Judge Rules Against Stonegate in Defamation Suit

Stonegate processed loans originated by Neighborhood Mortgage — where Daniel Gallagher was employed from 2007 until 2010 — according to a decision Thursday.

But Gallagher claims that Stonegate interfered with the employment relationship he had with Neighborhood Mortgage, case documents indicate.

So, in his capacity as president of DBG Holdings & Management Ltd, Gallagher filed two small claims actions.

An August 2010 settlement was reached between the two parties.

But Gallagher claims Stonegate Chief Executive Officer James Cutillo subsequently began tarnishing his image.

“Gallagher alleges that shortly after their settlement, Cutillo stated to others that he wanted to ‘bury [Gallagher] in the backyard of a house,'” court records state. “Gallagher then alleges that Stonegate contacted Neighborhood Mortgage, and on that same day, he was fired from Neighborhood Mortgage.”

Gallagher also claims Cutillo wrote a letter to the Department of Housing and Urban Development accusing Gallagher of doing “side agreements” that violated HUD requirements.

Stonegate’s comments to HUD were “false and misleading,” according to Gallagher. The comments harmed his reputation.

Gallagher filed a lawsuit against Stonegate in Cuyahoga County Court of Common Pleas during November 2012.

“Gallagher alleges that Stonegate, by virtue of Cutillo’s actions, is liable for the deceptive trade practices performed by Cutillo in harming his professional reputation,” the decision states.

A motion to dismiss argued, among other things, that Gallagher failed to state a claim because he was outside of the statute of limitations and that he failed to allege a false statement of fact.

The motion to dismiss was granted.

So Gallagher appealed to the Court of Appeals of Ohio.

The appeals court found that the trial court was wrong in granting the motion to dismiss.