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Valentine & Kebartas, Inc. v. Lenahan

Supreme Court of West Virginia

June 12, 2017

VALENTINE & KEBARTAS, INC., Defendant Below, Petitioner
v.
GARY J. LENAHAN, Plaintiff Below, Respondent

          Submitted: January 17, 2017

         Appeal from the Circuit Court of Raleigh County The Honorable Robert Burnside, Jr., Judge Civil Action No. 13-C-190(B)

          Albert C. Dunn, Jr., Esq. Bailey & Wyant, PLLC Charleston, West Virginia Counsel for the Petitioner

          Ralph C. Young, Esq. Christopher B. Frost, Esq. Steven R. Broadwater, Jr. Esq. Jed R. Nolan, Esq. Hamilton, Burgess, Young & Pollard, pllc Fayetteville, West Virginia Counsel for Respondent

          JUSTICE DAVIS dissents and reserves the right to file a dissenting opinion.

         SYLLABUS BY THE COURT

         1. "In reviewing challenges to the findings and conclusions of the circuit court made after a bench trial, a two-pronged deferential standard of review is applied. The final order and the ultimate disposition are reviewed under an abuse of discretion standard, and the circuit court's underlying factual findings are reviewed under a clearly erroneous standard. Questions of law are subject to a de novo review." Syllabus Point 1, Public Citizen, Inc. v. First National Bank in Fairmont, 198 W.Va. 329, 480 S.E.2d 538 (1996).

          OPINION

          WALKER, Justice.

         Valentine & Kebartas, Inc. ("V&K") appeals the January 15, 2016 Verdict Order of the Circuit Court of Raleigh County. Following a bench trial, the circuit court ruled in favor of Respondent Gary J. Lenahan ("Mr. Lenahan") that V&K violated the West Virginia Consumer Credit and Protection Act ("Act").1 V&K challenges the circuit court's determination that the volume of telephone calls made by a debt collector to the consumer in this case, absent any other evidence of intent to annoy, abuse, oppress or threaten, is sufficient to establish a violation of West Virginia Code § 46A-2-125(d) (1974). Upon consideration of the parties' briefs and arguments, the submitted record and pertinent authorities, we reverse the circuit court's order.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         V&K is a third-party debt collector who purchased Mr. Lenahan's delinquent consumer account from ADT, a home security system provider. ADT informed V&K that Mr. Lenahan owed $1, 349.53 on the account. The facts are undisputed that Mr. Lenahan informed ADT that he denied owing the debt. Similarly, there is no dispute that Mr. Lenahan never notified V&K that he denied owing the debt.

         V&K's collection efforts commenced with a March 9, 2012, letter to Mr. Lenahan notifying him of V&K's intent to collect the debt on the ADT account. Mr. Lenahan admitted receiving the letter. Thereafter, V&K made telephone calls to the telephone number provided by ADT for Mr. Lenahan. According to the testimony of Linda Diaz, V&K's Chief Compliance Officer, V&K used a computer referred to as an auto dialer to place the telephone calls.

         As Ms. Diaz testified, V&K directs its managers to schedule auto dialer campaigns for selected accounts on a daily basis. The auto dialer is programmed to make telephone calls according to certain parameters such as time of day and number of calls per day or week in compliance with applicable laws.[2] Ms. Diaz further testified that the auto dialer campaigns may be programmed to call during the "prime time" hours of a particular consumer's time zone. Pursuant to V&K policy, managers scheduled auto dialer calls during a consumer's prime time hours all in an effort to comply with the law while maximizing the chances of actually reaching the consumer at a time he or she would be home to answer the phone.

         Ms. Diaz further testified that a manager cannot schedule the specific time of a call or calls. The exact time the auto dialer places the calls within the parameters set by V&K is chosen randomly by the computer. In the case of Mr. Lenahan, the auto dialer campaigns were programmed not to leave a message.[3] If the call was answered, the auto dialer was programmed to connect a collection agent with the person answering the call. Mr. Lenahan offered no evidence to contradict Ms. Diaz's testimony regarding V&K's process and procedures.

         The number of telephone calls placed by V&K to Mr. Lenahan is also not in dispute. Between March 10 and 25, 2012, V&K used its auto dialer to call Mr. Lenahan twenty-two times. Between March 26 and 28, 2012, the auto dialer placed seventeen additional calls to Mr. Lenahan. Beginning on March 29 and continuing through November 17, 2012, the auto dialer attempted 211 more calls to Mr. Lenahan at times after 8:00 a.m. but before 9:00 p.m. on various days, never more than six times per day. The parties agree that V&K attempted to call Mr. Lenahan 250 times during the eight-month period between March 10, 2012, and November 17, 2012.[4]

         Mr. Lenahan testified that the telephone number provided by ADT to V&K had been his cell phone number for twenty years. During 2011 and 2012, he had encountered significant financial difficulties and was receiving approximately twenty to thirty collection calls each day from various parties. According to Mr. Lenahan, he made a conscious decision during this time frame not to answer the phone if he thought the call was from a debt collector. The facts are undisputed that Mr. Lenahan did not answer the 250 telephone calls placed by V&K, kept no record of those calls, and never contacted V&K by telephone or otherwise to contest the debt.

         Mr. Lenahan filed suit against V&K in March 2013. During the bench trial on February 2, 2015, Ms. Diaz and Mr. Lenahan were the only two witnesses who testified. On May 22, 2015, the circuit court ruled in a memorandum opinion that V&K's unanswered telephone calls to Mr. Lenahan violated West Virginia Code § 46A-2-125(d)(1974). On January 15, 2016, [5] the circuit entered its Verdict Order[6] awarding Mr. Lenahan $75, 000 in damages.

         In its Verdict Order, the circuit court concluded that the first twenty-two telephone calls to Mr. Lenahan attempted from March 10 through 25, 2012, did not violate West Virginia Code § 46A-2-125. However, the circuit court found that V&K "ramped up its collection campaign" with the seventeen calls placed on March 26, 27 and 28, 2012. As the circuit court explained:

The Court cannot fathom any possible legitimate purpose that could be served by increasing the volume and frequency of collection calls to a consumer who is known to exercise dominion over the telephone number being called and who has already been informed that [V&K] was collecting a debt by mail. Thus, the only logical conclusion is that [V&K] increased its volume and frequency of collection calls to Mr. Lenahan in an attempt to harass or oppress him into answering [V&K]'s telephone calls.

         Thus, the circuit court ruled that beginning with the first call on March 26, 2012, V&K's 230 subsequent unanswered collection calls to Mr. Lenahan violated West Virginia Code § 46A-2-125. The circuit court awarded Mr. Lenahan a statutory penalty of $326.08 per call for a total of $75, 000.[7]

         II. STANDARD OF REVIEW

         This Court has established the following standard of review following a bench trial:

"In reviewing challenges to the findings and conclusions of the circuit court made after a bench trial, a two-pronged deferential standard of review is applied. The final order and the ultimate disposition are reviewed under an abuse of discretion standard, and the circuit court's underlying factual findings are reviewed under a clearly erroneous standard. Questions of law are subject to a de novo review." Syllabus Point 1, Public Citizen, Inc. v. First National Bank in Fairmont, 198, W.Va. 329, 480 S.E.2d 538 (1996).

Syl. Pt. 2, Timberline Four Seasons Resort Management Co. v. Herlan, 223 W.Va. 730, 679 S.E.2d 329 (2009). With these standards in mind, we consider the parties' arguments.

         III. DISCUSSION

         Whether the number of collection calls alone is sufficient to find V&K liable to Mr. Lenahan under West Virginia Code § 46A-2-125(d) (1974) is the issue raised in this appeal and is a matter of first impression. The version of West Virginia Code § 46A-2-125 in effect at the time of the bench trial in this case states as follows:

No debt collector shall unreasonably oppress or abuse any person in connection with the collection of or attempt to collect any claim alleged to be due and owing by that person to another. Without limiting the general application of the foregoing, the following conduct is deemed to violate this section:
(a) The use of profane or obscene language or language that is intended to unreasonably abuse the hearer or reader;
(b) The placement of telephone calls without disclosure of the caller's identity and with the intent to annoy, harass or threaten any person at the called number.
(c) Causing expense to any person in the form of long distance telephone tolls, telegram fees or other charges incurred by a medium of communication, by concealment of the true purpose of the communication; and
(d) Causing the telephone to ring or engaging any person in telephone conversation repeatedly or continuously, or at unusual times or at times known to be inconvenient, with the intent to annoy, abuse, ...

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