Foreclosure law firm can't be investigated by Florida's AG, court rules

Article Courtesy of The Palm Beach Post

By Kimberly Miller

Published April 29, 2011

Florida's attorney general has no authority to investigate a Boca Raton-based foreclosure law firm under a civil unfair trade practices statute, an appeals court ruled Wednesday.

In siding with the Shapiro & Fishman law firm, the 4th District Court of Appeals likely ended the state's current pursuit of subpoenas against other so-called "foreclosure mills," including the Law Offices of David J. Stern in Plantation.

Judge Spencer D. Levine wrote in Wednesday's ruling that the state's subpoena was not connected to "trade or commerce," a requirement when using Florida's Deceptive and Unfair Trade Practices Act to investigate.

Spencer says the attorney general could have proceeded with "a criminal investigative subpoena if other relevant criteria were satisfied."

The decision upholds a circuit court ruling made in October by Palm Beach County Circuit Court Judge Jack S. Cox.

"The court ruled correctly in terms of it being a matter of law that there was no jurisdiction," said attorney Gerald Richman, who represents Shapiro & Fishman. "That being said, we have maintained all along that we would give them a reasonable amount of information in the spirit of cooperation, and we still offer to do that."

Jennifer Meale, communications director for the attorney general's office, said the ruling "explicitly" outlined other avenues the office could pursue. It is reviewing those options.

West Palm Beach foreclosure defense attorney Melva Rozier was disappointed with Wednesday's ruling.

"If the attorney general can't investigate law firms, where is the recourse? How do we protect the public?" Rozier asked.

In August, then-Attorney General Bill McCollum, a Republican candidate for governor, issued subpoenas to three foreclosure law firms; Shapiro & Fishman, the Law Offices of Marshall C. Watson, in Fort Lauderdale, and the Stern firm. A fourth firm, the Florida Default Law Group in Tampa was already under investigation.

The Watson law firm settled with newly elected Attorney General Pam Bondi last month, agreeing to pay $1 million to the attorney general's office for the cost of investigating and another $1 million to the Florida Bar Foundation to pay for Legal Aid attorney positions for foreclosure cases.

In October, Stern's firm lost a protest in Broward Circuit Court against the subpoena, although it used the same argument as Shapiro & Fishman. It has an appeal pending with the 4th District Court of Appeal.

"We're encouraged by this," said Stern attorney Jeff Tew, about Wednesday's ruling. "We made the same argument in our brief, and it was the same subpoena."

David J. Stern closed his foreclosure operations last month, leaving as many as 100,000 cases statewide in question as they are transferred to new attorneys.

Florida Default Law Group did not respond to a message concerning the status of the investigation.

Four other law Florida law firms are either under investigation by the attorney general's office for foreclosure-related concerns or have been issued "letters of inquiry" requesting information.