UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 12-1064

In Re: WINCOPIA FARMS, LP,

Debtor.

-------------------------------------

WINCOPIA FARMS, LP,

Plaintiff - Appellant,

v.

G&G, LLC,

Defendant – Appellee,

and

TRENT GOURLEY,

Defendant.

No. 12-1080

In Re: WINCOPIA FARMS, LP,

Debtor.

-------------------------------------

WINCOPIA FARMS, LP,

Plaintiff - Appellee,

v. G&G, LLC,

Defendant – Appellant,

and

TRENT GOURLEY,

Defendant.

Appeals from the United States District Court for the District of Maryland, at Baltimore. William D. Quarles, Jr., District Judge. (1:11-cv-01159-WDQ)

Argued: October 26, 2012 Decided: December 12, 2012

Before TRAXLER, Chief Judge, DIAZ, Circuit Judge, and Catherine C. EAGLES, United States District Judge for the Middle District of North Carolina, sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: James Edmond Carbine, JAMES E. CARBINE PC, Baltimore, Maryland, for Appellant/Cross-Appellee. James Robert Schroll, Heidi Eileen Meinzer, BEAN, KINNEY & KORMAN, PC, Arlington, Virginia, for Appellee/Cross-Appellant.

Unpublished opinions are not binding precedent in this circuit.

2 PER CURIAM:

Wincopia Farms, LP (“WFLP”) appeals a district court

order adopting a bankruptcy court report recommending dismissal

of WFLP’s complaint against G&G, LLC (“G&G”), in an adversary

proceeding. Finding no error, we affirm.

I.

WFLP is a single-asset real estate limited

partnership, see

(51B), that owned 124 acres of

land in Howard County, Maryland (“the Farm”), which WFLP valued

at approximately $30 million. Wincopia Farms, Inc. (“WI”)

leased the property and operated a nursery thereon. The Hearn

family owns and operates both WFLP and WI.

In 2002, WI owed United Bank $2.9 million on a loan

secured by the Farm. Unable to repay its debt, WI decided to

refinance to avoid foreclosure. Accordingly, WI borrowed funds

each year from 2002 through 2006 from G&G (“the Loans”) to

refinance the United Bank loan and obtain the funds it needed to

operate. WFLP guaranteed the Loans and G&G received an

indemnity deed of trust on the farm.

WFLP filed for bankruptcy protection with the United

States Bankruptcy Court for the District of Maryland in June

2007. In August 2007, G&G sued WI and members of the Hearn

family and its trust in state court after WI defaulted on its

3 obligation to G&G. G&G obtained judgments in its favor in

November and December 2007.

In October 2007, G&G moved for relief from the

automatic stay in WFLP’s bankruptcy proceeding. As a result,

the bankruptcy court modified the automatic stay on December 13,

2007, so that although it remained in effect, WFLP was required

to make payments to G&G. WFLP failed to make those payments,

however, and the court lifted the stay on December 31, 2007. A

foreclosure sale of the Farm was scheduled for February 14,

2008.

On February 13, 2008, WFLP moved in the Circuit Court

for Howard County to stay the foreclosure sale, alleging that

the lien was invalid because of G&G’s fraud. The court denied

the motion, however, and the property was sold at auction to G&G

for $12.5 million. The circuit court later ratified the sale

over WFLP’s objections, and the ratification was affirmed on

appeal. See Wincopia Farms, LP v. Goozman,

(Md.

Ct. Spec. App. 2009).

In November 2007, WFLP had filed an adversary

proceeding in bankruptcy court, alleging that G&G had committed

fraud against WI and WFLP. In April 2008, WFLP amended its

complaint to allege causes of action for breach of contract,

intentional misrepresentation and fraud, negligent

misrepresentation, breach of fiduciary duty, tortious

4 interference, and Maryland Securities Act violations. The

bankruptcy court later granted a motion by G&G to dismiss the

complaint on the basis that WFLP, as the guarantor, lacked

standing under the applicable Virginia law to prosecute the

claims. However, the bankruptcy court granted a motion by WFLP

to reconsider as to the fraud claim on the ground that Maryland

law, rather than Virginia law, governed that claim.

WFLP subsequently moved to file a second amended

complaint (“the complaint”). That complaint alleged that WFLP

was induced to guarantee the loan and mortgage the Farm by G&G’s

fraud against, and intentional misrepresentations to, both WI

and WFLP. As is relevant here, the complaint alleged that G&G

(1) had led WFLP to believe that G&G had approved WI for the

Loans, when in fact G&G had not taken any steps to determine

whether WI could repay them, J.A. 224; (2) led WFLP “to believe

that its desire for a longer term loan would be satisfied by a

‘good behavior’ extension right offered to” WI when “[i]n fact,

since all the loans had prepaid interest and fees with a balloon

payment of the entire amount of the loan due annually, there was

no ‘good behavior’ by which to judge the merits of an

extension,” J.A. 225; and (3) falsely told WFLP it had no extra

funds to lend WI in response to WFLP’s plea for increased funds

WI “desperately needed” to reduce the chance of default, J.A.

225. The complaint also alleged that G&G concealed the material

5 facts that: by the fall of 2001, G&G had a policy of attempting

to obtain borrowers’ collateral for itself by lending “to

desperate borrowers on take-it-or-leave-it terms” and “grossly

over-collateraliz[ing] the loans,” J.A. 227; and “G&G had in

place a scheme and plan to purposefully structure the Loans so

that default on the loan was a virtual certainty” by refusing to

lend WI funds sufficient to grow the farming business, by

restricting the loan terms to one year, and by misleading WFLP

into believing that the loan term would be extended from year to

year, J.A. 227.

G&G objected to WFLP’s motion to file the amended

complaint and moved to dismiss it. Concluding that the

adversary proceeding was not a “core proceeding,” see

(c), the bankruptcy court prepared a report and

recommendation for the district court. In it, the bankruptcy

court granted WFLP’s motion to file the complaint. The report

also recommended granting G&G’s motion to dismiss on the basis

that (1) WFLP had alleged fraud against WI, not WFLP, and lacked

standing to assert WI’s claim, and (2) the court could not undo

the state court’s refusal to stay the foreclosure proceedings.

WFLP asserted several objections to the report. As is

relevant here, the district court ruled that, to the extent WFLP

sought to allege that G&G’s fraud induced WFLP to guaranty the

Loans, WFLP’s allegations failed to state a claim for which

6 relief could be granted, primarily because WFLP could not have

reasonably relied on the various misrepresentations and

omissions alleged. The district court then entered its order

dismissing the complaint with prejudice.

II.

WFLP argues that the district court erred in

concluding that the complaint failed to state a claim under

Maryland law for fraudulently inducing WFLP’s execution of the

guaranty. We disagree. *

We review de novo the grant of a motion to dismiss for

failure to state a claim. See McCorkle v. Bank of Am. Corp.,

(4th Cir. 2012). “In so doing, we must accept

as true all of the factual allegations contained in the

complaint.” Gerner v. County of Chesterfield, Va.,

(4th Cir. 2012) (internal quotation marks omitted). To

survive dismissal, the complaint must contain “enough facts to

state a claim to relief that is plausible on its face.” Bell

Atl. Corp. v. Twombly,

(2007).

* Although it did not affect the result, the district court ruled that the bankruptcy court had erred in concluding that the fraud claim was barred by the prior foreclosure proceedings. G&G has cross-appealed that ruling. However, in light of our rejection of WFLP’s challenge to the ruling that its complaint fails to state a claim, we do not address the merits of G&G’s cross-appeal.

7 To assert a claim of fraud under Maryland law, a

plaintiff must allege that: (1) the defendant made a false

representation of a material fact to the plaintiff; (2) the

defendant knew that the representation was false or made the

representation with reckless indifference as to its truth; (3)

the defendant made the misrepresentation for the purpose of

defrauding the plaintiff; (4) the plaintiff rightfully relied on

the misrepresentation; and (5) the plaintiff was injured by its

reliance. See Gourdine v. Crews,

(Md. 2008).

Maryland does not recognize a general duty upon a

party to a transaction to disclose facts to the other party.

See Sass v. Andrew,

(Md. Ct. Spec. App.

2003). However, a plaintiff may establish a cause of action for

fraudulent concealment even in the absence of a duty to disclose

if the seller actively, and with the intent to deceive, conceals

a material fact; the defendant reasonably relies on the fact;

and the concealment proximately causes the defendant to suffer

damages. See Rhee v. Highland Dev. Corp.,

(Md. Ct. Spec. App. 2008).

To successfully allege a fraud claim, a complaint must

identify “the facts constituting a fraud . . . with certainty

and particularity.” Sims v. Ryland Grp., Inc.,

(Md. Ct. Spec. App. 1977). “[M]ere vague, general, or

indefinite statements are insufficient.” Fowler v. Benton, 185

, 349 (Md. 1962). Indeed, vague or general statements

“should . . . put the hearer upon inquiry, and there is no right

to rely upon such statements.”

And, a plaintiff cannot

show he reasonably relied on a false statement if he knew or

should have known of the statement’s falsity. See Sass,

; Carozza v. Peacock Land Corp.,

(Md. 1963).

Arguing that it alleged sufficiently definite

statements upon which it reasonably relied, WFLP first points to

its allegations that G&G “issued a formal, written ‘loan

commitment’ and extracted a ‘loan commitment fee’” and that

“[b]y its actions, documents and statements, G&G led [WFLP] to

believe that [WI] had been ‘approved’ for the Loans.” J.A. 224.

Initially, we note that G&G’s representation that it agreed to

make the Loans cannot constitute fraud because that

representation was true. WFLP suggests, however, that, by

approving the Loans and charging a loan commitment fee, G&G made

an affirmative representation concerning how able WI was to

repay the Loans. Even assuming, however, that G&G could have

been understood to have made such a representation, any such

representation certainly would have been the very sort of

“vague, general” statement on which no reasonable person in

WFLP’s position could rely. Fowler, 185 A.2d at 349.

9 WFLP next points to its allegation that “G&G led

Wincopia to believe that its desire for a longer term loan would

be satisfied by a ‘good behavior’ extension right offered to”

WI. J.A. 225 (emphasis added). The complaint further alleges

that “[i]n fact, since all the loans had prepaid interest and

fees with a balloon payment of the entire amount of the loan due

annually, there was no ‘good behavior’ by which to judge the

merits of an extension.” J.A. 225. The complaint does not

identify exactly what action G&G took or what representation G&G

made that led WFLP to believe that “good behavior” during the

first year by WI would cause G&G to grant an extension. In any

event, as guarantor, WFLP was well aware of the terms of the

Loans and, thus, knew or should have known that there would be

no opportunity for “good behavior” during the year as the

interest and fees were all prepaid with a balloon payment of the

entire amount of the loan due annually. As a matter of law, any

reliance by WFLP on the notion that G&G would decline to

exercise its right to foreclose upon WI’s default simply was not

reasonable.

WFLP next contends that it alleged that G&G had a duty

to disclose both its hope that WI would default and its plan to

foreclose on the farm when that happened. However, WFLP does

not offer any legal basis for the existence of a duty to

disclose on the part of G&G to discuss its thinking, nor are we

10 aware of one. WFLP argues that G&G actually took affirmative

actions to conceal its plan and thus that it could be liable for

fraudulent concealment. However, WFLP does not specify what

those concealing actions were, nor does WFLP explain how it

could reasonably rely on the notion that G&G was not going to

take full advantage of its legal rights, especially when WFLP

knew that G&G, in order to agree to lend WI $4.5 million, had

required WFLP to give it a deed of trust to the Farm worth $30

million.

For all of these reasons, we hold that the district

court correctly concluded that WFLP failed to successfully state

a claim that G&G fraudulently induced WFLP into becoming a

guarantor of the Loans.

III.

In sum, finding no error, we affirm the decision of

the district court.

AFFIRMED

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