Simpson v. Cavalry SPV I, LLC
440 S.W.3d 335
Ark.2014Background:
- Simpson obtained an HSBC credit card; the account was charged off and assigned to Cavalry SPV I, LLC in November 2010.
- Cavalry, a debt‑buyer, was not licensed by the Arkansas State Board of Collection Agencies during the relevant period.
- Cavalry retained the McHughes Law Firm to sue Simpson in Arkansas county court; default judgment and garnishment followed.
- Simpson sued Cavalry (and initially the law firm) alleging violations of the Arkansas Fair Debt Collection Practices Act and the federal FDCPA, arguing Cavalry was required to be licensed as a collection agency.
- Cavalry argued it did not need an Arkansas collection license because it retained a licensed Arkansas attorney to pursue collection and thus did not itself "attempt to collect."
- The federal district court certified two questions to the Arkansas Supreme Court about whether a purchaser of delinquent accounts who retains counsel to litigate is "attempting to collect" and thus must be licensed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an entity that buys delinquent accounts and retains an Arkansas lawyer to collect or sue is "attempting to collect" under Ark. Code Ann. § 17-24-101 | Simpson: A debt buyer that purchases and then seeks collection (even via counsel) fits the statute's plain language and is a "collection agency." | Cavalry: It did not "attempt to collect" because it retained/assigned collection to a licensed attorney; only direct collection should trigger the statute. | Held: Yes. The statute unambiguously covers purchasers who attempt to collect, and using counsel is irrelevant; Cavalry is a "collection agency." |
| Whether a purchaser that files suit through counsel must be licensed under Ark. Code Ann. § 17-24-301(4) (prohibiting purchasing and attempting to collect delinquent accounts without a license) | Simpson: Section 17-24-301(4) makes it unlawful to purchase and attempt to collect without a license; Cavalry purchased and attempted to collect and thus needed a license. | Cavalry: Same defense — because collection was undertaken by an attorney, Cavalry itself was not "attempting to collect" and need not be licensed. | Held: Yes. Section 17-24-301 is plain; Cavalry purchased and attempted to collect and therefore was required to obtain a license despite using an attorney. |
Key Cases Cited
- Brown v. State, 375 Ark. 499 (explains when plain statutory language controls interpretation)
- Brock v. Townsell, 2009 Ark. 224 (avoids literal interpretation when it leads to absurd results)
- Pulaski Cnty. v. Ark. Democrat-Gazette, Inc., 370 Ark. 435 (defines statutory ambiguity framework)
- Helena-West Helena Sch. Dist. v. Fluker, 371 Ark. 574 (statutory interpretation when ambiguity exists)
- Williams v. Little Rock Sch. Dist., 347 Ark. 637 (reconcile statutory provisions to give effect to each part)
- Cave City Nursing Home, Inc. v. Ark. Dep’t of Human Servs., 351 Ark. 13 (hesitancy to read a statute contrary to its express language)
- Holbrook v. Healthport, Inc., 2014 Ark. 146 (agency interpretation is persuasive but not controlling when statute is unambiguous)
- Yamaha Motor Corp., USA v. Richard’s Honda Yamaha, 344 Ark. 44 (declines to override clear statutory text based on agency view)
- Finch v. LVNV Funding, LLC, 71 A.3d 193 (Maryland appellate case addressing similar statutory language)