Preston couple can't bring loan claim under consumer protection statute

CHARLESTON – The state Supreme Court has ruled against a Preston County couple who sought to have a bank loan characterized as a “consumer loan” rather than a “commercial loan.”

Doing so might have found them relief under the West Virginia Consumer Credit and Protection Act. The court issued the unanimous memorandum opinion affirming the Circuit Court of Preston County’s Order Granting Summary Judgment to the bank on March 29.

Wayne and Dorothy Miller took out three loans through Clear Mountain Bank in 2008-2010. After the bank foreclosed on certain collateral, the Millers asserted that the bank violated the West Virginia Consumer Credit and Protection Act.

The circuit court entered summary judgment for the bank, finding as a matter of law that the WVCCPA did not apply because the loans were commercial loans and the WVCCPA only applies to consumer transactions.

The first of these loans was for the principal amount of $350,112, and the Millers asserted that the loan was taken out to pay expenses for their farm, “including for the training of horses, and to save from foreclosure a different farm owned by a family member.” The Millers limited their appeal to the issues surrounding this particular loan.

The Millers raised as a sole assignment of error on the appeal “whether the circuit court erred in granting summary judgment to defendants on the issue of the applicability of the West Virginia Consumer Credit Protection Act regarding the loan of 2008 which had many consumer features including the fact that respondent bank characterized this loan as a consumer loan.”

The petitioners asserted two claims under two sections of the WVCCPA: (a) Section 127 which provides that no debt collector “shall use any fraudulent, deceptive or misleading representation or means to collect or attempt to collect claims”; and, (b) Section 128 which provided that “no debt collector shall use unfair or unconscionable means to collect or attempt to collect any claim.”

Moreover, they argued under Section 122, a “claim” means “any obligation of a consumer to pay money arising out of a transaction in which the money, property insurance or service which is the subject of the transaction is primarily for personal, family or household purposes, whether or not such obligation has been reduced to judgment.”

The petitioners also pointed to Section 102 which defines “consumer loan” as a loan in which “the debt is incurred primarily for a personal, family, household or agricultural purpose” and argued that since the 2008 loan was primarily for agricultural purposes, it was a “consumer loan.”

The court was unsympathetic to the arguments put forth by the Millers.

“Upon a careful review of the CCPA and the parties’ arguments, we agree that summary judgment was appropriate for respondents on this issue. Farm expenses and the purchase of a farm at a foreclosure sale do not constitute transactions that are “primarily for personal, family or household purposes," the decision says.

“[W]hether this loan satisfies the definition of ‘consumer loan’ does not control the issue of whether petitioners may obtain relief under West Virginia Code § 46A-2-127 and § 46A-2-128. The legislature has expressly defined the type of ‘claim’ that is subject to sections 127 and 128 more narrowly than it has defined the term ‘consumer loan.’

“‘Agricultural purposes’ is simply not included in the definition of a ‘claim’ that is subject to these sections. Accordingly, under the plain statutory language, and in light of the specific allegations in the Complaint, petitioners’ argument fails.”

The bank also had filed a Motion for Leave to File a Supplemental Appendix and Tax Costs during the appeals process. The bank argued that the petitioners had failed to include documents in the appendix record that were necessary for consideration of the appeal and which the petitioners had agreed to provide.

The court had granted the Bank’s Motion after agreeing the documents were necessary and the bank had prepared the documents at its own cost.