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Case Settlement Worries Landlord Lawyers

The decision this month by U.S. District Court Judge

Lorna G. Schofield found that the law firm for Mr. Lee’s landlord was liable for damages for the error, even though she also said the firm had relied on incorrect business records from the landlord’s managing agent and had moved quickly to correct the mistake.

The judge’s decision was based on an interpretation of a
strict federal law intended to curb abuses by collection agencies. But the ruling didn’t spell out what steps landlord lawyers must take to avoid liability for innocent errors in housing-court filings.

As a result, some lawyers say they have been left in limbo, and are reviewing procedures they use in evictions to find ways to protect themselves against liability in similar suits.

“Are we supposed to be the attorneys for the landlord and the accountants?” asked David Skaller, a partner at Belkin Burden Wenig & Goldman, which represents many landlords but wasn’t involved in the case. “It has a potential chilling effect.”

The decision follows other efforts since the recession and the national foreclosure crisis to hold lawyers more accountable in housing cases, where people risk losing their homes as well as their credit ratings because of potential errors in filings.

In 2010, for example, amid a “robo-signing” scandal involving foreclosure proceedings, New York state Chief Judge Jonathan Lippman required lawyers for banks and lenders to submit signed statements to certify reasonable steps were taken to verify the lenders’ claims.

In the case involving Mr. Lee, the law firm used by his landlord, Kucker & Bruh LLP, settled after Judge Schofield ordered a trial to determine how much was owed for damages to Mr. Lee. Alan Kucker, a partner at Kucker & Bruh, and others at the firm didn’t respond to requests for comment.

Mr. Lee’s attorney, James Fishman, a tenant and consumer lawyer, said the case was a “paradigm shift for the landlord bar” where some law firms have routinely made “mass filings of nonpayment proceedings without having to do any kind of checking.”
“Hopefully there will be fewer mistakes in Housing Court
eviction proceedings,” he said.

The Lee case revolved around the federal Fair Debt Collection Practices Act, a law designed to stop abuses by debt collection agencies and holds them strictly accountable for errors. The law allows for exceptions such as unintentional mistakes resulting from a “bona fide error” despite procedures set up to avoid such errors.

Judge Schofield found that Kucker & Bruh relied on printouts prepared by the managing agent for Mr. Lee’s building from its business records but the law firm had “no procedures to avoid discoverable errors in their client’s computation.”

Mr. Lee moved to his current building on West 183rd Street in Washington Heights in 1965 soon after coming to the U.S., according to court filings. Mr. Lee’s listed rent was $790.30 a month in 2012. But the eviction notice filed last year ignored a rent subsidy of $400 a month he was entitled to under a city program called the Senior Citizens Rent Increase Exemption paid through a property tax abatement for the landlord, the decision said.

As soon as Mr. Fishman told the Kucker law firm about the city subsidy, the Kucker firm checked with the management company, and moved to discontinue the eviction proceedings, the decision said. Nevertheless, Mr. Lee brought his suit, resulting in the decision by Judge Schofield that found that the landlord’s law firm was liable for damages.

Mr. Lee went to court seeking to “release all this anxiety I have against my landlord,” he said in a court deposition.

“You don’t know what it is to be dispossessed of your apartment,” he said in the deposition. “I am living there all my life since I came to the United States.”

Adam Leitman Bailey, who represents many landlords and isn’t connected with the Lee case, said it was a “very dangerous decision for lawyers” by a federal judge “who could not possibly understand the halls of housing court and the landlord-tenant industry.”

He noted that the same printouts of rent records that the judge found inadequate were routinely accepted as evidence in housing court. “We would be unable to practice law in any field, unless we rely on information from our clients,” he said.

Over the years, some landlord lawyers have questioned whether the fair-debt act should apply to the practice of landlord and tenant law in New York City housing courts. But since a federal appellate court ruling in 1998, most firms have included a standard federal debt-collection notice with all eviction proceedings, just in case, lawyers said.

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