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Franklin Credit Management Corp. v. Nefflen

Court of Appeals of Maryland

December 20, 2013

FRANKLIN CREDIT MANAGEMENT CORPORATION
v.
FRED NEFFLEN

Argued 11/5/13

Circuit Court for Frederick County Case No. 10-C-10-001379

Barbera, C.J. Harrell, Battaglia, Greene, Adkins, McDonald, Cathell, Dale R. (Retired, Specially Assigned), JJ.

OPINION

Battaglia, J.

In this case we initially are asked to consider whether a defendant who fails to respond to a complaint and against whom an order of default is entered and fails to move to vacate the order of default, after which judgment of default is entered may, thereafter, contest liability either by moving, under Maryland Rule 2-534 to alter or amend a judgment or directly on appeal.[1]

The dispute before the Court arises out of a suit alleging the breach of a settlement agreement terminating litigation in the Circuit Court for Frederick County that earlier ensued between the Petitioner, Franklin Credit Management Corporation (Franklin), and the Respondent, Fred Nefflen. The original litigation arose when Franklin was assigned the servicing rights to Mr. Nefflen's mortgage on a piece of property located in Frederick, Maryland. According to Mr. Nefflen's Complaint, Franklin attempted to collect more than was due on the loan as well as notified credit reporting agencies that Mr. Nefflen's payments were past due. Mr. Nefflen, thereafter, sued Franklin, and the settlement terms, as reflected in an agreement signed between Franklin and Mr. Nefflen, provided in relevant part:

7. The parties agree that there shall be no demand or requirement for flood insurance of any kind in connection with the Nefflen Loan.
8. The parties agree that there shall be no escrow requirement for the Nefflen Loan. Nefflen, upon request made through counsel, shall promptly provide [Franklin] with proof of payment of taxes and insurance.
11. [Franklin] will delete all derogatory information from any Credit Reports and report the Nefflen Loan as current and paid as agreed.

According to the Complaint, Franklin violated those provisions; Mr. Nefflen alleged breach of contract, defamation, as well as violations of the Maryland Consumer Debt Collection Act[2] and the Maryland Consumer Protection Act[3]:

COUNT I

Violation of the Maryland Consumer Debt Collection Act ("MCDCA")

40. Defendant has repeatedly made claims that Plaintiff owes amounts due to Defendant. The claims have no legal or factual basis.
41. Defendant has engaged in acts that violate the MCDCA. . . .
42. The Defendant's repeated and wrongful acts have caused the [P]laintiff emotional distress.
COUNT II
Defamation
44. The [D]efendant has defamed the [P]laintiff by knowingly, intentionally and repeatedly publishing false and inaccurate information about the [P]laintiff to third parties who reasonably recognize the information is defamatory with the intent to injure the [P]laintiff.
45. The Defendant acted with malice against the Plaintiff.
46. Plaintiff has been damaged by the defendant[']s actions.
COUNT III
Violation of the Maryland Consumer Protection Act ("MCPA")
48. The Defendant's violations of the MCDCA constitutes a violation of the Maryland Consumer Protection Act pursuant to § 13-301 (14)(iii) of the Commercial Law Article.[4]
COUNT IV
Breach of Settlement Agreement * * *
50. Defendant has materially breached the terms of the settlement agreement that it entered ...

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