Court Opinion

ID: 1036128
Source: CourtListenerOpinion
Date Created: 2013-08-01 21:08:43.636988+00
Date Added: 2024-06-11T11:38:46.702814
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 12-1795

MELISSA BEDIAKO, on her own behalf and on behalf of all
others similarly situated,

                Plaintiff – Appellant,

           v.

AMERICAN HONDA FINANCE CORPORATION,

                Defendant – Appellee.

−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−-----

AMERICAN FINANCIAL SERVICES ASSOCIATION,

                Amicus Supporting Appellee.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Roger W. Titus, District Judge. (8:11-
cv-00001-RWT)

Argued:   May 14, 2013                     Decided:   August 1, 2013

Before Sandra Day O’CONNOR, Associate Justice (Retired), Supreme
Court of the United States, sitting by designation, and WYNN and
DIAZ, Circuit Judges.

Affirmed by unpublished opinion. Judge Diaz wrote the opinion,
in which Justice O’Connor and Judge Wynn joined.

ARGUED:  Cory Lev Zajdel, Z LAW, LLC, Owings Mills, Maryland,
for Appellant.   Donald M. Falk, MAYER BROWN LLP, Palo Alto,
California, for Appellee.    ON BRIEF:    David M. Ross, WILSON
ELSER MOSKOWITZ EDELMAN & DICKER LLP, Washington, D.C., for
Appellee.   Robert L. Wise, BOWMAN AND BROOKE LLP, Richmond,
Virginia, for Amicus Supporting Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
DIAZ, Circuit Judge:

       Melissa Bediako, on behalf of a putative class, asserts

that    American       Honda     Finance       Corporation       (“Honda       Finance”)

violated Maryland’s Credit Grantor Closed End Credit Provisions,

Md.    Code,    Com.   Law     § 12-1001    et   seq.   (“CLEC”),        by    providing

inadequate notice of private sales of repossessed automobiles.

The    district    court     dismissed     Bediako’s        complaint,        concluding

that    her    claim   was     time    barred,   failed     to   allege       actionable

damages, and failed on the merits.                    Because we conclude that

Bediako has failed to allege actionable damages, we affirm.

                                           I.

                                           A.

       In 2004, Bediako, a citizen of Maryland, purchased a used

automobile with financing she obtained by executing a Retail

Installment Sale Contract (“RISC”).                   A provision in the RISC

chose CLEC as the governing law for the agreement.                       The RISC was

subsequently       assigned           to   Honda      Finance,       a        California

corporation.

       Bediako    eventually      defaulted      on   her    payment     obligations.

As a result, Honda Finance repossessed her vehicle on or before

April 28, 2005.         Thereafter, Honda Finance notified Bediako in

writing that it would sell the car at a private sale after May

15, 2005, but that she could get the vehicle back at any time

                                           3
before the sale if she paid her entire outstanding obligation.

J.A. 45.       Honda Finance also informed Bediako that she could

reinstate her contract if she paid the current arrearage within

fifteen days, and told her the exact location where her vehicle

was stored.     J.A. 46-47.

       On July 1, 2005, after Bediako failed to act, Honda Finance

sold her vehicle in a private sale.               Honda Finance subsequently

sent   a   post-sale     notice   to    Bediako     demanding   payment    on   a

deficiency of $7,036.80, which remained due on her account after

crediting the proceeds of the sale.            Bediako made three payments

after the sale (all in 2008), which totaled $375.

                                        B.

       In 2010, Honda Finance filed a lawsuit against Bediako in

Maryland state court to collect the remaining debt, but it later

dismissed the action without prejudice.               Honda Finance has said

repeatedly in this action that it has abandoned its deficiency

claim against Bediako.

       While   Honda    Finance’s      deficiency    action   was   pending     in

2010, Bediako filed a putative class action complaint against

Honda Finance in Maryland state court alleging defects in the

pre-sale notice, namely that Honda Finance systematically sold

repossessed property at private sales at unknown locations, on

unknown    dates,      and   at   unknown    times,     contrary    to    CLEC’s

requirements.       Bediako asserted claims for declaratory judgment,

                                         4
breach of contract, restitution, unjust enrichment, violations

of CLEC, and violations of Maryland’s Consumer Protection Act.

        Honda Finance removed the action to federal court and filed

a motion to dismiss asserting that Bediako’s claims were not

timely and failed as a matter of law.                       Bediako then voluntarily

dismissed the suit.             Three months later, however, she refiled

essentially the same complaint in the Southern Division of the

United    States     District       Court      for    the    District       of    Maryland.

Honda    Finance     then      moved     to    dismiss      Bediako’s       complaint       on

largely the same grounds as its prior motion to dismiss.

      The    district       court       granted      Honda     Finance’s         motion     to

dismiss.     First, the court concluded that Bediako’s claims were

time barred because the RISC is a contract for the sale of goods

subject to the four-year statute of limitations in section 2-275

of    Maryland’s     Uniform      Commercial         Code.         Second,       the     court

concluded that the purported CLEC violation did not result in

any actionable damages to Bediako because CLEC permits Honda

Finance     to      recover      the      principal          amount       of     its      loan

notwithstanding the alleged CLEC violation.                         Finally, the court

concluded that Honda Finance’s notice, which advised Bediako of

the   location      of   the    vehicle       and    the    date    after      which     Honda

Finance     would    conduct        a    private      sale,     comported         with    the

requirements        of      CLEC.             Bediako       filed     a        motion      for

                                               5
reconsideration,        which        the    district      court    summarily      denied.

Bediako timely appealed.

                                             II.

       The issues before us on appeal are whether the district

court erred in concluding that (1) Bediako failed to state a

claim    because      Honda    Finance      has     not   collected      more    than    the

principal amount of her loan; (2) Bediako’s claim is time barred

under section 2-725 of Maryland’s Uniform Commercial Code; and

(3)    Honda     Finance      complied       with    CLEC’s      notice    requirements

before conducting a private sale of Bediako’s automobile.                                 We

consider only the first issue because it is dispositive of the

appeal.

       We    review    de     novo    the    district      court’s      grant   of     Honda

Finance’s motion to dismiss.                  Kensington Volunteer Fire Dep’t,

Inc.    v.    Montgomery      Cnty.,       Md.,    684 F.3d 462,    467    (4th    Cir.

2012).        To survive a motion to dismiss, Bediako must allege

“sufficient facts to state a claim that is plausible on its

face.”       Id. (internal quotations omitted).

       Bediako’s claims in this appeal are premised on a violation

of the CLEC provisions requiring notice before a creditor may

sell collateral securing a loan.                     If a creditor violates the

CLEC notice requirements, it “may collect only the principal

amount of the loan and may not collect any interest, costs,

                                              6
fees, or other charges with respect to the loan.”                                  CLEC § 12-

1018(a)(2).         In addition, CLEC section 12-1021(k)(4) provides,

in   the   case     of    certain    notice         violations,           that    “the    credit

grantor    shall     not    be    entitled         to   any    deficiency         judgment     to

which he would be entitled under the loan agreement.”

      Bediako       maintains       that       the      district          court        improperly

dismissed     her    claims       for     failure        to    allege          actual    damages

because    CLEC     entitles       her    to       relief     without          proving    actual

damages.          Bediako        relies    primarily           on     CLEC       section     12-

1018(a)(2), which she argues allows her monetary, equitable, and

declaratory       relief    for     inadequate          notice       of    a    private    sale.

Looking to an analogous passage in Maryland’s Secondary Mortgage

Loan Law (“SMLL”), section 12-413, Bediako cites Duckworth v.

Bernstein, 466 A.2d 517, 526 (Md. Ct. Spec. App. 1983), among

other   Maryland         cases,    for    her      claim      that    an       accounting    and

declaratory order stating the amount of her debt is mandatory.

      Honda Finance responds that Bediako has no remedy under

section 12-1018(a)(2) because it never collected more than the

principal amount of Bediako’s loan.                     According to Honda Finance,

Bediako’s     request       for     declaratory,            equitable,           and     monetary

relief is flawed because the plain text of CLEC section 12-1018

provides no remedy until the creditor has collected more than

the principal amount of the loan.

                                               7
      We agree with Honda Finance and the district court that

Bediako’s claims fail as a matter of law because of her failure

to allege actual, compensable damages.                     Sections 12-1018(a)(2)

and 12-1021(k)(4) simply do not provide any relief for Bediako.

      Section      12-1018(a)(2),        by    its    plain     terms,      limits   a

debtor’s relief under CLEC to any amounts paid in excess of the

principal    amount    of    the   loan.       As    the    district    court    aptly

noted, all of Bediako’s payments, plus the amount Honda Finance

recovered in the private sale of her automobile, fall far short

of the original principal amount of the loan. 1                     Unlike the Fair

Debt Collection Practices Act, which, as Bediako notes, provides

for statutory damages as long as the claimant can establish a

violation, 15 U.S.C. § 1692k(a)(2), CLEC does not provide for

any fixed statutory damages beyond the plaintiff’s actual loss.

To   the   contrary,    CLEC   section 12-1018(a)(2)            expressly       permits

creditors     to     recover       the   principal         amount      of   a    loan.

Accordingly,       Bediako   has    no   right       to    monetary    relief    under

section 12-1018(a)(2).

      1
       Bediako owed a principal amount of $16,234.75.    Assuming
that she made all of her payments until the day Honda Finance
repossessed her automobile, these payments totaled $4,308.72.
After accounting for the proceeds of the sale ($7,900) and her
subsequent payments ($375), at least $3,701.03 of the principal
remains uncollected.   Bediako suggests that the district court
failed to consider other illegal fees Bediako might have paid,
but she does not allege that she actually paid any such fees.

                                           8
       Section 12-1021(k)(4), which bars a creditor from obtaining

a deficiency judgment in the case of certain notice violations,

fails to save Bediako’s claims as well.                    CLEC expressly provides

that    section         12-1021(k)(4)       applies   only   to    notice     violations

with respect to public sales, and therefore provides no relief

to Bediako or the putative class.                       See CLEC § 12-1021(k)(1)

(“The provisions of this subsection apply to a public sale of

property . . . .”).

       Nor may Bediako salvage her suit by relying on a potential

award of nominal damages.               Maryland courts have refused to allow

nominal damages in certain consumer protection cases, requiring

proof of actual damages.               See Frazier v. Castle Ford, Ltd., 27
A.3d 583, 589 (Md. Ct. Spec. App. 2011) (“[N]ominal damages are

not available in an action . . . for a deceptive trade practice

under    the    Consumer        Protection        Act . . . .”),     rev’d     on    other

grounds,       59 A.3d 1016   (Md.     2013).        The    purpose    of     this

restriction is “to prevent aggressive consumers who were not

personally          harmed     by     the     prohibited      conduct       . . .    from

instituting suit as self-constituted private attorneys general

over    relatively         minor    statutory      violations.”        Lloyd    v.    Gen.

Motors Corp., 916 A.2d 257, 280 (Md. 2007) (internal quotations

omitted).           A    similar    limitation      requiring      actual   damages    is

implicit       in       the    language      of     section 12-1018(a)(2),           which

provides no remedy beyond recovery of payments in excess of the

                                              9
principal amount of the loan.             The limitation is more explicit

in section 12-1016(c)(2), which provides that the Commissioner

of   Financial     Regulation    may    only   award    a   CLEC    complainant    a

refund of (1) the amount a creditor has collected in excess of

that expressly permitted by CLEC, or (2) the amount a creditor

is expressly not permitted to collect. 2                Considering these two

provisions    in    harmony     and    looking     to   CLEC   as   a    whole,   we

conclude that CLEC does not permit an award of nominal damages,

but rather requires an actual loss to sustain the claims alleged

by Bediako.

      Finally,     Bediako’s    request      for   equitable    and     declaratory

relief also fails.        Even assuming that declaratory relief is

available under CLEC when the debtor has paid less than the full

principal amount, Bediako has no right to such relief.                       Honda

      2
       Bediako suggests that section 12-1016 implies that there
is a broader right to statutory damages under section 12-
1018(a)(2)   because   to  proceed  under   section 12-1016  the
complainant must waive his or her right to “rais[e] or assert[]
against the credit grantor in any subsequent forum any claim,
defense, setoff, recoupment, penalty for violation, or right of
any kind based on the matters addressed in the complaint or the
hearing.”   CLEC § 12-1016(b)(3)(i).    We read this provision,
however, to simply state that a complainant who has pursued a
remedy with the Commissioner under section 12-1016 may not have
a second bite at the apple in another forum. We also note that
a section 12-1016 proceeding provides a remedy independent of
actual damages--the Commissioner may order the creditor to cease
and desist from unlawful practices.   CLEC § 12-1016(c)(1).   No
such remedy is provided under the civil remedy provision of
section 12-1018(a)(2).

                                        10
Finance      has    repeatedly        abandoned     any    claim    for   a   deficiency

judgment against Bediako, and such a claim would now be time

barred      under     the    applicable     statute       of   limitations.      In     the

absence of an actual controversy concerning Bediako’s liability

for a deficiency judgment, the federal courts lack authority

under 28 U.S.C. § 2201 to issue declaratory relief. 3

     In       short,        even     if   Bediako    has       adequately     alleged     a

violation of CLEC’s notice provisions, she is unable to state a

claim       because    she     has    suffered      no    actual   damages     that     are

compensable under CLEC. 4

        3
       Bediako has attempted to salvage her claims by contending
that the debt remains listed on her credit report.       However,
this argument was not raised in her opening brief and is waived.
United States v. Hudson, 673 F.3d 263, 268 (4th Cir. 2012).
        4
       Honda Finance also contends that because Bediako has not
suffered a compensable loss, she lacks Article III standing to
pursue her claims.    We disagree, as Bediako has alleged “an
invasion of a legally protected interest” that is concrete and
particularized, Lujan v. Defenders of Wildlife, 504 U.S. 555,
560 (1992), that is, Honda Finance’s purported failure to comply
with the notice provision of CLEC when repossessing and selling
her automobile. While a statute may not enlarge the boundaries
of Article III standing, a party certainly may enforce a
statutory right in federal court.      See, e.g., Havens Realty
Corp. v. Coleman, 455 U.S. 363, 374 (1982).    Thus, Bediako has
alleged an injury-in-fact sufficient to provide standing even
if, as we have concluded, the claim fails on the merits.

                                             11
                            III.

    For these reasons, we affirm the judgment of the district

court.

                                                     AFFIRMED

                             12