Nagle & Zaller, P.C. v. Delegall, 280 A.3d 653

Background

Nagle & Zaller, P.C., a law firm, drafted promissory notes containing confessed-judgment clauses and pursued confessed-judgment actions on behalf of homeowner associations (HOAs) to collect delinquent HOA assessments.
Plaintiffs (Delegall et al.) sued, alleging among other claims that the law firm and HOAs were "lenders" under the Maryland Consumer Loan Law (MCLL) and therefore required to be licensed; Count VIII asserted promissory notes were void and uncollectible because no license existed.
The federal district court certified the question whether a law firm that prepares such notes and files confessed-judgment complaints is subject to the MCLL.
Maryland Court of Appeals examined statute text, legislative history, and purpose, and accepted the Complaint’s factual allegations for the certified question.
The Court distinguished the MCLL (an industry-focused licensing scheme) from the broader Maryland Consumer Protection Act (MCPA), noting Goshen Run prohibits confessed-judgment clauses under the MCPA but does not by itself show the MCLL was meant to regulate law firms or HOAs.
Holding: the MCLL applies to persons "in the business of making loans" (consumer-lending industry); a law firm performing debt-collection/legal services for an HOA and an HOA offering payment plans are not, solely by those activities, subject to MCLL licensing requirements.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a law firm that drafts promissory notes with confessed-judgment clauses and files confessed-judgment actions is subject to the MCLL licensing/credit provisions	Delegall: the promissory notes are extensions of consumer credit; the firm "made" loans by drafting notes, collecting payments, and suing — thus qualifies as a "lender" required to be licensed	Nagle & Zaller: MCLL governs persons "in the business of making loans" (consumer-lending industry); law firms and HOAs are not in that business and licensing was not intended to reach routine legal/collection services	Held: No — MCLL targets the consumer-lending industry. A law firm providing legal/collection services for clients (and an HOA offering payment plans) is not necessarily a "lender" "in the business of making loans."
Whether the broad statutory definition of "loan" compels MCLL coverage of these transactions	Delegall: textual breadth means any advance of credit ≤ $25,000 is within MCLL regardless of actor	Nagle & Zaller: read in context, definitions must be harmonized with licensing scheme and legislative purpose to regulate lenders, not incidental actors	Held: Text construed in context and with legislative history; a literal expansion to all advances would yield absurd results and render "in the business" language meaningless, so MCLL does not reach incidental actors like law firms/HOAs here
Whether other consumer statutes leave these transactions unregulated if MCLL does not apply	Delegall: concerns that permitting the firm to escape MCLL creates a regulatory gap	Nagle & Zaller: other statutes (MCPA, MCDCA, FDCPA, HOA/Condominium Acts) and professional rules regulate abusive collection practices	Held: Court relied on those other remedies (e.g., Goshen Run under MCPA, federal/state debt-collection laws) to show regulation exists even if MCLL does not apply

Key Cases Cited

Goshen Run Homeowners Ass'n, Inc. v. Cisneros, 223 A.3d 917 (Md. 2020) (promissory note with confessed-judgment clause is an extension of consumer credit for MCPA purposes; confessed-judgment clauses prohibited)
Andrews & Lawrence Professional Servs., LLC v. Mills, 223 A.3d 947 (Md. 2020) (professional-services exemption does not shield attorneys from consumer-debt-collection rules when they engage in collection activity subject to licensing/statutory prohibition)
Commissioner of Financial Regulation v. Brown, Brown & Brown, P.C., 144 A.3d 666 (Md. 2016) (law firm may be subject to consumer-credit/credit-services regulation where facts show regular credit-related activity)
Heintz v. Jenkins, 514 U.S. 291 (U.S. 1995) (FDCPA can apply to attorneys who regularly attempt to collect consumer debts through litigation)