Monday, May 18, 2009

The FDCPA :: Just the Text

In the post "failed modification," "post foreclosure" world, I have never had so many questions posed at parties, private gatherings and baseball games about the Fair Debt Collection Practices Act ("FDCPA"). If an anecdotal sampling of questions is any test of the economy, then my guess is the economy is bad.

The questions that are almost as common as Fair Debt Collection Practices Act questions concern the workings of the "means test" in Chapter 7 vis-a-vis Chapter 13 after October 17, 2005 revisons to the Bankruptcy Act. Maybe I will post those next.

Here, by virtue of the number of times I have been asked and emailed questions about same is the (relevant part of) the FDCPA.

Hugh Wood
Atlanta, GA

& & &



The Fair Debt Collection Practices Act
TITLE 15. Commerce and Trade
CHAPTER 41. Consumer Credit Protection
15 USCS prec § 1692
§ 1692. Congressional findings and declaration of purpose
(a) Abusive practices. There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.

(b) Inadequacy of laws. ESxisting laws and procedures for redressing these injuries are inadequate to protect consumers.

(c) Available non-abusive collection methods. Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.

(d) Interstate commerce. Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.

(e) Purposes. It is the purpose of this title [15 USCS § § 1692 et seq.] to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.
15 USCS § 1692a
§ 1692a. Definitions
As used in this title [15 USCS § § 1692 et seq.]--
(1) The term "Commission" means the Federal Trade Commission.
(2) The term "communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.
(3) The term "consumer" means any natural person obligated or allegedly obligated to pay any debt.
(4) The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.
(5) The term "debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.
(6) The term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6) [15 USCS § 1692f(6)], such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include--
(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.
(7) The term "location information" means a consumer's place of abode and his telephone number at such place, or his place of employment.
(8) The term "State" means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.
15 USCS § 1692b
§ 1692b. Acquisition of location information
Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall--
(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;
(2) not state that such consumer owes any debt;
(3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;
(4) not communicate by post card;
(5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and
(6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector.
15 USCS § 1692c
§ 1692c. Communication in connection with debt collection
(a) Communication with the consumer generally. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt--
(1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o'clock antimeridian and before 9 o'clock postmeridian, local time at the consumer's location;
(2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or
(3) at the consumer's place of employment if the debt collector knows or has reason to know that the consumer's employer prohibits the consumer from receiving such communication.
(b) Communication with third parties. Except as provided in section 804 [15 USCS § 1692b], without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

(c) Ceasing communication. If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except--
(1) to advise the consumer that the debt collector's further efforts are being terminated;
(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or
(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy. If such notice from the consumer is made by mail, notification shall be complete upon receipt.
(d) "Consumer" defined. For the purpose of this section, the term "consumer" includes the consumer's spouse, parent (if the consumer is a minor), guardian, executor, or administrator.
15 USCS § 1692d
§ 1692d. Harassment or abuse
A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.
(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.
(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 603(f) or 604(3) of this Act [15 USCS § § 1681a(f) or 1681b(3)].
(4) The advertisement for sale of any debt to coerce payment of the debt.
(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.
(6) Except as provided in section 804 [15 USCS § 1692b], the placement of telephone calls without meaningful disclosure of the caller's identity.
15 USCS § 1692e
§ 1692e. False or misleading representations
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.
(2) The false representation of--
(A) the character, amount, or legal status of any debt; or
(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.
(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.
(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.
(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.
(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to--
(A) lose any claim or defense to payment of the debt; or
(B) become subject to any practice prohibited by this title [15 USCS § § 1692 et seq.].
(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.
(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.
(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.
(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.
(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.
(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.
(13) The false representation or implication that documents are legal process.
(14) The use of any business, company, or organization name other than the true name of the debt collector's business, company, or organization.
(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.
(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 603(f) of this Act [15 USCS § 1681a(f)].
15 USCS § 1692f
§ 1692f. Unfair practices
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector's intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.
(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.
(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.
(5) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.
(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if--
(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;
(B) there is no present intention to take possession of the property; or
(C) the property is exempt by law from such dispossession or disablement.
(7) Communicating with a consumer regarding a debt by post card.
(8) Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.
15 USCS § 1692g
§ 1692g. Validation of debts
(a) Notice of debt; contents. Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing--
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
(b) Disputed debts. If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

(c) Admission of liability. The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.
15 USCS § 1692h
§ 1692h. Multiple debts
If any consumer owes multiple debts and makes any single payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt which is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer's directions.
15 USCS § 1692i
§ 1692i. Legal actions by debt collectors
(a) Venue. Any debt collector who brings any legal action on a debt against any consumer shall--
(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or
(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity--
(A) in which such consumer signed the contract sued upon; or
(B) in which such consumer resides at the commencement of the action.
(b) Authorization of actions. Nothing in this title [15 USCS §§ 1692 et seq.] shall be construed to authorize the bringing of legal actions by debt collectors.
15 USCS § 1692j
§ 1692j. Furnishing certain deceptive forms
(a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.

(b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 813 [15 USCS § 1692k] for failure to comply with a provision of this title [15 USCS § § 1692 et seq.].
15 USCS § 1692k
§ 1692k. Civil liability
(a) Amount of damages. Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this title [15 USCS § § 1692 et seq.] with respect to any person is liable to such person in an amount equal to the sum of--
(1) any actual damage sustained by such person as a result of such failure;
(2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $ 1,000; or
(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $ 500,000 or 1 per centum of the net worth of the debt collector; and
(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.
(b) Factors considered by court. In determining the amount of liability in any action under subsection (a), the court shall consider, among other relevant factors--
(1) in any individual action under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or
(2) in any class action under subsection (a)(2)(B), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector's noncompliance was intentional.
(c) Intent. A debt collector may not be held liable in any action brought under this title [15 USCS § § 1692 et seq.] if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(d) Jurisdiction. An action to enforce any liability created by this title [15 USCS § § 1692 et seq.] may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.

(e) Advisory opinions of Commission. No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Commission, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.
15 USCS § 1692l
§ 1692l. Administrative enforcement
(a) Federal Trade Commission. Compliance with this title [15 USCS § § 1692 et seq.] shall be enforced by the Commission, except to the extent that enforcement of the requirements imposed under this title [15 USCS § § 1692 et seq.] is specifically committed to another agency under subsection (b). For purpose of the exercise by the Commission of its functions and powers under the Federal Trade Commission Act [15 USCS § § 41 et seq.], a violation of this title [15 USCS § § 1692 et seq.] shall be deemed an unfair or deceptive act or practice in violation of that Act [15 USCS § § 41 et seq.]. All of the functions and powers of the Commission under the Federal Trade Commission Act [15 USCS § § 41 et seq.] are available to the Commission to enforce compliance by any person with this title [15 USCS § § 1692 et seq.], irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests in the Federal Trade Commission Act [15 USCS § § 41 et seq.], including the power to enforce the provisions of this title [15 USCS § § 1692 et seq.] in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.

(b) Applicable provisions of law. Compliance with any requirements imposed under this title [15 USCS § § 1692 et seq.] shall be enforced under--
(1) section 8 of the Federal Deposit Insurance Act [12 USCS § 1818], in the case of--
(A) national banks, and Federal branches and Federal agencies of foreign banks, by the Office of the Comptroller of the Currency;
(B) member banks of the Federal Reserve System (other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25(a) [25A] of the Federal Reserve Act [12 USCS § § 601 et seq. or § § 611 et seq.], by the Board of Governors of the Federal Reserve System; and
(C) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches of foreign banks, by the Board of Directors of the Federal Deposit Insurance Corporation;
(2) section 8 of the Federal Deposit Insurance Act [12 USCS § 1818], by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;
(3) the Federal Credit Union Act [12 USCS § § 1751 et seq.], by the Administrator of the National Credit Union Administration [National Credit Union Administration Board] with respect to any Federal credit union;
(4) the Acts to regulate commerce [49 USCS § § 10101 et seq.], by the Secretary of Transportation, with respect to all carriers subject to the jurisdiction of the Surface Transportation Board;
(5) the Federal Aviation Act of 1958 [49 USCS § § 40101 et seq.], by the Secretary of Transportation with respect to any air carrier or any foreign air carrier subject to that Act [49 USCS § § 40101 et seq.]; and
(6) the Packers and Stockyards Act, 1921 [7 USCS § § 181 et seq.] (except as provided in section 406 of that Act [7 USCS § § 226 and 227]), by the Secretary of Agriculture with respect to any activities subject to that Act [7 USCS § § 181 et seq.].
The terms used in paragraph (1) that are not defined in this title [15 USCS § § 1692 et seq.] or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).

(c) Agency powers. For the purpose of the exercise by any agency referred to in subsection (b) of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this title [15 USCS § § 1692 et seq.] shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b), each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this title [15 USCS § § 1692 et seq.] any other authority conferred on it by law, except as provided in subsection (d).

(d) Rules and regulations. Neither the Commission nor any other agency referred to in subsection (b) may promulgate trade regulation rules or other regulations with respect to the collection of debts by debt collectors as defined in this title [15 USCS § § 1692 et seq.].
15 USCS § 1692m
§ 1692m. Reports to Congress by the Commission; views of other Federal agencies
(a) Not later than one year after the effective date of this title and at one-year intervals thereafter, the Commission shall make reports to the Congress concerning the administration of its functions under this title [15 USCS § § 1692 et seq.], including such recommendations as the Commission deems necessary or appropriate. In addition, each report of the Commission shall include its assessment of the extent to which compliance with this title [15 USCS § § 1692 et seq.] is being achieved and a summary of the enforcement actions taken by the Commission under section 814 of this title [15 USCS § 1692l]

(b) In the exercise of its functions under this title [15 USCS § § 1692 et seq.], the Commission may obtain upon request the views of any other Federal agency which exercises enforcement functions under section 814 of this title [15 USCS § 1692l].
15 USCS § 1692n
§ 1692n. Relation to State laws
This title [15 USCS § § 1692 et seq.] does not annul, alter, or affect, or exempt any person subject to the provisions of this title [15 USCS § § 1692 et seq.] from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title [15 USCS § § 1692 et seq.], and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this title [15 USCS § § 1692 et seq.] if the protection such law affords any consumer is greater than the protection provided by this title [15 USCS § § 1692 et seq.].
15 USCS § 1692o
§ 1692o. Exemption for State regulation
The Commission shall by regulation exempt from the requirements of this title [15 USCS § § 1692 et seq.] any class of debt collection practices within any State if the Commission determines that under the law of that State that class of debt collection practices is subject to requirements substantially similar to those imposed by this title [15 USCS § § 1692 et seq.], and that there is adequate provision for enforcement.


Hugh Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Suite 250
Atlanta (Tucker), GA 30084

www.woodandmeredith.com
hwood@woodandmeredith.com
www.hughwood.blogspot.com
twitter: USALawyer_
Phone: 404-633-4100
Fax: 404-633-0068

Wednesday, May 6, 2009

Have A Dispute With Your Lawyer? Send it to Fee Arbitration

Georgia is one of a majority of States that demands its attorneys submit to State Bar sponsored Fee Arbitration. If the attorney and client cannot agree on the amount of the fee to be paid the lawyer, the client may petition for fee arbitration.

Generally, the public does not know and is not aware that Georgia lawyers must submit, initially, to a demand made against them pursuant to State Bar sponsored fee arbitration.

This does not mean that a dissatisfied client may taken his or her attorney to task for no reason, nor does it set aside a valid contract entered into between the attorney and client. It does, however, provide an out of court solution to many common fee disputes.

The rules are stated below. The client must file within two (2) years of the date the dispute began, the client and lawyer cannot be (at the time of filing) in court litigating the same fee and the client must agree to be bound be the result rendered at the State Bar.

An unknown novel outcome to fee arbitration is: If the client wins at fee arbitration and the lawyer refuses to pay, the State Bar of Georgia will (after the award is entered) provide the client with a free lawyer to help defend and enforce the award against the losing lawyer.

Hugh Wood
Atlanta, GA


& & &

Georgia State Bar Rule 6-201. Jurisdiction.
The Committee may accept jurisdiction over a fee dispute only if all of the following requirements are satisfied:
(a) The fee in question, whether paid or unpaid, has been charged for legal services rendered by a lawyer who is or who at the time of rendition of the service had been licensed to practice law in the State of Georgia or who been duly licensed as a foreign legal consultant in the State of Georgia.
(b) The services in question were performed either in the State of Georgia or from an office located in the State of Georgia.
(c) At the time the legal services in question were performed there existed between the lawyer and the client an expressed or implied contract establishing between them a lawyer/client relationship. A relative or other person paying the legal fees of the client may request arbitration of disputes over those fees provided both the client and the payor join as co-petitioners or co-respondents and both agree to be bound by the result of the arbitration.
(d) The disputed fee:
(1) exceeds ($750) seven hundred and fifty dollars.
(2) is not one the amount of which is governed by statute or other law, nor one the full amount or all terms of which have already been fixed or approved by order of a court.
(e) A petition seeking arbitration of the dispute is filed with the Committee by the lawyer or the client no more than two (2) years following the date on which the controversy arose. If this date is disputed, it shall be determined in the same manner as the commencement of a cause of action on the underlying contract.
(f) The client, whether petitioner or respondent, agrees to be bound by the result of the arbitration.
(g) The fee dispute is not the subject of litigation in court at the time the petition for arbitration is filed.
(h) The petition contains the following elements:
(1) A statement of the nature of the dispute and the particulars of the petitioner's position, including relevant dates.
(2) The identities of both the client and the lawyer and the addresses of both.
(3) A statement that the petitioner has made a good faith effort to resolve the dispute and the details of that effort.
(4) The agreement of the petitioner to be bound by the result of the arbitration.
(5) The signature of the petitioner and date of the petition.
(6) The petition shall be filed on a form which will be supplied by the Committee. Such petition shall be served upon the opposite party at such party's last known address by certified mail, return receipt requested.
(i) In case of disputes between lawyers, the lawyers who are parties to the dispute are all members of the State Bar of Georgia, and all the lawyers involved agree to the arbitration.


& & &

The purpose of this program is to provide a convenient mechanism for (1) the resolution of disputes between lawyers and clients over fees, (2) the resolution of disputes between lawyers in connection with the withdrawal of a lawyer from a partnership or the dissolution and separation of a partnership, or (3) the resolution of disputes between lawyers concerning the entitlement to portions of fees earned from joint services. It is a process which may be invoked by either side after the parties have been unable to reach an agreement between themselves. Regardless of whether it is the lawyer or the client who takes the initiative of filing a petition requesting arbitration of the disputes, the petitioner must agree to be bound by the result of the arbitration. This is intended to discourage the filing of complaints which are frivolous or which seek to invoke the process simply to obtain an "advisory opinion". If the respondent also agrees to be bound, the resulting arbitration award will be enforceable under the general arbitration laws of the State.
A unique feature of this program provides that where the petitioner is a client whose claim after investigation appears to warrant a hearing, and the respondent lawyer refuses to be bound by any resulting award, the matter will not be dismissed, but an ex parte arbitration hearing may be held. If the outcome of this hearing is in the client's favor, the State Bar will provide a lawyer at no cost, other than actual litigation expenses, to the client to represent the client in subsequent litigation to adjust the fee in accordance with the arbitration award.
CHAPTER 1 COMMITTEE ON RESOLUTION OF FEE DISPUTES
Rule 6-101. Committee
Rule 6-102. Membership
Rule 6-103. Terms
Rule 6-104. Responsibility
Rule 6-105. Staff
Rule 6-106. Waiting Period
CHAPTER 2 JURISDICTIONAL GUIDELINES
Rule 6-201. Jurisdiction
Rule 6-202. Termination or Suspension of Proceedings
Rule 6-203. Revocation
CHAPTER 3 SELECTION OF ARBITRATORS
Rule 6-301. Roster of Arbitrators
Rule 6-302. Neutrality of Arbitrators
Rule 6-303. Selection of Arbitrators
Rule 6-304. Qualifications
Rule 6-305. Compensation
CHAPTER 4 RULES OF PROCEDURE
Rule 6-401. Time and Place of Hearing
Rule 6-402. Attendance at Hearing
Rule 6-403. Counsel
Rule 6-404. Stenographic Record
Rule 6-405. Death, Disability, or Resignation of Arbitrator
Rule 6-406. Discovery and Witnesses
Rule 6-407. Adjournments
Rule 6-408. Oaths
Rule 6-409. Order of Proceedings
Rule 6-410. Arbitration in the Absence of a Party
Rule 6-411. Evidence
Rule 6-412. Written Contract
Rule 6-413. Closing of Hearings
Rule 6-414. Reopening of Hearings
Rule 6-415. Waiver of Rules
Rule 6-416. Waiver of Oral Hearings
Rule 6-417. Award
Rule 6-418. Time of Award
Rule 6-419. Form of Award
Rule 6-420. Award Upon Settlement
Rule 6-421. Delivery of Award to Parties
Rule 6-422. Communication with Arbitrators
Rule 6-423. Interpretation and Application of Rules
CHAPTER 5 POST DECISION ACTIVITY
Rule 6-501. Where Both Parties Agree
Rule 6-502. Where Lawyer Refuses to be Boun
CHAPTER 6 SPECIAL PROCEDURES
Rule 6-601. Special Case Procedure
CHAPTER 7 CONFIDENTIALITY
Rule 6-701. Confidentiality

END



Hugh Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Suite 250
Atlanta (Tucker), GA 30084

www.woodandmeredith.com
hwood@woodandmeredith.com
www.hughwood.blogspot.com
twitter: USALawyer_
Phone: 404-633-4100

Fax: 404-633-0068

Saturday, May 2, 2009

Personal Liability Looms as Condo Market Continues to Implode

The continuing implosion of the condominium market is not only pushing the unpaid condominium first security deeds [first mortgages] back on the lender, it is leaving an ugly trail of personal liability of unpaid condo assessments following the defaulted unit owners. To add insult to injury, the Georgia Court of Appeals recently ruled that if the condominium association is forced to resort to suit to collect its condo fees an award of reasonable attorneys fees against the unit owner is virtually mandatory.

One lender recently reported to the Wall Street Journal at as of the end of 2008, "only 66 Atlanta units were sold in the second half of 2008, and just 645 were sold in all of last year (2008). That is down from 1,704 units sold in 2007 and a peak of 4,747 condos sold in 2005." Jonathan Karp, In Condo Terms, Atlanta Is the New Miami, Wall Street Journal, Jan 29, 2009. Of the 3,800 condo units that lender has for sale only 1,836 have been sold. Id.

A little watched statute change in the 2004 General Assembly granted condominium associations broad powers to sue the unit owners for unpaid condominium fees. OCGA § 44-3-109.[1] Prior to the 2004 change, it was cumbersome and expensive for condominium associations to sue the unit owners, obtain liens on the units and then foreclose against the units.

The 2004 statute provides a summary type action whereby the association simply affirmatively pleads the existence of the Condominium Declaration, the fact that owner "Y," owns unit "Z," and that owner "Y," is many thousands of dollars behind on condominium assessments due the association.

While the statute speaks for itself and the unit owner may interpose defenses, those defenses are limited to issues surrounding the debt and the legality of the Declaration, and the imposition of correct assessments. If the assessments are not paid, the Association goes to judgment against the unit Owner. The condominium association takes its judgment "subject to," the first security deed, which differs from the prior law. The condominium association is no longer required to conform the First leinholder about priority and possible acceptation and payoff of the first security deed.

While subordinate to county taxes and the first security deed, the condominium association nevertheless has a judgment. That judgment, unfortunately for the unit owner, becomes the "the personal obligation of the unit owner." OCGA § 44-3-109(a).

Not only is it painful in this economy that the unpaid judgment follows the owner as a "personal judgment," the Georgia Court of Appeals has indicated that the trial courts must award reasonable attorneys fees to the Associations if it is forced to collect its fees by suit. The Springs Condominium Association, Inc. v. Harris, Appeal Case No., A09A0297, Court of Appeals of Georgia, Second Division (April 16, 2009).[2]

Because the case is governed by OCGA § 44-3-109(b)(3), which mandates an award of attorney fees when an association is forced to file a statutory lien for condominium assessments and the association's condominium's documents provide for the payment of these fees, we reverse the trial court's order and remand this case for the trial court to determine the reasonableness of the Association's attorney fees. Id.

The old days of sleepy condominium associations are over. The battle for unpaid fees in this economy has now begun. [3] Armed with new state of the art collection weapons, expect to see more filings by condominium associations, until this real estate recession (depression) subsides.

Hugh Wood
Atlanta, GA



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[1]

OCGA § 44-3-109. Lien For Assessments; Personal Obligation Of unit Owner; Notice And Foreclosure; Lapse; Right To Statement Of Assessments; Effect Of Failure To Furnish Statement.
(a) All sums lawfully assessed by the association against any unit owner or condominium unit, whether for the share of the common expenses pertaining to that condominium unit, for fines, or otherwise, and all reasonable charges made to any unit owner or condominium unit for materials furnished or services rendered by the association at the owner's request to or on behalf of the unit owner or condominium unit, shall, from the time the same become due and payable, be the personal obligation of the unit owner and constitute a lien in favor of the association on the condominium unit prior and superior to all other liens whatsoever except:
(1) Liens for ad valorem taxes on the condominium unit;
(2) The lien of any first priority mortgage covering the unit and the lien of any mortgage recorded prior to the recording of the declaration;
(3) The lessor's lien provided for in Code Section 44-3-86; and
(4) The lien of any secondary purchase money mortgage covering the unit, provided that neither the grantee nor any successor grantee on the mortgage is the seller of the unit.
The recording of the declaration pursuant to this article shall constitute record notice of the existence of the lien, and no further recordation of any claim of lien for assessments shall be required.
(b) To the extent that the condominium instruments provide, the personal obligation of the unit owner and the lien for assessments shall also include:
(1) A late or delinquency charge not in excess of the greater of $10.00 or 10 percent of the amount of each assessment or installment thereof not paid when due;
(2) At a rate not in excess of 10 percent per annum, interest on each assessment or installment thereof and any delinquency or late charge pertaining thereto from the date the same was first due and payable;
(3) The costs of collection, including court costs, the expenses of sale, any expenses required for the protection and preservation of the unit, and reasonable attorney's fees actually incurred; and
(4) The fair rental value of the condominium unit from the time of the institution of an action until the sale of the condominium at foreclosure or until the judgment rendered in the action is otherwise satisfied.
(c) Not less than 30 days after notice is sent by certified mail or statutory overnight delivery, return receipt requested, to the unit owner both at the address of the unit and at any other address or addresses which the unit owner may have designated to the association in writing, the lien may be foreclosed by the association by an action, judgment, and foreclosure in the same manner as other liens for the improvement of real property, subject to superior liens or encumbrances, but any such court order for judicial foreclosure shall not affect the rights of holders of superior liens or encumbrances to exercise any rights or powers afforded to them under their security instruments. The notice provided for in this subsection shall specify the amount of the assessments then due and payable together with authorized late charges and the rate of interest accruing thereon. Unless prohibited by the condominium instruments, the association shall have the power to bid on the unit at any foreclosure sale and to acquire, hold, lease, encumber, and convey the same. The lien for assessments shall lapse and be of no further effect, as to assessments or installments thereof, together with late charges and interest applicable thereto, four years after the assessment or installment first became due and payable.
(d) Any unit owner, mortgagee of a unit, person having executed a contract for the purchase of a condominium unit, or lender considering the loan of funds to be secured by a condominium unit shall be entitled upon request to a statement from the association or its management agent setting forth the amount of assessments past due and unpaid together with late charges and interest applicable thereto against that condominium unit. Such request shall be in writing, shall be delivered to the registered office of the association, and shall state an address to which the statement is to be directed. Failure on the part of the association to mail or otherwise furnish such statement regarding amounts due and payable at the expiration of such five-day period with respect to the condominium unit involved to such address as may be specified in the written request therefore within five business days from the receipt of such request shall cause the lien for assessments created by this Code section to be extinguished and of no further force or effect as to the title or interest acquired by the purchaser or lender, if any, as the case may be, and their respective successors and assigns, in the transaction contemplated in connection with such request. The information specified in such statement shall be binding upon the association and upon every unit owner. Payment of a fee not exceeding $10.00 may be required as a prerequisite to the issuance of such a statement if the condominium instruments so provided.
(e) Nothing in this Code section shall be construed to prohibit actions maintainable pursuant to Code Section 44-3-76 to recover sums for which subsection (a) of this Code section creates a lien.
History. Amended by 2004 Ga. Laws 535, § 7, eff. 7/1/2004.

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[2]

THE SPRINGS CONDOMINIUM ASSOCIATION, INC.
v.
HARRIS.
A09A0297
Court of Appeals of Georgia, Second Division
April 16, 2009
JOHNSON, P. J., ELLINGTON and MIKELL, JJ.
Johnson, Presiding Judge.
The Springs condominium association, Inc. (the "Association") appeals the trial court's refusal to grant it an award of attorney fees in this case. Because the case is governed by OCGA § 44-3-109 (b) (3), which mandates an award of attorney fees when an association is forced to file a statutory lien for condominium assessments and the association's condominium's documents provide for the payment of these fees, we reverse the trial court's order and remand this case for the trial court to determine the reasonableness of the Association's attorney fees.
The facts of this case are not in dispute. The Association is an incorporated condominium association duly authorized to levy and collect assessments at The Springs Condominium. Cedric Harris is the owner of a condominium unit located at The Springs Condominium, and he is required to pay assessments to the Association pursuant to its declaration and OCGA § 44-3-70 et seq. The declaration and OCGA § 44-3-70 et seq. also authorize the collection of late charges, interest (at the rate of 10% per annum), reasonable attorney fees actually incurred, and costs and expenses related to the collection of these assessments. It is undisputed that Harris did not pay any required assessments, charges, late fees or interest, and the Association placed a lien on his condominium.
On November 8, 2007, the Association, through its attorney, sent Harris the statutory notice of intent to foreclose on its condominium lien. Harris did not respond, and on February 8, 2008, the Association sued Harris, seeking to recover a statutory lien in the amount of $15,522.90, reasonable attorney fees, costs and expenses. It also requested an order for judicial foreclosure of the statutory lien. On March 10, 2008, Harris answered and paid $15,522.90. However, this amount did not include attorney fees incurred after December 12, 2007, when the complaint was initially drafted. The trial court entered a final order on June 17, 2008, finding that Harris had paid the full amount of the statutory lien and declining to grant the Association an award of attorney fees. We agree with the Association's contention that the trial court was mandated by law to grant an award of attorney fees in this matter.
OCGA § 44-3-109 (b) (3) states as follows: "To the extent that the condominium instruments provide, the personal obligation of the unit owner and the lien for assessments shall also include... [t]he costs of collection, including court costs,... and reasonable attorney's fees actually incurred." Since the undisputed evidence in this case shows that The Springs Condominium declaration provides that a delinquent unit owner shall be liable for reasonable attorney fees actually incurred, an award of attorney fees was mandated under the statute. Where a statute's language as to an award of attorney fees is mandatory, the trial court is required to award attorney fees. [1] The trial court, therefore, erred in refusing to enter an award for attorney fees actually incurred subsequent to December 12, 2007. [2] We reverse the trial court's order and remand this case for the trial court to determine the reasonableness of the Association's attorney fees.
Judgment reversed.
Ellington and Mikell, JJ., concur.
---------
Notes:
[1] See Preece v. Turman Realty Co., 228 Ga.App. 609, 610 (492 S.E.2d 342) (1997).
[2] See Casey v. North Decatur Courtyards Condominium Assoc., 213 Ga.App. 190, 192 (3) (444 S.E.2d 361) (1994).
[Many thanks to my good friend Ned Blumenthal, Esq., for his helpful emails in this curious area of the law]



Hugh Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Suite 250
Atlanta, GA 30084

www.woodandmeredith.com
hwood@woodandmeredith.com
www.hughwood.blogspot.com
Phone: 404-633-4100Fax: 404-633-0068