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Allstate Lien & Recovery Corp. v. Stansbury

Court of Special Appeals of Maryland

October 7, 2014

ALLSTATE LIEN & RECOVERY CORPORATION, ET AL.
v.
CEDRIC STANSBURY

Argued by: Randolph C. Baker (Jeffrey N. Pritzker, Margolis, Pritzker, Epstein & Blatt, PA of Towson, MD) Steven A. Cohen of Baltimore, MD all on the brief for Appellant.

Argued by: Jane Santoni (Victoria Chihos, Williams & Santoni, LLP on the brief) all of Towson, MD for Appellee.

Zarnoch, Graeff, Hotten, JJ. Opinion by Graeff, J.

OPINION

Page 521

[219 Md.App. 577] Graeff, J.

This case involves a garageman's lien, a lien created on a motor vehicle on behalf of someone who conducted work on a vehicle but was not paid for the service by the owner of the vehicle. Cedric Stansbury, appellee, brought suit in the Circuit Court for Baltimore County against appellants,

Page 522

Allstate Lien & Recovery Corporation (" Allstate" ), Russel Auto Imports, LLC (" Russel" ), and Jeremy Martin. He alleged that appellants violated Maryland's Consumer Protection Act (" MCPA" ), Md. Code (2013) § 13-301, et. seq. of the Commercial Law Article (" CL" ), and Consumer Debt Collection Act (" MCDCA" ), CL § 14-201, et. seq., by, among other things, including a " processing fee" of $1,000 as part of the amount of the lien that Mr. Stansbury was required to pay to redeem his vehicle. The circuit court ruled, as a matter of law, that the processing fee was not part of the garageman's lien. It instructed the jury of that ruling, and the jury subsequently [219 Md.App. 578] found that appellants violated the MCPA and the MCDCA. It awarded Mr. Stansbury $16,500 in compensatory damages, plus attorney's fees.

On appeal, appellants present the following two questions for our review:

1. Did the circuit court err in finding that a processing fee is not part of a garageman's lien and cannot be included in the amount necessary to redeem the vehicle?
2. Does including the processing fee in the amount needed to redeem a vehicle violate the Maryland Debt Collection Act's prohibition against enforcing a " right" that does not exist?

For the reasons that follow, we shall affirm the judgment of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

Mr. Stansbury brought his vehicle to Russel's service department because the vehicle's engine had stopped running, and while it was stopped, it was hit by another vehicle. Mr. Martin, manager of Russel's car repair facility, testified that, in April 2011, he met with Mr. Stansbury, who signed a repair authorization form. Russel subsequently repaired Mr. Stansbury's vehicle. On May 9, 2011, someone left a message for Mr. Stansbury that the repairs were done. On May 16, 2011, Mr. Martin spoke with Mr. Stansbury and informed him that the repair work was complete. On May 17, 2011, he spoke with Mr. Stansbury again about picking up the car, and he advised that the total amount owed was $6,330.37. Mr. Stansbury requested a payment plan, but he was informed that the repair bill had to be paid in full. On May 21, 2011, Mr. Martin left a message for Mr. Stansbury informing him of the " deadline with the lien," meaning the date that Mr. Martin would start the lien process if Mr. Stansbury did not pick up his vehicle.

On June 2, 2011, fifteen days after Mr. Stansbury was made aware of the payment due to Russel, Mr. Martin met with Allstate to begin the process of selling Mr. Stansbury's vehicle. [219 Md.App. 579] Mr. Martin, the representative of Russel, the lien holder, and Allstate executed a " Notice of Sale of Motor Vehicle to Satisfy a Lien" (" Lien Notice" ). The Lien Notice sent to Mr. Stansbury provided that Allstate, on behalf of Russel, would sell Mr. Stansbury's vehicle at public auction to satisfy Russel's lien, unless Mr. Stansbury paid the following: repair charges in the amount of $6,630.37; and " Costs of Said Process," in the amount of $1,000, for a total of $7,630.37. The Lien Notice provided that, unless Mr. Stansbury paid that amount in full within ten days of the Lien Notice, Allstate would sell the vehicle on June 23, 2011.

Mr. Martin agreed that the repair charges in the Lien Notice were $300 more than the total amount owed for repairs, but he stated that Allstate suggested that they include the additional amount for storage charges. Mr. Martin agreed that Mr. Stansbury did not consent in writing to storage charges for the vehicle, and the

Page 523

repair authorization form did not mention storage fees. The additional $1,000 was not related to repair or storage. Mr. Martin testified at his deposition that, once the documents were signed on June 2, 2011, he would not have allowed Mr. Stansbury to get his car back unless he paid $7,630.37, but at trial, he stated that he would have referred any questions pertaining to the car to Allstate.

Mr. Martin certified under oath to the Motor Vehicle Administration that the amount owed for repairs to Mr. Stansbury's vehicle was $6,630.37, even though the total included $300 for storage fees, and a box on the MVA form where storage fees should have been indicated was not checked.[1] Thus, the number reported to the MVA for repair costs was incorrect. Mr. Martin stated that he did not know " why the official certification that was submitted to the MVA states the lien amount at $6,630.37, but . . . Mr. Stansbury was told the lien amount was $7,630.37."

[219 Md.App. 580] On June 23, 2011, Mr. Stansbury's vehicle was sold at auction for $7,730. Mr. Martin denied that the signature on the bill of sale submitted to the MVA was his, suggesting that the signature was forged.

John Ports, a representative of Allstate, testified during his deposition that Allstate assists automobile repair shops in collecting debts owed from vehicle repairs. Allstate does not " write a lien" to collect an unpaid debt until the lien holder has had the vehicle for thirty days. Although the actual costs incurred may vary from lien to lien, Allstate's standard " cost of process" for collecting debts is $1,000. The $1,000 charged to Mr. Stansbury, as with all other debtors, was " front-loaded" and becomes part of the lien. Mr. Ports agreed that Russel never incurred the $1,000 in costs. He also agreed that if Mr. Stansbury had attempted to retrieve his vehicle on June 3, he would have been required to pay $7,630.

At trial, Mr. Ports testified that Mr. Stansbury's vehicle sold at auction for $7,730, and Russel was entitled to $6,630, plus $522 that it paid to Allstate to process the lien. Mr. Stansbury was entitled to receive overage from the sale in the amount of $99.60, but that amount remained in escrow at the time of trial. Mr. Ports explained that Allstate adds $1,000 to the amount owed to a garage " as the minimum bid." After the vehicle is sold at auction, the funds are dispersed to the garage for the amount due to it for its bill, as well as the amount it paid to Allstate to recover the lien. The remainder is retained by Allstate, and split between the company and the sales representative. The " processing fee" includes payment for a title fee, advertising fees, the cost of a title search, and the cost of " paying the office staff and keeping the lights on and things like that." Allstate recommended to Russel that it charge the $300 storage fee. As of June 2, 2011, when the $1,000 was included in the lien amount, the only actual cost incurred was $22 for a title search. Mr. Ports agreed that a contract to recover a lien should not be entered into until the vehicle has been held for a period of thirty days after the bill becomes due.

[219 Md.App. 581] Mr. Stansbury testified that, in December 2010, he brought his vehicle to Russel for an oil change. Although his vehicle had been " running great before the oil change," a week after the oil change, it " ceased, cut off . . . right in the middle of the street during rush hour traffic," and he could not get it started again. As his car sat in the middle of the roadway, in the snow, another vehicle ran into the back of his car. Mr. Stansbury had his vehicle

Page 524

towed to Russel. A few days later, Russel advised Mr. Stansbury that he needed a new engine.

On May 18, 2011, Russel contacted Mr. Stansbury to inform him that his vehicle was ready to be picked up. The same day, at approximately 5:30 p.m., Mr. Stansbury went to Russel, and he was told that he owed $6,330.37. Mr. Stansbury began writing a check for that amount, but he was told that he would have to return the next day to talk to Mr. Martin because Russel did not accept personal checks. Mr. Stansbury did not have $6,330.37 in his checking account when he wrote the check, but he stated that he intended to immediately deposit the funds into the account after leaving Russel. The following day, Mr. Stansbury called Mr. Martin to tell him that he would try to get to Russel to pick up his vehicle, but by the time he arrived after work, the shop was closed. He made three or four attempts to get to Russel before it closed, but he was unable to do so.

In the beginning of June, Mr. Stansbury received the Lien Notice stating that there was a lien on his vehicle in the amount of $7,630.37. He called Mr. Martin and asked him why there was a lien on his vehicle. Mr. Martin responded that Mr. Stansbury did not pay for the repairs " in time," and he would have to contact Allstate to ask them not to put the car up for auction. Mr. Stansbury attempted to call Allstate, but his calls were not answered.

During the week of June 8, Mr. Stansbury went to Allstate. The office manager, Josephine Keehner, was " nasty" and not " very agreeable or cooperative." She told him that his car would be put up for auction on June 23. Ms. Keehner repeatedly told Mr. Stansbury that the vehicle was not his, [219 Md.App. 582] and that if he wanted it, he would have to bid on it at auction. Between June 8 and June 23, he repeatedly tried calling Allstate to get his vehicle back, but no one would answer or return his calls. At that point, Mr. Stansbury had $6,300 to recover his vehicle, he did not have $7,600.

With respect to the value of his vehicle at the time of auction, Mr. Stansbury believed that it was worth at least $25,000. Mr. Stansbury paid more than $31,000 for the vehicle, approximately ...


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