State ex rel. Morrisey v. Copper Beech Townhome Cmtys. Twenty-Six, LLC

• Decision Date: 12 October 2017
• Docket Number: No. 17-0228,17-0228
• Court: West Virginia Supreme Court
• Parties: STATE of West Virginia EX REL., Patrick MORRISEY, Attorney General, Respondent v. COPPER BEECH TOWNHOME COMMUNITIES TWENTY-SIX, LLC, et al., Petitioner

806 S.E.2d 172

STATE of West Virginia EX REL., Patrick MORRISEY, Attorney General, Respondent

v.COPPER BEECH TOWNHOME COMMUNITIES TWENTY-SIX, LLC, et al., Petitioner

No. 17-0228

Supreme Court of Appeals of West Virginia.

Submitted: October 3, 2017

Filed: October 12, 2017

M. David Griffith, Jr., Esq., Joseph K. Merical, Esq., Thomas Combs & Spann, PLLC, Charleston, West Virginia, Counsel for the Petitioner

Patrick Morrisey, Esq., Attorney General, Thomas M. Johnson, Jr., Esq., Deputy Solicitor General, Erica N. Peterson, Esq., Assistant

Attorney General, Charleston, West Virginia, Counsel for the Respondent

W. Bradley Sorrells, Esq., Robinson & McElwee, PLLC, Charleston, West Virginia, Counsel for Amicus Curiae, The West Virginia Association of Realtors, Inc.

Samuel H. Simon, Esq., Matthew J. Lautman, Esq., Houston Harbaugh, P.C., Pittsburgh, Pennsylvania, Counsel for Amicus Curiae, North Central West Virginia Landlords Association, Inc. d/b/a North Central West Virginia Business Owners Association

John R. Teare, Jr., Esq., Spilman Thomas & Battle, PLLC, Charleston, West Virginia, Counsel for Amicus Curiae, The West Virginia Housing Institute, Inc.

Marjorie Anne McDiarmid, Esq., WVU Litigation & Advocacy Clinic, Carrie Ann Showalter, Esq., WVU Student Legal Services, Morgantown, West Virginia, Counsel for Amici Curiae, WVU Litigation & Advocacy Clinic and WVU Student Legal Services

Marc E. Williams, Esq., Randy L. Saunders, Esq., Alexander L. Turner, Esq., Nelson Mullins Riley & Scarborough, LLP, Huntington, West Virginia, Counsel for Amicus Curiae, The Defense Trial Counsel of West Virginia

Matthew A. Jividen, Esq., Paul R. Sheridan, Esq., Legal Aid of West Virginia, Martinsburg, West Virginia, Counsel for Amicus Curiae, Legal Aid of West Virginia

Mark A. Kepple, Esq., Bailey & Wyant, PLLC, Wheeling, West Virginia, Counsel for Amicus Curiae, Metro Property Management

Justice Ketchum :

In this matter we address whether our consumer credit protection statute applies to and regulates the relationship between a landlord and tenant under a lease for residential real property. The Circuit Court of Kanawha County certified a question to this Court to resolve this issue.

After thorough review, we find that our consumer credit protection statute does not regulate the residential rental fees a landlord may charge pursuant to a residential lease. We therefore answer the certified question in the negative.

I. FACTUAL AND PROCEDURAL BACKGROUND

The relevant facts of this matter are brief and undisputed. In September 2015, the Attorney General of West Virginia ("Attorney General"), acting on behalf of the State,¹ filed a civil action in the Circuit Court of Kanawha County against a landlord, Copper Beech Townhome Communities Twenty-Six, LLC ("Defendant Landlord").² Defendant Landlord is one of the largest residential lessors in the state. It maintains a number of rental units in Morgantown, West Virginia.

The Attorney General's complaint alleged that Defendant Landlord's residential leases included various fees and charges that violated the West Virginia Consumer Credit and Protection Act, W.Va. Code §§ 46A-1-101 et seq. [1974] ("CCPA"). According to the Attorney General, the fees contained in Defendant Landlord's leases that violate the CCPA include: 1) a non-refundable redecorating fee, 2) debt collection fees, 3) attorney's fees, 4) dishonored check fees, 5) multiple check fees when co-tenants pay rent with more than one check, 6) a fee for written receipts, and 7) a fee for late payment of monthly rent. The Attorney General's complaint alleged that these fees violated two main provisions of the CCPA: 1) the debt collection provisions as set forth in W.Va. Code §§ 46A-2-122 to -129a, and 2) the unfair and deceptive acts and practices provisions contained in W.Va. Code §§ 46A-6-101 to - 106. The Attorney General's complaint sought an "injunction, consumer restitution, disgorgement, civil penalties, and other appropriate relief."

Defendant Landlord filed a motion to dismiss the Attorney General's complaint, arguing that the CCPA does not apply to residential leases. After the circuit court denied this motion, Defendant Landlord moved the circuit court to certify a question to this Court regarding the application of the CCPA to residential leases of real property. On March 8, 2017, the circuit court certified the following question to this Court: "Does the West Virginia Consumer Credit and Protection Act (including W.Va. Code §§ 46A-2-122 to - 129a and §§ 46A-6-101 to - 106 ) apply to the relationship between a landlord and tenant under a lease for residential rental property?"³ Thereafter, this Court accepted the certified question.⁴

II. STANDARD OF REVIEW

As this Court recognized in Syllabus Point 1 of Gallapoo v. Wal-Mart Stores, Inc., 197 W.Va. 172, 475 S.E.2d 172 (1996), "[t]he appellate standard of review of questions of law answered and certified by a circuit court is de novo." Applying this plenary standard of review, we proceed to address the certified question.

III. ANALYSIS

Before addressing the specific certified question, we begin with a brief background discussion of the CCPA. It was "enacted in 1974 and is a hybrid of the Uniform Consumer Credit Code and the National Consumer Act and some sections from then-existing West Virginia law." White v. Wyeth, 227 W.Va. 131, 136, 705 S.E.2d 828, 833 (2010) (internal citation omitted). This Court has observed that the purpose underlying the CCPA is as follows: "We have recognized the dual legislative purposes of protecting consumers and promoting sound and fair business practices." Id., 227 W.Va. at 139, 705 S.E.2d at 836. Further, this Court has stated that the CCPA "is a comprehensive attempt on the part of the West Virginia legislature to extend protection to consumers and persons who obtain credit in state." Harper v. Jackson Hewitt, Inc., 227 W.Va. 142, 151, 706 S.E.2d 63, 72 (2010).

Additionally, the purpose of the CCPA was described in an excellent law review article by WVU Law School Professor Vincent Cardi⁵ wherein he stated:

The West Virginia Consumer Credit and Protection Act is intended to: (1) increase the availability of consumer credit by raising allowable finance charges (interest rates) and move toward equalization of rates available to consumers whether they borrow the money from a lender or buy the goods on credit from a seller; (2) regulate the rate of finance charges allowed for consumer credit transactions by prescribing rates and rules for computation; (3) regulate those businesses which make small consumer loans and which were formerly regulated by the small loan act; (4) protect consumers who purchase goods or services on credit or through consumer loans from deceptive selling techniques, unconscionable contract terms, and undesirable debt recovery and collection practices; and (5) protect consumers who purchase goods or services for cash or credit from, and to give them remedies for, defective or shoddy goods and services and unfair and deceptive selling practices.

V. Cardi, The West Virginia Consumer Credit and Protection Act, 77 W.Va. L. Rev. 401, 402 (1974-75).

In researching the background and purpose underlying the CCPA, we have found no reported West Virginia cases, law review articles, or secondary sources stating that the purpose, or even a purpose, of the Act is to regulate fees that a landlord may charge to a tenant pursuant to a residential lease. In fact, in the forty-three years since the CCPA was enacted, this case is the first occasion in which any party has asserted before this Court that the Act applies to and regulates the landlord-tenant relationship.

With this background in mind, we turn to the specific certified question before us: "Does the West Virginia Consumer Credit and Protection Act (including W.Va. Code §§ 46A-2-122 to -129a and §§ 46A-6-101 to - 106 ) apply to the relationship between a landlord and tenant under a lease for residential rental property?" As highlighted by the circuit court in its formulation of the certified question, our resolution of this matter requires us to examine two statutory sections contained in the CCPA: the debt collection provisions contained in W.Va. Code §§ 46A-2-122 to -129a, and the unfair or deceptive acts or practices provisions contained in W.Va. Code §§ 46A-6-101 to - 106.

The Attorney General asserts that we should answer the certified question in the affirmative and conclude that the CCPA applies to a residential lease entered into by a landlord and tenant. According to the Attorney General, the CCPA was written to "broadly [and] unambiguously apply to many different categories of people ... including landlords." Further, regarding the specific statutory sections at issue, the Attorney General asserts:

Under the plain meaning of the debt collection provisions, a tenant is a consumer, a landlord is a debt collector, and the tenant's obligation to pay charges and fees to the landlord constitutes a debt. Accordingly, a landlord is prohibited from using unfair and unconscionable means in order to collect any debt owed. Under the unfair or deceptive acts or practices provisions, a landlord engages in a trade or commerce and is prohibited from using unfair or deceptive acts or practices.

By contrast, Defendant Landlord argues that neither the debt collection provisions, nor the deceptive practices provisions of the Act apply to residential leases. Defendant Landlord asserts that the CCPA is "designed to prohibit creditors from taking advantage of consumers in various transactions."⁶ A landlord's business of renting residential property to a tenant is not the type of conduct regulated by the CCPA according to Defendant Landlord. Instead, "residential leases are already subject to extensive statutory and regulatory oversight ... and the specific fees [the Attorney General] takes issue with are already addressed by other statutes."⁷ Stated simply, Defendant Landlord asserts that the CCPA was not written or...