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Maryland Appellate Court Finds for Auto Dealer on Class Action Complaint

September 21, 2015

On May 28, 2015, the Maryland Court of Special Appeals (“CSA”) in Len Stoler, Inc. v. Wisner, 223 Md. App. 218 (2015) ruled in favor of a Baltimore area auto dealership on a class action suit.  The case involved a claim that in violation of the Maryland Closed End Credit Grantor Law (“CLEC”), a widely used law that governs financing, the dealer had improperly kept certain charges paid by a customer who bought a car.  The CSA’s decision resolved a conflict between two laws—one that appeared to prohibit the dealer’s retention of the fees and another that allowed it.

The conflict arose out of a March 2011 sale in which a customer agreed to buy a new car, trade in her old one instead of making a cash down payment, and finance the rest of the purchase price.  The buyer signed a standard sales contract used by the dealer that itemized all of the charges, including those for taxes paid to government agencies, government registration fees, and government certification of title fees.

Two years after the sale, the buyer filed a class action complaint, meaning that she was trying to bring the case not just for herself, but also on behalf of other consumers who had bought cars from the same dealer and had been charged the same kinds of fees.  The customer’s lawsuit asserted that the dealer had violated CLEC by keeping a $24 tax allowance and a $20 electronic titling fee—for a total amount she claimed to have been overcharged of $44.  The dealership contended that it was allowed to charge these amounts under other provisions of Maryland law governing automobile sales.  The trial court ruled in favor of the customer and dealer appealed that decision. 

The CSA reversed the trial court’s decision and held that the dealer was allowed to charge and retain an electronic titling fee and tax allowance.  The CSA stated that to resolve a conflict between two Maryland laws on the electronic titling fee question, it would look to the history and context of the laws to determine legislative intent.  Applying well settled rules of statutory interpretation—that when laws conflict, the more recent will control over the earlier one, and that more specific enactments govern more general ones—the CSA held that the dealer was allowed to collect and keep the electronic titling fee because it was authorized by a more recent and more specific provision in the Transportation Article compared to the language in CLEC that seemed to prohibit it.  As to the excise tax issue, the CSA found that CLEC was inapplicable because the provision argued by the customer applied to “charges” and “fees” and the “tax” was not a charge or fee within the meaning of the statute. 

In sum, the decision is one that dealerships should note.  It provides helpful guidance on what dealers can charge and retain for electronic titling and excise taxes.  It also illustrates the risks that a dealership may face over a relatively small amount of money—a claim that a customer was overcharged by $44 led to not just a lawsuit, but one that was filed for class action relief.  Last, the case shows the benefit of mounting a strong legal defense to get a case dismissed before it gets to be certified (i.e., allowed to proceed) as a class action.

If you have questions or would like more information about this topic or other business issues relating to automotive dealers in Maryland, contact Daniel Katz at 410.752.9725 or dkatz@tydingslaw.com.

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