Quick Appeal Sought on Back Rent Issue
Circuit to Hear Federal Debt Act Question
The New York Law Journal, February 3, 1998

A FEDERAL judge has certified for early appellate review his far-reaching decision that a federal law requiring that debtors get 30 days' notice of legal action applies to the tens of thousands of mailings sent to New York tenants each year which, under New York law, give only three days' notice to pay back rent or face eviction.

Citing the potential "sea change" in landlord-tenant practices stemming from his earlier decision in Romea v. Heiberger & Associates, 97 Civ. 4681, Southern District Judge Lewis A. Kaplan asked the U.S. Court of Appeals for the Second Circuit to grant a rare interlocutory appeal before he makes a final decision in the case.

"It is critical that those concerned with the resolution of disputes concerning such [rental] housing -- tenants, landlords, and their attorneys -- have as much certainty as possible concerning the mechanisms by which those disputes are resolved," Judge Kaplan wrote in his latest Romea decision filed on Jan. 27.

Judge Kaplan's ruling came as tenants prepare to use his first Romea decision to try to defeat evictions in Housing Court and as a second Southern District judge, John S. Martin Jr., agreed with Judge Kaplan's rationale in another case, Hairston v. Whitehorn & Delman, 97 Civ. 3015.

In a recent Web site posting on the Internet, Judge Kaplan noted tenants' lawyers celebrated the Romea decision as one that "gives us a big rock to throw in Goliath's face. Let the monkeywrenchers storm the barricades!"

In his earlier ruling, filed on Dec. 23, Judge Kaplan reluctantly found the federal Fair Debt Collection Practices Act (FDCPA) applies to mailings made to a Manhattan tenant, Jennifer Lynn Romea, in late 1996 from Heiberger & Associates, her landlord's attorneys. The mailings, in conformance with New York State real estate law, advised her that if she did not pay four months back rent in three days she would face eviction. (NYLJ, Jan. 8).

Normally not appealable, Judge Kaplan's decision denied a motion to dismiss by the law firm which had claimed the unpaid rent was not a "debt" under the FDCPA and its eviction mailing was not a covered "communication."

In his latest ruling, Judge Kaplan granted a motion by Heiberger & Associates, not opposed by Ms. Romea, that he certify the denial to dismiss for interlocutory appeal.

Grounds for Appeal

Judge Kaplan found the Romea case satisfies both criteria necessary for such interlocutory appeals. First, he wrote, an appellate ruling on the FDCPA's application to eviction notices would "materially advance" termination of the Romea case. In addition, he wrote, it would also concern a "controlling question of law as to which there is substantial ground for difference of opinion."

Exemplifying this "difference of opinion," he noted that while the U.S. Court of Appeals for the Third Circuit has found that an obligation to pay for something in advance, like rent, is not a "debt" under the FDCPA, appellate courts in the Seventh and Eleventh Circuits have disagreed.

Judge Kaplan also noted that the Federal Trade Commission staff has taken a position, contrary to his, that a notice, "required by law as a prerequisite to enforcing a contractual obligation between creditor and debtor," -- like a rent eviction notice -- is not a "communication" under the FDCPA.

In his decision, filed on Friday, Judge Martin found that the FDCPA applied to four letters sent to Manhattan tenants', Veronica and James Hairston, by their landlord's attorneys, Whitehorn & Delman. The letters sent between October, 1990 and March 1997, advise the tenants to pay about $40,000 in back rent within three days or face eviction.

Judge Martin rejected the law firm's claims that rent does not constitute "debt" under the FDCPA, and that the firm was not a collecting a debt but following the procedure under New York Real Property Actions and Proceedings Law, 701, for evicting someone.

Judge Martin noted that while the letters do threaten eviction the "least sophisticated consumer would read these letters as a demand for rent and thus as being [covered by the FDCPA's requirement that they be issued 'in the collection of any debt.'"

Both Judges Martin and Kaplan, meanwhile suggested ways landlords can satisfy both the state and federal requirements. Judge Martin noted the FDCPA would not apply if a landlord, instead of a landlord's attorney or other agent, signs and sends the eviction letters.

Judge Kaplan noted that lawyers who regularly serve three-day eviction notices and, thus would be treated as debt collectors under the FDCPA, "could continue to do so free of liability only if they afford 30 days' notice rather than the three required by state law.'

An alternative, Judge Kaplan added, "would be for their landlord clients either to use lawyers who do not serve many three day notices or to serve the notices themselves" to avoid application of the FDCPA.

Colleen F. McGuire, an attorney for the tenants in both Romea and Hairston, said she is citing both decisions in New York Housing Court to fight evictions by landlords whose mailings failed to comply with FDCPA requirements.

In addition to Ms. McGuire, Robert E. Sokolski, represented the tenants. Janice J. DiGennaro of Rivkin, Radler and Kremer in Uniondale, represented Heiberger & Associates. James Robbins of White, Fleischner & Fino, represented Whitehorn & Delman in the case before Judge Martin.