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Decided: January 11, 2016

The Fourth Circuit affirmed the district court’s judgment with regard to Plaintiff Dante Askew’s (“Askew”) Maryland Credit Grantor Closed End Credit Provision (“CLEC”) claim and his breach of contract claim. However, the Court reversed the district court’s order granting summary judgment to Defendant Hampton Roads Finance Company “HRFC”) for Askew’s Maryland Consumer Debt Collection Act (“MCDCA”) claim and remanded for further proceedings.

In 2008, Askew entered into a contract between himself and a car dealership financing the purchase of a used car. The dealership subsequently assigned the contract to HRFC. The contract, which was subject to the CLEC’s maximum allowable rate of 24%, charged a 26.99% interest rate. In August 2010, HRFC recognized this error and informed Askew via letter that HRFC had credited his account $845.40. After receiving the letter from HRFC, Askew fell behind on his payments, leading to HRFC to take steps to collect on his account. Askew then filed suit in state court alleging violations of CLEC, MCDCA, as well as breach of contract based on HRFC’s alleged failure to comply with CLEC. HRFC removed the case to federal court. After limited discovery, HRFC moved for summary judgment, which the district court granted.

On appeal, the Court agreed with the district court regarding its grant of summary judgment to HRFC on Askew’s CLEC claims and breach of contract claim. The Court first gave a brief summary of CLEC’s framework. Creditors doing business in Maryland may opt to make a loan governed by CLEC if they “make a written election to that effect.” If the statute applies, section 12-1003(a) sets a maximum interest rate of 24%. Askew presented three arguments to the Court with respect to CLEC. First, he argued that HRFC violated CLEC by failing to expressly disclose in the contract an interest rate below the statutory maximum. Second, Askew contends that the “discovery rule” from the statute of limitations should apply to the safe harbor of CLEC. Finally, Askew argues that section 12-1020 of the CLEC provides HRFC no protection because HRFC failed to properly notify him of the interest rate error and it failed to make the proper corrections to the error. As for Askew’s first argument, the Court held that HRFC’s mere failure to disclose an interest rate below CLEC’s statutory maximum is not a distinct violation of section 12-1003(a) for which liability can be imposed. Likewise, the Court found that the district court properly found that HRFC was not liable under CLEC, as long as HRFC properly notified Askew and made proper adjustments. As to that, the Court held that HRFC properly complied with section 12-1020’s notice requirements. The Court also determined that the district court properly granted HRFC summary judgment for Askew’s breach of contract claim because the contract incorporated all of CLEC, including its safe harbors. Therefore, the Court determined that a defense under CLEC precludes contract liable for HRFC.

The Court, however, found that the district court erred in granting HRFC summary judgment as to Askew’s MCDCA claim. The Court reasoned that HRFC informed Askew at least three times that it had taken some legal action against him when, according to Askew, it had not. As a result, the Court held that a jury could find that HFRC’s alleged conduct, “at least in the aggregate, could reasonably be expected to abuse or harass Askew,” in violation of the MCDCA. Accordingly, the Fourth Circuit reversed the district court’s order granting summary judgment to HRFC on Askew’s MCDCA claim.

Full Opinion

Meredith Weisler