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W.Va. Supreme Court rules in favor of attorney general

CHARLESTON, W.Va.--The West Virginia attorney general may issue investigative subpoenas as part of his investigatory powers, the state Supreme Court recently decided.

Former Attorney General Darrell McGraw filed the original Kanawha County suit, which involves allegations of a company's collection practices.

It was filed against Cavalry SPV I LLC, Cavalry SPV II LLC, Cavalry Investments LLC, Cavalry Portfolio Services LLC, Michael Godner, Steve Anderson, Don Strauch and Christian Parker.

Cavalry asked justices in last month's oral arguments hearing whether the attorney general should be allowed to issue subpoenas to a company it also is suing.

A Nov. 13 opinion, written by Justice Robin Davis, determined if the attorney general files an action subject to an investigative subpoena, his subpoena authority does not cover matters forming the basis of the suit's allegations.

In that situation, the opinion states, rules of discovery would provide the procedure the attorney general can use to investigate wrongdoing.

According to the opinion, the subpoena survives filing if it deals in whole or in part to matters not forming the basis of the suit. 

The Kanawha Circuit Court ruled SPV I, SPV II and Cavalry Investments violated portions of the West Virginia Consumer Credit and Protection Act because they collected debts when they weren't licensed to do so, the order states.

The court granted a temporary injunction against these defendants but not Cavalry Portfolio Services LLC.

The lower court also granted the attorney general's request, requiring defendants to comply with the investigative subpoena.

In the brief to the state Supreme Court, Cavalry said the court shouldn't have let the attorney general enforce the investigative subpoenas and instead should have eliminated the subpoenas because the office filed a civil lawsuit alleging violations of the West Virginia Consumer Credit Protection Act.

Cavalry also argued an administrative hearing on the subpoenas, which they said was required by state code, was not held.

In his brief to the state Supreme Court, McGraw said the office received complaints Cavalry was collecting debts without a license and surety bond and also may have been practicing other prohibited debt collection practices.

The brief argued the office could not get Cavalry to comply so it issued an investigative subpoena to get Cavalry to produce documents.

Attorney General Patrick Morrisey took issue with Cavalry's allegation during oral arguments that the filing of a complaint should have ended the investigation and eliminated the subpoenas, saying there are no cases to support that position.

The brief also argued the attorney general does not have to issue a subpoena only in an administrative hearing, saying the argument is "contrary to any logical reading" of the West Virginia Consumer Credit Protection Act.

The recent opinion states the attorney general does not have to hold an administrative hearing before issuing a subpoena.

Justices decided the investigative subpoena was validly issued and is enforceable in matters not covered by the attorney general's pending civil action.

Justices reversed a part of the circuit court's order enforcing the entire investigative subpoena. The opinion states the court should determine whether any matters are subject to civil discovery. 

 "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," the opinion states.

"We thus believe it is necessary to clarify the extent to which the investigative subpoena may be enforced in this particular procedural context."

Contact writer Andrea Lannom at Andrea.Lannom@dailymail.com or 304-348-5148. Follow her at www.twitter.com/AndreaLannom.


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