7th Circuit Court of Appeals
Civil – Prisoner/Appellate Fees
Kelly S. Thomas v. Dushan Zatecky, superintendent, Pendleton Correctional Facility
The 7th Circuit Court of Appeals rejected a man’s argument that he and other prisoners do not need to pay appellate filing and docketing fees, and so a District Court’s certification of appeal is irrelevant.
Kelly Thomas sought to appeal the denial of his petition for a writ of habeas corpus in the Southern District of Indiana. He filed the petition after the state court affirmed his murder conviction on appeal. Judge Sarah Evans Barker declined to issue a certificate of appealability and certified that the appeal had been taken in bad faith. Because of that, Thomas has to pay the $455 in appellate fees to appeal or convince the 7th Circuit that he should be allowed to proceed in forma pauperis.
Thomas believed, based on the Prison Litigation Reform Act of 1996, he doesn’t have to pay the appellate fees. But his argument rests on “the mistaken premise that the appellate fees have their genesis in the PLRA,” Chief Judge Frank Easterbrook wrote. “They do not. They are authorized by 28 U.S.C. Section 1913, which long predates the PLRA.”
The judges also pointed out the portions of Sections 1915 and 1915A applicable exclusively to prisoners’ civil actions do not apply to collateral attacks on criminal judgments.
“When a district court grants permission under §1915(a)(1) to litigate in forma pauperis, that permission carries over to the appeal unless the district court itself revokes the permission after deciding the merits,” he wrote. “Section 1915(a)(3) says: ‘An appeal may not be taken in forma pauperis if the trial court certifies in writing that it is not taken in good faith.’ We do not see any reason why that provision should not apply to collateral proceedings, in common with all of the other litigation to which §1915(a)(1) refers.”
They denied his request to file his appeal without paying the fee, but he is entitled to contest the propriety of Barker’s declaration that the appeal was taken in bad faith. He has 21 days to file in the 7th Circuit a motion for permission to proceed in forma pauperis and a certificate of appealability. Failure to meet this schedule will result in a dismissal.
Civil – Collateral/Bond
Frontier Insurance Company v. J. Roe Hitchcock, Timothy S. Durham and Terry G. Whitesell
The 7th Circuit Court of Appeals ruled that Tim Durham and two other men who promised to indemnify and post collateral on a surety bond issued by Frontier Insurance Co. must post collateral on that bond.
Durham, Terry Whitesell and J. Roe Hitchcock were the principals of CT Acquisition. The company agreed in 1999 to buy Evans Trailers and John Evans Sales Co., with the price to be paid over time. The sellers insisted on a surety bond, which was put up by Frontier, but also demanded personal guarantees from the three principals.
CT didn’t pay up and the guarantors failed to keep their promise, leaving the sellers to turn to Frontier. But Frontier couldn’t pay on the bond because it was in financial distress and placed in “rehabilitation” by the New York Superintendent of Financial Services. Frontier then sought funds from the guarantors to honor their commitment to the sellers, demanding Durham, Whitesell and Hitchock post collateral under their agreement with Frontier. The men didn’t pay up.
After the sellers sued Frontier and earned a judgment of more than $1.5 million, plus post-judgment interest in the 4th Circuit Court of Appeals, Frontier sued the guarantors. Judge Tanya Walton Pratt in the Southern District ordered the three men to deposit $1,559,256.78 with the clerk.
The guarantors argued based on their agreement with Frontier they didn’t have to post collateral until Frontier paid the sellers and that their only obligation is to indemnify Frontier after the fact. They hope that the ongoing rehabilitation will prevent Frontier from paying or reduce the amount it owes.
“Paragraph 3 says that a demand for collateral may occur ‘before [Frontier] may be required to make any payment thereunder.’ The Guarantors must keep their promise to post collateral,” Chief Judge Frank Easterbrook wrote.
“If the existence of a fund in the registry of the district court permits Frontier to pay the Sellers 100 cents on the dollar, the Guarantors have no legitimate complaint. There is no reason why Frontier’s financial troubles should benefit the Guarantors at the expense of the Sellers,” he continued. “If, however, New York’s insurance authorities instruct or permit Frontier to pay the Sellers less than the face value of the surety bond, then the Clerk of the district court will return the excess to the Guarantors. The final disposition of these funds thus depends on the outcome of Frontier’s rehabilitation. Until then, however, Frontier is entitled to the security that the Guarantors promised to provide.”
Indiana Supreme Court
Criminal – Theft/Probation Revocation
Kimberly Heaton v. State of Indiana
Kimberly Heaton will have a new hearing on whether she violated the terms of her probation when she was charged with Class D felony theft. The Indiana Supreme Court vacated her probation revocation because a Madison Superior judge may have used the wrong legal standard to find the violation.
Heaton was on probation in September 2009 after pleading guilty to Class D felony receiving stolen property when she was arrested and charged with theft. The state filed a notice of probation alleging three technical violations and that she committed a new criminal offense. Madison Superior Judge Dennis D. Carroll, using the probable cause standard, found she violated her probation and ordered she serve 18 months of her previously suspended sentence.
Heaton argued that the trial court should have used the preponderance of evidence standard when determining if she committed a new criminal offense. The Indiana Court of Appeals agreed with Heaton, as did the justices.
The state claimed that caselaw shows the proper standard is probable cause, citing Cooper v. State, 917 N.E.2d 667 (Ind. 2009). But the only issue properly before the justices in Cooper was whether the trial court erred in denying his motion to reconsider, Chief Justice Brent Dickson pointed out. The Cooper court found that probable cause would be needed to revoke probation.
Since 1976, the Indiana Code has said that the state must prove a violation by a preponderance of the evidence, and “To the extent that Cooper may be read to permit proof only by probable cause, it is overruled,” Dickson wrote.
In Heaton’s case, the justices found the record unclear as to which standard Carroll used because he referenced the probable cause standard and claimed the court found by a preponderance of the evidence that Heaton committed the crime. They vacated the probation revocation and order she serve a portion of her previously suspended sentence and sent the case back to Madison Superior Court. There, Carroll will hold a new determination of whether Heaton violated the conditions of her probation by a preponderance of the evidence pursuant to I.C. 35-38-2-3(e) (2008), and if so, what the appropriate sanction is.
Civil Tort – Insurance/Civil Complaint
Holiday Hospitality Franchising, Inc. v. Amco Insurance Company
A divided Indiana Supreme Court affirmed summary judgment for a hotel, its owner and the hotel franchisor that the hotel’s insurance company had no duty to defend a civil complaint brought by a minor motel guest who was molested by an off-duty employee.
R.H.M. was a guest at the New Castle Holiday Inn Express owned by Anil Megha when employee Michael Forshey entered his locked room at night and molested him. Forshey has been convicted of child molestation. R.H.M.’s mom sued the hotel, the franchisor Holiday Hospitality and Megha, claiming, among other things, battery, negligent retention and supervision, and negligent hiring.
AMCO Insurance Co., which insured the Holiday Inn Express, claimed it owed no coverage for any liability from the complaint and it had no duty to defend any of the defendants. Holiday Hospitality and Megha were listed as additional insureds. The policy expressly disclaimed coverage for acts of molestation or abuse by excluding any bodily injury or personal or advertising injury arising from the actual or threatened abuse or molestation by anyone of any person while in the care, custody or control of the insured.”
The trial court ruled in favor of the defendants, but the Indiana Court of Appeals reversed, finding a genuine issue of material fact as to whether R.H.M. was in the care, custody or control of the hotel at the time of the molestation.
Justice Steven David, writing for the majority, affirmed summary judgment for the insurance company. Focusing on the “care, custody or control” portion of the policy and using those terms’ definitions from Webster’s Dictionary, David and Justices Mark Massa and Loretta Rush found the child was not in the custody or control of the hotel, but he was in the care of the hotel at the time of the molestation.
“Simply put, we believe these facts reflect precisely the sort of scenario contemplated by the parties to be excluded from coverage when they agreed to the insurance contract,” David wrote.
Chief Justice Brent Dickson concurred in a separate opinion, believing the proper understanding of “care” is established by Indiana law that a hotel guest is considered a business invitee and is entitled to a reasonable duty of care. In this case, “care” exists as a matter of law, so the exclusion applies.
Justice Robert Rucker dissented, believing it should be up to the trier of fact as to whether R.H.M. was under the control or care of the hotel.
Miscellaneous – Parental Rights
In Re: Visitation M.L.B.: K.J.R. v. M.A.B.
After finding a grandparent visitation order entered in Johnson County is voidable because of defects, the Indiana Supreme Court sent the case back to the trial court for new findings and conclusions without hearing new evidence.
M.L.B. was born out of wedlock and never had a relationship with his biological father. But his paternal grandfather M.A.B. was present in the child’s life from the beginning and mother K.J.R. allowed the boy to have frequent contact with the family, as long as the biological father was not present. After her new husband sought to adopt M.L.B., she curtailed the visits. M.A.B. intervened in the proceedings to petition for grandparent visitation.
The court awarded him visitation beyond what the boy typically experienced, including overnights and a summer family vacation of up to 10 days. The mother appealed, arguing it violated her fundamental parental rights. A divided Indiana Court of Appeals affirmed.
Justice Loretta Rush outlined the four factors a grandparent visitation order should address, as discussed in Troxel v. Granville, 530 U.S. 57 (2000), and later adopted by the Court of Appeals in McCune v. Frey, 783 N.E.2d 752, 757-59 (Ind. Ct. App. 2003), and by the Supreme Court in In Re K.I., 903 N.E.2d 453, 457 (Ind. 2009). The first three factors implement the constitutionally protected right of fit parents to make child-rearing decisions and reflect the significant burden of proof grandparents must carry to override those decisions. The order in the instant case is insufficient as to all three, Rush pointed out.
None of the trial court’s findings give any indication it recognized the presumption that a fit parent acts in his or her child’s best interests or special weight to a fit parent’s decision to deny or limit visitation. The justices also found that the amount of visitation awarded to M.A.B. far exceeded the parties’ earlier pattern.
On the fourth factor, which considers the child’s best interest, the trial court’s findings are amply supported by the evidence and that factor is satisfied.
“… despite the trial court’s ample ‘best interests’ findings, the lack of findings on the other three factors, both standing alone and as compounded by the extensive visitation awarded without those necessary findings, violates Mother’s fundamental right to direct M.L.B.’s upbringing,” Rush wrote for the unanimous court.
The justices found the trial court order is defective and voidable and ordered on remand for the trial court to issue new findings and conclusions as required by McCune and K.I.
Post Conviction – Evidence
Curtis A. Bethea v. State of Indiana
A Delaware County man who pleaded guilty to armed robbery and criminal confinement in a deal that dropped seven other felony counts was not improperly denied post-conviction relief when a judge considered evidence of charges that were dismissed, the Indiana Supreme Court ruled.
“Unless the evidence is forbidden by terms of the plea agreement, the trial court judge may consider all evidence properly before him,” Justice Steven David wrote for the unanimous court.
Curtis Bethea was one of four people charged in connection with the 2005 burglary of a home in which a male resident was pistol-whipped and bound with duct tape and a female resident was pulled from bed and thrown to the floor as the burglars ransacked the home looking for money and drugs.
The trial court weighed aggravating and mitigating factors and sentenced Bethea to 40 years in prision, the maximum allowable penalty for two Class B felony charges. Delaware Circuit Judge Marianne Vorhees denied post-conviction relief, which was affirmed by the Court of Appeals and upheld in this ruling.
Bethea “claims a trial court cannot aggravate a defendant’s sentence with an essential element of a charge that was dismissed pursuant to a plea agreement,” David wrote. “We hold that the trial court finding that the injury suffered by the victim to be an aggravating factor was proper despite the plea agreement that dismissed that count” of Class A felony burglary resulting in bodily injury.
The court’s ruling also sought to clarify the parameters of plea agreements.
“As Senior Judge (Randall) Shepard wrote recently, ‘a defendant receives the full benefit of his bargain when multiple charges are dismissed in accordance with the agreement.’ Sexton v. State, 968 N.E.2d 837, 841 (Ind. Ct. App. 2012). Our opinion today seeks to clarify this issue for trial courts, and to eliminate the application to guilty pleas with plea agreements.
“Our opinion today does not foreclose the possibility of the Defendant bargaining as to what can and cannot be potential aggravating and mitigating factors. It is well within the purview of contract law, and consequentially … the law as it relates to plea bargains, for the Defendant to bargain and the State to accept a plea bargain that forecloses the possibility of the trial court using enhancements from the underlying charges that were dismissed, or from the original charges from which a lesser included plea is taken. However, if a plea bargain lacks such language, we hold it is not necessary for a trial court to turn a blind eye to the facts of the incident that brought the defendant before them.”
In Bethea, justices rejected arguments of ineffective counsel but concluded that the court erred in stating he had been convicted of possession of cocaine with intent to distribute when he had pleaded guilty to the lesser included offense of possession of cocaine. The error was insignificant, though, David wrote, because it “did not change the fact that Bethea had in fact been convicted of a felony for possessing cocaine, which was also part of a pattern of Bethea’s involvement in criminal activity.”
Civil Plenary – Wage Payment Act
Brandy L. Walczak, Individually and on Behalf of Those Similarly Situated v. Labor Works - Fort Wayne LLC, d/b/a Labor Works
Indiana Justice Mark Massa made repeated references to the “Duck Test” – if it walks like a duck, swims like a duck and quacks like a duck, it’s a duck – in a day laborer’s lawsuit to recover unpaid damages from a Fort Wayne company. The justices found Brandy Walczak’s lawsuit may proceed under the Wage Payment Act.
Labor Works is a day labor service that has an office in Fort Wayne. Day labor employees don’t have to report on a regular schedule, but must show up in the office on the day they’d like to work. Even if they work a job the day before, they must show up the next day and may not be assigned to the same place.
While she was working as a day labor employee for Labor Works, Walczak filed a class-action lawsuit under the Wage Payment Act against Labor Works for unpaid wages. Labor Works argued that her claim should proceed under the Wage Claims Act because she was separated from the payroll at the time she filed the complaint. She filed the lawsuit on a day she did not work.
The trial court ruled in favor of Labor Works; the Indiana Court of Appeals ruled her claim should proceed under the Wage Claims Act and go before the Department of Labor.
The justices ruled that the question of whether Walczak is covered by the Wage Payment Act or the Wage Claims Act is jurisdictional as the resolution depends on what the meanings are of “voluntarily leaves employment” and “separates any employee from the pay-roll” used in those statutes.
The high court determined that “separates from the pay-roll” used in the Wage Claims Act means someone is fired, and Walcazk was not fired so she need not comply with the requirements of the Wage Claims Act. She sought work and was given work after filing her suit.
“Labor Works may say that all its employees are terminated after every shift and rehired the next day, like phoenixes rising daily from the ashes, but its employees, unlike those who have really been ‘separate[d] from the pay-roll,’ have a realistic expectation that if they show up the next day, they may receive a job assignment. In other words, Walczak is more duck than phoenix,” Massa wrote.
“Day labor employees are no less entitled to the statutory protections that the General Assembly has provided than any other Hoosier employees,” he continued. Walczak may proceed with her claim under the Wage Payment Act.
Indiana Court of Appeals
Civil Plenary – Schools/Public Bidding
Alva Electric, Inc., Arc Construction Co., Inc., Danco Construction, Inc., Deig Brothers Lumber & Construction Co., Inc., et al. v. Evansville Vanderburgh School Corp., and EVSC Foundation, Inc.
The Indiana Court of Appeals ruled that the Evansville Vanderburgh School Corporation’s renovation of a building to be used to house all administrative offices violated the state’s Public Bidding Laws.
Several contractors sued – as taxpayers and as contractors – the school corporation and the nonprofit EVSC Foundation, claiming the school corporation’s renovation of an administration building should have been subject to the competitive bidding procedures required for a public work project under Indiana Code 36-1-12-4 and that the actions taken to accomplish the renovation constituted an antitrust violation under Indiana Code 24-1-2-3.
The school corporation wanted to renovate a warehouse into administrative offices and did not open the renovation process up to contractors for public bidding. Instead, through a series of transactions with the EVSC Foundation, it sold the building to the foundation and later purchased it back. Since the foundation is a nonprofit, it was not subject to the public bidding laws.
The trial court ruled in favor of the school corporation and foundation.
Judges James Kirsch and Rudy Pyle III reversed, finding that the school corporation under statute had to provide public notice and public bidding for the construction or renovation of the school property, or if it wanted to proceed under the lease-purchase agreement statutes, the school corporation had to hold a public meeting on the terms of the lease and submit plans to state agencies for approval. None of those events happened.
“…[the] School Corporation ‘selected a contractor to renovate a public building according to plans prepared by an architect selected by the School and fully intended to pay for the project and in fact is paying for the project with public funds, without following the public bidding laws,’” Kirsch wrote. “This scheme has not been authorized by our General Assembly and, indeed, violates the public bidding laws that it has enacted.”
The judges vacated the summary judgment and ordered further proceedings on the matter.
Judge Ezra Friedlander dissented, believing the actions of the school corporation and foundation were lawful and not subject to the competitive bidding procedures.
“I am unconvinced that the series of concededly lawful transactions at issue in this case adds up to a violation of the Public Bidding Laws or the Antitrust Act,” he wrote.
“Moreover, I believe that today’s opinion creates uncertainty for private foundations regarding the extent of support they may provide for public educational institutions before becoming subject to Public Bidding Laws.”
Criminal – Trespass/Proof of Material Element
Marcus Willis v. State of Indiana
The Indiana Court of Appeals reversed a criminal trespass conviction for a Marion County man after finding the state didn’t prove a material element of the crime.
Off-duty Marion County Sheriff’s Deputy Talisha Harper was working as a security officer at an apartment complex in Indianapolis when she saw Marcus Willis near the leasing office. She asked if he lived in the complex, and he said no and produced his identification card. Harper checked his information against a no-trespassing list complied by the property owner management. Willis’ name was on the list, so she arrested him on suspicion of criminal trespass.
He was convicted of the charge as a Class A misdemeanor.
The judges reversed because the state didn’t prove that Willis had been “denied entry” as defined under Indiana Code 35-43-2-2(a)(1). There was no evidence that he was aware of the list or that he had otherwise been denied entrance to the property in a manner required by the statute.
As such, the state failed to show that Willis willfully trespassed on the apartment complex property.
Civil Plenary – Pleadings/Disparaging the Bench
In the Matter of the Supervised Estate of Evelyn Garrard; Ronald Garrard v. Debra L. Teibel and Douglas Grimmer and Debra Lindsay
A Lake County man with a history of filing unsupported allegations and derogatory comments in pleadings was rebuffed on his latest appearance before the Indiana Court of Appeals, which warned him against disparaging the bench.
A panel of the Indiana Court of Appeals affirmed summary judgment for Debra Teibel and Douglas Grimmer, the children of the late Evelyn Garrard. Her ex-husband, Ronald Garrard, had appealed after a Lake County trial court granted summary judgment in favor of Teibel and Grimmer on claims he made against the estate.
In long-running litigation, the children were given power of attorney for their mother after she was diagnosed with dementia in 2003, but Garrard was named her attorney-in-fact in 2006. A trial court later determined Evelyn Garrard had been incapacitated by September 2005, and dismissed her ex-husband’s claims.
The Court of Appeals had stern words for Garrard.
“As he did in his pleadings during the trial proceedings, Garrard continues to use a contentious tone in his appellate brief. Furthermore, as with his prior appeal, Garrard has failed to comply with our Appellate Rules,” Judge Rudy R. Pyle III wrote in a unanimous opinion. “Due to the deficient nature of Garrard’s brief, Teibel and Grimmer request that we find that Garrard has waived all issues on appeal. We agree.”
Pyle wrote that Garrard’s appeal lacked cogent argument and “utterly fails to show that a genuine issue of material fact existed.”
“Finally, we note that Garrard’s argument section is also rife with unsupported accusations and derogatory comments against opposing counsel, the trial judge, and the trial bench as a whole. … (H)e calls the judges in Northwest Indiana ‘corrupt’ and asserts that they are a ‘pitiful and despicable group[.]’
“We warn Garrard that ‘we do not look favorably upon disparaging and disrespectful language in briefs with regard to this Court or the trial courts of this state,’” Pyle wrote.
Civil Plenary – Public Easement
Bay Colony Civic Corporation v. Pearl Gasper Trust and Bruce F. Waller
A trial court ruling that forbid residents of a lakefront subdivision from accessing the water from a public easement was overturned by the Indiana Court of Appeals.
“Surely the reason for the easement was not merely to give residents a way to reach the edge of Bay Colony’s grounds so that they could gaze upon the shore and the water,” Senior Judge Randall Shepard wrote. The court reversed Marion Superior Judge Thomas Carroll’s ruling that limited access to the city-owned lake from the easement maintained by nonprofit neighborhood association Bay Colony Civic Corp.
“We thus conclude that the Association is correct that the easement was intended to give the residents a way to reach the reservoir,” Shepard wrote. “The trial court erred by barring residents from using the easement to access the water. … We reverse the trial court’s judgment and remand with directions to grant the Association’s motion for partial summary judgment.”
Pearl Gasper and Bruce Waller own lots in Bay Colony and posted private property signs on their docks unattached to their lots that had been built by previous owners. They also put up gates and fences to restrict access to the public reservoir. They cited plat language that said the easement “is established as an area over, through, and across which the owners in this subdivision, their tenants and invitees shall have access to public land adjoining Eagle Creek Lake.” They argued nothing in the easement language provided access to the water.
After the plaintiffs blocked access to the reservoir from their docks, Bay Colony, the nonprofit neighborhood association, cleared brush, added riparian stone and made a footpath on the easement to make it safer and easier for residents to get to the water without using Gasper’s or Waller’s docks. Gasper and Waller sued the association and won an injunction from the trial court barring it from entering their lots, altering or removing their docks or blocking Gasper’s access to her dock. The trial court also agreed with the plaintiffs’ allegation that the association misused $1,732 to complete its upgrade.
The panel also reversed the monetary judgment. “We find no violation of the Association’s bylaws,” Shepard wrote.
Civil Collection – Online Shopping/Multiple Lawsuits
Gersh Zavodnik v. Brian Richards and Njgolfman.com a/k/a Savva’s Golf Enterprises a/k/a ProGolfJerseyCity@yahoo.com and, Steve Panayiotov a/k/a Steve Panayiotou a/k/a Savva Panayiotou
The Indiana Court of Appeals held that a man with a propensity to sue over purchases made online may not file a new lawsuit in Marion County after a similar one was dismissed without prejudice.
Gersh Zavodnik filed 27 lawsuits against people living in five states and 10 countries from 2008 through 2010 in an attempt to “make his living by filing lawsuits … against individuals he alleges caused him damages by failing to complete Internet sales purchases,” according to the court opinion. Two of those defendants were Giselle Guzman and Brian Richards.
The 27 lawsuits were consolidated by Judge Timothy Oakes in Marion Superior Court; 24 of the lawsuits were dismissed without prejudice, including those against Guzman and Richards. About a year later, he filed new lawsuits against Guzman and Richards and added Steve Panayiotou as a co-defendant. The allegations in the new complaints were the same as those originally dismissed. Judge David Dreyer dismissed the lawsuits and denied motions to correct error.
The Court of Appeals affirmed, citing Thacker v. Barlett, 785 N.E.2d 621 (Ind. Ct. App. 2003). That case was similar and dealt with a dismissal under Trial Rule 12(B)(6) for failing to state a cause of action.
“Much like Trial Rule 12(B), we conclude that when a trial court has involuntarily dismissed a case without prejudice pursuant to Trial Rule 41(E), subsection (F) of that rule ascribes to the dismissing trial court the discretion to consider whether a complaint should be reinstated,” Judge Michael Barnes wrote. “We also presume that the Indiana Supreme Court, in drafting Trial Rule 41, did not intend to place a nullity in the rule by adding subsection (F)’s explicit procedure for how to go about reinstatement of a complaint dismissed without prejudice. Zavodnik’s position, that such complaints can be re-filed in a different court without following the reinstatement procedure, would render that provision meaningless.
“By re-filing complaints before Judge Dreyer that were substantially similar, if not identical, to complaints that Judge Oakes had already dismissed, Zavodnik was improperly attempting to circumvent Judge Oakes’s authority and discretion to decide whether Zavodnik had good cause to reinstate his original complaint(s). Judge Dreyer apparently recognized this and acted properly in dismissing the re-filed complaints, which dismissal served the interests of fairness to litigants, judicial comity, and judicial efficiency.”
Zavodnik must obtain reinstatement of his original complaints before Oakes if he wants to pursue his legal action against the parties.
Civil Tort – Insurance/Subrogation Lien
State Farm Insurance Company v. Thomas A. Young and Mary E. Young, Joel P. Genth and Philip K. Genth, INGENIX
The Indiana Court of Appeals rejected State Farm Insurance Company’s argument that its subrogation lien regarding one couple’s policy shouldn’t be reduced based on State Farm’s refusal in a policy held by another family to pay the full amount of the couple’s claim following a car accident.
Joel Genth was driving his father’s car, which was insured with a State Farm policy (Policy 2) when his car hit Thomas Young’s vehicle. Young was injured and received treatment. His medical insurance company Ingenix and his State Farm policy (Policy 1) paid for those treatments.
The Youngs sued Genth and his father for damages and listed two subrogation liens totaling $24,276.61. State Farm, on behalf of the Genths, offered to settle the Youngs’ claims for $17,432. The Youngs then filed a motion to reduce the subrogation liens pursuant to Indiana Code 34-51-2-9. They claimed they should only be responsible for 17.43 percent of the value of each subrogation lien because they were only receiving that percentage of the Genths’ $100,000 policy limit.
Policy 1 agreed to reduce the amount of its lien from $5,000 to $3,250 but not to reduce the lien to 17.43 percent of its value. The trial court ordered State Farm to accept $581 for Policy 1, which is 17.43 percent of the value of the original subrogation lien, minus its pro rata share of attorney fees and litigation expenses.
“In light of the unusual facts before us, i.e., that State Farm issued both Policy One and Policy Two, we decline to adopt State Farm Policy One’s premise that its subrogation lien should not be reduced based on State Farm Policy Two’s refusal to pay the full amount of the Youngs’ claim. The purpose of subrogation is to avoid unjust enrichment,” Judge Melissa May wrote.
“State Farm paid under Policy One for some of the Youngs’ damages, and thus was entitled to a subrogation lien. But ‘the one primarily liable,’ Wirth, 950 N.E.2d at 1216, and who ‘in good conscience should have been’ paying, id., was State Farm under Policy Two. Therefore, to allow State Farm to recover the full value of its subrogation lien under Policy One, when State Farm did not pay the full value of Youngs’ claim under Policy Two, would unjustly enrich State Farm.”
Civil Collection – Proper Forum
Carmeuse Lime & Stone and Carmeuse Lime, Inc. v. Illini State Trucking, Inc.
The Indiana Court of Appeals ruled that a producer of limestone and other products must file its complaint for indemnification in Pennsylvania based on its contract with a trucking company, and not Lake County, Ind.
Carmeuse Lime & Stone and Carmeuse Lime Inc. filed a complaint in Lake Superior Court against Illini State Trucking Inc. seeking indemnification based on their contract with Illini after one of the trucking company’s subcontractors received chemical burns on Carmeuse’s property. The injured subcontractor John Ruiz sued Carmeuse in Lake County alleging premises liability.
Before Carmeuse filed its suit in state court, it filed a similar third-party complaint in federal court, where Ruiz’s lawsuit was pending. The federal judge dismissed Carmeuse’s complaint without prejudice because it failed to allege any facts that Ruiz’s personal injuries were cause by Illini’s performance under the agreement or the negligent acts or omissions of Illini.
After Carmeuse submitted in state court the proposed amended complaint and controlling contract as an attachment to its motion for leave to amend, Illini raised the issue that Lake County was not the proper forum based on the contract between the two companies. The contract states that any legal action related to the contract shall be brought in Allegheny County, Pa.
The Lake Superior judge dismissed the complaint and denied the motion to amend brought by Carmeuse.
Judge Elaine Brown pointed out when Carmeuse initially filed its complaint in state court, Illini didn’t know how to respond because the complaint was averred as if it were submitted by a third-party plaintiff asking for indemnification against the claims of an injured plaintiff and it did not contain a copy of the contract at issue.
“Further, Carmeuse does not cite to authority for its proposition that because Illini did not assert the forum selection clause when it responded to Carmeuse’s third party complaint in the federal action it waived its ability to rely on the clause in a subsequent state court action,” she wrote. “Carmeuse also does not cite to authority that because the contract had been previously litigated in federal court, Illini was on notice, so to speak, regarding the forum selection provision of the contract, and that accordingly it was required to raise the forum selection clause in its original motion to dismiss despite the fact that the contract had not been attached to the original complaint. Under these circumstances, we cannot say that Illini waived its ability to raise the forum selection clause with the court.”
Enforcing the forum selection clause was not unjust or unreasonable. Carmeuse is not barred under the doctrine of res judicata from bringing the complaint against Illini in the proper forum, the COA ruled.
Civil Plenary – Dismissal/Breach of Contract
Judy Chang v. Purdue University, The Trustees of Purdue University; Dr. France A. Cordova, President of Purdue University (in her official capacity); et al.
A nursing student at Purdue University’s Fort Wayne campus was unable to convince the Indiana Court of Appeals that the university and officials violated her due process rights and breached a contract with her when they dismissed her from the program due to behavioral difficulties.
Judy Chang enrolled in the nursing program in 2007, but had several incidents and confrontations with students that led to meetings with program leaders. An incident in October 2008 with student Julie Webb led to dismissal of Chang from the program. Chang and Webb argued about a group project and Webb, who was pregnant at the time, believed Chang was going to push her down the stairs. Webb also contacted police about the incident.
Chang was charged with unprofessional conduct pursuant to the Department of Nursing Professional Misconduct policy. A committee of the Department of Nursing decided she should be dismissed; Chang appealed up to the IPFW chancellor, who also affirmed the dismissal. Chang filed her lawsuit against the school and officials in October 2009. She alleged her due process rights were violated under the 14th Amendment and the Indiana Constitution, and that the school officials’ acts breached a contract she had with the school. She also alleged tortious interference with contract.
The breach of contract claims were the only ones to survive summary judgment motions and go before a jury. The jury ruled in favor of the school.
The Court of Appeals concluded that Chang failed to designate any evidence that the nursing department’s decision to dismiss her was arbitrary, capricious or made in bad faith, so she wasn’t entitled to summary judgment on the breach of contract claims. The judges also found the evidence supported the jury verdict against her regarding those claims.
They affirmed summary judgment for the trustees and other school officials on Chang’s claims for due process violations and tortious interference. Regarding the tortious interference claims, Chang failed to comply with the notice provisions of the Indiana Tort Claims Act.•