New Jersey-based collection agency challenges $11M award

Daily Record, The (Baltimore), Jan 18, 2006 by Cynthia Di Pasquale

An out-of-state collection agency is fighting to set aside the $11.6 million award entered against it last month in Frederick County Circuit Court.JBC & Associates P.C. also was ordered to pay plaintiff Thomas Mael $869 in restitution plus $61,000 in damages for his individual claims against the New Jersey-based agency, which throughout 2004 was allegedly using unlawful tactics in attempting to recover a 10-year-old debt.

The company was not present for trial on Dec. 1, and Mael successfully moved for summary judgment before Judge Julie Solt. Solt had earlier granted summary judgment in the class action as to liability, and on Dec. 1, held a court trial on the issue of damages. Her ruling was entered Dec. 30, granting each class member $2,000.

JBC claims it did not know the class action would be tried on Dec. 1. It has asked the Frederick County Circuit Court to rehear both actions.

We have filed a motion to set aside the class action judgment because we do not believe that Maryland law permits the entry of a judgment under the Maryland Consumer Debt Collection Act in favor of the members of the plaintiff class, said Steven A. Allen, the defendant's Towson-based attorney. There is no provision in Maryland law for the assessment of a penalty in a private action brought under the Consumer Debt Collection Act and there was no proof presented that any members of the class suffered any damages as a result of receiving a collection letter from the defendant.

It is our position that under the circumstances of this case the class should not have been certified and that the judgment that was entered should be stricken, he continued.Allen was not hired as counsel for the agency until mid-December - after the trial and Mael's judgment had been entered. JBC was not represented by counsel at a pre-trial hearing or the trial because its previous attorneys asked to withdraw from the case after claiming they hadn't been paid. Extra nine cents

Mael says he received a letter from JBC claiming he had written a bad check in 1993 and owed $869.09, including a bounced check fee, according to his attorney Scott C. Borison. Because Mael was planning to purchase a home and didn't want his credit damaged, he paid the agency $869. JBC came back, however, seeking $1,000 as a penalty for his failure to pay the extra nine cents, Borison said.

The agency then proceeded to call Mael 81 times. Sixty-one of those calls were made after he told its agents to leave him alone - hence the $61,000 award.

Mael charged the agency was not licensed to practice in the state and was in some cases trying to collect debts no long enforceable. Furthermore, the letter the agency sent should have informed consumers that they had 30 days to pay the debt without incurring fees or owing damages, according to Borison.

He filed a class action suit on behalf of 5,808 individuals who also received letters from JBC. The judge awarded each of them $1,000 in restitution and another $1,000 in damages. But the company is now arguing that the judgment was wrong. Because of problems with its counsel, the agency was never informed that the plaintiff class had been certified and that its claims would be heard on Mael's trial date, according to a Jan. 9 memorandum supporting JBC & Associates' motion for a new trial. By entering a judgment against the agency, it says the court violated its due process rights.

As a matter of law, the court did not have authority to arbitrarily decide damages, the defendant claims. Damages can only be awarded if there is proof that an individual sustained damages directly and proximately caused by the defendant's conduct, according to the court document.Also, there was no statutory authority to award damages to this particular class, unless the damages are incidental to equitable relief, the agency argues.

Mael's response is due next week.Connecticut's attorney general already led a successful action against the collection agency for operating illegally in that state and West Virginia has an action pending.