DARDEN, Judge.
Brian J. Kelley, Denise D. Boyd, Yvonne S. Emous, Bertie M. Housley, and Bruce E. Kennedy (collectively, the "Debtors") appeal the trial court's entry of summary judgment in favor of Med-1 Solutions, LLC, William J. Huff, Francis Niper, Courtney Gaber, and Richard Huston (collectively, "Med-1").
We affirm.
The Debtors raise the following issue:
Med-1 raises the following issue:
Med-1 is a collection agency licensed in Indiana. Indiana Code section 25-11-1-1 defines a "collection agency" as "any individual, firm, partnership, limited liability company, or corporation" that "engag[es] directly or indirectly and as a primary or secondary object, business, or pursuit, in soliciting claims for collection, or in the collection of claims owed or due or asserted to be owed or due to another. . . ." Ind.Code § 25-11-1-1(a), (b). "Collection agency" also includes "any person who sells, furnishes, or maintains a letter or written demand services . . . designed for the purpose of making demand on any debtor on behalf of any creditor for the payment of any claim. . . ." Id.
Huff is the owner of Med-1, which employs Niper, Gaber, and Huston as in-house counsel. Med-1 collects delinquent debts on behalf of medical providers, including St. Vincent Carmel Hospital, Inc. ("St. Vincent") and Rush Memorial Hospital ("Rush Memorial"). In addition to collecting on delinquent accounts on behalf of its clients, Med-1, as a letter vendor, also produces and mails debt collection letters on behalf of, and in the name of, its clients.
At some point, Med-1 and St. Vincent entered into a contract, whereby they agreed, in part, to the following:
(Debtors' App. 150-51). Med-1 and Rush Memorial entered into a contract, whereby they agreed, in part, to the following: "Med-1 agrees to attempt to collect balances from patients using all available legal means, including, but not limited to, sending legal letters, calling patients, filing suit, and garnishing wages." (Debtors' App. 154).
On January 8, 2004, Kennedy signed an "Assignment of Benefits Authorization," agreeing to pay Rush Memorial "for all charges not paid by assigned insurance." (Debtors' App. 67). In the event Rush Memorial assigned his account to a collection agency, Kennedy also agreed to "be responsible for the total of the unpaid balance" and "any court costs or reasonable attorney fees. . . ." (Debtors' App. 67).
Subsequently, Rush Memorial referred four of Kennedy's accounts to Med-1 for collection. Accordingly, Med-1 mailed correspondence to Kennedy on January 21, 2004, February 19, 2004, March 22, 2004, and April 16, 2004, wherein it identified itself as a collection agency, collecting debt on behalf of Rush Memorial. Counsel for Med-1 signed the collection notices.
On February 17, 2006, Med-1 filed a notice of claim against Kennedy in the Rush Superior Court, Small Claims Division. Med-1 sought judgment in the amount of $3,778.80, which included attorney fees in the amount of $350.00. On or about March 20, 2006, Med-1 and Kennedy entered into a pre-trial settlement, whereby Kennedy agreed to pay Med-1 $3,848.80. The trial court approved the settlement agreement on March 27, 2006. Kennedy subsequently acknowledged that he knew that Med-1's requests for payment were on behalf of Rush Memorial.
On November 23, 2004, Housley signed a form, acknowledging her financial responsibility for all charges incurred due to medical services provided by St. Vincent. This form read, in part, as follows: "If your account is forwarded to a collection agency or attorney . . . you are responsible for any court costs or reasonable attorney fees incurred in the collection of your account." (Debtors' App. 63). Housley incurred charges under three separate accounts.
Between May 2, 2005, and July 15, 2005, Med-1, on behalf of St. Vincent and in St. Vincent's name, sent Housley a "Pre-Collection Agency Review Notice," for each account, notifying her that her "account has been referred to the St. Vincent Collection Department."
After St. Vincent referred the three accounts to Med-1 for collection, Med-1 mailed Housley correspondence, identifying itself as a debt collector representing St. Vincent in its attempt to collect a debt from Housley. Counsel for Med-1 signed the correspondence.
On August 15, 2006, Med-1 filed a notice of claim against Housley in the Hamilton Superior Court, Small Claims Division. Med-1 sought judgment in the amount of $2,336.45, which included attorney fees in the amount of $375.00. The notice included a copy of the Acknowledgment of Financial Responsibility form signed by Housley as well as an account summary of her accounts with St. Vincent. On November 1, 2006, the trial court entered a default judgment against Housley in the amount of $2,336.45, plus court costs. Housley never denied owing the debt to St. Vincent and later admitted during a hearing that she "knew that Med-1 was trying to collect the bill for St. Vincent." (Med-1's App. 219).
On March 18, 2005, prior to receiving treatment at St. Vincent, Yvonne Emous signed a standard form, titled "Acknowledgment of Financial Responsibility," which provided as follows:
(Med-1's App. 27) (Emphasis added).
On November 22, 2005, St. Vincent sent Emous a request for payment in the amount of $7,966.62, due December 6, 2005. On December 26, 2005, St. Vincent sent Emous a final notice that her account was past due and had incurred a late fee of $20.00. St. Vincent informed Emous that failure to pay her account in full by January 9, 2006, would result in "placement of [her] account with a collection agency." (Med-1's App. 69).
In St. Vincent's name and on behalf of St. Vincent, Med-1 sent Emous a Pre-Collection Agency Review Notice and a Collection Agency Referral Notification on June 20, 2005, and July 5, 2005, respectively. On July 27, 2005, Med-1 sent Emous notice that, as a debt collector representing St. Vincent, it was attempting to collect a debt from Emous. Counsel for Med-1 signed the correspondence.
On August 15, 2006, Med-1 filed a notice of claim against Emous in the Hamilton Superior Court, Small Claims Division. Med-1 sought judgment in the amount of $3,573.50, which included attorney fees in the amount of $375.00. The notice included a copy of the Acknowledgment of Financial Responsibility form signed by Emous as well as an account summary of Emous' accounts with St. Vincent. On September 6, 2006, the trial court entered a default judgment against Emous in the amount of $3,573.50, plus court costs.
On October 23, 2005, Kelley received medical treatment at St. Vincent. Prior to
On January 30, 2006, St. Vincent sent Kelley a request for payment in the amount of $537.09, due February 13, 2006. On March 3, 2006, St. Vincent sent Kelley a final notice that his account was past due and had incurred a late fee of $20.00. St. Vincent informed Kelley that failure to pay his account in full by March 17, 2006, would result in "placement of [his] account with a collection agency." (Med-1's App. 29).
On March 22, 2006, Med-1, on behalf of St. Vincent and in St. Vincent's name, sent Kelley a Pre-Collection Agency Review Notice. On April 10, 2006, Med-1, again on behalf of St. Vincent and in St. Vincent's name, sent Kelley a Collection Agency Referral Notification. On May 2, 2006, Med-1 sent a letter to Kelley, identifying itself as a debt collector representing St. Vincent in its attempt to collect a debt from Kelley. Counsel for Med-1 signed the letter.
On October 31, 2006, Med-1 filed a notice of claim against Kelley in the Hamilton Superior Court, Small Claims Division, seeking $432.09 for his "[u]npaid [m]edical [b]ill" and $375.00 in attorney fees "per contract. . . ." (Debtors' App. 43). The notice included a copy of the Acknowledgment of Financial Responsibility form signed by Kelley as well as an account summary of Kelley's St. Vincent account. On January 19, 2007, Med-1 and Kelley entered into an agreed judgment in the amount of $892.09.
On January 28, 2006, Boyd signed an Acknowledgment of Financial Responsibility prior to receiving treatment at St. Vincent. Boyd, either as the patient or responsible party, subsequently incurred medical bills under three separate account numbers. Between February 13, 2006, and April 10, 2006, Med-1, on behalf of St. Vincent and in St. Vincent's name, sent Boyd a Pre-Collection Agency Review Notice for each account. Thereafter, Med-1 sent Boyd three Collection Agency Referral Notifications, one for each account. Med-1 sent these in St. Vincent's name and on behalf of St. Vincent. After St. Vincent referred Boyd's accounts to Med-1 for collection, Med-1 mailed Boyd correspondence on March 25, 2006, April 4, 2006, and June 13, 2006, in which it identified itself as a debt collector representing St. Vincent in its attempt to collect a debt from Boyd. Counsel for Med-1 signed the correspondence.
On October 31, 2006, Med-1 filed a notice of claim against Boyd in the Hamilton Superior Court, Small Claims Division. The notice included an account summary for each of Boyd's past due St. Vincent accounts. On January 25, 2007, the trial court entered a default judgment against Boyd in the amount of $365.00, plus court costs. The default judgment included attorney fees in the amount of $150.00. Boyd acknowledged that she knew Med-1 was attempting to collect a debt on behalf of St. Vincent.
At some point in 2006, counsel for the Debtors in this matter filed a complaint on behalf of complainant William Beeson against Med-1 in the United States District Court, Southern District of Indiana after Beeson and Med-1 had settled Med-1's small claims dispute against Beeson for an unpaid hospital bill. In the districtcourt action, Beeson alleged that "Med-1's knowing failure to name the real owner of the debt, St. Vincent, as plaintiff in its small claims complaint was a false and misleading act under the [Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692o
On May 7, 2008, while the federal action was pending, the Debtors herein filed an amended complaint for damages and injunctive relief against Med-1 in Marion Superior Court. The Debtors asserted that Med-1 violated the FDCPA by collecting attorney fees to which it was not entitled and sharing the attorney fees with its employees. The Debtors also sought relief from judgment, asserting that Med-1 "was never a bona fide purchaser for value of the accounts being sued upon," and "there was no statutory or contractual basis for the courts to award Med-1 judgments that included attorney fees and/or costs." (Debtors' App. 32). In addition, the Debtors asserted constructive fraud, purporting that Med-1 "failed to disclose to the Small Claims Courts the fact that Med-1 did not own the accounts upon which it sued the consumer-debtors"; "misrepresented . . . the true value of their `reasonable attorney fees'"; and never disclosed "the existence of their attorney fee-sharing agreement." (Debtors' App. 33-34). The Debtors sought certification as a class to proceed on behalf of all other similarly situated debtors. The Debtors also sought injunctive relief, which the trial court denied following a hearing.
On July 7, 2009, Med-1 filed a motion for summary judgment, designated evidence, and memorandum in support of its motion for summary judgment. In support of its argument that Med-1 was entitled to summary judgment as to the Debtors' claim of misrepresentation, Med-1, inter alia, cited to the district court's holding in Beeson.
As to Med-1's alleged false representation, the Beeson-court found that Med-1 "made no `literally false statement' or any false representation at all" as it had "attached to and thus incorporated in the complaint a bill clearly indicating that St. Vincent owned the debt" and that Med-1's correspondence to Beeson had informed him "that his debt was being referred, and not sold, to Med-1." Beeson, 2008 WL 4443224, at *4. As to the alleged demand of interest on Beeson's debt, the district court found no violation of the FDCPA. Regarding the totality of Med-1's actions, the district court found as follows:
Beeson, 2008 WL 4443224, at *6 (footnote omitted). The district court also determined that the FDCPA did not require Med-1, in its small claims notices, to clarify that it was filing suit as an agent of St. Vincent. Beeson, 2008 WL 4443224, at *6 n. 8. Finding no genuine issue of material fact and that the facts clearly established that Med-1 did not violate the FDCPA or Indiana law, the district court granted summary judgment in favor of Med-1 in an opinion handed down in September of 2008. Accordingly, the district court also decertified the previously certified plaintiff class. Beeson did not appeal.
On August 26, 2009, the Debtors filed a motion for partial summary judgment and opposition to Med-1's motion for summary judgment. The trial court held a hearing on the parties' motions on October 30, 2009. On June 9, 2010, the trial court entered its order, finding, in pertinent part, as follows:
See Order attached to Debtors' Br. (internal citations omitted).
The Debtors assert that the trial court erred in granting summary judgment in favor of Med-1. Specifically, they argue that 1) Med-1's filing of small claims notices "in its own name on accounts that it did not own" and "demand[ing] and collect[ing]" attorney fees from the Debtors violated the FDCPA; 2) their claims are not barred by res judicata or collateral estoppel; and 3) Med-1 committed fraud in suing on accounts that it did not own. Debtors' Br. at 4.
When reviewing a grant or denial of summary judgment, our well-settled standard of review is the same as it was for the trial court: whether there is a genuine issue of material fact, and whether the moving party is entitled to judgment as a matter of law. Landmark Health Care Assocs., L.P. v. Bradbury, 671 N.E.2d 113, 116 (Ind.1996). Summary judgment should be granted only if the evidence sanctioned by Indiana Trial Rule 56(C) shows that there is no genuine issue of material fact and the moving party deserves judgment as a matter of law. Ind. T.R. 56(C); Blake v. Calumet Const. Corp., 674 N.E.2d 167, 169 (Ind.1996). "A genuine issue of material fact exists where facts concerning an issue which would dispose of the litigation are in dispute or
"The fact that the parties make cross-motions for summary judgment does not alter our standard of review. Instead, we must consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law." Indiana Farmers Mut. Ins. Group v. Blaskie, 727 N.E.2d 13, 15 (Ind.Ct.App.2000).
The Debtors argue that Med-1 violated section 1692e of the FDCPA when it filed the notices of small claims in its own name and sought attorney fees. We disagree.
One of the purposes of the FDCPA is "to eliminate abusive debt collection practices by debt collectors. . . ." 15 U.S.C. § 1692(e). Thus, the FDCPA provides that a "debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. It is a violation of section 1692e to falsely represent "the character, amount, or legal status of any debt" or falsely represent "any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt." 15 U.S.C. § 1692e(2)(A), (B). Also, section 1692f(1) prohibits the "collection of any amount (including any . . . fee . . .) unless such amount is expressly authorized by the agreement creating the debt or permitted by law."
The Debtors make a convoluted argument that Med-1 violated the FDCPA by suing the Debtors "in its own name on accounts that it did not own," thereby misleading the Debtors. Debtors' Br. at 6. The Debtors, however, do not dispute the validity of the debts owed by them or Med-1's authority to collect the debts on behalf of its clients.
"Practices purported to violate the [FDCPA] must be viewed from the objective standard of `unsophisticated debtor.'" Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir.2000). The "unsophisticated debtor" is one who possesses "rudimentary knowledge about the financial world, is wise enough to read collection notices with added care, possesses `reasonable intelligence,' and is capable of making basic logical deductions and inferences." Id. According to this standard, objectively, a statement would not be considered confusing or misleading "unless a significant fraction of the population would be similarly misled." Id.
In filing its claims, Med-1 did not purport or represent that it owned the debts owed by the Debtors. Rather, the exhibits attached to the small claims complaints filed in Hamilton Superior Court clearly identified that Med-1's claims were based on debts owed on St. Vincent's accounts, which were referred to Med-1 for collection.
Furthermore, prior correspondence from Med-1 clearly identified Med-1 as a collection agent of the respective medical providers, representing said medical providers. As a matter of undisputed fact, all of the correspondence from Med-1 plainly identified Med-1 as a collection agency or debt collector, collecting accounts on behalf of its named clients. We therefore cannot say that Med-1 made false, deceptive or misleading representations as to its status.
As to the Debtors' speculation regarding what they or other "unsophisticated consumers" are expected to know, see Debtors' Br. at 11-12, they have failed to present sufficient evidence to create a genuine factual issue for trial. See Pettit, 211 F.3d at 1061-62 (finding no genuine issue for trial where the debtor "merely speculate[d] about how a naive debtor would interpret [a] letter" from a collection agency). We therefore find no error in granting summary judgment in favor of Med-1 on this issue.
The Debtors maintain that Med-1 violated the FDCPA by collecting attorney fees to which it was not entitled. They argue that "[s]ince there is no written agreement between Med-1 and the [Debtors] for the payment of attorney fees, [Med-1] violate[d] § 1692f [of the FDCPA] when it . . . collect[ed] attorney fees from the [Debtors]."
Again, section 1692f(l) of the FDCPA prohibits the "collection of any amount (including any . . . fee . . .) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." The designated evidence shows, and the Debtors do not dispute, that each of the Debtors had entered into an agreement with their medical providers, whereby they acknowledged that their accounts may be forwarded to a collection agency, in the event of which they agreed to be responsible for "reasonable attorney fees," incurred in the collection of their accounts. (See, e.g., Debtors' App. 56, 63, and 67).
The agreements between Med-1 and its clients created an agency relationship by which Med-1 could pursue claims, including those for attorney fees, against the Debtors. See Mut. Hosp. Serv., Inc. v. Burton, 695 N.E.2d 641, 644 (Ind.Ct.App. 1998) (finding that where the creditor has granted express authority to its agent, the collection agency, to collect accounts, the collection agency may file claims to do so). Accordingly, we cannot say that, as a matter of law, the trial court erred in granting Med-1 summary judgment. See Spears v. Brennan, 745 N.E.2d 862, 872 (Ind.Ct. App.2001) (stating that an attorney hired by a creditor is not prohibited as a matter of law from seeking attorney fees and merely requesting attorney fees in a debt collection claim against a debtor does not violate the FDCPA).
The Debtors maintain that their claims are not barred by res judicata or collateral estoppel.
TacCo Falcon Point, Inc. v. Atl. Ltd. P'ship XII, 937 N.E.2d 1212, 1218-19 (Ind. Ct.App.2010) (internal citations omitted). "A default judgment is a judgment on the merits for the purposes of res judicata." Eichenberger v. Eichenberger, 743 N.E.2d 370, 374 (Ind.Ct.App.2001).
Citing to Indiana Small Claims Rule 11(F), the Debtors argue that the doctrine of res judicata does not apply because they are not disputing the amounts of the judgments entered against them, only the manner in which Med-1 obtained the judgments. Namely, the Debtors challenge Med-1's collection of accounts it did not own and demand for attorney fees "from consumer debtors even though it had no contractual right to make such demand." Debtors' Br. at 14.
Small Claims Rule 11(F) provides: "A judgment shall be res judicata only as to the amount involved in the particular action and shall not be considered an adjudication of any fact at issue in any other action or court."
In re Ault, 728 N.E.2d 869, 872 (Ind.2000) (internal citation omitted).
As noted, the Debtors do not dispute that they owe on their accounts or that they owe attorney fees; in fact, the Debtors do not seek to have the judgments entered against them set aside.
Regarding actions for violations of the FDCPA, this court has held that a plaintiff who brings a claim based on the manner in which a defendant brought an action in small claims court may bring such claim in an "independent action" and is not barred by res judicata. See Watson v. Auto Advisors, Inc., 822 N.E.2d 1017, 1028 (Ind.Ct.
Nevertheless, even if the Debtors' FDCPA claims are not barred by res judicata, we cannot say that the trial court erred in granting summary judgment in favor of Med-1 and against the Debtors. As discussed above, the manner in which Med-1 filed the small claims complaints against the Debtors did not violate the FDCPA.
The Debtors also assert that the trial court improperly entered summary judgment in favor of Med-1 on their independent action for relief from judgment for fraud on the court due to Med-1's alleged failure to "disclose[] to the Small Claims Court the fact that Med-1 did not own the accounts, or that Med-1 did not have an independent agreement with the [D]ebtors for the payment or collection of attorney fees." Debtors' Br. at 17. We disagree.
Trial Rule 60(B) provides, in pertinent part, as follows:
Trial Rule 60(B) "does not limit the power of a court to entertain an independent action to relieve a party from a judgment. . . for fraud upon the court." Further, independent actions are not limited to the one-year filing requirement under Trial Rule 60(B)(3). See Stronger v. Sorrell, 776 N.E.2d 353, 356 (Ind.2002).
In order to prevail on a claim of fraud on the court, a party "must establish that an unconscionable plan or scheme was used to improperly influence the court's decision and that such acts prevented the losing party from fully and fairly presenting its case or defense." Id. at 357. "Fraud on the court has been narrowly applied and is limited to the most egregious of circumstances involving the courts." Id.
The party seeking to have a judgment set aside carries the burden of proving fraud on the trial court. See id. at 358. "To prove fraud on the court, it is not enough to show a possibility that the trial court was misled." Id. "Rather, there must be a showing that the trial court's decision was actually influenced." Id.
Here, the Debtors presented no evidence that the manner in which Med-1 filed claims against the Debtors influenced or misled the small claims courts. Moreover, the Debtors presented no evidence that Med-1 engaged in any action that prevented the Debtors from fully and fairly
Finally, Med-1 requests appellate attorney fees pursuant to Rule 66(E) of the Indiana Rules of Appellate Procedure, which states that this court "may assess damages if an appeal, petition, or motion, or response, is frivolous or in bad faith. Damages shall be in the Court's discretion and may include attorneys' fees."
Poulard v. Laporte County Election Bd., 922 N.E.2d 734, 737-38 (Ind.Ct.App.2010) (internal citations omitted).
Bad faith on appeal may be "substantive" or "procedural." Id. at 738. Med-1 accuses the Debtors of both.
Procedural bad faith consists of the flagrant disregard for the form and content requirements of our rules; the omission and misstatement of relevant facts appearing in the record; and the filing of "briefs appearing to have been written in a manner calculated to require the maximum expenditure of time both by the opposing party and the reviewing court." Harness v. Schmitt, 924 N.E.2d 162, 168 (Ind.Ct. App.2010). While the Debtors failed to comply fully with our appellate rules and may have omitted relevant facts, we cannot say that their acts are so flagrant or significant as to warrant the imposition of attorney fees.
As to the substantive bad faith claim, Med-1 must show "that the appellant's contentions and argument are utterly devoid of all plausibility." Id. "Substantive bad faith `implies the conscious doing of wrong because of dishonest purpose or moral obliquity.'" Id. (quoting Wallace v. Rosen, 765 N.E.2d 192, 201 (Ind.Ct.App. 2002)). Although the Debtors' arguments on appeal fail, we cannot say that their arguments are "utterly devoid of all plausibility." Poulard, 922 N.E.2d at 738. We therefore deny Med-1's request for attorney fees.
In conclusion, we find that the trial court properly granted Med-1's motion for summary judgment and denied the Debtors' motion for partial summary judgment; and we decline to award Med-1 appellate attorney fees.
Affirmed.
RILEY, J., and BARNES, J., concur.
