Category Archives: Consumer Protection

Montana Court Awards $311,000 To Janitor

(CN) – A debt-collection law firm must pay a disabled former janitor $311,000 in damages because it pursued $3,000 credit card debt long after the statute of limitations had expired, the 9th Circuit affirmed Friday.

A Montana federal jury ordered Johnson, Rodenburg & Lauinger to pay Tim McCollough after the firm was found to have violated the federal and state fair debt laws, as well as state torts of malicious prosecution and abuse of process.

The court found that Johnson Rodenburg filed an average of five collection lawsuits a day in Montana between January 2007 and July 2008, which amounted to about 2,700 total. On one day, the North Dakota firm filed 40 lawsuits. About 90 percent of the firm’s suits end in a default judgment, one of its attorneys testified.

McCollough claims that he and his wife fell behind in credit card bill after he suffered a brain injury while working as a school custodian and his wife underwent surgery. He stopped making payments on his account with Chase Manhattan Bank in 1999 when there was an unpaid balance of about $3,000.

A subsidiary of Collect America, which now goes by SquareTwo Financial, paid more than $3,800 to buy McCullough’s account from Chase in 2001. It sued McCullough to collect the debt in 2005 but dismissed the case when McCullough replied that the five-year statute of limitations had already expired.

After the company retained Johnson Rodenburg to pursue collection, the firm requested Collect America to provide information to extend the statute. Collect America incorrectly replied that McCullough had paid $75 on his account in 2004, effectively resetting the clock to run through 2009.

But that 2004 activity was not a payment; it was the return of court costs to Collect America for an earlier attempt to pursue McCullough’s debt. A Johnson Rodenburg never followed up to request more documentation of the activity, however, and the firm simply sued McCullough in 2007 for about $10,000.

In a pro se answer to the complaint, McCullough again wrote that the statute of limitations had expired.

FORGIVE MY SPELLING I HAVE A HEAD INJURY AND WRITING DOSE NOT COME EASY,” McCullough wrote, as reprinted by the court. “THE STACUT OF LIMITACION’S IS UP, I HAVE NOT HAD ANY DEALINGS WITH ANY CREDITED CARD IN WELL OVER 8½ YEARS.”

McCullough went on to say that he was disabled and received just $736 a month in Social Security. He also claimed that that Chase harassed and insulted him when his Workers’ Compensation insurance ran out.

THEY CALLED AROUND THE CLOCK, SO I COULD NOT REST, THEY GOT ME SO WOUND UP AND CONFUSED THE HEALING OF MY HEAD INJURY STOPED!” he wrote.

WHEN WILL IT STOP DO I HAVE TO SUE THEM SO I CAN LIVE QUIETLY IN PAIN,” he asked.

When McCullough eventually got a lawyer, the firm fell on its sword and dismissed the suit with prejudice. McCullough then filed suit and won damages, $250,000 of which was for emotional distress. The District Court declined to reduce any part of the award or give Johnson Rodenburg a new trial.

The 9th Circuit, which heard arguments for the case in Billings, Mont., affirmed Friday. A three-judge panel, which included retired Supreme Court Justice Sandra Day O’Conner sitting by designation, said the firm’s error was its own to prevent.

Substantial evidence supports the jury’s findings of both a lack of probable cause and malice,” the 30-page decision, authored by Judge Sidney Thomas, states.

McCollough acknowledged his disabling pre-existing condition but characterized the impact of JRL’s lawsuit on him as ‘the straw that broke the camel’s back,” Thomas continued. “He thought that the lawsuit wasfrivolousandan insult,and that he was ‘being shoved around.’ We thus must conclude that the award was not based on speculation and guesswork, but rather on the jury’s valuation of McCollough’s emotional distress.” 

Debt Collection Law Suits Engulf Courts

Many debt buyers do not have the evidence to prove their claims in court if they are challenged.  Consumers are frequently being sued for inflated amounts or for debts they do not owe and should consider hiring a lawyer to defend themselves from unscrupulous collectors.

This recent article in the New York Times about the problems of huge numbers of debt lawsuits being filed in courthouses all over the country.  The collection companies buy the debts for mere pennies on the dollar but often really have nothing but electronic data and no live  witnesses to prove their claims.  The debt collectors hope to make money on those cases where people are frightened by the often intimidating collector, or give up and do not even question the debt.  Many times the claims being filed are for monthly late charges and over limit fees and inflated interest charges charged on top of the late and over limit fees themselves.

As a consumer advocate and attorney I have extensive experience in successfully defending consumers against debt lawsuits filed in Southern California courts.  If you need legal assistance I can be contacted at 661-771-2281.

Aurora Harris
Attorney at Law
The Harris Law Firm

Don’t Be Mowed Over By Debt!

Worried about Debt Lawsuits?
Act Quickly and File an Answer if you are Sued!

As a general rule the law will NOT protect people that “sleep” on their rights. If you do not fight a lawsuit promptly – as soon as you do find out about it- you may end up legally bound to a debt, even one that you never owed in the first place, or you could be  bound to pay a default judgment which you were totally unaware of at the time if was taken.

You can be sued whether or not you owe someone money.  Worse yet, you can have a default judgment against you whether or not you have received proper notice.  These types of default judgments happen all the time and you  need to act quickly when you discover it.  Whether someone is trying to sue you or  as  soon as  you discover that a judgment has been secretly taken against you, a quick response is necessary.  Defaults can be attacked by a motion to set aside but the time in which to challenge the default is limited in time.

It is your responsibility to be vigilant. Consumer advocates are noticing that there are a number of  aggressive collection lawyers and unscrupulous bill collectors looking for easy cash and they may be trying to get it from you!  Sometimes crooked process servers are signing false proofs of service  and lie about serving  someone with legal papers in order to take a sneaky default judgment without any notice.  This fraud needs to be challenged as soon as discovered or it may be too late.

Just because you did not incur any debt does not mean that there will never be claims against you.  Someone may have stolen your identity and incurred debt in your name. Even having a similar name to an actual debtor could mean you end up saddled with the debt unless you timely protest.  Never just ignore correspondence from collectors, especially not legal papers. The law presumes a reasonable person will write back, disputing the debt, not ignoring it. You can actually incur a legal obligation just by ignoring bills that come to you out of the blue.  So at a minimum write back, “I dispute this bill, I don’t owe this money”   on any false statement you receive.  And keep a copy.  Without appropriate action, you could end up being held responsible for someone else’s debt.

Defenses are available. There are a number of valid legal defenses which may be available to you if you timely contest the debt. For example, even if you do owe some money to a creditor, the interest rate and charges could have ballooned unconscionably.  Many debt buyers do not own the debt and do not have the necessary paperwork to prove their claim in court.  Be aware all of your affirmative defenses need to be filed with your Answer. A Consumer Advocate like attorney Aurora Dawn Harris can help  you understand your rights and defend you in court.

The debt buyer business is ugly and thriving in these tough economic times. For more information contact Attorney Harris at 661-771-2281.  In the mean time, read this interesting article in the New York Times about the problems people are having with Debt Collection cases.

http://www.nytimes.com/2010/04/23/us/23sfdebt.html

Submerged Car Surfaces In Court

Here is a very interesting video on You Tube about a man that purchased a car that had, at some point, been completely submerged under water. Something of a sales arbitration horror story.

There are lessons to be learned from this event.

  1. Do NOT take delivery of a car you are buying where work is orally “promised”. Even if the promise of repairs is in writing, it is best to leave the car at the dealership (do NOT even drive it home overnight) but let the dealer fix it first. Then only AFTER the dealer has attempted the promised repairs do your further inspect it before deciding whether you still want to complete the deal.
  2. Car faxes are highly overrated. They do not replace a careful inspection by a qualified mechanic. Car faxes seldom provide sufficient information about a vehicle’s history of accidents, past repairs, mechanical condition, out of state salvage title etc.to be of much use in learning much about the real history of a car.
  3. Never sign a contract that has an arbitration provision in it, giving up your right to a trial by jury. Demand that the dealer use a different form contract (yes they have them) or go shopping for a car at another dealership that does not use contracts with arbitration clauses. Yes people, this requires that you READ the contract. Try calling a dealership first before you go there and ask them if they use contracts without arbitration clauses. Then verify it when you first arrive and again before signing the actual contract.

ADH

Avoiding Auto-Dealer Fraud

Unfortunately, it seems that there is an inordinate number of unscrupulous people engaged in the car sales business.  We’ve all heard the jokes about the ‘used car salesman’.  A comparison was made a few years ago that the difference between a used car salesman and a computer salesman is that the used car salesman at least knows when he (or she) is lying.

Problematically, this unscrupulous, and often illegal, behavior is not limited just to the representations made about a vehicle.  Often times it will extend to the virtual ‘kidnapping’ of the unsuspecting shopper by the dealership and gross misrepresentation regarding actual costs and financing.

Frequently, people that have been unfairly manipulated into purchasing vehicles later find themselves unable to make the payments which then cascades into debt collector persecution, repossession, destruction of credit rating and subsequently a host of other credit related problems.  To say nothing of stress and not being able to get to work.

Aurora Harris, proprietor of The Honest Lawyer, and herself a nationally renowned consumer attorney who has often broken new ground in defending consumers from predatory lending and sales practices, has written an article that is posted on her personal web site.  You can read the full article here: http://www.theharrislawfirmonline.com/2009/12/avoiding-auto-dealer-fraud/