Fitzsimmons Law Firm recently obtained a confidential settlement on behalf of its clients who were subjected to unfair debt collection practices. The complaint filed by Fitzsimmons Law Firm alleged violations of West Virginia's Fair Debt Collection Practices Act and also asserted a cause of action for the tort of invasion of privacy.
In the underlying claim, the plaintiffs received an invitation to a free steak dinner via the mail. This middle-income family attended the dinner and ended up purchasing a radiant barrier for their attic, which supposedly would markedly decrease their utility bills. The merchant had an agreement to promote financing through a major bank's credit card division. The plaintiffs purchased the radiant barrier for $3,900 and applied for and received twelve months free interest and no payment on a line of credit. Under the terms of the credit card agreement, interest would be owed retroactively if the entire loan balance was not paid off within twelve months.
This radiant barrier strikingly resembles aluminum foil and was purchased by the merchant for 3 cents per square foot in Taiwan. Shortly after installation, the plaintiffs noticed moisture running down their walls and mold growth throughout their attic and their living quarters.
The plaintiffs contacted the merchant, who, after several months, ultimately agreed that the barrier contributed to the moisture and mold. The merchant subsequently removed the radiant barrier. Under the terms of the credit card agreement, the plaintiffs were to be given full credit when the product was returned, meaning they owed nothing to the bank.
The bank sent statements to the plaintiffs during the tenth and eleventh months indicating they still owed the full balance. After the twelfth month expired, the bank began calling the plaintiffs telling them that they owed the full amount plus retroactive interest at the rate of 22.9 percent. The plaintiffs advised the bank that the product had been returned and they owed no money; however, the bank never attempted to even contact its own merchant dealer to verify this fact.
The bank continued calling the plaintiffs demanding payment. During one of the initial phone calls, the plaintiffs advised the bank that they had an attorney; however, the bank did not follow up and ascertain the attorney's identity. Following 15 to 20 phone calls in which the plaintiffs continued to advise the bank that the product had been returned and plaintiffs also provided the bank with the name of their attorney. The bank did nothing, however, to further identify the attorney.
Following approximately 50 additional phone calls between January and the beginning of March, 2010, the bank programmed Robocalls to be made to the plaintiffs' residence five times per day at varying hours seven days per week between March 4 and April 29. Approximately 252 Robocalls were then made to the plaintiffs' residence.
In early March, the bank demanded that the plaintiffs send them a letter of dispute and a credit memo despite the absence of such requirement in the credit card agreement. Credit memos have to be filled out by the merchant and none was ever given to the plaintiffs. Nonetheless, the plaintiffs handwrote a letter of dispute, which they faxed to the bank, together with a document verifying that the product had been uninstalled. The bank's diaries documented receipt of this communication on at least two occasions in their collectors' logs.
Although the bank never contacted the merchant to verify that the product had been returned, the bank maintained regular communications with its merchant about various matters arising from their contractual arrangement, which plaintiffs contended was a joint venture. Interestingly, the bank's records were referred to as "The Gold Mine."
After the Robocalls concluded, the bank sent two letters to the plaintiffs styled "Last Chance of Settlement" and a "Notice of Right to Cure Default." Despite documents and diary entries in the bank's own file demonstrating that the plaintiffs did not owe anything, they then employed a law firm who sent plaintiffs a letter of "Right to Cure Default." The law firm then sued the plaintiffs in Magistrate Court and attached an Affidavit from in-house counsel that purportedly verified that the debt was owed based on the records. In addition to the debt allegedly owed, the lawsuit also sought interest at 22.9% and attorney fees of 25% plus costs. Plaintiffs removed the case to Circuit Court, and filed a Counterclaim against the bank, which was joined with a claim against the merchant for selling a defective product.
Plaintiffs settled with the merchant early in the litigation and settled with the bank within days of the scheduled trial. The confidential settlement is believed to be one of the largest settlements obtained in West Virginia for unfair debt collection.