Maryland Commissioner of Financial Regulation v. Cashcall, Inc.
124 A.3d 670
| Md. Ct. Spec. App. | 2015Background
- CashCall, a California corporation, and John Reddam marketed small loans to Maryland consumers.
- Loans were issued by two federally insured out-of-state banks (First Bank & Trust of SD and First Bank of Delaware).
- Loans ranged 59%–96% APR; consumers received reduced disbursements, with origination fees rolled into the loan.
- CashCall purchased each loan from the bank within 3 days of disbursement and then collected all payments, including the origination fee, from the consumer.
- From 2006–2010, CashCall arranged 5,651 Maryland loans and faced complaints about high interest and collection practices.
- Circuit court reversed the Commissioner’s final order under Gomez v. Jackson Hewitt, Inc.; the Commissioner appealed.
- The Maryland Court of Appeals held CashCall violated the MCSBA and reversed, remanding for entry of judgment affirming the Commissioner’s order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CashCall was a credit services business under the MCSBA | Commissioner: CashCall is a credit services business | CashCall: Gomez direct-payment rule applies | Yes, CashCall is a credit services business under MCSBA |
| Whether Gomez’s direct-payment rule governs CashCall’s facts | Gomez does not preclude application where services are the primary business | Gomez requires direct consumer payment to define a credit services business | Gomez did not control; direct payment not a universal prerequisite for CashCall’s activities |
| Role of legislative history in applying MCSBA to CashCall | Legislative history shows broad anti-predatory intent and third-party lender regulation | Gomez limits application to particular fact patterns | Legislative history supports broader application of MCSBA to CashCall's scheme |
| Standard of review and scope of appellate review | Agency findings are reviewed for substantial evidence and correct law | Circuit court misapplied Gomez and statutory interpretation | Agency’s legal conclusions sustained; circuit court’s reversal reversed |
Key Cases Cited
- Gomez v. Jackson Hewitt, Inc., 427 Md. 128 (2012) (MCSBA construed; direct payment not universally required; focus on anti-predatory intent and structure of arrangement)
- Md.–Nat. Capital Park & Planning Comm’n v. Greater Baden-Aquasco Citizens Ass’n., 412 Md. 73 (2009) (deferential review of agency decisions; substantial evidence standard)
- Crofton Convalescent Ctr. v. Dep’t of Health & Mental Hygiene, 413 Md. 201 (2010) (agency’s conclusions of law reviewed for correctness)
- United Parcel Service, Inc. v. People’s Counsel for Balt. Cnty., 336 Md. 569 (1994) (narrow, deferential judicial review of agency actions)
- Gomez v. Jackson Hewitt, Inc., 427 Md. 128 (2012) (see above for direct-payment discussion and legislative history)