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West Virginia High Court Affirms Penalties for Foreclosure Abuses - Vanderbilt Mortgage & Finance v. Cole

March 27, 2013

Vincent Howard and our Rialto foreclosure defense lawyers were interested to see a case that didn't stop a foreclosure, but awarded damages to the homeowner for consumer protection violations. In Vanderbilt Mortgage & Finance v. Cole, Vanderbilt filed a court action to remove Cole from her foreclosed home. Cole counterclaimed for violations of the West Virginia Consumer Credit and Protection Act, stemming from debt-collection phone calls the company had made to her workplace and relatives. A jury found violations but ordered no damages, so the trial court awarded more than $32,000 in civil penalties--but also removed Cole from the home. The state's Supreme Court upheld the award, and also upheld an award of attorney fees to Cole.

Cole and her former husband bought a manufactured home in 1996. They are separated and he is not a party to the appeal. Cole, a certified nursing assistant, had trouble making payments throughout the life of the loan, leading to loan modifications in 2005, 2007 and 2009. She didn't make one payment on time after Vanderbilt assumed the loan in 2005. Because she didn't have a land line and her mobile phone number kept changing, she gave the company her mother's phone number and also called it from the homes of various terminally ill clients, where she worked. Cole defaulted and was foreclosed in 2010, but didn't leave the home, forcing Vanderbilt to file the unlawful detainer case. Her counterclaim alleged that Vanderbilt had violated the state consumer protection law 57 times by repeatedly calling relatives and clients despite requests to stop; insulting her; and revealing details of the loans to third parties.

The judge decided the unlawful detainer issue for Vanderbilt, but allowed the jury to decide the debt collection claims. It found for Cole, but awarded no damages. The court nonetheless awarded damages of more than $32,000, citing the seriousness of the violations. It also awarded $30,000 in attorney fees over Vanderbilt's objections.

Vanderbilt appealed both the penalties and the attorney fees. It first argues that the statute conditions civil penalties on actual damages, of which there are none here. The high court disagreed, saying the language permits West Virginia courts to award penalties, damages or both. Furthermore, the Fair Debt Collection Practices Act, the federal law similar to the West Virginia statute at issue, permits either kind of award. Because the FDCPA's maximum statutory award is the same as the West Virginia law's (but West Virginia permits adjustments for inflation), the court also found that the maximum is not grossly excessive. It then rejected an appeal of the jury's findings as incorrectly argued. Finally, Vanderbilt argued that the attorney fee award was excessive because Cole did not prevail, but the high court rejected the cases it relied on. The law permits attorney fee awards for violations of the WVCCPA, and there were 13 violations of the law in this case, the court noted. It was not an abuse of discretion to award the fees, the court said, nor were they unreasonable.

At Howard Law, P.C., our Laguna Beach foreclosure defense attorneys are pleased to see a debt-collection lawsuit that succeeded against a foreclosing bank. The FDCPA and its state-law analogues, such as the WVCCPA, are not often used in foreclosure suits because they don't stop the foreclosure; they just penalize abusive behavior when attempting to collect a debt. But foreclosing is a type of debt collection, and several courts have upheld debt-collection lawsuits against foreclosing entities that were abusive or nasty. In fact, the behavior described by Vanderbilt in this case was a textbook case of debt-collector abuses. Vincent Howard and our Norco foreclosure defense lawyers are also pleased to see that West Virginia permits statutory damages for violations to be increased for inflation. This is a very common complaint about the FDCPA and other state statutes, which have lost much of their bite since they were passed in the 1970s.

Led by Vincent Howard, the law firm of Howard Law, P.C., represents clients taking legal action to stop an unfair foreclosure or abusive debt collection practices. If you'd like to talk to an experienced attorney about your rights and your legal options, call us today at 1-800-872-5925 or send us a message through our website.

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