Law firm to settle class-action suit over lien filings

Article Courtesy of The SUN SENTINEL

By Joe Kollin
Published March 22, 2005


A Plantation law firm has agreed to settle a federal class-action lawsuit over its filing of liens and foreclosures against homeowners for debts that may not even exist.

The suit accused Katzman & Korr, which represents 400 condo and homeowner associations in South Florida, of violating state and federal debt collection and deceptive trade practice laws.

The number of unit owners who could benefit by the settlement is estimated at more than 1,100, but whether they collect damages will be determined later. Details of the settlement were not released because it won't be presented to U.S. District Judge William P. Dimitrouleas in Fort Lauderdale for preliminary approval until late April.

If the judge agrees, details will be sent to each member of the class, who then will be given the chance to opt out.

The suit began in 2002, when the board of the Plaza East condo in Fort Lauderdale accused unit owners Ramsey and Grace Agan of not paying $356.43, part of a special assessment for replacing concrete balconies.

The Agans said they owed nothing and refused to pay. Katzman & Korr filed a lien on their unit for $1,001.01, which included the initial debt plus attorneys' fees and costs. The apartment would be foreclosed, the law firm warned, if the lien wasn't paid.

Angry, the Agans filed the federal lawsuit on behalf of themselves and other owners in condo and homeowner associations represented by Katzman & Korr whose homes had liens placed on them. Three years later, as part of the negotiations for the settlement, it was proven the Agans never owed anything, said their attorney, F. Blane Carneal.

Will the proposed settlement affect the way the law firm handles collections?

"If the settlement process is completed, our litigation objectives will be met and we'll have the opportunity to move on with our lives and conduct our business," said James M. Kaplan of Miami, attorney for Katzman & Korr.

Agan's situation is not unusual.

At public hearings during the past two years, an often-heard complaint by owners was that lawyers representing their associations would demand payment for amounts as low as $25 in late fees. The lawyers would add their fees, and when owners objected more fees were added. The lawyers then would file liens.

In an attempt to halt such activities, state Sen. Gary Siplin, D-Orlando, earlier this month filed a bill in the Legislature to make it more difficult to collect small debts. His proposal would require an owner owe at least $2,500, not counting attorney's fees and costs, before a lien could be filed.

Association attorneys and directors oppose the proposal because they say in cases where monthly assessments are only $100 a month an association might have to wait years to enforce a debt. When an owner doesn't pay, all other owners must pick up their tab.

Ramsey Agan, a retired mortgage banker, said he hopes the class-action suit will do some good.

"My action was to help people," he said.

The Agans and the association last month settled the foreclosure suit at a cost to Plaza East unit owners of more than $100,000, Ramsey Agan said.

"I never owed these people anything, and suddenly I found my house being foreclosed," he said. "Katzman & Korr ended up paying my attorneys' fees, my expenses, and they said they would change their way of doing business."