Price v. Murdy

Argued Before Barbera, C.J., Greene, * Adkins, McDonald, Watts, Hotten, Getty, JJ. Barbera, C.J. *¹⁴⁶ We are presented with a question of law certified by the United States District Court for the District of Maryland pursuant to the Maryland Uniform Certification of Questions of Law Act, §§ 12 -601 to 12-613 of the Courts and Judicial Proceedings Article ("CJP"), Maryland Code (1973, 2013 Repl. Vol.). The question posed is whether a Maryland statute-here, the ⁷⁹⁹ licensing requirement of the Maryland Consumer Loan Law, § 12-302 of the Commercial Law Article ("CL"), Maryland Code (1975, 2013 Repl.

Vol.)-is a statutory specialty as contemplated by CJP § 5-102(a)(6). If an action is on a specialty, CJP § 5-102 provides that it "shall be filed within 12 years after the cause of action accrues." For the following reasons, we hold that CL § 12-302 is a statutory specialty and actions on it are accorded a twelve-year limitations period. *¹⁴⁷ I. Facts and Procedural History Pursuant to the Maryland Uniform Certification of Questions of Law Act, CJP §§ 12-601 to 12-613, "we accept the statement of facts provided by the certifying court. We only 'answer questions of state law.' " AGV Sports Grp., Inc. v. Protus IP Sols., Inc. , 417 Md. 386 , 389 n.1, 10 A.3d 745 (2010) (citations omitted). We may reformulate, under CJP § 12-604, a question of law certified to us, TravCo Ins.

Co. v. Williams , 430 Md. 396 , 402, 61 A.3d 50 (2013), but we "may go no further than the question certified." AGV Sports , 417 Md. at 389 n.1, 10 A.3d 745 . We adopt the following facts set forth in the certification order of the United States District Court for the District of Maryland: Two Plaintiffs, [Price and Chovan,] consumers who financed the purchase of automobiles through loans under $6,000, brought a putative class action against the lender, Samuel Spicer, [ 1 ] for violations of the Maryland Consumer Loan Law ("MCLL"). Plaintiffs allege that Spicer was not licensed to enter into these loans under the MCLL. Plaintiffs further allege that Spicer violated the MCLL by: (1) failing to provide any notices related to repossession of cars; (2) charging and collecting compound interest; and (3) charging and collecting inflated or uncollectable attorneys' fees.

Plaintiffs claim that they entered into loans with Spicer while he was unlicensed, but all of the loan transactions occurred over three years before the instant lawsuit was *¹⁴⁸ filed on March 17, 2017. The general statute of limitations for civil actions is three years. CJP § 5-102(a)(6), however, provides a twelve-year statute of limitations for causes of action brought under a specialty statute: (a) An action on one of the following specialties shall be filed within 12 years after the cause of action accrues, or within 12 years from the date of the death of the last to die of the principal debtor or creditor, whichever is sooner: (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. Plaintiffs assert that the MCLL is an "other specialty," and therefore the twelve-year statute of limitations applies to their claims.

Spicer, on the other hand, maintains that the MCLL is not a specialty, and therefore the three-year statute of limitations applies. As a result, ⁸⁰⁰ Spicer contends, Plaintiffs' MCLL claims are time-barred. (Emphasis in certification order) (internal citations and footnote omitted). The District Court determined that the limitations issue involves a question of unresolved Maryland law and, therefore, certified the following question to this Court: Whether the MCLL § 12-302's licensing requirement is an "other specialty" subject to Maryland's twelve[-]year limitations period under [CJP] § 5-102(a)(6)?

(First alteration added).

II

The Licensing Provision of the Maryland Consumer Loan Law: A Brief History Maryland's licensing requirement for lenders of small loans dates to a 1912 Act. At that time, the General Assembly sought to protect consumers of small loans against far more than just usury: the Act, among other things, required licensing *¹⁴⁹ of "petty loan brokers," capped certain fees depending on the amount borrowed, and mandated disclosure of the loan's terms to the borrower. Ch. 836, 1912 Md. Laws 1621 , 1621-24. In 1918, the General Assembly replaced the 1912 law with "AN ACT to license and regulate the business of making [small] loans." Ch. 88, 1918 Md. Laws 197 , 197.

The law capped the interest rate for loans under $300 made by unlicensed lenders. Id. at 198 . The Act's preamble identified the legislature's goals of "prohibiting false or misleading statements" regarding these loans, setting maximum interest rates and charges, and regulating wage garnishments. Id. at 197-98 .

The preamble further explained: The conduct of [the business of making small loans] has long been a cause of general complaint, and of much hardship and injustice to borrowers, and there is no regulation or provision[ ] of law which has proved effective for the protection of such borrowers and for the punishment of usurious money lenders ... and there is a real need for the enactment of a law that will enable [the] continuance [of small loan lending] under proper supervision[.] Id. at 198 . In 1945, the General Assembly created the Maryland Industrial Finance Law, ch. 932, 1945 Md. Laws 1438 , 1453, to cover small loans, Md. Code Art. 11 §§ 165, 203 (1957, 1968 Repl. Vol.). Its purpose was to provide "further remedial legislation regulating the lending of sums of money not presently regulated by existing laws." Id. § 163.

The law required licensure or exemption from licensure for lenders of up to $1,500. Id. § 165. It also, among other things, governed the uniformity of monthly installment amounts, fee collection, and prepayment and any consequent refunding of interest. Id. § 196.

The law did not repeal or otherwise affect the 1918 law's regulation of loans and lenders of under $300, which itself had been codified at Article 58A. Id. § 166. Article 58A provided parallel regulation until repealed in 1977. 2 *¹⁵⁰ In 1975, the Maryland Industrial Finance Law was renamed the Maryland Consumer Loan Law ("MCLL"), and its credit provisions, including the licensing requirement at issue here, appeared in Subtitle 3 ("Consumer Loans - Credit Provisions") of Title 12 of the new Commercial Law Article. ⁸⁰¹ Md. Code, CL §§ 12-301 et seq. (1975).

The Revisor's note for the licensing requirement makes clear that its obligations already existed: This subsection is new language derived without substantive changes from Article 11, § 165. It is repeated here to note the general requirement of licensure for making of loans under this subtitle. The specific licensing provisions are retained in the cited Maryland Consumer Loan Law - Licensing Provisions, Article 11, §§ 163 et seq..... Id. § 12-302.

The language of the licensing requirement is unchanged since enacted in 1975, save for substituting "the person" for "he" in 1980. Ch. 33, 1980 Md. Laws 136 , 727. CL § 12-302 of the MCLL now provides: "A person may not engage in the business of making loans under this subtitle unless the person is licensed under or is exempt from the licensing requirements of Title 11, Subtitle 2 of the Financial Institutions Article, the Maryland Consumer Loan Law - Licensing Provisions." Other sections of the MCLL govern the amount of interest, other charges, and deceptive and unfair practices. CL §§ 12-303 to 12-314 (1975, 2013 Repl.

Vol.). The MCLL does not specify a limitations period for actions on its provisions. The applicable limitations period, therefore, is governed by the relevant statute of limitations found in the CJP Article. Although CJP § 5-101 provides a "blanket" three-year limitations period, NVR Mortg.

Fin., Inc. v. Carlsen , 439 Md. 427 , 439-40, 96 A.3d 202 (2014), there are exceptions. One such exception is CJP § 5-102, which sets a twelve-year limitations period for an action on a specialty. The certified question asks this Court to determine whether the MCLL's licensing requirement constitutes an "other specialty," *¹⁵¹ a category that we have previously deemed a "relatively narrow catchall," Master Fin., Inc. v. Crowder , 409 Md. 51 , 70, 972 A.2d 864 (2009). In answering this question, we are guided by recent cases, beginning with Crowder itself.

III

Discussion The Crowder Test and its Recent Application In Crowder , this Court laid out a test for determining whether a statute creates an "other specialty" under CJP § 5-102(a)(6): An action based on a statute will constitute an "other specialty" subject to the 12-year period of limitations 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, or, by applying clear statutory criteria, are readily ascertainable. Crowder , 409 Md. at 70 , 972 A.2d 864 . The Crowder plaintiffs brought their claim under the State Secondary Mortgage Loan Law ("SMLL"). Id. at 55 , 972 A.2d 864 .

The SMLL, among other provisions, "defines a secondary mortgage loan"; prohibits lending under the SMLL, unless the person is licensed or exempt from licensing; "limits the amount of interest, fees, points, commissions, and other charges" for such loans; and "requires certain disclosures to certain borrowers." Id. at 58, 972 A.2d 864 . The SMLL imposes civil and criminal penalties for violators. Id. The Crowder Court applied its test to the SMLL and concluded that a loan made ⁸⁰² pursuant to that statute is an "other specialty": *¹⁵² (1) the duties, obligations, prohibitions, and rights sought to be enforced by the plaintiffs are 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-is authorized solely by the SMLL, and (3) the ascertainment of those amounts is readily ascertainable.

Id. at 72 . Regarding the ascertainment of the damages, we rejected in Crowder the notion that the need for a court to conduct factfinding meant that the amount was not readily ascertainable. Id. at 72 , 972 A.2d 864 n.4 ("other[ issues] may well be resolved based on the relevant documents"). The Crowder test has been applied in two of this Court's opinions responding to certified questions from a federal court. 3 In the first Crowder application, we were asked whether the Maryland Telephone Consumer Protection Act ("MTCPA") is an "other specialty." *¹⁵³ AGV Sports Grp., Inc. v. Protus IP Sols., Inc. , 417 Md. at 389 , 10 A.3d 745 .

We did not address in AGV Sports the parties' arguments regarding whether the MTCPA satisfies the first and third Crowder prongs because the statute's available remedies "disclose[ ] why it is not a specialty." Id. at 397 , 10 A.3d 745 . The MTCPA prohibits certain unauthorized use of automated telephone equipment such as the "unsolicited sending of faxes." Id. at 391 , 10 A.3d 745 . AGV Sports alleged that Protus sent 882 such faxes over the course of three years. Id. at 390 , 10 A.3d 745 .

The MTCPA's remedies included a provision allowing " '[d]amages in the amount of the greater of: (i) $500 for each violation; or (ii) [a]ctual damages sustained as a result of the violation.' " Id. at 398 , 10 A.3d 745 (emphasis removed) (quoting the MTCPA). Black's Law Dictionary told us that "[a]ctual damages, by definition, are not liquidated or for a fixed sum." Id. at 398 , 10 A.3d 745 . The Court named several costs that would not be "readily ascertainable," such as decreased employee productivity caused by the review of the junk faxes as well as losses of paper and ink used to print them. Id. at 399 , 10 A.3d 745 .

Therefore, the Court held that the MTCPA is not an "other specialty" under CJP § 5-102(a)(6) and the twelve-year limitations period does not apply. Id. at 389 , 10 A.3d 745 . ⁸⁰³ Four years later, we were asked whether the Maryland Finder's Fee Act ("FFA") is an "other specialty." 4 NVR Mortg. Fin., Inc. v. Carlsen , 439 Md. at 429 , 96 A.3d 202 . The FFA requires an agreement between a mortgage broker and a borrower that discloses the broker's finder's fee and contains a representation that the broker is not the actual lender.

Id. at 431 , 96 A.3d 202 . The agreement must be made before the broker provides services and be signed by both parties. Id. at 431-32 , 96 A.3d 202 . In addition, a copy must be provided to the borrower.

Id. We held that the FFA is not an "other specialty," failing the first Crowder prong because the duty *¹⁵⁴ sought to be enforced was the "common law duty to 'disclose ... all facts or information which may be relevant or material in influencing the judgment or action of the [borrower] in the matter.' " Id. at 433-34 , 96 A.3d 202 (quoting St. Paul at Chase Corp. v. Mfrs. Life Ins. Co. , 262 Md. 192 , 215-16, 278 A.2d 12 , cert. denied , 404 U.S. 857 , 92 S.Ct. 104 , 30 L.Ed.2d 98 (1971) ).

The FFA's disclosure requirements,