Franklin Collection Service, Inc. v. Jerry Stewart

Mississippi Supreme Court·Decided April 4, 2002·No. 2002-IA-00591-SCT·Published

Opinion

IN THE SUPREME COURT OF MISSISSIPPI

FRANKLIN COLLECTION SERVICE, INC. AND UNKNOWN ATTORNEY “A”

v. NO. 2002-IA-00591-SCT JERRY STEWART AND LEOLA STEWART CONSOLIDATED WITH

FRANKLIN COLLECTION SERVICE, INC. AND ATTORNEY T. DALE BEAVERS

v. NO. 2002-IA-00592-SCT R. D. MALONE CONSOLIDATED WITH

FRANKLIN COLLECTION SERVICE, INC. AND ATTORNEY JEFFREY WALDO

v. NO. 2002-IA-00593-SCT BRENDA COCKRELL CONSOLIDATED WITH

FRANKLIN COLLECTION SERVICE, INC. AND ATTORNEY MARY E. MASON

v. NO. 2002-IA-00594-SCT WALTER & ETHEL WOODS

CONSOLIDATED WITH

FRANKLIN COLLECTION SERVICE, INC. AND ATTORNEY JEFFREY WALDO

v. NO. 2002-IA-00595-SCT WILLIAM D. BINION CONSOLIDATED WITH

FRANKLIN COLLECTION SERVICE, INC. AND ATTORNEY T. DALE BEAVERS

v. NO. 2002-IA-00596-SCT SHALONDA JONES A/K/A SHALONDA SMART CONSOLIDATED WITH

FRANKLIN COLLECTION SERVICE, INC. AND ATTORNEY T. DALE BEAVERS

v. NO. 2002-IA-00597-SCT ANNIE P. TATE CONSOLIDATED WITH

FRANKLIN COLLECTION SERVICE, INC. AND ATTORNEY T. DALE BEAVERS

v. NO. 2002-IA-00598-SCT LEE V. WILKERSON CONSOLIDATED WITH

FRANKLIN COLLECTION SERVICE, INC. AND ATTORNEY MARY E. MASON

v. NO. 2002-IA-00599-SCT BESSIE M. NEAL

DATE OF JUDGMENT: 4/4/2002 TRIAL JUDGE: HON. LEE J. HOWARD COURT FROM WHICH APPEALED: NOXUBEE COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANTS: WILLIAM V. WESTBROOK, III JOHN PAUL BARBER

CHARLES G. PERKINS

ATTORNEYS FOR APPELLEES: ARMSTRONG WALTERS THOMAS L. KESLER

BENNIE L. TURNER

NATURE OF THE CASE: CIVIL - OTHER DISPOSITION: REVERSED AND RENDERED - 12/31/2003 MOTION FOR REHEARING FILED: MANDATE ISSUED:

EN BANC.

COBB, JUSTICE, FOR THE COURT:

¶1. Franklin Collection Service, Inc. (Franklin) filed nine separate actions in the Noxubee County Justice Court over a period of four and a half years between June 1996 and December 2000. All sought to obtain judgments for unpaid medical bills owed to various medical service providers plus attorney’s fees and court costs. It is undisputed that each of the justice court defendants was a Noxubee County resident and was properly served with process. Each of the standard “form” complaints stated the amount owed to the service provider plus a specific amount for the attorney’s fee and for court costs. Further, the complaints stated that the debts were incurred upon open account, that the indebtedness had been assigned fully to Franklin, that a written demand for payment had been made more than 30 days before the suit was filed, and that the debtors had failed or refused to pay. In addition, the complaint stated that Franklin had

hired counsel to prosecute the collection suit. None of the justice court defendants answered the complaint filed against them, and default judgments were entered against each one. Details of each of the nine complaints, including the following itemization of the judgments, are as follows:

Date of Name of Name of Service Provider Debt Atty Court Total % Atty Judgment Debtor Owed Fee Costs Judgment Fee 1. 05-16-96 Stewart Clay Co. Med. Center $644 $50 $52 $745 08% 2. 06-16-98 Cockrell Columbus Foot Clinic $403 $100 $79 $582 25% 3. 11-10-98 Binion Gold’s Gym $163 $50 $54 $267 31% 4. 04-27-99 Neal Columbus Orthopaedic $130 $50 $54 $234 38% 5. 04-11-00 JonesRobert Trotter, M.D. Family$57 Health Clinic $179 Jeffrey Chain, M.D. $204 Columbus Orthopaedic $190 $150 $54 $834 24% 6. 04-11-00 Malone Clay Co. Med. Center $295 $75 $54 $424 25% 7. 08-08-00 Tate Lance Busch, M.D. $102 Columbus Orthopaedic $163 $75 $54 $394 28% 8. 10-10-00 Wilkerson Cardiology Assoc. N.M. $878 $175 $54 $1,107 20% 9. No date Woods Family Health Clinic $479 Kemper Comm. Hosp. $173 $150 $54 $856 23%

With the exception of Mrs. Neal, whose $50 attorney fee was $7 more than one-third of her indebtedness, the percentage of the debt owed which was allocated for attorney’s fees was well within the presumptively reasonable one-third of the indebtedness which this Court has traditionally approved as reasonable awards of attorneys’ fees in collection matters.1

¶2. On December 18, 2000, each of the debtors filed separate civil actions against Franklin in the Noxubee County Circuit Court, alleging that the debts sued upon were not open accounts and that Franklin

1 See Dynasteel Corp. v. Aztec Indus., Inc. 611 So. 2d 977, 987 (Miss. 1992). See also Estate of Baxter v. Shaw Assocs., Inc., 797 So.2d 396 (Miss. Ct. App. 2001) (There is a presumption in a collection suit in favor of awarding fees in the amount of one third of the indebtedness).

and its attorneys perpetrated a fraud on the court2 and abuse of process on the debtors. In January 2001, the case was removed to federal court. In June of 2001 it was remanded to the Noxubee County Circuit Court, after the federal court held that the debtor’s action was not completely preempted by the Fair Debt Collections Practices Act.

¶3. On April 4, 2002, the Noxubee County Circuit Court entered an order denying the motion to dismiss or for summary judgment filed by Franklin, and certified four issues for interlocutory appeal to this Court, which are consolidated into the three issues discussed below. We granted Franklin’s petitions to bring these consolidated interlocutory appeals. See M.R.A.P. 5.

FACTS

¶4. For the purposes of this opinion the facts are limited to those which led to this appeal, not the underlying facts which led to the original complaints in justice court against the circuit court plaintiffs.

¶5. These actions involve eleven plaintiffs, all Noxubee County residents against whom Franklin, through attorneys T. Dale Beavers (Beavers), Mary E. Mason (Mason), Jeffrey Waldo (Waldo), and Unknown Attorney A (Attorney A), instituted collection proceedings in the Justice Court of Noxubee County, concerning unpaid medical bills for various medical services. It is undisputed that service of process was properly obtained on all, that the amount billed by the medical providers was owed, and that none of the justice court defendants appeared in the justice court or contested the allegations in the complaint in any way. In due time, default judgments were entered. In all cases, the judgment sought by

2 The fraud allegation was that Franklin and its attorneys “knew, or should have known, the debt owed by the Plaintiffs was not a debt for which attorney’s fees are authorized under § 11-53-81” (the open account statute) and that the attorneys did not “advise the Justice Court Judge the debt was not an open account.” The abuse of process allegation was that Franklin and its attorneys, in seeking collection of attorneys’ fees in this manner, made “[a]llegations attorney fees were owed pursuant to § 11-53-81 [which] were false.”

Franklin included the debt amount, plus a specific attorney’s fee, plus court costs. No appeals were perfected by any of the justice court defendants.

¶6. On December 18, 2000, the justice court defendants filed their circuit court complaints, in separate actions, against Franklin and Beavers, Mason, Waldo and Attorney A, seeking, as damages, recovery of the attorney’s fees awarded by the justice court judgments and also seeking punitive damages and court costs, based upon a putative claim for “misrepresentation and abuse of process” and “perpetrat[ion of] a fraud on the Justice Court of Noxubee County.” Franklin responded by filing a motion to dismiss or for summary judgment, arguing that because none of the justice court judgments had been appealed, any challenge in the circuit court concerning the propriety of the “open account” attorney’s fee remedy, as well as the fee amount awarded, was barred.

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