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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. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  2. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

  3. I will agree with that as soon as law schools stop lying to prospective students about salaries and employment opportunities in the legal profession. There is no defense to the fraudulent numbers first year salaries they post to mislead people into going to law school.

  4. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  5. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

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