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Court upholds former W.Va. attorney general's investigatory subpoenas

CHARLESTON, W.Va. -- The West Virginia Supreme Court has upheld the state attorney general's authority to issue subpoenas and investigative questionnaires in a case involving four debt collection companies.

The unanimous decision came in appeals of two Kanawha County Circuit Court rulings by the four companies: Calvary SPV I, Calvary SPV II, Calvary Investments and Cavalry Portfolio. The Supreme Court consolidated the two cases.

In one appeal, the companies challenged the validity of an investigative subpoena issued in January 2010 by former Attorney General Darrell McGraw's office. They argued that the office had no probable cause to issue the subpoena and that it failed to hold an administrative hearing before doing so.

In the opinion released last week, the court rejected these arguments.

"Under the facts of the case ... we find that the Attorney General amply demonstrated probable cause to believe that the Petitioners had violated, or were violating, the provisions of the West Virginia Consumer Credit and Protection Act," states the opinion, written by Justice Robin Davis.

Davis wrote that the Attorney General's Office had received several consumer complaints and other information indicating that some of the companies were collecting consumer debts without a state license or surety bond.

"Contrary to the Petitioners' assertions, the Attorney General was not required to possess concrete proof of the specific alleged wrongdoing or to describe in detail the nature of the potentially nefarious misconduct at the time he issued his investigative subpoena," Davis wrote. "Rather, the purpose of an investigative subpoena is precisely as its name implies: to investigate. Such an investigation is designed to ascertain whether a violation of the Act has, in fact, occurred so as to permit the filing of an enforcement proceeding against the alleged offender."

Davis also wrote that state law does not require an administrative hearing before the attorney general issues an investigative subpoena.

The companies also claimed that the Attorney General's Office improperly requested a court order seeking to force compliance with the subpoena after it had sued them alleging the same misconduct.

When the attorney general files a civil action, its subpoena authority ends regarding matters that form the basis of the complaint's allegations, the court ruled. But a subpoena survives the attorney general's filing of a lawsuit when it pertains to matters that don't form the basis of the complaint.

The court sent the case back to circuit court to determine whether the lawsuit supplanted any portion of the subpoena, which would make it subject to civil discovery in the case.

The second appeal had challenged a temporary injunction issued by the circuit court barring the companies from collecting any debts they acquired before they were licensed in West Virginia as debt collectors. The Supreme Court upheld the temporary injunction.


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