Hanley’s company, Hanley Investments LLC, received the loan Dec. 9, 2009 to build houses in the 1000 block of Oak Street in Bel Air. The five undeveloped lots are off of James Street, less than a mile north of the town limits where he is an elected official.
The bank states in documents filed in Harford County Circuit Court that Hanley, his company and his wife, Debra, defaulted on the loan because they did not pay interest for four consecutive months between November and February.
“Defendants failed to make payments in accordance with the terms of the Note for the months of November 2010 through and including February 2011, and Defendants are, therefore, in default,” reads the bank’s complaint requesting a confessed judgment against Hanley.
On March 25, Circuit Court Judge Stephen M. Waldron entered a confessed judgment against Hanley, his wife and the corporation, ordering full payment of the loan, interest, late charges and attorney’s fees—for a total of $669,241, court records state.
A confessed judgment agreement signed between a bank and a borrower allows a judge to order full payment of a defaulted loan without a hearing or other prior notice given to the borrower.
On May 26, about two months after Waldron authorized the confessed judgment, Hanley asked the judge to reconsider and his attorneys filed a motion to vacate, or dismiss, the order against the Republican commissioner.
Hanley’s motion cites a 1996 Maryland case stating that “Maryland courts have long recognized that the practice of including in a promissory note a provision authorizing a confession of judgment lends itself far too readily to fraud and abuse.”
In his motion, Hanley states that a payment of slightly more than $30,000 was made to Harford Bank but that it was not credited by the lender. In a supporting affidavit, Hanley states he did not receive more than the $600,000 maximum originally agreed to in the loan, and therefore could not have defaulted.
Waldron granted the motion to dismiss the confessed judgment on June 21.
Hanley agrees that he must pay the loan—which is due in full by December, according to its terms—but not that he defaulted.
“I’m not disputing that I owe them the money,” Hanley said in a telephone interview. “It’s been vacated and [Harford Bank] got some jerk attorney who thinks he’s going to win and he’s not going to win.”
Harford Bank and its attorneys in the case have not returned numerous phone calls and messages seeking comment about the dispute.
Harford Bank asked Waldron on July 11 to reconsider his order to dismiss the judgment against Terence and Debra Hanley, claiming the couple did not properly appeal. Much of the legal back and forth between Hanley and Harford Bank centers on disagreements over filing deadlines. Harford Bank says Hanley's successful motion for dismissal of the confessed judgment is invalid because he didn't file it within 30 days. Hanley says Harford Bank's motion to reconsider the dismissal is bogus for a similar reason.
The bank’s motion to reconsider the order vacating the confessed judgment also states that Hanley's “payment of $30,000 [was] credited on July 13, 2010”—before the November to February period of nonpayment—and that Hanley’s arguments are “without merit.”
Hanley repeatedly told Patch the bank was being unfair and that the legal dispute did not warrant an article.
“There is no story there. I think it’s absolutely absurd and again I just think low class [to write about],” Hanley said Thursday.
Earlier that same week, after the July 18 town meeting, he said: “The more assets you have, the more vulnerable you are, unfortunately. And they knew that, so they figured they’d stick it up my ass and make sure that they covered themselves.”
In the Thursday interview, Hanley said an article should not be written because he was worried the public would not be able to understand the loan and its payment schedule.
“If you’re really going to write this you need to sit down and I need to show it to you. That’s the only way you’re going to understand it,” Hanley said. “The average human being is dumb.”
Multiple attempts to meet Hanley and his attorney, Joseph Snee, to review documents failed.
Hanley said he is close to a $1 million settlement deal for the Oak Street property, money he would use to pay the loan, with Stephen Homes. The commissioner said it is a “done deal” that will be completed within the next week. Don Stephen, a sales representative for Stephen Homes, was not as specific.
“I’m not sure exactly when the settlement’s going to take place,” Stephen told Patch in a telephone interview.
Hanley, whose second term as a town commissioner expires this fall, has told Patch he plans to run for reelection. He lost the 2010 Republican primary race for the County Council District C seat to James McMahan, who later won the general election to retain his seat.
One of Hanley’s colleagues who helped legally form Hanley Investments LLC in 2005 has since distanced himself from the business.
Bel Air mayor and fellow commissioner David Carey served as the resident agent for Hanley Investments until May 5. His name appears on the confessed judgment signed by Judge Waldron.
“[Hanley's] now the resident agent,” Carey said in a telephone interview Thursday. “After I got served with a lawsuit by Harford Bank a few months ago—and I don’t do any legal work for Terry—so I said, ‘Terry, why don’t you take over as the resident agent.’”