Circuit Court for Anne Arundel County
Case No. 02-C-14187207
Hon. William C. Mulford II
                                                           REPORTED

                                          IN THE COURT OF SPECIAL APPEALS

                                                       OF MARYLAND

                                                            No. 2280

                                                   September Term, 2015
                                                _________________________

                                                   CASSANDRA MURRAY

                                                                v.

                                                 MIDLAND FUNDING, LLC
                                                _________________________

                                               Graeff,
                                               Kehoe,
                                               Friedman,

                                                           JJ.*
                                                _________________________

                                                   Opinion by Friedman, J.
                                                _________________________

                                               Filed: June 29, 2017


                                        * Judge Kevin F. Arthur did not participate in the
                                        decision to report this opinion.
       Debt buyers purchase consumer debt at deep discount, obtain judgments, and try to

collect on those judgments. Md. Code Ann., Business Regulation Article § 7-301 (2015).

In 2010, the Maryland State Collection Agency Licensing Board clarified that these debt

buyers fall within the definition of collection agencies and, therefore, must have a license

before engaging in debt collecting. Md. State Collection Agency Licensing Bd. Advisory

Notice 05–10, May 5, 2010 (quoted in Finch v. LVNV Funding, 212 Md. App. 748, 758

(2013)); see also Cain v. Midland Funding, ___ Md. ___, ___, No. 2280, September Term

2016, Slip Op. at 2 (filed March 24, 2017). And, in Finch v. LVNV Funding, this Court

held that judgments obtained by unlicensed debt buyers while they were unlicensed are

void. 212 Md. App. at 764.

       Cassandra Murray—on behalf of a proposed class of similarly-situated

consumers—brought a lawsuit against Midland Funding, an allegedly unlicensed debt

buyer, 1 to have the judgment that Midland obtained against her declared void. Murray

sought to recover money that she paid to Midland (with fees and expenses), as well as to

obtain equitable relief. By the time the matter arrived in the Circuit Court for Anne Arundel

County, however, the counts seeking monetary damages had been dismissed and only the

two non-monetary counts—a count seeking a declaratory judgment and a count seeking



       1
         In Cain, the Court of Appeals stated that Midland was, in fact, unlicensed. Cain,
___ Md. ___, Slip Op. at 2. We don’t know the date on which Midland’s licensure became
effective. Further, we do not decide the effect of an alleged settlement agreement between
Midland and the Maryland State Collection Agency Licensing Board authorizing collection
on judgments obtained prior to licensure. See infra, n.2. Therefore, for our purposes,
Midland is only allegedly unlicensed.

                                           –1–
injunctive relief—remained viable. On November 30, 2015, the circuit court dismissed

these final two counts, finding that they were barred by the three-year statute of limitations

set forth in § 5-101 of the Courts & Judicial Proceedings (“CJ”) Article of the Maryland

Code. Murray noted a timely appeal.

       Four months after the circuit court’s decision in Murray’s case, this Court decided

another Finch-style case predicated on similar facts, Jason v. National Loan Recoveries.

227 Md. App. 516 (2016) (decided April 1, 2016). Because the circuit court here did not

have the benefit of our Jason opinion, it erroneously determined that Murray’s non-

monetary, equitable remedies are barred by limitations. We, therefore, will vacate the

circuit court’s decision and remand the case for reconsideration in light of our holding in

Jason. 2 We summarize the rules that apply.

                                        ANALYSIS

       Several rules have emerged for Finch-style cases, in which a judgment debtor files

a lawsuit to void a previously-obtained judgment by an unlicensed debt collector.




       2
         Midland raises several other arguments that, in its view, warrant affirming the
circuit court’s dismissal of Murray’s complaint. These arguments include: (1) that the
circuit court lacked jurisdiction to declare a district court judgment void; (2) that the
judgment Midland obtained against Murray was not void; and (3) that Midland signed an
agreement with the Maryland State Collection Agency Licensing Board that authorized it
to collect on judgments obtained prior to being licensed. Because the circuit court
dismissed the case on statute of limitations grounds, it did not reach any of these issues.
Because we remand the case so that the circuit court can reconsider the timeliness of
Murray’s complaint post-Jason, we think it is the wiser course to allow the circuit court to
pick up where it left off and resolve these other issues, if required, in the first instance.


                                            –2–
       1.     All claims for monetary damages are actions at law and, thus, subject to a

statute of limitations. Jason, 227 Md. App. at 529-530 (applying CJ §5-101’s three-year

statute of limitations). 3 Murray’s complaint, in its current form, does not advance any

claims—direct or ancillary—for monetary damages.

       2.     All claims for purely equitable remedies, including claims for injunctive

relief, are potentially subject to laches. Laches is the limit equity places on stale claims.

“Laches derives from concerns similar to those that undergird statutes of limitations. Both

devices—one a product of legislation, the other a development of the common law—are

intended to set time limits on the assertion of claims.” Lopez v. State, 433 Md. 652, 653

(2013). There is no firm time limit for laches: rather a judge sitting in equity considers

plaintiff’s delay in asserting the claim and its causes and weighs that against the prejudice

to the defendant caused by the late assertion of the equitable claim. “Laches bars an action

where there has been both an inexcusable delay and prejudice to the party asserting the

defense.” Dep’t of Human Serv. v. Kamp, 180 Md. App. 166, 205 (2008) (citations and

quotations omitted). “[I]n most cases involving an exclusively equitable remedy, [courts]

refer to the limitations period for the cause of action at law most analogous to the one in


       3
         Jason also explained that, under some circumstances, the statute of limitations for
a monetary remedy may be twelve years if the “Specialties” exception of CJ § 5-102
applies. 227 Md. App. at 528-29, 534 n.7. One such exception—argued in Jason—is an
“action on” a judgment. CJ § 5-102(a)(3). Jason held that, although the plaintiff’s unjust
enrichment claim pertained to a void judgment that he had paid, his claim was not an
“action on” a judgment and, therefore, the twelve-year statute of limitations did not apply.
227 Md. App. at 527-528 (“Pursuant to [CJ] § 5-102(a)(3), the twelve-year statute of
limitations has been applied in cases where the holder of the judgment seeks to enforce a
judgment.”).

                                           –3–
equity.” State Ctr., LLC v. Lexington Charles Ltd. P’ship, 438 Md. 451, 604 (2014)

(citations omitted).

       As noted above, one of Murray’s remaining claims seeks the equitable remedy of

injunction. The purpose of an injunction is to prohibit future conduct. 100 Harborview

Drive Condo. Council of Unit Owners v. Clark, 224 Md. App. 13, 64 (2015) (citations

omitted). We note, parenthetically, that it is not clear to us how an injunction would work

in Murray’s case. Specifically, Murray’s complaint seeks “an injunction against Midland

from collecting upon the void judgments.” There doesn’t seem to be a dispute that Midland

currently possesses the requisite license to collect debt. Moreover, Midland has completed

collection on its judgment against Murray. Thus, as to Murray herself, the proposed

injunction would likely be moot. Clark v. O’Malley, 186 Md. App. 194, 218 (2009)

(explaining that, because a police commissioner’s contract had expired, the injunctive relief

he sought—reinstatement into his job as the Police Commissioner—was moot) , aff’d, 434

Md. 171 (2013). Moreover, Murray may also have difficulty demonstrating that she has

standing to assert the claim for injunction on behalf of those who do. Finally, as we began

this discussion, on remand Midland will have the opportunity to argue that Murray has

inexcusably delayed in bringing this claim and that, as a result, it has suffered prejudice,

and therefore, laches is a bar to this equitable claim. 4




       4
        We express no views, however, on whether other members of the proposed class
will have similar difficulties.


                                             –4–
       3.     Actions seeking declaratory judgments present a unique, hybrid situation.

Claims for declaratory relief were unknown at the common law and are exclusively a

statutory construction. See CJ §3-401 et seq. The principal relief in a declaratory judgment

action is a declaration, a separate written statement of the court declaring the rights of the

parties. Bowen v. City of Annapolis, 402 Md. 587, 608 (2007) (explaining that a declaratory

judgment defines the rights and obligations of parties and must be in writing). In the context

of these Finch-style claims, three sub-rules have developed about the timeliness of

declaratory judgment actions.

       There is no time bar at all if Murray seeks the primary relief of a simple declaration.

Our courts (and others) hold that she can obtain such a declaration “at any time,” meaning

there is not, nor will there ever be a time bar to that cause of action. Jason, 227 Md. App.

at 525 (“[T]here appears to be no time limit for asserting that a judgment is void.” … “We

agree with Jason that [neither] the statute of limitations [nor laches] preclude him from

seeking a declaration that the judgment was void”); 5 Cook v. Alexandria Nat. Bank, 263

Md. 147, 151, 282 (1971) (“Although it is not necessary to take any steps to have a void

judgment reversed or vacated, it is open to attack or impeachment in any proceeding, direct

or collateral, and at any time or place, at least where the invalidity appears upon the face

of the record.”) (Emphasis added); United States v. One Toshiba Color Television, 213



       5
         The quoted sentence from Jason mentions only the statute of limitations. The
necessary implication of the Jason opinion, however, makes plain that the same rule applies
to laches.


                                            –5–
F.3d 147, 158 (3d Cir. 2000) (“[W]e hold that laches is not available to preclude a claimant

from attacking a void judgment.”). This rule may reflect an implicit conclusion about how

a laches analysis would play out: the value of such a declaration to the judgment debtor

(for example, to negate a derogatory notation on a credit report) far outweighs any potential

prejudice to the unlicensed debt buyer. In part, this is because the evidentiary burdens of

proving the judgment void are light (the only relevant issues are the date of the judgment

and the date of licensure) and there is minimal, if any, cost to the formerly unlicensed debt

buyer in allowing such a declaration to issue. Whatever the reason, the rule is clear that a

simple declaration that a judgment is void, is subject neither to a statute of limitations nor

laches.

          To the extent that a declaratory judgment action also seeks what the Jason Court

called “remedies,” Jason, 227 Md. App. at 525; “remedial relief,” id.; and “ancillary

remedies,” id. at 526; that ancillary relief may be stale and therefore can be subject either

to limitations or laches as the case may be. “A declaratory judgment can be obtained either

at law or in equity.” LaSalle Bank, N.A. v. Reeves, 173 Md. App. 392, 411 (2007). “The

determination of whether [a declaratory judgment] action is properly at law or in equity

must be made by an examination of the nature of the claim asserted and the relief

requested.” Id. (quoting Fisher v. Tyler, 24 Md. App. 663, 668-69 (1975) (holding that a

declaratory judgment action related to a legal cause of action, breach of contract, and

therefore was not in equity)). Put another way:

                A suit for a declaratory judgment is neither legal nor equitable,
                but is sui generis, and is neither wholly a suit in equity nor


                                             –6–
               wholly an action at law. Declaratory relief may take on the
               color of either equity or law, depending on the issues presented
               and the relief sought; that is, a declaratory judgment action
               assumes the nature of the controversy at issue. The legal or
               equitable nature of a declaratory judgment proceeding
               thus may be determined by the pleadings, the relief sought,
               and the nature of each case. When proceedings for a
               declaratory judgment are in the nature of equity, appropriate
               equitable principles are called into play, whereas when such
               proceedings are in the nature of an action at law, legal
               principles are used for the determination of the issues
               presented.

LaSalle Bank, 173 Md. App. at 411-12 (emphasis added).

         Therefore, when additional relief is sought ancillary to a declaratory judgment

action, the court will look to the remedy sought to see if that relief is at law or at equity. If

it is at law, the court will analyze whether that ancillary relief is barred by the statute of

limitations as discussed in #1, above. 6 If the ancillary relief is of an equitable nature, the

court will analyze whether that ancillary relief is barred by laches as discussed, in #2,

above.




         6
         This is why Midland’s reliance on Master Fin., Inc. v. Crowder, 409 Md. 51 (2009)
is misplaced. In Crowder, the plaintiff sought a declaratory judgment, by which he wanted
to have the court declare his contract of mortgage void. Id. at 60. Crowder’s declaratory
judgment action also sought ancillary relief: the cancellation of the mortgage. Because the
ancillary remedy would be in the nature of a money judgment (i.e., he would be absolved
of the responsibility to repay the loan), the Court of Appeals determined, if sub silentio,
that the claim was a claim at law, and therefore subject to the three-year statute of
limitations. Id. at 73. Crowder has no applicability to equitable claims.


                                             –7–
                                      CONCLUSION

       In sum, on remand, Murray’s injunctive claim may be subject to laches or other

defenses. If Murray’s declaratory judgment action seeks only a declaration that Midland’s

judgment against her is void, and she proves that the judgment is void, then she is entitled

to a declaratory judgment to that effect “at any time” regardless of limitations or laches. If

the declaratory judgment, however, seeks anything beyond a simple declaration, those

ancillary claims may themselves be subject either to a statute of limitations or to laches. 7



       7
        Murray also argues that the circuit court erred in ruling on Midland’s motion to
dismiss before considering her request for class certification and partial summary
judgment. Murray requests that we instruct the circuit court to hold a hearing and rule on
both. Regarding class certification, the Rules provide that:

              On motion of any party or on the court’s own initiative, the
              court shall determine by order as soon as practicable after
              commencement of the action whether it is to be maintained as
              a class action. A hearing shall be granted if requested by any
              party.

Md. Rule 2-231(c) (emphasis added). The Rule states the hearing must be held soon, but it
does not say the hearing must be held before a ruling on a motion to dismiss. Further, the
Rule governing motions for summary judgment provides:

              Any party may file a written motion for summary judgment on
              all or part of an action on the ground that there is no genuine
              dispute as to any material fact and that the party is entitled to
              judgment as a matter of law.

Md. Rule 2-501(a). The Rule does not state that a court must rule on a motion for summary
judgment prior to a ruling on a motion to dismiss. Such a rule would not make sense
because a court adjudicates a motion to dismiss on pleadings, while a motion for summary
judgment considers all appropriate evidence, much of which is gathered during discovery.
Murray has not cited to any Rule prohibiting a court from, as the circuit court did here,
ruling on a motion to dismiss prior to ruling on a motion for class certification or motion
for summary judgment. If the trial court allows Murray’s declaratory and injunctive relief

                                            –8–
                                         JUDGMENT OF THE CIRCUIT COURT
                                         FOR   ANNE    ARUNDEL    COUNTY
                                         VACATED AND CASE REMANDED FOR
                                         FURTHER    PROCEEDINGS.    COSTS
                                         ASSESSED AGAINST APPELLEE.




claims to proceed on remand, Murray is free to request a hearing or ruling on either. We,
however, will issue no such instruction.


                                          –9–
