144 A.3d 666
Md.2016Background
- BB&B, a small Virginia law firm (managing partner Christopher E. Brown, not Maryland‑licensed), accepted referrals from a mortgage‑consulting business and entered into 57 agreements with Maryland homeowners (June 2008–Mar 2009) to attempt mortgage loan modifications in exchange for upfront fees.
- Agreements stated BB&B would "engage the appropriate party in discussions to renegotiate the terms of your loan"; fees were paid upfront and characterized as "earned upon receipt." BB&B obtained no loan modifications for those clients.
- Commissioner of Financial Regulation investigated after a consumer complaint, found violations of the Maryland Credit Services Businesses Act (MCSBA), and issued a cease‑and‑desist order, civil penalties, and an order awarding treble damages to consumers.
- Circuit Court reversed (holding services were legal, not credit services); Court of Special Appeals affirmed that reversal. The Court of Appeals granted certiorari.
- The Court of Appeals held BB&B’s activities fell within MCSBA’s definition of a "credit services business," and that the attorney exemption did not apply because the firm engaged in such activities on a "regular and continuing basis." The case was remanded for consideration of willfulness and computation of damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BB&B’s loan‑modification work is a "credit services business" under MCSBA | Commissioner: agreements offered, for money, to obtain an "extension of credit" (loan modification) — fits statutory definition | BB&B: activities were legal services/foreclosure defense ancillary to practice of law, not MCSBA credit services | Held: Yes — renegotiating/modifying a mortgage is seeking an "extension of credit" and falls within MCSBA when done for money |
| Whether the attorney exemption (MD‑bar member; within scope of practice; not on a regular & continuing basis) shields BB&B/Brown | BB&B: employed Maryland lawyers and provided legal services, so exemption applies | Commissioner: exemption requires Maryland admission and no "regular and continuing" credit services; BB&B engaged regularly with Maryland homeowners | Held: No — exemption inapplicable because BB&B engaged in credit services on a "regular and continuing basis" (57 agreements in ~9 months; substantial practice focused on loan modifications) |
| Whether Brown personally qualifies for attorney exemption because firm employed MD lawyers | Brown: firm employed Maryland‑admitted attorneys, so firm and Brown (as managing partner) fall within exemption | Commissioner: Brown was not admitted to MD bar and cannot satisfy the exemption burden; firm’s conduct still fails third‑prong | Held: Not resolved on first‑prong; unnecessary because third‑prong failure defeated exemption claim |
| Willfulness of MCSBA violations and damages computation | Commissioner: violations were willful → treble damages and civil penalties appropriate | BB&B: any violations were not willful; disputes over amount collected | Held: Court did not decide willfulness; remanded to Circuit Court to address willfulness and damages arithmetic on remand |
Key Cases Cited
- Gomez v. Jackson Hewitt, Inc., 427 Md. 128, 46 A.3d 443 (2012) (discussed scope and legislative history of MCSBA and limits of the statute)
- Adventist Health Care, Inc. v. Maryland Health Care Comm’n, 392 Md. 103, 896 A.2d 320 (2006) (agency statutory interpretation entitled to great weight)
- Bd. of Directors of Cameron Grove Condo., II v. State Comm'n on Human Relations, 431 Md. 61, 63 A.3d 1064 (2013) (standard for reviewing agency factual findings and legal conclusions)
- In re Adoption/Guardianship of Tracy K., 434 Md. 198, 73 A.3d 1102 (2013) (statutory interpretation principle against rendering statutory language superfluous)