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Judges rule on issues stemming from cemetery case

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The Indiana Court of Appeals ruled on matters involving alleged looting of cemetery funds in two cases Monday, upholding the denial of class certification in one case and adopting a “plain legal prejudice” standard in the other case.

A proposed class-action lawsuit was filed against Memory Gardens Management Corp. regarding alleged misappropriation of millions of dollars in trust funds by the original owners of the corporation, the new owner — Ansure Mortuaries of Indiana, and other entities. William Fishback’s suit sought to recover damages for customers who had paid for perpetual care services; Angela Farno was later added as a plaintiff. She had pre-paid for space and services. Her complaint alleged 11 counts, including claims under Indiana’s Deceptive Consumer Practices Act and violations of statutes governing cemetery trust accounts.

After the proposed class action was filed, the receiver appointed by the Indiana Securities Commissioner filed a complaint asserting similar claims. The class-action claims regarding the perpetual care services were dismissed, leaving Farno as the only named plaintiff. She filed a motion for class certification, which the trial court denied because it found that action was not superior to other available methods for the fair and efficient adjudication of the controversy under Indiana Trial Rule 23(B)(3). The Court of Appeals took up the matter on interlocutory appeal.

After she filed a motion to stay the proceedings pending an appeal, another business agreed to acquire Ansure’s mortuary business and maintain the cemeteries. Farno sought to lift the stay so she could seek preliminary approval of a class-action settlement she had reached with some defendants, including Ansure and the receiver. Matthew Goldberg and his company, Indiana Investment, were the only non-settling defendants to object. Goldberg was alleged to have issued worthless debentures to the trust accounts in order to conceal the misappropriation of funds. The trial court granted preliminary approval to the class-action settlement. The Court of Appeals also accepted Goldberg’s appeal on interlocutory appeal.

In Angela K. Farno v. Ansure Mortuaries of Indiana, LLC, et al., No. 41A05-1002-PL-104, the appellate court affirmed the denial of Farno’s motion for class certification. Farno argued the trial court shouldn’t have considered the receiver’s action or an action brought by the Securities Commissioner in its superiority analysis under T.R. 23(B)(3). The judges cited Kamm v. California City Development Co., 509 F.2d 205 (9th Cir. 1975), as a case supporting that actions brought by third parties are superior to a class action to rule on issues between the class-action plaintiffs and defendants.

Citing Kamm, the judges found Farno and the receiver brought similar claims against many of the same defendants. In addition, Farno didn’t cite any authority for her suggestion that a trial court may not consider factors other than the four listed in T.R. 23(B)(3) when deciding the question of superiority.

“Farno’s stated purpose for requesting class certification was to ‘resolv[e] the customers’ claims to restore the pre-need trust funds and to ensure that customers’ pre-paid burial services and merchandise will be provided when they pass away,’” wrote Judge Terry Crone. “However, the Securities Commissioner’s Action, the Receiver’s Action, and the pending sale of the cemeteries were all geared toward restoring both the pre-need trust funds and the perpetual care trust funds, which would in turn ensure both that the customers’ pre-paid burial services and merchandise will be provided when they pass away and that their burial sites will be cared for in perpetuity. As such, these alternative methods were clearly better suited for ‘handling the total controversy’ in the words of the Federal Rules Advisory Committee.”

In Matthew Goldberg, et al. v. Angela K. Farno, et al., No. 41A01-1007-MF-348, the judges affirmed the trial court’s preliminary approval of the settlement agreement. The 7th Circuit Court of Appeals and other circuits have adopted the doctrine that a defendant must “prove plain legal prejudice in order to have standing to challenge a partial settlement to which it is not a party,” wrote Judge Crone. Indiana Trial Rule 41(a)(2) is substantially similar to Federal Rule of Civil Procedure 41(a)(2) regarding voluntary dismissals. The appellate court adopted the “plain legal prejudice” standard based on Federal Rule 41(a)(2) for determining whether a non-settling defendant has standing to challenge a partial settlement to which it is not a party, whether “in a class action or simply ordinary litigation.”

Goldberg failed to establish plain legal prejudice in this case. The class settlement didn’t interfere with his contractual rights, his ability to seek contribution or indemnification, nor did it strip him of a legal claim or cause of action, wrote Judge Crone. He has no standing to challenge the ruling.

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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