Appeals court affirms rejection of HOA ‘abusive junk fee’

A Morgan County man who took no action to defend a judgment in his favor nevertheless prevailed in the Indiana Court of Appeals on Friday. The judges upheld a trial court ruling that rejected a homeowners association charge it called an “abusive junk fee.”

The housing development in Camby sued in small claims court a homeowner who had fallen behind on homeowner association dues. In Heartland Crossing Foundation, Inc. v. Chris M. Dotlich, 55A01-1203-SC-119, Heartland Crossing Foundation sought to collect $795 in attorney fees and a $50 “administrative fee” in addition to a nearly 33 percent penalty for a late payment.

The trial court found in Chris Dotlich’s favor, holding that it was a cost not incurred and without basis and was “nothing more than an abusive junk fee.” The trial court also rejected Heartland’s plea for attorney fees because they were based on the administrative fee.

“Initially, we observe that Dotlich did not file an appellee’s brief,” Judge L. Mark Bailey wrote in a unanimous six-page opinion. “Under such a circumstance, we do not undertake to develop an argument on his behalf, and we may reverse upon Heartland’s prima facie showing of reversible error.”

The court ruled that a declaration of covenants, conditions, easements and restrictions of Heartland Crossing did not contain language allowing it to collect an administrative fee.

“The evidence most favorable to the judgment discloses that Heartland, by recovering late fees and attorneys’ fees from Dotlich, already recovered the ‘costs of collection’ and ‘reasonable attorney’s fees and paraprofessional fees actually incurred[.]’ … Therefore, under the terms of the Declaration, nothing remains for Heartland to recover,” the panel ruled.

“Dotlich does not owe Heartland the $50 ‘administrative fee,’ costs, or $795.10 in attorneys’ fees. Therefore, the trial court’s judgment for Dotlich is not clearly erroneous,” Bailey wrote.