*1 732A.2d887 UNITED CABLE TELEVISION OF BALTIMORE
LIMITED PARTNERSHIP Louis et al. BURCH 82, Sept. Term, No. 1998. Appeals Maryland. Court
July 1999. *3 (Brian Eberle, Williams, Robert E. Youle Youle & Koe- G. P.C., Denver, CO; Hartson, King, P. nigs, Hogan David & L.L.P., Baltimore), brief, on for appellant. (Ifshin
Philip Friedman, P.L.L.C., S. Friedman & Washing- ton, DC; Gorman, P.C., Simmons, Francis Jr., J. Charles L. Williams, Baltimore), brief, Gorman & for appellees. Sturdevant, Patricia Counsel for Nat. Ass’n of Consumer Advocates, DC, Washington, Michael Tankersley, Counsel for DC, Public Litigation Group, Washington, Citizen Deborah Zuckerman, Lock, Sarah Lenz AARP Litigation, Foundation DC, Washington, for amicus curiae American Ass’n of Retired Persons. Rifkin, Rifkin, Silver, Baltimore,
Alan Livingston, Levitan & Ass’n, amicus curiae Nat. Cable Television Cable Telecom- munications of Maryland, Ass’n Delaware and the District of Columbia, Ass’n, Nat. Leasing Vehicle Nat. Multi Housing Authority, Ass’n, Nat. Apartment American Seniors Housing Ass’n, Maryland Ass’n, Retailers Intern. Furniture Rental Ass’n Self-Storage Ass’n. BELL, C.J.,
Argued ELDRIDGE, before RODOWSKY, CHASANOW, RAKER, WILNER and CATHELL, JJ.
ORDER having Court considered the two motions for reconsid- eration and the four motions for leave file amicus curiae briefs, memoranda it is 26th this day July, ORDERED, by the Court of Appeals of Maryland, that the motion for Burch, reconsideration filed appellees, Louis al., be, and, et and it hereby, granted, it is further
ORDERED that opinion of Court filed on June be, it withdrawn, and is hereby, and the opinion filed with date this is Order substituted in lieu of opinion filed 8,1999, and, on June it is further
ORDERED that the motion for reconsideration by filed appellant, United Cable Television of Baltimore Ltd. Partner- be, ship, denied, and, it hereby, and is it is further cuñas to file memo- of amici
ORDERED, that the motions Leasing collectively by National Vehicle randa, first filed Council; Apart- Multi-Housing National Association; National Association; Housing Association; Seniors American ment Association; Furniture International Retailers Maryland Association, the second Association; Self-Storage and Rental Commerce, third and the Chamber Maryland filed Dela- Maryland, Association filed Telecommunications be, hereby, Columbia, they District of and the ware it is further granted, cuñas, Maryland of amicus
ORDERED, that the motion support a brief for leave to file Association Bankers reconsideration, accompanying with for- motion Appellant’s thereof, be, hereby, and it is in support of law memorandum denied. BELL ROBERT M.
/s/ Judge Chief RODOWSKY, Judge. subscrib- of consumer brought on behalf
This class action The action City. in Baltimore service to the cable television ers charged late fee that per month the five dollar challenges City concluded for Baltimore The Court Circuit subscribers. and not an enforceable penalty was a this late fee overes- unreasonably it because damages provision, liquidated We payment. from late resulting costs supplier’s timated the at that but we arrive penalty, is a charge agree contract to undertaking is a a subscriber’s because conclusion principal are the the breach of which damages for money, due, lawful interest. balance with n below, is Cable United and defendant respondent, (United) which Partnership Limited of Baltimore Television subsidiary is a of Baltimore. United business as TCI does (TCI), Telecommunications, company, Inc. a Denver-based franchises. forty cable approximately operates which owns For the interest United. majority owns a indirectly TCI to its various local support management providing purpose (cable geographi- into TCI is divided systems), cable affiliates *5 is TCI. wholly cal divisions. Each division owned The the management support United and other cable provided resources, human by the includes systems legal, divisions accounting. marketing, and 112,000 provided residents of Baltimore are
Approximately its cable services United services on a United. offers month-to-month basis.
During concerned, the period with which we are namely, 7, 1992, present, November variety to the United offered a service channel combinations and selections which the respective monthly subscription prices at' varied different during period. plan times the relevant The basic furnishes channels, the fewest number of court the circuit used a figure approximately twenty dollars the subscription as price for basic service. first
When instituted June late United’s was fee three dollars. The fee was increased to four dollars in Febru- ary and it present reached the five dollar level in January 1993. fees, Each time United its increased it customers of changes by notified the inserts. billing customers, billing In its United on operates billing cycles which run somewhat advance of the period cable service being given billed. Any billing cycle begins customer’s days three thirty advance of approximately day service period for which the bill is sent. Bills become due and payable six days after the commencement of then current period. service The bills indicate that the late fee is assessed on day the fifteenth then period. current service There that, testimony was as a matter of general practice, United did its impose days late fee until a few after fifteenth day of the service The period. next succeeding billing cycle begins twenty-seventh day the then period. current service In subscription addition price for the immediately forthcoming period, service bill from will any United include balance carried from prior billing cycle, forward any credits, payments any late charge, new balance. illustrated subscriber is between United and a contract entitled, TO OUR “IMPORTANT NOTICES aby document CUSTOMERS,” reads: which 24 hours service start within after
“Charges for service *6 service, any depos- one month’s charges installed. fees, its, payable equipment-lease installation or any that, you we will bill each After when service installed. in advance for service..... month total due you will show the amount “The bills receive by us agree pay monthly You to due date. any charges for that service and other payment due date late us, pay- fees due to including any administrative due any or returned check fees. ments date, agree to you bill the due pay your by “If do not you fee for late The admin- payment. an administrative pay us to a advance estimate is intended be reasonable istrative fee from late payments costs which result customers’ our assessed fees or also be charges Other non-payments.. your system. local cable late and you pay your will bill anticipate “We do in because it would fee is set advance administrative any one to determine the costs associated with difficult to our We not extend credit particular payment. late do interest, is not a credit and the administrative fee customers charge charge.” finance service a provides permitted that customers are The document further penalty at time without any to their cable service cancel giving notice. to custom- provided
Both and a rate card were the brochure Rate to cable they ers when subscribed United’s services. program each United’s printed cards also were month existing who order which is sent customers guide, Further, was a late fee policy statement United’s service. made mailing, in an customer and disclosures annual included form customers that billing apprised standard United’s for late charges imposed payment. would be If a due, customer does not bill when United begins its collection process by including a statement in the late- payer’s next bill that the account delinquent and that service will be disconnected if payment is not received. Upon notification, receiving this customers frequently call United an attempt to clear up their delinquent accounts. United is required to maintain a customer department, service in part, to field the calls that result from the late fee If notices. customer’s account remains delinquent, programs United an dialing automatic system, unit,” called the “automatic response place telephone calls to the customer’s residence. At about time, the same United mails a written reminder notice late-paying customer. These efforts result more calls to headquarters. United’s
If an account delinquent remains phone after the calls and mailings, company’s employees perform a “soft” disconnec- *7 tion prevents which the late-paying customer from taking advantage of United’s cable services and provides message a on the customer’s screen to call United. This step generally leads to a third round of calls from customers who wish to reactivate their cable services. to Subsequent soft disconnec- tion, the customer receives two final telephone calls from collection representatives employed by United. During the call, first representative the attempts to payment make ar- rangements with the customer. The second call warns the customer that hard disconnection is imminent and that the call is the customer’s last opportunity to avoid that result.
If the customer’s bill remains unpaid, a technician employed by United drives to the customer’s payment residence seek of the bill. If the customer refuses to pay bill, the overdue the technician permanently interrupts the customer’s cable ser- vice. employees United continue to make telephone calls to the customers after hard disconnect in an attempt to obtain payment of the bills. If these are unsuccessful United at point some writes the account off as a bad debt and turns it over to an outside collection agency. in November in instant matter was filed
The the complaint in for a of weeks the period was tried three 1995. The matter witnesses testimony many of 1997. The and summer spring To were introduced. many exhibits produced, was experts over degree the case was a battle considerable by when account was the incurred TCI an quantifying costs the United-subscriber paid by not in full the due date under properly costs were be contract, over which those For after this charge. example, a late computing included in firm, instituted, accounting an retained action was United Touche, delinquen- monthly calculate the cost Deloitte & customer, study author of that and the per delinquent cies expert the was Plaintiffs’ concluded that cost $16.14. cost cents. thirty-eight that that was opined all this the circuit court conclud- analyzing After evidence no than fifty should be more ed that the fee court concluded five dollars was per cents month. The damages that would be not reasonable estimate full by if failed to United a customer incurred Hence, charge five dollar late could due date. rather, provision; valid it liquidated damages as a sustained a penalty. was to its actual only United was entitled
Accordingly, which, fifty per was cents analysis, the circuit court’s under judgment against month. The court entered United 7, 1992, fees it from November “excessive” late collected $6,701,503.60 amount of through September per at percent interest calculated six simple prejudgment $897,015.11. amount of Counsel fees were annum efforts on behalf theory awarded on *8 a common fund. The court awarded Plaintiffs had created the Plaintiffs of the fund recovered counsel for one-third $85,615.60 litigation counsel fees reimbursement to be litigation paid The fees were expenses. expenses out that fund. ordered, appeals court effective after all
The circuit further exhausted, given by that be had been' determined or notice mail and by newspaper advertisement to customers/subscrib- advising paid ers those who had a late fee that six they have months within a proof which to file of claim for a rata pro share of the net common fund. The court then directed the unclaimed remainder of the net common fund be divided shares, into equal two one of which is to paid be to the City Mayor’s Baltimore Office of Cable and Communication and the other of which to paid be to a charitable fund per established the court’s order. appealed
United to the Court of Special Appeals, this Court, motion, on its own issued the writ certiorari.1
I position essence United’s is that it is entitled (1) recover as damages categories “six costs: (2) notification; local office handling, mailing, and cost (3) funds; (4) (5) data processing collections; and billing; field (6) collection; and bad debt.” Brief of Appel- in-house/outside lant at 14. Under United’s if theory, brought United suit subscriber, against a after United’s collection efforts had failed, United would right have a to produce proof as to each of the foregoing and, enumerated items cost if proof were accepted by fact, the trier of United would be entitled to judgment for the principal balance due on the account plus damages reimbursing United for its additional costs. Inas- much proof difficult, as of those costs is extremely particularly because United cannot predict when an account will go into default and how long it will remain delinquent, United asserts that it is entitled to make a reasonable estimate of its and include it the contract as a sum liquidated or late charge which the agrees subscriber pay. The short answer to United’s contention is that it is not prove entitled to costs of collection as damages under a contract of the type at issue here.
1. The complaint Plaintiffs’ alleged liability theories of other than the penalty liquidated damages versus theory. prevail The Plaintiffs did not in the circuit court on those other theories.
668 contract, pay to the promises the a subscriber
Under a amount the specific appearing which is account balance by is the services face of the bill and which determined A subscriber also by agreed prices. United at rendered that also specified that amount a date promises pay by to law a United custom appears billing. Maryland on the Under this money. are a to From conclu promises pay er’s contract sion, to this consequences flow that are relevant case. two First, damages for the breach of a contract to the measure of promised paid plus to be interest at pay money is amount judgment. rate from the due date to date lawful a Second, simply measure of matter because this calculation, liqui it a contractual increased payment greater of a damages provision. requiring dated the liquidated damages provision The result is that amount. is a penalty.
A varieties, interest comes two discre Prejudgment “in tionary right. Both versions are the nature an Admin. v. damages.” Maryland Highway State element (1999). Kim, 313, 327, 238, 726 245 There we 358 Md. A.2d said that pre-judgment in which interest allowed
“those instances ‘the obligation pay as a matter of course because [are] definite, certain, amount had due become prior judgment a date so liquidated specific deprive withholding payment was effect of debtor’s a use of a fixed amount as of known creditor ” date.’ Bank First Virginia Id. 326, at 245 (quoting 726 A.2d at Settles, 564, 803, (1991), in 555, 807 turn 322 Md. 588 A.2d Sloane, Assocs., Stanley Inc. v. House & David G. quoting Inc., (1987)). 36, 53-54, A.2d 702-03 Md. money is a subset of the class of
The contract to Administration Maryland Highway State cases described that, it is known at contract pay money, in the contract to obligation formation that “the to pay and the amount due certain, definite, and liquidated by specific [would be] date.” Callahan, Inc., As we said in Crystal v. West & 328 Md. (1992), cases,
The rule has been in actions for applied past due see Inc., Eidelman v. 538, 545, Walker & 265 Dunlop, Md. 290 (1972) (“Interest 780, A.2d 784 as of right upon recoverable certain.”); a contract to pay money upon a day Brown v. Bradshaw, 524, 539, 565, (1967); 245 Md. 226 A.2d 573 Denni- Lee, 383, (1833); son v. 6 G. & J. 386 Newson’s Adm’r v. 417, (1826). Douglass, 7 H. & J. 453-54 The rule has also recognized been in I.W. Berman v. Properties Porter Broth- ers, Inc., 1, 18, 65, 276 Md. (1975); 344 A.2d 76-77 Atlantic Co., States Constr. Co. v. 77, 85, Drummond & 251 Md. 246 251, (1968); A.2d 255 Distillers Brands v. Corp. Affiliated Co., 509, Liquor 516, R.W.L. Wine & 213 Md. 132 A.2d (1957). 586
Of significance here
that
the contract
“[w]here
obligation is for
of a definite sum of money[,] the
measure
damages is the amount of money promised to be
paid,
interest,
with legal
allowance
interest being [a]
legal
Poe,
matter of
1
right.”
J.P.
Pleading and Practice in
(5th
Courts
Law in Maryland
584C,
at 608
Tiffany
1925) (Poe)
added).
ed.
(emphasis
Brantly,
W.T.
Law of
(2d
1922)
Contract
165
accord,
ed.
(Brantly), is in
saying:
“Legal interest on the money is the
damages
measure of
the breach of a
pay
contract to
a sum at a certain time.” Id.
(footnote omitted).
at 368
See also
v. Diffenderffer,
Winder
(1829)
Bland
(“Legal interest
is the measure of
damages which the law allows in all cases for the detention of
money; which the holder is made to
pay
any
where he is
default in
paying,
or applying money
his hands as he
do.”).
was bound to
(1885),
rule.
Hardcastle,
applies
Brown issue, charge- was There, mortgaged property whether was mort- where the after default interest percent able with six to the due interest percent it carried one recited that gage as follows: This Court held date. think, is, decidedly in authorities we weight best
“[T]he at to run on overdue instruments interest making favor of In this instance there rate, unpaid. after due and legal debt, condi- penalty in double given a bond was day. particular the debt payment of for the tioned the measure bond penal at law on Upon a suit sustained; loss the had plaintiff be the exact damages would by particu- agreed pay had as the debtor and inasmuch condition, creditor, let him had upon day, lar and the cent, interest, ... the true measure only per off with one after interest thereon legal the debt with would be cent, interest per is not to one agreement default. *11 day, by particular sum named pay but to the paid, until cent, interest added.” per with one 491. Id. at Taxing Dist. in Loudon v. is also illustrated
The rule
of
(1881).
771,
There
Contemporary treatises recognize the rule. See 5 A.L. Corbin, (1964) (Corbin) § Corbin on Contracts at 373-74 (“In general, the damages pay collectible failure to a sum of money rate, exists, are limited to interest at if legal one rates.”); or at market Jaeger, S. Williston & W. A Treatise (3d 1961) (Williston on the Law Contracts at 732 ed. (“[T]he & Jaeger) doctrine of the common law [was] when A B promised pay a sum of money day a certain and did so, with, B only cases, do could recover the sum certain interest, but could never recover further for non- timeous payment[.]”). (Second) (1981)
Restatement of Contracts presents the following simple illustration: $10,000
“A credit, contracts to sell B goods for on 30 days nothing being said as to interest. A goods delivers the but B fails to them at the A days. end sues B and $10,000. recovers A is also entitled to simple interest on $10,000 at the legal rate from the expiration of the period.” credit *12 152,
Id. at Illustration 2. The rule that lawful interest limits the damages for breach of pay a contract to money recognized by other commenta- tors, both English and American. See Benjamin, J.P. A (8th Treatise on the Law Sale Personal Property 829 ed. of of 1950) (Benjamin); Field, G. Treatise on the Law Damages of (1876) § (Field); Hale, 153 W.B. Handbook on the Law of 672 1912) (Hale); (2d Joyce & 60, J.A. § at 220 ed.
Damages (1903) 1308, § at 1450 Damages A Joyce, Treatise H.C. McCormick, Damages Law Handbook on the (Joyce); C.T. (1935) (McCormick); A Treatise 2 T. 54, Sedgwick, § at 213 1920) (9th 622b, ed. at 1217 Damages on the Measure of Dam- Sutherland, A Treatise on the Law J.G. (Sedgwick); 1916) (Sutherland). (4th 311, ed. at 970-71 ages rules one impacts discussed above The rule a damages. “[W]here liquidated allowance of governing ... a less the failure paid upon is to be greater sum considered as in default will be party paid sum to be Co., R.R. 41 Md. Maryland Geiger v. penalty.” Western (1872); 195-96 (1874).2 36 Md. Hough Kugler, also v. See at 732. Jaeger & Williston presented for the rule is of and rationale
The evolution
(1854).
at the
Green,
Anciently,
2. did not involve a railroad under the construction of provision in a contract for with retainage on work pay to the owner the the contractor would which done, part engineer a default on the supervising declared if the owner’s of the contractor. *13 for stipulated damages narrowly “But contracts watched, of of facility they may being because afford for of penalties disguise. used as a cover One is, of on subject inflexible rules law this that whenever the agreed paid, though sum to be as expressed stipulated sum, is in damages, non-payment lieu a lesser capable being certain or ascertained from the terms of contract, it is to penalty. construed be a Besides laws, violating usury such a not contract could enforced, stipulated as it a damages, because would become subterfuge equitable mere and evasion of the doctrine of relieving against bonds with a conditioned for the penalty, creditor, payment money.... Though high where a integrity prevails, standard commercial be ruined his debtor’s want of law a punctuality, the has fixed certain compensation rate of interest as a for the use of money. Churchil, stated Orr vs. Hen. principle distinctly This Black., all cases.” pervades
Id. at 319-20. relationship between damages for breach of a contract pay
to and an money penalty explained unenforceable is well Sutherland, where the author states: true,
“It one of the test distinguishing rules for a from penalty liquidated damages is that if a sum is larger agreed to be for default in paid paying larger a smaller the is a A note penalty. payable made for a sum certain on a otherwise, specified day, without interest if punctually paid, date, with interest from comes within the letter of the rule. controlled, If the letter stipulation interest would be rule, however, held to be a penalty. The does not apply such a It designed case. to prevent agreements a sum in large consequence one, of default in paying small debt, which is the actual because interest is the established damages measure of apply such default. It does any legal promised invalidate rate of a the event default. “No for the non-payment money mere can liquidated ever be so parties between the as to evade the provisions of the law which fixes the rate of interest. In all rules, law, by positive the rate having cases the fixed
such
rule, the
damages.
This is the
the measure
has bounded
measure of
interest
is the
corollary;
other the
because
the law will
pay money
of contract to
damages for breach
may agrée
larger sum which debtor
penalty any
treat as a
*14
of the
But within the bounds
for such a default.
pay
for not
may liquidate damages
legal
parties
rate of interest
when it is due.”
paying money
omitted).
(footnotes
The same author reiterates
át 970-71
Id.
318,
858,
§in
at
as follows:
concept
same
for
rate of interest
be
greater
is valid
agreement
“No
paid
be
to be
maturity
may
legally stipulated
than
paid after
authority.
principle and
upon
This rule is founded
before.
we have
absolutely
conditionally,
as
Parties
contract
seen,
interest
limits.
fixing
rate within a statute
any
for
agreed
paid
limits is
to be
before
a rate above those
When
collectible;
usurious; not
if it is
to be
agreed
it is
maturity
in
nature of a
and has
penalty
after
it is
paid
maturity
though
as
no
effect;
legal
govern
then the
rate will
no
had been made.”
agreement
legal
than
greater
provisions
payment
Accordingly,
to pay
on breach of a contract
interest after the due date
Fellows,
257 F. at
penalty
void as a
money have been held
Semico,
275;
532;
at
972;
P. at
538 S.W.2d
Knight, 191
(1858).
403,
Clark,
406
Corbin
Kay,
Austin
26 Ga.
& Smith
agree
courts all
that
case which the
flatly
“[o]ne
states
a sum of
unenforceable is where
penalty
the amount is a
in the
of a
payable upon
default
money made
the two
money, and the difference between
smaller sum of
the interest value of the smaller.” Corbin
merely
sums is not
omitted).
(footnote
220;
60,
§
at
1065,
also Hale
§
at 373
See
1449;
146,
1308,
at 604.
at
McCormick
Joyce
Further,
liquidáted
elements of a valid
one of the
“ ‘in
anticipated damages
is that
damages provision
”
of exact ascertainment.’
incapable
their nature uncertain and
480,
275 Md.
County
Eng’g Corp.,
Anne Arundel
v. Norair
(1975)
287,
Bridge
Baltimore
Co. v.
(quoting
341
293
A.2d
420, 422
208, 214,
A.
Co.,
125 Md.
Elec.
Rys. &
United
at the
interest
(1915)). Here,
rule which makes
under
of a
for breach
rate the measure
lawful
highest
not uncer-
damages are
anticipated
money, the
contract
H.J. McGrath
ascertainment.
of exact
incapable
tain
Cf.
(1947)
(holding
Wisner,
liquidated era, where, the circumstances under penalty was a cost of substi- ascertaining the ready market there was tomatoes). tute
B below, is no statute there shall demonstrate As we subscribers, its accounts with to United’s applicable Maryland, Further, above. law rule described the common that alters III, legal “The Constitution, § 57 states: Article Maryland cent, annum; unless per per Interest shall be Six Rate of Thus, that Assembly.” by the General provided otherwise *15 interest. See rate of legal sets the provision constitutional 572; Nat’l 342, Maryland A.2d at at 614 328 Md. Crystal, 570, 599-600, 1219 Cummins, 588 A.2d 322 Md. Bank (1991). liquidated United’s that rate which It is must be measured. provision that, ways, in acknowl- various Maryland statutes
There are found charges. of These statutes imposition late edge Cum.Supp.), (1975, 1990 1998 Repl.Vol., in Code Maryland Law Article of the Commercial Regulations,” “Credit Title (1974, 1998 (CL) Repl.Vol., Cum. in Code Maryland and (RP). In present order Property Real Article Supp.), statutes, shall divide them of these we overview very general classes. into four timing of a late amount and regulate I
Class statutes 12-405(c), applicable § this class are CL Comprising charge. loans;3 12-623, § applicable CL secondary mortgage 12-405(c) § 3. CL reads: sales;4 11—110(d) §
retail installment (e), and RP and part the Maryland Condominium Act.5
What we as a II label Class statute regulates the amount and, addition, and timing charges late expressly provides "Delinquent charges.—(1) may A lender collect from the borrower a delinquent charge greater percent or late of the $2 or 5 of the installment, any delinquent periodic amount of or late if: (i) delinquency days; has continued for at least 10 (ii) delinquent charge A already charged late has not been delinquency....” the same 4. CL 12-623 reads: "(a) Delinquency charge.—If agreement an on which the finance charge computed provides, so agree- advance the holder of the may delinquency ment charge collect a or collection of the lesser of default, percent $10 or 5 any payment of the amount of if the days. default has continued for at least 10 (b) costs.—(1) Attorney's and court In addition to the delin- fees quency charge, agreement may or collection provide for the payment of: (1) Attorney’s exceeding percent fees not amount due and
payable agreement; under the (ii) Court costs. (2) Attorney’s may only agreement fees be collected if the is re- attorney ferred for collection to an who is not a salaried employee of the holder.” 11-110(d) (e) 5. RP reads: "(d) assessments, Imposition Payment lien. together with interest, charges, any, late if costs of collection and reasonable attorney’s may imposition fees be enforced of a lien on a unit provisions in accordance Maryland with the Contract Lien Act. any deficiency following Suit for may foreclosure be maintained in proceeding, any the same money judgment and suit to recover unpaid assessments proceeding, also be maintained in the same waiving right without impose to seek to Maryland a lien under the Contract Lien Act. (e) assessment; unpaid Interest charges; pay- demand for assessment.-—(1) assessment, remaining ment Any annual *16 or in- of thereof, interest, paid stallment not when due shall option bear at the owners, of the council of unit from the date paid when due until at provided annum, bylaws, the rate exceeding percent per provided, and if no rate percent per then at 18 annum. (2) bylaws may The provide also charge for a late $15 or one any installment, tenth of the delinquent total amount of assessment or greater, provided may
whichever is charge imposed not be more delinquent than once for the payment may only same imposed and be delinquency if the has days....” continued for at least 15 calendar of CL This class consists are not interest. charges that those 1 of Title to made under Subtitle 12-105, § loans applicable 12.6 fixing any charges late without authorize
Class III statutes state Further, expressly these statutes charge. late maximum neither the statute is charge permitted by any III are statutes in Class finance The charge. interest nor a § 12- credit,7 12-910, and CL open end applicable CL closed credit.8 end applicable 12-105, part, 6. CL in relevant reads: di- "(a) charges.—Fees charges at the and collected Governmental agency actually governmental paid government or of and to a rection may under this collected and not interest subtitle. be Service, late, (b) charges.—If contract prepayment and the loan them, may be provides following charges and also fees for this subtitle: and are not interest under collected (3) greater percent of $2 or 5 A delinquent charge or late any periodic delinquent or late installment total amount interest, principal if: (i) days; delinquency has continued for at least 15 calendar (ii) charged already has not A been delinquent charge or late delinquency____” the same §CL 7. reads: 12-910 "(a) governing revolving credit agreement a Authorized.—If plan grantor may: permits, a credit borrower, (1) per- charge higher periodic a nonconsumer For outstanding unpaid payments portions centage of interest on or rate default; plan payments under the which are in borrower, (2) any impose: For (1) pay- payments portions A late or or delinquency charge ments; and (ii) payment made check that is on the If with a dishonored presentment, charge $15. exceed second not to (b) Imposition; disposition; charges or not considered interest fi- charges.—(1) delinquency charge No or nance more than one late any portion regard- imposed single scheduled be during period less of the which it remains in default. subsection, (2) payments by purpose of all the borrow- For the this payments applied er of scheduled in the order shall satisfaction they become due. which (3) Charges permitted by may not inter- this section be considered charges plan.” est or finance under the §CL 8. 12-1008 reads:
Class IV statutes simply recognize that charges, late or late charges law, permitted by may in fact be assessed. The Class 12-506(a)(6), § IV statutes are CL applicable credit retail accounts;9 12-634(b), §CL applicable to renewals or exten granted sions by sales finance companies of retail installment contracts;10 § sales CL 14-2002(g), applicable to consumer “(a) agreement governing permits, a loan a Authorized.—If grantor may: credit (1) borrower, charge For a nonconsumer higher periodic per- centage rate or rates of interest on the outstanding unpaid amount of payments portions payments or under the loan which are in default; and (2) borrower, any impose: For (i) delinquency A late charge payment or portions on pay- or ments; and (ii) If is made awith check that is dishonored on the presentment, charge second not to $15. exceed (b) Imposition.—In borrower, the case of a loan to a consumer no delinquency charge may or charged be agreement, unless the note, or other evidence of the permits. loan No more than 1 late or delinquency charge may imposed any single payment or portion payment, regardless period during of the which it remains in default. (c) Disposition.—For (b) section, purposes of subsection of this payments by all applied borrower shall be to satisfaction of payments scheduled they the order in which become due. (d) Charges not considered interest charges.—Charges or finance permitted may under this section not be considered interest or charges agreement.” finance under the 12-506(a)(6) § 9. CL reads: open
"In an end account: (6) either, A seller or financial institution assess but not both: (i) charge equal A finance to the rate charged past of interest on provided agreement; due accounts as in the (ii) payment charge.” A late 12~506(a)(6) §CL was Chapter enacted 753 of the Acts of 1982 (House 1853). Bill Attorney In a letter from the General to the Governor, 21, 1982, May dated and Department on file with Legislative Services in the Bill File on House Bill purpose 12-506(a)(6) § permit is described to be "to the issuers of certain travel and entertainment impose credit cards that do charges finance impose their accounts to a late fee." accounts, (I), United's accounts are § not retail 12—501(j), credit CL (o), and (l )(2). § it is not a financial 12-501(g) institution. CL 12-634(b) § 10. CL reads: 8-401(e), summary dealing with leases;11 §RP vehicle
motor 11A-I10(e)(l), Maryland Real of the part § ejectments;12 RP 11B-105, Mary Act;13 part RP Time-Sharing Estate 14-202(b), Act;14 RP Association land Homeowner’s *18 amount of the may aggregate the principal not exceed "The extended any delin- agreement, portion time under the unpaid of the balance actually any of cash charges lawfully payable, and amount quency prepayment computed as if the buyer, a to less credit for refunded the of paid full at the time portion had been unpaid of the time balance renewal, extension, or refund.” the § 14-2002(g) reads: 11. CL "(1) may impose on the lessee: permits, a If the lease lessor (1) payments portions pay- of delinquency charge or A late for or lease; the ments that are in default under (ii) court and other charge, include all A which collection and, if the actually by the lease incurred lessor collection costs attorney employee a salaried for to an who not referred collection lessor, fee; attorney’s of the a reasonable (iii) any a check that is payment is to the lessor with If made presentment, charge $15. to a exceed dishonored on the second (2) charge may imposed be delinquency No one late or more than payment, regardless the any single or of of portion during default.” period which it remains in 8-401(e) § 12. RP reads: summary where any ejectment for to rent "In action of failure giving the judgment him restitution of
the landlord is awarded redemption premises, right the of the the tenant shall have leased cash, tendering money fees, or premises by certified check order leased agent plus late all past his all due rent and to the landlord or fees, of any time actual execution court awarded costs and at before any apply to tenant This subsection does not the eviction order. judgments possession have been entered for rent against whom 3 unpaid prior to action the initiation due and in the months apply.” would to which this subsection otherwise 11A-I10(e)(l), reads: part, in relevant 13. RP interest, estate, assessments, “(ii) charges, late As to a time-share collection, attorney's may be fees enforced costs of and reasonable Maryland imposition Contract Lien Act---- of a lien under the license, (iii) duty person has the As to who a time-share rights party 9- shall have secured under make assessments sell, lease, dispose Law 504 of the Commercial Article pro- otherwise Unless time-share instrument time-share license. vides, fees, fines, charges, charges, charged interest enforceable as assessments under this section.” IB-105, part, §RP 1 in relevant reads: 14.
part Maryland Contract Lien Act.15 If I, II, one views the Class III against statutes background rule, the common law these statutes permit that which would otherwise unpermitted, as contrasted with regulating that which is permitted, but otherwise would be unregulated. Reinforcing this conclusion are the disclaimers stating that certain statutorily authorized late charges are not interest. These disclaimers concern, reveal if not an underly- conclusion, ing legal the late charges, absent statutory authorization, would constitute interest on presently due and payable debt and subject would be to the limitations on interest.
The Class IV statutes may present a separate problem of statutory Nevertheless, construction. purposes this opinion, we shall assume that the Class TV statutes also change the common law rule with respect to damages for a default under a contract to pay money.
Under the Cable Communications Policy Act of *19 et seq., Congress has expressly provided that U.S.C. companies cable “shall not subject to regulation as a common carrier or utility by reason of providing any cable 541(c). Further, service.” Id. assume, we shall as United argues, that the “benchmark” subscription rates by set "(b) supplied by to be vendor.—The vendor a[of lot in a Information development containing more than 12 lots to a public member of the occupy
who intends to or rent the lot for purposes] residential shall provide purchaser following writing: information in
(11) regarding: A statement (vii) Whether lot owners will be charges assessed late attorneys’ collecting fees unpaid fees or any assessments and other conse- quences nonpayment for the of the fees or assessments." 14-202(b) RP§ 15. reads: may only "A lien secure the of: (1) Damages; (2) collection; Costs of (3) law; charges permitted Late (4) Attorney's provided fees for in a contract or awarded a court
for breach of a contract.” .
681 for United’s basic Communications Commission Federal costs which types not include basic service do expanded a charge late valid five dollar make its contends United provision. damage liquidated regulates authorizes or
Thus, is no statute that there remains charge late charges so that United’s late United’s law rule. subject to the common
C
from
have
us to cases
reason
parties
cited
as
recoverable
process
that costs
the collection
premise
Because
pay money.
of a contract to
damages
breach
a result of
expenses incurred as
difficulty
proving
actual
breach,
charge
cases
that a late
recognize
these
any particular
In those
damages provision.
as a
liquidated
be sustained
penalty,
late
held to be a
charge
which the
was
cases
accounting approach
we
call
cost
applied
might
what
courts
was
liquidated
that the amount
and concluded
damages. See United
of the actual
not a reasonable estimate
No. 21 v.
Bricklayers & Stone Masons Union
Am.
Order of
Cir.1975)
(7th
(ten
Son, Inc.,
liquidated damages, as
usury,
contrasted with
analysis);
Inc.,
Elec.,
309,
65,
Pierce v. B & C
104 Ill.App.3d
60 Ill.Dec.
(1982) (ten
964
percent charge
N.E.2d
on delinquent
by
contributions
employer
employees’ benefit fund sus
tained); Nylen v.
Apartments,
Park Doral
The Court of Appeals, applying Virginia has concluded, cases, citing after numerous that “[t]he modem view seems be that charges] penalties [late but compensation reasonable in commercial transactions[.]” Matt- vidi Assocs. Ltd. Partnership NationsBank Virginia, N.A., (1994). 71, 91, 100 Md.App. 639 A.2d policy argument.
United also makes a Invalidating the five fee, dollar predicts, United will result in simply spreading subscribers, the cost of the delinquencies payment across all with contrast assessing charge against the late delinquent payors responsible Furthermore, who are for increased costs. we have little doubt that it would be almost impossible to find a competent economist who would conclude the costs incurred United in addressing account delinquencies do not percent exceed six per annum interest on the amount of delinquent payment.
Nevertheless, Maryland common law rule of damages for the breach of a to pay money contract should not be judicial changed This decision. because the intimate connection III, between that common law rale and Article Maryland 57 of the Constitution which legal sets the rate of interest at percent six Assembly unless General otherwise III, provides. Article 57 has unchanged remained since the
683 provi of 1867. A constitutional of Constitution adoption as Article appeared rate of interest first setting legal sion it 1851. In that form read: III, § in Constitution of per in not exceed six of interest this State shall “That the rate cent, annum, be taken or demand higher and no rate shall per law, necessary ed, by all provide, shall Legislature and the form the In its 1851 against usury.” penalties forfeitures and III, § 50 of the Constitution included as Article provision was of legal rate Prior to 1851 statutes had set of 1864. the Acts of Chapter See 352 of percent. interest at six ed., in Browne XXVI W.H. reproduced and the Act of Acts of the General Maryland, Proceedings Archives (1906).16 1704-1706, at 351 Assembly Maryland, remains policy Maryland public The constitutionalized that, any if percent of interest is six legal rate made, by to be made they rate are to be are changes of a damages Inasmuch as for breach Assembly. the General rate of to the lawful money pegged pay contract interest, damages, absent in that common law rule change basis, judicially effect as would have the same statutory judicially enacting or as a statute the Constitution changing Assembly. that has not been enacted the General damages change If the common law we were money of a contract to damages for the breach untether damages of interest so that liquidated from the lawful rate not, be a ipso facto, rate of interest would excess lawful The very it create a anomalous situation. penalty, would Assembly created largest class of transactions the General certain to which there is no limitation on interest as 12—103(e)(1).17 In corn loans. See CL these commercial rejected by people general proposed at the 16. constitution 14, 1968, May forward the held on would not have carried election III, § 1867. provisions Article 57 of the Constitution of 12-103(e)(l) reads: 17. CL any charge interest at rate if the loan is:
"A lender (i) corporation; A loan made to a damages mereial loan transactions the rule of that we apply application this case has no because there is no rate of interest to which the are tethered.
In
plaintiffs’
overwhelmingly
the instant matter
class
consists of
If liquidated damages payable by
consumers.
*22
payment
on contracts for
money
consumers
are to be
of.
liquidated damages payable by
treated the same as
commer
promisors
pay money,
change
cial
on contracts
to
should be made
It
policy
by
Assembly.
General
would be
to achieve that effect in
particularly inappropriate
the instant
where,
by
matter
as
its late
represented
promisee,
charges
not only unregulated
are
but also where the
has no
promisee
vendor of cable television
competing
services.18
$15,000
(ii)
by
A commercial loan in excess of
not secured
residen-
property;
tial real
$75,000
(iii)
by
A commercial loan in excess of
secured
residential
property.”
real
description
18. The dissent takes no issue with the Court’s
Rather,
damages
payment money.
measure of
in contracts for the
express
the dissent
seems
the view that the TCI-subscriber contract is
payment money
not a contract for the
because the transaction is not
promises
a loan. Under the TCI-subscriber contract the subscriber
Thus,
hy
the amount billed each month
that month’s due date.
by
pay liquidated
breach
the subscriber is the failure to
amount on or
specific
before a
date.
Unfortunately, the dissent also muddles the TCI-subscriber contract
price
applicable
with the time
doctrine that is
to credit sales. See
Silver,
(1967);
Rothman v.
245 Md.
Accordingly, class, for unlawful from November compensation penalties as 20,1997, 7, 1992, is affirmed. That award through September amount of penalty difference between the represents $4.50 found damages fifty the actual cents as five dollars and our United’s actual analysis the trial court. Under one month on the percent per are standardized at one-half of *23 Using twenty in a customer’s account. dol- overdue balance account, the standardized agreed price lars as the for a basic .005). ($20 x monthly late of ten cents damages would be fee cents as the using fifty Thus the circuit court’s calculation United, is no cross- actual did not harm and there by the Plaintiffs. appeal order, affirm circuit court
For the same reasons we the deposit as of its which directs United to part stay, entered fifty in of cents into escrow. fee collections excess
II II fees. In this Part we address the award of counsel fund, submits that the fee of one-third of the common United way open-end plans problem avoid this The in which credit by inserting requirement for a create a determinable due date is payment per contract the minimum month. Under the TCI-subscriber paid by payment outstanding balance to be minimum 100% cycle being billed. due date fund, by paid
awarded
the circuit court to be
out of that
asks this Court to review that fee.
excessive. United
request
by
This
for review is met
the Plaintiffs’
standing. Citing Boeing
Co. v.
objection
has no
.United
Gemert,
Van
444 U.S.
100 S.Ct.
687 Plaintiffs contend argument, At the first level of their circuit court’s circuit fee award is within the that the court’s cases, because, in the fee awarded discretion common fund United, on the other percentage should be a of the fund. hand, rule. proper that is the argues approach a lodestar Shalala, 1271 F.3d Compare Hosp. Corp. Swedish (D.C.1993) is that a of the common fund (holding percentage fees) Depart with Kuhnlein v. proper approach to counsel (Fla.1995) Revenue, (holding ment So.2d the lodestar is the measure of counsel fees approach proper cases). present common is no in the case for fund There need As the particular methodology. this Court mandate process, circuit court described its it determined the award fund, basically percentage as a of the and then checked that of Professional Con against result the factors Model Rule 1.5(a). duct is a of the approaches This blend advocated and, parties, methodology, as a it was within the discretion fees, however, of the circuit court. The award counsel because reversed remanded reconsideration we have applied concerns over the manner which the circuit court its methodology. announced
In the contingent agree instant matter there is a fee ment between the Plaintiffs for the named and counsel class It provided recovery. Plaintiffs. a fee of one-third of the Fees, hearing At the on the Petition for Counsel the circuit question court raised the whether that contract was determi remand, native. guidance As for the circuit court on we hold percentage contingent of a fee in the contract be tween counsel for is not the Plaintiffs and the named Plaintiffs (5) imposed by the time or limitations client circum- stances; (6) length professional relationship the nature and of the with the client; (7) experience, reputation, ability lawyer lawyers or services; performing the (8) contingent.” whether the fee fixed
Id. at 448. *25 Court of Florida
controlling. agree Supreme We with when it said: to control agreements the court allowed the written fee
“[I]f fund, the common it would be the fee to be awarded from the vast of class enforcing agreements majority fee which Thus, counsel did not consent. the fact class members be attorney named fees would parties agreed and the ap- on a basis cannot control what percentage calculated power use in its inherent exercising the court should proach fees to from the attorney paid to determine reasonable common fund.”
Kuhnlein, at 314. So.2d recovery been a a common fund
Once there has
case, a conflict arises between counsel for the
class action
and the class. Because the stake
representative plaintiffs
small,
usually quite
class member is
and because
an individual
ordinarily
the defendant is not
affected
judgment against
plain
of the common fund that is awarded to
portion
counsel, it becomes the
of the court to insure that
duty
tiffs’
Thus, if a
protected.
the interests of the class members are
first to
an appropriate percentage
court concludes
determine
fee, it
do so
a market
utilizing
of the fund as the
should
i.e.,
locality
customarily charged
“the fee
approach,
Maryland Rule of Professional Con
legal
similar
services[.]”
1.5(a)(3).
the approximate
duct
The court should determine
that a
recovery
of a
multi-million dollar
percentage
potential
with
negotiate
business
would be able to
counsel
person
complexi
in a case of
plaintiffs’
comparable
caliber of
counsel
Litig.;
See In re Continental Illinois Sec.
ty.
Steinlauf
Cir.1992).
(7th
Illinois
In
Corp.,
Continental
Ill foregoing judgment For all the reasons the excess interest is affirmed. The award of charges prejudgment for further consider- is reversed and remanded counsel fees this opinion. ation consistent with BALTI- THE CIRCUIT COURT FOR
JUDGMENT OF IN IN PART AND REVERSED MORE CITY AFFIRMED THE AND REMANDED TO CIRCUIT CASE PART CITY FOR FURTHER PRO- COURT FOR BALTIMORE *26 OPINION. CEEDINGS CONSISTENT WITH THIS THE APPEL- IN BE PAID BY COSTS THIS COURT TO LANT, UNITED CABLE OF BALTIMORE TELEVISION LIMITED PARTNERSHIP.
CHASANOW, Judge, dissenting: why be a majority opinion may good example The appel- late courts not decide cases issues neither briefed should that, argued by parties. nor The Court decides ex- absent press statutory authority, any contractual late fee for failure timely per to is limited to the 6 % payment money make Maryland annum of interest for in provided rate Constitu- III, § majority recognize to that Article 57. The fails tion, reasons counsel good why representing there be the able the amici curiae never made the the class action plaintiffs and that to permissible contention the late fees were limited interest on the amounts. unpaid
The to on common law majority holding seems base its rules, but in doing may mixing up misapplying so it be and starting several of them. Our must be the mutual point contractual made and the class promises between United plaintiffs. require action The contracts at issue United to provide by wiring the class action with cable services plaintiffs homes, loaning equipment, the customers’ the customers cable and out the video The sending transmissions over cables. require contracts also class action to for the pay plaintiffs advance, if they services fail to do so the customers to agree pay provide late fee. The contracts further $5.00 plaintiffs equipment that the class action will return cable if to United the contract is terminated. It that indisputable require pre-payment contracts cable service and use of money not in loans of to any way and are equipment cable customers United. III, 57, authorities well as most of the cases and
Article as are limita inapplicable they are because majority, cited recognize does not seem to usury. majority tions on forbearance, loans, to against usury applicable prohibitions all applicable prom but are not transactions equivalent to the resolution of the instant money. Relevant ises usury applicable laws are not general is the rule case money. “Since the number one involving not the loan sales a loan or forbearance usury is that there must be element cannot property it that a sale of money,. clear (3d 1688A, at 737 usurious.” on Contracts Williston ed.1972)(footnote Silver, 292, omitted); 245 Md. Rothman v. (1967). have the instant 226 A.2d What we advance, if monthly price pays is one the customer case done, charge for if then there is an additional this is $5 the service credit when the customer has used extending paying. before *27 that is than the goods price greater
A on credit at a sale legal an amount in excess of the rate interest cash price subject usury laws as it is a sale and price on the cash Ford, 487, 242 Falcone v. Palmer Md. money. not a loan of (1966). Falcone, In 808 this Court discussed 219 A.2d apply limitations do not to sales. history usury of the rule that We stated: 792, 453, Eng. Rep. 7 B. & C. 108 Bidgood,
“In Beete v. estate, sixteen thou- an the cash value of which was where twenty eight sold for thousand hundred pounds, sand was (thé in installments added four thou- payable stated pounds would have made the transac- eight pounds sand hundred in money), if it been a loan of it was held tion usurious had of an the case arose ‘out of a contract for the sale 1827 that * * * (And) estate, in that money. not for the loan of and was no illegality.’ there in in the same view 1861 Supreme adopted Court (1 Black) 38, noting 17 Ruffner, v. 66 U.S. L.Ed.
Hogg usury that to constitute there must either be a loan and the taking legal or the of more than taking of usurious interest due, money for the forbearance of a debt or sum of interest holding: and if A B propose
‘But it is manifest that to sell to a tract $10,000 cash, $20,000 in or for in payable land ten instalments, if B sum prefers larger annual and time, A the contract cannot be called usurious. gain in may prefer vendor hand to double the sum $100 greater price expectancy, purchaser may prefer and credit; distinguish one who will not longer with the and differ, truth, things may say, apparent between with cent, forbearance, B pays per may a hundred usurious; assert that such a contract but whatever premises, truth there the conclusion is a contract has none of the manifestly erroneous. Such money, it is not for the loan of usury; characteristics of of a forbearance debt.’ predecessors Reyn
Our took the same view. Williams v. olds, usury 10 Md. held that for there to be there must money promissory be a loan of and that the sale of a valid note at a discount was not usurious because there was an Poe, 57, 120 actual sale and not a loan. A. Bailey Md. 242, took the same view. recognize
Almost all states
this rule. See the
apply
discussion
Judicial and
Treatment
‘Usuri
Legislative
Sales,
(1958),
Usury-
ous’ Credit
71 Harv. L.Rev. 1143
Sales,
Laws to Installment
Applicability
Usury
State
(1964);
Corbin,
Mich. L.Rev. 1268
6A
and see
Contracts
§ 1500.
typical relatively
Some
recent cases which are
Service,
illustrative are: Lincoln Loan
Inc. v. Motor Credit
Co.,
230;
(Mun.Ct.App.D.C.),
Capi
Inc.
83 A.2d
Luchesi v.
*28
(R.I.),
151,]
725;
tol Loan & Finance Co.
R.I.
113 A.2d
[83
Rose,
v. Mytelka
(N.J.Super.),
&
Inc.
[87
Steffenauer
506,]
88;
210
N.J.Super.
A.2d
Carolina Industrial Bank v.
(N.C.),
335,]
692;
Merrimon
N.C.
132 S.E.2d
Uni-Serv
[260
(Mass.),
Corp. Mass. v.
Banks
Commissioner
[349
283,]
Mass.
692 Falcone, 496-97, at also at 219 A.2d 812. See Stewart Md. Association, 675, 682, A. 106 Md. Building (1907)(there in a contract nothing oppressive is usurious or loan association a member to building requiring with a interest). neglect pay fines for to dues and pay mentioned, in contract the instant case is a contract As the is not a loan. equipment—it for sale of services and use of the “in a cash buyer agrees pay price to advance” $X services, if is not made and but the advance (in services) extended, is credit the form of advance words, In + for the other pays customer services. $5 $X advance, if if for the paid is but services monthly charge $20 date, the payment by month there is no the due began and at for that month is The contracts issue here charge $25. money regulated by usury loans of laws. The 6% III, Article not relevant to these simply limitation of only liquidated damage limitation on a contracts. The therefore, must not be a the 6% charge penalty; is that it applied rates should not be to a limita- cap usury interest tion on late be assessed on a valid contract charges but, instead, goods not a loan is a sale of and services. that the late fee Alternatively, majority seems to hold $5 damage provision penalty is not a valid but is a liquidated except no damages temporary because United suffered This money loss of the and 6% interest is all that was lost. finding only contrary findings fact is not to the appellate clearly required trial but is erroneous. The customer is judge, to using equipment advance before United’s receive pay assessed, transmissions. At the time the late fee is United’s retaining receiving customer is United’s equipment having transmissions without for the service. paid the cable permissible This leads to two elements of United’s monthly payment. the mere loss of the beyond First, usury generally preclude laws do not contractual promises reasonable costs collection additional had evidence payments. ample interest for overdue United system for an collection supporting its need in-house *29 the contracts are loans delinquent customers. Even when laws, this has never before held regulated by usury the Court of collection is void or promise pay that a to reasonable costs interest on the permissible payment. limited to the amount attorney’s fees and court costs are forms Contractual by costs and have not been limited the permissible collection interest, transactions permissible amount of even with loan case, In instant United regulated by usury the laws. the evidence, rejected an abundance of not refuted presented by majority, the that its collection costs were reasonable and necessary because of the nature of its business. United’s Agreement states: Customer date,
“If you pay your you agree do not bill the due pay us an administrative fee for late The admin- payment. istrative fee is intended to be a reasonable advance estimate of our costs that result from customers’ late payments. anticipate you pay your
We do not will bill late and it the administrative fee is set advance because would be any difficult to determine the costs associated with one particular late do not credit to our payment. We extend interest, customers not and the administrative fee is a credit charge service or a finance charge.”
Contractually agreed to costs of collection should not make a long loan usurious as as contractual necessary costs are majority and reasonable. The fails to us why tell contrac- tual agreement pay impermissible. costs collection is
Second, if even this contract could be construed as a loan of money and thus regulated by usury provisions, since proved United a customer’s failure to per advance as the contract caused it injury beyond just the loss of the monthly payment, United should not be limited 6% interest. The section of 5 A.L. at Corbin, Corbin on Contracts (1964), that, 373-74 cited if majority makes it clear has promisee special injury beyond just some non-receipt money, liquidated damages are not limited to the interest money, only value and it is the absence of a “[i]n exists, showing special injury that such agree- advance [that] ments are held to be if the sum unenforceable exceeds the at 374-75. Had
interest value.” Corbin on Contracts United’s subject possessed to the late fees the customers equipment equipment or returned cable boxes and other defaulted, damages arguably United’s could they soon as as showed money, on the but the evidence limited to the interest otherwise. assessed, were fees were the customers
By the time the late *30 to receive the cable services using plaintiffs equipment defaulting The class of they paid. plaintiff had not which only included not return of the late fee seeking customers $5 equipment violation those who used cable services but also those whose pay to advance agreements their undergo to the addi- required to on time United failure to attempting off the service and expenses cutting tional damages, incapable equipment. These additional retrieve action plain- the late class precise proof, paying caused tiffs, damage liquidated d’etre for the are the raison $5 provision. If, have majority opinion may significant implications. holds, fees contained in all contracts to majority
as the all late interest, late fees are constitute then the maximum pay money provides other- year legislature expressly 6% unless per not merely mentioning late fees would seem wise. Statutes 6%, beyond interest authorization unlimited legislative majority styles “Class IV statutes” would so what per or .5% charges per year interest over 6% permit seem I numbers of contracts that suspect great month. there are and class majority opinion, be rendered usurious In explore. lawyers action will have vast new vistas addition, continuously per how late fees of .5% month will be I challenge. Finally, question how computed present should usury sponte, can the issue of sua hold that majority raise usurious, annum but still per permit all late fees over 6% per a usurious late fee of month. The United to retain $.50 to review the trial court’s determi- majority should undertake and determine arguments parties, nation based on the damage provision is a liquidated whether the late fee valid $5 I penalty. respectfully or an dissent. impermissible