Federal Court - Hoa attorneys are bound by FDCPA rules!

CLASS-ACTION LAWSUIT AGAINST LAW FIRM
VIOLATION OF FAIR DEBT COLLECTION PRACTICES ACT

Since quite some time the argument about HOA attorneys being obligated to follow the guidelines of the FDCPA (Fair Debt Collection Practices Act) is going on in and out of courts. There was so far a collection of different court cases but no real court case which took place here in Florida. Until members of a property owners' association filed a class-action lawsuit against one of the biggest HOA law firms in Florida -- Becker & Poliakoff, a name well-known among homeowners all over Florida. This lawsuit alleged violations of the FDCPA. The law firm argued that maintenance assessments were not a debt for purposes of the ACT and the firm shouldn't be considered debt collectors under the ACT. It was the court's opinion that the assessments were for family or personal purposes, making them debts subject to the FDCPA. The court further argued that the firm was made up of attorneys who regularly collect or attempt to collect debts, so they had to be considered "debt-collectors". The court further found that the letter sent by the firm to the homeowners contained false and misleading representations under the debtor standards of the ACT.

The ruling in short terms :
Consumers brought action against lawyers for violating Fair Debt Collection Practices Act (FDCPA) and Florida Consumer Collections Practices Act (FCCPA). On consumers' motion for partial summary judgment, the District Court, Kovachevich, Chief Judge, held that:
(1) maintenance assessments from recreational property memberships were "debts";
(2) lawyers were "debt collectors";
(3) language used in collection letters was a "false representation" and "misleading" to a least sophisticated consumer;
(4) language used in collection letters was not "deceptive" to a least sophisticated consumer;
(5) collection letters did not "state amount of debt owed"; and
(6) fact issues existed precluding summary judgment.
Motion granted in part and denied in part.

ORDER :

KOVACHEVICH, Chief Judge.
THIS CAUSE is before the Court on Plaintiffs' Motion for Partial Summary Judgment and Memorandum of Law in support thereof (Dkt.Nos.41-42); Plaintiffs' Statement of Material Facts (Dkt. No. 43); Defendants' Legal Memorandum in Opposition to Plaintiffs' Motion for Partial Summary Judgment (Dkt. No. 34); Defendant's Motion for Summary Judgment (Dkt. No. 44); and Plaintiffs' Memorandum in Opposition to Defendants' Motion for Summary Judgment (Dkt. No. 56).
Background :
Glenn A. Fuller, Vera J. Fuller, Charles F. Curry, and Norma Curry (Plaintiffs), have filed suit on behalf of themselves, and others similarly situated, against Becker & Poliakoff, P.A. (Defendant Becker & Poliakoff) and Chris Alan Draper (Defendant Draper) for violations of the Fair Debt Collection Practices Act, Title 15, United States Code, Sections 1692, et seq. (FDCPA) and the Florida Consumer Collections Practices Act, Florida Statutes, Sections 559.55, et seq. (FCCPA). Plaintiffs assert that Defendants have violated the FDCPA and the FCCPA through deceptive, unfair collection practices. Specifically, Plaintiffs allege that Defendants violated these acts by sending a letter, dated February 24, 1999, to Plaintiffs and other members of a property owners association regarding delinquent maintenance assessments. The letter, which Defendant Draper wrote on behalf of the Deer Creek Phase Two UDI Property Owners Association (the Association), provided in part:
The Association is attempting to resolve [past-due maintenance assessments] and move forward through the following offer:
(1) For those who have not paid since 1997 or prior, you must pay the amount of $75.00 for the last quarter of 1997, $360.00 total for the four (4) quarters of 1998, $90.00 for the first quarter of 1999, plus $50.00 for attorney fees for this collection letter .... If these amounts, in total are received within thirty (30) days, the Association will take no further action to collect the prior delinquent amounts or to assess or collect for attorney's fees and costs.
(2) In the event that you wish to terminate your ownership of your UDI interest ... the Association will accept a Quit Claim Deed in return for your payment of the above owed sums, depending on your particular circumstance, plus the amount of $200.00, which will cover the cost for this letter as well as the preparation, filing and recording of the enclosed Quit Claim Deed.
(3) In the event that you do not choose one of the two above options and communicate that acceptance to the undersigned on or before thirty (30) days from the date this letter is sent, we shall proceed to enforce through the filing of a lawsuit against all of the delinquent owners.
Unless, within thirty days after the receipt of this correspondence you dispute the validity of the amounts due ... the amount due will be assumed to be valid. If you dispute the amount due, we would appreciate you submitting any documentation or evidence that you have in support of your contention that the amounts due are not correct.
This is an attempt to collect a debt and any information obtained will be used for that purpose.

KEY NOTES :

[1] In order to prevail on a Fair Debt Collection Practices Act (FDCPA) claim, a plaintiff must prove that: (1) the plaintiff has been the object of collection activity arising from consumer debt; (2) the defendant is a debtor collector as defined by the FDCPA; and (3) the defendant has engaged in an act or omission prohibited by the FDCPA. Consumer Credit Protection Act, § 802 et seq., as amended, 15 U.S.C.A. § 1692 et seq.

[2] Maintenance assessments from recreational property memberships were "debts," subject to Fair Debt Collection Practices Act (FDCPA), on basis that assessments were for personal or family purposes; interests that consumers bought in recreational vehicle parks were for personal or family purposes, consumers' maintenance assessments arose out of purchase of interest in parks, and assessments were used to maintain parks for benefit of parks. Consumer Credit Protection Act, § 803, as amended, 15 U.S.C.A. § 1692a.

[3] In the context of the Fair Debt Collection Practices Act (FDCPA), a "debt" is created whenever a transaction creates an obligation to pay; a "transaction" must involve, at a minimum, some kind of business dealing or other consensual obligation. Consumer Credit Protection Act, § 803, as amended, 15 U.S.C.A. § 1692a.

[4] Because Congress repealed the exemption for attorneys who collected a debt as an attorney on behalf of and in the name of a client in an earlier version of this statute, Congress intended that lawyers be subject to the Fair Debt Collection Practices Act (FDCPA) whenever they meet the "debt collector" definition. Consumer Credit Protection Act, § 803, as amended, 15 U.S.C.A. § 1692a.

[5] Consumers established that attorneys "regularly collected or attempted to collect debts" and were "debt collectors," for purposes of Fair Debt Collection Practices Act (FDCPA), where attorneys admitted that they did collection and foreclosure work and listed collection and foreclosure as their practice areas in firm profile. Consumer Credit Protection Act, § 803, as amended, 15 U.S.C.A. § 1692a.

[6] Language used in letter by attorneys in debt collection, that stated that debtors would incur "a substantial amount of attorney's fees and costs, which debtors are personally liable for and which can also constitute a judgment against any property debtors own, whether within or without the State of Florida" was a "false representation" and "misleading" to a least sophisticated consumer, in context of Fair Debt Collection Practices Act (FDCPA), since an unsophisticated consumer would have very likely interpreted letter to mean that there was no chance in prevailing once lawsuit was filed. Consumer Credit Protection Act, § 807, as amended, 15 U.S.C.A. § 1692e.

[7] The "least sophisticated consumer" standard under the Fair Debt Collection Practices Act (FDCPA) analyzes whether a hypothetical least sophisticated consumer would be deceived or misled by the debt collector's practices. Consumer Credit Protection Act, § 807(10), as amended, 15 U.S.C.A. § 1692e(10).

[8] Language used in letter by attorneys in debt collection, that differed in whether 30-day period in which debtors were allowed to dispute the debt began to run on date of letter or date after receipt of letter, was not "deceptive" to a least sophisticated consumer, in context of Fair Debt Collection Practices Act (FDCPA); although letter was unartfully drafted and poorly worded, nothing in letter restricted period to less than thirty days that statute provided. Consumer Credit Protection Act, § 807, as amended, 15 U.S.C.A. § 1692e.

[9] Letter used by attorneys in debt collection, that made blanket statement of different amounts that debtors might owe depending on when their delinquent payments began, did not "state amount of debt owed," in context of Fair Debt Collection Practices Act (FDCPA), since letter put those debtors that were not delinquent in making payments at risk of being deceived that they owed full amount when, in fact, they may not. Consumer Credit Protection Act, § 809(a)(1), as amended, 15 U.S.C.A. §1692g(a)(1).

[10] Validation notice contained in letter used by attorneys for debt collection, that stated amount due would assumed to be valid if debtors failed to respond within 30 days of receipt of letter, was not misleading, in context of Fair Debt Collection Practices Act (FDCPA); although letter contained unintentionally imprecise sentences, there was nothing in letter to suggest that debtors had less than 30 days to dispute the charge. Consumer Credit Protection Act, § 809, as amended, 15 U.S.C.A. §1692g.

[11] Genuine issue of material fact existed as to whether lawyers knew that debt they were attempting to collect was legitimate, precluding summary judgment on consumers' claim under Florida Consumer Collections Practices Act (FCCPA). Fed.Rules Civ.Proc.Rule 56, 28 U.S.C.A.; West's F.S.A. § 559.55 et seq.
*1363 O. Randolph Bragg, Horwitz, Horwitz & Associates, Chicago, IL, Christopher Nicholas Giuliana, Giuliana Associates, Chartered, Dunedin, for Glenn A. Fuller, on behalf of himself and all others similarly situated, Vera J. Fuller, on behalf of herself and all others similarly situated, Charles S. Curry, on behalf of himself and all others similarly situated, Norma Curry, on behalf of herself and all others similarly situated, plaintiffs.
*1364 Richard Michael Zabak, Gray, Harris, Robinson, Shackleford, Farrior, Tampa, Garry Rhoden, Pappas, Metcalf & Jenks, P.A., Jacksonville, for Becker & Poliakoff, P.A., Chris Alan Draper, defendants.

This can be considered a big victory for homeowners living in mandated properties like homeowners' associations. Many of the specialized HOA attorneys felt that they are not obligated to follow the FDCPA guidelines and treated the homeowners accordingly. This Federal law was enacted by Congress to protect consumers from overzealous debt-collectors charging unreasonable amounts. This court ruling upholds the protection given to consumers and will in the future as well protect homeowners in associations.