Wednesday, July 02, 2014

7th Circuit Court Of Appeals' Decision Shuts Down Forum Shopping By Debt Collectors In Marion County

The 7th Circuit Court of Appeals caught on to the unseemly practice of attorneys for creditors who forum shop among the nine small claims courts in Marion County's nine townships in filing their claims in courts where they know they've got a friendly judge on their side. Under a ruling handed down today in Suesz v. Med-1 Solutions, a majority panel of 7th Circuit judges decided that the Fair Debt Collection Practices Act requires creditors to file their claims in the township where a debtor resides or where the contract was made as opposed to any court of their choosing in Marion County, effectively ending the practice of forum shopping.

The case involved a collections company, Med-1 Solutions, which had been assigned to collect a debt owed to Community Hospital North by Mark Suesz, a resident of Hancock County. Community Hospital North is located in Lawrence Township. Med-1 sued Suesz in Pike Township Small Claims Court, presumably because it has a better relationship with the judge there, which entered a judgment against Suesz for $1,280. Suesz brought an action under the FDCPA alleging that Med-1 had a practice of filing its debt collection cases in townships in which neither the defendants resided or the contract was made. He also sought class action certification. Judge William Lawrence dismissed the case and Suesz appealed. An en banc hearing to review a three-judge panel opinion affirming Judge Lawrence's opinion was granted.

The FDCPA is designed to protect debtors from unscrupulous practices employed by debt collection attorneys, including the practice of filing claims in an inconvenient forum for the debtor in hopes of obtaining a default judgment for a debt the debtor may not actually be legally liable to pay. That's why the FDCPA requires the creditor to bring suit in the judicial district where either the debtor lives or the contract was signed. The term "judicial district" isn't defined and, in the past, courts have interpreted it to include any small claims court located in the county in which the debtor resided or the contract was signed, as opposed to a specific township. The original 7th Circuit panel of three judges which heard the appeal agreed that any of the nine township small claims courts in Marion County would suffice in Suesz' case. The en banc panel, reversed, after taking particular notice of a the 2012 Small Claims Court Task Force that found forum shopping abuses by creditor attorneys were a serious problem in Marion County.

A 1996 decision by the 7th Circuit had found that intra-county districts used in Cook County, Illinois to delineate venue for small claims courts did not constitute separate judicial districts within the meaning of the FDCPA. The 7th Circuit abandoned the rule it had approved in the earlier case, Newsom v. Friedman, and adopted an approach for defining a judicial district as one that "focuses on the state court venue rules faced by parties and lawyers, and the relevant geographic unit for applying those rules." The relevant "judicial district" under the FDCPA is defined as "the relevant judicial district or similar legal unity" that is "the smallest geographic area in the court system in which the case is filed." Med-1 asked that the Court apply the new rule prospectively, but the Court rejected that approach, noting that it's not engaged in writing laws like a legislature but exercising judicial authority. The Court reversed the district court's dismissal of the case and remanded to the Court, which should open the door for class action certification to remedy similarly-situated cases where debtors have been sued in a small claims court other than where the debtor lives or where the contract was signed. It's a pretty sweeping ruling that will greatly impact debt collection practices in Marion County and elsewhere in the 7th Circuit.

8 comments:

Anonymous said...

Nice to see this ruling. The 7th Circuit really needs to get the Indiana Southern District in line.

The Southern District gives Indianapolis a heavy pro-establishment tenor that stifles much vibrant economic activity that could occur here.



Anonymous said...

If Indiana does not create a Uniform court system and continues to allow a certain county to have small claims courts, this type of wrongdoing will continue.

It is time for The State to have a Uniform system of courts, so that justice is fair.

Why do some places have "Town Courts," "city courts," "small claims courts" (guess what county has them), some "Superior Courts" and every county has a Circuit Court???? There must be a uniform system of courts so that justice can prevail.

Anonymous said...

Did the Deft here reside in Marion County? I thought the opinion said that Deft. resided in Hancock County, which is a FDCPA violation.

Also, a good job of lawyering by Deft's attorney (whoever that was) by never giving up.

Anonymous said...

They make landlords file eviction actions in the township the property is located in, no exceptions. But these debt collectors can file all the way across the county, even if there’s no way a debtor could get to an 8:30 hearing in Pike Township by bus from a different side of town. Forum shopping isn’t the only problem with these debt collectors. They hammer out these pre-hearing settlements with the people who actually show up to court before the case is called and tell the judge the parties have reached agreement before the judge even has the chance to look it over. These lawyers ought not to be able to do this on the property grounds because it looks abusive, and you get these debtors who come all the way to court and they don’t get the benefit of really talking to the judge before these lawyers get them in a room and hammer out some agreement. Meanwhile busy landlords and tenants are sitting hours in the courtroom waiting while all these shenanigans are going on just to get a damn possession order that they could issue at the clerk’s desk without waiting weeks, taking half a day in court and having to come back a second time months later. Just who are these small claims courts supposed to help, anyway? Not the debtors. Not the landlords or tenants. Who?

Gary R. Welsh said...

The debtor lived in Hancock County. The contract was made in Lawrence Township where Community North Hospital is located, but the creditor brought the case in Pike Township.

Anonymous said...

You can’t sue an insurance company in small claims court, but they can sue you. I had an issue with an insurance company that wouldn’t pay for a window blown out in a storm even though I had to replace several. I tried to sue them in small claims court, because it was less than $2,000. But the court bounced that case up to what they call civil plenary court, a real superior court requiring formal papers and representation by lawyers, over my objection that this was a simple matter and in the court’s jurisdiction and less than the max amount of money in controversy. Nevertheless, it bounced up and I caved in and walked away. And the lawyer for the other side said “this is an insurance town”, they make it really hard to get anything from an insurance company, and the small claims courts won’t even handle claims because bouncing them up to superior court makes them expensive and complicated and all the people walk away. So think about that the next time you think about the fairness and impartiality of the Marion County Courts. Just try to sue your insurance company in small claims court and see what happens to you. Same runaround at the Dept. of Insurance. Try making a complaint. They run you through the mire, make you produce your receipts and everything, and then finally tell you to blow off even though you’re in the right because they protect the insurance companies. Period. Ask an insider about it and they’ll tell you the General Assembly protects insurance companies. Exempting them from Small Claims is only one small piece of evidence of that larger truth.

Anonymous said...

. . . Metropolitan Board of Realtors (MIBOR) explaining why they called in their favors and regretfully strong-armed an agreement that exempts all real estate professionals, defined as belonging to Mibor, from any forthcoming landlord registration requirements, meaning all city and county owned rental property will be exempt, all land bank property is exempt, all hospital and university rental property is exempt, all Section 8 property is exempt from anything more than the bull lies they report now, and all out of state owners are beyond the jurisdiction; so only local owners of rental properties will be funding this huge new city bureaucracy of inspecting rentals and fining owners for failures to be up to “code”, a lawsuit in the making for treating different property owners differently that has been invalidated as unconstitutional in several other states. So all politically well connected owners with lobbyists in Indianapolis are exempt while all retirees living off the income from their properties are hammered, and that includes black landlords, and there are thousands in Indianapolis. CCC members say there will be no inspections, but that’s a patent lie they should stop repeating. There are huge, expensive “compliance” reports that have to be provided the city by every landlord that will require a professional inspector to prepare, and landlords have also to affirm under oath that they are not in violation of any code (there are thousands), or penalties will attach. So, tearfully, the MIBOR explains that their members must be exempted from the draconian reporting requirements and enormous expenses such rules would require from their members, but that the mom and pops are fair game to raise money from. And one last blast, most of the boarded up buildings in Marion County are owned by the Indianapolis land bank, the single largest owner of boarded up buildings in the state of Indiana, and they will be exempt from registration and inspection requirements. So these Democrat ccc members, expect to be called to task for brutalizing your black, middle class landlords with this program you think will ease blight. It will only raise rents and force thousands of rentals into the Section 8 program.

Anonymous said...

Attorney Dan Edelman up in Chicago and his firm happen to be some of the best consumer class action lawyers in the country. Great job Dan in the Suesz en banc decision handed down by the 7th Circuit on July 2, 2014. It certainly will help to end abusive debt collection practices in Marion County Township Small Claims Courts.