Frederick J. Hanna pays a $120,000 settlement to a debtor in Georgia!

Case against debt collector nets $120K

Plaintiffs’ attorney calls Hanna firm’s practices ‘abusive’; Hanna says debt was valid

Read the article in it’s entirety at the Daily Report website.

Daily Report Article
Thursday, September 01, 2011
By Katheryn Hayes Tucker, Staff Reporter

A long-running legal battle between personal injury attorney R. Keegan Federal Jr. and lawyer and bill collector Frederick J. Hanna settled with the writing of a six-figure check, but it does not appear to be over. Federal said he is now searching for new ways to challenge the practices of debt collection law firm Frederick J. Hanna & Associates. “I’m concerned now that I know how aggressively this Hanna firm goes after people,” Federal said.

Federal sued Hanna for violation of the Fair Debt Collection Practices Act, plus emotional distress, on behalf of a former college professor who suffered a traumatic brain injury and was adjudicated incompetent, but still managed to get approval for a credit card and run up an unpaid balance. “To pursue the collection of money from an incompetent person to me is unconscionable,” Federal said. “We filed suit against the law firm frankly to try to get them to realize they need to clean up their own act and stop doing this to incompetent people and to get the word out to the brain-injured community that they don’t have to put up with this.”

The Hanna firm has been the subject of complaints to the Governor’s Office of Consumer Protection, but the Supreme Court of Georgia ruled in 2010 that only the State Bar has the authority to investigate a lawyer for unfair debt collection practices. Critics complain that although Hanna and a handful of others at the agency are lawyers, Hanna employs hundreds of non-lawyer bill collectors. Hanna has argued that his firm files more lawsuits in Georgia than any other law firm and that he’s in a tough business that naturally generates complaints. He said he sees a “lot of fraud” and it’s difficult to know “where to draw the line.”

Federal has posted on his blog, Federal’s Law, a picture of a Bank of America cashier’s check for $120,000 signed by Hanna to settle the professor’s case, with a caption that reads, “For once, it was the debt collector who had to pay up!”

“I don’t know whether Keegan Federal is trying to advertise and toot his own horn,” Hanna said. “It was a valid debt. There was nothing wrong with it.”   Asked why he would write a six-figure check for trying to collect a valid debt, Hanna said he just wanted the matter to be “over and done with.”

Federal filed the case in 2005 in Cobb County Superior Court against Hanna on behalf of former University of Georgia history professor Jonathan Y. Houghton, who suffered a traumatic brain injury in 1996.

The story reconstructed from court records begins with the accident, which occurred when Houghton was hit by a truck while he was rollerblading in Atlanta. Houghton nearly died. For six weeks, he was in a coma. He was left severely physically disabled, unable to walk. He also had speaking difficulties and permanent brain damage. It soon became clear he had difficulty managing his finances. His wife divorced him and took custody of their child, and his family took over his financial affairs. In 2000, the Fulton County Probate Court issued an order adjudicating him to be incompetent as a result of his brain injury and appointing as his guardian his brother, William H. Houghton III, according to court records.

That same year, Jonathan Houghton applied for a Bank of America Visa card, saying on the application that he was disabled. He began using the card without his family’s knowledge and built a balance. Soon he exceeded his credit limit. The bank raised it.

It wasn’t until May of 2003 that Jonathan’s brother, nicknamed “Chip,” found the credit card statement. The balance was more than $1,000. Chip called Bank of America to inform them of the guardianship. He was told to fax the guardianship papers to the bank, which he did. He requested that the card be canceled.

The bank didn’t cancel the card, but instead raised the credit limit again.

By July, 2003, the balance was up to nearly $4,000, with the limit raised to $5,100. In December of that year, Jonathan told Chip that the bank was harassing him with collection calls and had sent a collection demand. Chip called the bank again, and again faxed the guardianship documents. By January, 2004, the account still wasn’t closed and the balance was up to $5,465, including late fees, over limit fees and interest raised from 10 percent to 24 percent.

In 2004, the bank turned the collection over to Hanna’s firm. Jonathan contacted Federal’s firm. Federal informed Hanna’s firm of the disability and the guardianship and Hanna’s firm sued Houghton anyway.

In April 2004, an attorney from Federal’s firm wrote to Hanna’s firm notifying them that Jonathan had been adjudicated incompetent, sending them copies of the court documents, informing them that under Georgia law, “debts incurred by a person adjudicated to be incompetent are not enforceable,” and demanding that the lawsuit be withdrawn.

Hanna’s firm did eventually withdraw that lawsuit. But then Hanna sued Houghton again later the same year for the same debt.

In 2005, Federal’s firm filed a lawsuit against Hanna’s firm citing a series of letters, calls and collection attempts in violation of the Fair Debt Collection Practices Act and seeking to recover costs, attorney fees and punitive damages.

An attorney from Hanna’s firm wrote a letter to Federal’s firm accusing the Houghton family of “faking Jonathan’s brain injury to evade the credit card debt of less than $6,000,” according to the plaintiffs’ portion of the pretrial order. In another letter, the Hanna lawyer accused the Houghton family of fraud. The Hanna lawyer also suggested that Houghton might secure another loan to “pay us.”

Federal also released a copy of a 2006 letter written to him and signed by Hanna. The letter belittles Federal personally, questions his sincerity in his efforts to help brain injury victims and takes a shot at a 40-year legal career that includes two terms as a Fulton County Superior Court judge and leadership positions in bar associations, civic groups and even the Carter Center.

“You appear to have gotten your panties in a wad over the fact that we did not jump when you spoke,” Hanna’s letter states. “What I am confused about is in the brochures in your office about how you have bonded with other families regarding brain injuries to your families. To do this I would think it takes some sort of compassion.”

The letter withdraws an offer from Hanna to settle Federal’s lawsuit for $12,000—an offer Federal said he had already rejected. Federal said Hanna’s first offer was $2,000.

“Your refusal to settle this matter because of your own pride and arrogance does not reflect the person that I always heard about,” Hanna’s letter states. “We will now move for summary judgment.”  Hanna’s motion was rejected by Cobb County Superior Court Judge C. LaTain Kell Sr.

Federal gives credit to his partner, Keith S. Hasson, for negotiating the settlement with Hanna on the eve of the trial. “I was in Washington, D.C., when it settled,” Federal said. “I said no to $50,000, $60,000 and $70,000. I said, ‘Tell him more.'”

Federal said he also rejected Hanna’s request to keep the settlement confidential.

When the offer rose to $120,000, the client wanted to accept it.

“I wish the client had allowed us to take the case to trial,” said Federal. “I think a jury would have been outraged.”

The case is Houghton v. Hanna, No. 05-1-1115-28.

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