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Washington Supreme Court Sends Strong Message Regarding Consumers and Meritless Debt Collection

Posted Wednesday, August 30, 2017 by McKean J. Evans

In its recent published opinion in Elliott Bay Adjustment Co., Inc. v. Caren Dacumos, the Washington Supreme Court confirmed the right of a debtor to collect attorneys’ fees in defending a meritless debt collection action in small claims court (i.e., in a lawsuit seeking less than ten thousand dollars). The court issued a strongly-worded opinion criticizing both the conduct of the debt collector in bringing the bogus lawsuit and the lower courts in denying the debtor’s request for attorney’s fees.

Elliott Bay sued Dacumos in small claims court over a $482.84 doctor’s bill that Dacumos had already paid. When Dacumos received the lawsuit, she immediately called Elliott Bay and told them she had already paid the bill in full. Elliott Bay told her she needed to make additional payments or Elliott Bay would obtain a judgment against her in court, garnish her wages, and pursue her for interest and attorney’s fees.

Dacumos hired a lawyer to defend the lawsuit. In the course of litigation, Elliott Bay insisted there were no factual disputes over whether Dacumos owed the doctor’s bill. Elliott Bay threatened to seek “significant” attorney’s fees from Dacumos.

After Dacumos provided the court bank statements showing she had paid the doctor’s bill, Elliott Bay acknowledged that the doctor’s office had mistakenly credited Dacumos’ payment to another patient’s account. Elliott Bay asked the court to grant a voluntary dismissal of its lawsuit against Dacumos “without prejudice.” “Without prejudice” means, in plain language, that it would be as if Elliott Bay had never sued Dacumos and Elliott Bay would be free to bring the same lawsuit again. Dacumos asked the court to instead dismiss the lawsuit with prejudice, meaning Elliott Bay could not sue Dacumos again on the debt. The court agreed with Dacumos and dismissed the case with prejudice, but refused to award Dacumos attorney’s fees.

The Washington Supreme Court reversed and ordered the lower court to grant Dacumos’ request for attorneys’ fees. The court pointed out that Washington law makes an award of attorney’s fees mandatory in cases seeking less than ten thousand dollars where one party is the “prevailing party.” Disagreeing with the lower courts, the Supreme Court concluded that Dacumos was the “prevailing party” because the lower court’s dismissal with prejudice established that Elliott Bay would never recover anything from Dacumos on the disputed doctor’s bill.

Beyond that fairly straightforward ruling, the Supreme Court sent a message to Washington’s lower courts that consumers who have to hire lawyers to defend bogus debt collection cases should recover their attorney’s fees from the debt collector. The Supreme Court criticized the lower court for “fail[ing] to appreciate that litigants have difficulty in obtaining counsel to assist in defending against collection activity when the alleged debt is small.” The court reiterated its statement in a prior case that attorney’s fee awards are important because defending debt collection cases over small amounts of money is “undesirable work to the great majority of attorneys” and many law firms would not allow a client like Dacumos through the office front door or advise her it was not economical to hire a lawyer to fight the case. The court also noted that “large corporate defendants can be uncooperative in discovery, leading to an increase in effort expended by the debtor’s attorney.”

If you are concerned about wrongful debt collection, contact Pivotal Law Group today for a free consultation.

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Posted Wednesday, August 23, 2017 by Christopher L. Thayer

Alternative TextIn its recent published opinion in Schroeder v. Haberthur, the Washington Court of Appeals, Division Three, held that growing and felling timber is not “farming” under the Deed of Trust Act (“DTA”), construing the DTA using definitions found in the Uniform Commercial Code (“UCC”).

The lawsuit turned on whether Excelsior Mortgage Equity Fund (“Excelsior”) could conduct a nonjudicial foreclosure on 200 acres of Shroeder’s land. Schroeder took out a loan from Excelsior in 2007 and secured the loan by a deed of trust on his 200 acre parcel. Schroeder described the parcel as 75 percent “Ag and timberland” and 25 percent scrapyard. Schroeder operated a logging business on the land in addition to a scrap metal business.

After Schroeder defaulted on the loan, Excelsior sought a nonjudicial foreclosure on the parcel. At a lengthy nonjury trial, Schroeder argued that timber is a “crop” under the DTA, precluding a nonjudicial foreclosure under the DTA, which prohibits nonjudicial foreclosure of agricultural land.

The Court of Appeals held that timber is not a “crop” and thus Schroeder’s use of the parcel for timber and logging purposes did not render the parcel agricultural. Since the DTA does not define “crops,” the Court of Appeals held that the UCC definition applied. The court noted that the legislature likely expected that the UCC would apply to the DTA, and that UCC definitions often applied in other secured transaction settings. Thus, the court concluded that Schroeder’s use of the parcel was not agricultural and Excelsior was entitled to conduct a nonjudicial foreclosure on the parcel.

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If you were offered a free cruise over the phone, you may be due up to $900

Posted Thursday, August 17, 2017 by Christopher L. Thayer

If you received a robocall offering you a free cruise from 2009 to 2014, you may be entitled to a settlement up to $900.

Click here for a full link to the article or see the link below:


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Case Law Update: Injuries from assault not an “accident” and not covered by insurance

Posted Wednesday, August 16, 2017 by Christopher L. Thayer

Case Law Update: Injuries from assault not an “accident” and not covered by insuranceIn a recent unpublished decision, the Washington Court of Appeals (Division 1) addressed whether injuries caused by an intentional assault would be covered under an insurance policy that provided coverage for “accidents”. State Farm Fire and Casualty v. Peters, et al (No. 75705-9-I, August 14, 2017).

Belt and Peters got into an argument. Belt struck Peters several times in the face with a closed fist, breaking Peters’ jaw in three places. Belt pled guilty to fourth degree assault. Peters subsequently sued Belt for damages in Snohomish County. Belt was insured by State Farm, with a policy that covered bodily injury claims arising out of an “accident”. The term “accident” was not defined in the policy. State Farm sought a court order confirming it had no duty of defense or indemnity – and the trial court agreed.

Insurance policies are contracts and are construed as such. Insurance policies are to be interpreted “as an average insurance purchaser would understand them.” Kish v. Ins. Co. of North America, 125 Wn. 2d 164 (1994). If an insurance policy defines its terms, those definitions apply, but undefined terms “must be given their plain, ordinary, and popular meaning.” Kitsap County v. Allstate, 136 Wn.2d 567 (1998).

In the present case, the policy does not expressly define “accident” and the policy’s exclusionary provisions do not mention the term. The court then looked to the common law definition of “accident”:

Thus, where the insured acts intentionally but claims that the result was unintended, the incident is not an accident if the Insured knew or should have known facts from which a prudent person would have concluded that the harm was reasonably foreseeable. State Farm v. Ham & Rye, 142 Wn. App. 6 (2007).

Belt argued he lacked specific knowledge that his conduct would cause injuries to Peters and that he did not “expect or intend” to cause injuries. The Court noted Belt’s unintended result and purported subjective intent were of no consequence and that “a prudent person would have concluded that a broken jaw was a reasonably foreseeable result of punching someone in the jaw.” The Court concluded “There is no support for the proposition that a mere subjective belief that there would be no injury, or subjective lack of knowledge or appreciation of consequences, results in coverage of intentional conduct as an “accident.”

The Court of Appeals affirmed the trial court’s summary judgment order – confirming State Farm had no duty to provide coverage or indemnify against any damage award.

For the average person, Belt’s arguments probably seem pretty esoteric, but the reality is this case was all about insurance coverage. With certain exceptions, the typical home or auto policy will provide coverage for “accidents” and not intentional conduct. Without insurance, Belt may not have been able to afford a lawyer, and Peters may not recover any damages for his injuries.

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Proposed Seattle Legislation update to Limit use of prospective tenant's criminal history

Posted Tuesday, August 8, 2017 by Christopher L. Thayer

Seattle Legislation Update:

The Seattle City Council is considering passing an ordinance which would prohibit landlords from screening prospective tenants based on criminal histories (except for registered sex offenders). The proposed ordinance will be presented to the full Council for a vote in the near future. This legislation is based on a proposal Mayor Ed Murray sent to the Council in June 2017.

More information about the proposed provision can be found here: http://seattle.legistar.com/LegislationDetail.aspx?ID=3089232&GUID=49272C76-0464-4C6E-A1FF-140591D00410&FullText=1

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