Insurance and Collections
We bring you news on two popular topics; Insurance and collections. Two of our team members, Jeanne Lauer and Mike Inman, recently participated as presenters in an enjoyable association Leadership Retreat sponsored by two Virginia CAI chapters at the Boars Head Inn in Charlottesville and hope to repeat the experience next year – as do most who attended. It was a first time event which was well organized and executed. Much credit goes to our local Chapter Executive Director, Rebecca Woodring.
FACTS: A fire that started in one condominium unit spread to adjoining units, causing substantial fire and smoke damage. The insurer made payments to the association that covered damages to certain structural elements of the building, but did not cover individual members’ damage to the interior of their units. Both parties argued over the extent of property coverage required by the association’s governing documents. A trial court ruled in favor of the members requiring coverage of their unit damage by the master policy; the insurer appealed.
RULING: A North Carolina appeals court agreed with the lower court’s decision.
REASONING: The association’s governing documents required the association to purchase insurance coverage for the type of damage incurred by the members. The court noted that the association’s lawyer interpreted the governing documents in the same manner in a letter to the insurer’s attorneys.
Also, the court stated that it would be an absurd requirement that every member be named individually as an insured, which would require constant revision of the policy as units are purchased and sold. The named insured is the condominium association, and the association is comprised of every person owning even a partial interest in a condominium within the association.
Craig v.
Fair Debt Collection Practices Act Local Federal Court Case
The FDCPA is a particularly challenging statute in its application to management companies and we have been consulted about it a number of times in the past by our association clients.
There is currently a case involving this statute pending in the local federal district court. There is an issue as to whether or not an association management firm is a debt collector under the statute. This is not a settled issue and is not clear in the Federal statute. According to a recent Memorandum Opinion issued in the case, the Judge was considering a request by the plaintiff seeking class-certification for two additional classes of plaintiffs. Basically, the current single plaintiff wanted to add more plaintiffs to the case. The management company, as part of its opposition to the plaintiff's request, argued that it was pointless to add plaintiffs to the case because the Amended Complaint could not survive a motion to dismiss (if one were filed), because the management company was not a "debt collector."
The Judge concluded that the evidence provided "at this stage" of the proceedings was insufficient to support a denial of the plaintiff's Motion to Amend, and the plaintiff was granted permission to file an Amended Complaint.
In short, the decision made on the motion to add parties to the suit does not make clear how this federal court, much less any other federal court, ultimately will view the issue of whether management companies should be considered as "debt collectors" under the FDCPA. In fact, ultimately this court could dismiss the claim on the ground that the management company was not acting as a debt collector.
We will be following this case and will give you updates as it makes its way through the court. In a 2003 case in the local federal court, a management company was found not to be a debt collector based on the facts on that case, which were different from the facts on the current case.
Should you have any questions on this matter, please do not hesitate to contact us. If you wish not to receive communications such as this in the future, simply reply to the sender of this email and advice us of this, and we will be glad to remove you from our recipient list.