Recent federal court decision reinterprets the Fair Debt Collection Practices Act (FDCPA) and may create venue defense for current or future debtor defendants in debt collection suits.

By: Joseph R. Marconi 1

In Suesz v. Med-1 Solutions, LLC, 2014 U.S. App. LEXIS 12562 (7th Cir. 2014), the Seventh Circuit recently reinterpreted the venue provision of the federal Fair Debt Collection Practices Act (“FDCPA”). The issue for the court was whether township small claims courts in Marion County, Indiana (Indianapolis) constituted separate “judicial districts or similar legal entities” for purposes of section 1692i of the FDCPA. The en banc majority held that debt collectors must file collection actions in the “smallest geographic area that is relevant for determining venue in the court system in which the case is filed.”

Implications for Cook County Lawyers
In doing so, the Seventh Circuit not only overruled its own 1996 precedent in Newsom v. Friedman, 76 F.3d 813 (7th Cir. 1996), but also applied the en banc Suesz decision retroactively. Debt collectors previously relied on Newsom to file collection actions in a court in the debtor’s county — but not in the township or intra-county small claims court in the area where the debtor resided or where the debtor contract was signed. Per Suesz, for those of us in Cook County, collection lawsuits should be filed in the Municipal District where the debtor resides or where the contract was signed. For lawsuits that are already pending, an immediate motion to transfer to the appropriate Municipal District is most prudent.

Even neophyte attorneys understand that their clients’ actions can be barred if they miss a statutory limitations period. However, experienced attorneys may forget that when handling claims against insurance companies under their clients’ uninsured or underinsured motorist coverage a contractual two-year limitation2 will trump any longer statutory period. Failure to adhere to the two-year limitation period will terminate a claim as surely as a blown statute.

The Illinois Insurance Code (“Insurance Code”) (215 ILCS 5/1 et seq.) requires two provisions for all auto insurance policies issued in the state: uninsured or underinsured insurance coverage (”UM/UIM”) and a mandatory arbitration provision with respect to “any dispute with respect to coverage and the amount of damages …” 215 ILCS 5/143a. Practitioners need to realize that as a result, UM/UIM policies typically contain within them a contractual two-year limitations period for demanding arbitration of any claim against their clients’ UM/UIM carrier.

Two recent cases out of the First District of the Appellate Court in Illinois have bolstered the right of attorneys to assert the attorney client and work product privileges to withhold documents in the context of a malpractice claim against them. In Garvey v. Seyfarth Shaw LLP, 2012 Ill. App. LEXIS 132; 966 N.E. 2d 523 (1st Dist. Mar. 1, 2012) and MDA City Apartments, LLC v. DLA Piper LLP (US), 2012 Ill. App. LEXIS 201 (1st Dist. Mar. 22, 2012), the Court rejected the application of the “fiduciary-duty” exception to the attorney client and work product privileges. The opinions give instruction as to the underlying facts and factors which will frame and preserve an attorney’s asserted privilege as against his or her former client.

By Joseph R. Marconi[1]

The Rules of Professional Conduct now requires attorneys to provide consent for the banks holding client funds to automatically report overdraws to the ARDC. This is an early detection system for possible financial malfeasance and a call for more discipline in managing and accounting for client funds.

Illinois Rule of Professional Conduct 1.15 requires attorneys to hold client property in an interest-bearing trust account separate from the attorney’s own property.  These accounts include Interest on Lawyers Trust Accounts (IOLTAs) and non-IOLTA trust accounts.  In an article from last year, In “Eligible” IOLTAs We Trust, we noted some of the September 2011 changes to this rule. One of the more significant changes to Rule 1.15 is the automatic overdraft notification provision, Rule 1.15(h).  The rule requires the financial institution at which the trust account is established to promptly notify the ARDC if a trust account is overdrawn, regardless of whether or not the instrument is honored.

To implement the reporting requirement, the rule mandates that all attorneys admitted to practice in Illinois “shall, as a condition thereof, be conclusively deemed to have consented to the reporting and production requirements mandated by this Rule.”  Likewise, to be eligible to offer client trust accounts, financial institutions must agree to comply with the reporting requirement.