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Md. high court opens term, will hear tax, debt-collection cases

Maryland’s top court on Thursday opens the public sessions of its 2019-2020 term, during which it will consider among its approximately 75 appeals whether the state’s remedy for an unconstitutional tax it imposed on out-of-state income is similarly unconstitutional.

During its September Term 2019, the Court of Appeals will also weigh if creditors seeking delinquent payments can be held liable under the state’s Consumer Protection Act (CPA) for their attorneys’ debt-collection actions. In addition, the court will consider how much deference judges owe to a police officer’s conclusion that the person sitting in the driver’s seat during a traffic stop involving suspected drunken driving was indeed the driver.

The Court of Appeals term officially began Sunday — Sept. 1 — with the seven-judge panel in search of a seventh active member following Judge Clayton Greene Jr.’s decision to step down July 1.

Greene, citing a desire to spend more time with his four grandchildren, retired from the bench about 18 months before the Maryland Constitution would have compelled his retirement at age 70. Greene, like other retired Court of Appeals judges, will be available for special assignment to fill the vacancy until his successor is appointed by Gov. Larry Hogan.

The tax case will mark a return to the Court of Appeals by Brian and Karen Wynne, whose earlier constitutional challenge to Maryland’s piggyback tax on money earned and taxed in other states won in the state’s top court and then in the U.S. Supreme Court in 2015. In its 5-4 decision, the Supreme Court said the law violated the federal Constitution’s Commerce Clause by discouraging Marylanders from earning money outside the state.

Now before the Court of Appeals is the couple’s constitutional challenge to the state’s remedy, which provides that those who paid the unconstitutional, non-deducted tax would be reimbursed at 3% interest, which is less than the state’s 13% interest on tax refunds due for overpayment during a calendar year.

The Wynnes, through counsel, argue that this 10 percentage point disparity in interest for out-of-state wage earners and the interest owed to taxpayers on conventional refunds similarly violates the Commerce Clause by punishing those who earned money outside the state.

That argument won in Maryland Tax Court but lost on appeal in Anne Arundel County Circuit Court. Judge Donna M. Schaefer said in December that the 3% remedy’s retroactive application would not discourage Marylanders from working out of state in the future, as they have not been unconstitutionally taxed since the Supreme Court’s 2015 ruling.

Schaefer’s holding “defies logic,” the Wynnes’ counsel wrote in the couple’s successful request for Court of Appeals review.

“Under it, states could always avoid … Commerce Clause scrutiny by making their discriminatory laws retroactive for a finite period,” wrote attorneys Steven F. Barley and Sean Marotta, of Hogan Lovells US LLP. “If Marylanders engaged in interstate commerce know that the state will discriminatorily slash interest on their refunds when they prevail in a tax-refund suit, they are less likely – on balance – to engage in interstate commerce.”

The Maryland Attorney General’s Office filed responsive papers with the high court criticizing the Wynnes’ “attenuated connection, if any connection exists at all, between the payment of interest to Maryland residents on prior-year refund claims and interstate commerce.”

The Court of Appeals is scheduled to hear arguments Oct. 2 in the case, Brian Wynne et al. v. Comptroller of Maryland, No. 12, September Term 2019.

In the debt-collection case, the high court will review an intermediate Court of Special Appeals 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 counsel 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.

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 of Appeals is scheduled to hear arguments Monday in the case, Galyn Manor Homeowners Association Inc. and Andrews & Lawrence Professional Services LLC v. David O. and Tammy L. Mills, No. 5, September Term 2019.

In the police deference case, the high court will review whether administrative law and circuit court judges properly chose to believe an alleged drunken driver’s claim that she had not driven the vehicle over an officer’s testimony to the contrary.

Carroll County sheriff’s deputy Kathleen Yox pulled over a motorist who she said had driven through a stop sign.

Upon arriving at the vehicle, Yox said she smelled alcohol on the breath of Ariel Medvedeff, the person sitting in the driver’s seat. Yox said she asked Medvedeff to step out and conducted a sobriety test, which Medvedeff failed.

The man in the back seat, Anthony Crany, later said that he had consumed a few drinks as well, that he was in fact the driver and that he and the woman quickly changed seats after being stopped. His account was corroborated by Medvedeff.

The administrative law judge said Yox “was aware that the passenger had indicated the licensee had not been driving and therefore did not have reasonable grounds” to believe Medvedeff was the driver when the traffic stop occurred at 11:45 p.m. on Dec. 30, 2017.

The ALJ judge dismissed the case and the proposed suspension of Medvedeff’s license, a decision affirmed by the Carroll County Circuit Court. The Motor Vehicle Administration then appealed to the Maryland high court, saying that state law and Court of Appeals precedent require that officers have “reasonable grounds” or “reasonable articulable suspicion” to believe that a person “was driving or attempting to drive while under the influence.”

The administrative law judge erred in that “he negated the reasonable grounds standard by imposing his own findings upon the detaining officer,” Assistant Maryland Attorney General Leight D. Collins wrote on behalf of the MVA in its request for high court review.

The Court of Appeals has appointed attorney Kelly S. Kylis to represent Medvedeff. Kylis is with McNamee Hosea in Greenbelt.

The Court of Appeals is scheduled to hear arguments Oct. 7 in the case, Motor Vehicle Administration v. Ariel A. Medvedeff, No. 15, September Term 2019.

Based on its practice under Chief Judge Mary Ellen Barbera, the Court of Appeals is expected to decide by Aug. 31 – the last day of its 2019-2020 term – all cases that it hears this session.

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