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. 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.

ADVERTISEMENT