Opinion ID: 1979656
Heading Depth: 3
Heading Rank: 5

Heading: Unfair or Deceptive Trade Practices under Maryland Consumer Protection Act

Text: The Court of Special Appeals determined, and the respondents argue in this Court, that the petitioners have failed to articulate any actual injury or loss to sustain a Consumer Protection Act claim. [12] As we will elucidate, actual physical injury to a person or property or actual product malfunction is not required to state a cognizable injury under the Consumer Protection Act and, thus, the dismissal of the petitioners' Consumer Protection Act claim must also be reversed. The Consumer Protection Act, codified at Maryland Code (1975, 2005 Replacement Volume) งง 13-101 et seq. of the Commercial Law Article was intended to provide minimum standards for the protection of consumers in the State. ง 13-101. As this Court explained in Morris v. Osmose Wood Preserving, supra : The General Assembly enacted the Consumer Protection Act . . . in response to `mounting concern over the increase of deceptive trade practices in connection with sales of merchandise, real property, and services and the extension of credit.' . . . The Legislature was concerned that these deceptive practices were undermining public confidence in merchants. . . . It found existing federal and State laws to be `inadequate, poorly coordinated and not widely known or adequately enforced,' and found `that improved enforcement procedures [were] necessary to help alleviate the growing problem of deceptive consumer practices.' . . . With the Act, therefore, the General Assembly intended `to set certain minimum statewide standards for the protection of consumers across the State' and to `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.' 340 Md. at 536-37, 667 A.2d at 633 (citations omitted). The Act inter alia, prohibits unfair and deceptive trade practices in the sale, lease, rental, loan, or bailment of any consumer goods, consumer realty, consumer services . . . ง 13-303(1). Deceptive trade practices include, as relevant: (1) False, falsely disparaging, or misleading oral or written statement, visual description, or other representation of any kind which has the capacity, tendency or effect of deceiving or misleading consumers;[ [13] ] Representation that: (i) Consumer goods . . . have a sponsorship, approval, accessory, characteristic, ingredient, use, benefit, or quantity which they do not have;       (iv) Consumer goods, consumer realty, or consumer services are a particular standard, quality, grade, style or model which the are not; (3) Failure to state a material fact if the failure deceives or tends to deceive;       (9) Deception, fraud, false pretense, false premise, misrepresentation, or knowing concealment, suppression, or omission of any material fact with the intent that the consumer rely on the same in connection with: (i) the promotion or sale of any consumer goods . . .  ง 13-301. A party alleging unfair or deceptive trade practices may file a complaint with the Attorney General's office, ง 13-401, [14] or bring a private cause of action. ง 13-408. [15] While any person may bring an action to recover for injury or loss sustained by him as the result of a practice prohibited by this title, ง 13-408, a party who files a complaint with the Attorney General, who then brings the action, is not required to allege that actual injury has occurred. ง 13-302. [16] This Court has held, however, that a private party suing under the Consumer Protection Act must establish actual injury or loss. Citaramanis v. Hallowell, 328 Md. 142, 153-54, 613 A.2d 964, 969 (1992); Morris v. Osmose, 340 Md. 519, 538 n. 10, 667 A.2d 624, 635 n. 10 (1995); McGraw v. Loyola Ford, Inc., 124 Md.App. 560, 581, 723 A.2d 502, 512 (1999), cert. denied, 353 Md. 473, 727 A.2d 382 (1999). See Maryland Code, (1975, 2005 Replacement Vol.) ง 13-408 of the Commercial Law Article (any person may bring an action to recover for injury or loss sustained by him as the result of a practice prohibited by this title). We have, in earlier cases, established that, in order to articulate a cognizable injury under the Consumer Protection Act, the injury must be objectively identifiable. In other words, the consumer must have suffered an identifiable loss, measured by the amount the consumer spent or lost as a result of his or her reliance on the sellers' misrepresentation. Golt v. Phillips, 308 Md. 1, 11-14, 517 A.2d 328, 333-335 (1986); Citaramanis, 328 Md. at 151-53, 613 A.2d at 968-70 (1992); Morris v. Osmose, 340 Md. at 538 n. 10, 667 A.2d at 635 n. 10 (1995); McGraw v. Loyola Ford, 124 Md.App. 560, 581, 723 A.2d 502, 512 (1999), cert. denied 353 Md. 473, 727 A.2d 382 (1999). In Golt, the petitioner entered into a rental agreement to lease the respondent landlord's apartment. 308 Md. 1, 5, 517 A.2d 328, 330. The petitioner agreed to move into the premises only upon the landlord's promise that, prior to the move in date, certain cleaning and repairs would be done. When the petitioner took possession of the property, however, the respondent had not completed the requested repairs. The petitioner paid rent and occupied the apartment for three months, during which time the respondent made no attempt to remedy the condition of the apartment. The petitioner, therefore, contacted the Baltimore City Department of Housing and Community Development, which conducted an inspection of the dwelling. Id. Upon inspection, the Department of Housing discovered numerous housing code violations, which included, inter alia, lack of toilet facilities, defective door locks, and the lack of fire exits and fire door. Id. at 6, 517 A.2d at 330. Additionally, the housing inspector learned that the respondents did not possess the appropriate license to lease the building as a multiple-family dwelling unit. The respondent was ordered to make the requisite repairs and obtain the proper license. Id. Rather than obtain a license and make the repairs, the respondent chose to evict the petitioner, forcing the petitioner to move to a new, more expensive apartment. Furthermore, the respondent refused to refund all of the petitioner's security deposit, withholding a portion of it for one month's rent and for utility charges. The petitioner filed suit in District Court for violation of the Consumer Protection Act and seeking recovery of, inter alia, his security deposit. Id. The District Court found that the petitioner was entitled to the return of the total amount of his November rent because the dwelling was unlicenced, and, therefore illegal to rent, id. at 6, 517 A.2d at 330, and that the respondent had improperly withheld the security deposit. The District Court held, however, denied the petitioner relief under the Consumer Protection Act, holding that he had viewed the premises prior to moving in and, thus, was fully aware of their condition. Id. The Circuit Court for Baltimore City dismissed the petitioner's appeal and this court granted certiorari. Id. at 7, 517 A.2d at 331. We reversed, holding that the failure of the respondents to disclose the material fact that it did not hold a license to rent the premises as a multi-family unit amounted to a violation of the Consumer Protection Act. Id. at 9, 517 A.2d at 332. Particularly, we stated: Implicit in any advertisement and rental of an apartment is the representation that the leasing of the apartment is lawful. Baltimore City Code, Art. 13, ง 1101 (1983 Repl.Vol.) expressly prohibits the operation of any multiple family dwelling without a license or temporary certificate. As [the respondent] had neither a license nor a temporary certificate, it violated the City Code. Consequently, [the respondent's] advertisement and rental of the apartment was a `misleading . . . statement . . . or other representation of any kind which has the capacity, tendency, or effect of deceiving or misleading consumers.' Maryland Code (1983 Repl.Vol.), ง 13-301( l ) of the Commercial Law Article. Id. Recognizing that the purpose of a licensing scheme served the important purpose of ensuring that landlords do not rent apartments that are hazardous to the safety or welfare of the people, id. at 13, 517 A.2d at 334, we noted that licensing is an integral part of the City's effort to maintain safe residential conditions for its citizens. To that end, we explained: Dwellings that are not licensed provide no opportunity for the City to ensure minimum living conditions. Furthermore, an annual license fee for a multiple dwelling unit is only $20.00 per dwelling unit . . . It is evident that the license fee is charged to support the cost of inspections, and not to raise revenue. Therefore, [the respondents] may not retain any benefits from the unlicenced lease and [the Petitioner] may recover his full damages. Id. at 13-14, 517 A.2d at 334. With regard to the petitioner's loss, this Court determined that he was entitled to restitution of the total amount he paid in rent, as well as consequential damages, including the cost of moving to a new apartment and the difference in cost between reasonable substitute housing and the rental charged for the remainder of the legal term of his lease with the [respondents]. Id. at 13-14, 517 A.2d at 334. In Citaramanis, this Court further clarified when an injury is deemed sufficiently pled to state a consumer protection claim. In that case, the petitioner rented a house from the respondent homeowners for a period of one year. During that time, the petitioners did not complain regarding the condition of the home and, despite the fact that the respondent increased the rent, extended their tenancy beyond the first year, Citaramanis, 328 Md. at 144-45, 613 A.2d at 965. During the tenancy, only minor repairs were made on the home. After the petitioners informed the respondents that they planned to move, they learned that the respondents, when they rented the house, did not have a license to do so. Id. Armed with that information, the petitioners filed, in the Circuit Court for Howard County, a complaint alleging that the respondents had engaged in unfair and deceptive trade practices prohibited by the Maryland Consumer Protection Act and praying the return of all of the rent they paid to the respondent during their tenancy. Id. The respondents did not dispute that they failed to obtain a license before renting their home to the petitioners, nor did they dispute that they failed to obtain the license at any time during the petitioners' tenancy. Upon cross-motions for summary judgment, the Circuit Court granted the petitioners' motion, relying primarily on this Court's reasoning in Golt, and awarded the petitioners the full amount of the rent they paid to the respondents during their tenancy. Id. at 146, 613 A.2d at 966. The Court of Special Appeals reversed, holding that because the [petitioners] had not demonstrated that any condition of the premises during their tenancy constituted a `substantial housing code violation' . . . or the lack of licensure had caused a diminution in value of the property they had not incurred actual damages, a prerequisite to recovery in a private action under the Consumer Protection Act. Id. at 147, 613 A.2d at 966 quoting Hallowell v. Citaramanis, 88 Md.App. 160, 594 A.2d 591 (1991). Before this Court, the petitioners argued that the condition of the house in that case was irrelevant. They relied on the following language in Golt: It is evident that the [multiple family dwelling] licensing fee is charged to support the cost of inspections, and not to raise revenue. Therefore, Phillips Brothers may not retain any benefits from the unlicenced lease, and Golt may recover his full damages. Id. at 150, 613 A.2d at 967. Recognizing that, with regard to the Golt decision, [b]ecause of the obvious actual loss and damage suffered by the tenant [in that case], who paid rent for what proved to be an uninhabitable apartment, we realize now . . . that we spoke much too broadly in making the statement just quoted, id. at 150, 613 A.2d at 967, we distinguished the situation in Golt from the one at bar. We noted that, in Golt, as a result of the landlord's failure to obtain a license and abide by the requirements of the Baltimore City Code, the tenant was forced to live in conditions violative of basic health and safety, including no toilet in [the tenant's] apartment, no fire doors, defective door locks, and no fire exits. 328 Md. at 148, 613 A.2d at 966. Furthermore, this Court clarified, the tenant in Golt was evicted when the landlord decided not to obtain a license as required by the City, which required the tenant to incur moving expenses and an increase in rent when he had to lease a new apartment. Id. at 147-48, 613 A.2d at 966. By contrast, the CitaraManises alleged neither uninhabitable conditions nor monetary loss as a result of their landlord's failure to obtain a license. This Court explained: the CitaraManises do not allege that the house they rented was unclean, unsafe, unhabitable or unsuitable in any regard. To the contrary, during argument before the trial judge, the [petitioner]'s counsel explicitly argued that the condition of the property was irrelevant because the basis of their cause of action is misrepresentation regarding the failure to license, not the condition of the property. Indeed, the [petitioners] elected to extend their tenancy and remain on the premises for another six months after the termination of the original lease at a higher rent. Id. at 149, 613 A.2d at 967. We further elucidated that, under the Consumer Protection Act a party may pursue a public remedy, by filing a claim with the Attorney General, a private remedy, by filing a private cause of action, or both. We noted, however, that there is a difference between the two options with regard to the necessity of pleading injury or harm: Notwithstanding the availability of both public and private remedies to consumers, the Legislature has established a clear distinction between the elements necessary to maintain a public enforcement proceeding versus a private enforcement proceeding, In a public enforcement proceeding any practice prohibited by this title is a violation . . . whether or not any consumer in fact has been misled, deceived, or damaged as a result of that practice. ง 13-302. In contrast, a private enforcement proceeding pursuant to ง 13-408(a) expressly only permits a consumer to recover for injury or loss sustained by him as the result of a practice prohibited by this title. ง 13-408(a). Section 13-408(a), therefore, requires and aggrieved consumer to establish the nature of the actual injury or loss that he or she has allegedly sustained as a result of the prohibited practice. This statutory construction creates a bright line distinction between the public enforcement remedies available under the CPA and the private remedy available under ง 13-408(a). Id. at 151, 613 A.2d at 968. The requirement that parties plead actual injury or harm in a private cause of action under the Consumer Protection Act: is said to prevent aggressive consumers who were not personally harmed by the prohibited conduct, or even involved in a transaction with the offending businessman, from instituting suit `as self-constituted private attorneys general' over relatively minor statutory violations. Another fear is that the powerful weapon given to consumers in the form of the private remedy `was capable of being used improperly for harassment and improper coercive tactics.' Id. ( quoting 1 H. ALPERIN & R. CHASE, CONSUMER LAW: SALES PRACTICES AND CREDIT REGULATION ง 136 at 193). We acknowledged the differing interests sought to be promoted by the public and private enforcement proceedings. [T]he CPA's public enforcement mechanisms are set up to prevent potentially unfair or deceptive trade practices from occurring, even before any consumer is injured, whereas ง 13-408(a) requires that actual `injury or loss' be sustained by a consumer before recovery of damages is permitted in a private cause of action. A construction of the CPA that would establish ง 13-302 as a benchmark to determine whether a consumer has sustained `injury or loss' within the meaning of ง 13-408(a) is both strained and illogical. Id. at 153, 613 A.2d at 969 quoting Comment, Maryland's Consumer Protection Act: A Private Cause of Action for Unfair or Deceptive Trade Practices, 38 Md. Law Rev. 733, 739 n. 50 (1979). With those rules in mind, the Court held that, unlike the petitioner in Golt, the Citaramanis petitioners neither claimed that they received less than the full benefit of their agreement nor incurred any costs as a result of the respondents' failure to obtain a license; they alleged no injury or loss under the Consumer Protection Act. In the case sub judice, it is clear that the petitioners have alleged facts constituting a loss. Particularly, the petitioners allege that, as a result of the respondents' misrepresentation or omission, they suffered a loss, measured by the amount it will cost them to repair the defective seatbacks. [17] In Golt, the amount of the loss was quantified, in part, by the amount the petitioner had to pay to remedy his situation; namely, the difference between the amount he had to pay to rent another apartment and the rent he was originally paying in the unlicenced apartment. In Citaramanis, the petitioners articulated nothing they had lost as a result of the alleged misrepresentation. We conclude that the alleged damages in this case are more like those in Golt, in that they constitute no more than the amount it would take to remedy the loss they incurred as a result of the respondents' alleged deceptive trade practices. Thus, we hold that they have set forth sufficient facts of injury or loss to withstand dismissal of the consumer protection claim.