By Ed Elrod

CAMBODIA, 1979 – Young Sokhom Ly flees his country along with hundreds of thousands of other refugees.Pennsylvania,Ohio,Norwalk,California. Eventually, he ends up in Fillmore, where he raises three children while selling donuts on the main drag with his wife, Cheada.

Jump to 2011, when a “helpful man who is providing low-cost credit card processing services to minority-owned businesses in YOUR area” contacts Ly. The man persuades Ly he can grow his business by accepting credit cards. Ly believes the claims of the rep, who explains that the costs practically nothing, with a super-low discount rate of only 1 percent for qualifying purchases and 2.99 percent for non-qualifying purchases. The name Wells Fargo Bank makes Ly feel comfortable. The fees on the contract are low, 9 cents per transaction, 20 cents batch fee per item, and other non-recurring charges he won’t likely incur. Nearly everything else on the contract Ly signs has been marked through in ink with a big bold “X.” Ly wants to expand into catering and specialty cakes, something his customers have been asking for. Ly signs and waits for his first wedding cake order! He is more than surprised when his first bank statement arrives and his account has been debited in the amount of $102.63 by Lease Finance Group with the designation “Lease Payment.” Total credit card sales for the first two months: zero.

Ly calls the helpful young man who sold him this great “deal,” but is informed that “Payment Systems” and “Merchant Processing Solutions” are no longer involved. His contract has been sold and re-sold. He is referred to Lease Finance Group, LLC, inNew York,New York. Ly calls and asks to cancel. His daughter writes a very lawyerly letter after reading the fine print on the back of the last page (with a magnifying glass). The contract is not subject to cancellation, he is told, and he receives a copy of the contract very different from the one he signed. The contract was later modified to include the equipment leasing charges for which he is now being debited. Ly protests and later receives a copy of contract, with a new set of charges manually entered and “verbally agreed to” a few days after the initial visit. The early termination fee stated is 299 dollars but the fine print, in six-point type on the last page, states that breach results in the following: the entire lease comes due, there are liquidated damages of 25 percent penalty for legal fees, interest, and the recapture cost of the equipment, as well as an agreement to litigate in New York City! Of course, none of this is clear to Mr. Ly, whose English is limited and who has canceled the contract in writing with the help of his daughter, and closed the bank account that was being debited.

MARCH 31, 2012 – Enter Ed Elrod, newly-admitted attorney (11/22/2011) who receives a call from Ly’s daughter, Monica. Monica is the girlfriend of Ed’s nephew, Nick. I jot down some brief notes and agree to review some correspondence and a “funny looking document from the Civil Court of the City ofNew York.” I receive a PDF document with demand letters, statements, a helpful letter from an attorney who will offer “debt relief services in default judgment cases.” Most important is a Summons and Verified Complaint filed Jan. 31, 2012. I have about one day to file an answer or get an extension! My call to the attorney for the plaintiff is not returned, but I do get a call from the attorney liaison at the offices of the plaintiff. The caller refuses to speak to me in the absence of a letter of representation, which I can’t arrange until the next day. Mr. Ly has no fax machine or computer. A quick Google search shows the offices located in the same building as the attorney for the plaintiff. I fax off a quick letter requesting an extension of time to file an answer, and get another call back from the Lease Finance Group employee. I explain that Mr. Ly will file an answer as soon as possible, and I quickly point out some of the problems I see with the contract that I plan to incorporate into my answer. The employee, a self-styled “child of African immigrant parents,” chides my client for not “reading the fine print” and boasts of his highly successful first generation immigrant parents, who are by his claim “a lot smarter than my client.” Swallowing my gall, I reiterate my plan to file an answer and assure him that I will be happy to travel to NYC myself to appear, if necessary, and visit another nephew I have been meaning to visit who lives inBrooklyn.

I make a few hurried phone calls to Cambodian immigrant groups inNew York, and to the NY State and City Bar associations. Ironically, I find that there is no “pro bono referral service” like the marvelous one headed up by Verna Kagan here inVenturaCounty. Emails to theCityBarJusticeCenter leads me to another legal aid group, but they sadly only provide assistance to NYC residents, and only in non-civil matters. The courts own website offers a helpful packet for pro per litigants showing how to file an answer, and even a pre-drafted motion to set aside a default judgment! A call to the clerk provides some interesting information. This plaintiff has clogged this branch of the court with countless lawsuits against small business owners in dozens of states around the country, with the docket-filled default hearings. I quickly log on to Westlaw, check the New York Civil Practice Law and Rules, draft an answer and forward it to one of the attorneys in New York who has agreed to review it. Mr. Ly, as a pro per defendant, files his answer and asks for a phone conference with the judge at the court’s convenience. I sign up for email case updates and check the docket, relieved to find that the answer is filed and no request to enter default has been filed.

Jump to May 1, when I find an email in my box from one of the attorneys inNew Yorkinvolved with the “Consumer Rights Project” which opens my eyes wide. The link is to a press release: It seems that New York Attorney General Schneiderman has filed a $3.5 million dollar lawsuit against Northern Leasing Systems and its affiliates, which includes the plaintiff in Mr. Ly’s case. The suit alleges that the defendants “fraudulently siphoned millions of dollars from their former customers, including mom-and-pop stores and other small businesses.” I forward the link to Mr. Ly’s daughter, my nephew’s girlfriend, and ask her to explain this to her father. Ironically, I receive a call from the Lease Finance Group employee a few days later, asking if I am still Mr. Ly’s contact inCalifornia. While I am not his “attorney of record” I explain that I am his contact, and further explain that Mr. Ly is willing to settle for the amounts already withdrawn from his account along with return of the equipment at their expense. I further explain that I will request a continuance of any hearings or motions in Mr. Ly’s case pending the outcome of the Attorney General’s suit. I’m still waiting to hear back from him. Meanwhile, the docket shows no action and I’m hopeful that the matter will come to a resolution to which Mr. Ly will be agreeable. We can’t always hope that the facts and events will fall into a storybook pattern like this, and the case is still pending, but I am hopeful. As a 25-year veteran small business owner myself, the advice caveat emptor, and “read the fine print” are always appropriate!

For 22 years Ed Elrod and his partner Kent Weigel ran Ventura Bookstore, and Ed ran Ojai Table of Contents for five years. After the superstores entered Ventura County, Kent’s death and a failed attempt to sue Borders and Barnes & Noble (funded by the American Booksellers’ Assn.), Ed decided to pursue a career in law. He practices family law and estate planning in Ventura, with an occasional breach of contract case thrown in for good measure.

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