LVNV Funding, LLC v. Finch

• Decision Date: 14 September 2017
• Docket Number: No. 1075,1075
• Parties: LVNV FUNDING, LLC v. LARRY FINCH, et al.
• Court: Court of Special Appeals of Maryland

LVNV FUNDING, LLC v. LARRY FINCH, et al.

No. 1075

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2016

September 14, 2017

Circuit Court for Baltimore City

Case No. 24-C-11-007101

UNREPORTED

Berger, Kehoe, Sharer, J. Frederick (Senior Judge, Specially Assigned), JJ.

Opinion by Berger, J.

*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.

This appeal is the second time the parties have reached this Court. Our previous ruling reversed the circuit court's decision dismissing this class action against appellant LVNV Funding, LLC ("LVNV"), which was brought by consumers whom LVNV sued as an assignee for debts that it purchased in the course of its business. Our emphasis there was on the licensing requirements of the Maryland Collection Agency Licensing Act ("MCALA"). In this case, the named appellees are Ronald Jackson ("Jackson") and Larry Finch ("Finch").¹ After a jury trial on the merits, the jury returned a verdict finding LVNV liable for (1) violating a provision of the Maryland Consumer Debt Collection Act ("MCDCA"), a protective statute designed to protect Maryland consumers; and (2) unjust enrichment as a result of its violation of the MCDCA. As restitution for LVNV's unjust enrichment, the jury returned a verdict of $38,630,344 for the members of the subclass ("the Subclass"),² which the circuit court carved out of the class of consumers whom LVNV sued in the district court without complying with Maryland's licensing requirements ("the Class").

On appeal, LVNV raises numerous questions and challenges to the proceedings below. We have summarized those issues in the following way:

1. Whether the circuit court erred in granting partial summary judgment in favor of the appellees in which thecourt determined that LVNV is a "collection agency" subject to the requirements of the MCALA.

2. Whether the circuit court erred in declaring that all judgments obtained by LVNV in the district court during the period in which it was not licensed under the MCALA are void and unenforceable.

3. Whether there was insufficient evidence to support the jury's verdict of liability, such that the trial court erred in denying LVNV's motion for judgment and motion for judgment notwithstanding the verdict.

4. Whether the trial court erred by excluding evidence proffered by LVNV on the issues of its liability for violating the MCDCA and for unjust enrichment.

5. Whether the trial court erred in omitting any instruction to the jury on the proper method of determining a monetary award for unjust enrichment.

6. Whether the circuit court erred in certifying the Class and Subclass pursuant to Maryland Rule 2-231.

7. Whether the circuit court relied on the appropriate limitations period in defining the Class and the Subclass.

8. Whether the circuit court erred in granting a remittitur and reducing the jury's monetary award to $25,000,000.³

For the reasons discussed below, we affirm the trial court's entry of judgment against LVNV for violating the MCDCA and for unjust enrichment, but we vacate the jury's monetary award for the appellees. We further remand the case to the circuit court for a new trial on damages.

FACTS AND PROCEEDINGS

In recent years, the debt collection industry has experienced a rise in debt buyers who purchase debt, rather than merely providing debt collection services. Typically, the debts are purchased for a small fraction of the amount owed on the original debt. LVNV is a debt buyer that purchases and holds title to debts as the assignee. After purchasing a debt, an affiliate of LVNV, Resurgent Capital Services, L.P. ("Resurgent"), typically files an action in court to recover the debts from the debtors. Both Resurgent and LVNV were named complainants on the relevant complaints filed to recover debts in the district court. These complaints were an effort to enforce LVNV's right to payment on the debts.

In order to protect Maryland consumers against abusive debt buyers, the Maryland General Assembly has enacted legislation requiring "collection agencies" to follow particular procedures for collecting debts within Maryland. Md. Code (1992, 2015 Repl. Vol.), Bus. Reg. Art. ("B.R."), § 7-301(a). In 2007, the General Assembly amended the definition of "collection agency" under the MCALA to extend state regulations to debt buyers. Fiscal and Policy Note, H.B. 1324, 2007 Sess. (Md. 2007). Although debt buyers like LVNV were already subject to federal regulations, the General Assembly sought "to include a person who collects a consumer claim that was in default when it was acquired, thereby subjecting approximately 40 known debt purchasers to State regulation." 90 Day Report, H.B. 1324, 2007 Sess. (Md. 2007).

Procedural History

In 2008, LVNV filed collection actions in the District Court of Baltimore City against Finch and Dorsey, whose credit card debts LVNV had purchased. The district courtentered a default judgment against Finch on July 31, 2009 in the amount of $3,621.67 and against Dorsey on April 8, 2009 in the amount of $5,838.95. On November 9, 2011, plaintiffs Finch and Dorsey filed a "Class Action Complaint and Request for Jury Trial" in the circuit court. See Finch v. LVNV Funding, LLC, 212 Md. App. 748 (2013) [hereinafter "Finch I"]. In Finch I, the plaintiffs alleged, first, that LVNV violated the MCALA by engaging in debt collection activities without the license required for collection agencies. Second, the plaintiffs claimed that LVNV violated the MCDCA, which provides that "in collecting or attempting to collect an alleged debt a collector may not . . ." claim, attempt, or threaten to enforce a right with knowledge that the right does not exist." Md. Code (1975, 2013 Repl. Vol.), Comm. Law Art. ("C.L."), §14-202(8). Further, the plaintiffs sought declaratory and injunctive relief "based on LVNV's unlawful activities as an unlicensed collection agency." Finch I, supra, 212 Md. App. at 753. Additionally, the plaintiffs alleged unjust enrichment and asserted damages under the MCDCA.

On January 12, 2012, LVNV filed a motion to dismiss in the circuit court arguing that the plaintiffs' action was an "impermissible collateral attack on the district court judgments." See id. at 752. The circuit court agreed and dismissed the complaint, explaining that if the plaintiffs wanted to reopen their cases, the proper venue would be the district court. The plaintiffs moved to alter, amend, or revise the order of dismissal, which the circuit court denied. The plaintiffs timely appealed to this Court.

We issued our decision in Finch I on June 28, 2013, holding that "judgments entered in favor of an unlicensed collection agency are void." Id. at 754. We reversed the circuit court's decision granting the motion to dismiss and remanded the case to the circuit court.Id. at 769. LVNV filed a petition for a writ of certiorari, which the Court of Appeals denied on October 11, 2013.

On October 30, 2014, the appellees in the case sub judice filed an amended complaint in the circuit court, the operative complaint, adding Jackson as a named plaintiff and putative class representative. The appellees requested a declaration that the judgments obtained by LVNV against the appellees were "void and unenforceable" and that LVNV was liable for pre-judgment and post-judgment interest and costs. Further, the appellees included an unjust enrichment claim, a claim for "money had and received," and a claim under the MCDCA. The appellees and LVNV each filed motions for summary judgment. On September 30, 2014, the circuit court granted in part and denied in part LVNV's second motion to dismiss, which was treated as a motion for summary judgment. On May 5, 2015, the circuit court, in a memorandum opinion, determined that LVNV was a "collection agency."

On September 8, 2015, the circuit court denied LVNV's motion to dismiss the appellees' unjust enrichment claim as to "Finch and Jackson and as to any [S]ubclass member who made payments on the debts reduced to judgment by LVNV." The court granted partial summary judgment in favor of LVNV on the same counts for "the members of the [C]lass who did not pay any sums to LVNV but denied [summary judgment] in part as to members of the Subclass who paid sums to [LVNV]." The same day, the circuit court issued a ruling declaring the following:

The Judgments obtained by LVNV Funding LLC against the Named Plaintiffs Larry Finch, Kurt Dorsey, and Ronald Jackson and the Class, defined to include those persons suedby LVNV in Maryland state courts from October 30, 2007 through February 17, 2010 for whom LVNV obtained a judgment for an alleged debt in its favor in an attempt to collect a consumer debt, are void and unenforceable.

The circuit court certified the Class as "[t]hose persons sued by LVNV in Maryland state courts from October 30, 2007 through February 17, 2010 for whom LVNV obtained a judgment for an alleged debt in its favor in an attempt to collect a consumer debt." The court defined the Subclass as "[a]ll members of the plaintiffs' class who paid any amounts to LVNV."

On November 12, 2015, the circuit court issued the following administrative order:⁴

The claims of the Subclass Representatives shall be tried before a jury. In the event that an award of damages is entered in favor of any named Plaintiff, the trial court can then determine the method for the award of damages, if any, to the class.

The trial began on May 17, 2016. On May 19, 2016, during a motions hearing, the circuit court issued several decisions regarding the admission of evidence proffered by LVNV. One item of evidence concerned a consent judgment associated with the district court judgment against Jackson. In response to LVNV's attempt to admit the consent judgment into evidence, the following exchange occurred:

[APPELLEES' COUNSEL]: Your Honor, what's the

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