Vous êtes sur la page 1sur 30

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 1 of 30

FILED
2011 Jul-08 AM 09:45 U.S. DISTRICT COURT N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA, NORTHEASTERN DIVISION SAN FRANCISCO RESIDENCE CLUB, INC.; TAK TECH POINT, LLC; KKA CAS, LLC; THOMAS OSHEA and ANNE DONAHUE OSHEA, as Trustees of the Trust of Thomas and Anne OShea; THOMAS OSHEA, individually; and KATE LARKIN DONAHUE; ) ) ) ) ) ) ) ) Plaintiffs, ) ) v. ) ) CHERYL BASWELL-GUTHRIE; ) BASWELL- GUTHRIE, P.C.; and ) ONE SOURCE ESCROW & TITLE, LLC, ) ) Defendants. ) ) COMPLAINT COME NOW the Plaintiffs in the above-referenced action and assert the following Complaint against Defendants Cheryl Baswell-Guthrie, BaswellGuthrie, P.C., and One Source Title & Escrow, LLC: PARTIES 1. Plaintiff San Francisco Residence Club, Inc. (SFRC) is a California

CV NO.

corporation which, at all times pertinent hereto, was registered with the Alabama Secretary of States Office to conduct business within the State of Alabama.

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 2 of 30

2.

Plaintiff KKA CAS, LLC (KKA) is an Alabama limited liability

company whose members are citizens of California. 3. Plaintiff TAK Tech Point, LLC (TAK) is an Alabama limited

liability company whose members are citizens of California. 4. Plaintiff Thomas OShea is a resident of Alameda County, California

and brings this action individually and in his capacity as a Trustee of the Trust of Thomas and Anne OShea (the OShea Trust). The OShea Trust is a revocable living trust and was established under the laws of the State of California and is maintained within the State of California. Thomas OShea is, and, at all relevant times herein, was a managing member of Plaintiff TAK Tech Point, LLC. 5. Anne Donahue OShea brings this action in her capacity as a Trustee

of the OShea Trust. 6. Plaintiff Kate Larkin Donahue is a resident of Marin County,

California. Ms. Donahue is and, at all relevant times herein, was a managing member of Plaintiff KKA CAS, LLC. 7. Defendant Cheryl Baswell-Guthrie (Baswell-Guthrie) is an adult

resident of Madison County, Alabama. 8. Defendant Baswell-Guthrie, P.C. (BGPC), is an Alabama

professional corporation with its principal place of business located at 4092 South

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 3 of 30

Memorial Parkway SW, Suite 100, Huntsville, Alabama 35802. Ms. BaswellGuthrie is and, at all relevant times herein, was the sole shareholder of BGPC. 9. Defendant One Source Title & Escrow, LLC (One Source) is an

Alabama limited liability company with its principal place of business located at 4092 South Memorial Parkway SW, Suite 100, Huntsville, Alabama 35802. Ms. Baswell-Guthrie is and, at all relevant times herein, was the sole member of One Source. JURISDICTION AND VENUE 10. This Court has subject matter jurisdiction of this action pursuant to 28

USC 1332, and venue in this Honorable Court is proper pursuant to 28 USC 1391. Specifically, the requirements for complete diversity jurisdiction exist because: (1) the Plaintiffs are citizens of the State of California; (2) the Defendants are citizen of the State of Alabama; and (3) the amount in controversy exceeds $75,000.00. Additionally, venue in this district is proper, as (1) Defendant

Baswell-Guthrie maintains her residence in Madison County, Alabama; (2) Defendants BGPC and One Source maintain their principal places of business in Madison County, Alabama; and (3) the actions giving rise to the Plaintiffs claims primarily occurred within Madison County, Alabama.

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 4 of 30

THE UNDERLYING PROPERTY TRANSACTIONS 11. Plaintiffs are the owners of certain commercial real estate properties

located in Huntsville, Alabama, specifically at 100 Quality Circle (hereinafter referred to as the Quality Circle Property) and 7027 Old Madison Pike (hereinafter referred to as the OMP Property), which they purchased in November and December of 2007.1 12. Defendant Baswell-Guthrie, by and through her law firm, BGPC,

served as the closing agent2 for the Quality Circle and OMP property purchase transactions (collectively referred to herein as the Purchase Transactions). Additionally, Defendant One Source served as the escrow and title insurance agent for the Purchase Transactions.
1

Per a December 4, 2007 Deed to the Quality Circle Property, title was held by Quality Circle, LLC, a holding company created for that purchase transaction, of which Plaintiffs SFRC, Tom OShea and Kate Donahue held a majority interest. As of April 19, 2011, Plaintiffs KKA CAS, Kate Donahue, and the OShea Trust are the record owners of the Quality Circle Property (with a collective ownership interest of 100%) as tenants-in-common. Per a November 30, 2007 Deed to the OMP Property, title was transferred to Plaintiffs SFRC, TAK, KKA, and non-parties 7027 Old Madison Pike, LLC, Jeri Holden, and Delta Trust & Bank as custodian for Elizabeth A. Mason Traditional IRA (hereinafter referred to as Beth Mason) as tenants-in-common. Per the December, 2007 OMP Deed, Plaintiffs held a majority interest (i.e., over 92%) in the OMP Property, as well. As of April 19, 2011, Plaintiffs SFRC, TAK, and KKA are the record owners of the OMP Property (with a collective ownership interest of 100%) as tenants-in-common.
2

Baswell-Guthrie and BGPC have adamantly denied that an attorney-client relationship existed between either of them and the Plaintiffs with regard to the OMP and Quality Circle transactions. Accordingly, Plaintiffs will describe their roles in the underlying transactions as closing agent, in lieu of the generically used term closing attorney. As a point of clarification, it is not the Plaintiffs intention to assert legal malpractice claims via this action; rather the Plaintiffs claims relate to those services rendered by, and/or other actions of, the Defendants which do not fall within the definition of legal services under the Alabama Legal Services Liability Act. 4

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 5 of 30

13.

On May 23, 2008, the OMP Owners refinanced the OMP Property and

Baswell-Guthrie, by and through BGPC, served as the closing agent for that transaction (referred to herein as the OMP Refinance). Likewise, Defendant One Source also served as the escrow and title insurance agent for the OMP Refinance. INITIAL CAPITAL CONTRIBUTIONS 14. On November 30, 2007, One Source received $3,185,500.00 in wire

transfers from the Plaintiffs, as follows: Contributor SFRC Tom OShea Kate Donahue TAK Tech Point, LLC KKA CAS, LLC Amount $3,000,000.00 $82,500.00 $82,500.00 $10,000.00 $10,500.00

These funds were deposited into One Sources closing escrow account at Servis1st Bank (i.e., account #1110012869, hereinafter referred to as the Closing Escrow Account) as capital contributions to be used towards the Purchase Transactions. 15. Additionally, it was expected that One Source would maintain those

funds in its escrow account, and in trust, until the respective property purchasers (including but not limited to the Plaintiffs) authorized specific disbursements at closing via agreed-upon closing statements for each transaction.

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 6 of 30

16.

Contrary to this understanding, and without the knowledge or consent

of the Plaintiffs, One Source transferred a total of $3,232,500.003 from the Closing Escrow Account to an interest bearing account with Servis1st Bank (i.e., account #1110012638, hereinafter referred to as the Interest-Bearing Account) which was held in the name and for the benefit of One Source. 17. These funds were held in the Interest-Bearing Account until

Defendants returned $2,200,000.00 to the Closing Escrow Account on December 6, 2007, and the remaining $1,032,500.00 on December 17, 2009. 18. On January 2, 2008, One Source transferred another $450,000.00

from the Closing Escrow Account to the Interest-Bearing Account.4 Over the next two months, a majority of these funds (i.e., $449,994.98) were distributed towards various OMP Property obligations.5 The remaining escrow funds in the Interest-

One Source also received on November 30, 2007 a $200,000.00 wire transfer from co-investor Beth Mason.
4

As a condition of closing, the original OMP lender, Compass Bank, required the deposit of $920,000 in escrowed funds to be used towards tenant improvements on the OMP Property. These funds were distributed to Compass Bank from One Source in December of 2007. On January 2, 2008, Compass Bank returned a portion of those funds (i.e., $494,199.13) to One Source for distribution towards the tenant improvements. One Source did not, however, properly distribute these funds; rather it retained $2,431.85 for unspecified fees related to the Quality Circle closing and distributed another $40,182.00 to Baswell-Guthrie, PC for legal fees purportedly relating to OMP.
5

On January 4, 2008, One Source distributed $406,444.98 to pay construction bills related to the OMP Property. On February 12, 2008, One Source distributed $6,050.00 to pay the OMP Propertys utility bill. On March 11, 2008, One Source distributed an additional $37,500.00 to the OMP Propertys lender. 6

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 7 of 30

Bearing Account (i.e., $5.02) were either retained by One Source or ultimately distributed to Baswell-Guthrie or BGPC. 19. While deposited and held within the Interest-Bearing Account, the

escrow funds mentioned above earned interest in excess of $5,000.00, all of which was either retained by One Source or subsequently distributed to BGPC and/or Baswell-Guthrie. At no point did Baswell-Guthrie, BGPC, or One Source report this interest to the Plaintiffs or otherwise issue a credit/refund to them for their pro rata share of the same. OTHER ESCROW DEPOSITS AND CLOSING DISBURSEMENTS 20. Between November 30 and December 31, 2007, Baswell-Guthrie and

One Source received, held, and disbursed escrow funds in excess of $12.9 million in furtherance of the Purchase Transactions.6 21. In May of 2008, Baswell-Guthrie and One Source received, held, and

distributed escrow funds in excess of $8.9 million, in furtherance of the OMP Refinance.7 AUTHORIZED CLOSING STATEMENTS 22. For each of the aforementioned transactions, One Source was

authorized to distribute escrow funds solely in accordance with certain closing


6

In addition to the initial capital contributions of $3,385,500.00, One Source received mortgageloan proceeds of $8.6 million (for the Quality Circle Property) and subsequent owner-capitalcontributions for the OMP Property of approximately $1 million.
7

These funds were provided via an $8.9 million mortgage-loan against the OMP Property. 7

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 8 of 30

statements which were produced by Baswell-Guthrie/One Source and approved by the respective property purchasers. Specifically: (1) the closing statement for the OMP property purchase (the OMP Closing Statement) was dated November 30, 2007 and initialed by the OMP purchasers; (2) the closing statement for the Quality Circle property purchase (the Quality Circle Closing Statement) was dated December 3, 2007 and initialed by the Quality Circle purchasers; and (3) the closing statement for the OMP Refinance (the OMP Refinance Statement) was originally dated May 8, 2008, and initialed by the OMP owners. 23. The Defendants were authorized to distribute escrowed funds towards

the Purchase Transactions and/or the OMP Refinance only as authorized by the OMP Closing Statement, the Quality Circle Closing Statement, and/or the OMP Refinance Statement. RETAINED REAL ESTATE COMMISSIONS 24. The Purchase transactions involved a total of four (4) real estate

brokers: Triad Properties Corp., InterSouth Properties, Huntsville Commercial Brokerage, and Coldwell Banker Premier. According to the Quality Circle and OMP Closing Statements, the brokers split aggregate sales commissions of $810,500.00 (i.e., $224,500.00 to Triad Properties, $83,334.00 to InterSouth, and $502,666.00 split between Huntsville Commercial Brokerage and Coldwell Banker Premier).
8

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 9 of 30

25.

One Source distributed the Quality Circle and OMP commission funds

to Triad Properties and InterSouth, but retained the Huntsville Commercial Brokerage/Coldwell Banker Premier commission funds. Based upon prior

agreement of the purchasers, these retained commissions should have been rolledin to the closings to: (1) support the ownership interests credited to certain copurchasers8; and (2) reduce the overall closing balances remaining on both transactions. The Defendants did not, however, properly allocate, distribute, or credit these funds. Rather, One Source retained a significant portion these funds for its benefit and/or distributed said funds to Baswell-Guthrie and/or BGPC for their benefit. TITLE INSURANCE POLICY ISSUES 26. According to the Quality Circle Closing Statement, One Source

retained a total of $22,020.00 in premiums for title insurance coverage on the Quality Circle Property (i.e., owner-insured and lender-insured policies) issued through Chicago Title Insurance Company. Contrary to this reported premium, the Plaintiffs subsequently discovered that the aggregate premiums for both Quality Circle policies initially totaled only $19,900.00. One Source eventually produced copies of certain policy endorsements, for which the additional premiums (i.e.,
8

These particular purchasers/LLC members were affiliated with Coldwell Banker Premier/Huntsville Commercial Brokerage and agreed to fund their initial LLC capital contribution via the Coldwell Banker Premier/Huntsville Commercial Brokerage commissions. 9

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 10 of 30

$2,120.00) were purportedly necessary, but those endorsements appear to have been issued only after the Plaintiffs discovered and reported the premium discrepancy. 27. In December of 2007, One Source retained a $19,775.00 title

insurance premium for an owner-insured policy, issued through Chicago Title and covering the OMP Property. That policy was not issued, however, until August of 2008 -- eight months following the OMP purchase transaction. 28. During this lapse of coverage, multiple contractors asserted

materialmans liens against the OMP Property in excess of $2 million. These lien claims were ultimately satisfied by the OMP Property owners9 from funds obtained via the OMP Refinance transaction. Had One Source timely and properly issued an owner-insured title policy for the OMP Property, these claims would have been covered by title insurance. 29. In May of 2008, One Source retained an additional premium of

$15,730.00 for a lender-insured title policy issued through Chicago Title and covering the OMP Property. Contrary to this reported premium, the Plaintiffs subsequently discovered that the actual price of the lender-insured policy was only $50.00.

At the time, the Plaintiffs held an aggregate ownership interest of the OMP Property in excess of 92%. 10

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 11 of 30

30.

Upon investigation of these discrepancies, the Plaintiffs have also

learned that One Source was not registered with the Alabama Department of Insurance as an authorized agent for Chicago Title Insurance Company until after the Purchase Transactions were completed. One Sources pre-registration activity as a purported agent of Chicago Title was a violation of Alabama Code section 2725-4 (1975, as amended). UNAUTHORIZED FEES 31. In addition to fees and expense reimbursements that were properly

received by BGPC and One Source, the Defendants distributed and/or retained additional fees of $107,148.41 from the Closing Escrow Account. distributions were unauthorized and improper. SUMMARY OF TRANSACTIONS 32. While handling over $21 million in escrowed funds relating to the Said

Quality Circle and OMP transactions, the Defendants: (1) failed to issue titleinsurance policies in a timely and proper manner; (2) overcharged the Plaintiffs for the title insurance coverage actually provided; (3) misappropriated over $125,000.00 for their benefit; and (4) misrepresented and/or suppressed these facts from the Plaintiffs.

11

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 12 of 30

COUNT ONE: BREACH OF CONTRACT (ONE SOURCE) 33. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein. 34. One Source had and/or undertook a contractual duty in favor of the

Plaintiffs to: (a) maintain all closing/escrow funds deposited into its bank accounts, or otherwise held within its possession and/or control, until such time as said funds were to be properly disbursed in furtherance of the Quality Circle and OMP transactions or otherwise towards approved tenant-improvement costs for the OMP Property; (b) to accurately report and charge what disbursements were necessary to complete the Quality Circle and OMP transactions; and (c) to properly credit and/or refund to the Plaintiffs any funds contributed by them which were not required to complete the Quality Circle and OMP transactions. 35. One Source breached these duties by: (a) transferring closing/escrow

funds from the Closing Escrow Account to the Interest Bearing Account for its own benefit; (b) retaining and/or improperly distributing a portion of the transferred funds; (c) retaining and/or improperly distributing interest accrued upon the transferred funds; (d) failing to credit the Plaintiffs with interest accrued upon the transferred funds; (e) failing to properly distribute, allocate, credit, and/or otherwise account for $502,666.00 in retained real estate commissions; (f)
12

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 13 of 30

improperly reporting disbursements required to complete the Quality Circle and OMP transactions and improperly withholding escrowed funds based upon those erroneous reports; (g) failing to refund to the OMP owners, including the Plaintiffs, excess title insurance premiums of approximately $15,680.00; (h) improperly distributing additional fees of $107,148.41 to BGPC/One Source in excess of those authorized via the Quality Circle and OMP Closing Statements; and (i) improperly retaining and/or distributing any other funds within One Sources possession or control. 36. As a direct and proximate result thereof, Plaintiffs have suffered

monetary damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, Plaintiffs hereby demand a judgment in their favor and against One Source Title & Escrow, LLC for compensatory damages in an amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper. COUNT TWO: BREACH OF CONTRACT (BASWELL-GUTHRIE AND BGPC) 37. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein. 38. Baswell-Guthrie and BGPC had and/or undertook a contractual duty

in favor of the Plaintiffs to: (a) ensure that all closing/escrow funds deposited
13

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 14 of 30

within One Sources bank accounts, or otherwise held within the Defendants possession and/or control, were properly maintained until such time as said funds were to be properly disbursed in furtherance of the Quality Circle and OMP Closing Statements or otherwise towards approved tenant-improvement costs for the OMP Property; (b) to ensure that all disbursements required to complete the Quality Circle and OMP transactions were properly reported and charged to the respective purchasers, including the Plaintiffs; and (c) to ensure that the Plaintiffs were properly credited and/or refunded any funds contributed by them which were not required to complete the Quality Circle and OMP transactions. 39. Baswell-Guthrie and BGPC breached that duty by allowing and/or

facilitating: (a) the transfer of closing/escrow funds from the Closing Escrow Account to the Interest Bearing Account; (b) One Sources retention and/or improper distribution of a portion of the transferred funds; (c) One Sources retention and/or improper distribution of interest accrued upon the transferred funds; (d) One Sources failure to credit the Plaintiffs with interest accrued upon the transferred funds; (e) the improper distribution, allocation, credit, and/or accounting of $502,666.00 in retained real estate commissions; (f) the improper reporting and charging of disbursements required to complete the Quality Circle and OMP transactions; (g) the retention and/or improper distribution of excess title insurance premiums of $15,680.00; (h) the improper distribution of additional
14

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 15 of 30

fees of $107,148.41 to BGPC/One Source in excess of those authorized via the Quality Circle and OMP Closing Statements; and (i) the improper retention and/or distribution of any other funds derived from the Plaintiffs. 40. As a direct and proximate result thereof, Plaintiffs have suffered

monetary damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, Plaintiffs hereby demand a judgment in their favor and against Cheryl Baswell-Guthrie, and Baswell-Guthrie, P.C. for compensatory damages in an amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper. COUNT THREE: CONVERSION OF FUNDS (ONE SOURCE, BASWELL-GUTHRIE, AND BGPC) 41. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein. 42. With respect to the Quality Circle and OMP transactions, the

Defendants were authorized to hold and distribute funds deposited into the Closing Escrow Account solely in accordance with the Quality Circle and OMP Closing Statements, and only to the extent necessary to properly complete the Quality Circle and OMP transactions. 43. With respect to the funds deposited into One Sources Interest Bearing

Account from the Compass Bank escrow account, the Defendants were authorized
15

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 16 of 30

to distribute those funds only towards the payment of approved tenantimprovement construction costs associated with the OMP Property. 44. With respect to any funds not disbursed from either the Closing

Escrow or Interest Bearing Accounts in the manner described above, Plaintiffs held a majority ownership interest therein and, to the extent of said ownership interest, were the only proper recipients thereof. 45. By improperly disbursing, receiving, and/or retaining said funds, the

Defendants wrongfully took and exercised dominion of the same to the exclusion and/or in defiance of the Plaintiffs rights therein. 46. 47. Defendants are, thus, liable to the Plaintiffs for conversion. In committing the wrongful acts stated herein, the Defendants acted

willfully, with malicious intent to harm the Plaintiffs, and/or with a knowing or reckless disregard for the consequences of the same. 48. As a direct and proximate result thereof, Plaintiffs have suffered

monetary and mental anguish damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, Plaintiffs hereby demand a judgment in their favor and against One Source Title & Escrow, LLC, Cheryl BaswellGuthrie, and Baswell-Guthrie, P.C. for compensatory and punitive damages in an

16

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 17 of 30

amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper. COUNT FOUR: UNJUST ENRICHMENT (ONE SOURCE, BASWELL-GUTHRIE, BGPC) 49. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein. 50. Defendants are holding funds which: (1) in equity and good

conscience, belong to the Plaintiffs; (2) were obtained and/or held by the Defendants as the result of mistake or fraud; and (3) should be returned to the Plaintiffs. 51. As a direct and proximate result thereof, Plaintiffs have suffered

monetary damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, Plaintiffs hereby demand a judgment in their favor and against One Source Title & Escrow, LLC, Cheryl BaswellGuthrie, and Baswell-Guthrie, P.C. for compensatory damages in an amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper.

17

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 18 of 30

COUNT FIVE: WANTONNESS (ONE SOURCE) 52. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein. 53. In its capacity as escrow agent, One Source had and/or undertook a

duty in favor of the Plaintiffs to: (a) maintain all closing/escrow funds deposited into its bank accounts, or otherwise held within its possession and/or control, until such time as said funds were to be properly disbursed in furtherance of the Quality Circle and OMP transactions or otherwise towards approved tenant-improvement costs for the OMP Property; (b) to accurately report and charge what disbursements were necessary to complete the Quality Circle and OMP transactions; and (c) to properly credit and/or refund to the Plaintiffs any funds contributed by them which were not required to properly complete the Quality Circle and OMP transactions. 54. One Source breached these duties by: (a) transferring funds from the

Closing Escrow Account to the Interest Bearing Account for its benefit; (b) retaining and/or improperly distributing a portion of the transferred funds; (c) retaining and/or improperly distributing interest accrued upon the transferred funds; (d) failing to credit the Plaintiffs with interest accrued upon the transferred funds; (e) failing to properly distribute, allocate, credit, and/or otherwise account
18

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 19 of 30

for $502,666.00 in retained real estate commissions; (f) improperly reporting disbursements required to complete the Quality Circle and OMP transactions and improperly withholding escrowed funds based upon those erroneous reports; (g) failing to refund to the OMP owners, including the Plaintiffs, excess title insurance premiums of $15,680.00; (h) improperly distributing additional fees of $107,148.41 to BGPC/One Source in excess of those authorized via the Quality Circle and OMP Closing Statements; and (i) improperly retaining and/or distributing any other funds within One Sources possession or control. 55. In its capacity as the purported title insurance agent for the OMP

transactions, One Source also had a duty to: (1) timely and properly issue title insurance covering the OMP purchase transaction; and (2) to accurately calculate, report, and charge the OMP owners for a lender-insured policy covering the OMP Property. 56. One Source breached that duty by: (1) failing to issue a proper title

commitment prior to the OMP purchase transaction; (2) failing to timely issue an owner-insured title policy from such a commitment; and (3) overcharging the OMP owners for a lender-insured policy covering the OMP Property. 57. In committing these wrongful acts, One Source acted wantonly with a

knowing and/or reckless disregard for the consequences of the same.

19

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 20 of 30

58.

As a direct and proximate result thereof, Plaintiffs have suffered

monetary and mental anguish damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, Plaintiffs hereby demand a judgment in their favor and against One Source Title & Escrow, LLC for compensatory and punitive damages in an amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper. COUNT SIX: WANTONNESS (BASWELL-GUTHRIE AND BGPC) 59. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein. 60. In their capacity as closing agent, Baswell-Guthrie and BGPC had

and/or undertook a duty in favor of the Plaintiffs to: (a) ensure that all closing/escrow funds deposited within One Sources bank accounts, or otherwise held within the Defendants possession and/or control, were properly maintained until such time as said funds were to be properly disbursed in furtherance of the Quality Circle and OMP Closing Statements or otherwise towards approved tenantimprovement costs for the OMP Property; (b) to ensure that all disbursements required to complete the Quality Circle and OMP transactions were properly reported and charged to the respective purchasers, including the Plaintiffs; and (c)
20

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 21 of 30

to ensure that the Plaintiffs were properly credited and/or refunded any funds contributed by them which were not required to complete the Quality Circle and OMP transactions. 61. Baswell-Guthrie and BGPC breached that duty by allowing and/or

facilitating: (a) the transfer of closing/escrow funds from the Closing Escrow Account to the Interest Bearing Account; (b) One Sources retention and/or improper distribution of a portion of the transferred funds; (c) One Sources retention and/or improper distribution of interest accrued upon the transferred funds; (d) One Sources failure to credit the Plaintiffs with interest accrued upon the transferred funds; (e) the improper distribution, allocation, credit, and/or accounting of $502,666.00 in retained real estate commissions; (f) the improper reporting and charging of disbursements required to complete the Quality Circle and OMP transactions; (g) the retention and/or improper distribution of excess title insurance premiums of approximately $15,680.00; (h) the improper distribution of additional fees of $107,148.41 to BGPC/One Source, in excess of those authorized via the Quality Circle and OMP Closing Statements; and (i) the improper retention and/or distribution of any other funds derived from the Plaintiffs.

21

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 22 of 30

62.

In committing the wrongful acts stated herein, Baswell-Guthrie and

BGPC acted wantonly with a knowing and/or reckless disregard for the consequences of the same. 63. As a direct and proximate result thereof, Plaintiffs have suffered

monetary and mental anguish damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, Plaintiffs hereby demand a judgment in their favor and against Cheryl Baswell-Guthrie, and Baswell-Guthrie, P.C. for compensatory and punitive damages in an amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper. COUNT SEVEN: MISREPRESENTATION (ONE SOURCE, BASWELL-GUTHRIE, AND BGPC) 64. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein. 65. In their respective capacities as closing agent, escrow agent, and

insurance agent for the Quality Circle and Tech Point transactions, Defendants One Source, Baswell-Guthrie, and BGPC, acting in concert, made misrepresentations of material fact regarding distributions purportedly required to complete the Quality

22

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 23 of 30

Circle and OMP transactions and the aggregate amounts of cash capital (i.e., the closing balances) required to complete those transactions, to wit: According to the Quality Circle Closing Statement, the purchasers were purportedly required to pay a closing balance of $2,294,181.71 to fully fund that transaction. In fact, however, the Defendants inflated this figure by $187,802.73;10 According to the OMP Closing Statement, the purchasers were purportedly responsible for a closing balance of $2,173,866.52 to fully fund that transaction. In fact, however, the Defendants inflated this figure, possibly by as much as $830,926.3011, and also failed to apply excess closing funds in their possession to that purported balance. According to the OMP Refinance Statement, the OMP owners were purportedly responsible for a closing balance of $65,644.20. In fact, however, the Defendants inflated this figure by $1,606.9412 and, further, failed to apply excess closing funds in their possession to that purported balance. 66. Additionally, Baswell-Guthrie and One Source made

misrepresentations of material fact regarding the actual premium due for lender-insured title insurance on the OMP Property. Specifically, the

Defendants represented in May of 2008 that said coverage would require an


10

This aggregate discrepancy arises from retained real estate commissions of $166,666.00, retained third-party legal fees of $19,106.48, a retained reserve of $1,346.00, and an inflated One Source charge of $684.25.
11

This aggregate figure arises from discrepancies in reported distributions to Compass Bank ($494,199.13), BGPC ($727.17), and the Huntsville Commercial Brokerage/Coldwell Banker Premier real estate commissions ($336,000.00).
12

This figure arises from discrepancies in reported distributions to MCI, the mortgage broker ($1,606.94), and One Source ($9,868.09). 23

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 24 of 30

additional premium of $15,730.00, when in fact the proper charge was only $50.00. 67. These misrepresentations were made willfully with malicious intent

to deceive and harm the Plaintiffs, or recklessly without knowledge, or made by mistake, and justifiably acted and relied upon by the Plaintiffs to their detriment. 68. Through active suppression of the same, the Defendants hid these

misrepresentations from Plaintiffs until their discovery of the same, via independent investigation, between September of 2009 and February of 2011. 69. As a direct and proximate result thereof, the Plaintiffs have suffered

monetary and mental anguish damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, Plaintiffs hereby demand a judgment in their favor and against Cheryl Baswell-Guthrie, Baswell-Guthrie, P.C., and One Source Title & Escrow, LLC for compensatory and punitive damages in an amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper. COUNT EIGHT: SUPPRESSION (ONE SOURCE, BASWELL-GUTHRIE, AND BGPC) 70. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein.


24

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 25 of 30

71.

Defendants suppressed the following material facts from the Plaintiffs,

despite being obligated to communicate the same: (1) that One Source transferred the closing/escrow funds from the Closing Account to the Interest Bearing Account; (2) that interest accrued upon said funds while deposited within the Interest Bearing Account; (3) that One Source retained and/or distributed to Baswell-Guthrie and/or BGPC a portion of the transferred funds and interest accrued thereon; (4) that One Source did not fully and/or properly credit retained real estate commissions towards the Purchase Transactions; (5) that One Source retained a portion of said commissions and/or distributed them to Baswell-Guthrie and/or BGPC; (6) that the Quality Circle and OMP Closing Statements did not accurately reflect distributions required to complete the transactions and/or the distributions actually made from escrow; (7) that One Source intended to distribute, and ultimately distributed, escrowed funds for additional fees purportedly owed to BGPC and/or One Source in excess of those amounts authorized on the Quality Circle and OMP Closing Statements; (8) that the premium charged for the OMP lender-insured title policy was in excess of the actual, and proper, premium initially charged by Chicago Title; and (9) that the Defendants, acting in concert, misappropriated over $100k from the Quality Circle and OMP transactions.

25

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 26 of 30

72.

Defendants hid these material facts from Plaintiffs until their

discovery of the same, via independent investigation, between September of 2009 and February of 2011. 73. In suppressing these material facts, Defendants acted willfully with

malicious intent to deceive and harm the Plaintiffs, and/or with a knowing or reckless disregard for the consequences of the same. 74. As a direct and proximate result thereof, the Plaintiffs have suffered

monetary and mental anguish damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, the Plaintiffs demand a judgment in their favor and against One Source Title & Escrow, LLC, Baswell-Guthrie, P.C., and Cheryl Baswell-Guthrie for compensatory and punitive damages in an amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper. COUNT NINE: DECEIT (ONE SOURCE, BGPC, AND BASWELL-GUTHRIE) 75. Plaintiffs hereby incorporate the material allegations contained in

paragraphs one though thirty-two of this Complaint as if set-out fully herein. 76. Defendants deceived the Plaintiffs by willfully misrepresenting the

distributions purportedly required to complete the Quality Circle and OMP


26

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 27 of 30

transactions and the aggregate amounts of cash capital (i.e., the closing balances) required to complete those transactions, to wit: According to the Quality Circle Closing Statement, the purchasers were purportedly required to pay a closing balance of $2,294,181.71 to fully fund that transaction. In fact, however, the Defendants inflated this figure by $187,802.73; According to the OMP Closing Statement, the purchasers were purportedly responsible for a closing balance of $2,173,866.52 to fully fund that transaction. In fact, however, the Defendants inflated this figure, possibly by as much as $830,926.30, and also failed to apply excess closing funds in their possession to that purported balance. According to the OMP Refinance Statement, the OMP owners were purportedly responsible for a closing balance of $65,644.20. In fact, however, the Defendants inflated this figure by $1,606.94 and, further, failed to apply excess closing funds in their possession to that purported balance. 77. Additionally, Baswell-Guthrie and One Source made

misrepresentations of material fact regarding the actual premium due for lenderinsured title insurance on the OMP Property. Specifically, the Defendants

represented in May of 2008 that said coverage would require an additional premium of $15,730.00, when in fact the proper charge was only $50.00. 78. These misrepresentations were made willfully with knowledge of their

falsehood and/or fraudulently or recklessly without knowledge of their falsehood, but with the intent to deceive, and for the purpose of inducing the Plaintiffs to act

27

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 28 of 30

to their detriment. Furthermore, Plaintiffs relied upon said misrepresentations to their detriment. 79. Defendants hid these misrepresentations from Plaintiffs until their

discovery of the same, via independent investigation, between September of 2009 and February of 2011. 80. Defendants further deceived the Plaintiffs by suppressing the

following material facts, which Defendants were under an obligation to communicate: (1) that One Source transferred the closing/escrow funds from the Closing Account to the Interest Bearing Account; (2) that interest accrued upon said funds while deposited within the Interest Bearing Account; (3) that One Source retained and/or distributed to Baswell-Guthrie and/or BGPC a portion of the transferred funds and interest accrued thereon; (4) that One Source did not fully and/or properly credit retained real estate commissions towards the Purchase Transactions; (5) that One Source retained a portion of said commissions and/or distributed them to Baswell-Guthrie and/or BGPC; (6) that the Quality Circle and OMP Closing Statements did not accurately reflect distributions required to complete the transactions and/or the distributions actually made from escrow; (7) that One Source intended to distribute, and ultimately distributed, escrowed funds for additional fees purportedly owed to BGPC and/or One Source in excess of those amounts authorized on the Quality Circle and OMP Closing Statements; (8)
28

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 29 of 30

that the premium charged for the OMP lender-insured title policy was in excess of the actual, and proper, premium initially charged by Chicago Title; and (9) that the Defendants, acting in concert, misappropriated over $100k from the Quality Circle and OMP transactions. 81. Defendants were bound to disclose these material facts and/or gave

information of other facts which were likely to mislead the Plaintiffs regarding the same. 82. Defendants hid these material facts from Plaintiffs until their

discovery of the same, via independent investigation, between September of 2009 and February of 2011. 83. As a direct and proximate result thereof, the Plaintiffs have suffered

monetary and mental anguish damages within the jurisdictional limits of this Court. WHEREFORE, premises considered, Plaintiffs hereby demand a judgment in their favor and against One Source Title & Escrow, LLC, Baswell-Guthrie, P.C., and Cheryl Baswell-Guthrie for compensatory and punitive damages in an amount within the jurisdiction of this Honorable Court, plus any such further relief this Honorable Court deems just and proper.

/s/ Charles A. Ray, IV CHARLES A. RAY, IV


29

Case 5:11-cv-02420-SLB Document 1

Filed 07/01/11 Page 30 of 30

CHARLES A. RAY, IV MAPLES & RAY, P.C. ATTORNEYS FOR PLAINTIFFS 401 HOLMES AVENUE, SUITE H HUNTSVILLE, AL 35801 (256) 489-9779 - TELEPHONE (256) 489-9720 FACSIMILE

TO BE SERVED VIA PRIVATE PROCESS SERVER: Cheryl Baswell-Guthrie 4092 South Memorial Parkway SW, Suite 100 Huntsville, AL 35802 Baswell-Guthrie, P.C. 4092 South Memorial Parkway SW, Suite 100 Huntsville, AL 35802 One Source Title & Escrow, LLC 4092 South Memorial Parkway SW, Suite 100 Huntsville, AL 35802

30