by Thomas K. Bleyhl

In Iowa and elsewhere, there has been an explosion of collection lawsuits involving credit-card debt in recent years due to people struggling to pay their debts in a bad economy. Some of these lawsuits are brought by the credit card companies themselves. Others are brought by debt buyers. Debt buyers are companies that purchase the right to collect a debt allegedly owed by individuals to credit card companies. They often buy these debts for a small percentage of the amount they will try to collect from the debtor. Debt buying is a lucrative business, because many people will end up paying what the debt buyers say they owe, even though they may have had valid defenses that could have defeated the debt buyer in court.

One of the most common valid defenses to a credit card lawsuit is the statute of limitation defense. All civil lawsuits must be brought within a certain time period prescribed by law. If a lawsuit is brought after the statute of limitations expires, the defendant can get the lawsuit dismissed. In Iowa, there is a ten year statute of limitations for lawsuits brought to enforce a written contract (Iowa Code § 614.1(5)). However, the statute of limitations for lawsuits based on unwritten contracts is only five years (Iowa Code § 614.1(4)). Often, debt buyers bring lawsuits in Iowa on credit card debts wherein the last payment on the original account occurred at least five years before the date the lawsuit gets filed. Defendants can get those lawsuits thrown out if the shorter limitation period applies. Accordingly, debt buyers argue that the longer limitation period should apply to such lawsuits. Small claims court judges and trial court judges in Iowa have been faced with this issue quite a bit recently, and have come to opposite conclusions. The Iowa Court of Appeals faced this issue for the first time on September 8, 2011. Gemini Capital Group v. New, No. 1-521/10-1096 (Iowa Ct. App. Sep. 8, 2011), available at http://www.iowacourts.gov/court_of_appeals/Recent_Opinions/20110908/1-521.pdf (publication decision pending).).


In Gemini Capital Group v. Neu, a debt buyer sued an credit card holder in small claims court for a claimed debt of $3,016.48 on a Sears credit card. The last payment on the card was made in 2004, more than five years before the lawsuit was filed. The cardholder filed an answer to the lawsuit, his defense was that the lawsuit was barred by the statute of limitations. At trial, the debt buyer produced a generic cardholder agreement (not signed by anyone), a statement of the amount that was owed and how the interest was calculated, and documents showing that Gemini Capital Group was the owner of the debt. The debt buyer did not produce any agreement signed by the cardholder. The small claims magistrate found that the debt buyer proved that the defendant owed the debt, and that the applicable statute of limitations was ten years. Judgment was granted in favor of the debt buyer. The cardholder appealed, and a district court judge affirmed the small claims judgment. The Court of Appeals examined the issue after an application for discretionary review by the cardholder was granted.

The Court of Appeals reversed the judgment in favor of the debt buyer, holding that a five year statute of limitations applied and that the lawsuit was time barred. The Court relied on a 1984 decision of the Iowa Supreme Court (Matherly v. Hanson, 359 N.W.2d 450 (Iowa 1984)), which held that for the ten year limitation period to apply, the essential facts establishing defendant’s liability must be shown by a writing. In other words, if evidence other than a contract or other document attributable to defendant is necessary to prove that the defendant owes money under the contract, then the statute of limitation for unwritten contracts applies. In this case, the debt buyer only produced a generic cardholder agreement. It did not produce anything signed by the cardholder showing that he owed the debt. Because a written contract was not proven, the debt was time barred.

At the time this article was written, the debt buyer still had the option of asking for a rehearing before the Court of Appeals, or further review with the Iowa Supreme Court. But assuming this case is not overturned, and the Court decides to make it an officially published decision, it will provide the definitive answer under Iowa law to the question of what statute of limitation applies to credit card agreements. Theoretically, if a credit card company or debt buyer could produce a written contract signed by the cardholder, then the ten year limitation period would apply. But in our experience defending lawsuits of this nature, we have never seen that. What we usually see is a generic cardholder agreement of the sort produced in this case by the debt buyer. Usually the debt buyer can produce no evidence that the agreement was ever agreed to by the cardholder, or even that it has anything to do with their particular case. While the Court of Appeals did not rule on whether such a generic document is sufficient to prove a case, it did rule that it is not enough to prove a written contract. Because they never have enough evidence to prove a written contract, it is unlikely in our opinion that a credit card company or debt buyer will ever win another case where the account is more than five years old. Assuming the defendant in the lawsuit properly raises the issue.

The bottom line for those sued by debt buyers? The first line of defense, if you are sued by a debt buyer, is to prevent them from getting a default judgment against you. A default judgment will likely be granted against you if you do not answer the lawsuit, even if you have a valid defense like the statute of limitation defense discussed in this article. Instead, consult a lawyer as soon as you see the lawsuit. Iowa debt collection defense attorneys George Qualley IV and Tom Bleyhl of Qualley & Bleyhl, P.L.C. may be able to assist you with your case, you may contact them here.

Please note that this article is for informational purposes only, may not apply to your situation, and is not legal advice. Your reading of this article does not create an attorney-client relationship with anyone. If you need legal advice, get a lawyer.

One of the most difficult problems for any homeowner's association comes in the form of homeowners who can't or won't pay their association dues. From time to time, your association may be faced with a homeowner who refuses to pay some or all of their dues because they disagree with a certain practice of the association. While every situations is different and the best way to handle your unique situations is to contact a lawyer, we've outlined some of the most common excuses and some general answers to those excuses. Keep in mind that many of questions and answers may involve state law (in our case, Iowa) and may be resolved differently in other states.

• The association doesn’t mow my lawn/shovel my walk.

While it is no doubt frustrating to be asked to pay dues when you have snow on your sidewalk or when your lawn is not being mowed as frequently as you might like, it’s not a defense to not paying dues. Your obligation to pay dues comes from the Iowa Code and the recorded documents that run with the land and are binding on you as the owner of the property. Whatever problems you might have with the association are not relevant to the issue. Further, as a practical matter, consider that your association can't provide services (such as snow removal) when they don't have the money to do so. Why don’t they have any money? You (and possibly others) aren’t paying dues. Homeowner's associations generally don’t have any source of income other than what they collect in dues, and all the dues they collect go directly back to the responsibilities of the association, which may include buying insurance, street upkeep, lawn maintenance, and snow shoveling, etc. Usually, your neighbors are making those decisions, through a board of directors elected by the entire association. So, if you don’t like the frequency with which your snow is shoveled, consider running for your association’s board of directors. Refusing to pay your dues not only won't solve the problem (it will likely make it worse) but it could cost you a significant amount in court costs and fees if a lawyer becomes involved.

• I never signed a contract to pay dues.

You may not have signed a contract, but you did buy real property subject to a restrictive covenant, which is treated the same as a contract under Iowa law. The governing documents of homeowner’s associations in Iowa usually contains provisions for paying dues that are binding on everyone who owns a home in the association. Before buying any real estate, you should find out whether it is subject to any restrictive covenants. Consulting a qualified real estate agent or an attorney is a good idea. Claiming that you never agreed to pay dues is not.

• Why should I have to pay an association management company?

While you may be sending the check to your association's management company, you are not paying them. Rather, they are processing the check for your homeowner's association, and your funds check will be deposited in your association’s account. Your association, by itself, probably does not have the capability to process the many checks and pay the many bills that an association must process every month. An association management company can help accomplish that and many other things. While your association does pay the association management company a fee for their services (if you have one, not all do) a good professional management company can ultimately save your association money and add value to your property.

• The association doesn’t send me bills.

The fact that an association might not send you bills does not mean that you don’t have to pay your homeowner's association dues as there is usually no requirement that bills be sent out every month (think about your mortgage, as you probably don't receive a monthly bill for that either). However, you will likely have been contacted by the association at least once before you are turned over to a law firm or collection agency. Make sure you pay attention to all mail from your association or management company. Doing so will probably save you money in the long run. Most association boards don’t like to sue their neighbors, but may do so if they don’t think you will pay otherwise.

• My dues were supposed to be paid out of an escrow account.

On occasion, homeowners are under the impression that an escrow account was supposed to pay their condo dues, but find out that they are in collections because that is not being done. If this happens, you should contact your escrow agent or mortgage servicer and make sure that your homeowner's association dues are escrowed and that payments are being made in a timely manner. The obligation is always on the homeowner to pay condo dues, and no one else is required to pay them, including a mortgage holder. However, there are occasionally misunderstandings and being proactive about the situation can usually get things resolved in a way that’s favorable for everyone.

• My builder was supposed to pay my dues.

Sometimes, homeowners who purchase a new condominium, townhome, or single family home receive an incentive from a builder or developer who agrees to pay for an initial period of association dues. If you purchased your property under such an arrangement and the builder or developer is not living up to it, you may have a legal claim against that party. However, again, only the homeowner is responsible for paying condo dues under the law. As such, the important thing here is that you make sure you understand exactly what you are buying when you buy real estate. Especially real estate subject to a homeowner’s association.

• I don’t have any money.

The fact that you do not have any money is not a defense to the question of whether you owe the money. It may be relevant to the question of whether and how you can pay the money that you owe. Keep in mind that in most cases your neighbors (and even collection firms or attorneys) are sympathetic to tough economic times so being proactive may be in your best interest if your situation is temporarily. But ultimately, if you can’t afford to pay the dues, then you can’t afford to live in the association.

• The association won’t accept my payment plan.

Associations are not required to take payment plans unless they are imposed by a court. Associations may agree to take a payment plan, but they are not required to do so. Your association may be more inclined to take a plan if you make a good faith effort to pay as much as you can and address your account before it becomes seriously delinquent.

• I’m getting foreclosed on by the bank.

The fact that you may be getting foreclosed on by your mortgage lender is not a defense to your obligation to pay association dues. You have to pay the dues as long as you own the property. Generally, if a residential foreclosure in Iowa on your property goes through to the end, you own the property until it is sold at a sheriff’s sale. If you are seeking to avoid foreclosure by arranging a short sale or other remedy, it is in your interest to make sure outstanding condo dues are paid off in the transaction.

• I’m not going to pay because there’s nothing the association can do about it.

If, despite reading all of the above, you decide that you still don’t want to pay your condo dues, you should know what remedies the association has. An association can file a lawsuit against you for the money owed. If the association gets a judgment in its favor, it may be able to garnish your wages, garnish your bank account, or levy on your property until the judgment is satisfied. The judgment may show up on your credit report. The association also has a lien against your property in the association for the money owed. The association may choose to foreclose on that lien, forcing the property to be sold so that they are paid off. These remedies may not necessarily be applicable to your situation, and you may have defenses to any or all of them. But you should know that Iowa associations may use them against you if you fail to pay your dues.

In closing, if your association is having problems with delinquent homeowners, don't hesitate to contact Qualley & Bleyhl and see how we can assist your association.

Beyond the Rolodex and the Desk Calendar
by George Qualley IV
In part 1 of this article, I introduced Marketcircle Inc's Daylite 3 application. Generally speaking, Daylite is a customer relationship management (CRM) application. If the term "CRM" is a little technical, you might be familiar with either Sage Software's ACT!, Now Software's Now Up-to-Date and Contact, or Microsoft's Entourage. All of the aforementioned applications either are, or contain aspects of CRM. If that still doesn't clear things up, here's a simple description: a CRM application basically helps you mange your customers (or in the legal world, clients), your calendar, your tasks, and more, all in one application (or an integrated suite of applications). Stated another way, a good CRM application can centralize many of the tasks we as lawyers do each and every day.

Historically, there has been somewhat of a dearth of good CRM applications on the Mac platform. In fact, CRM has been one of the key weaknesses of the Mac platform for businesses with a very customer centered workflow (e.g. sales). However, the fine folks at Marketcircle have single-handedly obliterated that weakness with Daylite. In fact, I happen to believe that Daylite is not only the best CRM application on the Mac platform (a recent resurgence in the Mac platform has yielded several competitors), but the best CRM application on any platform. That said, let's take a look at what Daylite can do--or more specifically, what Daylite can do for your law practice.

Essentially, the core Daylite application handles four major areas. Those areas are calendaring, notes, contacts, and project management. Setting aside some of the more advanced features for a moment, it should be fairly obvious how each of these areas are critical to managing a busy law office. Unless your office is total chaos, I imagine that you've got some sort of system for managing each of the aforementioned types of information. At this point, you might be thinking, "but I already have a system for managing my contacts, calendar, etc., why would I want to switch?" And, that's a great question.

Perhaps the simplest explanation of Daylite's strength is that it basically integrates all of your important information. Of course, "integration" is somewhat of a five-dollar tech-term so I'll attempt to break it down a bit better. In the legal world, your clients are one of your primary groups of contacts (there are many others as well: lawyers, court attendants, expert witnesses, etc.).

Of course, if you've got a client, you probably have a legal issue that is related to your client—e.g. John Anderson's divorce. Moreover, you might have an appointment related to the client's legal issue—e.g. a 10:00 AM hearing on Thursday regarding John Anderson's divorce. To go one step further, if you have an upcoming hearing regarding John Anderson's divorce, you probably have (or will have) some notes regarding that hearing. The key here is that all of the foregoing information interrelated.

Allowing you to visualize and benefit from this type of connection is where Daylite really shines (pardon the pun). Instead of dealing with a multiple separate stores of information (which are, in fact, very connected in the real world) Daylite centralizes your information in one application. Moreover, Daylite makes it easy to interconnect or "link" people to meetings, clients to cases, notes to clients and/or cases, or almost any other connection that you can imagine while keeping all of your information immediately and easily accessible.
I've already indirectly mentioned some of the applications of Daylite in the law office in this section of the article. However, I'll expand on those concepts and show you exactly how to exploit the connections that I've just mentioned in the next segment of this article. Read on...

Tags: Macintosh, Law Office Management

Introduction
by George Qualley IV

I've been a Mac guy for as long as I can remember. That said, it should come as no surprise that, as the person in charge of IT for my firm, we've always been a Mac based law office. Of course, a large part of the legal world (and the world at large) relies primarily on Microsoft Windows as their operating system of choice. And, because the legal services industry is relatively small, the proliferation of Windows can cause some problems for the Macintosh using attorney.

One long-standing challenge has been the search for law specific Macintosh software. This challenge can prove to be especially problematic for lawyers that limit their practice to a specific area (e.g. litigation, collections, etc.). Although Apple's switch to Intel along with the generous contributions of members of the legal community (you might be familiar with the excellent work of Mr. Randy B Singer at www.macattorney.com) have made have made this less of a hurdle than it once was, this can still be a difficult area for many attorneys.

Like Mr. Singer, I hope that my effort will enrich the world of the Mac-using attorney, but in a slightly different manner. Rather than focus on the breadth of Macintosh software available in the marketplace, this series of articles is going to focus on a specific piece of Macintosh (in this case, Macintosh-only) software that has the potential to significantly improve the mac-using law practice. The application to which I am referring is Marketcircle Inc's Daylite 3.

If you're not already familiar with Daylite, I would suggest that you head over to Marketcircle's website and have a look around. It's not only a great application from a great Mac developer, but it's also the software which I'll be focusing on in this series of articles. Read on...

Tags: Macintosh, Law Office Management