Blaylock v. Johns Hopkins Federal Credit Union

SALMON, Judge. In November 1997, the automobile of Paulette Blaylock was repossessed and sold by Johns Hopkins Federal Credit Union (“the credit union”). After the sale, the credit union instituted suit in the District Court for Baltimore City, seeking a deficiency judgment against Ms. Blaylock of approximately $8,200. Ms. Blaylock retained the law firm of Quinn, Gordon & Wolf, Chartered, to represent her in the matter.

The law firm filed a jury trial demand and a counterclaim against the credit union. In her counterclaim, Ms. Blaylock alleged that the credit union had violated the Maryland Consumer Protection Act, which prohibits unfair or deceptive trade practices in the extension of consumer credit. See Md.Code Ann., Com. Law II (“CL”) §§ 13-303-13-408(a) (1975, 2000 RepLVol.).

Much later, in December 1999, she filed an amended counterclaim alleging that the credit union had violated the Uniform Commercial Code by failing to give her accurate pre-sale information concerning when her automobile was to be sold at auction. After about two-and-a-half years of litigation, the case, save for the issue of attorney’s fees due to Ms. Blaylock’s counsel, was settled. The terms of the settlement agreement, which was approved by the court, were: ³⁴² 1. The Johns Hopkins Federal Credit Union (“JHFCU”), Plaintiff/Counter-Defendant in this matter, dismisses with prejudice the case against Paulette Blaylock (“Blaylock”), Defendant/Counter-Plaintiff, and releases her and her co-signer Lawrence Smith (“Smith”) from further liability. 2.

JHFCU agrees to pay Blaylock $7,300.00 in damages. 3. JHFCU agrees that Blaylock is a prevailing party in this matter. ' 4. Blaylock releases JHFCU from further liability, though Blaylock will retain the right to petition the (cjourt for reasonable attorney’s fees upon the following schedule: a. Blaylock will submit a Petition for Attorney’s Fees on or before September 22, 2000; b.

JHFCU shall respond to the Petition for Attorney’s Fees on or before October 10, 2000; and c. Blaylock shall file a reply brief, if necessary, on or before October 28, 2000. 5. JHFCU agrees to notify and request that the credit reporting bureaus remove any adverse or negative reference on Blaylock’s and Smith’s credit reports in respect of the automobile loan at issue in this case. A hearing was held before the circuit court regarding the attorney’s fees issue.

At the hearing, Ms. Blaylock introduced detailed time records from Quinn, Gordon & Wolf, showing that the law firm had expended 263.8 hours in total paralegal and attorney time in regard to the subject case. According to the bill, paralegal time was billed at $95 per hour; one attorney charged $230 per hour; and a senior partner charged $350 hourly. Total fees were $48,951.97. In addition, Ms. Blaylock was charged $1,038.30 in expenses.

The circuit court awarded Ms. Blaylock’s counsel $5,000 for fees and $1,038.30 expenses. Ms. Blaylock filed this timely appeal in which she raises one question, viz: Did the trial judge err in allowing appellant only $5,000 in attorney’s fees? The credit union filed a cross-appeal in which it asks: ³⁴³ Did the trial court err in finding that appellant was entitled to any award of attorney’s fees? I. BACKGROUND Ms. Blaylock, an employee of Johns Hopkins and a member of the Johns Hopkins Federal Credit Union, purchased an automobile in 1990.

To finance the purchase, she borrowed $9,765.74 from the credit union and agreed to repay the loan, plus interest, in sixty equal monthly payments of $211.38. She signed a note evidencing the debt, as did a co-signer, one Lawrence Smith. The loan agreement had the following provisions, which are here pertinent: Property Insurance: If I obtain a loan secured by a motor vehicle or other tangible property, I must obtain insurance which protects the credit union from financial loss. Such a policy must provide at least fire, theft, combined additional coverages and collision insurance.

It must contain a Loss Payable clause endorsement naming the credit union as lien holder. I may obtain this insurance from any agent of my choice and direct the agent to send you a copy of the policy. ❖ * * ... I will maintain insurance to cover any vehicle or other property in which you have a security interest. This insurance will be in a form and an amount satisfactory to you.

I will supply you with proof of such insurance until all sums owed to you and secured by this property are repaid. If I fail to maintain such insurance, you may, but are not required to obtain insurance of your own and add the cost of suck to the sums owed. This cost may bear interest at the contract rate until paid.... (Emphasis added.) In addition, on June 7, 1990, Ms. Blaylock signed a document titled “Borrowers Agreement to Provide Automobile Insurance,” which provided: ³⁴⁴ In consideration for the granting of the loan given on this date I/we agree to provide and maintain in force for the term of such loan, and any extension or renewals thereof, an insurance policy including Comprehensive and Collision Coverages.

With loss payable to the JOHNS HOPKINS-FEDERAL CREDIT UNION. It is understood that proof of insurance is to be delivered to the CREDIT UNION at the earliest possible date. To facilitate repayment of the loan, Ms. Blaylock authorized her employer to deduct $60 per week and deposit it directly into an account at the credit union. The credit union, in turn, was authorized to deduct $211.38 per month from the account to repay the loan.

For approximately six years, $211.38 was deducted each month to pay off the car loan. For the first six years, Ms. Blaylock, apparently, did not carefully read the periodic loan statements sent to her by the credit union, because, each year, the statement would have a “loan add on” line. The “add ons” were as follows: [[Image here]] In 1996, Ms. Blaylock retained John Rhines, Esq., of the law firm of Stancil and Rhines, to find out why she still owed money on the car loan, despite the fact that she had been making her payments regularly for over six years. The credit union was contacted by Mr. Rhines, and sometime in 1996, the credit union, apparently for the first time, advised Ms. Blay-lock that they had purchased insurance on her behalf and charged her for it because she had failed to send them proof that she had insured her vehicle.

When insurance is purchased by a creditor on behalf of a debtor, in situations such as this, the purchase is known in the loan business as forced-placement insurance (“FPI”). ³⁴⁵ As a result of Mr. Rhines having contacted the credit union, the latter advised Ms. Blaylock that she would receive a full refund of any monies charged against her account for FPI if she would supply the credit union with proof that her car had the required insurance during the periods that FPI was purchased. Thereafter, Ms. Blaylock supplied proof that she had ear insurance for 1996. Accordingly, the credit union deducted $1,001 from the balance she (purportedly) owed. Although Ms. Blaylock maintained that she had her own automobile insurance ever since she purchased the car, she could not provide the credit union with proof of insurance for the period between the date the loan was made in 1990 and the end of 1995.

After the $1,001 deduction, the credit union continued to deduct $211.38 per month for car payments from Ms. Blay-lock’s account. But in June of 1997, Ms. Blaylock was laid off from her job at Johns Hopkins. As a consequence of the layoff, no additional funds were placed in the credit union account, and her payments ceased. At the time the payments were stopped, Ms. Blaylock had paid $17,775.92 to the credit union on her loan.

Not long after Ms. Blaylock ceased to make payments, the car was repossessed. The credit union, by letter dated October 10, 1997, informed Ms. Blaylock that she still owed $9,124.92 in principal and interest on the car loan. The letter informed Ms. Blaylock that if she did not redeem the vehicle by tendering the full amount due, plus $275 to reimburse the credit company for repossessing the car, the automobile would be sold at public auction on November 11, 1997. Ms. Blaylock’s automobile was sold at public auction on November 1, 1997, i.e., ten days prior to the date mentioned in the credit union’s notice.

The auction price of the vehicle was $1,600. After crediting Ms. Blaylock in that amount, and deducting costs for repossessing and selling the vehicle, the deficiency owing to the credit union was calculated to be $8,235.54. ³⁴⁶ In December of 1997, the credit union filed suit against Ms. Blaylock in the District Court of Maryland for Baltimore County. In its statement of claim, the credit union contended that Ms. Blaylock owed $8,285.54 in principal, $224.82 in interest, and $1,235.33 in attorney’s fees. Thus, the total amount at issue was approximately $9,695.

As mentioned earlier, Ms. Blaylock prayed for a jury trial, and the case was removed to the Circuit Court for Baltimore County. On March 13, 1998, Ms. Blaylock’s attorneys filed a fifteen-page counterclaim against the credit union. Count I of the counterclaim alleged a violation of Maryland’s Consumer Protection Act. According to the counterclaim, the credit union was guilty of deceptive trade practices in the extension of consumer credit by charging illegal FPI premiums, making improper “add ons” to Ms. Blaylock’s loan balances, and in repossessing her automobile.

In addition, the counterclaim asserted causes of action for breach of contract (Count II), fraud (Count III), conversion (Count IV), negligent misrepresentation (Count V), and unjust enrichment (Count VI). Approximately two years and five months separated the filing of the counterclaim and the settlement of the case. About three months after the counterclaim was filed, Ms. Blaylock’s attorneys took the deposition of Mary Boyle, the credit union’s “lead accountant,” and Charles Colvin, the credit union’s collection manager. At the depositions, representatives of the credit union revealed that FPI was obtained from an organization known as Stewarts CPI (“Stewarts”).

According to the deposition testimony of Mr. Colvin, representatives of Stewarts would come into the collection office every Thursday to review documentation sent in by various insurance companies concerning, coverage of vehicles securing loans made by the credit union. Representatives of Stewarts, using credit union stationery, would notify debtors that FPI insurance had been placed. Copies of such letters were not, however, kept either in the debtor’s file or elsewhere. Besides taking depositions, the law firm retained by Ms. Blaylock sent interrogatories and a motion for production of documents to the credit union. ³⁴⁷ One odd fact developed in discovery was that Mr. Colvin, the credit manager, did not know if Stewarts “actually wrote an insurance policy” to insure Ms. Blaylock’s vehicle; he had never seen such a policy, nor did Stewarts consult with him concerning the amount of premiums charged for FPL Moreover, Mr. Colvin was unable to say whether anyone at the credit union was consulted in regard to the amount of premiums charged for the FPL In regard to the premiums, Mr. Colvin acknowledged that many people had told him that the FPI premiums are “the highest ... in the world.” During discovery, the credit union was asked to produce all documents relating to the FPL No such documents were produced because the credit union had none.

As a consequence, Ms. Blaylock’s attorneys attempted to serve a subpoena duces tecum on the resident agent of Stewarts, a company headquartered in Illinois. Stewarts failed to respond to the subpoena, and as a result, Ms. Blaylock’s attorneys filed a motion to compel on November 16, 1998. The motion was granted, and Stewarts was ordered to produce all subpoenaed documents by December 19, 1998. Stewarts, however, ignored the court’s order.

On January 14, 1999, Ms. Blaylock filed a petition to find Stewarts in contempt. After the court filed a show cause order, Stewarts produced some, but not all, of the documents requested. When Ms. Blaylock filed her first amended counterclaim on December 8, 1999, she added a count for the violation of the Uniform Commercial Code (the “UCC”). She did not, however, request attorney’s fees as to that count.

Shortly thereafter, Ms. Blaylock filed a comprehensive motion for summary judgment as to both the complaint filed by the credit union and as to her counter-claim. While the motion for summary judgment was pending, the parties entered into a stipulation, which read: 1. Paulette Blaylock (“Blaylock”) stipulates that for the period from 1990 to 1995 she does not presently have any documentation to establish that she possessed comprehensive or collision insurance on the vehicle that secured her ³⁴⁸ loan with the Johns Hopkins Federal Credit Union (“JHFCU”), except as otherwise set forth in the record. 2. Blaylock further stipulates that, at present, she has no independent witnesses who can testify that she possessed such insurance on the subject vehicle, though Blaylock maintains that she had such coverage during this period. 3.

JHFCU stipulates that it does not now, nor did it ever possess the actual insurance policies purchased on behalf of Ms. Blaylock. Nor does JHFCU, its agents and employees have any actual or personal knowledge that such insurance policies exist. 4. JHFCU further stipulates that it did not directly notify Blaylock that it had purchased collateral protection (“forced placed”) insurance, though JHFCU maintains that it was JHFCU’s understanding that Blaylock was sent notice of such insurance directly by the insurer. 5. JHFCU further stipulates that it does not presently have any documentation to establish that Blaylock did not possess comprehensive or collision insurance on the vehicle that secured her loan with JHFCU. 6.

JHFCU further stipulates it does not now, nor did it ever possess any records or other documents in its files indicating that notice was given to Blaylock by the insurer. 7. JHFCU further stipulates that, at present, it does not have any independent witnesses who can testify that notice was given to Blaylock or that an insurance policy was actually purchased on her behalf. In support of the summary judgment motion, Ms. Blaylock’s counsel filed a twenty-eight page memorandum and eleven exhibits. Later, after the credit union filed its opposition motion, Ms. Blaylock’s attorneys filed a fifteen-page reply to the credit union’s response.

The summary judgment motion was denied on February 16, 2000. One of the issues discussed in the motion for summary judgment concerned the allegation in the amended counterclaim that the credit union had violated the UCC by giving inaccurate notice to Ms. Blaylock as to the date the repos ³⁴⁹ sessed car would be sold. Ms. Blaylock’s counsel argued that Maryland courts have consistently held that “compliance with the notice provision of [CL section] 9-504(3) is a condition precedent to recovery of a deficiency judgment.” (Citing Maryland Nat’l Bank v. Wathen, 288 Md. 119, 126 , 414 A.2d 1261 (1980).) In its opposition to the summary judgment motion, the credit union, citing Ruden v. Citizens Bank and Trust Co., 99 Md.App. 605 , 638 A.2d 1225 (1994), argued that the court should impose a “less severe penalty” than forfeiture of the deficiency judgment. Suffice it to say, the Ruden case did not support the credit union’s position, although the motions judge apparently was misled into thinking otherwise. 1 During the two-and-a-half years this case was pending, the parties went through mediation and there were attempts to settle the case.

On November 4, 1998, counsel for Ms. Blay-lock offered to settle if (1) both sides dismissed their claims with prejudice, (2) the parties executed mutual releases, (3) the credit union permitted Ms. Blaylock to maintain an action against Stewarts, (4) the credit union paid Ms. Blaylock her outstanding attorney’s fees and costs, and (5) the credit union returned any monies taken from Ms. Blaylock’s credit union account during the pendency of the action. In September 1999, Ms. Blaylock’s counsel indicated a willingness to settle if the credit union would: (1) pay Ms. Blaylock $5,000, (2) pay Ms. Blaylock’s outstanding attorney’s fees and costs, and (3) execute a mutual release.' Later, on April 10, 2000, Ms. Blaylock’s counsel offered to settle on the ³⁵⁰ same terms as suggested in September 1999, except that, this time, Ms. Blaylock upped her demand for damages to $10,000. As mentioned earlier, the subject case ultimately was settled by an agreement dated August 21, 2000. A hearing concerning attorney’s fees was held on August 26, 2001.

At the hearing, Louise Carwell, Esq., an attorney employed by the Legal Aid Bureau, testified as an expert in consumer litigation. She also submitted an affidavit to the court concerning the legal services provided by Ms. Blaylock’s counsel. Mrs. Carwell opined that the time spent litigating the subject case was fair and reasonable and that Ms. Blaylock’s counsel’s performance was efficient. She also gave the following opinion: The result was really exceptional, and that is because of the fact that initially this appeared to be simply a repossession case.

I’ve seen hundreds of those in my years of practice, and on the face, they always appear like many collection cases to be valid and to have a validity to them. In this particular case, however, the consumer had not only defenses to the lawsuit, but also had claims that evolved only after really digging to find out what exactly had happened here, and the result then for the consumer was not only that the lawsuit against her was negated, but that she received from a consumer’s point of view, a large award. She received an assurance that her credit report would be repaired with respect to this particular issue. And so that is not a result that happens very often.

Consumer cases where the consumer prevails does [sic] not occur very often, so that was an exceptional result. The credit union presented no evidence, nor did it contest either the amount of time spent nor the hourly rate charged by Ms. Blaylock’s attorney. Counsel for the credit union, however, argued that Ms. Blaylock was entitled to no attorney’s' fees because she had failed to prove that she had prevailed on the consumer protection count set forth in her counterclaim. The circuit court rejected that contention. ³⁵¹ During oral argument, the trial judge and counsel for Ms. Blaylock had the following exchange, which foreshadowed the court’s final disposition of the attorney’s fees issue, viz: [THE COURT:] I know you have expert testimony saying fifty thousand dollars to save eight thousand dollars is reasonable, but I would personally never pay fifty thousand dollars for a District Court case to save eight thousand dollars, would you? [MS.

BLAYLOCK’S COUNSEL]: Well, Your Honor, it depends upon the complexity of this case. THE COURT: I’m asking you would you pay fifty thousand dollars to save eight thousand dollars? [MS. BLAYLOCK’S COUNSEL]: I think it depends on the case. THE COURT: You would? [MS.

BLAYLOCK’S COUNSEL]: I would. THE COURT: Okay. See me back in chambers when this is over. If you give me sixty thousand dollars, I’ll give you ten back. [MS.

BLAYLOCK’S COUNSEL]: Your Honor, I appreciate the court’s comment, but the fact is, when you’re dealing with consumer cases, you’re going to naturally have that disparity. One of the cases before the Maryland Court of Special Appeals is Barnes v. Rosenthal Toyota— THE COURT: Let me stop you— But I think, in the first place, this was a District Court case. It was filed in District Court, and it was brought up to circuit court by the defendant who prayed a jury trial. I looked through the pleadings, and I see tons of time for discovery, tons of time for summary judgment motions, an enormous amount of time for subpoenas to be issued, considering the complexity of subpoenas for a District Court case basically. ³⁵² And I know it came to circuit court, but it was still a District Court case.

And the complexity issues can be argued in District Court, too. There are contempt petitions, and Stewarts, that’s the company that wasn’t even a defendant in the case. [MS. BLAYLOCK’S COUNSEL]: In cases like this, these are normally run-of-the-mill repossession cases where there are deficiencies owed. In order to determine whether or not the consumer has a claim, there is an extraordinary amount of work that needs to be done.

In connection with discovery, one of the main issues was the placement of forced placed insurance. We tried to obtain those records from Johns Hopkins. They advised us in depositions that we have