The Maryland Court of Appeals — the top court in the state — has broadly interpreted a state debt collection law allowing plaintiffs to accuse collectors of violating one of the law’s provisions in instances where the collector attempts to collect amounts that “the debt collector, to its knowledge, does not have the right to collect,” overturning a lower court’s decision.
A copy of the ruling in the combined cases of Chavis et al v. Blibaum & Associates and Moore et al v. Peak Management can be accessed by clicking here.
The issue in these cases is the amount of post-judgment interest that was charged when individuals breached residential tenant contracts. Both of these cases have been through a number of different departments within the Maryland state court system, which ultimately ended up before the state Court of Appeals. Ultimately, the lower courts “incorrectly dismissed” claims that the defendants violated the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA) by obtaining writs of garnishment that charged post-judgment interest at a rate of 10%, when the legal maximum in the state had been established at 6%.
The defendants attempted to argue that the lower court rulings should be upheld because the plaintiffs sought to hold the defendants liable for collecting certain amounts from the plaintiffs rather than challenging the methods that were used to collect the debts, and that it was impossible at that time to know that the post-judgment interest rate was 6%.
But the relevant provision of the MCDCA — Section 14-202(8), which prohibits “Claim, attempt, or threaten to enforce a right with knowledge that the right does not exist” — requires that, “where the law is settled at the time a collector takes a contrary position in claiming a right, the collector’s recklessness in failing to discover the contrary authority is equivalent to
‘aware[ness]’ (i.e., actual knowledge) of the authority,” the Appeals Court ruled.
There is no strict liability interpretation of Section 14-202(8), the Appeals Court ruled, because the state legislature intended to require a showing of actual knowledge or recklessness.
“An attorney acting in good faith (viewed objectively) occasionally will provide advice to a debt collector client that the client does not like, just as an attorney advocate acting in good faith (viewed objectively) must occasionally refuse to make an argument the client wants to advance because there is not a substantial justification to do so,” the Appeals Court wrote in its ruling. “Walking this ethical tightrope is not easy. It is a challenge that Maryland attorneys face every day. We have every reason to believe that Maryland’s debt collection bar is up to the task.”
