Maryland Court Holds No Time Limit to Attack a Judgment as ‘Void’

A judgment debtor’s lawsuit requesting the court declare a judgment as “void” is not subject to any limitations period, under a decision from Maryland’s Court of Special Appeals. However, claims arising from the “void” judgment may be subject to Maryland statutes of limitations according to the decision in Jason v. National Loan Recoveries, LLC, available here.

No Limitations Period on Claim that an Unlicensed Debt Buyer’s Judgment is ‘Void’

National Loan Recoveries (“NLR”), a debt buyer, obtained a judgment against Jason on an unpaid delinquent credit card account. However, at the time NLR obtained the judgment, it was not licensed to act as a debt collector in Maryland. More than three years later, Jason sued NLR seeking a declaratory judgment that NLR’s 2009 judgment was “void,” because it lacked the required license.

NLR moved to dismiss the complaint arguing that Jason failed to bring his claim within Maryland’s three-year limitations period for civil actions. The trial court agreed with NLR and dismissed the complaint.

On appeal, Jason argued that his complaint was not barred by the three-year limitations period because an action to declare a judgment void may be brought at “any time” under an earlier Maryland appellate court decision. The Court of Special Appeals, however, disagreed and determined that the earlier opinion did not address actions to void judgments. But, after surveying federal and state decisions from outside Maryland, it nonetheless agreed with Jason that a suit seeking to declare a judgment as “void” is not subject to a statute of limitations.

Unjust Enrichment Claim Subject to 3-Year Limitations Period

Although there is no limitations period on an action to void a judgment, the Court pointed out that its ruling does not extend to other remedies Jason may seek. In particular, Jason’s claim for unjust enrichment was subject to the three-year limitations period. Following entry of the judgment, NLR obtained an execution against Jason’s bank account sufficient to pay the entire judgment. The Court rejected Jason’s argument that the claim was not subject to any limitations period at all or, in the alternative, it was subject to Maryland’s 12-year limitations period for actions on judgments.

MCDCA Claim Subject to 3-Year Limitations Period

The Court also affirmed the dismissal of Jason’s claim under the Maryland Consumer Debt Collection Act (MCDCA) because it was asserted beyond the applicable three-year limitations period. Jason argued that NLR had a duty to disclose it was not licensed and, since it did not make the disclosure, the time to file his MCDCA claim should be extended. NLR disagreed, noting no decisional law supported Jason’s argument. The Court did not address whether Maryland law imposed such a requirement on NLR, but found that even if it did, Jason himself was obligated to inquire into NLR’s license status, if not when he was served with NLR’s complaint, or even its judgment, then certainly, at the latest, he was obligated to inquire in April 2009 when he learned his bank account was garnished. So even if Jason were correct, the Court concluded, the limitations period on his MCDCA claim would have run in 2012.

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Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has successfully argued before the Third, Fourth and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. In addition to being a frequent speaker and author on consumer financial services law, he serves as legal counsel to DBA International and as chair of the ABA's Bankruptcy and Debt Collection Subcommittee. He serves on the governing Board of Regents of the American College of Consumer Financial Services Lawyers and on the Governing Committee of the Conference on Consumer Finance Law .