Title: Hoffman v. Stamper

State: maryland

Issuer: Maryland Supreme Court

Document:

In the Circuit Court for Baltimore City
Case No. 98233107/CC7330
IN THE COURT OF APPEALS OF MARYLAND
No. 33
September Term, 2004
______________________________________
ARTHUR J. HOFFMAN, ET AL.
v.
TOYOME STAMPER, ET AL.
______________________________________
Bell, C.J.
Raker
Wilner
Cathell
Harrell
Battaglia
Greene,
   JJ.
______________________________________
Opinion by Wilner, J.
______________________________________
Filed:    February 4, 2005
1 The word “flipping” was not used at trial, but it has been used as a descriptive
term by the parties on appeal.
2 An additional “lender” defendant, Homeside Lending, Inc., was let out on
summary judgment.
3 The record shows two other amounts as the aggregate judgment, but the parties
agree that the correct amount, based on the jury’s verdicts, is $1,434,020.
In an amended complaint filed in the Circuit Court for Baltimore City, nine plaintiffs
claimed that, through an elaborate “flipping” scheme, the defendants had conspired to
defraud them, and did defraud them, into purchasing dilapidated residential properties in
Baltimore City at inflated prices.1  The participants in this alleged conspiratorial scheme were
(1) the “flippers,” Robert Beeman, Suzanne Beeman, and a corporation controlled by the
Beemans, A Home of Your Own, Inc. (AHOYO), (2) the lenders, Irwin Mortgage
Corporation (then known as Inland Mortgage Corporation) and one of Irwin’s loan officers,
Joyce Wood, and  (3) the appraiser, Arthur Hoffman.2  Each of the nine plaintiffs charged all
of the defendants with conspiracy to defraud, fraud, violations of the State Consumer
Protection Act (CPA), and negligent misrepresentation, and Irwin and Wood were charged
as well with general negligence.  Compensatory and punitive damages were sought by each
plaintiff against each defendant.
After disposition by the court of various motions, a jury found each of the defendants
liable to each of the plaintiffs for fraud, conspiracy to defraud, and violations of the CPA.
The jury awarded each plaintiff, as against all of the defendants, differing amounts of
economic damages and $145,000 for non-economic (emotional) damages, for an aggregate
total of $1,434,020.3  In addition, it awarded each plaintiff $200,000 in punitive damages
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against the Beemans and AHOYO.  Through a partial judgment in their favor, the court had
previously withdrawn from the jury the punitive damage claims against Irwin, Wood, and
Hoffman.  Their liability, joint and several, was only for the compensatory damages.  In post-
trial proceedings, the court awarded attorneys’ fees and expenses under the CPA against all
defendants in the aggregate amount of $195,591, subject to a dollar-for-dollar credit for
attorneys’ fees and expenses received by plaintiffs’ counsel under their contingent fee
agreement.
Everyone except Robert Beeman and AHOYO appealed, although Suzanne Beeman
later withdrew her appeal.  The Court of Special Appeals affirmed the judgments for
compensatory damages, but, after concluding that there was sufficient evidence to show that
Irwin, Wood, and Hoffman participated in the fraudulent scheme and made
misrepresentations of their own with actual knowledge of the fraud and the falsity of those
representations, it reversed the partial judgment in their favor with respect to punitive
damages and remanded for further proceedings on those claims.  See Hoffman v. Stamper,
155 Md. App. 247, 843 A.2d 153 (2004).
On the premise that an award of attorneys’ fees under the CPA must take into account
all of the circumstances, including the amount of recovery, and because, on remand, there
was the prospect of a punitive damage award being entered against Irwin, Wood, and
Hoffman, the intermediate appellate court also vacated the award of attorneys’ fees and
remanded that as well for reconsideration.  As “guidance” for the trial court, the Court of
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Special Appeals observed that an award of attorneys’ fees under the CPA would not
duplicate fees paid by the plaintiffs under a contingent fee agreement but would simply
reimburse them for all or part of those fees. 
We granted petitions for certiorari filed by Irwin, Wood, and Hoffman to consider the
following questions:
(1) Was there sufficient evidence of culpability on Hoffman’s part to sustain the
verdicts for conspiracy, fraud, and violation of the CPA;
(2) In affirming the judgment for compensatory damages, did the Court of Special
Appeals err in holding that, in an action based on fraud, non-economic damages may be
awarded in the absence of any physical injury;
(3) Did the trial court err in instructing the jury that damages in an action based on
fraud need be proved only by a preponderance of the evidence and, if so, did the Court of
Special Appeals err in holding that Irwin and Wood waived their objection to such an
instruction;
(4) Did the Court of Special Appeals err in reversing the judgment for Irwin, Wood,
and Hoffman as to punitive damages and, if not, did it err in remanding for only a partial new
trial on punitive damages rather than an entire new trial on all issues; and
(5) Did the Court of Special Appeals err in vacating the award of attorneys’ fees and
remanding that issue for further reconsideration?
We shall answer some of these questions in the affirmative and some in the negative
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and shall therefore affirm in part and reverse in part the judgment of the Court of Special
Appeals.  For convenience, we shall refer to the Beemans and AHOYO collectively as
“Beeman,” unless the context requires otherwise.  Robert Beeman was the principal culprit.
Irwin’s culpability is a vicarious one, resting on the conduct of its employee, Wood.
BACKGROUND
The basis of the plaintiffs’ case, in a nutshell, was that Beeman (1) bought dilapidated
properties in Baltimore City at low prices, (2) then searched for unsophisticated, low-income
buyers with poor credit histories, (3) promised them that he could sell them a renovated
home for a down payment of only $500, (4) got those buyers to sign contracts of sale at
significantly inflated prices upon a promise to make extensive repairs, many of which were
never made, (5) arranged for the buyers to finance the purchases with 100% FHA loans
obtained through Wood, and (6) obtained those loans for the buyers in part by conspiring
with Wood to have Hoffman prepare erroneous appraisals showing the value of the homes
to be at or above the grossly inflated contract price and in part by engaging in practices that
clearly violated Department of Housing and Urban Development (HUD) regulations and
requirements regarding the FHA program in order to consummate the transactions.  All nine
plaintiffs – two of whom (Brower and Spencer) purchased one house together – testified that,
after taking possession, they experienced major problems with their homes, some of which
were uninhabitable.  Six of the nine eventually lost their homes to foreclosure.
4 There are some discrepancies and uncertainties with respect to the dates of
Beeman’s purchases and sales.  In the record is an exhibit stipulated to by the parties that
purports to show those dates, but the source of that data is not clear.  It seems to indicate
when Beeman and his buyers took title to the properties, but there is other evidence that
puts some of the dates stated for Beeman’s purchases in question.  The appropriate dates,
for our purposes, are the dates that Beeman took title and then entered into contracts to
sell the properties.  The dates noted above for the sales to the plaintiffs are the dates on
the contracts of sale.  Closing of those sales took place two months or so later.  With one
or two exceptions, the dates upon which Beeman actually took title to the properties are
not in the record.  We shall use the dates stated in the exhibit even though by doing so it
would appear that Beeman sold the properties before he had title to them.  The
discrepancies are not important with respect to the issues before us.
-5-
The transactions at issue in this case were as follows:4
Property
Buyer
 Beeman Purchase
Price
Sale Price to Buyer
17 N. Kresson St.
Jerry McFadden
$14,500 (4/23/97)
$52,000 (5/9/97)
612 E. 41 St.
Carl Haley
$20,000 (6/25/97)
$57,200 (5/28/97)
610 N. Belnord
Ave.
Gertrude Green
$12,500 (6/18/97)
$44,000 (7/30/97)
5601 Force Rd.
Denise Brower &
Forrest Spencer
$24,000 (8/7/97)
$65,900 (7/21/97)
406 Oldham St.
Francine Henderson
$17,550 (3/27/97)
$58,000 (2/17/97)
$65,000 (9/9/97)
3132 Piedmont
Ave.
Eva Elder
$29,551 (9/5/97)
$51,000 (8/12/97)
6521 Lenhert St.
Toyome Stamper
$41,790 (9/5/97)
$87,250 (8/14/97)
1127 Carroll St.
Inez Coward
$7,550 (9/29/97)
$58,000 (12/19/97)
The trial lasted three weeks, during which a great deal of documentary and testimonial
evidence, some of it conflicting, was presented.  We must view that evidence in a light most
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favorable to the part(ies) who prevailed on the issues to which it relates and shall recite the
facts accordingly.
Beeman began his business of buying distressed houses in Baltimore City at low
prices and selling them to unsophisticated buyers at inflated prices in 1996.  Initially, he
arranged financing for the buyers through conventional mortgage loans, but those loans
financed only 60% to 80% of the purchase price.  At some point in 1997, he met Wood, who
was a loan officer for Irwin and dealt in FHA insured loans.  Wood received a commission
on loans generated by her and looked upon Beeman (and others in his line of business) as
customers and a source of commission income for her.  She educated Beeman about the FHA
program.  Mortgage loans approved under that program are insured by HUD.  If a loan goes
into default, the lender, or current holder of the mortgage, forecloses, buys the property at the
foreclosure sale for the balance due on the loan, transfers the property to HUD, and is
reimbursed by HUD for 100% of the unpaid balance of the loan.  Because of the greatly
reduced risk of loss under that arrangement, lenders are willing to lend up to 100% of the
appraised value of the property.
Most of Beeman’s prospective buyers had both poor credit and insufficient funds to
meet their share of the closing costs.  At their initial meeting, Wood advised Beeman that,
under the HUD program, a seller could not contribute more than six percent of the loan
amount (which, with a 100% loan, was equivalent to the purchase price), and that if the seller
contributed more, the purchase price would be reduced accordingly.  Included in the six
5 This advice was apparently based on HUD Mortgagee Letter 87-35, issued
October 22, 1987, amending Mortgagee Letter 86-15 (August 8, 1986) to provide that
“seller buydowns in excess of six percent of the mortgage amount must be applied as a
dollar-for-dollar reduction of the sales price in mortgage credit process.  Seller buydowns
are payments for discount points, any type of interest payments, or seller payment of
closing costs normally (under local market practice) paid by the buyer.”
-7-
percent cap were a seller’s contributions to the buyer’s share of closing costs and payments
made to clear up the buyer’s credit problems.5  To maximize his profit, of course, Beeman
had an incentive not to have any reduction of the contract price.  Wood explained that it was
possible for closing costs to be donated by a friend or relative of the buyer but that any such
gift must be verified by (1) a gift letter from the donor, and (2) evidence that the funds were
drawn from the donor’s bank account.  
Wood offered a range of services to Beeman to permit him to pursue his business.
First, presumably aware that Beeman’s buyers would be unable, on their own, to pay their
share of closing costs, she gave him a supply of blank gift letters.  She also agreed to
generate on Irwin’s computer, for each buyer referred by Beeman, a “good faith estimate.”
The “good faith estimate,” according to Wood, was based on the contract price and the
estimated share of closing costs to be paid by the buyer and determined how much cash the
buyer would need to close. That would allow Beeman to determine how much of a “gift”
would be required.  In fact, that estimate had a greater significance.  In most, if not all, of the
transactions, the “good faith estimate” prepared by Wood became the purchase price for the
house.  The purchase price thus was determined by the maximum loan amount, not the other
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 way around.  It was not negotiated between Beeman and the buyers but was inserted into the
contract by Beeman after the “good faith estimate” was calculated by Wood.
Each of the nine plaintiffs called Beeman in response to one of his ads offering a
“rehabbed” home for only $500 down or after learning of such an offer by word-of-mouth.
Beeman met with the plaintiff, ascertained the area of the City where the plaintiff wanted to
live, got some basic credit information regarding the plaintiff, and showed the plaintiff the
houses that he had in that part of the City, without clearly disclosing that the properties were
his.  Most of the plaintiffs thought that Beeman was an agent of some kind or a lender and
did not realize that he was the owner/seller.  Each house was still in a dilapidated condition,
but Beeman promised that the house would be fixed by his own contractor, that he would
have it inspected, and that he would assist in obtaining FHA financing for the plaintiff.
When the plaintiff indicated interest, Beeman, either that day or shortly thereafter, drove
him/her to Irwin’s office in Columbia, where they met with Wood and made application for
an FHA loan.  
Some of the plaintiffs testified that they signed a contract of sale with Beeman prior
to meeting with Wood based on a price quoted or estimated by Beeman, that the purchase
price was nonetheless left blank in the contract, and that, when or after meeting with Wood,
a price had been inserted in the contract that was higher than was first quoted.  Wood
confirmed that Beeman and the buyer would bring contracts of sale when they met with her,
that the price was sometimes missing from the contract, but that it was inserted before the
-9-
end of the meeting.  Plaintiff McFadden said that Beeman had estimated the price of the
house on Kresson Street at $50,000, but that, at the meeting with Wood the price had been
filled in at $52,000.  Plaintiff Haley said that he thought the price of the house on 41st Street
was between $35,000 and $40,000, but that, when presented with the contract at Wood’s
office, the price was $57,200.  Plaintiff Green was told by Beeman that the price for the
house on Belnord Avenue would be $38,000, but that the contract handed to her by Wood
showed the price as $44,000.  When Beeman took Plaintiff Henderson to see the house on
Oldham Street, he told her the purchase price would be $58,000; at the meeting with Wood,
the price was changed to $65,000.  When he took Plaintiff Coward to see the house on
Carroll Street, he told her that the price was $40,000; at the meeting with Wood, she was
handed a document showing the price to be $58,000.
As none of the plaintiffs had sufficient funds to pay their share of the closing costs,
Beeman paid those costs through a sham transaction.  Beeman asked each of them to find a
friend or relative with a bank account who would be willing to act as a “donor.”  Once that
was done, Beeman filled out one of the gift letters given to him by Wood and had the buyer
and the “donor” sign the letter.  The letter was an attestation by the “donor” that he/she was
making a gift of the amount specified to the buyer, to be applied to the purchase of the
property described, and that no repayment was expected.  Beeman then arranged to meet the
“donor,” sometimes with the buyer, at the “donor’s” bank or credit union.  Beeman arrived
with cash in an amount equal to the “gift.”  He gave the cash to the “donor,” who deposited
6 The amounts contributed by Beeman through these phony gift letter transactions
were as follows: (1) for McFadden, $3,000; (2) for Haley, $6,000; (3) for Green, $2,600;
(4) for Brower and Spencer, $2,850; (5) for Henderson, $3,100; (6) for Elder, $2,200; (7)
for Stamper, $4,800; (8) for Coward, $3,000.
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it into his/her account.  The “donor” then obtained a certified check for that amount payable
to the buyer and gave the check to Beeman.  That check was then used to pay the buyer’s
share of transactional costs.  The “donor” made no contribution to the costs; they were
contributed entirely by Beeman.6  Wood was aware that a “gift” would be required in each
of the eight cases now before us.
Although all of the plaintiffs knew that Beeman was providing the funds and that the
gift letters were not accurate, Beeman explained, when asked, that the gift letter procedure
was necessary to provide the closing costs and was a standard and legitimate procedure in
buying a house.  The plaintiffs testified that they did not know that the process used by
Beeman was illegal and that, had they known it was illegal, they would not have participated
in it.
The third piece of the scheme was the appraisal.  Hoffman, a licensed appraiser, had
once worked for HUD and was familiar with the regulations and requirements pertaining to
FHA loans.  He also had worked for Irwin as an in-house appraiser.  After leaving that
employment, he continued to do freelance appraisal work for Irwin and was paid $300 for
each appraisal.  Indeed, he said that, after leaving Irwin’s employ, 99% of his income still
came from work he did for Irwin.  We shall recite more of the evidence against Hoffman
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shortly.  It will suffice here to note that there was evidence showing that (1) Hoffman was
aware of a HUD requirement that, if an appraisal showed the value of the property to be less
than the contract price, the buyer had to be informed and that the buyer then had an absolute
right to cancel the contract, in Hoffman’s words “that would kill the deal”, (2) most of the
appraisals he did in these cases contained admitted errors of one kind or another, either with
respect to the appraised property itself or regarding the properties he used as comparable
sales, (3) in most cases, he used inappropriate sales as comparable – properties in different
kinds of neighborhoods or that were distant from the subject property that sold for higher
prices – and ignored closer and more similar properties that had sold for much less, (4) in
each case, he appraised the dilapidated property at or above the contract price without regard
to the much lower price paid by Beeman just months before, (5) although he justified the
difference between Beeman’s purchase price and his much higher appraisals on the basis that
substantial repairs would be made to the property, he did not make reasonable efforts to
assure that those repairs had, in fact, been made and many of them were not, in fact, made,
(6) he was aware of a HUD requirement that an appraiser keep the supporting data for
appraisals made with respect to FHA loans for a period of five years, and (7) in knowing and
deliberate violation of that requirement, he destroyed those records shortly after Beeman’s
activity became public and investigations into it commenced.  Because in each case the
appraisal showed the value as equal to or greater than the inflated contract price, the buyer
lost the option to cancel the contract.
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With this somewhat general background, we turn to the issues before us.
DISCUSSION
A. Hoffman’s Culpability
Pursuant to Maryland Rule 2-519, Hoffman moved for judgment at the end of the
case, and, when that motion was denied and the verdicts against him were rendered, he
moved for judgment NOV pursuant to Rule 2-532.  That motion, too, was denied.  He makes
two complaints about the denial of those motions: (1) the trial court and the Court of Special
Appeals applied the wrong evidentiary standard in resolving the motions addressing the
conspiracy and fraud claims; and (2) because, under the correct standard, the evidence was
legally insufficient to establish conspiracy, fraud, or violations of the CPA on his part, those
motions should have been granted.
(1) Standard of Proof
Hoffman contends that findings of conspiracy and fraud require proof by clear and
convincing evidence and that, when reviewing the denial of the motions for judgment, the
Court of Special Appeals looked only to see whether there was “any evidence . . . however
slight” to support the claims.  Hoffman, supra, 155 Md. App. at 288, 843 A.2d at 178.  That,
he claims, is not the proper standard.  
Hoffman is correct in stating that fraud must be proved by clear and convincing
evidence.  VF Corp. v. Wrexham Aviation, 350 Md. 693, 704, 715 A.2d 188, 193 (1998).  It
7 The intermediate appellate court did cite Darcars in its discussion of punitive
(continued...)
-13-
is not so clear whether that standard applies to the conspiracy count.  In Daugherty v.
Kessler, 264 Md. 281, 292, 286 A.2d 95, 101 (1972), we held that “[i]n a civil case not
involving a criminal act, conspiracy may be shown by a preponderance of the evidence.”
Compare, however, Rent-A-Car Co. v. Fire Ins. Co., 161 Md. 249, 267-68, 156 A. 847, 855
(1931), which could be read either consistently or inconsistently with that holding.  In this
case, it matters not.
Hoffman’s argument arises from the statement by the Court of Special Appeals that,
in a civil jury case, “if there is any evidence adduced, however slight, from which reasonable
jurors could find in favor of the plaintiff on the claims presented, the trial court should deny
the defendant’s motion for judgment at the close of the evidence and submit the claims to the
jury for decision.”  Hoffman, supra, 155 Md. App. at 288, 843 A.2d at 178.  That is a correct
statement, which mirrors what this Court has said in many cases.  It would, however, be more
precise if it read, “from which reasonable jurors, applying the appropriate standard of proof,
could find in favor of the plaintiff on the claims presented.”  In Darcars v. Borzym, 379 Md.
249, 270, 841 A.2d 828, 840 (2004), we essentially made that point – that, in deciding a
motion for judgment, a court “must account for and consider the appropriate burden of
persuasion in deciding whether to allow the jury to decide an issue.”  Even though the Court
of Special Appeals failed to cite Darcars when discussing this point, there is no indication
that the intermediate appellate court failed to apply the appropriate standard in its review.7
7(...continued)
damages, so it certainly was aware of that case.
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It understood that fraud needed to be shown by clear and convincing evidence and, indeed,
believed that conspiracy required that heightened standard of proof as well.
The important thing, in any event, is not how the Court of Special Appeals articulated
the standard but whether the appropriate standard was applied by the trial court in deciding
the motion, and we think that it was.  The trial judge filed a memorandum explaining his
reasons for denying the motions for judgment NOV filed by Hoffman, Wood, and Irwin.  In
that memorandum, he clearly recognized that, although civil conspiracy need be proved only
by a preponderance of the evidence, fraud must be shown by clear and convincing evidence,
and there is no indication that he ever lost sight of that standard in finding the evidence
sufficient to warrant submission of the fraud count to the jury.  Whether the trial court was
correct in that conclusion and, indeed, in its further conclusion that the evidence sufficed to
warrant submission of the conspiracy and CPA counts, is now before us, and we shall
examine those conclusions in light of what we said in Darcars.
(2) Evidence of Culpability
As noted, the basic charge against Hoffman was that, in furtherance of the conspiracy
by Beeman and Wood, Hoffman knowingly prepared inflated appraisals that he knew were
necessary in order for the transactions to take place.  Evidence to that end was presented with
respect to each of the appraisals he prepared.
8 The appraisal report was prepared on June 9 based on an inspection on June 5,
and it appraised the property as of June 5.
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(a) McFadden – Kresson Street
Beeman purchased the property at 17 N. Kresson Street on April 23, 1997 for
$14,500.  Less than three weeks later, on or about May 9, 1997, he sold the property to
McFadden for $52,000.  When the property was sold to McFadden, it was in the same
condition as when Beeman bought it.  On June 5, Hoffman, knowing that Beeman had only
recently bought the property for $14,500, appraised the property for $52,000.8  There were
a number of deficiencies noted in that report.  A glaring, though relatively minor, one was
that Hoffman reported that the property was in a residential zone, when, in fact, it was in a
manufacturing zone.  The census track number was also incorrect.  The more significant
errors concerned the condition of the structure and the comparable sales that Hoffman used
to establish his estimate of value.
Hoffman noted that the property was in “poor condition” when purchased by Beeman
but was in “good” condition “now.”  That could not have been so, for, on an attached
Valuation Condition sheet, he listed 14 repairs that still needed to be made, from replacing
rotted wood on the porch floor and ceiling, to repairing chipped paint in various parts of the
house, to installing a downspout and gutter, to patching, pointing, and painting parts of the
house, to replacing windows.  He apparently assumed that all of them would be made.  On
July 2, Hoffman certified that those repairs had been completed, but there was evidence that
9 Hoffman claimed that his method of measurement was authorized by a HUD
handbook provision directing appraisers to “[e]nter proximity in straight line distance,
like ‘3 houses or one tenth of a mile W subject.’”  The problem is that he did not state the
distance to the comparables in parts of a mile but in terms of blocks.  Hoffman regarded
twelve blocks as equaling a mile, so if a property was a half mile away by direct
measurement “as the crow flies,” he would regard it as six blocks away even though it
might, in fact, be twenty blocks away.   In calculating distances in that manner, he made it
(continued...)
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some of them had not been done.  Apart from the listed items, Hoffman stated on his
Valuation Condition sheet that there was no evidence of roof leakage or damage.  McFadden,
when first inspecting the property with Beeman, noted that repairs needed to be made to the
roof.  Although someone – Wood thought it was probably Beeman – prepared and submitted
to Wood a document showing that extensive repairs had been made, including a “new 2-ply
roofing system on entire roof of property,” a month after moving into the house McFadden
said that the roof was leaking and that, when it rained, water poured into his laundry room.
The plaintiffs’ expert appraiser described the Kresson Street property as being part of
a residential “pocket” surrounded by industrial use properties and fronting on a “heavy truck
traffic” road.  The three properties used by Hoffman as comparable sales – 3500 Claremont
Avenue, 3613 East Fayette Street, and 3811 Gough Street – were all in residential areas quite
some distance away.  Indeed, the distances were misleadingly stated in the appraisal.
Hoffman reported the Claremont Avenue property as five blocks away when, in fact, it was
eleven blocks away; the East Fayette Street property was reported as being four blocks away
when, in fact, it was ten blocks away; he declared the Gough Street property to be four blocks
away when it was shown to be twelve blocks away.9  Evidence was presented that there were
9(...continued)
appear that the “comparable” properties were a lot closer than they actually were.  These
discrepancies appeared in most of Hoffman’s appraisals.
10 Most ground rents in Baltimore City are capitalized at six percent.  Thus, had the
property not been subject to the $90 ground rent, it would be worth $1,500 more.
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eight more comparable recent sales of properties in the neighborhood overlooked or ignored
by Hoffman, and that the predominant value in the area was between $35,000 and $45,000.
(b) Haley – 612 East 41st Street
Beeman purchased the 41st Street property for $20,000 and, on May 28, 1997, sold it
to Haley for $57,200.  It is not clear when Beeman bought the property; the exhibit noted
shows a date of June 25, but that is subject to question, for it would indicate that Beeman
sold the property before he owned it.  Hoffman appraised the property on July 17, 1997 at
$57,500, subject to a $90 ground rent.10  He reported that the property had been purchased
a month earlier for “$25,000±” claiming to be unaware that the price paid was only $20,000.
He stated that the house had been “recently re-habbed” and characterized its condition as
“good.”  When Haley took possession in August, he found that the sump pump was broken
and the basement had flooded, the kitchen windows and the kitchen and bedroom ceilings
leaked when it rained, the floorboards under the living room carpet were rotting, the walls
behind the paneling were crumbling, and the front porch had extensive dry rot.  Hoffman
based the inflation in price on his having seen workmen, sheetrock, carpeting, paint, and
windows in the house when he inspected it.  He did not ask for documentation, with respect
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to this appraisal or any other, that the work had been done.  Instead, he made a cursory walk-
around, often of just the exterior of the house, prior to closing.
Hoffman identified the sales of three properties as comparable, two of which he
emphasized because the properties were only two blocks away.  One, the evidence showed,
was larger than he reported – 1,830 sf. rather than 1,600 sf.  It also had a fireplace and a
modern kitchen, which the subject property did not have.  Evidence showed that the second
comparable was “in far superior condition than the subject property.”  Three other lower-
price sales in the area were ignored.
(c) Green – 610 North Belnord Avenue
Beeman purchased the Belnord Avenue property on June 18, 1997 for $12,500 and
sold it to Green for $44,000 on July 30, 1997.  On August 13, 1997, Hoffman appraised the
property for $44,000, subject to a $180 ground rent ($3,000).  For purposes of selecting
comparable sales, he defined the “neighborhood” as “East Baltimore” with “no precise
boundaries.”  The first comparable sale he chose was of 3501 East Baltimore Street, which,
using his “as the crow flies” approach, he claimed was seven blocks away when in fact, it
was sixteen blocks away.  Another comparable sale was of 3613 East Fayette Street, which
Hoffman said was five blocks away when, in fact, it was seventeen blocks away.  Evidence
showed that Beeman was also the person who sold that property, a fact that should have
been, but was not, disclosed on the appraisal report.  Evidence also showed that there were
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seven closer sales, at much lower prices, that were ignored by Hoffman.
(d) Brower/Spencer – 5601 Force Road
Beeman sold the property at 5601 Force Road to Brower and Spencer on July 21,
1997, for $65,900.  He purchased the property for $24,000, but, as with some of the other
properties, it is not clear when he actually bought it.  The record shows that he purchased it
on August 7, 1997, but that is questionable.  On August 26, 1997, Hoffman appraised the
property for $65,900 subject to a $96 ground rent ($1,600). Unlike some of his other
appraisals, Hoffman did not note that the property had been recently purchased by Beeman,
although he did state that it was “recently renovated.”  
Hoffman selected three comparable sales, stressing the second one, 5531 Force Road,
because it was on the same street.  That house had sold very recently – settlement was in
August, 1997 – for $75,000.  In deposition testimony that he sought to disavow at trial,
Hoffman conceded that, without that sale as a comparable, he could not have justified a
$65,900 appraisal of the subject property.  What he did not disclose, although he knew, was
that the allegedly comparable property had been sold by Beeman.  The plaintiffs’ expert
noted that Beeman had purchased that property in August, 1997 for $27,000.  He opined that
the 5531 Force Road sale was “out of line” and that Beeman’s role as seller should have been
noted.  The expert also identified six comparable sales, all within three blocks of the subject
property, ignored by Hoffman – houses that sold for $36,500, $50,000, $44,500, $55,000,
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$55,000, and $45,000.
(e) Henderson – 406 Oldham Street
Beeman purchased 406 Oldham Street for $17,550.  The record indicates that he
purchased the property on March 27, 1997, but that is questionable, for, on February 17,
1997, he entered into a contract to sell it to Henderson for $58,000 and was given a $500
deposit at that time.  Nothing more transpired for several months.   Beeman was supposed
to be making repairs.  In August, 1997, Henderson took possession under a lease calling for
$500/month rent. No application for financing was made until September 9, 1997, when
Beeman and Henderson met with Wood.  At that meeting, the price was increased to
$65,000, and a new contract at that price was signed.  On September 26, 1997, Hoffman
appraised the property for $65,500 subject to a $90 ground rent ($1,500).  
Plaintiffs’ expert stated that the three comparables used by Hoffman were, for a
variety of reasons, inappropriate.  The subject property was surrounded by industrial uses and
was near heavy truck and rail traffic.  The comparables were in residential areas and one was
only half the age of the subject property.  The expert noted a number of closer properties in
the area that had sold for much lower prices.
(f) Elder – 3132 Piedmont Avenue
Beeman purchased 3132 Piedmont Avenue for $29,551 and, on August 12, 1997, sold
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it to Elder for $51,000.  It is not clear when Beeman bought the property; the record indicates
that he bought it on September 5, 1997.  On October 7, 1997, aware that Beeman had
purchased the property only a month earlier for about $29,000, Hoffman appraised the
property for $53,000, subject to a $180 ground rent ($3,000).  He noted that the property had
a “modern kitchen,” although an inspection by the plaintiffs’ expert revealed that not to be
the case.
One of the comparables used by Hoffman – 3033 Mondawmin Avenue – he reported
as a center row house when in fact it was an end of group, which made it more valuable.  It
also had a new kitchen, for which no adjustment was noted.  A second comparable he
reported as having only 1,200 sf. when, in fact, it had 1,584 sf.; Hoffman also erred in stating
the ground rent on that property, thereby overvaluing it by $1,400.  He miscalculated the
square footage of the third comparable as well, showing it as 1,100 sf. when, in fact, it was
1,292 sf.  As in the other cases, plaintiffs’ expert identified other comparables that Hoffman
ignored.
(g) Stamper – 6521 Lenhert Street
Beeman purchased 6521 Lenhert Street for $41,790 and, on August 14, 1997, sold it
to Stamper for $86,250.  It is not clear when Beeman purchased the property; in his appraisal,
Hoffman notes that it was bought in September, 1997 – before it was sold to Stamper.
Wood’s initial “good faith estimate” showed Stamper’s share of closing costs to be $4,149.
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At some point, Wood discovered that the taxes on the property were higher than she first
thought, which would increase Stamper’s monthly payment.  She suggested to Beeman that,
if she added an up-front fee of one point, she could reduce the interest rate enough to keep
the monthly payment the same.  Beeman agreed, so a new “good faith estimate” of $87,250
was prepared showing the closing costs to be $4,519. On November 14, 1997, Hoffman
appraised the property for $87,500, subject to a $180 ground rent ($3,000).
Hoffman reported that the house sat on a slab and had no crawl space, which the
evidence showed was not the case.  The existence of a crawl space would have been apparent
from just walking around the house.  Hoffman said that he did walk around the house but
that, because it was raining that day, he walked fast.  Hoffman also incorrectly reported that
the house had 1,804 sf., when, in fact, it had only 1,505 sf.  Two experts regarded that
discrepancy, of nearly 20%, as significant; one noted that an appraiser could be suspended
by FHA for a discrepancy over 10%.
(h) Coward – 1127 Carroll Street
Beeman purchased 1127 Carroll Street for $7,550 in September, 1997, and, on
December 19, 1997, sold it to Coward for $58,000.  On January 26, 1998, Hoffman appraised
the property for $58,000, subject to a $180 ground rent ($3,000).  Hoffman knew that
Beeman owned the property and that he was required to report whether it had sold within the
past year.  Although, had he consulted the land records, he would have learned that Beeman
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bought the property a few months earlier, he reported “last sale unknown.”  When Hoffman
initially could not locate any sales that he regarded as comparable, he called Beeman, who
supplied him with sales of his own properties, somewhat distant from the subject property.
Hoffman used those high-price sales as comparables, without disclosing that Beeman was
the seller or that he had purchased those properties a short time before at far lower prices.
The plaintiffs’ expert opined that, when relying on three comparables all controlled by the
same seller, that fact should be disclosed.
The first comparable used by Hoffman, 1207 West Cross Street, he reported sold in
December, 1997, for $73,900.  He did not report that Beeman had purchased the property in
October, 1997, for $27,000 but instead reported that there was no other sale within the year.
The second comparable, 1202 Carroll Street, he reported as sold in September, 1997, for
$54,900 without disclosing that Beeman had purchased it in August, 1997, for $24,000.
Instead, he stated that there was no other sale of that property within the year.  Similarly, with
the third comparable, 1119 Ward Street, Hoffman reported as sold for $64,000 a month
earlier, without disclosing that Beeman had purchased that property for $12,700 in
November, 1997.  There, too, he stated that there was no other sale of the property within the
year.  In place of these suspect sales, the plaintiffs’ expert found ten lower price comparable
sales within the year prior to Hoffman’s appraisal.  The range of values estimated by that
expert was between $25,000 and $45,000.
Hoffman views this evidence as establishing, at worst, nothing more than simple
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negligence, not a conspiratorial agreement to commit fraud, or fraud itself, or a violation of
the CPA.  Inaccuracies in his appraisals, he says, do not suffice to show a conspiratorial
agreement between him and Beeman; nor, in the absence of any evidence that any of the
plaintiffs ever saw or relied upon his appraisals, did they establish actual fraud.  Finally,
Hoffman argues, given the absence of any evidence that he dealt directly with any of the
plaintiffs, the CPA simply does not apply.  
(3) Conspiracy
We have defined a  civil conspiracy as “a combination of two or more persons by an
agreement or understanding to accomplish an unlawful act or to use unlawful means to
accomplish an act not in itself illegal, with the further requirement that the act or the means
employed must result in damages to the plaintiff.”  Green v. Wash. Sub. San. Comm’n, 259
Md. 206, 221, 269 A.2d 815, 824 (1970).  Although the notion of a tortious conspiracy was
derived from the common law criminal conspiracy and each requires proof of an agreement,
the tort plaintiff must show more than just an unlawful agreement.  The plaintiff must also
prove the commission of an overt act, in furtherance of the agreement, that caused the
plaintiff to suffer actual injury.  See Alleco v. Weinberg Foundation, 340 Md. 176, 189-91,
665 A.2d 1038, 1044-45 (1995) and cases cited there.  The tort actually lies in the act causing
the harm; the agreement to commit that act is not actionable on its own but rather is in the
nature of an aggravating factor.  That is why this Court, in Alleco, held that civil conspiracy
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“‘is not a separate tort capable of independently sustaining an award of damages in the
absence of other tortious injury to the plaintiff.’”  Alleco, supra, 340 Md. at 189, 665 A.2d
at 1044-45 (quoting Alexander v. Evander, 336 Md. 635, 645 n.8, 650 A.2d 260, 265 n.8
(1994)).
There is little doubt here that Beeman, with the assistance of Wood, committed overt
acts that were intended to defraud, and did defraud, the nine plaintiffs and that the plaintiffs
suffered actual harm from that conduct.  That is not really contested by Hoffman.  The only
question, as to Hoffman, is whether the evidence sufficed to establish that he joined and
helped to implement an agreement to achieve that result.  In that regard, we pointed out in
Western Md. Dairy v. Chenowith, 180 Md. 236, 243, 23 A.2d 660, 664 (1942) that a
conspiracy may be proved by circumstantial evidence, “for in most cases it would be
practically impossible to prove a conspiracy by means of direct evidence alone.”  We
explained:
“Conspirators do not voluntarily proclaim their purposes; their
methods are clandestine.  It is sufficient if the proven facts and
circumstances, pieced together and considered as a whole,
convince the court that the parties were acting together
understandingly in order to accomplish the fraudulent scheme.
Thus a conspiracy may be established by inference from the
nature of the acts complained of, the individual and collective
interest of the alleged conspirators, the situation and relation of
the parties at the time of the commission of the acts, the motives
which produced them, and all the surrounding circumstances
preceding and attending the culmination of the common design.”
Id. at 243-44, 23 A.2d at 664.  See also Daugherty, supra, 264 Md. at  292, 286 A.2d at 101.
11 Hoffman stated that “sometimes” he would go back and verify whether required
repairs had been made, but sometimes he did not do so, believing it to be the
underwriter’s problem.  The problem with that is that, in each case here, he knew that his
appraisal was far in excess of what Beeman had paid for the property only a few months
earlier and he justified his appraisal on the premise that the property had been “rehabbed”
– that substantial improvements and repairs had been made to it in the meanwhile.  He
thus knew that if those repairs and improvements were not made, the appraisal would be
(continued...)
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Viewing the evidence in that context and in a light most favorable to the plaintiffs,
who prevailed at trial on this issue, we are convinced that it sufficed, under even a clear and
convincing evidence standard, to permit the jury reasonably to have concluded that Hoffman
acted together with Beeman and Wood to accomplish the fraudulent scheme.  We are not
dealing here with just with some isolated inaccuracies in individual appraisals or with honest
differences of opinion between Hoffman and the plaintiffs’ expert over some fine points of
appraisal practice.  The evidence – clear and convincing – showed a pattern in all of the
appraisals of:
(1) actual knowledge by Hoffman in some cases and the ability to know in others, that
Beeman had purchased the properties only months earlier for a fraction of what Hoffman
appraised them for;
(2) an attempt by Hoffman to justify the huge inflation, at least in part, by assuming
that major improvements would be made to the properties when, in fact, many of those
improvements were not made and, had Hoffman made a reasonable effort to investigate that
critical assumption, he would have known, or had reasonable grounds to suspect, that they
were not made;11 and
11(...continued)
grossly inaccurate.  This was not a case of checking to see if a dishwasher was working or
a closet had been painted.  There was substantial evidence that the very repairs and
improvements needed to justify the grossly inflated appraisal were not made and that, had
Hoffman made a reasonable investigation, he would have known that they were not made.
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(3) a further attempt by Hoffman to justify the actual appraisal by positing as
comparable the sale of distant properties that were not at all comparable, in part by including
material misstatements as to both the physical characteristics of some of those properties and
their actual proximity to the subject properties, and by ignoring recent sales at much lower
prices of properties more like and in greater proximity to the subject properties. 
The end result of this consistent pattern, documented in one form or another in each
of the appraisals, was a seemingly automatic appraisal, in each case, at or just in excess of
whatever the contract price happened to be.  Overarching all of this were the facts that
Hoffman derived 99% of his income from appraisals done for Irwin, that he knew if the
appraisal did not match the contract price, the deal would fall through, thereby depriving
Wood of her commission and Beeman of his profit, that in at least two cases, he actually
consulted Beeman with respect to which comparables to use and used the high-price sales
recommended by Beeman even though they were not truly comparable, and that, in direct
violation of HUD and ethical requirements applicable to appraisers, he deliberately destroyed
all of his notes once Beeman’s activities came to public attention.  From that spoliation alone
the jury was entitled to infer that those notes would have been detrimental to Hoffman’s
defense, that they would not have supported what he said from the witness stand.  
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Some of these departures, viewed in isolation, might be regarded as simple
negligence, as Hoffman argues, but “pieced together and considered as a whole,” they suffice
to show that Hoffman was aware of what Beeman was doing, that he understood that
Beeman’s scheme could not work unless he produced appraisals at or above the inflated
contract price, and that he knowingly participated in that scheme by providing those
appraisals.  He was dependent on Wood for his livelihood, Wood was dependent on people
like Beeman for her livelihood, and Hoffman made it all work.
Hoffman argues that this case is similar to Electronics Store v. Cellco, 127 Md. App.
385, 732 A.2d 980 (1999), cert. denied, 356 Md. 495, 740 A.2d 613 (1999), and Cavalier
Mob. Homes v. Liberty Homes, 53 Md. App. 379, 454 A. 2d 367 (1983), cert. denied, 295
Md. 736 (1983), in which the Court of Special Appeals held that there was insufficient
evidence to support a finding of conspiracy under Maryland antitrust law.  The quantum and
quality of evidence in this case is much greater than that presented in those cases, however,
and they are therefore distinguishable.
(4) Fraud
To prove an action for civil fraud based on affirmative misrepresentation, the plaintiff
must show that (1) the defendant made a false representation to the plaintiff, (2) the falsity
of the representation was either known to the defendant or the representation was made with
reckless indifference to its truth, (3) the misrepresentation was made for the purpose of
12 It has long been clear that “[f]raud may consist in a suppression of the truth as
well as in the assertion of a falsehood.”  Schnader v. Brooks, 150 Md. 52, 57, 132 A. 381,
383 (1926).  We described the elements of an action based on fraudulent concealment of
material facts in Green v. H & R Block, 355 Md. 488, 525, 735 A.2d 1039, 1059 (1999):
“(1) the defendant owed a duty to the plaintiff to disclose a material fact; (2) the
defendant failed to disclose that fact; (3) the defendant intended to defraud or deceive the
plaintiff; (4) the plaintiff took action in justifiable reliance on the concealment; and (5)
the plaintiff suffered damages as a result of the defendant’s concealment.”  See also Levin
v. Singer, 227 Md. 47, 64, 175 A.2d 423, 432 (1961)
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defrauding the plaintiff, (4) the plaintiff relied on the misrepresentation and had the right to
rely on it, and (5) the plaintiff suffered compensable injury as a result of the
misrepresentation.  See Nails v. S & R, 334 Md. 398, 415, 639 A.2d 660, 668 (1994); VF
Corp., supra, 350 Md. at 703, 715 A.2d at 193 (1998); Environmental Trust v. Gaynor, 370
Md. 89, 97, 803 A.2d 512, 516 (2002).12
Hoffman contends that there was no evidence that any of the plaintiffs actually relied
on his appraisals and that, in any event, because of an FHA warning that the purpose of the
appraisal was to determine the value of the property for mortgage insurance purposes and
that the buyer should independently evaluate the reasonableness of the purchase price, they
had no right to rely on his appraisal.  The Court of Special Appeals rejected both of those
arguments on the premise of indirect reliance – that the plaintiffs were aware that if the
appraisal was less than the contract price, they would have the right to cancel the contract and
that, when that option was not afforded them because of the inflated appraisal, they relied
and had a right to rely on the fact that the property was worth what they were paying for it.
That kind of indirect reliance, Hoffman argues, does not suffice.
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Hoffman is correct with respect to two of the factual underpinnings of his argument.
There is no evidence that any of the plaintiffs actually read Hoffman’s appraisal.  It is also
clear that each of them entered into the contract of sale with Beeman prior to Hoffman even
being employed to make the appraisal, so the appraisal could not have affected their decision
to enter into the purchase contract.  There are several other important facts to be considered,
however.  As the Court of Special Appeals noted, the plaintiffs were aware of the HUD
requirement that, if an appraisal showed the value of the property to be less than the contract
price, they had an absolute right to cancel the contract, and Hoffman also knew that to be the
case, although he said he was unaware that such an option was provided for in the contract
itself.  Wood testified that, if the appraisal did not support the contract price, she would have
notified the plaintiffs of that fact, and the plaintiffs each testified that, had they been advised
of the true value of the property and the reasons why it was less than the contract price, they
would, in fact, have cancelled the contracts.  
In each contract of sale was an “FHA Amendatory Clause” that provided, in relevant
part:
“It is expressly agreed that . . . Buyer shall not be obligated to
complete the purchase of the Property described herein or incur
any penalty by forfeiture of monies on deposit or otherwise,
unless the Buyer has been given, in accordance with HUD/FHA
or VA requirements, a written statement issued by the . . . Direct
Endorsement Lender setting forth the appraised value of the
Property of not less than the purchase price.  Buyer shall have
the privilege and option of proceeding with consummation of
the Contract without regard to the amount of the appraised
valuation.  The appraised valuation is arrived at to determine the
13 Irwin was a direct endorsement lender.
14 The record indicates that Beeman took out 100% commercial mortgages to
finance his purchase of the properties, that the mortgages carried 14% interest, were due
in two years, and were personally guaranteed by Beeman and his wife.  He had a clear
financial interest in not holding the properties too long.
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maximum mortgage [HUD] will insure.  HUD does not warrant
the value nor the condition of the Property.  Buyer should satisfy
himself/herself that the price and the condition of the Property
are acceptable.”13
Although that clause makes clear that the buyer may not rely on the appraisal as a
warranty either against defects in the property or that the value of the property is precisely
as stated in the appraisal, it does permit the buyer to rely on the fact that, unless stated
otherwise, the value is at least equal to the contract price.  It could have no other effect.  The
buyer may not cancel the contract if the property is appraised at or above the contract price,
but only if informed that the appraised value is less than the contract price.  Significantly, if
in that event if the buyer elects to cancel, his/her deposit or down payment is not forfeited,
but must be returned.  The cancellation, in other words, is without cost to the buyer.  Also
implicit in that clause is the ability of the buyer, if the appraisal is less than the contract price,
to attempt to renegotiate the price, so that it can be brought in line with the appraisal.  Indeed,
with the appraisal effectively fixing the maximum contract price in an FHA transaction, even
Beeman, who had a fairly substantial investment in the properties, would have had some
incentive to renegotiate the matter.14  
The phony appraisals prepared for Wood by Hoffman, as part of the fraudulent
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scheme, precluded the plaintiffs from exercising those options.  In proceeding with
settlement, they each necessarily, even if implicitly, relied on the fact that Hoffman had
correctly valued the property as at least equal to the contract price.  
(5) Consumer Protection Act
Maryland Code, § 13-303 of the Commercial Law Article, which is part of the State
CPA, prohibits a person from engaging in an unfair or deceptive trade practice in the sale of
consumer realty.  An “unfair or deceptive trade practice” includes any false or misleading
statement or representation which has the capacity, tendency, or effect of deceiving or
misleading consumers and encompasses a representation that consumer realty has a
characteristic that it does not have or is of a particular standard or quality that is not the case.
Commercial Law Art. § 13-301.  Section 13-408 of that article provides for a private cause
of action to recover for loss or injury sustained as the result of a practice forbidden by the
CPA.
Citing Morris v. Osmose Wood Preserving, 340 Md. 519, 541, 667 A.2d 624, 635
(1995), Hoffman points out that, for the CPA to apply, the deceptive practice “must occur
in the sale or offer for sale to consumers.”  His contention is that he did not sell any
consumer realty or offer any consumer services to any of the plaintiffs, but merely provided
appraisals to Irwin, for Irwin’s benefit.  
Morris involved an action by homeowners, in part under the CPA, against the
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manufacturer of plywood that the builder used in constructing the roofs of their homes and
that subsequently deteriorated.  We affirmed the dismissal of the CPA claim on the ground
that any misrepresentations made by the manufacturer regarding the plywood were made to
the builder, not the plaintiff-buyers of the homes, and that there was “no allegation that the
defendants were in any way involved in selling, offering, or advertising the townhouses that
the plaintiffs bought.”  Morris, supra, 340 Md. at 542, 667 A.2d at 636.
In holding that the deceptive practice must occur in the sale to consumers, we were
careful to point out that we did not mean “that the only entity that can engage in a deceptive
practice is one who directly sells or offers to sell to consumers” and that “[i]t is quite possible
that a deceptive trade practice committed by someone who is not the seller would so infect
the sale or offer for sale to a consumer that the law would deem the practice to have been
committed ‘in’ the sale or offer for sale.”  Id. at 541, 667 A.2d at 635.  For the reasons noted
above, the evidence more than sufficed to show that Hoffman’s erroneous and misleading
appraisals directly “infected” the sales at issue here. They would not have proceeded to
closing absent those appraisals.  He was an integral part of the entire scheme of deceptive
trade practices committed in the sale of consumer realty.
B. Non-Economic Damages – Physical Injury Rule in Fraud Cases
Hoffman, Wood, and Irwin complain about the award of $145,000 in non-economic
damages to each of the plaintiffs in the absence of any evidence that any of the plaintiffs
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suffered any physical injury from the alleged fraud or deception.  They aver that this Court
has traditionally precluded the recovery of emotional damages in the absence of some
evidence of an accompanying or consequential physical injury and that the lower courts erred
in relaxing that rule in this case.  The plaintiffs counter that the physical injury requirement
applies only in negligence cases and not to intentional torts such as fraud.
To set the stage, although all of the plaintiffs testified that the problems they
encountered with their homes caused them emotional distress – sadness, anger, humiliation,
embarrassment, stress – only one of them, Haley, testified as to any physical manifestation
of those emotions.  Haley, who died prior to trial, stated in deposition testimony that,
whenever he began thinking about his problems, he would get headaches and would vomit.
Haley also admitted that he was a diabetic and was required to have kidney dialysis three
times a week, and that those conditions were not caused by the stress emerging from the
problems with his house.
At the end of the case, Hoffman, Irwin, and Wood moved for judgment on non-
economic damages, arguing that there was no corroborating evidence of emotional injury.
Those motions were denied.  In its written instructions on the fraud count, the court told the
jury that, in addition to any economic injury suffered by the plaintiffs, it could consider any
non-economic injury that it found to be “proximately and directly caused” and that, in
determining non-economic damages, the jury could consider “any mental pain, anguish,
humiliation, nervousness, stress and insult to which the Plaintiff [was] subjected and which
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was a direct result of the conduct of one or more Defendants.”  The award, the court added,
must not be based on guesswork but must fairly and adequately compensate the Plaintiff for
the injury sustained.  Hoffman, Irwin, and Wood excepted to those instructions on the ground
that they did not go far enough – that “the jury should have been instructed that any claimed
injury in the nature of non-economic damages must be capable of objective determination”
and that “the evidence must be detailed enough to give you a basis upon which to quantify
the injury.”  The court disagreed and gave no further instruction.  
We recounted the history and rationale of the physical injury requirement in Vance v.
Vance, 286 Md. 490, 408 A.2d 728 (1979).  We observed that, in earlier times, courts did not
recognize a specific duty to refrain from the negligent infliction of emotional distress and
that, as a result, recovery of damages solely for mental distress was not permitted.  Instead,
we said, “damages for mental distress had a parasitic status; recovery was dependent upon
an immediate physical injury accompanying an independently actionable tort.”  Id. at 496,
408 A.2d at 731.  Over time, we added, courts generally and this Court in particular began
to modify that “accompanying physical impact” rule, because it led to arbitrary results, and
to create in its place what we termed the “modern rule,” which permitted recovery for
negligent infliction of mental distress if a physical injury resulted from the commission of
the tort, regardless of impact.   See Green v. Shoemaker, 111 Md. 69, 73 A. 688 (1909);
Bowman v. Williams, 164 Md. 397, 165 A. 182 (1933); Mahnke v. Moore, 197 Md. 61, 77
A.2d 923 (1951).
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Although courts were not averse to eliminating the requirement of an accompanying
physical impact, they were reluctant to eliminate entirely the requirement of some
consequential physical injury as a condition to the award of damages for emotional or mental
distress.  There still remained concern that mental distress may be too easily simulated and
that there was no practical standard for measuring such distress; thus, recovery for emotional
injury would not be allowed based on the plaintiff simply saying, “This made me feel bad;
this upset me.”  The “modern rule,” allowing recovery of damages for emotional distress if
there was at least a “consequential” physical injury, we regarded as a proper balance – a
“sufficient guarantee of genuineness that would otherwise be absent in a claim for mental
distress alone.”  Vance, supra, 286 Md. at 498, 408 A.2d at 732.  It simply applied the same
rule to this kind of injury that applied to other kinds as well – recovery could be had if the
injury was objectively ascertainable and was shown to be a provable consequence of the
wrongful conduct.
That rule itself underwent a significant expansion when we gave an elastic definition
to the word “physical.”  In Vance, we noted that, for purposes of applying the “modern rule,”
the term “physical” was not used in its ordinary dictionary sense, but instead “is used to
represent that the injury for which recovery is sought is capable of objective determination.”
Id. at 500, 408 A.2d at 733-34.  In that regard, we observed that it had been held to include
such things as depression, inability to work or perform routine household chores, loss of
appetite, insomnia, nightmares, loss of weight, extreme nervousness and irritability,
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withdrawal from socialization, fainting, chest pains, headaches, and upset stomachs.  Id. at
501, 408 A.2d at 734, and cases there.  Examined analytically, that had more to do with
proving, rather than defining, this kind of injury.  See also Belcher v. T. Rowe Price, 329 Md.
709, 621 A.2d 872 (1993); Faya v. Almaraz, 329 Md. 435, 620 A.2d 327 (1993); Smith v.
Borello, 370 Md. 227, 804 A.2d 1151 (2002).
Relying on an earlier decision, Laubach v. Franklin Square Hosp., 79 Md. App. 203,
556 A.2d 682 (1989), aff’d on other grounds, 318 Md. 615, 569 A.2d 693 (1990), the Court
of Special Appeals concluded that the physical injury rule, even as so modified, does not
apply in a tort case based on intentional conduct, as “proof that the defendant committed the
wrong alleged is sufficient reassurance that the plaintiff’s claimed emotional distress is not
feigned, because the wrongful conduct ordinarily would cause emotional distress in the
victim.”  Hoffman, supra, 155 Md. App. at 321, 843 A.2d at 197.  The court thus held that
there was “no need for the plaintiff to support his claim of emotional distress with objective
evidence of a physical injury.”  Id. 
Although it is true that most of the cases in which the physical injury rule has been
discussed or applied have been cases founded on negligence and the Court has therefore
often expressed the rule as applicable in negligent tort cases, this Court has never clearly
limited the rule to negligence actions or carved out an exception to it for torts based on fraud.
The cases from this Court relied on by the intermediate appellate court in Laubach –  H &
R Block, Inc. v. Testerman, 275 Md. 36, 338 A.2d 48 (1975), abrogated on other grounds by
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Owens-Illinois v. Zenobia, 325 Md. 420, 601 A.2d 633 (1992), and Zeigler v. F Street Corp.,
248 Md. 223, 235 A.2d 703 (1967) – do not support its contrary conclusion. 
For one thing, both Testerman and Zeigler were negligence cases, not intentional tort
cases, so there was no occasion to determine whether the physical injury requirement applied
in intentional tort cases.  In both cases, the Court merely held, in this regard, that physical
impact was not a prerequisite to mental anguish damages, which, under the “modern rule”
adopted much earlier in Green, supra, 111 Md. 69, 73 A. 688, and Bowman, supra, 164 Md.
397, 165 A. 182, is true.  The Court expressly confirmed in Testerman, however, that there
still must be “clearly apparent and substantial physical injury,” and that, in consequence of
that requirement, “Maryland decisions have generally denied compensation for mental
anguish resulting from damage to property.”  Testerman, supra, 275 Md. at 48-49, 338 A.2d
at 55.  The Testerman court cited Zeigler in support of that proposition.  Zeigler, indeed,
made the same point, that “ordinarily, there can be no recovery for mental suffering, resulting
from damage done to property,” with the caveat that “[where] the act occasioning the injury
to the property is inspired by fraud, malice, or like motives, mental suffering is a proper
element of damage.”  Zeigler, supra, 248 Md. at 226, 235 A.2d at 705.
The passage relied on from Zeigler, which was basically a trespass case with an added
negligence count, was intended as an exception to the general rule that emotional damages
were not recoverable at all where the tortious injury is only to property.  We indicated that,
where the injury to the property was motivated by fraud or malice, emotional damages could
15 See Moore v. Slonim, 426 F. Supp. 524, 527 (D. Conn. 1977), aff’d by oral op.,
562 F.2d 38 (2 nd Cir. 1977); Cornell v. Wunschel, 408 N.W.2d 369, 382 (Iowa 1987);
Jourdain v. Dineen, 527 A.2d 1304, 1307 (Me. 1987); Walsh v. Ingersoll-Rand Co., 656
(continued...)
-39-
be recovered, even in the absence of a physical impact.  We did not say, or imply, that they
could be recovered in the absence of some consequential physical injury of the extended
variety noted in Vance.  Indeed, the evidence in Zeigler was that the plaintiff, whose home
was inundated by dirt and debris due to the conduct of his neighbor, actually died from the
stress caused by what was happening to his home.
This Court has never addressed whether, or under what conditions, emotional damages
may be recovered in an action for fraud.  Courts around the country seem to be split on the
issue.  See Steven J. Gaynor, Fraud Actions: Right to Recover for Mental or Emotional
Distress, 11  A.L.R. 5th 88 (1993).  Most courts view fraud as an economic tort in the nature
of a breach of contract and thus generally apply the measure of compensatory damages
applicable to a breach of contract – pecuniary loss.  See Webster v. Woolford, 81 Md. 329,
330-31, 32 A. 319, 319 (1895) (“The action, it is true, is in the nature of an action for tort,
but it is a tort founded on a breach of contract, and there being no question as to exemplary
damages, the rule as to the measure of damages is the same as in cases for breach of contract
in regard to the sale of property”); see also RESTATEMENT (SECOND) OF TORTS, § 549
(Measure of Damages for Fraudulent Misrepresentation) (1977 & Supp. 1998).
In close conformance with that view, some courts have held that emotional damages
are not recoverable at all in an action for fraud.15   Other courts have allowed such damages
15(...continued)
F.2d 367, 370-71 (8th Cir. 1981) (applying Missouri law); Stich v. Oakdale Dental Center,
P.C., 501 N.Y.S.2d 529, 531 (N.Y. App. Div. 1986); Citicorp Intern. Trading v. Western
Oil & Refining, 790 F. Supp. 428, 436 (S.D.N.Y. 1992) (applying New York law);
Sparrow v. Toyota of Florence, Inc., 396 S.E.2d 645, 648 (S.C. Ct. App. 1990).
16 See Holcombe v. Whitaker, 318 So.2d 289, 292-93 (Ala. 1975); McNeill v. Allen,
534 P.2d 813, 819 (Colo. Ct. App. 1975).
17 See Ellis v. Crockett, 451 P.2d 814, 820 (Haw. 1969); Food Fair, Inc. v.
Anderson, 382 So.2d 150, 154-55 (Fla. Dist. App. 1980); S.H. Inv. & Development Corp.
v. Kincaid, 495 So.2d 768, 770 (Fla. Dist. App. 1986); Umphrey v. Sprinkel, 682 P.2d
1247, 1258 (Idaho 1983); Crowley v. Global Realty, Inc., 474 A.2d 1056, 1058 (N.H.
1984); Emmons v. Merrill Lynch, Pierce, Fenner & Smith, 532 F. Supp. 480, 485 (S.D.
Ohio 1982); McRae v. Bolstad, 646 P.2d 771, 775 (Wash. Ct. App. 1982), aff’d,
remanded on other grounds, 676 P.2d 496 (Wash. 1984).
18 See Kilduff v. Adams, Inc., 593 A.2d 478, 484-85 (Conn. 1991).
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on the premise that the defendant should be liable for the ordinary and proximate
consequences of his/her/its actions.16  Some courts have allowed emotional damages only
when the defendant’s conduct is wanton, outrageous, shows malice, or when there is
accompanying physical injury.17  Others have allowed such damages where emotional injury
was foreseeable, where the defendant should have been aware that its fraudulent conduct
would cause that kind of distress.18  There clearly is no universal view.
We see no reason to create an exception for fraud cases to the carefully crafted rule
enunciated in Vance and the subsequent cases.  It is consistent with the more liberal approach
adopted by other courts; it remains a fair balance that permits recovery of damages for
emotional injury which, by reason of either an accompanying or consequential “physical”
19 Hoffman also complains about the inclusion of injury to credit as part of non-
economic damages.  As we are striking the non-economic damages for other reasons, that
complaint is moot and need not be addressed.
-41-
injury, is objectively ascertainable; and it avoids the dilemma of requiring some physical
manifestation where the misrepresentation is negligent but not where it is deliberate, even
though the consequences to the plaintiff may be precisely the same.  The Court of Special
Appeals erred in excusing the plaintiffs from having to show some physical manifestation
as a condition to recovery of damages for purely emotional injury.  
Because eight of the plaintiffs offered no evidence of any physical manifestation of
their claimed emotional stress, the defense motions on that issue should have been granted.
The uniform $145,000 awards to them must be stricken.  As Haley did present sufficient
evidence of some physical manifestation, an award of non-economic damages to him would
be possible under a correct jury instruction.  We cannot affirm the award to him because the
instruction, to which a proper objection was made, was wrong.  As we have indicated, Haley
died prior to trial.  Whether his estate still can or might desire to pursue a retrial on that issue
we cannot determine, but we shall not foreclose it.19
C. Evidentiary Standard for Proof of Fraud Damages
The trial court gave both written and oral instructions to the jury.  In ¶ 4 of its written
general instructions, the court told the jury that the plaintiffs were required to prove fraud and
conspiracy to commit fraud by clear and convincing evidence, that that burden applied to “the
-42-
elements of the claim,” but that “[i]ndividual items of damage attributable to these claims
must only be provided by a preponderance of the evidence.”  Later, in its written instructions
regarding Question 6 on the verdict sheet, which dealt with damages upon a finding of fraud
or conspiracy to commit fraud, the court iterated that the plaintiffs had the burden “to prove
by a preponderance of the evidence each item of injury or loss claimed to be sustained and
that such injury was sustained as a proximate result of the Defendant or Defendants’
conduct.”  That instruction was also given orally to the jury.
At the conclusion of the oral instructions, Irwin and Wood, but not Hoffman, lodged
the following objection:
“Instruction No. 4 indicates that Plaintiffs only need to satisfy
the jury by a preponderance of the evidence on the damages for
the conspiracy and fraud claims.  We take exception to that.  The
clear and convincing test applies to all elements of the claims
and so on that basis we believe that the clear and convincing
standard should be assigned to damages as well.”
The trial judge did not agree and responded that “I’m going to ride with what I’ve got
as far as that goes.”
Irwin and Wood raised this issue on appeal, but the Court of Special Appeals, relying
on Casey v. Roman Catholic Arch., 217 Md. 595, 143 A.2d 627 (1958) and Sydnor v. State,
365 Md. 205, 776 A.2d 669 (2001), cert. denied, 534 U.S. 1090, 122 S. Ct. 834, 151 L. Ed.
2d 714 (2002), held that it was waived because, although an objection was properly made to
general instruction No. 4, no objection was made to Question 6 or the oral restatement of it.
Hoffman, supra, 155 Md. App. at 326-28, 843 A.2d at 200-01.  Those cases are not in point,
-43-
and we think that the intermediate appellate court erred in its finding of waiver.
Maryland Rule 2-520(e) requires, as a condition to seeking appellate review of a jury
instruction, that the party object promptly after the instruction is given and “stat[e] distinctly
the matter to which the party objects and the grounds of the objection.”  The purpose of the
rule, as we have made patently clear on a number of occasions, is “to enable the trial court
to correct any inadvertent error or omission in the oral [or written] charge, as well as to limit
the review on appeal to those errors which are brought to the trial court’s attention.”  Fisher
v. Balto. Transit Co., 184 Md. 399, 402, 41 A.2d 297, 298 (1945).  In that manner, “the trial
judge is afforded ‘an opportunity to amend or supplement his charge if he deems an
amendment necessary.’”  Sergeant Co. v. Pickett, 283 Md. 284, 288, 388 A.2d 543, 546
(1978) (quoting in part from State v. Wooleyhan Transport Co., 192 Md. 686, 689-90, 65
A.2d 321, 322 (1949)).  Although we have often said that objections must be precise, the
purpose of precision is “that the trial court has no opportunity to correct or amplify the
instructions for the benefit of the jury if the judge is not informed of the exact nature and
grounds of the objection.”  Fearnow v. C & P Telephone, 342 Md. 363, 378, 676 A.2d 65,
72 (1996).
Irwin and Wood clearly presented to the trial court their view that every element of
an action of fraud, including damages, had to be proved by clear and convincing evidence.
Although counsel briefly referenced Question 4, the objection, unmistakably, was to allowing
the jury to find damages based on a mere preponderance of the evidence, and the judge
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seemed to understand that point but simply disagreed.  In Casey, the plaintiff objected to an
initial jury instruction on damages, whereupon the court gave a supplemental instruction, to
which no objection was made.  On appeal, the plaintiff complained only about a deficiency
in the supplemental instruction, which we held was waived.  In Sydnor, the defendant, who
did not object to the initial instruction, complained about a supplemental restatement of that
instruction.  Both the Court of Special Appeals and this Court held that the objection was
preserved.  The objection here was clearly preserved.  The problem for Irwin and Wood is
that the objection has no merit.
In order to recover damages in an action of fraud, the plaintiff must prove, by clear
and convincing evidence, among other things, that he/she/it “suffered compensable injury
resulting from the misrepresentation.”  VF Corp., supra, 350 Md. at 703, 715 A.2d at 193
(quoting Nails, supra, 334 Md. at 415, 639 A.2d at 668); see also Environmental Trust,
supra, 370 Md. at 97, 803 A.2d at 516.  What must be proved by that standard is that some
compensable injury arose from the deceit, because a compensable injury arising by reason
of the fraud is an element of the tort.  We have never held, however, that the measure of the
damages required to compensate for that injury must be proved by clear and convincing
evidence.  Indeed, in Empire Realty Co. v. Fleisher, 269 Md. 278, 284, 305 A.2d 144, 148
(1973), we drew a distinction between liability for damages, on the one hand, and the
measure of those damages, on the other, noting that, as to the latter, though not the former,
Maryland applies “the flexible approach to damages for fraud and deceit.”
-45-
We have required a higher standard of proof in fraud cases because of the seriousness
of the allegations – an imputation of dishonesty sometimes bordering on criminal behavior.
See Everett v. Baltimore Gas & Elec., 307 Md. 286, 301, 513 A.2d 882, 890 (1986),
overruled on other grounds by Coleman v. Anne Arundel Police, 369 Md. 108, 797 A.2d 770
(2002).  That rationale has no relevance to the proof of specific elements of loss or injury,
however, especially in tort cases.  There is no reason to require a greater quantity or higher
quality of evidence to show the amount of economic loss or the nature or degree of emotional
injury caused by fraudulent conduct than that caused by negligent conduct.  The thing to be
proved in either case is the same.  The trial court did not err in permitting “individual items
of damage” attributable to the fraud and conspiracy claims to be proved by a preponderance
of evidence.
D. Punitive Damages
As we have previously observed, to establish the tort of fraud, the plaintiff must
prove, among other things, that the defendant made a false representation to the plaintiff and
that “its falsity was either known to the defendant or that the representation was made with
reckless indifference as to its truth.” (Emphasis added).  Environmental Trust, supra, 370
Md. at 97, 803 A.2d at 516 (quoting VF Corp., supra, 350 Md. at 703, 715 A.2d at 192-93).
Reckless indifference as to truth arises when the defendant makes the representation even
though aware that he does not know whether it is true or false – where he knows that he lacks
-46-
knowledge as to its truth or falsity – and nonetheless makes the representation without regard
to that lack of knowledge.  See Ellerin v. Fairfax Savings, 337 Md. 216, 232, 652 A.2d 1117,
1125 (1995).
Although that alternative mental state of reckless indifference suffices to support a
finding of fraud and an award of compensatory damages that flow from it, we made clear in
Ellerin that it does not suffice to justify an award of punitive damages.  We pointed out that,
in Owens-Illinois v. Zenobia, 325 Md. 420, 601 A.2d 633 (1992), reconsideration denied,
325 Md. 665, 602 A.2d 1182 (1992), the Court modified the standard for an award of
punitive damages and that, under the new standard, as applied in fraud cases, actual
knowledge of falsity “include[s] the type of deliberate wrongdoing and evil motive that has
traditionally justified the award of punitive damages,” but that, where the fraud is based on
the alternative state of reckless disregard, “the traditional basis for the allowability of
punitive damages is not present.”  Ellerin, supra, 337 Md. at 235, 652 A.2d at 1126.   What
is needed to support an award of punitive damages is conscious and deliberate wrongdoing.
The Court thus concluded that only “a person’s actual knowledge that his statement is false,
coupled with his intent to deceive another by means of that statement, constitute the ‘actual
malice’ required for the availability of punitive damages.”  Id. at 240, 652 A.2d at 1129.  The
Ellerin court recognized and confirmed, however, that “actual knowledge” did include “‘the
wilful refusal to know.’”  Id. at 235, n.10, 652 A.2d at 1126, n.10 (quoting Zenobia, supra,
325 Md. at 462, n.23, 601 A.2d 654, n.23).  Zenobia made the same point:
-47-
“Actual knowledge, however, does include the wilful refusal to
know.  See, e.g., State v. McCallum, 321 Md. 451, 458-61, 583
A.2d 250, 253-55 (1991) (Chasanow, J., concurring)
(‘“[K]nowledge” exists where a person believes that it is
probable that something is a fact, but deliberately shuts his or
her eyes or avoids making reasonable inquiry with a conscious
purpose to avoid learning the truth.’) Therefore, a defendant
cannot shut his eyes or plug his ears when he is presented with
evidence of a defect and thereby avoid liability for punitive
damages.”
Zenobia, supra, 325 Md. at 462, n.23, 601 A.2d at 654, n.23.  See also Le Marc’s v. Valentin,
349 Md. 645, 653, n.4, 709 A.2d 1222, 1226, n.4 (1998).
Aware of Zenobia and Ellerin, the trial court concluded that, although there was
sufficient evidence that Hoffman, Irwin, and Wood acted with reckless disregard as to
whether statements made to the plaintiffs, including the appraisals prepared by Hoffman,
were true or false, there was not sufficient evidence to establish that they had actual
knowledge of the falsity of those statements.  It was on that finding that the court granted
partial judgment to those defendants and withdrew the punitive damage claims as to them
from the jury.
On the plaintiffs’ cross-appeal, the Court of Special Appeals reversed that ruling.  As
to Wood and Irwin, the court concluded that the evidence introduced to show liability for
fraud, which “show[ed] that Wood participated in creating a number of false impressions for
the buyers, by words and conduct amounting to partial and fragmentary disclosures,”
Hoffman, supra, 155 Md. App. at 305, 843 A.2d at 188, was “sufficient to send the issue of
punitive damages to the jury.”  Id. at 342, 843 A.2d at 209.  That conclusion, in turn, was
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drawn from evidence that (1) at the initial meetings with the plaintiffs, Wood treated
Beeman, whom she knew to be the seller, as if he was the buyer’s representative, (2) she
misused her good faith estimates to set or increase the sales price for the properties, and (3)
she misled the buyers into thinking that it was proper for Beeman to be arranging gift letters.
Id.  As to Hoffman, the court believed that Hoffman knew that he was furnishing inaccurate
appraisals.
Two issues are presented: first, whether the Court of Special Appeals was correct in
concluding that there was sufficient evidence of actual knowledge, of either the affirmative
or willful blindness variety, on the part of Wood and Hoffman, based on their own conduct;
and second, if not, whether Wood, Irwin, and Hoffman can be held liable for punitive
damages based on their participation in the conspiracy with Beeman, whose liability for
punitive damages based on his conduct is unquestioned.  For reasons to be explained, we
need not decide either issue.
The first issue hinges, to some extent, on the very subtle distinction between willful
blindness to fraudulent activity, which suffices as actual knowledge, and reckless disregard
for truth or falsity, which does not.  Willful blindness occurs when a person “‘has his
suspicion aroused but then deliberately omits to make further enquiries, because he wishes
to remain in ignorance.’”  State v. McCallum, supra, 321 Md. at 459-60, 583 A.2d at 253-54
(Chasanow, J. concurring) (quoting United States v. Jewell, 532 F.2d 697, 700 (9th Cir.
1976)).  A recklessly indifferent person, on the other hand, “has actual knowledge that he or
-49-
she [does] not know whether the statement [is] true or false, but, with reckless indifference
to the truth, [makes] the statement with the intent of deceiving the listener.”  Le Marc’s,
supra, 349 Md. at 654, 709 A.2d at 1227.  The subtle gradient that makes the former more
culpable is that the person actually suspects that the representation is false and chooses not
to investigate, whereas the latter simply does not know and does not care.
   There are two dilemmas here.  The first is that the trial court acted inconsistently on
this issue.  It withdrew the punitive damage claim as to Hoffman, Irwin, and Wood because
it concluded that there was legally insufficient evidence of actual knowledge on their part
that the fraudulent representations they made were, in fact, false.  Yet, it concluded that there
was sufficient evidence of such actual knowledge to submit the issue to the jury with respect
to the fraud count itself.  Ordinarily, that might not be a problem, but here it is. In its
instructions on the fraud count, the court stated that, to recover, the plaintiffs had to prove,
by clear and convincing evidence, that the representations made by them were false and “that
its falsity was known to the Defendant at the time of the representation.”  Earlier, in
explaining “knowledge,” the court told the jury:
“Now, in determining whether someone had knowledge of
something you may look at all the evidence in the case and use
your own common sense in determining whether that person
really knew what was going on.  You may draw reasonable
inferences from facts but you must take care to avoid guess
work or speculation.  You may consider the willful and knowing
violation of a statute or the willful and knowing violation of a
known duty as evidence of such knowledge.  You may also
consider whether the person involved willfully refused or
deliberately refused to look at the facts in the face of obvious
-50-
facts because such willful refusal to know in the face of obvious
facts may be deemed knowledge.  If you find that a person was
willfully blind or made a consci[ous] effort not to know
something th[e]n you may determine under all the facts in the
case that the person actually knew it.”
(Emphasis added).
Those instructions, when juxtaposed, presented to the jury only the “actual
knowledge” variety of fraud.  Although the court included “willful blindness” as an aspect
or part of actual knowledge, as, under our recent case law it was obliged to do, it did not
permit the jury to find fraud on the basis of reckless indifference or reckless disregard.  In
denying the defendants’ motions for judgment and submitting that instruction, thereby
permitting the jury to determine fraud based solely on “actual knowledge,” the court
necessarily concluded that there was legally sufficient evidence to permit such a finding to
be made by clear and convincing evidence.  That conclusion is inconsistent with the contrary
finding made regarding the punitive damage claim.
The relevant question, of course, is whether the evidence actually did suffice to show
actual knowledge on the part of Hoffman and Wood, which brings us to the second dilemma
– that of preservation.  At the conclusion of the evidence, Hoffman, Wood, and Irwin filed
memoranda in support of their respective motions for judgment and jury instructions.  As to
the fraud count, Hoffman complained only about the lack of evidence of reliance by the
plaintiffs on his appraisals.  He did not argue a legal insufficiency of evidence regarding his
actual knowledge that the appraisals were false and misleading.  That was true as well with
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his motion for judgment NOV, filed after the jury returned its verdicts; his complaint as to
Count II for fraud was only that the plaintiffs had failed to prove reliance.  Irwin and Wood,
as to the fraud count, argued in their memorandum only that “willful failure to know” does
not constitute actual knowledge and that there was no evidence that the plaintiffs relied on
any of Wood’s representations.  Other than their mistaken effort to have the court, as a matter
of law, reject “willful failure to know” as a form of actual knowledge, they also did not argue
an insufficiency of evidence of actual knowledge.  That was true as well with respect to their
motion for judgment NOV.
Before us, these defendants make essentially the same limited arguments as to the
fraud count that they made in the trial court.  Hoffman complains about the lack of reliance
on his appraisals.  Irwin and Wood complain about the evidentiary standard used to
determine damages arising from the fraud.  None of them have argued that there was legally
insufficient evidence of actual knowledge to preclude submission of the fraud claim to the
jury.  
To attack the evidence of actual knowledge with respect only to the punitive damage
claim is, itself, inconsistent.  If they are satisfied, at this point, that there was legally
sufficient evidence to sustain the jury’s finding of fraud based on the very kind of actual
knowledge that would also support a claim for punitive damages, they have no enduring
claim that it was insufficient to submit the punitive damage claim to the jury, since both
rested on precisely the same evidence as to actual knowledge.  For that reason, we shall
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affirm the determination by the Court of Special Appeals that the punitive damage claims
should have been submitted to the jury.  Had we reached the issue, we would have found the
evidence sufficient to show the kind of actual knowledge required for punitive damages. 
E. Limited Remand
Having concluded that the claim for punitive damages against Hoffman, Irwin, and
Wood was wrongfully withheld from the jury, the Court of Special Appeals determined that
the plaintiffs were entitled to a partial new trial limited to that claim – whether punitive
damages were warranted against those defendants.  Hoffman, supra, 155 Md. App. at 343,
843 A.2d at 210.  The court held that, if the jury finds the evidence admitted at that trial is
sufficient to establish the plaintiffs’ entitlement to punitive damages, a separate hearing on
the proper amount of those damages would have to be held.  Id.
Hoffman, Irwin, and Wood complain that such a limited remand would be terribly
prejudicial in that consideration of punitive damages would be detached from the evidence
and theories pertaining to the underlying fraud.  They urge that, if there is to be a new trial,
the judgment entered on the fraud count should be stricken and the new trial should include
both liability and damages.  The plaintiffs respond, of course, that requiring a full retrial as
to liability and compensatory damages would be unfair to them.  They note as well that they
had suggested in the trial court that the jury answer two conditional questions that would
have avoided this problem but that the defendants rejected that approach.
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Maryland Rule 8-604(b) permits an appellate court, if it concludes that error affects
a severable part of the action, to reverse or modify the judgment as to that severable part,
remand that part for further proceedings, and affirm the other parts of the judgment.  That
is precisely what the Court of Special Appeals did in this case.  In Caldor v. Bowden, 330
Md. 632, 625 A.2d 959 (1993), after concluding that, because a punitive damage award had
been based, in part, on verdicts for compensatory damages that were stricken through
judgments NOV, the punitive award could not stand, we applied that Rule and remanded the
case for a limited retrial on just the punitive damages.  See also Bowden v. Caldor, 350 Md.
4, 710 A.2d 267 (1998); Alexander v. Evander, 88 Md. App. 672, 596 A.2d 687 (1991), cert.
denied, 326 Md. 435, 605 A.2d 137 (1992).  There was no error in ordering the limited
remand as to punitive damages.
F. Attorneys’ Fees
As noted, the Court of Special Appeals struck the award of $195,591 in attorneys’ fees
entered as ancillary relief under the CPA and remanded that issue as well for reconsideration.
Its decision was based on the premise that, as an award of attorneys’ fees under the CPA
must take into account the amount of recovery on the substantive claims and there was the
prospect of an additional punitive damage recovery against Hoffman, Wood, and Irwin, the
trial court should revisit the matter based on what the jury might do with the punitive damage
claim.  Hoffman, supra, 155 Md. App. at 344-45, 843 A.2d at 211.  The intermediate
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appellate court, for “guidance,”also suggested that the trial court erred in directing that there
be a dollar-for-dollar reduction in that award for whatever the plaintiffs’ attorneys recovered
under their contingent fee agreement with the plaintiffs.  Id. at 345, 843 A.2d at 211-12.
Irwin and Wood have made no complaint about the attorney fee award.  Hoffman
complains that the remand was inappropriate in that the award is justified only under Count
III – the CPA claim – and that it cannot be based on punitive damages awardable only under
Count II for fraud.  
Hoffman is correct.  Maryland Code, § 13-408(a) of the Commercial Law Article
authorizes a private cause of action “to recover for injury or loss sustained by him as the
result of a practice prohibited by this title.”  Section 13-408(b) provides that a person who
brings an action “to recover for injury or loss under this section and who is awarded damages
may also seek, and the court may award, reasonable attorney’s fees.”  (Emphasis added).  The
fee award is limited to the CPA action and may not be based on additional recoveries under
other causes of action.  See Barnes v. Rosenthal, 126 Md. App. 97, 103-04, 727 A.2d 431,
434 (1999); Mercedes-Benz v. Garten, 94 Md. App. 547, 568-69, 618 A.2d 233, 243 (1993).
Punitive damages may not be awarded in an action brought under § 13-408.  In Golt v.
Phillips, 308 Md. 1, 12, 517 A.2d 328, 333 (1986), we concluded that the private remedy
under that section was “purely compensatory” and “contains no punitive component.”
Because the remand for reconsideration of attorneys’ fees was based solely on the prospect
20 There might have been a basis for remand to consider lowering the award as to
all plaintiffs except Haley, given our conclusion that the judgments in favor of those
plaintiffs must be amended to strike the award of non-economic damages, but none of the
parties has sought that relief.
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of punitive damages being awarded under the fraud count, it was erroneous.20
JUDGMENT OF COURT OF SPECIAL APPEALS
AFFIRMED IN PART AND REVERSED IN PART; CASE
REMANDED TO THAT COURT WITH INSTRUCTIONS
(1) TO MODIFY JUDGMENTS FOR ALL PLAINTIFFS
BY STRIKING AWARD OF $145,000 FOR NON-
ECONOMIC DAMAGES OR TO REMAND TO CIRCUIT
COURT FOR BALTIMORE CITY FOR THAT PURPOSE;
(2) TO REMAND CASE AS TO PLAINTIFF CARL
HALEY FOR FURTHER PROCEEDINGS AS TO NON-
ECONOMIC DAMAGES; (3) TO REMAND CASES TO
CIRCUIT COURT FOR BALTIMORE CITY FOR NEW
TRIAL AS TO PUNITIVE DAMAGES AGAINST
PETITIONERS HOFFMAN, IRWIN AND WOOD; AND
(4) TO OTHERWISE AFFIRM JUDGMENTS ENTERED
BY CIRCUIT COURT FOR BALTIMORE CITY.  COSTS
IN THIS COURT AND IN COURT OF SPECIAL
APPEALS TO BE PAID 3/4 BY PETITIONERS
HOFFMAN, 
IRWIN, 
AND 
WOOD 
AND 
1/4 
BY
RESPONDENT PLAINTIFFS.