The Fair Debt Collections Practices Act (“FDCPA”) is a federal statute that establishes legal protection for consumers from abusive debt collection practices. The FDCPA applies to debt collectors, which are broadly defined as persons who regularly collect or attempt to collect consumer debts for another. Law firms who attempt to collect debts on behalf of a community association are considered debt collectors and are bound by the rules of the FDCPA.
In the fall of 2014, a federal district court in Ohio refused to dismiss a case brought by a condominium owner against her condominium association’s debt collection law firm for violations of the FDCPA. In Myles v. Kaman & Cusimano, condominium owner, Frankie Myles, brought an action under the FDCPA alleging that the association’s law firm had made false,
deceptive, and misleading statements in connection with the collection of a debt. The action was filed in federal court and demands actual damages in excess of $90,000.
The case began as a typical foreclosure brought by the association against Myles for the nonpayment of maintenance fees. The case proceeded to default judgment when Myles did not respond to the association’s complaint in foreclosure. After receiving judgment, the property went to auction at sheriff’s sale. After a number of attempts, the property sold at sheriff’s sale. Myles claimed she had no knowledge of the sheriff’s sale until after the property sold.
When Myles became aware of the sale, her foreclosure attorney contacted the association’s attorney and requested a payoff amount in order to redeem the property. In Ohio, there is a statutory right to redeem a foreclosed property at any time prior to the confirmation of sale. (See R.C. 2329.33.) As counsel for the association, Kaman & Cusimano (“K&C”) responded, in writing, stating that Myles had an absolute right to redeem the property until three (3) days before the sheriff’s sale. The letter stated that no payoff amount would be provided because the association had decided to move forward with confirming the sale. At that time of this letter, the sheriff’s sale had not been confirmed.
In her complaint, Myles argued that K&C’s letter stating that the “right to redeem has expired” was a false, deceptive, and misleading statement. The FDCPA prohibits a debt collector from using false, deceptive, or misleading representations in connection with the collection of a debt. Myles contended that since the sheriff’s sale had not yet been confirmed, and because Myles had an absolute right to redeem the property prior to confirmation, K&C’s representation that “the right to redeem has expired” was false and violated the FDCPA.
K&C argued that while the statement was indeed false, it should be read in conjunction with the entire letter as a whole. K&C pointed out that the letter was not intended to be a legal opinion and that Myles should not have perceived the letter has a representation about her legal rights in the pending foreclosure.
The Court agreed that K&C’s statement that the “right to redeem has expired” was an inaccurate statement of Ohio law and that the letter mischaracterized Myles’ right of redemption. The Court denied K&C’s motion for judgment in its favor and granted Myles’ request to amend her complaint. On December 29, 2014, both parties stipulated to the case’s dismissal.
The Myles case demonstrates how essential it is for a community association to hire knowledgeable and effective collection counsel. Myles’ successful motion to vacate the sale due to the attorney’s error delayed the association from collecting the delinquent amount. The FDCPA is fraught with numerous pitfalls the unwary lawyer can fall into which can be harmful to the association.
Should you have any specific questions about the FDCPA and how failure to comply with its many requirements can affect your association’s foreclosures and collection efforts, please do not hesitate to contact one of the attorneys in our office.
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Cleveland, OH 44114
Ph: 216-771-2600
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