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

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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.


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  1. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  2. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

  3. (A)ll (C)riminals (L)ove (U)s is up to their old, "If it's honorable and pro-American, we're against it," nonsense. I'm not a big Pence fan but at least he's showing his patriotism which is something the left won't do.

  4. While if true this auto dealer should be held liable, where was the BMV in all of this? How is it that the dealer was able to get "clean" titles to these vehicles in order to sell them to unsuspecting consumers?

  5. He has refused his Assent to Laws, the most wholesome and necessary for the public good. He has forbidden his Governors to pass Laws of immediate and pressing importance, He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: For imposing Taxes on us without our Consent: He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.. He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless [ ] Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions. GOD BLESS THE GOVERNORS RESISTING! Count on the gutless judiciary to tie our children down and facilitate the swords being drawn across their throats. Wake Up America ...