LVNV Funding LLC v. Finch, 207 A.3d 202

Background

LVNV Funding LLC, a debt buyer in an affiliated corporate group, purchased charged-off consumer debts and sued debtors in Maryland District Court to collect, frequently obtaining judgments on affidavit (many by default). LVNV lacked a Maryland collection agency license until February 2010.
Plaintiffs (class action) sued after LVNV obtained default judgments in 2008 against representative plaintiffs Finch, Dorsey, and Jackson, seeking to void those judgments and recover damages for LVNV’s unlicensed collection activity (claims under MCALA, MCDCA, and CPA).
The Commissioner of Financial Regulation previously found LVNV acted as part of an integrated debt-collection enterprise and brought an enforcement action that led to a settlement requiring dismissal of prior Maryland collection cases and payment of penalties and restitution.
The Circuit Court dismissed the plaintiffs’ suit as an impermissible collateral attack on enrolled District Court judgments. The Court of Special Appeals reversed, holding judgments obtained by an unlicensed collector are void; after trial a large class verdict was entered and later reduced by remittitur.
On cross-petitions, the Court of Appeals held: (1) the District Court had fundamental jurisdiction, so enrolled judgments were not void and thus not subject to collateral attack; (2) MCDCA (and MCALA read with MCDCA) provides a private right of action for damages from unlawful collection activity, and remanded for a new trial on damages.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether LVNV’s unlicensed pursuit of lawsuits made the resulting District Court judgments void	Unlicensed collection equals attempt to enforce a non‑existent right, so judgments are void and subject to collateral attack	District Court had authority over collection actions; lack of licensing makes judgments voidable but not void; collateral attack improper	Judgments were not void; collateral attack disallowed because the court had fundamental jurisdiction to decide collection cases
Whether LVNV was required to hold a collection agency license after Oct. 1, 2007	MCALA’s 2007 amendment closed the loophole and covers purchasers of defaulted consumer claims who collect them	LVNV claimed it was a passive owner with no employees and that collection was performed by a licensed affiliate (Resurgent)	LVNV was required to be licensed from Oct. 1, 2007; its collection activity before licensing was unlawful
Whether MCALA/MCDCA/CPA provide a private cause of action for plaintiffs harmed by unlicensed collection	Plaintiffs: MCDCA and related statutes expressly create liability for collectors who enforce non‑existent rights; plaintiffs can recover damages including emotional distress	LVNV: statute and history do not show intent to create a private remedy against debt purchasers; relief belongs to regulator	Court: MCDCA (and MCALA read together) permits private damages actions; plaintiffs can pursue damages under CL §14‑203; remand for retrial on damages
Remedy respecting enrolled judgments and prospective enforcement	Plaintiffs sought voiding judgments and disgorgement of amounts collected	LVNV argued collateral attack barred; alternatively relief limited	Court held enrolled judgments stand but allowed declaratory/injunctive relief to prohibit LVNV from enforcing judgments and allowed damages assessment under MCDCA; remanded for damages proceedings

Key Cases Cited

Abell v. Simon, 49 Md. 318 (1878) (importance of finality of judgments)
Ranoul v. Griffie, 3 Md. 54 (1852) (judgments of competent jurisdiction conclusive despite procedural irregularities)
Penn Central Co. v. Buffalo Spring, 260 Md. 576 (1971) (finality and repose of judgments)
Carroll Craft v. County Comm’rs, 384 Md. 23 (2004) (distinguishing fundamental jurisdiction from limits on relief; judgments void only for lack of fundamental jurisdiction)
Stein v. Smith, 358 Md. 670 (2000) (corporate capacity and relation‑back issues distinguished from collateral attack context)
Harry Berenter v. Berman, 258 Md. 290 (1970) (unenforced mechanics’ liens by unlicensed contractors and public policy limits on judicial assistance)
McDaniel v. Baranowski, 419 Md. 560 (2011) (license‑related defenses and limits on relief distinguished from collateral attack context)