jay-mcclendon-pa

Small Business and the Florida Consumer Collection Practice Act

Wed, 21 Oct 2015 18:27:12 GMT

How Are Consumers Protected

In my practice, I often see that large corporations have large law firms and sophisticated information technology departments that monitor their business operations, while the small business owner struggles to stay abreast of the law and avoid unforeseen legal entanglements. Unfortunately, sometimes the law is more of a trap for the unaware than a protection from mistreatment. A case in point recently came to my attention when a local businessman contacted me regarding a lawsuit that had been filed against his business.

A doctor’s office got sued for sending an ordinary billing statement in the amount $160 to its patient. Whether or not the billing statement was a technical violation of Florida’s Consumer Collection Practices Act, the doctor will spend thousands of dollars in litigation fees and thousands more to settle the claim. The law is an unfair trap for the unwary. I felt so bad for the doctor, that I wrote my congressman and asked that the law be changed to make it fairer to the small business owner. A copy of that letter follows:

October 13, 2015

The Honorable Mike La Rosa
State House of Representatives
201 West Central Avenue
Lake Wales, FL 33853

Re: The Florida Consumer Collection Practices Act §559.55

Dear Representative La Rosa:

I am a practicing attorney who resides in your district. I have recently become aware of a situation that needs the attention of the Florida legislature. A local doctor’s office contacted me because they are being sued on by a patient to whom a statement for $160 was mailed shortly after she had filed for Chapter 7 bankruptcy. The suit alleges that this statement was a violation of the Florida Consumer Collection Practices Act, and asks for a jury trial and requests actual damages, statutory damages, costs and attorney’s fees pursuant to §559.77 Florida Statutes.

The facts are:

1) The debtor filed a Chapter 7 bankruptcy case in Tampa on July 16, 2015. 2) A Notice of Bankruptcy was mailed on July 19, 2015. 3) A standard invoice from the doctor was mailed to the debtor on August 4, 2015.

The debtor has not pursued any claim for violation of the bankruptcy stay because the bankruptcy court would view such a violation as harmless. On the other hand, the debtor has filed a suit in County Court seeking damages for violation of Florida’s Consumer Collection Practices Act (the “Act”). The Act is bad law in that it can be used by an attorney for no other purpose than to generate fees and revenue for the law firm.

In all cases, the creditor has no liability if the violation was not intentional, resulted from a bona fide error, and the creditor had procedures in place designed to avoid the violation. Here’s the problem; in the event of a mere innocent technical violation where there are no actual damages, and no statutory damages, and no punitive damages, the Court nonetheless must award attorney’s fees to the debtor’s attorney. That seems terribly unfair to me, and I suspect some attorneys file claims simply to produce income for themselves.

Florida’s Consumer Collection Practices Act is a trap for Florida residences and a boon for Florida attorneys. If the business fights the claim and losses, it will be liable for substantial attorney’s fees. Most businesses will not take that risk and will immediately pay about $2,000 in attorney’s fees and $500 to the plaintiff to make the case go away.

I would like to see this act amended to include a time frame of 30 days or so after the bankruptcy is filed which acts as a grace period for creditors to adjust their billing to accommodate the provisions of the act. This allows for small business owners who are less aware of the provisions of the act and less technically savvy to be able to adjust their billing and collection practices to conform to the act. I find that large corporations have systems in place to stop billing and collections activities immediately when notified of a filed bankruptcy. However, many small businesses do not. The small business owner is also less able to bear the costs of paying the penalties imposed by act. I also do not think that the drafters of the act intended it to be a fee generating source for the attorney when the letter of the law, but not the intent, is violated. Please amend the Act to exclude any normal invoice issued within 30 days of a debtor filing bankruptcy.

If you have any questions regarding this matter, I would be more than happy to speak with you. Thank you for your service and consideration of this matter.

With best wishes, I remain

Sincerely,

James C. McClendon II

I will post any response that I receive to my request for a legislative remedy. In the meantime, please feel free to contact me with any questions you may have concerning compliance with Florida’s business regulations.

Sad, But True

Fri, 02 Oct 2015 18:18:25 GMT

After practicing law for almost three decades, I am glad to see that I have not become jaded. Occasionally, I find a client’s problem particularly sad. Often times, the sadness is a result of my knowing that the client could have easily avoided the problem, if only he had known what to do. My firm’s moto is “Life Requires Navigation”. Navigation means knowing exactly where you want to go and how to get there. Getting off course can be expensive if not dangerous.

A few days ago, an elderly gentleman came to my office for help. It is easy to have a soft spot for senior citizens, but this gentleman took the cake. He was the kindest old soul that I have met with in quite some time. He was so kind, you might even call him naïve. He was trusting and expected everyone to treat him as he would treat them

This client had hired a roofer to put a new roof on his house. The roofer did just that and at a fair price. The work was well done, neat and prompt. My client paid the contractor for the work. A few weeks later my client found out that the roofer had not paid for the shingles, and that the supplier of the shingles had placed a lien on my client’s house for $5,000. The roofer cannot be found. He appeared to be legitimate, but the roofer turned out to be a scoundrel. My client had to pay the shingle supplier in order to have the lien released and avoid foreclosure of his home.

The point of this sad story is that the client did nothing wrong, but there was little I could do to help him. That is a very sad situation made even worse when the victim is a truly nice elderly gentleman. The client simply did not know how to navigate the construction process.

Whenever you are about to enter into a contract involving a substantial amount of money, contact an attorney and get some advice before signing the contract. In other words, “Life Requires Navigation” . Whenever you enter into a contract, you are about to take a journey. Be sure to get good directions; make sure you understand the route; and know where you will be at the end of the journey. This applies to not just this specific issue, but to any situation involving a contract.

In this specific case, Chapter 713 of the Florida Statutes provides that all subcontractors, suppliers, and laborers for construction projects can become lien holders on the property if they are not paid. Those construction liens can be foreclosed and the property can be taken by the subcontractor. Property owners can protect themselves by getting lien waivers from the subcontractors and suppliers before paying the general contractor. My client simply did not know to demand a lien waiver from the shingle supplier before he paid his roofer. Imagine how easy it would have been to tell the roofer “I’ll be happy to pay you just as soon as you give me the supplier’s lien waiver”.

The moral of this sad story is not that Florida Construction law is unfair, or that my client should have known better, or that the dishonest roofer should not have been granted a contractor’s license. The moral of the story is that “Life Requires Navigation” . Protect yourself by getting proper directions. Here at Jay McClendon, P.A. we stand ready to help you with construction law issues and a wide variety of other legal matters as well.

What is Probate in Florida?

Tue, 05 May 2015 17:31:30 GMT

Here I discuss probate in order to answer any questions you may have and define some of the terms used in probate cases. Do you have a probate question? If so, contact our Lake Wales Probate Florida Attorney at 863-232-5200.

What is Guardianship in Florida?

Thu, 30 Apr 2015 17:31:30 GMT

Here I discuss guardianship in order to answer any questions you may have and define some of the terms used in guardianship cases. Do you have a guardianship question? If so, contact our Lake Wales Guardianship Attorney at 863-232-5200.

Do I Need A Will?

Tue, 10 Jun 2014 17:31:30 GMT

A recent Florida Supreme Court decision reminded me of a series of questions people have been asking me since I began practicing law. Friends are always asking me, “Do I need a will?” “How much will it cost?” and “Can I do it myself?” always in that order. My answers are; “Probably,” “It depends” and “Probably not.” The new case deals with the third question, “Can I do it myself?”

Before we get to the case, let’s look at the first two questions. If you do not have a will, Florida statutes dictate how your property will be distributed upon your death. Those statutes can get pretty complicated. If your plan of distribution is just the same as the statutory scheme, then maybe you do not need a will, but the odds of that are slim. The second thing a will does is name a personal representative to be in charge of the administration of your estate. The applicable Florida Statute may not provide for the same person as you would select. It is almost always best to have your own will prepared just the way you want, rather than having the statutes control everything.

It would be wrong of me to quote pricing for the drafting of a will in the context of this article. My advice is to call around to a few attorneys and get pricing information for your specific situation. There is no shortage of attorneys, and the market for this kind of work is very competitive. It is very unlikely that you will be overcharged.

Now let’s look at this new case out of the Florida Supreme Court. The decedent wrote her own will using a form she got from the internet or office supply store. It was called an “E-Z Legal Form,” which is funny, because using the form did not turn out to be easy. The decedent made a mistake, a simple mistake that anyone could have made. The Supreme Court ruled that it did not matter what the decedent meant to say. The only thing that mattered was what the words in the will actually expressed. The result was that a large part of the decedent’s estate did not go to the person the decedent wanted to receive the property.

Justice Pariente summed it up this way,

While I appreciate that there are many individuals in this state who might have difficulty affording a lawyer, this case does remind me of the old adage “penny- wise and pound-foolish.” Obviously, the cost of drafting a will through the use of a pre-printed form is likely substantially lower than the cost of hiring a knowledgeable lawyer. However, as illustrated by this case, the ultimate cost of utilizing such a form to draft one’s will has the potential to far surpass the cost of hiring a lawyer at the outset. In a case such as this, which involved a substantial sum of money, the time, effort and expense of extensive litigation undertaken in order to prove a testator’s true intent after the testator’s death can necessitate the expenditure of much more substantial amounts in attorney’s fees than was avoided during the testator’s life by the use of a pre-printed form.

The wise man learns from his mistakes, but the wiser man learns from other people’s mistakes.