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DADE CITY – Pasco County Circuit Judge Susan Gardner decided to take a closer look at her foreclosure cases after law firms were accused recently of overbilling and forging documents.
She doesn’t like what she’s finding – a mountain of fees to serve notice of foreclosure lawsuits to homeowners and to people who don’t exist.
“Routinely, routinely, I’m seeing charges of $1,600, $1,800, $1,000, $800, any of those are ridiculous, and there had better be a good reason for it,” Gardner said, noting that these fees should typically be $45 to a couple hundred bucks.
The judge chose 12 random files and said she found 11 of them had what she says appear to be inflated charges to serve homeowners with lawsuits. Some of the lawyers who submitted affidavits to the court saying the fees are “reasonable” often sign their names and bar numbers in an illegible scribble, court records show.
“I used to think this was just sloppy work, but I truly have begun to wonder if it’s not concealment,” Gardner said.
The files in question involve two of the law firms that are currently under investigation by the Florida Attorney General’s Office for submitting fabricated or misleading documents in foreclosure cases.
Gardner plastered files with adhesive notes detailing her concerns and drew unhappy faces on beside fees. She issued orders this week requiring five lawyers from the firms to appear in court early next month and explain the fees and signatures. If they fail to show up, they could be arrested.
“I don’t want to throw anybody in jail, but I’m getting really angry, and I’m not going to tolerate it anymore,” Gardner said. “I want some answers. This stuff isn’t getting through on my watch.”
At least two of the cases Gardner flagged involve Florida Default Law Group in Tampa, which is under state investigation.
Consider this case.
The process server, Firefly Legal, served two named defendants in Land O’ Lakes in August 2009. The invoice reflects that both defendants were served, but it also included charges for two unknown spouses and for two unknown tenants, even though none of those four people were found, according to court documents.
Three days later, the invoice shows, the process server attempted to serve the main defendants and unknown spouses again – this time in Indiana.
The total bill was $1,633.50. Gardner says a reasonable fee for this case would be $175.
“Now why would they do this?” Gardner said. “It clearly notes they had already been served.”
Firefly representatives told the Tribune the dates on the invoice are internal notations and not reflective of actual service and that the company followed its policy of serving only people its client directed them to serve.
The company said that “to suggest that there is anything improper about the service attempts that our agents made or any related charges in this particular matter is simply wrong.”
Florida Default Law Group issued a statement to the Tribune and said the firm will submit a response to Gardner soon, “with supporting documentation.”
“The costs charged to and paid by the firm are included in the affidavits of attorneys’ fees and costs and are supported by an attached invoice from the process server,” Ronald R. Wolfe, managing partner for the firm, said in a statement.
The type of fees Gardner is questioning is at the center of growing debate over a controversial method some of Florida’s major foreclosure law firms use to notify homeowners of lawsuits.
Two former employees of the law offices of David J. Stern recently testified to the attorney general’s office that the firm consistently inflates bills by creating summonses for homeowners, unknown spouses, unknown tenants and others.
Representatives from the law firms and process servers who use this method say this isn’t done to inflate bills but to make sure anyone with an interest in the property is served, as required to get clear title. They also say this is done to save time and money in the long run.
Others, such as Henry P. Trawick Jr., a Sarasota lawyer, think it’s not right to routinely serve people who don’t exist. Trawick is the author of Florida’s Practice and Procedure, a textbook used by lawyers.
Part of the problem is that the large firms handling foreclosures for lenders have so many files and speed through them, Trawick said. Lawyers should take more time to locate the proper parties before summonses are issued, he said.
“It’s just totally unexplainable to me how they’ve been able to get away with this sloppiness for so long,” Trawick said.
Homeowners who get loan modifications must pay the service fees to get their houses back, but even when the homes are lost to foreclosure, the fees are added to the homeowners’ judgments. That means they may have to pay them later. Otherwise, taxpayers may foot the bill through lender bailouts, Gardner said.
The Tampa Tribune last month reviewed some internal billing records from one of the companies Stern uses to deliver lawsuits, Gissen & Zawyer Process Service in Miami. In one case, $5,000 was billed for process fees on a single property in foreclosure. There were 46 defendants in that case.
The company said the reason the number was so high was because the defendant had a common name, making it necessary to serve anyone with a claim against someone with a similar name, in case that person turned out to be the defendant.
Trawick and Bruce Rogow, a lawyer and professor at Nova Southeastern University, say law firms should issue summonses for “unknowns” only after the servicer goes to the property and finds other people there.
But Alan Rosenthal, a lawyer representing G&Z, said that would actually be more expensive because foreclosure suits would have to be amended for the new names to be added to the suit. It would also take a lot more time, he said.
For example, he said, if a server gets to house and finds it’s been rented, the tenant has a right to be served with notice of the suit.
“Speed is not necessarily bad, as long as the right people are served,” Rosenthal said. “This is required to get clear title.”
Gardner said she often gives lawyers the benefit of the doubt for an unknown spouse or unknown tenant, “but these bills go beyond one or two extra summonses.”
“Because of the large work volume, judges have let things like this slide,” Gardner said. “But lawyers have abused the system, and now it’s time to answer questions.”
Shannon Behnken can be reached at (813) 259-7804. Follow her on Twitter @TBORealtyCheck.
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