United States District Court, District of Maryland
Richard D. Bennett United States District Judge
The Plaintiff Dante Askew has brought this suit against the Defendant HRFC, LLC, after it notified him of an interest rate error on a used car loan, lowered that interest rate, and applied a refund to his account for any overpayment. Askew’s claims against HRFC seek to impose liability upon HRFC for its compliance with Maryland statutory law.
Specifically, Askew asserts claims against the Defendant HRFC, doing business as Hampton Roads Finance Company, for violations of Maryland Credit Grantor Closed End Credit Provisions, Md. Code. Ann., Com. Law § 12-1001, et seq., a claim for breach of contract, and a claim under the Maryland Consumer Debt Collection Act, Md. Code Ann., Com. Law § 14-201, et seq. Presently pending is the Defendant’s Motion for Summary Judgment (ECF No. 26). The parties’ submissions have been reviewed and a hearing was held on March 20, 2014. There are no genuine issues of any material fact, and the Plaintiff’s claims are without merit and contrary to the public policy implemented by the Maryland statutes in question. For the reasons that follow, Defendant’s Motion for Summary Judgment (ECF No. 26) is GRANTED, and JUDGMENT shall be entered in the Defendant’s favor.
As agreed by counsel at the hearing, the operative facts of this case are largely uncontested. The Plaintiff Dante Askew is a resident of Baltimore County, Maryland. The Defendant HRFC, LLC, d/b/a Hampton Roads Finance Company, is a Virginia finance company licensed in Maryland, that purchases and services loans. This case arises out of a car loan the Plaintiff entered into on September 4, 2008 for the purchase of a used 2005 Buick from Heritage Dodge in Baltimore County. The parties entered into a Retail Installment Sales Contract (“RISC”) to finance the purchase, and Heritage Dodge took a security interest in the vehicle. See HRFC 00047-00048, ECF No. 33-1. The RISC, by its terms, is governed by the Maryland Credit Grantor Closed End Credit Provisions, Md. Code Ann., Com. Law § 12-1001, et seq. (“Subtitle 10” or “CLEC”):
6. Applicable Law Federal law and Maryland law apply to this contract.
This contract shall be subject to the Credit Grantor Closed End Credit Provisions (Subtitle 10) of Title 12 of the Commercial Law Article of the Maryland Code.
See HRFC 00048.
After the sale was complete, Heritage Dodge assigned the loan to Defendant HRFC, LLC on September 10, 2008. The Plaintiff was charged 26.99% interest, a rate exceeding the Maryland statutory maximum for that specific type of loan under Subtitle 10 of the Commercial law article.
From the Plaintiff’s purchase of the vehicle in September of 2008 until July of 2010, he made monthly payments on the loan, but was assessed fees for late payment on five occasions. Under the terms of the loan, Askew was charged a late fee of 10% of the part of the payment that was late. See HRFC 00047. Then, on or about July 17, 2010, the Defendant realized that the interest rate charged to some of its customers was higher than that allowed by statute. In the resulting internal review, HRFC discovered that the Plaintiff had been charged an erroneously high interest rate. As of September 5, 2010, the Defendant began charging Askew an interest rate of 23.99% and credited his account, backdated to July 23, 2010. Then, HRFC sent Askew a letter dated September 17, 2010, stating that:
During a recent review of your contract, we determined that the interest rate applied to your contract was not correct. As a result, we have applied a credit of $845.40 to your account. We will continue to compute interest at the new rate until you make your final payment.
As a result of this adjustment, you will repay the contract earlier than originally scheduled if you continue to make your scheduled monthly payments. If you would like us to adjust your monthly payments so that the contract will be repaid on the date originally scheduled, please let us know.
See Letter from Craig R. Siebel, Jr., CPA, Secretary/Treasurer & Controller – HRFC, LLC to Dante Askew, Sept. 17, 2010, ECF No. 33-1. Since receiving the refund and his rate being adjusted, the Plaintiff has been charged for late payments on eight more occasions.
As a result of Askew’s various late payments, HRFC undertook collection efforts. On July 28, 2011, HRFC represented to Askew that his account was turned over to attorneys to “prepare a replevin warrant (Court order to surrender) which is to be issued against you for this vehicle if it is not paid or in the alternative the vehicle is not turned in. The cost to you for this action is about $2200. . . . Running up your deficiency balance does not benefit you as the garnishment which follows is for a longer period of time.” Compl. ¶¶ 33-34. On September 19, 2012, HRFC informed Askew that $2441.95 was due on the account but that “TOTAL DOES NOT INCLUDE PENDING FEES (REPO FEES $425, ATTORNEY $732.59), ” and that the loan balance must be “paid before the vehicle is repo’d or the attorney files the case[.] (The file has already been release [sic] for both).” Id. ¶¶ 38-39. Then, on October 10, 2012, HRFC represented to Askew that “[t]o stop the repossession you will need $ 1664.48 the repo close fee (if paid before the replevin warrant is served) . . . [w]e are seeking a courts [sic] order for the surrender.” Id. ¶ 41. Two days later, on October 12, 2012, HRFC notified Askew that “[p]ayoff is $2900.61 now (IF PAID BEFORE WARRANTS ARE SERVED) or $4700.61 courts costs if paid after service, ” and that “[n]otice of complaint has been forwarded to the MVA fraud division for your refusal to insure the vehicle and for hiding the car from the lien holder” in a friend’s garage. Id. ¶¶ 42-43. As a result of the Defendant’s collection efforts, Askew retained counsel.
On October 15, 2012, the Plaintiff filed a Complaint in the Circuit Court of Maryland for Baltimore County, and the Defendant removed the case to this Court. The Plaintiff asserts claims for statutory damages under the Credit Grantor Closed End Credit Provisions and for mental distress and anguish under the Maryland Consumer Debt Collection Act, as well as a breach of contract claim. The Plaintiff filed an Amended Complaint on December 28, 2012 containing additional allegations in support of the same three causes of action.
Specifically, the Plaintiff alleges that on December 17, 2012, after the filing of this lawsuit, an HRFC employee called Askew on his cell phone attempting to collect on the alleged debt or in the alternative requesting that Askew voluntarily turn in the motor vehicle. Askew alleges that after stating that he was represented by counsel and that all communications should be directed to his attorney, during that same phone call, the HRFC employee represented to him that the litigation filed by Askew’s attorney was dismissed and that he needed to either pay off the motor vehicle or voluntarily turn the vehicle in to HRFC. Compl. ¶ 44.
Originally, the Plaintiff sought to sue on a class basis on behalf of all customers who were subject to the same overcharged interest rate. The Defendant filed a Motion to Dismiss (ECF No. 10). In a telephonic hearing, this Court addressed matters outside the pleadings and addressed many issues in the context of summary judgment. Therefore, this Court denied the Motion to Dismiss and allowed a limited period of discovery to proceed as to liability only on an individual, not class, basis. A schedule for limited discovery and summary judgment briefing was set forth in the Letter Order of September 25, 2013 (ECF No. 18). In accordance with the scheduling order, the Defendant filed a Motion for Summary Judgment (ECF No. 26).
SUMMARY JUDGMENT STANDARD
Rule 56 of the Federal Rules of Civil Procedure provides that a court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A material fact is one that “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue over a material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. In considering a motion for summary judgment, a judge’s function is ...