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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. This law is troubling in two respects: First, why wasn't the law reviewed "with the intention of getting all the facts surrounding the legislation and its actual impact on the marketplace" BEFORE it was passed and signed? Seems a bit backwards to me (even acknowledging that this is the Indiana state legislature we're talking about. Second, what is it with the laws in this state that seem to create artificial monopolies in various industries? Besides this one, the other law that comes to mind is the legislation that governed the granting of licenses to firms that wanted to set up craft distilleries. The licensing was limited to only those entities that were already in the craft beer brewing business. Republicans in this state talk a big game when it comes to being "business friendly". They're friendly alright . . . to certain businesses.

  2. Gretchen, Asia, Roberto, Tonia, Shannon, Cheri, Nicholas, Sondra, Carey, Laura ... my heart breaks for you, reaching out in a forum in which you are ignored by a professional suffering through both compassion fatigue and the love of filthy lucre. Most if not all of you seek a warm blooded Hoosier attorney unafraid to take on the government and plead that government officials have acted unconstitutionally to try to save a family and/or rescue children in need and/or press individual rights against the Leviathan state. I know an attorney from Kansas who has taken such cases across the country, arguing before half of the federal courts of appeal and presenting cases to the US S.Ct. numerous times seeking cert. Unfortunately, due to his zeal for the constitutional rights of peasants and willingness to confront powerful government bureaucrats seemingly violating the same ... he was denied character and fitness certification to join the Indiana bar, even after he was cleared to sit for, and passed, both the bar exam and ethics exam. And was even admitted to the Indiana federal bar! NOW KNOW THIS .... you will face headwinds and difficulties in locating a zealously motivated Hoosier attorney to face off against powerful government agents who violate the constitution, for those who do so tend to end up as marginalized as Paul Odgen, who was driven from the profession. So beware, many are mere expensive lapdogs, the kind of breed who will gladly take a large retainer, but then fail to press against the status quo and powers that be when told to heel to. It is a common belief among some in Indiana that those attorneys who truly fight the power and rigorously confront corruption often end up, actually or metaphorically, in real life or at least as to their careers, as dead as the late, great Gary Welch. All of that said, I wish you the very best in finding a Hoosier attorney with a fighting spirit to press your rights as far as you can, for you do have rights against government actors, no matter what said actors may tell you otherwise. Attorneys outside the elitist camp are often better fighters that those owing the powers that be for their salaries, corner offices and end of year bonuses. So do not be afraid to retain a green horn or unconnected lawyer, many of them are fine men and woman who are yet untainted by the "unique" Hoosier system.

  3. I am not the John below. He is a journalist and talk show host who knows me through my years working in Kansas government. I did no ask John to post the note below ...

  4. "...not those committed in the heat of an argument." If I ever see a man physically abusing a woman or a child and I'm close enough to intercede I will not ask him why he is abusing her/him. I will give him a split second to cease his attack and put his hands in the air while I call the police. If he continues, I will still call the police but to report, "Man down with a gunshot wound,"instead.

  5. And so the therapeutic state is weaonized. How soon until those with ideologies opposing the elite are disarmed in the name of mental health? If it can start anywhere it can start in the hoosiers' slavishly politically correct capital city.

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