275 A.3d 390
Md.2022Background
- Lyles purchased a motor vehicle under a Retail Installment Sales Contract (RISC) that expressly elected Maryland’s Credit Grantor Closed End Credit Provisions (CLEC).
- Santander (assignee of the RISC) collected at least $27,029.67 on the loan, $6,372.67 more than the financed principal; Santander also charged twelve $10.95 "convenience" fees totaling $131.40.
- Lyles sued in state court asserting Santander knowingly violated CLEC and sought relief under CL § 12-1018(a)(2) and (b); Santander removed under CAFA to federal court.
- The federal court certified a question to the Maryland Court of Appeals because the proper damages calculation under § 12-1018(b) affects the amount-in-controversy and federal jurisdiction.
- The certified question asked whether § 12-1018(b) requires treble (1) all amounts collected in excess of principal, (2) only the amounts the borrower contends violate CLEC (here, convenience fees), or (3) some other amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What amount must be trebled under CL § 12-1018(b) when a credit grantor knowingly violates CLEC? | Lyles: treble the unauthorized charges the borrower identifies (here, convenience fees); total = 3 × $131.40 = $394.20. | Santander: treble all amounts collected in excess of the principal of the loan; total = 3 × $6,372.67 = $19,118.01. | The Court held § 12-1018(b) requires treble of the interest, fees, and charges that were collected in violation of the subtitle — i.e., treble the amounts not authorized by CLEC (here, the convenience fees). |
Key Cases Cited
- Bedaiko v. American Honda Finance Corp., [citation="537 F. App'x 183"] (4th Cir. 2013) (interpreting CLEC damages under § 12-1018(a)(2) and addressing requirement of actual overpayment)
- Gardner v. GMAC, Inc., 796 F.3d 390 (4th Cir. 2015) (reaffirming Bedaiko’s approach to damages under CLEC)
- Bolling v. Bay Country Consumer Finance, Inc., 251 Md. App. 575 (Ct. Spec. App. 2021) (intermediate appellate decision interpreting § 12-1018(a)(2) differently from federal courts)
- Patton v. Wells Fargo Fin. Md., Inc., 437 Md. 83 (2014) (discussing CLEC applicability to vehicle installment sales)
- Biggus v. Ford Motor Credit Co., 328 Md. 188 (1992) (credit deregulation Act legislative context)
- United Bank v. Buckingham, 472 Md. 407 (2021) (statutory construction principles invoked in analysis)