HOA Fee Debt Collection Imbroglio Leads to Litigation...for All

Collection agencies that represent homeowners associations in the greater Las Vegas area are fighting back against attorneys that have targeted them for attempting to collect the debts of their clients. But their clients are claiming that…you know what, this story is way too epic for a traditional treatment (tip of the hat to the Las Vegas Sun for following this mess). And I can’t really explain this story without Dickens and visual aids, so here goes:

Charles Dickens published Bleak House serially between 1852-1853. The novel is primarily concerned with the legendary lawsuit, Jarndyce & Jarndyce:

This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. Innumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it…but Jarndyce and Jarndyce still drags its dreary length before the court, perennially hopeless.

While it’s no Jarndyce & Jarndyce, a series of suits in Las Vegas has some Jarndyce potential. Plunging into the story in medias res is no help to anyone, so here’s a timeline of sorts to help us muddle through what’s happening in Las Vegas:

1852 – 1853 Charles Dickens publishes Bleak House in Household Words. He’ll also soon leave his wife in a super-messy way. Email me for details.

~2005 – ~2008 A messload of folks who have no business buying houses (as well as a lesser messload of folks who do have business buying houses) buy a lot of houses. Some of these are in Las Vegas, where this tale is set.

~2009 – ~2010 When those folks who shouldn’t have bought houses in the first place start defaulting on their mortgages, savvy investors buy up the foreclosed houses. However: just like in Monopoly, buying the property often means inheriting the debts that are included with that property.

Late summer/early fall 2010 Those investors convince George Burns (no, the other George Burns), commissioner of Nevada’s Financial Institutions Division, to hand down an opinion limiting collection agencies’ fees and assessments on foreclosed properties.  The collection agencies are working on behalf of neighborhood homeowners associations, attempting to recover dues owed to the groups.

Effectively, if the rule holds, collection agencies will not be able to tack on fees to the nine months’-worth of late-fee assessments collection agencies are allowed to collect. Those who are in favor of this ruling claim that collection agencies are already overcharging. (This seems to be the “we weren’t already getting these foreclosed houses at enough of a song” argument.)

November 2010 Collection agencies say, “Hell no.”

December 2010 Nevada Association Services, RMI Management, and Angius & Terry Collections, file an injunction against George Burns’s (no, the other George Burns) decision. Judge Susan Johnson agrees, and issues a temporary restraining order. They argue that limiting the implementation of fees would shortchange already-strapped Home Owners’ Associations (HOA) budgets. (This seems to be the “won’t somebody think about the children” argument.)

17 December 2010 Two homeowners file a suit against Nevada Association Services, claiming Fair Debt Collection Practices Act (FDCPA) violations — sort of the easiest way to file suit against a collection agency – like when a cop pulls you over “on a hunch” about your seatbelt. Among the allegations: the fees and costs that the collection agency is assessing were never authorized by homeowners, and thus can’t be counted as “debts.” The suit is filed by James Adams.

~17 December 2010 David Stone, president of Nevada Association Services, says, effectively, “Hell no.” He plans to countersue, telling the Las Vegas Sun, “[Adams has] been unsuccessful in state court and he’s just forum shopping.” Forum-shopping is also known as the mom-said-no-let’s-try-dad method of conflict resolution. Stone again says that the fees the collection agencies collect help HOAs and their budgets. The fees also help Nevada Association Services’ budget, too.

January 2011 The temporary restraining order against George Burns’s (no, the other George Burns) decision that would limit fees and assessments on foreclosed properties is still in effect.

18 March 2011 Nevada Association Services, RMI Management, and Angius & Terry Collections — the trio who filed the restraining order back in December of 2010 — file suit against an entire cadre of defendants, including Nevada sibling attorneys Puoy (sister) and Rutt (brother) Premsrirut. The Premsriruts, the plaintiffs allege, have been busy filing frivolous regulatory complaints and lawsuits against collection agencies. (See insideARM’s Patrick Lunsford’s blog post on Forbes.com for some additional thoughts on these kinds of frivolous suits.) There’s a lovely kind of irony in collection agencies going after consumer-friendly attorneys for similar kinds of (alleged) infractions. The irony becomes extra super delicious when one learns that among the allegations against the Premsriruts are such hits as intimidating calls, letters, and emails.

March 2011 Puoy Premsrirut and co-counsel/BFF James Adams (who filed suit against David Stone and Nevada Association Services, and who in turn was sued by David Stone of the just-mentioned Nevada Association Services) release statements against the suit, essentially amounting to “nu-uh.”

(flashback) 31 January 2011 Oh, and P.S.: Bank of America begins its suits against both HOAs AND the collection agencies. BoA feels it is being unfairly obligated to pay fees and collection costs.

(another flashback) 12 January 2011 Oh, and homeowner Jacob Seeley filed an FDCPA suit against Nevada Association Services over five months’-worth of HOA fees the collection agency was attempting to collect. Seeley alleges that the HOA changed management, and he didn’t know where to pay his bill. (Personal note: I tried a similar tactic with AT&T in my ill-spent twenties, claiming that since I never opened their mailed bills, I shouldn’t have to pay. Spoiler alert: this didn’t work out in my favor. Special note to Mr Seeley: it may not work in your favor, either.)

Which, essentially, brings us up to now: eleventy million suits in various stages of litigation, and no real closure. However, to wrap things up visually, the whole thing currently looks like this: