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Consumer Attorney Services, P.A. v. State

Supreme Court of Indiana

March 21, 2017

Consumer Attorney Services, P.A., The McCann Law Group, LLP, and Brenda L. McCann, Individually and as Owner and/or Officer of Consumer Attorney Services, P.A. and The McCann Law Group, LLP, Appellants (Defendants below),
v.
State of Indiana, Appellee (Plaintiff below).

         Appeal from the Marion Superior Court, No. 49D11-1401-PL-1477 The Honorable John F. Hanley, Judge

         On Petition to Transfer from the Indiana Court of Appeals, No. 49A05-1504-PL-274

          ATTORNEYS FOR APPELLANTS Kevin P. Podlaski Micah J. Nichols Beers Mallers Backs & Salin, LLP Fort Wayne, Indiana

          ATTORNEYS FOR APPELLEE Curtis T. Hill, Jr. Attorney General of Indiana

          Aaron T. Craft David L. Steiner Deputy Attorneys General Indianapolis, Indiana

          Massa, Justice.

         Consumer Attorney Services, P.A., The McCann Law Group, LLP, and Brenda McCann (collectively "Defendants") appeal the trial court's denial of their motion for summary judgment, claiming they are all expressly or impliedly exempt from liability under each of the four statutes cited by the State in this civil suit. Finding that none of the Defendants properly fit within these statutory exemptions, we affirm.

         Facts and Procedural History

         CAS[1] is a Florida corporation that purports to specialize in foreclosure- and mortgage-related legal defense work, requiring non-refundable retainers and monthly fees up front to be automatically deducted from bank accounts.[2] McCann was an attorney licensed in Florida, who acted as CAS's manager.[3] CAS subcontracted with at least five Indiana attorneys to provide local services, who executed "Of Counsel, " "Associate, " and/or "Partnership" agreements with CAS. Under the "Partnership" agreement, the attorney acquired a 1% non-voting interest in CAS, and was to be involved with client intake and screening, to administer the referral of Indiana cases to other Indiana lawyers employed by CAS, and to provide clients with direct legal services as needed. Under the "Associate" agreements, CAS handled all aspects of client intake and communication, document preparation, and billing, with the attorney's role limited to speaking with clients only when directly asked by the client, and meeting with them only once prior to filing any legal documents such as a bankruptcy petition (in order to obtain appropriate signatures), and speaking with opposing counsel only when "necessitated." Appellant's App. at 86. Under the "Of Counsel" agreements, the lawyer was a completely independent contractor, but was to perform essentially the same functions as under the Associate agreement. All of these agreements were entered into before CAS registered as a foreign entity authorized to do business in Indiana.

         Indiana homeowners quickly began to register complaints with the Office of the Indiana Attorney General regarding CAS's treatment of their foreclosure and loan-modification cases. The OAG's investigation revealed that at no point between initial contact and retention did the majority of the Indiana homeowners in question have any contact with an Indiana-licensed attorney, and moreover that the legal services they did receive after retention were "perfunctory." Appellant's App. at 252. Of the cases the OAG investigated, no home owners obtained a successful loan modification. And all of the conduct in question (including the majority of the complaints examined) also occurred prior to CAS's registration with the Indiana Secretary of State.

         The State then brought this civil suit against Defendants, alleging their conduct violated four Indiana consumer protection statutes: (1) the Credit Services Organizations Act (CSOA), Indiana Code chapter 24-5-15 (2016); (2) the Mortgage Rescue Protection Fraud Act (MRPFA), Indiana Code article 24-5.5 (2016); (3) the Home Loan Practices Act (HLPA), Indiana Code article 24-9 (2016); and (4) the Deceptive Consumer Sales Act (DCSA), Indiana Code chapter 24-5-0.5 (2016). Defendants moved for summary judgment, claiming they were all statutorily exempted from liability. The trial court denied the motion, but certified its order for interlocutory appeal. Our Court of Appeals affirmed in part, reversed in part, and remanded, finding that CAS was exempt from liability under everything but a portion of the DCSA claim, while McCann was not exempt under any of the four statutes. Consumer Attorney Servs., P.A. v. State, 53 N.E.3d 599, 612 (Ind.Ct.App. 2016), reh'g denied. We hereby grant the State's petition to transfer and vacate the Court of Appeals' decision below. Ind. Appellate Rule 58(A).

         Standard of Review

         On review of a grant or denial of a motion for summary judgment, we stand in the same position as the trial court: the movant bears the initial burden of designating evidence affirmatively negating that there is any genuine issue of fact as to a determinative issue, at which point the burden shifts to the non-movant to demonstrate such a genuine issue of fact indeed exists. Hughley v. State, 15 N.E.3d 1000, 1003-04 (Ind. 2014); Ind. Trial Rule 56(C). And although our review is de novo, "a trial court's judgment comes to this court clothed with a presumption of validity, and the appellant bears the burden of proving that the trial court erred." Schwartz v. Heeter, 994 N.E.2d 1102, 1105 (Ind. 2013) (internal quotations omitted).

         Neither the CSOA, the MRPFA, the HLPA, Nor the DCSA Provides an ...


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