Close call

Betty Winfrey lets a handful of her 20 grandchildren and 20 great-grandchildren use the mailing address at her tidy house south of Interstate 90, resulting in stacks of mail every day. For that reason, Winfrey initially ignored the notices that began arriving in 2004 from a collection agency demanding she pay a towing bill for a car she never owned or used.

Then came the notice in 2005 that she was being sued in Spokane County District Court, a development Winfrey welcomed because she was certain that the judge would put a stop to the collection agent’s accusations and demands that she pay more than $1,000 she didn’t owe.

“Why make me pay for something I had nothing to do with?” Winfrey asked. “I just knew I was going to win.”

She couldn’t have been more wrong.

In a ruling that left consumer advocates, a legal ethicist and even – privately – her judicial colleagues dumbfounded, District Court Judge Sara B. Derr ordered Winfrey last summer to pay the debt even though Derr acknowledged documents showing Winfrey as the registered owner of the 1982 Chevrolet Citation were wrong.

Derr, who worked for collection agency Aetna Adjustment before being elected judge in 1994, concluded the grandmother should have done more to prove that she was incorrectly listed as the registered owner of the towed sedan.

The judge at no time informed Winfrey or her attorney that she had worked for more than a decade in the same law office as Jack R. Reeves, who filed the suit against Winfrey on behalf of the collection agency, Automated Accounts.

Even though she said it wasn’t the basis of her decision, Derr noted that Reeves’ collection agency would not be able to recoup the money from the towing bill if she ruled in Winfrey’s favor.

Although the Derr decision was reversed on appeal and dismissed last week, consumer advocates and others say the case typifies what they believe is a local justice system set up to help collection agencies make more money.

“It really seems to be that their function is to issue judgments for collection agencies,” said attorney and law professor Al McNeil, who argued Winfrey’s case as part of University Legal Assistance at Gonzaga. “I hope we can change the culture down there so things aren’t always so tough for the small person.”

Derr disputes any suggestion that her association with Reeves or her work with a collection agency prior to becoming a judge had anything to do with her ruling. She says she simply followed the technical requirements of the law even though she felt bad for Winfrey.

“I do not always rule in favor of a collection company or landlord or whoever,” Derr said. “I follow my oath. I take it seriously. And I have no bias to that collection company or any collection company.”

Gifts and raffles

Nonetheless, the case has focused new attention on District Court’s apparent coziness with collection agencies.

Valley Empire Collections, for example, supplied gifts for District Court’s 2004 holiday party. Valley Empire in 1999 won the contract to handle the collection of unpaid court fines even though eight other companies offered to charge residents lower collection fees.

Lobbying on behalf of Valley Empire during the selection process was Judge Mike Padden, a former state lawmaker who retired from the bench last month. Before becoming a judge, Padden served as Valley Empire’s lawyer, and his son received a paid internship with the company while Padden was judge.

Padden, who is Derr’s brother-in-law, disputed any impropriety in an interview last month but acknowledged the appearance of conflict.

While Valley Empire remains the court’s collection agent, it no longer is allowed to give gifts to the court’s staff, said District Court Administrator Ron Miles.

“It was poor judgment on several people’s part,” Miles said of allowing Valley Empire to supply raffle prizes, including a small television, boombox and remote-control truck for the 2004 holiday party. “We put a stop to it.”

But the issue is bigger than raffle prizes and the Derr ruling in Winfrey’s case, consumer advocate attorney Tim Durkop said.

He believes District Court has created a mill where collection agencies make money by filing a “mammoth amount” of suits against mostly poor people who don’t have the means to fight them.

The local system is weighted in favor of the collection agencies for several reasons, Durkop said. “The local rules were written to make the process easier for the judges, but the end result is collection agencies’ benefit.”

McNeil, who represented Winfrey, agreed with Durkop, saying that most of the civil cases filed in District Court come from collection agencies.

“Lo and behold, the collection agency attorneys end up being judges on District Court,” McNeil said. “It gives the appearance of conflict.”

Prior to going to the bench, for example, Padden and Derr worked years together at the same law firm as Jack Reeves and Mark Hanley, who sometimes work as judges pro-tem.

The same law office also produced former District Court judges Ray Tanksley Jr. and Richard Richard, who is the father of Spokane County Commissioner Mark Richard.

Winfrey said she didn’t know until told by a reporter that Derr once represented a collection agency and had worked for years in the same law office as Reeves.

“Oh my goodness, no wonder. How can they do that?” Winfrey asked. “You look for the courts and the judges to do the right thing.”

Leave no questions

Rob Aronson, a law professor who teaches ethics at the University of Washington School of Law, said the American Bar Association Code of Judicial Conduct calls for a judge to disqualify himself or herself in a proceeding where the judge’s impartiality might reasonably be questioned.

After reading a transcript of Derr’s ruling in the Winfrey case, Aronson said he questions whether Derr should have presided over the case.

The official commentary on Canon 3 states, in part: “A judge should disclose on the record information that the judge believes the parties or their lawyers might consider relevant to the question of disqualification, even if the judge believes there is no real basis for disqualification.”

Asked why she didn’t disclose her relationship with Reeves at the start of the Winfrey trial, Derr replied: “We are talking 12 years” since she worked with Reeves, who refused to comment about any aspect of the Winfrey case.

When Derr was elected to the bench in 1994, she said she didn’t rule on collection agency cases for four or five years. And she said she told attorneys about her former law practice associations for a year after that.

“We have former prosecutors on the bench. We have former public defenders on the bench. Can they not hear cases from their former offices? How long do you wait? What is the distance that you need before you are no longer associated even in appearance with a former office or a former law firm?” Derr said.

She added, “What you are doing is telling the firms that if one of your partners becomes a judge, you’ll never get in front of them.”

Philip Thompson, who served as judge on district, superior and state appellate benches, said he didn’t feel compelled to disclose his prior work relationships after a period of years.

“It’s a tough question,” said Thompson, who once chaired the state’s Judicial Ethics Advisory Committee. “The bottom line is fairness so whoever is in front of you has the opportunity to use their judgment whether they want you to hear the case.”

Derr said in an interview and in writing that she told McNeil, Winfrey’s attorney, about her former working relationship with Reeves in other cases the two attorneys argued in her court.

“I believe if you ask (McNeil), he would confirm that,” Derr wrote in a letter.

McNeil said he remembers Reeves working as a partner with Derr’s mother, Antoinette Derr, but he didn’t know that Sara Derr was part of that same law firm.

Aronson, the UW law professor, said that scenario is exactly why Derr should have done more to disclose the relationship, because a reasonable person could have found her ruling in the Winfrey case to be unfair.

“A judge who regularly represented collection agencies might be perceived to have a bias in favor of those agencies,” Aronson said.

And Derr’s comment expressing concern that the towing company wouldn’t be able to collect its money if she ruled in Winfrey’s favor “might certainly” call the judge’s impartiality into question, he said.

“One has to be at least a bit suspicious that only someone sympathetic to collection agencies would even consider such a basis in rendering a decision,” Aronson said.

Price of justice

When Winfrey was sued in 2005, a friend told her about the free legal services provided by McNeil, who uses second- and third-year law students from Gonzaga University School of Law to help argue real cases.

Winfrey’s grandson testified about how he purchased the Citation for $200 and how he registered the car in his grandmother’s name without telling her. The car broke down and was towed in 2004 from a Spokane apartment complex where it essentially had been abandoned.

Derr accepted the grandson’s explanation as fact.

“I have no doubt that occurred,” Derr said, according to a trial transcript. “The flip side of this … would be that the towing company would be completely out of any funds or any recoupment … and that is not the basis for my ruling.”

“I’m basically looking at what was done,” Derr said at the trial. “I don’t believe that Ms. Winfrey took sufficient action to rebut” the presumption that she owned the car.

Derr then ordered Winfrey to pay the $911 bill, plus interest and court costs, which totaled more than $1,000, to Reeves and the collection agency.

The case was appealed to Superior Court Judge Sam Cozza, who reversed Derr’s decision in November. However, the final judgment absolving Winfrey of any fines or court costs wasn’t entered until last week.

“Quite simply, (Derr) found that Mrs. Winfrey did nothing to create a debt owed by her to the plaintiff,” Cozza wrote in his decision. “The net result is that the conclusion of law does not flow from the findings of fact.”

Derr said she was simply following the law as she saw it.

“I didn’t feel good about ordering (Winfrey) to pay,” Derr said. “I rule according to the law, and I’m proud of that.”

Aronson questioned what law Derr could have been following.

“One of the most disappointing aspects of this case is that had the judge’s decision not been overturned, a substantial and clearly avoidable injustice would have been done,” Aronson said. “Although the judge states that she had ‘equitable powers,’ she was more concerned that the towing company might not be able to collect.

“How could someone exercising ‘equitable powers’ believe that it was more fair to make the grandmother pay that much money?”

Derr countered that the statute in question was written in such a way as to assume the name on the car’s registration is the owner unless that person can show otherwise. “So, that’s where you have to start,” Derr said.

She said Reeves argued at trial that his client would have dropped the lawsuit if Winfrey would have simply written a letter explaining that her grandson was responsible for the problem.

Winfrey testified that she called the towing company officials several times to alert them of the error, but Derr said that wasn’t enough.

“To me, (writing a letter) was reasonable to rebut the presumption in the statute that she is the registered owner,” Derr said. “I didn’t write the law. In most cases it’s fair.”

McNeil said the problem here is that Derr’s interpretation of the law put Winfrey in a position where she was forced to prove her innocence.

“That’s ridiculous. The collection agency has to prove these things, not Mrs. Winfrey,” McNeil said.

Derr, who ran unopposed for election last fall, said she decides cases the same no matter who is standing before her.

“I don’t have contacts with those former companies. I don’t have contacts with those lawyers. I don’t golf with them. I don’t socialize with them,” she said.

“There is no reason for me to give anybody special treatment.”

However, Winfrey remains convinced that she would have been forced to follow Derr’s ruling and pay the fine if she hadn’t received help from McNeil and the Gonzaga students.

“These judges are just having a ball up there. This is not right.” Winfrey said. “A person don’t have a chance.”