• Maryland Court Advises When Claims Against Debt Buyers Come Too Late
  • August 15, 2017 | Authors: Lawrence D. Coppel; Marjorie A. Corwin; Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • In Maryland, debt buyers are facing what feels like a tsunami of litigation. In 2007, Maryland’s Collection Agency licensing law was amended to apply to persons collecting a debt they actually own if, when the debt was acquired, the debt was already in default. Since that time, debt buyers have been facing challenges. In recent months alone, Maryland’s Court of Special Appeals, our intermediate appellate court, has decided no fewer than 3 cases relating to debt collection. Many of the debt collection challenges involve a judgment debtor (individually or on behalf of an alleged class) claiming that the unlicensed status of the debt buyer should lead to relief for judgment debtors. In a decision dated June 29, 2017, the Maryland Court of Special Appeals again addressed debt collection, this time providing guidance on when a claim against a debt buyer is brought too late (i.e., guidance on the effect of statutes of limitations or laches for various types of claims). The Court explained that Maryland courts hear actions both in law (e.g., claims based on statute or common law and often asking for monetary damages) and in equity (e.g., claims based on concepts of fairness and asking for equitable relief). The Court explained that actions in law are subject to statutes of limitations, often 3-years but, depending on applicable law, that could be longer or shorter. The Court explained that claims asking purely for equitable remedies (e.g., injunctive relief) are not subject to a statute of limitations but may be subject to “laches.” As described by the Court, “Laches is the limit equity places on stale claims....There is no firm time limit for laches: rather a judge sitting in equity considers plaintiff’s delay in asserting the claim and its causes and weighs that against the prejudice to the defendant caused by the late assertion of the equitable claim.” Finally, the Court recognized that some claims, such as a declaratory judgment action, present a hybrid situation because the relief requested can be exclusively equitable or can be relief provided by statute or other law. Therefore, the Court instructed that a court determine if the requested relief is at law or equity. If the relief sought is of a type found at law, a statute of limitations will apply. If the relief is of an equitable nature, the court should analyze whether the relief is barred by laches or is otherwise not subject to any time limit. Debt buyers and judgment debtors alike will bring and defend claims guided by this recent decision. Please contact Margie Corwin if you would like to discuss this case or debt collection in Maryland.