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Appeals court warns parties against no-response strategy

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A Marion Superior judge didn’t err in holding a big tax resolution company in contempt for failing to appear by closing six of its state offices and then issuing a default judgment against the firm, the Indiana Court of Appeals has ruled.

The unanimous three-judge panel ruled today in the class-action case of JK Harris & Company LLC v. Ronald Sandlin, No. 49A05-1003-CT-184, affirming the judgments by Marion Superior Judge Thomas Carroll.

South Carolina-based JK Harris, which has hundreds of offices in 43 states, advertises that it can help individuals settle their IRS tax debts for pennies on the dollar. But that didn’t happen in this Indianapolis case of Ronald Sandlin, who sued in August 2009 on claims that he was misled and the company didn’t perform the actions it had promised.

Sandlin learned from the IRS in 2006 that he’d been delinquent in his federal income tax payments, and so he hired JK Harris and paid $4,350 for tax relief help. Two settlement offers from the firm were rejected by the federal tax agency, and ultimately JK Harris wasn’t able to achieve any reduction in that tax debt and the company refused to refund Sandlin’s initial fee. He sued, alleging negligence, breach of contract, deceptive advertisement, and unjust enrichment. The case ultimately received class certification in late 2009. But while his counsel certified the notices and the Marion Superior Court later did the same, JK Harris didn’t enter an appearance and failed to appear at two proceedings.

In January 2010, Judge Carroll found JK Harris in contempt of court, fined the company $10,000, and also issued writs of attachment ordering the closure of offices in Bloomington, Evansville, Fort Wayne, Indianapolis, Lafayette and South Bend.

After learning its Indiana offices had been closed, JK Harris hired counsel and got involved in the litigation in February 2010, filing a motion to stay the proceedings, set aside the default judgment and class certification, and compel arbitration that it claimed was required in Sandlin’s contract. Judge Carroll denied those motions and set up this appeal.

The Indiana Court of Appeals criticized the company for ignoring the suit and court proceedings, warning that regardless of the merits its arguments may have had it doesn’t allow for parties to simply not participate once an issue goes to court.

Despite the proper service of Sandlin’s complaint and filings, JK Harris “apparently concluded that it was not worth its time and effort to respond in any manner until its Indiana offices had been padlocked by the Marion Superior Court,” the court wrote. “JK Harris’s arguments in this regard show only that it consciously ignored the Marion Superior Court for approximately five and one-half months and then hired able counsel to attempt to remove it from the deep procedural and substantive hole of its own making. Any ‘extraordinary circumstances’ it might and does allege to satisfy the requirements of Trial Rule 60(B)(8) are circumstances that would have been avoided with a timely responsive pleading after initial service of the complaint.”

The six offices that Judge Carroll ordered shut down remain closed, according to defense attorney Gary Miller with Miller Meyer in Indianapolis. This appellate ruling remands the case for the trial judge to further define the class of litigants. Miller says that his firm is reviewing the ruling to determine whether a transfer petition may be filed with the Indiana Supreme Court.

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  1. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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