Gardner v. GMAC, Inc.

Decision Date06 August 2015
Docket NumberNos. 14–1048,14–1049.,s. 14–1048
Citation796 F.3d 390
PartiesGladys GARDNER, Individually and on Behalf of All Persons Similarly Situated, Plaintiff–Appellant, v. GMAC, INC., now known as Ally Financial Incorporated, Defendant and Third–Party Plaintiff–Appellee, v. Manheim Remarketing, Inc., Third–Party Defendant. Randolph Scott, Individually and on Behalf of All Persons Similarly Situated, Plaintiff–Appellant, v. Nuvell Financial Services, LLC; Nuvell National Auto Finance, LLC, d/b/a Nuvell National Auto Finance, Defendants and Third–Party Plaintiffs–Appellees, v. Manheim Remarketing, Inc., Third–Party Defendant.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED:Benjamin Howard Carney, Gordon, Wolf & Carney CHTD., Towson, Maryland, for Appellants. Martin C. Bryce, Jr., Ballard Spahr LLP, Philadelphia, Pennsylvania, for Appellees. ON BRIEF:Martin E. Wolf, Gordon, Wolf & Carney CHTD., Towson, Maryland; Mark H. Steinbach, Washington, D.C.; John J. Roddy, Elizabeth A. Ryan, Bailey & Glasser, LLP, Boston, Massachusetts, for Appellants.

Robert A. Scott, Glenn A. Cline, Ballard Spahr LLP, Baltimore, Maryland, for Appellees.

Before NIEMEYER, KEENAN, and DIAZ, Circuit Judges.

Opinion

Affirmed by published opinion. Judge DIAZ wrote the opinion, in which Judge NIEMEYER and Judge KEENAN joined.

DIAZ, Circuit Judge:

The main question raised by this appeal is when borrowers may seek a remedy after their creditors violate the repossession notice requirements in Maryland's Credit Grantor Closed End Credit Provisions (“CLEC”), Md.Code Ann., Com. Law § 12–1001 et seq. Because we conclude that CLEC requires borrowers to have repaid more than the original principal amount of their loans before they are entitled to relief, we affirm.

I.

Gladys Gardner and Randolph Scott each entered into a retail installment sale contract with GMAC, Inc.—now Ally Financial, Inc.—or its subsidiary, respectively, to finance the purchase of a car. Both contracts were forms drafted by GMAC that designated CLEC as the applicable law. Relevant to this appeal, CLEC establishes rules, including notice requirements, for creditors that repossess “tangible personal property securing a loan” after the borrower defaults on that loan. Md.Code Ann., Com. Law § 12–1021. Creditors who violate CLEC “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.” Id. § 12–1018(a)(2).

After making some payments, Gardner and Scott defaulted on their loans and GMAC repossessed their cars. GMAC sent the borrowers notices that the cars would be sold at public sales. GMAC sold them for less than the amount owed under the contracts and issued post-sale notices explaining that deficiency.

Gardner and Scott filed separate class action complaints against GMAC, alleging counts for (1) CLEC violations; (2) breach of contract; (3) declaratory and injunctive relief; (4) restitution/unjust enrichment; and (5) violation of Maryland's Consumer Protection Act, Md.Code Ann., Com. Law § 13–101 et seq. The complaints allege that GMAC's pre-sale notices mischaracterized the sales as public, when in fact they were private, due to a $1,000 refundable cash entrance fee required to view the sale. They further contend that, because of that mischaracterization, GMAC's post-sale notices lacked certain statutorily required disclosures for private sales. See Md.Code Ann., Com. Law § 12–1021(j)(2).

The district court found that the sales were public and granted summary judgment to GMAC on that basis. On appeal, we certified the question to the Court of Appeals of Maryland, which held that the sales were private. Gardner v. Ally Fin. Inc., 430 Md. 515, 61 A.3d 817, 828 (2013). We therefore reversed the district court's judgment and remanded the cases. Gardner v. Ally Fin. Inc., 514 Fed.Appx. 378, 379 (4th Cir.2013).

On remand, the district court again granted summary judgment to GMAC. This time, the court reasoned that (1) neither Gardner nor Scott had sustained any damages under CLEC because, based on this court's decision in Bediako v. American Honda Finance Corp., 537 Fed.Appx. 183 (4th Cir.2013), an unpaid principal balance remained on their loans; and (2) GMAC had, in a binding judicial admission, abandoned any claim for deficiency judgments against them. Scott v. Nuvell Fin. Servs., Nos. JFM–09–3110, JFM–10–1094, 2013 WL 6909518, at *1 (D.Md. Dec. 31, 2013). Gardner and Scott appeal, contending that those rulings are in error and raising other issues. We review de novo a district court's order granting summary judgment. Triton Marine Fuels Ltd., S.A. v. M/V PACIFIC CHUKOTKA, 575 F.3d 409, 412 (4th Cir.2009).

II.

Two CLEC provisions are at issue in this appeal. First, CLEC's civil remedies section provides, “Except for a bona fide error of computation, if 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.” Md.Code Ann., Com. Law § 12–1018(a)(2). Second, CLEC's repossession section states, “If the provisions of this section, including the requirement of furnishing a notice following repossession, are not followed, the credit grantor shall not be entitled to any deficiency judgment to which he would be entitled under the loan agreement.” Id. § 12–1021(k)(4).

A.

We have previously interpreted Section 12–1018(a)(2)'s plain language as limiting “a debtor's relief under CLEC to any amounts paid in excess of the principal amount of the loan.” Bediako, 537 Fed.Appx. at 186. We have also explained that, unlike statutes such as the federal Fair Debt Collection Practices Act, CLEC does not establish a fixed statutory damages award. Id. To add an example from Maryland, a statute prohibiting unwanted commercial email provides for damages “in an amount equal to the greater of $500 or the recipient's actual damages.” Md.Code Ann., Com. Law § 14–3003 (emphasis added). The absence of a parallel provision in CLEC is telling.

Gardner and Scott do not say that Bediako was wrongly decided; they instead attempt to distinguish it by claiming that the creditor in Bediako fully complied with CLEC. But our holding in Bediako was premised on the assumption that the creditor violated CLEC: [E]ven if Bediako has adequately alleged a violation of CLEC's notice provisions , she is unable to state a claim because she has suffered no actual damages that are compensable under CLEC.” 537 Fed.Appx. at 188 (emphasis added). Turning that assumption into an actual violation does not alter the damages analysis.

Because Gardner and Scott have given us no good reason to depart from Bediako, we will follow it.1 And like the borrower there, the borrowers here have not paid anything in excess of the principal. In Bediako, we recharacterized all of the borrower's payments during the life of the loan as payments toward principal and then subtracted that total and the sale proceeds from the original principal amount of the loan. Id. at 186 & n. 1. Applying that same calculation, Gardner and Scott each still owe roughly $11,000 in principal on their loans.

B.

Despite the fact that neither Gardner nor Scott has paid anything in excess of the principal, they nonetheless insist that they are entitled under CLEC to a refund of (1) the funds they claim GMAC collected after repossessing their cars2 and (2) their payments to GMAC during the life of their loans to cover interest, costs, fees, or other charges. That is not correct.

Gardner and Scott build their first argument on a misreading of two cases from the Court of Appeals of Maryland. They say that GMAC is now “limited to the proceeds of the sale as satisfaction of the debt” because it violated CLEC. Appellants' Br. at 29 (quoting Gardner, 61 A.3d at 823, and citing Patton v. Wells Fargo Fin. Md., Inc., 437 Md. 83, 85 A.3d 167, 181 (2014) ). But the full sentence from Gardner gives important context: “If 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 and limited to the proceeds of the sale as satisfaction of the debt.” 61 A.3d at 823 (emphasis added). Contrary to Gardner and Scott's view, the court was merely acknowledging the practical reality that a creditor who violates CLEC will likely be unable to collect anything beyond the proceeds of the sale because CLEC bars violators from obtaining a deficiency judgment. Nowhere does the court's opinion or CLEC itself say that creditors who violate CLEC cannot try to collect the deficiency by means other than a judgment, or apply toward the outstanding principal any funds they receive after the repossession sale.

Gardner and Scott would have us read “judgment” out of Section 12–1021(k)(4) and ignore the fact that Section 12–1018(a)(2) expressly permits creditors who violate CLEC to collect the principal amount of the loan. We decline to do so. See Mid–Atlantic Power Supply Ass'n v. Pub. Serv. Comm'n of Md., 361 Md. 196, 760 A.2d 1087, 1097 (2000) (“It long has been the law of Maryland and well settled, that statutes are to be read to give meaning to every word used and to do otherwise contravenes this cardinal rule of statutory construction.”); Kaczorowski v. Mayor & City Council of Balt., 309 Md. 505, 525 A.2d 628, 631 (1987) ([S]tatutes dealing with the same subject matter should, when possible, be read together and harmonized.”).

As to the second refund claim, Gardner and Scott's argument relies solely on a decision by the Commissioner of Financial Regulation interpreting Maryland mortgage law. Comm'r of Fin. Regulation v. Ward, No. CFR–FY2010–418 (Nov. 26, 2013), aff'd , No. C 13–2191 (Md.Cir.Ct. Feb. 23, 2015). Similar to CLEC Section 12–1018(a)(2), violators of the Maryland Mortgage Lender Law “may collect only the principal amount of the loan and may not collect any interest, costs, finder's...

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