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February 2017

Maryland Court of Special Appeals Affirms Dismissal of Class Action Lawsuit

The Maryland Court of Special Appeals affirmed the Circuit Court for Baltimore County’s dismissal of three consolidated actions in which Gordon & Rees Washington, D.C. Partner Brian Scotti represented a national property management company in a putative class action lawsuit. 

The Court of Special Appeals agreed with the circuit court’s analysis of the appellants’ claims under the Maryland Consumer Debt Collection Act (“MCDCA”) and the Maryland Consumer Protection Act (“MCPA”) against the property management company as well as an attorney retained by the property management company to collect unpaid rents. The appellants had contended that they were subjected to unfair debt collection practices. Specifically, the appellants maintained that the property management company violated the MCDCA by attempting to collect a debt without a Maryland collection agency license.  Additionally, the appellants alleged that the property management company violated both the MCDCA and MCPA by allowing its collection attorney to place false and misleading “disclosure stamps” on court orders compelling the appellants to appear and answer questions under oath relating to their financial status.

In affirming the circuit court’s order of dismissal, the Court of Special Appeals held that the property management company was not required to hold a collection agency license because it was not “engaged in the business of collecting claims for any party other than itself.”  Additionally, the Court of Special Appeals agreed with the circuit court that the “disclosure stamps” affixed to the court orders was not false or misleading.  Moreover, the Court of Special Appeals agreed with an additional argument advanced by Gordon & Rees on behalf of the property management company – that the MCPA sounds in fraud and the appellants must plead facts to support the proposition they relied on the purported misrepresentation.  The appellants failed to do so in their Complaint so the Court of Special Appeals affirmed on the separate and independent basis that the element of reliance was inadequately pled.

Brian A. Scotti



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