Case Title: Goshen Run Homeowners Ass'n v. Cisneros

Citation: 

Docket Number: 3/19

State: maryland

Court: Maryland Supreme Court

Date: 2020-01-27T00:00:00Z

Document:
Goshen Run Homeowners Association, Inc. v. Cumanda Cisneros, No. 3, September Term, 
2019, Opinion by Booth, J. 
 
HOMEOWNERS 
ASSESSMENTS 
– 
CONSUMER 
PROTECTION 
ACT.  
Homeowners association assessments fall within the broad definition of “consumer debt” 
under the Consumer Protection Act, Maryland Code, Commercial Law Article (“CL”), § 13-
301, et seq.  Moreover, a promissory note containing a confessed judgment clause executed 
for the purpose of memorializing payment of delinquent homeowners assessments falls 
squarely within the definition of “consumer credit” under the Consumer Protection Act.   
 
COLLECTION PROCEEDINGS – CONFESSED JUDGMENTS.  Under the plain 
language of CL § 13-301(12), the Consumer Protection Act forbids the use of all confessed 
judgment clauses in contracts related to consumer transactions.  A creditor cannot circumvent 
the protections afforded to a debtor under the Consumer Protection Act by inserting language 
in the confessed judgment clause, which purports to preserve a debtor’s legal defenses.  
 
RULES OF PROCEDURE – DISMISSAL OF COMPLAINT.  Where a homeowners 
association lacked the legal authority to file a confessed judgment complaint, the appropriate 
remedy under Maryland Rule 3-611(b) was dismissal of the case.  Although the association 
may be able to file a separate breach of contract claim under a promissory note by severing 
the confessed judgment clause from the balance of the note, it was improper under the 
circumstances to file such an action within the unlawful confessed judgment action.  
 
 
 
 
Circuit Court for Montgomery County 
Case No.:  9842D 
Argued: September 5, 2019 
IN THE COURT OF APPEALS 
OF MARYLAND 
 
 
 
 
 
 
 
 
No. 3 
September Term, 2019 
 
 
 
 
 
 
 
 
GOSHEN RUN HOMEOWNERS 
ASSOCIATION, INC.  
 
v. 
CUMANDA CISNEROS 
 
 
 
 
 
 
 
 
 
 
Barbera, C.J. 
McDonald 
Watts 
Hotten 
Getty 
Booth 
Raker, Irma S., 
   (Senior Judge, Specially Assigned), 
 
JJ. 
 
 
 
 
 
 
 
 
 
 
Opinion by Booth, J. 
Hotten, Getty and Raker, JJ., dissent. 
 
 
 
 
 
 
 
 
 
 
Filed:  January 27, 2020
Pursuant to Maryland Uniform Electronic Legal Materials Act  
(§§ 10-1601 et seq. of the State Government Article) this document 
is authentic.
Suzanne C. Johnson, Clerk  
Suzanne Johnson
2020-06-30 14:25-04:00
 
 
Confessed judgments derive from the ancient legal device of a cognovit note, in 
which a debtor consents in advance to the holder obtaining a judgment without notice or a 
hearing.  For centuries, the cognovit process has been the subject of much criticism.  The 
United States Supreme Court has noted that the cognovit method has been described as 
“the loosest way of binding a man’s property that was ever devised in any civilized 
country.”  D.H. Overmyer Co. v. Frick Co., 405 U.S. 174, 177 (1972) (citations omitted). 
In Maryland, confessed judgments have been disfavored and have been viewed 
with circumspection.  Given the ease with which a creditor may obtain a confessed 
judgment and the potential for fraud and abuse, we have liberally considered attacks on 
confessed judgments.  Although confessed judgments have been permitted in the 
commercial context, the General Assembly prohibits their use in certain consumer 
transactions.  Through Maryland’s Consumer Protection Act (“CPA”), the General 
Assembly has determined that the “use of a contract related to a consumer transaction 
which contains a confessed judgment clause that waives a consumer’s right to assert a 
legal defense to an action” constitutes an unfair, abusive, or deceptive trade practice and 
is therefore prohibited.  Maryland Code, Commercial Law Article (“CL”), § 13-301(12) 
(2013).   
Homeowners associations (“HOAs”) are often placed in a difficult situation of having 
to undertake collection efforts against lot owners in their communities for delinquent 
homeowners assessments.  To address the problem, the General Assembly has provided 
HOAs with multiple collection tools, which are codified in the Maryland Homeowners 
Association Act, Maryland Code, Real Property Article (“RP”), § 11B-101, et seq. (the 
2 
“HOA Act”).  Specifically, the HOA Act permits homeowners associations to collect 
delinquent assessments through both in rem proceedings under the Maryland Contract Lien 
Act, as well as in personam proceedings at law.  
In this case, we must decide whether a confessed judgment is another enforcement 
tool that a HOA has at its disposal when seeking to collect delinquent HOA assessments, 
costs, and attorney’s fees.  For the reasons set forth in this opinion, we conclude that the 
General Assembly has not included this enforcement tool in the box.  Collection of HOA 
assessments falls within the broad purview of the Consumer Protection Act, which prohibits 
the use of confessed judgment clauses for the collection of consumer debts.   
I. 
BACKGROUND AND PROCEEDINGS BELOW 
The Goshen Run Village subdivision (“Goshen Run”) is a residential community 
located in Montgomery County, Maryland.  In December 1983, the developer of Goshen 
Run recorded a Declaration of Covenants and Restrictions (“Declaration”) in the land records 
of Montgomery County, which imposed certain covenants and restrictions upon the lots and 
conferred certain privileges and obligations upon the lot owners within the subdivision. 
Goshen Run Homeowners Association 
The Goshen Run Homeowners Association (“Association”) was established as the 
governing body to carry out the powers and duties set forth in the Declaration.  The Board 
of Directors of the Association is required to adopt an annual operating budget for the 
Association and may establish annual assessments to cover the costs of maintaining, 
3 
repairing, and replacing the common areas and community facilities,1 as well as any taxes 
and assessments imposed upon the Association.   
Under the Declaration, the Board has the authority to levy assessments on each lot 
within the subdivision.  If a lot owner does not pay an assessment levied under the 
Declaration, the Association has multiple collection remedies at its disposal.  First, the 
delinquent amount, together with interest and the cost of collection, becomes a continuing 
lien on the lot belonging to the member against whom the assessment has been levied.  
Declaration, Article VI, Section 1.  In addition, the Association may file a suit against the 
delinquent lot owner to recover a money judgment for the non-payment of the amount 
assessed.  Id.  The Board has the authority, by resolution, to establish an interest rate for 
delinquent assessments, and to impose a late charge.  The Declaration further provides 
that: 
[T]he Association may bring an action at law against the 
member personally obligated to pay the same, or foreclose on 
the Lien against the lot or lots then belonging to said member 
in the manner now or hereafter provided for the foreclosure of 
mortgages, deeds of trust or other liens on real property in the 
State of Maryland containing a power of sale or consent to a 
decree, and subject to the same requirements, both substantive 
and procedural, or as may otherwise from time to time be 
provided by law, in either of which events, interest, costs and 
reasonable attorneys’ fees of not less than twenty percent 
                                              
1 The Declaration describes “common areas” and “community facilities,” which are 
owned or leased by the Association or are otherwise available to the Association “for the 
use and enjoyment of its members.”  Article IV, Section 1 of the Declaration creates a right 
of enjoyment and an appurtenant easement in the common areas for the benefit of each 
member, subject to certain terms and conditions: “Every member shall have a right and 
easement of enjoyment in and to the common areas and community facilities and such 
easement shall be appurtenant to and shall pass with fee title to every lot . . . .”  
4 
(20%) of the sum claimed shall be added to the amount of each 
assessment.  
 
Declaration, Article VI, Section 1.  
Ms. Cisneros and the Confessed Judgment Promissory Note 
Cumanda Cisneros purchased a home in Goshen Run for her principal residence in 
2004.  Upon purchasing her lot, Ms. Cisneros became obligated to comply with the 
Declaration.  Pursuant to its authority in the Declaration, the Association imposed 
assessments upon the lots within the subdivision, including Ms. Cisneros’s property.   
In 2014, Ms. Cisneros became delinquent in her HOA assessment payments and her 
delinquent account was turned over to the Association’s law firm, Andrews & Lawrence 
Professional Services, LLC (“Andrews”), to pursue collection of the delinquent amount.  
During the collection process, Ms. Cisneros contacted Andrews and proposed a plan to pay 
her debt in monthly installments of $126 over approximately six years.  The Association’s 
Board accepted the deferred repayment plan and agreed to forbear collection action.  
Andrews prepared a promissory note (“Promissory Note” or “Note”) and mailed it to Ms. 
Cisneros with instructions to return it signed and notarized within two weeks.  In April 
2016, Ms. Cisneros signed the Promissory Note,2 had it notarized, and returned it to the 
Association’s attorneys.   
                                              
2 Ms. Cisneros executed the Promissory Note with the assistance of a relative.  Ms. 
Cisneros’s native language is Spanish.  An interpreter was present at the hearings in this 
matter.  At the hearing in the District Court of Maryland sitting in Montgomery County, 
Ms. Cisneros testified that she did not know what “the confessed judgment provision 
meant.”   
5 
The Promissory Note, which was titled “Promissory Note and Mortgage,” was for 
the repayment of the amount of $8,733.97, payable in 79 installments.  The document also 
included a mortgage secured by Ms. Cisneros’s Goshen Run property.  The debt evidenced 
by the Promissory Note was expressly recited as “delinquent homeowners association 
assessments on [Ms. Cisneros’s Goshen Run property] accrued through March 2016 . . . .”  
The Promissory Note also referenced future HOA assessments that would come due during 
the term of the payment period of the Note and recited that the failure to pay those future 
assessments when they came due would trigger a default of the Promissory Note.  In the 
event of a default, all subsequent fees owed after the execution of the Note would become 
due and payable and be enforceable by confession of judgment under the Promissory Note.   
The Promissory Note contained the following provision:  
D. Confession of Judgment:  
Upon default, the undersigned, CUMANDA CISNEROS, 
hereby empowers and authorizes any attorney to appear for the 
undersigned in any court within the United States of America 
or elsewhere, and confess judgment, or a series of judgments, 
against the undersigned in favor of GOSHEN RUN 
HOMEOWNERS ASSOCIATION, INC., for such amounts as 
may be due and owing thereunder, including the costs of the 
proceeding and twenty percent (20%) of the outstanding 
balance as attorney’s fees, or such amount as the court shall 
deem reasonable.  
 
E. Non-Waiver of Legal Defenses.  
I, CUMANDA CISNEROS, do not waive any legal defenses 
to any action to enforce this promissory note and mortgage.   
 
Proceedings Below  
Ms. Cisneros defaulted on the Promissory Note.  In July 2016, the Association filed 
a confessed judgment complaint in the District Court of Maryland sitting in Montgomery 
6 
County pursuant to Maryland Rule 3-611, attempting to recover the debt memorialized in 
Ms. Cisneros’s Promissory Note.  The complaint consisted of the district court’s standard 
form titled “Complaint for Judgment by Confession (Md. Rule 3-611).”  As the basis for 
its complaint, the Association attached the Promissory Note.  The standard attestation 
contained in the affidavit portion of the complaint is required by Md. Rule 3-611(a) and 
states:  
8. The instrument does not evidence or arise from a consumer 
transaction as to which a confessed judgment clause is 
prohibited by Code, Commercial Law Article § 13-301.   
 
Based on the confessed judgment complaint form, the attached Promissory Note, 
and the attestation that the debt was not a consumer transaction, the district court entered 
judgment in the principal amount of $5,594.17 and attorney’s fees of $300.   
The Association did not serve Ms. Cisneros with the confessed judgment for more 
than a year.  During that time, the Association proceeded to garnish Ms. Cisneros’s bank 
account and record liens against her real property.  Ms. Cisneros was finally served with 
the confessed judgment in December 2017.3  In January 2018, Ms. Cisneros filed a motion 
                                              
3 After Goshen Run’s debt collection attorneys, Andrews & Lawrence Professional 
Services, LLC (“Andrews”), issued the writ and recorded the liens against Ms. Cisneros 
but before they served her with the notice of confessed judgment, Ms. Cisneros initiated a 
class action lawsuit against Andrews in which she alleges that the practice of obtaining 
confessed judgments for past-due homeowners assessments pursuant to promissory notes 
containing confessed judgment clauses violates the Fair Debt Collection Practices Act 
(“FDCPA”), 15 U.S.C. §§ 1692–1692p.  Ms. Cisneros filed her class action complaint in 
the Circuit Court for Montgomery County in October 2017, and the matter was removed 
to the United States District Court for the District of Maryland in December 2017.  As of 
the date of this opinion, the matter is still pending.   
 
7 
to stay, or in the alternative, to vacate the confessed judgment in the district court.4  Ms. 
Cisneros alleged that the confessed judgment was entered based upon an illegal confessed 
judgment promissory note arising from a consumer transaction and consumer debt, and 
therefore was required to be vacated.   
In March 2018, following a hearing during which the Association acknowledged 
and did not contest that the Promissory Note evidenced a consumer debt, the district court 
granted Ms. Cisneros’s motion to vacate the confessed judgment.  In rendering its decision, 
the district court stated as follows:  
After reviewing all of the memoranda and listening to the 
arguments of counsel[,] I concur with the Defendant in this 
matter.  I do believe that this was definitely a consumer 
transaction which has been consented to but that this [was a] 
confessed judgment note definitely and the Defendant waived 
her legal defenses and for that reason I will vacate the 
judgment. 
  
There were no further proceedings as part of the March 2018 hearing.  After vacating 
the confessed judgment, the case was set for trial.  Upon receiving the trial notice, Ms. 
Cisneros filed a motion to dismiss the confessed judgment complaint, arguing that Md. Rule 
3-611(b) required dismissal of the complaint given the district court’s previous determination 
that the confessed judgment action violated the CPA.   
At the hearing on Ms. Cisneros’s motion to dismiss, the district court reaffirmed 
that the confessed judgment arose from a consumer transaction and was therefore 
                                              
4 Ms. Cisneros’s motion to stay was based upon the federal class action that she had 
initiated against Andrews.  The district court denied the motion to stay but granted the 
motion to vacate. 
8 
prohibited by the CPA.  The district court denied Ms. Cisneros’s motion to dismiss, and 
instead severed the confessed judgment provision from the remaining terms of the 
Promissory Note and permitted the Association leave to file an amended complaint and 
proceed with a breach of contract action against Ms. Cisneros.  The Association filed an 
amended complaint for breach of contract in May 2018, seeking the same relief claimed in 
the complaint for confession of judgment plus additional attorney’s fees.  Following a 
hearing in June 2018, the district court entered judgment against Ms. Cisneros for 
$5,352.53, costs of $151, and attorney’s fees totaling $1,100.57.   
In July 2018, Ms. Cisneros appealed the district court’s denial of her motion to 
dismiss and the judgment entered against her to the Circuit Court for Montgomery County.  
In January 2019, the circuit court entered a written opinion and order.  Specifically, the 
circuit court found that the payments and the collection of homeowners association dues 
constituted a consumer transaction under the CPA and that the use of a confessed judgment 
promissory note to collect the payments was prohibited.  The circuit court held that: 
Within the procedural history of this matter, the District Court 
consistently ruled . . . that the confessed judgment in this case 
is prohibited.  This Court concurs with previous rulings and 
finds that due to the consumer transaction nature of the 
agreement between Goshen Run and Ms. Cisneros, the 
Confessed Judgment cannot stand, which required the 
complaint to be dismissed.   
 
The Association filed a petition for writ of certiorari, which this Court granted.   
9 
II. 
DISCUSSION 
The Association raises four questions on appeal, which we have consolidated and 
rephrased for clarity as follows:5 
1. 
Does the Consumer Protection Act apply to collection efforts by a 
HOA to collect delinquent HOA assessments?  
 
2. 
Does § 13-301(12) of the Consumer Protection Act prohibit the use 
of all confessed judgment clauses in contracts related to consumer 
transactions?  
 
3. 
Did the circuit court err when it found that the HOA’s filing of its 
complaint to confess judgment for the payment or collection of HOA 
assessments violated the Consumer Protection Act, and that therefore, 
                                              
5 The questions as presented in the writ for certiorari were: 
 
1. 
Does a confessed judgment clause in a promissory note/forbearance 
agreement involving homeowners association assessments that 
expressly preserves the right of the defendant to assert legal defenses, 
violate the Maryland Consumer Protection Act [(“CPA”), Maryland 
Code, Commercial Law Article, § 13-301, et seq.,]? 
  
2. 
Assuming, arguendo, that homeowners association assessments are 
consumer debts within the meaning of the CPA, if the consideration 
given by a payee to a promisor in a promissory note is the forbearance 
of debt collection activity on the antecedent debt, does such a 
promissory note relate to a “consumer transaction” under the CPA? 
 
3. 
Assuming, arguendo, that the answer to the first question is 
affirmative, was it appropriate for the district court to invoke a 
severability provision in the note, sever the confession clause, and 
proceed to trial on the merits, because the CPA does not provide the 
remedy of voiding contracts?  
 
4. 
Did the circuit court misapply Maryland law when it determined that 
after a confessed judgment is vacated, it is impermissible to permit a 
trial on the merits on an amended complaint, as that would constitute 
“another bite at the apple,” and that such complaint should be 
dismissed pursuant to [Maryland] Rule 3-611(b)?  
10 
the proper procedure was the dismissal of the complaint pursuant to 
Maryland Rule 3-611(b)? 
 
For the reasons set forth herein, we answer questions one and two in the affirmative.  
With respect to question 3, we agree that under the procedural posture of this case, 
dismissal of the unlawful confessed judgment action was appropriate.  We hold that HOA 
assessments fall within the broad definition of “consumer debt” under the CPA.  Moreover, 
the Promissory Note constituted an extension of credit to Ms. Cisneros to pay delinquent 
HOA assessments, which falls squarely within the definition of “consumer credit” under 
the CPA.  We hold that under the plain language of CL § 13-301(12), the CPA forbids the 
use of all confessed judgment clauses in contracts related to consumer transactions, and 
that a creditor cannot circumvent the protections afforded to a debtor under the CPA by 
inserting language in the confessed judgment clause which purports to preserve a debtor’s 
legal defenses.  We hold that because the Association lacked the legal authority to file a 
confessed judgment complaint, the appropriate remedy under Maryland Rule 3-611(b) was 
dismissal of the case.  However, we hold that the dismissal of the confessed judgment 
action should have been without prejudice to the Association’s right to file a separate 
breach of contract action severed from the confessed judgment clause.  Although the 
Association may be able to file a separate breach of contract claim under the Promissory 
Note by severing the confessed judgment clause from the balance of the Note, it was 
improper to attempt to file such an action within the unlawfully filed confessed judgment 
action.  
11 
A. 
Standard of Review 
When an action has been tried without a jury, this Court reviews the action on both 
the law and the evidence.  Md. Rule 8-131(c).  The trial court’s factual findings are 
accepted unless clearly erroneous.  Id.  The appellate court affords no deference to the legal 
conclusions of the district court and the circuit court.  Friendly Fin. Corp. v. Orbit Chrysler 
Plymouth Dodge Truck, Inc., 378 Md. 337, 342–43 (2003).  We review their interpretations 
of the relevant statutes de novo.  Id. at 343.  As this case involves purely questions of law, 
our standard of review is de novo.   
B. 
Parties’ Contentions6 
The Association argues that HOA assessments do not constitute “consumer debt” 
under the CPA.  The Association asserts that, even if HOA assessments are considered 
consumer debt under the CPA, “such status is of no import” because the Promissory Note 
constituted a new and distinct obligation, enforceable in its own right and according to its 
own terms.  The Association contends that the Promissory Note is not related to a 
“consumer transaction” and does not constitute the “collection of consumer debts” under 
the CPA.  The Association further argues that the execution of the Promissory Note for the 
payment of past-due assessments does not constitute the extension of consumer credit 
under the CPA.  The Association characterizes the Promissory Note as a forbearance 
agreement—in other words, an agreement to not engage in debt collection—which it 
                                              
6 In addition to the contentions raised by the parties, the Attorney General of 
Maryland filed an Amicus Curiae Brief supporting the position taken by Ms. Cisneros.  
12 
contends cannot be considered an unfair or deceptive trade practice in the collection of 
consumer debts under CL § 13-303(5).   
The Association claims that, even if the collection of HOA assessments falls within 
the purview of the CPA, its confessed judgment clause is not prohibited under the CPA 
because CL § 13-301(12) does not prohibit the use of all confessed judgments in consumer 
contracts; rather, it prohibits only a subset of confessed judgment clauses “that waive the 
consumer’s right to assert a legal defense to an action.”  The Association contends that it 
escapes the reach of the CPA because the Promissory Note contains a clause whereby Ms. 
Cisneros agreed that she did “not waive any legal defenses to any action to enforce” the 
Note.  The Association further contends that under the language in its confessed judgment 
clause, Ms. Cisneros retains all her rights under the law to assert any defenses she wishes 
to raise under Md. Rule 3-611.  
Finally, the Association argues that, even if the CPA applies to its collection efforts 
and its confessed judgment clause violates the CPA, it should nonetheless be permitted to 
file an amended complaint within its confessed judgment suit and proceed with a breach of 
contract claim under the Promissory Note with the confessed judgment clause severed from 
the remainder of the agreement.   
In response, Ms. Cisneros argues that HOA assessments are consumer in nature and 
fall within the ambit of the CPA.  She asserts that the assessments imposed by the 
Association are for the care and maintenance of the Goshen Run common areas, which she 
has the right to use and enjoy and from which she derives a personal benefit.  As such, Ms. 
Cisneros claims that the assessments fall within the broad definition of “consumer debt” 
13 
under the CPA because the assessments are incurred for her “personal, family, and 
household needs.”  Ms. Cisneros also contends that the Promissory Note constitutes an 
extension of “consumer credit” under the CPA because the Note allows her to repay the 
delinquent HOA assessments pursuant to a specific payment plan.  
As for the enforceability of the confessed judgment clause under the CPA, Ms. 
Cisneros contends that under the plain language of CL § 13-301(12), the General Assembly 
intended to prohibit the use of all confessed judgment clauses in contracts related to 
consumer transactions, not just a subset of confessed judgment clauses.  Ms. Cisneros 
further asserts that despite the language in the confessed judgment clause which purports 
to preserve her ability to raise defenses to the entry of the confessed judgment, the very 
essence of a confessed judgment process necessarily involves the waiver of key defenses 
such as service of process, venue, and personal jurisdiction, which are minimal due process 
protections.   
Finally, Ms. Cisneros claims that the circuit court did not err in holding that 
dismissal of the confessed judgment complaint was the appropriate remedy.  She contends 
that Md. Rule 3-611(b) mandates dismissal of the unlawful action.   She asserts that the 
Association should not be permitted to proceed on a breach of contract action severed from 
the confessed judgment clause because the General Assembly intended to prohibit all 
consumer contracts containing a confessed judgment clause.  Accordingly, she contends 
that principles of severability do not apply here.7 
                                              
7 Ms. Cisneros also argues that the Association’s use of a confessed judgment is 
unconstitutional as applied to her circumstances under the Supreme Court’s holdings in 
14 
C. 
Analysis 
To determine whether a HOA may use a confessed judgment clause to collect 
delinquent HOA assessments from a lot owner, we must first determine whether the CPA 
applies to the HOA’s collection efforts.  Specifically, we must determine whether, under the 
CPA, Ms. Cisneros is a “consumer”; whether the HOA assessments constitute “consumer 
debt”; and whether the confessed judgment note constitutes an extension of “consumer 
credit.”  As part of our analysis, it is necessary to consider not only the language of the CPA 
but also the applicable provisions of the Maryland Homeowners Association Act.   
1. The Maryland Homeowners Association Act 
The General Assembly enacted the Maryland Homeowners Association Act (“HOA 
Act”) in 1987.  See 1987 Laws of Maryland, chapter 321.  In its present form, the Act is 
set forth in Maryland Code, Real Property Article (“RP”), § 11B-101, et seq. (2015).  The 
HOA Act applies to the sale of lots that are subject to a declaration of a HOA.  RP § 11B-
102.  The provisions of the HOA Act extend far beyond the initial purchase of a lot or the 
resale of a lot within a development.  The HOA Act also provides the legislative framework 
                                              
D.H. Overmyer v. Frick Co., 405 U.S. 174 (1972) and Swarb v. Lennox, 405 U.S. 191 
(1972) and our holding in Billingsley v. Lincoln National Bank, 271 Md. 683 (1974).  Ms. 
Cisneros contends that the waiver of her due process rights to notice and personal 
jurisdiction were not “voluntary, knowing, and intelligently made, or an intentional 
relinquishment or abandonment of a known right or privilege.”  Overmyer, 405 U.S. at 186 
(internal citations omitted).  Ms. Cisneros testified through an interpreter that she did not 
understand what a confessed judgment clause meant.  Because we hold that a HOA cannot 
use a confessed judgment clause to collect delinquent HOA assessments and that the 
appropriate remedy was dismissal of the case under Maryland Rule 3-611(b), we do not 
need to reach the constitutionality of the entry of a confessed judgment as applied to Ms. 
Cisneros.  
15 
under which HOAs8 operate and manage their affairs.  A HOA is governed by its governing 
body9 in accordance with its declaration,10 as well as other corporate documents such as its 
bylaws, and rules and regulations promulgated and adopted in accordance with the 
declaration and other governing documents.   
The HOA Act contains provisions which address many operational and governance 
aspects of a development that are subject to a HOA declaration, such as the notice and 
conduct of meetings of the HOA or its governing body, requirements for maintaining books 
and records of the association, and the establishment of an annual budget for repair and 
maintenance of common areas.  RP §§ 11B-111, 112, 112.2.   
In connection with the establishment of a budget, the HOA has the authority to adopt 
assessments and charges to cover the expenses for maintaining and repairing common 
areas.11  Under its declaration, the homeowners association can establish and impose upon 
                                              
8 “Homeowners association” is defined under the HOA Act as “a person having the 
authority to enforce the provisions of a declaration” and “includes an incorporated or 
unincorporated association.” Maryland Code, Real Property Article (“RP”), § 11B-101(i). 
 
9 “Governing body” is defined as “the homeowners association, board of directors, 
or other entity established to govern the development.”  RP § 11B-101(h). 
 
10 The declaration of a HOA is the genesis of its authority.  The HOA Act defines 
the “declaration” as: “an instrument, however denominated, recorded among the land 
records of the county in which the property of the declarant is located, that creates the 
authority for a homeowners association to impose on lots or on the owners or occupants of 
lots, . . . any mandatory fee in connection with the provision of services or otherwise for 
the benefit of some or all of the lots, the owners or occupants of lots, or the common areas.”  
RP § 11B-101(d)(1).   
 
11 Under the HOA Act, “common areas” are defined as “property which is owned 
or leased by a homeowners association.”  RP § 11B-101(b).   
16 
any lot, or on the owners or occupants of any lot, mandatory assessments or fees to cover 
“the provision of services or otherwise for the benefit of the owners of the lots, the owners 
or occupants of the lots, or the common areas.”  RP § 11B-101(d)(1).   
Section 11B-117(a) of the HOA Act states that, “[a]s provided in the declaration, a 
lot owner shall be liable for all homeowners association assessments and charges that come 
due during the time that the lot owner owns the lot.”  To encourage the payment of timely 
assessments, the HOA Act gives a HOA the authority to establish in its declaration or 
bylaws “a late charge of $15 or one-tenth of the total amount of any delinquent assessment 
or installment, whichever is greater, provided the charge may not be imposed more than 
once for the same delinquent payment and may be imposed only if the delinquency has 
continued for at least 15 calendar days.”  RP § 11B-112.1.   
With respect to enforcement, the HOA Act permits a HOA to establish provisions 
in its declaration for collection of delinquent assessments through both in rem and in 
personam proceedings.  Section 11B-117(b) provides: 
Enforcement. — In addition to any other remedies available at 
law, a homeowners association may enforce the payment of the 
assessments and charges provided in the declaration by the 
imposition of a lien on a lot in accordance with the Maryland 
Contract Lien Act.   
 
The express language of the HOA Act authorizes the governing body of a HOA to 
take enforcement action to collect delinquent assessments and charges owed by the 
individual lot owners within the development.  As part of its collection efforts, the HOA is 
authorized to assess late charges, to impose a lien on the lot in accordance with the 
17 
Maryland Contract Lien Act, Md. Code, Real Property Article, § 14-201 et seq. (2013), 
and to file suit against the individual lot owner for the amount of the debt owed.   
In 2007, the HOA Act was amended to add RP § 11B-115, titled “Enforcement 
Authority of Division of Consumer Protection.” (“2007 Amendment”).  The 2007 
Amendment added a specific definition of “consumer” to the HOA Act, which defines 
consumer as “an actual or prospective purchaser, lessee, assignee, or recipient of a lot in a 
development.” RP § 11B-115(a).  The 2007 Amendment provides that the section “is 
intended to provide minimum standards for protection of consumers in the State.”  RP 
§ 11B-115(b).  The 2007 Amendment brought the HOA Act within the specific 
enforcement authority of the Office of the Attorney General under the CPA.  Specifically, 
the 2007 Amendment states that “to the extent that a violation of any provision of this title 
affects a consumer, that violation shall be within the scope of the enforcement duties and 
powers of the Division of the Consumer Protection of the Office of the Attorney General, 
as described in Title 13 of the Commercial Law Article.”  RP § 11B-115(c). 
2. Collection of HOA Assessments Falls Within the Scope of the Consumer 
Protection Act 
 
The Consumer Protection Act is set forth in CL § 13-101, et seq.  The purpose of 
the CPA is to “set certain minimum standards for the protection of consumers across the 
State . . . .” CL § 13-102(b)(1).  In enacting the CPA, the General Assembly determined 
that the State “should take strong protective and preventative steps to investigate unlawful 
consumer practices, to assist the public in obtaining relief from these practices and to 
prevent these practices from occurring in Maryland.”  CL § 13-102(b)(3).  The General 
18 
Assembly further instructed that the CPA shall be “construed and applied liberally to 
promote its purpose.”  CL § 13-105.  To that end, the CPA prohibits all trade practices that 
are unfair, abusive, or deceptive in, among other things, the collection of consumer debts.  
See CL §§ 13-301(14)(iii); 13-303(5).   
Section 13-303 of the CPA generally prohibits unfair, abusive, or deceptive trade 
practices, and § 13-301 contains a nonexclusive list of practices that are defined to be unfair 
or deceptive.  Practices defined to be unfair, abusive, or deceptive include the “[u]se of a 
contract related to a consumer transaction which contains a confessed judgment clause that 
waives the consumer’s right to assert a legal defense to an action.”  CL § 13-301(12).   
Under the CPA, “consumer credit,” “consumer debts,” “consumer goods,” “consumer 
realty,” and “consumer services” are defined, respectively, as “credit, debts or obligations, 
goods, real property, and services which are primarily for personal, household, family or 
agricultural purposes.”  CL § 13-101(d)(1).  Similarly, “consumer” is defined as “an actual 
or prospective purchaser, lessee, or recipient of consumer goods, consumer services, 
consumer realty, or consumer credit.”  CL § 13-101(c).  “Merchant” is defined as “a person 
who directly or indirectly offers or makes available to any consumers any consumer goods, 
consumer services, consumer realty, or consumer credit.”  CL § 13-101(g)(1).12   
                                              
12 Although the term “consumer transaction” is not expressly defined within the 
Consumer Protection Act, it is defined in a closely related statute—the Maryland Consumer 
Debt Collection Act (“MCDCA”), Md. Code Ann., Comm. Law Art. § 14-201 et seq.—as 
“any transaction involving a person seeking or acquiring real or personal property, services, 
money or credit for personal, family, or household purposes.”  CL § 14-201(c).   
19 
Ms. Cisneros is a “consumer” under the CPA and the HOA Act 
Ms. Cisneros falls within the definition of “consumer” under the CPA.  She is a 
purchaser and recipient of consumer services and consumer realty, which are primarily for 
her household and family purposes.  Ms. Cisneros also falls within the definition of 
“consumer” under the HOA Act, which defines “consumer” as “an actual or prospective 
purchaser, lessee, assignee, or recipient of a lot in a development.”  RP § 11B-115(a).  
Under the HOA Act, Ms. Cisneros is an “actual purchaser” of a lot.  Immediately upon her 
purchase of a lot, she became subject to the Declaration, including an obligation to pay 
assessments.  In other words, Ms. Cisneros was legally obligated to pay the HOA 
assessments the moment her deed was signed.   
HOA assessments are “consumer debt”  
The HOA assessments and charges fit within the broad definition of “consumer 
debt” under the Consumer Protection Act.  The assessments are established to cover the 
repair, maintenance, and expenses associated with the “Common Areas” and “Community 
Facilities,” which are defined under the Goshen Run Declaration as “all real property 
owned or leased by the Association or otherwise available to the Association for the benefit, 
use and enjoyment of its members.”  Declaration, Article IV, Section 1(c) (emphasis 
added).  Under the Goshen Run Declaration, each member has an appurtenant “right and 
easement of enjoyment in and to the common areas and community facilities . . . .”  
Declaration, Article IV, Section 1.  As a lot owner, Ms. Cisneros has a right to use and 
enjoy the common areas and community facilities, and a concomitant duty to pay the 
assessments or fees—debts which are incurred “primarily for personal, household [or] 
20 
family . . . purposes.”  CL § 13-101(d)(1).  As noted above, Ms. Cisneros’s obligation to 
pay the HOA assessments arose in connection with the purchase of her property, even if 
the timing and amount of the particular assessment was yet to be determined.  The fact that 
the assessments may benefit more than a single household does not change their character 
as debts incurred primarily for personal, household or family purposes.   
In arriving at this conclusion, we note that several federal courts construing the 
parallel federal statute, and several state supreme courts analyzing similar state consumer 
protection statutes, have reached the same result.  Although not binding, these cases are 
instructive.   
Under the federal Fair Debt Collection Practices Act (“FDCPA”), debt is defined as 
“any obligation or alleged obligation of a consumer to pay money arising out of a 
transaction in which the money, property, insurance, or services which are the subject of 
the transaction are primarily for personal, family or household purposes, whether or not 
such obligation has been reduced to judgment.” 15 U.S.C.A.  § 1692a(5). 
The Third Circuit was the first to construe this definition.  In Zimmerman v. HBO 
Affiliate Group, 834 F.2d 1163 (3d Cir. 1987), that court concluded that, to be a debt, there 
must be an actual extension of credit plus a deferred payment obligation, i.e., a transaction 
in which “a consumer is offered or extended the right to acquire money or property.”  Id. 
at 1168–69.   
Several courts thereafter used Zimmerman’s “extension of credit” analysis to conclude 
that condominium or HOA assessments are not debt because the unit owner is required to pay 
the dues and assessments up front, prior to the association providing any services in return.  
21 
See, e.g., Azar v. Hayter, 874 F. Supp. 1314 (N.D. Fla. 1995) (condominium association fees); 
Nance v. Petty, Livingston, Dawson & Devening, 881 F. Supp. 223 (W.D. Va. 1994) (HOA 
dues); see also Bryan v. Clayton, 698 So. 2d 1236 (Fla. Dist. Ct. App. 1997) (holding that 
condominium association fees are not debt under Florida state law).   
Zimmerman’s extension of credit argument has come under sharp criticism.  In 
Newman v. Boehm, Pearlstein & Bright, Ltd., 119 F.3d 477, 481 (7th Cir. 1997), the court 
rejected Zimmerman’s analysis, stating that “because the statute’s definition of ‘debt’ 
focuses on the transaction creating the obligation to pay, it would seem to make little 
difference under that definition that unit owners are generally required to pay their 
assessments first, before any goods are provided by the association.”  The court in Newman 
concluded that HOA assessments are indeed debt under the FDCPA.  Id. at 481–82.  The 
court reasoned that: 
By paying the purchase price and accepting title to their home, 
the [homeowners] became bound by the Declaration of 
Covenants, Conditions, and Restrictions of their homeowners 
association, which required the payment of regular and special 
assessments imposed by the association . . . .  It is therefore 
clear that the obligation to pay in these circumstances arose in 
connection with the purchase of the homes themselves, even if 
the timing and amount of the particular assessments was yet to 
be determined.   
 
Id. at 481.  The court in Newman further explained that:  
 
There can be little doubt that the subject of those transactions 
[the purchase of a home] had a personal, family, or household 
purpose.  More specifically, however, we also believe that the 
assessments themselves satisfy the statutory requirement.  To 
the extent that the assessments were to be used to improve or 
maintain commonly-owned areas, that purpose, too, qualifies 
as “personal, family, or household.”  In our view, when a 
22 
special assessment is used to pay for services like snow 
removal from a common walkway or landscaping of a common 
yard, the assessments are for a household purpose even if more 
than a single household benefits.   
 
Id. 
 
Since then, nearly every state or federal court that has considered the issue has 
concluded that HOA assessments or dues are properly classified as consumer debt.  See, 
e.g.,  Agrelo v. Affinity Mgmt. Servs., LLC, 841 F.3d 944, 951 (11th Cir. 2016) (holding 
that the term “debt” under both the FDCPA and the Florida Consumer Collection Practices 
Act was broad enough to encompass homeowners’ obligations to pay a fine imposed by a 
HOA pursuant to the association’s governing documents); Haddad v. Zelmanski, Danner 
& Fioritto, PLLC, 698 F.3d 290, 291 (6th Cir. 2012) (holding that condominium owner’s 
obligation to pay assessments constituted “debt” under the FDCPA and the Michigan Debt 
Collection Practices Act); Ladick v. Gemert, 146 F.3d 1205, 1206-7 (10th Cir. 1998) 
(concluding that an assessment owed to a condominium association qualifies as ‘debt’ 
within the meaning of the Fair Debt Collection Practices Act based upon the express 
finding that “although the assessment at issue here is used to maintain and repair the 
common area, it nevertheless has a primarily personal, family, or household purpose”); 
Taylor v. Mount Oak Manor Homeowners Ass’n, 11 F. Supp. 2d 753, 755 (D. Md. 1998) 
(concluding that HOA assessments are “debts” under the FDCPA); Garner v. Kansas, No. 
98-1274, 1999 WL 262100, at *2 (E.D. La. 1999) (“Upon review of the FDCPA and the 
case law discussing the issue, the Court concludes that condominium fees do constitute 
‘debts’ under the FDCPA.”); Caron v. Charles E. Maxwell, P.C., 48 F. Supp. 2d 932, 934 
23 
(D. Ariz. 1999) (adopting Newman reasoning that HOA assessments are collected in order 
to improve and maintain commonly owned areas by each unit owner, which directly benefit 
each household in the development.  As a result, the assessments have a “personal, family, 
or household purpose”); Thies v. Law Offices of William A. Wyman, 969 F. Supp. 604, 608 
(S.D. Cal. 1997) (applying the Newman rationale and concluding “homeowner association 
fees for maintenance and improvement of common areas within a housing development 
are a service primarily for personal, family, and household purposes”); Reid v. Ayers, 138 
N.C. App. 261, 264 (N.C. 2000) (holding that HOA assessments constitute “debt” under 
the North Carolina Debt Collection Act);  Loigman v. Kings Landing Condo. Ass’n, 324 
N.J. Super. 97, 105–07 (N.J. Ch. Div. 1999) (holding that condominium assessments fall 
within the scope of the FDCPA and that the association’s attorney violated the FDCPA by 
failing to halt its collection efforts with respect to unpaid assessments after the unit owner 
questioned and sought verification of the amount). 
Our holding that HOA assessments constitute consumer debt because they are 
incurred primarily for personal, household, and family purposes is consistent with the 
majority of the federal courts interpreting similar language under the FDCPA, as well as 
state courts interpreting similar consumer protection statutes.   
The Promissory Note constituted an extension of “consumer credit” 
In addition to delinquent HOA assessments constituting “consumer debt” under 
the CPA, the Promissory Note also constituted an extension of credit to Ms. Cisneros to 
pay the HOA assessments, which falls squarely within the definition of “consumer credit” 
under the CPA.  Whether a transaction involves a consumer good, service, or loan 
24 
depends upon the purpose for which a good, service, or loan is used.  See Boatel Indus., 
Inc. v. Hester, 77 Md. App. 284, 303 (1988).  As discussed above, the CPA defines 
“consumer credit” as credit “primarily for personal, household, family, or agricultural 
purposes.”  CL § 13-101(d)(1).   
The CPA’s definition of “consumer credit” is consistent with the definition of 
“credit” and “extension of credit” in the context of other consumer debt statutes codified 
in the Commercial Law Article.  See Maryland Equal Credit Opportunity Act, CL § 12-
701(d) (“‘Credit’ means the right guaranteed by a creditor to a debtor to: (1) Defer payment 
of a debt; (2) Incur a debt and defer its payment; or (3) Purchase property or services and 
defer payment for it.”); see also Maryland Credit Services Businesses Act, CL § 14-1901(f) 
(“‘Extension of credit’ means the right to defer payment of debt or to incur debt and defer 
its payment, primarily for personal, family, or household purposes.”).  Given its broad 
language, we read CL § 13-101(d) to apply generally to transactions in which repayment 
of personal, household, family, and agricultural debts are deferred.   
The language in the Promissory Note clearly reflects that it consists of an extension 
of credit for the payment of HOA assessments—a debt incurred by Ms. Cisneros for 
personal, household and family purposes:  
For value received and delinquent homeowners association 
assessments on the unit at … (the “Subject Property”) accrued 
through March 2016, the undersigned, Cumanda Cisneros, (the 
PROMISSOR), promise(s) to pay to the order of GOSHEN 
RUN HOMEOWNERS ASSOCIATION, INC., the sum of 
EIGHT THOUSAND SEVEN HUNDRED THIRTY-THREE 
DOLLARS AND NINETY-SEVEN CENTS ($8,733.97), by 
SEVENTY-NINE (79) payments as follows: . . .  
 
25 
On its face, the Promissory Note is comprised of Ms. Cisneros’s acknowledgment of 
and agreement to repay the delinquent HOA assessments under a specific plan.  As such, the 
Promissory Note is an extension of credit to Ms. Cisneros.  Cf. Schinnerer v. Maryland Ins. 
Admin., 147 Md. App. 474, 492–93 (2002) (recognizing that promissory notes made by an 
insurance agent to the order of the insurance company to pay premiums collected after they 
were due constituted an extension of credit), cert denied Schinnerer v. Maryland Ins. Admin., 
373 Md. 408 (2003).  Contrary to Goshen Run’s assertions, the incorporation of the past-due 
HOA assessments into the Promissory Note did not transform the underlying consumer 
nature of the debt.  Accordingly, the Promissory Note constitutes an extension of “consumer 
credit,” which falls within the purview of the Consumer Protection Act. 
In conclusion, we hold that the collection of HOA assessments falls within the 
purview of the CPA.13  The HOA assessments are imposed for the maintenance of common 
                                              
13 Our holding that the collection of HOA assessments falls within the scope of the 
CPA is consistent with our decision in MRA Property Management, Inc. v. Armstrong, 426 
Md. 83, 112 (2012).  In MRA, we held that a condominium association could be liable under 
the CPA for providing misleading budgets—including assessments—to prospective 
condominium purchasers.  The Court rejected the condominium management company’s 
argument that its compliance with the disclosure obligations of the Maryland Condominium 
Act, Md. Code, Real Prop. Art. § 11-101 et seq. insulated them from liability for false and 
deceptive trade practices.  The Court opined that both statutes protected prospective 
purchasers of condominium units:  
 
The Maryland Condominium Act, in Section 11-135, creates 
duties for the [property management company] and the 
Association in the sale of a condominium unit.  The Consumer 
Protection Act, on the other hand, establishes boundaries 
beyond which the [property management company] and the 
Association may not go, unless they wish to be liable for 
deceptive or unfair trade practices.  The Maryland 
26 
areas, which Ms. Cisneros has the right to use and enjoy.  She became obligated to pay 
these debts the moment her deed was signed.  She is the purchaser of realty (her personal 
residence) and consumer services (the maintenance of the common areas over which she 
has an easement and a right to use and enjoy).  Ms. Cisneros falls within the definition of 
“consumer” under both the HOA Act and the CPA.  The assessments fall within the broad 
definition of “consumer debt” under the CPA because they are debts primarily incurred for 
her personal, household, and family purposes.  Additionally, the Promissory Note 
constituted an extension of credit to pay the HOA assessments.  Through the Promissory 
Note, the Association has extended credit for her to pay the HOA assessments pursuant to 
a payment plan.   
3. Enforceability of Confessed Judgment Note Under the Consumer Protection 
Act  
 
Having determined that the Consumer Protection Act applies to the collection of 
Ms. Cisneros’s HOA assessments, we must now determine whether the Association’s 
attempt to collect this debt under the confessed judgment clause of the Promissory Note 
violated the CPA.   
The CPA prohibits all trade practices that are unfair, abusive, or deceptive in, among 
other things, the collection of consumer debts.  See CL §§ 13-301(14)(iii); 13-303(5).  
Section 13-303 of the CPA generally prohibits unfair, abusive, or deceptive trade practices, 
                                              
Condominium Act requires disclosures, while the Consumer 
Protection Act mandates that those disclosures not be deceptive. 
 
Id. at 112–13.   
27 
and Section 13-301 contains a nonexclusive list of practices that are defined to be unfair or 
deceptive.  Golt v. Phillips, 308 Md. 1, 8–9 (1986).  These acts and practices include the 
“[u]se of a contract related to a consumer transaction which contains a confessed judgment 
clause that waives the consumer’s right to assert a legal defense to an action.”  CL § 13-
301(12).   
The Association argues that, under the CPA, not all confessed judgment clauses are 
prohibited.  Rather, the Association’s position is that, under the plain language of CL § 13-
301(12), only confessed judgment clauses “that waive the consumer’s right to assert legal 
defenses” are considered unfair or deceptive and therefore unlawful under CL §13-303(5).  
According to the Association, the confessed judgment provision contained in the 
Promissory Note is not an unfair or deceptive trade practice under the CPA because the 
Note contained the following provision immediately after the confessed judgment clause:  
E. 
Non-Waiver of Legal Defenses.  
I, CUMANDA CISNEROS, do not waive any legal defenses 
to any action to enforce this promissory note and mortgage.   
 
The Association contends that under this provision, Ms. Cisneros retained all her 
rights under the law to assert defenses to the enforcement of the Note by confession of 
judgment.  Accordingly, the Association argues that the confessed judgment clause 
contained in the Promissory Note does not violate the CPA.   
Ms. Cisneros argues that the confessed judgment provision in the Promissory Note 
violates the CPA.  Ms. Cisneros contends that the Association’s attempt to avoid the CPA 
by adding subsection E. to the Note, which purports to preserve Ms. Cisneros’s defenses, 
28 
is meaningless because the very nature of the confessed judgment process necessarily 
involves a waiver of significant legal defenses.   
Before we analyze the language set forth in CL § 13-301(12), it is instructive to 
provide some background related to confessed judgments, as well as the process for 
obtaining a confessed judgment under the Maryland Rules of Procedure.   
Confessed Judgments—Background 
Confessed judgments derive from the ancient legal device known as the “cognovit 
note,” dating back to at least William Blackstone’s time, by which the debtor consents in 
advance to the holder’s obtaining a judgment without notice to the debtor or a hearing.  
Overmyer, 405 U.S. at 176.  In Schlossberg v. Citizens Bank, 341 Md. 650, 655 (1996), 
this Court summarized the function of a judgment by confession: 
A confession of judgment clause in a debt instrument is a 
device designed to facilitate collection of a debt.  It is a 
provision by which debtors agree to the entry of a judgment 
against them without the benefit of a trial in the event of a 
default on the debt instrument.  As a general rule, a judgment 
by confession is entitled to the same faith and credit as any 
other judgment.   
 
(internal citations omitted).  However, given the ease with which a creditor may obtain a 
confessed judgment, we have been liberal in considering attacks on confessed judgments.  
Specifically, we have concluded that:  
Because the widespread practice of including a provision 
authorizing a confessed judgment in promissory notes lends 
itself to fraud and abuse . . . this Court has made clear that 
judgments by confession are to be “‘freely stricken out on 
motion to let in defenses.’”  
 
29 
Schlossberg, 341 Md. at 655 (citing Keiner v. Commerce Trust Co., 154 Md. 366, 370 
(1927) (citation omitted)).  Even in business transactions involving commercial debts, we 
have recognized that “‘the practice of including in a promissory note a provision 
authorizing confession of judgment lends itself far too readily to fraud and abuse.’”  Pease 
v. Wachovia SBA Lending, Inc., 416 Md. 211, 230–31 (2010) (quoting Garliss v. Key Fed. 
Sav. Bank, 97 Md. App. 96, 103 (1993) (citing Keiner, 154 Md. at 366)).   
The ability for the confessed judgment process to lead to fraud, abuse, and unfair 
results is obvious from the nature of the proceeding.  Unlike a typical civil action, a 
confessed judgment is entered prior to service on the defendant and without a trial.  See 
Md. Rule 2-611; 3-611.  It is entirely ex parte.  Although the rules provide a mechanism 
for the defendant to move to open, vacate, or modify the judgment within 30 days after 
service of the notice of a judgment,14 the debtor’s defenses are limited.  See NILS, LLC v. 
Antezana, 171 Md. App. 717, 728–29 (2006) (noting that meritorious defenses that can be 
raised by a defendant in a post-judgment attack pursuant to Md. Rule 2-611(c) include only 
the execution of the note itself and the amount due).   
Under the confessed judgment procedure, all the defendant’s pre-judgment defenses 
are waived.  For example, Md. Rule 2-322 sets forth many legal defenses that a defendant 
can raise prior to the entry of judgment, which include: lack of jurisdiction over the person, 
improper venue, insufficiency of process, insufficiency of service of process, and failure 
                                              
14 Maryland Rules 2-611 and 3-611 establish identical procedures in the District 
Court and Circuit Courts of Maryland for obtaining a confessed judgment, as well the 
courts’ ability to open, vacate, modify, or strike a judgment upon motion of a defendant 
after entry.  
30 
to state a claim upon which relief can be granted.  Because many of these defenses provide 
fundamental due process protections, case law makes clear that a confessed judgment 
clause is unconstitutional unless the promisor waives his or her due process rights.   
In 1972, the United States Supreme Court decided two companion cases on the same 
day, both of which challenged the constitutionality of the confessed judgment process:  
D.H. Overmyer v. Frick, 405 U.S. 174 (1972) (Ohio confessed judgments) and Swarb v. 
Lennox, 405 U.S. 191 (1972) (Pennsylvania confessed judgments).  Subsequently, in 1974, 
this Court analyzed Maryland’s confessed judgment procedure in light of Overmyer and 
Swarb.  These cases are instructive in understanding the constitutional limitations 
associated with the enforcement of confessed judgment clauses.   
In Overmyer, the Supreme Court considered the constitutionality of Ohio’s 
confessed judgment procedure.  In that case, both parties were corporations which 
bargained at arm’s length before a cognovit clause was included in a reformed contract.  
The debtor argued that the cognovit process, whereby the debtor, in advance of default, 
waives service of process and authorizes entry of judgment, offends the Due Process 
Clause of the Fourteenth Amendment.  The Supreme Court held that Ohio’s confessed 
judgment procedure did not violate Overmyer’s due process rights under the Fourteenth 
Amendment because the right to receive notice prior to the entry of civil judgment is 
subject to waiver.  The Court held that under the facts of the case, Overmyer, a 
sophisticated warehousing corporation, had “voluntarily, intelligently, and knowingly 
waived the rights it otherwise possessed to prejudgment notice and hearing . . . .”  Id. at 
187.  The Court cautioned, though, that “[o]ur holding . . . is not controlling precedent for 
31 
other facts of other cases.  For example, where the contract is one of adhesion, where there 
is great disparity in bargaining power, and where the debtor receives nothing for the 
cognovit provision, other legal consequences may ensue.”  Id. at 188.   
In a companion case to Overmyer, the Supreme Court considered the 
constitutionality of Pennsylvania’s confessed judgment procedure in a class action brought 
by Pennsylvania citizens who had signed documents containing confessed judgment 
clauses.  Swarb v. Lennox, 405 U.S. 191 (1972).  The lower court held that the Pennsylvania 
confessed judgment process was not facially unconstitutional.  However, based upon the 
evidence presented, the lower court held that a class action could be maintained on behalf 
of Pennsylvania residents who earn less than $10,000 annually, and who signed consumer 
financing or lease contracts containing a confessed judgment clause.  The lower court held 
that the Pennsylvania practice of confessing judgments against the designated class was 
unconstitutional against a member of that class in the absence of a showing that the debtor 
“intentionally, understandably, and voluntarily waived” his rights under Pennsylvania law.   
On appeal, the sole issue presented to the Supreme Court was whether the 
Pennsylvania confessed judgment statute was facially unconstitutional.  The Supreme 
Court cited to Overmyer and held that the statute was not unconstitutional on its face.  The 
Supreme Court did not reach the rest of the merits of the case because no cross appeal was 
taken.  Although the Supreme Court did not address the merits of the lower court’s opinion, 
the Court reiterated that the Overmyer decision was not controlling precedent for other 
facts of other cases.  Id. at 201.   
32 
 
After the Supreme Court’s decisions in Overmyer and Swarb, this Court considered 
the constitutionality of the Maryland confessed judgment rules in Billingsley v. Lincoln 
National Bank, 271 Md. 683 (1974).  Like the parties in Overmyer, Billingsley involved 
sophisticated parties—a corporate borrower and a commercial bank.  This Court 
specifically relied upon the Supreme Court’s analysis in Overmyer and Swarb, stating that 
“[f]ortunately, we are not required to chart a new course dealing with this important 
contention, since the Supreme Court has recently addressed itself to the very issue 
presented here.”  Billingsley, 271 Md. at 687.  We held that the Maryland confessed 
judgment rules were not unconstitutional on their face.  Id. at 692.  We further held that the 
debtor offered no evidence to establish that the confessed judgment procedure was 
unconstitutional as applied under the facts of that case.  In that situation, we held that the 
instrument was not a contract of adhesion, given the original face amount of the note 
($46,000) and the fact that one of the appellants signed the note as the vice president of the 
corporate maker.  This Court declined to remand the case to determine whether the 
appellants knowingly and intelligently waived their rights to notice, finding that under the 
facts of the case, appellants had such an opportunity at the hearing on their motion to 
vacate.   
 
The Supreme Court’s decisions in Overmyer and Swarb, and our decision in 
Billingsley make clear that, although the confessed judgment process is not 
unconstitutional on its face, there are situations in which the judgment may be challenged 
if the debtor did not knowingly, intelligently, and voluntarily waive his or her rights prior 
to execution of the contract or note.  These situations exist where the contract is one of 
33 
adhesion, there is great disparity in bargaining power, or the debtor receives nothing for 
the cognovit provision. 
1981 Amendment to the Consumer Protection Act 
Against the backdrop of the Supreme Court cases of Overmyer and Swarb, and our 
case of Billingsley, in 1981, the General Assembly amended the Consumer Protection Act 
to prohibit the use of confessed judgment clauses “related to a consumer transaction” by 
adding what is now CL § 13-301(12) through the enactment of 1981 Laws of Maryland, 
chapter 388 (“H.B. 692”).  We must determine whether the General Assembly intended to 
prohibit the use of all confessed judgment clauses in contracts related to consumer 
transactions or, as the Association argues, only intended to prohibit the use of a subset of 
confessed judgment clauses that include a waiver of a consumer’s right to assert any legal 
defense to such an action.  For the reasons set forth below, we hold that all confessed 
judgment clauses are prohibited in contracts related to consumer transactions. 
“The ultimate objective of our analysis is to extract and effectuate the actual intent 
of the Legislature in enacting the statute.”  Reier v. State Dep’t of Assessments & Taxation, 
397 Md. 2, 26 (2007) (citing Deville v. State, 383 Md. 217, 223 (2004)).  “This process 
begins with an examination of the plain language of the statute.”  Id.  In Koste v. Oxford, 
we summarized our statutory construction analysis as follows:  
The primary goal of statutory construction is “to discern the 
legislative purpose, the ends to be accomplished, or the evils to 
be remedied by a particular provision[.]”  In doing so, we first 
look to the “normal, plain meaning of the language of the 
statute,” read as a whole so that “no word, clause, sentence or 
phrase is rendered surplusage, superfluous, meaningless or 
nugatory[.]”  If the language of a statute is clear and 
34 
unambiguous, we “need not look beyond the statute’s 
provisions and our analysis ends.”  Where the language of the 
statute is ambiguous and may be subject to more than one 
interpretation, however, we look to the statute’s legislative 
history, case law, purpose, structure, and overarching statutory 
scheme in aid of searching for the intention of the Legislature. 
 
 
431 Md. 14, 25–26 (2013) (citing Whitley v. Md. State Bd. of Elections, 429 Md. 132, 149 
(2012) (additional internal citations omitted)).   
We hold that under the plain language of the statute, the CPA prohibits the use of 
all confessed judgment clauses in consumer transactions because the very essence of a 
confessed judgment clause requires a waiver of a “consumer’s right to assert a legal 
defense to an action.”  CL § 13-301(12).  In Schlossberg v. Citizens Bank of Maryland, we 
explained that “[a] confession of judgment clause in a debt instrument . . . is a provision 
by which debtors agree to the entry of judgment against them without the benefit of a trial 
in the event of a default on the debt instrument.”  341 Md. 650, 655 (1996).  A confessed 
judgment, by its inherent attributes, mandates that a debtor waive his or her right to assert 
any pre-judgment defenses including lack of venue, personal jurisdiction, and service of 
process.  These pre-judgment defenses are significant and are intended to protect an 
individual’s right to due process of law.  See Flanahan v. Dep’t of Human Res., 412 Md. 
616, 624 (2010) (“The Maryland Rules governing service of process are ‘declaratory of the 
basic requirements of due process of law . . .’ and the ‘failure to comply with those Rules 
constitutes a jurisdictional defect that prevents a court from exercising personal jurisdiction 
over the defendant.’”) (internal citations omitted).  
35 
The Association argues that we should interpret the words following the pronoun 
“that” as a restrictive modifying clause, thereby limiting the prohibition on the use of 
confessed judgments under the CPA only to those “that waive the consumer’s rights to 
assert legal defenses to an action.”  CL § 13-301(12).  Although we agree that the pronoun 
“that” is typically used to introduce a restrictive clause,15 we reject this interpretation here 
because it is unreasonable.  When interpreting the language in a statute, our interpretation 
“must be reasonable, not ‘absurd, illogical, or incompatible with common sense.’” State v. 
Neiswanger Mgmt. Servs., LLC, 457 Md. 441, 459 (2018) (quoting Lockshin v. Semsker, 
412 Md. 257, 276 (2010)).  The Association’s interpretation, which purports to distinguish 
between confessed judgment clauses generally on the one hand, and a subset category of 
confessed judgments “that waive the consumer’s rights to assert legal defenses to an 
action” on the other, is based upon a fiction that a confessed judgment debtor is not waiving 
his or her legal defenses and leads to an illogical result.   
A confessed judgment clause necessarily waives all legal defenses that a consumer 
could assert prior to entry of judgment.  Indeed, that is precisely what happened in this 
case.  Despite the language in the Promissory Note stating that Ms. Cisneros “[did] not 
waive any defenses to any action to enforce this promissory note and mortgage,” she clearly 
waived many defenses by executing the Promissory Note containing the confessed 
judgment clause.  For example, Ms. Cisneros waived her right to challenge venue and 
personal jurisdiction.  These defenses are significant.  Under this waiver of personal 
                                              
15 See that & which, A. Generally, Bryan Garner, Garner’s Dictionary of Legal 
Usage (3d ed. 2011). 
36 
jurisdiction, the Association could obtain a confessed judgment against Ms. Cisneros in 
any of the 50 states, the District of Columbia, or Puerto Rico.16  After the entry of a 
confessed judgment, Ms. Cisneros or a similarly situated defendant is limited to raising any 
post-judgment defenses in the jurisdiction that entered the confessed judgment.  Moreover, 
such post-judgment defenses are limited to challenges on the execution of the note or on 
the amount due.  NILS, LLC v. Antezana, 171 Md. App. 717, 728 (2006) (“A defense to the 
claim is a defense challenging: 1) the execution of the promissory note itself or 2) the 
amount of debt due on the note.”).  Under the confessed judgment process, once judgment 
is entered, the burden falls to the defendant to raise meritorious defenses in a post-judgment 
proceeding.  Id. at 726.  To suggest that a confessed judgment debtor does not “waive 
defenses” is illogical.  
                                              
16 At oral argument, counsel for the Association conceded that the confessed 
judgment provisions in the Promissory Note would authorize the Association to enter 
judgment against Ms. Cisneros anywhere in the United States and that she would then be 
forced to present any post-judgment defenses in that jurisdiction.  The possibility of such 
an occurrence is not simply speculative.  There has been a documented increase in the use 
confessed judgment clauses by lenders to obtain judgments in other states that are more 
favorable to the entry of confessed judgments.  The recent uptick in these predatory 
practices is described in a series of articles published in Bloomberg.  See Zachary R. Mider 
& Zeke Faux, Sign Here to Lose Everything: Part 1: “I Hereby Confess Judgment,” 
Bloomberg (Nov. 20, 2018) https://www.bloomberg.com/graphics/2018-confessions-of-
judgment/ (https://perma.cc/VKG4-8836); Zachary R. Mider & Zeke Faux, Sign Here to 
Lose Everything: Part 3: Rubber-Stamp Justice, Bloomberg (Nov. 29, 2018) 
https://www.bloomberg.com/graphics/2018-confessions-of-judgment-new-york-court-
clerks/ (https://perma.cc/DXV6-2J2T).  Courts in rural New York have become favorite 
venues of creditors because they can enter judgments usually in one day.  One court in 
Orange County, New York entered 176 judgments in the month of July 2018 for one 
creditor against small businesses in 38 states and Puerto Rico (none of which were located 
in New York).  Mider & Faux, How to Lose Everything: Part I, supra.   
37 
We hold that the plain language of CL § 13-301(12) is unambiguous and prohibits 
all confessed judgment clauses in consumer contracts.  The very nature of a confessed 
judgment action necessarily involves the waiver of significant defenses which protect due 
process.  We do not find the language in the statute to be ambiguous because the 
Association’s interpretation is not a reasonable or logical one.  See Koste, 431 Md. at 29 
(“When the plain language of a statute is ‘subject to more than one reasonable 
interpretation,’ the statutory language is ambiguous.”) (citations omitted) (emphasis 
added); Lewis v. State, 348 Md. 648, 654 (1998) (“[W]e interpret the meaning and effect 
of the language in light of the objectives and purposes of the provision enacted.  Such an 
interpretation must be reasonable and consonant with logic and common sense.  In addition, 
we seek to avoid construing a statute in a manner that leads to an illogical or untenable 
outcome.”) (citations omitted).  Adding language to a confessed judgment clause stating 
that the debtor is not “waiving defenses” does not make it so—nor does it rescue a 
confessed judgment provision from the CPA’s clear prohibition on their use in consumer 
contracts. 
However, even assuming the General Assembly’s use of the relative pronoun “that” 
instead of the relative pronoun “which” in the statute created ambiguity, our review of the 
legislative history, purpose, structure, and overarching statutory scheme confirms that the 
General Assembly intended to prohibit the use of all confessed judgment clauses in 
consumer contracts.  See State v. Roshchin, 446 Md. 128, 140 (2016) (holding that “even 
when the language is unambiguous, it is useful to review the legislative history of the 
38 
statute to confirm that interpretation and to eliminate another version of legislative intent 
alleged to be latent in the language.”) (citation omitted).  
The General Assembly enacted the prohibition on confessed judgment clauses 
through H.B. 692.  The legislative history of H.B. 692 makes clear that, throughout the 
legislative process from January through May 1981, the bill’s proponents in the General 
Assembly were aware of the Supreme Court’s recent holding in Overmyer and this Court’s 
holding in Billingsley, and were concerned that confessed judgment clauses allowed the 
holder of a confessed judgment note, through its agents, to appear in court on behalf of the 
consumer-defendant to confess judgment against that consumer in favor of the holder—all 
without the knowledge of the consumer.  
H.B. 692, as originally drafted, prohibited only the use of confessed judgment 
clauses for home improvements.  The original legislation, as proposed by the Consumer 
Law Center of the Legal Aid Bureau in January 1981, at the request of Delegate John Pica, 
Jr., had the stated purpose of “prohibiting the use of confessed judgment notes in home 
improvement transactions,” and would have amended the licensing statute applicable to 
home improvement companies to prohibit “the use of a confessed judgment note, cognovits 
or other clause authorizing the holder to appear in court and enter judgment against the 
maker in the case of default.”  Following the drafting process, H.B. 692 was introduced 
with altered language to prohibit home improvement companies’ “use of a confessed 
judgment note, authorizing the holder to appear in court and enter judgment against the 
maker in case of default.”  The bill clearly equated the “use of a confessed judgment note” 
with “authorizing the holder to appear in court and enter judgment against the maker in 
39 
case of default.”  As such, the original bill focused exclusively on prohibiting the activity 
occurring prior to the entry of confessed judgment against the consumer.  The written 
testimony of the bill’s sponsor, Delegate Pica, confirms this interpretation.  His remarks 
expressed the bill’s intent to ban the use of all confessed judgment clauses in home 
improvement transactions and focused exclusively on the harm caused by the activity 
leading up to, and including, the entry of confessed judgment by a court.  Delegate Pica 
explained that the legislation was “merely extending existing Maryland law prohibiting 
confessed judgments in loans not secured by residential real property, consumer loans, and 
retail sales contracts.”  
In explaining the many reasons to prohibit confessed judgments in home 
improvement contracts, Delegate Pica noted “the first of these reasons is that confessed 
judgments tend to eliminate the minimal due process rights of notice and opportunity to be 
heard, rights which have been devoted to constitutional standards, thus deprival of them 
results in substantial harm to consumers.”  Delegate Pica referred to the Supreme Court’s 
holding in Overmyer and this Court’s holding in Billingsley, noting that although the 
confessed judgment process has been determined to be facially constitutional in some 
transactions, “they may not be in certain [other] factual situations, especially situations 
where contracts of adhesion are most likely to flourish.”  Delegate Pica further noted that 
the “ex[]parte nature of the proceeding as a practical matter cuts off any defense on the 
counterclaim that may be available to the consumer,” and that as a result, consumers often 
end up making payments on the disputed debts.   
40 
Subsequently, the Economic Matters Committee amended H.B. 692 by extending 
the scope of the bill to apply to all consumer transactions—not just those in the home 
improvement context—and it introduced the language, which appears in the present form 
of CL § 13-301(12).  This amended version of H.B. 692 was adopted and went into effect 
on July 1, 1981.  The legislative history is devoid of support for the notion that by adding 
the clause “that waives the consumer’s right to assert a legal defense to an action,” the 
General Assembly intended to limit the type of confessed judgment contracts that were 
prohibited.  The Committee file explains the purpose of these amendments to the original 
bill:  
Makes use of a confessed judgment clause in any consumer 
transaction an unfair or deceptive trade practice.  
 
Amendments rewrite the bill so that it applies to all consumer 
contracts, not just home improvement.  
 
 
With these amendments, the language “use of a confessed judgment” in the original 
bill ultimately became “use of a contract related to a consumer transaction which contains 
a confessed judgment clause,” while the original description of the instrument as 
“authorizing the holder to appear in court and enter judgment against the maker of the note” 
became “that waives the consumer’s right to assert a legal defense to an action.”  The first 
of these changes reflects an expansion of the types of instruments being covered; from 
“confessed judgment notes” to “any contract related to a consumer transaction.”  The 
second of these changes appears to reflect a shift in emphasis from the acts taken by the 
holder of the note, to the harm that the holder’s actions have on the consumer.   
41 
 
Thus, our review of the legislative history confirms that the last part of subsection 
CL § 13-301(12)—“that waives the consumer’s right to assert legal defenses to an 
action”—is merely descriptive of what was understood to be the typical confessed 
judgment clause; it does not establish a separate element that must be satisfied in order for 
a confessed judgment clause to be in violation of the CPA.  The legislative history makes 
it clear that the General Assembly was concerned about protecting consumers’ pre-
judgment rights—not the possibility of post-judgment attempts to vacate a confessed 
judgment already entered.   
 
Our holding that CL § 13-301(12) prohibits the use of contracts containing any 
confessed judgment clause is also consistent with the purpose, structure, and overarching 
statutory scheme of the CPA, as well as our case law interpreting the statute.  The purpose 
of the CPA is to “set certain minimum standards for the protection of consumers across the 
State . . . .” CL § 13-102(b)(1).  The General Assembly has instructed that the CPA shall 
be “construed and applied liberally to promote its purpose.” CL § 13-105.  We have 
previously described that the CPA is “intended to be construed liberally in order to promote 
its purpose of providing a modicum of protection for the State’s consumers.” Washington 
Home Remodelers, Inc. v. State, 426 Md. 613, 630 (2012).  Moreover, “[w]e seek to 
‘construe the statute in a way that will advance [the statute’s] purpose, not frustrate it.’” 
Lockett v. Blue Ocean Bristol, LLC, 446 Md. 397, 423 (2016) (quoting Neal v. Fisher, 312 
Md. 685, 693 (1988)).  The Association’s attempt to limit the CPA’s prohibition on the use 
of confessed judgment clauses to a certain subset of confessed judgment clauses that 
expressly waive legal defenses is not only illogical, given that all confessed judgment 
42 
clauses operate to waive legal defenses, but is inconsistent with the remedial purpose of 
the CPA.   
 
Finally, we note that other statutes in the Commercial Law Article that apply to 
consumers clearly prohibit the use of confessed judgments in transactions such as 
consumer loans (CL § 13-311(b)(1)), retail credit (CL § 12-507(b)), and retail installment 
sales (CL § 12-607(a)(2)).  We shall interpret the General Assembly’s intent to eliminate 
confessed judgments from consumer transactions consistently with the other consumer 
statutes prohibiting the use of confessed judgment clauses.  
 
In conclusion, we hold that the plain language of CL § 13-301(12) prohibits the use 
of contracts containing all confessed judgment clauses in consumer transactions because 
the very essence of a confessed judgment clause requires that the debtor waive defenses.  
Our holding that CL § 13-301(12) prohibits the use of all confessed judgment clauses in 
consumer contracts is confirmed by our review of the legislative history and is consistent 
with the purpose of the CPA.   
4. Dismissal of a Confessed Judgment Complaint Pursuant to Maryland Rule 
3-611 
 
Having determined that the Association was not permitted under the CPA to obtain 
a confessed judgment against Ms. Cisneros, we must determine whether the circuit court 
erred in holding that the complaint should have been dismissed pursuant to Md. Rule 3-
611(b).  We hold that, under the facts and procedural posture of this case, the proper 
procedure was dismissal of the confessed judgment action.  
43 
In this case, the Association filed a single-count complaint for confession of 
judgment in the district court pursuant to Md. Rule 3-611.  As a condition to filing suit, 
Md. Rule 3-611(a) requires that the plaintiff sign an affidavit stating that “[t]he instrument 
does not evidence or arise from a consumer transaction as to which a confessed judgment 
clause is prohibited by Code, Commercial Law Article, § 13-301.” 
Md. Rule 3-611(b) provides that: 
Action by the Court.  If the court determines that (1) the 
complaint complies with the requirements of section (a) of this 
Rule and (2) the pleadings and papers demonstrate a factual 
and legal basis for entitlement to a confessed judgment, the 
court shall direct the clerk to enter the judgment.  Otherwise, it 
shall dismiss the complaint. 
 
(emphasis added).   
 
Once the confessed judgment is entered, under Md. Rule 3-611(c), the clerk “shall 
issue a notice informing the defendant of entry of judgment and of the latest time for filing 
a motion to open, modify, or vacate the judgment.”  After the defendant is served with the 
notice, Md. Rule 3-611(d) and (e) provide the following process for opening the judgment:  
(d) 
Motion by Defendant.  The defendant may move to 
open, modify, or vacate the judgment within 30 days after 
service of the notice.  The motion shall state the legal and 
factual basis for the defense to the claim.  
 
(e) 
Disposition of the Motion.  If the court finds that there 
is substantial and sufficient basis for an actual controversy as 
to the merits of the action, the court shall order the judgment 
by confession opened, modified, or vacated and permit the 
defendant to file a responsive pleading.   
 
 
The Association argues that because the Promissory Note contains a severance 
clause, it was appropriate for the district court to vacate the confessed judgment, allow the 
44 
Association to file an amended complaint alleging a breach of contract arising out of the 
Promissory Note, and proceed on the amended complaint with a trial on the merits.  To 
support its position, the Association points to the sequence outlined in Md. Rule 3-611(d) 
and (e) which permits a court to vacate the confessed judgment and authorizes parties to 
proceed with a trial on the merits.  The Association relies upon Schlossberg v. Citizens 
Bank of Maryland, 341 Md. 650, 656 (1996) and Metalcraft v. Pratt, 65 Md. App. 281 
(1985) for the proposition that if the court opens, vacates, or modifies the judgment, the 
defendant may file a responsive pleading and defend the case on the merits.  These cases 
are inapposite because they involve commercial transactions, not consumer transactions 
where the General Assembly has prohibited the use of a confessed judgment clause in a 
consumer contract as an “unfair, abusive, or deceptive” trade practice.   
 
Although the Association accurately recites the process for opening a confessed 
judgment under the Maryland Rules, the process described in subsections (d) and (e) are 
premised upon the entry of a lawful confessed judgment.  Here, as a matter of law, the 
filing of the initial complaint and subsequent entry of the confessed judgment under 
subsections (a) and (b) of the Rule were unlawful and were undertaken in violation of the 
CPA based upon an erroneous affidavit that the Promissory Note “does not evidence or 
arise from a consumer loan as to which a confessed judgment clause is prohibited by Code, 
Commercial Law Article, § 13-301.” 
 
Because the entry of a confessed judgment was prohibited under the CPA, there was 
no legal basis for its entry.  The confessed judgment complaint did not comply with the 
requirements of Md. Rule 3-611(a), and Md. Rule 3-611(b) mandated dismissal of the 
45 
complaint.  Under the procedural posture of this case, we will not ignore the mandatory 
dismissal language in the rule and grant the Association leave to file an amended complaint 
alleging breach of contract in the unlawful confessed judgment action. Given the 
mandatory language of the rule and the equities, dismissal of the initial confessed judgment 
case was required under Md. Rule 3-611(b).   
Although we hold that the Association could not file an amended complaint in the 
unlawful confessed judgment action, we nonetheless hold that the Association may file a 
separate complaint alleging breach of contract under the terms of the Promissory Note, 
severed from the unenforceable confessed judgment clause.17  We disagree with Ms. 
Cisneros’s position that the Promissory Note is void in its entirety.  Although CL § 13-
301(12) prohibits the use of “a contract related to a consumer transaction containing a 
confessed judgment clause,” there is nothing in the Consumer Protection Act to indicate 
that the General Assembly intended that a contract made in violation of its provisions is 
void in its entirety, where the offending clause may be severed.  We have held that: 
“A contract conflicting with public policy set forth in a statute 
is invalid to the extent of the conflict between the contract and 
that policy.”  Medex v. McCabe, 372 Md. 28, 39 (2002).  See 
also State Farm Mut. Auto. Ins. Co. v. Nationwide Mut. Ins. 
Co., 307 Md. 631, 643 (1986) (holding that a contractual 
                                              
17 In the end, we recognize that if the Association files a separate action for breach 
of contract severed from the confessed judgment case, the end result may be the same as if 
the Association were permitted leave to file an amended complaint for breach of contract 
in the initially filed confessed judgment case.  However, given the mandatory language of 
Md. Rule 3-611(b) and the fact that filing the confessed judgment action was unlawful, it 
is neither fair nor equitable to allow the Association to file an amended complaint seeking 
relief that may relate back to the initial filing date of the unlawful action. To the extent that 
there is a benefit to filing an amended complaint in the context of the unlawful action, the 
Association should not reap that benefit.   
46 
provision that violates public policy is invalid, but only to the 
extent of conflict between stated public policy and contractual 
provision).   
 
Mayor & City Council of Baltimore v. Clark, 404 Md. 13, 33 (2008).  A clause “can be 
severed from the instrument without destroying the instrument’s overall validity or the 
validity of other provisions if it is not so interwoven as to be logically inseparable from the 
rest.”  Connolley v. Harrison, 23 Md. App. 485, 488 (1974) (citing Northwest Real Estate 
Co. v. Serio, 156 Md. 229, 232 (1929) (citations omitted)).   
Here, we hold that the confessed judgment clause of the Promissory Note may be 
severed without destroying the instrument’s overall validity.  Ms. Cisneros should not 
obtain a windfall and escape responsibility for paying her delinquent homeowners 
assessments solely because the Promissory Note contained a confessed judgment clause.  
Should the Association decide to proceed with an action for breach of contract on the 
Promissory Note, severed from the confessed judgment clause, Ms. Cisneros will have the 
ability to raise all defenses permitted by law.  We agree with the circuit court that dismissal 
was required under Md. Rule 3-611(b).  However, we hold that the dismissal should have 
been without prejudice to the Association to file a separate breach of contract action based 
on the promissory note with the confessed judgment clause severed.   
III. CONCLUSION 
 
For the reasons explained above, we hold that the collection of HOA assessments 
falls within the purview of the Consumer Protection Act.  Specifically, we hold that HOA 
assessments fall within the broad definition of “consumer debt” under the CPA.  Moreover, 
the Promissory Note containing the confessed judgment clause constituted an extension of 
47 
credit to Ms. Cisneros to pay delinquent HOA assessments, which falls squarely within the 
definition of “consumer credit” under the CPA.  Under the plain language of CL § 13-
301(12), the CPA forbids the use of all confessed judgment clauses in contracts related to 
consumer transactions.  A creditor cannot circumvent the protections afforded to a debtor 
under the CPA by inserting language in the confessed judgment clause which purports to 
preserve a debtor’s legal defenses.  Finally, we hold that because the Association lacked 
the legal authority to file a confessed judgment complaint, the appropriate remedy under 
Maryland Rule 3-611(b) was dismissal of the case without prejudice to file a separate 
breach of contract action based on the promissory note with the confessed judgment clause 
severed.  Although the Association may be able to file a separate breach of contract claim 
under the Promissory Note by severing the confessed judgment clause from the balance of 
the Note, it was improper to file such an action within the unlawful confessed judgment 
proceedings.   
JUDGMENT OF THE CIRCUIT COURT 
FOR 
MONTGOMERY 
COUNTY 
IS 
AFFIRMED IN PART, REVERSED IN 
PART.  COSTS TO BE PAID BY THE 
PETITIONER. 
Circuit Court for Montgomery County 
Case No.: 9842D  
Argued: September 5, 2019 
 
 
 
 
 
IN THE COURT OF APPEALS 
OF MARYLAND 
 
No. 3 
 
September Term, 2019 
 
 
  
GOSHEN RUN HOMEOWNERS 
ASSOCIATION, INC. 
 
 
 
v. 
 
CUMANDA CISNEROS 
 
 
Barbera, C.J. 
McDonald, 
Watts, 
Hotten, 
Getty, 
Booth, 
Raker, Irma S., 
     (Senior Judge, Specially Assigned) 
 
JJ. 
 
 
Dissenting Opinion by Getty, J.,  
which Hotten and Raker, JJ., join. 
 
 
Filed: January 27, 2020 
 
 
Respectfully, I dissent. 
As a threshold issue in this case, I would hold that homeowners’ association 
assessments (“HOA assessments”) derive from a real property obligation under the 
Maryland Real Property Article and are not consumer transactions subject to the Consumer 
Protection Act (“CPA”), Md. Code (1975, 2013 Repl. Vol.), Commercial Law (“CL”) § 13-
101 et seq.   
The Maryland Homeowners Association Act (“HOA Act”) in the Real Property 
Article establishes HOA assessments.  Md. Code (1974, 2015 Repl. Vol.), Real Property 
(“RP”) § 11B-101 et seq.  The statutory authority for a homeowners’ association to impose 
a mandatory fee on lots, or the owners or occupants of lots, is through a real property 
“declaration,” an instrument recorded among the land records of the county.  RP § 11B-
101(d).  HOA assessments are not optional consumer contracts but instead are a 
requirement of the HOA declaration and a responsibility of the lot owner.  RP § 11B-117.  
Unlike a consumer transaction, the HOA declaration creates continuing and mandatory 
obligations for HOA assessments to support common use property maintenance and 
facilities. 
In this case, Ms. Cisneros argues that HOA assessments fall within the purview of 
the CPA because the assessment “relates to a consumer transaction.”  Ms. Cisneros first 
argues that assessments are consumer transactions because they are used for “personal, 
 
2 
 
family or household needs.”1  Ms. Cisneros further argues that HOA assessments relate 
back to the sale and original extension of credit—which is a consumer transaction.  
Therefore, Ms. Cisneros believes, HOA assessments fit into the CPA definition of 
“consumer credit.” 
Adopting Ms. Cisneros’ argument, the Majority proceeds to apply other statutory 
schemes to attempt to fit the real property declaration of HOA assessments into the 
Maryland definition of a consumer transaction under the state CPA.  As discussed below, 
I would hold that HOA assessments are not consumer transactions under the Maryland 
CPA because they are neither “consumer debt” nor an “extension of credit.” 
I. 
HOA Assessments Are Not Consumer Debt. 
The Majority first relies on the federal Debt Collection Practices Act (“FDCPA”) to 
hold that HOA assessments constitute consumer debt because they are incurred primarily 
for personal, household, and family purposes.  Therefore, the Majority believes, HOA 
assessments fit within the definition of “consumer debt” under the CPA.  I disagree.   
                                                 
1 Specifically, Ms. Cisneros argues that 
[i]t is beyond doubt that the assessments imposed by Goshen Run for care 
and maintenance of the common areas was in part for the benefit of Ms. 
Cisneros’ property interest in those common areas.  In other words, the 
assessments are for the benefit of Ms. Cisneros personally, and her 
household.  The [confessed judgment promissory note], which Goshen Run 
acknowledges is “composed of . . . the delinquent assessments imposed by 
Goshen Run,” and which mandates payment of future assessments, is related 
to a consumer transaction, subject to [CL] § 13-301(12). 
 
3 
 
The FDCPA defines “debt” as “any obligation or alleged obligation of a consumer 
to pay money arising out of a transaction in which the money, property, insurance, or 
services which are the subject of the transaction are primarily for personal, family or 
household purposes, whether or not such obligation has been reduced to judgment.”  15 
U.S.C.A. § 1692a(5).  The Maryland Consumer Debt Collection Act (“MCDCA”) 
prohibits a debt collector, inter alia, from “[e]ngag[ing] in any conduct that violates . . . the 
[FDCPA].”  CL § 14-202(11). 
In contrast, the Maryland CPA defines “consumer debt” as “debts . . . which are 
primarily for personal, household, family or agricultural purposes.”  CL § 13-101(d)(1).  
Noticeably absent in the language of the CPA definition is the “obligation” and “arising 
out of” language present in the FDCPA: “any obligation or alleged obligation of a 
consumer to pay money arising out of a transaction. . . .” 
The Majority attempts to read those words into the CPA definition of “consumer 
debt” by applying federal cases that have interpreted the FDCPA.  Since 1997, several 
federal courts have held that HOA assessments are debts under the FDCPA.  See Majority 
Slip Op. at 22–23.  Those courts follow a familiar refrain: homeowners are consumers that 
have an obligation to pay money to the association and because the obligation arises out of 
a “transaction” which is “primarily for personal, family, or household purposes,” thus HOA 
assessments are a debt within the definition of the FDCPA.   
To be sure, the Maryland CPA cross references the violation of the MCDCA, and 
by implication the FCDCA, as a violation of the CPA.  CL § 13-301(14)(iii).  There is no 
indication, however, that the FDCPA’s broader definition of “debt” should be transposed 
 
4 
 
on the Maryland CPA’s limited definition of “consumer debt.”  Reading anything else into 
the statute, such as transposing definitions from one cross-referenced act to supersede a 
definition of the same word in the CPA, is counter to the General Assembly’s language 
and to this Court’s long-standing tradition of deferring to the Maryland legislature.   
II. 
The Promissory Note Is Not An “Extension of Consumer Credit.” 
 
The Majority next determines that HOA assessments constitute “consumer credit” 
because they are incurred primarily for personal, household, and family purposes.  The 
Majority reasons that HOA assessments relate back to the sale of property and original 
“extension of credit”—which is a consumer transaction.  This position incorrectly conflates 
the consumer transaction of purchasing personal property with the property obligation of 
paying HOA assessments.2  
In Schinnerer v. Maryland Insurance Administration—the Majority’s only support 
for their consumer credit argument—Schinnerer, an insurance agent, was obligated to 
collect, report, and remit premiums to his insurance company within forty-five days.  147 
Md. App. 474, 479–80 (2002).  When Schinnerer was unable to make the remittance in 
time, he negotiated payment plans with interest that were memorialized in promissory 
notes.  Id. at 480–81.  The insurance commissioner suspended Schinnerer’s license for 
                                                 
2 See Fink v. Meadow Lake Estates Homeowners’ Ass’n, 384 Mont. 552 (2016) (holding 
that under the Montana CPA definition of “consumer” i.e., “a person who purchases or 
leases goods, services, real property, or information primarily for personal, family, or 
household purposes,” the homeowner was not a “consumer” in relation to the HOA when 
purchasing her lot (quoting Mont. Code. Ann. § 30-14-102(1)).  
 
 
5 
 
failure to remit payments.  Id. at 483.  Schinnerer, in attempting to avoid the suspension, 
argued that the extension of credit under the promissory notes transformed the relationship 
from principal-agent to lender-borrower, such that he did not violate the fiduciary duties 
set out by his agreement with the insurance company.  Id. at 489.  The Court of Special 
Appeals rejected this argument and found that Schinnerer still owed a fiduciary duty based 
on the existence of a loan program that the insurance company formerly had in place for 
its agents.  Id. at 490. 
The Majority takes Schinnerer to mean that an “extension of credit” under 
circumstances similar to the present case does not change the character of the relationship.  
This argument is tenuous even putting aside the factual nature of Schinnerer, its specific 
review of an Insurance Commissioner’s findings for error, and its limited analysis as 
applied to the Insurance Article.  The Majority reasons that the confessed judgment 
promissory note does not change the consumer nature of the HOA assessments or the 
character of the relationship between the parties but provides limited support for the 
similarities between the original extension of credit and the HOA assessment transactions.  
As the Majority admits, the primary question is the “nature” of the transactions.  Even 
accepting that the promissory note reflects a debt incurred by Ms. Cisneros for personal, 
household and family purposes—which I do not—the “nature” of the acknowledgment of 
and agreement to repay the delinquent HOA assessments (mandatory property interest) is 
not of the same “nature” as the original credit transaction to purchase the property 
(voluntary consumer transaction). 
 
6 
 
Citing the Equal Credit Opportunity Act and the Credit Services Businesses Act, the 
Majority reasons that “[t]he CPA’s definition of ‘consumer credit’ is consistent with the 
definition of ‘credit’ and ‘extension of credit’ in the context of other consumer debt statutes 
codified in the Commercial Law Article.”  Majority Slip Op. at 24.  That reasoning assumes 
that HOA assessments are consumer debts, see id. (“Given its broad language, we read CL 
§ 13-101(d) to apply generally to transactions in which repayment of personal, household, 
family, and agricultural debts are deferred.”), a premise with which, as outlined above, I 
fundamentally disagree.   
To the contrary, the HOA Act, and not the CPA, governs assessments: “As provided 
in the declaration, a lot owner shall be liable for all homeowners association assessments 
and charges that come due during the time that the lot owner owns the lot.”  RP § 11B-
117(a).  As for collection of assessments, “a homeowners association may enforce the 
payment of the assessments and charges provided in the declaration by the imposition of a 
lien on a lot in accordance with the Maryland Contract Lien Act.”  RP §11B-117(b).  The 
statutory provisions of the Contract Lien Act are also a title in the Real Property article.  
See RP § 14-201 et seq.  Assessments are in turn governed by the covenants of the 
respective HOA.  Such covenants are not typically optional contracts but rather a 
requirement of the HOA declaration.   
Unlike a consumer transaction, the HOA declaration creates continuing and 
mandatory real property obligations.  More specifically, a declaration  
creates the authority for a homeowners association to impose on lots, or on 
the owners or occupants of lots, or on another homeowners association, 
condominium, or cooperative housing corporation any mandatory fee in 
 
7 
 
connection with the provision of services or otherwise for the benefit of some 
or all of the lots, the owners or occupants of lots, or the common areas.  
 
RP § 11B-101(d)(1).   
The General Assembly has not specified that such a required real property 
obligation is subject to the Maryland CPA.  The CPA does not reference or adopt the HOA 
Act.3  In contrast, the Legislature has adopted statutory provisions for the CPA to cover 
                                                 
3 Inversely, the Majority cites but does not rely on the “2007 Amendment,” RP § 11B-115, 
the lone instance where the HOA Act cross references the CPA.  Majority Slip Op. at 16–
17.  Prior to 2007, there is no indication in the legislative history or otherwise that the CPA 
applied to the HOA Act.  In 2007, however, the HOA Act was amended to add RP § 11B-
115, titled “Enforcement Authority of Division of Consumer Protection.”  In addition to 
adding a specific definition of “consumer” to the HOA Act, the 2007 Amendment states 
that “to the extent that a violation of any provision of this title affects a consumer, that 
violation shall be within the scope of the enforcement duties and powers of the Division of 
the Consumer Protection of the Office of the Attorney General, as described in Title 13 of 
the Commercial Law Article.”  RP § 11B-115(c).  The language of § 11B-115(c) thus limits 
the application of the enforcement provisions of Subtitle 4 of the CPA to the HOA Act.  In 
other words, where an HOA Act violation affects a “consumer” as defined in the HOA Act, 
the Division of Consumer Protection has enforcement powers under CL § 13-401 et seq.   
The Fiscal and Policy Note to the 2007 Amendment explains that the Legislature amended 
the Real Property Article, including the addition of enforcement powers under RP § 11B-
115, as a recommendation from the 2006 Final Report of the Task Force on Common 
Ownership Communities.  See TASK FORCE ON COMMON OWNERSHIP 
COMMUNITIES, 
2006 
FINAL 
REPORT 
(Dec. 
31, 
2006), 
https://msa.maryland.gov/megafile/msa/speccol/sc5300/sc5339/000113/003000/003160/u
nrestricted/20066534e.pdf ; 2007 Md. Laws ch. 593, House Bill 183, Fiscal & Policy Note, 
http://mgaleg.maryland.gov/2007rs/fnotes/bil_0003/hb0183.pdf. 
 
The 
Task 
Force 
concluded that “local governments should be required to coordinate referrals of disputes 
involving alleged violation of State common ownership community laws to the Office of 
the Attorney General for review and appropriate enforcement action.”  House Bill 183, 
Fiscal & Policy Note at 2.  The Task Force’s Report makes clear that the main concern of 
the Task Force was to apply Subtitle 4 of the CPA to have the Division of Consumer 
Protection intervene and act as a mediator to avoid HOA disputes from ending up in court.  
See TASK FORCE REPORT at 14 (Suggesting “government enforcement at the State level 
when disputes involving alleged violations of [common ownership community] laws 
cannot be resolved through conciliation, mediation or arbitration at the local 
level. . . .  [S]uch disputes should be reviewed by the Office of the Attorney General and, 
 
8 
 
unfair or deceptive trade practices as it relates to the sale of real property, the sale of home 
warranties, and the protection of homeowners in foreclosure.  See CL § 13-301(14)(xvi) 
(indicating that an unfair or deceptive trade practice includes a violation of RP § 10-601 et 
seq. governing new home warranties and RP § 7-301 et seq. governing the homeowners in 
foreclosure).   
Absent specific language that incorporates the HOA Act or HOA assessments as 
consumer transactions subject to the CPA, I would exclude this real property obligation.  I 
am cognizant of CL § 13-105 which requires us to construe and apply liberally the CPA to 
promote its purpose.  There is no doubt that confessed judgments can be used as a deceptive 
trade practice.  They are not, however, per se deceptive trade practices within the definition 
of the CPA as it relates to HOA declarations and assessments.  The CPA, even construed 
liberally, is not the proper vehicle to prohibit confessed judgments in HOA declarations.   
In summary, I would hold that under the Maryland Real Property article, HOA 
assessments are not consumer transactions and therefore are not subject the CPA.   
Judge Hotten and Judge Raker have authorized me to state that they join in this 
opinion. 
 
                                                 
where appropriate, enforcement action taken. . . .”).  There is no statutory language or 
indication of legislative intent that § 11B-115 applies the CPA wholesale to the HOA Act.  
Rather, the language of § 11B-115 and the findings of the Task Force indicate a very 
nuanced cross-reference to the CPA specifically regarding enforcement.