Court Opinion

ID: 804616
Source: CourtListenerOpinion
Date Created: 2012-07-18 18:35:50+00
Date Added: 2024-06-11T18:00:12.979835
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 11-1708

GLADYS GARDNER, Individually     on   behalf    of   all   persons
similarly situated,

                Plaintiff − Appellant,

           v.

ALLY FINANCIAL INCORPORATED, f/k/a GMAC INCORPORATED,

                Defendant and 3rd-Party Plaintiff – Appellee.

                            No. 11-1731

RANDOLPH SCOTT, Individually and on behalf of all persons
similarly situated,

                Plaintiff − Appellant,

           v.

NUVELL NATIONAL AUTO FINANCE, LLC, d/b/a Nuvell            National
Auto Finance; NUVELL FINANCIAL SERVICES LLC,

                Defendants and 3rd-Party Plaintiffs – Appellees.

Appeals from the United States District Court for the District
of Maryland, at Baltimore.   J. Frederick Motz, Senior District
Judge. (1:10-cv-01094-JFM; 1:09-cv-03110-JFM)

Argued:   May 18, 2012                         Decided:    July 18, 2012
Before AGEE, DAVIS, and THACKER, Circuit Judges.

Unpublished Order of Certification to the Court of Appeals of
Maryland.   Judge Thacker directed the entry of the order with
the concurrences of Judge Agee and Judge Davis.

ARGUED: Benjamin Howard Carney, GORDON & WOLF, CHTD., Towson,
Maryland, for Appellants.     Andrew Seth Doctoroff, HONIGMAN,
MILLER, SCHWARTZ & COHN, Detroit, Michigan, for Appellees.    ON
BRIEF: Martin E. Wolf, QUINN, GORDON & WOLF, CHTD., Baltimore,
Maryland; Mark H. Steinbach, O'TOOLE, ROTHWELL, NASSAU &
STEINBACH, Washington, D.C.; John J. Roddy, Elizabeth A. Ryan,
RODDY, KLEIN & RYAN, Boston, Massachusetts, for Appellants.
Jason R. Abel, HONIGMAN, MILLER, SCHWARTZ & COHN, Detroit,
Michigan; Kimberly A. Manuelides, Geoffrey M. Gamble, SAUL EWING
LLP, Baltimore, Maryland, for Appellees.

                                2
                                 ORDER

THACKER, Circuit Judge:

            In their combined appeals, Gladys Gardner and Randolph

Scott challenge the district court’s grant of summary judgment

on behalf of Appellees Ally Financial, Inc. f/k/a GMAC, Inc.,

Nuvell National Auto Finance LLC, and Nuvell Financial Services

LLC (collectively, “GMAC”). 1    Because the determinative issue in

this appeal hinges on a novel question of Maryland state law, we

certify   the   following   question   to   the   Court   of   Appeals   of

Maryland:

     Where tangible personal property financed pursuant to
     Maryland’s Creditor Grantor Closed End Credit Act
     (“CLEC”), Md. Code Ann., Com. Law §§ 12-1001 et seq.,
     is subsequently repossessed and sold by the credit
     grantor at an auction that is publicly advertised but
     requires a $1,000 refundable fee for a person to enter
     and observe the auction, regardless of whether the
     person intends to bid, is the sale a private sale
     under CLEC, and thus subject to the post-sale
     disclosure requirements in Md. Code Ann., Com. Law §
     12-1021(j)(2), or is it a “public auction” (or “public
     sale”), 2 subject instead to the requirements of § 12-
     1021(k)?
     1
       Nuvell National and Nuvell Financial are both wholly owned
subsidiaries of GMAC.
     2
       Section 12-1021 appears to use the terms “public auction”
and “public sale” interchangeably. Compare Md. Code Ann., Com.
Law § 12-1021(j)(1)(i) (using “public auction”), with § 12-
1021(k)(1) (using “public sale”).     Neither term is defined in
CLEC, nor is the term “private sale.”

                                   3
                                      I.

             The relevant and undisputed facts as recited by the

district court and set forth in the Appellants’ complaints are

as follows. 3       See Scott v. Nuvell Fin. Servs., 789 F. Supp. 2d

637 (D. Md. 2011); Scott Am. Compl. (J.A. 20-41); Gardner Am.

Compl. (J.A. 81-103). 4

             In    2007,   Scott   purchased    a   2007   Mitsubishi    Galant

under    a   retail    installment    sales    contract    governed     by   the

provisions of the CLEC.            His contract was assigned to GMAC.

Scott subsequently defaulted on the loan, and GMAC repossessed

the vehicle on February 22, 2009.             On March 17, 2009, GMAC sent

a notice to Scott, informing him that the Galant would be sold

at a “public sale” conducted by Manheim of Baltimore-Washington

(“Manheim”) on Tuesday, March 31, 2009.              GMAC then sent Scott a

notice on a form indicating that his car had been sold at that

auction, and explaining that an approximate balance of $16,541

remained.         See Scott, 789 F. Supp. 2d at 638-39; Scott Am.

Compl. ¶¶ 12-13, 15-18, 26.

     3
       Both of these complaints were styled as putative class
actions; however, the district court ruled on GMAC’s summary
judgment motion before a class was certified.
     4
       Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.

                                       4
          In July 2006, Gardner likewise purchased a Chevrolet

Impala under a retail installment sales contract governed by the

provisions   of   the   CLEC.     Gardner   failed   to   make    scheduled

payments on the vehicle, and GMAC, who was assigned the contract

and a security interest in the vehicle, repossessed it.                  On

December 8, 2009, GMAC sent a notice to Gardner, notifying her

that the Impala would be sold at a public sale on Tuesday,

January 5, 2010, as part of another Manheim auction.             The notice

stated, “[Y]ou may attend the sale and bring bidders if you

want.”   Scott, 789 F. Supp. 2d at 639; Gardner Compl. ¶¶ 12-13,

15-17.

          Neither Scott’s nor Gardner’s notices mentioned that

members of the public needed to provide a refundable $1,000 cash

deposit in order to attend the auction. 5       Scott Am. Compl. ¶ 20;

Gardner Am. Compl. ¶ 22.        In fact, Gardner tried to attend, but

she was denied admission because she could not pay the deposit.

Gardner Am. Compl. ¶ 26.        She stated, “Since I did not find out

about the $1,000 entrance fee until I arrived at the auction, I

did not even have time to try to get the $1,000 entrance fee to

attend the auction.”      Gardner Aff. ¶ 5 (J.A. 413).           After her

     5
       If an attendee does not buy anything at the auction, he or
she is refunded the deposit amount via check two days later. If
a purchase is made, the deposit is credited toward the purchase
price. See Scott, 789 F. Supp. 2d at 638 n.1; Gardner Compl. ¶
19.

                                    5
vehicle was sold at the auction, GMAC informed her of the sale

and    also    that    she   had     a   deficiency     balance    of    approximately

$12,196.      Scott, 789 F. Supp. 2d at 639; Gardner Compl. ¶ 28.

              The     Manheim      “Tuesday       Sales,”    including   the    ones    in

which Gardner’s and Scott’s vehicles were sold, were advertised

every     Sunday      in     the     Baltimore       Sun’s    classified       “auction”

section.       The ads, printed in a similar font as other ads in

that section, provided the time and location of the sale, a

contact phone number, and the terms and conditions of the sale,

including the requirement of a refundable $1,000 cash deposit to

attend.       See Scott, 789 F. Supp. 2d at 643.                   The ads did not,

however, mention the makes or model years of the cars to be

sold,    nor    did     they       include    a    specific     description      of    the

condition of the cars.             Id.

              Scott and Gardner filed suit against GMAC, and they

both alleged the same five counts:                    (1) violation of the CLEC;

(2) breach of contract; (3) declaratory and injunctive relief;

(4) restitution and unjust enrichment; and (5) violation of the

Maryland Consumer Protection Act, Md. Code Ann., Com. Law §§ 13-

101 et seq.           Their suits were combined, as they were “nearly

identical in all material respects.”                   Scott, 789 F. Supp. 2d at

639.      Notably, “both suits are [] predicated on the factual

                                              6
premise that the Tuesday [Sales] were private sales subject to

more stringent notice and accounting requirements.”                       Id. 6

            After     discovery      had    begun,       the    district    court     sua

sponte raised the question of whether the Tuesday Sales were

actually   “public     sales”       under   Maryland        law,    and   invited     the

parties to move for judgment on the pleadings on this issue.

Thereafter, the Appellees filed a motion for summary judgment,

which the court granted as to all five counts.                        See Scott, 789

F. Supp. 2d at 645.           The court also rejected a request by Scott

and   Gardner   to    pursue    further         discovery      on   the   issue    before

ruling.    See id. at 640-42.

            Upon     appeal    to    this       court,   the    Appellants        filed   a

Motion to Certify Questions of Law to the Court of Appeals of

Maryland on October 6, 2011.                This court denied the motion on

November 14, 2011.        Here, however, we address the certification

motion sua sponte.

      6
       On August 24, 2010, GMAC filed a third-party complaint
against Manheim Marketing, Inc., a company with which GMAC
contracted to conduct auctions of its repossessed automobiles.
See J.A. 115-121.    However, GMAC filed a Notice of Dismissal
Without Prejudice as to Manheim on November 18, 2010, and the
district court approved the dismissal the same day.      As a
result, Manheim did not participate in this appeal.

                                            7
                                        II.

           It is appropriate for this court to certify a question

of state law to the state’s highest tribunal “when [we are]

required   to    address   a    novel    issue   of    local      law   which   is

determinative in the case before [us].”               Grattan v. Bd. of Sch.

Comm’rs of Baltimore City, 805 F.2d 1160, 1164 (4th Cir. 1986)

(citing Lehman Bros. v. Schein, 416 U.S. 386 (1974)).                   See also

Allanz Ins. Co. v. Garrett, 47 F.3d 665, 665 (4th Cir. 1995)

(certifying     question   of   Virginia      law);    Doe   v.    Pharmacia     &

Upjohn, Inc., 122 F. App’x 20, 21 (4th Cir. 2005) (certifying

question of Maryland law).

           The Maryland Uniform Certification of Questions of Law

Act provides a mechanism for certification of questions of law

to the Court of Appeals of Maryland, its highest court.                         The

Act states,

     The Court of Appeals of this State may answer a
     question of law certified to it by a court of the
     United States . . . if [1] the answer may be
     determinative of an issue in pending litigation in the
     certifying court and [2] there is no controlling
     appellate   decision,  constitutional  provision,   or
     statute of this State.

Md. Code Ann., Cts. & Jud. Proc. § 12-603.

                                    III.

           First, whether the Manheim Tuesday Sales were public

auctions or private sales is the determinative issue in this

                                         8
case.     Under Maryland’s CLEC provisions, repossessed vehicles

must be sold at a “private sale” or “public auction.”                      Md. Code

Ann., Com. Law § 12-1021(j)(1)(i).               Private sales require post-

sale    disclosures    that    public    auctions      do   not.      Private     sale

disclosure requirements include,

       (i) The unpaid        balance    at    the   time    the    goods   were
       repossessed;

       (ii) The refund credit of unearned finance charges and
       insurance premiums, if any;

       (iii) The remaining net balance;

       (iv) The proceeds of the sale of the goods;

       (v) The remaining deficiency balance, if any, or the
       amount due the buyer;

       (vi) All expenses incurred as a result of the sale;

       (vii) The      purchaser's      name,    address,      and    business
       address;

       (viii) The number of bids sought and received; and

       (ix) Any statement as to the condition of the goods at
       the time of repossession which would cause their value
       to be increased or decreased above or below the market
       value for goods of like kind and quality.

Md. Code Ann., Com. Law § 12-1021(j)(2).                If a creditor does not

comply with the stated requirements, it “shall not be entitled

to any deficiency judgment to which [it] would be entitled under

the loan agreement.”          Id. § 12-1021(k)(4).          Because GMAC did not

provide    all   of    the    required       private   sale       disclosures,    the

resolution of whether the sales of Appellants’ vehicles were by

                                         9
private sale or public sale is determinative of the issue in the

pending litigation.

               Second,   there      is   no    controlling      appellate   decision,

constitutional provision, or Maryland statute on point.                             The

CLEC does not define “public auction” or “private sale,” and the

Court of Appeals of Maryland has never expressly construed these

terms.     The district court recognized as much, see Scott, 789 F.

Supp.     2d   at   642,      but   then      relied   upon     decisions   that    are

factually distinct from the case at hand.                         For example, the

court cites Pyles v. Goller, a Maryland case in which a real

estate sale was deemed “public” even though the sale required

funds “in the amount of $5,000 . . . in order to bid for each

lot [a buyer] intend[ed] to buy.”                      674 A.2d 35, 37 (Md. Ct.

Spec.     App.   1996)     (emphasis       supplied).         However,    whether    an

auction is a “public sale” when an attendance fee, as opposed to

a   bidder’s     fee,    is    required       has   not   yet    been   addressed    in

Maryland.

               Therefore, we certify the question set forth above to

the Court of Appeals of Maryland.                   We note that the court may

reformulate the certified question we present.                          See Md. Code

Ann., Cts. & Jud. Proc. §§ 12-604, 606(a)(3). 7

      7
       Appellants also challenge the district court’s denial of
their request for further discovery before ruling on the
(Continued)
                                              10
         Counsel of record for the parties are as follows:

    Appellants:    Martin W. Wolf and Benjamin H. Carney
                   Quinn, Gordon & Wolf, Chtd.
                   102 W Pennsylvania Ave., Suite 402
                   Baltimore, MD 21204
                   (410) 825-2300

                   Mark H. Steinbach
                   O’Toole, Rothwell, Nassau & Steinbach
                   1350 Connecticut Ave., N.W., Suite 200
                   Washington, D.C. 20036
                   (202) 775-1550

                   John J. Roddy
                   Elizabeth A. Ryan
                   Roddy, Klein & Ryan
                   727 Atlantic Ave., 2nd Floor
                   Boston, MA 02111
                   (617) 357-5500

    Appellees:     Andrew S. Doctoroff
                   Jason R. Abel
                   Honigman Miller Schwartz and Cohn LLP
                   2290 First National Building
                   660 Woodward Ave.
                   Detroit, MI 48226
                   (313) 465-7360

                   Kimberly Manuelides
                   Geoffrey M. Gamble
                   Saul Ewing LLP
                   Lockwood Place
                   500 E Pratt St., 8th Floor
                   Baltimore, MD 21202-3133
                   (410) 332-8844.

appellees’ motion for summary judgment.     This issue shall be
tabled until the certified question is answered.

                              11
                                IV.

          Accordingly,   pursuant     to   the   Maryland   Uniform

Certifications of Questions of Law Act, we hereby ORDER: (1)

that the question stated above be certified to the Court of

Appeals of Maryland for answer; (2) that the Clerk of this Court

forward to the Court of Appeals of Maryland, under the official

seal of this Court, a copy of this Order, together with the

original copies of the record before this Court to the extent

requested by the Court of Appeals of Maryland; and (3) that the

Clerk of this Court fulfill any request for all or part of the

record simply upon notification from the Clerk of Court of the

Court of Appeals of Maryland.

                                                 QUESTION CERTIFIED

                                12