FDCPA Claim is Dismissed When Resolution of Claim Will Necessarily Result in Review of State Court Judgment
KELLEY v. MED-1 SOLUTIONS (November 25, 2008)
Brian Kelley received medical treatment at St. Vincent Carmel Hospital (“St. Vincent”). When Kelley failed to pay for the services, St. Vincent hired Med-1 Solutions, LLC (“Med-1”) to collect the amounts due. Although St. Vincent always owned the debt, it gave Med-1 the right to collect it. Med-1 sued Kelley in an Indiana small claims court. It attached documents to the small claims court form which indicated that the debt was owed to St. Vincent. Med-1 also attached Kelley’s financial responsibility form he had signed prior to receiving medical treatment. That form provided for payment of “reasonable attorney fees” if the debt was assigned to a collection agency. St. Vincent paid Med-1’s fees and costs and a percentage of the amount collected. Med-1’s in-house attorneys received a percentage of the attorney fees collected by Med-1. Med-1 obtained a judgment against Kelley for $892.09. Kelley and several others in a similar situation brought suit against Med-1, its owner, and its in-house attorneys. Plaintiffs alleged violations of the Fair Debt Collection Practices Act (“FDCPA”), claiming that Med-1 was not entitled to attorney fees and that its claims that it was were false and deceptive. The district court dismissed the complaint. Plaintiffs appeal.
In their opinion, Judges Bauer, Flaum and Williams affirmed. The issue before the Court was whether the case was controlled by the Rooker-Feldman doctrine. That doctrine, taken from two Supreme Court decisions, Rooker v. Fidelity Trust Co. and District of Columbia Court of Appeals v. Feldman, prohibits a lower federal court review of a decision of a state court. Plaintiffs attempted to avoid the application of Rooker-Feldman by characterizing their complaint as one attacking defendants’ representations and requests for attorneys fees, not the actual state court judgment awarding the fees. The Court did not accept the distinction. It concluded that if it found that defendants were not entitled to fees and therefore violated the FDCPA, it was also determining that the state court judgments were in error. The Court next addressed the “reasonable opportunity” exception to the Rooker-Feldman doctrine. Plaintiffs contended that they were unable to raise their FDCPA claims in the Indiana small claims venue. The Court disagreed. The plaintiffs could have transferred their case out of the small claims venue and litigated their FDCPA claims. The Court concluded that plaintiffs had a “reasonable opportunity” to litigate their claims and their complaint was properly dismissed. In addition, the Court questioned the continued viability of the “reasonable opportunity” exception since the Supreme Court’s decision in Exxon Mobil Corp. v. Saudi Basic Industries.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select