Suntrust Bank v. Goldman
201 Md. App. 390
Md. Ct. Spec. App.2011Background
- SunTrust Bank and appellees Frank J. Goldman and Lisa B. Goldman entered a $390,000 line of credit secured by a deed of trust on their home on Feb 20, 2007.
- The loan agreement permits collection costs and attorneys' fees: either 15% of principal plus accrued interest or reasonable fees as allowed by law, for collection efforts.
- Appellees defaulted after a payment on Oct 9, 2008; SunTrust filed suit in Baltimore County Circuit Court on Jun 30, 2009 seeking principal, interest, and $60,206 in attorneys' fees (15% of principal).
- Default judgment entered Mar 12, 2010 for principal and pre-judgment interest; fee request deferred to a later hearing.
- On Apr 27, 2010, the court revised judgment to $3,258.30, found no evidence of a fee agreement to pay 15% and awarded only incurred, reasonable fees; the court did not permit 15% as a guaranteed recovery and acknowledged indemnity and reasonableness requirements.
- Appellant SunTrust appealed, and the Court of Special Appeals affirmed, holding the trial court properly awarded only incurred fees and that merger and reasonableness principles limit contractual fee amounts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 15% of principal should be awarded as fees under the contract. | SunTrust argues the contract allows 15% of principal plus accrued interest. | Goldmans contend the 15% is a contractual indemnity limit that should be enforced, subject to reasonableness. | No; 15% may be disallowed if not reasonable or not supported by incurred fees. |
| Whether the merger doctrine bars post-judgment recovery of unincurred fees. | SunTrust seeks post-judgment fees or future collection costs. | Merger extinguishes contract-based fee rights after judgment absent clear non-merger language. | Merger bars recovery of unincurred fees; only incurred, reasonable fees are recoverable. |
| Whether the fee award was properly limited to incurred fees under reasonableness standards. | SunTrust asserts the contract allows amount based on 15% and future costs. | Fees must be reasonable and based on actual services rendered; Rule 1.5 factors apply. | Yes; the circuit court correctly applied reasonableness standards and awarded incurred fees. |
Key Cases Cited
- Mortgage Investors of Washington v. Citizens Bank & Trust Co. of Maryland, 278 Md. 505 (Md. 1976) (indemnity-based fee cap; cannot exceed actual fees paid to attorneys)
- Webster v. People's Loan, Sav. & Deposit Bank of Cambridge, 160 Md. 57 (Md. 1931) (discussed indemnity and crediting excess/deficit after judgment; context of confessed judgments)
- AccuBid Excavation, Inc. v. Kennedy Contractors, Inc., 188 Md.App. 214 (Md. Ct. Spec. App. 2009) (merger doctrine; post-judgment fee rights extinguished unless exceptions exist)
- Monmouth Meadows Homeowners Ass'n v. Hamilton, 416 Md. 325 (Md. 2010) (reasonableness standard for contract-based attorney fees; Rule 1.5 factors guidance)
- Johnston v. Johnston, 297 Md. 48 (Md. 1983) (non-merger clause analysis; incorporated but not merged agreements survive)