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Lawyer's report sounds latest alarm about Marion County Small Claims courts

Dave Stafford
August 14, 2013
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Problems with Marion County’s Small Claims courts are by now well-documented. After the Wall Street Journal took note of forum shopping, creditors’ cozy relationships with some courts and other lax practices, Court of Appeals Judge John Baker and Senior Judge Betty Barteau issued a report advocating reform.

Jeffrey Boulden was familiar with such problems, having represented clients in those courts for years as a legal aid attorney. But he began noticing something he considered so egregious that he said he couldn’t ignore it: A company called Driver Solutions was getting default judgments in Warren Township Small Claims Court against out-of-state defendants who he said weren’t properly served notice they had been sued.

There were thousands of such judgments over a period of just over three years, he claims.

report-1col.jpg Attorney Jeffrey Boulden holds a copy of a report he compiled detailing alleged deficiencies in Driver Solutions cases filed in Franklin and Warren townships that he says should be voided. (IL Photo/ Dave Stafford

“Over a series of a couple of months in 2012, I discovered that Franklin Township was also entering default judgments without defendants being properly served,” Boulden said of the discovery that led him to pore over thousands of judgments, document his findings and provide a statistical analysis to key judges and state officials in the form of “The Poplicola Report on the Marion County Small Claims Courts.”

By Boulden’s count, Indianapolis-based Driver Solutions has filed more than 7,700 suits in Franklin and Warren townships, often winning judgments in excess of the $6,000 statutory cap.

The truck driving school’s financing contract stipulates that litigation will be filed in Marion County, even though the vast majority of defendants live outside the state. Boulden estimates about 3,200 default judgments against out-of-state defendants lacked proper notice and should be voided.

“This is a blight on the reputation of the courts, and it should be taken seriously,” he said. “It’s definitely the worst I’ve ever seen in terms of performance of the courts and an attorney.”

Based in Indianapolis, Driver Solutions LLC trains big-rig drivers at campuses here and around the country. In a period between 2008 and April 30, 2012, the company filed an average of six cases against trainees every business day in Franklin and Warren township courts, according figures provided by Boulden.

He said the company’s tuition of $5,995 is just below the small-claims cap, but its contracts also stipulate pre-judgment interest of 18 percent may be awarded on defaults.

“Anyone with whom I’ve shared the numbers is dumbfounded,” Boulden said. “Is this a school or a debt racket or a collection entity?”

In a statement, Driver Solutions CEO Michael Bankert said, “While we have not received a copy of the report in question, I am pleased with our commitment to providing career skills and employment opportunities within the trucking industry. In the past year alone, we have assisted over 4,000 individuals in obtaining gainful employment.”

Franklin Township Small Claims Judge John Kitley Jr. acknowledged a problem for part of 2011, but he said he doubts the number of faulty judgments is as high as Boulden asserts. Kitley said once he learned Driver Solutions attorney Brian Alsip was using delivery confirmation without signatures as a form of notice to out-of-state defendants, he put a stop to it. Kitley said he also forwarded a report about Alsip to the Indiana Supreme Court Disciplinary Commission.

“I’ve never felt compelled to report an attorney,” Kitley said. “I felt compelled in this case. I felt like I’d been misled.” The judge said he relied on affidavits from Alsip swearing that defendants had been properly served in those cases. He sent 15 such affidavits to the commission in which he said he believed notice wasn’t properly served, but Alsip swore it was.

“I hope the Supreme Court (Disciplinary Commission), when they look at this, will investigate it and follow up on some of these files,” Kitley said. If it is determined notice wasn’t properly served, “I would hope they would order Driver Solutions to set aside those judgments.”

The Indiana attorney general’s office also is reviewing the report, according to a statement, but a spokesperson declined to confirm whether the report had led to an investigation.

Kitley and Warren Township Judge Garland Graves said they had instituted reforms in their courts after the Baker-Barteau report was issued, but Kitley said major reform is still needed. He backs the Baker-Barteau task force report’s suggestion that the township courts be incorporated into Marion Superior courts.

Graves said after the report was issued that he had seen it and was reviewing Driver Solutions cases filed after he took the bench in 2011. But he took issue with some of Boulden’s conclusions. “He never contacted me as a judge to address any concerns he may have,” Graves said.

Kitley said the fallout from the report has been tough. “I spent my entire career trying to set the standard of doing things as best as could possibly be done,” he said. “I’ve had many sleepless nights.”

Baker said after reviewing Boulden’s report, “It’s pretty sad. … This may well cover times before some significant changes were made, but I am frustrated that notwithstanding our efforts in getting the (task force) report out, there has been no reaction from the General Assembly.”

Marion Circuit Court Judge Louis Rosenberg oversees township small claims courts but said it’s hard to determine what might happen if default judgments are found to have followed improper service.

“If there are defects that should have been apparent by reviewing the file, the court must accept responsibility for that,” Rosenberg said when asked what could be done about judgments that may have resulted from improper service.

He later provided a more nuanced statement that read, in part: “Whether service was defective may be raised by a motion to set aside judgment per (Trial Rule) 60. … As for the court setting aside such judgments on its own motion, assuming that TR 60 permitted such action, the parties would have to be notified in advance and have the opportunity to present their respective positions.”

Kitley said he wasn’t troubled by the volume of claims from Driver Solutions. But he was concerned by what he described as a pattern of delay of many years before cases were filed. He said in most cases he recalled, the school would delay filing for two to three years or more, then ask for post-judgment interest of 18 percent on the unpaid balance.

“Do I have any proof whatsoever it was intentional? No,” he said. “That’s the only thing on those Driver Solutions cases I was really perplexed over.”

He said that while he doesn’t believe Driver Solutions is subject to the Fair Debt Collection Practices Act that requires a debt collector to bring suit where a defendant lives or where a contract was signed, he said he wasn’t fond of the clause requiring litigation in Marion County.

“I questioned that clause from a sense of fairness,” he said. In many of those cases where notice was received, he allowed out-of-state defendants to appear by phone. He said the clause was enforceable unless a defendant could show fraud, coercion, undue influence, or that the defendant didn’t understand it.

“I probably would not have enforced that contract if anyone had met that burden,” Kitley said. “But they didn’t.”•

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