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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. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  2. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  3. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  4. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  5. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

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