Background
Alexandra Hustedt-Mai leased a Purdue-area apartment managed by Granite Management. At move-out, Granite assessed roughly $110 for cleaning and repairs. Mai disputed the charges, maintaining that the conditions either predated her tenancy or reflected ordinary wear. Granite referred the account to national debt collector Hunter Warfield, Inc., which reported the debt to two credit-reporting agencies. Mai repeatedly disputed the account, but Hunter Warfield continued reporting it.
Mai sued under the federal Fair Credit Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA). The case was removed to federal court and then remanded because the federal court found no Article III standing. Back in Tippecanoe Circuit Court, Hunter Warfield unsuccessfully sought judgment on the pleadings and summary judgment. A jury ultimately found for Mai, awarding $200,000 in actual damages and $1.75 million in punitive damages. The parties also stipulated to $1,000 in FDCPA statutory damages. The trial court separately awarded $306,984 in attorney fees and $47,393 in costs and expenses.
Hunter Warfield appealed on multiple fronts. It argued that the federal standing ruling deprived Mai of standing in Indiana court, that an “as is” lease addendum made the underlying charges valid, that Mai’s evidence should not have reached the jury, and that punitive damages required a heightened burden of proof. It also challenged the amount of punitive damages as unconstitutional and disputed expert, deposition, and attorney expenses included in the costs award.
The Court’s Holding
The Indiana Court of Appeals affirmed the verdict and punitive award but reversed part of the costs award. Judge Altice explained that Indiana standing and notice-pleading rules governed in state court. Mai alleged concrete expenditures of time, effort, and mailing costs arising from Hunter Warfield’s conduct, which sufficed at the pleading stage. The lease addendum did not eliminate factual disputes over whether Mai actually caused the charged conditions or whether Hunter Warfield reasonably investigated her dispute. Her testimony, move-in records, Granite testimony, dispute-processing evidence, and expert testimony allowed the FDCPA and FCRA claims to go to the jury.
The panel also upheld the preponderance-of-the-evidence instruction on punitive damages because Mai sought punitive relief under the FCRA, not Indiana’s punitive-damages statute. Applying federal constitutional guideposts, the majority found the 8.75-to-1 punitive-to-compensatory ratio within constitutional limits. The jury could find repeated, nonaccidental misconduct: Hunter Warfield reported the disputed account twice monthly for about a year and used a high-volume investigation system that allegedly left processors only minutes per dispute and few investigative tools. The majority viewed Mai as financially vulnerable and deferred to the jury’s assessment that meaningful punishment and deterrence were warranted. Judge Brown dissented from the damages rulings, concluding that Mai’s actual-damages proof was too speculative and that punitive damages should be sharply reduced.
The trial court did overreach on taxable costs. Federal law limited recoverable costs to the categories Congress specified. Fees for non-court-appointed experts were not fully recoverable and had to be recalculated under statutory witness allowances. Both video and transcript costs for depositions may be allowed, but only if reasonable and necessary, requiring further findings. Certain out-of-pocket attorney expenses could remain part of the fee award. The panel remanded solely for the expert-cost calculation and review of deposition expenses.
Key Takeaways
- A federal court’s Article III standing decision does not displace Indiana’s own standing and liberal notice-pleading principles after remand to state court.
- When a furnisher receives a credit dispute, the reasonableness of its investigation is generally fact-sensitive; creditor paperwork alone may not resolve the issue.
- A substantial FCRA punitive award can survive due-process review when repeated reporting, weak investigation procedures, financial vulnerability, and deterrence support the jury’s judgment.
- Fee-shifting statutes that authorize “costs” do not automatically permit every litigation expense; expert and deposition charges remain subject to federal statutory limits.
Why It Matters
The decision gives Indiana consumer and commercial litigators a detailed roadmap for state-court FCRA and FDCPA cases. Defendants cannot assume that a federal remand for lack of Article III standing ends the controversy, especially at the pleading stage. On the merits, furnishers should be prepared to show a genuine investigation of the consumer’s evidence rather than a rapid confirmation of whatever the creditor initially supplied.
The damages analysis is equally consequential. The majority accepted an unusually large punitive award arising from a disputed debt of about $110 because the case concerned the collector’s system and repeated conduct, not merely the account balance. At the same time, prevailing plaintiffs must separate attorney-fee components from taxable costs and document why dual-format depositions and related services were reasonable and necessary.