Perils of Efficiency

Perils of Efficiency

Tampa lawyer Michael J. Echevarria has streamlined the mortgage foreclosure process. In business, he would be hailed. Not so in law.

By Francis X. Gilpin

Associate Editor

Elizabeth R. Meehan says she was shocked by what she found on the front door of her St. Petersburg home on a January afternoon two years ago. It was an eviction notice, signed by a Pinellas County sheriff's deputy.

She and her husband, St. Petersburg banking and insurance executive David K. Meehan, had 24 hours to clear out.

Banks foreclose on homeowners all the time. But the Meehans aren't your average working stiffs, nor is their residence just any old shack.

Among other posts, David K. Meehan is vice chairman of First Community Bank Corp. of America, a $179-million-asset thrift with four offices stretching from Largo to Port Charlotte. The tax assessor estimates the Meehan waterfront home to be worth $812,500.

How did an affluent businessman - a bank vice chairman, no less - nearly lose his house in a bank foreclosure? The Meehans faulted the Tampa law firm of Michael J. Echevarria, which had filed a foreclosure lawsuit against them for SunTrust Bank.

The couple's beef echoed an earlier complaint that led to a four-year Florida Bar investigation of Echevarria and his firm, Echevarria & Associates PA. Echevarria, 47, accepted a reprimand from the Florida Supreme Court in February for improperly supervising another attorney who vouched for the fees of Echevarria & Associates.

Donald A. Smith Jr., a partner at Tampa's Smith & Tozian PA who represented Echevarria before the Bar, says his client has revolutionized the way mortgage bankers deal with overdue accounts. By handling a high volume of foreclosure cases with brisk efficiency, Echevarria has saved money for lenders while counseling negotiation with cooperative delinquents.

Echevarria & Associates files as many as 800 new foreclosure actions a month, employing 15 attorneys and 80 non-lawyer staffers. In 2000, the firm completed approximately 2,800 foreclosures.

"Mr. Echevarria fully understood and appreciated that, although he had an obligation to his clients and that was always what he was most concerned with, he could represent his clients in their best interest by having a law firm that was the most efficient and able to provide competent legal services at the least fee," says Smith. "He was also able to represent his clients while at the same time providing indirectly a benefit to the borrowers and the public because he recognized and was able to show his clients that it was in their best interest not to foreclose, only as a last resort."

Lawyers for the Meehans came away with an entirely different take. In a February court filing, they accused Echevarria of running a "foreclosure mill" and cutting corners to obtain a court order to evict the Meehans.

"The goal of conducting a lucrative law practice involving a volume practice simply cannot justify ethical lapses," wrote Lee H. Rightmyer of Carlton Fields PA and Leonard S. Englander of Englander & Fischer PA.

In the world of entrepreneurial capitalism, Echevarria & Associates' practice of standardizing fairly routine legal procedures into a vertically integrated legal business would be hailed and rewarded. In the legal profession, however, Echevarria can attest that streamlining more likely invites censure.

Last notice, or first?

Gov. Jeb Bush appointed David Meehan to the state Fish and Wildlife Conservation Commission in 1999. The 57-year-old president of Bankers Insurance Co. and his St. Petersburg companies have contributed hundreds of thousands of dollars to Florida political campaigns.

Despite his position in the local financial services industry, Meehan says the Jan. 9, 2002, eviction order caught him by surprise.

"I had no idea that a foreclosure suit had been filed, a default had been entered against me, a judgment was entered and/or that a foreclosure sale had been held," Meehan stated in an affidavit a day after his wife found the eviction order. "I was never served with a copy of the complaint."

The Meehans blamed Echevarria's law firm, representing SunTrust. The couple's lawyers accused the firm of collecting excessive fees and filing misleading affidavits, which the court relied upon to enter the foreclosure judgment.

They also objected to Echevarria's use of a Tampa process server called Lightning Serve Inc. to deliver court papers to the couple. At the time, Echevarria owned half of Lightning Serve. "Service of process is facially invalid because process was not made by a 'disinterested' person," the Meehan lawyers stated in a court brief.

But SunTrust argued that there was a simpler explanation for why the Meehans did not think they had been served. When Lightning Serve visited the Meehan abode on Aug. 29, 2001, "Elizabeth Meehan attempted to avoid service of process by telling the process server that she would not accept service of the papers in this matter and by slamming the door shut [in] the process server's face," SunTrust lawyers L. Geoffrey Young and Stephen M. Teplin of Ruden, McClosky, Smith, Schuster & Russell PA stated in a court filing.

The stakes were high for the Meehans.

In early 2002, Pinellas officials auctioned off the Meehan house for a bid price of $218,000, little more than a quarter of the estimated market value. County records show the Meehans had to come up with $370,200 just to make the savvy buyers go away. Even then, the Meehans weren't assured they could resume payments on the $185,000 balance of their SunTrust mortgage.

"The Meehans could have repaid the mortgage being foreclosed upon with liquid assets had they known of the suit," Carlton Fields' Rightmyer asserted in a brief.

On the offensive

The Meehans went after Echevarria and his business practices in an effort to keep their house.

Their lawyers stated that the Meehan foreclosure file from SunTrust was one of more than 400 assigned to an Echevarria associate with only a few months of legal experience.

"Importantly, this is not a situation where these problems were caused by an overwhelmed, newly minted attorney trying to cope with 400 inherited files," Rightmyer and Englander wrote. "Instead, many of these problems are systemic in the Echevarria firm's efforts to process about 800 new files each month. And perhaps most importantly, Mr. Echevarria had an ethical duty to closely supervise such untrained associates receiving crushing caseloads."

Last summer, the Meehan lawyers requested the court take judicial notice of the Bar complaint that had been filed against Echevarria. Echevarria responded by moving to intervene in the SunTrust-Meehan dispute because, he wrote, "the Meehans have raised several additional issues to set aside the judgment, all of which are directed toward conduct, or alleged misconduct of the Echevarria law firm."

Subsequently, Echevarria filed an affidavit stating that his then-partner in Lightning Serve, Scott Strady, supervised all of the process servers, and he had no daily involvement with the business. The testimony of a Lightning Serve process server also undermined the Meehan case.

Joseph W. Daly recalled for lawyers at a December 2002 deposition how Elizabeth Meehan told him the SunTrust matter had been resolved, declined a copy of the complaint and slammed the door in his face. Daly testified he was sure he had served the foreclosure complaint at the right address because he'd been stung by a bee at the Meehan house on a prior visit.

The Meehan lawyers, "employing questionable artifice" as the SunTrust attorneys labeled it, tried to cross up Daly by showing him a photograph of another house and asking him to confirm that was the Meehan place.

"That's not even the house," Daly told Englander. "See, that's unfair."

The SunTrust attorneys say their colleagues on the other side tried again by bringing in a ringer for David Meehan's wife to sit beside him during Daly's deposition. The deposition transcript identified the woman as Nancy Haire, which is the name of an assistant secretary on the corporate boards of several businesses affiliated with David Meehan.

Young and Teplin described Haire as an "Elizabeth Look-Alike" with similar hair and complexion who appeared to be about the same age as Elizabeth Meehan, then 46. When called upon to identify Haire as Elizabeth Meehan, Daly was unsure.

"Counsel for the Meehans attempted to fool Mr. Daly by having the Elizabeth Look-Alike attend the deposition rather [than] the real Elizabeth Meehan," Young and Teplin stated in a court filing. "Mr. Daly, though, did not fall for counsel's deceptive tactic."

The Meehans maintain they never saw any of seven court notices served at their home during the fall of 2001. They told the court that they had kept current on their mortgage and even received a fresh set of payment slips from SunTrust while the foreclosure suit was pending.

David Meehan suggested process servers may have experienced the same trouble as postal carriers finding his home address. "We have periodic problems with mail at our house," David Meehan stated in an affidavit.

After the eviction notice got their attention, the Meehans battled SunTrust in court for two years before the parties agreed to set aside the foreclosure judgment in March. Each side was ordered to bear their own legal costs.

Back at the Bar

Meanwhile, Michael Echevarria was trying to resolve the Bar probe over his fees.

Naples solo practitioner L.N. Ingram III filed the original complaint against Echevarria in 2000. Ingram, 64, accused Echevarria of "padding" his legal bills with extra charges through Lightning Serve.

Echevarria answered Ingram's complaint by saying Lightning Serve, as its name implied, was faster than using sheriff's civil process servers. That made it cheaper for his clients to use, not more expensive. He added that his 50% ownership of Lightning Serve didn't violate Bar rules.

In 2001, a Bar grievance committee began hearing evidence and ordered an audit of Echevarria's trust accounts. Donald Smith, Echevarria's lawyer whose firm represents attorneys and judges undergoing disciplinary review, indicated the audit covered more than 700 trust matters and about 70 case files.

The committee found probable cause in 2002 that Echevarria violated seven Bar rules, including engaging in a conflict of interest. The committee cleared Echevarria of three other charges, including collecting an excessive fee.

Smith went to work.

"Our perception, initially, was this would be eventually explainable," says Smith. "The Florida Bar, the Supreme Court, whoever it took - but eventually it would be understandable and their perception would change."

Echevarria took the position that he needn't have disclosed his ties to Lightning Serve.

"There wasn't anything to tell somebody because it didn't make any difference. There wasn't any charge that was being different from the industry standard or what anybody was making," Smith says. "It was never a clandestine or hidden piece of information. It was completely open, obvious. Anyone that ever inquired - borrower, borrower's lawyer, judge, client - it was always fully disclosed."

Smith entered into settlement talks with Thomas E. DeBerg, an assistant staff counsel in the Bar's Tampa office. By last year, Smith says, the Bar had abandoned most of the original seven charges, and Echevarria had agreed to be reprimanded for a remaining violation. But DeBerg wanted to require more fee disclosures to future clients than Echevarria was prepared to make.

Echevarria sold his interest in Lightning Serve and surrendered the presidency of the Tampa company to partner Scott Strady.

Finally, in January, Smith and DeBerg settled on a conditional guilty plea that they presented to the Supreme Court, which endorsed it. The consent judgment requires Echevarria to make more consistent disclosure of his fee arrangements.

One charge sticks

But Echevarria also acknowledged that his firm had condoned misrepresentations in affidavits as to reasonable attorney fees filed in hundreds of foreclosure cases.

Echevarria & Associates used Tampa attorney Anthony G. Woodward to validate requests for foreclosure fees. At first, Woodward reviewed every Echevarria file for reasonable fees before signing an affidavit. Over time, however, the sheer number of files coming over from Echevarria's office forced Woodward to begin charging $2 an affidavit.

Woodward also stopped looking at the files, although the reasonable-fee affidavits he signed continued to contain a phrase indicating he had reviewed each file.

"Someone in Mr. Echevarria's office either consented to the request of Mr. Woodward or made the decision themselves - I don't know, I'm not privy to that - to stop sending the files," says Smith, "which would have been OK, if they had thought to change the affidavit."

The Meehan lawyers discovered that Woodward had signed a reasonable-fee affidavit for the Echevarria firm just three days after the SunTrust lawsuit was filed against the couple. The Meehan attorneys grilled Woodward at a deposition.

"Are you surprised to learn that a file was turned over to you to certify as to the reasonableness of attorney's fees when it was only three days old?" Leonard Englander asked Woodward. "Would it surprise you to learn that service of process hadn't even been effected at the time you signed the fee affidavit?"

Meehan's lawyers were disgusted with Woodward's evasive answers. "I was embarrassed to call myself an attorney after listening to this," wrote the Englander firm's William K. Bennett in a 2003 letter accompanying a copy of the Woodward deposition transcript that was forwarded to the Bar's DeBerg.

In April, the Supreme Court suspended Woodward from practicing law for 60 days. GCBR couldn't reach him for comment.

Echevarria's reprimand required him to reimburse the Bar for $2,582 in investigative costs. "One circumstance had occurred," Smith says of his client. "He had not supervised a part of his practice the way he should have."

Smith praises Echevarria for accepting the punishment. "It's his firm. He was the lawyer responsible and in charge," says Smith. "When he realized that, he stepped up and took responsibility."

Echevarria, who referred GCBR's questions to Smith, celebrated 21 years as a lawyer in May.

"This has been difficult for him to accept," says Smith, whose client hadn't been professionally disciplined before. "Understand, Mr. Echevarria was a former grievance committee member. He takes this bar ethics and responsibilities very seriously. So this had a dramatic impact on him personally."

What can be said of Echevarria & Associates after four years of Bar investigation as well as scrutiny from other quarters?

"His firm is probably now as good a model as there is in state of Florida for efficient, competent, ethical foreclosure practice," says Smith.