The Maryland Court of Appeals recently issued a decision that significantly lengthens the limitations period applicable to claims brought under Maryland's Second Mortgage Loan Law (SMLL). According to Crowder v. Master Financial, individuals in Maryland who obtain second mortgage loans under the SMLL may bring claims within 12 years of their loan closing.

Lenders doing business in Maryland should be aware not only of the new potential for liability under the SMLL, but also of the possibility that borrowers may attempt to apply the reasoning of Crowder to claims brought under other statutes.

Before Crowder, courts had consistently applied Maryland's three-year general statute of limitations to claims brought under the SMLL. The Court of Appeals, however, concluded that the remedy available under the SMLL qualifies as a "statutory specialty" under Maryland law and set forth a three-part test for determining whether a statutory claim constitutes a specialty:

  • the basis for liability must be created by statute and not otherwise exist as a matter of common law;
  • the remedy pursued by the plaintiff must be authorized solely by the statute and not otherwise exist as a matter of common law; and
  • if the plaintiff pursues civil damages, such damages must be "liquidated, fixed, or, by applying clear statutory criteria, readily ascertainable."

Applying these criteria, the court concluded that a claim under the SMLL is a "statutory specialty" and thereby subject to the longer limitations period.

Crowder raises the concern that claims and remedies created by other Maryland statutes may now arguably be deemed "statutory specialties," thereby subject to a 12-year limitations period. This is not a concern for Maryland statutes that specify a limitations period, such as the subtitles of the Maryland code setting forth the Credit Grantor Revolving Credit Provisions and the Credit Grantor Closed End Credit Provisions. Other subtitles, however, create statutory claims and remedies without specifying a limitations period, potentially implicating the Crowder reasoning.

As a result of Crowder, several new and amended SMLL complaints have been filed in state court in Maryland.

About Ballard Spahr's Consumer Financial Services Group

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance to clients in structuring and documenting new consumer financial services products, as well as its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and risk avoidance. Our Consumer Financial Services Group includes attorneys in our Baltimore and Bethesda offices.

Contact Information

For more information about the Crowder decision, please contact Alan S. Kaplinsky, partner-in-charge of the group, 215.864.8544 or kaplinsky@ballardspahr.com; or Daniel J. Tobin, 301.664.6210 or tobindj@ballardspahr.com.


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