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Underhill v. Best

United States District Court, W.D. Michigan, Northern Division

May 10, 2018

John H. Underhill, Plaintiff,
Stuart A. Best, Gary D. Popovits, & Brandt, Pezzetti, VErmetten & Popovits, P.C., Defendants.




         Water damage is no joke-in this case, a faulty sump pump spawned a $20, 000 insurance claim, an interpleader suit brought in state court, and this suit for violation of the Fair Debt Collection Practices Act.

         Plaintiff John Underhill is a consumer and homeowner, and he suffered water damage to his basement. Luckily, his homeowner's insurance policy covered the damage, and his insurer issued a check made out to Underhill and his mortgagor, Soo Co-Op Credit Union. Underhill endorsed the check and deposited it with Soo Co-Op.

         Underhill selected an entity called Lechner Construction to perform the necessary repairs to his basement. However, Underhill asserts that Lechner Construction did not perform as agreed, so he chose to terminate the arrangement, and he did not have the company “reconstruct” the basement. After that, he says that he agreed with Lechner Construction for the payment of a lesser amount for its already-performed work.

         On June 9, 2017, Underhill told Soo Co-Op to issue a cashier's check to Lechner Construction for $17, 135.96 to pay for the repairs. At some point in this process, Underhill also called Soo Co-Op and told it to apply a portion of the insurance proceeds as his July mortgage payment.

         The cashier's check never made it to Lechner Construction's account. Mark Lechner signed an affidavit averring that the check had been fraudulently signed over to Underhill and that Lechner Construction had never been paid for any of its work. The company also refused to execute a waiver for its lien on Underhill's home. Underhill asserts that Lechner Construction was not licensed and insured pursuant to Michigan law, so it was not entitled to any proceeds for its work.

         Instead of going to Lechner Construction, the check was deposited in Underhill's account at mBank. But as a result of the alleged forgery, mBank reversed the deposit and issued a check back to Soo Co-Op Credit union and placed a stop-payment on the check. The full amount of the check was no longer in Underhill's account, so mBank withdrew what it could from Underhill's account ($6, 063.22) and charged him for the remaining $11, 072.74.

         After taking these steps, mBank filed an interpleader complaint in state court, naming Underhill, Lechner Construction, and Soo Co-Op as defendants. Essentially, mBank did not know who owed what, and it wanted the court to resolve the issue.

         Soo Co-Op retained Defendant Stuart Best to represent it in resolving issues arising out of Underhill's insurance claim, including the interpleader action. In that capacity, Best allegedly called Underhill once and wrote two letters to him that form the basis for this Fair Debt Collection Practices Action.[1]

         In a letter dated July 14, 2017, Best wrote to Underhill to advise him that Soo Co-Op had retained him. He informed Underhill of the circumstances leading to his retention-as has been summarized above. And Best informed Underhill that the remaining funds in escrow at Soo Co-Op would not be applied as a payment on his mortgage because of the outstanding issues in the interpleader suit. Best also wrote that the funds would remain in escrow until a full waiver of lien and completion certificate was issued by Lechner Construction. Best concluded the letter by informing Underhill that, because the escrow funds could not be used as a mortgage payment, his July payment was past due. Best closed the letter by indicating that Underhill could expect Soo Co-Op to continue to communicate with him about his mortgage payments, but that “any other communication regarding this matter is to be directed to me. I will address all issues as to the check insurance proceeds as well as the release and waver [sic] of the lien.” Best wrote a second letter to Underhill on August 31, 2017, again addressing the funds remaining in escrow at Soo Co-Op. This time, Best wrote to inform Underhill that the amount of money that did not pertain to Lechner's repair bill or the previous attempted mortgage payment was considered insurance proceeds relating to Underhill's loss of personal property. Best instructed Underhill to complete an attached form releasing Soo Co-Op from liability for releasing the funds and indicated that the funds would be released upon its receipt.


         Underhill now brings claims against Best under the Fair Debt Collection Practices Act. He alleges Best violated the Act in the following ways:

(A) Claiming that the Plaintiff is indebted to the credit union in the amount of the check attached as ex. "A", in violation of 15 USC §1692e(2)(A), for falsely representing the "character", "amount" and/or "legal status" of a debt because there is no "debt" because the credit union has, at most, a security interest to protect, "Lechner" cannot claim it/he/she is owed any money as a matter of law AND there cannot be a "debt" arising out of the Plaintiff's own insurance proceeds AND the credit union does not have legal standing to even be involved in a dispute between the Plaintiff and "Lechner" because "Lechner" does not exist as ANY legal entity;
(B) Falsely claiming that the Plaintiff committed a crime or other conduct, based simply on the bald allegations of a 3rd party, simply to disgrace the Plaintiff, in ...

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