Cavalry SPV I, LLC v. Patrick Morrisey, Attorney General, etc. ( 2013 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2013 Term
FILED
November 13, 2013
released at 3:00 p.m.
RORY L. PERRY II, CLERK
No. 11-1564 SUPREME COURT OF APPEALS
OF WEST VIRGINIA
CAVALRY SPV I, LLC; CAVALRY SPV II, LLC;
CAVALRY INVESTMENTS, LLC; AND
CAVALRY PORTFOLIO SERVICES, LLC,
Defendants Below, Petitioners
V.
PATRICK MORRISEY,
ATTORNEY GENERAL,
Plaintiff Below, Respondent
Appeal from the Circuit Court of Kanawha County
Honorable James C. Stucky, Judge
Civil Action No. 10-C-994
AFFIRMED, IN PART; REVERSED, IN PART; AND REMANDED
AND
No. 12-0546
CAVALRY SPV I, LLC; CAVALRY SPV II, LLC;
CAVALRY INVESTMENTS, LLC; AND
CAVALRY PORTFOLIO SERVICES, LLC,
Defendants Below, Petitioners
V.
PATRICK MORRISEY,
ATTORNEY GENERAL,
Plaintiff Below, Respondent
Appeal from the Circuit Court of Kanawha County
Honorable James C. Stucky, Judge
Civil Action No. 10-C-994
AFFIRMED
Submitted: October 1, 2013
Filed: November 13, 2013
Don C.A. Parker Patrick Morrisey
Bruce M. Jacobs Attorney General
Spilman Thomas & Battle, PLLC Elbert Lin
Charleston, West Virginia Solicitor General
Attorneys for the Petitioners Norman Googel
Assistant Attorney General
Charleston, West Virginia
Attorneys for the Respondent
JUSTICE DAVIS delivered the Opinion of the Court.
SYLLABUS BY THE COURT
1. The Attorney General’s investigatory powers include the power to issue
investigative subpoenas pursuant to W. Va. Code § 46A-7-104 (1974) (Repl. Vol. 2006).
2. When the Attorney General files a cause of action against a person or
entity that is subject to an investigative subpoena, the Attorney General’s subpoena authority
ends as to those matters that form the basis of the complaint’s allegations, and the rules of
discovery applicable to civil proceedings generally provide the method by which the Attorney
General may continue to investigate the alleged wrongdoing. However, an investigative
subpoena survives the Attorney General’s filing of a lawsuit when the subpoena, in whole
or in part, pertains to matters that do not form the basis of the subject complaint.
3. Once the Attorney General has instituted a civil action against a person
or entity to enjoin unlawful conduct, the Attorney General may also seek temporary relief
against the person or entity during the pendency of such proceedings in accordance with
W. Va. Code § 46A-7-110 (1974) (Repl. Vol. 2006).
i
Davis, Justice:
The petitioners herein and defendants below, Cavalry SPV I, LLC (“SPV I”);
Cavalry SPV II, LLC (“SPV II”); Cavalry Investments, LLC (“CI”); and Cavalry Portfolio
Services, LLC (“CPS”)1 appeal from two orders entered by the Circuit Court of Kanawha
County pertaining to the enforcement of an investigative subpoena issued against them by
the respondent herein and plaintiff below, the Attorney General of West Virginia, Patrick
Morrisey2 (“Attorney General”). This Court consolidated the two appeals for purposes of
“argument, consideration[,] and decision” by orders entered April 24, 2013.
In Case Number 11-1564, the Petitioners appeal from an order entered October
7, 2011, by the Circuit Court of Kanawha County. By that order, the circuit court denied the
Petitioners’ motion to dismiss the investigative subpoena; granted the Attorney General’s
motion for a temporary injunction enjoining the Petitioners from collecting debts they had
acquired before they were licensed in West Virginia to do so; compelled the Petitioners to
comply with the investigative subpoena; and ordered the Petitioners to send a letter to
affected consumers. On appeal to this Court, the Petitioners challenge the validity and
1
Where context permits, the named petitioners will be referred to collectively
as “the Petitioners.”
2
While this case was pending before the Court, Patrick Morrisey was sworn
into office as Attorney General for the State of West Virginia, replacing former Attorney
General Darrell V. McGraw, Jr. See W. Va. R. App. Proc. 41(c) (explaining procedure for
substitution of parties who hold public office).
1
enforceability of the Attorney General’s investigative subpoena. Upon a review of the
parties’ arguments, the appendix record submitted for appellate consideration, and the
pertinent authorities, we affirm, in part, and reverse, in part, the circuit court’s October 7,
2011, order. In summary, we find that the Attorney General’s investigatory powers include
the power to issue investigative subpoenas pursuant to W. Va. Code § 46A-7-104 (1974)
(Repl. Vol. 2006) and that the subject investigative subpoena was validly issued in the case
sub judice in accordance with the Attorney General’s statutory authority to conduct
investigations. We further conclude that when the Attorney General files a cause of action
against a person or entity that is subject to an investigative subpoena, the Attorney General’s
subpoena authority ends as to those matters that form the basis of the complaint’s allegations,
and the rules of discovery applicable to civil proceedings generally provide the method by
which the Attorney General may continue to investigate the alleged wrongdoing. However,
an investigative subpoena survives the Attorney General’s filing of a lawsuit when the
subpoena, in whole or in part, pertains to matters that do not form the basis of the subject
complaint. Therefore, the Attorney General’s investigative subpoena in the case sub judice
is enforceable as to matters that are not encompassed by the Attorney General’s pending civil
action against the Petitioners. Accordingly, we reverse that portion of the circuit court’s
order that enforced the entirety of the Attorney General’s investigative subpoena prior to
determining whether any of the matters of inquiry addressed therein are now subject to civil
discovery in the pending enforcement proceedings and remand this case to the circuit court
2
to conduct such an analysis. We affirm the remainder of the circuit court’s rulings
preliminarily upholding the Attorney General’s investigative subpoena.
In Case Number 12-0546, the Petitioners appeal from an order entered March
20, 2012, by the Circuit Court of Kanawha County. By that order, the circuit court denied
the Petitioners’ motion to dissolve or modify the aforementioned temporary injunction;
refused the Attorney General’s motion for stay of discovery pending the Petitioners’
compliance with the Attorney General’s investigative subpoena; deemed that portion of the
court’s October 7, 2011, order requiring the Petitioners to comply with the Attorney
General’s investigative subpoena to be a final and appealable order; and provided language
to be included in the Petitioners’ letter to affected consumers. On appeal to this Court, the
Petitioners contest the circuit court’s decision to uphold its imposition of a temporary
injunction. Upon a review of the parties’ arguments, the appendix record submitted for
appellate consideration, and the pertinent authorities, we affirm the circuit court’s March 20,
2012, order. In summary, we find that once the Attorney General has instituted a civil action
against a person or entity to enjoin unlawful conduct, the Attorney General may also seek
temporary relief against the person or entity during the pendency of such proceedings in
accordance with W. Va. Code § 46A-7-110 (1974) (Repl. Vol. 2006). We further conclude
that the temporary injunction imposed upon the Petitioners herein was properly issued in
compliance with this Court’s prior holding in Syllabus point 2 of State ex rel. McGraw v.
3
Imperial Marketing, 196 W. Va. 346, 472 S.E.2d 792 (1996).3
I.
FACTUAL AND PROCEDURAL HISTORY
The facts giving rise to the instant controversies are not generally disputed by
the parties. All of the Petitioners herein are engaged in various aspects of the collection of
consumer debts, which include purchasing charged-off debts that are deemed to be
uncollectible by the original creditors and attempting to collect these debts from consumer
debtors.4 The subject investigation originated when the Consumer Protection Division of the
Attorney General’s Office received information and approximately sixteen complaints from
affected consumers indicating that certain5 of the Petitioners had engaged in conduct in
violation of the consumer protection laws of this State.6 Based upon this information, as well
as the Attorney General’s desire to determine whether the alleged violations of the West
Virginia Consumer Credit and Protection Act had been committed, and, if so, to prevent
3
See Section III.B.2., infra, for the full text of Syllabus point 2 of State ex rel.
McGraw v. Imperial Marketing, 196 W. Va. 346, 472 S.E.2d 792 (1996).
4
In their brief in Case Number 11-1564, the Petitioners describe their individual
roles in this debt collection process as follows: “SPV I and SPV II were purchasers and
holders of credit card debt”; CI “is a purchaser and holder of different types of obligations,
including credit card debt”; and “CPS is a collection agency[.]”
5
See note 10, infra.
6
For further discussion of the nature of the alleged violations, see Section
III.A.3., infra.
4
further violations thereof, the Attorney General issued the subject investigative subpoena on
January 25, 2010. Although all four Petitioners were referenced within the body of the
investigative subpoena, only “CAVALRY SPV I, LLC and CAVALRY SPV II, LLC” were
named in the style of the subpoena and in the accompanying letter detailing the
“Investigation of Cavalry SPV I and II.”7 The Petitioners filed numerous objections in
response to the Attorney General’s investigative subpoena. At this juncture, the parties differ
as to whether the named Petitioners provided information requested by the investigative
subpoena; however, it is clear that any such compliance did not respond completely to the
subpoena’s demands.
Thereafter, on June 3, 2010, the Attorney General filed a civil action in the
Circuit Court of Kanawha County against all four Petitioners (1) seeking an order compelling
the named Petitioners to comply with the investigative subpoena and (2) alleging violations
of the West Virginia Consumer Credit and Protection Act, W. Va. Code § 46A-1-101 et seq.
See generally W. Va. Code § 46A-7-108 (1974) (Repl. Vol. 2006) (authorizing Attorney
General to bring action to enjoin violations of chapter); W. Va. Code § 46A-7-111 (1999)
(Repl. Vol. 2006) (permitting Attorney General to bring civil actions against creditors). As
to the alleged statutory violations, the Attorney General also sought temporary relief pursuant
to W. Va. Code § 46A-7-110 (1974) (Repl. Vol. 2006) to enjoin the Petitioners from
7
See infra notes 8 & 10.
5
continuing their alleged misconduct during the pendency of the enforcement proceedings.
The Petitioners moved to dismiss the Attorney General’s complaint.
By order entered October 7, 2011, which order forms the basis of Case Number
11-1564 in this Court, the circuit court denied the Petitioners’ motion to dismiss the
complaint and granted the Attorney General’s request for temporary relief. In pertinent part,
the court ruled:
The Attorney General’s motion for temporary injunction
against the LLC Defendants should be, and it hereby is,
GRANTED against SPV I, SPV II, and Calvary [sic]
Investments, but not CPS.[8]
The Defendants SPV I, SPV II, and Calvary [sic]
Investments should be, and they hereby are, ENJOINED from
engaging in any actions to collect debts acquired prior to the
date that they became licensed, including but not limited to, (i)
collecting or continuing to collect payments arising from oral or
written agreements; (ii) prosecuting or continuing to prosecute
pending collection suits; (iii) collecting or continuing to collect
payments arising from judgments already entered in lawsuits;
and (iv) placing or continuing to place liens or attachments on
personal or real property, including garnishment of wages,
arising from judgments already entered in lawsuits. In addition,
SPV I, SPV II, and Calvary [sic] Investments are hereby
ORDERED to release all garnishments of wages and liens or
8
The circuit court found that three of the Petitioners did not become licensed
and bonded with the West Virginia State Tax Department to collect debts until after the
Attorney General had filed his complaint against them: SPV I (October 13, 2010), SPV II
(October 12, 2010), and CI (October 7, 2010). By contrast, the court found that “CPS was
licensed and bonded with the State Tax Department to collect debts at all relevant times in
question.”
6
attachments filed against real or personal property prior to the
time that they became licensed to collect debts in West Virginia.
Notwithstanding all of the foregoing, SPV I, SPV II, and
Calvary [sic] Investments may receive or continue to receive
payments made voluntarily by consumers to them without
solicitation or effort on their part. Provided, however, all such
money received shall be placed in an escrow account and the
LLC Defendants shall make appropriate periodic reports
accounting for such funds to the Attorney General.
The Attorney General’s request for an Order compelling
the LLC Defendants to comply with his investigative subpoena
should be, and it hereby is, GRANTED.
(Footnote added). Finally, the order directed the Petitioners to send a letter to all affected
consumers
informing them of the existence of this Order so that they may
decide whether to voluntarily continue to make payments to
these entities as a result of any judgments, settlement
agreements, or other collection activities initiated prior to the
time that they became licensed to collect debts in West Virginia.
From this order, the Petitioners appeal to this Court in Case Number 11-1564.
Following the circuit court’s order restraining the Petitioners’ debt collection
activities through its imposition of a temporary injunction, the Petitioners moved to dissolve
or otherwise modify the terms of the temporary injunction. By order entered March 20, 2012,
which order forms the basis of Case Number 12-0546 in this Court, the circuit court denied
the Petitioners’ motion to dissolve or modify the temporary injunction. In rendering its
ruling, the circuit court also declared final that portion of its earlier order compelling the
7
Petitioners to comply with the Attorney General’s investigative subpoena so as to permit the
Petitioners to file an appeal therefrom. The court further clarified the language to be
included in the aforementioned letter to affected consumers. In addition, the circuit court
denied the Attorney General’s request to stay discovery pending the Petitioners’ compliance
with the investigative subpoena thereby allowing discovery to proceed in the underlying civil
action. Finally, with regard to the Petitioners’ subpoena compliance, the court recognized
that,
[i]nasmuch as the parties have advised the Court that they
may have reached a tentative agreement to resolve their dispute
concerning compliance with the subpoena, the parties’
respective motions pertaining to compliance with the subpoena
will be held in abeyance to afford the parties an opportunity to
finalize and perform the Agreement or to request further
assistance from the Court.
From this order, the Petitioners appeal to this Court in Case Number 12-0546.9
9
After the circuit court rendered these rulings, it appears that the Attorney
General has continued to seek the Petitioners’ compliance with the terms of the investigative
subpoena. In this regard, the Attorney General has filed a “Petition for Contempt” against
the Petitioners on May 30, 2012, and an “Amended Petition for Contempt” against the
Petitioners on July 5, 2012. Insofar as no corresponding orders of the circuit court holding
the Petitioners in contempt, or failing to hold the Petitioners in contempt, for their alleged
failure to comply with the Attorney General’s investigative subpoena have been appealed
from herein, we need not consider these continuing proceedings in deciding the cases sub
judice.
8
II.
STANDARD OF REVIEW
Given that our consideration of the assigned errors is governed by specific
standards of review applicable to each issue, we will set forth the corresponding standards
in our discussion thereof.
III.
DISCUSSION
Because each of the instant appeals raises distinct issues, we will consider each
case separately.
A. Case Number 11-1564
In Case Number 11-1564, the Petitioners contend that the circuit court erred
by (1) determining that the Attorney General’s investigative subpoena is valid despite the
Attorney General’s failure to hold an administrative hearing prior to its issuance, the lack of
probable cause to support the subpoena, and the subpoena’s inclusion of unauthorized
interrogatories and (2) enforcing the investigative subpoena after the Attorney General had
filed a lawsuit against the Petitioners.10
10
The Petitioners additionally assigned error to the circuit court’s ruling
whereby it purportedly enforced the Attorney General’s investigative subpoena against all
four of the Petitioners herein, rather than requiring only the two Petitioners actually named
(continued...)
9
1. Standard of review. At issue in this appeal is the authority of the Attorney
General of West Virginia to issue investigative subpoenas and the correctness of the circuit
court’s order enforcing the same. Insofar as the Attorney General’s investigatory authority
is created and defined by statute, we accord a plenary review to the circuit court’s
interpretation thereof: “Interpreting a statute or an administrative rule or regulation presents
a purely legal question subject to de novo review.” Syl. pt. 1, Appalachian Power Co. v.
State Tax Dep’t of West Virginia, 195 W. Va. 573, 466 S.E.2d 424 (1995). Accord Syl. pt.
1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415 (1995) (“Where the issue
on an appeal from the circuit court is clearly a question of law or involving an interpretation
of a statute, we apply a de novo standard of review.”).
Moreover, we apply a three-part standard of review to the circuit court’s order
finding the Attorney General’s investigative subpoena to be valid and enforceable against the
Petitioners:
In reviewing challenges to the findings and conclusions
of the circuit court, we apply a two-prong deferential standard
of review. We review the final order and the ultimate
disposition under an abuse of discretion standard, and we review
10
(...continued)
in the style of the subpoena to comply with its terms. Counsel for the Attorney General
represented during the oral argument of this case before this Court that the subpoena would
be enforced only against those Petitioners who are specifically named in the style of the
investigative subpoena. Because the Attorney General’s concession resolves this assignment
of error, we need not consider it further.
10
the circuit court’s underlying factual findings under a clearly
erroneous standard. Questions of law are subject to de novo
review.
Syl. pt. 2, Walker v. West Virginia Ethics Comm’n, 201 W. Va. 108, 492 S.E.2d 167 (1997).
Our consideration of the Petitioners’ assignments of error will be guided by these standards.
2. Investigatory power of the Attorney General. Although the Petitioners
contend that the circuit court erred in enforcing the subject investigative subpoena, certain
of their contentions are more appropriately considered in the context of the scope of the
Attorney General’s statutory authority to conduct investigations in the first instance.
Specifically, whether the Attorney General was required to hold an administrative hearing
before issuing the subject subpoena and whether the Attorney General could request
information by interrogatory may be determined by examining the Legislature’s definition
of the Attorney General’s investigatory authority.
At the outset, we note that “[t]he powers and duties of the Attorney General
are specified by the constitution and by rules of law prescribed pursuant thereto.” Syl. pt. 1,
Manchin v. Browning, 170 W. Va. 779, 296 S.E.2d 909 (1982), overruled on other grounds
by State ex rel. Discover Fin. Servs., Inc. v. Nibert, 231 W. Va. 227, 744 S.E.2d 625 (2013).11
11
In Syllabus point 3, in part, of State ex rel. Discover Financial Services, Inc.
v. Nibert, 231 W. Va. 227, 744 S.E.2d 625 (2013), we recognized that the Attorney General
(continued...)
11
Stated otherwise, “the Attorney General[’s] . . . power . . . is conferred by law through statute
and the Constitution.” State ex rel. Fahlgren Martin, Inc. v. McGraw, 190 W. Va. 306, 312,
438 S.E.2d 338, 344 (1993). In the case sub judice, the Attorney General derives his power
to investigate possible violations of the West Virginia Consumer Credit and Protection Act
from W. Va. Code § 46A-7-104 (1974) (Repl. Vol. 2006), which provides, in pertinent part:
(1) If the attorney general has probable cause to believe
that a person has engaged in an act which is subject to action by
the attorney general, he may, and shall upon request of the
commissioner, make an investigation to determine if the act has
been committed and, to the extent necessary for this purpose,
may administer oaths or affirmations, and, upon his own motion
or upon request of any party, may subpoena witnesses, compel
their attendance, adduce evidence, and require the production of
any matter which is relevant to the investigation, including the
existence, description, nature, custody, condition and location of
any books, records, documents or other tangible things and the
identity and location of persons having knowledge of relevant
facts, or any other matter reasonably calculated to lead to the
discovery of admissible evidence.
....
(3) Upon failure of a person without lawful excuse to
obey a subpoena or to give testimony and upon reasonable
notice to all persons affected thereby, the attorney general may
apply to the circuit court of the county in which the hearing is to
be held for an order compelling compliance.
To ascertain whether a hearing is a necessary prerequisite to the issuance of an investigative
11
(...continued)
“retains inherent common law powers, when not expressly restricted or limited by statute.”
Insofar as the authority of the Attorney General in the case sub judice is derived from the
governing statutes, we need not consider the extent of his common law authority.
12
subpoena and whether the Attorney General has the authority to request information by
interrogatory, we must examine the governing statutory language.
The first step of statutory construction requires an examination of the
Legislature’s intent in enacting the subject statute: “[t]he primary object in construing a
statute is to ascertain and give effect to the intent of the Legislature.” Syl. pt. 1, Smith v.
State Workmen’s Comp. Comm’r, 159 W. Va. 108, 219 S.E.2d 361 (1975). “When a statute
is clear and unambiguous and the legislative intent is plain, the statute should not be
interpreted by the courts, and in such case it is the duty of the courts not to construe but to
apply the statute.” Syl. pt. 5, State v. General Daniel Morgan Post No. 548, Veterans of
Foreign Wars, 144 W. Va. 137, 107 S.E.2d 353 (1959). Accord Syl. pt. 2, State v. Epperly,
135 W. Va. 877, 65 S.E.2d 488 (1951) (“A statutory provision which is clear and
unambiguous and plainly expresses the legislative intent will not be interpreted by the courts
but will be given full force and effect.”). In other words, “[w]here the language of a statute
is clear and without ambiguity the plain meaning is to be accepted without resorting to the
rules of interpretation.” Syl. pt. 2, State v. Elder, 152 W. Va. 571, 165 S.E.2d 108 (1968).
Accord Appalachian Power Co. v. State Tax Dep’t of West Virginia, 195 W. Va. 573, 587,
466 S.E.2d 424, 438 (1995) (“We look first to the statute’s language. If the text, given its
plain meaning, answers the interpretive question, the language must prevail and further
inquiry is foreclosed.”).
13
Applying these rules of statutory construction to the subject legislative
provision, we find the language of W. Va. Code § 46A-7-104 to be plain and unambiguous
in its intention to permit the Attorney General to issue an investigative subpoena.
Accordingly, we hold that the Attorney General’s investigatory powers include the power to
issue investigative subpoenas pursuant to W. Va. Code § 46A-7-104 (1974) (Repl. Vol.
2006). Considering the questions posed by the Petitioners, we further conclude that the plain
language of W. Va. Code § 46A-7-104 definitively answers and dispenses with both the
Petitioners’ contention that an administrative hearing is a necessary prerequisite to the
Attorney General’s issuance of an investigative subpoena and the Petitioners’ assertion that
interrogatories are not included within the scope of the Attorney General’s investigatory
authority.
In their arguments before this Court, the Petitioners contend that W. Va. Code
§ 46A-7-104(1) requires the Attorney General to hold an administrative hearing prior to the
issuance of an investigative subpoena. We disagree. The language of this provision does not
impose upon the Attorney General an obligation to hold an administrative hearing incident
to the issuance of an investigative subpoena. In fact, the word “hearing” does not appear
anywhere in the language of W. Va. Code § 46A-7-104(1). While it is plausible to read the
statute as contemplating that a hearing may be held at some point in time to facilitate certain
processes related to the subpoena’s execution, e.g., the administration of oaths or
14
affirmations and the compulsory attendance of witnesses, W. Va. Code § 46A-7-104(1)
simply does not require the Attorney General to hold a hearing as a prerequisite to the
issuance of an investigative subpoena.
“‘Courts must presume that a legislature says in a statute what it means and
means in a statute what it says there.’” Martin v. Randolph Cnty. Bd. of Educ., 195 W. Va.
297, 312, 465 S.E.2d 399, 414 (1995) (quoting Connecticut Nat’l Bank v. Germain, 503 U.S.
249, 253-54, 112 S. Ct. 1146, 1149, 117 L. Ed. 2d 391 (1992)). Moreover, “[i]t is not for this
Court arbitrarily to read into [a statute] that which it does not say. Just as courts are not to
eliminate through judicial interpretation words that were purposely included, we are obliged
not to add to statutes something the Legislature purposely omitted.” Banker v. Banker, 196
W. Va. 535, 546-47, 474 S.E.2d 465, 476-77 (1996) (citations omitted).
We are confident that if the Legislature had intended to establish a precise and
definite requirement that a hearing be held prior to the issuance of an investigative subpoena,
the Legislature would have clearly stated the necessity of such a procedure as it did when it
explained the process for the Attorney General to seek a party’s compliance with an
investigative subpoena. In this regard, the Legislature specifically has stated in W. Va. Code
§ 46A-7-104(3) that,
[u]pon failure of a person without lawful excuse to obey
a subpoena or to give testimony and upon reasonable notice to
15
all persons affected thereby, the attorney general may apply to
the circuit court of the county in which the hearing is to be held
for an order compelling compliance.
(Emphasis added). This statutory language plainly directs that a hearing is required before
an order compelling compliance with an investigative subpoena may be issued. This
language does not, however, address the need for a hearing to issue an investigative subpoena
in the first instance. Therefore, we conclude that the Attorney General is not required to hold
an administrative hearing prior to the issuance of an investigative subpoena pursuant to
W. Va. Code § 46A-7-104.
Likewise, we reject the Petitioners’ contention that the Attorney General’s
investigatory authority does not encompass the use of interrogatories. The plain language
of W. Va. Code § 46A-7-104(1) permits the Attorney General to issue an investigative
subpoena that
require[s] the production of any matter which is relevant to the
investigation, including the existence, description, nature,
custody, condition and location of any books, records,
documents or other tangible things and the identity and location
of persons having knowledge of relevant facts, or any other
matter reasonably calculated to lead to the discovery of
admissible evidence.
Given that the investigative subpoena can request a party to provide specific information,
e.g., through description, identity, and location details, it stands to reason that the Attorney
General’s investigatory authority contemplates the use of questionnaires, or interrogatories,
16
to specify the type of information sought through the subpoena. The use of interrogatories
in this manner also benefits the party subject to the subpoena by directing his/her attention
to the specific type of information sought by the subpoena. By focusing upon the precise
information sought, the interrogatories also instruct the subject party as to what information
he/she should provide to comply with the subpoena’s terms. Therefore, we find that the
Attorney General did not exceed his investigatory authority by issuing interrogatories in
conjunction with the investigative subpoena issued to the Petitioners in this case.
3. Validity and enforceability of investigative subpoena. We next turn to
the Petitioners’ contentions that the investigative subpoena issued in this case was neither
valid nor enforceable. Whether an investigative subpoena is valid and enforceable is an
interrelated inquiry insofar as a judicial tribunal cannot enforce an investigative subpoena
that is not valid in the first instance. In the case sub judice, the Petitioners contend that the
Attorney General’s investigative subpoena was not valid because no probable cause existed
to support its issuance. Furthermore, the Petitioners argue that the circuit court erred by
enforcing the Attorney General’s investigative subpoena after the Attorney General had filed
the instant lawsuit against them.
Pursuant to W. Va. Code § 46A-7-104(1), the existence of probable cause is
a necessary prerequisite to the issuance of an investigative subpoena: “[i]f the attorney
17
general has probable cause to believe that a person has engaged in an act which is subject
to action by the attorney general, he may . . . make an investigation to determine if the act
has been committed[.]”12 (Emphasis added). Probable cause to support the issuance of
“an investigative subpoena . . . exists when facts and
circumstances . . . would warrant an honest belief in the mind of
a reasonable and prudent person that an offense has been, or is
being, committed and that . . . information relative to the
commission of that offense is in the possession of the person or
institution to whom the subpoena is directed.”
State v. Fregien, 331 Mont. 18, 20-21, 127 P.3d 1048, 1050 (2006) (quoting State v. Nelson,
283 Mont. 231, 243-44, 941 P.2d 441, 449 (1997) (additional citation omitted)). Accord
State v. Bilant, 307 Mont. 113, 121, 36 P.3d 883, 888 (2001) (finding probable cause for the
issuance of an investigative subpoena to exist when there are “sufficient facts to support a
determination that there is a probability of criminal activity” (citation omitted)). See also
People v. Mason, 989 P.2d 757, 761 (Colo. 1999) (holding that “probable cause for a
subpoena . . . requires a reasonable likelihood that the evidence sought exists and that there
is a nexus between the [person to whom, or entity to which, the subpoena is directed] and the
[alleged] crime”). Cf. Syl. pt. 4, Feathers v. West Virginia Bd. of Med., 211 W. Va. 96, 562
12
One other state also has promulgated a similar statute requiring the existence
of probable cause to support the issuance of an investigative subpoena to determine whether
the state’s consumer protection laws have been, or are being, violated. See Wyo. Stat. Ann.
§ 40-12-112(a) (West 2000) (“If, by inquiry the enforcing authority or as a result of
complaints, the enforcing authority has probable cause to believe that a person has engaged
in, or is engaging in, an act or practice that violates this act [Wyoming Consumer Protection
Act], investigators designated by the Wyoming attorney general may administer oaths and
affirmations, subpoena witnesses or matter, and collect evidence.”).
18
S.E.2d 488 (2001) (“A finding that probable cause exists to substantiate a complaint made
under the Medical Practice Act is not a necessary prerequisite for the Board of Medicine to
issue a subpoena or subpoena duces tecum under W. Va. Code, 30-3-7(a)(2) [1980].”).13
Under the facts of the case sub judice, we find that the Attorney General amply
demonstrated probable cause to believe that the Petitioners had violated, or were violating,
the provisions of the West Virginia Consumer Credit and Protection Act, W. Va. Code
§ 46A-1-101 et seq., and that the Petitioners possessed information relevant to such inquiry.
13
It is important to note that the probable cause prerequisite to the issuance of
the Attorney General’s investigative subpoena in this case is established by W. Va. Code
§ 46A-7-104(1), which specifically requires the existence of “probable cause.” By contrast,
investigatory subpoenas issued by federal administrative agencies, and some state
administrative agencies, do not require the existence of probable cause. See, e.g., Becker v.
Kroll, 494 F.3d 904, 916 (10th Cir. 2007) (“Under Fourth Amendment law, an investigatory
. . . subpoena is not subject to . . . probable cause requirements[.]” (citing See v. City of
Seattle, 387 U.S. 541, 544, 87 S. Ct. 1737, 1740, 18 L. Ed. 2d 943 (1967))); Hartford Cnty.
Sheriffs Dep’t Cmtys. Charities Ass’n v. Blumenthal, 47 Conn. Supp. 447, 463, 806 A.2d
1158, 1171 (2001) (“The protections of a finding of probable cause, supported by oath or
affirmation, simply do not apply in the context of an . . . investigatory subpoena.” (citing
Oklahoma Press Publ’g Co. v. Walling, 327 U.S. 186, 208-09, 66 S. Ct. 494, 505-06, 90
L. Ed. 614 (1946))); Francis v. Accardo, 602 So. 2d 1066, 1069 (La. Ct. App. 1992)
(“[A]dministrative agencies need no probable cause to exercise their investigative powers[.]”
(citation omitted)); In re Suffolk Cnty. Ethics Comm’n, 909 N.Y.S.2d 339, 342, 29 Misc. 3d
1136, 1139 (N.Y. Sup. Ct. 2010) (“[T]he factual basis required to sustain an investigative
subpoena issued by a government agency need only be preliminary in nature as the agency
is not required to demonstrate . . . probable cause that wrong doing has occurred or will be
disclosed[.]” (citations omitted)). Because the governing statute herein expressly requires
the existence of probable cause as a necessary prerequisite to the Attorney General’s issuance
of an investigative subpoena, we find the above-referenced authorities neither persuasive nor
instructive to our analysis.
19
Prior to his issuance of the investigative subpoena in January 2010, the Attorney General had
received several complaints and other information indicating that certain14 of the Petitioners
were collecting consumer debts without a license15 or a surety bond16 and suggesting that they
may have engaged in, or may be engaging in, other improper debt collection practices.17
Thus, prior to issuing the subject investigative subpoena, the Attorney General had “an
honest belief . . . that an offense had been, or is being, committed”18 and possessed sufficient
information to specifically identify the various statutes that potentially had been violated.
Moreover, the Attorney General directed the investigative subpoena to those Petitioners
believed to possess “information relative to the commission of that offense.”19 Contrary to
the Petitioners’ assertions, the Attorney General was not required to possess concrete proof
of the specific alleged wrongdoing or to describe in detail the nature of the potentially
14
See notes 8 & 10, supra.
15
See W. Va. Code § 47-16-4(a) (1973) (Repl. Vol. 2006) (requiring collection
agency to possess license).
16
See W. Va. Code § 47-16-4(b) (1973) (Repl. Vol. 2006) (requiring collection
agency to file surety bond).
17
These other improper debt collection actions, which, if substantiated,
constitute violations of the West Virginia Consumer Credit and Protection Act, include
collecting debts for unlicensed debt purchasers (W. Va. Code § 46A-2-127(e) (1997) (Repl.
Vol. 2006)); repeatedly contacting consumers who do not owe a debt (W. Va. Code § 46A-2­
127(d) (1997) (Repl. Vol. 2006) and W. Va. Code § 46A-2-128(d) (1990) (Repl. Vol. 2006));
and harassing consumers by telephone (W. Va. Code § 46A-2-125 (1974) (Repl. Vol. 2006)).
18
Fregien, 331 Mont. at 21, 127 P.3d at 1050 (internal quotations and citation
omitted).
19
Id.
20
nefarious misconduct at the time he issued his investigative subpoena. Rather, the purpose
of an investigative subpoena is precisely as its name implies: to investigate. Such an
investigation is designed to ascertain whether a violation of the Act has, in fact, occurred20
so as to permit the filing of an enforcement proceeding against the alleged offender. In short,
“[t]he investigatory power of the Attorney General . . . authoriz[es the Attorney General] to
investigate prior to making any charges of a violation of the law.” State ex rel. Palumbo v.
Graley’s Body Shop, Inc., 188 W. Va. 501, 505 n.2, 425 S.E.2d 177, 181 n.2 (1992). The
United States Supreme Court has summarized such investigatory authority as
the power to get information from those who best can give it and
who are most interested in not doing so. . . . [A]n administrative
agency charged with seeing that the laws are enforced may . . .
have and exercise powers of original inquiry. It has a power of
inquisition . . . [and] can investigate merely on suspicion[21] that
the law is being violated, or even just because it wants assurance
that it is not.
United States v. Morton Salt Co., 338 U.S. 632, 642-43, 70 S. Ct. 357, 363-64, 94 L. Ed. 401
(1950) (footnote added).
Probable cause for the issuance of an investigative subpoena, then, does not
anticipate information of sufficient detail as would permit the successful prosecution of an
20
See W. Va. Code § 46A-7-104(1).
21
See supra note 13 discussing differences between probable cause standard
applicable to investigative subpoenas issued by the Attorney General in this State and lesser
standard applicable to administrative subpoenas issued by federal, and some state, agencies.
21
enforcement proceeding. Rather, the Attorney General’s investigative subpoena is designed
to be issued when probable cause exists to believe a violation of the consumer protection
laws of this State has occurred and serves to facilitate the Attorney General’s investigation
of such alleged wrongdoing by producing information that would support the filing of an
enforcement action against the alleged violator. Under the facts of the case sub judice, we
find that the Attorney General had probable cause to issue the subject investigatory subpoena
and that the circuit court properly upheld the investigatory subpoena as valid.
We next consider whether the circuit court properly enforced the Attorney
General’s investigative subpoena. Pursuant to W. Va. Code § 46A-7-104, the Attorney
General is authorized to seek an order compelling compliance with an investigative
subpoena: “[u]pon failure of a person without lawful excuse to obey a subpoena . . . and upon
reasonable notice to all persons affected thereby, the attorney general may apply to the circuit
court of the county in which the hearing is to be held for an order compelling compliance.”
W. Va. Code § 46A-7-104(3). Whether a court should enforce an administrative subpoena
is governed by satisfaction of the criteria we enumerated in Syllabus point 1 of State ex rel.
Hoover v. Berger, 199 W. Va. 12, 483 S.E.2d 12 (1996):
In order to obtain judicial backing for the enforcement of
an administrative subpoena, the agency must prove that (1) the
subpoena is issued for a legislatively authorized purpose, (2) the
information sought is relevant to the authorized purpose, (3) the
information sought is not already within the agency’s
possession, (4) the information sought is adequately described,
22
and (5) proper procedures have been employed in issuing the
subpoena. If these requirements are satisfied, the subpoena is
presumably valid and the burden shifts to those opposing the
subpoena to demonstrate its invalidity. The party seeking to
quash the subpoena must disprove through facts and evidence
the presumed relevance and purpose of the subpoena.
Applying these elements to the facts of the present case, we find that the
Attorney General has satisfied the elements necessary to obtain judicial backing of his
investigative subpoena. Unquestionably, the investigative subpoena was issued for a purpose
specifically authorized by the Legislature, i.e., to investigate alleged violations of the West
Virginia Consumer Credit and Protection Act, and the material sought thereunder was
designed to elicit information as to whether such statutory violations had, in fact, occurred.
Moreover, at the time the Attorney General issued his investigative subpoena, he did not yet
have the information in hand that he sought to obtain regarding the commission of the alleged
violations, and the subpoena, itself, is sufficiently detailed to inform the parties subject
thereto of the type of material that is requested thereunder. Finally, as noted in the preceding
section, the Attorney General properly complied with the mandates of W. Va. Code § 46A-7­
104(1) in issuing the investigative subpoena.
The investigative subpoena being thus “presumably valid” under Hoover, the
Petitioners now bear the burden of proving the subpoena is invalid by challenging its
“presumed relevance and purpose.” Syl. pt. 1, in part, Hoover, 199 W. Va. 12, 483 S.E.2d
23
12. On appeal to this Court, the Petitioners contend that it is improper for the Attorney
General to seek the enforcement of his investigative subpoena after he has filed a civil action
against them alleging they have committed the same misconduct that he sought to investigate
through the subpoena. Had the Attorney General sought to enforce his investigative
subpoena at an earlier juncture, our inquiry likely would end here with a ratification of the
circuit court’s enforcement order. See Citizens’ Aide/Ombudsman v. Grossheim, 498 N.W.2d
405, 407 (Iowa 1993) (noting that “[e]nforcement [of investigative subpoena] is the rule, not
the exception, so long as [test for judicial enforcement thereof] is met” (citations omitted)).
However, because the Attorney General sought to enforce his investigative subpoena in
conjunction with the filing of a civil action against the same parties who were subject to the
subpoena and because, through this civil action, the Attorney General sought to enforce the
same statutory provisions the possible violation of which formed the impetus for the issuance
of his investigative subpoena, we find the Petitioners’ point to be well taken. We thus
believe it is necessary to clarify the extent to which the investigative subpoena may be
enforced in this particular procedural context.
As we noted in the foregoing discussion, “[t]he investigatory power of the
Attorney General . . . authoriz[es the Attorney General] to investigate prior to making any
charges of a violation of the law.” Graley’s Body Shop, 188 W. Va. at 505 n.2, 425 S.E.2d
at 181 n.2 (emphasis added). Once a complaint has been filed formally charging a party with
24
statutory misconduct, however, the Attorney General no longer may rely upon his powers of
investigation to elicit information to establish those specific consumer protection violations
that form the basis of the complaint. Rather, upon the commencement of enforcement
proceedings through the filing of a civil action by the Attorney General, the Attorney
General’s investigatory powers end as to those matters addressed in the complaint and are
supplanted by the rules of discovery applicable to civil proceedings generally.22 This
reciprocal right of discovery in civil actions is described generally as follows:
Parties may obtain discovery regarding any matter, not
privileged, which is relevant to the subject matter involved in
the pending action, whether it relates to the claim or defense of
the party seeking discovery or to the claim or defense of any
other party, including the existence, description, nature, custody,
condition and location of any books, documents or other
tangible things and the identity and location of persons having
knowledge of any discoverable matter. It is not ground for
objection that the information sought will be inadmissible at the
trial if the information sought appears reasonably calculated to
lead to the discovery of admissible evidence.
W. Va. R. Civ. P. 26(b)(1). It has been said that
22
We note that prior decisions of this Court involving the West Virginia
Consumer Credit and Protection Act, W. Va. Code § 46A-1-101 et seq., have acknowledged
the availability of discovery in such proceedings. See, e.g., White v. Wyeth, 227 W. Va. 131,
134, 705 S.E.2d 828, 831 (2010) (referencing class certification discovery); Syl. pt. 4, State
ex rel. Bell Atlantic-West Virginia, Inc. v. Ranson, 201 W. Va. 402, 497 S.E.2d 755 (1997)
(holding, in context of consumer protection action, that court may allow discovery as aid to
deciding defendant’s motion to dismiss for lack of personal jurisdiction). But see State ex
rel. McGraw v. Imperial Mktg., 203 W. Va. 203, 209-11, 506 S.E.2d 799, 805-07 (1998) (per
curiam) (upholding disallowance of discovery pursuant to W. Va. R. Civ. P. 56(f) because
extrinsic evidence was not necessary for summary disposition of case).
25
[t]he overarching purpose of discovery is to clarify and
narrow the issues in litigations, so as to efficiently resolve
disputes. This purpose makes litigation less of a game of
“blindman’s bluff” and more of a contest that seeks a fair and
adequate resolution of a dispute. The discovery rules are
available to any party in a civil action.
Franklin D. Cleckley, Robin J. Davis, and Louis J. Palmer, Jr., Litigation Handbook on West
Virginia Rules of Civil Procedure § 26[2], at 540 (2002) (footnotes omitted).
While both an investigative subpoena and civil discovery are designed to elicit
information to support a claim, an investigative subpoena is not, however, a substitute for
discovery. Simply stated, “[a] subpoena . . . is not a discovery device,”23 “[n]or may a
subpoena be used as a substitute for pretrial discovery.”24 Accord Building Mgmt. Co. Inc.
v. Schwartz, 773 N.Y.S.2d 242, 244, 3 Misc. 3d 351, 353 (N.Y. Civ. Ct. 2004) (admonishing
that “a trial subpoena . . . should [not] be used as a substitute for discovery” (internal
quotation and citations omitted)). See also United States v. Caro, 461 F. Supp. 2d 478, 481
(W.D. Va. 2006) (observing that “subpoena duces tecum cannot substitute for the limited
discovery otherwise permitted in criminal cases” (citations omitted)), aff’d, 597 F.3d 608,
620 (4th Cir. 2010).
23
In re Brussels Leasing Ltd. P’ship v. Henne, 664 N.Y.S.2d 905, 907, 174
Misc. 2d 535, 538 (N.Y. Sup. Ct. 1997).
24
Law Firm of Ravi Batra, P.C. v. Rabinowich, 909 N.Y.S.2d 706, 708, 77
A.D.3d 532, 533 (N.Y. App. Div. 2010) (internal quotations and citation omitted).
26
That is not to say, however, that the Attorney General’s investigative subpoena
did not survive the filing of his complaint in the case sub judice. Rather, the Attorney
General’s investigative subpoena unquestionably remains valid and enforceable as to those
matters about which his investigation remains pending. See, e.g., In re McVane, 44 F.3d
1127, 1141 (2d Cir. 1995) (“[T]he initiation of civil proceedings does not moot an
administrative subpoena.” (citations omitted)); Resolution Trust Corp. v. Walde, 18 F.3d 943,
950 (D.C. Cir. 1994) (same); Linde Thomson Langworthy Kohn & Van Dyke, P.C. v.
Resolution Trust Corp., 5 F.3d 1508, 1518 (D.C. Cir. 1993) (same); National Labor
Relations Bd. v. Bacchi, No. 04 MC 28 (ARR), 2004 WL 2290736, at *4 (E.D.N.Y. June 16,
2004) (“[I]t is well settled that the commencement of civil proceedings does not terminate
an administrative agency’s investigative authority nor moot its administrative subpoena.”
(citations omitted)); Reich v. Hercules, Inc., 857 F. Supp. 367, 369 (D.N.J. 1994) (“When an
administrative agency issues a subpoena pursuant to broad statutory authorization, a
supervening civil proceeding does not render the subpoena moot.” (citations omitted)); Sutro
Bros. & Co. v. Securities & Exch. Comm’n, 199 F. Supp. 438, 439 (S.D.N.Y. 1961)
(suggesting that administrative agency therein may continue its investigation following the
commencement of public proceedings against alleged violators and recognizing that “such
investigation [may] reveal further evidence for use in the pending proceeding”). See also
Bowles v. Bay of New York Coal & Supply Corp., 152 F.2d 330, 330 (2d Cir. 1945) (“[T]he
rules of civil procedure do not apply to restrict or control administrative subpoenas.”).
27
Nevertheless, to ensure that an investigative subpoena is not inadvertently used
to obtain information from a defendant, against whom a civil complaint alleging statutory
violations has been filed, when such inquiries should, instead, be made in accordance with
the rules of discovery applicable to civil actions generally, we find it prudent to adopt the
following holdings. Accordingly, we hold that when the Attorney General files a cause of
action against a person or entity that is subject to an investigative subpoena, the Attorney
General’s subpoena authority ends as to those matters that form the basis of the complaint’s
allegations, and the rules of discovery applicable to civil proceedings generally provide the
method by which the Attorney General may continue to investigate the alleged wrongdoing.
However, an investigative subpoena survives the Attorney General’s filing of a lawsuit when
the subpoena, in whole or in part, pertains to matters that do not form the basis of the subject
complaint.25
25
Given the unique procedural posture of the case sub judice, the Attorney
General’s proceeding to enforce his investigative subpoena and his lawsuit to restrain
violations of the consumer protection statutes were included within the confines of a single
complaint. Other courts considering the continued viability of an investigative subpoena
following the commencement of civil proceedings have suggested that the proper method of
challenging the enforceability of the subpoena in associated judicial proceedings is in the
judicial tribunal in which such proceedings are pending rather than in the context of the
subpoena enforcement proceedings. See, e.g., Office of Thrift Supervision, Dep’t of the
Treasury v. Dobbs, 931 F.2d 956, 959 (D.C. Cir. 1991) (“If information is wrongly obtained
through an administrative subpoena and used in a subsequent civil or criminal proceeding,
the subpoenaed party remains free to challenge the use of the information in the appeal from
that proceeding.” (emphasis in original)). See also Linde Thomson Langworthy Kohn & Van
Dyke, P.C. v. Resolution Trust Corp., 5 F.3d 1508, 1518 n.8 (D.C. Cir. 1993) (commenting
that subpoena enforcement proceeding “is not the proper occasion for challenge to a
(continued...)
28
Applying these holdings to the instant proceeding, we conclude that the
Attorney General’s investigative subpoena in the case sub judice is enforceable as to matters
that are not encompassed by the Attorney General’s pending civil action against the
Petitioners. Insofar as the circuit court’s order does not distinguish between those areas of
investigation that remain subject to the Attorney General’s investigative subpoena and those
inquiries that relate to the complaint’s allegations against the Petitioners, we reverse the
circuit court’s order enforcing the Attorney General’s investigative subpoena in toto. We
further remand this case to the circuit court for it to determine which portions, if any, of the
investigative subpoena have been supplanted by the civil complaint against the Petitioners,
and, as such, are thus subject to civil discovery in the pending enforcement proceedings.
25
(...continued)
hypothetical future abuse of process [resulting from use of subpoena to circumvent discovery
in civil action]. Questions of suppression should not be considered until such time as the
government seeks to use wrongfully obtained information.” (citations omitted)). While this
authority is informative, we find that the unusual posture of the case sub judice requires more
definitive guidance regarding the manner in which an investigative subpoena may be
enforced in associated judicial proceedings when the subpoena enforcement and the judicial
proceedings are prosecuted simultaneously in a single proceeding.
29
B. Case Number 12-0546
In Case Number 12-0546, the Petitioners contend that the circuit court erred
by issuing and enforcing the temporary injunction enjoining them from collecting upon debts
they acquired prior to their licensure as debt collectors in the State of West Virginia.
1. Standard of review. At issue in this appeal is the authority of the circuit
court to issue and enforce a temporary injunction restraining the Petitioners from engaging
in further alleged violations of the West Virginia Consumer Credit and Protection Act,
W. Va. Code § 46A-1-101 et seq., during the pendency of the underlying enforcement
proceedings. We previously have held that
[i]n reviewing the exceptions to the findings of fact and
conclusions of law supporting the granting of a temporary or
preliminary injunction, we will apply a three-pronged deferential
standard of review. We review the final order granting the
temporary injunction and the ultimate disposition under an abuse
of discretion standard, West v. National Mines Corp., 168
W. Va. 578, 590, 285 S.E.2d 670, 678 (1981), we review the
circuit court’s underlying factual findings under a clearly
erroneous standard, and we review questions of law de novo.
Syllabus Point 4, Burgess v. Porterfield, 196 W. Va. 178, 469
S.E.2d 114 (1996).
Syl. pt. 1, State ex rel. McGraw v. Imperial Mktg., 196 W. Va. 346, 472 S.E.2d 792 (1996).
Guided by this standard, we proceed to consider the Petitioners’ assignment of error.
30
2. Validity and enforceability of temporary injunction. Although they
advance several different theories in support of their contentions, the sole error assigned by
the Petitioners in this case concerns the validity and enforceability of the circuit court’s
temporary injunction enjoining them from collecting upon debts they acquired prior to their
licensure in West Virginia as debt collectors. In the proceedings below, the Attorney General
requested temporary relief in his complaint alleging that the Petitioners had violated the
consumer protection laws of this State.
W. Va. Code § 46A-7-110 (1974) (Repl. Vol. 2006) specifically authorizes the
Attorney General to seek temporary relief in conjunction with enforcement proceedings and
provides that,
[w]ith respect to an action brought to enjoin violations of
this chapter or unconscionable agreements or fraudulent or
unconscionable conduct, the attorney general may apply to the
court for appropriate temporary relief against a respondent,
pending final determination of the proceedings. If the court
finds after a hearing held upon notice to the respondent that
there is reasonable cause to believe that the respondent is
engaging in or is likely to engage in conduct sought to be
restrained, it may grant any temporary relief or restraining order
it deems appropriate.
W. Va. Code § 46A-7-110. See also W. Va. Code § 46A-7-108 (1974) (Repl. Vol. 2006)
(permitting Attorney General to “bring a civil action to restrain a person from violating this
chapter”); W. Va. Code § 46A-7-109 (1996) (Repl. Vol. 2006) (authorizing Attorney General
to bring civil action to restrain creditor from engaging in enumerated activities). Construing
31
this provision in accordance with the rules of statutory construction,26 we find the language
employed by the Legislature to be a clear expression of its intent to enable the Attorney
General to prosecute violations of this State’s consumer protection laws. Accordingly, we
hold that once the Attorney General has instituted a civil action against a person or entity to
enjoin unlawful conduct, the Attorney General may also seek temporary relief against the
person or entity during the pendency of such proceedings in accordance with W. Va. Code
§ 46A-7-110 (1974) (Repl. Vol. 2006).
Having established the Attorney General’s authority to seek the subject
temporary injunction, we next must consider whether the circuit court properly issued and
enforced it. We previously have held that
[t]he method of analysis which governs the propriety and
scope of an injunction under W. Va. Code 46A-7-110 (1974)
deviates from the customary standard for the issuance of
temporary relief[27] and may best be described as whether the
26
See, e.g., Syl. pt. 1, Smith v. State Workmen’s Comp. Comm’r, 159 W. Va.
108, 219 S.E.2d 361 (1975) (“The primary object in construing a statute is to ascertain and
give effect to the intent of the Legislature.”); Syl. pt. 2, State v. Elder, 152 W. Va. 571, 165
S.E.2d 108 (1968) (“Where the language of a statute is clear and without ambiguity the plain
meaning is to be accepted without resorting to the rules of interpretation.”).
27
In cases not involving the specialized deference accorded to the Attorney
General’s request for temporary relief, we have held that
[a] temporary injunction should be dissolved, where upon
proper denial of the allegations of the bill on which it was
granted, and in the absence of proof to sustain the bill, it appears
(continued...)
32
Attorney General has shown by the existence of some credible
evidence, even if disputed, that reasonable cause exists to
believe that the respondent is engaging in or is likely to engage
in conduct sought to be restrained. The Attorney General need
not prove the respondent has in fact violated the [applicable
statutory law], but only needs to make a minimal evidentiary
showing of good reason to believe that the essential elements of
a violation of the [statute] are in view.
Syl. pt. 2, State ex rel. McGraw v. Imperial Mktg., 196 W. Va. 346, 472 S.E.2d 792 (footnote
added). We further have clarified that
[t]he statutory standard for issuing a preliminary
injunction under W. Va. Code, 46A-7-110 [1974] – whether
“there is reasonable cause to believe that the respondent is
engaging in or is likely to engage in conduct [prohibited by
Chapter 46A]” – does not include the requirement that there first
be proved a “pattern or practice” of violations of the statute.
Syl. pt. 4, State ex rel. McGraw v. Telecheck Servs., Inc., 213 W. Va. 438, 582 S.E.2d 885
(2003). See also Syl. pt. 4, Imperial Mktg., 196 W. Va. 346, 472 S.E.2d 792 (“Findings of
‘material misrepresentation’ or ‘actually misleading’ are not necessary predicates to support
a temporary injunction under the West Virginia Consumer Credit [and Protection] Act,
W. Va. Code 46A-7-110 (1974).”).
27
(...continued)
from the record of the cause that no great hardship can come to
the plaintiff by such dissolution, and that great and unnecessary
damage may result to the defendant by continuing the same.
Syl. pt. 2, in part, Leslie Co. v. Cosner Coal Co., 131 W. Va. 483, 48 S.E.2d 332 (1948).
33
Applying these holdings to the facts of the case sub judice, we find that the
circuit court did not err in its issuance of the subject temporary injunction or in rendering its
ruling upholding the same. In the proceedings below, the Attorney General amply
demonstrated, “by the existence of some credible evidence, . . . that reasonable cause exists
to believe that the [Petitioners are] engaging in or [are] likely to engage in conduct sought
to be restrained.”28 By complaint filed June 3, 2010, the Attorney General asserted a cause
of action against Petitioners SPV I, SPV II, and CI29 by claiming that they were collecting
debts without a license:
Cavalry Investments [CI], SPV I, and SPV II have collected
debts in West Virginia, directly and indirectly through others, by
making collection calls, sending collection letters, reporting
debts to credit bureaus, and filing collection law suits.
The records of the West Virginia state tax department
confirm that Cavalry Investments [CI], SPV I and SPV II do not
have a license and surety bond to collect debts in West
Virginia. . . .
Cavalry Investments [CI], SPV I, and SPV II collected debts in
West Virginia without a license and surety bond in violation of
the Collection Agency Act and W. Va. Code § 46A-6-104.
Thereafter, by order entered October 7, 2011, the circuit court issued the subject temporary
injunction specifically to “ENJOIN[] [Petitioners SPV I, SPV II, and CI] from engaging in
28
Syl. pt. 2, in part, State ex rel. McGraw v. Imperial Mktg., 196 W. Va. 346,
472 S.E.2d 792 (1996).
29
The fourth Petitioner, CPS, was properly licensed at all times relevant to the
instant proceedings. See supra note 8.
34
any actions to collect debts acquired prior to the date that they became licensed” as debt
collectors in West Virginia. The record reflects that the three named Petitioners were not
licensed at the time that the Attorney General filed the instant enforcement action on June
3, 2010, and that they did not become licensed until some time thereafter. SPV I eventually
became licensed as a West Virginia debt collector on October 13, 2010; SPV II acquired its
West Virginia debt collection license on October 12, 2010; and CI achieved licensure on
October 7, 2010.
From this record evidence, we conclude that the Attorney General adequately
established the existence of “reasonable cause” that the named Petitioners had collected debts
in this State without a license sufficient to support the circuit court’s issuance of a temporary
injunction to restrain such alleged misconduct. See Syl. pt. 2, Imperial Mktg., 196 W. Va.
346, 472 S.E.2d 792. The Attorney General was not required to prove that the named
Petitioners actually had engaged in the alleged misconduct, but rather only that there exists
reasonable evidence to believe such a violation has been committed. See Syl. pt. 4,
Telecheck Servs., 213 W. Va. 438, 582 S.E.2d 885; Syl. pt. 2, Imperial Mktg., 196 W. Va.
346, 472 S.E.2d 792. Moreover, the relief granted by the circuit court was temporary in
nature; it was not permanent. As such, the circuit court’s issuance of the temporary
injunction was designed to forestall the named Petitioners’ alleged misconduct only during
the pendency of the proceedings until the matter achieves its final resolution through either
35
the substantiation or disproof of the Attorney General’s claims of the Petitioners’ alleged
statutory violations. Therefore, we conclude that the temporary injunction imposed upon the
Petitioners herein was properly issued in compliance with this Court’s prior holding in
Syllabus point 2 of State ex rel. McGraw v. Imperial Marketing, 196 W. Va. 346, 472 S.E.2d
792 (1996). Accordingly, we affirm the circuit court’s ruling in this regard.
IV.
CONCLUSION
For the foregoing reasons, in Case Number 11-1564, the October 7, 2011, order
entered by the Circuit Court of Kanawha County is affirmed, in part, and reversed, in part,
and this case is remanded for further proceedings consistent with this opinion. Furthermore,
in Case Number 12-0546, the March 20, 2012, order entered by the Circuit Court of
Kanawha County is affirmed.
Case Number 11-1564 – Affirmed, in part; Reversed, in part; and Remanded.
Case Number 12-0546 – Affirmed.
36