Judge Tosses $2.5M Jury Verdict For Collection Agencies Against Lexington Law

A District Court judge in Texas has tossed a $2.5 million jury award in favor of two collection agencies that sued Lexington Law Group, saying that the evidence put forth was “legally insufficient” to support the jury determining that the defendants engaged in fraud by “preying on financially troubled consumers by drafting, signing, and mailing frivolous dispute correspondences.”

A copy of the ruling in the case of The CBE Group and RGS Financial v. John C. Heath, Attorney at Law d/b/a Lexington Law Firm and Progrexion ASG, Inc., can be accessed by clicking here.

The plaintiffs originally filed suit against the defendants in 2017. They claimed the defendants engaged in fraud, fraud by nondisclosure, tortious interference with the plaintiffs’ existing contracts with creditors, tortious interference with prospective relations, and civil conspiracy. The plaintiffs did withdraw their tortious interference claims during the six-day trial, which was held last summer.

When both sides had finished presenting their cases, the defendants filed a motion for Judgment as a Matter of Law. Judge Sam Lindsay of the District Court for the Northern District of Texas, reserved ruling on the motion until after the verdict was determined.

The jury ultimately found in favor of the plaintiffs on most of the counts, awarding $2.5 million in damages. The jury did rule that the plaintiffs had failed to prove their conspiracy claim. But in tossing out the verdict, Judge Lindsay determined that the plaintiffs failed to show during the trial that the defendants made any material false statement, which is one of the criteria for determining whether fraud took place.

“Reduced to its essence, the question is whether the evidence — viewed in the most favorable light to Plaintiffs — established that Lexington Law Firm or Progrexion made a material misrepresentation that was false when Lexington Law Firm, at the direction of its clients, signed its clients’ names on the credit dispute letters mailed to Plaintiffs,” Judge Lindsay wrote. “For the reasons stated below, the court determines that there was insufficient evidence for the jury’s finding on this element of Plaintiffs’ fraud claim.”

The defendants submitted a retainer agreement as evidence that details what consumers sign when deciding to work with Lexington Law. The agreement includes the following statement:

“You understand Communications sent by Lexington to Furnishers and Bureaus on your behalf will be sent in your name, and will not be identified as being sent by Lexington. Copies of written Communications will be provided to you upon request.”

Wrote Judge Lindsay, “Plaintiffs have not explained convincingly — at the July 1, 2019 oral argument or in their postverdict briefing — how Defendants’ conduct amounts to an actionable misrepresentation.”

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