Todd Turner
When William Echols of Amity made a nearly $1,400 credit card payment in 2012, he thought he was done with the bill. But it was only the beginning.
GE Money Retail Bank, the company that financed the credit for furniture Echols bought, sold the debt to Cach LLC of Denver, which then sued Echols in 2013 in Clark County District Court.
Echols turned around and filed a class-action complaint against Cach and its parent company, SquareTwo Financial Corp. He alleges violations of the Arkansas Fair Debt Collection Practices Act, malicious prosecution and abuse of process.
The case was moved to Clark County Circuit Court, and in December, Circuit Court Judge Robert McCallum gave the case class-action status, which could include thousands of potential class members in Arkansas who were subjected to Cach’s collection techniques.
The defendants appealed the class-certification order. The Arkansas Supreme Court said June 9 that it won’t hear oral arguments on the case, but will instead decide it using the briefs and the court record.
David Donovan of Little Rock, the attorney for the defendants, told Arkansas Business last week that the basis for the appeal is that Echols’ claims are different from others in the class.
Echols had already paid the alleged debt that Cach sued him to collect.
“The others claimed that Cach was not properly licensed; of course, that’s changed a little bit,” said Donovan, of the law firm Watts Donovan & Tilley. “But that’s for another day. That’s not the subject of the appeal.”
When Echols filed the lawsuit, debt collectors had to be licensed by the Arkansas State Board of Collection Agencies.
But during the 2015 legislative session, Rep. Dan M. Douglas, R-Bentonville, sponsored a bill that allowed collection agencies that had collected money without a license to retroactively get their license by paying a $10,000 fine, the only consequence they would face. The bill passed.
Douglas told Arkansas Business that he sponsored the legislation because he was approached by collection agencies that said they didn’t realize that they needed to be licensed.
“The way the laws were written, they had to be licensed,” Douglas said. “It was just very poorly worded language.”
Douglas said last week that he didn’t remember who first approached him to sponsor the legislation and his notes weren’t readily available.
Attorney Todd Turner of Arkadelphia, who is representing the class members with his brother, attorney Dan Turner, said last week that he thinks the retroactive legislation is unconstitutional and “very disappointing.” But he didn’t think it would have an impact on the class members’ case.
He said the Fair Debt Collection Act punishes the method of the collection.
“So it doesn’t matter if you owe a debt or get a judgment; if they improperly collect it, then you’ve got a separate cause of action,” said Todd Turner, of Arnold Batson Turner & Turner.
Cach’s business plan was to buy bad debt, including debts that it did not know had already been paid or satisfied, Turner said.
Most debt buyers would first contact the debtors to either validate the charge or encourage them to pay it, Turner said.
“So you can have some communication with them before they just up and sue you at the courthouse,” he said.
But Cach didn’t contact the debtors, he said. It “just started filing lawsuits,” he said.
Cach wanted the default judgments because once it received those, it wouldn’t matter if the wrong person was sued, Turner said.
“Then they start garnishing bank accounts,” he said.
Dan Turner said collection companies should be accountable if they sue the wrong person — instead of just saying, “We’re sorry we made you go hire a lawyer and took a default judgment against you.”
Donovan, the attorney for Cach, said his clients didn’t do anything wrong.
“They were fully complying with the law at all times,” he said.
Dan Turner said if the class-action order is reversed, it will not end the case.
“Mr. Echols himself would still have his claim,” he said. “He just wouldn’t represent all the other consumers” that were similarly situated.
Or the state Supreme Court could send the case back to Clark County Circuit Court for further review.
Once the issues at the Supreme Court are resolved, Dan Turner said, he’ll ask the Clark County Circuit Court for a trial date.
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