7th Circuit Court of Appeals
Civil – Indiana Unclaimed Property Act/Interest on Bank Account
Katherine Cerajeski, guardian for Walter Cerajeski v. Greg Zoeller, Attorney General of the State of Indiana, et al.
The 7th Circuit Court of Appeals agreed with an Indiana woman acting as guardian for a relative that the state can’t retain the interest earned on unclaimed property once the owner files a valid claim to the property. Katherine Cerajeski argued that action by the state is a taking that violates the takings clause in the Constitution because the owner is paid nothing for his lost interest.
Cerajeski’s ward had a small, interest-bearing bank account, of which the value is considered property in Indiana. She learned about the bank account in 2011; it had been considered abandoned in 2006. She filed this lawsuit, seeking a declaration that she is entitled on behalf of her ward to the interest. The District Court dismissed her lawsuit that challenged part of the Indiana Unclaimed Property Act.
Under Indiana statute, property owners have 25 years to claim property.
Judge Richard Posner, writing for the court, held that interest on interest-bearing unclaimed property is unclaimed property too, so the owner can claim it upon proving title.
“There is no basis for the state’s confiscating the interest in Cerajeski’s account. There is no articulated basis for fixing a 25-year term for escheat of principal and only 3 years for escheat of interest—a period so short as to present a serious question whether it is consistent with the requirement in the Fourteenth Amendment that property not be taken without due process of law, implying adequate notice and opportunity to contest.”
“And so if before then the state takes either principal or interest it must render just compensation to the owner if as in this case the owner’s identity is known. The state can charge a fee for custodianship and for searching for the owner, but the interest on the principal in a bank account is not a fee for those services.”
The case is remanded for further proceedings, including a determination of the compensation to Cerajeski when she files her claim.
Indiana Supreme Court
Criminal – Sentencing
Robert Bowen v. State of Indiana
The Indiana Supreme Court granted a man’s petition for rehearing regarding his sentencing order, but again rejected his claim that concurrent sentences are required.
Robert Bowen was sentenced for 14 years for convictions on multiple felony gun and drug charges. The Supreme Court affirmed in June, but ordered the trial court to revise the sentencing order to explain why one conviction was ordered served consecutive to the others. The new sentencing order was to be prepared “without a hearing.”
But the judge who originally sentenced Bowen is no longer on the bench, so Bowen argued that the current judge can’t clarify the original sentencing decision.
The justices rejected Bowen’s request that they order he receive concurrent sentences, but did modify their remand instructions in a two-page per curiam decision.
“On remand for a new sentencing order that responds to concerns raised by the Supreme Court, the trial court may discharge this responsibility by (1) issuing a new sentencing order without taking any further action, (2) ordering additional briefing on the sentencing issue and then issuing a new order without holding a new sentencing hearing, or (3) ordering a new sentencing hearing at which additional factual submissions are either allowed or disallowed and then issuing a new order based on the presentations of the parties,” the opinion states.
Domestic Relation – Modification of Custody
Jason Wilson v. Kelly (Wilson) Myers
The laws in place to protect children caught in the middle of a custody battle were ignored by a St. Joseph Superior Court, the Indiana Supreme Court ruled, pointing to a change in custody despite a lack of a proper evidentiary hearing.
Jason Wilson had physical custody of his two children with ex-wife Kelly Myers for six years until she filed a motion seeking physical custody of both children. The family was ordered to participate in family counseling. Myers later alleged Wilson was trying to sabotage the counseling process, so the court received permission from the parents to communicate with the counselor directly. The counseling service director found out Wilson secretly recorded the sessions and informed the court.
Judge Margot Reagan announced at the beginning of the hearing her intent to rule on Myers’ motion to modify custody and told Wilson she “didn’t want to have another in-camera” with the children and didn’t “understand why we would need an evidentiary hearing.” No witnesses were sworn during the hearing or evidence received. Reagan awarded custody to Myers, with Wilson receiving parenting time. This resulted in the children having to relocate to Michigan.
“In short, what we are now faced with on appeal is an order directing one parent to hand over two children to another parent with no mention or hint that doing so is in accordance with the Indiana Code. And the only support for this order is the transcript of what seems to be little more than an unorganized shouting match labeled as an ‘evidentiary hearing.’ To issue such an order was therefore an abuse of discretion,” Justice Steven David wrote.
“Tempers clearly ran hot for all involved in this case, as can easily happen in family law cases with disputed custody concerns,” he continued. “In such cases, we encourage trial courts to utilize the formal procedures embodied in the Indiana Trial Rules to maintain a level of control and decorum that keeps the litigation process from turning into a mud-slinging argument and preserves the rights of all involved.”
The modification is vacated and a proper evidentiary hearing and inquiry into in-camera interviews are ordered. But since the two children have already been pulled from their Indiana school system and are attending school in Michigan, this status quo should continue until further order of the court as to minimize further disruption.
Indiana Tax Court
Tax – Jeopardy Tax Warrants/Puppy Mill
Virginia Garwood v. Indiana Dept. of State Revenue.
The former owners of an alleged puppy mill in Harrison County may pursue their claim that because the state overreached in using jeopardy tax warrants to seize their animals and property, they are entitled to a refund of the value of the taken property.
The Tax Court denied a state motion to dismiss the appeal. The state argued the court lacked jurisdiction because a related suit was pending in a Harrison County trial court.
Long-running litigation voided the tax warrants used in 2009 by Indiana Attorney General Greg Zoeller to demand more than $142,000 in sales taxes the state claimed were owed by Virginia and Kristin Garwood, who the state accused of running a puppy mill. The Garwoods pleaded guilty in May 2010 to Class D felony charges of failing to pay sales taxes.
Zoeller had described the use of jeopardy tax warrants in the case as an “Al Capone” approach to taking down what was described as a puppy mill on a dairy farm. Police, state agents and dozens of animal rescue workers raided the farm in 2009.
The state served jeopardy assessments on the Garwoods and demanded they pay $142,368 immediately or their personal property would be seized. When they couldn’t pay, 244 dogs and puppies were seized. The animals, some of which tested positive for disease, were sold by the state to the Humane Society for a total $300.
After the Tax Court voided the use of the warrants, the Garwoods formally requested a refund of the value of the seized animals, cash and other property, claiming they were owed a refund of $122,684.50. The state disputed the claim, and the Garwoods brought the current suit the state unsuccessfully moved to dismiss.
“Based on the totality of … jurisdictional facts, the Court finds that Garwood’s case ‘arises under Indiana’s tax laws’: she filed a refund claim with the Department … and now seeks to have the validity of her claim resolved by this Court,” Senior Judge Thomas Fisher wrote.
The state argued that Garwood sought to recover money that wasn’t paid and that the claim is for compensatory damages rather than a refund of sales taxes. “The Court, however, is not persuaded by either of these arguments,” Fisher wrote, denying the motion and lifting a stay imposed in August.
Indiana Court of Appeals
Criminal – Drugs/Constructive Possession
Michael R. Houston v. State of Indiana
The state did not have sufficient evidence to convict a man of possession of cocaine under the intent prong of constructive possession, the Indiana Court of Appeals ruled. As a result, the judges reversed the defendant’s drug conviction.
Police pulled over a car Michael Houston was driving, which contained three passengers. Houston was not the owner of the car and did not have a valid license. The license plate belonged to a different car, so police towed the car. While inventorying the vehicle, police found cocaine in a baggie between the passenger seat and the center console area. A vial was also found in the center console area, which Houston claimed was urine. The owner of the car, who was in the back seat at the time of the stop, said it was “anointing oil” used by his church.
Houston was charged with and convicted of Class D felony possession of cocaine. Because Houston didn’t have direct physical control over the drug in the car, the state had to prove constructive possession of it. But the evidence presented by the state couldn’t support that Houston had the intent to maintain dominion and control over the drug, the Court of Appeals held. No evidence was introduced that Houston knew about the drug, he did not attempt to flee, and he denied presence of the drug in the car.
The state argued that Houston’s knowledge of the vial in the center console shows he knew of the drug in the car, but there was no evidence showing the vial was connected to the cocaine in any way, the judges ruled.
Domestic Relation – Visitation/Domestic Partners
A.C. v. N.J.
A former same-sex domestic partner of a woman who gave birth to a child has standing to seek visitation, the Indiana Court of Appeals ruled, reversing a trial court in an opinion begging lawmakers to speak to the rights of same-sex couples in parenting disputes.
In a 21-page order, the court ruled that partner A.C. had standing to seek visitation under King v. S.B., 837 N.E.2d 965 (Ind. 2005). The court, however, could find no caselaw or legislative guidance to reverse trial court rulings denying A.C’s request for joint custody or to enforce the couple’s prior agreement that both parties would act as the child’s parent.
Relying on the King decision, the panel found an opening to grant standing to third-party non-biological parents to seek visitation. But that same Supreme Court ruling also vacated a COA holding that “when two women involved in a domestic relationship agree to bear and raise a child together by artificial insemination … both women are the legal parents of the resulting child.”
Judge Ezra Friedlander wrote that courts and lawmakers have been loathe to address societal changes, leaving parents and children of same-sex couples in legal limbo when relationships end.
“Since King, the status of the law surrounding a lesbian partner’s right, if any, to enjoy the rights of a legal parent of a child born to her partner under the circumstances presented here remains uncertain. … (W)e solicited guidance from the General Assembly on this issue. In the years that have passed since then, none has been forthcoming. The existing statutory framework does not contemplate the increased use of assisted reproductive technologies. Accordingly, it provides no guidance in situations where an intended parent lacks a genetic connection to the child.”
“That deficiency is exacerbated by the growing recognition of less traditional family structures. Our system of government entrusts the General Assembly, not the courts, to fashion a framework for deciding matters as tethered to social mores and sensibilities as this subject is. We feel the vacuum of such guidance even more acutely now than we did eight years ago, when King was decided,” Friedlander wrote.
“Indeed, what began as a trickle is rapidly becoming a torrent, and the number of children whose lives are impacted by rules that have yet to be written only increases with the passage of time. They, and we, would welcome a legislative roadmap to help navigate the novel legal landscape in which we have arrived. Until that happens, however, we must do the best we can to resolve the issues that come before us.”
Declining to find that A.C. had the same rights as a biological parent to seek joint custody, Friedlander wrote that the decision in the King line of cases controls. “In the absence of a legislative directive, if full parental rights are to be recognized in a former same-sex partner under the circumstances presented here, that recognition must come from our Supreme Court,” he wrote.
Criminal – Evidence/Motion in Limine
David Wise v. State of Indiana
The Indiana Court of Appeals decided that it was improper for it to accept a man’s appeal of his motion seeking to exclude video recordings of video files found on his phone. The judges accordingly dismissed David Wise’s appeal.
Wise’s wife discovered video files on his phone that showed him performing sex acts on her while unconscious. She suspected he drugged her so he could perform the acts. She was unable to download the videos from his phone directly, so she used a camcorder to record video of the files playing on her husband’s phone. The state charged Wise with rape and criminal deviate conduct. He filed a motion in limine to exclude the video evidence taken by his wife, which the trial court denied Sept. 26, 2012.
On Oct. 22, 2012, Wise asked the trial court to certify its order for interlocutory appeal, but the trial court did not grant his motion to certify until Dec. 4. The COA’s motions panel accepted jurisdiction in February.
Based on Appellate Rule 14(B)(1), the Court of Appeals should not have accepted jurisdiction over the case in the first place, Judge Paul Mathias wrote. The trial court did not rule on the motion or set a hearing on the motion within 30 days after Wise asked for certification. Therefore, the motion was deemed denied 30 days after it was filed – Nov. 22, 2012.
“We are unable to conclude that the trial court’s belated certification complies with Appellate Rule 14(B)’s time limitations. To hold otherwise would effectively nullify the ‘deemed denied’ provision of Appellate Rule 14(B)(1)(e), the clear purpose of which is to limit the amount of time a trial court has to rule on a motion to certify. We therefore conclude that, by operation of Appellate Rule 14(B)(1)(e), Wise’s motion to certify was deemed denied, and the trial court could not resuscitate Wise’s motion by belatedly granting it after it had been deemed denied,” Mathias wrote.
Criminal – Evidence/Public Intoxication
Tin Thang v. State of Indiana
Based on the language of the recently amended statute defining public intoxication, the Indiana Court of Appeals reversed a man’s conviction due to lack of evidence that he endangered his life or the life of someone else.
When police officer Michael Agresta came out of the restroom at a gas station while on patrol, he was notified by the cashier that customer Tin Thang was possibly intoxicated. Thang was unsteady, smelled of alcohol and had bloodshot eyes. He also saw a car in the parking lot that wasn’t there before and keys in Thang’s hands. The car belonged to Thang.
Thang was charged with and convicted of Class B misdemeanor public intoxication at a bench trial.
Judge Terry Crone noted that the recent timing of the amendment “leaves us with little precedent concerning the new language.” The statute says it is a Class B misdemeanor for someone to be in a public place in a state of intoxication if the person: endangers his or her own life; endangers the life of another person; breaches the peace or is in imminent danger of breaching the peace; or harasses, annoys or alarms another person.
The judges agreed with Thang that he did not “alarm” the cashier for purposes of the statute. The cashier, who did not testify at trial, simply alerted Agresta that Thang may be intoxicated. There’s also insufficient evidence to support that Thang endangered himself or others by driving to the gas station while intoxicated. Again, the cashier did not testify at trial and Agresta, the only person who did testify, did not see Thang drive.
Civil Collection – Termination of Lease Agreement
Claire’s Boutiques, Inc. v. Brownsburg Station Partners LLC
A retail chain that closed an underperforming store in a Hendricks County shopping center had a contractual right to do so under its lease, the Indiana Court of Appeals held.
The Court of Appeals reversed a ruling in favor of shopping center Brownsburg Station and remanded with an order that the trial court grant summary judgment in favor of Claire’s Boutiques Inc.
At issue is a co-tenancy provision of a contract that allowed Claire’s to terminate the lease if occupancy levels at the shopping center fell below 70 percent. The trial court ruled that Claire’s violated that clause because the total amount of comparable space occupied did not fall below 70 percent.
“We hold as a matter of law that the operating co-tenancy provision in the Lease unambiguously states that Claire’s could terminate the Lease in the event the occupancy level fell below seventy percent of the non-department retail store tenants in Buildings A1 and A3, not seventy percent of the gross leasable area in those buildings, for a period of one year or more,” Judge Edward Najam wrote for the panel.
Najam wrote that Brownsburg Station was inviting the court to rewrite the contract, which it may not do. “As such, we conclude that Claire’s exercised its option under the operating co-tenancy provision to terminate the Lease when it vacated the premises.
“Therefore, the trial court erred as a matter of law when it denied Claire’s motion for summary judgment as to liability under the lease. We vacate the Judgment and remand for the trial court to enter summary judgment in favor of Claire’s.” Panelists Mark Bailey and Michael Barnes concurred.
Criminal – Post-Conviction Relief
Ritchie Hodges v. State of Indiana
Offenders may seek post-conviction relief from Department of Correction placement changes, the Court of Appeals ruled after the state revised its view that a claim should be dismissed.
A panel ruled that the trial court erred in dismissing a PCR claim for an offender whose community corrections placement was revoked. The panel found Post-Conviction Rule 1(1)(a)(5) permits a claim such as Ritchie Hodges’ that he received ineffective assistance of counsel at his placement-revocation hearing. Hodges was reassigned to the Department of Correction to serve the balance of a sentence for convictions of three counts of Class D felony possession of child pornography and Class D felony voyeurism.
“Hodges’s allegation that he received ineffective assistance of counsel at the hearing to revoke his community corrections placement is a claim that his conditional release was unlawfully revoked. The trial court’s order dismissing his petition for post-conviction relief on the grounds that the post-conviction rules do not allow his claim is therefore reversed, and this case is remanded to the trial court for further proceedings on the merits,” Chief Judge Margret Robb wrote in an opinion joined by Judges James Kirsch and Patricia Riley.
Criminal – Suppression of Evidence/Traffic Stop
State of Indiana v. William Gilbert
A Marion Superior Court should not have suppressed evidence of intoxication of a man who was taken to a roll-call station on suspicion of drunken driving, the Indiana Court of Appeals ruled.
Police pulled over William Gilbert after they said he ran a stop sign. Police said they detected the odor of alcohol and Gilbert stumbled as he exited his vehicle, at which time he was taken in for testing.
“These observations are sufficient to constitute probable cause, and therefore, Gilbert’s arrest and transport to the roll call site did not violate his rights under the Fourth Amendment,” Chief Judge Margret Robb wrote.
The state dismissed the charges against Gilbert after evidence was suppressed, but pursued this appeal.
The trial court didn’t rule based on Gilbert’s argument that officers failed to inquire about his false teeth, thus rendering breath test results inadmissible. The Court of Appeals, though, was chomping to address the question and found Guy v. State, 823 N.E.2d 274, 275 (Ind. 2005), provided guidance. In that case, an argument that a tongue stud made breath tests inadmissible was rejected.
“We believe our supreme court’s decision in Guy precludes Gilbert’s argument that his false teeth make the breath test results inadmissible,” Robb wrote for the panel.
Civil Plenary – Motion to Correct Error/Delivery by Mail
Anthony E. Boyd v. WHTIV, Inc. and Walter Tarr, IV
While neither snow nor rain nor heat nor gloom of night will keep the U.S. Postal Service from its appointed rounds, the Indiana Court of Appeals reminded a lower court that trial rules allow for three extra days when motions are sent by mail.
The Court of Appeals overturned a Marion Superior Court’s denial of a motion to correct error, ruling that Anthony Boyd did file in a timely manner his motion for an extension of time to respond to a summary judgment motion.
WHTIV and Walter Tarr argued that Boyd filed his motion 33 days after they filed their motion for summary judgment. This was three days beyond the 30-day limit established in Indiana Trial Rule 56 (F) or Trial Rule 56 (I).
In addition, the pair cited DeLage Landen Financial Services, Inc. v. Community Mental Health Center, 965 N.E.2d 693 (Ind. Ct. App. 2012), in asserting that Trial Rule 6(E) does not apply. Trial Rule 56 exclusively controls the timing of summary judgment proceedings.
The Court of Appeals pointed to State v. Gonzalez-Vazquez, 984 N.E.2d 704, 706 (Ind. Ct. App. 2012) which addressed the scope of the DeLage decision.
There, the appeals court faulted the post-conviction court for broadly interpreting DeLage to mean that no provision of Trial Rule 6 could be applicable in summary judgment proceedings.
Using Gonzalez-Vazquez as a guide, the Court of Appeals agreed with Boyd that the three-day extension provided in Trial Rule 6(E) applied to his request for an extension of time. Therefore, Boyd’s motion was not untimely and the trial court should not have denied his motion to correct error.
Furthermore, the Court of Appeals, finding the grant of summary judgment was premature, also reversed the grant of summary judgment in favor of WHTIV and Tarr.
Criminal – Sentence Enhancement
Christopher Cross v. State of Indiana
A defendant attempted to persuade the Indiana Court of Appeals that the Class A felony classifications for dealing or possession of cocaine are disproportionate by pointing to the recent revisions to the Criminal Code. The new criminal classifications and sentencing structure that take effect next year no longer include these crimes in the highest level of felonies.
Christopher Cross was convicted of several drug and weapons offenses as a result of his role in the sale of cocaine in Shelby County in 2006 about 120 feet from a youth center. He was originally sentenced to 50 years after being found to be a habitual offender. After a joint petition for post-conviction relief was filed by Cross and the state in January, he was resentenced to 38 years.
On appeal, Cross contended that the classification of his acts of dealing in cocaine and possession of cocaine as Class A felonies was disproportionate to the nature of his offenses and that he suffered certain double jeopardy violations.
The appellate judges disagreed with Cross that dealing in cocaine and possession of cocaine should not be classified as Class A felonies because the offenses lack the serious physical harm that is inherent in other Class A felony offenses. The judges also found Cross’ argument relating to the revision of the criminal code to be unpersuasive.
“Nothing in House Enrolled Act 1006 suggests that the overhaul of the criminal classifications and sentencing structure should apply retroactively. To the contrary, House Enrolled Act 1006 indicates that crimes committed before July 1, 2014, should be charged and sentenced pursuant to the old classifications and sentencing structure,” Judge Cale Bradford wrote.
There were not double jeopardy violations involving Cross’ conviction for Class C felony carrying a handgun without a license and the sentence enhancement imposed due to his firearm use during the commission of the offense of dealing in cocaine. The record contains independent evidence which shows he used the handgun during the commission of the act of dealing in cocaine instead of merely possessing the gun.
The judges ordered his conviction for Class A misdemeanor carrying a handgun without a license vacated because it is a lesser-included offense of the Class C felony conviction.
Civil Plenary – Restitution for Damages Paid
Debra Minott, Faith Laird, Patti Bailey v. Lee Alan Bryant Health Care Facilities, Inc.; Parkview Residential Care Center, L.L.C.; Parke County Residential Care Center, L.L.C., et al.
In a dispute over whether two law firms should have to repay money from a judgment they received by way of attorney liens, the Indiana Court of Appeals held that the law firms are judgment creditors, so they are liable to pay restitution to the state of Indiana.
Several residential care facilities that provided services funded by the Family and Social Services Administration’s Residential Care Assistant Program sued the FSSA after it suspended funding for new RCAP residents and imposed fixed reimbursement rates. The providers were awarded $176,664.25 in damages. The money was disbursed among two banks and two law firms – Lewis & Kappes in Indianapolis and Chicago firm Williams Bax & Saltzman P.C., which had filed attorney liens. The firms received $72,399.22 of the damages award.
But the Court of Appeals reversed the judgment and ordered more proceedings. At the trial court level, the final judgment order entered Nov. 8, 2012, did not address restitution to the state for the damages paid out. The state sought reimbursement from the law firms and the banks, but the trial court denied the state’s motion.
The law firms argued that the state’s motion for restitution was untimely and, even if it wasn’t, restitution following a reversal on appeal cannot be extended to non-party creditors.
The Court of Appeals was not persuaded by the firm’s claims, ruling first that the state’s motion for restitution is timely.
“The issue of restitution arose only after this court’s decision to reverse the trial court’s judgment. The trial court’s November 8th order neither addressed nor disposed of that lingering issue. Therefore, it was not a true final judgment,” Chief Judge Margret Robb wrote.
The judges then ruled that the law firms and banks are liable for restitution of the funds paid by the state to the providers. The banks and law firms are judgment creditors or their lawful equivalent, so they are liable. The COA pointed to an agreed order entered by the trial court in 2011 that gave the law firms and creditor banks the right to enforce the judgment.
“Because the creditors had the power to enforce the judgment in their own favor, they are judgment creditors and should be treated as such for the State’s request for restitution,” she wrote.
Civil Collection – Burden of Proof/Credit Card Debt
Hitesh Seth v. Midland Funding, LLC, as an Assignee of Columbus Bank and Trust as Issuer of Aspire Visa
Finding a company did not satisfy its burden of proof under Indiana Trial Rule 56(C) when attempting to collect on a breach of a credit card contract, the Indiana Court of Appeals reversed summary judgment in the case.
The trial court granted summary judgment to Midland Funding on its lawsuit seeking damages of more than $3,400 plus interest and costs from Hitesh Seth. Seth had not paid his credit card debt on a card opened with Columbus Bank and Trust. The COA agreed with Seth’s appellate argument that Midland did not make a prima facie case showing no issues of material fact that would support summary judgment.
Of Midland’s designated evidence, only the affidavits from Andrew Carlson of Jefferson Capital Systems LLC and Midland Credit Management employee Erin Degel are potentially proper Trial Rule 56 evidence. But these affidavits are insufficient to support summary judgment.
The judges found that the Carlson affidavit is too vague to support Midland’s contentions in support of summary judgment. And Degel’s affidavit is not based on personal knowledge as required by Trial Rule 56(E). Degel’s employment with Midland’s servicing agent, MCM, does not establish her personal knowledge of any of the facts pertaining to Midland’s complaint against Seth.
The case is remanded for further proceedings.•