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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. From his recent appearance on WRTV to this story here, Frank is everywhere. Couldn't happen to a nicer guy, although he should stop using Eric Schnauffer for his 7th Circuit briefs. They're not THAT hard.

  2. They learn our language prior to coming here. My grandparents who came over on the boat, had to learn English and become familiarize with Americas customs and culture. They are in our land now, speak ENGLISH!!

  3. @ Rebecca D Fell, I am very sorry for your loss. I think it gives the family solace and a bit of closure to go to a road side memorial. Those that oppose them probably did not experience the loss of a child or a loved one.

  4. If it were your child that died maybe you'd be more understanding. Most of us don't have graves to visit. My son was killed on a state road and I will be putting up a memorial where he died. It gives us a sense of peace to be at the location he took his last breath. Some people should be more understanding of that.

  5. Can we please take notice of the connection between the declining state of families across the United States and the RISE OF CPS INVOLVEMENT??? They call themselves "advocates" for "children's rights", however, statistics show those children whom are taken from, even NEGLIGENT homes are LESS likely to become successful, independent adults!!! Not to mention the undeniable lack of respect and lack of responsibility of the children being raised today vs the way we were raised 20 years ago, when families still existed. I was born in 1981 and I didn't even ever hear the term "CPS", in fact, I didn't even know they existed until about ten years ago... Now our children have disagreements between friends and they actually THREATEN EACH OTHER WITH, "I'll call CPS" or "I'll have [my parent] (usually singular) call CPS"!!!! And the truth is, no parent is perfect and we all have flaws and make mistakes, but it is RIGHTFULLY OURS - BY THE CONSTITUTION OF THIS GREAT NATION - to be imperfect. Let's take a good look at what kind of parenting those that are stealing our children are doing, what kind of adults are they producing? WHAT ACTUALLY HAPPENS TO THE CHILDREN THAT HAVE BEEN RIPPED FROM THEIR FAMILY AND THAT CHILD'S SUCCESS - or otherwise - AS AN ADULT.....

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