Goshen Run Homeowners Ass'n, Inc. v. Cisneros
| Decision Date | 27 January 2020 |
| Docket Number | No. 3, Sept. Term, 2019,3, Sept. Term, 2019 |
| Citation | 467 Md. 74,223 A.3d 917 |
| Parties | GOSHEN RUN HOMEOWNERS ASSOCIATION, INC. v. Cumanda CISNEROS |
| Court | Court of Special Appeals of Maryland |
Argued by Torin K. Andrews (Andrews & Lawrence Professional Services, LLC, Ijamsville, MD) and Argued by Timothy Guy Smith (Law Offices of Timothy Guy Smith, Glenwood, MD), on brief, for Petitioner.
Argued by Martin E. Wolf (Richard S. Gordon and Ashley A. Wetzel, Gordon, Wolf & Carney, Chtd., Towson, MD; Alexa E. Bertinelli, Civil Justice Inc., Baltimore, MD), on brief, for Respondent.
Dena Elizabeth Robinson, Murnaghan Appellate Advocacy Fellow, Public Justice Center, One North Charles Street, Suite 200, Baltimore, MD 21201, for Amici Curiae Public Justice Center, Cash Campaign of Maryland, Maryland Consumer Rights Coalition, Inc. and Public Justice in Support of Respondent.
Louise M. Carwell, Esquire, Daniel L. Rosenberg, Esquire, Anthony Hayes Davis II, Esquire, William F. Steinwedel, Esquire (Luyao) Helen L. Zhang, Esquire, Charlotte M. Aheam, Esquire, Legal Aid Bureau, Inc., 500 East Lexington Street, Baltimore, MD 21202, for Amicus Curiae Legal Aid Bureau, Inc. (Maryland Legal Aid) in Support of Respondent.
William D. Gruhn, Esquire, Chief, Consumer Protection Division, W. Thomas Lawrie, Esquire, Assistant Attorney General, Consumer Protection Division, Office of the Attorney General, 200 Saint Paul Place, 16th Floor, Baltimore, MD 21202, for Amicus Curiae Attorney General of Maryland in Support of Respondent.
Argued before: Barbera, C.J., McDonald, Watts, Hotten, Getty, Booth, Irma S. Raker (Senior Judge, Specially Assigned), JJ.
Booth, J. Confessed judgments derive from the ancient legal device of a cognovit note, in which a debtor consents in advance to the holder obtaining a judgment without notice or a hearing. For centuries, the cognovit process has been the subject of much criticism. The United States Supreme Court has noted that the cognovit method has been described as "the loosest way of binding a man's property that was ever devised in any civilized country." D.H. Overmyer Co. v. Frick Co. , 405 U.S. 174, 177, 92 S.Ct. 775, 31 L.Ed.2d 124 (1972) (citations omitted).
In Maryland, confessed judgments have been disfavored and have been viewed with circumspection. Given the ease with which a creditor may obtain a confessed judgment and the potential for fraud and abuse, we have liberally considered attacks on confessed judgments. Although confessed judgments have been permitted in the commercial context, the General Assembly prohibits their use in certain consumer transactions. Through Maryland's Consumer Protection Act ("CPA"), the General Assembly has determined that the "use of a contract related to a consumer transaction which contains a confessed judgment clause that waives a consumer's right to assert a legal defense to an action" constitutes an unfair, abusive, or deceptive trade practice and is therefore prohibited. Maryland Code, Commercial Law Article ("CL"), § 13-301(12) (2013).
Homeowners associations ("HOAs") are often placed in a difficult situation of having to undertake collection efforts against lot owners in their communities for delinquent homeowners assessments. To address the problem, the General Assembly has provided HOAs with multiple collection tools, which are codified in the Maryland Homeowners Association Act, Maryland Code, Real Property Article ("RP"), § 11B-101, et seq. (the "HOA Act"). Specifically, the HOA Act permits homeowners associations to collect delinquent assessments through both in rem proceedings under the Maryland Contract Lien Act, as well as in personam proceedings at law.
In this case, we must decide whether a confessed judgment is another enforcement tool that a HOA has at its disposal when seeking to collect delinquent HOA assessments, costs, and attorney's fees. For the reasons set forth in this opinion, we conclude that the General Assembly has not included this enforcement tool in the box. Collection of HOA assessments falls within the broad purview of the Consumer Protection Act, which prohibits the use of confessed judgment clauses for the collection of consumer debts.
The Goshen Run Village subdivision ("Goshen Run") is a residential community located in Montgomery County, Maryland. In December 1983, the developer of Goshen Run recorded a Declaration of Covenants and Restrictions ("Declaration") in the land records of Montgomery County, which imposed certain covenants and restrictions upon the lots and conferred certain privileges and obligations upon the lot owners within the subdivision.
The Goshen Run Homeowners Association ("Association") was established as the governing body to carry out the powers and duties set forth in the Declaration. The Board of Directors of the Association is required to adopt an annual operating budget for the Association and may establish annual assessments to cover the costs of maintaining, repairing, and replacing the common areas and community facilities,1 as well as any taxes and assessments imposed upon the Association.
Under the Declaration, the Board has the authority to levy assessments on each lot within the subdivision. If a lot owner does not pay an assessment levied under the Declaration, the Association has multiple collection remedies at its disposal. First, the delinquent amount, together with interest and the cost of collection, becomes a continuing lien on the lot belonging to the member against whom the assessment has been levied. Declaration, Article VI, Section 1. In addition, the Association may file a suit against the delinquent lot owner to recover a money judgment for the non-payment of the amount assessed. Id. The Board has the authority, by resolution, to establish an interest rate for delinquent assessments, and to impose a late charge. The Declaration further provides that:
[T]he Association may bring an action at law against the member personally obligated to pay the same, or foreclose on the Lien against the lot or lots then belonging to said member in the manner now or hereafter provided for the foreclosure of mortgages, deeds of trust or other liens on real property in the State of Maryland containing a power of sale or consent to a decree, and subject to the same requirements, both substantive and procedural, or as may otherwise from time to time be provided by law, in either of which events, interest, costs and reasonable attorneys' fees of not less than twenty percent (20%) of the sum claimed shall be added to the amount of each assessment.
Declaration, Article VI, Section 1.
Cumanda Cisneros purchased a home in Goshen Run for her principal residence in 2004. Upon purchasing her lot, Ms. Cisneros became obligated to comply with the Declaration. Pursuant to its authority in the Declaration, the Association imposed assessments upon the lots within the subdivision, including Ms. Cisneros's property.
In 2014, Ms. Cisneros became delinquent in her HOA assessment payments and her delinquent account was turned over to the Association's law firm, Andrews & Lawrence Professional Services, LLC ("Andrews"), to pursue collection of the delinquent amount. During the collection process, Ms. Cisneros contacted Andrews and proposed a plan to pay her debt in monthly installments of $126 over approximately six years. The Association's Board accepted the deferred repayment plan and agreed to forbear collection action. Andrews prepared a promissory note ("Promissory Note" or "Note") and mailed it to Ms. Cisneros with instructions to return it signed and notarized within two weeks. In April 2016, Ms. Cisneros signed the Promissory Note,2 had it notarized, and returned it to the Association's attorneys.
The Promissory Note, which was titled "Promissory Note and Mortgage," was for the repayment of the amount of $8,733.97, payable in 79 installments. The document also included a mortgage secured by Ms. Cisneros's Goshen Run property. The debt evidenced by the Promissory Note was expressly recited as "delinquent homeowners association assessments on [Ms. Cisneros's Goshen Run property] accrued through March 2016 ...." The Promissory Note also referenced future HOA assessments that would come due during the term of the payment period of the Note and recited that the failure to pay those future assessments when they came due would trigger a default of the Promissory Note. In the event of a default, all subsequent fees owed after the execution of the Note would become due and payable and be enforceable by confession of judgment under the Promissory Note.
The Promissory Note contained the following provision:
Ms. Cisneros defaulted on the Promissory Note. In July 2016, the Association filed a confessed judgment complaint in the District Court of Maryland sitting in Montgomery County pursuant to Maryland Rule 3-611, attempting to recover the debt memorialized in Ms. Cisneros's Promissory Note. The complaint consisted of the district court's standard form titled "Complaint for Judgment by Confession ( Md. Rule 3-611 )." As the basis for its complaint, the Association attached the Promissory Note. The standard attestation contained in the affidavit...
To continue reading
Request your trial
-
Wheeling v. Selene Fin. LP
...de novo , without deference to either the circuit court's or the Court of Special Appeals' analysis. See Goshen Run Homeowner's Ass'n v. Cisneros , 467 Md. 74, 88, 223 A.3d 917 (2020) ; Harvey v. Marshall , 389 Md. 243, 257, 884 A.2d 1171 (2005). The issues in this case also involve the suf......
-
Genon Mid-Atlantic, LLC v. Md. Dep't of the Env't
...646 A.2d 413 (1994) ). We avoid any interpretation that would lead to illogical or absurd results. Goshen Run Homeowners Assoc., Inc. v. Cisneros , 467 Md. 74, 109, 223 A.3d 917 (2020).1. The ELGs in the 2015 Final Rule and the Department's permits remain valid, and the 2017 Postponement Ru......
-
Minh-Vu Hoang v. Lowery
...analysis is to extract and effectuate the actual intent of the Legislature in enacting the statute." Goshen Run Homeowner's Ass'n, Inc. v. Cisneros , 467 Md. 74, 107–08, 223 A.3d 917 (2020) (quoting Reier v. State Dep't of Assessments & Taxation , 397 Md. 2, 26 (2007) ) (additional citation......
-
Kemp v. Nationstar Mortg. Ass'n
...absurd results, even where the legislation at issue is not necessarily identified as ambiguous. See Goshen Run Homeowners Assoc., Inc. v. Cisneros , 467 Md. 74, 109, 223 A.3d 917 (2020) ("When interpreting the language in a statute, our interpretation ‘must be reasonable, not absurd, illogi......