7th Circuit Court of Appeals
Civil – Transfer/First Impression
Tommy L. Morris, personal representative of the estate of Thomas Lynn Morris v. Salvatore Nuzzo
A federal judge in the Southern District of Indiana erred when she determined that a claims adjuster from Ohio was fraudulently joined to a case that was transferred out of federal court in Ohio to Indiana, the 7th Circuit Court of Appeals ruled. The case also presented two issues of first impression for the Circuit.
The estate of Thomas Lynn Morris filed a lawsuit in Ohio state court against Mid-Century and Salvatore Nuzzo, alleging tortious bad faith failure to pay an insurance claim and breach of contract. Mid-Century was the insurer of the car driven by Daemon Sampson in Brown County, Ind., which was involved in an accident that killed passenger Morris. Nuzzo, a resident of Ohio, was the claims adjustor assigned to handle the estate’s claims. Mid-Century was based out of California.
The lawsuit was removed to federal court in Ohio, which then granted Mid-Century and Nuzzo’s request to transfer the case to federal court in Indiana. There, Judge Sarah Evans Barker ruled that Nuzzo had been fraudulently joined and should be dismissed because under Indiana law, the claims against him were not cognizable and stood no chance of success. Those claims are potentially viable under Ohio law.
“The question before us is whether the district court erred in applying the fraudulent joinder doctrine to Nuzzo, whose presence triggers the forum defendant rule but does not compromise the parties’ complete diversity,” wrote Judge James Zagel, of the U.S. District Court for the Northern District of Illinois, Eastern Division, sitting by designation. “In other words, we are asked to determine whether the fraudulent joinder doctrine creates an exception to the forum defendant rule. It does not appear that any court of appeals has answered this question.”
The 7th Circuit determined that the costs of expanding the doctrine could far outweigh the benefits of policing against what appears to be an exceptionally rare abusive pleading tactic.
Another issue of first impression arose: whether, or to what extent, a federal court can make choice of law determinations in conducting a fraudulent joinder analysis. The appeals court held that these determinations can be made as part of the fraudulent joinder analysis where the choice of law decision is dispositive to the outcome, and where the removing defendant bears the same “heavy burden” to make the choice of law showing.
“We believe that there was more than a reasonable possibility that the Ohio state court would have decided against Nuzzo and applied Ohio law to the Estate’s bad faith failure to settle claim. Thus, regardless of what law the Ohio state court would have ultimately applied to the breach of contract claim, Nuzzo was not fraudulently joined and his presence prevented removal under 28 U.S.C. § 1441(b)(2). Because the Estate timely objected to this procedural defect in removal, it has a right to remand,” Zagel wrote.
Indiana Supreme Court
Discipline – Attorney
In the Matter of: Arthur J. Usher, IV
Indianapolis attorney Arthur J. Usher IV’s rejected romantic advances toward a summer intern led him to have his paralegal email more than 50 attorneys a video clip purporting to depict the former intern nude in a film, according to the Indiana Supreme Court. Usher’s bid to discredit and humiliate her while she was seeking employment resulted in a three-year suspension.
Usher, who met Jane Doe in 2006 while he was a partner at Bose McKinney & Evans LLP, had moved to Krieg DeVault LLC when the former intern began seeking employment at Bose and elsewhere, according to the 14-page per curiam Supreme Court disciplinary order.
Usher expressed an interest in having a romantic relationship with Jane Doe, but she always declined. In 2008, their relationship deteriorated primarily due to Usher’s continued romantic pursuit, the opinion says. Usher then asked the producer of a horror movie in which Jane Doe appeared to help me get a clip from a different horror movie she was in that showed her nude. After learning of Usher’s meeting with the producer, Jane Doe ended their friendship, which led to Usher attempting to humiliate her and interfere with her employment prospects.
After the former intern accepted a job offer at Bose, Usher provided the film clip to a Bose attorney and “attempted to convince the attorney that Jane Doe’s appearance in a horror film in a state of undress would have an adverse effect on the ability of Bose to retain and/or attract clients. Suspicious of (Usher’s) motives, the attorney did not take (Usher’s) suggestion to send the clip to the firm’s executive committee. Jane Doe commenced her employment with Bose despite (Usher’s) efforts to interfere.”
Usher then had his paralegal go to Kinko’s, establish an email address based on a Bose attorney’s name, and send an email containing the film clip to at least 51 attorneys, many of them at Bose, but others also at Barnes & Thornburg, Baker & Daniels, Locke Reynolds, Ice Miller and Krieg DeVault, the court notes.
According to the order, the email subject line was, “Firm slogan becomes ‘Bose means Snuff Porn Film Business’ w/addition of (Jane Doe).” The email contained contrived dialogue “intended to appear to be an exchange of opinions among lawyers and other fictitious persons,” according to the order.
Usher did this even though he knew Jane Doe hadn’t taken off her clothes for the scene, the court said. He was aware that a body double had been used, but didn’t disclose this in the email, giving the impression Jane Doe appeared topless in the movie.
“The hearing officer rejected (Usher’s) assertion that the email was a prank or humorous. Rather, it was a mean-spirited and vindictive attempt to embarrass and harm Jane Doe, both personally and professionally,” the court said.
When Kreig DeVault was presented with a protective order that Doe had obtained against Usher, the firm demanded his resignation, according to the order. The court in a footnote acknowledges Doe filed a civil action against Usher that he said was settled “‘amicably’ on the eve of trial with his payment of an undisclosed amount to Jane Doe.”
While four of the justices agreed on a three-year suspension without automatic reinstatement, Justice Stephen David dissented and would have disbarred Usher. The court said Usher “has shown no substantial remorse or insight into his misconduct. It is this lack of insight that leads us to believe that a substantial sanction is necessary.”
Usher, who had been a sole practitioner after he was forced to leave Kreig DeVault, was found to have violated the Indiana Professional Conduct Rules 3.3(a)(1), 8.1(a), 8.1(b), 8.4(a), 8.4(c), and 8.4(d), “by, among other things, engaging in a pervasive pattern of conduct involving dishonesty and misrepresentation that was prejudicial to the administration of justice,” the court said.
Indiana Tax Court
Tax – County Government
Board of Commissioners of the County of Jasper, Indiana v. Micah G. Vincent, Commissioner, Indiana Department of Local Government Finance
Jasper County was improperly denied the ability to establish a cumulative building fund and tax levy to enlarge and remodel a hospital, the Indiana Tax Court ruled.
“This case concerns the Department of Local Government Finance’s (DLGF) determination that Indiana Code § 16-22-5-4 provides for the establishment of only one cumulative building fund and levy during the life of a county hospital,” Tax Court Judge Martha Blood Wentworth wrote. “The Court finds it does not.”
Jasper County Commissioners sought to levy a tax of up to 0.7 cents per $100 of assessed value for up to three years, but the DLGF refused. The DLGF interpreted a phrase in the statute, “for not more than twelve (12) years,” to means that a county may only establish one cumulative building fund and levy for up to 12 years, not that it may establish a new fund and levy every 12 years.
“None of the DLGF’s reasons persuade the Court that Indiana Code § 16-22-5-4 provides for a single fund and levy during the service life of a county hospital,” Wentworth wrote.
The decision was “arbitrary, capricious, and contrary to law. Consequently, the Court reverses the DLGF’s final determination and remands this matter for action consistent with this opinion.”
Indiana Court of Appeals
Criminal – Improper Communications with Jury
Jason Lee Sowers v. State of Indiana
The bailiff at a man’s trial for criminal recklessness and resisting law enforcement improperly communicated with the jury foreperson regarding reaching a verdict, leading the Indiana Court of Appeals to reverse Jason Lee Sowers’ convictions.
Sowers was on trial after he fled from police, struck one officer’s car causing it to flip, and ran into a nearby home. Sowers suffered from schizo-affective and bipolar disorder and had previously been committed for treatment. He was charged with Class C felony battery and Class D felonies criminal recklessness and resisting law enforcement. He was also alleged to be a habitual offender.
During deliberations the jury foreperson asked the bailiff if “they were to stay and deliberate until they reached a 100 percent agreement with the counts.” The jury instructions said “To reach a verdict, each of you must agree to it.” The bailiff told the foreperson that the judge stated they have to be 100 percent in agreement. Sowers was found guilty but mentally ill on the Class D felonies, and not responsible by reason of insanity on the battery charge. The judge later found him to be a habitual offender.
A poll of the jury about whether these were their true verdicts led Juror 3 to say “I have a conscience about it but yes.” This juror later indicated that the jury had been told there had to be verdicts.
Because Sowers didn’t object at trial, the judges had to decide on appeal whether the bailiff’s communication with the foreperson resulted in fundamental error. It did, they concluded, noting that Coolman v. State, 163 Ind. 503, 72 N.E. 568 (1904), is instructive. The bailiff is not to communicate with a juror except in certain circumstances, such as to ask if they have agreed on a verdict or when ordered to do so by the court.
“Here, we observe that the question was not whether the jurors had to reach 100 percent agreement to reach a verdict, but whether ‘they were to stay and deliberate until they reached a 100 percent agreement with the counts,’” Judge Elaine Brown wrote for the majority in Jason Lee Sowers v. State of Indiana, 08A02-1208-CR-640. And the record reveals the bailiff’s comment was told to the foreperson and shared with at least one other juror. The error constitutes a “blatant violation of basic principles” and that error denied Sowers fundamental due process.
Judge Cale Bradford wrote in his dissent that he would uphold the jury’s convictions, finding the communication did not result in a fundamental error.
“The communication between the bailiff and the jury foreperson did not make it impossible for Sowers to receive a fair trial. At most, the record suggests that Juror Overman may have relied on the jury foreperson’s recitation of the bailiff’s answer regarding whether the jurors had to agree ‘100%’ to return a verdict,” he wrote.
However, he would vote for remand with instructions to amend the sentencing order to treat the habitual offender enhancement as a sentence enhancement of one of the underlying felony convictions rather than treating it as a separate consecutive sentence.
Juvenile – Probable Cause
C.B. v. State of Indiana
A Court of Appeals panel reversed a ruling in a juvenile case and set a new standard for how juvenile judges must handle conditional admission agreements when probable cause is disputed.
C.B., an 11-year-old girl, entered into a conditional admission agreement in which she admitted to what would have been Class A misdemeanor battery if committed by an adult for striking younger children. The state dropped a separate delinquency petition. If she didn’t reoffend within 90 days, C.B.’s remaining petition also would be dismissed. If she violated the agreement, her case would move immediately to disposition.
When the state filed probable cause for another alleged instance of battery, witnesses to that alleged offense could not attend the hearing, so the state dropped the petition. The trial court nevertheless moved to disposition, which the Court of Appeals ruled was error.
“We conclude that before a juvenile court can determine that a conditional admission agreement has failed based upon probable cause that a new offense has been committed, the juvenile court must independently find probable cause instead of merely relying on the probable cause finding that authorized the filing of the delinquency petition,” the majority ruled.
“Additionally, a juvenile must be given a meaningful opportunity to challenge the existence of probable cause. Here, because the juvenile court relied solely on the finding of the probable cause that supported the filing of the new delinquency petition, and C.B. was not given a meaningful opportunity to challenge probable cause, we reverse.
“The only evidence presented indicated that the incident did not occur. To be clear, we are not saying that anytime a juvenile presents evidence that tends to negate probable cause, a juvenile court must grant a motion to reconsider probable cause,” Judge John Baker wrote in an opinion joined by Judge Patricia Riley. “However, under these facts and circumstances where the only evidence indicates a lack of probable cause, it is error to deny a motion to reconsider probable cause.”
Judge Michael Barnes concurred in a separate opinion that said the facts of C.B.’s case should be considered without imposing such broad conditions. “I think the language used by the majority could be construed too broadly. I respectfully believe we must be careful not to overreach and that we should limit our holding to the particular facts of this case,” Barnes wrote.
Criminal – Belated Appeal/P.C. Rule 2
Mark L. Jordan v. State of Indiana
The Indiana Court of Appeals declined to hold a man at fault for the failure to file a timely notice of appeal, pointing to his attorney’s death from cancer shortly after the sentencing hearing.
Mark Jordan appealed the denial of his petition for relief under Indiana Post-Conviction Rule 2. He was convicted of burglary, theft and auto theft in January 2010 and sentenced June 4, 2010, to 23 years. At the time of the sentencing, Jordan indicated he wanted to appeal, but his attorney, Frederick Work, said the decision to appeal would be made after talking to Jordan’s family.
Jordan’s mother paid Work to handle the appeal, but on July 29, 2010, he was admitted to a hospital for surgery to treat a recurrence of cancer. He died Sept. 13, 2010. The only activity on Jordan’s case during this time was an August letter Jordan sent inquiring whether an appeal had been filed. No appeal was filed within the 30-day time period.
In 2012, when represented by counsel, Jordan filed his petition for post-conviction relief in order to file a belated appeal. The trial court denied his request without a hearing or specific findings.
“We decline to say that a post-conviction petitioner is at fault for failing to file a timely notice of appeal when his attorney becomes terminally ill shortly after the sentencing hearing, and the petitioner is incarcerated,” Judge John Baker wrote.
The appellate judges found Jordan was not at fault for Work’s failure to timely file notice of appeal. Jordan was in prison and unaware of the circumstances, and his family believed that Work was preparing for the case during the time he was actually fighting cancer.•