Please ensure Javascript is enabled for purposes of website accessibility

Md. high court will not reconsider mortgage-default ruling

Judges issue footnote explaining controversial citation

Maryland’s top court last week denied a request from distressed homeowners that it reconsider and permit rehearing on its August ruling that entities seeking to collect defaulted mortgage loans need not be licensed by the state.

However, the Court of Appeals did add a footnote to its decision explaining a controversial citation to an executive-branch document that formed the basis for the reconsideration request.

The homeowners, through counsel, had contended the court improperly considered and cited a letter from the Department of Labor, Licensing and Regulation in concluding that the Maryland Collection Agency Licensing Act does not apply to mortgages.

The lawyers, in their failed bid for reconsideration, said the document was neither part of the record nor generally available to the public until after the case had been argued before the high court.

But the Court of Appeals, in what it calls a clarifying footnote, states that DLLR’s 2006 letter to then-Gov. Robert Ehrlich was cite-worthy because it is publicly available through the state archives and its contents were disclosed in the department’s testimony to the General Assembly in 2007.

In its 5-2 decision, the high court cited the letter – a request that the law be amended – in holding the granted 2007 expansion of the law did not add mortgages. The court also said the General Assembly has shown no intent to include these home loan collectors in the state’s licensure requirement for collection agencies.

In moving for reconsideration, the homeowners’ lawyers, Phillip R. Robinson and Scott C. Borison, suggested Judge Joseph M. Getty, the decision’s author, should have recused himself because he was serving as Ehrlich’s policy and legislative director in 2006 and was presumably privy to the letter they contend was not otherwise available during court proceedings.

The high court, in the newly added Footnote 22, defends the citation.

“The Maryland State Archives is the repository for public documents including legislative files from the Governor’s Office, state departments and agencies,” the footnote states. “The Proposal for Legislation-2007 Session is a factual memorandum of the Department of Labor, Licensing and Regulation and may be requested by the public through the procedures of the State Archives for records of prior Administrations. The Summary for Governor’s Review contains the identical justification for the departmental bill as presented in the written testimony submitted to the legislative committees by the (DLLR’s) Commissioner for Financial Regulation.”

The specific document at issue was a “bill request form” DLLR submitted to Ehrlich’s office — where Getty then worked — in seeking the governor’s endorsement of an amendment that would expand the law’s definition of collection agencies.

The General Assembly passed that amendment in 2007 – Martin O’Malley’s first year as governor – to further define collection agency as a person who engages directly or indirectly in the business of “collecting a consumer claim the person owns, if the claim was in default when the person acquired it.”

Getty, now a judge, cited the bill request in his majority opinion.

“The department did not request, and the General Assembly did not intend, to expand the scope of MCALA’s licensing requirement to other industries beyond the collection agency industry,” Getty wrote. “There is nothing in the department’s bill request form, the fiscal and policy note, or the written testimonies that suggest DLLR was proposing to license and regulate the mortgage industry by revising the definition of collection agency under MCALA. Overall, the legislative history of the 2007 departmental bill reveals that the changes did not intend to expand the scope of MCALA beyond the collection industry.”

Robinson said in an email Monday “the homeowners are disappointed that they were not granted leave of the court to address the circumstances of the records released to the Maryland Archives months after argument actually occurred.  However, the law of the case makes clear that the mortgage actors are subject to the homeowners’ alternative arguments and they will be raising those on remand.”

Robinson is with Consumer Law Center LLC in Silver Spring; Borison is with Legg Law Firm LLP in Frederick.

Getty was joined in the majority opinion by Judges Clayton Greene Jr., Shirley M. Watts, Michele D. Hotten and Glenn T. Harrell Jr., a retired jurist who sat by special assignment in place of Chief Judge Mary Ellen Barbera who had recused herself for reasons not publicly disclosed.

Judge Robert N. McDonald wrote a dissenting opinion that Judge Sally D. Adkins joined.

The Court of Appeals rendered its decision in four consolidated cases: Kyle Blackstone v. Dinesh Sharma and Terrance Shanahan v. Seyed Marvastian, No. 40; Laura O’Sullivan v. Jeffrey Altenburg, No. 45; and Martin S. Goldberg v. Martha Lynn Neviaser, No. 47, September Term 2017.

To purchase a reprint of this article, contact [email protected].