Lawyer charles gallagher iii, known for tv ads, now under fire k electric bill payment online

You’ve probably seen the TV ads — lawyer Charles Gallagher III perched on jagged rocks, warning that "navigating your way around court can be very rocky." Or standing on the beach by a huge sand castle, vowing to "defend your home and fight the bank" against foreclosure.

Three years ago, Leslie and Daniel Hughes turned to Gallagher for help in modifying the mortgages on their Tierra Verde home and a small motel they own in St. Pete Beach. Although neither property was in foreclosure, they say Gallagher told them to stop making payments because the banks would be more willing then to negotiate.

By the time the Hugheses and Gallagher parted company last year, they say they had paid him $88,000 — yet both mortgages were in foreclosure. They say he told them there was nothing more he could do and that they needed to hire another attorney — at an extra cost of nearly $17,000 — and declare bankruptcy.

To be admitted to the Florida Bar, lawyers must swear that they will not delay a case because of malice or greed. Yet the goal in fighting foreclosure is often to drag out a case long enough to get a modification or sell the house. Delaying, though, can run up the legal tab more than the client expected.

Gallagher, 42, one of Tampa Bay’s best-known foreclosure defense lawyers, said he could not comment on the suit. According to his attorney, Jeffrey Goodis, Gallagher never told the couple to stop paying their mortgages but did "vigorously contest" the banks as shown by numerous motions, depositions and counterclaims over a year and a half.

In 1999, the Hugheses moved from Pennsylvania to Florida and went into the motel business. They bought and sold a Treasure Island motel, then in 2004 assumed the mortgage on the Sundial Inn, an aging 22-room motel across the street from the beach near Blind Pass.

Due to the sluggish economy, business had slowed enough by 2012 that the couple — he’s 70, she’s 53 — worried about whether they could keep paying their motel and home loans. They found Gallagher’s name online and went to see him at his St. Petersburg office.

"He said, ‘What we want you to do, if you’re current on your mortgage, is to stop making your mortgage payments immediately,’ " Leslie Hughes recalled. "We said, ‘Why should we do that?’ And he said, ‘Because it will get (the banks’) attention and then we’ll sue them and negotiate for a lower payment.’ Basically his words were, ‘Don’t pay them, pay me.’ "

Nevertheless, in December 2012, the couple paid the retainers and agreed to pay Gallagher $1,800 twice a month to handle the motel loan and $780 twice a month for the home loan — a total of $5,160 every month, about half of what they had been making in mortgage payments.

Two months later, Cornerstone Community Bank began foreclosing on the motel loan. Court records show Gallagher countered with allegations common in foreclosure cases — the bank lacked standing to sue, it couldn’t prove it owned the mortgage and note, some of the loan documents weren’t properly signed.

"His face became flaming red, he was screaming at the top of his lungs and raised his hand as if he was going to strike me. He was so enraged that his son-in-law, Jason Cox, and (his) son, Charles Gallagher, had to restrain him and keep him away from me."

"As a result of the defendants’ dilatory tactics, this case has been pending since Feb. 20, 2013, with interest accruing daily at 18 percent on a loan exceeding $1 million and attorney fees needlessly multiplying with every day," lawyer William Lazenby wrote.

Gallagher fended off one attempt by the bank to have a receiver appointed to run the motel. But last June, just before the hearing on another attempt at receivership, the Hugheses say Gallagher called to tell them they needed to immediately declare bankruptcy.

The couple were surprised to learn that Gallagher’s firm doesn’t handle bankruptcy cases and that they would have to hire a specialist, which cost them $16,717 in attorney and filing fees. Last June 24, they filed to reorganize the motel business under Chapter 11 of the federal bankruptcy code.

"If you go into Chapter 11, you can restructure your debt, which is what they were trying to do at the very beginning," he said. "Restructuring was the end game that should have been initiated at the beginning rather than pay (Gallagher) $88,000 to do nothing other than face ouster by the appointment of a receiver."

Gallagher’s lawyer would not comment on allegations that his fees were excessive, saying that was "irrelevant" because the Hugheses agreed to pay them. Many defense attorneys, however, charge substantially lower amounts for home foreclosures.

Jon Coats, a St. Petersburg lawyer who has represented many homeowners, said he offers a choice: either a $500 retainer and a flat monthly fee of $300, or a $1,500 retainer that includes six hours of work — often enough to resolve a case through a loan modification or sale of the house.

Gallagher, a Stetson University College of Law graduate who began practicing in 2001, has been in trouble with the Bar. In 2010, he was admonished for threatening to sue a client for defamation unless she withdrew a Bar complaint she had filed against him in a fee dispute.

Goodis, the Gallaghers’ attorney, called the allegations "untruths" that "reek of desperation." He acknowledged that there was "one meeting where I guess you could interpret it as raised voices." He said, however, that Chip Gallagher never raised his hand at Leslie Hughes or made inappropriate comments to her.

For a retainer of $2,000, the couple hired another attorney who has put them in touch with three banks about modifying the loan on their home. As with the motel mortgage, though, they expect years of accrued interest to swell the total amount they owe.

"We now realize that we had several options aside from allowing both our business as well as our home to go into foreclosure — but it is too late," Leslie Hughes wrote in her Bar complaint against Gallagher. "I think that it is unconscionable that a law firm would advise people to do something it realizes is not in their best interest, simply to collect money from them."