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12/15/95 ROBERT WILKINS v. DAN HAGGERTY &

December 15, 1995

ROBERT WILKINS, ET AL.
v.
DAN HAGGERTY & ASSOCIATES, INC., ET AL.



Appeal from Mobile Circuit Court. (CV-93-1717). Edward B. McDermott, TRIAL JUDGE.

Released for Publication April 26, 1996.

Houston, Justice. Hooper, C. J., and Maddox, Shores, Kennedy, Cook, and Butts, JJ., concur.

The opinion of the court was delivered by: Houston

HOUSTON, JUSTICE.

The plaintiffs appeal from a judgment entered by the Circuit Court of Mobile County after a jury trial in favor of the defendants, the City of Mobile and Dan Haggerty & Associates, Inc. (hereinafter referred to as "Haggerty"). This class action was brought in favor of all persons who had paid delinquent Mobile Municipal Court fines and "delinquent fees" pursuant to collection letters sent out by Haggerty, while acting as an agent for Mobile's municipal court. We affirm.

FACTUAL BACKGROUND

On December 23, 1991, Haggerty contracted with the City of Mobile to provide collection services for the Mobile Municipal Court. The contract called for Haggerty to "provide management services limited to the management/ collection of delinquent fines, court costs, charges and fees from persons, subject to unsatisfied attachments or warrants related to traffic violations and misdemeanors." Using the list of names and addresses provided by the Mobile Municipal Court, Haggerty sent collection letters on Mobile Municipal Court letterhead informing persons with unsatisfied fines and cost assessments that a warrant had been issued for their arrest and informing them of the total amount of money they must pay in order to avoid arrest. *fn1 The amount listed in the vast majority of these letters included a "delinquent fee," which was calculated as 38% of the total fine and court costs owed.

Mobile Municipal Court Judge James H. Lackey testified that he had agreed to add this "delinquent fee" pursuant to the contract between the City of Mobile and Haggerty; he testified that the fee was based upon an understanding reached between him and Haggerty. In the contract, the City of Mobile had agreed to pay Haggerty for its collection services on a contingency basis. The plaintiff class alleged that the defendants agreed to add the 38% contingency fee to the total amount sought to be collected from all persons. Judge Lackey testified at trial though that there actually were two distinct categories of delinquent cases turned over to Haggerty. The first category, which constituted all but a small minority of the cases turned over, consisted of cases against persons who had been given traffic tickets or citations for other misdemeanors, but who had failed to plead guilty or to appear to contest the charges against them. As to this category of cases, Judge Lackey testified that he agreed to add 38% of the pending total fines and court costs as an additional fine (referred to in the letters as a "delinquent fee"), when the persons responding to Haggerty's collection letters appeared to pay their fines and thereby plead guilty to the pending charges. The second category consisted of cases against persons who had appeared in the municipal court and had been found guilty, but who after having been given additional time to pay their fines had failed to do so. Judge Lackey testified that the Haggerty agreement provided for the collection of the already assessed fine without the addition of a "38% delinquent fee." According to Judge Lackey, Haggerty's contingency fee for this second category of cases was to be subtracted from the original fine amount rather than added thereto.

PROCEDURAL BACKGROUND

This case was filed on June 1, 1993, and it was certified as a class action on September 2, 1994. It named Haggerty and the City of Mobile as defendants. The class was composed of all persons who had paid overdue fines and "delinquent fees" pursuant to letters sent by Haggerty. The gravamen of the claims centers around the question whether the city had the legal authority to hire Haggerty, a private collection agency, to collect delinquent fines at all and whether the City of Mobile had statutory or rule authority to assess "delinquent fees" on the class members. The plaintiff class alleged causes of action based upon negligent misrepresentation, intentional misrepresentation, deceit, outrage, bad faith, breach of contract, negligence, and 42 U.S.C. § 1983.

On February 21, 1995, the case went to trial on all claims. At the close of the plaintiffs' case, the defendants filed a motion for a directed verdict, which the court granted as to the bad faith and negligence claims. The Judge granted the defendants' motion for a directed verdict made at the close of all the evidence, as to the plaintiffs' 42 U.S.C. § 1983 claims and the claim for punitive damages. During the trial, the class renewed its motion for a partial summary judgment as to the issue of the legality of the Haggerty collection agreement and the legality of the "delinquent fees" charged. The Judge denied the plaintiffs' motion, ultimately submitting to the jury the question of the legality of the assessment of the "delinquent fees." The special verdict submitted to the jury asked simply whether Judge Lackey, the Mobile Municipal Court Judge, authorized the "delinquent fees." The jury returned a verdict for the defendants, finding that the "delinquent fees" had been authorized by Judge Lackey, and the court held that they were therefore legal.

The class appeals from the judgment entered in favor of the defendants. The class asserts that it was error for the trial court to deny its motion for a partial summary judgment. It asserts that the trial court should have ruled as a matter of law that the City had no legal authority to contract with a private collection agency to collect past due municipal court fines. The class likewise asserts that the trial court should have also ruled that, as a matter of law, Mobile had no legal authority to tack on a 38% "delinquent fee" to any of the cases assigned to Haggerty, as compensation to Haggerty.

I.

The class contends that the trial court erred in denying its motion for a partial summary judgment as to the question of the legality of the agreement. The class bases its argument in this regard solely upon the absence of any express statutory or rule-based authority specifically permitting Alabama cities to contract with private companies for the collection of municipal court fines. The class correctly points out that "cities are political subdivisions of the State ... and each exercises such power, and ...


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