State Supreme Court Dismisses AG Suit Against Collection Law Firm...Again

The Arkansas Supreme Court Thursday dismissed a lawsuit filed by the state’s attorney general against a debt collection law firm on the grounds that the statute the AG sued under did not cover practices of law. It is nearly identical to a decision the Court handed down just two months ago involving similar parties.

Arkansas Attorney General Dustin McDaniel last year won a lawsuit in lower court against Jack H. Boyajian and his California-based law offices for “badgering and harassing” state consumers while attempting to collect debts. In the suit, McDaniel accused the firms of violations of the Arkansas Deceptive Trade Practices Act (ADTPA).

A circuit court sided with McDaniel granting him summary judgment and hit Boyajian with a $194,000 civil fine for 776 violations of the ADTPA. On appeal, Boyajian argued that the statute is “inapplicable to an attorney collecting on debts in the course of the practice of law.” The Supreme Court agreed and reversed the lower court decision and dismissed the case in an opinion dated May 17.

In a written statement to the Arkansas News Bureau, McDaniel said of the decision, “While I respect the Court’s decision, I am deeply troubled by its far-reaching effect on Arkansas consumers and the likely harm that will result.”

In March, the Arkansas Supreme Court handed down a decision nearly identical to Thursday’s ruling. That suit was also filed by McDaniel against an out-of-state collection law firm under the ADTPA and was reversed by the high court on similar grounds. Indeed, the most recent opinion cited the March case.

Boyajian may not be entirely off the hook in the long run. The court’s opinion noted that “An appeal from an order of summary judgment typically concerns the issue of whether a material question of fact is left unanswered; however, the issue presented in this appeal involves the interpretation of the ADTPA, which is a question of law decided by this court.”

Boyajian has a history with states’ attorneys general. His businesses have been the target of actions brought by numerous AGs over the years, including Eliot Spitzer in New York.