Posted on Monday, October 18, 2010
Adolfo Pesquera and Julie Kay
Daily Business Review
Broward Circuit Judge Eileen O'Connor cleared the way Thursday for a state attorney general's office subpoena to obtain foreclosure records from the Law Offices of David J. Stern in Plantation, which has filed foreclosures with the courts by the thousands for the nation's biggest lenders.
O'Connor'stwo-paragraph ruling offered no comment or insight into her legal reasoning but authorized the subpoena under the Florida Deceptive and Unfair Trade Practices Act.
"She's not required to give any explanation," said Jeffrey Tew, the Tew Cardenas attorney for Stern who asked to quash the subpoena.
Stern's back-office operation, the publicly traded DJSP Enterprises, issued a statement late Thursday saying the company is cutting its staff about 10 percent and an audit committee of independent directors has started an internal investigation with Greenberg Traurig as outside counsel.
O'Connor reached the opposite conclusion of Palm Beach Circuit Judge Jack Cox, who quashed a separate subpoena last week that was served on another law firm, Shapiro & Fishman of Boca Raton and Tampa. The West Palm Beach judge refused Thursday to reconsider his decision.
Attorney General Bill McCollum has been pursuing litigation against four Florida law firms accused of shoddy foreclosure practices.
Tew argued for Stern that the attorney general has no jurisdiction to investigate Stern under the unfair trade law.
"We argued that the conduct of this law firm does not fall under the statute that the attorney general is traveling under," Tew said. "And since it doesn't, he is not authorized to investigate it."
Tew said his client will have to look at his appeal rights. "That's probably where we're going, and see what the 4th District [Court of Appeal] says."
The Stern case is crucial for McCollum to make any progress in his investigation given Cox's ruling two weeks ago. Cox concluded The Florida Supreme Court and The Florida Bar are the only ones with jurisdiction over lawyers and castigated McCollum's office for its subpoena, calling it overbroad.
McCollum's office issued the subpoenas as part of a broad investigation into the practices of so-called foreclosure mills. The other two were Fort Lauderdale-based Marshall Watson and the Florida Default Law Group of Tampa. None of the firms has been charged with any wrongdoing.
On Thursday, Judge Cox reasserted his position that the subpoena against Shapiro & Fishman is improper, noting McCollum's office cited numerous criminal cases in its motion for rehearing when its investigation is under civil law.
However, Cox added, "No part of this order prohibits the attorney general from using any of its other investigative tools or to seek alternative relief available to the state."
McCollum's office has not decided whether to appeal Cox's decision, a spokeswoman said. The law firm probes are expected to figure into an investigation being pursued by all 50 state attorneys general into foreclosure documents prepared against hundreds of thousands of homeowners. Stern already has suffered consequences from the McCollum inquiry. Fannie Mae, Freddie Mac and Citigroup have stopped doing foreclosure business with his firm since the attorney general launched his investigations.
Four other large lenders have halted foreclosures while reviewing the legal work supporting them.