8/7/13 Daily Business Review: Settlement Reached in Class Action Against Marshall Watson

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Settlement Reached in Class-Action Against MarshallWatson

Settlement reached in a consumer class-action alleging Marshall Watson, a defunct Fort Lauderdale foreclosure law firm,violated federal law on debt collection practices.

Julie Kay

2013-08-07 09:00:00 PM

While other defense lawyers are suing so-called foreclosure mills over the robo-signing scandal, a Hallandale Beach lawyerhas had success suing law firms on novel grounds: violation of a federal debt collection law.

Solo practitioner Scott Owens agreed last week to settle a class action lawsuit with the Law Offices of Marshall C. Watson, aFort Lauderdale foreclosure firm that closed down under a Florida Bar order in December. The firm reconstituted as ChoiceLegal Group.

The consumer class action filed in Miami federal court last October alleged the law firm's initial contact letter to homeownersfacing foreclosure violated the federal Fair Debt Collection Practices Act. Owens cited the letter's failure to include a provisionnotifying consumers that they have 30 days after receipt of the notice to dispute the validity of the debt.

Owens filed the suit on behalf of 10,000 to 15,000 Floridians who received the letters from Marshall Watson. With trialscheduled for this month, the case was settled after two days of mediation last month led by Samuel L. Heller of MediationInc. Owens said he could not disclose the final settlement terms. A report is due to be filed Aug. 16 with U.S. District JudgeJose E. Martinez.

"We feel it's a favorable settlement," Owens said. "Defense counsel put up an admirable fight, and both parties, as is thecase with mediation, gave away a little bit to come to a resolution."

Dale Friedman of Conroy Simberg Ganon Krevans & Abel in Hollywood, who represents the law firm, said: "It's beenresolved, and that's all we need to say.

'Everyone Is Copying'

This is not the first time Owens has sued a law firm on an FDCPA violation. He also filed lawsuits against GreenspoonMarder of Fort Lauderdale; the former Atkinson, Diner, Stone, Mankuta & Ploucha; Jennings & Valancy of Stuart; and McCallaRaymer of Atlanta.

"It's my opinion that the majority of the foreclosure mills in Florida violate FDCPA on a regular basis," Owens said. "I see it

8/7/13 Daily Business Review: Settlement Reached in Class Action Against Marshall Watson

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every day. There are few attorneys that are competent in FDCPA. The problem is everyone is copying everyone else'spaperwork. I've seen errors that have tracked back to 2002."

He has garnered some powerful support in the lawsuit filed against McCalla Raymer, which has offices in South Florida.Washington-based Public Citizen, a consumer rights advocacy group, has joined in Owens' appeal to the U.S. Court ofAppeals for the Eleventh Circuit.

"We're very interested in decisions under the Fair Debt Collection Practices Act and try to be aware of lower court decisionsthat may undercut the act," said Scott Nelson, a staff lawyer at Public Citizen. "When Scott Owens brought this case to ourattention, we felt the district court's decision undercut the act by not recognizing that the letter was an initial contact by a debtcollector containing an effort to collect the debt. The court treated it as a trivial matter."

On May 2, Senior U.S. District Judge James Lawrence King in Miami dismissed the case filed on behalf of a Miamihomeowner who fell behind on a $269,786 mortgage.

"Debt collectors are not required to use the exact language of the statute so long as the language they use would notmislead the least sophisticated consumer regarding the nature of their rights in contesting the debt," he wrote. "The lettercould not be reasonably interpreted as confusing to the least sophisticated consumer."

Law Firm Liability

Matthew Weidner, a St. Petersburg foreclosure defense lawyer, said he and other colleagues have started using FDCPA asgrounds to fight foreclosures under a 2012 ruling by the Eleventh Circuit opening the door.

"There used to be this artificial firewall that existed in foreclosure that exempted law firms from these actions," he said. "Thatwas an artificial creation and bad law. To say that a bank or law firm that is throwing me out of my home is not a debtcollector but a credit card calling me on my cellphone is absurd."

Weidner said he and other foreclosure lawyers are raising the issue on individual foreclosure suits rather than classactions.

"We find class actions unwieldy and do not provide very satisfactory results for individuals," he said.

Are law firms reacting to the new actions and making sure their dunning letters comply with the FDCPA? Some are, andsome aren't, Weidner said.

"There's a disconnect among law firms," he said. "Some are now stamping the debt collection notice on the bottom of theletters, and some aren't."

Watson, under investigation by The Florida Bar for lapses tied to the robo-signing scandal, agreed last December to a 91-day law license suspension and the closing of his firm. The agreement amounts to the toughest disciplinary action to dategrowing out of the questionable practices of lenders and their lawyers during the housing crisis.

At the height of the foreclosure crisis, Watson's firm was one of the top plaintiffs foreclosure firms in Florida, handling morethan 66,000 cases with 71 lawyers and 597 support staff.

8/7/13 Daily Business Review: Settlement Reached in Class Action Against Marshall Watson

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