Cain v. Midland Funding, LLC
Decision Date | 21 April 2016 |
Docket Number | No. 0530,0530 |
Parties | CLIFFORD CAIN, JR. v. MIDLAND FUNDING, LLC |
Court | Court of Special Appeals of Maryland |
UNREPORTED
*Zarnoch, Leahy, **Hotten, JJ.
Opinion by Leahy, J.
*Zarnoch, Robert A., J., participated in the hearing and conference of this case while an active member of this Court; he participated in the adoption of this opinion as a retired, specially assigned member of this Court.
**Hotten, Michelle D., J., participated in the hearing of this case while still an active member of this Court but did not participate in the preparation or adoption of this opinion.
***This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.
In 2009, Midland Funding, LLC ("Appellee"), sought and obtained a small claims judgment on a credit card debt owed by Appellant Clifford Cain, Jr. ("Mr. Cain"). After this Court's decision in Finch v. LVNV Funding, LLC, 212 Md. App. 748, 764, reconsideration denied (Sept. 3, 2013), cert. denied sub nom. LVNV Funding v. Finch & Dorsey, 435 Md. 266 (2013), holding that a judgment entered in favor of an unlicensed debt collector is a void judgment as a matter of law, Mr. Cain filed a putative class action for damages related to Midland's unlicensed debt collection. Midland filed a petition to compel arbitration pursuant to the Cardmember Services Agreement between Mr. Cain and CitiBank. After a hearing, the Circuit Court for Baltimore City concluded that the contractual right to compel arbitration was not barred by the doctrine of merger as Mr. Cain contended. The court also found that Midland had not waived the right to compel arbitration, and that "the present action clearly falls within the purview of the arbitration agreement."
Mr. Cain filed a timely appeal and presents the following questions, which we have reordered:
We conclude that the arbitration provision was not merged into the 2009 small claims judgment and that it remains applicable to the separate cause of action now advanced by Mr. Cain. Additionally, the circuit court did not clearly err in determining that Midland's conduct in this case did not reflect a refusal to arbitrate, that Midland's petition to compel arbitration was not unduly delayed, and thus, that Midland had not waived the right to compel arbitration. We affirm.
On or about October 15, 2003, Mr. Cain opened an AT&T Universal Savings and Rewards Card account with Citibank ("Citibank Account"). In February 2005, Citibank issued a "Notice of Change in Terms, Right to Opt Out, and Information Update" applicable to the Citibank Account. That notice, making changes effective April 2, 2005, provided, in pertinent part:
According to his own testimony, Mr. Cain ceased using or making payments on the Citibank Account sometime in 2007.1 On August 29, 2008, pursuant to a bill of sale, Citibank assigned all rights, title, and interest in the debt on the Citibank Account to Midland. The "Bill of Sale, Assignment, and Assumption Agreement" executed by Citibank and Midland provided that "the Bank does hereby transfer, sell, assign, convey, grant, bargain, set over and deliver to [Midland], and to [Midland's] successors and assigns, the Accounts described in Section 1.2 of the [Purchase and Sale Agreement]." Thereafter, on March 30, 2009, Midland filed a complaint in the district court in Baltimore City to collect the outstanding balance on the Citibank Account. The district court entered judgment for Midland in the amount of $4,520.54 on August 19, 2009.
Although Midland was doing business as a "collection agency" as defined by the Maryland Collection Agency Licensing Act ("MCALA")—codified at Maryland Code (1992, 2004 Repl. Vol., 2009 Supp.) Business Regulation Article ("BR"),2 § 7-101 etseq.—the company was not licensed as a debt collector in Maryland until January 15, 2010. On June 28, 2013, this Court published its opinion in Finch v. LVNV Funding, LLC, and stated:
212 Md. App. at 764 (footnote omitted).
On July 30, 2013, Mr. Cain filed a putative class action against Midland in the circuit court arguing that Midland's failure to comply with the licensure requirements in BR § 7-3013 rendered Midland unable to engage in debt collection activities and, relying onFinch, maintained that the August 2009 judgment obtained against Mr. Cain was void. Mr. Cain sought to represent a class comprised of:
Those persons sued by MIDLAND in Maryland state courts from October 30, 2007 through January 14, 2010 for whom MIDLAND obtained a judgment for an alleged debt, interest or costs, including attorney's fees in its favor in an attempt to collect a consumer debt.
The complaint asserted five causes of action, including requests for declaratory and injunctive relief based on Midland's activities as an unlicensed collection agency, and a claim for unjust enrichment. Mr. Cain sought relief in the form of a money judgment "of a sum directly related to the [now void] judgment sums, pre- and post-judgment interest and costs (including attorney's fees)[.]" The complaint further alleged that Midland's unlicensed collection activities violated the Maryland Consumer Debt Collection Act ("MCDCA"), Maryland Code (1975, 2005 Repl. Vol., 2009 Supp.) Commercial Law Article ("CL"), § 14-201 et seq., and the Maryland Consumer Protection Act ("MCPA"), CL § 13-301 et seq.
On September 6, 2013, the parties filed a consent motion to stay the case pending the resolution of Finch v. LVNV in the Court of Appeals. The circuit court entered the requested stay on September 12, 2013. Less than a month later, on October 8, the Court of Appeals denied certiorari in LVNV Funding v. Finch & Dorsey, 435 Md. 266 (2013).
Midland filed a petition to compel arbitration and stay the proceedings pursuant to Maryland Code (1973, 2013 Repl. Vol.) Courts and Judicial Proceedings Article ("CJP"), §§ 3-202, -207, -209 on October 24, 2013. In the alternative, Midland moved to dismiss the complaint. Midland argued that, pursuant to the Card Agreement governing the Citibank Account, any disputes arising out of the account are subject to binding arbitration, and that Citibank's right to enforce the arbitration provision in that agreement passed to Midland when it purchased and was assigned the account in 2008.
Mr. Cain filed an opposition to the petition to compel arbitration on October 25, 2013, arguing, in part, that the case should not proceed to arbitration because "no private arbitrator could possibly issue any declaration to void the state court judgments obtained by [Midland]." Mr. Cain further argued that arbitration is a matter of contract and requires consent, and maintained that no contract between Midland and Mr. Cain existed. Rather, Mr. Cain maintained that Midland "only proffer[ed] a 2011 form agreement that can be downloaded from a website" while the "only activity [Midland] allege[d] on the account occurred between July 2006 and November 2007." Thus, Mr. Cain argued that Midland had failed to produce any valid and enforceable contract to arbitrate upon which a court could make the requisite determination that an agreement exists before ordering arbitration pursuant to CJP § 3-207.4
On October 30, 2013, the circuit court entered an order lifting the September 12 stay. On November 12, 2013, Midland filed an amended petition to compel arbitration, providing as an attached exhibit an "exemplar copy of the Cardmember Services Agreement that applied to AT&T Universal Card accounts as of October 15, 2003[.]" Midland also submitted the affidavit of Ezra S. Gollogly, Esq., affirming that he had requested, from Citibank's customer relations department, copies of the Cardmember Services Agreements that applied to AT&T Universal Card accounts as of October 15, 2003 and April 6, 2007. Copies of those...
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