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Winning Results
Verdict
April 3, 2009
Federal Jury in San Jose, California Finds Credigy Services Corporation Guilty of Fraudulent and Deceptive Collection Practices
Trial Report- $500,000 Award for Malicious Violations of Fair Debt Collection Practices Act
David Humphreys and Luke Wallace of Humphreys Wallace Humphreys P.C., from the Tulsa, Oklahoma Consumer Protection Law Firm along with Ronald Wilcox, San Jose, CA and Balam Letona, Santa Cruz represented the Plaintiffs, Manuel and Luz Fausto.
Jury Verdict totaling $500,000, consisting of $100,000 in actual damages and $400,000 in punitive damages. We are informed that the verdict is the largest under the Fair Debt Collection Practices Act on behalf of a consumer who owed the debt. The Plaintiffs are entitled to an award of attorney fees and costs as prevailing party under federal Fair Debt Collection Practices Act and the California Fair Debt Collection Practices Act.
Manuel Fausto opened a Wells Fargo charge card at a local branch in 1992. The account had a credit limit of about $1,000. Manuel Fausto and his wife Luz made monthly payments on the account as agreed but the balance kept increasing. After asking (and being declined) at the local Wells Fargo branch to have the interest on the account "frozen" so the balance could be paid off, the Faustos received help from a local business that promised to negotiate a discounted payoff of credit card balances. The Faustos had no other credit card debt but paid the Wells Fargo account off in 1998 or 1999 with two money orders delivered to the local debt negotiator. Seven years later, in August of 2006, the Faustos received a phone call at their home from a debt collector calling from Credigy Services Corp. The Faustos had no dealings with and did not recognize Credigy as someone they owed. The Faustos also received a letter from Credigy claiming that almost $17,000 was due on the account. The Fausto's made an appointment with a non profit legal clinic, the Watsonville Law Center, who wrote a letter for Mr. Fausto to sign demanding that Credigy provide a copy of the contract proving they owned the debt and some proof that the debt was actually unpaid. Credigy responded with a form letter restating the balance claimed due. The Fausto's brought the letter back to the Watsonville Law Center. WLC wrote a letter for Mr Fausto informing Credigy that since they ignored the request for information, that the Fausto's demanded under federal law that Credigy Cease and Desist all further contact with the Faustos. Credigy continued to collect on the account, writing numerous letters and calling the Faustos home over 90 times. The collectors were calling from a Credigy affililate in Brazil and made repeated false threats to the Fausto's that Credigy would take their home and paycheck even though the time to sue had expired years before Credigy's first phone call to the Fausto's home. Mrs. Fausto tape recorded the last phone call from Credigy which documented false claims that the account had been reviewed in the legal department that the account was a joint debt owed by Mrs. Fausto also, that Credigy was a "Credit Agency" and that Credigy would report the account "forever" on Mr. Faustos credit file. Credigy's training manuals suggested to the Brazillian collectors, who were paid the equivalent of $400 monthly salary, to use the "coercion method," that credit reporting is the most important financial information for American consumers and to tell the consumer that their life will not be the same if the debt remains on their credit report. Credigy sued Mrs. Fausto claiming that its debt collection phone calls were confidential and seeking damages. Credigy admitted receiving the written cease and desist demand (sent certified mail) but claimed it made a "Bona Fide Error" in continuing its collection efforts. The jury heard testimony that the "Dispute Resolution Team" was confronted with stacks of dispute letters, was understaffed and told that no more resources would be made available because it cost the company money. Two employees who testified left Credigy because of physical problems they attributed to the stress of their jobs.
The collection calls only stopped after a lawsuit was filed. Credigy had scheduled the calls to continue until the year 2020. No records from any source, including Wells Fargo existed as to what was charged and what had been paid on the account. A consumer from Illinois (a victim of ID theft) and another from New Mexico (former husbands account) testified that Credigy ignored their request for proof that the debt was owed and that Credigy continued collecting upon them after having received cease and desist demands.
Credigys trial strategy was to attack the credibility of the Faustos and their nine children. Mr.Fausto had a second grade education and Mrs. Fausto received an education until the sixth grade. Neither spoke English. Credigy issued subpoenas to depose the majority of their children and sought banking, mortgage and medical records of them and their children. The trial court permitted Credigy to elicit testimony that Mrs. Fausto had been charged with driving without a license and hit and run of a child on a bicycle and that Mr. Fausto had been cited for driving with a suspended license and that the police arrived at his home to arrest him during the time period Credigy was making its collection calls. Credigy also introduced evidence that the Faustos borrowed a significant sum against their home in the name of their oldest son and that the house was the subject of a foreclosure several months after the collection calls stopped.
The Credigy defendant's filed nine separate motions for summary judgment and withdrew four of them following receipt of Plaintiff's responses. In denying the remaining five motions, the trial court invited a motion for sanctions to be filed because of defendant apparent efforts to unnecessarily multiply the proceedings
BALTIMORE, MARYLAND JURY FINDS FRANCHISE CAR DEALER GUILTY OF FRAUD
January 2007
TRIAL REPORT---$426,000 JURY VERDICT
Tulsa, Oklahoma consumer lawyers Luke Wallace and David Humphreys represented a Maryland consumer who obtained a $426,100 verdict against a Baltimore-based franchise car dealer for selling a used car as new and for causing her emotional distress when she attempted to receive warranty repairs.
"The jury spoke the truth," said Wallace, who called it another outrageous example of lying, cheating and stealing by a car dealer. "The jury understood that the dealer had a very sophisticated fraud scheme going on. It involved delivering cars to customers before they were approved for financing, jerking back the car if the customer ultimately was not approved and then re-selling the used car as new to another unsuspecting customer. The jury understood that selling a used car as new is wrong and adding negative equities to the sales price is wrong. These dealers intend to financially bury their customers."
Undisclosed sale
In May 2005, a Baltimore, Maryland consumer purchased what the dealership represented was a new 2005 Suzuki Forenza. The consumer had previously owned several used cars and was very excited to finally be able to purchase a new car. Several weeks after the purchase, she found another individuals temporary tag registration for the very same "new" car in the glove compartment, her attorney said.
The vehicle, which had apparently been sold by the dealership, but later returned, had 596 miles on it, her attorney noted. But "there were no disclosures that it had ever been sold to another customer," Wallace said.
The car also broke down less than a month after Eastons purchase, her attorney said. When the consumer brought the car to the dealership, she got into a dispute with an employee, who allegedly threatened to call police and have her arrested for trespassing.
As for the car, it was moved off the dealership lot to a tow-away zone on the street, though it could not be driven, the initial law suit states.
On the fraud count, the jury awarded $35,000 in economic damages and $75,000 in punitive damages. On a Consumer Protection Act count regarding the cars use, it awarded $8,000 in economic damages and $100,000 in non-economic damages.
It also awarded $200,000 in non-economic damages on a Consumer Protection Act count in connection with the moving of the plaintiffs disabled car.
The jury also awarded $8,100 for the dealerships inclusion of negative equity in the purchase price of the car. Since the plaintiffs trade-in was worth $3,500, with $8,100 needed to pay off the lien, the defendants listed the value of the trade-in as $8,100 and tacked the $4,600 difference onto the price of the "new" car without telling the consumer, Wallace said.
Humphreys Wallace Humphreys P.C. is a Tulsa, Oklahoma based consumer protection litigation law firm representing consumers nationwide.
JURY FINDS MULTISTATE LENDER GUILTY OF FRAUD
December 2004
Trial Report---JURY VERDICT 1.765 MILLION
Security Finance Corporation of Oklahoma, Security Finance Corporation of Spartanburg, Security Group Inc., Maverick Acquisition Corporation, MACI Holdings Inc. and Contiental Holding Company Guilty of Fraudulent Predatory Loan Flipping Scheme
For a link to Trial Court Docket click here.
IN THE DISTRICT COURT IN AND FOR TULSA COUNTY, OKLAHOMA
GARY GILBERT, as Guardian for
JOHN E GILBERT, an incapacited person,
Plaintiff,
v.
SECURITY FINANCE CORPORATION OF OKLA INC,
Defendant, and
MAVERICK ACQUISITION CORPORATION,
Defendant, and
MACI HOLDINGS INC,
Defendant, and
SECURITY FINANCE CORP OF SPARTANBURG,
Defendant, and
SECURITY GROUP INC,
Defendant, and
CONTINENTAL HOLDING COMPANY,
Defendant. No. CJ-2002-807
(Civil relief more than $10,000)
Filed: 02/11/2002
Closed: 12/08/2004
Judge: Thornbrugh, P. Thomas
Plaintiff’s theory and record evidence established that the Oklahoma defendants presented every customer with a loan contract specifying repayment terms that the Oklahoma defendants never intended to honor. The loan contracts (PX 97, PX 105, PX 110) were themselves false, material representations that borrowers will be permitted to pay off the loan in installments as promised and without interference. Oklahoma defendants intended to interfere with and prevent customers from paying off their loans. This was admitted by corporate representative and SFC-OK vice president, Lisa Burroughs:
Q. - …Do you attempt to prevent payoff, yes or no?
A. – I think probably since it says attempt, I would
say yeah.
[T. III 704, lines 14-17].
Q. – Do you tell a customer up front that you intend to
attempt to prevent them from paying off a loan?
A. – No.
[T. III 709, lines 3-5].
Q. – And do you warn the customers up front that you
are going to try to prevent the payoff?
A. – No, sir, we don’t.
[T. IV 726, lines 1-3].
Q. – Could you point the jury to any provision in any of
those contracts where it says that the company is going
to try to prevent the payoff?
A. – I don’t know that there is one or not.
[T. IV 725, lines 8-10, 13-14].
Q. – Well, can you tell this jury that there is a single word
in that contract that indicates that the customer is put on
fair notice that you are going to try to prevent the payoff?
A. – No, I can’t say that there is.
[T. IV 725, lines 21-25].
The Oklahoma defendants also admitted that, contrary to the payment terms in the loan contract, they, and not the customer, decide whether a loan will be renewed or paid out as agreed. (T. IV 773-775, 789-790).
Gilbert presented evidence that the following practices were employed in furtherance of the fraudulent and oppressive scheme:
Ø Oklahoma defendants do not tell borrowers before entering into the first loan transaction that once two payments are made, they intend to renew the borrowers loan. (T. IV 839).
Ø Supervisors instructed employees to “gang up” and “double team” borrowers who attempted to pay an installment without renewing (T. V. 1158-59; T. VIII 1864-1865).
Ø No consideration was given to whether the borrower needed to have the loan renewed (T. IV 862).
Ø The Oklahoma defendants renewed borrowers with the intention of increasing the customers’ loan balance to prevent pay off (T. V 1249).
Ø Supervisors were instructed by the Oklahoma vice president to train employees on how to prevent borrowers from paying off their loan contracts. (T. III 703), and employees were trained to push renewals on renewal-eligible customers (T. III 648-649; 671-672; T. IV 765-766; T. V 1159-1160).
Ø Oklahoma defendants instructed their employees to “train our customers to renew every two months.” (T. VII 1651, 1653).
Ø If a customer came into the office with the intention of paying off his or her loan, the policy was to keep the customer from paying off the loan (T. V 1251-1252; T. III 704-705; T. VIII 1864-1865).
Ø The Oklahoma defendants’ employees were disciplined for “allowing” borrower to pay off loans (called “collecting out” a loan) rather than convincing the customer to renew the loan (T. IV 784-787).
This case represents the first ever jury trial verdict in a predatory lending case against an installment lender engaged in fraudulent loan flipping scheme. The jury returned a verdict of $1.75 million in punitive damages to punish Security Finance and to deter other predatory lenders.
JURY PUNISHES CREDIT UNION FOR CHEATING MEMBER
FEBRUARY 10, 2006
Trial Report--$350,000 JURY VERDICT
On Friday an Orange County, California Superior Court jury awarded $220,000.00 in punitive damages against North Orange County Credit Union, plus $127,000.00 in compensatory damages in favor of Julie Hiatt, one of its credit union members. Hiatt was represented by David Humphreys and Luke Wallace of the consumer protection law firm, Humphreys Wallace Humphreys P.C., Tulsa Oklahoma. Hiatt, age 30, of Fullerton sued her credit union for breach of fiduciary duty and negligence for failing to obtain the title to a $27,500 used 2001 Chevy Tahoe she had purchased from an auto broker in May of 2002. At trial , the jury heard evidence that the credit union did not take any steps to confirm the auto broker had title and did not discover for 10 months that the auto broker ran off with the money and another lender was the true legal owner and still held the title to the SUV.
Evidence was presented to the jury that North Orange County Credit Union altered Hiatts loan documents after the fact, wrongfully seized the DMV bond monies to which Hiatt alone was entitled and invaded Hiatts privacy by giving her name to the prior lender who then seized the SUV from Hiatt. Hiatts lawyers argued the credit union released her name because its employees wanted to be sure Hiatts vehicle would be repossessed by the prior lien holder so that the credit union could make an insurance claim.
Judge Dennis Choate ruled that the credit union was a fiduciary with special trust obligations toward Hiatt because it had taken a power of attorney from her to handle the title. After a six-day trial, the jury found the credit union had breached their fiduciary duties toward Hiatt and had acted with oppression, or fraud or malice in their dealings with her. Hiatts attorneys stated, "What started out as a mistake became very oppressive mistreatment of a trusting and vulnerable young lady. The jury was angered because the credit union was lying, cheating and stealing. Even a non-profit credit union can't strong arm"
North Orange County Credit Union has assets of over $7 million and the punitive damage award is equivalent to about half of its annual earnings. Hiatt was represented by Oklahoma trial lawyers David Humphreys and Luke Wallace and California lawyer Aurora Dawn Harris of Orange.
December 2005 $5 Million Jury Verdict Against Ameriquest
Ameriquest Guilty of Predatory Lending, Wrongful Forclosure and False Credit Reporting
For link to the trial court docket click here.
IN THE DISTRICT COURT IN AND FOR TULSA COUNTY, OKLAHOMA
MELBA M GILLEAN,
Plaintiff,
v.
AMERIQUEST MORTGAGE COMPANY,
Defendant.
No. CJ-2003-4426
(Civil relief more than $10,000)
Filed: 07/07/2003
Closed: 11/18/2005
Judge: Nightingale, Rebecca B.
Sixty five year old Melba Gillean agreed to refinance three mortgages with Ameriquest Mortgage Company. The properties were more than an investment to her; they represented homes that as a young girl she helped her father build. She needed to refinance the homes quickly to pay off mounting credit card debt that she took on to repair and remodel them and she needed extra cash to pay for nursing care for her ninety year old aunt ameriquest put Melba in its "fast track" program, promising her she would have her money in seven to ten days. Melba believed Ameriquest and did not seek out financing from one of Ameriquest's competitors. Ameriquest sent a notary to meet her in a Mexican restaurant to sign the closing papers. She was asked to sign them a second time, which she did. She even met the agent at the hospital where she was staying with her aunt to sign them a third time. Ameriquest never funded her loans, although they promised in writing that they would do so three separate times. At trial, the company's representative could offer no explanation as to why Ameriquest failed to fund the loans in spite of written promises to do so. Instead, the company claimed that it had no obligation to honor either a note, mortgage or settlement statement unless and until it decided to fund the loans. The company was forced to admit that its contracts do not permit this and Ameriquest does not inform customers that it intends to bind the customer but not the company. In spite of claiming that it was not obligated to fund the new loans, Ameriquest reported the new loans (which it never funded) as being open loans to the credit reporting agencies and even sent notice of its intent to foreclose the loans that it did not ever intend to fund. In addition, Ameriquest reported the old loans that it had agreed to pay off as being up to six months delinquent even though the evidence at trial established that she was never late on payments until Ameriquest's loan officers told her to stop making payments on the loans that it agreed to pay off. Ameriquests' corporate representative admitted at trial that the company had reported Ms. Gillean to be seriously delinquent on her mortgage accounts hundreds of times and that it intended to continue to report her as delinquent until 2010. Gillean established at trial that her business of property investment and residential rentals was effectively shut down, that she had been denied lower cost, fixed rate credit because of Ameriquests' false reporting and that the present value of the increase cost of credit was approximately $70,000. The Tulsa County District Court jury found unanimously in her favor on her claims of negligence, defamation and intentional interference with prospective economic advantage, awarding her over 1.94 million dollars in actual damages and 3.0 million in punitive damages. Including prejudgment interest, the District Court entered judgment in her favor for more than five million dollars.
June 2000 $115,000 Judgment
KEYSTONE CHEVROLET IN TULSA (SAND SPRINGS) OKLAHOMA GUILTY OF FRAUD IN AUTO LEMON LAUNDERING GM BUYBACK
$115,000 JUDGMENT
For a link to the Trial Court Docket click here.
For a copy of the Court of Appeal Opinion click here.
The evidence in this case established that Keystone Chevrolet engages in a fraudulent sales practice known as ?lemon laundering.? This practice involves the purchase of lemon buy back vehicles from out of state and the sale of these vehicles in Oklahoma to unsuspecting consumers through selective misrepresentations and false written disclosures.
In 1998, the Coats? were interested in purchasing a different vehicle. One evening, Mrs. Coats, without her husband present, decided to take a look at the vehicles on Keystone?s lot. Mrs. Coats told the salesman she was interested in purchasing a Suburban type vehicle. Mrs. Coats told the salesman about a 1995 bankruptcy, due to an uninsured fire loss that destroyed their business and Keystone?s salesman advised it would not be a problem. After filling out some dealership paperwork, the salesman informed Mrs. Coats that she would not be able to purchase a Suburban, but that they did have a vehicle for her. The salesman then left, telling Mrs. Coats he would return in a few minutes with the only vehicle she could purchase. When the salesman returned driving a van which had been on Keystone?s lot for five months Mrs. Coats made it very obvious she was not interested or pleased with this vehicle. In response to Mrs. Coats? objections, the salesman told Mrs. Coats that if the Coats would purchase the vehicle and make payments on it for nine months to one year, then Keystone could put them in a Suburban. The salesman told Mrs. Coats that an older couple had traded in the van because they wanted to travel and didn?t have enough room to haul everything. Coats relied upon this representation and attached significance to it. The salesman did not tell Mrs. Coats that Keystone purchased it at a California auction for GM dealers knowing it was a lemon law buyback vehicle. Keystone wanted Mrs. Coats to sign all the documents that evening without her husband present. Mrs. Coats told Keystone that she was hesitant to sign any documents without her husband present, but Keystone assured her that if Mr. Coats did not want to complete the purchase, the documents would be torn up and the deal would be off.
Keystone Chevrolet presented Mrs. Coats with an ?AS-IS, NO WARRANTY,? form that had the box checked on the form that stated ?you [THE COATS] will pay all costs for any repairs.? Keystone told the Coats? that the vehicle did not have a warranty. Steve Pashael, the business manager at Keystone, testified that he actually dealt with Mrs. Coats. Contrary to the written and oral representations from Keystone, the vehicle carried a 12-month, 12,000 mile manufacturer's warranty. The dealership did not disclose the 12-month, 12,000 mile warranty in writing to the Coats?.
Mrs. Coats testified that when Keystone presented the ?GM Disclosure Notice? form for her signature, she was told that this form was signed by all customers of Keystone who purchased a used vehicle to ensure that the customer knew the vehicle was in fact used and not new. The salesman further explained that if any repairs were required, it would have been noted and the fact that the document was silent as to any repairs meant none were preformed since the vehicle had been traded into Keystone. The GM disclosure notice form contained numerous blanks which were not filled in and there were no boxes checked on the form. Mrs. Coats testified that the GM disclosure notice Keystone produced at trial contained a handwritten ?repaired to specs? that was not on the form at the time it was presented to her for signature. Keystone?s corporate representative testified that the GM disclosure notice, signed only by Mrs. Coats which contained blanks without information and no boxes checked, was prepared and a signature from Mrs. Coats was obtained in accord with Keystone?s company policy. The GM disclosure notice form was not affixed to the vehicle and Mrs. Coats was not presented with this document until after she had agreed to a price. Every aspect of this transaction, according to Keystone?s president and corporate representative, was carried out in accordance with Keystone?s policies and procedures.
Keystone never told Mr. or Mrs. Coats that the vehicle was in fact a five month old California lemon. Mrs. Coats believed and trusted the salesman when he told her that they used the GM disclosure notice in the sale of every one of their used vehicles and that it merely meant it was a used vehicle. This GM disclosure notice form was never presented to or signed by Mr. Coats. Keystone chose to not provide the Coats? with a copy of the branded "lemon law buy back" California title.
The Coats? would not have purchased this vehicle if they had been told or known the truth, that the vehicle was a lemon vehicle and that the document Mrs. Coats signed was not as represented by the salesman. The "lemon" disclosure decal which had been affixed to the left side of door frame of California lemon vehicles was obliterated or scratched out prior to delivery to the Coats?.
Keystone sold the van to the Coats? for a cash price of $16,889.00. The factory delivered price on the vehicle when it was brand new was $18,358.00. When the Coats? purchased the van, the odometer read 40,813 miles after having been declared a lemon by the state of California.
After purchase and before learning the history of the vehicle, Mrs. Coats returned to Keystone to service the brakes. She explained that the vehicle jerked to the right and made a growling noise when she applied the brakes. The Keystone representative told Mrs. Coats that the vehicle had been designed to jerk to the right so that it would not jerk to the left and into oncoming traffic.
The Coats? continued to experience numerous problems with the brakes and other components on the van. These problems could have been addressed under the bumper to bumper warranty, if Keystone had disclosed its existence. The Coats? had to park the van on the side of the road numerous times because of mechanical failures.
Approximately seven to eight months after buying the van, the Coats? returned to inquire about purchasing the Suburban as agreed, and were told by a representative of Keystone that they hadn?t been paying on the van long enough. A few months thereafter, the Coats? returned yet again in an attempt to trade-in the van and purchase the Suburban. On this occasion, the Coats? were told that the van they had purchased less than a year before for almost $17,000.00 from Keystone was now only worth about $7,000.00 and the only way they could get into the Suburban was if they could pay at least $8,000.00 cash down. Mrs. Coats realized then and there for the first time that it was possible that Keystone had lied to her in the sale of this vehicle and she accused the salesman of lying to them. The Coats learned the vehicle had a problem title by filling out a form on an internet website. The Coats ultimately learned that the vehicle was a lemon and instituted this action.
Mrs. Coats testified that she told Keystone that she believed she had been lied to; that Keystone made her feel dumb; that what Keystone had done was very upsetting; that driving this vehicle in this condition was nerve-racking; that they would not have purchased the vehicle had they been told the truth; that the vehicle is of no value to their family; and, that the vehicle is not reliable transportation
Keystone?s Corporate Representative testified as to the repairs and complaints identified in the warranty history prior to Keystone?s acquisition of the vehicle, which included a series of problems with the brakes and other items. The Coats? offered expert testimony from David Stivers, an automotive industry consultant. Mr. Stivers offered opinions on lemon buy back sales and disclosure practices and the quantum of economic harm sustained by the Coats.
The twelve person jury found for the Coats on their NEGLIGENCE, VIOLATION OF THE OKLAHOMA CONSUMER PROTECTION ACT AND DECEIT/FRAUD theories of recovery and awarded actual damages in the sum of $30,000. The jury also found by "clear and convincing" evidence that KEYSTONE CHEVROLET, INC., ACTED IN RECKLESS DISREGARD OF THE RIGHTS OF PLAINTIFFS and ACTED INTENTIONALLY AND WITH MALICE TOWARD PLAINTIFFS. THE JURY awarded $55,000 in punitive damages.
The trial court awarded the Coats $26,500.00 in attorney fees and $163 in court costs.
David Humphreys and Luke Wallace of Humphreys Wallace Humphreys P.C. were the Coats' lawyers.
February 2002 $1.35 Million Jury Verdict
Conseco Finance Guilty of False Credit Reporting Wrongful Forclosure and Wrongful collection practices jury verdict 1.35 million
IN THE DISTRICT COURT IN AND FOR CREEK COUNTY
STATE OF OKLAHOMA
Case No.: CJ-00-227
Trial Court Docket Link
Conseco Finance Servicing Corporation,
Counterclaim Defenant/
Plaintiff/Appellant,
vs
Carl M. Carlson, III & Robin M. Carlson,
Counterclaimant
Defendants/Appellee,
and
Carl M. Carlson, III,
Defendant and Crossclaimant,
v.
Robin M. Waltripp, (f/k/a Robin M. Hendricks & f/k/a Robin M. Carlson),
Defendant.
An Oklahoma jury returned a 1.35 million dollar verdict against Conseco Finance Servicing Corporation, for false credit reporting and wrongful collection practices. Carl Carlson contended that Conseco knew or did not care that his signature had been forged on loan refinance contracts by his wife seven days after she filed for divorce. In June 1998, Carlson applied for a vehicle loan which was denied. He requested a copy of his credit report and learned, for the first time, that Green Tree Financial Servicing Corporation (?Conseco?) was reporting a $25,000.00 debt. Carlson called Conseco and got a faxed copy of the contracts. The forgery was obvious even to the untrained eye and Carlson immediately reported the forgery to Conseco. Then Carlson retained two different lawyers over a year apart who wrote letters to Conseco advising of the forgery and requesting that Conseco remove its negative reporting of this account from Carlson?s credit report. Conseco admitted at trial that it ignored Carlson?s claims of forgery and unleashed its debt collectors who called him at home, at work, on his work cell phone, at previous employers even though Conseco knew he no longer worked there, and at relatives? homes. Each time Carlson spoke with a debt collector, he told them of the forgery and requested they quit calling him.
Carlson?s ex-wife admitted under oath during the divorce trial that she had forged his signatures to the contracts. Carlson told Conseco about the transcript of this admitted forgery, but Conseco did nothing to verify whether Carlson?s signature was forged. Conseco continued to report the account as delinquent on Carlson?s credit history.
In March of 2000, Conseco sued Carlson and his ex-wife. Carlson answered the lawsuit and filed a counterclaim against Conseco for invasion of privacy, libel and violation of the Oklahoma Consumer Protection Act based upon Conseco?s wrongful credit reporting and collection. Carlson also sued his ex-wife who immediately filed bankruptcy. Conseco began to report Carlson as being bankrupt and did so fifty-four times over the next eighteen months. Carlson received numerous denials for credit based upon the bankruptcy falsely being reported on his credit.
Just weeks before the jury trial and some nineteen months after Conseco filed its lawsuit, it filed a Motion to Compel Arbitration of the matter, however, Conseco later withdrew its motion when its own expert admitted that the signatures on the contract were forgeries. Just days before the trial of this matter, Conseco dismissed its claims against Carlson and notified all relevant credit reporting agencies that any reference to this account should be removed from Carlson?s credit as it was a forgery account.
After three and a half days of trial, the jury returned a verdict for $450,000 in actual damages and $900,000 punitive damages for a total of $1,350,000. Carlson?s total out of pocket expenditures were $305.00. The remaining balance of the jury?s $450,000.00 actual damage verdict consists of emotional distress, frustration, inconvenience, loss of time, credit damage, embarrassment and humiliation.
Counsel for Carlson were Luke Wallace and David Humphreys of Humphreys Wallace Humphreys, P.C. - Consumer Advocates, Trial Lawyers, 9202 South Toledo Ave., Tulsa, Oklahoma 74137; (918)-747-5300, luke@hwh-law.com and david@hwh-law.com . Counsel for Defendant was Tom Moore and Brent Austin of Metzer & Austin, P.L.L.C., 1 South Broadway, Suite 100, Edmond, OK 73034.
October 2001 $310,000 Jury Verdict
$310,000 JURY VERDICT AGAINST PAYDAY LENDER CASHLAND FOR PREDATORY LENDING, OKLAHOMA CONSUMER PROTECTION ACT VIOLATIONS AND WRONGFUL GARNISHMENT
IN THE DISTRICT COURT IN AND FOR TULSA COUNTY, OKLAHOMA
TERRY EVANS
v.
CASHLAND INC
No. CJ-2000-172
(Civil relief more than $10,000)
Filed: 01/10/2000
Closed: 10/24/2001
Judge: Shallcross, Deborah C.
To see the Trial Court Docket click here.
An Oklahoma jury returned a $310,000 verdict against a payday lender who admittedly over-garnished $110 from a customer. The lender said it was a simple mistake while attorneys for the customer David Humphreys and Luke Wallace of Tulsa, Oklahoma claimed it was part of a company wide practice of overcharging financially strapped customers who lacked the means to contest the company?s actions. On October 24, 2001 the jury awarded $20,000 in actual damages and $290,000 in punitive damages against Cashland, Inc., a payday lender with seven locations throughout Oklahoma.
Terry Evans entered into a series of small loan transactions with Cashland beginning in 1997. In December 1998, he refinanced his loan, agreeing to repay a total of $382.50 which included $300 in principle and interest at 126% APR. When Evans defaulted, Cashland filed suit for $448.80, which included $66 more than the principle and interest owed on the loan. Evans appeared at the small claims hearing to contest the amount Cashland sought. Judgment was entered against Evans at the hearing for $287.
Cashland filed a continuing garnishment summons and affidavit seeking to recover the amount of its judgment plus the cost for the continuing garnishment summons. Cashland did not include the amount it was due for the cost of filing and serving the small claims case. Rather than amending the existing continuing garnishment, Cashland filed a second continuing garnishment seeking an additional $177. Evans contested the amount sought by Cashland and appeared at a hearing on his claim for exemption. The small claims court ordered Cashland to refund $110 to Evans. When Cashland failed to return that amount after nine months, Evans filed suit for wrongful garnishment.
At trial, Evans? attorneys called Cashland?s corporate representative as their first witness. Cashland?s representative offered several explanations for the additional amount sued for in the small claims case. Cashland?s loan file contained no explanation for the additional amount. Cashland explained that the additional amount may represent a $16.50 per installment late fee. The promissory note itself permitted no more than a $5 fee. In other testimony, Cashland?s representative offered that perhaps the additional amount represented a simple mistake.
Cashland also could offer no explanation for the excess amounts it obtained through its second continuing garnishment. The lender maintained that it was not provided notice of the hearing on Evans exemption, did not attend the hearing and therefore did not know that it was ordered to return to Evans the excess amount it garnished. Deposit records obtained from Cashland revealed that it held the funds obtained from the second continuing garnishment and did not deposit them until the date of the exemption hearing, which took place six weeks after Cashland received the funds from Evans? employer. Cashland?s loan file also contained a loan history computer screen that was printed out on the date of the exemption hearing. Cashland?s attorney suggested that this had been printed in preparation for the exemption hearing, and thus Cashland knew that it had been ordered to repay the $110 but willfully refused to do so.
During discovery, Evans? attorneys obtained inspection reports from the Oklahoma Department of Consumer Credit concerning its review of Cashland?s loan files. These records established that Cashland had been cited for hundreds of instances of imposing excess late fees on consumers as well as numerous instances of excess collections on legal accounts.
During closing argument, Evans? attorney, Luke Wallace, requested the jury to return a verdict for actual damages, including upset, distress, inconvenience and aggravation in the range between $5,000 - $10,000. The jury returned a note to the trial court asking whether there was a limit on the amount of actual damages it could award Evans. On October 25, 2001, the jury returned a verdict of $20,000 in actual damages and separately indicated that it had found by clear and convincing evidence that Cashland had acted intentionally and with malice and in reckless disregard of the rights of Evans.
In a separate, second stage proceeding for punitive damages mandated by Oklahoma?s tort reform legislation, Cashland?s exposure to punitive damages was limited at $500,000. According to David Humphreys, ?The jury sent Cashland and the industry as a whole a very clear message. This was a shot across the bow. You are not going to be able to continue to roll over the most vulnerable and least financially sophisticated among us.?
The jury verdict received statewide press coverage and locally, the Tulsa World headline read: ?Small Claims Case Grows to 310,000.? One juror, Kevin Byrne, wrote a letter to the editor pointing out that the Tulsa World missed the real story and the reason why the jury returned a substantial punitive damage verdict. Byrne wrote: ?It is interesting that the same information that [the Tulsa World] chose to omit from the article was also data that Cashland?s attorney tried to suppress by objections that were overruled by Judge Shallcross. The state agency that oversees businesses such as Cashland had a representative in court who testified to the pattern of overcharges prevalent at several Cashland offices. In one store, 100% of the more than 500 accounts that were audited contained such an overcharge. For your article to omit such crucial information feeds the popular misconception that juries are out of control and are willing to award any Tom, Dick or Terry Evans ridiculous settlements. By sensationalizing a partial story of the case, your article distorted the real story and furthers public distrust of a court system that I find laudable. Jurors have busy lives with many pressures and difficulties, yet they show up in court and give their time to do what is required. I found the wisdom of our group of jurors to be true and insightful and the process gave me more confidence in our system of law.?
According to Luke Wallace, the verdict is believed to be the largest ever in Oklahoma for violation of the Oklahoma Consumer Protection Act or wrongful garnishment. Cashland has indicated that it intends to seek a new trial.
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South Toledo Avenue
Tulsa, OK 74137
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