Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, August 21, 1995 TAG: 9508210003
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: LESLIE TAYLOR STAFF WRITER
DATELINE: LENGTH: Long
Collection agencies are a joy to perhaps no one. But the owing public copes, accepting their phone calls, poring over their terse letters.
Janet Hayes of Roanoke County took one to court - and won.
Hayes sued GC Services Ltd., a Houston-based collection agency, for violating the Fair Debt Collection Practices Act, a federal law that protects consumers from potentially harassing practices common in the debt collection business.
Last week, two months after a federal judge in Roanoke ruled that GC Services had violated that law, the collection agency agreed to pay Hayes $7,500 in damages.
Why Hayes sued is a complicated tale, dating to 1992.
Hayes' husband had walked out and stopped making mortgage payments on their home. Disabled by an accident that caused her to have seizures and unable to afford the payments on her own, Hayes faced foreclosure.
Hayes applied for the federal mortgage assistance program, a U.S. Department of Housing and Urban Development effort to help people who, through no fault of their own, can't meet payments on homes purchased with loans insured by the Federal Housing Administration.
Hayes' application was denied. With help from the Legal Aid Society of Roanoke Valley, she sued HUD, won and was placed in the assistance program in January 1993. Her mortgage payments were suspended until 1996, allowing her time to recover financially without being penalized.
Hayes said she was grateful for the financial relief.
But, in December 1993, Hayes began getting phone calls at home from GC Services. That year, the collection agency had entered a contract with HUD to provide an auto-call reminder service for people who were late with their single-family mortgage loan payments.
In the first call, GC Services told Hayes that HUD's records showed her payments were late, and advised her to call HUD to settle the matter.
"I thought it was a joke," Hayes said. "I truly thought someone was playing a joke on me. I asked, `Who is this?' and the man said, `My name is totally irrelevant to you.'"
Hayes said she explained to the caller that her payments had been suspended for three years through HUD's mortgage assistance program. The caller said he would make a note of it in his computer, Hayes said.
The calls continued, however, in January, February and March. Each time, a GC Services caller would recite these scripted sentences:
"My name is ... and I am with GC Services. Your mortgage is held by the Department of Housing and Urban Development, and its records indicate that your last monthly payment of $... was not received. Please call your local HUD office and discuss your financial situation with one of the loan services."
Hayes went back to Legal Aid for help. In March, Henry Woodward, Legal Aid's general counsel, wrote a letter to GC Services on Hayes' behalf asking the collection agency to stop calling her.
The calls continued for two more months.
Hayes, represented by Woodward, filed a lawsuit in U.S. District Court in Roanoke, alleging that GC Services' actions violated the Fair Debt Collection Practices Act. She claimed that GC Services had a duty to stop contacting her once they had been notified by Woodward. She asked for $5,000 in damages.
The calls continued for two more months.
Hayes filed another lawsuit, repeating initial claims but adding that, even after she filed the first lawsuit, the calls continued. She asked for $8,000 in damages and claimed that the repeated calls caused her anxiety, making her more vulnerable to seizures.
GC Services argued that its conduct did not violate federal law because it was not in "connection with the collection of a debt." Connection implied actually requesting and receiving debt payments, instead of mere reminder phone calls, the collection agency argued.
But in June, U.S. District Judge Samuel Wilson, in a summary judgment, ruled in Hayes' favor.
"Here, the reminder phone calls made by GC Services are clearly related to HUD's collection of mortgage payments," Wilson wrote. "Under the plain meaning of the words, the court finds that the conduct at issue is `in connection with the collection of a debt.'''
Wilson did not rule on the liability of GC Services and damages. Those issues were to be taken up at a trial that was set for this month. Instead, Hayes and the collection agency settled out of court last week.
"This wasn't a matter of fighting a situation that involved just me," Hayes said. "I knew that if they were calling me, they were calling thousands of people."
GC Services' administrators were unavailable for comment, as was a Lynchburg lawyer representing the agency. A spokeswoman in HUD's Washington headquarters said she did not know enough about the department's contract with GC Services to comment.
Woodward said the case could change how GC Services handles its reminder calls.
"It is an outrageous sequence," Woodward said, referring to Hayes' dilemma. "Whether it was done negligently or intentionally, it's inexcusable."
by CNB