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Recent Amendments to West Virginia Consumer Credit Protection Act Signal a Move to Level the Playing Field

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By Jason E. Manning, David Asbury, Kim Gershen, Megan Burns & David N. Anthony on May 26, 2021
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On March 18, the West Virginia legislature passed Senate Bill 5, amending the West Virginia Consumer Credit and Protection Act (WVCCPA). The amendments will apply to all causes of action filed on or after June 16, 2021, the effective date of the amendments.

The amendments signal a continuing trend in West Virginia toward equalizing the positions of parties litigating under the WVCCPA. The amendments provide more clarity to creditors and debt collectors, as well as tools to avoid litigation. When litigation is involved, the amendments give defendants additional means to control the ongoing accrual of the plaintiff’s attorney fees and costs, including a newly added provision that cuts off attorneys’ fees when a party recovers 75% or less of amounts set forth in an offer of judgment. Significantly, the amendments also provide additional avenues for recovery of fees when an action is brought in bad faith, adding a right to recover fees when a party asserts frivolous claims or rejects a settlement offer without justification.

The Amendments Focus on Deterring Meritless Claims by the Addition of an Offer of Judgment Provision, Including the Right to Recover Attorneys’ Fees

West Virginia Code § 46A-5-104 was revised to add specific factors courts are required to consider when awarding attorneys’ fees, including fees awarded under Section 46A-5-104(b). Section 104(b) restates the legislature’s commitment to discourage parties from asserting frivolous claims or defenses: “Upon a finding by the court that a claim brought under this chapter was brought in bad faith and for the purposes of harassment, the court may award reasonable attorney’s fees and expenses to the defendant … .” Newly added Section 46A-5-109 goes further, providing a mechanism to make an offer of judgment at least 30 days prior to trial. Section 109(e) authorizes the prevailing party to make a motion, at the time that the verdict or judgment is rendered, requesting “that the court determine whether the opposing party presented a frivolous claim or defense. In that event, the court shall hold a separate bifurcated hearing in which the court shall make a determination of whether the frivolous claims or defenses were asserted and to award damages, if any, against the party presenting the frivolous claims or defenses.” (emphasis added). “Damages,” as defined in this section, include reasonable attorney’s fees and expenses of litigation.

In light of this new emphasis on potentially frivolous or de minimis claims, the plaintiffs will be required to assess their claims more thoroughly before filing suit. Similarly, defendants will need to engage in a more thorough analysis before filing affirmative defenses. Implementing a mechanism for courts to weed out non-meritorious claims under the WVCCPA, by penalizing the parties that assert them, may result in fewer frivolous claims.

By extension, the amendments are likely to have a major impact on settlement negotiations. Cure offers or offers of judgment will be important tools to effectuate settlements that are more commensurate with the strength of the claims or defenses asserted by either party. Plaintiffs’ attorneys face both the risk of being unable to recover their attorney’s fees and costs and the potential that they or their clients will be required to reimburse the defendants’ fees and costs. For example, section 46A-5-109(b) cuts off a plaintiff’s ability to recover attorney fees or costs when he rejects an offer judgment made more than 30 days before trial (or 20 days in the case of a counteroffer), and the final judgment is less than 75% of the offer (exclusive of an attorneys’ fee award). And also under Section 46A-5-109(b), if an offer is made and the subsequent judgment does not exceed 75% of the offer, defendants may petition the court for their own attorney fees and costs incurred after the offer was made, with any award based on the court’s determination as to whether the plaintiff acted without substantial justification or without good faith in rejecting the offer. Now, in addition to costs, the amendments enable the potential recovery of attorney’s fees.

The Amendments Bring Uniformity to the Pre-Suit Notice of Right to Cure Provisions

The amendments also affect pre-suit notice procedures under the WVCCPA. Prior to the amendments, the nature of the claim determined whether the cure offer was governed by Section 46A-5-108 or Section 46A-6-106. The amendments provide a more uniform procedure, adding claims under Section 46A-6-1 et seq. to the pre-suit notice requirements set forth in Section 46A-5-108. As a result, a cure notice directed at claims under claims brought under Section 46A-6-1, et seq. must now state the “factual basis for the claim” as well as identifying the “alleged violation.” Also of note, pursuant to Section 46A-5-108(f), a defendant no longer has the ability to advise the jury that it attempted to resolve the case by making a cure offer. Nevertheless, evidence of a cure offer is admissible in a proceeding seeking an award of attorney’s fees and expenses following entry of judgment.

Troutman Pepper will monitor WVCCPA litigation once the amendments go into effect on June 16, 2021 and report on any opinion interpreting the new provisions.

Photo of Jason E. Manning Jason E. Manning

Jason Manning is a commercial trial attorney with a focus on defending consumer-facing companies against class action and individual consumer protection claims. He has particular experience representing clients in mortgage- and auto finance-related litigation in state and federal courts.

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Photo of David Asbury David Asbury

David Asbury handles critical debt collection litigation matters with a keen understanding of his clients’ business goals. Particularly experienced in the loan servicing industry, David helps clients pinpoint problems, avoiding costly litigation whenever possible and vigorously defending litigation when necessary.

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Photo of Kim Gershen Kim Gershen

Kim is an attorney in the firm’s Consumer Financial Services practice, with a focus on mortgage lending and servicing, including foreclosure, bankruptcy, and debt disputes.

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Photo of Megan Burns Megan Burns

Megan Burns handles complex litigation for national banks, mortgage investors and loan servicers, especially the defense of class actions. Experienced with numerous federal and state consumer protection statutes, Megan helps clients posture cases for early and favorable resolution whenever possible.

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Photo of David N. Anthony David N. Anthony

David Anthony handles litigation against consumer financial services businesses and other highly regulated companies across the United States. He is a strategic thinker who balances his extensive litigation experience with practical business advice to solve companies’ hardest problems.

Read more about David N. AnthonyEmailDavid N.'s Linkedin Profile
  • Posted in:
    Financial
  • Blog:
    Consumer Financial Services Law Monitor
  • Organization:
    Troutman Pepper Hamilton Sanders LLP
  • Article: View Original Source

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