W.Va. SC says AG wrong to seek writ instead of direct appeal

Jessica M. Karmasek Jun. 13, 2012, 12:30pm


Chief Justice Menis Ketchum

CHARLESTON, W.Va. (Legal Newsline) - The West Virginia Supreme Court of Appeals has denied a request by Attorney General Darrell McGraw for a writ of prohibition, seeking to stop the enforcement of a circuit court's order in a case against two title loan companies.

McGraw, in his petition, argued that Kanawha County Circuit Court Judge Charles E. King Jr. should have enforced an investigative subpoena issued by his office.

The subpoena was issued against Virginia-based Fast Auto Loans Inc., Georgia-based Community Loans of America Inc. and Robert I. Reich, the president and CEO of both corporations.

FAL and CLA are non-resident corporations that do not have offices or places of business in West Virginia.

Their business consists of loaning money to people who own motor vehicles. The loan is secured by a lien on the borrower's vehicle. These types of loans are often referred to as "title loans" -- which are not authorized by state law, according to the Attorney General's Office.

At issue is the collection of the title loans, McGraw's office said.

The attorney general's Consumer Protection Division received three separate complaints by West Virginia residents.

The complaints were not about the loans themselves, but about telephone calls seeking information from and about the debtors.

The manner of the calls, McGraw argued, violated the West Virginia Consumer Protection Act.

As part of his investigation into the collection calls, the attorney general on March 2, 2011 issued an administrative subpoena duces tecum to FAL and CLA, seeking disclosure of documents regarding loans made to West Virginia residents.

Neither FAL nor CLA responded to the subpoena with documents. Instead, each asked for more time -- to April 4, 2011 -- to respond to the State's requests.

On April 5, 2011, the respondents filed the affidavit of Terry E. Fields, the chief financial officer of FAL.

The affidavit stated that FAL was not registered to transact business in West Virginia. Further, Fields testified that FAL did not have any offices or employees in the state.

FAL and CLA, along with Reich, indicated it was their position that they were under no obligation to produce the documents requested by the attorney general in the subpoena.

On April 28, 2011, in response, McGraw filed an action seeking enforcement of the subpoena duces tecum in Kanawha Circuit Court.

That same day, King issued a rule to show cause directed to FAL, CLA and Reich, setting a hearing for June 8, 2011 on the issue of whether they needed to comply with McGraw's request for documents.

The corporations and Reich argued the subpoena duces tecum was invalid and moved that it should be quashed because the attorney general ignored procedural requirements for the issuance of an out-of-state subpoena.

They also questioned whether McGraw was "properly before" the West Virginia courts for enforcement.

On Aug. 15, 2011, King ruled that the investigative subpoena was procedurally defective and therefore invalid, and denied McGraw's request for enforcement of the subpoena.

The attorney general did not file a direct appeal to the state's high court from the Aug. 15, 2011 order. Instead, on Dec. 5, 2011, he filed a petition for writ of prohibition.

In its per curiam opinion filed Tuesday, the Court said because McGraw had "another adequate remedy," it was forced to deny the requested writ.

"The underlying order issued by Judge King clearly framed the issue facing him as whether the attorney general issued a procedurally sound subpoena to the respondents. Relying upon the Hoover analysis the circuit court found that the petitioner made procedural missteps in executing and serving the subpoenas upon the out-of-state respondents," the justices explained in their 12-page ruling.

"An appeal of that decision to this Court would have allowed this Court to rule on the propriety of that ruling. However, the proceeding before us is not an appeal on the merits, but rather a petition for writ of prohibition."

The Court noted that it looks "with disfavor" on the use of the "extraordinary" writ process to problems that "should have been handled by an appeal."

"The writ of prohibition is truly an extraordinary remedy, one which should be reserved for extraordinary cases," the justices wrote.

In this case, a direct appeal would have been the "more appropriate" remedy to address the perceived error in King's order, the Court said, adding that a writ of prohibition is not a "substitute" for an appeal.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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