A Chicago law firm that represents condominium associations in recovering unpaid fees will need to prove in court it did not violate the legal rights of condo owners from whom it was attempting to collect from.
U.S. District Court Judge John F. Grady in an April 16 ruling rejected Chuhak & Tecson's motions to dismiss a pair of proposed class action lawsuits brought by Lelia and Patrick Vincent and Michelle Lockett and Sebastian Lorenzo.
In those suits, filed in the fall of 2013, the plaintiffs allege they received letters from the firm on behalf of the condo associations to whom they owed past-due assessments to.
The plaintiffs claim the letters violate the federal Fair Debt Collection Practices Act by not properly explaining their rights to challenge the debt's validity and placing an emphasis on debt collectors' ability to move to “terminate” the plaintiffs’ “right to possession of the premises” if full payment was not made within 30 days of receiving the letters.
That language, the plaintiffs argue in their suits, “overshadowed” language included in earlier portions of the letters explaining their rights to “dispute the validity of the debt,” and to receive “a verification of the debt” from the collector.
They contend the conflicting language violates a clause within the Fair Debt Collection Practices Act, which states debt collection notices “may not overshadow or be inconsistent with the disclosure of the consumer’s rights to dispute the debt or request the name and address of the original creditor.”
In their suits, the plaintiffs allege as many as 40 other condo owners may have received similar letters from Chuhak & Tecson, prompting their decision to seek class action status.
Chuhak & Tecson, in response, asked Grady to dismiss the complaints for failure to state a claim, arguing that their notice letters followed the law because they included required language explaining the consumers’ rights.
The firm claims the letters’ language was plain, such that “an unsophisticated consumer ‘should have no trouble recognizing that he or she has a full 30 days from receipt of the notice to dispute the validity of the debt without further legal action being taken.’”
Further, Chuhak & Tecson explained it had tailored its letters to conform to state law governing eviction procedures against condominium owners.
In his ruling, Grady brushed aside the firm’s contention regarding the nature of the notice letters’ language, noting precedent has established collectors not only must include language referencing consumers’ rights, but must also use the notice to explain how that language fits “with the debtor’s validation rights.”
Grady determined the language of the letter from Chuhak & Tecson was “possibly confusing,” as it fails to include language “that explains how the disclosed validation rights relate to the debt collector’s rights and obligations.”
The judge also said the debt collectors’ duties under state law “does not relieve a debt collector from its duty under the FCDPA to explain to the debtor how the debtor’s rights fit together with the debt collector’s rights, when there is an apparent contradiction.”
“It would not have been difficult for Chuhak to have crafted a legally accurate notice … but it evidently chose not to do so, at its own risk,” Grady wrote in his ruling.
Grady has not ruled on the plaintiffs' class certification motion, and last month continued the request. An April 30 status hearing has been set in the case.
Chuhak & Tecson P.C. is being represented by attorneys Corey Berman and Michael J. Flaherty of Flaherty & Youngerman P.C. in Chicago.
The plaintiffs are being represented by Chicago attorneys Daniel A Edelman and Michelle R. Teggelaar of Edelman, Combs, Latturner & Goodwin LLC.