A federal court in Maryland just handed a New York debt validation law firm a mixed result in a lawsuit brought by a former client. The client says she paid the firm about $13,450 over two years to dispute fourteen debts, was sued by creditors along the way without the legal help she was promised, and was eventually told that none of her debts could be validated and that no refund was coming. On October 28, 2026, the court let her breach of contract claim and a Maryland Consumer Protection Act claim move forward against the firm, while throwing out her fraud and Federal Trade Commission Act claims.
Much of the decision turned on a short choice of law clause in the firm’s client agreements. Both agreements included a single sentence saying New York law “applies to this Agreement,” and the firm argued that was enough to put every claim in the case under New York law. The court disagreed, finding that the language simply was not broad enough. Because the clause only talked about the agreement itself, the court held that it reached the contract claim and nothing else.
The court contrasted the firm’s clause with broader clauses that other courts have read to cover more than contract claims, such as language covering any dispute “arising out of or related to” the agreement or language reaching the parties’ rights and obligations under it. The firm also pointed to a line in the later agreement saying New York law would govern civil litigation, but that line sat in a paragraph about fee disputes, and the court read it as limited to fee disputes. That short clause left room for the client to pursue her claim under Maryland’s consumer protection statute even though the firm thought it had contracted for New York law across the board.
The firm’s three principals, on the other hand, were dismissed from the case entirely. The client only had a contract with the firm itself, and the court found that her allegations against the individuals, including that one of them “defrauded” her and another “made excuses” about why no attorney would be provided, were too vague to keep them in the case. The court also refused to consider her arguments under the Maryland Debt Settlement Services Act and the Credit Repair Organizations Act, but only because she never raised either law in her complaint.