State ex rel. McGraw v. King

729 S.E.2d 200, 229 W. Va. 365, 2012 WL 2203449, 2012 W. Va. LEXIS 305
CourtWest Virginia Supreme Court
DecidedJune 12, 2012
DocketNo. 11-1644
StatusPublished
Cited by2 cases

This text of 729 S.E.2d 200 (State ex rel. McGraw v. King) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. McGraw v. King, 729 S.E.2d 200, 229 W. Va. 365, 2012 WL 2203449, 2012 W. Va. LEXIS 305 (W. Va. 2012).

Opinions

PER CURIAM:

The petitionex’, Dai’rell V. McGraw, Attorney Genei’al for the State of West Virginia, seeks a writ of prohibition directed to the respondent, Charles E. King, Jr., Judge of the Circuit Court of Kanawha County, to enjoin enforcement of the August 15, 2011, order herein dismissing the petitioner’s action seeking enforcement of cei’tain investigative subpoenas issued against the respondents, Fast Auto Loans, Inc., a Virginia corporation; Community Loans of America, Inc., a Georgia corporation; and Robert I. Reich, the president and chief executive office of both corporations. After careful review of the record presented, the briefs and arguments of the parties as well as the brief of the amici curiae1 we deny the re[368]*368quested writ of prohibition for the reasons contained herein.

I.

FACTUAL AND PROCEDURAL HISTORY

The petitioner, Darrell V. McGraw, is the Attorney General for the State of West Virginia. Respondent Charles E. King, Jr., is a judge of the Circuit Court of Kanawha County. Respondent Fast Auto Loans, Inc. (hereinafter “FAL”), is a Virginia corporation. Respondent Community Loans of America, Inc. (hereinafter CLA) is a Georgia corporation. Respondent Robert I. Reich (hereinafter “Reich”), is the chief executive officer of both FAL and CLA and is a resident of the state of Georgia.

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 motor vehicle. These types of loans are often referred to as “title loans.” It is the position of the Attorney General that these loans are not authorized by West Virginia law, that West Virginia residents obtain these loans in Virginia, and that FAL and CLA attempt to collect on some of the delinquent title loans in West Virginia.

The Attorney General’s Consumer Protection Division received three complaints by West Virginia residents regarding the collection of these title loans provided by respondents, FAL and CLA The complaints were not about the loans themselves; rather the complaints were about telephone calls seeking information from and about the debtors. The first complaint was received on February 16, 2007. The second complaint was received on March 16, 2009, by a father whose daughter, a resident of Virginia, was the recipient of the respondent FAL’s loan. The final complaint was received on September 9, 2010. The manner of the calls, according to the Attorney General, violated the West Virginia Consumer Protection Act (W. Va.Code § 46A-1-101, et seq.)

These complaints triggered an investigation by the Attorney General into the legality of these collection calls. As part of his investigation, the Attorney General on March 2, 2011, issued an administrative subpoena duces tecum to the respondents, seeking disclosure of documents regarding loans made to West Virginia residents.2 The authority of the Attorney General to issue this type of investigative subpoena may be found in W. Va.Code § 46A-7-104G) (1974).3 The sub[369]*369poena requested compliance with the disclosure of documents by March 21, 2011. This investigative subpoena duces tecum was served upon the respondents by certified mail, return receipt requested. FAL’s subpoena was mailed to an address in Georgia. Neither FAL nor CLA responded to the subpoenas with documents. Instead, each had 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. This affidavit stated that FAL was not registered to transact business within West Virginia. Further, Mr. Fields testified that FAL did not have any offices or employees within this state. The respondents indicated that it was their position that they were under no obligation to produce the documents requested by the Attorney General in the investigative subpoena.

On April 28, 2011, the Attorney General filed in the Circuit Court of Kanawha County an action seeking enforcement of the previously issued subpoena duces tecum. On April 28, 2011, the respondent, Judge Charles E. King, Jr., issued a Rule to Show Cause directed to FAL, CLA and the respondent, Robert I. Reich, setting a hearing for June 8, 2011, on the issue of whether the respondents needed to comply with petitioner’s request for documents. The respondents filed a response indicating that 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. The respondents contended that the Attorney General should have attempted to domesticate the subpoena in the state of incorporation or residence for each respondent instead of merely mailing the self-issued subpoena to the respondents. The respondents also raised the issue of whether the Attorney General was properly before the West Virginia courts for enforcement.

A hearing was held before the respondent Judge King on June 8, 2011. At the conclusion of the hearing the circuit court requested that each party submit proposed findings of fact, conclusions of law and a proposed order for the court’s review and entry. On August 15, 2011, the circuit court ruled that the investigative subpoena was proeedurally defective and therefore invalid, and denied the petitioner’s request for enforcement of the subpoena.

In denying the petitioner’s request for judicial enforcement of the subpoena, the circuit court held that the petitioner had failed to abide by the requirements for issuance of and service of subpoenas on out-of-state entities. Citing Syl. pt. 1, State ex. rel. Hoover v. Berger, 199 W.Va. 12, 483 S.E.2d 12 (1996), the circuit court found that in order to obtain judicial enforcement of the investigative subpoena, the petitioner had to prove five “tightly drawn” requirements, including (1) that the subpoena was issued for a legislatively authorized purpose; (2) that the information sought is relevant to the authorized purpose; (3) that the information sought is not already in the petitioner’s possession; (4) that the information described is adequately described and (5) that proper procedures were employed in issuing the subpoena.

The circuit court reasoned that it was only after these factors were satisfied that the subpoena could be determined to be presumptively valid, shifting the burden to the respondent to show why the subpoena is not enforceable. Quoting again from Hoover, the circuit court found that “West Virginia courts are ‘particularly sensitive to claims of administrative subpoena ‘abuse,’ ” and when such a claim is raised, the circuit court must perform its “gatekeeper function” and provide “meaningful judicial oversight” and “careful [370]*370scrutiny” to determine if the subpoena is entitled to judicial backing. Hoover at 18-19,483 S.E.2d at 18-19.

The circuit court found that the sole issue before it was whether the petitioner had employed proper procedures in issuing the administrative investigative subpoena to the respondents. The order noted, inter alia, that if the Attorney General could not demonstrate that the subpoena was procedurally sound, the subpoena would be invalid and could not be enforced by the circuit court.

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729 S.E.2d 200, 229 W. Va. 365, 2012 WL 2203449, 2012 W. Va. LEXIS 305, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-mcgraw-v-king-wva-2012.