Despite Jury's Actual Damage Award Of $0, Booted WV Homeowner Walks Away With $32K In Inflation-Adjusted Civil Penalties, $30K In Attorney Fees Anyway In Connection With Foreclosing Lender's Unlawful Debt Collection Practices

From Justia.com US Law:

• In 1996, Terri Cole and her husband financed the purchase of a home through a loan secured by a deed of trust on the home and the underlying property.
  
  In 2005, Vanderbilt Mortgage and Finance, Inc. became the servicer of the loan. Code defaulted on her loan in 2010. Vanderbilt foreclosed and purchased the home and real property at a trustee's sale.
  
  Thereafter, Cole refused to vacate the home. Vanderbilt filed an unlawful detainer action. Cole counterclaimed, alleging that Vanderbilt had violated the West Virginia Consumer Credit and Protection Act (WVCCPA).
  
  Regarding the unlawful detainer claim, the circuit court found in favor of Vanderbilt.
  
  As to the remaining issues, the jury found Vanderbilt engaged in several violations of the WVCCPA.
  
  The circuit court subsequently awarded civil penalties to Cole totaling $32,125,(1) and, some weeks later, granted Cole's motion for attorney fees and costs.(2)
  
  The Supreme Court affirmed the circuit court's civil penalties order and award of attorney fees, holding that the circuit court did not commit error with regard to either the civil penalties order or the attorney fees order.(3)

Source: Opinion Summary - Vanderbilt Mortgage and Finance, Inc. v. Cole.

For the ruling, see Vanderbilt Mortgage and Finance, Inc. v. Cole, Nos. 11-1288, 11-1604 (WV. March 8, 2013).

(1) After a trial, the jury reached a unanimous verdict that the foreclosing lender engaged in 13 acts of unlawful debt collection, and awarded the foreclosed homeowner a total of $0 in actual damages.

Despite the lack of actual damages, the West Virginia high court agreed with the trial judge that the West Virginia Consumer Credit and Protection Act (WVCCPA) nevertheless allows for a discretionary award of civil penalties to the homeowner in addition to, and apart from, an award of actual damages, if any. The $32,125.24 award in civil penalties to the homeowner ("Ms. Cole") broke down as follows:

• One civil penalty at $4,583.45 for failure to provide a statement of account upon written request.
• Ten civil penalties at $2,250.00 for each penalty, totaling $22,500, regarding the placement of repeated and unsolicited calls to Ms. Cole's mother and third parties despite specific requests to cease.
• One civil penalty at $458.34 for the use of language intended to unreasonably abuse the hearer.
• One civil penalty at $4,583.45 for unreasonable publication of indebtedness to a third party.

The court noted that WVCCPA (§ 46A-5-101(1)) only allows for a civil penalty of no more than one thousand dollars for each violation. However, the court also noted that "[a]ny civil penalty enforced against them may be adjusted for inflation pursuant to W. Va. Code § 46A-5-106 (1994)" to account for inflation from the time the WVCCPA became operative - 12:01 am on September 1, 1974.

By the way, and unlike a case involving an award of punitive damages, an award of civil penalties in a civil case where no actual damages were awarded is permitted and not unusual, as the West Virginia Supreme Court observed:

• We are by no means the first jurisdiction to allow an award of civil penalties in the absence of an award of actual damages.
  
  A number of courts, including the United States Supreme Court, have awarded civil penalties without awarding actual damages.
  
  See, e.g., F. W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952) ("Even for uninjurious and unprofitable invasions of copyright the court may, if it deems just, impose a liability within statutory limits to sanction and vindicate the statutory policy."); St. Louis, Iron Mountain & S. Ry. Co. v. Williams, 251 U.S. 63, 66 (1919) ("Nor does giving the penalty to the aggrieved passenger require that it be confined or proportioned to his loss or damages . . . as it is imposed as a punishment for the violation of a public law . . . ."); Baker v. G. C. Servs. Corp., 677 F.2d 775, 781 (9th Cir. 1982) (concluding that under the FDCPA, "statutory damages are available without proof of actual damages"); Knoll v. Allied Interstate, Inc., 502 F. Supp. 2d 943 (D. Minn. 2007) (finding that the FDCPA is a remedial, strict liability statute, and thus, the debtor was not required to prove deception or actual damages to recover); McCammon v. Bibler, Newman & Reynolds, P.A., 493 F. Supp. 2d 1166 (D. Kan. 2007) (finding that actual damages are not required for standing under FDCPA because the FDCPA permits recovery of statutory damages in absence of actual damages); In re Hobbs, No. 10-42736 (Bkrtcy. E.D. Tex. filed 2012) ("[I]n light of the statutory damage provision, the Plaintiff need not show actual damages in order to recover under [the Code]."); DirectTV, Inc. v. Cantu, No. SA-04-CV-136-RF, 2004 WL 2623932, at *4 (W.D. Tex. Sept. 29, 2004) ("The law has held for many years that statutes may provide for damages even where a plaintiff cannot prove actual damages.").

(2) As to the amount of attorneys fees awarded by the trial court (foreclosing lender to be stuck with the tab), the West Virginia high court stated:

• The court awarded $30,000 of the $48,852.00 requested in attorney fees to Ms. Cole pursuant to W. Va. Code §46A-5-104,[6] reasoning that, upon analyzing the facts pursuant to case law, Ms. Cole deserved attorney fees, but that the award should be limited "due to the mixed degree of success that was achieved."

The homeowner, Ms. Cole, was successful in 13 out of a total of 57 claims she made in her lawsuit against the foreclosing lender.

(3) Representing the homeowner was Sara Bird, Esq., with Mountain State Justice, Inc., a non-profit public interest law office dedicated to pursuing litigation focusing primarily on combating predatory lending and abusive debt collection techniques on behalf of low-income West Virginians, and which provides free legal services in its areas of practice to qualifying individuals.