Chavis v. Blibaum Assoc.

Larry S. Chavis, et al. v. Blibaum Associates, P.A., No. 334, Sept. Term, 2019; Bryione K. Moore v. Peak Management LLC, No. 528, Sept. Term 2019. Opinion filed on July 2, 2020, by Berger, J. DEBT COLLECTION – MCDCA– METHODS– AMOUNT OF DEBT The MCDCA may be used by a debtor to challenge methods of debt collection. A debtor may not use the MCDCA to challenge the amount of a debt, which the creditor had a right to collect. DEBT COLLECTION – MCDCA – WRIT OF GARNISHMENT A creditor does not violate the MCDCA, § 14-202(8) of the Commercial Law Article, by using wage garnishment to collect the filing fee for a writ of garnishment.

DEBT COLLECTION – MCDCA – RETROACTIVITY The 2018 amendments to the MCDCA, which added § 14-202(11) to the Commercial Law Article, do not apply retroactively. There is a presumption that a statute operates prospectively, unless there is clear legislative intent otherwise. CLASS ACTION CERTIFICATION – HEARING REQUIREMENT A trial court is not obligated to grant the moving party a hearing when it files a second motion for class certification, following the denial of the first. Circuit Court for Baltimore County Case No. 03-C-18-010602 Circuit Court for Baltimore City Case No. 24-C-17-000033 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND Nos. 334, 528 September Term, 2019 ______________________________________ LARRY S. CHAVIS, ET AL. v. BLIBAUM ASSOCIATES, P.A. ______________________________________ BRYIONE K. MOORE, ET AL. v. PEAK MANAGEMENT LLC ______________________________________ Berger, Arthur, Gould, JJ. ______________________________________ Opinion by Berger, J. ______________________________________ Pursuant to Maryland Uniform Electronic Legal Materials Act Filed: July 2, 2020 (§§ 10-1601 et seq. of the State Government Article) this document is authentic. 2020-07-02 14:32-04:00 Suzanne C. Johnson, Clerk This appeal arises out of two consolidated cases from the Circuit Court for Baltimore City and the Circuit Court for Baltimore County involving the collection activities of two judgment creditors.

Appellants are residential tenants who defaulted on their leases with their landlord, Appellee, Peak Management LLC (“Peak”). Peak hired Blibaum & Associates (“Blibaum”), Appellee, which sought to collect on the judgments entered against the tenants.1 Appellants challenged the debt collection activities of Peak and Blibaum in separate actions in Baltimore City and Baltimore County. Appellants sought damages for violations of the Maryland Consumer Debt Collection Act (“MCDCA”), the Maryland Consumer Protection Act (“MCPA”), as well as declaratory and injunctive relief. On appeal, Appellants present the following issues for review, which we rephrase in accordance with the consolidation of the two cases: I. Whether the circuit court erred when it dismissed Appellants’ claims under the Maryland Consumer Debt Collection Act.

II

Whether the circuit court erred when it dismissed Appellants’ claims under the Maryland Consumer Protection Act.

III

Whether the 2018 Amendments to the Maryland Consumer Debt Collection Act apply retroactively.

IV

Whether the circuit court erred when it denied Appellants’ Second Motion for Class Certification. 1 Although we collectively refer to the tenants as “Appellants” throughout this Opinion, we recognize that not all Appellants are the same in both cases. V. Whether the circuit court erred when it denied Appellants’ request for attorney’s fees pursuant to the Maryland Consumer Protection Act. For the reasons explained herein, we hold that neither the Circuit Court for Baltimore City nor the Circuit Court for Baltimore County erred in dismissing Appellants’ MCDCA or MCPA claims. Additionally, the Circuit Court for Baltimore City did not err in finding that the 2018 Amendments to the MCDCA did not apply retroactively.

In light of our holding that Appellees did not violate the MCDCA or the MCPA, we need not address whether the Circuit Court for Baltimore County erred in denying Appellants’ request for attorney’s fees. FACTS AND PROCEEDINGS Although we have consolidated both appeals into one opinion, we shall outline the procedural history of both cases separately. Tenants Bryione Moore, Albert Grantham, Patricia Grantham, Sharone Crowell, and Larry S. Chavis defaulted on their residential leases with Peak. Peak hired Blibaum to obtain judgments against the tenants for damages caused by the breaches of their leases.

Blibaum obtained judgments against the tenants, which they failed to satisfy. Blibaum, therefore, initiated collection activities against the tenants, which included filing and obtaining writs of garnishments. Blibaum sought to collect the fee that it incurred for filing the writs of garnishment, as well as post-judgment interest in the amount of 10%. Chavis and Grantham satisfied the judgments obtained against them in full.

Moore and Crowell did not satisfy the judgments entered against them. 2 The tenants filed a lawsuit against Peak Management in the Circuit Court for Baltimore City, seeking damages for the debt collection activities by Peak. In their First Amended Class Action Complaint, which was filed on March 24, 2017, the tenants sought declaratory and injunctive relief, damages for violations of the MCDCA, Md. Code (1975, 2013 Repl. Vol.), § 14-202(8), of the Commercial Law Article (“CL”), damages and attorney’s fees for violations of the Maryland Consumer Protection Act (“MCPA”), CL § 13-301 et. seq., as well as restitution in the amount of the overpayments made to Peak. The tenants’ primary contention was that Blibaum’s utilization of a 10% post-judgment interest rate was contrary to Maryland law, which authorizes a post-judgment interest rate of 6% for the collection of rent of residential premises.

On April 19, 2017, the Honorable Barry Williams dismissed both the MCDCA and the MCPA counts against Peak. Thereafter, the tenants filed a Fourth Amended Complaint on May 1, 2018, which added claims for permanent injunctive relief, a new MCPA claim based on CL § 13-303(1) and a claim, pursuant to CL § 15-605, that Peak was not entitled to collect a fee in order to file a writ of garnishment. Following a motion to dismiss filed by Peak, the new claims under the MCPA and CL § 15-605 were dismissed by the Honorable Michael DiPietro. Judge DiPietro additionally denied the tenants’ request for the entry of a declaratory judgment, permanent injunction, and an order for restitution.

The tenants filed their first Motion for Class Certification on May 14, 2018. The only remaining count at that time was an action for unjust enrichment. Following a hearing, the Honorable Videtta A. Brown denied the motion on September 10, 2018. In an effort to resolve the concerns expressed by the court when it denied the first motion, the tenants 3 subsequently filed a Second Motion for Class Certification that included the deposition testimony of Gary Blibaum.

The circuit court denied the second motion for class certification without a hearing on February 6, 2019. Both Peak and the tenants filed cross- motions for summary judgment, which were considered by the Honorable Julie R. Rubin. The circuit court granted judgment in favor of Peak with respect to Moore and Crowell’s unjust enrichment claims. The court further entered judgment in favor of Albert Grantham, Patricia Grantham, and Larry S. Chavis with respect to their claims of restitution.

The judgments were entered on May 3, 2019 and this timely appeal was filed on May 7, 2019. The second of these consolidated cases involves the following undisputed facts. Tenants Larry S. Chavis, Patricia Grantham, Laronda T. Green, and Cassandra J. Reid defaulted on their residential leases with Peak. Blibaum was retained by Peak to file claims against the tenants for breach of contract, seeking damages caused by the breaches.

Blibaum obtained judgments against the tenants, on behalf of Peak, which included a 10% pre-judgment interest rate. When the tenants failed to satisfy the judgments entered against them, Blibaum began to garnish their wages. Blibaum utilized a 10% post-judgment interest rate when calculating the amount the tenants owed on the judgments. On October 22, 2018, the tenants filed a Complaint against Blibaum in the Circuit Court for Baltimore County, similarly alleging violations of the MCDCA and requesting attorney’s fees pursuant to the MCPA.

Blibaum filed a motion to dismiss the complaint and requested a hearing. While the motion was pending, the tenants filed their First Amended Class Action Complaint on January 4, 2019. Blibaum filed a motion to dismiss the First Amended Class Action Complaint and requested a hearing. Following a hearing 4 on the motion to dismiss, the Honorable Paul J. Hanley granted Blibaum’s motion to dismiss the complaint in its entirety in an order dated April 11, 2019.

The core of Appellants’ arguments on appeal is based on Appellees charging the incorrect post-judgment rate pursuant to Md. Code (1974, 2013 Repl. Vol.), § 11–107, of the Courts and Judicial Proceedings Article (“CJ”). Three related cases are currently pending in Federal Court and are relevant to this issue on appeal. See Amber Ben-Davies v. Blibaum & Associates P.A., CCB-16-2783 (D. Md. 2019); Bryione K. More v. Blibaum & Associates, P.A., CCB-16-3546 (D. Md. 2019); Larry Chavis v. Blibaum & Associates, P.A., CCB-17-2220 (D. Md. 2019).

The U.S. District Court for the District of Maryland certified the following question to the Maryland Court of Appeals regarding the proper post-judgment interest rate: Is the legal rate of post-judgment interest on a judgment awarded in a breach of contract action where the underlying contract is a residential lease ten percent (10%)[,] as stated in [CJ] § 11–107(a)[,] or is it six percent (6%)[,] as stated in [CJ] § 11–107(b), which states that it is applicable to ‘a money judgment for rent of residential premises,’ where the judgment in the breach of contract action does not specifically delineate what portion, if any, of the judgment was awarded for unpaid rent? Ben-Davies v. Blibaum & Assocs., P.A., 457 Md. 228 , 232–33 (2018). The Court of Appeals explained that “under Md. Code Ann., Cts. & Jud. Proc.

(1974, 2013 Repl. Vol.) (“CJ”) § 11–107, different post-judgment interest rates apply to different types of judgments.” Id. at 231. Moreover, “[g]enerally, under CJ § 11–107(a), except as provided otherwise, a post-judgment interest rate of 10% applies to all judgments. Meanwhile, under CJ § 11–107(b), a post-judgment interest rate of 6% applies to ‘money judgment[s] for rent 5 of residential premises[.]’” Id.

Blibaum and Peak argued that “the plain language of CJ § 11–107(b) demonstrates that it does not apply to judgments in actions for breach of contract, even if the damages include rental payments under a lease.” Id. at 244. The Court of Appeals agreed with the Tenants’ reading of CJ § 11-107(b) and held the following: Here, we conclude that, where a landlord sues a tenant for breach of contract based on a residential lease, and the trial court enters judgment in the landlord’s favor against the tenant and the judgment includes amounts for unpaid rent and other expenses, a post-judgment interest rate of 6% applies to the judgment pursuant to CJ § 11–107(b). Id. at 265. We shall add additional facts as they become relevant to the issues on appeal.

I. MCDCA Claims. Appellants allege that Blibaum and Peak violated the MCDCA, CL § 14-202(8), for their collection of two “unauthorized charges.” First, Appellants argue that it was a violation of the MCDCA to collect 10% post-judgment interest when the legal rate was 6%.2 Second, Appellants contend that Appellees violated the MCDCA by collecting the filing fees associated with obtaining writs of garnishments by adding those fees to the amounts it sought to collect through the garnishments. 2 Appellants in Case No. 334 additionally challenge Blibaum’s utilization of a 10% pre-judgment interest rate. We agree with Appellants, that the legal rate of pre-judgment interest in Maryland is 6%, not 10%. Harford Cty. v. Saks Fifth Ave.

Distribution Co., 399 Md. 73, 96 (2007) (holding that “pre-judgment interest shall be calculated at the legal rate of six percent per annum.”). We undertake the same analysis for both the collection of pre- judgment and post-judgment interest as it relates to the MCDCA. 6 Both the Circuit Court for Baltimore County and the Circuit Court for Baltimore City granted motions to dismiss the Appellants’ MCDCA and MCPA claims. “A trial court may grant a motion to dismiss if, when assuming the truth of all well-pled facts and allegations in the complaint and any inferences that may be drawn, and viewing those facts in the light most favorable to the non-moving party, ‘the allegations do not state a cause of action for which relief may be granted.’” Sutton v. FedFirst Fin. Corp., 226 Md. App. 46, 73 (2015) (quoting Latty v. St. Joseph’s Soc. of Sacred Heart, Inc., 198 Md. App. 254 , 262–63 (2011)). This Court reviews the grant of a motion to dismiss de novo.

Advance Telecom Process LLC v. DSFederal, Inc., 224 Md. App. 164, 173 (2015). “We will affirm the circuit court’s judgment ‘on any ground adequately shown by the record, even one upon which the circuit court has not relied or one that the parties have not raised.’” Id. at 174 (quoting Monarc Constr., Inc. v. Aris Corp., 188 Md. App. 377, 385 (2009)). A. Collection of 10% post-judgment and pre-judgment interest was not a violation of the MCDCA § 14-202(8). We shall first address whether the Appellees violated the MCDCA by collecting post-judgment and pre-judgment interest at a rate of 10%, when the legal rate is 6%. CL § 14-202(8) provides that “[i]n collecting or attempting to collect an alleged debt a collector may not . . . [c]laim, attempt, or threaten to enforce a right with knowledge that the right does not exist[.]”3 “The MCDCA, and in particular § 14–202, is meant to proscribe 3 The “knowledge” requirement of CL § 14-202(8) “has been held to mean that a party may not attempt to enforce a right with actual knowledge or with reckless disregard as to the falsity of the existence of the right.” Allen v. Bank of Am., N.A., 933 F. Supp. 2d 716, 729 (D. Md. 2013) (quoting Kouabo v. Chevy Chase Bank, F.S.B., 336 F. Supp.2d 471, 475 (D. Md. 2004)). 7 certain methods of debt collection and is not a mechanism for attacking the validity of the debt itself.” Fontell v. Hassett, 870 F. Supp. 2d 395, 405 (D. Md. 2012). “A collector who violates any provision of this subtitle is liable for any damages proximately caused by the violation, including damages for emotional distress or mental anguish suffered with or without accompanying physical injury.” CL § 14-203.

Appellants rely heavily on Allstate Lien & Recovery Corp. v. Stansbury, 219 Md. App. 575, 577 (2014) and Mills v. Galyn Manor Homeowner’s Ass’n, Inc., 239 Md. App. 663, 676 (2018), aff’d sub nom., Andrews & Lawrence Prof’l Servs., LLC v. Mills, 467 Md. 126 (2020), in support of their argument that Appellees collected or attempted to collect two “unauthorized charges.” In Allstate, supra, 219 Md. App. at 577 , a vehicle repair shop placed a “garageman’s lien” on a vehicle that it repaired, when the owner could not pay for the repairs in full. The repair shop included a $1,000 processing fee in the lien amount that the owner was required to pay in order to redeem his vehicle. Id. The vehicle owner alleged that the processing fees were not authorized by statute, and therefore, the repair shop violated the MCDCA by including the processing fee in the lien amount.

Id. The repair shop argued that it had an “absolute legal right to execute upon the lien and sell the vehicle because of the garageman’s lien on the vehicle, even if a portion of the lien amount [was] disputed.” Id. at 590 . The repair shop further argued that “the MCDCA addresses the method of debt collection, as opposed to a challenge to the amount of the underlying debt.” Id. 8 This Court first determined that CL § 16-202, which authorizes a garageman’s lien, did not authorize including processing fees as part of the lien amount. We next addressed whether the inclusion of those fees constituted a violation of the MCDCA.

We rejected the repair shop’s reliance on Fontell, supra, 870 F. Supp. 2d at 406 , where a homeowner challenged the validity of an underlying homeowner’s association debt under the MCDCA. The Fontell Court held that the MCDCA is “meant to proscribe certain methods of debt collection and is not a mechanism for attacking the validity of the debt itself.” Id. at 405 . This Court observed that Fontell was unhelpful to the repair shop, because the vehicle owner was not disputing the underlying debt, but rather the “method of collecting the debt, i.e., front-loading processing fees and including those fees as part of the lien.” Allstate, supra, 219 Md. App. at 530 . Accordingly, we held that because the repair shop did not have the right to include the processing fees as part of the lien amount, the vehicle owner could recover under the MCDCA.

Id. at 591 . More recently in Mills, supra, 239 Md. App. at 676 , we considered whether a Homeowner’s Association violated the MCDCA. The homeowners challenged the Association’s right to file liens against them because the statute of limitations had expired. Additionally, the homeowners alleged that the Association levied fines against them that were unauthorized by the Association’s governing documents.

We held that “the Homeowners may pursue a MCDCA claim because they challenge [the Association’s] methods in filing liens.” Further, we remanded the case to the trial court to determine whether the fines levied against the homeowners “are the type of ‘unauthorized’ charges 9 covered by the statute.” By “unauthorized charges,” we addressed charges that the Association did not have the right to assess at all. Critical to both the Allstate and Mills holdings was that the creditors sought to collect fees that it did not have the right to collect. Neither holding suggests that a debtor may use the MCDCA to challenge the amount of a debt, which the creditor had a right to collect. Indeed, there is no dispute that Appellees had a right to collect pre-judgment and post-judgment interest.

The only dispute pertains to the amount of pre-judgment and post- judgment interest. Accordingly, we affirm the judgments of both the Circuit Court for Baltimore City and the Circuit Court for Baltimore County with respect to dismissal of Appellants’ MCDCA claims.4 4 Relying on Mills, supra, 239 Md. App. at 679 and Allstate, supra, 219 Md. App. 591 , the United States District Court for the District of Maryland issued an interlocutory order denying summary judgment, in connection with similar claims asserting violations of the MCDCA. Ben-Davies v. Blibaum & Assocs., P.A., 421 F. Supp. 3d 94 , 99-100 (D. Md. 2019). We disagree with the Court’s interpretation of our holdings in Mills and Allstate.

The Federal Court observed that in Allstate, this Court “held that a plaintiff’s claim was proper under the MCDCA where he disputed the inclusion of a processing fee on top of the valid underlying debt.” Id. at 100 (citing Allstate, supra, 219 Md. App. at 591 ). The Court further observed that in Mills we “suggested that the levying of fines not authorized by the contract governing the underlying debt might constitute a violation of the MCDCA.” Id. (citing Mills, supra, 239 Md. App. at 679 ). As we explained above, in both Mills and Allstate, the creditors sought to collect fees that they did not have the right to collect at all.

In the instant case, Appellees clearly had a right to collect pre- judgment and post-judgment interest. The parties, however, disagreed on the amount of the interest. Blibaum and Peak were incorrect in their legal assessment of the amount they were entitled to collect. After certification of this legal question from the District Court, the Court of Appeals issued a comprehensive opinion holding the proper rate of post- judgment interest is 6%.

In our view, the parties’ legal disagreement --that was ultimately resolved by the Court of Appeals -- does not result in a cognizable claim under the MCDCA. 10 B. Using wage garnishment to collect the filing fee for a writ of garnishment does not constitute a violation of the MCDCA § 14-202(8). Appellants next contend that Appellees assessed an “unauthorized charge” by including the fee for the filing of a writ of garnishment in the amount they attempted to collect through the garnishments. Appellants argue that the cost of the filing fee for the writ of garnishment was not included in the costs “actually assessed in the cause,” as required by CL § 15-605. We, therefore, address whether the Appellants had a right to include the filing fee in the amount it was attempting to collect through garnishing the Appellants’ wages.

Generally, Maryland Rule 3-603 provides that “the prevailing party is entitled to the allowance of costs.” When a judgment debtor fails to satisfy a judgment, the creditor may garnish their wages, by first filing a writ of garnishment. Pursuant to Maryland Rule 3-646, a “judgment creditor may obtain issuance of a writ of garnishment by filing in the same action in which the judgment was obtained a request that contains (1) the caption of the action, (2) the amount owed under the judgment, (3) the name and last known address of the judgment debtor, and (4) the name and address of the garnishee. Upon filing of the request, the clerk shall issue a writ of garnishment directed to the garnishee together with a blank answer form provided by the clerk.” The District Court of Maryland published Form Number DC-CV-065 (Rev. 01/2020), which a creditor utilizes in order to do so. Indeed, Rule 3-303 requires that “[a]s far as practicable, all pleadings shall be prepared on District Court forms prescribed by the Chief Judge of the District Court.” The form provides spaces for the creditor to fill in “the amount now due on the judgment.” It includes 11 a line for “[t]otal court costs, including this writ.” Appellees correctly completed the form and filed it with the district court.

Appellants aver that the collection of the filing fee, however, was contrary to the mandate in CL §15-605, which establishes the duties of a judgment creditor who garnishes a debtor’s wages. CL § 15-605(c) requires that “[a]ll payments received by a judgment creditor shall be credited first against the accrued interest on the unpaid balance of the judgment, if any, second upon the principal amount of the judgment, and third upon those attorney’s fees and costs actually assessed in the cause.” Appellants argue that