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| Two Virginia-based companies are fighting a legal battle over nearly $10 million in lost profits that allegedly resulted from mismanagement of a mortgage company.Stamm Mortgage Management Inc. has filed a demand for arbitration over a management agreement it had with Greater Atlantic Financial Corp. The agreement reportedly governed Stamm’s management of Greater Atlantic Mortgage Corp. before its operations were terminated earlier this year.
The demand for arbitration alleges recession, breach of contract and defamation and that Stamm is seeking damages related to the closure of the mortgage unit, Greater Atlantic said in a written statement. Citing the advice of his attorney, Mark Stamm, Stamm Mortgage’s president, declined to comment. David Ritter, chief financial officer for Greater Atlantic Financial, also declined to comment. But according to Greater Atlantic, Stamm Mortgage has claimed that the management agreement is unenforceable and should be rescinded, requiring Greater Atlantic Bank and Greater Atlantic Mortgage to return $1.77 million that Stamm Mortgage says it paid to the bank and mortgage company under the agreement. Stamm Mortgage has also claimed that the bank and mortgage company breached the agreement by terminating it contrary to its terms, resulting in $9.6 million in lost profits to Stamm Mortgage. Stamm Mortgage and Stamm both have reportedly alleged that Greater Atlantic Financial, its banking arm and its chief executive defamed Stamm Mortgage and Stamm through statements made in press releases and in public securities filings by the company. Stamm and Stamm Mortgage are seeking $1 million in compensatory damages and $350,000 in punitive damages. Greater Atlantic Financial, its banking arm, its chief executive and Greater Atlantic Mortgage have said in written statements that the claims are without merit and that they intend to vigorously defend against them. The demand for arbitration filed with the American Arbitration Association. A spokesman for the organization declined to comment on the case. Greater Atlantic is based in Reston, Va., It operates as the holding company for Greater Atlantic Bank. The bank offers banking services in the Washington and Baltimore metropolitan areas. Its lending activities include residential mortgage lending, construction and development lending, commercial real estate lending. Greater Atlantic also originates mortgage loans for sale in the secondary market. |
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Lisa D. Burden is a legal analyst for MortgageDaily.com and holds a law degree from the University of Maryland. She is currently a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record. e-mail Lisa at: burdenlisa@yahoo.com |
