ILNews

Judges order more proceedings in low-income apartment tax credit case

Back to TopCommentsE-mailPrintBookmark and Share

Because there are genuine issues of material fact regarding claims made against apartment management company Flaherty & Collins in a complaint alleging fraud and other charges dealing with renting apartments to people who did not qualify based on income requirements, the Indiana Court of Appeals ordered more proceedings on the case.

In Flaherty & Collins, Inc. v. BBR-Vision I, L.P., and New Castle Realty, LLC, 49A05-1111-PL-569, F&C entered into a management agreement with BBR-Vision I to manage Autumn Oaks in New Castle as an independent contractor. BBR owns the complex, in which a majority of the apartments are designated as low-income units, qualifying them for tax credits under Section 42 of the Internal Revenue Code. New Castle Realty and BBR had a partnership agreement.

F&C hired several on-site employees, including a manager, and F&C was required to obtain income certifications and verify them before renting to someone. In September 2001, F&C discovered that a previous onsite manager may have forged a resident’s income documents from his employer to make him eligible to live in the low-income apartment. Other instances were discovered of people in apartments they did not financially qualify to live in. BBR was informed in November of the issues, which were a concern because BBR and its members could lose tax credits if the IRS conducted an audit and demanded a recapture.

In January 2002, BBR fired F&C as manager. In April of that year, BBR and NCR sued F&C alleging breach of contract, negligent supervision, indemnity, fraud and civil recovery of treble damages by a crime victim pursuant to the Crime Victims Statute.

On interlocutory appeal, F&C appealed the trial court’s ruling that evidence shows F&C’s conduct violated the Crime Victims Statute, that NCR had standing to assert its claim as a third-party beneficiary, and that the indemnity clause in the management agreement between F&C and BBR required F&C to pay BBR's and NCR’s attorney fees.

The COA reversed the trial court’s interpretation that Section 12(a) of the agreement requires F&C to pay attorney fees for first-party actions. The language of that section doesn’t create an exception to the general rule that an indemnity clause creates liability to pay only for third-party actions, Senior Judge Carr Darden wrote.

The appeals court also found the trial court erred in making findings that effectively granted summary judgment to BBR and NCR on the issue of whether they could recover damages under the Crime Victims Statute because there is a genuine issue of material fact as to whether the F&C’s employee’s action or BBR and NCR’s inaction cause any pecuniary loss to the companies. It also reversed what was effectively summary judgment on the issue of whether F&C committed deception.

The judges affirmed the decision that NCR had standing in this action. The partnership agreement between NCR and BBR and management agreement between F&C and BBR establish that the parties clearly intended to benefit NCR and that the duty imposed on F&C was in favor of NCR. NCR’s receipt of money and tax benefits depended on F&C’s performance of its responsibilities under the partnership and management agreements, Darden wrote.

The case is remanded for further proceedings.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

ADVERTISEMENT