In a divided decision, in Wheeling v. Selene Fin. LP, 473 Md. 356, 250 A.3d 197 (2021), the Court of Appeals (Court) reversed the Court of Special Appeals (CSA) and held that posting notices by the servicer of two residential mortgage loans threatening to lockout the residents of properties securing those loans violated Real Property Article (RP) §7-113. As a result, the Court permitted the plaintiffs to claim damages for emotional distress.
RP §7-113 prohibits people from using self-help to evict occupants of residential properties. That statute prohibits locking out a resident or depriving the resident of water, utility, and other services, which the servicer did not do. The law also prohibits a person from “taking any other action that deprives the protected resident of actual possession.”
This case involves residential loans that were in default. The servicer made no effort to determine whether the properties were vacant. They were not, but the servicer posted notices of eviction on the properties that secured the loans. One of the properties was occupied by tenants and the other by the homeowners. In neither case did the servicer actually evict the residents. The plaintiffs filed a proposed class action in the Circuit Court for Baltimore City. The circuit court granted the servicer’s motions to dismiss without leave to amend because it found that the plaintiffs did not suffer an objectively identifiable actual injury.
The plaintiffs appealed to the CSA, which affirmed. Wheeling v. Selene Fin. LP, 246 Md. App. 255, 228 A.3d 791, 2020). This statute, the CSA held, would have been violated by the servicer’s posting eviction notices without first making reasonable inquiry to determine whether the properties were occupied, if the residents vacated the property. Because the residents did not vacate the property, they were not entitled to the specific remedies set forth in RP §7-113(d).
The CSA considered whether the plaintiffs were entitled to damages under the Maryland Consumer Protection Act (MCPA), as claimed by the plaintiffs. The CSA held that under the MCPA the plaintiffs must plead and prove actual injury or loss to recover damages. The plaintiffs alleged that they had incurred emotional distress upon receipt of the eviction notices and had to pay legal fees to determine their rights. However, the CSA determined that without an allegation of a physical manifestation of emotional distress or other objectively determinable evidence, the plaintiffs had no remedy for their complaints.
The Court granted plaintiffs’ petition for certiorari, and it reversed the judgment of the CSA. The Court held that the threat of eviction was sufficient to establish a violation of RP §7-113. The Court further found that the complaint set forth a cause of action under the Maryland Consumer Protection Act. The Court agreed with the CSA that in order to recover for emotional distress a litigant must establish a physical injury, but it gave “an elastic” definition to the word physical and allowed the plaintiffs’ claims to proceed to trial. However, the Court did not permit the plaintiffs’ claim for attorneys’ fees paid before trial to proceed because that was not specifically permitted by statute.
Judge Joseph M. Getty (now Chief Judge) wrote a long and strong dissent, officially called a concurrence and dissent. Both the majority opinion, written by Judge Brynja Booth, and the dissent claimed their interpretations of RP §7-113 were based on the plain meaning of the statute, but they reached diametrically opposite conclusions relating to the facts of the case and their interpretations of the law. Judge Getty also relied heavily on the legislative history of RP §7-113, but he was able to convince only Judge Michele D. Hotten to join him in his opinion.
For more information, contact Edward J. Levin.
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