Thursday, June 3, 2010

Collection Attorneys and Marion County Small Claims Courts - Why We Need Reform


To show you how low some attorneys will stoop, an attorney on behalf of the Marion County Health and Hospital filed a proceeding supplemental action against a man who had a medical bill from Wishard for services rendered in 1993. In 1995, another H&H attorney obtained a $317 (which includes pre-judgment interest) judgment against the man for the bill. That year the man's wages were garnished pursuant to a court order and, as he recalls, every pay period $20 or so was taken from his check to satisfy the judgment.

Fast forward 15 years and an H & H attorney picks up the judgment. The attorney knows the man's wages had been garnished in 1995 but he doesn't know if the bill had been paid. So he files for a second proceeding supplemental in a Marion County Small Claims Court to collect on the original amount. Even though Health & Hospital has no evidence regarding the current balance of the judgment or whether it had been paid off with the 1995 garnishment, a new garnishment on the original amount is entered by the court. This time, with additional post-judgment interest, the amount is close to $500.

People need to be very aware of the tactics of collection attorneys, especially in this age when attorneys are desperate for work and will do almost anything to pay their bills. Collection attorneys will find old judgments and go after debtors, regardless of whether the debt is legitimate or not. Fifteen year or so later, most people don't have the records to prove certain bills or judgments have been paid. While the burden should be on the creditor to prove the case, very often in Marion County Small Claims Courts this evidentiary burden is not as strictly enforced as it is in a county circuit or superior court.

Another problem is created by the fact that collection attorneys can choose which Marion County Small Claims Court they file in and the courts (and townships) make money off of those filing fees. It doesn't matter where the plaintiff or defendant lives or where the debt was incurred...an attorney can file any non-real estate collection matter in any Marion County Small Claims Court. As a result, collection attorneys get their "favorite" courts to file their cases in. A far too cozy relationship often develops between the court and the collection attorney that many defendants and attorneys find inappropriate. Some small claims courts provide those collection attorneys offices to meet with defendants. I've heard of other small claims courts where the collection attorney is allowed to set the court's calendar or will go behind the calendar to pull files.
You have the additional problem that, with the rule that collection attorneys can file their cases in any Marion County small claims court, these townships compete against one another for the collection business that dominates the courts' calendars.

As a side note, many years ago, I was looking at running for Pike Township Small Claims Court. I was told by the then Pike Trustee that, if I became Pike judge, I should almost always rule for the collection attorneys who file in Pike as their filings bring a lot of money into the township. He said I could occasionally rule for the defendant, but only rarely as we want to keep the collection attorneys happy and their money coming in the door. I was aghast at the suggestion.

A few years later, the Indiana Supreme Court amended the rules to require small claims actions involving real estate to be filed in the township in which the real estate is located. That ended forum shopping by apartment complex attorneys, which were a significant part of the Marion County Small Claims Courts' business. The Court though needs to go further and put a complete end to the forum shopping by collection attorneys in Marion County. Justice is not well served by the current system where collection attornesy can pick their Small Claims Court.

11 comments:

Nicolas Martin said...

As in California, attorneys here should not be allowed in Small Claims.

Has the maximum claim limit kept up with inflation since the Small Claims court was created? If not the limit should be updated, and a provision put into law which raises the limit each year commensurate with the inflation rate.

Citizen Kane said...

I filed a claim in small claims court against someone who caused an accident and left me $1,000 in the hole and the union attorney (and unlike some of them I met he knew what he was doing), filed to transfer the case to Superior Court. I filed a written objection prior to the hearing, thinking that I had found the law that said that they could not be granted such a transfer wily-nily, without a solid reason. However, he, at the hearing, of course, provided a copy of a law that indicated that in Marion County, no reason was required to grant the transfer. The judge excepted what he presented, without me even having the chance to verify whether it was current law, past law or a mis-interpreted law. I eventually withdrew the case, with prejudice, as supposedly, even though they requested the transfer, I would have to refile before the Superior Court and either get a lawyer or continue pro se.

And that was one of my best experiences with the local court system. Don't get me started on the manner in which court papers are supposedly served on people.

Paul K. Ogden said...

Nicolas Martin,

The maximum claim in Marion County Small Claims Court is $6,000. That's plenty sufficient in my book. In fact, it may be too high. $6K is not an insignificant amount of money.

Paul K. Ogden said...

CK,

Fortunately, or unfortunately, the attorney is correct. You can remove it to Superior Court even before the Small Claims Court hears the case. Then the plaintiff has to replead. Even if the plaintiff wins in small claims court, if the defendant files an appeal to the superior court, the plaintiff has to replead, i.e. file a new complaint. Don't try to file a copy of the small claims court complaint in superior court. That won't fly.

HOOSIERS FOR FAIR TAX said...

wow...that trustee leveled with you about how the whole thing works.

The court isn't about justice, it's about collecting FEES!

Good God!

Cato said...

Indiana judges are incompetent, unprofessional, biased, and they decide their cases prior to hearing them.

Nicolas Martin said...

Paul, you didn't respond to my questions. I'm not surprised that you think $6,000 is a excessive limit since attorneys lose money when clients can represent themselves. But a cause of action for $!0,000 is not necessarily more legally complex than one for $6K, and one that is $50 may not be less complex.

The small claims limit in California is $7,500. In Illinois it is $10,000. In Ohio it's a piddly $3,000, and I'm sure the attorneys there think that is "plenty sufficient." Texas has a $10,000 limit, and Kentucky's is a laughable $1,500. As a consumer, I think a higher limit is better and that attorneys should be kept out of the process. Ideally these cases should be moved from the courts to private binding arbitration, but the legal cartel would object, as you do, to any measures which make lawyers unnecessary.

Paul K. Ogden said...

Nicolas,

Actually I think you're misunderstanding what I meant when I said the $6K limit may be too high. You see a higher limit as being beneficial for the average Joe Litigant. On paper, that would be the case. In practice, the exact opposite is true, at least here in Marion County.

The higher limit causes collection attorneys to file in the small claims courts where the defendant doesn't have the protections he has in the "big boy" court. Collection attorneys, who can choose their small claims court, often develop a very close relationship with the court.

If the small claims court limit was smaller, these collection attorneys would be filing in "big boy" court where they couldn't get away with the things they do in small claims court.

Trust me, if you're an Average Joe up against a collection attorney who files a lot of cases, you're going to not want to be in a small claims court where the collection attorney files regularly.

See, my position on the $6K limit isn't because it's beneficial to attorneys but because I want people to be protected from unscrupulous collection attorneys who are taking advantage of the Marion County Small Claims Court system.

No, the $6K is not indexed to inflation.

Marycatherine Barton said...

Thanks for sending out this warning, Paul. This year, at
the last Indianapolis Bar Association luncheon I attended, when giving his address, federal Judge Hamilton said, that they never knew of the job market for attorneys in Indianapolis, being so bad.

Citizen Kane said...

Paul, I knew he was correct later; but in the court, I had no chance to seriously review what he submitted. He knew my arguments before hand and could prepare and I did not have that advantage.

As for collection attorneys in small claims court, when you walk in a small claims court and see how they operate within some of them, you would think that they were running the court. You just get the feeling that anyone dealing with them is about to be skinned alive.

Dale said...

The only answer maybe is reform that's why you probably need it. Thanks a lot for sharing that valuable information.

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