ILNews

Indiana Court Decisions – Feb. 5 to 18, 2014

IL Staff
February 26, 2014
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7th Circuit Court of Appeals

Feb. 7

Criminal – Sentencing Guidelines/Identify Theft

United States of America v. Timmothy Williams

13-1260

An Indiana man convicted of stealing the Social Security numbers of more than 10 people must be sentenced to less time in prison because of a recent Supreme Court of the United States decision, the 7th Circuit Court of Appeals ruled in a five-page opinion.

Timmothy Williams’ sentence will be significantly reduced, the Circuit Court ruled, because he was sentenced under guidelines calling for longer incarceration that were revised after Williams committed the crimes.

Williams pleaded guilty in U.S. District Court for the Northern District of Indiana, Hammond, to an 11-count indictment charging him with identity theft, making a false statement to an IRS agent and aggravated identity theft. He was sentenced to 56 months in prison, compounded by an additional 24 months because there were more than 10 victims. In a per curiam opinion, a panel of the Circuit Court ruled that there would have been no constitutional problems with the sentence under prior 7th Circuit precedent.

“While this case was on appeal, however, the Supreme Court held that applying the guidelines in effect at sentencing violates the ex post facto clause if it raises the defendant’s imprisonment rage,” the court wrote, citing Peugh v. United States, 133 S.Ct. 2072, 2078 (2013).

The panel remanded the case to Northern District Chief Judge Philip P. Simon with instructions to resentence Williams to 30 to 37 months in prison.

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Feb. 14

Criminal – Sentence/Supervised Release

United States of America v. Steven J. Perry

13-2182

In a case of first impression for the 7th Circuit Court of Appeals, the court agreed with its fellow Circuit courts that prior time served for violations of supervised release is not credited toward nor limits the statutory maximum a court may impose for subsequent violations of supervised release pursuant to 18 U.S.C. Section 3583(e)(3).

The District Court in South Bend sentenced Steven Perry to a five-year term of imprisonment as well as a 10-year term of supervised release in 2013. This was the second time Perry had violated the terms of his supervised release imposed in 2005 based on his 2003 offense. The probation officer mistakenly stated in his report that Perry was subject to the statutory minimum five-year term of imprisonment mandated by the current version of Section 3583(k).

But this was an error, the 7th Circuit held, because Perry was subject to the version of this statute in effect at the time of his initial offense. That version of Section 3583(k) authorized a maximum sentence of only two years; the amended version the probation officer relied on did not take effect until July 27, 2006, and is not retroactive.

Perry argued that this maximum two-year term of imprisonment should be reduced by the three months that he served in prison in 2009 for a prior violation of his supervised release. The statute he relies on 18 U.S.C. Section 3583(e)(3) was amended in 2003 to include the phrase “on any such revocation.” Before the amendment was added, the Circuit courts interpreted this statute to allow credit time toward the maximum term of imprisonment authorized by statute. But since that amendment, every appellate court to address this issue has determined that language eliminates the credit time. The 7th Circuit agreed with its fellow Circuit courts.

The judges remanded for the District Court to sentence Perry to no more than two years imprisonment and to determine his conditions of supervision.



Indiana Supreme Court

Feb. 6

Civil Plenary – Common Law Sovereign Immunity

Veolia Water Indianapolis, LLC, City of Indianapolis, Department of Waterworks, and City of Indianapolis v. National Trust Insurance Company and FCCI Insurance Company a/s/o Ultra Steak, Inc., et al

49S04-1301-PL-8

The Indiana Supreme Court held that for-profit, private company Veolia Water is not entitled to common law sovereign immunity from liability for damages resulting from a fire that destroyed an Indianapolis Texas Roadhouse restaurant in 2010.

When Indianapolis firefighters arrived at the restaurant, they were delayed in fighting the fire because of several frozen hydrants. As a result, the restaurant was a total loss. At the time of the fire, Veolia Water Indianapolis LLC was responsible for operating the city’s water utility pursuant to an agreement with the city. The restaurant’s insurers brought this lawsuit, alleging the hydrants froze because the private companies to whom Veolia licensed access failed to properly close the hydrants.

The trial court held that the city is not entitled to common law sovereign immunity or statutory sovereign immunity under the Indiana Tort Claims Act regarding the water supply and that Veolia is not entitled to common law sovereign immunity on the matter. The Court of Appeals reversed and held that the two entities are entitled to common law sovereign immunity.

The COA urged the Supreme Court to take this case to rule on the growing use and complexity of public-private contracts. The justices relied on Metal Working Lubricants Co. v. Indianapolis Water Co., 746 N.E.2d 352 (Ind. Ct. App. 2001), and a test outlined by the 5th Circuit Court of Appeals to affirm the trial court’s decision that Veolia isn’t entitled to sovereign immunity.

“Despite the arguments that the City and Veolia advance, we are persuaded by the Insurers’ claim that the profit motive of Veolia — a for-profit, private company operating a public water utility under contract with a governmental unit — precludes extension of the common law sovereign immunity to which the City is entitled. Therefore, Veolia is not entitled to common law sovereign immunity on the Insurers’ claims that it failed to provide an adequate supply of water from which to fight the fire. The case against Veolia may proceed; although the Insurers’ case may not be successful on its merits, or even reach the merits, their case survives Veolia’s Rule 12 motion,” Justice Steven David wrote.

David encouraged trial courts to look to the 5th Circuit test for guidance when these kinds of issues arise in court.

The justices also affirmed that the city is not entitled to statutory sovereign immunity from liability regarding the inadequate water supply, but found the city is entitled to common law sovereign immunity.

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Feb. 12

Juvenile – CHINS

In the Matter of S.D., Alleged to be a Child in Need of Services, J.B. v. Indiana Department of Child Services

49S05-1309-JC-585

The Indiana Supreme Court reversed the finding that a child with special needs is a child in need of services after ruling that the circumstances of this case don’t support that the mother needed the court’s coercive intervention to address concerns in the CHINS petition.

Mother J.B. has five children, including S.D., who at 2 years old required hospitalization in Indianapolis for cardiomyopathy. She was placed on a ventilator, and given a tracheostomy and gastrostomy. As a result of her hospitalization, J.B. moved her other children from Gary to Indianapolis.

The Department of Child Services initiated CHINS proceedings regarding all of the children because J.B. failed to enroll them in school and had become disengaged from S.D.’s care plan. She allowed the state to remove the four siblings from her care to focus on S.D.’s treatment.

But J.B. found stable housing and the four children were returned to her care. The petition regarding S.D. continued because, although S.D. was ready to come home, J.B. had not met the training requirements regarding care of S.D. for her to be released. The hospital would not discharge S.D. until mother and a second caregiver completed significant medical training. S.D.’s grandmother initially was going to be the second caregiver, but DCS did not approve her based on a background check. The next person chosen as the second caregiver was unable to complete a 24-hour practice session at the hospital because of her work schedule.

“Mother’s most significant failure—to complete the home-care simulation—appears as much a product of DCS’s intervention as it is a sign of her need for that intervention,” Justice Loretta Rush wrote, pointing out that DCS’ disapproval of the grandmother required the mother to “go back to the drawing board” to recruit someone else.

“S.D. and her siblings were legitimately in need of services when DCS filed its petitions. But by the fact-finding hearing, Mother had voluntarily addressed all but one of those concerns to the trial court’s satisfaction. In view of that judgment, the remaining evidence fails to show that Mother was likely to need the court’s coercive intervention to complete that final item — and when that coercion is not necessary, the State may not intrude into a family’s life. We therefore reverse the trial court’s judgment that S.D. was a child in need of services.”

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Feb. 13

Civil Tort – Hazing/Personal Injury

Brian Yost v. Wabash College, Phi Kappa Psi Fraternity- Indiana Gamma Chapter at Wabash College, Phi Kappa Psi Fraternity, Inc., and Nathan Cravens

54S01-1303-CT-161

See page 1.



Indiana Court of Appeals

Feb. 5

Civil Tort – Municipality/Damages

The Board of Commissioners of the County of Jefferson v. Teton Corporation, Innovative Roofing Solutions, Inc., Gutapfel Roofing, Inc. and Daniel L. Gutapfel

72A04-1302-CT-55

The Indiana Court of Appeals adopted the “majority approach” in a waiver of subrogation issue and concluded a southern Indiana county waived its right to subrogate any and all claims covered by its property insurance. Jefferson County sued contractors after its courthouse caught fire during renovations in 2009.

Jefferson County entered into a contract with Teton Corp. to renovate the building and subcontract work to several companies. The contract prepared by the American Institute of Architects stated that Jefferson County, as owner of the project, should obtain separate insurance. Instead of obtaining separate property or builder’s risk insurance for the project, the county relied on its existing property and casualty insurance. The county also did not tell Teton that it wasn’t getting the separate insurance. The contract also required Teton to obtain contractors liability insurance.

During renovations, a fire broke out in May 2009 causing more than $6 million in damages. The county relied on its general insurance policy, but that did not cover all of the damages.

The county sued Teton and other defendants involved in renovations, claiming negligence, breach of implied warranties and breach of contract. The defendants argued Jefferson County agreed to provide insurance for the project and waived its subrogation rights against them, so the county can’t recover damages that were caused by the fire.

In granting the defendants’ motion for summary judgment, the trial court ruled that the county as owner of the project was to obtain insurance and that insurance would be the source of compensation in the event of a loss. The contract also says every party would waive the right to seek recovery of the loss covered by the insurance policy.

Jefferson County conceded that pursuant to the terms of the AIA contract, subrogation is barred when a property owner seeks to recover damages to its insured “Work” property, but maintains that “this case involves damage to non-Work property.” And therefore, Jefferson County argues that under the AIA contract, Teton was responsible for procuring insurance to cover damages for claims “other than to the Work.”

In support of its argument, Jefferson County relied on Midwestern Indemnity Company v. Systems Builders, Inc., 801 N.E.2d 661 (Ind. Ct. App. 2004), which concluded that under the AIA contract there is a distinction between work and non-work property, and the scope of the waiver is limited to damages to the work property.

The interpretation of the waiver provision has been litigated in other jurisdictions and the Court of Appeals, but not made it to the Indiana Supreme Court. After examining caselaw, Judges Paul Mathias and Edward Najam affirmed, ruling the “majority view” is the better approach to risk allocation in construction projects in general, which rejects the “work” v. “non-work” approach.

They believed adopting the “minority, non-Work distinction” used previously by the Indiana Court of Appeals would “throw many projects into protracted litigation, possibly even years after project completion and acceptance.”

“Each and every major construction project adds both value and risk to the owner’s property. Section 11.3.1 of the AIA contract therefore requires owners to insure their interests in the construction project at least to the value of the underlying contract.

The AIA contract expressly requires property owners to separately insure these interests and, in order to facilitate the completion of the project without delaying and debilitating litigation, to obtain an ‘all-risk’ insurance policy that waives the carrier’s rights to be subrogated to any loss arising within the extremely broad coverage described in the contract. If the owner does not secure such insurance, then it still waives its subrogation rights for any loss described within the AIA contract that it sustains,” Mathias wrote.

Judge Elaine Brown dissented, believing the court should uphold the minority approach as outlined in Midwestern. By adopting the majority approach, the majority in this case has prevented the county from being able to attempt to recoup damages to non-work property from Teton’s liability insurer based upon alleged negligence.

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Feb. 13

Civil Plenary – Contract/Material Breach

State of Indiana, acting on behalf of the Indiana Family & Social Services Administration v. International Business Machines Corporation

49A02-1211-PL-875

The Indiana Court of Appeals has reversed a Marion County judge’s finding that IBM did not materially breach the contract it had with the state to modernize its welfare system. As a result, the appeals court ordered a determination of damages to the state.

The state and IBM entered into a billion-dollar contract to update and modernize Indiana’s welfare system in December 2006. But the process was plagued with problems and the state ended the 10-year contract in October 2009 “for cause,” in part because of IBM’s “numerous and repeated quality and timeliness failures.”

When the contract was terminated, Indiana had paid IBM nearly $437 million, plus $4.4 million for disengagement services.

The state and IBM sued each other – the state sought $170 million; IBM wanted at least $52 million. Marion Superior Judge David Dreyer in July 2012 awarded IBM $52 million, plus $10 million in prejudgment interest. He found that IBM did not materially breach the contract.

But two of the three judges on the appeals panel found this was an error, that he should have considered IBM’s failures to meet federal program targets in determining whether to terminate the contract for cause. They also held that the economic downturn and flooding that hit Indiana in 2008 should not have been considered as reasons to excuse IBM’s performance because the contract provided IBM with a remedy in the event of these issues.

“We find that the heart of this contract was to provide services to the poor in a way that complied with federal law,” Chief Judge Nancy Vaidik wrote. “In this respect IBM’s performance, as the trial court explained, ‘consistently missed the mark.’ This substandard performance by IBM, $437 million and 36 months later, went to the essence of this contract.”

The COA upheld that IBM is entitled to the $40 million in assignment fees, despite the material breach because these fees represent value to the state in the ability to assume certain subcontracts, as well as that deferred fees are not payable to IBM in the event the contract was terminated for cause.

The state no longer has to pay the $2.5 million in early termination close out payments because of IBM’s breach, but it must pay the $9.5 million for the equipment it kept after cancelling the contract.

IBM is not entitled to $10.6 million prejudgment interest, the court held. The judges remanded for a determination of the amount of fees IBM is entitled to for change orders 119 and 133 and to determine the state’s damage and offset any damages awarded to IBM as a result of its material breach.  

Judge Ezra Friedlander dissented in part, believing that IBM did not materially breach the contract and that IBM can recover transition fees.

Criminal – Public Intoxication Statute

Rodregus Morgan v. State of Indiana

49A02-1304-CR-386

The Indiana Court of Appeals has found that the portion of the public intoxication statute enacted in 2012 that uses the term “annoys” is void for vagueness. As such, it reversed a man’s conviction for public intoxication that was based on annoying behavior.

Indianapolis Metropolitan Police officer Brycen Garner arrested Rodregus Morgan after believing him to be intoxicated. Garner found Morgan’s brother yelling at Morgan at a bus stop after Morgan would not wake up. Garner woke Morgan up to have him leave the shelter and saw his eyes were blood shot and glassy, and he was unsteady.

While Garner completed paperwork, Morgan yelled and continued to be agitated. The state charged him with Class D felony intimidation and Class B misdemeanors public intoxication and disorderly conduct.

The officer identified Morgan’s behavior as “annoying” when he placed him under arrest.

Morgan was convicted of the misdemeanor charges.

He argued that I.C. 7.1-5-1-3, which states that it is a Class B misdemeanor if an individual is intoxicated while in a public place and harasses, annoys or alarms another person, is unconstitutionally vague. The statute doesn’t define “annoys” and there is no objective standard for evaluating what “annoys” constitutes, Morgan claimed.

“ … we find the challenged portion of Indiana’s public intoxication statute to be unconstitutionally vague. Namely, the statute neither requires that a defendant have specifically intended to annoy another, nor does it employ an objective standard to assess whether a defendant’s conduct would be annoying to a reasonable person,” Judge Patricia Riley wrote. “Furthermore, the statute does not mandate that the defendant have been first warned that his behavior was considered annoying conduct. Instead, this section of the statute enables arbitrary and discriminatory enforcement because the illegality of any conduct — no matter how trivial or how substantial — is based solely on the subjective feelings of a particular person at any given time.”

The judges emphasized they are only holding the term “annoying” void for vagueness and removing that from the section does not inhibit the statute’s execution, so the remainder of the section stands.

They also affirmed his conviction for disorderly conduct based on sufficient evidence.

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Feb. 14

Civil Plenary – Educational Service Providers

Teaching Our Posterity Success, Inc. v. Indiana Department of Education and Indiana State Board of Education

49A05-1308-PL-386

Noting that the Indiana Supreme Court has been divided on this issue – but will take it up soon – the Indiana Court of Appeals has held that it could review the dismissal of a petition for judicial review even though the company filing the petition did not file a complete, certified agency record.

Teaching Our Posterity Success Inc. sought judicial review of the Indiana Department of Education’s and State Board of Education’s decision to remove TOPS from the list of approved supplemental educational services providers.

The DOE sent TOPS a letter stating it reviewed TOPS’ request for appeal and is keeping TOPS off the provider list. It does not contain any factual findings regarding the decision nor does it reference any other document that would contain such findings.

 When it filed its petition for judicial review, TOPS included a copy of the letter, which it argued failed to make specific findings and was arbitrary, capricious and an abuse of discretion. The company did not submit additional materials.

The trial court granted the DOE’s motion to dismiss.

Judge Michael Barnes pointed out that the Supreme Court is split on the effect of the failure to timely file the agency record on a petition for judicial review. It has granted transfer to two cases that again present this issue. But in the meantime, Barnes wrote that the panel believes that although best practices is to timely file the entire agency record, where the record is not necessary for review, the dismissal of the petition is not warranted.

Before the trial court, the DOE admitted that the letter was a final agency decision, but on appeal argued the letter may not even be genuine and that another document could exist elsewhere that provided the necessary findings and conclusions.

“The DOE’s argument seems to suggest either of the following: that counsel for TOPS, an officer of the court, knowingly filed a verified petition for judicial review, under penalties for perjury, falsely identifying the letter as DOE’s final agency action, or the DOE has somewhere hidden away in its records a document that lists its findings and conclusions regarding TOPS but never provided it to TOPS,” Barnes wrote. “Neither option is palatable and we decline to entertain them, particularly given that the DOE did not make any such arguments regarding the letter before the trial court.”

The trial court erred in dismissing the petition, so the appeals court remanded this case to the DOE for entry of the statutorily mandated findings and conclusions to accompany its final order.

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Feb. 17

Criminal – Intimidation

Rakiea McCaskill v. State of Indiana

49A02-1306-CR-480

The Indiana Court of Appeals reversed a woman’s misdemeanor intimidation conviction stemming from her communications with the wife of her baby’s father. The court held that the state was unable to prove she committed intimidation as charged.

Rakiea McCaskill had a one-year-old child with Tamika Matlock’s husband when McCaskill called Matlock four times the evening of Oct. 28 and morning of Oct. 29, 2012, and threatened to beat her up. She also said she was outside of Matlock’s home.

The state charged McCaskill under subsection (a)(1) of the intimidation statute, saying she communicated a threat with the intent that Matlock engage in conduct against her will: to leave her husband and/or cause her husband to leave her.

The Court of Appeals reversed the conviction, noting there is insufficient evidence of McCaskill’s intent because she never specified the reason for her threats toward Matlock. At trial, Matlock admitted she didn’t know why McCaskill wanted to beat her up. The state argued there is enough circumstantial evidence to show intent. It argued that because McCaskill and Matlock do not have a relationship other than through the husband, McCaskill’s aim must have been for Matlock to leave her husband.

McCaskill had been in a relationship with the husband for several years before threatening Matlock, Judge Rudolph Pyle III wrote. It is not clear why McCaskill would suddenly start threatening Matlock with that aim.

The state did argue at McCaskill’s trial for the lesser-included offense of harassment, which is supported by the evidence. As such, the Court of Appeals ordered the Class A misdemeanor intimidation charge vacated and that the trial court enter judgment of Class B misdemeanor harassment.•

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  1. I like the concept. Seems like a good idea and really inexpensive to manage.

  2. I don't agree that this is an extreme case. There are more of these people than you realize - people that are vindictive and/or with psychological issues have clogged the system with baseless suits that are costly to the defendant and to taxpayers. Restricting repeat offenders from further abusing the system is not akin to restricting their freedon, but to protecting their victims, and the court system, from allowing them unfettered access. From the Supreme Court opinion "he has burdened the opposing party and the courts of this state at every level with massive, confusing, disorganized, defective, repetitive, and often meritless filings."

  3. So, if you cry wolf one too many times courts may "restrict" your ability to pursue legal action? Also, why is document production equated with wealth? Anyone can "produce probably tens of thousands of pages of filings" if they have a public library card. I understand this is an extreme case, but our Supreme Court really got this one wrong.

  4. He called our nation a nation of cowards because we didn't want to talk about race. That was a cheap shot coming from the top cop. The man who decides who gets the federal government indicts. Wow. Not a gentleman if that is the measure. More importantly, this insult delivered as we all understand, to white people-- without him or anybody needing to explain that is precisely what he meant-- but this is an insult to timid white persons who fear the government and don't want to say anything about race for fear of being accused a racist. With all the legal heat that can come down on somebody if they say something which can be construed by a prosecutor like Mr Holder as racist, is it any wonder white people-- that's who he meant obviously-- is there any surprise that white people don't want to talk about race? And as lawyers we have even less freedom lest our remarks be considered violations of the rules. Mr Holder also demonstrated his bias by publically visiting with the family of the young man who was killed by a police offering in the line of duty, which was a very strong indicator of bias agains the offer who is under investigation, and was a failure to lead properly by letting his investigators do their job without him predetermining the proper outcome. He also has potentially biased the jury pool. All in all this worsens race relations by feeding into the perception shared by whites as well as blacks that justice will not be impartial. I will say this much, I do not blame Obama for all of HOlder's missteps. Obama has done a lot of things to stay above the fray and try and be a leader for all Americans. Maybe he should have reigned Holder in some but Obama's got his hands full with other problelms. Oh did I mention HOlder is a bank crony who will probably get a job in a silkstocking law firm working for millions of bucks a year defending bankers whom he didn't have the integrity or courage to hold to account for their acts of fraud on the United States, other financial institutions, and the people. His tenure will be regarded by history as a failure of leadership at one of the most important jobs in our nation. Finally and most importantly besides him insulting the public and letting off the big financial cheats, he has been at the forefront of over-prosecuting the secrecy laws to punish whistleblowers and chill free speech. What has Holder done to vindicate the rights of privacy of the American public against the illegal snooping of the NSA? He could have charged NSA personnel with violations of law for their warrantless wiretapping which has been done millions of times and instead he did not persecute a single soul. That is a defalcation of historical proportions and it signals to the public that the government DOJ under him was not willing to do a damn thing to protect the public against the rapid growth of the illegal surveillance state. Who else could have done this? Nobody. And for that omission Obama deserves the blame too. Here were are sliding into a police state and Eric Holder made it go all the faster.

  5. JOE CLAYPOOL candidate for Superior Court in Harrison County - Indiana This candidate is misleading voters to think he is a Judge by putting Elect Judge Joe Claypool on his campaign literature. paragraphs 2 and 9 below clearly indicate this injustice to voting public to gain employment. What can we do? Indiana Code - Section 35-43-5-3: Deception (a) A person who: (1) being an officer, manager, or other person participating in the direction of a credit institution, knowingly or intentionally receives or permits the receipt of a deposit or other investment, knowing that the institution is insolvent; (2) knowingly or intentionally makes a false or misleading written statement with intent to obtain property, employment, or an educational opportunity; (3) misapplies entrusted property, property of a governmental entity, or property of a credit institution in a manner that the person knows is unlawful or that the person knows involves substantial risk of loss or detriment to either the owner of the property or to a person for whose benefit the property was entrusted; (4) knowingly or intentionally, in the regular course of business, either: (A) uses or possesses for use a false weight or measure or other device for falsely determining or recording the quality or quantity of any commodity; or (B) sells, offers, or displays for sale or delivers less than the represented quality or quantity of any commodity; (5) with intent to defraud another person furnishing electricity, gas, water, telecommunication, or any other utility service, avoids a lawful charge for that service by scheme or device or by tampering with facilities or equipment of the person furnishing the service; (6) with intent to defraud, misrepresents the identity of the person or another person or the identity or quality of property; (7) with intent to defraud an owner of a coin machine, deposits a slug in that machine; (8) with intent to enable the person or another person to deposit a slug in a coin machine, makes, possesses, or disposes of a slug; (9) disseminates to the public an advertisement that the person knows is false, misleading, or deceptive, with intent to promote the purchase or sale of property or the acceptance of employment;

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