Brown v. Emery Federal Credit Union

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

ANGELIA BROWN, et al., *

Plaintiffs, *

v. * Case No.: DLB-21-591

EMERY FEDERAL CREDIT UNION, *

Defendant. *

MEMORANDUM OPINION

Angelia Brown, Michael and Sharlene Ellis, Joseph Taylor, and Angelia (Miller) Mincey,

all of whom received residential home mortgage loans originated or brokered by defendant Emery

Federal Credit Union (“Emery” or “Credit Union”), bring the instant action in which they allege

violations of the Real Estate Settlement Procedures Act (“RESPA”) and the Racketeer Influence

Corrupt Organizations Act (“RICO”). ECF 1. Emery has moved to transfer the case to the

Southern District of Ohio pursuant to 28 U.S.C. § 1404. ECF 18. It argues a forum-selection

clause in a contract to which plaintiffs are bound requires transfer of this case to Hamilton County,

Ohio, where a federal court in the Southern District of Ohio is located. ECF 18. The motion is

ripe for disposition. ECF 27 & 29. The Court finds that the mandatory forum-selection clause

covers the claims at issue in this case and that it would not be unreasonable to enforce it. Because

the clause provides that plaintiffs’ claims must be brought in Hamilton County, Ohio, the motion

to transfer is granted.1

1 Defendant also has moved to dismiss the complaint in its entirety. ECF 19. Because the Court

grants the motion to transfer, it declines to decide the pending motion to dismiss.

I. Background

This case involves an allegedly illegal kickback agreement between Emery and All Star

Title, Inc. (“All Star”), for which plaintiffs claim to have paid the price. For the purposes of the

pending motion to transfer, the underlying dispute is relevant to the extent it implicates a forum-

selection clause Emery argues prevents this Court from adjudicating this case. Indeed, this case is

predicated on another case filed in and dismissed without prejudice by the Southern District of

Ohio. See Solis v. Emery Fed. Credit Union, 459 F. Supp. 3d 981, 996 (S.D. Ohio 2020).

Plaintiffs refinanced mortgage loans with Emery’s assistance. Emery, in turn, referred

plaintiffs to All Star for settlement services. Plaintiffs allege they paid illegitimate and inflated

fees for those services, unwittingly and unwillingly funding an illegal kickback agreement

whereby All Star defrayed Emery’s marketing costs in exchange for the referrals. In support of

these allegations, plaintiffs attached numerous documents to their complaint, most of which

apparently evidence emails between All Star and representatives from a variety of lenders and

Emery. According to plaintiffs, these emails and other documents showing the details of the

plaintiffs’ loans and closing costs establish Emery’s liability under RESPA and RICO. But that

issue is not before the Court today. Nor does the pending motion to transfer more than tangentially

touch upon the merits of those claims. Rather, the motion to transfer primarily presents two

questions: whether the contract containing the forum-selection clause is valid and, if so, whether

it should be enforced.

Attached to Emery’s motion to transfer are “Membership Application and Ownership

Information” forms that the plaintiffs filled out and signed.2 According to Troy Cyrus, Emery’s

2 Mrs. Ellis did not fill out the form, but her husband did. Plaintiffs do not argue this fact is material

to the pending motion.

compliance manager, “[i]n order to obtain a mortgage loan from Emery FCU, a borrower who is

not already a member of Emery FCU must sign up to join the credit union.” ECF 18-2, ¶ 6. Each

plaintiff who filled out an application signed an agreement that states:

By signing below, I/we agree to the terms and conditions of the Membership and

Account Agreement, Truth-in-Savings Disclosure, Funds Availability Policy

Disclosure, if applicable, and to any amendment the Credit Union makes from time

to time which are incorporated herein. I/We acknowledge receipt of a copy of the

agreements and disclosures applicable to the accounts and services requested

herein. If an access card or EFT service is requested and provided, I/we agree to

the terms of and acknowledge receipt of the Electronic Fund Transfers Agreement

and Disclosure.

ECF 18-3 – 18-6. While plaintiffs uniformly affirm they do not recall signing the applications,

they also unanimously identify the signatures on the applications as their own. ECF 27-1 – 27-4.

Also attached to Emery’s motion to transfer is a copy of the Membership and Account

Agreement (“MAA”) in effect at the time the plaintiffs signed the applications. ECF 18-7. It

begins, “This Agreement covers your rights and responsibilities concerning your accounts and the

rights and responsibilities of the Credit Union providing this Agreement.” ECF 18-7, at 2. The

MAA contains a forum-selection clause: “As permitted by applicable law, you agree that any legal

action regarding this Agreement shall be brought in the county in which the Credit Union is

located.” ECF 18-7, ¶ 34. Plaintiffs concede Emery is incorporated and has its principal place of

business in Hamilton County, Ohio. ECF 9, ¶ 14. The MAA contains another clause relevant to

the pending motion. It provides that “[a]ny conflict regarding what you and our employees say or

write will be resolved by reference to this agreement.” ECF 18-7, ¶ 17.

II. Discussion

Emery moves to transfer this case to the Southern District of Ohio pursuant to 28 U.S.C. §

1404(a). That statute provides: “For the convenience of parties and witnesses, in the interest of

justice, a district court may transfer any civil action to any other district or division where it might

have been brought or to any district or division to which all parties have consented.” 28 U.S.C. §

1404(a). Section 1404(a) “permits transfer to any district where venue is also proper . . . or to any

other district to which the parties have agree by contract or stipulation. Section 1404(a) therefore

provides a mechanism for enforcement of forum-selection clauses that point to a particular federal

district.” Atl. Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S. 49, 59 (2013).

“[A] proper application of § 1404(a) requires that a forum-selection clause be ‘given controlling

weight in all but the most exceptional cases.” Id. at 59–60 (quoting Stewart Org., Inc. v. Ricoh

Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring)); see also BAE Sys. Tech. Sol. & Servs.,

Inc. v. Republic of Korea Def. Acquisition Program Admin., 884 F.3d 463, 471 (4th Cir. 2018).

When deciding whether to grant a motion to transfer venue under § 1404(a), courts

“ordinarily” weigh several factors, including convenience to the parties and witnesses and the

plaintiffs’ choice of forum. Atl. Marine Const. Co., 571 U.S. at 62–63. But “[t]he calculus changes

. . . when the parties’ contract contains a valid forum-selection clause, which represents the parties’

agreement as to the most proper forum.’” Id. (quoting Stewart 487 U.S. at 31). In such

circumstances, the plaintiff’s “choice of forum merits no weight,” and the Court “should not

consider arguments about the parties’ private interests.” Id. at 63–64. The Court may consider

only public-interest factors. Id.

Additionally, “a federal court interpreting a forum selection clause must apply federal law

in doing so.” Albemarle Corp. v. AstraZeneca UK Ltd., 628 F.3d 643, 650 (4th Cir. 2010). Federal

law generally favors enforcement of forum-selection clauses. Id. at 649. Valid forum-selection

clauses are presumptively enforceable when (1) the clause is “mandatory rather than permissive,”

BAE Sys. Tech. Sol. & Servs., 884 F.3d at 470, and (2) “the claims fall within the scope of the

forum-selection clause,” Evans v. Cantor Ins. Grp., No. GJH-21-617, 2021 WL 4951917, at *3

(D. Md. Oct. 25, 2021) (citing Open Text Corp. v. Grimes, 262 F. Supp. 3d 278, 287 (D. Md.

2017); Olawole v. Actionet, Inc., No. PX-16-3506, 2017 WL 1230821, at *2 (D. Md. Apr. 4,

2017)). A plaintiff may overcome the presumption of enforceability by demonstrating

enforcement of the clause would be unreasonable. Albemarle Corp., 628 F.3d at 649; BAE Sys.

Tech. Sol. & Serv., 884 F.3d at 471.

Courts outside the Fourth Circuit deciding a motion to transfer under § 1404(a) have

considered “evidence external to the complaint.” Anderson v. TransUnion, LLC, No. 17-1813,

2018 WL 334495, at *3 n.2 (E.D. Pa. Jan. 9, 2018); Panaserve, LLC v. Trion Sols., Inc., No. 19-

cv-16496-NLH, 2021 WL 2644122, at *2 n.3 (D.N.J. June 29, 2021). The parties ask the Court to

do so here.

A. Validity of the Contract

Before the Court considers whether the forum-selection clause should be enforced, the

Court first addresses the threshold question of whether the MAA, the contract containing the

clause, is valid. Plaintiffs argue the forum-selection clause should not be enforced because the

contract is invalid for lack of consideration and mutual assent. Defendant disagrees, arguing that

the MAA was supported by valid consideration and that the plaintiffs agreed to be bound by its

terms. The parties do not squarely address whether the Court should look to Maryland or Ohio

law to resolve these issues. Plaintiffs cite Maryland law; defendant cites Ohio law. Because there

is no meaningful difference between the states’ laws on consideration and mutual assent, the Court

cites and applies the law of both states.

The Court first addresses mutual assent. Plaintiffs argue that they did not assent to the

terms of the MAA because they did not sign the MAA. ECF 27, at 18–22. “Manifestation of

mutual assent requires that each party make a promise or begin to render performance.” Costner

Consulting Co. v. U.S. Bancorp, 960 N.E.2d 1005, 1010 (Ohio Ct. App. 2011); see Cochran v.

Norkunas, 919 A.2d 700, 708 (Md. 2007) (“Manifestation of mutual assent includes two issues:

(1) intent to be bound, and (2) definiteness of terms.”).

In their applications to become members of the Credit Union, the plaintiffs signed a

statement that directly referenced the MAA and indicated their agreement to its terms and

conditions. ECF 18-3 (Angelia Brown’s member application); ECF 18-4 (Angelia Miller’s

member application); ECF 18-5 (Michael Ellis’ member application); ECF 18-6 (Joseph Taylor’s

member application). Above their signature, the membership applications state: “By signing

below, I/we agree to the terms and conditions of the Membership and Account Agreement [and

other documents not relevant here] . . . which are incorporated herein. I/We acknowledge receipt

of a copy of the agreements and disclosures applicable to the accounts and services requested

herein.” ECF 18-3 – 18-6. Plaintiffs now claim that never received or reviewed the MAA before

signing the application. Even if true, the MAA was part of the application because it was

incorporated by reference. Both Ohio and Maryland have adopted “the doctrine of incorporation

by reference.” See Volovetz v. Tremco Barrier Sols., Inc., 74 N.E.3d 743, 751 (Ohio Ct. App.

2016); see, e.g., Woodpoint Seafood Grill, LLC v. Woodpoint Bar & Grill, Inc., No. 21-C-17-

59303-DJ, 2020 WL 1487696, at *2–3 (Md. Ct. Spec. App. Mar. 25, 2020). “Under that doctrine,

when a document is incorporated into a contract by reference, that document becomes part of the

contract.” Volovetz, 74 N.E.3d at 751; see, e.g., Woodpoint, 2020 WL 1487696, at *2–3. “The

parties to a contract may incorporate contractual terms by reference to a separate,

noncontemporaneous document, including . . . a separate document which is unsigned, if the

contract makes clear reference to the document and describes in such terms that its identity may

be ascertained beyond doubt.” Volovetz, 74 N.E.3d at 751 (quoting 11 Lord, Williston on

Contracts, Section 30:25, at 294–301 (4th Ed. 2012)) (internal quotation marks omitted); see also

Woodpoint, 2020 WL 1487696, at *2–3. By signing the membership application, plaintiffs agreed

to the terms and conditions of the incorporated-by-reference MAA, and they therefore intended

and promised to be bound by the MAA’s terms, including its forum-selection clause. Frazier v.

Navistar Int’l Transp. Corp., No. 99-CA-89, 2000 WL 426162, at *5 (Ohio Ct. App. Apr. 21,

2000) (finding a contract was valid because, in part, the party’s “signature on the application

manifested a clear intent to enter into the bargain”).

Plaintiffs cite Versus Evil LLC v. PNC Bank, N.A., and Ripley v. Long Distance Relocation

Services, LLC, for their position that they did not assent to the terms of the MAA. Versus Evil, --

- F. Supp. 3d ----, 2020 WL 2112155 (D. Md. May 4, 2020); Ripley, No CCB-19-373, 2019 WL

5538343 (D. Md. Oct. 25, 2019). Both cases are distinguishable. In Versus Evil, the plaintiffs

signed a statement that they acknowledged receipt of the relevant agreement and that the agreement

was binding on the defendant company. 2020 WL 2112155, at *4. The statement said nothing

about the plaintiffs’ agreement to be bound by the terms of the agreement, and mere

acknowledgement of receipt of an agreement does not amount to a binding acceptance of its terms.

Id. In Ripley, the defendant provided proof only that the plaintiffs signed an addendum to a

contract containing the forum-selection clause. 2019 WL 5538343, at *4. There was no indication

that the two documents cross-referenced each other. See id.

Here, in contrast, the plaintiffs signed a document that specifically incorporated the MAA

by reference, and by their signatures, they stated they agreed to the MAA’s terms and conditions.

That plaintiffs do not recall signing the document or ever receiving the MAA or any confirmation

regarding the next steps taken after they signed does not undermine the fact that they did, in fact,

sign the forms. ECF 27-1 – 27-4 (containing declarations from the plaintiffs in which they admit

the signatures on the member application forms are their own); see Bennett v. KeyBank, N.A., No.

L-19-1249, 2020 WL 1492573, at *5 (Ohio Ct. App. Mar. 27, 2020) (finding the plaintiff’s

“signature constitute[d] an acknowledgement that” the plaintiff agreed to the “terms and

conditions” and that whether the plaintiff “actually reviewed the terms and conditions” was

“irrelevant, because the incorporation was clearly stated within the document [the plaintiff]

voluntarily executed”); Holloman v. Cir. City Stores, Inc., 894 A.2d 547, 556 (Md. 2006)

(“[U]nder Maryland law, a party who signs a contract is presumed to have read and understood its

terms and as such will be bound by its execution.”).

Plaintiffs also argue the MAA was not supported by consideration. Specifically, they claim

that the “benefits” the MAA conferred upon them were mere gifts. ECF 27, at 17. Consideration

is “the bargained for legal benefit and/or detriment.” Minster Farmers Coop. Exchange Co., Inc.

v. Meyer, 884 N.E.2d 1056, 1061 (Ohio 2008); Cnty. Comm’rs for Carroll Cnty., Md. v. Forty

West Builders, Inc., 941 A.2d 1181, 1213–14 (Md. Ct. Spec. App. 2008) (“consideration may be

established by showing a benefit to the promisor or a detriment to the promise”) (citing Harford

Cnty. v. Town of Bel Air, 704 A.2d 421, 430 (Md. 1998) (quoting Vogelhut v. Kandel, 517 A.2d

1092, 1096 (Md. 1986))). “Although courts generally do not inquire into the adequacy of

consideration if consideration is found to exist, courts must determine whether any consideration

was really bargained for.” Cincinnati Reds, L.L.C. v. Testa, 122 N.E.3d 1178, 1184 (Ohio 2018)

(internal quotation marks omitted); see Lillian C. Blentlinger v. Cleanwater Linganore, Inc., 173

A.3d 549, 567 (Md. 2017) (stating “it is basic contract law that courts generally will not inquire as

to the adequacy of consideration”) (citing Vogelhut, 517 A.2d at 1096). “[T]he requirement for

consideration is what distinguishes a contract from a gift.” Williams v. Ormsby, 966 N.E.2d 255,

260 (Ohio 2012); Vincent v. Palmer, 19 A.2d 183, 187 (Md. 1941) (distinguishing between “a

mere gratuity” and “a contract with valuable consideration”).

Here, there was consideration for the MAA. Signing the membership application, which

incorporated the MAA by reference and bound plaintiffs to its terms, was a prerequisite to

receiving Emery’s services. ECF 18-2, ¶ 6; ECF 27-6, at 2 (sample enrollment package indicating

application form “must be filled out by the borrowers”). Thus, to refinance their loans through

Emery, plaintiffs had to consent to the terms and conditions of the MAA. This exchange—the

agreement to the MAA’s terms for refinancing their loans through Emery—conferred benefits and

obligations on plaintiffs. Among those obligations was compliance with the forum-selection

clause.

The MAA, furthermore, outlines other rights and benefits plaintiffs received. Plaintiffs

received the right to transfer or withdraw funds in numerous ways, including by ATM, in person,

by mail, through the internet, and by telephone. ECF 18-7, at 3. They also received the rights to

order electronic fund transfers either from or to their accounts and to contact Emery to determine

whether payments have been received. Id. Emery promised to pay interest and dividends in the

event those payments were delayed. Id. Plaintiffs also received benefits from Emery. Plaintiffs

were entitled to receive the name of every agency from which Emery receives a credit report and

to terminate their membership at any time. Id. at 6. Emery also agreed to “be liable for [plaintiffs’]

losses or damages not to exceed the amount of” an improperly completed transaction. Id. at 5. It

promised “not to disclose account information to third parties” except in four circumstances. Id.

These rights and benefits constitute consideration. See Rudolph v. Wright Patt Credit Union, 175

N.E.3d 636, 656 (Ohio Ct. App. 2021) (finding consideration existed where credit union members

got “free internet access to accounts, . . . free mobile banking, free telephone and automated teller

access, free bill payment free consumer accounts, and no monthly fee for Total Fair Checking

accounts”); Lillian C. Blentlinger, 173 A.3d at 578–82 (concluding an agreement was supported

by adequate consideration based on the various rights and responsibilities assumed by the

contracting parties under the terms of the contract).

Ignoring the plethora of rights and responsibilities conferred by the MAA, plaintiffs claim

the agreement does not bind them because the only benefits they perceived were merely gifts. ECF

27, at 17. In plaintiffs’ view, because Emery sent them, as part of its enrollment package, a

document indicating the credit union account, a five-dollar deposit, and a ten-dollar donation were

“complimentary,” they received no valuable consideration for their agreement to the MAA. Id.

While a five-dollar deposit into a cost-free account and a ten-dollar donation may have been gifts,

they are incidental to the rights, benefits, and obligations conferred on plaintiffs as consideration

for the MAA, to which they were required to agree prior to receiving services from Emery.

The Court finds that plaintiffs intended and assented to be bound by the MAA’s terms and

that the MAA was supported by consideration.

B. Forum-Selection Clause

Having established that the MAA was not invalid for lack of consideration or mutual

assent, the Court now considers whether its forum-selection clause should be enforced in this case.

This Court has previously granted a motion to transfer to the Southern District of Ohio

filed by Emery and based on the same forum-selection clause. Fangman v. Genuine Title, LLC,

No. RDB-14-81, 2015 WL 8315704, at *12–15 (D. Md. Dec. 19, 2015). In Fangman, the Court

considered whether several marketing and financial institutions, including Emery, violated RESPA

by “receiv[ing] and accept[ing] cash payments, free marketing materials, and other things of value”

from a title and settlement services company, Genuine Title, LLC (“Genuine”), in exchange for

referring borrowers to Genuine. Id. at *2. Emery sought severance and transfer of the claims

against it on the grounds that a valid forum-selection clause identical to the one at issue here

required the claims to be brought in the Hamilton County, Ohio. Id. at *13; compare id. at *13,

with ECF 18-7, at 6. The Court concluded the forum-selection clause was mandatory because it

made jurisdiction proper in only one forum: Hamilton County, Ohio. Id. (quoting Belfiore v.

Summit Fed. Credit Union, 452 F. Supp. 2d 629, 631 (D. Md. 2006)).

Proceeding to the scope of the forum-selection clause, the Court found the claims were

“regarding” the operative agreement, noting that courts have “interpreted forum selection clauses

like the one at issue as applying to a broad array of claims related to the parties’ contractual

relationship.” Id. at *14. The Court further noted that submitting the application was a

precondition to receiving loans through Emery. Id. And because the plaintiffs’ factual allegations

“focus[ed] on referrals made to [the p]laintiffs by mortgage brokers employed by Emery” and

“those referrals supposedly occurred around the time of closing . . . and involved loans obtained

from Emery,” the Court found the RESPA claims fell within the scope of the forum-selection

clause. Id.

Plaintiffs argue that this Court should not follow Fangman because the Court in Fangman

did not decide whether the underlying contract was invalid or whether the enforcement of the

forum-selection clause would be unreasonable, as plaintiffs argue here. ECF 27, at 15–17. For

the reasons discussed above and below, the Court sees no reason to depart from the sound analysis

in Fangman.

1. Mandatory

The “presumption of enforceability . . . only applies if the forum selection clause is

mandatory rather than permissive.” BAE Sys. Tech. Sol. & Servs., 884 F.3d at 470 (citing

Albemarle Corp., 628 F.3d at 650–51). “A mandatory clause requires litigation to occur in a

specified forum; a permissive clause permits litigation to occur in a specified forum but does not

bar litigation elsewhere.” Id. (citing Albemarle Corp., 628 F.3d at 650–51).

The forum-selection clause at issue here provides that “any legal action regarding th[e]

Agreement shall be brought in the county in which the Credit Union is located.” ECF 18-7, at 6;

ECF 18-8, at 7. Plaintiffs make several unconvincing arguments that this clause is permissive, not

mandatory.

Plaintiffs argue use of the word “shall” does not necessarily mean the clause is mandatory.

They cite BAE Systems and Auto Body Express LLC v. Corp. ADR LLC, No. 8:20-cv-3349-DCC,

2021 WL 2291776, at *2 (D.S.C. June 4, 2021), for the proposition that, “in context, the clause

[using shall] may still ‘permit[] jurisdiction in one court but . . . not prohibit jurisdiction in

another.’” ECF 27, at 26. But the language of the forum-selection clauses in those cases is

different than the language at issue here. In BAE Systems, the forum selection clause provided that

disputes “shall be resolved through a litigation and the Seoul Central Court shall hold jurisdiction.”

884 F.3d at 469. That clause established jurisdiction, not venue, and jurisdiction in Seoul was not

exclusive because there could be jurisdiction in another court without conflicting with the language

of the clause. Similarly, in Auto Body Express, the clause created jurisdiction in a specific location

but did not exclude the possibility of jurisdiction in other forums. 2021 WL 2291776, at *2. In

this case, however, the word “shall” makes the clause mandatory because it requires that any legal

action “shall be brought in the county in which the Credit Union is located” and thus precludes

jurisdiction in other forums. It does not state that courts in that county shall have jurisdiction,

which would be analogous to the clause in BAE Systems. Under the MAA’s forum-selection

clause, bringing a legal action in any county besides the county in which Emery is located would

violate the plain terms of the clause. Legal actions must be brought in the specified county.

Plaintiffs alternatively argue the forum-selection clause is not mandatory because “where

the Credit Union is located” could refer to multiple counties because Emery maintains a number

of branches outside Hamilton County. Id. at 27. This argument is without merit. First, plaintiffs

concede Emery is incorporated and has its principal place of business in Hamilton County, Ohio.

ECF 9, ¶ 14. Second, the language of the clause itself does not support this broad reading. The

clause uses the definite article “the” to refer to the appropriate county, suggesting only one county

fits the bill. It also uses a definite article where it refers to “the” Credit Union—not “any branch

or office” of the Credit Union, as plaintiffs argue. And third, this Court has enforced forum

selection clauses containing identical language. See, e.g., Fangman, 2015 WL 8315704, at *12–

15 (enforcing an identical forum selection clause); Belfiore, 452 F. Supp. 2d at 631, 633–34

(enforcing a forum selection clause limiting venue to “the county in which the Credit Union is

located”).

Plaintiffs finally argue the forum selection clause is not exclusive because it refers only to

a county and thus creates venue in both state and federal courts. But this possibility does not

undermine the exclusivity of the forum selection clause under Fourth Circuit caselaw, which

recognizes and enforces forum selection clauses limiting the geographic location of an action,

inclusive of federal and state courts. Bartels ex rel. Bartels v. Saber Healthcare Group, LLC, 880

F.3d 668, 676 (4th Cir. 2018) (“forum-selection clauses using geographical limitations permit the

case to be filed with any court, whether state or federal, that is located within the contractually

described geographical boundary”) (emphasis in original); FindWhere Holdings, Inc. v. Sys. Env’t

Optimization, LLC, 626 F.3d 752, 755 (4th Cir. 2010) (adopting the “widely accepted rule that

forum selection clauses that use the term ‘in [a state]’ express the parties’ intent as a matter of

geography, permitting jurisdiction in both the state and federal courts of the named state, whereas

forum selection clauses that use the term ‘of [a state]’ connote sovereignty, limiting jurisdiction

over the parties’ dispute to the state courts of the named state”).

The Court finds that the forum-selection clause is mandatory. The clause requires that any

legal action regarding the MAA must be brought in Hamilton County, Ohio.

2. Within the Scope of the Clause

Plaintiffs argue the claims in this case fall outside the scope of the forum-selection clause

because they do not arise from the express terms of the contract. A forum-selection clause is

presumptively enforceable only where the claims asserted fall within the scope of the clause.

Evans, 2021 WL 4951917, at *3. “To determine the scope of the forum selection clause, ‘the court

‘looks to the language of the parties’ contracts to determine which causes of action are governed

by [the clause].’” Brooks-Williams v. Keybank, Nat’l Ass’n, No. WDQ-15-559, *5 (D. Md. Dec.

17, 2015) (quoting NC Contracting, Inc. v. Munlake Contractors, Inc., No. 5:11-CV-766-FL, 2012

WL 5303295, at *6 (E.D.N.C. Oct. 25, 2012) (quoting Marinechance Shipping, Ltd. v. Sebastian,

143 F.3d 216, 222 (5th Cir. 1998))).

The forum selection clause in this case provides that “any legal action regarding this

Agreement shall be brought in the county in which the Credit Union is located.” ECF 18-7, at 6

(emphasis added). Elsewhere, the MAA states: “Any conflict regarding what you and our

employees say or write will be resolved by reference to this Agreement.” Id. at 5 (emphasis added).

These broad provisions encompass plaintiffs’ claims because the legal action relates to what

Emery’s employees said or wrote in connection with the refinancing of plaintiffs’ loans. Indeed,

what Emery’s employees did, said, and wrote is the very substance of the principal claims in this

suit.

Plaintiffs allege Emery “financed into borrowers’ loans” illegitimate charges by “falsely

allocating title and settlement fees,” “manipulating the APR associated with loans,” and making

“false and fraudulent representations and omissions in borrowers’ loan documents.” ECF 9, ¶¶ 6,

8, 26. They further allege:

At all relevant times, the Emery branch managers, loan officers, and other

employees participating in the [k]ickback [a]greement [were] license mortgage

brokers and/or authorized loan officers, and at all relevant times were acting within

the scope of the business relationship and their employment on behalf of Emery,

specifically seeking borrowers and originating and securing loans for residential

mortgages through Emery and/or brokering such loans through Emery to other

lenders with whom Emery authorized, referring Emery borrowers to title

companies, and working with title companies to close these loans.

Id. ¶ 56. Plaintiffs allege Emery represented in borrower solicitations that borrowers would save

30–40 percent on title and settlement services by using All Star. Id. ¶ 69.

These “false and fraudulent representations and omissions [appear] in borrowers[’] loan

documents, including the Truth in Lending Act . . . Disclosure, the Good Faith Estimate, the Direct

Endorsement, and the HUD-1 Settlement Statement.” Id. ¶ 39. Plaintiffs allege that Emery

provided them the Good Faith Estimate and fraudulently included or omitted certain charges on

the Good Faith Estimate as part of its allegedly illegal scheme. Id. ¶¶ 169–76. Elsewhere,

plaintiffs allege Emery falsely certified on the Direct Endorsement of the HUD-1 form that the

charges on VA or FHA loans complied with applicable regulations. Id. ¶¶ 185–86. This

certification was “presented to borrowers.” Id. ¶ 185. Plaintiffs also allege, “[a]s a condition of

funding their loan, Emery require[d] the . . . [p]laintiffs to participate in a closing, and the . . .

[p]laintiffs attend[ed] and fully participate[d] in the required closing and review[ed] all documents

with All Star’s representative.” Id. ¶¶ 197, 214, 231, 248.

These allegations of fraud and misrepresentation concern a conflict regarding what Emery

employees represented to plaintiffs. This conflict must be “resolved by reference to [the MAA].”

See ECF 18-7, at 5. The MAA, in turn, contains the mandatory forum-selection clause.

Plaintiffs argue the MAA does not cover claims relating to the mortgages Emery brokered

for plaintiffs because mortgages are not “accounts” within the meaning of the MAA. This

argument elides a critical fact: The MAA is a membership and account agreement. See ECF 18-

7, at 2. By signing the agreement, plaintiffs agreed that Emery could “verify [their] eligibility for

the accounts and services [they] request[ed].” Id. (emphasis added). Among the services Emery

provided was its origination or brokerage of plaintiffs’ loans. To refinance through Emery,

plaintiffs had to become members of the Credit Union, a fact that plaintiffs have not disputed in

their opposition. Thus, the legal action “regards” the membership agreement.

Plaintiffs attempt to distinguish this case from Belfiore v. Summit Federal Credit Union

and Varsity Gold, Inc. v. Lunenfeld, both of which held the alleged torts fell within the applicable

forum-selection clauses. Belfiore, 452 F. Supp. 2d 629 (D. Md. 2006); Varsity Gold, No. CCB-

08-550, 2008 WL 5243517 (D. Md. Dec. 12, 2008). In so doing, they misconstrue the holdings in

those cases, arguing they held that a forum-selection clause applies only if the claims “arise from

accounts held with the credit union” and “only where the allegations are built on the terms of the

agreement.” ECF 27, at 19. Neither case’s holding is so limited, and neither controls this case or

espouses law that conflicts with any law the Court cites. Rather, Belfiore and Varsity Gold stand

as examples in which the Court looked at the nature of the claims and the relevant language of the

applicable forum-selection clauses and determined certain torts fell within their scope. The Court

follows the same steps followed in Belfiore and Varsity Gold and finds, as in those cases, the

claims fall within the forum-selection clause.

3. Unreasonable

Plaintiffs argue it would be unreasonable to enforce the clause because it is the product of

fraud and overreach. ECF 27, at 28–29. They claim the memberships and savings accounts were

represented as automatic and complimentary and came to them with “no strings attached.” Id. at

28.

“[A] forum selection clause may be found unreasonable if . . . [its] formation was induced

by fraud or over-reaching.” Albemarle Corp, 628 F.3d at 651 (quoting Allen v. Lloyd’s of London,

94 F.3d 923, 928 (4th Cir. 1996) (summarizing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1,

12–13 (1972); citing Carnival Cruise Lines v. Shute, 499 U.S. 585, 595 (1991)). “This . . . does

not mean that any time a dispute arising out of a transaction is based upon an allegation of fraud .

. . the clause is unenforceable.” Scherk v. Alberto-Culver Co., 417 U.S. 506, 59 n.14 (1974).

“Rather, it means that” a “forum-selection clause in a contract is not enforceable if the inclusion

of that clause in the contract was the product of fraud or coercion.” Id.; see also Callendar v.

Anthes, No. DKC-14-0121, 2014 WL 1577787, at *7 (D. Md. Apr. 18, 2014) (finding enforcement

of a forum selection clause not unreasonable in part because the allegation of fraud did not relate

specifically to the forum selection clause). Plaintiffs bear the burden of showing enforcement

would be unreasonable. BAE Sys. Tech. Sol. & Serv., 884 F.3d at 471.

Plaintiffs claim Emery lied when it told them that they would automatically become

members of the Credit Union when their transaction was complete. ECF 27, at 23. Now, plaintiffs

claim, Emery has changed its tune by asserting they were required to join the credit union to obtain

the loan. Id. at 23-24. To prove fraud under Ohio and Maryland law, a plaintiff must show, among

other things, that there was a misrepresentation, that the plaintiff justifiably relied upon it, and that

the misrepresentation was made for the purpose of defrauding the plaintiff or with the intent of

misleading the plaintiff into relying on it. State ex rel. Seibert v. Richard Cyr, Inc., 134 N.E.3d

1185, 1194 (Ohio 2019); Thomas v. Nadel, 48 A.3d 276, 282 n.18 (Md. 2012).

Even assuming a misrepresentation was made here, the Court finds no merit to the fraud

allegation because plaintiffs do not claim they relied on it or that Emery made the

misrepresentation with the intent to defraud. More significantly, plaintiffs do not make a single

allegation or argument that the inclusion of the forum-selection clause itself was the product of

fraud. Scherk, 417 U.S. at 59 n.14; Callendar, 2014 WL 1577787, at *7. Plaintiffs have not shown

enforcement of the forum-selection clause would be unreasonable. Accordingly, the Court finds

plaintiffs have not overcome the presumption of enforceability in this case.

The Court finds the forum-selection clause is mandatory, applies to these claims, and

should be enforced. The motion to transfer this case to the Southern District of Ohio is granted.

C. Motion for Discovery

Plaintiffs ask for leave to take discovery to resolve factual disputes they believe are relevant

to whether the forum-selection clause is valid, mandatory, or enforceable. ECF 27, at 24–26. They

want to depose Emery’s compliance manager, Troy Cyrus, about the use of Emery’s enrollment

package offering a complimentary account, donation, and initial deposit and about Emery’s

internal investigation into the alleged failure to establish the promised savings accounts. They also

seek written discovery and documents regarding whether plaintiffs received the MAA, as well as

the plaintiffs’ complete loan files to demonstrate Emery’s limited role as broker, not lender. Such

discovery is unnecessary and unwarranted.

First, Emery concedes the savings accounts, five-dollar deposit, and ten-dollar donation

were complimentary to individuals, such as plaintiffs, who signed up to join the Credit Union. The

fact that these specific items may have been complimentary does not change this Court’s view that

consideration supported the agreement or that the forum-selection clause is mandatory, applicable,

and should be enforced.

Second, whether the savings accounts were opened is immaterial to whether the forum-

selection clause is valid and enforceable. As Emery correctly points out, that issue goes to

performance under the contract, not existence of a contract. Additionally, the applications

plaintiffs signed were for a membership with Emery. Plaintiffs do not argue they were not

members at Emery, and because the MAA governs their membership in the Credit Union,

including their Credit Union accounts, any discovery relating to the savings accounts would not

affect the applicability of the forum-selection clause.

Third and finally, whether Emery brokered, as opposed to financed, the loans is also

immaterial. The Court has already rejected plaintiffs’ restrictive reading of the MAA, which they

contend applies only to the savings accounts Emery may have created for them. As discussed

above, the MAA and its forum-selection clause reach a wide variety of transactions with Emery:

all those regarding anything Emery or its employees say or write to people who have agreed to the

MAA’s terms. Whether Emery brokered or funded the loans is immaterial where, as here, its

employees did one or the other by communicating to borrowers who agreed to the MAA’s terms.

None of the discovery plaintiffs seek would change the facts that form the basis for the

Court’s decision to transfer the case. The motion for discovery is denied.

Ii. Conclusion

The forum-selection clause in the MAA is presumptively enforceable. Plaintiffs have not

shown its enforcement would be unreasonable. Accordingly, this case is transferred to the

Southern District of Ohio. The motion to dismiss remains pending. A separate Order follows.

Date: March 31, 2022 « 662

Deborah L. Boardman

United States District Judge

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