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Judges address first impression issue on attorney fees

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For the first time, the Indiana Court of Appeals addressed a contract that included a provision stating the signee is responsible for 40 percent in attorney fees if a hospital had to initiate collection efforts to recover amounts owed.

Mark French admitted his child to Harsha Behavioral Center in Terre Haute. He signed a contract regarding financial responsibility which included the provision “I also acknowledge that I am responsible for reasonable interest, collection fees, attorney fees of the greater of a) forty (40%) or b) $300.00 of the outstanding balance, and/or court costs incurred in connection with any attempt to collect amounts I may owe.”

Harsha billed French for $8,500 in of services, which he never paid. The amount was assigned to Corvee Inc., a collection agency. The trial court entered a default judgment against French awarding the full outstanding balance, but only awarded Corvee $1,000 in attorney fees instead of the $3,400 it was asking for. The amount it wanted was 40 percent of the $8,500.

Corvee filed a motion to correct error, which the trial court denied.

“There is no dispute here that the contract unambiguously required French to pay that amount, designated as attorney fees. The issue is whether that provision is enforceable,” wrote Judge Michael Barnes in Corvee, Inc. v. Mark French, No. 84A04-1010-CC-696. “Indiana appellate courts have not yet had the occasion to address an attorney fees provision identical to this one.”

The judges concluded that the attorney-fees provision in the contract is in the nature of a liquidated damages provision. They also found it to be unnecessary to transform the standard attorney-fees provision in a contract into a liquidated-damages provision that may or may not have any correlation to the attorney fees actually incurred.

Citing Smith v. Kendall, 477 N.E.2d 953 (Ind. Ct. App. 1985), the judges found there was no evidence that Corvee actually incurred $3,400 in attorney fees in attempting to collect the debt from French.

“To allow Corvee to recover that amount in the absence of such evidence gives rise to the possibility that it will enjoy a windfall at French’s expense, or that it will recover more from French than the outstanding account balance and the necessary costs Corvee actually incurred in collecting it,” wrote Judge Barnes. “Collection actions should permit creditors to recover that to which they are rightfully entitled to make themselves whole, and no more.”

The judges found no basis to second-guess the trial court’s calculations that $1,000 would actually compensate Corvee for its attorney fees.

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  • SAJ
    The next time that one of us laments the fact that our profession is no longer admired by the public, despite the large number of good deeds done by the majority, we can point to the greed and stupidity exhibited by the small minority. And spring-boarding that into a reported opinion? Priceless.

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  1. Good riddance to this dangerous activist judge

  2. What is the one thing the Hoosier legal status quo hates more than a whistleblower? A lawyer whistleblower taking on the system man to man. That must never be rewarded, must always, always, always be punished, lest the whole rotten tree be felled.

  3. I want to post this to keep this tread alive and hope more of David's former clients might come forward. In my case, this coward of a man represented me from June 2014 for a couple of months before I fired him. I knew something was wrong when he blatantly lied about what he had advised me in my contentious and unfortunate divorce trial. His impact on the proceedings cast a very long shadow and continues to impact me after a lengthy 19 month divorce. I would join a class action suit.

  4. The dispute in LB Indiana regarding lake front property rights is typical of most beach communities along our Great Lakes. Simply put, communication to non owners when visiting the lakefront would be beneficial. The Great Lakes are designated navigational waters (including shorelines). The high-water mark signifies the area one is able to navigate. This means you can walk, run, skip, etc. along the shores. You can't however loiter, camp, sunbath in front of someones property. Informational signs may be helpful to owners and visitors. Our Great Lakes are a treasure that should be enjoyed by all. PS We should all be concerned that the Long Beach, Indiana community is on septic systems.

  5. Dear Fan, let me help you correct the title to your post. "ACLU is [Left] most of the time" will render it accurate. Just google it if you doubt that I am, err, "right" about this: "By the mid-1930s, Roger Nash Baldwin had carved out a well-established reputation as America’s foremost civil libertarian. He was, at the same time, one of the nation’s leading figures in left-of-center circles. Founder and long time director of the American Civil Liberties Union, Baldwin was a firm Popular Fronter who believed that forces on the left side of the political spectrum should unite to ward off the threat posed by right-wing aggressors and to advance progressive causes. Baldwin’s expansive civil liberties perspective, coupled with his determined belief in the need for sweeping socioeconomic change, sometimes resulted in contradictory and controversial pronouncements. That made him something of a lightning rod for those who painted the ACLU with a red brush." http://www.harvardsquarelibrary.org/biographies/roger-baldwin-2/ "[George Soros underwrites the ACLU' which It supports open borders, has rushed to the defense of suspected terrorists and their abettors, and appointed former New Left terrorist Bernardine Dohrn to its Advisory Board." http://www.discoverthenetworks.org/viewSubCategory.asp?id=1237 "The creation of non-profit law firms ushered in an era of progressive public interest firms modeled after already established like the National Association for the Advancement of Colored People ("NAACP") and the American Civil Liberties Union ("ACLU") to advance progressive causes from the environmental protection to consumer advocacy." https://en.wikipedia.org/wiki/Cause_lawyering

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