Gladys Gardner v. GMAC Incorporated

Filing

PUBLISHED AUTHORED OPINION filed. Motion disposition in opinion denying Motion to certify question to state court [999358762-2]; terminating Motion to certify question to state court [999587287-2] Originating case number: 1:10-cv-01094-JFM. [999635459]. [14-1048, 14-1049]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-1048

GLADYS GARDNER, Individually and on Behalf of All Persons
Similarly Situated,
Plaintiff - Appellant,
v.
GMAC, INC., now known as Ally Financial Incorporated,
Defendant and Third-Party Plaintiff – Appellee,
v.
MANHEIM REMARKETING, INC.,
Third-Party Defendant.

No. 14-1049

RANDOLPH SCOTT, Individually and on Behalf of All Persons
Similarly Situated,
Plaintiff - Appellant,
v.
NUVELL FINANCIAL SERVICES, LLC; NUVELL NATIONAL
FINANCE, LLC, d/b/a Nuvell National Auto Finance,

AUTO

Defendants and Third-Party Plaintiffs – Appellees,
v.

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MANHEIM REMARKETING, INC.,
Third-Party Defendant.

Appeals from the United States District Court for the District
of Maryland, at Baltimore.
J. Frederick Motz, Senior District
Judge. (1:10−cv−01094−JFM; 1:09-cv-03110-JFM)

Argued:

May 12, 2015

Decided:

August 6, 2015

Before NIEMEYER, KEENAN, and DIAZ, Circuit Judges.

Affirmed by published opinion. Judge Diaz wrote the opinion, in
which Judge Niemeyer and Judge Keenan joined.

ARGUED: Benjamin Howard Carney, GORDON, WOLF & CARNEY CHTD.,
Towson, Maryland, for Appellants. Martin C. Bryce, Jr., BALLARD
SPAHR LLP, Philadelphia, Pennsylvania, for Appellees. ON BRIEF:
Martin E. Wolf, GORDON, WOLF & CARNEY CHTD., Towson, Maryland;
Mark H. Steinbach, Washington, D.C.; John J. Roddy, Elizabeth A.
Ryan, BAILEY & GLASSER, LLP, Boston, Massachusetts, for
Appellants. Robert A. Scott, Glenn A. Cline, BALLARD SPAHR LLP,
Baltimore, Maryland, for Appellees.

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DIAZ, Circuit Judge:
The main question raised by this appeal is when borrowers
may seek a remedy after their creditors violate the repossession
notice

requirements

in

Maryland’s

Credit

Grantor

Closed

End

Credit Provisions (“CLEC”), Md. Code Ann., Com. Law § 12-1001 et
seq.

Because we conclude that CLEC requires borrowers to have

repaid more than the original principal amount of their loans
before they are entitled to relief, we affirm.

I.
Gladys
retail

Gardner

installment

and

Randolph

Scott

each

sale

contract

with

GMAC,

entered

into

Inc.--now

a

Ally

Financial, Inc.--or its subsidiary, respectively, to finance the
purchase of a car.

Both contracts were forms drafted by GMAC

that designated CLEC as the applicable law.

Relevant to this

appeal, CLEC establishes rules, including notice requirements,
for

creditors

that

repossess

“tangible

personal

property

securing a loan” after the borrower defaults on that loan.
Code Ann., Com. Law § 12-1021.
collect

only

the

principal

Md.

Creditors who violate CLEC “may

amount

of

the

loan

and

may

not

collect any interest, costs, fees, or other charges with respect
to the loan.”

Id. § 12-1018(a)(2).

After making some payments, Gardner and Scott defaulted on
their loans and GMAC repossessed their cars.
3

GMAC sent the

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borrowers notices that the cars would be sold at public sales.
GMAC sold them for less than the amount owed under the contracts
and issued post-sale notices explaining that deficiency.
Gardner and Scott filed separate class action complaints
against

GMAC,

alleging

counts

for

(1)

CLEC

violations;

(2)

breach of contract; (3) declaratory and injunctive relief; (4)
restitution/unjust enrichment; and (5) violation of Maryland’s
Consumer Protection Act, Md. Code Ann., Com. Law § 13-101 et
seq.

The

complaints

allege

that

GMAC’s

pre-sale

notices

mischaracterized the sales as public, when in fact they were
private, due to a $1,000 refundable cash entrance fee required
to view the sale.

They further contend that, because of that

mischaracterization,

GMAC’s

post-sale

notices

lacked

statutorily required disclosures for private sales.

certain
See Md.

Code Ann., Com. Law § 12-1021(j)(2).
The district court found that the sales were public and
granted summary judgment to GMAC on that basis.
certified

the

question

to

the

Court

of

which held that the sales were private.
Inc., 61 A.3d 817, 828 (Md. 2013).

On appeal, we

Appeals

of

Maryland,

Gardner v. Ally Fin.

We therefore reversed the

district court’s judgment and remanded the cases.

Gardner v.

Ally Fin. Inc., 514 F. App’x 378, 379 (4th Cir. 2013).
On
judgment

remand,
to

the

GMAC.

district
This

court

time,
4

the

again
court

granted

reasoned

summary
that

(1)

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neither Gardner nor Scott had sustained any damages under CLEC
because, based on this court’s decision in Bediako v. American
Honda Finance Corp., 537 F. App’x 183 (4th Cir. 2013), an unpaid
principal balance remained on their loans; and (2) GMAC had, in
a binding judicial admission, abandoned any claim for deficiency
judgments against them.

Scott v. Nuvell Fin. Servs., Nos. JFM-

09-3110, JFM-10-1094, 2013 WL 6909518, at *1 (D. Md. Dec. 31,
2013).

Gardner and Scott appeal, contending that those rulings

are in error and raising other issues.

We review de novo a

district court’s order granting summary judgment.

Triton Marine

Fuels Ltd., S.A. v. M/V PACIFIC CHUKOTKA, 575 F.3d 409, 412 (4th
Cir. 2009).

II.
Two CLEC provisions are at issue in this appeal.

First,

CLEC’s civil remedies section provides, “Except for a bona fide
error of computation, if a credit grantor violates any provision
of

this

subtitle

the

credit

grantor

may

collect

only

the

principal amount of the loan and may not collect any interest,
costs, fees, or other charges with respect to the loan.”
Code

Ann.,

Com.

Law

§ 12-1018(a)(2).

Second,

Md.

CLEC’s

repossession section states, “If the provisions of this section,
including

the

requirement

of

furnishing

a

notice

following

repossession, are not followed, the credit grantor shall not be
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entitled

to

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any

deficiency

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judgment

entitled under the loan agreement.”

to

which

he

would

be

Id. § 12-1021(k)(4).

A.
We

have

previously

interpreted

Section

12-1018(a)(2)’s

plain language as limiting “a debtor’s relief under CLEC to any
amounts paid in excess of the principal amount of the loan.”
Bediako, 537 F. App’x at 186.
unlike

statutes

such

as

We have also explained that,

the

federal

Fair

Debt

Collection

Practices Act, CLEC does not establish a fixed statutory damages
award.

Id.

To

add

an

example

from

Maryland,

a

statute

prohibiting unwanted commercial email provides for damages “in
an amount equal to the greater of $500 or the recipient’s actual
damages.”

Md. Code Ann., Com. Law § 14-3003 (emphasis added).

The absence of a parallel provision in CLEC is telling.
Gardner

and

Scott

do

not

say

that

Bediako

was

wrongly

decided; they instead attempt to distinguish it by claiming that
the

creditor

holding
creditor

in

in

Bediako

Bediako

violated

was
CLEC:

fully

complied

premised
“[E]ven

on
if

the

with

CLEC.

assumption

Bediako

has

But

our

that

the

adequately

alleged a violation of CLEC’s notice provisions, she is unable
to state a claim because she has suffered no actual damages that
are compensable under CLEC.”
added).

537 F. App’x at 188 (emphasis

Turning that assumption into an actual violation does

not alter the damages analysis.
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Because Gardner and Scott have given us no good reason to
depart from Bediako, we will follow it. 1

And like the borrower

there, the borrowers here have not paid anything in excess of
the

principal.

borrower’s

In

payments

Bediako,
during

we

the

recharacterized

life

of

the

loan

all
as

of

the

payments

toward principal and then subtracted that total and the sale
proceeds from the original principal amount of the loan.
186 & n.1.

Id. at

Applying that same calculation, Gardner and Scott

each still owe roughly $11,000 in principal on their loans.
B.
Despite the fact that neither Gardner nor Scott has paid
anything in excess of the principal, they nonetheless insist
that they are entitled under CLEC to a refund of (1) the funds
they claim GMAC collected after repossessing their cars 2 and (2)

1

Gardner and Scott are correct that the district court
mistakenly referred to our unpublished Bediako decision as
binding authority, but that alone does not require reversal.
2

Neither borrower made any payments after repossession.
But they contend that GMAC impermissibly credited their accounts
with refunds it received from insurance companies after their
policies were canceled, instead of forwarding those refunds to
Gardner and Scott.
In their opening brief, Gardner and Scott also argue that
GMAC collected funds that it designated on their accounts as
“PRIN-PAID,” “FIN-PAID,” “LC-PAID,” and “OTHER PAID.”
But the
undisputed evidence shows that these are internal accounting
entries used by GMAC to “zero out” the borrowers’ accounts in
its active account management system before reloading them into
the system for accounts in default. J.A. 597.
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their payments to GMAC during the life of their loans to cover
interest, costs, fees, or other charges.
Gardner

and

Scott

build

That is not correct.

their

first

argument

on

a

misreading of two cases from the Court of Appeals of Maryland.
They say that GMAC is now “limited to the proceeds of the sale
as

satisfaction

of

the

debt”

because

it

violated

CLEC.

Appellants’ Br. at 29 (quoting Gardner, 61 A.3d at 823, and
citing Patton v. Wells Fargo Fin. Md., Inc., 85 A.3d 167, 181
(Md. 2014)).

But the full sentence from Gardner gives important

context: “If the debtor can show that the creditor failed to
abide by the requirements of CLEC in selling the collateral, the
creditor may be barred from a deficiency judgment and limited to
the proceeds of the sale as satisfaction of the debt.”
at 823 (emphasis added).

61 A.3d

Contrary to Gardner and Scott’s view,

the court was merely acknowledging the practical reality that a
creditor

who

violates

anything

beyond

the

CLEC

will

proceeds

likely

of

the

be

unable

sale

because

violators from obtaining a deficiency judgment.
the

court’s

opinion

or

CLEC

itself

say

to

that

collect

CLEC

bars

Nowhere does
creditors

who

violate CLEC cannot try to collect the deficiency by means other
than a judgment, or apply toward the outstanding principal any
funds they receive after the repossession sale.
Gardner
Section

and

Scott

12-1021(k)(4)

would
and

have

ignore
8

us

read

the

fact

“judgment”
that

out

Section

of
12-

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1018(a)(2)

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expressly

permits

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creditors

collect the principal amount of the loan.

who

violate

CLEC

to

We decline to do so.

See Mid-Atlantic Power Supply Ass’n v. Pub. Serv. Comm’n of Md.,
760 A.2d 1087, 1097 (Md. 2000) (“It long has been the law of
Maryland and well settled, that statutes are to be read to give
meaning to every word used and to do otherwise contravenes this
cardinal rule of statutory construction.”); Kaczorowski v. Mayor
&

City

Council

of

Balt.,

525

A.2d

628,

631

(Md.

1987)

(“[S]tatutes dealing with the same subject matter should, when
possible, be read together and harmonized.”).
As to the second refund claim, Gardner and Scott’s argument
relies solely on a decision by the Commissioner of Financial
Regulation interpreting Maryland mortgage law.

Comm’r of Fin.

Regulation v. Ward, No. CFR-FY2010-418 (Nov. 26, 2013), aff’d,
No. C 13-2191 (Md. Cir. Ct. Feb. 23, 2015).

Similar to CLEC

Section 12-1018(a)(2), violators of the Maryland Mortgage Lender
Law “may collect only the principal amount of the loan and may
not collect any interest, costs, finder’s fees, broker fees, or
other charges with respect to the loan.”
Inst. § 11-523(b).
Commissioner

in

Ward

Md. Code Ann., Fin.

Gardner and Scott posit that because the
awarded

a

reimbursement

of

all

amounts

collected other than principal, CLEC commands the same result.
We are unpersuaded.

Ward is easily distinguishable.

The

lender there violated Maryland mortgage law at the time the loan
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was originated by operating without a license.
FY2010-418, at 13; J.A. 626.

Ward, No. CFR-

As a result, the lender collected

the reimbursed interest, etc. after the violation.

Here, by

contrast, GMAC’s pre-repossession collection of interest, etc.
occurred

before

any

violation.

This

difference

in

timing

renders Ward inapposite. 3

3

We deny Gardner and Scott’s May 2014 motion to certify a
question to the Court of Appeals of Maryland because that motion
is based entirely on the purported conflict between Bediako and
Ward.
In two Federal Rule of Appellate Procedure 28(j) letters,
Gardner and Scott add that Bediako conflicts with orders of the
Circuit Court for Anne Arundel County, Maryland, denying a
creditor’s motion for summary judgment and granting the
borrower’s motion for class certification. See Patton v. Wells
Fargo Bank NA, No. 02-C-10-149844, (Md. Cir. Ct. Apr. 24, 2015);
Patton, No. 02-C-10-149844 (Md. Cir. Ct. June 18, 2015).
Neither order, however, provides any reasoning on the issue
before us.
In a third Rule 28(j) letter, Gardner and Scott press
another purported conflict between Bediako and Len Stoler, Inc.
v. Wisner, No. 0490, 2015 WL 3421134 (Md. Ct. Spec. App. May 28,
2015). In Wisner, the creditor argued that the borrower lacked
standing because even if the creditor had improperly retained
part of the excise tax in violation of CLEC, it should have sent
the retained amount to the State.
As a result, the borrower
sustained no injury. The court rejected that argument by simply
declaring that if a violation occurred, the borrower “would be
entitled to penalties proscribed by CLEC.”
Len Stoler, Inc.,
2015 WL 3421134, at *11.
However, the court did not analyze
CLEC’s penalties provisions and gave no explanation as to why
the borrower would be entitled to those penalties.
Moreover,
the creditor never raised the argument that GMAC has made before
us based on Bediako and CLEC Section 12-1018(a)(2).

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III.
Gardner and Scott next argue that the district court erred
in denying their claim for declaratory and injunctive relief.
We find no error.
First,

the

erroneously

borrowers

found

that

no

contend
case

or

that

the

controversy

district
existed

court
as

to

their claim for a declaratory judgment and an injunction barring
GMAC

from

Gardner

seeking

and

a

Scott,

deficiency
“GMAC’s

judgment

claim

that

them. 4

against
it

is

To

abandoning

deficiency judgments is not the same as a declaratory judgment
in Plaintiffs’ favor” because they could only rely on the latter
if “GMAC, or one of its debt collectors, resumed dunning them.”
Appellants’ Br. at 27.
court

that,

deficiency

because

judgments

actual controversy.

GMAC

However, we agree with the district
expressly

against

Gardner

abandoned
and

any

Scott,

claim

there

is

for
no

See Bediako, 537 F. App’x at 187-88. 5

4

We read the district court’s order together with its
accompanying memorandum as dismissing this particular claim,
rather than entering judgment in favor of GMAC.
The district
court ruled that no case or controversy existed as to the
deficiency judgment issue.
That, of course, means it lacked
subject matter jurisdiction.
S.C. Coastal Conservation League
v. U.S. Army Corps of Eng’rs, No. 14-1796, 2015 WL 3757640, at
*6 (4th Cir. June 17, 2015) (“When a case or controversy ceases
to exist, the litigation is moot, and the court’s subject matter
jurisdiction ceases to exist also.”).
5

Scott contends that because his case was removed from
state court, it must now be remanded.
See 28 U.S.C. § 1447(c)
(Continued)
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Second, Gardner and Scott posit that they are entitled to a
declaratory

judgment

and

an

injunction

barring

GMAC

from

pursuing the deficiency balance on their loans, even through
out-of-court debt collection methods.
CLEC

for

this

claim.

CLEC

But there is no basis in

specifically

seeking a “deficiency judgment.”
1021(k)(4) (emphasis added).

bars

violators

from

Md. Code Ann., Com. Law § 12-

Once again, we decline to read

that word out of the statute.
Lastly, Gardner and Scott argue that the district court
should

have

awarded

them

a

declaratory

judgment

and

an

injunction barring GMAC from collecting interest, costs, fees,
or other charges on their loans in the future.
CLEC

does

not

permit

such

relief

to

borrowers

We find that
who

violation of the repossession notice requirements.
of

CLEC

Sections

12-1007

and

12-1021

illustrates

allege

a

A comparison
why.

The

(“If at any time before final judgment it appears that the
district court lacks subject matter jurisdiction, the case shall
be remanded.”). But the Supreme Court has all but rejected that
interpretation of § 1447(c).
Wis. Dep’t of Corr. v. Schacht,
524 U.S. 381, 392 (1998) (“An ordinary reading of the language
indicates that the statute refers to an instance in which a
federal court ‘lacks subject matter jurisdiction’ over a ‘case,’
and not simply over one claim within a case.”).
The Court
skeptically acknowledged another possible reading--that the
statute requires remand of the individual claim over which the
court lacks jurisdiction.
Id.
We agree that the first
interpretation is a better reading of the statute and therefore
hold that § 1447(c)’s mandate applies only when a district court
lacks subject matter jurisdiction over an entire case.
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legislature specifically provided that a violation of Section
12-1007, which covers insurance, entitles the borrower to “[a]n
injunction to prohibit the credit grantor who has engaged or is
engaging in the violation from continuing or engaging in the
violation.”

Md. Code Ann., Com. Law § 12-1007(f)(3)(i).

In

CLEC Section 12-1021, covering repossession, the legislature did
not authorize similar relief.

Instead, Section 12-1021 simply

states that a violation of its provisions means that “the credit
grantor

shall

not

be

entitled

to

any

deficiency

judgment

which he would be entitled under the loan agreement.”

to

Id. § 12-

1021(k)(4).

IV.
We turn now to Gardner and Scott’s claims for breach of
contract,

restitution/unjust

enrichment,

Maryland’s Consumer Protection Act.

and

violations

of

None succeed.

A.
Gardner and Scott contend that, regardless of their lack of
actual damages under CLEC, they have a claim for nominal damages
for

breach

of

contract

under

Maryland

law.

See

Taylor

v.

NationsBank, N.A., 776 A.2d 645, 651 (Md. 2001) (“[I]t is well
settled that where a breach of contract occurs, one may recover
nominal

damages

damages.”).

even

Here,

though

though,

he
the
13

has

failed

borrowers’

to

prove

actual

sole

basis

for

a

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breach-of-contract claim is that GMAC violated CLEC.
them

to

pursue

nominal

breach-of-contract

damages

claim

would

by

asserting

effectively

a

To allow

stand-alone

render

CLEC’s

requirement that a borrower suffer actual damages a nullity.
This is so because the only way for CLEC to govern a dispute is
for the creditor to specifically elect it in the contract.
Code

Ann.,

Com.

Law

§ 12-1013.1(a).

We

do

not

think

Md.
that

Maryland’s highest court would countenance such a result, and
neither shall we. 6
B.
Gardner and Scott also argue that the district court erred
in

granting

summary

restitution/unjust
Protection Act.

judgment

enrichment

to
and

GMAC

on

under

their

claims

Maryland’s

for

Consumer

We disagree.

On the restitution/unjust enrichment claim, the borrowers’
entire argument is that they “are entitled to actual damages in
restitution

and

unjust

enrichment

for

collected on their deficiency balances.”

the

amounts

unlawfully

Appellants’ Br. at 34.

But GMAC has not collected anything “unlawfully” because it has

6

After we heard oral argument, Gardner and Scott filed a
motion to certify the question about the availability of nominal
damages to the Court of Appeals of Maryland.
We decline to
burden that court with a request to rule on what amounts to a
claim for a dollar or less. See Brown v. Smith, 920 A.2d 18, 30
(Md. Ct. Spec. App. 2007) (noting that Maryland courts typically
award nominal damages from one cent to one dollar).
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yet to recoup the full principal amount of the loan, and has not
collected anything since it sent the repossession notices.
Turning to the borrowers’ claim under Maryland’s Consumer
Protection Act, that statute prohibits “any unfair or deceptive
trade

practice”

in,

among

other

things,

the

“extension

consumer credit” and the “collection of consumer debts.”
Code

Ann,

trade

Com.

practice

written

Law

§ 13-303(4)-(5).

includes

statement . . .

a

An

unfair

“[f]alse . . .

which

has

the

or

or

of
Md.

deceptive

misleading . . .

capacity,

tendency,

or

effect of deceiving or misleading consumers” and the “[f]ailure
to state a material fact if the failure deceives or tends to
deceive.”

Id. § 13-301(1), (3).

The Act allows “any person

[to] bring an action to recover for injury or loss sustained by
him as the result of a practice prohibited by [the Act].”

Id.

§ 13-408(a).
“Maryland law requires [Consumer Protection Act] claimants
to

show

‘they

were

actually

violation of the [Act].’”
N.A.,

36

A.3d

399,

417

injured

by

[the

defendant’s]

Polek v. J.P. Morgan Chase Bank,
(Md.

2012)

(second

alteration

in

original) (quoting DeReggi Constr. Co. v. Mate, 747 A.2d 743,
752 (Md. Ct. Spec. App. 2000)).
injury” will not do.

Id. at 418.

15

A “conjectural or potential

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Gardner and Scott contend that the defective repossession
notices constitute an unfair and deceptive trade practice.

Even

assuming this is so, neither has stated a claim.
Scott’s sole argument on this point is that he is entitled
to the “amounts collected” on his deficiency balance.
has

not

collected

repossession

anything

notice.

on

his

Therefore,

loan

Scott

has

But GMAC

since

sending

the

not

sustained

an

actual injury or loss.
Gardner adds that she sustained an injury or loss because
she traveled to the site listed in the pre-sale notice to view
the sale of her car, but was denied entry because she did not
have the undisclosed $1,000 refundable cash deposit.

However,

nowhere in her complaint does Gardner allege that she would not
have traveled to the site had the $1,000 deposit requirement
been disclosed.

Without this causal link, she too has failed to

state a claim.

V.
Finally, Gardner and Scott challenge the district court’s
denial of their motion under Rule 23(d)(1)(B) of the Federal
Rules of Civil Procedure for notice to putative class members.
We review that decision for abuse of discretion.

See Gulf Oil

Co. v. Bernard, 452 U.S. 89, 99-103 (1981) (applying abuse-ofdiscretion

review

to

a

district
16

court’s

Rule

23(d)

order

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restricting

the

counsel

communicate

to

ability

of

Pg: 17 of 18

the

with

named

potential

plaintiffs
class

and

members

their
without

advance judicial approval); Cruz v. Am. Airlines, Inc., 356 F.3d
320, 328 (D.C. Cir. 2004) (reviewing for abuse of discretion the
“district court’s decision not to order notice to [putative]
class [members]”).
Rule

23(d)(1)(B)

states,

“In

conducting

an

action

under

this rule, the court may issue orders that: . . . require--to
protect

class

appropriate

members

notice

and

to

fairly

some

or

conduct
all

the

class

action--giving

members . . . .”

Assuming for the sake of argument, as the district court did,
that this rule permits notice to putative class members before a
class has been certified, we find no abuse of discretion in the
district court’s refusal to give notice.
In

a

previous

case

discussing

notice

to

putative

class

members after the named plaintiffs agree to a settlement, we
observed that “unlike the situation in a certified class action,
a

‘pre-certification

dismissal

does

not

legally

bind

absent

class members,’ and, before certification, the absent putative
class

member

has

at

best

a

mere

‘reliance

interest,’

the

strength of which will vary with the facts of the particular
case.”

Shelton v. Pargo, Inc., 582 F.2d 1298, 1314-15 (4th Cir.

1978) (quoting Magana v. Platzer Shipyard, Inc., 74 F.R.D. 61,
69 (S.D. Tex. 1977)).

Gardner and Scott have not demonstrated
17

Appeal: 14-1048

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Filed: 08/06/2015

Pg: 18 of 18

that the reliance interest of putative class members in their
case is so compelling that the district court’s denial of notice
constituted an abuse of its discretion.

VI.
For the reasons given, the district court’s judgment is
AFFIRMED.

18