s role, the court stated:
...  I think it’s going to be offensive to a jury and it’s
offensive to me to try to make Mr. Mathews out to be this poor
little ... teacher, who is, ..., just knows nothing about real estate
or nothing about business and he’s just this innocent little
homemaker who I’ve got this money and I don’t know what to
do with it, I mean, it’s offensive to me because it’s not true. ... 
This guy’s not some unsophisticated real estate person.  That is,
he has a degree of sophistication.  You don’t do it for forty years
and all of a sudden, I don’t know anything about it.... 
37
4.  Investment adviser violations 
Finally, Mr. Mathews seeks recovery against Cassidy Turley for acting as an
investment adviser without being registered under the Maryland Securities Act, which would
violate CA §§11-401(b), 11-402(b), and for making material misrepresentations to Mr.
Mathews in that capacity, which would violate CA §11-302(c).  There is a private cause of
action for such violations under CA §11-703(a)(3).  
40
Pursuant to CA §11-703(f)(3), such a claim must be brought no later than the earlier
of “3 years after the date of the advisory contract or the rendering of investment advice, or
the expiration of 2 years after the discovery of the facts constituting the violation....”   Again,
  CA §11-703(a)(3) provides:
40
A person is civilly liable to another person if the person:
      (i) Acts as an investment adviser or representative in
violation of §11-302(c), §11-401(b), §11-402(b), or §11-304(b)
of this title or any rule or order promulgated under it, except that
an action based on a violation of §11-402(b) of this title may not
be maintained except by those persons who directly received
advice from the unregistered investment adviser representative;
or
      (ii) Receives, directly or indirectly, any consideration from
another person for advice as to the value of securities or their
purchase or sale or for acting as an investment adviser or
representative under §11-101(h) and (i) of this title, whether
through the issuance of analyses, reports, or otherwise, and
employs any device, scheme, or artifice to defraud such other
person or engages in any act, practice or course of business
which operates or would operate as a fraud or deceit on such
other person.
38
there is a discovery rule built into this statute of limitations, but it is capped at three years
after the date of the rendering of investment advice (there being no advisory contract in this
case).  As indicated in the previous section, the presence of a discovery rule within this
statutory scheme suggests that it is inappropriate to apply a judicially-created discovery rule
that would render the statutory discovery rule meaningless.  But, for the same reasons
explained in the previous section of this opinion, there appears to be no reason why tolling,
pursuant to CJ §5-203,  as a result of a defendant’s fraudulent concealment could not be
applied with respect to a claim that a defendant made material misrepresentations in the
course of rendering investment advice.  Again, the issue of fraudulent concealment is largely
factual inquiry.  Accordingly, we reverse and remand as to this claim for the same reasons
as in the previous section.
Limitations with respect to common law claims
The next question is whether the Circuit Court erred in granting summary judgment 
on limitations grounds in favor of Cassidy Turley on Mr. Mathews’ common law claims. 
The complaint includes four tort claims and one claim for breach of contract.  The written
motion for summary judgment that Cassidy Turley filed did not seek summary judgment on
the basis of limitations with respect to the common law claims.  However, at the pre-trial
motions hearing in December 2011, after the Circuit Court had granted summary judgment
on the count under the Securities Act, it proceeded, with the assent of both parties, to
39
consider whether the remaining common law counts were barred by limitations.  It concluded
that they were.
The common law causes of action were each subject to a three-year statute of
limitations.  CJ §5-101.  The parties agree that Mr. Mathews’ action was filed more than
three years after his common law claims would ordinarily have accrued.  Mr. Mathews
argues, however, that either the Poffenberger discovery rule or the tolling provision of CJ §5-
203 based on a defendant’s fraudulent concealment tolled limitations for those claims. 
Similar to its disposition of the count under the Securities Act, the Circuit Court held that the
Poffenberger discovery rule did not save Mr. Mathews’ claims because it concluded that Mr.
Mathews should have discovered his injury more than three years before the filing of the
action.   Again, the Circuit Court did not explicitly address the question of tolling under CJ
41
 At the hearing, the Circuit Court explained its ruling:
41
[The common law counts are] based on the, the
allegations that Mr. Weiss gave Mr. Mathews advice to buy the
[TICs] and advised him that they were a good investment and
that they were appropriate for him and that he, this was
something that was appropriate for him.  And he would have
given that advice in, on or before 2004.  And, in fact, suit is filed
in 2010.  And the Defendants, as I understand it, have raised the
issue of statute of limitations.  And I’ve held that, in fact, the
fact that this advice was given, if it was erroneous, if it was
wrong, if it was fraudulent, if it was, whatever you want to call
it, in 2004, was easily discoverable by Mr. Mathews doing basic
investigation as to the accuracy of the advice given by Mr.
Weiss ...
I just think that assuming [Mr. Weiss’] advice, assuming there
(continued...)
40
§5-203 on the basis of fraudulent concealment.  We reverse the award of summary judgment
as to the common law counts and remand for the same reason as with respect to the fraud
claims in Count VI under the Securities Act.
Whether summary judgment should have been granted based on the absence of expert
testimony on the duties of real estate broker
In connection with its motion for summary judgment on the four counts alleging tort
claims, Cassidy Turley argued that each of those claims was ultimately based on a duty
allegedly owed by Cassidy Turley to Mr. Mathews.  It further argued that expert testimony
would be required to establish the relevant standard of care that defined that duty.  Because
 (...continued)
41
was a duty and the duty was not to make statements that were
misleading, not to have a, not to make false statements to Mr.
Mathews about the appropriateness of the investment or the, the
nature of the investment, that Mr. Mathews could have
determined all of that within a three year period after the advice
was given and suit wasn’t filed for six years after, that, in fact,
the summary judgment should be issued in favor of the
Defendants against the Plaintiff because the claims made exceed
the statute of limitations and that the discovery rule really
doesn’t apply here because the Plaintiff, by a reasonable
investigation, could have determined that the tort occurred
certainly within the three year period from 2004 to 2007 and
certainly the action that’s filed exceeds that limitations period.
As is evident, the court referred to a tort claim and did not appear to separately consider the
breach of contract claim in the complaint.  (In its written motion for summary judgment on
the breach of contract claim, Cassidy Turley had argued that it did not have a contractual
relationship with Mr. Matthews.)  Thus, it is not entirely clear that the court intended to grant
summary judgment on limitations grounds with respect to the breach of contract claim.  In
any event, given our disposition of the court’s ruling on the common law claims, we need not
resolve that issue.
41
Mr. Mathews did not intend to offer expert testimony on the scope of commercial practice
of a real estate broker, Cassidy Turley argued, he would not be able to prove the requisite
foundation for his tort claims.   
42
The Circuit Court denied Cassidy Turley’s motion for summary judgment based on
the anticipated absence of expert testimony concerning the duties of a licensed real estate
broker.  The court appeared to accept, at least provisionally, an argument by Mr. Mathews
that the duty of a real estate broker could be established by reference to standards set forth
in statute and regulation that the court could summarize in a jury instruction.
Cassidy Turley offers this issue as an alternative ground on which summary judgment
could be affirmed in its favor.  However, the Circuit Court did not grant summary judgment
on that ground.  Limitations was the sole basis that the court stated for granting summary
judgment in favor of Cassidy Turley.  As indicated above, an appellate court will not
ordinarily sustain a grant of summary judgment on a ground other than that relied upon by
the circuit court, unless the circuit court would have lacked discretion to withhold judgment
in the movant’s favor on the other ground.   
The common law claims in the complaint contain several references to the “legal and
fiduciary duties” allegedly owed to Mr. Mathews by Cassidy Turley, although the pleading
is somewhat vague as to the nature and source of such duties.  Generally, an enhanced duty
 Cassidy Turley itself proffered expert opinion testimony that a commercial real
42
estate broker has no duty to analyze whether a particular real estate transaction is appropriate
for a buyer, given the buyer’s finances and investment strategy, or whether the seller has
properly characterized the transaction.  
42
of care is often associated with membership in a profession.  Heavenly Days Crematorium,
LLC v. Harris, Smariga & Associates, Inc., 433 Md. 558, 561, 72 A.3d 199 (2013).   In such
a case, expert testimony may be necessary to establish the particular standard of care that
allegedly has been breached and to elucidate why it was breached, although that is not always
the case.  433 Md. at 577; Schultz v. Bank of Am., N.A., 413 Md. 15, 29, 990 A.2d 1078
(2010).43
In the argument on Cassidy Turley’s summary judgment motion, Mr. Mathews
indicated that he intended to prove that Cassidy Turley had violated certain duties of real
estate professionals that are defined by reference to standards set forth in statute and
regulation and that could be adequately summarized in an appropriate jury instruction.  The
Circuit Court expressed some skepticism as to the viability of that course, but deferred a final
decision until trial.
In our view, it was not unreasonable for the Circuit Court to defer decision on the
necessity for testimony by an expert real estate broker to establish the standard of care for
one or more of the common law claims.   It was certainly within the court’s discretion to put
 In Schultz v. Bank of Am., N.A., 413 Md. 15, 990 A.2d 1078 (2010), this Court
43
stated: “Where the plaintiff alleges negligence by a professional, expert testimony is
generally necessary to establish the requisite standard of care owed by the professional.  This
is because professional standards are often ‘beyond the ken of the average layman,’ such that
the expert's testimony is necessary to elucidate the relevant standard for the trier of fact.” 413
Md. at 28.  (internal citations omitted).  The Court also observed, however, that this is not
true in every case.  For example, where “the alleged negligence is so obvious that the trier
of fact could easily recognize that such actions would violate the applicable standard of
care,” expert testimony would not be required.  Id. at 21.  
43
off that determination until it was clear that one or more of those claims was not barred by
limitations and the issue could be assessed in light of other evidence and the proposed jury
instructions.   Given that the Circuit Court had such discretion and exercised it appropriately,
we decline to affirm the grant of summary judgment on the alternative ground advanced by
Cassidy Turley.  Of course, Cassidy Turley may renew that motion at an appropriate time on
remand.
Whether the bankruptcy examiner’s report is admissible
Bankruptcy Examiners
The federal bankruptcy code authorizes a bankruptcy court to appoint an examiner to
conduct an investigation of the debtor “as is appropriate, including an investigation of any
allegations of fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity
in the management of the affairs of the debtor ....”  11 U.S.C. §1104(c).  Courts rely on
examiner reports for a variety of purposes, including evaluating potential legal claims on
behalf of and against the debtor’s estate.   Examiners also sometimes testify.
44
45
  
One bankruptcy court has described the role of an examiner as “an independent
examiner ... that ... will act as an objective nonadversarial party [and] will review the
 See, e.g., In re Apex Oil Co., 118 B.R. 683, 688 (Bankr. E.D. Mo. 1990)
44
(appointment of examiner to evaluate claims on behalf of estate);  In re Best Prods. Co., 168
B.R. 35, 45 (Bankr. S.D.N.Y. 1994) (same); In re Concept Clubs, Inc., 125 B.R. 634, 637
(Bankr. D. Utah 1991) (use of examiner’s report to evaluate claim against estate).
 See, e.g., In re General Dev. Corp., 147 B.R. 610, 617 (Bankr. S.D. Fla. 1992)
45
(examiner testified as expert witness).
44
pertinent transactions and documents, thereby allowing the parties to make an informed
determination as to their substantive rights.  Often, the information that an examiner provides
in his or her report serves as a road map for parties in interest ...”  In re FiberMark, Inc., 339
B.R. 321, 325 (Bankr. D. Vt. 2006) (internal citations omitted).  “[Al]though the examiner's
report may not be admissible, it is a resource containing information and observations of an
independent expert.  Bankruptcy courts routinely consider and rely on the testimony and
reports of examiners. ... [A]n examiner's report is helpful to the court in understanding facts,
but is not intended to establish evidence [].  In essence, an examiner's report paints a picture,
his or her image of what happened in the case, and ends with that expert's opinion of what
that story means, in legal terms.  The report puts the story on paper and provides a context
for debate.  It is the duty of the parties to formulate a fuller version of the debate using the
rules of evidence.”  Id.
DBSI Bankruptcy Examiner’s Report
In connection with the DBSI bankruptcy proceeding, the bankruptcy court in
Delaware appointed an attorney from a Washington law firm as examiner for the bankrupt
estate.  The examiner submitted a final report of approximately 265 pages detailing various
findings about the operation of the DBSI-related companies, their management, their
financial affairs, and the structure and marketing of the DBSI TICs.
45
Motion in Limine to Exclude the Report
Mr. Mathews’ counsel intended to offer the bankruptcy examiner’s final report in
evidence at the trial of this case.   In addition, he indicated that certain expert witnesses
46
would rely on and refer to the report as a basis for their opinions.   Cassidy Turley filed a
47
motion in limine in the Circuit Court to preclude use of the examiner’s report at trial.  The
Circuit Court orally “granted” that motion, although its ruling in fact only precluded mention
of the report before the jury without a further ruling by the court on its admissibility in the
context in which it would be offered.48
Admitting the report directly into evidence
In arguing that the examiner’s report may be admitted directly into evidence, Mr.
Mathews asserts that the report may be introduced against Cassidy Turley under the doctrine
of collateral estoppel, as well as under an exception to the hearsay rule.
 Cassidy Turley notes that the examiner also submitted an interim report, although
46
Mr. Mathews apparently intended to use only the final report.
 In his brief, Mr. Mathews also asks that his experts be permitted to rely on the
47
findings of fact made by the bankruptcy court in the DBSI bankruptcy.  He states that  those
findings incorporate the examiner’s report.  Cassidy Turley disputes that the bankruptcy court
adopted the examiner’s report.  We are unable to resolve the matter from the materials in the
record in this case.  In any event, the findings of the bankruptcy court were not the subject
of Cassidy Turley’s motion in limine and their admissibility was not ruled upon by the Circuit
Court.  We decline to provide an advisory opinion on an issue not presented to or decided by
the Circuit Court.
 The Court described its ruling in a single sentence: “There’ll be no mention of the
48
bankruptcy examiner’s report or any parts of it without first having a ruling by the Court as
to its admissibility at the time it’s sought to be introduced or mentioned.”
46
Mr. Mathews first argues that Cassidy Turley is bound by the facts asserted in the
bankruptcy report on the basis of collateral estoppel because Cassidy Turley is a “privy” of
DBSI.  This argument fundamentally misapplies the concept of privity in the collateral
estoppel context.
The analysis of privity for purposes of collateral estoppel focuses on whether the
interests of the party against whom estoppel is sought were fully represented, with the same
incentives, by another party in the prior matter.  Warner v. German, 100 Md. App. 512, 520-
21, 642 A.2d 239 (1994) (Harrell, J.); see also Klein v. Whitehead, 40 Md. App. 1, 12-17,
389 A.2d 374 (1978) (Wilner, J.) (trustee of bankruptcy estate held to be in privity with the
bankrupt party for purposes of collateral estoppel).  Mr. Mathews has not alleged that
Cassidy Turley shared an identity of interests with DBSI in connection with the DBSI
bankruptcy proceeding.  Indeed, we do not know from the record before us what relationship
Cassidy Turley had to the bankrupt estate – whether as a creditor or otherwise.  It is not self-
evident that whatever contractual relationship existed between DBSI and Cassidy Turley in
connection with the marketing and sale of TIC interests established the necessary identity of
interests to bind Cassidy Turley by collateral estoppel as to determinations made in the DBSI
bankruptcy proceeding.
Second, Mr. Mathews argues that, although the examiner’s report constitutes hearsay
that is normally inadmissible, it may be admitted into evidence because it fits within an
47
exception in the Maryland Rules for public records and reports.  The rule provides, in
pertinent part:
The following are not excluded by the hearsay rule, even
though the declarant is available as a witness:
....
(8) Public records and reports.  (A)  Except as otherwise
provided in this paragraph, a memorandum, report, record,
statement, or data compilation made by a public agency setting
forth
(i)  the activities of the agency;
(ii)  matters observed pursuant to a duty imposed by law,
as to which matters there was a duty to report; or
(iii)  in civil actions and when offered against the State in
criminal actions, factual findings resulting from an investigation
made pursuant to authority granted by law.
(B)  A record offered pursuant to paragraph (A) may be
excluded if the source of information or the method or
circumstance of the preparation of the record indicate that the
record or the information in the record lacks trustworthiness.
 
Maryland Rule 5-803(8)(A)-(B).   This rule was derived from the hearsay exception set forth
49
in Federal Rule of Evidence 803(8),  which this Court essentially incorporated as part of
50
 There are two additional subparagraphs in this exception, not pertinent to this case. 
49
One concerns admissibility in criminal cases of matters observed by law enforcement
officers; the other is a savings clause that makes clear that the rule does not supersede
statutory provisions on the admissibility of particular records.  Maryland Rule 5-803(8)(C),
(D).  No other Maryland Rule or statute appears to address directly the admission of a
bankruptcy examiner’s report.  
 Despite minor differences in style and wording, Federal Rule of Evidence 803(8)
50
is substantively similar in pertinent part to Maryland Rule 5-803(8).
48
Maryland’s common law of evidence, prior to the adoption of Title 5 of the Maryland Rules. 
See Ellsworth v. Sherne Lingerie, Inc., 303 Md. 581, 603-13, 495 A.2d 348 (1985); 6 L.
McLain, Maryland Practice §803(8).1 (1987).  As this Court has previously noted, the
“[j]ustification for this exception is the assumption that a public official will perform his duty
properly and the unlikelihood that he will remember details independently of the record.” 
Ellsworth, 303 Md. at 606 (quoting Advisory Committee Note to federal rule).  
Rule 5-803(8)(A)(iii) creates an exception to the hearsay rule for a “report ... by a
public agency setting forth ... factual findings resulting from an investigation made pursuant
to authority granted by law” when offered in evidence in a civil action, if other facts do not
suggest it to be untrustworthy.   A bankruptcy examiner’s report would appear to qualify as
51
a report setting forth factual findings resulting from an investigation made pursuant to
authority granted by law and Mr. Mathews seeks to use it in a civil proceeding.  However,
the question remains whether a bankruptcy examiner is a “public agency” for purposes of this
rule.
 The Advisory Committee Note to the federal rule refers to such documents as
51
“evaluative reports” and suggests a number of factors for assessing trustworthiness: (1) the
timeliness of the investigation; (2) the special skill or experience of the official; (3) whether
a hearing was held and the level at which it was conducted; and (4) possible motivation
problems.  This Court has adopted the “more liberal view” that factual findings in such
records are presumptively admissible and has placed the burden on the party opposing
admission to demonstrate the record’s unreliability, although the term “factual findings” will
be strictly construed to exclude material that is in the nature of an opinion.  Ellsworth, 303
Md. at 608-12.
49
Strictly speaking, an examiner is not a “public agency.”  A bankruptcy examiner is
very likely to be a disinterested person in the investigation of the debtor’s affairs and an
examiner’s report may well be just as trustworthy in many instances as a government agency
report – or perhaps more so.  But we cannot render a generic holding to that effect, for each
appointment of an examiner is ad hoc and much depends on the nature of the particular case,
the charge given to the examiner, and how the examiner discharges the duties of the
appointment.  As indicated above, the bankruptcy courts themselves appear to regard an
examiner as a neutral expert appointed for the particular case.  See In re FiberMark, Inc., 339
B.R. at 325;  In re Adelphia Communs. Corp., 348 B.R. 99, 107 (Bankr. S.D.N.Y. 2006) (an
examiner is not a judicial officer or master and is “better analogized to a court-appointed
expert”); see also In re Enron Corp. Securities, Derivative & ERISA Litigation, 623 F. Supp.
2d 798, 823-26 & nn. 21, 23 (S.D. Tex. 2009) (admitting portions of report on theory that
examiner was expert witness in the proceeding, while conceding it was “technically”
inadmissible because the examiner had not been designated as an expert by any party).  It is
also notable that, as best we can determine, the bankruptcy courts, in determining whether
to admit an examiner’s report into evidence, do not rely on the analogous federal rule of
evidence.  
50
Accordingly, a bankruptcy examiner’s report is not a public record or report for
purposes of the exception to the hearsay rule in Rule 5-803(8) because a bankruptcy
examiner is not a public official or agency.  
52
The admissibility of a bankruptcy examiner’s report, in light of a hearsay objection,
may be more appropriately assessed under the catch-all exception of Maryland Rule 5-
803(24).  That rule allows for the admission of a statements “not specifically covered by any
of the hearsay exceptions listed [in Rules 5-803 and 5-804] but having equivalent
circumstantial guarantees of trustworthiness” if the court determines that the statement is
evidence of a material fact, is more probative than other reasonably available evidence, and
its admission serves the interests of justice.   Although an examiner’s report does not come
53
 Mr. Mathews directs us to Redding v. Montana First Judicial District Court, 281
52
P.3d 189 (Mont. 2012), which, like this case, arose out of a lawsuit by an investor in DBSI
TICs.  Mr. Mathews contends that the Montana Supreme Court held in Redding that the same
examiner’s report was admissible in evidence.  But the Redding opinion does not justify that
conclusion.  The only reference to the examiner’s report in the Montana court’s opinion is
a single sentence indicating that “the examiner found that DBSI was running a Ponzi
scheme.”  281 P.3d at 193.  The court made that statement in the context of its review of a
lower court’s award of summary judgment in favor a seller of DBSI TICs and was reciting
facts “for purposes of this opinion” that were “not materially disputed.”  Id. at 192.  There
is no suggestion in the opinion that the Montana Supreme Court – or , indeed, the Montana
trial court – considered the issue of the admissibility of the report into evidence under a
public records hearsay exception.
 That rule provides:
53
(24)
Other 
exceptions. 
 
Under 
exceptional
circumstances, the following are not excluded by the hearsay
rule:  A statement not specifically covered by any of the hearsay
exceptions listed in this Rule or in Rule 5-804, but having
(continued...)
51
within the exception for public records and reports, it is not obvious that an examiner’s report
is necessarily any less reliable than one conducted by a public agency; the burden and
expense of reproducing the information provided in the report may be prohibitive; and the
information in the examiner’s report may not be genuinely contested.
This determination is very dependent on the facts of the particular case and the good
judgment of the trial court.  We also note that such a report may repeat or include out-of-
court statements offered for the truth of content – hearsay within hearsay, which may require
reference to other hearsay exceptions.  See United States v. Moore, 27 F.3d 969, 975 (4th Cir.
1994). 
Finally, the record does not indicate precisely which statements in the report Mr.
Mathews wished to use, and the parties have advanced their arguments only in the most
general terms.  The Circuit Court’s oral order on this issue granted the motion excluding the
 (...continued)
53
equivalent circumstantial guarantees of trustworthiness, if the
court determines that (A) the statement is offered as evidence of
a material fact; (B) the statement is more probative on the point
for which it is offered than any other evidence which the
proponent can procure through reasonable efforts; and (C) the
general purposes of these rules and the interests of justice will
best be served by admission of the statement into evidence.  A
statement may not be admitted under this exception unless the
proponent of it makes known to the adverse party, sufficiently
in advance of the trial or hearing to provide the adverse party
with a fair opportunity to prepare to meet it, the intention to
offer the statement and the particulars of it, including the name
and address of the declarant.  
Maryland Rule 5-803(24).
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report in its entirety, but the court pointed out that it was open to modifying its order and
would reconsider its decision with respect to specific portions of the report that might be
offered in the context in which they were offered.  
In our view, the Circuit Court wisely declined to make a blanket ruling on admission
and use of the examiner’s report without more specification and context.  (As noted above,
the report consists of 265 pages and covers topics well beyond the TICs).  To the extent that
Mr. Mathews asks that we overrule that approach, we decline to do so.
Use of the report as the basis for an expert opinion
Finally, Mr. Mathews argues that, at a trial, his expert witnesses should be permitted
to rely on the report of the examiner as well as the findings of fact made by the court in the
DBSI bankruptcy.  Maryland Rule 5-703(a) defines the permissible bases of expert opinion
testimony:
(a) In general.  The facts or data in the particular case upon
which an expert bases an opinion or inference may be those
perceived by or made known to the expert at or before the
hearing.  If of a type reasonably relied upon by experts in the
particular field in forming opinions or inferences upon the
subject, the facts or data need not be admissible in evidence.
As is evident from the text of the rule, facts or data relied upon by an expert in reaching an
opinion may include hearsay and may be admitted for the limited purpose of explaining the
basis of that opinion.  Ellsworth, 303 Md. at 603.  Mr. Mathews submitted affidavits by his
experts attesting that they had relied on the examiner’s report in reaching their opinions
concerning the nature and risks of the DBSI TICs and that the report was the type of
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document typically relied upon by experts in their respective fields.   The expert witness
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report of one of the experts explained in some detail how he relied upon the report in
reaching the conclusion that the TIC interests are securities.
The record is ambiguous as to whether the Circuit Court actually ruled on this issue. 
There was almost no argument on the subject, no discussion of specific anticipated expert
testimony referring to the report, and no discussion of reasonableness of the experts’ reliance
on the report.  We decline to provide an advisory opinion on this limited record.  It will be
the task of the trial court on remand to evaluate the proffered expert testimony and make a
determination whether the expert’s reliance on the report is reasonable.  See Univ. of Md.
Med. Sys. Corp. v. Waldt, 411 Md. 207, 237, 983 A.2d 112 (2009) (determination of whether
expert testimony is sufficiently reliable is subject to abuse of discretion review). 
Conclusion
In sum, we hold as follows:
1.
The undisputed facts demonstrate that the DBSI TICs purchased by Mr.
Mathews are “securities” for purposes of the Maryland Securities Act.
2. 
Mr. Mathews’ claims under the Securities Act are barred by limitations as a
matter of law insofar as they relate to registration under the Act.  Insofar as his claims under
 Of course, the use of the report by an expert cannot be simply a vehicle to
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circumvent the hearsay rule to admit otherwise inadmissible hearsay.  The expert opinion
testimony must be relevant to some issue in the case and, as the rule indicates, the portion of
the report used by the expert must be of a nature reasonably relied upon by experts in the
field.  
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the Securities Act relate to alleged fraud and misrepresentation by the defendants, or by
others for which the defendants may be liable, it was premature to award summary judgment
on the basis of limitations.  
3.
It was also premature to award summary judgment as to Mr. Mathews’
common law tort claims on limitations grounds as a matter of law based on the record to date. 
4. 
We decline to affirm the award of summary judgment on an alternative ground
that the Circuit Court did not adopt.  
5.
The DBSI bankruptcy examiner’s report is not admissible under Rule 5-803(8),
but may be admissible under Rule 5-803(24) and may be an appropriate basis for an expert
opinion at trial under Rule 5-703.  The Circuit Court appropriately reserved judgment on the
admissibility and use of a bankruptcy examiner’s report until it had additional information
concerning the proposed use of the report in the context of the trial.   
JUDGMENT OF THE CIRCUIT COURT FOR
BALTIMORE COUNTY AFFIRMED IN PART AND
REVERSED IN PART.  CASE REMANDED TO THAT
C OURT 
FOR 
FURTHER P ROCEEDING S
CONSISTENT WITH THIS OPINION.  COSTS TO BE
SPLIT EQUALLY BY THE PARTIES.
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