July 18, 2014 | dan The following is from the Indianapolis Star: Judges call for an end to Marion County’s small claims court system Marisa Kwiatkowski, email@example.com:48 p.m. EDT July 12, 2014 37CONNECTTWEET 6LINKEDIN 5COMMENTEMAILMORE Traveling even a short distance is difficult for 68-year-old Richard Bovey. The Indianapolis man suffers from myriad health problems that make it painful to walk. So when he received notice that he was being sued in a small-claims court in Decatur Township, a 40-minute drive from his home near Geist Reservoir, it was more than just an inconvenience. Bovey, who disputed his hospital bill, said he couldn’t understand why the case was filed in Decatur Township in southwest Marion County, when both he and the hospital that claimed he owed the money are in Lawrence Township, in the northeast corner of the county. Was it to inconvenience Bovey and make it easier for the hospital to receive a judgment? Did the company have a special relationship with that court? Such allegations have plagued Marion County’s unique small claims court system for at least 20 years. That long-standing perception of bias resulted in numerous lawsuits and caused the Indiana Supreme Court to step in in January to ban some common practices allowed in the tiny township courts. “Some creditors have an unhealthy close relationship in the courts where they could file without restriction,” said Marion Circuit Court Judge Louis Rosenberg, who supervises the county’s nine township-based small claims courts. “They no longer enjoy that cozy relationship.” Now, a task force appointed by the Supreme Court has recommended Marion County’s township courts be abolished, which would be a financial hit to township government. Defenders of township government in Marion County consider the idea “preposterous.” And the small claims judges vehemently deny special treatment for debt collectors, saying companies chose to file in their courts because they are efficient and fair. But as lawsuits wend their way through the federal courts, some companies that operated under the old rules could face judgments in tens of thousands of cases, at a potential cost of millions of dollars. Company practices A case involving an Indianapolis-based truck-driving school perhaps offers the best example of how company practices can tarnish the courts’ image. For years, Driver Solutions attracted prospective students with offers of company-paid tuition and “great-paying” careers, yet it filed more than 12,500 small-claims cases against former students between 2008 and 2013. The company secured millions of dollars in judgments relating to unpaid tuition and interest, some of it from out-of-state students who did not appear in court. Over one three-year period, Driver Solutions accounted for nearly 19 percent of the cases filed in Franklin and Warren townships’ small-claims courts, a Star review found. The number of claims filed in Warren Township had been so high that Judge Garland Graves had dedicated Mondays to hearing only the company’s cases. A Star investigation published last year examined whether defendants, some of whom lived thousands of miles from Marion County, were properly notified they were being sued before judgments were ordered against them. But Driver Solutions is not the only company to file large numbers of cases in particular courts. Debt collectors for hospitals also have been high-volume filers, raising questions about “cozy relationships” with the courts. At least one township judge bristles at such allegations. “Cozy relationships? I am so sick and tired of those words being thrown around,” said John Kitley Jr., the Franklin Township small claims court judge. “That would violate every oath I’ve ever taken.” But recent attempts to reform the system only added to the notion that companies might be shopping for friendly courts. On Jan. 1, the Supreme Court began requiring debt collectors in Marion County to file their cases in the township where the person accused of owing money lives, works or signed the contract. The result was dramatic. The number of new cases filed in Franklin Township Small Claims Court between Jan. 1 and April 30 dropped 83.7 percent from the same time period the year before. In Decatur Township, the number of new cases declined 70.7 percent. Overall, small claims filings are down. But Rosenberg said the significant drops in Decatur and Franklin townships say something about the system. He said the two judges in those courts probably handled their cases as best they could. But the high volume of cases by particular companies fosters an appearance of bias. Attorney Phillip LaMere denies any court-shopping shenanigans. He said debt collectors and lawyers put as many lawsuits as possible in one judicial district or county to save money and for their own convenience, rather than to game the system. “To think that a consumer collection firm or plaintiff’s firm would take the time, when they’re filing hundreds and hundreds of lawsuits, to figure out where a debtor lives in one township within Marion County so that we can somehow put them to some onerous chore to get to court that will afford us some sort of a benefit is ridiculous,” LaMere said during a 2012 public hearing about Marion County’s small claims courts. Myron Hockman, the small claims court judge in Decatur Township, did not return calls seeking comment. Kitley said he was “devastated” by the insinuation that the decline in cases filed in his court indicated special treatment. ‘End of the problem’ Now, a recent federal appellate court opinion exposes debt collectors that operated under the old rules to potential liability. The appellate court opinion relates to the federal case filed by Hancock County resident Mark Suesz. Suesz sued debt collector Med-1 Solutions in 2012, claiming the company violated the Fair Debt Collection Practices Act by filing a small-claims suit against him in a place where he didn’t live and hadn’t signed the contract. The case was filed in Pike Township, while the hospital where Suesz allegedly owed money is in Lawrence Township. U.S. District Court Judge William Lawrence dismissed Suesz’s lawsuit based on a federal appellate court opinion from 1996, which said township courts were part of the Marion County judicial district and were not districts of their own. That distinction matters because, under the Fair Debt Collection Practices Act, consumers must be sued in the judicial district in which they live or signed the contract. Suesz appealed and, on July 2, the Seventh Circuit Court of Appeals agreed with him, ruling that each township is its own judicial district. Now his case against Med-1 Solutions can move forward, and his lawyer is seeking class-action status. If Suesz’s suit succeeds, that could add up to millions of dollars in damages. The Court of Appeals also made its decision retroactive, meaning debt collectors that had relied on the older opinion could be challenged. Suesz’s attorney, Daniel A. Edelman, said the court’s opinion will have the largest impact on small-claims cases filed in Marion County and Cook County, Ill. Both counties have courts with geographic subdivisions and a high volume of debt collection cases. Francis Niper, attorney and chief compliance officer for Med-1 Solutions, said the company is reviewing the court’s opinion and will decide whether to appeal. Who handles reforms? Indiana Appellate Court Judge John Baker said he hopes the federal opinion may be the final push needed to reform Marion County’s small-claims system. The Marion County Small Claims Task Force, which was set up to study issues in the courts, said it is time to abolish Marion County’s township courts. “The evidence is becoming pretty overwhelming that reform is required,” said Baker, who serves on the task force with Senior Judge Betty Barteau. On Wednesday, Baker and Barteau sent a letter to Supreme Court Chief Justice Brent Dickson that proposes the General Assembly shift jurisdiction of small-claims cases to the Marion Superior Courts. Such a plan would require additional judges, clerks and hearing officers, they said. A preliminary report by the Court Consulting Division of the National Center for State Courts makes a similar recommendation. But the courts also have strong defenders. Attorney Richard Gonon, who handles consumer and commercial debt collection cases, said legislators should exercise caution when considering sweeping changes. “I think that’s absolutely ludicrous, preposterous,” he said of abolishing the township courts. Gonon said he believes the system works well and that claims to the contrary have been sensationalized. Judge Kitley said recommendations to abolish the courts are an extension of a long-standing push by some to abolish township government. But while he vehemently argues there is no impropriety in the courts, even Kitley said the perception of it should be corrected. He and several other township judges have proposed their own plan to reform Marion County’s small claims courts. Their proposal, which Kitley acknowledged will need to be tweaked in light of the recent federal appellate court opinion, calls for the courts to have a centralized filing system that would randomly assign cases as well as other reforms. “Move forward,” Kitley said. “Let’s give the legislature something to stop all this.” Sen. Brent Waltz, R-Greenwood, said he isn’t convinced the courts need reform that would require legislative action. “This is classic case of chopping off an arm because you have a hangnail,” Waltz said. “It’s become very clear to me that the township courts provide a tremendous value to the taxpayer. If we abolish small claims courts and add additional superior courts in Marion County, the additional expense taxpayers would have to incur would be significant. And I’m not convinced they would receive any better justice in the superior court than they would in the small claims court.” State Rep. Ed DeLaney, D-Indianapolis, said the problem with reforming the system is figuring out how to do it without losing the benefit of multiple locations and low expenses in those courts. “The bottom line is if the public and the courts themselves and the supervising courts, if they all want change, there’s going to have to be discussion of that in the (House Judiciary) committee,” DeLaney said. “I’d welcome discussion of how we improve these things.” Call Star reporter Marisa Kwiatkowski at (317) 444-6135. Follow her on Twitter: @IndyMarisaK.