New Amendments to the WVCCPA to Provide Additional Certainty for Businesses

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In a development that provides some measure of relief to businesses operating in West Virginia, particularly within the financial services industry, Gov. Jim Justice signed into law on March 29, 2021, amendments to the West Virginia Consumer Credit and Protection Act (WVCCPA). These amendments appear to provide clarity on certain attorneys’ fees provisions in the WVCCPA, to define the process for a pre-suit notice to cure and offer in response, and to provide new limitations on recovery of attorneys’ fees in the instance of an offer of judgment or a written offer to settle. And most notably, this legislation provides an avenue for defendants to recover attorneys’ fees from plaintiffs in the event a finding is made that a claim was frivolous or made in bad faith, or in the event that a settlement was rejected without justification. All told, these amendments should work to help provide additional certainty to businesses operating in West Virginia and additional tools for combatting litigation under this statute.

It is hardly insignificant that West Virginia is now enacting more business-friendly provisions into the WVCCPA. The WVCCPA was initially enacted in 1974 and is notoriously consumer-friendly in practice. Its scope includes consumer loans, credit sales, and leases, as well as general consumer protection against “unfair, deceptive and fraudulent acts or practices.” Claims under the WVCCPA are routinely significant because some of its civil liability provisions provide for an award of actual damages and attorneys’ fees, as in many other states, and statutory penalties of $1,000 per violation as increased for inflation. These amounts — particularly the statutory penalties — add up very quickly for business defendants. In many ways, this statute is unique amongst peer states in its potential severity due to the penalty provisions.

As a result, the prospect of a more business-friendly shift in certain components of the WVCCPA when these amendments become effective in June 2021 might provide more certainty to businesses operating in the state. Key changes to the WVCCPA include:

  • Recovery for frivolous claims and defenses: Under newly enacted provisions of this law, a party prevailing after a verdict or judgment is entered may move the court to determine whether the opposing party presented a frivolous claim and may seek reasonable attorneys’ fees and litigation expenses. This change is potentially critical, as a “frivolous” claim is defined as one that lacks substantial justification, is not made in good faith, or is made in the absence of any reasonable belief that a court would accept the claim. Plaintiffs (and defendants) will now need to think twice before asserting claims or defenses in cases — but the expectation is that WVCCPA claims will now need to be subject to more thorough scrutiny by plaintiffs in advance of their filing.
  • Pre-suit notices: The new amendment provides a uniform manner for consumer plaintiffs to transmit their required notices to cure in advance of bringing an action under the WVCCPA. It also provides a framework for businesses to respond by making a cure offer, as well as guidance as to the legal effect of making a cure offer.
  • Offers of settlement or of judgment: Newly enacted provisions outline a process for transmitting an offer to settle or an offer of judgment more than 30 days before trial. If this process is followed and an offer is made in writing, this mechanism may provide attorneys’ fee relief for defendants. A plaintiff that rejects a written offer of this nature may not recover attorneys’ fees or expenses from the date of the offer through the entry of judgment if the final judgment is less than 75% of the offer, subject to certain restrictions.

Critically, if the judgment entered does not exceed 75% of the offer, a defendant may petition the court for recovery of its reasonable fees and expenses incurred after the offer was made if the court finds that the plaintiff acted without substantial justification or without good faith in rejecting the offer. This is a significant departure from the offer of judgment rules set forth in W. Va. R. Civ. P. 68 and Fed. R. Civ. P. 68 because the potential now exists for recovery of attorneys’ fees in addition to costs.

These changes are significant, and defendants facing a WVCCPA claim — in a West Virginia state court or federal court — will now have additional tools at their disposal to combat such claims and to control the risk of escalating attorneys’ fees. While these changes are only prospective in nature, and while they apply only to cases filed after the effective date, it now appears that the WVCCPA will be slightly more business-friendly going forward. It will be intriguing to see how these new amendments are interpreted, and how aggressively defendants will use these new tools to combat WVCCPA claims in the future.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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