Posted on Thursday, October 21, 2010
A Broward County judge's ruling on Friday gives Florida Attorney General Bill McCollum the right to continue his investigation into a Plantation foreclosure law firm.
Circuit Judge Eileen O'Connor denied a request from the law offices of David J. Stern to quash the state's subpoena for documents relating to the firm's procedures, clients and investments.
That leaves the lower courts split on which agency has the right to police law firms employing hundreds of people who prepare thousands of documents monthly for lenders and loan services.
Palm Beach County Circuit Judge Jack Cox, presiding over the Shapiro & Fishman foreclosure law firm's bid to throw out the state's subpoenas, had ruled against the attorney general a second time on Thursday. Cox said The Florida Bar, the State Supreme Court and the lower courts have jurisdiction over lawyers and their conduct, not the attorney general.
O'Connor gave no reason for her decision. Her order said the motion based on the argument "that the Attorney General has no jurisdiction to issue a subpoena to a law firm" was denied.
"We respectfully disagree with the ruling," said Miami attorney Jeffrey Tew, representing Stern. He said he would file an appeal.
Tew had echoed the argument used by Shapiro & Fishman attorney Gerald Richman in Tew's hearing before O'Connor earlier this week. But Tew's focus was that the foreclosure firm's practices did not fall under the deceptive and unfair trade statute cited by the state because it had no direct relationship with homeowners.
Tew would not speculate why two judges ruled differently on the subpoena cases, given the motions cited the same legal grounds.
Who will investigate the foreclosure firms' actions ultimately may be decided by the appellate courts. The Attorney General's Office said Thursday that it still was considering an appeal of Cox's decision on Shapiro & Fishman, which has offices in Boca Raton and Tampa.
McCollum's office has active investigations into four foreclosure firms, three in South Florida. All but one, Marshall C. Watson of Fort Lauderdale, are fighting the state's request for information.
The increased pressure on the foreclosure industry overall may be taking its toll on the law firms. DJSP Enterprises, the publically traded company created by Stern that handles the firm's support work, this week announced it was cutting 10 percent of its workforce and was looking at other ways to cope with a drop in business.
In a written statement, the company blamed a dramatic decline in referrals as lenders freeze or stall foreclosures and media reports that clients were suspending their referrals to the firm until the attorney general's investigation is completed. The company also said it had hired an independent counsel to work with DJSP's auditors examining its foreclosure procedures.
Diane C. Lade Sun Sentinel