State pays attorneys’ fees in federal lawsuit

Indiana has doled out $440,000 to a title-loan company to help cover its legal expenses in a successful lawsuit against the state.

Midwest Title Loans in 2009 prevailed in a lawsuit against the state’s Department of Financial Institutions.

The company, which is based in Illinois and has no Indiana offices, made loans to Indiana residents while they were in Illinois, mailed solicitations to customers in Indiana, and advertised on Indiana TV stations and in Indiana Yellow Pages listings.

The Department of Financial Institutions told the company to stop this activity based on Indiana’s Uniform Consumer Credit Code, which defines what information must be provided to a consumer before he or she commits to any credit transaction.

Midwest Title Loans sued to stop enforcement of the law, and the U.S. District Court for the Southern District of Indiana sided with the company.

Now, Midwest Title Loans has recovered its attorney’s fees from the state—a move that the law firm representing Midwest Title Loans, Philadelphia-based Ballard Spahr LLP, says is unusual.

“Typically, state attorneys general recover substantial penalties from companies in consumer cases,” the firm said in its July 18 consumer financial services alert. “However, it is rare for a company to turn the tables and recover substantial attorney’s fees from a state.”