Lauderhill law firm to settle lawsuit over

foreclosure threats for $250,000

Article Courtesy of The SUN SENTINEL

By Joe Kollin
Published June 9, 2005


An estimated 2,500 South Florida homeowners threatened with foreclosure by a Lauderhill law firm for not paying alleged debts soon could get a $30 check in the mail.

Some of the debts the firm tried to collect were for as little as $25.
Katzman & Korr, which represents 400 homeowner and condo associations in Broward, Miami-Dade, Palm Beach and Monroe counties, has agreed to settle a federal class-action lawsuit that accused it of violating the federal Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act.

If a deal is approved by U.S. District Judge William P. Dimitrouleas, the firm would settle the 2003 suit for $250,000 and promise not to continue using the type of letter it sent to thousands of owners.

The settlement agreement calls for four residents of Plaza East in Fort Lauderdale -- Ramsey Agan, Grace Agan, Sherry Ann Spies and Nancy J. Bochicchio -- to get $5,000 each. Their attorneys, J. Blane Carneal of Fort Lauderdale and O. Randolph Bragg of Chicago, would get $135,000. Another $20,000 would be used for expenses.

The remaining $75,000 would to go to the estimated 2,500 members of the class, for about $30 each. Owners considered part of the class will be notified by mail and will have the right to opt out and deal with the firm individually.

The two sides filed their settlement agreement this week. Dimitrouleas hasn't yet set a date to consider it.

The larger issue in the case -- foreclosure threats by attorneys for small or nonexistent debts -- affects everyone who owns a residence in an association-controlled community.

The problem has drawn increased scrutiny from state officials. State legislators failed to come up with measures this year to address the issue but are expected to try again next year.

The lawsuit hinged on the legal issue of the form of collection letters. It alleged the Katzman & Korr letters were illegal because they didn't give owners specifics about the debts, such as when a payment was due and how much. Rather, the letters gave total amounts. Consumer protection laws require complete information.

In its settlement, Katzman & Korr said members of its firm "do not admit or concede (but, to the contrary, expressly deny) any wrongdoing, liability or improper conduct of any nature" in connection to the allegation in the lawsuit.

The attorney for the firm, James M. Kaplan of Miami, said he is pleased to end the "potentially costly" lawsuit.

The settlement, if approved, "would clarify the acceptable way to collect from those who don't pay" their bills, he said, and "there could be no dispute that the letters Katzman & Korr will be using comply with the letter of the law in every respect."

Dimitrouleas last year declared the case a class-action lawsuit representing all unit owners who received collection letters similar to those received by the four Plaza East unit owners. The settlement says owners must have received the collection letters between December 2001 and Jan. 12, 2005.