PAR Running out of places to run from lawsuit

Court shoots down another stalling effort in George Badeen’s 11 year lawsuit against PAR, Primeritus (Renovo)

Like a ping-pong ball bouncing from court to court, PAR and Primeritus have been filing motion after motion in their efforts to avoid the inevitable. The fact that they got caught operating in Michigan without a license as a debt collector during a 6-year period. Now, a Michigan Court has denied what could be one of their last hail Mary efforts to get off the hook for what could be a crippling judgement in excess of $270M!

On October 4^th, the United States Court of Appeals for the 6^th circuit denied a petition for a writ of certiorari filed by PAR and Primeritus (fka; Renovo) on this case that has gone back and forth from state to Federal courts for over ten years now. Certiorari is a court process to seek judicial review of a decision of a lower court or government agency. In order to win this review, the petitioner needs only four of nine circuit judges to agree with the review. Having lost this appeal, it is unknown what legal defenses aside form stalling remain for the defendants.

Whole careers have come and gone since this fight began way back in April of 2010, when George Badeen, then President of Allied Finance Adjusters (AFA) filed a proposed class action lawsuit against PAR, Inc. (“PAR”), Remarketing Solutions, LLC, and Renovo Services, LLC, alleging that the named defendants had been actively soliciting accounts that the Plaintiffs (Badeen and class) historically managed and the Forwarder Defendants were not licensed to collect such debt. The class being represented, is “every automobile repossession agency or owner who held a license as a debt collector in the State of Michigan during the last 6 years [– i.e., April 2004 to April 2010].” This is estimated to represent approximately 150 agencies.

In the amended complaint, Plaintiff alleged that;

(1) the Forwarder Defendants operated as unlicensed collection and repossession agencies in violation of the Michigan Occupational Code and Michigan Regulation of Collection Practices Act; and

(2) the Lender Defendants conspired with the Forwarder Defendants to violate the law by employing the Forwarder Defendants directly.

Discovery as to total repossessions done by Forwarders is still ongoing. As an individual, George Badeen would be entitled to $175 per motor vehicle, or $50.00 per motor vehicle tripled under the statute, MCL 339.916, plus attorney’s fees and costs. As to the unnamed class members, damages would be the total number of repossessions times $175 net proceeds per repossession.

Considering Plaintiffs’ allegation of 1.8 million repossessions together with their request for treble damages under Mich. Comp. Laws § 339.916, it is unambiguously ascertainable that the amount in controversy exceeds $5,000,000. In fact, multiplying the trebled damages available under § 339.916 by the alleged 1.8 million repossessions/violations, the amount in controversy is at least $270,000,000 (i.e., 1.8 million * $150). See Mich. Comp. Laws § 339.916(2) (if it is a willful violation, the Court “may award a civil penalty of not less than 3 times the actual damages, or $150.00, whichever is greater . . .” (emphasis added)).

In an earlier motion, PAR had successfully requested and was granted a change of venue to the higher Federal Courts where procedural requirements were more to their favor.

Years ago, when the activity in the George Badeen vs. Par class action lawsuit were at their peak, we used to muse at the scale of the legal action as being akin to Opie Taylor from Maybury RFD vs. Godzilla. Now that ten years have passed since this action first began, it would be more like Richie Cunningham from Happy Days vs. Godzilla.

There is no word on whether there have been any meaningful discussions of settlement on this case. Should a full judgement be received and enforced, it could be catastrophic to the survival of these forwarders, who are two of the largest in the nation.

In an interesting and apparently related story, On August 17th, 2021, Michigan state Representatives Gregory Markkanen[R]and Sara Cambensy [D], introduced HB5256, a bill written to draft new definitions of what is to be considered a “Collection Agency” and what is not. In the proposal, it specifically omits repossession forwarders from being deemed collection agencies. So far, this bill has gone nowhere, but it does appear to be a direct attempt to revise existing law in their favor. How this could play out against the Badeen lawsuit is unknown, but it could be interesting to see.