NVR Mortgage Finance, Inc. v. Carlsen

WATTS, J. The United States District Court for the District of Maryland (“the federal court”) certified to this Court the following question of law: “Is [an alleged violation of] the Maryland Finder’s Fee Act [ (“the FFA”), Md.Code Ann., Com. Law (1975, 2013 RepLVol.) (“CL”) §§ 12-801 to 12-809,] a[n] ‘[other] specialty’ ... under [Md.Code Ann., Cts. & Jud. Proc. (1973, 2013 RepLVol.) (“CJP”)] § 5-102(a)(6)[, which is a twelve-year statute of limitations]?” Because this case involves only CL § 12 — 805(d), we reformulate the certified question of law 1 as follows: “Is an alleged violation of Md.Code Ann., Com.

Law (1975, 2013 Repl.Vol.) § 12-805(d) an ‘other specialty’ under Md.Code Ann., Cts. & Jud. Proc. (1973, 2013 Repl.Vol.) § 5-102(a)(6), which is a twelve-year statute of limitations?” We answer the reformulated certified question of law “no” and hold that that an alleged violation of CL § 12-805(d) is not an “other specialty” under CJP § 5-102(a)(6), and thus is subject to CJP § 5-101, which is the default three-year statute of limitations. BACKGROUND In the certification order, the federal court stated the following facts, 2 which we summarize.

In 2004, Soren Carlsen (“Carlsen”), Appellee, and NVR, Inc., Appellant, entered into a contract under which NVR, Inc. ⁴³⁰ would build a home for Carlsen, who would use NVR Mortgage Finance, Inc. (“NVR Mortgage”), Appellant, 3 to obtain financing for the home. Carlsen applied for a mortgage from NVR Mortgage, but Carlsen and NVR Mortgage did not close on the mortgage. Afterward, Carlsen used NVR Mortgage to apply for a mortgage from C & F Mortgage Corporation. In 2005, Carlsen and C & F Mortgage Corporation closed on the mortgage, and Carlsen paid NVR Mortgage a broker fee.

More than three but fewer than twelve years later, in the Circuit Court for Baltimore County, Carlsen sued NVR Mortgage and NVR, Inc. (together, “NVR”), for allegedly violating CL § 12-805(d) by failing to make certain disclosures to Carlsen and similarly situated homebuyers before collecting finder’s fees for brokering mortgages. 4 NVR removed this case to the federal court, in which NVR moved to certify a question of law to this Court. The federal court granted the motion to certify and stayed proceedings in the federal court pending this Court’s response. DISCUSSION NVR contends that an alleged violation of CL § 12-805(d) is not an “other specialty” under CJP § 5-102(a)(6) because, in an action for an alleged violation of CL § 12-805(d), the duty sought to be enforced exists as a matter of common law, rather than having been created solely by CL § 12-805(d). Alternatively, NVR argues that the General Assembly intended an alleged violation of CL § 12-805(d) not to be an “other specialty” under CJP § 5 — 102(a)(6), as the General Assembly enacted CJP § 5-101 (which is the default three-year statute of limitations) in 1973, and enacted CL ⁴³¹ § 12-805(d) in 1979.

Alternatively, NVR asserts that, here, the alleged violation of CL § 12 — 805(d) is not an “other specialty” under CJP § 5 — 102(a)(6) because Carlsen does not seek damages that are liquidated, fixed, or readily ascertainable by applying clear statutory criteria. Carlsen responds that an alleged violation of CL § 12-805(d) is an “other specialty” under CJP § 5-102(a)(6) because, in an action for an alleged violation of CL § 12 — 805(d), the duty sought to be enforced is created solely by CL § 12-805(d), rather than existing as a matter of common law. Carlsen contends that the General Assembly intended an alleged violation of CL § 12-805(d) to be an “other specialty” under CJP § 5-102(a)(6), as, during the General Assembly’s 2012 Regular Session, the House Economic Matters Committee gave an unfavorable report to House Bill 674, which would have added a three-year statute of limitations to the FFA. Carlsen argues that, here, the alleged violation of CL § 12-805(d) is an “other specialty” under CJP § 5-102(a)(6) because he seeks damages that are readily ascertainable by applying clear statutory criteria.

Unabridged, CL § 12-805(d) (which is part of the FFA) states: (1) A finder’s fee may not be charged unless it is pursuant to a written agreement between the mortgage broker and the borrower which is separate and distinct from any other document. (2) The terms of the proposed agreement shall: (i) Be disclosed to the borrower before the mortgage broker undertakes to assist the borrower in obtaining a loan or advance of money; (ii) Specify the amount of the finder’s fee; and (iii) Contain a representation by the mortgage broker that the mortgage broker is acting as a mortgage broker and not as a lender in the transaction. (3) A copy of the agreement, dated and signed by the mortgage broker and the borrower, shall be provided to the ⁴³² borrower within 10 business days after the date the loan application is completed. “Any mortgage broker who violates any provision of [the FFA] shall forfeit to the borrower the greater of: (1) Three times the amount of the finder’s fee collected; or (2) The sum of $500.” CL § 12-807 (paragraph breaks omitted). The FFA does not contain a statute of limitations.

CJP § 5-101 provides: “A civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period of time within which an action shall be commenced.” CJP § 5-102(a) states: “An action on one of the following specialties shall be filed within 12 years after the cause of action accrues ... (1) Promissory note or other instrument under seal; (2) Bond except a public officer’s bond; (3) Judgment; (4) Recognizance; (5) Contract under seal; or (6) Any other specialty.” (Paragraph breaks omitted). 5 Whether an alleged violation of CL § 12-805(d) is an “other specialty” under CJP § 5-102(a)(6) is the basis of the reformulated certified question of law. CJP § 5-102(a)(6) is a “ ‘relatively narrow catchall[.]’ ” AGV Sports Grp., Inc. v. Protus IP Solutions, Inc., 417 Md. 386, 399 , 10 A.3d 745, 753 (2010) (quoting Master Fin., Inc. v. Crowder, 409 Md. 51, 70 , 972 A.2d 864, 875 (2009)). An alleged violation of a statute is an “other specialty” under CJP § 5-102(a)(6) if and only if: (1) the duty, obligation, prohibition, or right sought to be enforced is created or imposed solely by the statute, or a related statute, and does not otherwise exist as a matter of common law; (2) the remedy pursued in the action is authorized solely by the statute, or a related statute, and does not otherwise exist under the common law; and (3) if the action is one for civil damages or recompense in the nature of civil damages, those damages are liquidated, fixed, ⁴³³ or, by applying clear statutory criteria, are readily ascertainable.

AGV Sports Grp., 417 Md. at 395-96 , 10 A.3d at 750 (quoting Crowder, 409 Md. at 70 , 972 A.2d at 875 ). In Crowder, 409 Md. at 55, 70-72 , 972 A.2d at 867, 875-76 , this Court held that certain alleged violations of the Maryland Secondary Mortgage Loan Law (“the SMLL”), CL §§ 12-401 to 12-415, were “other specialties]” under CJP § 5-102(a)(6). This Court stated: (1) the duties, obligations, prohibitions, and rights sought to be enforced by the plaintiffs [were] created and imposed solely by the SMLL, (2) the remedy pursued — forfeiture of all interest and unlawfully assessed fees, or, in the class action cases, forfeiture of three times the amount of interest charged — [was] authorized solely by the SMLL, and (3) ... those amounts [were] readily ascertainable. Id. at 72, 972 A.2d at 876 (footnote omitted).

By contrast, in AGV Sports Grp., 417 Md. at 389, 398 , 10 A.3d at 746, 752 , this Court held that an alleged violation of the Maryland Telephone Consumer Protection Act (“the MTCPA”), CL §§ 14-3201 to 14-3202, is not an “other specialty” under CJP § 5-102(a)(6) because, in an action for an alleged violation of the MTCPA, a plaintiff can seek actual damages instead of liquidated damages. In dicta, this Court observed that “the common law actions of trespass to chattel and conversion” “addressed” both the duty sought to be enforced in an action for an alleged violation of the MTCPA and the remedy pursued in an action for an alleged violation of the MTCPA. Id. at 400, 10 A.3d at 753 . Here, we conclude that an alleged violation of CL § 12-805(d) is not an “other specialty” under CJP § 5-102(a)(6) because, in an action for an alleged violation of CL § 12-805(d), the duty sought to be enforced exists as a matter of common law, rather than having been created solely by CL § 12-805(d).

A mortgage broker owes to a borrower a common law duty to “disclose ... all facts or information which may be relevant or material in influencing the judgment or ⁴³⁴ action of the [borrower] in the matter.” St. Paul at Chase Corp. v. Mfrs. Life Ins. Co., 262 Md. 192, 215-16 , 278 A.2d 12, 24 , cert. denied, 404 U.S. 857 , 92 S.Ct. 104 , 30 L.Ed.2d 98 (1971) (citations omitted). 6 Under CL § 12-805(d), a mortgage broker must disclose to a borrower in a prescribed manner a finder’s fee’s existence, which is information that may be relevant in influencing the borrower’s judgment in the matter. An alleged violation of a statute is not an “other specialty” under CJP § 5-102(a)(6) where, in an action for an alleged violation of the statute, “the duty ... sought to be enforced ... exist[s] as a matter of common law[,]” rather than having been “created ... solely by the statute[.]” AGV Sports Grp., 417 Md. at 395-96 , 10 A.3d at 750 (quoting Crowder, 409 Md. at 70 , 972 A.2d at 875 ); see also AGV Sports Grp., 417 Md. at 389, 400 , 10 A.3d at 746, 753 (This Court held that an alleged violation of the MTCPA is not an “other specialty” under CJP § 5-102(a)(6), and observed that “the common law actions of trespass to chattel and conversion” “addressed” both the duty sought to be enforced in an action for an alleged violation of the MTCPA and the remedy pursued in an action for an alleged violation of the MTCPA.). 7 ⁴³⁵ Accordingly, an alleged violation of CL § 12-805(d) is not an “other specialty” under CJP § 5 — 102(a)(6), and thus is subject to CJP § 5-101, which is the default three-year statute of limitations. 8 We reject Carlsen’s contention that an alleged violation of CL § 12-805(d) is an “other specialty” under CJP § 5-102(a)(6) because, in an action for an alleged violation of CL § 12-805(d), the duty sought to be enforced is created solely by CL § 12-805(d), rather than existing as a matter of common law.

Carlsen points out that, for example, under CL § 12 — 805(d)(1), a mortgage broker must disclose a finder’s fee’s existence in a “written agreement])]” CL § 12-805(d) did not create a statutory duty for mortgage brokers; instead, CL § 12-805(d) prescribed the manner in which a mortgage broker must fulfill the mortgage broker’s common law duty to the borrower to “disclose [certain] facts or information which may be relevant or material in influencing the judgment or action of the [borrower] in the matter.” St. Paul at Chase, 262 Md. at 215-16 , 278 A.2d at 24 (citations omitted). The duty sought to be enforced in an action for an alleged violation of a statute exists as a matter of common law, rather than having been created solely by the statute, where the statute ⁴³⁶ prescribes the manner in which a common law duty must be fulfilled. See AGV Sports Grp., 417 Md. at 389, 400 , 10 A.3d at 746, 753 (This Court held that an alleged violation of the MTCPA is not an “other specialty” under CJP § 5-102(a)(6), and observed that “the common law actions of trespass to chattel and conversion” “addressed” both the duty sought to be enforced in an action for an alleged violation of the MTCPA and the remedy pursued in an action for an alleged violation of the MTCPA, which prescribes the manner in which telemarketers must fulfill common law duties.). As NVR points out, if we accepted Carlsen’s contention, then an alleged violation of any statute that supplements the common law in any superficial way would be an “other specialty” under CJP § 5-102(a)(6), which would no longer be a “ ‘relatively narrow catchall[.]’ ” AGV Sports Grp., id. at 399, 10 A.3d at 753 (quoting Crowder, 409 Md. at 70 , 972 A.2d at 875 ).

We are unpersuaded by Carlsen’s reliance on Crowder, 409 Md. at 68 , 972 A.2d at 874 (“If the statute imposes an obligation, and gives a special remedy therefor, which otherwise could not be pursued, but at the same time a remedy for the same matter exists at common law independently of the statute, and the statute does not take away the common law remedy, the bar of the statute [of limitations] is effectual when the common-law duty or liability is pursued, but is not applicable when the special statutory remedy is employed.” (Alteration in original) (citation omitted)) for the contention that an alleged violation of CL § 12-805(d) is an “other specialty” under CJP § 5-102(a)(6) even if, in an action for an alleged violation of CL § 12-805(d), the duty sought to be enforced exists as a matter of common law, rather than having been created solely by CL § 12-805(d). An alleged violation of a statute is an “other specialty” under CJP § 5-102(a)(6) only if the statute creates both “the duty ... sought to be enforced” in an action for an alleged