Indiana Court Decisions – Oct. 10-23, 2019

7th Circuit Court of Appeals

Oct. 11

Civil Plenary — Animal Cruelty/Jurisdiction

Jamie Swartz, et al. v. Heartland Equine Rescue, et al.

18-3260

A case alleging state and private actors conspired to give false claims of animal neglect about two Washington County residents’ livestock was dismissed by the 7th Circuit Court of Appeals for lack of subject matter jurisdiction.

The health of several horses, goats and a donkey living on a Washington County hobby farm owned by Jamie and Sandra Swartz was determined to be in “immediate jeopardy” after an Indiana State Board of Animal Health veterinarian reported a significant decline in the animals’ welfare.

Jodi Lovejoy conducted four separate assessments of the animals between May 2013 and June 2014 after a local animal control officer asked for her help in evaluating a thin horse on the Swartzes’ property. The Swartzes, who owned the livestock, were deemed by Lovejoy unlikely to be able or willing to adequately care for the animals. A Washington County Superior Court judge found there was probable cause to believe animal neglect or abandonment was occurring and therefore entered an order to seize the animals.

The Swartzes were charged with three counts of animal cruelty and ordered to reimburse Uplands Peak Sanctuary and Heartland Equine Rescue $928 for the care of the animals following their seizure from the property. The state deferred prosecuting the Swartzes as part of a pretrial diversion agreement, in which the defendants agreed to pay pretrial diversion fees, not commit or attempt to commit any crimes, report to the prosecutor’s office as directed and follow the court’s order regarding reimbursing Heartland for the care of the animals.

The Swartzes sued in federal court, alleging the state and private defendants conspired to deprive them of their property. U.S. Southern District Court Judge Tanya Walton Pratt dismissed the private defendants and later entered summary judgment in favor of the state defendants. However, the 7th Circuit Court of Appeals vacated in Jamie Swartz, et al. v. Heartland Equine Rescue, et al., 18-3260, on the finding that the Swartzes’ alleged conspiracy is the type of claim routinely dismissed under Rooker-Feldman.

The 7th Circuit noted that the ex parte nature of the initial probable cause hearing did not prevent the application of Rooker-Feldman because the Swartzes were provided an effective opportunity to litigate the probable cause issue by contesting the state’s motion for authority to permanently place the livestock. Likewise, the Swartzes could have filed motions for reconsideration or to alert the court to new evidence or used any other method by which litigants in Indiana may place arguments on the record, the 7th Circuit stated.

“Third, the Swartzes failed to appeal the state trial court’s orders in the state appellate court, which would have constituted another reasonable opportunity to litigate whether their animals should have been seized,” Circuit Judge Joel Flaum wrote. “… In sum, this case should have been dismissed for lack of jurisdiction under the Rooker-Feldman doctrine at its outset.”

The 7th Circuit therefore remanded the case for dismissal due to a lack of federal subject matter jurisdiction, finding the Swartzes’ claims to be inextricably intertwined with state court judgments.

Indiana Supreme Court

Oct. 10

Civil Plenary — Rehearing/Post-Judgment Interest

International Business Machines Corporation v. State of Indiana, acting on behalf of the Indiana Family & Social Services Administration

19S-PL-19

The Indiana Supreme has once again revisited the years-long dispute between the state and IBM Corp., issuing an opinion on rehearing that provides more detail on the post-judgment interest due to IBM.

In the opinion on rehearing — which was sought by IBM — the justices determined that pursuant to Indiana Code §34-13-1-6, the company can draw interest on a 2012 judgment in its favor dating back to March 14, 2018.

“We hold that the post-judgment interest due to IBM stems from the judgment on remand,” Justice Steven David wrote. “Under Indiana Code section 34-13-1-6, the judgment ‘draw[s] interest at an annual rate of six percent (6%) from the date of the adjournment of the next ensuing session of the general assembly ….’

“Following the judgment in this case on August 4, 2017, the next ensuing session of the General Assembly adjourned on March 14, 2018,” he continued. “Therefore, the post-judgment interest due to IBM runs from March 14, 2018.”

The court’s prior opinion in June held only that the post-judgment interest due to IBM would date back to the 2017 judgment on remand. The interest has been accruing on a $49.5 million judgment entered in 2012 for the technology company.

The question of post-judgment interest was just one issue raised in the decade-long litigation stemming from a failed contract between the state and IBM. The state contracted with IBM in 2006 to redesign Indiana’s welfare system, but a series of issues led to the contract’s termination in 2009 and the ensuing breach litigation.

In awarding post-judgment interest to IBM, the Supreme Court likewise upheld a $78 million award to the state.

Barnes & Thornburg attorneys John Maley and Peter Rusthoven represented the state and said in a statement Oct. 16, “The Indiana Supreme court has now resolved this breach of contract action in the state’s favor, meaning that IBM owes $96 million to the state in damages and post-judgment interest.”

Justice Geoffrey Slaughter dissented from the court’s summary affirmance of the Indiana Court of Appeals’ September 2018 decision, which likewise upheld the state’s award and granted interest to IBM.

One of the central premises of the COA’s ruling was that the welfare system IBM created was “essentially the same” as the system the state created after the contract was terminated. But Slaughter said the state initially asked IBM to implement the state’s revised system, known as “hybrid,” through a change-order process before terminating the contact and develop hybrid on its own.

Thus, he said the COA wrongly classified the costs the state incurred through its new system as “procurement costs” when they should have been classified as consequential damages subject to a $3 million cap.

“I respectfully dissent from the Court’s limited grant of rehearing,” Slaughter wrote. “For the reasons expressed in my separate opinion … I would modify the Court’s opinion further by treating the State’s additional costs to implement ‘Hybrid’ not as direct damages subject to a $125-million cap but as consequential damages subject to a $3-million cap.”

Justice Mark Massa did not participate in the case because he was part of the administration of former Gov. Mitch Daniels, who initiated and terminated the IBM contract.

Indiana Court of Appeals

Oct. 10

Civil Collections — Credit Card Debt/Reversal of Judgment

Diana F. Zelman v. Capital One Bank (USA) N. A.

19A-CC-989

A bank failed to prove that one of its customers is thousands of dollars behind on her credit card payments, the Indiana Court of Appeals ruled.

More than 20 years after Diana Zelman opened a credit card account with Capital One Bank, she was alleged to have an unpaid balance of $6,292.34 on the card. Capital One filed a complaint against her concerning the unpaid card, but Zelman denied the allegations.

When it moved for summary judgment, Capital One designated evidence in support along with its complaint and exhibits, including Zelman’s response, the bank’s memorandum in support of summary judgment and an affidavit of debt. Zelman argued in a motion to strike that Capital One had failed to designate admissible evidence in support of its motion, but a trial court ultimately granted summary judgment to the bank.

Appealing that ruling, Zelman contended that the bank failed to attach to its affidavit of debt copies of documents to which the affidavit refers, and that the affidavit was not based on personal knowledge as both required by Trial Rule 56(E). She also asserted that the bank failed to lay a proper foundation for its exhibit titled Capital One Customer Agreement and its exhibit B, as required to authenticate those documents under the business record exception to hearsay, Indiana Evidence Rule 803(6).

The Indiana Court of Appeals reversed in Diana F. Zelman v. Capital One Bank (USA) N. A., 19A-CC-989, finding that neither the customer agreement nor Zelman’s purported credit card statements attached to the summary judgment motion were certified or sworn. Thus, the court concluded, they were inadmissible hearsay and were not proper Rule 56 evidence.

It further noted that while Capital One’s witness stated she had access to documents needed to verify the affidavit’s information, she never stated what the documents were, nor identified the customer agreement attached to the complaint.

“Thus, the Affidavit of Debt did not lay a proper foundation to authenticate the Customer Agreement or credit card statements as business records admissible under Evidence Rule 803(6)’s hearsay exception,” Judge L. Mark Bailey wrote. “And the affiant’s employment as a litigation support representative of Bank’s affiliate does not, in itself, establish her personal knowledge of any of the facts relating to the complaint.

“In addition, because the affiant explicitly states that her affidavit is based upon her personal knowledge of facts obtained from Bank’s business records, she was required to attach to, or submit with, her affidavit sworn, certified, or self authenticated copies of any such records upon which she relied. … She did not attach to or submit with her affidavit any such records, and her failure to do so means we must disregard her affidavit,” the panel concluded.

Zelman was found to have shown prima facie error, and the appellate court therefore remanded for further proceedings.

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Oct. 17

Small Claims — Mediation Prohibited

Kay Kim, et al. v. Village At Eagle Creek Homeowners Association, et al.

19A-SC-970

Parties cannot be ordered to participate in alternative dispute resolution in small claims proceedings, the Indiana Court of Appeals ruled, reinstating a dog-bite case that a judge had dismissed after litigants refused to participate in court-ordered mediation.

When Kay Kim and Charles Chuang alleged a neighboring dog bit their own two dogs at an outdoor common area in their condominium complex, they sued the Village at Eagle Creek Homeowners Association Inc. and Muhammed and Andleeb Javed seeking damages.

The Marion County Small Claims Court of Pike Township ordered the parties to participate in alternative dispute resolution, including either mediation or arbitration. A mediator was picked, but Kim and Chuang refused to pay more than $70 for the mediation, rejecting the mediator’s requested $200 per hour to be split equally between the parties and a retainer of $300 to be paid by both sides.

The mediator later resigned from the post, informing the court that due to correspondence between Kim, Chuang and himself, he felt that he was “in an adversarial relationship with the Plaintiff[s]” and could no longer act as mediator in the case. The small claims court thus sua sponte set a Rule to Show Cause hearing and ordered Kim and Chuang to appear and show cause as to why they should not be held in contempt for failing to attend mediation.

The small claims court ultimately dismissed Kim and Chuang’s case with prejudice, citing their refusal to attend court-ordered mediation and their unwillingness to change their position on the mediator’s cost.

Kim and Chuang appealed, arguing the small claims court erred in its dismissal.

The Indiana Court of Appeals reversed for the plaintiffs, noting that although the small claims court had ordered the parties to participate in mediation or arbitration, they were not required to do so pursuant to the Indiana Rules for Alternative Dispute Resolution.

Specifically, members of the appellate panel noted that Indiana Rule for Alternative Dispute Resolution 1.4 only lists that its rules shall apply in all Circuit, Superior, County, Municipal and Probate Courts in the state.

“The Marion County small claims courts are not included in this rule; therefore, cases filed in these courts are not subject to the rules, and the parties in these cases cannot be ordered to alternative dispute resolution, including mediation or arbitration,” Judge James Kirsch wrote. “In the present case, therefore, contrary to the order by the small claims court, the parties could not be ordered to mediation.”

It did note, however, that while parties cannot be ordered to participate in alternative dispute resolution in Marion County small claims proceedings, the appellate court’s holding does not bar parties in those small claims proceedings from being compelled to participate in alternative dispute resolution when they have contracted to be subject to such processes.

“Under Indiana Small Claims Rules, the ‘sole objective’ of the informal proceedings is ‘dispensing speedy justice between the parties according to the rules of substantive law’ and the proceedings ‘shall not be bound by the statutory provisions or rules of practice, procedure, pleadings or evidence … .’ We find that the inapplicability of the Indiana Alternative Dispute Rules to small claims cases furthers this objective in that barring alternative dispute resolution streamlines the small claims procedure and brings about ‘speedy justice between the parties,’” the panel concluded.

The small claims court was thus found to have erred in its dismissal in Kay Kim, et al. v. Village At Eagle Creek Homeowners Association, et al., 19A-SC-970. The case was reversed and remanded for further proceedings.

Civil Tort — Negligence/Jurisdiction

Cadorath Aerospace Lafayette, LLC, et al. v. Colleen Ricks, as the Personal Representative of the Estate of Brandon Seth Ricks, et al.

18A-CT-2953

A divided Indiana Court of Appeals panel ruled for three aerospace defendants in a negligence case brought by victims of a fatal helicopter crash that took place in Mississippi, finding Indiana has no personal jurisdiction in the matter.

Following a 2015 helicopter crash that killed two passengers and severely injured one, Colleen Ricks, Cynthia Cobb and Brendan Mullen sued Cadorath Aerospace Lafayette LLC, Cadorath Aerospace Inc. and H-S Tool & Parts Inc.

At the time of the crash, the helicopter’s Rolls-Royce Model 250 engine allegedly failed.

All three defendants had entered into an Authorized Repair Facility agreement with Rolls-Royce, which contemplated that the entities would work together in the future to develop repair processes and to complete off-manual repairs at these facilities. The accident victims thus claimed that the defendants performed negligent repair work in the outer combustion case of the engine sometime after an overhaul that took place years prior.

A trial court denied both the Cadorath defendants’ and H-S Tool’s motions to dismiss the case for lack of personal jurisdiction.

In an interlocutory appeal, the defendants argued, among other things, that there are insufficient minimum contacts between the Cadorath defendants, H-S Tool and the state of Indiana to establish specific personal jurisdiction.

A divided Indiana Court of Appeals agreed, reversing in the defendants’ favor and dismissing the case.

The appellate majority noted that nearly identical evidence existed to show that no repairs took place in Indiana. Cadorath LLC, the majority found, conducts its services at a repair facility in Louisiana and is organized under the laws of Louisiana.

Likewise, Cadorath Inc. conducts services at a repair facility in Winnipeg, Canada, where its principal place of business resides, as well as H-S Tool, a Canadian corporation established under the laws of British Columbia.

“In sum, Indiana does not have personal jurisdiction over this matter. We recognize the financial and pragmatic strain that this decision places on all parties involved. However, we will not find personal jurisdiction when it is plainly not present,” Judge John Baker wrote for the majority. “Additionally, we have neither the necessary information nor the judicial authority to decree exactly where the parties should litigate this matter. We only find that the evidence and legal arguments proffered by all parties lead us to one singular conclusion: the trial court erred.”

In a separate opinion, Judge James Kirsch dissented from the majority’s conclusion, finding the Cadorath defendants and H-S Tool did consent to jurisdiction because they are Rolls-Royce Authorized Repair Facilities as a result of their agreements with Rolls-Royce.

“Those agreements stated that all suits relating to the agreements shall be brought and tried in Marion County, Indiana,” Kirsch wrote. “… While their day-to-day business is conducted outside the state of Indiana, H-S Tool and the Cadorath Defendants have extensive contacts with Rolls-Royce in Indiana, and each of the three entities has consented to jurisdiction in Indiana for matters relating to their agreement.”

The dissenting judge said he would therefore affirm and remand for trial in Cadorath Aerospace Lafayette, LLC, et al. v. Colleen Ricks, as the Personal Representative of the Estate of Brandon Seth Ricks, et al., 18A-CT-2953.

Adoption — Reversal/Mother’s Consent

In Re: The Adoption of D. H., K.W. v. B.H.

19A-AD-707

The Indiana Court of Appeals reversed and vacated an adoption petition for a 4-year-old Greene County child, finding the trial court erred in determining the mother’s consent to the adoption by the child’s stepmother was not required.

The case, In Re: The Adoption of D. H., K.W. v. B.H., 19A-AD-707, involves mother K.W. and father J.H., who were never married but lived together briefly and are the biological parents of child D.H. The child tested positive for opiates after birth in April 2015, and mother tested positive for substances including opiates and THC, ultimately prompting the Department of Child Services to file a child in need of services petition.

The parents separated after a domestic violence incident, and mother left the baby in the care of father in September 2015. But shortly thereafter, mother was granted supervised visitation.

Mother continued to have regular contact with the child until moving 90 miles away to Johnson County in December 2015, according to the record, after which Judge Elizabeth Tavitas wrote that her contacts were “sporadic and inconsistent.”

From September 2016 until February 2018, there were no visits between mother and child. “During this period, K.W. appears to have worked to achieve sobriety,” Tavitas wrote. “The record reveals that K.W. passed drug screens to secure employment; maintained gainful employment; secured stable housing; and obtained means of transportation. Thereafter, K.W. resumed her requests to schedule supervised visits with the Child.”

Stepmother B.H. filed an adoption petition in April 2018 and alleged that under Indiana Code § 31-19-9-8, mother’s consent to the adoption was not required because she had provided no child support, had abandoned the child for at least six months immediately before the petition was filed, and was unfit. She also argued adoption without mother’s consent was in the child’s best interest.

Mother objected, but after a hearing, the court ruled mother’s consent was not required and granted the adoption decree in March 2019, prompting mother’s appeal.

In reversing the adoption decree, the COA relied on In re Adoption of E.B.F. v. D.F., 93 N.E.3d 759, 767 (Ind. 2018), another case involving addiction, domestic violence and recovery in which an adoption decree was overturned on appeal.

There, Tavitas wrote, “Our Supreme Court acknowledged that the mother’s contact with the child was ‘not significant’ after Christmas 2013 and the stepmother’s August 2015 filing of her adoption petition, but found that ‘a single significant communication within one year is sufficient to preserve a non-custodial parent’s right to consent to the adoption.’ … We find that such is the case here.”

The COA proceeded to find that the trial court’s findings that K.W. abandoned or deserted her child, failed to communicate and failed to support her child were clearly erroneous. “Guided by E.B.F., we find, under the totality of the circumstances that K.W.’s: (1) progress toward achieving sobriety after seven years of acute drug dependency; (2) employment record; (3) stable home environment; (4) lack of contacts with law enforcement; (5) favorable assessment from DCS regarding her youngest child; and (6) record of consistently visiting and paying child support for her other three children, provide justifiable cause for her failure to communicate with the Child for a time exceeding one year, such that it was clear error to dispense with her consent for purposes of Stepmother’s adoption petition.

“…Further, we note that we would be hard-pressed, in the context of a proceeding for termination of parental rights, to proceed to termination of K.W.’s parental rights here, given the progress she displayed regarding the conditions that led to the Child’s removal from her care. … To be clear, this opinion does not foreclose the possibility of Stepmother’s adoption of the Child in the future, but the statutes dispensing with K.W.’s consent do not apply at this time.”

Because the panel found the trial court erred in the consent determination, it did not reach the merits of mother’s claims due process or best interest claims.

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Oct. 23

Miscellaneous —Driving Privileges/Out-of-State Revocation

Indiana Bureau of Motor Vehicles v. Thomas Douglass

19A-MI-216

A man whose driving privileges were revoked after he moved from Indiana to California had them restored by an Indianapolis trial court, but the Bureau of Motor Vehicles won a reversal of that decision.

Thomas Douglass lived in Marion County when he was issued an Indiana driver’s license in May 2014, but one month later, he moved to California, where he surrendered his Indiana license and obtained a California license. In August that same year, the BMV sent a letter to Douglass’ last know address, notifying him that his driving privileges were being suspended for 10 years because he’d had three qualifying driving-related convictions in the prior 10 years and was therefore deemed a habitual traffic offender.

It wasn’t until January 2018 that the California Division of Motor Vehicles notified Douglass of the decision, and that his license would be cancelled in 30 days. Douglass hired an attorney who sought administrative review with the Indiana BMV, and when that failed, he sought judicial review.

The Marion Circuit Court granted Douglass an injunction and ultimately reinstated his driving privileges and ordered the BMV to vacate its habitual traffic violator determination against him. The trial court found the BMV’s findings and suspension unsupported by credible evidence, arbitrary and capricious.

But the Indiana Court of Appeals reversed in Indiana Bureau of Motor Vehicles v. Thomas Douglass, 19A-MI-216, holding that the BMV was within its rights under the Interstate Driver’s License Compact, and that Douglass’ privileges were properly suspended.

“We agree with BMV’s assertion that it had the right to pursue a suspension of Douglass’ driving privileges even though he was a no longer a resident of Indiana,” Judge Patricia Riley wrote for the panel.

“We therefore reverse the trial court’s order canceling Douglass’ HTV determination and the reinstatement of Douglass’ driving privileges in Indiana. Our conclusion harmonizes with the legislative mandate of Indiana Code section 9-30-10-4 which authorizes BMV to determine that a person is an HTV and proceed in suspending a person’s driving privileges in light of qualifying judgments. Moreover, nothing under the Interstate Driver’s License Compact requires party states, such as Indiana, from enforcing its laws against a nonresident regardless of whether they have a valid license issued by their home-state.”

Criminal — Drugs/Speedy Trial Violation

Kyle Scott Dilley v. State of Indiana

19A-CR-173

A man who was convicted of drug-dealing charges and sentenced to 12 years in prison won a reversal because his trial was wrongly continued when the state could not timely produce lab results. The appellate court noted a lengthy prosecutorial delay in providing the evidence for lab testing was to blame.

The Indiana Court of Appeals reversed enhanced convictions of Level 2 felony dealing in methamphetamine, two counts of Level 5 felony possession of a narcotic, and Level 5 felony dealing in marijuana in Kyle Scott Dilley v. State of Indiana, 19A-CR-173.

Kyle Dilley had been arrested by Michigan City police who found him and another person asleep in a car with a stash of drugs including meth, heroin and marijuana. A jury ultimately convicted him, and his convictions were enhanced due to a prior heroin dealing charge.

The appellate panel tossed the convictions, however, holding that Dilley had shown prima facie error by the LaPorte Superior Court for granting the state a continuance under Trial Rule 4(D), which resulted in failing to bring him to trial within a year of the filing of criminal charges.

Judge Patricia Riley noted that Dilley had moved for a speedy trial at his earliest opportunity and was not to blame for a continuance granted to the state because lab tests on the drugs were not finished in time. “The prosecutor further averred that she had contacted Dilley’s counsel to attempt to procure a stipulation to the preliminary drug testing results already disclosed but that Dilley had declined to stipulate,” Riley wrote.

“… At the final pre-trial conference on May 31, 2018, the prosecutor informed the trial court that the only matter ‘outstanding’ for trial preparation was the test results,” Riley continued. “In her Rule 4(D) continuance motion filed June 1, 2018, a mere seventeen days before trial, the prosecutor averred that the continuance was necessary because the testing results were ‘not yet prepared,’” Judge Patricia Riley wrote for the panel.

“In her argument at the hearing on the continuance motion, the prosecutor represented to the trial court that she had personally contacted the director of the laboratory ‘to confirm that the lab results would be back by June 19th’. … The implication of these statements was that testing was already underway. The prosecutor did not inform the trial court in either her written or oral motions that the evidence had not been conveyed to the State Laboratory for testing and was, in fact, not conveyed until June 4, 2018, after the written continuance motion was filed. This was a fact that had to have been known to the prosecutor when she argued the continuance motion on June 5, 2018, and which she should have made known to the trial court before it rendered its ruling.

“… (W)e conclude that Dilley has demonstrated that the trial court’s grant of the Rule 4(D) continuance under the facts and circumstances of this case constituted prima facie error,” the panel concluded.•