Supreme Court affirms AG's subpoena power

By John O'Brien | Nov 18, 2013


CHARLESTON – State Attorney General Patrick Morrisey is pleased with a recent ruling by the state Supreme Court over a subpoena issued by his predecessor to a debt-purchasing company.

On Nov. 18, Morrisey called the decision a win for consumers in that it upholds the AG’s office’s power to issue investigatory subpoena.

“Not only did the court uphold our office’s right to issue investigatory subpoenas, but the justices also upheld our power to seek temporary injunctive relief as part of our enforcement proceedings,” Morrisey said.

“Investigatory subpoenas and seeking injunctive relief are two essential tools in our quest to crack down on companies that either operate illegally or try to take advantage of our citizens. We applaud the court in assuring we have the ability to continue using these tools.”

The unanimous opinion was released Nov. 13 and authored by Justice Robin Davis. The two sides participated in oral arguments Oct. 1.

Cavalry Portfolio Services made its case to the court almost two years after Kanawha County Circuit Court Judge James C. Stucky granted a temporary injunction against it while denying its motions to dismiss.

Former Attorney General Darrell McGraw sued Cavalry SPVI, Cavalry SPV II, Cavalry Investments and Cavalry Portfolio Services in June 2010.

Cavalry purchases debts from debtors who have given up on collecting them. Cavalry then attempts to collect the debts itself with litigation.

Testimony from McGraw’s staff alleged that Cavalry debt-purchasers had filed at least 1,300 collection lawsuits prior to becoming licensed in October 2010.

Of those lawsuits, 743 resulted in judgments totaling more than $3 million against West Virginia consumers, with 369 default judgments.

In October 2011, Stucky ordered Cavalry to stop all wage garnishments and to release all liens filed against West Virginia consumers’ property stemming from judgments obtained by its companies before they became licensed.

It also ordered Cavalry to fully comply with an investigative subpoena issued by McGraw in January 2010.

After Stucky refused to dissolve the temporary injunction, Cavalry appealed.

Cavalry argued the injunction should be dissolved because the debtors from whom they seek to recoup debts will suffer no harm in its absence.

Cavalry also argued Stucky erred in enforcing the investigative subpoena, which it says was not supported by probable cause and was issued without an administrative hearing.

Because McGraw filed the lawsuit, the subpoenas should have been terminated, the company claims.

“(W)e find that the Attorney General’s investigatory powers include the power to issue investigative subpoenas,” Davis wrote, “and that the subject investigative subpoena was validly issued…

“We further conclude that when the Attorney General files a cause of action against a person or entity that is subject to an investigative subpoena, the Attorney General’s subpoena authority ends as to those matters that form the basis of the complaint’s allegations, and the rules of discovery applicable to civil proceedings generally provide them method by which the Attorney General may continue to investigate the alleged wrongdoing.

“However, an investigative subpoena survives the Attorney General’s filing of a lawsuit when the subpoena, in whole or in part, pertains to matters that do not form the basis of the subject complaint.”

The ruling also affirmed the temporary injunction issued by Stucky.

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.

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