United States District Court, D. Maryland, Northern Division
WILLIAM D. QUARLES, Jr., District Judge.
Michelle Williams sued Lendmark Financial Services, Inc. ("Lendmark Financial"), individually and on behalf of all others similarly situated,  in the Circuit Court for Baltimore City for violations of the Maryland Credit Grantor Closed End Credit Provisions ("CLEC") and breach of contract. Pending is Lendmark Financial's motion for summary judgment. No hearing is necessary. See Local Rule 105.6 (D. Md. 2014). For the following reasons, the motion will be granted.
On November 17, 2009, Williams obtained a personal loan from Lendmark Financial in the principal amount of $2, 620.72. ECF No. 32-2 at 2. The loan was documented in the "Combination Statement of Transaction, Promissory Note & Security Agreement" ("Promissory Note"). See id. The Promissory Note included credit life and disability insurance, and a $100 "Loan Fee." Id. The loan had an annual interest rate of 20.24 percent. Id. . Williams was scheduled to make 36 monthly payments of $102.23 with the final payment to be made on December 1, 2012. Id. The total payment on the loan was disclosed as $3, 680.28. Id.
The Promissory Note required Williams to make monthly payments on the first day of each month starting in January 2010. ECF No. 32-2 at 2. The Note also provided that "[i]f [Williams] d[id] not pay any installment within 5 days after its scheduled or deferred due date, [she] agree[d] to pay a late charge of the greater of 10% of the unpaid amount of the installment or $25.00." Id. The Note did not contain any information about how the payments were to be made beyond including the address of the "Lender." See id. Patsy Jones, Lendmark Financial's Assistant Vice President of Branch Administration, declares that borrowers had three payment options, and that these options were communicated to Williams. See ECF No. 32-4 at 2-3.
First, the borrower could make a payment at any Lendmark branch office (as opposed to the specific branch office identified in the Promissory Note). All Lendmark branch officers in Maryland maintain the same minimum hours of operation. They all open no later than 8:30 a.m. and close no earlier than 5:30 p.m. Monday through Friday. Lendmark's branch offices may open earlier or stay open later and be open for some period of time on Saturdays at the discretion of branch management. Second, a borrower could make a monthly payment by mailing the payment to Lendmark. Third, a borrower could make a monthly payment by calling Lendmark during the time that a Lendmark employee is physically present at a Lendmark business location which is typically between the hours of 8:30 a.m. and 5:30 p.m. There is no mechanism or means by which a borrower can make a payment after Lendmark's close of business. Lendmark does not have lockboxes to collect payments nor does Lendmark provide on-line payment services.
In administering its loan accounts, Lendmark Financial uses an automated program known as the GOLD Point System ("the System"). ECF No. 32-4 at 3. The System updates in real time and "payments are reflected immediately upon receipt and entry by Lendmark, regardless of the method of payment." Id. The System "is programmed to run after the close of business on each regularly scheduled business day." Id. Therefore, if a borrower does not make a required payment by the close of business on the last day of his grace period, the System will assess a late fee to the borrower's account after the close of business on that day because there is no longer any way that the borrower can make a timely payment. See id. Each month, Lendmark Financial would mail the borrower a statement "setting forth the date on which the borrower's next payment [was] due and the total amount owed for the month in aggregate and broken down according to (i) the amount of the regular payment owed; (ii) the balance owed from any prior payment; (iii) the amount of any late fees or delinquency charges due; and (iv) other charges." ECF No. 32-4 at 2.
Between April 2010 and May 2013, Williams made numerous payments after the end of her monthly grace period, and almost all of these payments were in sufficient amounts to pay off her late fees and delinquency charges from the prior months. See ECF No. 32-3 (Williams's Account Statement); ECF No. 32-4 at 4-7 (explaining payment history and Account Statement). After the close of business of the fifth day of her grace period each month, the System would assess a late fee to Williams's account. Williams's monthly statements simply provide the date when the late charges were assessed - the last day of the grace period; the monthly statements do not give a specific time for the assessment. See ECF No. 33-2 at 3 (borrower's statement for December 2013). Lendmark Financial's internal Account Summary shows that all late fees were assessed between 8:40 pm and 9:02 pm after the close of business on the fifth day of the grace period. See ECF No. 32-3.
On May 9, 2013, Williams sued Lendmark Financial in the Circuit Court for Baltimore City, Maryland. See ECF Nos. 1, 2. Williams alleged that Lendmark Financial assessed late fees to Williams and class members "prior to the expiration of her 5 day grace period after missing a scheduled or deferred payment." ECF No. 2 ¶ 47. In essence, Williams alleges that Lendmark Financial violated the promissory note's provisions and Maryland law by allowing the System to assess late payments after the close of business on the last day of grace periods rather than waiting until midnight - the beginning of the first day after the grace period. Williams had never alleged or argued that she attempted to make a payment to Lendmark Financial between the close of business on the last day of her grace period and midnight the next morning. See, e.g., ECF No. 33.
On June 14, 2013, Lendmark Financial removed the action to this Court under the Class Action Fairness Act of 2005 ("CAFA"). See ECF No. 1. On June 28, 2013, Lendmark Financial moved to dismiss for failure to state a claim. ECF No. 13. On March 25, 2014, the Court dismissed all counts in the complaint except the claims alleging violation of the CLEC and breach of contract based on violation of the CLEC. ECF Nos. 24-25.
On October 17, 2014, Lendmark Financial moved for summary judgment on the remaining claims. ECF No. 32. On November 17, 2014, Williams opposed the motion. ECF No. 33. On December 18, 2014, Lendmark Financial replied. ECF No. 35.
A. Legal ...