Christian v. Jackson Hewitt Inc.

Decision Date23 November 2010
Docket NumberNo. 35295.,35295.
Citation227 W.Va. 142,706 S.E.2d 63
PartiesChristian and Elizabeth HARPER, on their own Behalf and on Behalf of those Similarly Situated, Plaintiffs,v.JACKSON HEWITT, INC., Defendant.
CourtWest Virginia Supreme Court
OPINION TEXT STARTS HERE
Syllabus by the Court

1. ‘A de novo standard is applied by this court in addressing the legal issues presented by a certified questions from a federal district or appellate court.’ Syl. Pt. 1, Light v. Allstate Ins. Co., 203 W.Va. 27, 506 S.E.2d 64 (1998).” Syllabus Point 2, Aikens v. Debow, 208 W.Va. 486, 541 S.E.2d 576 (2000).

2. A tax preparer who receives compensation, either directly from the borrower or in the form of payments from the lending bank, for helping a borrower obtain a refund anticipation loan meets the statutory definition of a credit services organization under W. Va.Code § 46A–6C–2(a) (2004).

3. The borrowers in a refund anticipation loan transaction meet the definition of a buyer under W. Va.Code § 46A–6C–1(1) (1991).

4. “If the language of an enactment is clear and within the constitutional authority of the law-making body which passed it, courts must read the relevant law according to its unvarnished meaning, without any judicial embroidery.” Syllabus Point 4, West Virginia Health Care Cost Review Authority v. Boone Memorial Hosp., 196 W.Va. 326, 472 S.E.2d 411 (1996).

5. For actions alleging violations of the Credit Services Organizations Act, W. Va.Code § 46A–6C–1 et seq. and the resulting statutory prohibition on unfair or deceptive acts or practices specifically identified in W. Va.Code § 46A–6–104, the applicable statute of limitations is four years pursuant to W. Va.Code § 46A–5–101(1) (1996).

6. “An agent in the restricted and proper sense is a representative of his principal in business or contractual relations with third persons; while a servant or employee is one engaged, not in creating contractual obligations, but in rendering service, chiefly with reference to things but sometimes with reference to persons when no contractual obligation is to result.' Syl. Pt. 3, State ex rel. Key v. Bond, 94 W.Va. 255, 118 S.E. 276 (1923).” Syllabus Point 2, Teter v. Old Colony Co., 190 W.Va. 711, 441 S.E.2d 728 (1994).

7. ‘One of the essential elements of an agency relationship is the existence of some degree of control by the principal over the conduct and activities of the agent.’ Syl. Pt. 3, Teter v. Old Colony, 190 W.Va. 711, 441 S.E.2d 728 (1994).” Syllabus Point 2, Thomson v. McGinnis, 195 W.Va. 465, 465 S.E.2d 922 (1995).

John W. Barrett, Esq., Brian A. Glasser, Esq., Jonathan R. Marshall, Esq., Bailey & Glasser, Charleston, WV, for Plaintiffs.Charles L. Woody, Esq., Spilman, Thomas & Battle, Charleston, WV, for Defendant.Lonnie Simmons, Esq., DiTrapano, Barrett & DiPiero, Charleston, WV, for Amici Curiae, AARP, et al.

BENJAMIN, Justice:

This matter is before the Court upon a September 29, 2009, order of the United States District Court for the Southern District of West Virginia, Huntington Division, which certified the four following questions:

1. “Does a tax preparer who receives compensation, either directly from the borrower or in the form of payments from the lending bank, for helping a borrower obtain a refund anticipation loan meet the statutory definition of a credit services organization, or a “CSO,” (W. Va.Code § 46A–6C–2(a)), and do the borrowers in such a transaction meet the definition of a buyer ( id. § 46A–6C–1(1))?

2. Is the appropriate limitations period for actions alleging violations of the CSO statutes ( id. § 46A–6C–1 et seq.) and the statutory prohibition on unfair or deceptive acts or practices ( id. § 46A–6–104) four years under West Virginia Code § 46A–5–101(1), or one year under the general limitation period in West Virginia Code § 55–2–12?

3. Are the contractual agency disclaimers in the refund anticipation loan applications enforceable under West Virginia law?

4. Is a tax preparer who helps a customer obtain a refund anticipation loan in exchange for compensation an agent under West Virginia law?

By order dated November 12, 2009, this Court accepted the certified questions and docketed the matter for resolution. Upon review of the parties' briefs, arguments and the record, we answer the certified questions, as reformulated, and remand this matter for further proceedings consistent with this opinion. 1

I.FACTUAL AND PROCEDURAL BACKGROUND

This putative class action was originally filed by Linda Hunter in the United States District Court for the Southern District of West Virginia, Huntington Division, against Jackson Hewitt, Inc.2 Mrs. Hunter hired Jackson Hewitt to prepare her federal income tax return for the 2005 tax year, and in the process, purchased a Refund Anticipation Loan [“RAL”], which allows customers to obtain a loan based upon their anticipated income tax refund. Mrs. Hunter claimed that she allowed Jackson Hewitt to forward her application for the RAL, along with her tax return, to Santa Barbara Bank and Trust [“SBB & T”], a lending institution.3 She claimed that the RAL carried an exorbitant interest rate and was financially unsound, and that Jackson Hewitt received secret payments back from SBB & T and concealed profits from SBB & T for arranging the loan.

In her complaint, Mrs. Hunter alleged that Jackson Hewitt: (1) breached its fiduciary duty to her arising out of an agency relationship; (2) breached its fiduciary duty arising out of a confidential relationship; (3) breached its fiduciary duty arising out of Jackson Hewitt's status as a loan broker; (4) breached West Virginia statutes governing credit organizations; (5) breached its contract with her; and (6) committed unfair or deceptive acts or practices in violation of West Virginia law. On November 6, 2007, the District Court granted Jackson Hewitt's motion to dismiss the claims alleging breach of fiduciary duty arising out of a confidential relationship and breach of a fiduciary duty arising out of its status as a loan broker, but denied Jackson Hewitt's request to dismiss the remaining counts.4 On March 13, 2008, the District Court granted Jackson Hewitt's motion for partial summary judgment on Plaintiff's breach of contract claim, finding that no contract with Mrs. Hunter existed, as there was simply nothing in the provisions cited by the Plaintiff which a reasonable juror could find contractually obligated Defendant to Plaintiff with respect to the RAL.

Also on March 13, 2008, the parties filed a joint motion to amend the scheduling order, stating that Defendant has obtained discovery relating to Plaintiff and her husband's tax returns. Mrs. Hunter no longer desires to participate in this action, and Plaintiff's counsel have determined that Mrs. Hunter is not an appropriate class representative.” On April 21, 2008, Plaintiff moved for leave to amend the complaint to substitute Christian and Elizabeth Harper 5 and Donna Wright for Mrs. Hunter. The District Court granted this motion on June 30, 2008. However, in its order, the District Court stated that “those claims in the Amended Complaint which previously were dismissed and/or for which Defendant was granted summary judgment are not revived by virtue of the Amended Complaint being filed.” The Amended Complaint was filed that same day.6

In February 2009, Plaintiffs moved for class certification and partial summary judgment with respect to their credit services organization [“CSO”] claim. On February 13, 2009, Jackson Hewitt filed its cross motion for summary judgment on the three remaining claims. These motions were fully briefed before the District Court.

On April 7, 2009, almost two and a half years after the case was brought in the District Court, Plaintiffs moved to certify the above four questions to this Court. On September 29, 2009, the District Court granted Plaintiffs' motion to certify four questions to this Court, denied in part Defendant's motion for summary judgment, denied without prejudice the remainder of Defendant's motion for summary judgment, denied without prejudice Plaintiffs' motion for summary judgment, and held in abeyance Plaintiffs' motion for class certification. In its order, the District Court found the following: 1) it denied Jackson Hewitt's motion for summary judgment regarding whether there is sufficient evidence of an injury to maintain a CSO claim, finding that an injury exists if the CSO statute is violated, regardless of whether a consumer may be willing to take the same course of action if he could go back in time; 2) the District Court acknowledged that plaintiffs' CSO claims may be moot if they are preempted by the National Bank Act, 12 U.S.C. § 24, but denied without prejudice defendant's motion for summary judgment on this issue to wait to address the subject of preemption after this Court determines whether the CSO statute applies to Jackson Hewitt and following the Fourth Circuit's impending decision in H & R Block Eastern Enterprises, Inc. v. Turnbaugh, Nos. 08–2162, and 08–2163 (4th Cir. Filed Oct. 9, 2008) 7; 3) denied Jackson Hewitt's motion for summary judgment on whether there was sufficient evidence of an agency relationship, breach of fiduciary duty and damages, finding that there is a sufficient basis to allow a jury to determine whether Jackson Hewitt breached its alleged duty of loyalty and trust to plaintiffs and whether plaintiffs suffered damages, but asking this Court to determine whether an agency relationship exists in the first instance; and 4) denied Jackson Hewitt's motion for summary judgment on plaintiff's unfair or deceptive act or practice claim, finding that if this Court determined that Jackson Hewitt qualifies as a CSO, then pursuant to W. Va.Code § 46A–6C–7(d), a “breach by a credit services organization under this article, or any obligation arising from this article, is an unfair or deceptive act or practice.” Accordingly, the only presently remaining claims...

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