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FDCPA Violation

7th Circuit Court of Appeals

Case Name: Ann Robbins v. MED-1 Solutions, LLC,

Case No.: 20-1343

Officials: SYKES, Chief Judge, and WOOD and BRENNAN, Circuit Judges.

Focus: FDCPA Violation

Ann Robbins defaulted on a small debt to an Indiana hospital system for services provided to her minor children. The hospital hired MED-1 Solutions, LLC (“MED-1”), to collect the debt. After MED-1 filed a small claims action, Robbins paid the debt but refused to pay attorney’s fees as required by the agreement she signed when the care was provided. MED-1 then incurred more attorney’s fees—the parties refer to these as “fees-on-fees”— as the small-claims proceeding moved forward for the purpose of recovering the attorney’s fees that were initially incurred. The small-claims court ordered Robbins to pay both the initial attorney’s fees and the fees-on-fees, and she appealed to the Marion County Superior Court. Under then existing Indiana law, the appeal initiated a de novo proceeding, so MED-1 filed a new complaint.

Meanwhile, just before the final hearing in small-claims court, Robbins filed suit against MED-1 in the Southern District of Indiana seeking damages under the Fair Debt Collection Practices Act (“FDCPA” or “the Act”), 15 U.S.C. §§ 1692–1692p. Among other claims, she alleged that MED-1 violated the Act by attempting to collect attorney’s fees and fees-on-fees that were not contractually owed. A magistrate judge stayed the case to await the outcome of the state proceedings. But the state-court case sat dormant for a long time. Perhaps because the stakes were so small, MED-1 didn’t pursue it, and the Superior Court eventually dismissed it for failure to prosecute.

Robbins then returned to federal court and revived the FDCPA case, and the parties filed cross-motions for summary judgment. As relevant here, Robbins raised res judicata, arguing that the state court’s dismissal order precluded MED-1 from claiming that the contract required her to pay attorney’s fees and fees-on-fees. In the alternative, she advanced a contractual argument that she was not required to pay fees-on-fees. These alternatives formed the basis of her FDCPA claim; she contended that MED-1 violated the Act by trying to collect sums she did not owe. The magistrate judge rejected these arguments and entered judgment for MED-1.

We affirm. The Superior Court’s dismissal order does not have preclusive effect here. And because Robbins’s contract with the hospital system required her to pay all collection costs, including attorney’s fees, MED-1 did not violate the FDCPA by attempting to collect fees-on-fees in the state-court proceedings.

Affirmed

Full Text

Derek A Hawkins is Corporate Counsel, at Salesforce.

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