Maryland Business Litigation Lawyer Blog
In a landmark decision in Kathleen Anderson, et al. v. Evan Hammerman, et al., the Maryland Supreme Court ruled that attorneys can be held liable under consumer protection statutes like the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA) for submitting false or inaccurate fee affidavits in debt collection lawsuits. This holding is a departure from the traditional protections afforded by the litigation privilege and signals a shift in the legal landscape surrounding attorney fees in debt collection lawsuits.
The case involved a putative class action lawsuit filed by Kathleen Anderson and Bianca Diehl (the Consumers) against a group of medical providers and related entities (the Collectors) alleging violations of the (MCDCA) and the (MCPA). Consumers alleged in their Complaint that Hammerman, acting as general counsel for some of the Collectors, falsely stated under oath in his affidavits filed in each case, that “he dedicated approximately six (6) hours including but not limited to client communication, review and analysis of client file documents, the drafting of the Complaint, and Motion for Summary Judgment.” Consumers averred that Hammerman did not spend six hours preparing the action, given numerous mistakes in the complaint, and identical attorneys’ fees in another case that did not involve drafting a summary judgment.
The court determined that the common law litigation privilege, which typically shields attorneys from liability for statements made during court proceedings, does not extend to situations where debt collectors, including attorneys, knowingly file lawsuits to collect debts they know are not owed. The court reasoned that such an application of the privilege would undermine the core remedial purpose of consumer protection laws like the MCDCA and the MCPA. These statutes aim to prevent unfair and deceptive practices in debt collection and granting attorneys immunity for potentially false fee affidavits would contradict that objective.
The Court also held that the professional services exemption in the MCPA, which exempts certain professionals from liability, did not protect Hammerman from liability for submitting allegedly false affidavits about the nature and amount of his legal services in support of attorney fee claims. The court reasoned that submitting these affidavits was part of the commercial aspects of a law practice, not the professional services of a lawyer, and therefore was not protected by the exemption. The case was remanded to the Circuit Court based on this ruling for further proceedings.
This ruling is a clear signal to attorneys that submitting false or misleading information in court filings, especially to inflate legal fees, can expose them to liability under consumer protection statutes.
Attorneys who engage in debt collection practices must ensure they comply with the MCDCA and MCPA, taking care to avoid actions that could be construed as unfair or deceptive, even when acting within the scope of their professional representation.
To discuss this case or its implications, please contact attorney Kerri Smith at (410) 385-2225 or ksmith@silvermanthompson.com.