The West Virginia Supreme Court ruled against a debt collector in LTD Financial Services, L.P. v. Collins, affirming the lower court’s order granting the plaintiff’s motion for a directed verdict. Specifically, the Court ruled that the plaintiff was not required to prove intent as part of his affirmative claim and LTD Financial Services did not carry its burden of proving the affirmative defense of bona fide error at trial.
Plaintiff Brian Collins alleged violations of Section 128(e) of the West Virginia Consumer Credit and Protection Act (“WVCCPA”) arising from debt collection phone calls he received from LTD after he gave it notice that he was represented by counsel. LTD defended the lawsuit by claiming that the phone calls were the result of a bona fide error. Pursuant to West Virginia Code § 46A-5-101(8), if a debt collector establishes that a violation of the WVCCPA was unintentional or the result of bona fide error of fact notwithstanding the maintenance of procedures reasonably adapted to avoid the violation, no liability can be imposed.
The lower court granted summary judgment on Collins’s affirmative claims. At a trial on LTD’s bona fide error defense, the collection agency testified that its policy was that “once [the collector] was informed that [respondent] was represented by counsel but … was unable to input counsel’s correct telephone number, the [collector] should have entered a substitute telephone number for [respondent] … to prevent any future calls.” LTD could not, however, point to where the policy was memorialized in its written policies and procedures. The circuit court held that LTD failed to carry its burden of proving the affirmative defense and entered a directed verdict.
On appeal, LTD argued that the lower court erred when it failed to require Collins to show that LTD intended to violate the statute and improperly interpreted West Virginia Code § 46A-5-101(8) as creating only one defense instead of two, thereby failing to recognize LTD’s defense that the calls were unintentional.
The West Virginia Supreme Court disagreed, weighing in on the WVCCPA’s bona fide error defense for the first time. First, the Supreme Court held that a plaintiff consumer has no burden to establish that the violation was intentional unless the statute specifically creates such a burden. Section 128(e) of the WVCCPA, unlike Section 125, does not require proof of intent. Next, citing the lower court’s finding that LTD did not claim the calls were unintentional, let alone produce evidence of such a defense, the Supreme Court held that the lower court did not improperly analyze the statute as providing only one possible affirmative defense. LTD failed to put on any evidence of the “unintentional” defense and could not carry its burden by pointing to the plaintiff’s failure to prove intent.
Finally, the Court affirmed that LTD failed to establish the second of the two possible defenses – the affirmative defense of bona fide error of fact. Although there was oral evidence of the existence of a policy, because the policy was not written, LTD failed to establish that it had any policy or procedure. Further, notwithstanding the absence of policies and procedures, the Court held that that “failing to follow procedures is not a factual error.”
In its decision, the West Virginia Supreme Court cited the lower court’s interpretation of the bona fide error defense as providing a “two-tiered approach” to proving the defense: “First, a defendant must prove that it maintains procedures reasonably adapted to avoid violating the law. Once the maintenance of reasonable procedures is proven by a preponderance of the evidence, the next tier of inquiry is whether the violation alleged was “unintentional” or the result of a “bona fide error of fact.” However, because LTD did not put on any evidence that the violation was unintentional, the Court was not required to squarely address the propriety of the lower court’s “two-tiered approach.” Accordingly, it remains unclear whether the West Virginia Supreme Court would read the statute to require the existence of “reasonable procedures” as a threshold to invoking either the “unintentional” or the “bona fide error of fact” prongs of the defense.