In response to a certified question from United States District Court Judge George L. Russell, III, the Court of Special Appeals unanimously ruled that alleged victims of unlicensed lenders have a twelve (12) year statute of limitations in which to file suit after suffering injuries and damages, rather than the usual “blanket” three year statute of limitations prescribed by Maryland Courts and Judicial Proceedings §5-101.  Judge Russell sought resolution of this statute of limitations dispute because it involved a question of Maryland state law and not federal law.     

In William Price, et al. v. Ralph M. Murdy, et al., Misc. No. 1, September Term 2018, the Court of Appeals accepted the following statement of facts from the United States District Court for the District of Maryland:  The Plaintiffs/Appellants, Price and Chovan, were consumers who financed the purchase of automobiles through loans less than $6,000.  Plaintiffs subsequently brought a class-action lawsuit against the lender, Samuel Spicer¹, for alleged violations of the Maryland Consumer Loan Law (“MCLL”).  The suit alleges that Spicer was not licensed to enter into these loans under the MCLL.  The suit further alleges that Spicer violated the MCLL by: (1) failing to provide notices relating to the repossession of vehicles; (2) charging and collecting compound interest; and (3) charging and collecting inflated or uncollectable attorney’s fees.   While the Plaintiffs alleged that they entered into the loans when Spicer was unlicensed, they conceded that the actual loan transactions were over a decade prior to the filing of the lawsuit on March 17, 2017.  The general statute of limitations for civil actions is three years.  However, Maryland Courts and Judicial Proceedings §5-102 provides a twelve year statute for causes of action brought under a specialty statute.  The relevant language of §5-102 reads: (a) An action on one of the following specialties shall be filed within 12 years after the cause of action accrues, or within 12 years from the date of death of the last to die of the principal debtor or creditor, whichever is sooner:                                                  (1) Promissory note or other instrument under seal;
                                                  (2) Bond except a public officer’s bond;
                                                  (3) Judgment;
                                                  (4) Recognizance;
                                                  (5) Contract under seal; or
                                                  (6) Any other specialty.

Plaintiffs alleged that the MCLL is an “other specialty,” which would allow the twelve year statute of limitations and make their claim viable.  Spicer argued that the MCLL is not a specialty, and that as a result, Plaintiffs’ claims are time-barred.

To answer this certified question from the District Court, the Court of Appeals turned to Master Fin., Inc. v. Crowder, 409 Md. 51 (2009), where the Court had previously laid out a test for determining whether a statute creates an “other specialty” under Courts and Judicial Proceedings §5-102(a)(6).  In Crowder, the Court held that “an action based on a statute will constitute an ‘other specialty’ subject to the 12-year period of limitations if (1) the duty, obligation, prohibition or right sought to be enforced is created or imposed solely by the statute, or a related statute, and does not otherwise exist as a matter of common law…”  Crowder, 409 Md. at 70.   

The Court concluded that the MCLL’s many statutory protections were created and imposed solely by the statute, rather than by common law.  Thus, the MCLL carries a 12-year statute of limitations in which an injured party may bring a claim involving “other specialty” requirements – such as a licensing requirement to make commercial loans; limitations on the amount of interest, fees, points, and commissions a lender is allowed to charge; and various disclosure requirements. 

This decision may bring some regulation and supervision to the business of making small loans, but will require attorneys to advise their lender clients to retain over a decade of records.

¹ The claims against Defendant Ralph Murdy were dismissed prior to the District Court’s certification order to the Court of Appeals.