from the Circuit Court for Baltimore County. Nancy M.
BY: John T. Prisbe & Nathaniel S. Berry (Venable, LLP on the
brief) all of Baltimore, MD. FOR APPELLANT
BY: Phillip Robinson (Jesse Iliff, Consumer Law Ctr, LLC of
Silver Spring, MD and Scott Borison, Legg Law Firm, LLP of
San Manteo, CA) all of the brief FOR APPELLEE
BEFORE: Graeff, Kehoe, Nazarian, JJ. Opinion by Graeff, J.
Dissenting Opinion by Nazarian, J.
Md.App. 2] Graeff, J.
Finch v. LVNV Funding LLC, 212 Md.App. 748, 71 A.3d
193, cert. denied, 435 Md. 266, 77 A.3d 1084 (2013),
this Court held that judgments obtained by collections
agencies that do not have a license are void. In this case,
we must determine whether Old Republic Insurance Company
(" Old Republic" ), appellant, is a collection
agency pursuant to Md. Code (2010 Repl. Vol.) § 7-101(c)
of the Business Regulation Article (" BR" ), part
of the Maryland Collection Agency Licensing Act ("
MCALA" ), and therefore, was required to be licensed as
a [228 Md.App. 3] collection agency to pursue this action
against Nancy Gordon, appellee.
Republic is an insurance company that offers, among other
things, credit insurance. In December 2006, Old Republic
issued a credit insurance policy to Countrywide Home Loans
(" Countrywide" ) to insure a mortgage that
Countrywide had extended to Ms. Gordon. Ms. Gordon defaulted
on her mortgage, and Old Republic paid Countrywide pursuant
to the insurance policy.
Republic filed suit in the Circuit Court for Baltimore County
against Ms. Gordon, seeking the unpaid amount of her debt. It
subsequently moved for summary judgment. Ms. Gordon opposed
Old Republic's motion, arguing that she was entitled to
summary judgment because Old Republic was an unlicensed
collection agency, and therefore, it could not obtain a
judgment against her. After a hearing, the circuit court
found, as a matter of law, that Old Republic was engaged in
activity, and it granted Ms. Gordon's motion for summary
appeal, Old Republic raises three questions for our review,
which we have rephrased slightly, as follows:
1. Did the circuit court err in its construction of the
phrase " collection agency" under B.R. §
2. Did the circuit court err in granting an oral summary
3. Did the circuit court err in dismissing the case with
reasons set forth below, we answer the first question in the
affirmative, and therefore, we shall reverse the [228 Md.App.
4] judgment of the circuit court and remand for further
AND PROCEDURAL BACKGROUND
28, 2005, Ms. Gordon purchased a property in Parkville,
Maryland for $589,700. On October 26, 2006, Countrywide
extended a loan to Ms. Gordon in the amount of $95,000,
secured by a deed of trust in the property.
Republic states, and Ms. Gordon does not dispute, that Old
Republic issued a credit insurance policy to Countrywide in
December 2006, " providing insurance coverage for loss
if a qualified loan held by Countrywide defaulted."
Although the insurance contract is not a part of the record
on appeal, Old Republic stated in its motion to vacate,
alter, or amend, or for other appropriate relief, and Ms.
Gordon has not disputed, that the policy set forth
subrogation rights, as follows:
In the event of any payment under this Policy, the Company
[i.e., Old Republic] shall be subrogated to all of the
Assured's [i.e., Countrywide] rights of recovery against
the Borrower and any other person or organization liable
under the terms of the defaulted Note and against any reserve
or holdback funds in its hands, and the Assured shall execute
and deliver at the request of the Company instruments and
papers and do whatever else is necessary to transfer, assign
and secure such rights. The Assured shall do nothing after
Loss to prejudice such rights, and the execution by the
Assured of a release or waiver of the right to collect the
unpaid balance of a Loan shall equally release the Company
from any further obligation under this Policy as to said
Loan, anything in this Policy to the contrary
around February 1, 2011, Ms. Gordon defaulted on her loan,
and Countrywide submitted a claim to Old Republic. [228
Md.App. 5] At the time of default, $70,481.19 remained unpaid
on the loan. Old Republic determined that the claim was
covered and paid it. Old Republic then began to pursue
repayment from Ms. Gordon.
February 29, 2012, after negotiations with Ms. Gordon, Old
Republic agreed to release the deed of trust in exchange for
a payment of $9,000 and Ms. Gordon's acknowledgment that
she still owed $85,541.62 on the loan, minus the $9,000 she
paid. By October 2013, Old Republic had received no further
payment from Ms. Gordon. It then filed a complaint for money
due on accounts stated. Old Republic sought $70,481.19, as
well as pre-judgment interest of $10,572 and attorney's
fees of $10,572.18, plus costs. Old Republic also filed a
motion for summary judgment on the ground that Ms. Gordon had
no defense to the claim.
Gordon filed an answer and an opposition to the motion for
summary judgment. She asserted that the collection attempt
was illegal because Old Republic acquired the alleged debt
when it was in default, and therefore, Old Republic was
acting as a " collection agency" under B.R. §
7-101(c), but Old Republic was not licensed as a collection
agency. Relying on Finch, 212 Md.App.
at 764, in which this Court held that " a judgment
entered in favor of an unlicensed debt collector constitutes
a void judgment as a matter of law," Ms. Gordon argued
that Old Republic was not entitled to summary judgment
against her because any judgment it obtained would [228
Md.App. 6] be void. She requested that the circuit court
enter judgment against Old Republic because it was not
entitled to the relief it sought.
circuit court directed Old Republic to file a reply, not to
exceed five pages and limited to the argument that it was not
authorized to bring the complaint because it was not licensed
as a collection agency. Old Republic did so, asserting that
it was not required to be licensed under MCALA because it did
not engage in debt collection, but rather, it was licensed in
the State of Maryland to conduct insurance business. It
argued that it was pursuing the subrogation rights it
obtained after paying Countrywide pursuant to its insurance
policy, and therefore, it did not " acquire" Ms.
Gordon's debt at a time when she was in default, but
rather, it " stepped into the shoes" of Countrywide
and enjoyed " the same rights that [Countrywide] enjoyed
prior to filing its claim." Moreover, Old Republic
stated that it did not engage in the debt collection agency
business, noting that it did not undertake debt collection
for third parties or purchase defaulted debts from third
parties for the purpose of collection. Citing MCALA's
legislative history, it asserted that B.R. §
7-101(c)(1)(ii) was targeted at " 'debt
purchasers,' a special subset of entities," which
did not include insurance companies pursuing subrogation
rights. Consequently, it argued that it was not a collection
agency, and it was permitted to obtain a judgment against Ms.
Gordon disagreed, asserting that Old Republic was requesting
the circuit court to " create a judicial exception for
it that does not exist under the statute or common law."
Stating that MCALA governs businesses attempting to assert a
consumer claim " if the claim was in default when the
person acquired it," Ms. Gordon asserted that, because
Old Republic acquired this debt when it was in default and
was trying to collect it, Old Republic was required to be
licensed under MCALA, regardless of its status as an
March 6, 2014, the circuit court held a hearing on Old
Republic's motion. Counsel for Old Republic listed three
[228 Md.App. 7] reasons why Old Republic should not be
required to be licensed in this matter. First, Old Republic
was an insurance company and did not do business as a
agency. Second, MCALA was targeted toward debt purchasers,
not insurance companies pursuing subrogation rights, and Old
Republic did not purchase the debt at issue in this case.
Third, Old Republic's rights vested prior to Ms.
Gordon's default, as it was essentially stepping into
Countrywide's shoes as Ms. Gordon's creditor. It
argued that, because MCALA was not targeted toward a party in
Old Republic's position, Old Republic did not qualify as
a collection agency under B.R. § 7-101, and it did not
need to be licensed as such.
for Ms. Gordon argued that Old Republic acquired its interest
in Ms. Gordon's debt when it was in default, and it was
now pursuing a consumer claim against her. Accordingly,
counsel asserted that, pursuant to the plain language of B.R.
§ 7-101, Old Republic was acting as a collection agency.
He argued that, because any judgment obtained by Old
Republic, an unlicensed collection agency, would be void, Ms.
Gordon was entitled to judgment in her favor.
for Ms. Gordon also noted that B.R. § 7-102 contains a
list of persons and entities to whom MCALA is inapplicable,
and insurance companies pursuing subrogation rights are not
listed. He argued that this list would be essentially
meaningless if the court carved out a new exception for Old
end of the hearing, counsel for Old Republic stated that,
because the parties had been limited to five pages of
argument on the issue of interpreting MCALA, it believed that
the parties could " flesh out" the record more
substantially with further submissions, particularly with
regard to MCALA's legislative history. The court
responded: " If you want to supplement the record, I am
going to permit you to do that." The court took the
parties' motions for summary judgment under advisement
and indicated that it would issue a written opinion at an
unspecified later date.
Md.App. 8] On March 18, 2014, the circuit court issued a
memorandum opinion. The court stated that there were no facts
in dispute, and the sole question before it was the legal
issue whether Old Republic was required to be licensed as a
collection agency in order to pursue its claim against Ms.
Gordon. The court found that, under the plain language of
MCALA, Old Republic was acting as a collection agency because
it was asserting a consumer claim related to a debt that it
acquired while the debt was in default. It refuted Old
Republic's arguments to the contrary, stating: "
That [Old Republic] acquired the debt through a subrogation
agreement as opposed to a debt purchase is immaterial. The
plain meaning of the statutory language captures the activity
that [Old Republic] is engaging in."
court stated that MCALA's legislative history " does
not supersede a plain meaning analysis of the statutory
language," which " requires a court to end its
inquiry into legislative intent when the statutory language
is unambiguous and the resulting application of the statute
is reasonable, as it is in the instant case." In any
event, it was not persuaded by Old Republic's argument
that MCALA was targeted solely at debt purchasers because
B.R. § 7-102(b) contained an extensive list of persons
and entities who were not required to obtain a collection
agency license, and insurance companies were not included in
that list. Because it found that Old Republic was acting as a
collection agency without a license, the court granted
summary judgment to Ms. Gordon and dismissed Old
Republic's action with prejudice.
April 14, 2014, Old Republic filed a motion to vacate, alter,
or amend, or for
other appropriate relief. It stated that the court's
initial order limiting it to a five page reply on the issue
whether it was required to be licensed " materially
limited" its ability to respond, and therefore, it was
" materially prejudiced" when the court granted Ms.
Gordon's oral summary judgment motion. It explained that
it was in the process of preparing its supplemental
memorandum when the court issued its order, but it was unable
to submit it prior to the order. Old Republic asserted that
the court " appear[ed] [228 Md.App. 9] to miss certain
material points" in granting Ms. Gordon's motions.
In particular, it noted that the court did not discuss what
it meant to " engage in the business of" collecting
consumer claims, and it argued that it was not engaged in any
Republic elaborated on its argument that MCALA was targeted
only at regulating debt purchasers. It asserted that debt
purchasers were a very specific group of entities, whose
primary business was collecting debts that they had
purchased. It contended that it was not a debt purchaser, and
accordingly, MCALA did not apply to it. Old Republic stated
that it was not seeking to carve out a judicial exception for
itself, but rather, it simply was seeking a construction of
the statute that recognized it was not " engaged in the
business of" collecting consumer claims.
Republic also argued that the rule of lenity was applicable
to the court's analysis because MCALA contained both
civil and criminal provisions. It asserted that, because it
was at least ambiguous whether MCALA applied to it, pursuant
to the rule of lenity, that ambiguity should be resolved in
Old Republic asserted that, even if the court disagreed with
Old Republic's proposed interpretation of MCALA, it would
be deciding that Old Republic did not have standing to bring
the complaint. Accordingly, it argued that only a dismissal
without prejudice was appropriate because the court's
decision would not constitute an adjudication of the case on
Gordon filed a response, characterizing Old Republic's
pleading as a " 'kitchen sink' tome." She
asserted that Old Republic did not raise any new arguments
and had a full and fair opportunity to present its position
before the circuit court, objecting to the five-page
limitation only after the court ruled against it. In any
event, Ms. Gordon argued that MCALA was unambiguous, and
therefore, its legislative history and the rule of lenity
were not applicable. She asserted that the court did not err
in holding that the plain language of MCALA required Old
Republic to be licensed as a collection agency [228 Md.App.
10] and precluded it from obtaining a judgment against her.
Finally, she argued that the court did not err in dismissing
Old Republic's action with prejudice, as any judgment it
obtained would be void.
Gordon subsequently filed a document entitled Supplemental
Authority in Opposition to Plaintiff's Motion to Vacate,
Alter or Amend. She noted that Old Republic was involved in a
related matter in the Circuit Court for Frederick County,
Old Republic Insurance Company v. Joana Oteng, in
which it sought to enforce a debt as subrogee of a mortgage
company, and the circuit court in that case found that Old
Republic was a collection agency and could not collect the
debt. She attached a copy of the Frederick County decision.
24, 2014, the circuit court issued another memorandum opinion
and order denying Old Republic's motion to vacate, alter
or amend. The court rejected Old Republic's claim that it
did not have an adequate opportunity to respond to Ms.
Gordon's oral motion for summary judgment,
noting that: (1) Old Republic did not object to the oral
motion at the hearing; and (2) Ms. Gordon "
unequivocally requested 'that the Court grant judgment
against [Old Republic] since it is not entitled to the relief
it seeks in this action' in her Opposition to Motion for
Summary Judgment." The court further noted that it had
permitted Old Republic to submit a supplemental response to
the court after the hearing, but Old Republic failed to
submit it timely. For these reasons, the court believed that,
even if there were any procedural abnormalities, Old Republic
was not prejudiced. In any event, the court stated that the
additional materials recently submitted by Old Republic did
not impact its decision because MCALA was unambiguous. The
court further ruled that dismissal with prejudice was proper
because, Old Republic's assertions notwithstanding, the
court did not rule that Old Republic lacked standing to sue
Ms. Gordon, but rather, it ruled that Old Republic was
engaged in illegal debt collection and was not permitted to
obtain the relief it was seeking. Accordingly, the court
denied Old Republic's motion to vacate, alter, or amend.
This timely appeal followed.
Md.App. 11] DISCUSSION
addressing the propriety of the circuit court's ruling on
the merits, we address Ms. Gordon's motion to dismiss
this appeal. This motion is based on Old Republic's
action, subsequent to the judgment here, in obtaining a
Maryland collection agency license. Ms. Gordon asserts that,
given that action, this appeal should be dismissed as moot
because it " now concerns a hypothetical question for
which no further controversy exists." She contends that,
" [b]y voluntarily seeking and obtaining a collection
agency license as of November 7, 2014, Old Republic is
equitably estopped from acting in a manner contrary to its
declaration to the Maryland Collection Agency Licensing Board
that it requires a collection agency license."
first the mootness argument, this Court has stated that
" '[a] case is moot when there is no longer any
existing controversy between the parties at the time that the
case is before the court, or when the court can no longer
fashion an effective remedy.'" Thana v. Bd. of
License Comm'rs for Charles County, 226 Md.App. 555,
567, 130 A.3d 1103 (2016) (quoting Green v. Nassif,
401 Md. 649, 654, 934 A.2d 22 (2007)). Here, Old
Republic's action in obtaining a license after the
hearing does not make this appeal moot. The issue presented,
whether the circuit court properly determined that the action
against Ms. Gordon should be dismissed because Old Republic
did not have a license at the time it instituted suit,
remains an existing controversy. Dismissal on the grounds of
mootness is not warranted.
to the equitable estoppel argument, we note that the Court of
Appeals has explained the doctrine ...