A handful of law firms in Philadelphia and Eastern Pennsylvania that has handled thousands of mortgage foreclosures throughout the State. However, the firm was delivered a severe blow in Bankruptcy Court this week. Coverage of that matter brought to light a suit recently filed in Allegheny County Common Pleas Court that is likely to have far-reaching consequences — to that firm, to numerous cases statewide and even to real estate previously sold in sheriff sales.
Earlier this week, the Pittsburgh Tribune Review reported that Chief Judge Agresti of the US Bankruptcy Court for the Western District of Pennsylvania sanctioned Attorney Leslie A. Puida and her firm, Goldbeck, McCafferty and McKeever (GMM), for the fabrication certain documents by Countrywide Mortgage relating to a foreclosure against Sharon D. Hill. The court determined that Puida had filed the fraudulent documents, lied about the fraud both to opposing counsel and in court and refused to take responsibility for her actions. Judge Agresti, according to press reports, gave Puida and GMM until Friday December 3 to self-report to the Pennsylvania Disciplinary Board.
While these developments constitute major trouble for GMM, the perfect storm appears to be coming up fast in the form of an equity suit filed by Pittsburgh Attorney Patrick J. Loughren against 33 non-lawyer employees of GMM and the firm itself in the Court of Common Pleas of Allegheny County at GD 10-021437.
The introduction to the Complaint states that it is an action to enjoin non-lawyers from the unauthorized practice of law, which is a crime in Pennsylvania. “These non-lawyers prepare complaints, sign lawyers’ names to those complaints, and file those complaints in county courts across this Commonwealth without an attorney ever having read the document. "[Emphasis in original].
Then, according to the Complaint, the non-lawyers prosecute the actions by filing other documents purported to be signed by lawyers, but are signed by non-lawyers, frequently before notaries who improperly state that the documents were signed by the lawyers. Attorneys fees are improperly claimed for this unsupervised work by non-lawyers, usually paid by the foreclosing lender unless the loan is reinstated.
The plaintiff, Loughren, is member of the legal profession. The Complaint asserts that a member of a profession has standing to seek an injunction against the unauthorized practice of his profession without the necessity of being personally involved in the factual matters involved. In addition to criminal prosecution, a county court of common pleas may enjoin unauthorized practice and the party obtaining the injunction may be awarded costs and expenses, including reasonable attorneys fees, against the enjoined party.
According to the Complaint, all three named partners of GMM have admitted the main allegations of the Complaint in sworn testimony. Gary McCafferty testified in a deposition taken on September 21, 2010 in the ongoing US District Court case of Kimberley A. Robinson v. Countrywide Home Loans, Inc. et al. No. 08-cv-01563 in the Western District of Pennsylvania.
“Q: Was it the practice in 2006 that Complaints could be filed without an attorney reviewing the Complaint?
A: It could be, yes.
Q: Did the firm authorize its administrative staff, which I’ll just describe as non-lawyers, so inclusive of secretaries, paralegals, legal assistants, to sign attorneys’ names and file them,knowingly that the attorney had not read the document?
A: Yes." [Emphasis in complaint.]
Joseph Goldbeck, former shareholder and of counsel to GMM, was, according to the Complaint deposed in the same case on the same day.
“Q: Back in 2006, you were an active practicing lawyer at the firm?
Q: And did you authorize individuals who were employed at the firm who were not lawyers to write up Complaints and sign your name to them and file them without you reviewing them?
A: Yes I did." [Emphasis in Complaint.]
In another Western District bankruptcy case, DeAngelis v. Countrywide Home Loans, Inc.,the Complaint states that Michael McKeever, the third name partner at GMM, testified at a hearing on December 8, 2009 that it was a standard practice at GMM in 2007 and up to the date of his testimony for non-lawyer staff to sign lawyers’ names to pleadings without the lawyers reviewing the document.
The Complaint goes on to allege that the firm filed suits without investigation by attorneys of the underlying facts in FHA cases, violating FHA Regulations, quoting additional testimony of McCafferty.
The Complaint alleges that the non-lawyers also prepared and filed pleadings in Bankruptcy Court without attorney supervision, which the Complaint states, is also the unauthorized practice of law.
The Complaint goes on to assert at paragraph 86: “Every foreclosure action pending in every Court of Common Pleas in this Commonwealth that has been prepared by and filed by the Non-Lawyer Defendants, without attorney review, should be dismissed on the basis that the Court lacks jurisdiction over the lawsuit."
In addition, according to the Complaint, GMM should not be permitted to collect and retain attorneys fees for work performed by paraprofessionals without attorney supervision.
The Complaint goes on to display a large number of documents, both with and without the signature and seal of a notary, purportedly signed by others.
In his prayer for relief, Loughren requests that the the Court (1) declare that the conduct of non-lawyers at GMM constitutes the unauthorized practice of law, (2) grant an injunction barring non-lawyers at GMM from engaging in practice of law in Pennsylvania, (3) enjoin continued prosecution of cases filed by non-lawyers in violation of Pennsylvania law (4) issue a rule to show cause why all pending foreclosure actions filed by GMM should not be dismissed, (5) issue a rule to show cause why attorneys fees should not be accounted for and returned to homeowners, (6) issue a rule to show cause why every judgment entered in favor of defendant clients should not be opened or vacated, (7) enjoin defendants from supporting claims with false affidavits, (8) enjoining the notaries from notarizing documents in violation of statutory requirements, (9) enjoining all non-lawyers at GMM from signing their names to affidavits, (10) costs of suit and other relief the Court deems appropriate.
It should be borne in mind that only a complaint has been filed and there have been no responsive pleadings filed. Notwithstanding the testimony quoted in the complaint, these allegations may be difficult or impossible to prove in individual cases. Exactly where or how far this matter will go cannot be determined. However, the allegations in the Complaint involve so many cases that its potential impact could be sweeping. Moreover, the activities of other firms involved in the prosecution of mortgage foreclosure actions in bulk will undoubtedly receive increased scrutiny going forward.
Here is a link to the Complaint.