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High court will weigh lawyers’ exemption in debt collection

Court of Appeals to consider clients' liability

ANNAPOLIS – Maryland’s top court will consider whether creditors seeking delinquent payments can be held liable under the state’s Consumer Protection Act for the debt-collection actions of their attorneys when lawyers are exempt from liability under the CPA.

The Court of Appeals agreed last week to review a lower court ruling that a creditor, in this case a Brunswick homeowners association, could be held liable for its attorneys’ actions in trying to collect unpaid assessments of association members.

In its successful request for high-court review, the association argued through counsel that the CPA’s liability exemption for attorneys serves as a shield for creditors who hire them.

A client cannot be held responsible for its lawyers’ actions when the attorneys themselves cannot be held liable, stated counsel for Galyn Manor Homeowners Association Inc. and its debt-collecting law firm Andrews & Lawrence Professional Services LLC.

Counsel for the association members countered that the CPA does not permit creditors to hide behind their attorneys.

Rather, the clients remain responsible for their attorneys’ actions, much as an employer can be held liable for its employees’ negligence under the legal doctrine respondeat superior, stated Leslie K. Dickinson, attorney for the members, David and Tammy Mills.

The Mills sued Galyn Manor, seeking to have the association held liable for its law firm’s allegedly unlawfully actions in trying to recover the couple’s assessment debt of $5,000.

Andrews & Lawrence is exempt from liability under the CPA’s protection for law firms and other professional advisers. However, the Ijamsville firm has agreed to indemnify Galyn Manor for any liability and is thus a named third-party defendant in the litigation.

An Andrews & Lawrence attorney, Torin K. Andrews, was also lead counsel on the brief that sought high-court review.

The case opened with Frederick County Circuit Judge William R. Nicklas Jr. granting Galyn Manor’s motion for summary judgment, saying the exempt-from-liability law firm’s alleged misdeeds in debt collection could not be visited upon the client/association.

But the intermediate Court of Special Appeals held in a reported decision in December that a creditor could be held liable for its law firm’s actions, though attorneys are statutorily exempt from liability.

The court, in returning the case for trial, pointed to statutes and decisions holding principals or employers liable despite liability exemptions for their agents or employees.

In its papers seeking high-court review, Galyn Manor stated that the Court of Special Appeals’ decision, if left unchanged, “radically alters the legal landscape for attorneys,” whom the General Assembly sought to protect from liability under the CPA, and for the clients they serve.

“Under the court’s ruling, lawyers must now follow the precepts of the act as if there were no lawyer’s exemption at all,” Andrews wrote. “To do otherwise incurs liability for their clients and thereby exposes lawyers to professional malpractice claims by their clients.”

Andrews noted that the exemption does not absolve attorneys of their ethical and professional obligations, which are well enforced by the Court of Appeals.

“The legislature signaled its decision to not infringe on (the Court of Appeals’) traditional authority over the profession by exempting lawyers from the CPA,” Andrews wrote “As a practical matter, the ruling puts the CPA in conflict with the Rules of Professional Conduct, and lawyers are left dealing with both.”

But Dickinson, the Mills’ attorney, countered that the CPA is a “remedial statute” designed to protect Maryland consumers against unfair collection practices. As a result, the liability exemption provided to attorneys should be “construed narrowly” and not extended to protect the clients who hire them.

“The Court of Special Appeals is correct that the CPA attorney exemption does not transfer to the principal, Galyn Manor, and that the doctrine of respondeat superior applies to their principal/agent relationship,” wrote Dickinson, of the Dickinson Law Firm LLC in Mount Airy.

The Court of Appeals is expected to hear arguments in the case in September. The high court is expected to render its decision by Aug. 31, 2020 in Galyn Manor Homeowners Association Inc. and Andrews & Lawrence Professional Services LLC v. David O. and Tammy L. Mills, No. 5, September Term 2019.

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