Month: January 2013

Lawyer Who Filed 50 Cases Challenging Completed Foreclosures Subject to Sanctions

RABBAH v. Federal Home Loan Mortgage Corp., Dist. Court, ED Michigan 2013 – Google Scholar.

A lawyer who filed 50 cases against banks for clients who were foreclosed upon, has been put on notice that he may be sanctioned for further filings. The problem with the cases is that the foreclosures were already completed, the redemption period had expired and the foreclosures were concluded.

If the allegations are true, this is a sad case of a lawyer earning money by charging people for lawsuits that have no merit.

The court explains: “Beginning at least as early as November 9, 2012, Chief Judge Gerald Rosen began issuing show cause orders, in several cases pending before him in this district, requiring Mr. Greenwood to show cause why those actions should not be dismissed and to show cause why he should not be sanctioned for his conduct pursuant to Fed. R. Civ. P. 11. (See, e.g. D.E. No. 5 in Case No. 12-12589, D.E. No. 5 in Case No. 12-14149, D.E. No. 5 in Case No. 12-11996, D.E. No. 5 in Case No. 12-12965). In no uncertain terms, Chief Judge Rosen advised Mr. Greenwood that he was considering imposing sanctions against him for having filed complaints and briefs lacking factual support and not warranted by existing law or by any nonfrivolous argument for extending or modifying existing law, in violation of Fed. R. Civ. P. 11(b).”

11th Circuit Holds Lawyers Are Debt Collectors

Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F. 3d 1211 – Court of Appeals, 11th Circuit 2012 – Google Scholar.

This is a case under the Fair Debt Collection Practices Act. The lawyers represented a lender and sent a letter to the plaintiffs seeking to collect a debt and threatening to file a foreclosure action if the debt was not paid.

Plaintiffs sued alleging that the lawyers’ letter was deceptive and misleading in that it misstated some provisions of Georgia law. The lawyers moved to dismiss on the ground that they were not debt collectors.

The district court agreed, but the Court of Appeals held that the lawyers were debt collectors. Because the law firm regularly collected debts, it qualified as a debt collector under the statute and could be held liable.

“So a party can qualify as a “debt collector” either by using an “instrumentality of interstate commerce or the mails” in operating a business that has the principal purpose of collecting debts or by “regularly” attempting to collect debts.

The complaint contains enough factual content to allow a reasonable inference that the Ellis law firm is a “debt collector” because it regularly attempts to collect debts. The complaint alleges that the law firm is “engaged in the business of collecting debts owed to others incurred for personal, family[,] or household purposes.” It also alleges that in the year before the complaint was filed the firm had sent to more than 500 people “dunning notice[s]” containing “the same or substantially similar language” to that found in the letter and documents attached to the complaint in this case. That’s enough to constitute regular debt collection within the meaning of ยง 1692a(6).”

Comment: this case is not novel or unique. The lawyers here appeared to make a few minor errors in attempting to collect a valid debt, only to find they were on the wrong end of a FDCPA lawsuit.