New calls to abolish Marion County's Township small claims courts

Small claims court

For nearly a year, 13 Investigates showed you why the courts have come under fire including high attorney fees and allegations of favoritism toward debt collectors.

Now a new national audit and a Federal Appeals Court Ruling are fueling the fire for more change and a class action lawsuit.

Weeding out bad roots, recovering cancer patient Lisa Jones won't allow weeds to overtake her flower garden. She questions why it's taking Marion County's Township Small Claims Courts so long to get cleaned up.

"The number of people that have been hurt by this is just phenomenal," she said referring to her recent experience in the system. She's one of thousands ordered into Decatur Township Small Claims Court over outstanding medical debt.

During cancer treatment, she was forced to go to court on the southwest side even though her case had no connections there. She lives, works and receives treatment on the northeast side.

"It happens. It happens to so many people," Jones told 13 Investigates.

Now the 7th Circuit Court of Appeals in Chicago has ruled: no more.

The court reversed a pivotal 1996 case (Newsom v. Friedman, 76 F.3d 813) that said small claims courts were not separate judicial districts.

That meant debt collectors in Marion County could file in any township court, many of them opting for their favorites.

Now the 7th Circuit says:

"The correct interpretation of 'judicial district' is the smallest geographic area that is relevant for determining venue..."

In other words, debt collectors must file where the debt originated or where the person being sued lives.

"I think it's very substantial. If you violate the venue rules there's a significant monetary consequence," said Attorney Dan Edelman of Chicago who helped represent the Indiana case filed under the Fair Debt Collection Practice Act.

"It puts an end to abusive practices that tended to rise in major metropolitan areas," he added.

Edelman is talking about bulk filing practices like the ones 13 Investigates exposed last year in Decatur Township.

There we found one attorney filing thousands of lawsuits to collect medical debts never incurred in that township.

In that one court, attorney Derek Johnson charged a $450 attorney fee for each judgment and each time the person being sued failed to show up.

The Indiana Supreme Court changed court rules in January to stop the erroneous filings.

"I have believed from the beginning that what they were doing was not only unethical but against the law," said Jones.

"The Township small claims judges have been herculean in their efforts to clean this up. They've really done a wonderful job, but they need help," said Indiana Appeals Court Judge John Baker. He said the 7th Circuit ruling adds teeth to the Indiana Supreme Court rule. Still Baker doesn't think it goes far enough.

He wants to do away with the Township small claims courts altogether.

"No control of the court system by the Trustee. Courts were never intended to be money making operations for government," Baker told 13 Investigates.

Baker also pointed to a preliminary report from an independent audit by the National Center for State Courts as confirmation Marion County Township Small Claims Courts need for more than just pruning.

Lisa Jones is in agreement.

"I'm alive. I'm well. I'm doing great but not everybody has that story. I'm glad that they are doing something," said Jones with a sigh of relief.

Marion County Circuit Court Judge Louis Rosenberg, the advisor for Small Claims reserved comment until the final audit report from the NCSC is released.

Judge Baker turned over his recommendation to the Supreme Court. He said it will be up to lawmakers to take action next year.

In the meantime, the Chicago attorney who won the appeal said he's taking steps to create a class action lawsuit for all Marion County residents who were forced into courts outside of the legal venue.

If Township Small Claims Courts are abolished, Marion Superior Courts would establish a Small Claims Court that would be a part of the system in Marion County. The big difference is the Township Trustees would not control them. It would be the same type of system now operating in Indiana’s remaining 91 counties.