Under a recent ruling from Maryland's Court of Special Appeals, a judgment debtor's lawsuit requesting that the court declare a judgment "void" for lack of licensure by the creditor is not subject to any statute of limitations period. However, the Court also held that claims arising from the "void" judgment may be subject to Maryland statutes of limitations.
A copy of the opinion is available at: Link to Opinion
A debt buyer obtained a judgment against the plaintiff on an unpaid delinquent credit card account in 2009. At the time the debt buyer obtained the judgment, it was not licensed to act as a debt collector in Maryland.
More than three years later, the plaintiff sued the debt buyer seeking a declaratory judgment that the debt buyer's 2009 judgment was "void," because it lacked the required license.
The debt buyer moved to dismiss the complaint arguing that the plaintiff failed to bring his claim within Maryland's three-year limitations period for civil actions. The trial court agreed with the debt buyer and dismissed the complaint.
On appeal, the plaintiff argued that his complaint was not barred by the three-year limitations period because an action to declare a judgment void may be brought at "any time" under an earlier Maryland appellate court decision.
The Court of Special Appeals disagreed and determined that the earlier opinion did not address actions to void judgments. However, after surveying federal and state decisions from outside Maryland, it nonetheless agreed with the plaintiff that a suit seeking to declare a judgment as "void" is not subject to a statute of limitations.
Although there is no limitations period on an action to void a judgment, the Court pointed out that its ruling does not extend to other remedies the plaintiff may seek.
In particular, the plaintiff's claim for unjust enrichment was subject to the three-year limitations period. Following entry of the judgment, the debt buyer obtained an execution against the plaintiff's bank account sufficient to pay the entire judgment. The Court rejected the plaintiff's argument that his unjust enrichment claim was not subject to any limitations period at all or, in the alternative, it was subject to Maryland's 12-year limitations period for actions on judgments.
The Court also affirmed the dismissal of the plaintiff's claim under the Maryland Consumer Debt Collection Act (MCDCA) because it was asserted beyond the applicable three-year limitations period.
The plaintiff argued that the debt buyer had a duty to disclose it was not licensed and, because it did not make the disclosure, the time to file his MCDCA claim should be extended. The debt buyer disagreed, noting no decisional law supported the plaintiff's argument.
The Court did not address whether Maryland law imposed such a requirement on the debt buyer, but found that even if it did, the plaintiff himself was obligated to inquire into the debt buyer's license status, if not when he was served with the debt buyer's complaint, or even its judgment, then certainly, at the latest, he was obligated to inquire in April 2009 when he learned his bank account was garnished.
Thus, even if the plaintiff were correct, the Court concluded, the limitations period on his MCDCA claim would have run in 2012.
Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@MauriceWutscher.com
Admitted to practice law in Illinois
Alabama | California | Florida | Illinois | Indiana | Maryland | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Texas | Washington, DC
NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.
Our updates and webinar presentations are available on the internet, in searchable format, at:
Financial Services Law Updates
and
The Consumer Financial Services Blog™
and
and
California Finance Law Developments
and
