By Yolanda Woodlee
Washington Post Staff Writer
Saturday, August 26, 2006

A Bethesda title company sued D.C. Council member Adrian M. Fenty and his wife last year, alleging that it was owed $62,310 from the Fentys' mortgage refinancing in 2003. The case was settled when the Fentys agreed to repay most of the money, denying that they had done anything wrong.

The title company, Vision Settlements, said it filed the lawsuit in March 2005, after it failed to work out a payment arrangement with the Fentys. The lawsuit alleged that the Fentys "knew or should have known" that they had an outstanding debt that had not been paid.

In a response to the suit, the Fentys denied the allegations. They said that the title company and their bank, National City Bank, were at fault and that they were not responsible for paying the loan to Vision Settlements, court documents show.

Montgomery County court records show that the funds were used to pay off a previous mortgage held by Fenty, the front-runner in the Sept. 12 Democratic mayoral primary, and his wife, Michelle Cross Fenty. The title company should have been reimbursed from the Fentys' home equity line of credit issued by their bank, but that never happened, based on the court records.

Vision Settlements said it made a mistake and did not report the home equity portion of the transaction to the Fentys' bank for reimbursement, an official at the title company said. Company auditors discovered the error more than a year later. Vision Settlements has changed its name to Bethesda Title and Escrow and is affiliated with Vision Mortgage of Rockville.

Vision Settlements expected to be reimbursed by National City Bank for the money shortly after closing, court records show. The lawsuit said that the bank line of credit should have reflected the $62,310 debt owed by the Fentys. But the loan did not show up as a debt and Vision Settlements was not repaid, according to the records.

After discovering the mistake, the company contacted National City Bank to recover the money, but the bank said it could not comply because the Fentys had closed that line of credit, according to the lawsuit.

The title company official, who spoke on condition of anonymity because of the sensitivity of the case, said that the Fentys were notified in December 2004 -- 17 months after the transaction -- that the amount paid by Vision Settlements had not been reimbursed.

In response to the lawsuit, the Fentys said, "The injury or damage, if any, that the plaintiff may have sustained was caused solely, directly and proximately by the acts or omissions of the plaintiff" and/or its affiliates, including National City Bank and National City Mortgage."

Fenty and his wife, both lawyers, filed a complaint a few weeks later to add the bank to the title company's lawsuit. The Fentys claimed that the bank was responsible for paying the title company and they did not expect to "owe any money to Vision."

The Fentys said they had never received a bill for the line of credit. Fenty, his wife and their attorney, Peter Nickles, discussed the lawsuit in interviews and in an e-mail in response to written questions. The Fentys said they thought they had paid the loan all along as part of their mortgage.

"We put the case in the hands of my lawyer," Fenty said in a telephone interview. "It resolved itself to everyone's satisfaction."

Nickles said that Fenty and his wife did not settle the lawsuit until they had legal assurance that they would not be charged for the same loan twice, once by the title company and again by the bank. They received that assurance and then agreed to pay Vision directly.

Fenty, who announced his candidacy for mayor in June 2005, reached the settlement in September, about six months after he was sued. They paid the title company $58,650 "to resolve all allegations" in the case, Nickles said.

"There has never been any allegation or suggestion by anyone that there was any wrongdoing in connection with the transaction," Nickles said.

Property records filed with the D.C. Recorder of Deeds show that the Fentys have a $332,400 30-year mortgage with National City Bank. The Fentys also obtained a credit line for $29,700 on a house on Underwood Place NW. Less than a month before they closed the $150,000 line of credit at National City Bank, the records show they opened another $341,000 line of credit. That line of credit appears to still be active.

Fenty said he and his wife "have always remained in compliance with the terms of our mortgage and line of credit."

Fenty, 35, is one of five major candidates for mayor, including Council Chairman Linda W. Cropp (D), council member Vincent B. Orange Sr. (D-Ward 5), and former Verizon Washington president Marie C. Johns and lobbyist Michael A. Brown.