Thought you guys might enjoy this - it's from the Virginia Lawyers Weekly. What makes this interesting is that Virginia is a conservative state that usually gives plaintiffs a hard time.
'Overzealous' Debt Collection Prompts Award Of Punitives
By John D. Tuerck
A debt-collection company that threatened a woman with arrest over a $148.78 check must pay her more than $34,000 in damages and attorney's fees, a federal district judge has ruled.
Last summer, the company called the woman and abruptly demanded that she pay the money for a check that had bounced at a grocery store four years earlier. The company's agent, who said he was a lawyer, said the woman would be sentenced to six years in jail if she failed to repay the debt within one hour.
As it happens, the woman owed nothing. However, she wired $163 to the company to cover the debt.
The woman sued the company under the Fair Debt Collection Practices Act, 15 U.S.C. Sect. 1692, tossing in a state claim for intentional infliction of emotional distress.
After the company failed to appear, the judge awarded $26,398 to the woman, including actual damages of $10,163 and punitive damages of $15,000. The judge also awarded attorney's fees of $7,795.
"Their conduct was horrific," said Harrisonburg lawyer Brian K. Brake, who represented the plaintiff. "I was not surprised that punitive damages were awarded. This is exactly what punitive damages are for."
The case is McHugh v. Check Investors Inc., a/k/a National Check Control (VLW 003-3-124). Chief U.S. District Judge Samuel G. Wilson wrote the eight-page unpublished opinion.
On Saturday, Aug. 17, the plaintiff opened a letter from the defendant demanding $148.78. The letter accused the plaintiff of ignoring previous payment demands "for dishonored checks fraudulently issued." The plaintiff, however, had never received a previous demand.
The plaintiff called the defendant two days later. An agent, who represented himself as an attorney, said that check number 1749, written in July 1998, had been turned over to the defendant for criminal prosecution.
The defendant's agent refused to provide a copy of the check and became "very angry, belligerent." The agent added that if the plaintiff did not repay the amount within the hour, she would serve six months in jail. After additional discussion, the agent extended the deadline to 5 p.m. that day.
The plaintiff, the mother of a six-year-old girl, was concerned by the prospect of arrest. The plaintiff's mother testified that the plaintiff was "hysterical and crying" after the conversation with the defendant's agent.
Consulting her bank statements, the plaintiff saw that the check at issue had bounced, but only for $16.78. Nevertheless, she wired $163, including a $16 fee, through Western Union to the defendant.
Later, the plaintiff reviewed her records again and saw that a receipt from August 1998 showed that she had completely satisfied the debt.
The plaintiff filed suit in November 2002, alleging 10 violations of the FDCPA and claiming intentional infliction of emotional distress. After the defendant failed to appear, the clerk filed a default judgment.
Under the FDCPA, the plaintiff was entitled to maximum statutory damages of $1,000. Typically, wrote Wilson, plaintiffs receive the maximum after demonstrating multiple violations of the act.
"The egregious facts of this case, however, distinguish it from the others," Wilson wrote. "Accordingly, the court will award the statutory maximum of $1,000."
With respect to punitive damages stemming from the distress claim, Wilson took note of the U.S. Supreme Court's recent ruling on punitives in State Farm Mut. Auto Ins. Co. v. Campbell, __U.S.__, 123 S.Ct. 1513, 1524 (April 7, 2003).
"In this case, [the defendant] intentionally panicked [the plaintiff,] causing her to pay a debt she did not owe," Wilson wrote. "[The defendant], through its overzealous, deceitful collection agent, clearly intended to cause [the plaintiff] severe emotional distress, and she in fact experienced severe emotional distress."
"They basically told the plaintiff in this case if she didn't pay the debt within an hour, they would come and arrest her," said Brake. "People who don't know much about the law â?? a tactic like that can work."
To arrive at his request for $10,000 in actual damages, Brake consulted comparable cases with awards for mental anguish.
"That's very hard to quantify. What's it worth to be scared to death?" he asked. "Judge Wilson ended up awarding $10,000 then $163 for the actual damages.
While Brake was pleased with the punitive and actual damages, he suggested that the maximum statutory damages of $1,000 was inadequate.
"It would seem to me that if Congress really wanted to effectuate the purpose of the act, it would be more than $1,000," he said.
Brake has since learned from an agent of the Federal Trade Commission that the commission has sued the New Jersey-based defendant and frozen its assets.
"According to [the agent], these guys have been doing this type of stuff for a number of years," he said.
The FTC's involvement complicates Brake's collection efforts, but he is optimistic that his client will recover some or all of the award.
"I'm led to believe from my conversations with the FTC that there are assets in the company," he said. "There probably is money there."