Judge Orders Plaintiff’s Attorneys to Pay Defendant’s $163K Legal Bill in FDCPA Case

A District Court judge in Texas has granted a defendant’s motion for attorney’s fees and ordered a pair of attorneys who represented a plaintiff to pay $163,627.82 because they “manufactured” a case “with practically no input from, consultation with, or influence” by the plaintiff.

A copy of the ruling in Ozmun v. Portfolio Recovery Associates, Rausch, Sturm, Israel, Enerson & Hornik, and Travelers Casualty and Surety Company of America can be accessed by clicking here.

The plaintiff filed suit after he was sued by the defendant in an attempt to collect on an unpaid debt of $2.065.21. After the defendant filed its suit, the plaintiff made a payment of $57, bringing the unpaid balance to $2.008.21. The plaintiff’s suit alleged the defendant violated the Fair Debt Collection Practices Act and the Texas Debt Collections Act by seeking a default judgment for the full amount of $2.065.21 and for communicating the debt to a credit reporting agency without noting the debt was being disputed. As Judge Sam Sparks of the District Court for the Western District of Texas, Austin Division wrote in his ruling:

“It is therefore fair to say that this lawsuit — which includes 174 docket entries and which has required the attention of a United States District Court for more than two years — is rooted in a dispute over fifty-seven dollars.

But Judge Sparks was more concerned with the actions of the plaintiff’s attorneys, Celetha Chatman and Michael Wood, “who have repeatedly violated scheduling orders and the Texas Disciplinary Rules of Professional Conduct.” Judge Sparks wrote that the attorneys appear to have manufactured the case to collect attorney’s fees “they contend must be given to any plaintiff who brings a ‘successful action’ under the FDCPA.”

The plaintiff’s involvement in the case is “strikingly” limited; the lawsuit was apparently filed before the plaintiff was even aware he was being represented. The plaintiff’s attorneys also are accused of refusing to agree to a proposed settlement without consulting the plaintiff.

Aside from Ozmun’s near-nonexistent involvement in this lawsuit and Chatman and Wood’s unexplained failure to communicate a generous settlement offer to their client, there are further indications that Chatman and Wood are part of a cottage industry of litigants who seek to manufacture lawsuits under the FDCPA in order to secure attorneys’ fees. As the Court has previously noted, this case follows a well-established pattern whereby Chatman and Wood represent a debtor- plaintiff, fax a misleadingly worded dispute letter to a debt collector, and then file suit against the debt collector who was misled by the dispute letter.

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