Missouri woman gets $83 million after debt collector sues wrong person over $1,000 credit card
Welcome! My name is Joel Z Williams and the purpose of this
blog is to give tips and tricks and other life hacks to people of limited
means.
Today marks my inaugural post in which I will discuss a
landmark case which affects debtor’s rights regarding credit card companies. This
case first came to my attention on March 14, 2015 after a story reported by Dan
Margulies was published by a National Public Radio affiliated channel in Kansas
City, Missouri. KCUR-89.3 FM aired the piece as part of its Heartland Health
Monitor team program.
The case began in North Kansas City, Missouri after a debt
collector wrongly sued a 51-year-old woman for allegedly owing a $1,000 credit
card debt. The defendant in that case, Maria Guadalupe Mejia, says she never
owned a credit card and first learned of the alleged debt on Feb. 6, 2013 after
her husband showed her the plaintiff’s petition and summons.
Watch my YouTube video about this case:
The plaintiff in this case is known as Portfolio Recovery
Associates, LLC. PRA is currently the second largest debt buyer in the nation,
with its headquarters located in Norfolk, Virginia. PRA makes its money by
purchasing defaulted credit card debt for pennies on the dollar from credit
card companies and other debt buyers. PRA then assumes efforts to collect on
those debts, usually through litigation in civil courts around the nation.
Just prior to the lawsuit, Mrs. Mejia, the defendant, had
been working for approximately 15 years at a drycleaners on Independence Avenue
in northeastern Kansas City, Missouri. She lost her long-standing job when the
owner of that business closed the drycleaners right around the same time PRA
filed his lawsuit against her. With no money and no way of convincing PRA that
she did not owe the alleged debt, Mrs. Mejia ultimately turned to legal aid for
assistance.
Legal aid unsuccessfully made several attempts to convince
PRA to dismiss their case, but PRA would not be dissuaded. In fact, PRA
continued on with their case for a total of 15 months. All the way to the point
where the matter was set to be heard by Judge Joel P Fahnestock at the Jackson
County Circuit Court. It was around that time when a law firm decided to step
in and assume representation from legal aid on behalf of Mrs. Mejia.
High-powered lawyer and former Public Defender step into the fray
Two attorneys from the law firm of Slough, Connelly, Irwin andMadden, LLC. spearheaded the effort to challenge PRA’s assertions that Mrs. Mejia
actually owed any credit card debt to them. According to one of those attorneys
they appeared at two hearings and filed four motions in an effort to get PRA to
provide documents verifying the alleged debt. Attorneys Gina Chiala and Fred
Slough were unsuccessful in those actions. Fred Slough has been practicing since 1973 and is qualified to litigate before the Supreme Court. Gina Chiala is a former Public Defender in Jackson County, MO.
Judge Fahnestock finally grew weary of PRA’s failure to
comply with discovery procedures and eventually had the plaintiff’s pleadings
stricken from the record. That decision immediately moved the case to the award
phase of the trial. It was around that time that the judge learned the true
identity of the person who actually owed the $1000 debt in question. It was
revealed that the actual debtor is a man who happens to have a similar sounding
name as the defendant. Incensed by the plaintiffs actions, Judge Fahnestock
determined that PRA had engaged in a malicious prosecution of Mrs. Mejia and an
invasion of her individual privacy.
Judge gets hopping mad after learning of debt buyer's deceitful practices
The judge then awarded Mrs. Mejia actual damages of $250,000
for PRA’s willful violations of the Fair Debt Collections Practices Act
(FDCPA). The judge also granted punitive damages to the defendant in the amount
of $82,990,000 for PRA’s malicious prosecution of her for a period of over one
year and three months, despite being informed of the mistaken identity.
After the trial was completed the defendant’s attorney Gina
Chiala spoke to reporters. Ms. Chiala said that PRA has established a reputation
within the field of consumer law as a company that aggressively pursues
litigation against alleged debtors even in cases where there may be problems
with the validity of those claims. A PRA spokesman issued a statement for the
company indicating that Judge Fahnestock’s award was excessive and beyond the
bounds of fairness. PRA says that they will pursue an effort to have the court
review the verdict and perhaps set it aside.
According to publicly filed documents, PRA’s parent company,
PRA group Inc., reported a total revenue in 2014 of $881 million. The company
also reported a net income that same year of $176.5 million. The judgment in
this case represents nearly half of the companies 2014 profits. Other sources
also indicate that the top five executives of that organization each earned
approximately $17 million in salary last year.
Debt buyers cannot sue you if the debt is too old
If you are currently being sued on a debt that you do not
owe there are a few things you should know. Mrs. Mejia’s case is unusual in many
ways, yet very typical of a debt buyer lawsuit. During her interview with
reporters Mrs. Mejia revealed that she was scared of being arrested during the
litigation process. This is a common fear that many defendants face when local
sheriffs, acting as process servers, place legal documents into the hands of
defendants. This is especially true of recent immigrants and others who may be
from countries where law enforcement officials are corrupt.
Debt buyers take advantage of that fear and apprehension in
several ways. For example, every state has a time limit in which creditors are
entitled to sue debtors for payment. This is known as a statute of limitations.
In Missouri, that timeframe is five years. Kentucky has the longest SOL,
allowing creditors to sue debtors for up to 15 years! Here is a hyperlink to
bank rate.com, a website which contains a state-by-state breakdown of
individual SOL’s. Click Here to View .
It’s important for you to know that the SOL begins the
moment that a debtor goes into default on their credit card. That date is known
as the date of delinquency, and typically occurs within 90 days of the debtor’s
first failure to pay. This can be important to you because creditors are time-barred
by both state and federal laws from filing a lawsuit to recover a delinquent debt
beyond the statute of limitations. You can receive money awards if a court
determines that a company sued you beyond the statutory limitations.
