IN THE SUPREME COURT OF FLORIDA
THE FLORIDA BAR, Case No:
Complainant, TFB Case Nos. 1998-50,098(17D)
2000-51,788(170)
v.
DAVID JAMES STERN,
Respondent.
COMPLAINT
The Florida Bar, by and through undersigned counsel and pursuant to
R. Regulating Fla. Bar 3-3.2(b), hereby files its complaint against David James
Stern, respondent, and states as follows:
AS TO ALL COUNTS
1. The respondent is, and at all times material to this action was, a
member of The Florida Bar subject to the jurisdiction and disciplinary rules of The
Supreme Court of Florida.
2. The respondent operates a law firm in Broward County, Florida,,
incorporated as The Law Offices of David J. Stern, P. A.
3. The law firm’s primary business relates to collecting debts on behalf
of residential mortgage lenders through foreclosure actions.
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4. Respondent’s law firm employs over thirty attorneys, and over two
hundred support staff.
5. A significant portion of work performed by the respondent’s law firm
is not performed by attorneys, but it is performed by nonlawyer staff. The
attorneys in respondent’s law firm have a duty to supervise the nonlawyer staff, as
well as review the nonlawyer staff work product and sign off on it for the purposes
of the foreclosure actions.
6. At all times material to this complaint, the respondent was the sole
shareholder, director and officer of the law firm.
7. Respondent is the sole officer, director and shareholder of
Professional Title and Abstract Company of Florida, Inc., (hereinafter referred to
as “Professional Title”). Professional Title is located at respondent’s law office
address, and at all times material to this complaint, it was staffed by respondent’s
law office personnel.
COUNTI
8. Complainant reasserts and realleges by reference the allegations set
forth in paragraphs 1 through 7 above.
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9. As a matter of industry standard, residential loan documents provide
that borrowers must pay lenders the reasonable attorneys’ fees and costs lenders
incur in foreclosing defaulted loans.
10. As a result of market pressure, reflecting the competition among law
firms which concentrate in or limit their practice to foreclosure, respondent has
agreed with several lenders to charge a fixed fee for foreclosure actions. This fee
is generally $1,000.00, sometimes slightly more.
11. As part of the foreclosure proceeding, the respondent’s law firm must
ensure that they foreclose the interest of anyone whose involvement with the real
property in question may result in a cloud on the title to the real property.
12. Respondent is an agent for Attorneys Title Insurance Fund, Inc.,
(hereinafter referred to as “the Fund”). The Fund will provide to attorney/agents,
such as respondent, all of the title work necessary for the foreclosure proceeding at
a modest charge.
13. Because the amount of attorneys’ fees respondent may charge is
limited by his contract with his clients, respondent created Professional Title as a
means for providing the services in a manner he controls, and as a result
increasing the monies he receives for each foreclosure matter. Fund.”>www.4closureFraud.org
Fund. In reality, in many cases respondent’s out-of-pocket expenses for title work
were only those of the Fund. These costs range from $75.00 to $150.00.
19. But for his contractual relationship with his lender clients, respondent
could have his firm’s attorneys, or perhaps even legal assistants, spend a
reasonable amount of time reviewing title work provided by the Fund, and then
properly bill and collect for that time.
20. In many instances, the mischaracterizing as costs what should be
identified as attorneys’ fees or legal assistant fees allowed respondent to avoid his
agreed-to fee cap.
21. In addition, the attorneys’ fee affidavits filed by respondent’s firm in
foreclosure proceedings reflect, under attorney time, time that was actually spent
by nonlawyer staff. The amount reflected on these affidavits is a standard or
estimated amount, based not on actual time spent by attorneys or legal assistants,
but on the nature and nuances of the case. It may be permissible to bill for this
nonlawyer time if it is properly identified in any bills and fee affidavits. It is not
permissible for an attorney to represent, in bills and/or fee affidavits, that work
performed by a nonattorney was performed by the attorney personally.
22. The affidavits filed by respondent’s law firm in the foreclosure
proceedings routinely contain these misstatements of material fact described in 25.”>www.4closureFraud.org
25. Respondent’s invoicing practices could mislead clients and others to
believe that Professional Title performed services separate from those of his law
firm, and that he incurred actual out-of-pocket expenses due and owing to
Professional Title.
26. The respondent did not fully inform some clients of the manner in
which these legal services were performed by his firm through Professional Title
Services.
27. Although the respondent had performed legal services for several of
his lender clients in the past, when he formed Professi
onal Title and began billing
in the fashion described above, respondent incurred the obligation to properly
inform his clients of the manner in which fees were earned and calculated.
28. By the actions set forth above, respondent violated Rule Regulating
The Florida Bar 3-4.3 [Acts contrary to honesty and justice are cause for
discipline.]; and Rule 4-1.5(e) [When the lawyer has not regularly represented the
client, the basis or rate of the fee shall be communicated to the client, preferably in
writing, before or within a reasonable time after commencing the representation.].
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COUNT III
29. Complainant reasserts and realleges by reference the allegations set
forth in paragraphs 1 through 7, 9 through 15, 17, 19 through 21, and 25 through
27 above.
30. Respondent could have obtained all necessary title insurance work
from Attorneys Title Insurance Fund, for which he was an agent.
31. Certain products and services, such as an examined title insurance
report, were guaranteed and eliminated the need for respondent to have his
attorneys and other personnel engage in further examination of Fund searches.
32. The cost the Fund charged for examined title was significantly less
than what respondent billed as a cost through Professional Title.
33. If the equivalent services could have been provided to his clients at a
savings, respondent’s own interests conflicted with the best interests of his clients.
Respondent did not fully explain these circumstances to clients so that they could
make an informed waiver of this conflict.
34. By the actions set forth above, respondent violated Rule Regulating
The Florida Bar 3-4.3 [Acts contrary to honesty and justice are cause for
discipline.]; Rule 4-1.7(b) [A lawyer shall not represent a client if the lawyer’s
exercise of independent professional judgment in the representation of that client
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may be materially limited by the lawyer’s responsibilities to another client or to a
third person or by the lawyer’s own interest, unless: (1) the lawyer reasonably
believes the representation will not be adversely affected; and (2) the client
consents after consultation.].
COUNT IV
35. Complainant reasserts and realleges by reference the allegations set
forth in paragraphs 1 through 7, 9 through 15, 17, and 19 through 22 above.
36. Residential borrowers have the right to attempt to reinstate defaulted
mortgage loans, even after being served with a foreclosure summons and
complaint.
37. Respondent, by substantial use of and reliance on nonlawyer
personnel with no authority to negotiate a resolution, inhibits foreclosure
defendants’ access to information about their reinstatement figures.
38. Unsuccessful attempts by foreclosure defendants to communicate
with the attorneys handling their cases result in increasing attorneys fees, and
consequently, increased difficulty in defendant’s ability to reinstate.
39. In many situations, foreclosure defendants or their counsel request
verification of fees spent and costs incurred.
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40. Respondent’s nonlawyer personnel have a duty to disclose that they
are not lawyers and that they cannot engage in settlement negotiations, but these
personnel do not routinely make this disclosure.
41. By the actions set forth above, respondent violated Rule Regulating
The Florida Bar 3-4.3 [Acts contrary to honesty and justice are cause for
discipline.]; Rule 4-3.4(a)[A lawyer shall not unlawfully obstruct another party’s
access to evidence or otherwise unlawfully alter, destroy, or conceal a document
or other material that the lawyer knows or reasonably should know is relevant to a
pending or a reasonably foreseeable proceeding; nor counsel or assist another
person to do any such act.]; Rule 4-4.4 [In representing a client, a lawyer shall not
use means that have no substantial purpose other than to embarrass, delay, or
burden a third person.]; Rule 4-5.3(a) [A partner in a law firm shall make
reasonable efforts to ensure that the firm has in effect measures giving reasonable
assurance that nonlawyers’ conduct is compatible with the professional obligations
of the lawyer.]; Rule 4-8.4(a) [A lawyer shall not violate or attempt to violate the
Rules of Professional Conduct, knowingly assist or induce another to do so, or do
so through the acts of another.]; Rule 4-8.4(d) [A lawyer shall not engage in
conduct prejudicial to the administration of justice.].
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WHEREFORE, The Florida Bar, complainant, respectfully requests that
David James Stern, respondent, be disciplined appropriately, including awarding
costs to the complainant and restitution to the client(s), as appropriate.
Respectfully submitted,
BAR^ WILLIAM RIGBYT#613770
Bar Counsel
The Florida Bar
650 Apalachee Parkway
Tallahassee, FL 32399-2300
(850) 561-5600
JAY KOHAN, #238473
Chair, Seventeenth Judicial Circuit
Grievance Committee “D”
5140 Coconut Creek Parkway
Margate, FL 33063-3913
ANTHONY BOGGS, #253847
Staff Counsel
The Florida Bar
650 Apalachee Parkway
Tallahassee, Florida 32399-2300
(850)561-5600
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JOHNF. HARKNESS, JR., #123390
Executive Director
The Florida Bar
650 Apalachee Parkway
Tallahassee, FL 323919-2300
(850)561-5600
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has
been forwarded by regular U.S. mail to respondent’s counsel, Jeffrey Allen Tew,
201 South Biscayne Boulevard, Miami, Florida 33131-4332, on this :W day of
2002.
BanywilliamRlgby
NOTICE OF TRIAL COUNSEL
PLEASE TAKE NOTICE that the trial counsel in this matter is Barry
William Rigby, whose address and telephone number are: The Florida Bar, 650
Apalachee Parkway, Tallahassee, FL 32399-2300, (850) 561-5600. Respondent
need not address pleadings, correspondence, etc. in this matter to anyone other
than trial counsel and to Staff Counsel. The Florida Bar. 650 Apalachee Parkway.
Tallahassee. FL 32399-2300.
MANDATORY ANSWER NOTICE
RULE 3-7.6(g)(2), RULES OF DISCIPLINE, PROVIDES THAT A
RESPONDENT SHALL ANSWER A COMPLAINT.
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