eNotes: Liability – December 2024 – Maryland

SIGNIFICANT CASE SUMMARIES

Maryland Case Summaries

Anderson v. Hammerman
Maryland Appellate Court
No. 1254, Sept. Term, 2023

Decided: November 6, 2024

The Appellate Court of Maryland holds that the common law litigation privilege cannot bar claims against debt collectors under the Maryland Consumer Debt Collection Act or the Consumer Protection Act.

Background

Plaintiffs Kathleen Anderson and Bianca Diehl (“Consumers”) appealed an Order dismissing their putative class action Complaint against Defendants The Center for Innovative GYN Care, P.C. (“GYN”); Innovations Surgery Center, P.C.; 42 Services, LLC d/b/a Tower Surgical Partners (“Tower”); and Evan Hammerman (collectively “Collectors”). The Consumers’ Complaint alleged that the Collectors violated Maryland’s Consumer Debt Collection Act (“MCDCA”) and Consumer Protection Act (“MCPA”) by filing lawsuits against them in an attempt “to collect money that is not owed to them or not owed at all.” See Md. Code Ann., Com. Law. § 14-202(8); Com. Law § 13-301(14)(iii). In dismissing the Consumers’ Complaint, the Circuit Court concluded, inter alia, that Maryland’s common law litigation privilege barred such claims against debt collectors.

The Consumers each underwent surgery performed by GYN. Tower, GYN’s billing company, previously told Consumers that they would not be charged more than what Consumers’ health care providers paid. Collectors then filed lawsuits against Consumers claiming Consumers owed more for those medical services than what their health insurer paid. Consumers then filed the subject putative class action suit against Collectors alleging Collectors waived any right to payment not covered by Consumers’ health insurance and that Collectors violated the MCDCA and MCPA by attempting to collect money not owed to them. Upon a Motion by Collectors, the Court dismissed the Consumers’ Complaint holding, inter alia, that the common law litigation privilege broadly bars Consumers’ claims and that the Complaint failed to state a claim against Tower.

Holding

The Appellate Court of Maryland held that Collectors were not immune from MCDCA/MCPA liability for filing a suit against Consumers that demanded payment of money that Collectors allegedly knew was not owed. After reviewing the text, purpose, precedent, legislative history and consequences in its interpretation of the MCDCA and MCPA, the Appellate Court of Maryland found that the General Assembly did not intend the litigation privilege at common law to prevent consumers from using the statutory remedies available under the MCDCA and MCPA to hold debt collectors accountable for filing lawsuits to demand payment of money they know is not owed. The Appellate Court vacated the judgment in favor of the Collectors and remanded the case for further proceedings on all claims against Collectors.

Questions about this case can be directed to Nicholas Daetwyler at (443) 641-0567 or ndaetwyler@tthlaw.com.

Lyles v. Santander Consumer USA Inc.
Maryland Appellate Court
No. 1459, September Term, 2023

Decided: October 31, 2024

If a provision compelling arbitration is unambiguous and the parties clearly agree to arbitration, even a sparse arbitration cause will be enforced.

Background

Jabari Morese Lyles purchased a Ford Escape from Liberty Ford, a Maryland automobile dealership. Lyles signed two documents in purchasing the vehicle, one which established the terms for the vehicle purchase (“Purchase Agreement”), and a Retail Installment Sales Contract (“RISC”). The final page of the Purchase Agreement included a paragraph in bold print stating that the parties irrevocably agree that any controversy, claim or dispute arising out of or relating to the purchase or the financing of the vehicle would be settled by arbitration. That same paragraph referred to a separate Arbitration Agreement which included the specific details of any arbitration under the Purchase Agreement. The RISC stated that Lyles would pay monthly loan payments in the amount of $503.52 for 72 months, with the RISC assigning Liberty Ford’s interest in the contract to Santander Consumer USA.

Lyles filed suit against Santander in the Circuit Court for Baltimore City, alleging breach of contract and violations of the Maryland Credit Grantor Closed End Credit Provisions due to Santander’s convenience fees on customer payments. After several venue disputes, Santander filed a Motion to compel arbitration based on the Purchase Agreement and separate Arbitration Agreement. A hearing was held on the Motion, with Lyles claiming that he was never presented with the separate Arbitration Agreement. Lyles claimed that the arbitration clause in the Purchase Agreement was too ambiguous and Santander, as an assignee, had no standing to compel arbitration. Santander stated the arbitration terms in the Purchase Agreement were unambiguous and incorporated the separate Arbitration Agreement. The Court ruled that the parties irrevocably agreed to arbitration and granted the Motion.

Holding

The Appellate Court of Maryland affirmed the Lower Court’s decision and held that the language in the Purchase Agreement was clear and unambiguous, with both parties agreeing to arbitration. The omission of specific terms and procedures governing the arbitration process does not render an arbitration provision unenforceable. If the provision compelling arbitration is unambiguous, then even a sparse arbitration clause will be enforced. Even if Lyles was not presented the separate Arbitration Agreement, under Maryland law a party who signs a contract is presumed to have read and understood its terms, this is true even if a party never receives or signs the separate agreement referenced by the contract. The Appellate Court held that Santander, as assignee, stood in the shoes of Liberty Ford and could raise the same claims as Liberty Ford under the RISC.

Questions about this case can be directed to Lucas Duty at (443)-641-0572 or lduty@tthlaw.com.