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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. Looks like 2017 will be another notable year for these cases. I have a Grandson involved in a CHINS case that should never have been. He and the whole family are being held hostage by CPS and the 'current mood' of the CPS caseworker. If the parents disagree with a decision, they are penalized. I, along with other were posting on Jasper County Online News, but all were quickly warned to remove posts. I totally understand that some children need these services, but in this case, it was mistakes, covered by coorcement of father to sign papers, lies and cover-ups. The most astonishing thing was within 2 weeks of this child being placed with CPS, a private adoption agency was asking questions regarding child's family in the area. I believe a photo that was taken by CPS manager at the very onset during the CHINS co-ocerment and the intent was to make money. I have even been warned not to post or speak to anyone regarding this case. Parents have completed all requirements, met foster parents, get visitation 2 days a week, and still the next court date is all the way out till May 1, which gives them(CPS) plenty of to time make further demands (which I expect) No trust of these 'seasoned' case managers, as I have already learned too much about their dirty little tricks. If they discover that I have posted here, I expect they will not be happy and penalized parents again. Still a Hostage.

  2. They say it was a court error, however they fail to mention A.R. was on the run from the law and was hiding. Thus why she didn't receive anything from her public defender. Step mom is filing again for adoption of the two boys she has raised. A.R. is a criminal with a serious heroin addiction. She filed this appeal MORE than 30 days after the final decision was made from prison. Report all the facts not just some.

  3. Hysteria? Really Ben? Tell the young lady reported on in the link below that worrying about the sexualizing of our children is mere hysteria. Such thinking is common in the Royal Order of Jesters and other running sex vacays in Thailand or Brazil ... like Indy's Jared Fogle. Those tempted to call such concerns mere histronics need to think on this: http://www.msn.com/en-us/news/us/a-12-year-old-girl-live-streamed-her-suicide-it-took-two-weeks-for-facebook-to-take-the-video-down/ar-AAlT8ka?li=AA4ZnC&ocid=spartanntp

  4. This is happening so much. Even in 2016.2017. I hope the father sue for civil rights violation. I hope he sue as more are doing and even without a lawyer as pro-se, he got a good one here. God bless him.

  5. I whole-heartedly agree with Doug Church's comment, above. Indiana lawyers were especially fortunate to benefit from Tom Pyrz' leadership and foresight at a time when there has been unprecedented change in the legal profession. Consider how dramatically computer technology and its role in the practice of law have changed over the last 25 years. The impact of the great recession of 2008 dramatically changed the composition and structure of law firms across the country. Economic pressures altered what had long been a routine, robust annual recruitment process for law students and recent law school graduates. That has, in turn, impacted law school enrollment across the country, placing upward pressure on law school tuition. The internet continues to drive significant changes in the provision of legal services in both public and private sectors. The ISBA has worked to make quality legal representation accessible and affordable for all who need it and to raise general public understanding of Indiana laws and procedures. How difficult it would have been to tackle each of these issues without Tom's leadership. Tom has set the tone for positive change at the ISBA to meet the evolving practice needs of lawyers of all backgrounds and ages. He has led the organization with vision, patience, flexibility, commitment, thoughtfulness & even humor. He will, indeed, be a tough act to follow. Thank you, Tom, for all you've done and all the energy you've invested in making the ISBA an excellent, progressive, highly responsive, all-inclusive, respectful & respected professional association during his tenure there.

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