BATTAGLIA, J.
We have before us a question of law certified by the United States Bankruptcy Court for the District of Maryland, pursuant to the Maryland Uniform Certification of Questions of Law Act, Maryland Code (1974, 2006 Repl.Vol.), Sections 12-601 et seq. of the Courts and Judicial Proceedings Article and Maryland Rule 8-305,
In the Certification Order, the bankruptcy judge summarized the circumstances giving rise to the question now before us, involving an action by a debtor, Maureen Roberson, to recover damages because Ford Motor Credit Company had repossessed her car shortly after she was discharged in bankruptcy, even though she had made timely monthly payments on the vehicle indebtedness before, during, and after the bankruptcy proceedings, but failed to "reaffirm"
Ms. Roberson had entered into a "Maryland Simple Interest Vehicle Retail Installment Contract," containing an ipso facto clause,
After Ms. Roberson's Chapter 7 bankruptcy case was closed, Ford Motor Credit repossessed the car because Ms. Roberson failed to cure the default by executing a reaffirmation agreement. Ms. Roberson, thereafter, filed a Chapter 13 bankruptcy petition, the sole basis for which was to "facilitate recovery" of the car and to seek damages from Ford Motor Credit for "wrongfully, illegally and maliciously" repossessing the car:
Ms. Roberson alleged that the repossession was in violation of the "Discharge Injunction"
The action for damages is the crucible for the certified question. During the proceedings, Ford Motor Credit filed a motion for summary judgment, asserting that it did not violate the discharge injunction as a matter of fact or law, was not a "debt collector" as that term is used in the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (2006) and that the Bankruptcy Court lacked "subject matter jurisdiction over the [remaining] state law allegations." Before the Bankruptcy Court ruled on the motion for summary judgment, Ms. Roberson filed a motion seeking certification of the instant question, which the Bankruptcy Court granted.
The crux of the certified question is whether a secured creditor is permitted under Maryland law to repossess a car in which it maintains a security interest when the debtor has filed a bankruptcy petition and has failed to reaffirm the indebtedness, but has otherwise made timely payments before, during, and after bankruptcy proceedings. To address the question in order to establish its context, we review the choices available to a debtor who seeks to keep her car which is encumbered by a loan, when the debtor opts for discharge as a Chapter 7 bankrupt.
When a buyer finances the purchase of a car with funds advanced by a creditor, the creditor often retains a security interest in the car as collateral. See Section 12-1021 of the Commercial Law Article, Maryland Code (1975, 2005 Repl.Vol.) (stating that if the "consumer borrower is in default," the "credit grantor may repossess tangible personal property securing the loan"). The creditor, in turn, may also define what constitutes a default under the loan, and Ford Motor Credit defined default in the vehicle retail installment contract in the present case as follows:
Once the debtor files a Chapter 7 bankruptcy petition, the protection of the automatic stay is triggered, 11 U.S.C. § 362, which "operates as a stay against lawsuits and lien enforcement[.]" Richard B. Levin, Fundamentals of Bankruptcy Law 175 (7th ed. 2010).
At this juncture, the debtor has two options: either "reaffirm" the debt by assuming personal liability for the loan or redeem the car by paying the entire balance due on the note. 11 U.S.C.
In the present case, Ford Motor Credit tendered a reaffirmation agreement to Ms. Roberson after her Chapter 7 bankruptcy filing, which, although not relevant to the question before us, would have formed the basis for a new contract between Ford Motor Credit and Ms. Roberson. The Bankruptcy Court would have also had to ratify the agreement for it to be valid. 13A Collier on Bankruptcy at § CS20.11 [2]-[3]. Ms. Roberson, however, refused to execute a reaffirmation agreement, instead stating that she intended to "retain" the car and "pay pursuant to original contract."
Ford Motor Credit argues that because Ms. Roberson neither reaffirmed the debt nor paid off the remainder of the loan, it was permitted to repossess the car by Section 12-1023(b) of the Credit Grantor Closed End Credit Provisions ("CLEC"), Commercial Law Article, Maryland Code (1975, 2005 Repl.Vol.), which Ford Motor Credit elected to govern the retail installment contract, pursuant to Section 12-1013.1 of CLEC.
The relevant statutory provisions are as follows:
Section 12-1023(b) of CLEC states, in pertinent part:
Section 12-923(b) of OPEC states, in pertinent part:
Section 12-607(a) of RISA states, in pertinent part:
Sections 12-1023 of CLEC, 12-923 of OPEC, and 12-607 of RISA, all prohibit the creditor from taking certain actions if it considers itself "insecure." The term "insecure" is not expressly defined in the Commercial Law Article, although a number of its provisions recognize "insecurity" as a condition which gives rise to the need for a debtor or another who is expected to give assurance to the creditor or one needing assurance that performance of a contract will occur.
Section 2-609 of the Commercial Law Article, Maryland Code (1975, 2002 Repl.Vol.), also provides that, "A contract for sale imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return." Finally, Section 2A-401 of the Commercial Law Article, Maryland Code (1975, 2002 Repl.Vol.), involving leases, also integrates the term "insecurity," as follows:
Other Commercial Law provisions incorporating the term include Section 22-504(c)
With this sense of what the term "insecure" or "insecurity" means and the breadth of its inclusion in the Commercial Law Article, we turn to the statutory sections in issue. RISA, the oldest of the three statutory schemes, was enacted by Chapter 851 of the Maryland Laws of 1941 to address abuses in retail installment contracts, as follows:
Stride v. Martin, 184 Md. 446, 451-52, 41 A.2d 489, 491-92 (1945). Section 12-607 of RISA, the specific provision, was also enacted by Chapter 851 of the Laws of 1941, and stated:
(emphasis added). The Section was repealed and reenacted as Section 12-607 of the Commercial Law Article by Chapter 49 of the Maryland Laws of 1975, but otherwise remained substantively unchanged.
Section 12-1023 of CLEC and Section 12-923 of OPEC have more circuitous origins. As we described in Biggus v. Ford Motor Credit Co., 328 Md. 188, 613 A.2d 986 (1992), CLEC and OPEC were enacted
Id. at 197, 613 A.2d at 991. Both CLEC and OPEC enable a creditor to unilaterally elect the legal framework for structuring a form contract to be offered to potential borrowers.
1993 Maryland Laws, Chapter 404. A nearly identical provision was added to Section 12-923 of OPEC, as follows:
1993 Maryland Laws, Chapter 404.
Ms. Roberson interprets these provisions as having prohibited Ford Motor Credit from repossessing her car based solely on her Chapter 7 bankruptcy filing. Ford Motor Credit counters that Section 12-1023 of CLEC prohibits only acceleration in the face of creditor insecurity, and therefore permits repossession when a debtor files bankruptcy.
Id. at 191-92, 613 A.2d at 988. When he failed to make two consecutive scheduled payments, the van was repossessed and sold at a public auction. Ford then filed suit against Mr. Biggus in the District Court to collect a deficiency of $2,248.92, and Mr. Biggus responded by alleging that Ford had not complied with the repossession provisions of RISA, such that he was absolved from any deficiency liability. The District Court agreed with Mr. Biggus, but the Circuit Court reversed, holding that CLEC rather than RISA applied and entered judgment in favor of Ford Credit. We affirmed the Circuit Court, reasoning that the contract elected CLEC both "by express election and also by structuring the document consistently with CLEC," such that the disclosure and storage of vehicle provisions of RISA were not applicable. Id. at 202, 613 A.2d at 994. In so holding, we reasoned that "[t]he repossession systems of RISA and CLEC are respectively complete in themselves, in the sense that each is intended to be applied independently of the other." Id. at 208, 613 A.2d at 996. We also addressed, in dicta, the question of whether CLEC was intended to apply exclusively to all aspects of a transaction for which CLEC had been elected, even if CLEC was silent on, but RISA spoke about, the issue. We opined that where CLEC was silent, the provisions of RISA could apply:
Id. at 208, 613 A.2d at 996.
In reaction to Biggus, the General Assembly enacted Chapter 404 of the Maryland Laws of 1993, containing Section 12-1023 of CLEC and Section 12-923 of OPEC:
House Economic Matters Committee Bill Analysis on HB 424, at 10.
The language of Section 12-607(a)(4) of RISA prohibiting both "repossession" and "acceleration" if "the holder considers himself insecure" then, is certainly distinct from the language of Section 12-1023(b)(2)(ii) of CLEC prohibiting only "acceleration" if the creditor "deems itself insecure." Thus, the language of CLEC does not prohibit repossession in the event of insecurity. CLEC clearly is intended to be construed independently from RISA. Moreover, the Legislature is "presumed to act with full knowledge of existing laws," so that if the General Assembly sought to safeguard debtors by prohibiting both "repossession" and "acceleration" on the basis of creditor insecurity in CLEC (and OPEC), as it did in RISA, it could and
Ms. Roberson's reference to Ford v. GMAC, 98 Md.App. 257, 633 A.2d 410 (1993), in which our colleagues on the intermediate appellate court considered whether a creditor had appropriately repossessed a vehicle pursuant to RISA when the car was seized by police, is inapposite because the General Assembly intended that RISA and CLEC operate independently. See Summary by staff member Lars Kristiansen, Revolving and Closed End Credit—Applicability of Other Laws, at 1 (on file with the Department of Legislative Services) ("The bill states that any extension of credit made under subtitles 9 and 10 will be governed exclusively by these subtitles and not by any other subtitle of Title 12 of the Commercial Law Article.").
Further, were we to preclude a creditor from repossessing a car under Section 12-923 of OPEC or 12-1023 of CLEC when the debtor has filed a bankruptcy petition
As a result, because the parties agree that Ford Motor Credit elected CLEC to govern the retail installment contract in the present case, the answer to the certified question concerning whether, under Maryland law, a creditor may repossess a car when a debtor has filed bankruptcy and has failed to reaffirm the indebtedness, is "yes" under CLEC. Section 12-1023(b) of CLEC and Section 12-923(b) of OPEC clearly prohibit only "acceleration" in the face of creditor insecurity, as evidenced by the plain meaning and corroborated by the legislative history of those provisions, while Section 12-607(a) of RISA prohibits both "repossession" and "acceleration" when a creditor deems itself "insecure."
1B Bankruptcy Service Lawyers Edition § 10A:238 (Thomson Reuters 2010) (footnotes omitted).
13 Collier on Bankruptcy § CS4.03 (15th ed. 2010).
13 Collier on Bankruptcy § CS4.03 (15th ed. 2010).
The bill file also contains a press release dated February 18, 1993, that demonstrates that the legislation was designed to overrule Biggus, insofar as Biggus suggested that areas of RISA may be read into OPEC or CLEC, as follows:
Press Release, Feb. 18, 1993, House Bill 424 (on file with Department of Legislative Services).
A coalition of amicus curiae comprised of Civil Justice, Inc., the Maryland Cash Campaign, the Public Justice Center, the Maryland Legal Aid Bureau, Inc., and the University of Maryland School of Law Consumer Protection Clinic, refers us to an unpublished opinion of a Pennsylvania trial court, Malachin v. Daimler Chrysler Financial Services, 2007 Pa. Dist. & Cnty. Dec. LEXIS 158 (2007), in which the creditor repossessed a car when a debtor filed bankruptcy and failed to reaffirm the debt. The court interpreted a statute prohibiting "acceleration" when a creditor "deems himself to be insecure," as follows:
The court determined that "[t]here having been no default except the filing of the bankruptcy petition, Defendant was not entitled to repossess the vehicle." Id. at *2. Malachin is distinguishable, however, because the trial court was not presented with parallel statutory schemes, in which one prohibited both "acceleration" and "repossession" and the other prohibited only "acceleration" in the face of insecurity. Because we presume that the Legislature acted with full knowledge of existing law, namely RISA Section 12-607(a)'s language of "repossession" and "acceleration," Malachin is not persuasive.
The amici also assert that Chapter 404 of the Maryland Laws of 1993 was opposed by some creditors, as evidenced by a letter from Charles W. Turnbaugh, Senior Vice President and General Counsel of Loyola Federal Savings Bank, asserting that "the severe penalties imposed for any failure to comply with Subtitles 9 and 10 of Title 12 . . . could clearly cost Loyola and other lenders." Although lenders may have viewed the amendments to OPEC and CLEC unfavorably, there is no specific reference in the letter to the prohibition against "acceleration" on the grounds of insecurity in Section 12-1023 of CLEC or 12-923 of OPEC as potentially also preventing creditors from repossessing in the face of insecurity.
