W.Va. Changes in Consumer Law Offer Help to Financial Companies | Bradley Arant Boult Cummings LLP


On March 29, in a development that to some extent relieves companies operating in West Virginia, particularly in the financial services industry, Governor Jim Justice signed amendments to the Credit and Consumer Protection Act of West Virginia, or WVCCPA.

These changes are part of a legislative trend in West Virginia since 2015 to provide more certainty and greater defensive rights for businesses, in light of a law that was previously one of the protective laws. most impactful consumers nationwide.

In short, the most recent changes appear to clarify certain provisions relating to attorney’s fees in the WVCCPA, better define the process for an advance notice to be processed and offered in response, and provide new limitations on the recovery of attorney’s fees. lawyer in the case of an offer of judgment or a written offer of settlement.

More specifically, this legislation provides defendants with a means to recover plaintiffs’ attorney fees in the event that a frivolous or bad faith claim is made against them, or in the event that an offer to settle has been rejected without justification. .

Of course, there are still significant litigation risks for companies, in particular
those in the financial services industry – doing business in West Virginia. But all in all, these changes should help provide additional certainty for businesses operating in the state and additional tools to fight litigation under this law.

A pro-business trend?

Historically, it is not trivial that West Virginia continues to add more business-friendly provisions to the WVCCPA. The law was originally enacted in 1974 and has historically been notoriously consumer-friendly in practice.

Its scope includes consumer loans, credit sales and rentals, as well as general consumer protection against unfair, deceptive and fraudulent acts or practices. Claims under the WVCCPA are consistently important, as some of its liability provisions provide for the award of actual damages and attorney’s fees, as in many other states, and statutory penalties of $ 1,000 per violation plus inflation.

In previous years, before recent changes, legal penalties even reached up to
$ 4,800 per offense. These amounts, and in particular the legal penalties, add up very quickly for the defendant companies.

In many ways, this law is unique among peer states in its potential seriousness due to the penalty provisions. As a result, it is often particularly difficult for businesses to defend themselves against claims filed under this law.

Previous changes to the WVCCPA, starting in 2015, started a trend away from the largely pro-consumer lean of this law that had existed for more than 40 years. Some of the most notable changes to the WVCCPA since then have included reducing legal penalties to $ 1,000 per violation, adjusted for inflation; the imposition of a prior notice requirement offering potential defendants the opportunity to remedy; the creation of an overall cap on penalties; and a reduction in the applicable limitation period.

Some of these changes brought immediate relief to defendants, especially with regard to changes in penalties under the law. But others, such as advance notice and the possibility of remedy, were often more useful to corporate defendants in theory than in practice.

Notable changes to the WVCCPA

The most recent WVCCPA changes appear to continue the trend of trying to level the playing field for businesses, especially creditors and debt collectors, in WVCCPA litigation. These changes, which will take effect in June, include the following.

Collection for frivolous claims and defenses, or other positions without substantial justification

Under the newly enacted provisions of this law, a winning party after the entry of a verdict or judgment may ask the court to determine whether the opposing party has presented a frivolous claim or defense, or has took an “other position” which lacks substantial justification. As part of this request, the party may request reasonable attorney fees and litigation costs.

A frivolous claim is defined as a claim which lacks substantial justification, is not made in good faith, is made in the absence of any reasonable belief that a court would accept the claim, or is made for the purpose of delaying or to harass another party. It is currently unclear what would constitute an “other position” – which is not a claim or defense – under this amendment.

When a party argues that a claim or defense is frivolous, it is particularly noteworthy that the court now “must” hold a separate two-part hearing in which it makes that decision and awards damages, the court. optionally. The damages to be awarded may include reasonable attorney fees and litigation costs.

In practice, claimants and defendants will now have to think twice before asserting claims or defenses, or taking certain positions, in cases that invoke the WVCCPA. For complainants in particular, the discovery of factual claims will be essential – especially since there was previously less incentive to conduct a thorough discovery before filing a complaint. For the defendants, the choice of affirmative defenses may also need to be more carefully considered than in previous years.

There is no doubt that this change is significant. For many years, defendants facing WVCCPA lawsuits filed for frivolous reasons have faced the difficult decision of simply paying a nuisance settlement or spending even more to defend a false claim.

Defendants often choose the safest route in this case, even when there is no factual basis for a claim to be made against them. After this amendment, defendants can begin to step back a little further and demonstrate to plaintiffs that they themselves bear risks if their claims lack a reasonable factual or legal basis. It will be fascinating to watch this dynamic unfold.

Notice of prosecution

A previous feature of the WVCCPA was a bifurcated pre-action notice system, where certain types of complaints were subject to the limitations of section 46A-5-108, and other types of complaints arising from acts or practices. allegedly disloyal and deceptive were subject to Section 46A. -6-106.

The new amendment provides a uniform way for claimants to convey their notices required to remedy before bringing an action under the WVCCPA, eliminating the latter requirement in the process and extending the old requirement to cover unfair or deceptive acts and other WVCCPA articles.

A change in the advance notice regime is less beneficial to defendants than other changes. Previously, a defendant could present to the jury the fact that he was attempting to resolve the case by making an offer of cure. The new amendment, while providing a more uniform overall regime for advance notice and redress, removes this possibility.

The impact of an offer of prior redress for defendants remains essentially unchanged. An offer of cure is admissible in a procedure aimed at obtaining the allocation of legal fees and costs following the entry of the judgment. If an offer of relief is made and a plaintiff’s recovery in litigation, excluding attorney’s fees and court costs, does not exceed the offer, the defendant is not not responsible for the plaintiff’s attorney fees and expenses.

Settlement or judgment offers

The newly enacted provisions describe a process for transmitting an offer to settle or an offer to adjudicate more than 30 days before trial. If this process is followed and an offer is made in writing to the plaintiff, this mechanism can provide legal fee relief for defendants.

The amendment to section 46A-5-109 sets out a series of conditions for an offer to be eligible under this rule. The offer must be made in writing, must indicate that it is made in accordance with section 46A-5-109, must identify the parties making and receiving the proposal, must identify the claim (s) that the proposal attempts to resolve, must indicate all the conditions, must indicate the total amount of the proposal and must be delivered by specific expedited means.

If a qualifying offer is made more than 30 days before trial, or 20 days in the case of a counter-offer, and rejected by the claimant, the claimant is not entitled to recover attorney’s fees or costs. from the date of the offer until the entry of judgment if the final judgment is less than 75% of the offer, subject to certain restrictions. This appears to be a powerful tool for defendants, as the threat of a continued increase in attorney fees during the trial could be mitigated in appropriate cases through a thoughtful offer of settlement.

The new changes, however, go one step further by potentially providing a remedy for defendants. If an offer is made, and the subsequent judgment does not exceed 75% of the offer, a defendant may also seek recovery from the court for its own reasonable costs and expenses incurred after the offer has been made.

This award is conditional on the court determining that the claimant acted without substantial justification or in good faith in rejecting the offer. This is a significant departure from the offer of judgment rules set out in West Virginia Civil Procedure Rule 68 and Federal Civil Procedure Rule 68, as there is now potential for fee recovery. lawyer in addition to fees.

From a practical standpoint, one of the most difficult nuances in arguing WVCCPA claims has always been the threat to continue paying attorney fees as a case is litigated. These parts of the recent changes will provide defendants with options to attempt to address this threat in appropriate cases.


The most recent changes to the WVCCPA are not limited to the above – and other changes, including how to calculate attorney fees using a so-called Lodestar analysis, are also likely to be significant. in disputes under this law.

The net result of these changes is that defendants facing a WVCCPA claim in a state of West Virginia or a federal court will now have additional tools to fight such claims and control the risk of escalating attorney fees. . In fact, these tools could even offer defendants a recourse to recoup their own attorney fees and expenses in some cases.

While these changes are only forward-looking in nature and only apply to cases filed after the effective date in June, it now appears that the WVCCPA will be slightly more business-friendly in the future. . It will be interesting to see how these new changes are interpreted and how aggressively defendants use these new tools to fight WVCCPA claims in the future.

Republished with permission. This article, “W.Va. Consumer Law Changes Offer Help For Finance Cos. », Was published by Law360 on May 5, 2021.

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