Gomez v. Jackson Hewitt Inc.

• Decision Date: 31 March 2011
• Docket Number: 2009.,Sept. Term,No. 1074,1074
• Citation: 16 A.3d 261,198 Md.App. 87
• Parties: Alicia GOMEZv.JACKSON HEWITT, INC. et al.
• Court: Court of Special Appeals of Maryland

198 Md.App. 87

16 A.3d 261

Alicia GOMEZ

v.JACKSON HEWITT, INC. et al.

No. 1074

Sept. Term

2009.

Court of Special Appeals of Maryland.

March 31, 2011.

Daniel Katz, Silver Spring, MD, & John Roddy, Boston, MA (Elizabeth Ryan, Roddy, Klein & Ryan, Patrick Perotti, Nicole T. Fiorelli, Dworken & Berstein LPA, Andalman & Flynn, on the brief), for Appellant.Richard Brusca & Paul Solomon, Washington, DC, for Appellee.Panel: MATRICCIANI, GRAEFF and ARRIE W. DAVIS, (Retired, Specially Assigned), JJ.DAVIS, J.

Appellant, Alicia Gomez, appeals from the ruling of the Circuit Court for Montgomery County (Rubin, J.), dismissing her claims against appellee, Jackson Hewitt, Inc. (Jackson Hewitt). On February 4, 2009, appellant filed a Complaint against appellee alleging violations of the Credit Services Businesses Act (CSBA), Md.Code (2005 Rep. Vol., 2007 Supp.), Commercial Law, C.L. § 14–1901 et seq. and the Consumer Protection Act, C.L. § 13–301 et seq. Appellee moved to dismiss appellant's claims, which the circuit court granted.¹ Appellant noted a timely appeal to this Court and presents one question for our review, which we have rephrased as follows:

Did the circuit court err in dismissing appellant's claims on the grounds that the CSBA does not apply to appellee?

For the reasons that follow, we answer appellant's question in the negative. Accordingly, we affirm the judgment of the circuit court.

PROCEDURAL AND FACTUAL BACKGROUND

Appellant's Complaint alleged that, on February 6, 2007, appellee prepared her 2006 Federal Income Tax Return. At that time, appellee assisted appellant in acquiring a Refund Anticipation Loan (RAL) from a lender, Santa Barbara Bank & Trust (SBBT) in anticipation of her income tax refund. Appellant asserted that she “indirectly paid” appellee for arranging the RAL “in that the credit that [appellee] obtained for her included in its principal amount the cost of obtaining this extension of credit.” She further alleged that appellee included in “its principal amount fees charged by [appellee] for the preparation and filing of her federal income tax return.” Appellant elected to use part of her RAL to pay appellee's tax preparation fee of $284.

Appellant alleged that appellee failed to obtain the required license from the Commissioner of Financial Regulation of the Department of Labor, Licensing & Regulation (the Commissioner) pursuant to C.L. § 14–902, failed to obtain a surety bond pursuant to Section 14–1908 and failed to provide her with numerous “documents and disclosures” required by Sections 14–1904, 14–1905 and 14–1906.

Appellee filed a Motion to Dismiss on the grounds that its actions in providing appellant with the RAL did not fall within the purview of the CSBA because she failed to establish that she was a “consumer” within the meaning of the CSBA and that she did not pay anything of value to appellee in exchange for receiving credit services.

On June 18, 2009, the circuit court held a hearing on appellee's motion to dismiss. On June 23, 2009, the circuit court filed a Memorandum Opinion and Order dismissing appellant's claims. Based upon appellant's Complaint, the circuit court determined:

[Appellant's] RAL application says that she expected a federal tax refund of $2,323, that she has requested a RAL from SBBT, and that the estimated amount of her loan disbursement is $1,950.97, net of loan and fees and the $284 tax preparation fee owed to [appellee]. The loan agreement [appellant] entered into with SBBT is clear that it is for a loan in anticipation of her federal tax refund. In addition to [appellee's] tax preparation fee of $284, [appellant] agreed to pay SBBT a handling fee of $29.95 and prepaid finance charges of $58.08.

The circuit court initially examined appellant's claim under the CSBA and found that the definition of a “credit service business” in § 14–1901(e) and “consumer” in § 14–1901(c) were ambiguous; thus, it looked to the legislative history of the CSBA, which was enacted on May 14, 1987 as 1987 Md. Laws, ch. 469. The trial court examined the Fiscal and Policy Note, along with numerous documents in the bill file, and concluded that the General Assembly sought to regulate credit repair agencies by enacting the CSBA. Thus, the circuit court ruled:

It is manifest that the reason why the General Assembly passed the CSBA was to protect unsuspecting Marylanders from credit repair agencies who offered to ‘fix’ their credit rating, or to obtain loans for the credit impaired customer, in exchange for a fee. The CSBA simply was neither intended nor designed to cover firms engaged in the business of selling goods or services to their customers, when such goods or services are not aimed at improving one's credit rating. Nor was it intended to cover the extension of credit by a third-party, not privy to the primary transaction, which is ancillary to the customer's purchase of the goods or services provided by the merchant.

....

[Appellant] is [sic] this case neither had a contract with [appellee] in return for credit services nor a contract for the extension of credit. The documents appended to her complaint make it clear that her contract in this regard was with SBBT and that the fee she paid for the extension of credit was paid by her to SBBT. The only fee [appellant] was obligated to pay to [appellee] was the $284.00 she agreed to pay for the preparation of her income tax returns.

....

Count I will be dismissed for failure to state a claim. Additionally, because relief under count II is dependent upon a cognizable claim under Count I, it will be dismissed as well.

Thereafter, appellant noted an appeal to this Court. Additional facts shall be supplied infra as warranted.

STANDARD OF REVIEW

The Court of Appeals recently reiterated the standard of review of a grant of a motion to dismiss a plaintiff's Complaint for failure to state a claim in RRC Northeast, LLC v. BAA Md., Inc., 413 Md. 638, 643, 994 A.2d 430 (2010).

Considering a motion to dismiss a complaint for failure to state a claim upon which relief may be granted, a court must assume the truth of, and view in a light most favorable to the non-moving party, all well-pleaded facts and allegations contained in the complaint, as well as all inferences that may reasonably be drawn from them, and order dismissal only if the allegations and permissible inferences, if true, would not afford relief to the plaintiff, i.e., the allegations do not state a cause of action for which relief may be granted. Lloyd v. Gen. Motors Corp., 397 Md. 108, 121–22, 916 A.2d 257, 264–65 (2007); Sprenger v. Pub. Serv. Comm'n, 400 Md. 1, 21, 926 A.2d 238, 249–50 (2007); Pendleton v. State, 398 Md. 447, 458–60, 921 A.2d 196, 203–04 (2007); Converge Servs. Group, LLC v. Curran, 383 Md. 462, 475, 860 A.2d 871, 878–79 (2004); Fioretti v. Maryland State Bd. of Dental Exam'rs, 351 Md. 66, 71–72, 716 A.2d 258, 261 (1998).

Id.

In addition, we review the circuit court's interpretation of the CSBA de novo. Herlson v. RTS Residential Block 5, LLC, 191 Md.App. 719, 730, 993 A.2d 699 (2010) (“we review the Circuit Court's interpretation of the statute de novo.”) (quoting Gleneagles, Inc. v. Hanks, 385 Md. 492, 496, 869 A.2d 852 (2005)). Thus, we are tasked with determining whether the circuit court erroneously interpreted the CSBA to preclude appellant's claims against appellee, based upon the facts as pleaded by appellant in her Complaint, as a matter of law.

LEGAL ANALYSIS

Appellant contends that the CSBA applies to “loan arrangers” such as appellee, based upon a reading of the plain language of the statute. Specifically, appellant posits that appellee falls within the plain language of the statutory definition of a “credit services business” and she falls within the definition of a “consumer” under C.L. § 14–1901. Alternatively, she argues that, if there is any ambiguity that requires an examination of the legislative history, the legislative history reveals that the General Assembly intended to target businesses like appellee.

Appellee counters that the plain language of the statute is unambiguous and Jackson Hewitt falls outside its purview. In addition, appellee claims that the legislative history confirms that the General Assembly did not intend for the statute to apply to Jackson Hewitt. Finally, appellee points out that, in May 2010, the General Assembly enacted a statute that specifically targets tax preparation businesses engaged in facilitating RALs, which undermines appellant's interpretation of the CSBA.

For the reasons that follow, we agree with appellee. The plain meaning of the language supports appellee's position and we think the legislative history undergirding the enactment of CSBA and subsequent amendments indicates that the General Assembly did not contemplate the statute's application to businesses such as Jackson Hewitt. The enactment of 2010 Md. Laws, ch. 730 further supports our interpretation of the CSBA. We explain.

The Plain Language of the CSBA

Initially, appellant contends that the language of the CSBA plainly applies to “loan arrangers” such as appellee. The CSBA seeks to regulate “credit services businesses” by imposing licensing requirements, implementing disclosure requirements, providing for an administrative review process for complaints and providing monetary and criminal penalties for violations. Section 14–1901 provides, in pertinent part:

(c) Consumer.—“Consumer” means any individual who is solicited to purchase or who purchases for personal, family, or household purposes the services of a credit services business.

....

(e) Credit services business.—

(1) “Credit services business” means any person who, with respect to the extension of credit by others, sells, provides, or performs, or represents that such person can or will sell, provide, or perform, any of the following services in return for the payment of money or other valuable consideration:

(i) Improving a consumer's credit record, history, or...