(CN) – An elderly woman can sue a law firm and two banks that tried to foreclose on her when she missed the last payment on a 30-year mortgage because she had reportedly been hospitalized, the 3rd Circuit ruled.
Dorothy Rhue Allen, 85, had borrowed $40,000 to buy a home in Deptford, N.J., in 1976, according to a Jan. 14 article from the Associated Press. The widow reportedly failed to make the final $432 payment in 2006 because she was in the hospital.
LaSalle Bank initiated foreclosure proceedings through the law firm, Fein, Such, Kahn and Shepard, and demanded a $5,700 payoff.
Allen filed a class action against LaSalle, the law firm and Cenlar Federal Savings Bank, which serviced the loan, in New Jersey federal court. She claimed the defendants had violated the Federal Debt Collection Practices Act by demanding excessive funds: “$910 in attorney fees when court rule permits only $15.43, $335 for searches when court rule permits only $75, $160 for recording fees when the actual fee was only $60, and $475 for service of process when statute and court rule limit reimbursement to $175,” according to the ruling.
Fein Such Kahn argued that the allegedly inappropriate communications were between it and Allen’s attorney, which is a practice not covered by the act.
A federal judge agreed, dismissing the claims since a competent attorney would recognize the overcharges and protect their client from unfair debt-collection practices.
The Philadelphia-based federal appeals panel vacated the judgment on Jan. 12, however, concluding that attempts at unfair collection are prohibited as equally as actual collection.
Writing for the court’s three-judge panel, Judge Dolores Sloviter explained that she and her colleagues did not decide whether Allen has alleged a viable state-law claim.
“In light of our disposition, on remand the District Court should reconsider whether to exercise supplemental jurisdiction over Allen’s state law claims, whether to consider the alternative grounds for dismissal set forth in the motions to dismiss, and whether to certify a class, as requested by Allen,” Sloviter wrote.