Tuesday, February 20, 2018
Business

Troubled Tampa-based LM Funding faces class action lawsuit

A judge has ruled that dozens of condominium associations can collectively sue a Tampa debt-collection company, potentially a major blow to the already-troubled company's prospects.

Miami-Dade Circuit Judge John H. Thornton recently certified a class-action lawsuit that accuses LM Funding of deceptive trade practices and charging illegally high interest rates.

Founded in 2008 at the start of the foreclosure crisis by Tampa lawyer Bruce Rodgers and his wife, Carollinn Gould, LM Funding advances condominium associations money for maintenance and repairs in exchange for the right to collect delinquent fees, interest and late fees from unit owners.

But in a lawsuit filed in Miami-Dade County, the Solaris at Brickell Bay Condominium Association says that while LM Funding purports to "buy" the rights to delinquent accounts, it actually operates as a lender charging interest in excess of the 25 percent allowed by state law.

In 2011, LM Funding gave Solaris a $140,458 advance but later collected $198,410 on the accounts. When Solaris terminated the contract, LM Funding demanded an additional $395,605 for what it said was the value of uncollected accounts and the interest that had accrued on them.

"Thus a debt of less than $150,00 became a debt of nearly $600,000 in less than three years," according to the suit.

Solaris also alleges that LM Funding entered into "materially similar" contracts with other condominium associations and that their claims could best be handled on a class-action basis.

On Dec. 5, the judge agreed and certified a class that could include 325 or more condo associations.

Lawyers for Solaris will also represent other members of the class.

In a statement, Rodgers predicted that LM Funding will get the suit dismissed and continue in business "for years to come."

"The allegations in the complaint mistakenly recharacterize our business model as a loan, rather than as a business that takes on the risk of collecting delinquent dues from individual condo units," Rodgers said.

He added that the judge should remove himself from the case because his wife is partner in the law firm that filed the suit.

Class-action lawsuits are relatively common, especially in cases in which a defective product harms thousands of people. Although not familiar with the LM Funding lawsuit, one expert said that certification as a class is "a very important watershed" in any litigation and can increase the pressure on the defendant to settle.

"What you have is a single litigation with a lot of aggregated claims and potentially a fairly large damage recovery," said William H. Page, a professor at the University of Florida's Levin College of Law. "That's not to say it's good to face an enormous number of individual lawsuits, but it sounds like it may be that some of these condo associations wouldn't file at all unless in the form of a class action."

LM Funding has struggled since it went public in October 2015 and raised about $10 million in an initial public offering. In September, the company announced that it was cutting staff and slashing salaries, including those of Rodgers, who went from $385,000 to $269,500, and Gould, who went from $150,000 to $84,000. Its president left the company.

At the time, Rodgers said the company was collecting on fewer accounts.

In its third-quarter 2016 filing with the federal Securities and Exchange Commission, LM Funding said that it lost $914,180 on revenues of slightly more than $1 million. After going public at $10 a share in 2015, its shares have fallen sharply, closing Monday at $4.65 apiece.

Contact Susan Taylor Martin at [email protected] tampabay.com or (727) 893-8642. Follow @susanskate.

Comments
Following deaths from Irma, Florida looks to new rules for keeping nursing homes cool after outages

Following deaths from Irma, Florida looks to new rules for keeping nursing homes cool after outages

After national headlines and a public outcry over the deaths of 14 people at a Broward County nursing home after Hurricane Irma, nursing homes across the state are working to comply with new rules requiring them to have back-up power.But the process ...
Updated: 12 hours ago
Yoshi — car maintenance that comes to you — launches in Tampa Bay

Yoshi — car maintenance that comes to you — launches in Tampa Bay

A California-based company that promises to bring limited on-site car maintenance directly to you — from an oil change to a fill-up — has picked Tampa Bay as its next pit stop."Anything that your car needs, we’re going to bring to you," said Nick Ale...
Published: 02/20/18
St. Petersburg set to rename main library after President Obama

St. Petersburg set to rename main library after President Obama

ST. PETERSBURG — Speaking in front of a small crowd gathered on the front lawn of the city’s main library, Mayor Rick Kriseman announced Monday that the facility will get a $6 million renovation and be renamed in honor of President Barack Obama.The a...
Updated: 11 hours ago
Sheriff’s undercover sting nabs 26 ‘brazen’ unlicensed contractors

Sheriff’s undercover sting nabs 26 ‘brazen’ unlicensed contractors

DUNEDIN –– Pinellas sheriff’s detectives spent their weekend luring in unlicensed electrical, plumbing and other home improvement contractors to a vacant home wired with cameras.It took only hours before a stream of people arrived to work on the outd...
Published: 02/19/18
Tampa Electric appeals OSHA citation for fatal Big Bend accident

Tampa Electric appeals OSHA citation for fatal Big Bend accident

TAMPA — Tampa Electric Co. is formally contesting the biting citation the federal Occupational Safety and Health Administration handed down in December for a maintenance incident in June that left five workers dead.At a meeting with the Tampa Bay Tim...
Published: 02/19/18
On deck in Rays ballpark quest: Tampa Bay’s business community

On deck in Rays ballpark quest: Tampa Bay’s business community

TAMPA — Columbia Restaurant owner Richard Gonzmart says he’s ready to put his checkbook where his heart is when it comes to supporting a Tampa Bay Rays move to Ybor City.So is the investment fund for the founding family of Ashley Furniture. So, it ap...
Published: 02/19/18
Epilogue: Tourism community remembers Paradise founder Cedar Hames

Epilogue: Tourism community remembers Paradise founder Cedar Hames

When Cedar Hames spoke, you listened.He was a natural storyteller, always dressed sharp to match his wit and natural elegance. He grew a two-person business in St. Petersburg into a leading tourism, advertising and marketing agency over an esteemed 3...
Published: 02/19/18
Report: Winn-Dixie parent company could close 200 stores

Report: Winn-Dixie parent company could close 200 stores

Bi-Lo LLC, a subsidiary of the same Jacksonville company that owns Winn-Dixie, could file for bankruptcy as soon as next month, according to a Bloomberg report.Parent company Southeastern Grocer is planning to shut down nearly 200 stores either befor...
Published: 02/19/18
New bus routes, times to start on Sunday in Hillsborough

New bus routes, times to start on Sunday in Hillsborough

TAMPA — More than a dozen bus routes in Hillsborough County will have new times, paths and stops starting Sunday.The changes come almost four months after the Hillsborough Area Regional Transit Authority rolled out an entirely new bus network, scrapp...
Published: 02/19/18
The small gun shop that sold the weapon to the alleged high school shooter ‘closes indefinitely.’

The small gun shop that sold the weapon to the alleged high school shooter ‘closes indefinitely.’

The aftermath of the horrific mass shooting at Florida’s Marjory Stoneman Douglas High School has led to the closure of one small business.According to the Miami Herald, the owners of Sunrise Tactical Supply, the Coral Springs, Florida shop that auth...
Published: 02/19/18