Landlord's Attorneys Violated FDCPA

Attorneys representing landlord, a new client, sued to evict elderly rent-controlled tenant for nonpayment of rent. Tenant answered, pointing out that he had a Senior Citizens Rent Increase Exemption (SCRIE) and claiming that he owed no outstanding rent. Attorneys confirmed this with landlord and asked to withdraw the case. The court permitted the withdrawal on condition that landlord pay tenant's attorneys' fees.

Tenant then sued landlord's attorneys in federal court, claiming that they violated the Federal Debt Collection Practices Act (FDCPA) by misrepresenting that tenant was delinquent in his rent obligations. The court ruled for tenant, finding that the attorneys made false representations of the character, amount, and legal status of tenant's debt and that they failed to show that they maintained procedures reasonably geared to avoid any error. The attorneys argued that they didn't know they were misrepresenting tenant's debt because they relied on information received from their client landlord. But the misrepresentation of tenant's debt to landlord was a violation of the FDCPA. The attorneys then argued that they made an excusable bona fide error.

But the fact that the attorneys didn't intend to violate the law wasn't enough. The attorneys had no formal or written procedures regarding the collection of debts. For example, they didn't ask landlord whether tenant received SCRIE or any other rent subsidies, and didn't have procedures in place for following up with clients when provided information was questionable. Before sending a rent demand, they required only a written statement or printout prepared from records landlord maintained in the ordinary course of business. Before sending a notice of petition and petition, they confirmed with landlord whether tenant had paid any of the demanded rent. But the attorneys did nothing to confirm the accuracy of landlord's information and had no track record with this new client. There were discrepancies in landlord's rent arrears printout that the attorneys didn't address. A payment noted on landlord's printout wasn't applied to the claimed arrears; in error it was added rather than subtracted from the total claimed due. The court ordered a hearing to determine the amount of damages that were due to tenant.

Lee v. Kucker & Bruh, LLP: No. 12 Civ. 04662, 2013 WL 3982427 (SDNY; 8/2/13; Schofield, J)