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Mills v. Galyn Manor Homeowner's Association, Inc.

Court of Special Appeals of Maryland

December 21, 2018

DAVID MILLS, ET AL.
v.
GALYN MANOR HOMEOWNER'S ASSOCIATION, INC.

          Circuit Court for Frederick County Case No. 10-C-16-000961

          Berger, Arthur, Leahy, JJ.

          OPINION

          Berger, J.

         This case arises out of an action filed in the Circuit Court for Frederick County by appellants, David and Tammy Mills (the "Homeowners") against appellee, Galyn Manor Homeowners Association, Inc. ("Galyn Manor"). In 2016, the Homeowners filed a complaint challenging the way Galyn Manor calculated and collected debts. The Homeowners specifically alleged violations of the Maryland Consumer Protection Act and the Maryland Consumer Debt Collection Act, in addition to claims of conversion and breach of contract.[1] Thereafter, Galyn Manor filed a motion for summary judgment. The circuit court granted Galyn Manor's motion on the debt collection and consumer protection claims. The court also disposed of the conversion and contract claims that arose prior to April 1, 2013, ruling that those claims were time-barred. Any claims arising after that date proceeded to trial. At trial, the court granted Galyn Manor's motion for judgment at the close of the Homeowners' case-in-chief, ruling that the Homeowners did not present sufficient evidence to satisfy the elements of either cause of action.

         On appeal, the Homeowners pose four questions, which we set forth verbatim.

1. Did the Circuit Court err by concluding the Maryland Consumer Protection Act didn't apply to Appellant's claims of unfair and deceptive trade practices?
2. Did the Circuit Court err by concluding that the Maryland Consumer Debt Collection Act does not protect consumers who claim that a collector is collecting or attempting to collect an invalid debt?
3. Did the Circuit Court err by ruling that all evidence of breach of contract, collection activity and conversion occurring prior to April 1, 2013 was time-barred?
4. Did the Circuit Court err by granting judgment in Appellee's favor on the breach of contract and conversion claims?

         For the reasons explained herein, we affirm in part and reverse in part, and remand the case for further proceedings.

         FACTS AND PROCEEDINGS

         The Homeowners own a home in Frederick, Maryland and are members of Galyn Manor, a homeowners' association ("HOA"). As members of the HOA, the Homeowners are bound by Galyn Manor's governing documents. The governing documents contain the bylaws and declaration of covenants, conditions, restrictions, and easements. The bylaws and declaration require members to comply with certain rules and restrictions, and to pay yearly assessment fees, due in quarterly installments. The declaration sets forth the way delinquent assessments accrue interest and late fees. Galyn Manor may also seek attorney's fees and costs in collecting unpaid assessments. To secure the payment of assessment fees, Galyn Manor holds a continuing lien on each member's property.

         The governing documents also authorize Galyn Manor to fine members who violate certain sections of the declaration and bylaws. For example, fines are permitted when a member constructs a structure on a lot without the HOA's permission. The declaration includes trailers in its definition of a "structure." These fines may be enforced and collected in the same manner as unpaid assessments.

         In February 2007, Galyn Manor's former management company -- Chambers Management, Inc. ("Chambers") -- discovered that the Homeowners regularly parked a large trailer on their property overnight. Chambers notified the Homeowners that this conduct was in violation of the HOA's governing documents. Chambers further advised the Homeowners that they would be subject to a $50 fine for each day that the trailer was parked on their property. The Homeowners were given thirty days to correct the violation. Chambers sent the Homeowners four more letters between April and October 2007, but the Homeowners did not take any corrective action. On October 24, 2007, Chambers sent another letter to the Homeowners, informing them that the Homeowners owed $645 in fines. The letter further provided that it was the Homeowners' final notice, that the Homeowners had until November 26 to pay, and that the letter served as "an attempt to collect a debt[.]"

         In December 2007, Galyn Manor retained Andrews & Lawrence Professional Services, LLC ("Andrews") to provide legal services and to collect overdue assessments. By March 2008, the Homeowners accrued $1, 500 in parking violations, while also falling behind on their quarterly assessment payments. Andrews notified the Homeowners in April 2008 that it represented Galyn Manor and that the Homeowners owed $2, 632.84 in "assessments due, late fees and costs of collections, including attorney's fees, authorized by the Declaration." The letter did not specifically provide whether the fines from the parking violations were included in the stated amount. Andrews warned the Homeowners that it would accelerate the debt and file a lien if the Homeowners did not satisfy the debt within thirty days.

         Andrews further provided the Homeowners with notice of their rights under the Maryland Contract Lien Act ("MCLA"). Specifically, Andrews advised the Homeowners that the debt would be presumed valid unless the Homeowners disputed its validity within thirty days. The Homeowners did not dispute the debt or otherwise respond to the letter within the thirty-day period. Andrews also attached a statement of the Homeowners' account, which itemized each individual charge. A statement of lien was filed and recorded in June 2008 in the amount of $3, 581.88. This amount represented the amount due and owing at the time, i.e. $2, 632.84, plus interest, late fees, attorney's fees, and costs.

         The Homeowners responded to the notice on August 28, 2008. In a handwritten letter to Andrews, the Homeowners agreed to "make payment arrangements for all overdue quarterly HOA dues[, ]" but "dispute[d] the validity of all other fines." The Homeowners further stated that they were preparing "factual evidence to proceed with a hearing." The Homeowners did not explain their failure to respond within the thirty-day period.

         Andrews sent the Homeowners a second notice of acceleration and intent to file a lien in August 2010. Andrews stated that the Homeowners owed $4, 256.88 in assessments, late fees, costs, and attorney's fees. Andrews again provided the Homeowners with their rights under the MCLA, and the Homeowners again failed to respond within thirty days. Thereafter, a statement of lien in the amount of $4, 791.58 was filed and recorded.

         On October 14, 2010, Galyn Manor filed a complaint against the Homeowners in the District Court for Frederick County. The District Court entered judgment in favor of Galyn Manor in the amount of $1, 872.93. In July 2011, Andrews filed a writ of garnishment on behalf of Galyn Manor, seeking to garnish funds in the Homeowners' bank account to satisfy the judgment. Shortly thereafter, the Homeowners asked Galyn Manor to rescind the garnishment. Galyn Manor agreed to rescind the garnishment on the condition that the Homeowners sign a promissory note. Thereafter, a promissory note for $3, 429 was executed. The note obligated the Homeowners to make monthly payments of $130. The note also included a confession of judgment and a waiver of exemptions.

         The Homeowners made two timely payments on the promissory note before defaulting. Galyn Manor filed a complaint for judgment by confession in the District Court for Frederick County, seeking $2, 069 -- the remaining amount owed on the promissory note -- plus $413.80 in attorney's fees.[2] On July 18, 2013, the District Court awarded Galyn Manor judgment. Galyn Manor filed another District Court complaint in August 2014 and a consent judgment of $3, 297.53 was entered on November 7, 2014. On May 14, 2015, Galyn Manor garnished $3, 497.53 from the Homeowners' bank account. Despite the garnishment, the record demonstrates that the Homeowners remained at least $5, 000 in arrears.

         After nearly ten years of collection efforts, the Homeowners commenced this suit on April 1, 2016. In March 2017, the Homeowners filed an amended complaint alleging that Galyn Manor's collection efforts violated the Maryland Consumer Protection Act ("MCPA") and the Maryland Consumer Debt Collection Act ("MCDCA"). The Homeowners also brought conversion and breach of contract claims. Galyn Manor filed a third-party complaint against Andrews, contending that Andrews agreed to indemnify Galyn Manor for any liability.

         In a memorandum opinion, the Circuit Court for Frederick County granted Galyn Manor's summary judgment motion on the MCPA claim, noting that the statute specifically exempts attorneys. As a result, the circuit court held that Galyn Manor could not be held vicariously liable. The circuit court also awarded Galyn Manor judgment as a matter of law on the MCDCA claim, ruling that the Homeowners improperly used the statute as a vehicle to dispute the validity of the debt, whereas the statute only proscribes certain methods of collecting the debt.

         Finally, the court granted Galyn Manor judgment as a matter of law on the conversion and breach of contract claims that arose before April 1, 2013, holding that those alleged breaches were barred by the statute of limitations. The Homeowners' claims that arose after April 1, 2013 proceeded to trial. At the close of the Homeowners' case, the court awarded Galyn Manor judgment as a matter of law, concluding that the Homeowners did not present sufficient evidence to satisfy the elements of a breach of contract or conversion claim. This appeal followed.

         STANDARD OF REVIEW

         The Homeowners challenge both the circuit court's grant of summary judgment and the grant of Galyn Manor's motion for judgment at trial. "[T]hese rulings were premised on purely legal issues," therefore, "we apply the same standard of review." Golub ex rel. Golub v. Cohen, 138 Md.App. 508, 516 (2001). Under the Maryland rules, a circuit court "shall enter judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law." Md. Rule 2-501(f).

         "The purpose of the summary judgment procedure is not to try the case or to decide the factual disputes, but to decide whether there is an issue of fact, which is sufficiently material to be tried." Jones v. Mid-Atl. Funding Co., 362 Md. 661, 675 (2001) (citations omitted). Thus, "[i]n reviewing the grant of a summary judgment motion, we are concerned with whether a dispute of material fact exists," id. (citations omitted), and our review is de novo. MAMSI Life & Health Ins. Co. v. Callaway, 375 Md. 261, 278 (2003) (citing Green v. H & R Block, Inc., 355 Md. 488, 502 (1999)). In doing so, we review the same record and issues of law as the trial court and are "tasked with determining whether the trial court reached the correct result as a matter of law." Id. (citing Tyma v. Montgomery Cnty., 369 Md. 497, ...


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