The opinion of the court was delivered by: John D. Bates United States District Judge
Plaintiffs Sara Lee and Gavin Chen (collectively, "plaintiffs") bring this action against defendants Jewell Bell-Smith, Darryl Smith, EK Settlements, Inc., Sandy Kim, Ocwen Loan Servicing, and HSBC Bank USA, N.A., asserting various claims arising from an allegedly fraudulent mortgage foreclosure rescue scheme orchestrated by a woman named Carline Charles. Plaintiffs maintain that in late 2005, Charles -- purporting to act on behalf of a company named "C&O Property Solutions" -- approached them about a mortgage refinancing program by which they could avoid foreclosure of their home at 5011 14th St., NW, Washington DC. Plaintiffs agreed to participate in the program, and signed several documents provided to them by Charles, including (allegedly unbeknownst to them) a deed of sale dated December 28, 2005, which transferred title to their home to defendants Bell-Smith and Smith ("the Smiths") for $425,000.
The Smiths financed their purchase of plaintiffs' home with two loans that they obtained from Pinnacle Financial Corporation, which were secured by deeds of trust in the property. The beneficial interest in the loans has since been assigned to HSBC Bank ("HSBC"), while the servicing obligation on the loans has been assigned to Ocwen Loan Servicing ("Ocwen"). EK Settlements oversaw the "sale" and prepared a HUD-1 settlement statement, which plaintiffs and the Smiths signed, and which indicates that the $425,000 purchase price was used to satisfy two existing loans on the property and several mysterious charges -- i.e., a "security escrow" fee, a "property management" fee, and a "consultant" fee. Plaintiffs received $32,119.76 from the transaction, which they continued to believe was a mortgage refinancing until 2007, when Bell-Smith contacted Lee to inform her that the Smiths were, in fact, the owners of plaintiffs' home.
Plaintiffs filed this suit on June 11, 2008, alleging fraud (Count 1), violations of the D.C. Consumer Protection Procedures Act (Count 2), the D.C. Loan Shark Act (Count 3), the D.C. Interest and Usury Law (Count 4), the D.C. Consumer Credit Service Organization Act (Count 5), and the Real Estate Settlement and Procedures Act (Count 6), as well as breach of fiduciary duty (Count 7), conversion (Count 8), injurious falsehood, disparagement, and slander of title (Count 9), unjust enrichment (Count 10), breach of contract (Count 11), and negligence (Count 12). Plaintiffs seek to quiet title (Count 17), and request a declaratory judgment voiding the deed of sale (Count 13), as well as $425,000 in actual damages and $1.275 million in punitive damages. The Smiths have counter-claimed for unjust enrichment and declaratory relief, and also seek $425,000 in damages. Presently before the Court are the motions for summary judgment filed by the Smiths, see Smiths' Mot. for Summ. J. ("Smiths' Mot.") [Docket Entry 68] and by HSBC and Ocwen, see Defs.' Ocwen and HSBC's Renewed Mot. for Summ. J. ("HSBC Mot.") [Docket Entry 72]. For the reasons explained below, the Court will grant in part and deny in part the Smiths' motion, and grant the motion filed by HSBC and Ocwen.
I. The Alleged Fraudulent Mortgage Foreclosure Rescue Program
Plaintiffs Lee and Chen are both college-educated, and they both have master's degrees, in social work and economics, respectively. See Pls.' Opp. to Smiths' Mot. for Summ. J. ("Pls.' Opp.") [Docket Entry 73], Ex. 8 ("Lee's Resp. to Interrog.") no. 3; see also Reply Mem. in Supp. of Defs.' Ocwen and HSBC's Renewed Mot. for Summ. J. ("HSBC Reply Mem.") [Docket Entry 77], Ex. 9 ("Reply Chen Dep.") at 18-19. In late 2005, plaintiffs were facing foreclosure of their home at 5011 14th St., NW, Washington, DC. 2nd Am. Compl. ¶ 6. At the time, they had a mortgage of $172,040.59, and an additional lien on the property in the amount of $65,224.09. See Pls.' Opp., Ex. 3 ("HUD-1 Statement"). Carline Charles, an alleged representative of C&O Property Solutions, approached plaintiffs and explained that she could help them refinance their mortgage to avoid foreclosure. 2nd Am. Compl. ¶ 8. Specifically, Charles proposed that plaintiffs enter into a mortgage refinancing program whereby C&O Property Solutions would "hold title to the property for six months, [and] then transfer it back to the Plaintiffs." Id. ¶ 4. During this time, plaintiffs could "rebuild their credit, [and] pay the monthly mortgage" via checks made payable to C&O Property Solutions. Id. ¶ 8; see also Pls.' Opp., Ex. 6 ("Lee Dep.") at 39-40, 121-124, 134-136. After six months had elapsed and plaintiffs' credit had improved, plaintiffs could refinance their mortgage again, at which point the title to their home would be transferred back to them. See 2nd Am. Compl. ¶ 8; see also Lee Dep. at 121-122.
Plaintiffs understood their arrangement with Charles to be a pure mortgage refinancing transaction, and never believed that they would be selling their home. See Lee Dep. at 39-40; see also Pls.' Opp., Ex. 1 ("Lee Aff.") ¶ 7; id., Ex. 2 ("Chen Aff.") ¶ 3. Indeed, Lee only agreed to the transaction because she thought that her dealings with Charles would prevent her from having to sell her home. See Lee Dep. at 122. Shortly after proposing the refinancing plan, Charles came to plaintiffs' home and presented plaintiffs with some documents, which they signed. 2nd Am. Compl. ¶ 9; see also HSBC Mot., Ex. 3 ("Defs.' Lee Dep.") at 47-48, 51; id., Ex. 1 ("Chen Dep.") at 39. Later, a representative from EK Settlements came to plaintiffs' home with some additional documents for plaintiffs' signature. See Defs.' Lee Dep. at 52-54. Lee maintains that when she signed the documents, no names were listed on them as purchasers of her home, see Defs.' Lee Dep. at 45-49, 340; Chen also claims that the documents he signed were at least partially blank, see Chen Dep. at 56, 87. Regardless, plaintiffs both allege that Charles led them to believe the documents they signed were related to a mortgage refinancing -- not to a sale of their home. See Lee Dep. at 31, 35-40; Chen Dep. at 38; Lee's Resp. to Interrog. no. 5.
In actuality, the documents that plaintiffs signed included a notarized "deed of sale" and a HUD-1 settlement statement, both dated December 28, 2005, which transferred title to their home to the Smiths for $425,000. See Pls.' Opp., Ex. 18 ("Deed of Sale"); HUD-1 Statement.*fn1
At the time of the transaction, the property had an appraised value of $627,000. See Pls.' Opp., Ex. 4 ("Dec. 2005 Appraisal"). The settlement statement prepared by EK Settlements -- and signed by plaintiffs and the Smiths -- indicates that the $425,000 purchase price was used to pay (1) the existing $172,040.59 mortgage; (2) a $65,224.09 lien on the property to a company identified as "Purdue, LLC"; (3) $23,063.69 in closing costs; and (4) a series of mysterious charges -- i.e., a "security escrow" fee ($40,004.00), a "property management" fee ($45,996.00), and a "consultant" fee ($40,000.00). See HUD-1 Statement. The settlement statement also shows that the deal was brokered by a company called Mortgage Star, which commissioned the appraisal of the property. See id.; see also Dec. 2005 Appraisal. Finally, the settlement statement reflects a $32,119.79 cash payment to plaintiffs, which plaintiffs concede was made by C&O Property Solutions to Lee's checking account on January 3, 2006. See Pls.' Opp., Ex. 13. This payment was consistent with Lee's understanding, based on her discussions with Charles and EK Settlements, that she would receive some money pursuant to the "refinancing" to pay her outstanding debts. See Lee Dep. at 121; Defs.' Lee Dep. at 55-56.
The same day that Lee received that cash payment, plaintiffs received a letter from C&O Property Solutions welcoming them as "new customer[s]" and informing them that the first payment on their refinanced "mortgage loan," in the amount of $1,900, would be due on February 1, 2006. See Pls.' Opp., Ex. 5 ("Welcome Letter"). The letter also explained that C&O Property Solutions would maintain an "escrow account" on plaintiffs' behalf, which would be used to pay their "taxes" and "insurance." Id. From January 2006 through August 2007, plaintiffs wrote C&O Property Solutions monthly $1,900 checks, which they believed were being applied to their newly-refinanced mortgage. See Lee Dep. at 124, 134-35; see also Lee's Resp. to Interrog. no. 14. After six months had passed, plaintiffs contacted Charles to inquire about the second refinancing of their mortgage, but Charles told plaintiffs that it was not the appropriate time to refinance. 2nd Am. Compl. ¶ 11.
In the spring of 2007, Charles' scheme began to unravel. Lee started to have difficulty reaching Charles, and she received several telephone messages from a woman identifying herself as Bell-Smith. See Lee Dep. at 137-39, 145-47. Lee did not know anyone by that name, but she eventually returned Bell-Smith's call after Charles advised her to do so. Id. At that point, Bell-Smith -- for the first time -- informed Lee that the Smiths were the owners of plaintiffs' home. 2nd Am. Compl. ¶ 12.*fn2 Bell-Smith told Lee that C&O Property Solutions had ceased paying the mortgage on the property, and that Lee should make all future mortgage payments to Bell-Smith, or directly to the mortgage company. Id.; see also Bell-Smith Decl. ¶ 15. Shortly thereafter, plaintiffs began making monthly payments of approximately $1,900 to Bell-Smith, and they continued to do so through March 2008. Bell-Smith Decl. ¶ 19; Lee's Resp. to Interrog. no. 16.*fn3
From the date of the alleged "sale" through the filing of this suit, plaintiffs have lived at 5011 14th St., NW, Washington, DC, and they have never signed a lease with the Smiths. See Pls.' Opp., Statement of Undisputed Facts ¶ 17; see also Smiths' Mot. at 7; 2nd Am. Compl. ¶ 99.
II. Defendants' Alleged Role in the Fraudulent Mortgage Foreclosure Rescue Program
The Smiths apparently purchased plaintiffs' home pursuant to an agreement they had with Charles and C&O Property Solutions, whereby the Smiths would act as "credit buyers," who would hold title to the property for one year only. See Pls.' Opp., Ex. 9 ("Bell-Smith Dep.") at 87-88; id., Ex. 10 ("Smiths' Resp. to Interrog.") no. 8; id., Ex. 15 ("Charles/Bell-Smith 5/4/07 E- mail"). On December 28, 2005, a representative from EK Settlements came to the Smiths' home with documents for the closing, which already had plaintiffs' names written on them. Bell-Smith Decl. ¶¶ 5-6. Bell-Smith recalls that she met with the EK Settlements agent for less than thirty minutes, and had no subsequent interaction with him after signing the closing documents. Id. ¶ 8. In January 2006, Charles paid Bell-Smith $10,000 for her "credit buying" services, and told her that she would receive additional funds from a $30,000 escrow account in a year, once the property had been sold back to plaintiffs. See Bell-Smith Dep. at 87-88, 239; Smiths' Resp. to Interrog. nos. 6, 8; Charles/Bell-Smith 5/4/07 E-mail; Pls.' Opp., Ex. 17.
Bell-Smith made other, similar "investments" with Charles around the same time, agreeing to serve as a "credit buyer" for another property in Owings Mills, Maryland the same month that she and her husband purchased plaintiffs' home. See Smiths' Resp. to Interrog. no. 22. Prior to entering into these "investments" with Charles, Bell-Smith had been trained and certified as a mortgage loan processor, and did some work for Mortgage USA -- a branch of Mortgage Star, the company that brokered the sale of plaintiffs' home. See Bell-Smith Dep. at 14, 24-25; Smiths' Resp. to Interrog. no. 4.
The Smiths financed their purchase of plaintiffs' home with two notes that they obtained from Pinnacle Financial Corporation, in the amounts of $340,000 and $85,000, which were secured by deeds of trust in the property. See Smiths' Mot., Exs. 2-3, 6-7. The former note had an adjustable interest rate and a monthly payment of $2,125.00, while the latter had a fixed interest rate of 11.875% and a monthly payment of $866.15. Id., Exs. 2-3. When they obtained the notes, the Smiths fraudulently represented to Pinnacle Financial Corporation that they intended to occupy plaintiffs' home as their "primary residence." See Pls.' Opp., Ex. 20.
Charles allegedly assured the Smiths that they would not be responsible for making any payments on the notes -- even though the notes were in their name -- and that C&O Property Solutions would make the payments through funds "provided by an 'investor.'" See Smiths' Resp. to Interrog. no. 13-14. Charles did not tell the Smiths the identity of this "investor," nor did the Smiths ask Charles where the money would be coming from. See Bell-Smith Dep. at 87, 239. Then, in April 2007, Charles informed the Smiths that C&O Property Solutions would no longer be making payments on the notes, and that neither she nor her company had any further obligations regarding the property. See Smiths' Resp. to Interrog. no. 13-14. At that point, Bell-Smith became concerned as to the effect that non-payment would have on her credit score, and she e-mailed Charles, telling her that she wanted the property transferred out of her name immediately. Pls.' Opp., Ex. 15 ("Charles/Bell-Smith 5/1/07 E-mail"). Bell-Smith e-mailed Charles again on May 4, 2007, writing: "I had an agreement with C&O Property Solutions to be [a] [c]redit buyer for 1 year and 1 year only . . . I want my money TODAY!!!! I don't live at 14th Street . . . and I should not have to pay for [it]. If you took Ms. Lee's money and spent it, you need to replace it not me." See Charles/Bell-Smith 5/4/07 E-mail. Bell-Smith wrote to Charles a few weeks later, telling her, "[y]ou are worse than the people you talk about, you call them hustlers and say they treat it like a hustle, so what are [you]????" Pls.' Opp., Ex. 15 ("Charles/Bell-Smith 5/21/07 E-mail"). Shortly after sending this e-mail, Bell-Smith contacted Lee, and informed her of the situation. See Bell-Smith Decl. ¶ 15; Lee's Resp. to Interrog. no. 6.
Lee then began paying approximately $1,900 per month toward the notes, while the Smiths paid the balance of approximately $1,300 per month. See Smiths' Resp. to Interrog. no. 10.*fn4 At one point, the Smiths' attorney wrote to plaintiffs, and tried to convince them to either increase what he characterized as their "monthly rent payment," or agree to purchase the property from the Smiths for $525,000. See Pls.' Opp., Ex. 19. Plaintiffs were not receptive to either option, and stopped making payments to the Smiths altogether in March 2008. See Smiths' Resp. to Interrog. no. 10; Bell-Smith Decl. ¶ 19; Lee's Resp. to Interrog. no. 16. Bell-Smith maintains that from May 2007 through February 2008, she and her husband paid approximately $15,931.00 on the two notes. Bell-Smith Decl. ¶ 18.*fn5 The record does not specify the total amount currently due under the two notes, nor does it specify whether plaintiffs or the Smiths have made any payments on the notes since 2008, and if so, in what amounts.
In April 2006, Ocwen was assigned the servicing obligation on the two notes. See HSBC Mot., Ex. 8 ("Jones Aff.") ¶ 5. As a servicing agent, Ocwen "does not hold the beneficial interest in notes, deeds of trust, or the right of payments on said notes"; rather, it is merely responsible for collecting payments "on behalf of certain lenders and investors with which it contracts." Id. ¶ 4. In May 2006, Mortgage Electronic Recovery Systems, as nominee for Pinnacle Financial Corporation, assigned the beneficial interest in the notes and the deeds of trust to Nomura Credit and Capital, Inc., which assigned its interest to HSBC -- the current interest-holder -- in August 2006. Id. ¶ 6. HSBC and Ocwen allege, and plaintiffs do not dispute, that "[p]rior to being assigned its respective interests in the . . . Notes and Deeds of Trust, neither HSBC or Ocwen had any knowledge or notice of the facts alleged in the Second Amended Complaint." Id. ¶ 16.
Plaintiffs initially filed this action in D.C. Superior Court, naming
the Smiths, EK Settlements, Charles, C&O Property Solutions, Pinnacle
Financial Corporation, and Mortgage Star as defendants. See Notice of
Removal [Docket Entry 1]. Mortgage Star removed the case to this Court
on the basis of diversity jurisdiction, and filed a motion to dismiss
all claims against it, see Mortgage Star Mot. to Dismiss [Docket Entry
33], which the Court granted as conceded when plaintiffs failed to
timely respond, see 11/7/08 Minute Order.*fn6
Plaintiffs have since twice amended their complaint, such that all
claims are now raised only against the Smiths, EK Settlements, its
president Sandy Kim, Ocwen, and HSBC. See 2nd Am. Compl.*fn7
The Smiths have filed two counter-claims against plaintiffs,
asserting unjust enrichment and a claim for a declaratory judgment
that they are the lawful owners of the property. See Smiths' Answer
("Answer") [Docket Entry 21]. Although the alleged wrongdoing by
Charles and C&O Property Solutions still lies at the heart of
plaintiffs' Second Amended Complaint, see, e.g., 2nd Am. Compl. ¶¶ 8,
11, 14, neither Charles nor C&O Property Solutions is currently named
as a defendant in this suit.
Counsel for EK Settlements and Sandy Kim withdrew in December 2008. See Mot. to Withdraw [Docket Entry 44]; see also 12/10/2008 Minute Order. At that time, counsel represented to the Court that Kim "was shutting down EK Settlements," that the company was insolvent, and that it did not have any insurance coverage. See Mot. to Withdraw. Since their attorneys' withdrawal, Kim and EK Settlements have been totally unresponsive parties. However, plaintiffs have neither amended their complaint to omit Kim and EK Settlements as defendants, nor have they sought a default judgment against them.
In March 2009, HSBC filed a motion to dismiss all counts against it except Count 13 (declaratory judgment) and Count 17 (quiet title). See HSBC Mot. to Dismiss [Docket Entry 51]. In August 2009, HSBC and Ocwen filed a motion for summary judgment on all claims, see HSBC Mot. for Summ. J. [Docket Entry 58], as did the Smiths, who sought summary judgment on plaintiffs' twelve claims against them as well as on their two counter-claims against plaintiffs, see Smiths' Mot. for Summ. J. [Docket Entry 57]. On November 12, 2009, Judge Robertson granted HSBC's motion to dismiss all counts against it except Count 13 (declaratory judgment) and Count 17 (quiet title), but denied both sets of defendants' motions for summary judgment. See Mem. Order [Docket Entry 64] at 4-5. In denying summary judgment to HSBC and Ocwen, the Court explained that denial was necessary, "if only because, until or unless we are able to sort out who is the proper owner of the property and who owes what to whom, they are necessary parties." Id. at 5. With respect to the Smiths, the Court found that summary judgment would also be improper, given the "many unanswered questions in this record" and the fact that plaintiffs "have not yet had the discovery that might fill some of the gaps in the record." Id.
After the completion of discovery, plaintiffs voluntarily dismissed all claims against HSBC and Ocwen except Count 13 (declaratory judgment). See 4/20/10 Minute Entry. Now before the Court are the post-discovery, renewed motions for summary judgment filed by the Smiths and by HSBC and Ocwen. HSBC and Ocwen seek summary judgment on plaintiffs' only remaining claim against them, while the Smiths seek summary judgment on all twelve of plaintiffs' claims against them -- that is, their claims alleging fraud (Count 1), violations of the D.C. Consumer Protection Procedures Act (Count 2), the D.C. Loan Shark Act (Count 3), the D.C. Interest and Usury Law (Count 4), the D.C. Consumer Credit Service Organization Act (Count 5), and the Real Estate Settlement and Procedures Act (Count 6), as well as their common law claims for conversion (Count 8), injurious falsehood, disparagement, and slander of title (Count 9), unjust enrichment (Count 10), and breach of contract (Count 11), and, finally, plaintiffs' quiet title claim (Count 17) and request for a declaratory judgment (Count 13). The Smiths have also moved for summary judgment with respect to their counter-claims against plaintiffs for unjust enrichment and declaratory relief, in which they seek $425,000 in damages.
Summary judgment is appropriate when the pleadings and the evidence demonstrate that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party may successfully support its motion by identifying those portions of "the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of motion only), admissions, interrogatory answers, or other materials," which it believes demonstrate the absence of a genuine issue of material fact. Fed. R. Civ. P. 56(c)(1); see also Celotex, 477 U.S. at 323.
In determining whether there exists a genuine dispute of material fact sufficient to preclude summary judgment, the court must regard the non-movant's statements as true and accept all evidence and make all inferences in the non-movant's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A non-moving party, however, must establish more than the "mere existence of a scintilla of evidence" in support of its position. Id. at 252. By pointing to the absence of evidence proffered by the non-moving party, a moving party may succeed on summary judgment. Celotex, 477 U.S. at 322. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citations omitted). Summary judgment is appropriate if the non-movant fails to offer "evidence on which the jury could reasonably find for the [non-movant]." Id. at 252.
HSBC and Ocwen both seek summary judgment on Count 13 of plaintiffs' Second Amended Complaint, in which plaintiffs request a declaratory judgment setting forth "their rights and responsibilities under the contracts between the parties." 2nd Am. Compl. ¶ 97. Specifically, plaintiffs demand that the December 28, 2005 deed of sale "be declared null and void"; that the "$425,000 Deed of Trust liens on the Plaintiffs' property be declared null and void"; and that the Court enter a judgment "vesting the subject real property title in the sole name of the Plaintiff Gavin M. Chen and Sara J. Lee." Id. HSBC has moved for summary judgment on the ground that it is a bona fide purchaser for value, and as such, its interests in the property are valid and enforceable even if the Smiths obtained title to the property by fraud.
Ocwen argues that summary judgment should be entered in its favor because it does not hold any beneficial interest in the property, and therefore, it "has no ability to independently comply with any declaratory judgment with respect to title." See HSBC Mot. at 15.
Ocwen is correct that it is not a proper defendant in plaintiffs' declaratory judgment action. Ocwen is merely the servicing agent for the two notes; it does not hold the beneficial interest in the notes or deeds of trust, nor does it possess the right to payment on the notes. Jones Aff. ¶ 4. Plaintiffs mistakenly assert that Ocwen is a necessary party because "there is a fierce dispute about how the deed, currently held by HSBC and Ocwen, was obtained." See Pls.' Opp. to HSBC Mot. [Docket Entry 74] at 10. But again, the deeds of trust belong only to HSBC, not to Ocwen. Because Ocwen does not possess any beneficial interest in the notes or deeds of trust, it "cannot afford Plaintiffs the declaratory relief they seek." HSBC Mot. at 15. Hence, Ocwen's motion for summary judgment will be granted.
Whether HSBC is entitled to summary judgment presents a more complicated question, as it depends both on the nature of the alleged fraudulent transaction between plaintiffs and the Smiths, and on whether HSBC can be considered a bona fide purchaser for value. A bona fide purchaser is "one who 'acquire[d] . . . interest in a property for valuable consideration and without notice of any outstanding claims which are held against the property by third parties.'" Smith v. Wells Fargo Bank, 991 A.2d 20, 26 (D.C. 2010) (quoting Clay Props., Inc. v. Wash. Post Co., 604 A.2d 890, 894 (D.C. 1992)). A bona fide purchaser is "protected from outstanding interests in the property of which it had no notice," see Smith, 991 A.2d at 26, and hence a bona fide purchaser "may obtain a valid interest in real property from someone who obtained that property by fraud," so long as the bona fide purchaser "had no notice of the fraud." Haley v. Corcoran, 659 F. Supp. 2d 714, 722 (D. Md. 2009) (citing Wicklein v. Kidd, 131 A.2d 780, 783 (Md. 1926)).*fn8 Courts in the District of Columbia have held that "deed of trust holders" like HSBC are "on the same legal footing as bona fide purchasers in matters involving title to real property" when they "take an interest in real property in exchange for value and without notice of an outstanding claim." Assocs. Fin. Servs. of Am., Inc. v. Dist. of Columbia, 689 A.2d 1217, 1221-22 (D.C. 1997) (citing Osin v. Johnson, 243 F.2d 653, 657 (D.C. Cir. 1957)).
However, HSBC cannot be afforded the protections available to bona fide purchasers if the alleged fraudulent conveyance of the property from plaintiffs to the Smiths was "void ab initio." See Smith, 991 A.2d at 26. In contrast to a voidable contract -- which "may be avoided or confirmed," but is not "absolutely void and of no effect" -- a contract that is void ab initio is "null from the beginning and nothing can cure it." Julian v. Buonassissi, 963 A.2d 234, 244 (Md. Ct. Spec. App. 2009), vacated on other grounds, 997 A.2d 104 (Md. 2010). This distinction is significant for purposes of determining the rights of bona fide purchasers, for while a "voidable deed is 'unassailable in the hands of a bona fide purchaser,' the 'protections afforded to bona fide purchasers do not apply to deeds that are void.'" Smith, 991 A.2d at 26 (quoting SEC v. Madison Real Estate Group, LLC, 647 F. Supp. 2d 1271, 1279 (D. Utah 2009)).
Before assessing whether HSBC constitutes a bona fide purchaser, then, this Court first must determine whether the deed by which plaintiffs transferred title to their property to the Smiths was void ab initio. Forged deeds are void ab initio, see, e.g., M.M. & G., Inc. v. Jackson, 612 A.2d 186, 191 (D.C. 1992) ("It is well settled that a forged deed cannot validly transfer property and that even a bona fide purchaser takes nothing from that conveyance"); Julian, 997 A.2d at 120 (quoting Harding v. Ja Laur Corp., 315 A.2d 132, 135 (D.C. 1974)) ("A forged deed . . . is void ab initio"), but plaintiffs have conceded that their signatures were not forged on the December 28, 2005 deed of sale. See n.1 supra. A non-forged deed may, however, still be considered void ab initio if it was obtained via "fraud in the factum," defined as "the sort of fraud that procures a party's signature to an instrument without knowledge of its true nature or contents." See Langley v. FDIC, 484 U.S. 86, 93-94 (1987); see also Meyers v. Murphy, 28 A.2d 861, 862 (Md. 1942) (explaining that fraud in the factum arises "from the want of identity or disparity between the instrument executed and the ...