Dua v. Comcast Cable of Maryland, Inc., No. 71

• Citation: 805 A.2d 1061,370 Md. 604
• Decision Date: 29 August 2002
• Docket Number: No. 71, No. 121
• Parties: Ash DUA, et al., v. COMCAST CABLE OF MARYLAND, INC., et al. Douglas Harvey v. Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc.
• Court: Court of Appeals of Maryland

805 A.2d 1061

370 Md. 604

Ash DUA, et al., v. COMCAST CABLE OF MARYLAND, INC., et al.

Douglas Harvey v. Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc.

Nos. 71, 121, Sept. Term, 2000.

Court of Appeals of Maryland.

August 29, 2002.

Ronald B. Rubin (Rubin & Rubin, Chartered, on brief) Rockville, for appellants, Ash Dua, et al.

Philip Scott Friedman, Friedman Law Offices, P.L.L.C., Seth D. Goldberg, Seth D. Goldberg, P.C., Paul D. Gleiberman, Gleiberman & Associates, P.C., Washington, DC, Kieron F. Quinn, Quinn, Gordon & Wolf, LLP, Baltimore, Philip O. Foard, Foard Gisriel & O'Brien, L.L.C., Towson, John J. Beins, Gavett & Datt, P.C., Rockville, of counsel for appellants Ash Dua, et al.

Frederick M. Baron, Jeffrey Robert White, Washington, DC, brief of the Association of Trial Lawyers of America, amicus curiae, for appellants.

F. Paul Bland, Trial Lawyers for Public Justice, P.C., Washington, DC, amici curiae, for HMO Subrogation plaintiffs.

Deborah M. Thompson, Public Justice Center, Professor Michael I. Meyerson, University of Baltimore School of Law, Baltimore, for amici curiae Public Justice Center, Maryland Public Interest Research Group, AARP, and National Association of Consumer Advocates.

Melvin J. Sykes, Baltimore, of counsel: Terry S. Bienstock (Bienstock & Clark, on brief) Miami, FL, for appellees, Comcast Cable of Maryland, Inc, et al.

F. Paul Bland, Jr. (Trial Lawyers for Public Justice, on brief, Washington, D.C.; Bruce M. Plaxen, Plaxen & Adler, P.A., on brief, Columbia; Robert K. Jenner, Greenberg & Bederman, on brief, Silver Spring; Kieron F. Quinn, Quinn, Gordon & Wolf, on brief, Baltimore) for petitioner, Douglas Harvey.

M. Miller Baker (Michael S. Nadel of McDermott, Will & Emery, on brief) Washington, DC, for respondent, Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc.

J. Joseph Curran, Jr., Attorney General of Maryland, Kathryn M. Rowe, Assistant Attorney General, Annapolis, on brief, State of Maryland an amicus curiae filed on behalf of appellee.

Lawrence P. Fletcher-Hill, Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, Baltimore, Daly D.E. Temchine, Kathy C. Potter, Epstein, Becker & Green, P.C., Washington, DC, on brief of amici curiae, Maryland Association of Health Plans, M.D., Individual Practice Association, Inc., Optimum Choice, Inc., Capital Care, Inc., Aetna U.S. Healthcare Inc., and The Prudential Insurance Company of America filed on behalf of appellee.

Argued before BELL, C.J., and ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL and BATTAGLIA, JJ. ELDRIDGE, Judge.

We issued writs of certiorari in these cases to determine the constitutionality of retroactive provisions in two statutes enacted by the General Assembly.

Ch. 59 of the Acts of 2000, effective October 1, 2000, enacted detailed regulations governing provisions for late fees in "consumer contracts," including regulations concerning the allowable amounts of late fees. Section 5 of Ch. 59 stated that "this Act shall apply to all late fees provided for in contracts entered into, or in effect, on or after November 5, 1995." In addition, Section 6 stated that the Act shall apply to all cases pending in courts on or after June 1, 2000, including those where final judgments had been rendered as long as all appeals had not been exhausted.

Ch. 569 of the Acts of 2000, effective June 1, 2000, generally authorized contracts between health maintenance organizations and subscribers to contain provisions "allowing the health maintenance organization to be subrogated to a cause of action that a subscriber has against another person." Ch. 569 went on to set forth some exceptions, limitations, and requirements with regard to such contractual subrogation provisions, including the requirement that a health maintenance organization's rates reflect any subrogation clause in its contracts. Section 2 of Ch. 569 provided that the new statute shall apply to cases pending on or after June 1, 2000, and Section 3 of Ch. 569 stated "[t]hat this Act shall apply to all subrogation recoveries by health maintenance organizations recovered on or after January 1, 1976."

The petitioners in the two cases before us challenge the retroactive provisions of Chs. 59 and 569 on numerous state and federal constitutional grounds. We shall hold that the retroactive provisions in both statutes violate Articles 19 and 24 of the Maryland Declaration of Rights and Article III, § 40, of the Maryland Constitution. We shall not reach the federal constitutional issues or the other state constitutional issues raised by the petitioners.

I.

Since this opinion encompasses two separate cases in this Court, Nos. 71 and 121, we shall set forth the background and relevant facts of each case separately.

A. No. 71

The dispute in No. 71 had its genesis in this Court's opinion in United Cable v. Burch, 354 Md. 658, 732 A.2d 887 (1999). Burch was an action by consumer cable television subscribers against their cable television provider, challenging the five dollar per month late fee that was charged to subscribers who did not pay their monthly bills by a particular date each month. This Court, in an opinion by Judge Rodowsky, extensively reviewed Maryland cases and other authorities and held that, under the common law rule in effect in Maryland, when money is not paid by a date certain in a contract "`for the payment of a definite sum of money[,] the measure of damages is the amount of money promised to be paid, with legal interest,'" United Cable v. Burch, supra, 354 Md. at 669, 732 A.2d at 893, quoting Poe, Pleading and Practice in the Courts of Law in Maryland § 584C, at 608 (Tiffany ed.1925) (emphasis added by the Burch opinion). Consequently, the defendant United Cable was entitled to charge a late fee, when the principal was not paid by the due date, only at the legal rate of interest.

We continued in Burch by setting forth Article III, § 57, of the Maryland Constitution which states:

"The Legal Rate of Interest shall be Six per cent per annum, unless otherwise provided by the General Assembly."

We then reviewed several enactments by the General Assembly regulating certain late charges or exempting some late charges from the category of "interest," or otherwise dealing with specified late charges. The Burch opinion pointed out that "there is no statute that authorizes or regulates United's late charges, so that United's late charge remains subject to the common law rule." 354 Md. at 681, 732 A.2d at 899. As no statute provided to the contrary, the Court in Burch held that, under Article III, § 57, of the Constitution, six per cent per annum "is that rate by which United's liquidated damages provision must be measured." 354 Md. at 675, 732 A.2d at 896. The Court in Burch concluded as follows (354 Md. at 683, 732 A.2d at 900):

"The constitutionalized public policy of Maryland remains that the legal rate of interest is six percent and that, if any changes in that rate are to be made, they are to be made by the General Assembly. Inasmuch as damages for breach of a contract to pay money are pegged to the lawful rate of interest, a change in that common law rule of damages, absent a statutory basis, would have the same effect as judicially changing the Constitution or as judicially enacting a statute that has not been enacted by the General Assembly."

The Court affirmed the trial court's judgment which had required that United Cable refund the greater part of the monthly late fee which it had charged each subscriber who did not pay on time.

Ch. 59 of the Acts of 2000 was a legislative response to the Burch decision, and, in that statute, the Legislature for the first time enacted statutory provisions regulating late fees in contracts like those involved in Burch. There is no challenge in this case to the prospective operation of Ch. 59, applying to late fees in consumer contracts, covered by the statute, entered into on or after October 1, 2000. The constitutional challenge is to the retroactive application of the statute.

Turning to the relevant facts in No. 71, several consumer subscribers of cable television services provided by Comcast Cable of Maryland, Inc., at various times in 1999, filed actions in the Circuit Court for Baltimore County and the Circuit Court for Harford County against Comcast Cable of Maryland, Inc., and several of its affiliated corporations (hereafter referred to collectively as "Comcast"). The plaintiffs sought to recover from Comcast monthly late fees which they had paid to Comcast, to the extent that such fees exceeded six per cent per annum. The Harford County actions were transferred to the Circuit Court for Baltimore County, and all of the actions were consolidated in February 2000.

Subsequently, after the passage of Ch. 59 of the Acts of 2000, the defendants moved to dismiss the actions on the ground that Ch. 59 validated the late fees and applied to pending causes of action, requiring that they be dismissed. The plaintiffs responded by arguing that the retroactive sections of Ch. 59 violated various provisions of the state and federal constitutions.

After the submission of memoranda and a hearing, the Circuit Court rejected the plaintiffs' constitutional arguments, held that the retroactive sections of Ch. 59 were valid, and granted the defendants' motion to dismiss. The only issues decided by the court were those relating to the constitutionality of Ch. 59.

The plaintiffs filed a notice of appeal and, prior to any proceedings in the Court of Special Appeals, filed in this Court a petition for a writ of certiorari. We granted the petition, Dua v. Comcast, 360 Md. 485, 759 A.2d 230 (2000).

B. No. 121

Like No. 71, the controversy in No. 121 also began with a decision by this Court, Riemer v. Columbia Medical Plan, 358 Md. 222, 747 A.2d 677 (2000). The facts of Riemer were that several members or subscribers of Columbia Medical Plan, Inc., a health maintenance organization (HMO), who...