Based on a recent decision in the Maryland Court of Special Appeals, judges in the Circuit Court for Baltimore City are refusing to award attorneys’ fees in collection cases based on a percentage of the debt, even if the promissory note provides for such an award. In the case, Suntrust Bank v. Frank J. Goldman, 29 A.3d 724, 2100 Md.App. LEXIS 135, (2011), the promissory note provided for an award of attorneys’ fees in the amount of 15% following a default. The Court of Special Appeals decided in Suntrust Bank that such clauses are not enforceable and that in order for a plaintiff to obtain legal fees as part of the recovery, the plaintiff must prove the actual amount of fees incurred and the fairness and reasonableness of the request. The Circuit Court for Baltimore City is setting in all confessed judgments seeking legal fees for an inquisition hearing on legal fees to determine the actual amount of fees incurred in obtaining the confessed judgment. Whether other Maryland Circuit and District Courts will follow suit has yet to be determined.
For more information contact a member of HPK’s Corporate and Business Services Group at http://www.hpklegal.com/practice-areas/corporate-and-business-services/.