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High court weighs breadth of lawyers’ CPA exemption

ANNAPOLIS – An attorney for a debt-collecting law firm told a seemingly skeptical Maryland high court Monday that creditors seeking delinquent payments cannot be held liable under the state’s Consumer Protection Act for the debt-collection actions of their lawyers.

Timothy Guy Smith said the CPA’s liability exemption for attorneys extends to the creditors who hire them because if the contracted attorney cannot be held liable then neither can the principal who retained them.

“We cannot look at what the attorney does and impute it to the client,” Smith said on behalf of Andrews & Lawrence Professional Services LLC in Ijamsville. “The attorney was the driving force. (The clients) were taking the advice of their lawyer.”

But Judge Robert N. McDonald interjected, saying Smith was essentially telling creditors that “if you want to violate the CPA, get yourself an attorney.”

Judge Brynja M. Booth told Smith that creditors should not necessarily elude liability because they are not always passively deferential to their debt-collecting attorneys but often take an active role in helping them retrieve the money they believe is owed.

“The client is directing the lawyer in this case,” Booth said.

Smith disagreed, saying the attorneys’ activities cannot be visited upon the client.

The question, Smith said, is, “Who is driving the bus?” He added that the attorney is the bus driver in debt collection.

Smith is with the Law Offices of Timothy Guy Smith in Glenwood.

Attorney Megan T. Mantzavinos also appeared before the high court, on behalf of the creditor in the case, Galyn Manor Homeowners Association Inc. in Brunswick.

She said the homeowners association hired Andrews and Lawrence for its legal expertise, not to gain exemption from liability.

“That’s why we hire a lawyer,” said Mantzavinos, of Marks, O’Neill, O’Brien, Doherty & Kelly P.C. in Towson.

Smith and Mantzavinos were urging the high court to overturn a Court of Special Appeals decision that Galyn Manor could be held liable for the actions of its attorneys at Andrews & Lawrence in trying to collect unpaid assessments of association members.

In pressing the high court appeal, Smith denied any wrongdoing either by Andrews & Lawrence or Galyn Manor in their efforts to recover a debt allegedly owed by David and Tammy Mills.

The Mills’ attorney, Ejaz H. Baluch Jr., faced few questions from the Court of Appeals judges when he argued that Galyn Manor should not be immune from its law firm’s alleged fraud and misrepresentation in seeking payment from the Mills.

“Hiring someone with a law license is not a license to violate the CPA,” said Baluch, a Murnaghan Appellate Advocacy Fellow at the Public Justice Center in Baltimore.

Baluch urged the high court to construe the CPA’s liability exemption for attorneys narrowly in order to achieve the General Assembly’s goal of protecting consumers broadly.

The Mills sued Galyn Manor, seeking to have the association held liable for its law firm’s allegedly unlawful 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 Special Appeals, in returning the case for trial, pointed to statutes and decisions holding principals or employers liable despite liability exemptions for their agents or employees.

The law firm and homeowners association then sought review by the Court of Appeals.

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

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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