Simpkins v. Ford Motor Credit Co.

GREENE, J. This matter originated with the filing of a class action complaint 1 in connection with the legality of late fees charged to a lessee pursuant to an automobile lease. In 1996, Wendy Simpkins leased an automobile from Primus Automotive Financial Services, Inc., a subsidiary of Ford Motor Credit Company (“FMC”). The leasing contract established a monthly payment and a late charge of 7.5% of the full amount of the scheduled payment or $50.00, whichever is less, for each payment not received within 10 days after its due date. Ms. Simpkins paid at least one late charge in accordance with two leases with FMC, one in 1996 and another in 1999.

Since the filing of the initial complaint, the parties and claims in the instant case have gone through several incarnations. 2 The ⁴²⁹ dismissal of the Second Amended Complaint is the origin of this appeal. In the Second Amended Complaint, Ms. Simpkins alleges that any late payment fee charged by FMC in excess of 6% per annum to its Maryland lease finance customers is an unlawful penalty under the Maryland Constitution and the common law. 3 Ms. Simpkins asked the trial court to force FMC to refund all excessive late fees collected, plus prejudgment interest, to her and the members of the putative class. Ms. Simpkins also requested a declaratory judgment holding that the Maryland Consumer Motor Vehicle Leasing Contracts Act, Md.Code (1975, 2000 Repl.Vol.), § 14-2001 el aeq. of the Commercial Law Article did not permit motor vehicle lessors like FMC to charge and collect a late fee in excess of the 6% per annum, constitutional limit on interest set forth in Art. Ill, § 57 of the Maryland Constitution. 4 Finally, Ms. ⁴³⁰ Simpkins alleged that she was entitled to statutory penalties and damages provided under Md.Code (1975, 2000 Repl.Vol.), § 14-2002(g)(1)(I). 5 The trial court dismissed Ms. Simpkins’s remaining claims concluding that the amount of the late fee assessed is the amount specified by the lease, and not the 6% interest rate established by Md. Const. Art. III, § 57.

Ms. Simpkins filed a timely appeal, and the intermediate appellate court affirmed the decision of the trial court. Simpkins v. Ford Motor Credit Co., 160 Md.App. 1 , 862 A.2d 471 (2004). We granted Ms. Simpkins’s petition for writ of certiorari. 6 Simpkins v. Ford Motor, 386 Md. 180 , 872 A.2d 46 (2005). Ms. Simpkins presents two questions for our review, which we have recast for clarity: 1.

Does Md.Code (1975, 2000 Repl.Vol.), § 14-2002(g)(l) of the Commercial Law Article and the Maryland Consumer Motor Vehicle Licensing Contracts Act authorize motor vehicle lessors to charge consumer lessees a late fee in excess of 6% per annum? 2. Does Md.Code (1975, 2000 Repl.Vol.), § 14-1315 of the Commercial Law Article authorize FMC to charge Ms. Simpkins a late fee in excess of 6% per annum on the lease she entered into in 1999? We decline to reach the issues presented by Ms. Simpkins and remand the instant case for proceedings to address the effect, if any, of Ms. Simpkins’s involvement with the settlement of the class action suit in Stickles v. Ford Motor Credit ⁴³¹ Co., Case No. 981289, filed in the Superior Court for the State of California, County of San Francisco, and related issues. Facts Wendy Simpkins and Lynford Martin filed a class action complaint on February 20, 2001, in the Circuit Court for Prince George’s County naming Mazda American Credit Corporation t/a Mazda American Credit as the sole defendant. 7 Ms. Simpkins and Mr. Martin filed a First Amended Class Action Complaint on July 17, 2001, adding FMC Company t/a Mazda American Credit and Primus Automotive Financial Services, Inc. 8 The intermediate appellate court summarized Ms. Simpkins’s relationship with FMC: On September 5, 1996, Wendy Simpkins leased a Mazda automobile from Primus Automotive Financial Services, Inc, a subsidiary of Ford Motor Credit Company.

The contract established a monthly payment of $430.70 for three years. It also stated: “You will pay a late charge on each payment that is not received within 10 days after it is due. The charge is 7.5% of the full amount of the scheduled payment or $50.00, whichever is less.” Simpkins paid at least one late charge under this lease. On September 6, 1999, Simpkins entered into another three-year lease agreement with Ford Motor.

This agreement provided for a monthly pay ⁴³² ment of $437.73 and contained the same late charge provision, to which Simpkins was subjected at least once. Simpkins, 160 Md.App. at 4 , 862 A.2d at 473 . On August 23, 2001, Ms. Simpkins and Mr. Martin removed the case to the United States District Court for the District of Maryland, Southern Division. A Motion for Remand filed by Ms. Simpkins and Mr. Martin was granted on November 28, 2001, and the Federal Court issued a Memorandum Opinion and Order remanding the case back to the Circuit Court for Prince George’s County.

After the case was remanded, Ms. Simpkins and Mr. Martin filed the aforementioned Second Amended Complaint on September 10, 2002. Respondents filed motions to dismiss. The first hearing (on FMC’s motion to dismiss) was held on January 17, 2003. 9 On February 4, 2003, a Rule 2-502 10 hearing was held for the Circuit Court’s determination of certain issues of law in accordance with a stipulated statement of facts. 11 During the hearing, the court noted that the ⁴³³ defendants had requested a stay “based on the nationally certified case of [Stickles ].” 12 At this time, the trial judge briefly addressed Stickles: [THE COURT]: Stickles v. Ford Motor Credit Company. This is a case filed in the California Superior Court in the County of San Francisco, Case No. 981289.

And there was a settlement reached in that case. And it’s potentially possible, and 1 emphasize just potentially, it’s potentially possible that the sole plaintiff in this case, Ms. Simpkins, may be a party to that case. However, it is my understanding that that settlement is now under appeal. The appeal was filed by one of the members ⁴³⁴ of the class.

And since there is no final resolution to that case, there is, at least as far as this case is concerned, no reason to hold up my decision in this case. Is that a fair statement? Do either one of you want to add to that? [COUNSEL FOR FMC]: The only thing I would add, Your Honor, is that, it’s a correct statement. If and when that case becomes final and there is a non-appealable order in California, we would make application to the Court for res judicata effect, but we are not in that position at the present time. [THE COURT]: Thank you. [COUNSEL FOR MS.

SIMPKINS]: With that statement, I’ll fight that battle when I have to fight that battle. This colloquy was the only discussion that took place at the hearing on the implications of Stickles. On June 6, 2003, the Circuit Court dismissed the remaining claims of Ms. Simpkins’s Second Amended Complaint and in its Memorandum Opinion and Order held: (1) that the holding in United v. Burch, is not binding on the Motor Vehicle Leasing Contracts Act, CL § 14-2002 et seq.; (2) that the amount of the late fees Defendants charge pursuant to CL § 14-2002(g)(2) shall be the amount specified in the lease, subject to the “Consumer Leasing Act” codified at 15 U.S.C. § 1667 through 1667(e), and regulations promulgated pursuant thereto, as amended. CL § 14-2001(e), until May 31, 2000; (3) that commencing June 1, 2000, lessors in Maryland became subject to CL § 14-1315(a)-(e) and commencing October 1, 2000, lessors became subject to CL § 14 — 1315(f); (4) that CL § 14-1315 applies to and regulates late fees charged by motor vehicle lessors to consumer lessees after June 1, 2000.

This Court also concludes that it is unnecessary to address Questions V [Whether the applicable statute of limitations for plaintiffs’ constitutional and common law claims is three years or a greater period?] and VII [Whether plaintiff Wendy Simpkins states a cause of action under any com ⁴³⁵ mercial motor vehicle lease?] since its rulings deny Plaintiff any and all relief she requested. Ms. Simpkins filed a timely Notice of Appeal, and the intermediate appellate court issued its reported opinion on December 3, 2004, affirming the trial court’s judgment. 13 This court issued its mandate on January 3, 2005. The Stickles Settlement Agreement 14 Stickles v. Ford Motor Credit Company is a class action suit filed by Connie Stickles and others in the Superior Court of California. The class action complaint asserted contract claims and violations of California’s version of the Uniform Commercial Code against FMC as a result of alleged illegal penalties and/or late fee charges imposed upon motor vehicle lessees.

In May 2002, the parties reached a settlement and executed a Settlement Agreement and Release. 15 The Final Judgment stated that all members of the class certified in Stickles “have released and are hereby permanently enjoined and restrained from filing or prosecuting any Settled Claim 16 ⁴³⁶ against any of the Released Parties.” “Plaintiff Class” was defined by the Final Judgment as: [A]ll persons in the United States ... who, at any time from September 24, 1992 to March 1, 2002:(1) entered into a lease of a vehicle for personal and/or business use for which Ford Motor Credit Company (but not one of its dbas) either directly or by assignment from a dealer, provided retail lease financing; (2) made one or more required lease payments after the payment due date; (3) were thereafter charged late fees by Ford Motor Credit Company; (4) paid those late fees; and (5) were not subject to counter claims from Ford Motor Credit Company. On August 1, 1999, Primus Automotive Financial Services, Inc. was merged into Ford Credit. The Plaintiff Class also includes former Primus customers who paid late fees to Ford Credit after August 1,1999. The Release provided in part: 5.

As of the Effective Date of this Agreement, each Plaintiff, and each member of the Plaintiff Classes who has not opted out in accordance with the procedures set forth in paragraph 10 below, acknowledges full satisfaction of, and fully, finally and forever releases, settles and discharges the Released Parties of and from all Settled Claims. ⁴³⁷ b. For purposes of this paragraph, “Settled Claims” means and includes: I. Any and all clams, actions, causes of action, offsets or liabilities, whether known or unknown, suspected or unsuspected, contingent or matured, related to fees or other charges for delinquency, default or late payment, including claims for excessive late fees or improper disclosure of such fees or other charges, which any named plaintiff or any Class member has had, or now has[.] Paragraph 14b of the Settlement Agreement provided that each settlement check mailed to a member of the Settlement Class contain a statement on the reverse side of the check reserved for endorsement by the payee indicating: In full satisfaction and release of all claims respecting Ford Motor Credit vehicle lease late fees and/or disclosures thereof as provided in paragraph [4.7] 17 of the judgment in [Stickles v. Ford Motor Credit Co.], no. 981289 in the San Francisco Superior Court. The Ford Motor Credit settlement period began on September 24, 1992, and ended on March 1, 2002. The Primus settlement period began on August 1, 1999, and ended on March 1, 2002. 18 Ms. Simpkins received a notice providing her with an opportunity to opt out of the Stickles settlement class, but she did not.

Discussion FMC filed a Motion to Dismiss the instant appeal pursuant to Md. Rules 8-603, and 8-602(a)(l), (10), 19 on the grounds ⁴³⁸ that Ms. Simpkins’s claims, and the issues raised on appeal, are moot in light of Ms. Simpkins’s voluntary participation as a class member in Stickles. FMC supports its argument by noting that Ms. Simpkins filed a claim form and subsequently received a settlement payment of $24.11 as a class member, thus settling and releasing her claims against FMC regarding excessive late fees. Ms. Simpkins counters that, through the act of depositing the settlement check she received, she did not release her claims against FMC, nor did that act constitute an accord and satisfaction. 20 The issues raised by FMC’s Motion to Dismiss and Ms. Simpkins’s response were not considered substantively by the lower court. It is asserted here that Ms. Simpkins signed a release purportedly as a member of the Stickles class and deposited the settlement check she received from FMC.

The court did not make findings of fact as to Ms. Simpkins’s participation in that case nor did it explore what effect, if any, the alleged deposit of Ms. Simpkins’s settlement check had on the present case and what Ms. Simpkins’s exact actions were in connection with the receipt and execution of the Settlement Agreement purportedly sent to her by FMC. Moreover, there is some dispute raised before us as to whether Ms. Simpkins met the requirements of Stickles class membership because ⁴³⁹ FMC had filed a counterclaim against her. 21 The Stickles Final Judgment Order, which defines both who is a member of the “Plaintiff Class” and what is a “Settled Claim,” were not a part of the record before the Circuit Court. There was limited mention of Ms. Simpkins’s actions in connection with the receipt of the Settlement Agreement and Release, but little or no consideration or analysis of these actions at either the circuit or intermediate appellate court levels. It was admitted by counsel that Ms. Simpkins deposited the settlement check she received from FMC and never returned the money.

Generally, we may only review issues raised in, or decided by, the trial court. Md. Rule 8-131(a). As the bulk of these issues were not considered substantively by the trial court, we are not in a position to rule definitively whether Ms. Simpkins’s was a member of the Stickles class, and what effect, if any, the alleged execution of the Settlement Agreement will have in the instant case. The Circuit Court, in the first instance, is in the best position to develop this record and decide these issues.

Md. Rule 8-604 dictates our determination of a matter on appeal, 22 and Section (d)(1) details when a remand to the lower court is proper: Generally. If the Court concludes that the substantial merits of a case will not be determined by affirming, reversing or modifying the judgment, or that justice will be served by ⁴⁴⁰ permitting further proceedings, the Court may remand the case to a lower court. In the order remanding a case, the appellate court shall state the purpose for the remand. The order of remand and the opinion upon which the order is based are conclusive as to the points decided.

Upon remand, the lower court shall conduct any further proceedings necessary to determine the action in accordance with the opinion and order of the appellate court. Because the merits of the case cannot be determined on the record before us, the matter must be remanded, providing the parties with an opportunity to engage in additional proceedings at the trial court “as the purposes of justice may require.” Campbell v. Lowe, 9 Md. 500, 511 (1856). We are permitted to remand a case if “ ‘the purposes of justice will be advanced by permitting further proceedings in the cause, either through amendment of any of the pleadings or the introduction of further evidence, making additional parties, or otherwise[.]’ ” State Rds. Comm’n of Md. v. Hudson, 210 Md. 59, 62 , 122 A.2d 558 , 554 (1956) (quoting Code 1951, Art. 5, § 42) (internal alterations omitted).

Where there is solid evidence in support of disputed factual allegations, it is proper to place the responsibility for resolving such a conflict “with the trial court, a tribunal which is in a position vastly superior to that of an appellate court to perform this very important task.” Kowell Ford, Inc. v. Doolan, 283 Md. 579, 584 , 391 A.2d 840, 843 (1978). The Stickles case and its potential res judicata 23 effect on the instant case was brought to the hearing court’s atten ⁴⁴¹ tion in both FMC’s motion to dismiss and in open court on February 4, 2002. Prior to the intermediate appellate court’s decision in the instant case, several key