County Court, where most collection cases are heard, tends to judge a case more by equity rather than the letter of the law. Each County Court Judge or Magistrate has their own interpretation of what is fair and reasonable. Thus, we must proceed with caution when going to trial, even if we know the law is on our side. Our first trial story took place last summer and illustrates this point.
It was to be a simple assessment collection trial. The homeowner, as is often the case, felt the attorney fees were unreasonable. He had, early on, sent a check to the attorney written for a portion of the total assessments due. He indicated this was to be payment in full. This check was returned to him. Unfortunately, he later put a similar check, with endorsement indicating this was to be payment in full, into the Association’s drop box. That check was deposited into the Association’s bank and cashed. Even more unfortunate, neither the manager nor I were aware that a restricted check had been deposited. It was not until the middle of the trial that the check was presented. Despite my objections, it was admitted and the case was all but over. However, the Court, in its ruling, also focused on another issue, a theory of equity, which all Associations and attorneys should be mindful.
The homeowner claimed he sought a breakdown of attorney fees when disputing our demand letter. Under the Fair Debt Collection Practices Act, when a debtor disputes a debt, verification of that debt is nothing more than showing the letter was sent to the correct person and the debt is still owed. [See Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (C.A.4 Md.,1999)]. Thus, when this homeowner sent a letter disputing the debt, including attorney fees, we provided a ledger showing the amount was still owed. The homeowner followed up with a nasty letter stating he would not pay the outrageous fees. The Court found it was clear from his letters the homeowner wanted a breakdown of attorney fees. The Court went on to say that although the Fair Debt Collection Practices Act did not require such breakdown, equity did. Therefore, our failure to breakdown our initial fees would have precluded any additional fees being awarded.
The lesson from our first trial story: Put forth more effort than the law technically requires. We must be mindful that most of the defendants will remain a part of the community. If we can respond to their specific requests, it is possible that we can settle the case without too many hurt feelings. If the case does not settle, it still looks better to the Judge when the Association, or its attorney, goes beyond what is legally required. If the Judge looks more towards what is equitable, our efforts may contribute to a favorable verdict.