Sweeney v. Savings First Mortgage, LLC

Citation388 Md. 319,879 A.2d 1037
Decision Date09 August 2005
Docket NumberNo. 148,148
PartiesLinda SWEENEY v. SAVINGS FIRST MORTGAGE, LLC.
CourtCourt of Appeals of Maryland

Frank Paul Bland, Jr. (Trial Lawyers for Public Justice, Washington, DC; Scott C. Borison and Douglas B. Bowman, Legg Law Firm, LLC, Frederick), on brief for Appellant.

Michael R. Schuster, AARP, Stuart Cohen, AARP Foundation Litigation, Washington, DC, Beth Mellen Harrison, Francis D. Murnaghan, Public Justice Center, Baltimore, Brief of Amici Curiae, the Public Justice Center, the Maryland Consumer Rights Coalition, the Community Law Center, the National Consumer Law Center, the Center for Responsible Lending and AARP.

John A. McCauley (Craig E. Smith, James E. Weaver, Michael J. DeVinne, Venable LLP, Baltimore), on brief for Appellee.

Argued Before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

HARRELL, Judge.

Linda R. Sweeney brought suit against Savings First Mortgage, L.L.C. (Savings First) in the Circuit Court for Frederick County, alleging a violation of the Maryland Finder's Fee Law. Md.Code (1975, 2000 Repl.Vol.), §§ 12-801-12-809 of the Commercial Law Article.1 Savings First acted as a mortgage broker for Ms. Sweeney in the procurement of two mortgage refinance loans within a one-year period. Ms. Sweeney alleged that the mortgage broker fee charged by Savings First in connection with the second loan was in violation of the Maryland statute, specifically § 12-804(c).2

Savings First responded to Ms. Sweeney's suit by filing a motion to dismiss, or, in the alternative, for summary judgment. In support of its motion, Savings First argued that the Finder's Fee Law was preempted by § 501(a)(1) of the Federal Depository Institutions Deregulation and Monetary Control Act,3 and, in the alternative, was barred by the applicable Maryland one-year statute of limitations.4 The Circuit Court granted the motion, dismissing Ms. Sweeney's complaint with prejudice based on its conclusion that § 1735f-7a of Title 12 of the United States Code preempted the Maryland statute. Ms. Sweeney noted an appeal to the Court of Special Appeals. We granted certiorari, Sweeney v. Savings First Mortgage, L.L.C., 385 Md. 511, 869 A.2d 864 (2005), on our initiative while the appeal was pending in the intermediate appellate court, in order to consider the following question of first impression in this State:5

Is Maryland's Finder's Fee Law, and the limits it places on the fees that mortgage brokers may charge, preempted by the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA)?

Based on our analysis of the federal statute, and an investigation of the legislative history behind the DIDMCA, we hold that the Maryland Finder's Fee Law is not preempted in this case. Accordingly, we shall reverse the judgment of the Circuit Court for Frederick County and remand this matter for further proceedings.

I.
A.

On 29 August 2000, Savings First acted as a mortgage broker in obtaining a refinance loan for Ms. Sweeney and Harry E. Stockman6 secured by a residence at 9204 Oak Tree Circle in Frederick, Maryland. The amount of the loan was $140,250 and the lender for the transaction was First Union National Bank of Delaware. As payment for its efforts in brokering the loan, Savings First received a mortgage broker fee of $8,427. The following year, on or about 12 July 2001, Savings First arranged a replacement mortgage refinance loan for the same residence for Ms. Sweeney and Mr. Stockman in the amount of $158,400. The lender in this second transaction was Concorde Acceptance Corporation (Concorde). The mortgage broker fee paid to Savings First in the second transaction was $10,788. The mortgage broker fee for each transaction was rolled into the amounts financed.

B.

Ms. Sweeney filed a complaint on 1 March 2004 in the Circuit Court for Frederick County seeking a judgment in the amount of $30,564 against Savings First.7 Ms. Sweeney contended that the maximum fee allowed by Maryland law for Savings First's brokering of the second loan was $1,452, or 8% of $18,150, the amount of the second loan in excess of the first loan. The relevant portions of § 12-804 of the Maryland Finder's Fee Law state:

Fees mortgage broker permitted to charge.
(a) Maximum amount of finder's fee. — A mortgage broker may charge a finder's fee not in excess of 8 percent of the amount of the loan or advance.
* * * * *
(c) Mortgage loan obtained more than once on same property. — A mortgage broker obtaining a mortgage loan with respect to the same property more than once within a 24-month period may charge a finder's fee only on so much of the loan as is in excess of the initial loan.

Md.Code, § 12-804.

Savings First filed its motion to dismiss for failure to state a claim, or, in the alternative, for summary judgment, on 14 May 2004. Savings First argued that Ms. Sweeney's complaint stated no basis for relief because her claim was barred by law for either of two reasons. The first contention was that § 501(a)(1) of the DIDMCA expressly preempts application of the Maryland Finder's Fee Law. Under this federal statute, a state is prohibited from "expressly limiting the rate or amount of interest, discount points, finance charges, or other charges" applying to qualifying mortgages. 12 U.S.C. § 1735f-7a(a)(1) (2000). Savings First's alternate argument was that Ms. Sweeney's claim was barred by the one-year statute of limitations applicable to penalties and forfeitures.8 Savings First included affidavits in support of its motion demonstrating particular facts, beyond those alleged in Ms. Sweeney's complaint, that it contended were material and not in genuine dispute.

At the conclusion of the motions hearing on 18 August 2004, the Circuit Court ostensibly granted the motion to dismiss Ms. Sweeney's claim, with prejudice, because § 1735f-7a preempted the cause of action brought under § 12-804 of the Maryland Commercial Law Article. In ruling on the motion, the Circuit Court did not state whether it had considered the additional facts offered by Savings First in its affidavits.9

II.

Upon a motion by either party for summary judgment, the court "shall enter judgment in favor of or against the moving party" if there is shown to be "no genuine dispute as to any material fact." Md. Rule 2-501(f). There appears from the record to be no genuine dispute of any material fact. Thus, whether the grant of summary judgment is appropriate is entirely a question of law. Johnson v. Mayor of Balt., 387 Md. 1, 5, 874 A.2d 439, 442 (2005). On appeal, the matter is reviewed de novo to determine if the trial court was "legally correct" in its decision. Id. Accordingly, the case before us turns on the interpretation of a federal statute and whether that statute preempts the Maryland law that is the basis of the complaint.

Courts must begin the process of statutory interpretation "with an analysis of the language of the statute." Holland v. Big River Minerals Corp., 181 F.3d 597, 603 (4th Cir.1999); accord Comptroller v. Phillips, 384 Md. 583, 591, 865 A.2d 590, 594 (2005)

. We must determine if the language "has a plain and unambiguous meaning with regard to the particular dispute in the case." Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 846, 136 L.Ed.2d 808, 813 (1997); accord Phillips, 384 Md. at 591,

865 A.2d at 594. If the statutory language is found to be ambiguous, it is necessary to look beyond the statute itself and into the legislative history for guidance as to the intent of Congress in passing the statute. Holland, 181 F.3d at 603; accord Phillips, 384 Md. at 591,

865 A.2d at 594. In interpreting federal statutory law, a court may look beyond the plain language of a statute when: 1) Congress has expressed a clear intent contrary to the statutory text; 2) literal application would frustrate the purpose of the statute; or 3) literal application would "produce an absurd result." Holland, 181 F.3d at 603 n. 2.

In addressing a statute enacted to preempt state law, our system of federalism has caused the Supreme Court to presume "that Congress does not cavalierly pre-empt state-law causes of action." Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 2250, 135 L.Ed.2d 700, 715 (1996). This presumption against preemption especially has been true in areas historically governed by the police power of the states, and has led to narrow interpretations of such express preemption provisions. Id. (citing Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518, 112 S.Ct. 2608, 2618, 120 L.Ed.2d 407, 423 (1992)). We adopt the view of the Supreme Court that it is our (the Court of Appeals of Maryland's) "reasoned understanding" of the statute's purpose that helps us to determine the scope of preemption; we must consider how the statute was meant to "affect business, consumers, and the law." Medtronic, 518 U.S. at 486,116 S.Ct. at 2251,135 L.Ed.2d at 716.10 We must examine the Maryland Finder's Fee Law against the express preemption provision of the DIDMCA, as well as the possibility that the law is preempted through conflict with federal law.

III.

Ms. Sweeney raises three arguments in her attempt to demonstrate that the DIDMCA does not preempt the Finder's Fee Law.11 Her first contention is that the DIDMCA preemption only covers aspects of covered loans affecting interest, and does not extend to consumer protection statutes like the Maryland Finder's Fee Law. Next, Ms. Sweeney argues that the DIDMCA only applies to purchase money loans and not to refinance mortgage loans. Finally, Ms. Sweeney advances that the DIDMCA only applies to creditors. Her reasoning continues that, because Savings First is a mortgage broker, not a creditor, the Finder's Fee Law is not preempted. We shall address each of Ms. Sweeney's arguments in turn, ultimately reversing the judgment of the Circuit Court solely because the DIDMCA applies only to creditors and not to mortgage brokers. Thus, the...

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