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Law Digest — Court of Special Appeals — Feb. 3, 2022

Maryland Court of Special Appeals

Administrative: Where a state statue and the Prince George’s County code both provide an exemption from recordation and transfer taxes for transfers to “the State[,] an agency of the State[,] or a political subdivision in the State,” the “State” was the State of Maryland. As such, a pension fund for California employees was not entitled to the exemption. Gateway Terry LLC v. Prince George’s County, No. 708, Sept. Term, 2020. (Filed Jan. 26, 2022).

Arbitration: Where plaintiffs alleged that certain agreements were obtained by fraud, and those agreements contained arbitration clauses, the trial court, and not an arbitrator, must determine whether the arbitration agreements exist. Linton v. Access Funding LLC, No. 1398, Sept. Term, 2020 (filed Jan. 26, 2022).

Civil Practice: Where residents of Baltimore alleged a police review board was not functioning as an independent agency, but rather under the control of the City, but they could not show that they were personally and specifically affected in a way that was different from the general public, they lacked standing. Paula v. Mayor and City Council of Baltimore, No. 1272, Sept. Term, 2020 (filed Jan. 26, 2022).

Consumer Protection: Where a property management company filed multiple failure to pay rent actions against a tenant, requesting “possession of the property and a judgment for the amount determined to be due,” it was engaging in debt collection activity and was required to possess a debt collection license. Williams v. eWrit Filings LLC, No. 206, Sept. Term, 2021 (filed Jan. 26, 2022).

Criminal: Where a lawful permanent resident was told the maximum sentence for her crime was five years, when it was really 20 years, and where she was allegedly given incorrect information about the effect of a guilty plea on her citizenship application, her plea was not knowing and voluntary. Reyes v. State of Maryland, No. 1092, Sept. Term, 2020 (filed Jan. 26, 2022).

Criminal: Where a judge who was new to the case initially acknowledged her unfamiliarity with the facts, but then allowed both the prosecution and defense to present evidence and call witnesses prior to sentencing, and allowed the defendant to address the court prior to sentencing, his right of allocution was not violated. Wilkins v. State, No. 112, Sept. Term, 2021 (filed Jan. 26, 2022).

Administrative

BOTTOM LINE: Where a state statue and the Prince George’s County code both provide an exemption from recordation and transfer taxes for transfers to “the State[,] an agency of the State[,] or a political subdivision in the State,” the “State” was the State of Maryland. As such, a pension fund for California employees was not entitled to the exemption.

CASE: Gateway Terry LLC v. Prince George’s County, No. 708, Sept. Term, 2020 (filed Jan. 26, 2022) (Judges Fader, ARTHUR & Kenney).

FACTS: Gateway Terry LLC is a California limited liability company wholly owned and managed by the Los Angeles County Employees Retirement Association. Gateway Terry purchased real property in Prince George’s County. It claimed a statutory exemption from state transfer and recordation taxes on the ground that it was “a political subdivision in the State.” It also claimed a statutory exemption from county transfer taxes on the ground that it was a “political subdivision of the State.” The tax court denied Gateway Terry’s request for a refund, and the Circuit Court for Prince George’s County affirmed the tax court’s decision.

LAW: Although the General Provisions Article defines the term “State,” with a capital “S,” to mean the State of “Maryland,” Gateway Terry argues, with some force, that that general definition applies only if another definition is not “otherwise provided.” Gateway Terry points out that the Tax-Property Article provides its own definition of “State” or “state,” and that the definition includes “a state . . . of the United States.” Gateway Terry concludes that, in determining the meaning of the term “State” in Tax-Property Article § 12-108(a)(1), a court must apply the definition in the Tax-Property Article.

The tax court relied on the presence of the definite article “the,” which modifies the word “State” in § 12-108(a)(1): “an instrument of writing is not subject to recordation tax, if the instrument of writing transfers property to or grants a security interest to . . . the State.” The tax court reasoned that because the statute refers to “the” State rather than “a” State or state, the legislature must have intended the statute to refer to only one, specific state, namely, the State of Maryland. This court agrees.

The definite article “‘the’ refers to a certain object.” The use of the definite article “the” in § 12-108(a)(1) demonstrates that the term “the State” refers only to the State of Maryland. In creating this exemption for transfers to “the State,” an agency of “the State,” or a political subdivision in “the State,” the General Assembly expressed its intention to limit the exemption to one, specific and particular State, which, in context, could only mean the State of Maryland. The statutory exemption for “the State” does not extend to all 50 American states.

Had the General Assembly intended to exempt conveyances to any one of the 50 states (and to their agencies and political subdivisions), it could easily have done so by employing the phrase “a state” or “a State,” rather than “the State.” As such, the exemption for transfers to “the State” does not apply to transfers to California, or to its agencies or political subdivisions.

This court’s conclusion, that “the State” means the State of Maryland, is supported by other uses of the term “the State” in the Tax-Property Article. As the tax court recognized, the statutory history of the Tax-Property Article provides additional confirmation that the term “the State” in § 12-108(a)(1) refers to the State of Maryland, and not to any other state.

Gateway Terry also argues that the tax court erred in determining that it was not exempt from Prince George’s County’s County transfer tax. This argument has no more merit than its argument concerning the State transfer and recordation taxes. Prince George’s County Code § 10-187(a)(1) states that “Conveyances to the State, any agency of the State, or any political Subdivision of the State shall not be subject to the tax imposed under this Section.” Section 10-102(33) of the Prince George’s County Code defines the term “State” to mean “the State of Maryland.”

By its terms, therefore, § 10-187(a)(1) creates an exemption only for conveyances to the State of Maryland, an agency of the State of Maryland or a political subdivision of the State of Maryland. It does not create an exemption for conveyances to another state, to an agency of another state, to a political subdivision of another state or to an LLC that is owned by a pension fund for employees of a political subdivision of another state.

Accordingly the judgment of the circuit court is affirmed.

Arbitration

BOTTOM LINE: Where plaintiffs alleged that certain agreements were obtained by fraud, and those agreements contained arbitration clauses, the trial court, and not an arbitrator, must determine whether the arbitration agreements exist.

CASE: Linton v. Access Funding LLC, No. 1398, Sept. Term, 2020 (filed Jan. 26, 2022) (Judges Kehoe, Berger, NAZARIAN).

FACTS: Crystal Linton and Dimeca D. Johnson and other putative class members had obtained structured settlements, and the resulting stream of payments, after resolving their lead paint exposure claims. Plaintiffs later signed agreements that purported to transfer their rights to those income streams to Access Funding LLC and/or affiliated entities, in exchange for discounted lump sum cash payments. Ms. Linton and Ms. Johnson filed this action in July 2016, alleging claims of negligence, misrepresentation, fraud and conspiracy in connection with those agreements.

In or about March 2017, the class plaintiffs and the defendants entered into a settlement agreement that the Circuit Court for Baltimore City approved. This court reversed the approval, and the Court of Appeals agreed, so the case was remanded to the circuit court for further proceedings. The circuit court then granted defendants’ renewed motions to compel arbitration.

LAW: The agreements contained identical arbitration clauses that provide, among other things, that, “[o]nce your transaction has closed,” any claim “arising from or relating in any way to this Agreement” shall be resolved by arbitration. The court’s task on a petition to compel arbitration is narrow—it determines only whether a valid arbitration agreement exists. 

In this case, the circuit court didn’t phrase the issue or its holding in those terms. Instead, it phrased the issue as “whether the agreement to arbitrate should be determined by an arbitrator or the court,” and ruled that “arbitrability in this case must be determined by an arbitrator and not the court.” But in using the term “arbitrability,” the court (and the parties) conflate two separate issues: first, whether there is an agreement to arbitrate at all and second, whether a particular dispute falls within the scope of an arbitration agreement.

The first question is always for the court, and not the arbitrator, to decide. The second question, if in dispute, may be decided by the court or the arbitrator, depending on the circumstances. Here, the second question—the scope of the clause—is not at issue. Instead, the dispute centers around the existence of the arbitration agreement itself.

The parties’ arguments in this case flow from a line of cases originating with the United States Supreme Court’s decision in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967), and followed by the Court of Appeals in Holmes v. Coverall N. Am., Inc., 336 Md. 534 (1994). But the Prima Paint and Holmes line of cases proceed from the premise that the underlying agreement and the arbitration clause were entered into at arm’s length. That isn’t the case here, nor could it be—by statute, the agreements weren’t, and couldn’t be, arm’s-length agreements because they aren’t effective unless and until the circuit court approves the transfers.

And the plaintiffs’ claims here allege negligent misrepresentation and fraud directed not only at the plaintiffs but—importantly—at the court. Not only was the court’s authorization required by statute for the metaphorical meeting of the minds to ripen, but the court’s authorization also was required, under the express terms of the arbitration clause, for the arbitration obligation to arise in the first place. For those reasons, then, Prima Paint and Holmes don’t drive our analysis of whether the arbitration clause came into being.

The court looks instead to first principles, as embodied in the Maryland Arbitration Act. Under Courts and Judicial Proceedings Article § 3-206(a), “a provision in a written contract to submit to arbitration any controversy arising between the parties in the future is valid and enforceable, and is irrevocable, except upon grounds that exist at law or in equity for the revocation of a contract.” The plaintiffs have alleged grounds at law or in equity to rescind these contracts. As such, they have denied the existence of a valid arbitration agreement, and that puts to the court, not the arbitrator, the question of whether the arbitration agreement exists.

Judgment of the circuit court for Baltimore City reversed and case remanded for further proceedings.

Civil Practice

BOTTOM LINE: Where residents of Baltimore alleged a police review board was not functioning as an independent agency, but rather under the control of the City, but they could not show that they were personally and specifically affected in a way that was different from the general public, they lacked standing.

CASE: Paula v. Mayor and City Council of Baltimore, No. 1272, Sept. Term, 2020 (filed Jan. 26, 2022) (Judges Kehoe, Berger & RIPKEN)

FACTS: Appellants filed a complaint against the Mayor and City Council of Baltimore City and various related entities, alleging that the Baltimore City Civilian Review Board, or CRB, was not functioning as an independent agency, but rather under the control of the City. The Circuit Court for Baltimore City dismissed the complaint for lack of standing.

LAW: To maintain standing, a plaintiff must demonstrate both that (1) he or she “has an interest such that he [or she] is personally and specifically affected in a way different from . . . the public generally,” and that (2) “the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.”

Appellants claim that a special interest exists because plaintiff Megan Kenny, who was subject to police misconduct at a May 2020 protest, “maintains a complaint to file to the [CRB],” and is currently denied the ability to do so. Appellants also argue that the repeated discrimination by the Baltimore Police Department towards African American citizens furthers their specific interest in an independent review board to conduct unbiased investigations of officer misconduct. According to appellants, plaintiff Gisell Paula’s status as an African American citizen and Kenny’s status as a frequent activist provides a personal and specific interest distinct from the public.

The purpose of the CRB is to act as an independent and non-departmental agency to review public complaints concerning police misconduct. It is an independent entity created by the General Assembly to advise the Police Commissioner on matters of police discipline arising from complaints of abusive language, harassment and use of excessive force. These disciplinary proceedings exist not to remedy a wrong done to a complainant, but to maintain the integrity of the agency.

A complainant’s role in the CRB’s investigatory process is limited. A complainant is not a party to the disciplinary proceeding and has no control over the procedure following the submission of the complaint. In fact, though appellants argue that complainants have a right to the CRB’s independent investigation, the statute makes clear that the Internal Investigation Division is tasked with investigating the complaint, and the CRB may choose to simultaneously investigate, but it need not do so. Aside from filing the initial complaint and possibly being called as a witness in the investigation process, a complainant is otherwise uninvolved in the process.

Finally, any benefit conferred by the disciplinary proceeding is bestowed on the public, in the form of a disciplinary action taken against the officer, as opposed to on a private individual, such as through monetary compensation. Similarly, any risk of injury is suffered either by the public, in the event of an officer not receiving discipline, or by the officer, in the event he is disciplined. Accordingly, the interests asserted do not amount to specific and personal injuries distinct from the general public.

Appellants next contend that the taxpayer standing doctrine provides an alternate basis for standing. The court disagrees. The portion of the CRB budget appellants identify purportedly relates to the salaries of five staff members, but appellants do not explain how the staffs’ duties or expenses would change if appellants’ relief were granted. It is not clear that the relief sought—enjoining the City from exercising authority over the CRB and directing it to provide administrative staff and support and to allow the CRB “access and control” over CRB records—would alleviate any pecuniary loss cited by the appellants.

Lastly, the court finds that Articles 9, 19 and 24 of the Maryland Declaration of Rights does not provide appellants with standing to assert constitutional violations. Consequently, the judgments of the Circuit Court for Baltimore City are affirmed.

Consumer Protection

BOTTOM LINE: Where a property management company filed multiple failure to pay rent actions against a tenant, requesting “possession of the property and a judgment for the amount determined to be due,” it was engaging in debt collection activity and was required to possess a debt collection license.

CASE: Williams v. eWrit Filings LLC, No. 206, Sept. Term, 2021 (filed Jan. 26, 2022) (Judges Reed, BEACHLEY & Zarnoch).

FACTS: From November 2017 through September 2018, eWrit Filings LLC filed nine failure to pay rent, or FTPR, actions against Leslie Williams. On Aug. 26, 2020, Ms. Williams filed a class action complaint, alleging that eWrit unlawfully acted as a debt collector by filing the FTPR actions without having first obtained a debt collection license as required by Maryland law. The circuit court granted eWrit’s motion to dismiss the complaint.

LAW: The threshold issue in this case is whether eWrit, by simply filing FTPR actions on behalf of another, performed debt collection activity and therefore functioned as a debt collection agency for purposes of the MCALA, the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act.

The court has no difficulty concluding that eWrit’s complaints, on their face, sought to collect “consumer claims” as defined in the MCALA. Each FTPR complaint represents “a claim that: (1) is for money owed or said to be owed by a resident of the State; and (2) arises from a transaction in which, for a family, household, or personal purpose, the resident sought or got credit, money, personal property, real property, or services.”

eWrit attempts to extricate itself from the grasp of the MCALA’s licensing requirements by arguing that, because it never personally served Ms. Williams and thus did not obtain personal jurisdiction over her, the district court could not have entered a monetary judgment against her. The court is wholly unpersuaded by eWrit’s argument—the complaints filed against Ms. Williams unequivocally sought “possession of the property and a judgment for the amount determined to be due.”

That eWrit effectively withdrew its request for a monetary judgment when it appeared before a district court judge does not vitiate its “claim” for “money owed” by a Maryland resident where the resident received “personal property” (a leasehold interest) for a “family, household, or personal purpose.” Furthermore, in Ms. Williams’s complaint, she specifically alleged that eWrit sought and obtained money judgments against her. In short, eWrit, by filing the FTPR complaints in this case, falls squarely within the plain language of the MCALA’s definition of a collection agency and, accordingly, eWrit was required to be licensed.

Notably, the MCALA provides a list of entities to which its licensure requirements do not apply, and entities such as eWrit that are engaged in the business of recovering unpaid rents for landlords are not among them. The MCALA does, however, exempt a specific type of entity seeking to recover the collection of rent for another: licensed real estate brokers or their agents. By only exempting real estate brokers and their agents from licensure requirements in the context of collecting rent for others, the MCALA implicitly asserts that all other individuals or entities that seek to collect rent for others are in fact performing debt collection activity.

The court therefore concludes that the plain language of the MCALA makes clear that eWrit’s FTPR actions constitute debt collection activity. The court’s review of the legislative history of the MCALA vindicates its plain reading, and confirms that entities such as eWrit that file FTPR actions on behalf of others are performing debt collection activity.

eWrit next argues that Md. Code § 5-1201 et seq. of the Courts and Judicial Proceedings Article clarify that filing FTPR actions on behalf of others does not constitute debt collection activity. The court disagrees. These statutes were enacted to govern the procedures by which a debt collector may file a claim against a consumer. The court finds that the plain language of CJP § 5-1201 et seq. demonstrates the General Assembly’s intent that the subtitle was not intended to modify Maryland licensure requirements. The legislative history of CJP § 5-1201 et seq. further bolsters the court’s view that this legislation was not meant to address licensure requirements.

Because the court concludes that eWrit’s actions constituted debt collection activity, eWrit was required to possess a debt collection license, and the circuit court erred in dismissing the complaint.

Criminal

BOTTOM LINE: Where a lawful permanent resident was told the maximum sentence for her crime was five years, when it was really 20 years, and where she was allegedly given incorrect information about the effect of a guilty plea on her citizenship application, her plea was not knowing and voluntary.

CASE: Reyes v. State of Maryland, No. 1092, Sept. Term, 2020 (filed Jan. 26, 2022) (Judges Arthur, LEAHY, Eyler).

FACTS: Jeanette Reyes has been a lawful permanent resident since Oct. 1990. In 2003, she was charged with possession of a controlled dangerous substance with intent to distribute. The State intended to prosecute her for possession with intent to distribute cocaine, which would have had a maximum possible sentence of 20 years’ imprisonment. But the State mistakenly maintained that the maximum sentence she faced was only five years, and she was told as much at her initial appearance.

Before Ms. Reyes pleaded guilty, she claims that she asked her attorney whether pleading guilty would make it harder for her to gain American citizenship, and her attorney advised her that her plea would have no effect and that it would be off her record in five to seven years. In fact, the conviction makes her permanently ineligible for citizenship and makes her subject to deportation with no possibility of discretionary relief.

Ms. Reyes now seeks to have the conviction vacated through a petition for a writ of error coram nobis. She argues that her plea was obtained in violation of Maryland Rule 4-242(c), which requires the court to determine that a defendant “understand[s] the nature of the charge and the consequences of the plea.” Her petition was denied by the Circuit Court for Montgomery County.

LAW: The State argues that Ms. Reyes waited too long before bringing her petition. But a party asserting laches must show prejudice resulting from the delay. Here, the State did not assert any form of prejudice in its answer to the petition. Then, during the hearing, the State conceded, multiple times on the record, that it suffered no prejudice from the delay. Accordingly, the State has waived its defense of laches.

In the coram nobis proceedings below, both the circuit court and the State interpreted Coleman v. State, 219 Md. App. 339 (2014), as holding that because Coleman failed to seek a direct appeal, waited many years before filing a coram nobis petition and received a sentence well below the maximum, the error in failing to inform him of the true maximum sentence was harmless. The circuit court concluded that the same factors are present here, and that they are enough to deny Ms. Reyes’s petition.  This court disagrees.

First, the failure to seek a direct appeal has limited relevance to the analysis. Since the General Assembly enacted Criminal Procedure § 8-401, it has been the law that a petitioner does not waive her right to coram nobis relief by failing to seek a direct appeal.

Second, the amount of time that elapsed between Ms. Reyes’s conviction and her petition was not a proper factor for the circuit court to consider in its coram nobis analysis. Because the State conceded that it suffered no prejudice from Ms. Reyes’s delay in bringing her petition, the delay had limited relevance—if any—to a weighing of the equities of this case.

Third, while the State is correct that Coleman considered the petitioner’s actual sentence as a factor in its decision, it played a relatively small role in the court’s analysis. The dispositive factor in Coleman was that even though the petitioner was not properly informed of the maximum sentence at his plea hearing, he had actual knowledge of the true maximum sentence before he pleaded guilty. Here, the facts are very different.

The court also disagrees with the State’s contentions regarding the prosecutor’s comment at the sentencing hearing that this was a “20-year offense,” and Ms. Reyes’s lack of a recorded response. Ms. Reyes’s silence at the sentencing hearing tells the court nothing about whether she heard and comprehended the prosecutor’s comment. But even if Ms. Reyes heard and comprehended the prosecutor’s comment, her knowledge of the maximum sentence at the sentencing hearing is not probative of her knowledge at the plea hearing two months earlier. Finally, the court is unable to agree with the State’s assertion that it is “improbable” that Ms. Reyes did not learn of the maximum sentence before she pleaded guilty.

Ms. Reyes’s plea was not knowing and voluntary. The circuit court abused its discretion in denying her petition for writ of error coram nobis. On remand, the question before the circuit court is whether Ms. Reyes’s conviction, as the product of an unlawful guilty plea, should remain on her record and continue subjecting her to collateral consequences.

Criminal

BOTTOM LINE: Where a judge who was new to the case initially acknowledged her unfamiliarity with the facts, but then allowed both the prosecution and defense to present evidence and call witnesses prior to sentencing, and allowed the defendant to address the court prior to sentencing, his right of allocution was not violated.

CASE: Wilkins v. State, No. 112, Sept. Term, 2021 (filed Jan. 26, 2022) (Judges BERGER, Wells & Sharer).

FACTS: In 2012, a jury found Davon Wilkins guilty of involuntary manslaughter; use of a handgun in the commission of a crime of violence and wearing, carrying and transporting a handgun. The court sentenced Wilkins to 10 years’ imprisonment for involuntary manslaughter, a consecutive term of 20 years for unlawful use of a handgun and a concurrent term of three years for wearing, carrying and transporting a handgun. Those judgments were affirmed on direct appeal.

Wilkins thereafter sought postconviction relief, and, in 2019, he was awarded a new sentencing hearing. That hearing was held in 2021 and resulted in the re-imposition of his original sentence (with the exception that the conviction for wearing, carrying and transporting a handgun was merged into that for unlawful use of a handgun). Wilkins now appeals from that ruling, raising two claims: (1) that the sentencing court violated his right of allocution and/or Maryland Rule 4-342 and (2) that the sentencing court abused its discretion in imposing sentence.

LAW: Wilkins contends that he was provided his right of allocution only in form, not in substance. According to Wilkins, the resentencing judge acknowledged that “she did not know the facts of the case” and that “she had not read the trial transcript,” from which he invites us this court to conclude that the resentencing judge “had apparently studiously ignored the facts of this case.” Not only did this “effectively depriv[e] him of his right of allocution under Rule 4-342(e),” Wilkins asserts, but the court furthermore failed to “state on the record its reasons for the sentence imposed,” in violation of Rule 4-342(f). These contentions are without merit.

The original sentencing judge had retired during the time between Wilkins’s trial and his resentencing. Although the replacement judge acknowledged initially her unfamiliarity with the case, the sentencing hearing that followed provided both parties a full opportunity to present evidence relevant to sentencing. Not only did the prosecutor summarize the facts of the crimes, but defense counsel conceded that the prosecutor’s summary was substantially accurate. The prosecutor presented victim impact testimony, and the defense presented testimony in mitigation by a social worker it had chosen for that purpose.

Finally, Wilkins was provided his opportunity to address the court, which he did. Only after all this did the court impose sentence. Nothing about this procedure was a sham. Wilkins was provided a full and fair opportunity to present his case, but merely because the replacement judge imposed the maximum possible sentence does not mean that his opportunity was in any sense an empty gesture. The court did not infringe Wilkins’s right of allocution.

As for Wilkins’s claim that the circuit court violated Rule 4-342(f) because it failed to state its reasons on the record, because defense counsel did not raise this issue at sentencing, it is not preserved and the court shall not address it.

Wilkins also claims that the circuit court abused its discretion in resentencing him. The gravamen of that claim is that the replacement judge failed to familiarize herself with the record prior to the resentencing hearing, which, according to Wilkins, violated Rule 4-361. Wilkins did not raise this claim before the resentencing court. Because a violation of Rule 4-361 does not result in an inherently illegal sentence, a contemporaneous objection was required. This claim is therefore unpreserved.

Even if it had been preserved, it has no merit. The replacement judge openly acknowledged that she had not read the trial transcript prior to the resentencing hearing. She then declared that both parties would have a full opportunity to present their respective cases, which they did. At no point did anyone object to the manner in which the court proceeded. Under these circumstances, the court’s actions were not “manifestly unreasonable,” and it therefore did not abuse its discretion. Judgment of the Circuit Court for Baltimore City affirmed.