Summary
The Supreme Court of South Dakota held that a hospital consent form containing an attorney-fee provision was not a note, bond, mortgage, or other evidence of debt under SDCL 15-17-39. Because the form was a service agreement governing the parties’ rights and obligations, the contractual attorney-fee provision was not void as against public policy. The court reversed and remanded for consideration of the appropriate attorney-fee award.
Topics
Practice areas
Questions Presented
- Whether SDCL 15-17-39 prohibits enforcement of the attorney's-fee provision in the hospital's consent form because the form is a note, bond, mortgage, or other evidence of debt.
- Whether the trial court erred in denying CCS's motion for attorney's fees.
Holdings
- A medical-services consent form that describes the conditions under which services will be provided and establishes the parties' rights, liabilities, and obligations is not a note, bond, mortgage, or other evidence of debt within the meaning of SDCL 15-17-39.
- The trial court erred as a matter of law by denying CCS's motion for attorney's fees solely on the ground that the consent form was evidence of debt. CCS was entitled to a determination of reasonable attorney's fees and collection costs under the contractual provision.
Key quotations
“Thus, even if there is no statute authorizing attorney’s fees, they are recoverable if the parties’ contract so provides.” (¶ 6)
“The phrase “evidence of debt” as used in the statute refers to debtor-creditor relationships, such as those in bonds, mortgages, and promissory notes, not to every contract where one party is obligated to pay money to the other.” (¶ 13)
“Therefore, the consent form is not “evidence of debt” within the meaning of SDCL 15-17-39.” (¶ 17)
“Reversed and remanded for consideration of the appropriate factors for awarding attorney’s fees.” (¶ 18)
Factual background
Pesicka and Ashford received medical services from Avera Sacred Heart Hospital, and Pesicka signed a printed consent form containing a billing and credit policy. The policy provided that accounts referred for collection would make the signer responsible for attorney's fees and collection expenses. After only two small payments, the account remained unpaid and was assigned to CCS, which obtained judgments against the defendants and then sought attorney's fees under the consent form.
Procedural history
Avera Sacred Heart Hospital assigned an unpaid medical-services account to Credit Collection Services. CCS sued Pesicka and Ashford for breach of contract; Ashford defaulted, Pesicka failed to appear for trial, and judgments were entered against both defendants, including a $12,569.51 judgment against Pesicka. The circuit court denied CCS's subsequent motion for attorney's fees, ruling that the contractual fee provision was void under SDCL 15-17-39. The South Dakota Supreme Court reversed and remanded.
Remand instructions
Remand for consideration of the appropriate factors and determination of a reasonable award of attorney's fees and collection costs.