Marion County small claims reform faces hurdles in Legislature

September 10, 2014

The Indiana Supreme Court’s recommendation to merge Marion County’s nine township small claims courts with Marion Superior Court may be too bold for the Indiana General Assembly, a key senator said.

“I think that plan is going to be difficult to get through,” said Sen. R. Michael Young, an Indianapolis Republican who sits on the Interim Study Committee on Courts and the Judiciary.

Unique in Indiana, some of Marion County’s township courts have been accused of catering to large-volume filers. Allegations of forum shopping by debt-collection filers have persisted for years and were highlighted in a 2011 Wall Street Journal article on common practices in the township courts.

The Supreme Court issued its recommendations for reform Sept. 2, urging lawmakers to abolish the current system and unify the township courts with the Superior Courts’ Civil Division effective Jan. 1, 2016.

Doing so, the court said, would “address the significant criticism and controversies associated with the system of Marion County township small claims courts … better provide for fair and impartial justice, and … strengthen the public’s confidence in Marion County’s management of small claims matters.”

The recommendations mirror those contained in a recently released report from the National Center for State Courts.

Young expects some reform of the courts to move through the Indiana Legislature during the 2015 session, but he doubts a majority will go along with adding additional judges at higher salaries than township court judges currently earn.

Costs also would increase if the venues become courts of record, “all of which is going to shift the burden to people outside of Marion County,” he said.

“The only issue is, are they operating in a way that gives people the faith and trust in the system that they have a fair and honest system,” Young said. “That should be the goal.”

Young said it’s also likely the proposal will be resisted by many lawmakers who may view it as an attack on township government, which enjoys considerable support in the General Assembly.

The Interim Study Committee on Courts and the Judiciary meets Sept. 18, but the small claims proposal was not on the agenda at IL deadline.

The NCSC report seconds suggested changes recommended in May 2012 by the Task Force on Marion County Small Claims Courts headed by Court of Appeals Judge John Baker and Senior Judge Betty Barteau.

“Every organization or group studying this matter has come to the same conclusion. The flexibility and responsiveness of the proposed changes will better serve all of the people in Marion County,” Baker said.

The NCSC study was prepared at the request of the Marion Circuit Court and funded by a $30,000 grant from the Indiana Supreme Court. Marion Circuit Judge Louis Rosenberg said that the NCSC report, together with the earlier task force study, details a “reliable factual basis for identifying the shortcomings of the present system.”

In July, the full 7th Circuit Court of Appeals ruled in Suesz v. Med-1 Solutions, LLC, 13-1821, that every township court was a judicial district. Under the Fair Debt Collection Practices Act, that means people could be sued only in the township where they live or where the transaction took place.

The Indiana Supreme Court amended the small claims rules on Jan. 1, 2014, to require proper venue for collections cases filed in the courts.

The report shows a decline of filings countywide of 8.7 percent between 2010 and 2013. During that time, case filings in Decatur Township fell almost 42 percent, and filings declined more than 29 percent in Washington Township and 23.5 percent in Center Township. Between 2012 and 2013, only one of the nine township courts showed an increase in case filings.

“Based upon this data and observations provided by local practitioners, there appears to have been a general movement of debt collection cases from the small claims courts to the Superior Court,” the report says. “In addition, because of the previous rule that permitted such cases to be filed in any of the townships the data likely also reflects movement of debt collection cases among the township courts.”

The report also collected unofficial case-filing statistics from January to April 2014, reflecting the period after the Supreme Court amended small claims rules to include venue. Compared to the same period one year earlier, filings declined about 84 percent in Franklin Township; 71 percent in Decatur Township; 47 percent in Pike Township; and 29.5 percent in Center Township. Overall, filings countywide declined more than 25 percent.

The report also shows that in two township courts – Center and Decatur – case dispositions fell by more than 50 percent between 2010 and 2013. From 2010 to 2012, expenditures in Center Township’s court rose more than 68 percent. Spending in Decatur Township declined during that time by almost 16 percent.

The Supreme Court’s recommendation to lawmakers includes a table of 14 statutes that would need to be amended or repealed to abolish the township courts, along with the relevant statutory amendments to establish small claims venues in Marion Superior Court.

The court advocates for an additional eight Marion Superior judges to hear small claims cases. The Marion Superior Executive Committee would determine staffing for the new small claims division.

“After years of studies and deliberation, it is time to implement reforms to ensure that small claims cases in Marion County are treated like small claims cases in other counties,” according to the court’s recommendations.•


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