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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. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  2. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

  3. Pass Legislation to require guilty defendants to pay for the costs of lab work, etc as part of court costs...

  4. The fee increase would be livable except for the 11% increase in spending at the Disciplinary Commission. The Commission should be focused on true public harm rather than going on witch hunts against lawyers who dare to criticize judges.

  5. Marijuana is safer than alcohol. AT the time the 1937 Marijuana Tax Act was enacted all major pharmaceutical companies in the US sold marijuana products. 11 Presidents of the US have smoked marijuana. Smoking it does not increase the likelihood that you will get lung cancer. There are numerous reports of canabis oil killing many kinds of incurable cancer. (See Rick Simpson's Oil on the internet or facebook).

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