Dante Askew v. HRFC, LLC
2016 U.S. App. LEXIS 384
| 4th Cir. | 2016Background
- In 2008 Askew bought a used car under a retail installment contract that was later assigned to Hampton Roads Finance Company (HRFC); the contract indicated CLEC governed but listed a 26.99% interest rate (CLEC cap = 24%).
- HRFC discovered the excessive rate in August 2010 and in September 2010 sent Askew a letter crediting his account $845.40 and stating it would compute interest at a corrected rate and adjust payments if requested.
- Askew fell behind on payments; HRFC made multiple collection contacts (letters and one phone call) from 2011–2012. Askew alleges HRFC made false/threatening statements implying legal actions (replevin warrant, MVA fraud referral, dismissal of Askew’s lawsuit).
- Askew sued in state court alleging violations of CLEC (Md. Code Ann., Com. Law § 12-1001 et seq.), breach of contract (incorporating CLEC), and violations of the Maryland Consumer Debt Collection Act (MCDCA), § 14-201 et seq.; case removed to federal court.
- District court granted summary judgment for HRFC on CLEC and breach claims (relying on CLEC’s 60-day cure safe harbor, § 12-1020) and also granted summary judgment on the MCDCA claim; Askew appealed.
- Fourth Circuit affirmed as to CLEC and breach of contract but reversed as to the MCDCA claim and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether failure to disclose an interest rate ≤24% in the contract is a standalone CLEC violation | Askew: contract must expressly state a rate ≤24%; listing 26.99% is an uncured statutory violation | HRFC: §12-1003(a) only bars charging >24% and requires expression as simple interest; paper error alone is not strict liability | Court: No standalone violation; statute targets charging excessive interest and format, not strict paper-disclosure error |
| Whether CLEC §12-1020’s 60-day cure period is governed by Maryland’s discovery rule (moving discovery to contract-assignment date) | Askew: apply discovery rule so HRFC ‘‘discovered’’ at assignment and thus failed to cure within 60 days | HRFC: it actually discovered the error in Aug 2010 and cured within 60 days; discovery means actual knowledge of the error | Court: Rejected discovery-rule application; “discovering an error” means actual discovery so HRFC cured within 60 days |
| Whether HRFC’s September 2010 notice and adjustments satisfied §12-1020 notice and cure requirements | Askew: letter was vague and insufficient; cure inadequate (should refund more or all excess interest) | HRFC: letter identified the problem and credited $845.40; adjustments were made; safe harbor satisfied | Court: Letter was adequate notice of the error; cure sufficient and safe-harbor applies; refund of all interest not required |
| Whether HRFC’s collection communications violated the MCDCA §14-202(6) by abusive/harassing conduct (false threats of legal action) | Askew: HRFC falsely claimed legal actions (replevin warrant, MVA referral, case dismissal) — a jury could find harassment/abuse | HRFC: communications were not abusive or false threats warranting relief | Court: Reversed summary judgment for HRFC on MCDCA; a reasonable jury could find violations based on false representations about legal actions |
Key Cases Cited
- Defenders of Wildlife v. N.C. Dep’t of Transp., 762 F.3d 374 (4th Cir. 2014) (standard of review for summary judgment; view facts favoring nonmovant)
- Horace Mann Ins. Co. v. Gen. Star Nat’l Ins. Co., 514 F.3d 327 (4th Cir. 2008) (apply state law where federal court decides state-law issues)
- Poffenberger v. Risser, 431 A.2d 677 (Md. 1981) (Maryland discovery rule for accrual of causes of action)
- Ford Motor Credit Co. v. Roberson, 25 A.3d 110 (Md. 2011) (background on CLEC/legislative purpose to attract creditors while adding consumer protections)
- Dorsey v. Morgan, 760 F. Supp. 509 (D. Md. 1991) (distinguishing truthful/future threats from false representations of existing legal action under FDCPA-like provisions)
- Baker v. Allstate Financial Services, Inc., 554 F. Supp. 2d 945 (D. Minn. 2008) (false implication that a legal case was pending can survive dismissal under debt-collection harassment statute)
- Pearce v. Rapid Check Collection, Inc., 738 F. Supp. 334 (D.S.D. 1990) (no FDCPA violation where defendants’ threatened actions were legally obtainable and in fact taken)