Attorneys representing the parties in the case of Charter One Mortgage Corporation v. Kyle Condra include David P. Sanders and others for the appellant, while Irwin B. Levin and others represent the appellee. The case originated in the Marion Superior Court and is being reviewed by the Indiana Supreme Court following a petition to transfer from the Indiana Court of Appeals.
The core issue involves whether the preparation of mortgage documents by non-attorneys constitutes unauthorized practice of law under Indiana law. Kyle Condra borrowed $89,600 from Charter One, which charged him a $175 fee for document preparation done by non-lawyers. Condra subsequently filed a class action lawsuit claiming this fee was illegal. Charter One moved to dismiss the case, asserting that as an operating subsidiary of a national bank, it was governed by federal regulations allowing such fees, which it argued preempt Indiana law.
The trial court initially stayed proceedings pending the outcome of the motion to dismiss but later denied the motion. The Court of Appeals affirmed the trial court's decision, stating that the jurisdiction over unauthorized practice of law is not preempted by federal regulations. The Indiana Supreme Court granted transfer for further review.
The standard of review for a motion to dismiss under Indiana Trial Rule 12(B)(6) focuses on the legal sufficiency of the claim rather than the underlying facts, allowing for de novo review of the trial court’s decision.
When evaluating a motion to dismiss, courts favorably interpret pleadings for the nonmoving party, only dismissing a complaint when it is evident that relief is not warranted based solely on the complaint's content. Condra acknowledged that Charter One operates as a subsidiary of a national bank, but the Court of Appeals chose not to explore its relevance under a 12(B)(6) motion since it does not impact the case's outcome. The court has original jurisdiction over unauthorized practice of law, overseeing attorney admission and discipline, and defining legal practice. Legal practice involves providing advice and managing client affairs, aimed at protecting the public from unqualified individuals. In Miller v. Vance, the court ruled that a bank employee's completion of a mortgage form did not constitute unauthorized practice, as it involved only filling in basic information without fiduciary duties or legal advice. However, the court warned that such employees should not offer legal opinions and that banks cannot charge separately for document preparation. Condra argued that the fee he was charged for non-attorney document preparation was unauthorized, while Charter One contended that federal OCC regulations preempt state laws on this matter, allowing them to charge for document preparation. The Court of Appeals disagreed, interpreting Miller to prohibit separate charges for non-attorney document preparation as unauthorized practice.
The Court of Appeals determined that the Office of the Comptroller of the Currency (OCC) regulations do not preempt state law regarding unauthorized practice, as the state law aligns with the regulations. The court clarified that the Miller case does not prohibit national banks from charging fees for document preparation and does not obstruct OCC regulatory purposes, but merely delineates who may perform such document preparation (licensed attorneys or non-attorneys). The court upheld the trial court’s denial of Charter One’s motion to dismiss, indicating that it was unnecessary to address federal preemption.
The court criticized the overbroad interpretation of Miller regarding fees for document preparation, emphasizing that the classification of an activity as the practice of law depends on the nature of the activity itself, not on compensation. Citing examples, the court noted that non-attorneys completing standard mortgage documents without legal discretion do not constitute the practice of law, as affirmed by Michigan's Dressel case, which established that charging a fee does not alter the nature of permissible conduct.
The court also referenced a contrasting position from Washington's Perkins case, which categorized non-attorney mortgage document preparation as the practice of law but allowed it due to the absence of legal discretion. Moreover, the Illinois Supreme Court recognized a 'pro se' exception for non-attorney document preparation for personal benefit, asserting that charging a fee does not change the legality of such conduct. Ultimately, the court rejected a generalized 'pro se' exception for organizational employees giving legal advice or representing their employers.
Employees may engage in unprofessional conduct that could harm third parties, thus they should adhere to the same discipline and professional standards as non-employee lawyers. However, the preparation of form mortgage documents by non-attorneys does not constitute unauthorized practice of law, as affirmed by the Supreme Courts of Michigan, Washington, and Illinois. Charging a fee for such preparation does not change its permissibility. Charter One justifies its fees as a means to recover salary costs and offset overhead, but whether this claim is accurate is irrelevant. Condra does not allege that Charter One provided legal services or that its non-lawyers were qualified to perform legal tasks, nor does he claim any harm from the loan document preparation. Many routine tasks involve legal knowledge without constituting legal practice, and this principle applies here. The filling in of standard mortgage documents is reaffirmed as not being the practice of law. The restriction of legal practice to licensed attorneys aims to protect the public from harmful legal advice, but banning fees for mortgage document preparation does not serve this purpose. If fees made the act a regulated practice, it would either eliminate fees or necessitate attorney involvement, leading to inconvenience and additional costs for the public. The regulation of such economic matters should be left to the legislature or market forces. Thus, if completing legal documents is a routine part of a lender's activities, it is generally not deemed the practice of law, regardless of fee charging. The case is remanded to the trial court with instructions to grant Charter One's motion to dismiss for failure to state a claim.
