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Law firms hired by landlords in collection actions against tenants can be liable to pay the tenant both statutory penalties and attorneys fees if they use improper collection practices. That’s the ruling in an appeals court decision in the case of Kelly Williams v. Gluck & Tobin Esquires and Irving Tobin, which upheld an attorneys fee award of $20,852.80 and a $5000 statutory damage award against a law firm and the firm’s owner.
The facts of this case warrant review. The Plaintiff lived in Roselle Park in an apartment that qualified for Section 8 Assistance. The law firm initially filed a summary dispossess action on October 2016 which was dismissed after the tenant paid the overdue rent. Five more summary dispossess actions were then filed by the law firm, each demanding outstanding rent, late charges, lock and fee charges and perhaps ironically, attorneys fees.
Some of these charges were not permitted under the lease.
Plaintiff first sued the law firm in a Special Civil case, which resulted is a judgment in plaintiff’s favor. The Court found the law firm was a “debt collector” under the federal Fair Debt Collections Practices Act who did engage in unfair collections practices by filing five unwarranted cases seeking attorneys fees and late charges that were prohibited charges under the controlling lease. The Court awarded a one thousand dollar penalty and attorneys fees and costs against the law firm in the amount of $25,604.53.
While that Special Civil case was pending, the Plaintiff started a new lawsuit in the Superior Court against the law firm essentially based on the same facts. The law firm failed to make a timely claim that the second case should be dismissed or consolidated with the first because it was essentially the same as the first case and the firm’s efforts to dismiss the second case on those grounds much later in the second case were rejected by the trial court as essentially coming too late in the process. The second court awarded plaintiff an additional $20,852.80 in attorneys fees, totaling over $45,000.00 against the law firm.
The appeals court upheld the second judgment. The Court found that many of the claims the law firm sought to advance on appeal were not properly included in the initial appellate filings, which meant that those claims could not be pursued on appeal. Further the appeals court found that the trial court’s findings were adequately supported by the record in the case.
Law firms retained by landlords need to recognize that they are collecting debts and are subject to federal laws that govern that practice. This requires that the firm make claims supported by the lease and avoid treating tenants unfairly. Failure to do so may reverse the tables: and it may the the law firm, not the tenant, who ends up paying hefty counsel fees.
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