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WV Supreme Court reverses decision in Parkersburg college suit

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A Parkersburg college's enrollment agreement does not fall under a consumer credit sale, West Virginia Supreme Court justices recently decided.

The March 28 per curiam opinion was appealed from the Kanawha County Circuit Court case of Sheryl Holsinger, Sandra R. Carpenter and Mary Yeater against Mountain State College.

All three of the plaintiffs graduated with associate degrees from Mountain State College, seeking legal assistant jobs but finding none. Mountain State College is a separate institution from the now-closed Mountain State University.

The three women asserted that they are now in debt from $30,000 to $50,000 from attending the school, further alleging that this is despite the college employees' verbal promise that they would receive these high-demand jobs in their fields.

They filed the suit against the college in June 1998.

In their testimony, college officials said they did not guarantee jobs to students and said the college did assist students in finding jobs after graduation.

The college asserted the circuit court permitted the jury to answer a special interrogatory on equitable relief on fraudulent inducement even though the judge said the only thing going before the jury was unconscionability.

The jury found the college engaged in unconscionable and fraudulent inducement and recommended a $30,000 award to each graduate for restitution for student loan debt and $20,000 to each graduate for in actual damages.

The lower court found the college's enrollment agreement unconscionable because of an initial misrepresentation that there would be a great demand for paralegal jobs in Parkersburg and the misrepresentation that the graduates would receive a job in that field.

The college filed a motion for judgment or in the alternative a motion for a new trial but that motion was denied. Then, the college initiated the appeal to the Supreme Court.

Justices reversed and remanded the case back to Kanawha County Circuit Court in order to enter judgment in favor of the college.

Justices additionally ruled the circuit court should not have granted relief to the graduates and should have granted the college's motion for judgment.

In its appeal, the college argued the circuit court erred in finding that the college violated the West Virginia Consumer Credit and Protection Act.

The opinion notes the lower court did not specifically find the act applied to the case but presumed applicability when ruling the college violated state code.

The college further argued that the college is not a creditor, so the act would not apply. However, graduates argued state code applies to "a transaction which is or gives rise to a consumer credit sale."

Graduates argued the transaction under the enrollment agreement would fall under "consumer credit sale" in state code and the seller of services is financed by credit, or student loans.

Justices disagreed, saying credit was not granted to the graduates by the college and the college did not grant credit to them pursuant to a seller credit card, which is provided under state code.

The college also asserted the court erred in saying the enrollment agreement was unconscionable, saying the agreement did not guarantee employment.

The opinion notes the circuit court's finding of unconscionability is based on evidence of verbal promises, not the enrollment agreement.

"The respondents (graduates) failed to show that the enrollment agreement is inconsistent on its face or that parties can have reasonable differences in construing the terms of the agreement," the opinion states. "Moreover, the fact that the agreement does not address job placement does not make it ambiguous."

Justices also decided the court erred in granting equitable relief to graduates on the basis of fraudulent inducement.

"Having failed to timely seek their proper legal remedy for damages which was fraudulent inducement, the respondents cannot now obtain damages for fraudulent inducement simply because the damages are characterized as equitable in nature," the opinion states. "Therefore to the extent that the circuit court's award of damages to the respondents was based on a finding of fraudulent inducement it is error.