Line drawn between helping and lawyering

The North Carolina State Bar has reached a truce with a retired real estate broker in Franklin County who ruffled the feathers of some local debt collection lawyers when she began helping homeowners fight foreclosure.

 The bar’s agreement with Mary Ella Hutchinson is outlined in a July 15 consent order that allows her to continue her advocacy work just as she had before the bar sued her for practicing law without a license, but with one exception. She can no longer file notes with the clerk’s office about the validity of other people’s foreclosure actions.

 The order also prohibits Hutchinson from speaking out during foreclosure hearings – something she’d done in the past but had stopped doing before the bar sued. But she is allowed to keep handing out general legal information and attending foreclosure hearings as long as she keeps quiet.

White

 An attorney for the bar, Katherine Jean, wrote in an email that Hutchinson “indicates that she now understands where the line is drawn between advocating for change in the law, which she may certainly do, and providing legal advice and attempting to represent people in legal proceedings, which may only be done lawfully by those who are licensed to practice law in North Carolina.”

 Hutchinson, meanwhile, trumpeted the resolution of the 1-year-old suit against her as a victory for her and the Franklin County Foreclosure Fraud Task Force that she founded. She has taken her localized effort statewide in the wake of her agreement with the bar by launching a website, which the consent order expressly permits.

 She said the site, ncforeclosurefraud.org, which is a work in progress, would contain the same information about due process that she has been providing in fliers that she continues to hand to homeowners who visit her local courthouse.

 “It will give me a great deal more opportunity to get the truth out there,” she added. “Everything that we’ve learned here fits every county in North Carolina.”

 The website also will feature foreclosure cases that Hutchinson and her task force members – none are lawyers and all are unpaid – have worked on in the past, though the identities of the parties will be withheld to protect their privacy.

 The site includes a disclaimer stating that task force members are not attorneys and do not provide legal advice.

 “We leave the legal advice to the attorneys and encourage each of you to seek legal advice to help you defend your home,” the site says.

 Hutchinson had argued that the bar targeted her because she was making it difficult – and more expensive – for banks and their attorneys to foreclose by forcing them to prove that they held promissory notes for the houses they were trying to take. An assistant clerk who handles the foreclosure hearings in Franklin County estimated that the task force had a 20-percent success rate in saving homes.

 But Jean contended in her email that the bar went after Hutchinson because it has a duty to protect residents from non-lawyers who provide potentially harmful legal advice.

 “Ms. Hutchinson assured the State Bar that she was acting with good motives,” Jean wrote in her email. “Nonetheless, there is a serious risk posed when a person who has not received proper legal education and has not demonstrated a thorough understanding of the law advises homeowners facing foreclosure what legal strategies they should pursue and attempts to advocate in court on their behalf.”

‘Depositions went well’

The bar’s unauthorized practice suit against Hutchinson had been propped up by affidavits from five debt collection lawyers who claimed that they witnessed her giving legal advice to homeowners and arguing for them in court.

But Hutchinson and her attorney, James White of Chapel Hill, said several of those same lawyers testified during depositions that Hutchinson had not actually represented any homeowners in court.

“The answer was always, ‘No,’” Hutchinson said. “That was the crux of the whole thing, the basis of it all was that I was representing people at these hearings.”

White added in a separate interview, “I thought the depositions went well. Nobody could point to any time when she objected or when she actually appeared [on behalf of a homeowner] at any hearing.”

Franklin County Superior Court Judge Robert Hobgood’s factual findings in the consent order make no mention of Hutchinson acting as an attorney for homeowners.

He found that she was not engaged in the unauthorized practice of law, which is a misdemeanor, when she distributed informational fliers at the courthouse. He also determined that Hutchinson did not have any criminal intent when she filed notes with the clerk about particular foreclosure cases, though he said her actions might be considered unauthorized practice. He did not make any further findings on the issue.

“The important thing about this is the [bar’s] complaint makes it sound like she was doing all kinds of horrendous things,” White said. “But if you look at the findings, the only finding about what she did is she submitted documents and the clerk filed them.”

 Now, instead of filing those documents with the clerk, Hutchinson can post them on her website for anyone to see, White added.

Hutchinson’s previous attorney, Matt Ceradini of Raleigh, had likened her case to an ongoing suit pitting LegalZoom.com against the state bar. The bar asserts that the self-help legal website’s services constitute the practice of law. He said both cases were “watershed moments for testing” the scope of the state’s unauthorized practice law and the bar’s authority to enforce the statute.

“I was very happy that this was resolved in her favor,” he said of the consent order. “I think she has been somebody who really pioneered getting information out to the public about the foreclosure process and how it works in North Carolina.”

A “very fair” resolution

Franklin County, which is an hour’s drive north of Raleigh and has a population of more than 60,000, recorded 480 foreclosures in 2012. That number decreased by about 100 foreclosures in 2013 and again last year.

The county’s clerk of court, Patricia Chastain, supports Hutchinson’s efforts. She said foreclosure hearings in the county used to be rubber-stamp hearings that were over in a few minutes. But she said things changed when she became clerk in 2013 and Hutchinson arrived on the scene.

Chastain, who filed an affidavit backing Hutchinson in the bar’s unauthorized practice action, called the consent order “very fair.”

“She’ll still be able to pursue her passion and interest and provide information to citizens who were facing foreclosure matters,” she said, “and yet it will not be disruptive to the foreclosure process or the judicial process.”

One of the lawyers who complained about Hutchinson and her work, Joseph Olivieri of Louisburg, said he was “glad the issue is over.” He added that he was summoned to give a deposition but the case was settled before he could testify.

“I like the consent order because it makes clear what can and cannot be done by a non-party, non-attorney,” he said. “She has a First Amendment right to disseminate information. But she doesn’t have the First Amendment right to participate in hearings or file paperwork in court, unless she’s a party.”

Follow Phillip Bantz on Twitter @NCLWBantz