Small Claims Courts are Not Judicial Districts Subject to Section 1692i of FDCPA

Brad Council

The matter of Mark Suesz v. Med-1 Solutions, LLC, came before the United States District Court, S.D. Indiana, Indianapolis Division on March 21, 2013 whereby the court concluded that the Indiana judicial structure provides that the Circuit Courts are considered “judicial districts” for purposes of the required venue provisions in the Fair Debt Collection Practices Act, 15 U.S.C. § 1692i, but township small claims courts are not.

Plaintiff Suesz brought a putative class action suit against Med-1 claiming that Med-1 filed in the wrong judicial district in violation of the Federal Debt Collection Practices Act (FDCPA).  The FDCPA in 15 U.S.C.§ 1692i states that the action to collect a debt must be brought “only in the judicial district or similar legal entity in which such consumer signed the contract sued upon; or in which such consumer resides at the commencement of the action.”  The key issue in this matter is that of judicial district.  While Med-1 contends bringing the action in Marion County albeit not in the small claims court where the debtor lives, is the correct venue, Suesz believes that the district scope should be narrowed to a township small claims court.

In Indiana,  Article 7 of the State’s constitution provides that the state is divided into judicial circuits.  The Circuit Court Judge may transfer a small claims case from one township to another. This ability somewhat blurs the lines of jurisdiction as it relies on the discretion of the judge and suggests that the rules of jurisdiction are rules of administrative convenience.   Ind. Code §33-34-5-3 allows the small claims judges to sit in place of one another and perform each other’s duties at the direction or approval of the Circuit Court Judge.

The same issue was addressed by the Seventh Circuit in Newsom v. Friedman, 76 F. 3d 813 (7th Cir. 1996 813 (7th Cir. 1996), with respect to Illinois courts.  According to Newsom, the district court found that the FDCPA required the debt collector to file in the appropriate Circuit Court, but did not further require him to file in any particular sub-district within the Circuit Court.  Of particular importance in Newsom was the local rule which provided for the trial of a proceeding in any Circuit Court regardless of department or division.  The court also found it persuasive that actions filed in the wrong department or division were not subject to dismissal. Thus the court in Newsom determined that the divisions were for “administrative” purposes and therefore not judicial districts.

Like in Illinois and Newsom, the township small claims courts of Indiana were determined by the court to be set up for “administrative purposes.”  The venue provisions of Ind. Code § 33-34-3-1(a) allow small claims cases to be venued and decided in any township in the county.  Small claims courts are also not the court of record (Ind. Code § 33-34-1-3) and may not hold jury trials (Ind. Code § 33-34-2-10).  Therefore, the court determined that for the purposes of the FDCPA and 15 U.S.C. § 1692i, township small claims courts are not considered “judicial districts”.

As Med-1 filed in Pike Township which is located in Marion County, the same county in which the debtor resides, there was no violation of the FDCPA.

The Full Text of the Opinion May Be Found at: http://scholar.google.com/scholar_case?case=13361200775488162425

Many thanks to Kim Goldwasser for her contributions to this article.  Kim is a paralegal with Slovin & Associates Co., L.P.A.

Brad A. Council is an associate in the Cincinnati based law firm of Slovin & Associates Co., LPA. His practice covers all areas of commercial litigation, creditor’s rights including compliance with federal and state consumer credit and collection laws, and landlord-tenant matters. He frequently represents national banking associations, medical service providers, debt-buyers, and other credit grantors in the areas of creditor’s rights and account receivables management. He also regularly advises and counsels these organizations on issues related to compliance with the federal Fair Debt Collection Practices Act and federal Fair Credit Reporting Act as well as similar state law acts and regulations.