Los Gatos Weekly-Times

Los Gatos process server operated without license, required bonding

Legal Beagle seeks relief in Chapter 13 bankruptcy

Angry customers file suits

By Clarence Cromwell

Along the curb in front of the Los Gatos small claims court, half a dozen assorted cars and a van bristle with fliers and posters taped to their windows.

The process-serving agents who own these cars deliver summons papers, wage garnishments and bank account levies for small claims combatants. Each morning, they jockey for the best parking spaces and linger in front of the court to chat up potential customers.

Nancy Cockerill was lured by advertising that said Legal Beagle Associates would do all the work and that she would get her money back if the job wasn't done right. She hired Legal Beagle in June 1996 to file her case.

But months later, the work was still not completed.

"It was delayed and delayed and delayed," she said "My paperwork got lost in the shuffle or something. I left many, many messages."

Even after Cockerill hired another company to complete the work, Legal Beagle refused to refund the $124 Cockerill paid, she said.

Nine months later, she hired another server, who completed the first job and also helped her file a case against Legal Beagle. Cockerill won the suit against Legal Beagle but still hasn't received her refund.

Cockerill's story might sound familiar to anyone who hired the Legal Beagle Associates, named in a dozen small claims suits over the past two years, mostly from disgruntled customers.

The lawsuits and a Better Business Bureau report reveal that the company repeatedly failed to complete services that customers paid for or didn't complete them to the satisfaction of customers and that the company ignores or doesn't follow through on complaints from such customers.

In a Chapter 13 bankruptcy filed this summer, owners Terry and Patricia Shewbert sought to discharge debts, half of them from suits they've lost or cases still in progress.

Bankruptcy proceedings revealed that the Shewberts have failed to file federal and state income taxes since 1990 and that they operate the Los Gatos office without a business license. The couple additionally operated their business for six months without a bond required by state law.

Customers disgruntled

The Shewberts have left a trail of disgruntled customers who say that the company didn't deliver documents or didn't deliver them in a satisfactory way.

* David Hopkins, owner of Progressive Collision Repair, says he hired the Shewberts to collect $2,500 of his business' unpaid accounts. He paid $400 for the services, but three months later, Hopkins said he still hadn't received proof that Legal Beagle had served the papers.

Legal Beagle did not return repeated calls: He phoned at least 20 times and his wife, Alice Hopkins, phoned about 10 times, he said.

"They completely avoided us," Hopkins added.

Finally, Hopkins got so mad he went to Legal Beagle's Capri Avenue offices last week in person, but he wasn't able to get a refund or get paperwork back. A Legal Beagle employee told him the files were lost, he said.

* Robert Barlow hired Legal Beagle on Feb. 20, 1996, to serve papers garnishing a debtor's paycheck. Almost a year later, the service still wasn't done. Barlow hired a new process server on Jan. 10, 1997, and the job was completed within 11 days.

Patricia Shewbert said Legal Beagle was waiting for the money to appear in a bank account.

Barlow said, however, that Legal Beagle didn't respond to phone calls and messages inquiring about his case.

"Even when I walked in several times, I was given the heave-ho. They walked right by me and wouldn't talk to me," he said.

Barlow sued Legal Beagle in January 1997 to get back his fees plus the amount that was to be collected from his debtor. Barlow said Patricia Shewbert threatened to sue him for fraud, breach of contract and abuse of process.

Nevertheless, Barlow took Legal Beagle to court and won in June 1997, shortly before the Shewberts filed for bankruptcy.

Barlow said the Shewberts finally attempted to serve his papers after he sued them to get his money back and hired another company to complete the process service work.

Barlow received proofs of service from Legal Beagle and from San Jose-based Attorney's Services on the same day. But Legal Beagle served the papers after Attorney's Services had already done the job, he said. (He checked sheriff's department records to confirm that the document carried by Attorney's Services had been recorded with a lower number.)

Patricia Shewbert explained that some files did take a long time to complete because a former employee had a pile of papers buried on her desk that nobody knew about.

"We did have a problem in the office here," Shewbert said. "After she left, we found quite a lot of work that had not been done."

She said all the work has been done now.

"When somebody pays me to do something, I do it," Shewbert said.

Customers' phone messages went unanswered because her policy is to reply only to faxed requests about the status of a case.

"That's where we're having a problem, because people won't follow directions," she said.

Another problem is that Legal Beagle lacks office help, Shewbert said. She uses eight process servers, who are independent contractors, but an office manager would have to be on the payroll.

"I can't have employees in here," Shewbert said. "You'd have to have insurance and all this other stuff."

Instead of hiring secretaries or an office manager, Shewbert occasionally asks independent process-serving contractors to pick up the phones for a while and help any customers who walk into the office.

* The Better Business Bureau of Santa Clara County has a report about Legal Beagle in its files, said Kandy Davis, a telephone representative for the bureau.

The report states: "Our file experience shows that the company has an unsatisfactory record with the bureau. Specifically, our records show that the company has a pattern of not responding to customer complaints brought to its attention by the bureau."

The bureau does not reveal the number of complaints received pertaining to a particular business, nor does it endorse or disapprove of individual businesses, Davis said.

Turf war

The Los Gatos small claims courthouse has long been the scene of aggressive competition between process servers for customers. Servers resort to loitering outside the courthouse to solicit business, parking their cars--covered with posters and fliers--right in front of the main entrance and badmouthing the competition.

At times the tension wells to the surface: Patricia Shewbert said she had to obtain a restraining order against another server who threatened to kill her husband after Terry Shewbert accused the perpetrator of following prospective customers from the courthouse to Legal Beagle's next-door offices in an attempt to steal Legal Beagle's share of the market.

Phillip Erkenbreck, once a friend of the Shewberts and the manager of their business, has become a fierce competitor.

When Erkenbreck quit his job at Legal Beagle Associates and started his own legal process-serving company, the Shewberts claimed that Erkenbreck agreed to never open a business within 150 miles of their office.

Erkenbreck says the term of the agreement was one year and that he complied with it.

He opened the business Hassle Free Process Service two years ago and competed with the Shewberts and other local servers by parking his car, papered with signs and fliers, in front of the courthouse on Capri Drive. The Shewberts subsequently targeted Erkenbreck's business with advertising that he says damaged his business (it stated that the competition didn't want to be "hassled" with customer requests, an apparent play on Erkenbreck's company name). They used their van to push his car away from its strategic position in front of the courthouse--damaging the transmission in the process--and told potential customers that Erkenbreck was unreliable, Erkenbreck claims.

Patricia Shewbert said the car-pushing allegation was false.

"[The police] wasted a half-hour of our time writing up something that didn't happen," she said.

Erkenbreck sued the Shewberts for $20,000, stating that their remarks and the advertising about his business cost him customers. The Shewberts filed a cross-complaint, alleging that Erkenbreck violated a verbal agreement to never open a Bay Area process-serving office.

Now it doesn't appear to matter, however, whether Erkenbreck or the Shewberts prevail in the case, because the Shewberts named Erkenbreck as a potential creditor in the bankruptcy, and if the bankruptcy becomes complete the Shewberts will be able to pay off most of their creditors at the rate of 10 cents on the dollar.

Patricia Shewbert alleges that Erkenbreck and Marty Brazil, another process server, are out to ruin her business so they can take a larger share of the customers. She said process servers discourage potential customers from picking up literature at Legal Beagle's van and that they disparage the company's services so they can snatch up business. She said the efforts have drastically cut into the company's flow of customers and cash.

"The combination of those two people out there has caused us to file Chapter 13," she said.

The Shewberts have decided to close the Los Gatos office because of the aggressive competition from other servers, Patricia Shewbert said.

"We want out of that scene," she said. "We're going heavily into the business customers."

The Shewberts conduct business under at least a half-dozen names (Legal Beagle Associates, Small Claims Service of Santa Clara County, Santa Clara Small Claims Service, Secretary of State Corporate Information Services, Guaranteed Process Service and Mobile Eviction Service).

They work from a building on Capri Drive in Los Gatos, but the town never issued a permit under any of these business names.

Patricia Shewbert decided not to pay for the Los Gatos business license because she felt that Los Gatos police treated the business unfairly, she said. Police officers repeatedly tried to stop Legal Beagle from monopolizing space in front of the courthouse, asking Shewbert to close the side door of the van, which opens to reveal a large sign and a table covered with Legal Beagle's advertising literature.

Superior Court records show that Legal Beagle did not register a bond for the period between Oct. 26, 1996, and March 18, 1997, said deputy court executive Kathy Smith. The California business and professions code requires that process servers post a $2,000 bond and register the bond with court clerks.

There is no penalty for failing to register a bond, and any court papers served during the gap would still be legal and binding, although the company lacked proof of a bond, Smith said.

Shewbert said the lack of a bond was an oversight. The company from whom she used to purchase bonds gave her a reminder every two years to renew, she said. She never got a reminder when the bond expired in 1996, she said, and when she called the agent his phone was disconnected. Legal Beagle now uses a different bonding company.

Unpaid back taxes stand out among debts the Shewberts want discharged. The couple listed $2,500 in federal income taxes for 1992-96 and $3,755 in state income taxes owed for 1993-96.

A July 30, 1997, letter to the court from the Shewbert's trustee, Devin Derham-Burk, stated that the Shewberts told Derham-Burk they hadn't filed income tax returns since 1990. The trustee asked that the bankruptcy case be delayed long enough for the Shewberts to file tax returns for the past seven years and confirm the total amount of their tax debt.

"Tax problems with process servers are very common," Shewbert said.

The Shewberts believed they didn't make enough money to pay taxes, Patricia Shewbert said. After the trustee requested tax forms, the Shewberts hired an accountant to help them file their delinquent tax returns.

"We're having the taxes done, and it's being taken care of," Shewbert said.

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