CSA gives car buyer a chance at higher attorneys' fee award

Daily Record, The (Baltimore), Sep 10, 2003 by Ann Parks

A consumer who incurred nearly $50,000 in attorney's fees before settling a lawsuit with her credit union regarding a car loan and repossession was entitled to reasonable attorneys' fees, the Court of Special Appeals held yesterday.

In an opinion by Judge James P. Salmon, the intermediate appellate court held that Paulette D. Blaylock was entitled to fees under the Consumer Protection Act even though no judgment or consent decree had been entered in her favor.

The court also vacated a fee award granted to Blaylock by the Circuit Court for Baltimore County, concluding that the $5,000 amount was unreasonably low.

The trial court abused its discretion because it 1) applied a proportionality rule [related to the dollar amount recovered by the consumer] and 2) based its reduction of fee, in part, on the erroneous belief that the case should have remained in the District Court, Salmon wrote.

It's a great opinion for the consumer, said Philip O. Foard, one of Blaylock's attorneys. Lawyers' fees are always going to be more than the claim, in a small consumer case. This is what the Legislature wanted to protect, with the act.

Both Foard and attorney Kieron F. Quinn - who was also involved in the case - contended that the Johns Hopkins Federal Credit Union could have turned off the spigot at any time.

They dramatically extended the litigation by 'scorched earth' tactics for almost three years, Quinn said. Everything in the case was a fight.

Dennis W. King, counsel for the credit union, declined to comment on the case.

The credit union brought an action in state district court against Blaylock in December 1997, after it repossessed and sold the car it had financed for Blaylock, a Hopkins employee. The credit union sought a deficiency judgment of $8,235.

Blaylock prayed for a jury trial, prompting the removal of the case to the Circuit Court for Baltimore County. She also filed a counterclaim in March 1998, contending that the credit union had violated the Maryland Consumer Protection Act by illegally charging her for insurance it had purchased on her behalf from 1990 to 1995.

The parties settled in August 2000. At a hearing on attorneys' fees a year later, Blaylock sought almost $49,000 for 264 hours of paralegal and attorney time - an amount the circuit court deemed unconscionable since Blaylock's gain was only about $17,000.

Yesterday, the Court of Special Appeals rejected the credit union's argument that Blaylock was not entitled to any fees since she failed to prove she prevailed on her consumer protection claim.

It was unnecessary for any court to find a violation of the Act because the parties agreed, when they signed the settlement agreement, that Ms. Blaylock was the prevailing party, Salmon wrote.

The court also rejected the contention that Blaylock was not entitled to fees because she was never awarded damages under the act.

Victory can be achieved well short of a final judgment, Salmon asserted, citing Marbley v. Bane, a 1995 case from the 2nd U.S. Circuit Court of Appeals.

Regarding the reasonableness of the $5,000 fee award, the court noted that other jurisdictions have not favored a proportionality rule comparing the amount recovered to the effort expended by counsel.

The Consumer Protection Act, the court pointed out, provides for attorney's fees to a prevailing party precisely so that consumers may obtain legal recourse in cases with relatively small damages.

The relevant factors in determining an award of attorney's fees include the novelty and difficulty of the questions involved and experience of the lawyer, the court noted.

Finally, the court faulted the circuit judge's reduction of the fee based on a theory that the case should have remained in state district court.

No competent attorney representing Ms. Blaylock would have failed to have the case removed to the circuit court, Salmon wrote. The case cried out for significant discovery.

WHAT THE COURT HELD

Case:

Blaylock v. Johns Hopkins Federal Credit Union, CSA No. 1994, Sept. Term 2001. Reported. Opinion by Salmon, J. Filed September 9, 2003.

Issue:

(1) Was a borrower entitled to an award of attorney's fees after settling her Consumer Protection Act claim? (2) Did the Circuit Court for Baltimore County err in allowing only $5,000 for those fees?

Holding:

Yes; vacated and remanded. (1) The settlement provided that the consumer was the prevailing party; thus, no judgment or consent decree was necessary to establish her status. (2) The trial court erred in granting an award that was proportionate to the recovery, rather than the effort expended; and in reducing the fee on the belief that the case should have stayed in state district court.

Counsel:

Philip O. Foard, Kieron F. Quinn and Richard S. Gordon for appellant; Dennis W. King for appellee.