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Volume XII, Number 147

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Unconscionable Inducement of Consumer Credit in West Virginia Requires Intentional Bad Acts

A recent amendment to § 46A-2-121 of the West Virginia Consumer Credit and Protection Act (the WVCCPA) clarifies that for a consumer loan to have been unconscionably induced, the loan originator must have made “affirmative misrepresentations” or engaged in “active deceit or concealment of a material fact.”

In McFarland v. Wells Fargo Bank, N.A., the U.S. Court of Appeals for the Fourth Circuit interpreted this subsection of the WVCCPA to provide borrowers with a claim for unconscionable inducement apart from a claim that the resulting transaction was, itself, unconscionable.  The Fourth Circuit was predicting how the West Virginia Supreme Court likely would interpret the language of the subsection, although the West Virginia Supreme Court had not done so before.

The Fourth Circuit went on to say that “[w]e of course leave to West Virginia law the precise contours of an unconscionable inducement claim, but it appears that [an unconscionable inducement claim] will turn not on status considerations that are outside the control of the defendant, but instead on affirmative misrepresentations or active deceit.”

Recently, the state legislature amended the WVCCPA in accord with the Fourth Circuit’s statement.  Unconscionable inducement now will require proof of “unconscionable conduct such as affirmative misrepresentations, active deceit or concealment of a material fact.”  The clarifying amendment will be effective June 8, 2016.

How West Virginia’s courts apply this specific language remains to be seen.  For now, the Legislature has provided a clear indication that unconscionable inducement requires intentional bad acts, such that courts have guidance on the severity of the acts that must be proven to establish unconscionable inducement.

© Steptoe & Johnson PLLC. All Rights Reserved.National Law Review, Volume VI, Number 137
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About this Author

Russell Jessee, Litigation Attorney, Steptoe Johnson Law Firm, West Virginia
Member

Russell Jessee is the leader of the firm's Business Litigation Practice Group.  His practice focuses on resolving disputes for business clients.  He defends creditors and servicers in consumer credit litigation.  Additionally, he litigates contract disputes and unfair trade practices cases.  Mr. Jessee represents businesses in disputes with regulatory agencies.  He pursues medical providers who wrongfully/fraudulently submit claims to health insurers, and he pursues commercial debtors for commercial creditors.  Furthermore, Mr. Jessee defends businesses in difficult employment cases,...

(304) 353-8103
John Meadows, Energy Litigator, Steptoe Johnson Law FIrm
Member

John Meadows focuses his practice in the area of energy litigation and is an experienced civil litigator in both state and federal courts. John is the co-leader of Steptoe & Johnson's Energy Litigation Team.

(304) 353-8154
Ancil G. Ramey, Appellate Litigator, Steptoe Johnson Law Firm
Member

Ancil Ramey concentrates his efforts in the areas of appellate litigation, having handled over 300 appellate matters, as well as matters involving commercial litigation and insurance litigation. Prior to joining Steptoe & Johnson, Mr. Ramey served as Clerk of the Supreme Court of Appeals of West Virginia for more than a decade.

304-526-8133
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