A Manhattan law firm committed a "veritable 'perfect storm' of mistakes, errors, misdeeds and improper litigation practices" in trying to collect a debt from a Long Island, N.Y., woman, a New York state judge has ruled in ordering sanctions against the firm.
Eltman, Eltman & Cooper was ordered by District Court Judge Michael A. Ciaffa in Nassau County to pay $14,800 for a series of state ethics rules violations, including "disobeying" a court order dismissing the case by making "harassing" phone calls to the defendant.
"'High volume' debt collection law practices are subject to the same ethical rules as apply to lawyers handling any other civil litigation matter," the judge observed in Erin Services v. Bohnet, 19984/04. He directed the firm to pay $10,000 to the
Lawyers' Fund for Client Protection and $4,800 to defendant Patricia Bohnet of Lynbrook, N.Y. The firm was given 30 days in which to make payments.
In August 2004, a default judgment was entered against Bohnet on a $3,158 debt she allegedly owed to an entity called First USA. In July 2009, Bohnet moved pro se to vacate the judgment on the grounds that she knew nothing about the action as she was never properly served. She said she had not lived at the listed address in more than 10 years.
In support of her motion to dismiss, Bohnet testified that she had been "contacted and harassed" at her job by someone affiliated with the law firm. She said she had repeatedly tried to discuss the alleged debt with the firm but the judge noted that "[p]laintiff's counsel were completely uncooperative and abusive to her."
Based on Bohnet's testimony and the law firm's failure to appear, the court vacated the judgment, dismissed the complaint with prejudice and set a sanctions hearing for a date in October 2009.
At the hearing, Bohnet told the court that the firm had continued to "hound her for payment ... through multiple calls to her home and cell phone," even after the order dismissed the complaint. Since the firm had sent a per diem attorney with "no personal knowledge" of the case to the hearing, Judge Ciaffa rescheduled it and ordered the firm to stop calling Bohnet.
The next month, the firm sent an "inexperienced associate" who put forth a "meager presentation" in detailing the firm's procedures in bringing the suit, Ciaffa wrote.
But, the court observed, the associate "had no proof that defendant once owed a debt to First USA, as alleged ... had no proof that defendant ever defaulted on any such debt ... [and] offered no proof that anyone ... ever contacted the defendant, before bringing suit, attempting to collect the alleged debt."
Bohnet testified that she had been forced to take time off from work to contest the lawsuit and said she was disturbed and "scared" by the repeated calls.
Ciaffa ended the second hearing by ordering the firm to produce its complete file on the case to determine if it had a "valid factual and legal basis" to bring the claim.
The firm then produced a disk "containing a jumble of computer entries" that "raised more questions than it answered," Ciaffa wrote. The entries showed two incorrect addresses for Bohnet, including one where the law firm claimed she was personally served, with "[n]o explanation" as to why the firm believed either address was correct.
But more importantly, the records failed to show that Bohnet actually owed any money.
"Indeed, to this day counsel has failed to provide a scintilla of evidence that defendant was actually indebted to First USA many years ago," Ciaffa concluded.
The court then cited to 22 NYCRR §130-1, the statute authorizing sanctions for frivolous conduct, and listed 18 violations of the ethics code by the firm, including an attempt to enforce a judgment "it knew or should have known was invalidly obtained" and "failing to send an attorney with knowledge of the facts" to the October 2009 sanction hearing.
Rory Boyle, a spokesman for Eltman, Eltman & Cooper, said the firm "respectfully disagreed" with the decision.
"We feel that the judge does not have all the facts of the case," said Boyle, adding that an appeal is under consideration.
The law firm was one of 35 sued by Attorney General Andrew Cuomo last year for unscrupulous collection practices. The suit seeks to vacate an estimated 100,000 improperly obtained judgments averaging around $5,500 each.
Bohnet could not be reached for comment.