United States District Court, D. Maryland, Southern Division
MEMORANDUM OPINION AND ORDER
W. Grimm United States District Judge.
Delphine Campbell filed a class action suit in the Circuit
Court of Maryland for Montgomery County for violations of
Maryland's credit grantor closed end credit provisions
statute (“CLEC”), Md. Code Ann., Com. Law
§§ 12-1001 - 12-1029. Compl. ¶ 1, ECF No. 2.
On January 17, 2018, Defendant Toyota Motor Credit
Corporation (“TMCC”) removed the case to this
Court on the basis of diversity jurisdiction, 28 U.S.C.
§ 1332, pursuant to the Class Action Fairness Act of
2005, Pub. L. No. 109-2, 119 Stat. 4. Not. of Removal, ECF
No. 1. Plaintiff filed a Motion to Remand, arguing that
removal was improper because her alleged class did not exceed
one hundred people and the amount in controversy did not
exceed $5, 000, 000. Pl.'s Mot. to Rem., ECF No. 23.
Defendant opposed Plaintiff's motion and filed a cross
motion to dismiss the Complaint for failure to state a claim.
ECF No. 24. Plaintiff's Motion to Remand will be
denied because TMCC has provided sufficient evidence to
demonstrate the alleged class of plaintiffs is at least one
hundred people and the amount in controversy exceeds $5, 000,
000. Defendant's Motion to Dismiss will be granted
because Plaintiff has not stated a claim for which relief can
be granted and, because she has had multiple opportunities to
do so (in this and a prior litigation), her Complaint is
dismissed with prejudice.
Purpose and Structure
statutory scheme intended to “‘entice creditors
to do business in the State [of Maryland], '” also
includes consumer protection provisions and should be
“read to handle credit grantors with a relatively light
touch while still protecting consumers.” Askew v.
HRFC, LLC, 810 F.3d 263, 270 (4th Cir. 2016) (quoting
Ford Motor Credit Co. v. Roberson, 25 A.3d 110,
117-18 (Md. 2011)). The CLEC provisions, which apply only if
a credit grantor affirmatively elects for them to apply to a
specific loan, impose, inter alia, “notice and
other detailed procedural requirements for the repossession
and sale of collateral, ” as well as “a stringent
penalty for violation of the statutory scheme, ”
including treble damages for knowing violations.
McDaniels v. Westlake Servs., LLC, No. ELH-11-1837,
2013 WL 2491337, at *2 (D. Md. June 7, 2013) (citing Com. Law
§ 12-1018(a)(2), 12-1021, 12-1013.1(b)(1)). For example,
if the lender sells repossessed goods at a private sale, it
must make “a full accounting . . . to the borrower in
writing, ” and the “accounting shall
(i) The unpaid balance at the time the goods were
(ii) The refund credit of unearned finance charges and
insurance premiums, if any;
(iii) The remaining net balance;
(iv) The proceeds of the sale of the goods;
(v) The remaining deficiency balance, if any, or the amount
due the buyer;
(vi) All expenses incurred as a result of the sale;
(vii) The purchaser's name, address, and business
(viii) The number of bids sought and received; and
(ix) Any statement as to the condition of the goods at the
time of repossession which would cause their value to be
increased or decreased above or below the market value for
goods of like kind and quality.
Com. Law § 12-1021(j)(2).
litigation brought for an alleged violation of CLEC, the
statute, “by its plain terms, limits a debtor's
relief . . . to any amounts paid in excess of the principal
amount of the loan.” Bediako v. Am. Honda Fin.
Corp., 537 Fed.Appx. 183, 186 (4th Cir. 2013) (citing
Com. Law § 12-1018(a)(2)); see also Gardner v. GMAC,
Inc., 796 F.3d 390, 395 (4th Cir. 2015); Brown v.
Capital One, N.A., No. GJH-17-3076, 2018 WL 3105768, at
*3 (D. Md. June 25, 2018). In determining if the lender has
received money in excess of the principal amount of the loan,
the court “recharacterize[s] all of the borrower's
payments during the life of the loan as payments toward
principal and then subtract[s] that total and the sale
proceeds from the original principal amount of the
loan.” Gardner, 796 F.3d at 394 (citing
Bediako, 537 Fed.Appx. at 186 & n.1). If the
principal amount of the loan still has not been met, the
borrower is unable to recover for a violation. See
Id. Indeed, CLEC specifically allows for the lender to
collect the principal amount of the loan even after a notice
violation. See Com. Law § 12-1018(a)(2)
(“[I]f a credit grantor violates any provision of this
subtitle the credit grantor may collect only the principal
amount of the loan and may not collect any interest, costs,
fees, or other charges with respect to the loan.”).
“[i]f the debtor can show that the creditor failed to
abide by the requirements of CLEC in selling the collateral,
the creditor may be barred from a deficiency
judgment.” Gardner, 796 F.3d at 395
(quoting Gardner v. Ally Fin. Inc., 61 A.3d 817, 823
(Md. 2013)) (emphasis added by Fourth Circuit). For example,
when, as here, the collateral is sold in a private sale, if
“[t]he Commissioner of Financial Regulation . . .
make[s] a determination . . . that the sale was not
accomplished in a commercially reasonable manner, ”
then “the Commissioner may enter an order disallowing
any claim for a deficiency balance.” Com. Law §
12-1021(j)(3). Thus, the amount in controversy for litigation
purposes includes both the amount the borrower paid in excess
of the principal amount of the loan and the amount of any
deficiency to the total loan balance beyond the principal
amount, as the creditor may have no legal recourse for
collection if it violated the statute. See Sayre v.
Westlake Servs, LLC, No. ELH-15-687, 2015 WL 4716207, at
*7, *9 (D. Md. Aug. 7, 2015) (noting that “‘the
test' to determine the amount in controversy is
‘the pecuniary result to either party which [a]
judgment would produce'” and finding that the
defendant had established that its “pecuniary
harm” included both “refunds to borrowers who
paid . . . more than the principal amount of their
loan” and the defendant's “inability . . . to
collect amounts owed by borrowers above the principal amount
of their loan” (quoting Dixon v. Edwards, 290
F.3d 699, 710 (4th Cir. 2002)); Com. Law §
April 5, 2014, Ms. Campbell entered into a Retail Installment
Contract (“RISC”), which the parties
affirmatively elected to be governed by CLEC, to purchase a
Toyota Rav 4. Compl. ¶¶ 17-19. Through TMCC, Ms.
Campbell financed $26, 889.48, and the RISC also included an
additional $5, 128.20 in finance charges. Id.
¶¶ 21-24. Ms. Campbell made “numerous
payments”; however, ultimately, TMCC repossessed the
vehicle “before June 27, 2016.” Id.
¶¶ 25, 28. After repossessing the vehicle, TMCC
conducted a private sale and provided a post-sale notice to
Ms. Campbell, which stated the name of the purchaser
(“A 1 Imports Inc”) and the state
(“MD”). Compl. ¶ 31; Repossession Accounting
Statement (“RAS”), ECF No. 24-2, at 3. However,
the post-sale notice lists A 1 Imports' street address,
town, and zip code as “N/A.” Compl. ¶ 31;
RAS, ECF No. 24-2, at 3. TMCC also sent Ms. Campbell a
deficiency notice following the sale of her car and stated
she still owed TMCC $3, 538.91. Compl. ¶ 32; ECF No.
24-2, at 2-3.
Campbell initially filed a similar action against TMCC
regarding the same underlying events in state court, which
was removed to this Court on October 10, 2017. Campbell
v. Toyota Motor Credit Corp., No. RWT-17-2976 (D. Md.
Nov. 16, 2017) (“Campbell I”). In
Campbell I, Ms. Campbell alleged the same claims as
she does here but defined her class as “all persons
whose personal property was repossessed by TMCC in connection
with a credit contract governed by CLEC, whose vehicle was
sold at private sale and whose post-sale notice did not
include the purchaser's address.” Campbell
I Am. Compl. ¶ 37, ECF No. 22 in RWT-17-2976. Her
amended complaint (as well as her initial pleading) alleged
that the class “consisted, at a minimum, of more than
one hundred (100)” members. Id. ¶ 39;
see also Compl. ¶ 39, ECF No. 2 in Campbell
I. But then, in seeking remand, she argued that TMCC had
not demonstrated that the potential class was greater than
100 people, ECF No. 20 in RWT-17-2976, even though she
pleaded exactly that. And, in an effort to obtain “a
higher level of judicial expertise . . .by seeking to have
the case assigned to the Business and Technology Case
Management Program, ” Ms. Campbell had informed the
state court prior to removal that the class size exceeded 500
members. Campbell I Mem. Op. 2, ECF No. 30 in
Titus denied Ms. Campbell's Motion to Remand because
there was sufficient evidence in the record-mainly Ms.
Campbell's own statements-that demonstrated there was an
adequate class size and amount in controversy for the Court
to have subject matter jurisdiction over her claims.
Id. at 3-4. Judge Titus observed that it was
“disingenuous for Campbell to repeatedly manipulate the
class size based on the interests at stake, ” stating
that “Campbell cannot tell one judicial body that the
class size is 500 and thus warrants specialized judicial
processing, but then tell the next judicial body that the
class size is only 100 . . . .” Id. Ms.
Campbell's Motion to Remand was denied on November 16,
2017, and that same day, she filed a notice of voluntary
dismissal, ECF No. 31 in RWT-17-2976, which was approved by a
marginal order, ECF No. 32 in RWT-17-2976.
Campbell then initiated this action in the Circuit Court for
Montgomery County on November 20, 2017, and TMCC again
removed it to this Court on January 17, 2018. Not. of Removal
1; Compl. 1. In her Complaint, Ms. Campbell revised the class
definition she had provided in Campbell I as
All persons whose personal property was repossessed by TMCC
in connection with a credit contract governed by CLEC: (1)
whose personal property was sold at a private sale; (2) whose
post-sale notice did not include the purchaser's address;
and (3) where TMCC ...