United States v. Advocate Law Groups of Florida, P.A.
6:18-cv-01836
M.D. Fla.Sep 27, 2019Background
- Plaintiffs: United States (Attorney General) and three intervenor-plaintiffs (Hurtado, Roman, Roque) sued Advocate Law Groups of Florida, P.A. and its principals under the Fair Housing Act (FHA) alleging national-origin targeting of Hispanic homeowners for a mortgage-modification/foreclosure-rescue scam.
- Allegations: Defendants ran Spanish-language ads promising huge payment reductions, charged large up-front and monthly fees, advised clients to stop mortgage payments and communications with lenders, required English contracts, and provided little or no modification services.
- Intervenors' outcomes: Hurtado paid ≈$8,420 and completed a short sale; Roman paid >$13,500 and lost her home at foreclosure sale; Roque paid >$18,500 and later obtained a modification via a nonprofit.
- Procedural posture: HUD found reasonable cause and issued a charge; Attorney General filed suit alleging violations of 42 U.S.C. §§ 3604(a), 3604(b), 3605, 3617, and a § 3614 pattern-or-practice claim; Defendants moved to dismiss under Rule 12(b)(6).
- Court action: The court granted dismissal of claims under §§ 3604(a), 3604(b), and 3605 with prejudice; dismissed § 3617 and the Government’s § 3614 claim without prejudice and gave limited leave to amend those claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Defendants "made housing unavailable" under § 3604(a) | Defendants targeted Hispanic homeowners and their predatory scheme effectively made housing unavailable or placed homeowners at risk of losing housing (reverse redlining theory). | Defendants lacked power to make housing unavailable; lenders, not Defendants, decided modifications/foreclosures. | Dismissed § 3604(a): allegations do not plausibly show Defendants could make dwellings unavailable; claim dismissed with prejudice. |
| Whether § 3604(b) covers Defendants' services/terms | Defendants offered discriminatory terms/services (retainers, communications) and targeted services to Hispanics. | Services were distinct from the types of services the FHA protects; Defendants only assisted in seeking modifications (a step removed). | Dismissed § 3604(b): alleged services fall outside § 3604(b) as pleaded; claim dismissed with prejudice. |
| Whether Defendants engaged in "residential real estate-related transactions" or provided "financial assistance" under § 3605 | Mortgage modifications and foreclosure-rescue services qualify as financial assistance or real-estate-related transactions, so discrimination in making them available violates § 3605. | Defendants did not make loans or provide funds; they merely assisted clients to seek modifications—not the kind of "financial assistance" § 3605 covers. | Dismissed § 3605: assistance in applying for modifications is not "financial assistance" under § 3605; claim dismissed with prejudice. |
| Whether § 3617 (interference/coercion) and § 3614 (pattern or practice) are sufficiently pleaded | Plaintiffs allege threats/coercion (e.g., warning of loss if fees not paid) and that the conduct amounts to a broader pattern affecting other Hispanic homeowners. | Defendants attack sufficiency and causation; argue allegations are unclear and fail to state underlying FHA violations required for § 3614. | § 3617 and § 3614 dismissed without prejudice; court permits limited repleading of these claims only (must identify the specific FHA right infringed and precise conduct). |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: plausible claim required)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- LaGrasta v. First Union Sec., Inc., 358 F.3d 840 (11th Cir. 2004) (scope of materials considered on Rule 12(b)(6))
- Jackson v. Okaloosa County, 21 F.3d 1531 (11th Cir. 1994) (§ 3604(a) can reach zoning/post-acquisition acts that affect housing availability)
- City of Miami v. Bank of Am. Corp., 800 F.3d 1262 (11th Cir. 2015) (reverse redlining theory recognized under § 3604)
- People ex rel. Madigan v. Wildermuth, 91 N.E.3d 865 (Ill. 2017) (assistance in preparing modification applications is not "financial assistance" under analogous statute)
- Int’l Bhd. of Teamsters v. United States, 431 U.S. 324 (pattern-or-practice standard requires proof that discrimination is defendant’s standard operating procedure)