A bill collection agency owned by Baltimore County Executive C. A. Dutch Ruppersberger and several co-defendants quietly paid $40,000 to settle a federal lawsuit in which the Timonium firm was found to have violated federal credit laws.
The settlement, which has been sealed under a confidentiality agreement, came to light recently in a separate but related dispute between the woman who first sued the county executive's debt collection company and the lawyer who represented her.
Kerry Spencer-Fell, a former tenant in a Baltimore County apartment complex, contends in a lawsuit in Baltimore City Circuit Court that attorney J. Steven Lovejoy and his law firm, Shumaker Williams, defrauded her of her share of the settlement with Rupp and Associates, Ruppersberger's company.
Lovejoy, through his attorneys, denied all the charges and asked that the case be dismissed.
Lovejoy had represented Spencer-Fell in a separate lawsuit filed in U.S. District Court in 1998. In that action, Spencer-Fell contended that Rupp and Associates and an affiliated law firm, Zimlin and Kilberg, and her landlord, Hendersen-Webb, had violated the federal Fair Debt Collection Practices Act when they tried to collect past-due rent from her.
On Dec. 16, 1999, U.S. District Judge Joseph H. Young concluded in a 28-page opinion that Rupp and one of its employees violated the law when it overstated the amount Spencer-Fell owed by tacking on "non-existent legal fees."
Young, noting other errors by the collection company, including misstating the statute of limitations on the debt, concluded that practices of Rupp and Associates' were "woefully inadequate in preventing the collection of unjustified fees." The decision cleared the way for a trial to determine the amount of damages Spencer-Fell was entitled to collect.
Shortly after Young's ruling, but before the case was scheduled to go to trial, a private settlement was reached, court records show.
In the suit in city Circuit Court, Rupp and Associates is not mentioned by name, but the records in the case make clear that the current dispute stems from the settlement of Spencer-Fell's previous lawsuit against the agency.
Included in the court papers is a confidentiality pact that bars Spencer-Fell and all parties to the federal suit from discussing the case with the media.
The new suit contends that Spencer-Fell had been promised $7,500 out of the $40,000 settlement, but was sent $1,271. She said she was later offered an additional $2,500 in return for releasing the law firm from other claims.
Her lawsuit charges that Lovejoy and his firm deducted expenses from her portion of the settlement that had been paid, thus billing twice for the costs.
In an affidavit attached to her lawsuit, she wrote, "Nothing I signed authorized lawyers to take over 90 per cent of the settlement."
Lawyers for Lovejoy and his law firm denied the charges of fraud and breach of contract. .
"We certainly don't believe there is anything involved even approaching fraud," said Robert Hesselbacher, an attorney for Lovejoy and his firm. He said the issue "is simply a fee dispute."
A preliminary hearing in the case is scheduled for today before Circuit Judge Thomas E. Noel.
Last year, Ruppersberger placed his stock in the collection agency into a blind trust.
Mary DiMaio, the attorney who represented Rupp and Associates and other defendants in the federal suit, said the current litigation does not involve her clients. Ruppersberger declined to comment.
