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Indiana Court Decisions - March 18 to 31, 2015

April 8, 2015

Indiana Supreme Court

March 18

Domestic Relation – College/Release of Transcript

Ball State University v. Jennifer Irons; In Re the Marriage of: Jennifer Irons and Scott Irons

45S03-1503-DR-134

Ball State University should not have been added as a supplemental defendant in a woman’s petition to modify child support and seek postsecondary expenses from her ex-husband for their daughter, the Indiana Supreme Court held.

Jennifer and Scott Irons’ daughter, Jordan, was enrolled at Ball State University for the 2011-2012 school year, but withdrew before the end of the spring semester and had an outstanding tuition bill of more than $9,000. She sought to enroll at Indiana University Northwest but could not do so without her BSU transcript, which Ball State refused to release until her owed tuition was paid.

Jennifer Irons successfully had the trial court add Ball State as a supplemental defendant under Indiana Trial Rule 19 on her child support modification petition, arguing that the trial court could not determine Scott Irons’ financial obligation for expenses at IUN until their daughter was able to enroll there. Ball State claimed it would be willing to release the transcript, but not until the tuition was paid. The trial court denied Ball State’s motion to deny and ordered the school to release the transcript.

It appealed, but Jennifer Irons argued Ball State’s appeal was an impermissible interlocutory appeal; Ball State said it was an interlocutory appeal of right. A divided Court of Appeals ruled in favor of Jennifer Irons.

The justices held that Ball State was correct; it properly pursued an interlocutory appeal of right under Appellate Rule 14(A)(3) because the order to deliver the transcript is akin to compelling the delivery of any securities, evidence of debt, documents or things in action, Justice Robert Rucker wrote.

The justices also agreed with Ball State that it should not have been added to Jennifer Irons’ action seeking postsecondary expenses from her ex-husband. They adopted the abuse of discretion standard for reviewing decisions to join parties under T.R. 19 as outlined in Rollins Burdick Hunger of Utah Inc. v. Bd. Of Trustees of Ball State Univ., 655 N.E.2d 915 (Ind. Ct. App. 1996).

“Joinder then turns on whether Ball State was a necessary party to determine future education expenses. The record is devoid of any evidence that Mother attempted to obtain financial information from IUN or any other source before seeking to join Ball State in this action,” Rucker wrote. “There is also nothing in the record before us suggesting that without Ball State as a party, Mother would be unable to provide the trial court information relating to future college expenses at IUN or any other institution for that matter.”

The case is remanded with instructions to dismiss Ball State from this action.  
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March 19

Mental Health – Involuntary Civil Commitment

In the Matter of the Civil Commitment of T.K. v. Dep’t of Veterans Affairs

49S02-1503-MH-138

See story on page 4.
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March 20

Certified Question – Life Insurance/Bankruptcy/Dependents

In the Matter of Dennis Alan Howell

94S00-1405-CQ-321

The Indiana Supreme Court settled a certified question on whether nondependent spouses and children enjoy the exemption granted to life insurance policy beneficiaries who are “the spouse, children, or any relative dependent upon” the debtor. They do, the court concluded.

The question arose over the disposition of a life insurance policy with a cash value of a little more than $14,000 in a bankruptcy proceeding in the United States Bankruptcy Court for the Northern District of Indiana. The debtor had named a nondependent son as beneficiary, but a bankruptcy trustee objected based on the “dependent upon” language.

“That language undisputedly requires that relatives other than spouses and children must be dependent on the debtor for the exemption to apply, but whether that requirement also applies to spouses and children is less clear,” Chief Justice Loretta Rush wrote for the court.

“We accepted a certified question asking us to construe whether the ‘dependent upon’ phrase modifies only ‘any relative,’ or also ‘spouse’ and ‘children.’ The statutory language and structure standing alone are inconclusive, but all of the relevant interpretive canons indicate that we should construe ‘dependent upon’ to modify only ‘any relative.’ Accordingly, spouses and children need not be the debtor’s dependents for the exemption to apply,” Rush wrote.

Miscellaneous – Civil Forfeiture

Detona Sargent v. State of Ind., and the Consolidated City of Indianapolis/Marion Co., and the Indianapolis Metro Police Dept

49S02-1312-MI-790

A woman working at a Wal-Mart return center who helped herself to four iPhones on the way out the door wrongly had her car seized as a result of the conviction, a majority of the Indiana Supreme Court ruled. Justices reversed lower court civil forfeiture orders.

Detona Sargent was stopped before she got out the door, a search revealed the iPhones she’d stuffed under her shirt, and she was arrested. A friend was driving her 1996 Buick Century and waiting for her in the parking lot, and after Sargent was arrested, police located the car and impounded it.

Sargent ultimately pleaded guilty to Class D felony theft, and the state moved for summary judgment under Indiana’s asset forfeiture statute. I.C. 34-24-1-1(a) permits seizure of vehicles “if they are used or are intended for use by the person or persons in possession of them to transport or in any manner to facilitate the transportation of” stolen property worth $100 or more.

A Marion Superior trial court allowed seizure of the vehicle, a decision unanimously affirmed by the Court of Appeals.

Justice Robert Rucker wrote for the majority that included Justice Brent Dickson and Chief Justice Loretta Rush in reversing the forfeiture.

“Sargent had neither actual nor constructive possession of her Buick vehicle at the time it was ‘used or intended for use’ to ‘facilitate the transportation’ of stolen property,” Rucker wrote. “At all relevant times Sargent was detained in the store and thus had no physical control over the vehicle. Indeed Sargent had not been in actual possession of her car since earlier in the day when she allowed a co-worker to use it on condition the worker would return so that Sargent could drive home at the end of her shift.”

Justices Steven David and Mark Massa wrote separate dissents.

“Though at the time of the thefts Sargent was not physically occupying her vehicle, she exerted ‘dominion and control’ over the Buick, as evidenced by her instruction to her co-worker to return the vehicle by the end of her shift so she could drive home. Thus, she constructively possessed the Buick,” wrote David, who would affirm the trial court.

Massa joined David’s dissent but wrote separately to comment on the discretion the state enjoys in determining when to seek asset forfeiture. He noted increasing recent criticism of asset forfeiture regimes nationally and in Indiana, and observed this case seemed to fit the adage that hard cases make bad law.

“There is, in my judgment, sufficient evidence that Sargent constructively possessed her car and that it was ‘intended for use … to transport’ the phones, and thus technically eligible for forfeiture,” Massa wrote.

“But really? Firing Sargent and having her righteously prosecuted for felony theft was not enough? The State had to take her car, too?

“… These (asset forfeiture) tools are not without their critics, and their misuse invites further scrutiny. Moreover, when authorities overreach, the judiciary is tempted to impose remedies that do justice in a particular case but may do harm to the law over time,” Massa wrote.

Attorney Discipline – Suspension

In the Matter of: Christopher A. Hollander

49S00-1402-DI-118

A former Marion County public defender accused of offering to trade legal service for sex with a prostitute has been suspended from the practice of law.

Indiana Supreme Court justices unanimously agreed to suspend Christopher A. Hollander for a year without automatic reinstatement.

Hollander was arrested in January 2013 and charged with patronizing a prostitute. He pleaded guilty to the Class A misdemeanor last August, court records show, and he was ordered to serve two days of a one-year sentence.

Hollander had found a woman going by the name Harmony Scott on a website used by escorts and prostitutes, and he learned by looking through initial hearing records that she had been arrested. He sent a text message to Scott’s phone arranging to meet at a hotel to discuss legal services, unaware the phone was being used by an Indianapolis Metropolitan Police Department sergeant.

An undercover officer posing as Scott met Hollander at the hotel, and he was arrested after he offered to represent her in exchange for sex, according to charging information.

“The Court concludes that Respondent violated the Indiana Rules of Professional Conduct by, among other things, patronizing a prostitute and attempting to obtain sex or fellatio in exchange for legal services,” the court wrote in a per curiam opinion.

Mitigating factors include that Hollander has no prior discipline, he sought help from the Judges and Lawyers Assistance Program, he was candid with police after his arrest, and he expressed remorse for his behavior.
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March 25

Murder – Jury Instruction

Dustin E. McCowan v. State of Indiana

64S03-1408-CR-516

A convicted murderer who didn’t receive a requested jury instruction on the presumption of innocence lost his appeal, but the Indiana Supreme Court used the case to impart an exact instruction trial courts must use going forward upon request.

“Today we examine our holding in Robey v. State, 454 N.E.2d 1221 (Ind. 1983), and state unequivocally and prospectively that it is the absolute right of every criminal defendant to receive the following jury instruction upon request: “The presumption of innocence continues in favor of the defendant throughout the trial. You should fit the evidence to the presumption that the defendant is innocent if you can reasonably do so,” Justice Mark Massa wrote for the court.

The ruling, though, provided no relief for appellant Dustin E. McCowan, who was convicted in Porter Superior Court of the murder of Amanda Bach and sentenced to 60 years in prison.

“In this case, however, the jury instructions adequately encompassed these principles, which was the minimum required by prior precedent, and thus the trial court’s failure to use this precise language was not error,” Massa wrote.

Indiana Court of Appeals

March 19

Miscellaneous – Sanction/Alcohol Delivery

Indiana Alcohol and Tobacco Commission v. Lebamoff Enterprises, Inc.

49A02-1408-MI-529

The Indiana Court of Appeals reinstated the Indiana Alcohol and Tobacco Commission’s final order fining a northern Indiana liquor store company for using common carriers to transport wine to customers, which is a violation of its liquor permit.

The ATC issued its final order in February 2012 that approved recommendations by an administrative law judge to fine Lebamoff Enterprises Inc. $1,000 for the six citations which alleged it improperly used common carriers to transport wine to customers. A suspension of Lebamoff’s permit was deferred as long as it did not accrue any further violations during a one-year period.

Lebamoff sought judicial review of the ATC’s final order, arguing the state agency’s interpretation of I.C. 7.1-3-10-7 was unreasonable. In 2014, the trial court issued an order finding the ATC’s interpretation of that statute was incorrect and that ATC’s final order amounted to an improper attempt to exercise the ATC’s rulemaking function.

The COA examined Title 7.1 and all the various liquor permits the state can issue. Lebamoff has a liquor dealer’s permit, which allows it to sell liquor to customers for consumption off the licensed premises.

“The express language of Indiana Code section 7.1-3-10-7(c) indicates that the General Assembly intended that a home delivery of wine under this section was limited to delivery by the permit holder, i.e., the owner, partner, or manager of the package liquor store, or an employee of the permit holder, so long as the employee holds an employee permit. This language does not appear to allow for delivery of the wine by any other individual who might be acting as an agent for the permit holder,” Judge Cale Bradford wrote. “If the General Assembly had intended for Indiana Code section 7.1-3-10-7(c) to allow for home delivery by a common carrier, it could have crafted the language of this section to specifically allow for such delivery as it did in Indiana Code section 7.1-3-26-9. We therefore conclude that the ATC’s interpretation of Indiana Code section 7.1-3-10-7(c) was reasonable.”
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March 20

Civil Plenary – Employment/Compensation/Promissory Note

AM General, LLC v. James A. Armour

71A03-1402-PL-58

The ex-president, CEO and chairman of South Bend Humvee maker AM General will have to go to court to seek cash compensation that the company instead paid in the form of a promissory note, the Indiana Court of Appeals ruled.

James A. Armour retired three years ago, and his employment agreement included a provision that part of his compensation was long-term incentive payments in an amount redacted by the trial court. The promissory note given to Armour in December 2012 said the note was due and payable in December 2015.

After AM General sued seeking a declaratory judgment that the note didn’t breach its obligations to Armour under the contract, Armour prevailed on a counter-claim and won summary judgment in St. Joseph Superior Court.

The Court of Appeals reversed, though, and Judge Melissa May wrote for the majority joined by Judge Ezra Friedlander that summary judgment was improper. They said an affidavit from an AM General human resources officer saying the contract didn’t address how the long-term incentive payments were to be made created a “genuine issue of material fact, including whether the promissory note tendered to Mr. Armour met the criteria for when an assignable promissory note is the equivalent of cash.”

Chief Judge Nancy Vaidik dissented and would have affirmed summary judgment in favor of Armour, writing that the affidavit didn’t create an issue of material fact. “This is because ‘payment’ has a specific meaning, and AM General’s Note to Armour does not qualify as a ‘payment.’”
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March 25

Civil Plenary – Landlord/Tenant Dispute

Norris Avenue Professional Building Partnership v. Coordinated Health, LLC

40A01-1408-PL-349

A medical office that leased space from a landlord lost a judgment in its favor in a dispute over owed rent. The Indiana Court of Appeals reversed and ordered judgment in favor of the property owner.

A Jennings Circuit judge ruled for the defendant, after Coordinated Health vacated the space it rented from Norris Avenue with three years left on its five-year option term. Because the tenant had paid the higher rent it agreed to pay under terms of the option extension, Coordinated Health “demonstrated its intent to be held to the option terms,” Judge Edward Najam wrote for the panel.

“Although Coordinated Health did not satisfy the condition precedent of providing the contractual notice to exercise the option terms, it manifested its intent by its affirmative act of paying the option terms’ rent payments, which were materially different than the initial term’s rent payments,” Najam wrote for the panel. “And Norris waived the condition precedent when it accepted those payments in lieu of the notices (to exercise the option).

Criminal – Neglect of Dependent/Evidence

Chelsea Taylor v. State of Indiana

49A02-1402-CR-90

An Indianapolis mother was wrongly convicted of neglect of a dependent child resulting in death, the Court of Appeals ruled in reversing the jury’s verdict. Judges found evidence against Chelsea Taylor was insufficient to support the conviction.

Taylor was convicted of the Class A felony charge and ordered to serve four years in prison in the death of her 1-year-old son, J.N., in January 2012. J.N. had been left in the care of Taylor’s boyfriend, Ryan Worline, while Taylor was at work.

Worline was convicted of murder in the blunt-force trauma death of J.N., and Taylor, who was tried with Worline, was found guilty of neglect. But she argued there was no evidence that she was aware that J.N. needed medical care for injuries caused by Worline when she checked on the child upon returning home around 10 p.m. The child was dead the next morning.

Taylor also argued jurors were asked to draw inferences supported only by other inferences, and that a conviction may not rest on conjecture. The panel agreed.

“In this instance, the jury simply was not provided evidence that Taylor inflicted an injury, was present when injury was inflicted, heard the infliction of injury, or saw manifestations of an injury necessitating medical care,” Judge L. Mark Bailey wrote.

“Although reasonable inferences may be drawn from evidence, it is the State’s burden to present evidence on each element of the charged crime from which those inferences may be drawn. Ultimately, a criminal conviction absent proof beyond a reasonable doubt on each element of the charged crime amounts to fundamental error. ...

“The inference-stacking without establishment of a predicate fact, which the prosecution invited and the State deems sufficient to withstand appeal, is not constitutionally adequate. The State failed to adduce sufficient proof to support Taylor’s conviction for Neglect of a Dependent.”

Civil Tort – Duty to Protect

April Goodwin, Tiffany Randolph, and Javon Washington v. Yeakle’s Sports Bar and Grill, Inc.

27A02-1407-CT-526

When a customer pulled a gun and started shooting, a bar had a well-established duty to protect its other customers, the Indiana Court of Appeals has ruled.

April Goodwin, Tiffany Randolph and Javon Washington were socializing with friends at Yeakle’s Sports Bar and Grill in Grant County. After Rodney Carter thought he heard Washington make a derogatory remark about his wife, he shot Washington then accidentally shot Goodwin and Randolph.

The three injured individuals subsequently filed a complaint against the bar. However, the trial court entered a summary judgment in favor of the business, agreeing the bar did not have a duty of protection because Carter’s criminal acts were unforeseeable.

The Court of Appeals reversed and remanded for further proceedings. It held that the balancing test between the factors (relationship between the parties; reasonable foreseeability of harm; public policy concerns) set forth in Webb v. Jarvis, 575 N.E.2d 992, 995 (Ind. 1991) does not apply because the duty owed by the bar to its patrons is well-established.

Instead, it followed the Indiana Supreme Court’s analysis in Yost v. Wabash College, 3 N.E.3d 509, 515 (Ind. 2014), and found the bar owed the appellants a duty to take reasonable precautions to protect them from foreseeable criminal attacks.

“…as our supreme court has held, reasonable foreseeability does not determine duty where, as here, the duty is well-established,” Judge Edward Najam Jr. wrote for the court. “The Bar owed the Appellants a duty to protect them from foreseeable criminal acts of third parties. As such, the Bar cannot satisfy its burden to affirmatively negate the duty element of the Appellants’ negligence claims.”
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March 26

Civil Plenary – Addition of State as Defendant

LBLHA, LLC, Margaret L. West, and Don H. Gunderson v. Town of Long Beach, Indiana, Alliance for the Great Lakes and Save the Dunes, Long Beach Community Alliance, Patrick Cannon, et al.

46A05-1404-PL-146

Property owners along Lake Michigan will have another chance to make their arguments in a dispute over which part of the beach belongs to them and which belongs to the public.

The Indiana Court of Appeals found the LaPorte Circuit Court had improperly granted summary judgment to the town.

Lakefront property owners filed a complaint against Long Beach after the municipality adopted a resolution in 2012 which set the boundary between the public and private beach. The landowners charged the town was unlawfully claiming rights to the lakefront.

After a hearing on pending motions, the trial court entered summary judgment in favor of the town. The court ruled the town’s resolution does not constitute a taking. Instead, the court found the matter of ownership is a pure question of law and more properly dealt with by the Indiana General Assembly or an appellate court with the state of Indiana as a party.

Lakefront owners responded by filing a motion for leave to file an amended complaint in order to add the state of Indiana as a defendant. The chronological case summary does not show the trial court having ruled on the motion but the property owners did appeal.

The Court of Appeals said the issue was whether the state should have been added or joined as a party to the proceedings under Indiana Trial Rule 19 prior to the rulings on the claims of the owners.

“… the trial court did not determine the ownership rights of the Lakefront Owners or public rights to the beach area at issue and thus did not rule on the substantive allegations set forth under Count I of the Lakefront Owners’ complaint,” Judge Elaine Brown wrote. “While the trial court stated that it did not reach that determination because it had determined there was no taking, we observe that the Town did not establish that the Lakefront Owners are precluded from requesting the court to determine their relative property rights notwithstanding whether the designated evidence may or may not establish as a matter of law that there was not an impermissible taking.”

Consequently, the Court of Appeals concluded the trial court should have joined the state as a party to the proceedings. Indeed, the panel noted even the town and the intervening defendants, Alliance for the Great Lakes and Save the Dunes, asserted the owners’ claims are actually against the state.

Yet, the court maintained that adding the state as a defendant does not mean the property owners have no separate claim against the town. The 2012 resolution is a policy for enforcement of the town’s public property ordinances in the disputed area, the appeals court held, and the owners are objecting to the town’s ordinances.

The Court of Appeals remanded for further proceedings with the state of Indiana to be added as a party.
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March 30

Civil Tort – Indiana Tort Claims Act

In re: Indiana State Fair Litigation: Polet, et al. v. Mid-America Sound, et. al.

49A02-1404-CT-288

The company that leased a temporary stage that collapsed in a windstorm killing seven and injuring dozens prevailed in overturning a trial court ruling in favor of the Indiana State Fair Commission. A dissenting appellate judge wrote that the majority placed form over substance in shifting liability to the state.

A majority of an Indiana Court of Appeals panel ruled in favor of Mid-America Sound, reversing summary judgment in favor of the state granted by now-retired Marion Superior Judge Theodore Sosin. Mid-America argued that terms of its lease contracts with the state require the state to indemnify the company against claims arising from the 2011 stage collapse during a Sugarland concert.

“The trial court granted the Commission’s motion but did not articulate the basis for its decision. As the Tort Claims Act does not apply and there are genuine issues of fact regarding the validity and enforceability of the indemnification agreement, we reverse and remand for trial,” Judge Melissa May wrote in a majority opinion joined by Judge Ezra Friedlander.

The COA found that there were questions a jury must decide on whether the indemnification clause on the back of an invoice was unconscionable or enforceable.

Chief Judge Nancy Vaidik dissented and would affirm summary judgment in favor of the Indiana State Fair Commission.

“Given that the purported indemnification clauses were located on the backside of unsigned invoices, I have serious doubts as to whether there was an enforceable contract between Mid-America and the Commission,” Vaidik wrote. “But I respectfully dissent from the majority’s opinion because, taking substance over form, I believe that this case is nothing more than Mid-America’s attempt to shift tort liability to the Commission — a tort in contract’s clothing, if you will. I would find that the Commission has immunity from Mid-America’s claims against them since this is the type of action contemplated by the Indiana Tort Claims Act (ITCA) and the Commission is a governmental entity.”  

In a statement released after the ruling, Indiana Attorney Greg Zoeller said the state would appeal.
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March 31

Civil Collection – Indenture/Landowner Issues

Berthal O. Williams and Patricia Williams v. The Indiana Rail Road Company

77A04-1311-CC-580

Because a railroad company failed to prove there are no genuine issues of material fact regarding its defense to a breach of covenant claim against it concerning the maintenance of a dam, the Indiana Court of Appeals reversed summary judgment in its favor and remanded for further proceedings.

Berthal and Patricia Williams brought a lawsuit against the Indiana Rail Road Company in an attempt to enforce an indenture entered into in 1901 between property owners Constantine and Lucy Stewart and John and Sarah Boston, and the Southern Indiana Railway Company. According to the indenture, Southern could construct and maintain a dam on its right-of-way that would have a water depth between 14 and 20 feet. The right-of-way ran through or was adjacent to the property owners’ land.

The Williamses purchased property east of and adjacent to the right-of way in 2005; IRR acquired the railroad and right of way in May 2006. Berthal Williams sent letters to IRR in 2008 and 2010 informing it that the dam was leaking, which is causing damage to his property. The Williamses sought to enforce the indenture, meaning that IRR would have to also make sure the dam had at least 14 feet of water in it, which at the time of the lawsuit it did not contain. The indenture noted that the pond could be used for fishing, picnics and recreation use by the property owners.

The Court of Appeals looked at IRR’s three arguments and determined summary judgment should be reversed.

The judges determined based on the specific language used, the original parties’ intent was for the covenant in the indenture to run with the land. The parties included specific language providing that this accumulation of water would be “of a depth of not less than fourteen or more than twenty feet at its deepest point[.]” Thus, the indenture does contain a requirement regarding maintenance of the pond between a certain depth range, the majority held.

The COA also determined there is a covenant running with the land that has created obligations on the successor parties.

“From the language of the Indenture, we conclude that the covenant for maintaining the dam and the resulting accumulation of water is a perpetual or continuing one – as long as the dam or the covenant is in existence – and does not merely cease to exist upon a failure of one of the parties’ obligations. Thus, there is the potential that it could be breached on various occasions (as long as any breach was first cured),” Judge Rudolph Pyle III wrote.

Judge Paul Mathias dissented, writing the language granted the railroad the right to construct and maintain the dam, but imposed no duty or obligation to do so.

Civil Plenary – Zoning

County of Lake and the Lake County Plan Commission v. Alan J. Pahl and Roderick Pahl

45A03-1406-PL-214

The Indiana Court of Appeals held that a Lake County court erred when it denied the county’s request for an injunction to prevent a couple from raising alpacas on their property for business purposes.

Alan and Kimberly Pahl purchased 10 acres of land in January 2006 in a five-lot subdivision. Prior to their purchase, the land had been used for agricultural purposes and they believed it was still zoned for agricultural purposes. But it had been rezoned to single family residential in 1995 in order to create the subdivision.

In May 2008, the Pahls brought alpacas onto the property. Their fiber is sent to a mill in trade for a finished product. Sometimes Kimberly Pahl would sell the fiber directly to spinners or use it in her own products for sale.

The Lake County Plan Commission informed the Pahls that they could not keep the alpacas on the property based on zoning ordinances. The Pahls believed based on I.C. 36-7-4-616, their land would be protected for agricultural purposes.

The trial court ruled in favor of the Pahls, noting that the property has been classified for agricultural use in the county’s comprehensive plan since 1957 and that the property falls under I.C. 36-7-4-616(b)(2). The trial court also denied the county’s motion to correct errors.

The COA reversed because the trial court failed to apply subsection (f) of the statute in question and the relevant portions of the zoning ordinance to the Pahls’ use of the land. Subsection (f) states that the section does not prohibit a county from requiring an agricultural nonconforming use to be maintained and operated in compliance with all requirements to which conforming agricultural use land is subject under the county’s comprehensive plan or zoning ordinance.

Section 2.7 of the zoning ordinance in question requires at least 20 acres of land in order to keep, raise or breed farm animals. The judges noted the other provisions of the zoning ordinance applicable to the Pahls’ land, which should have led the trial court to rule in favor of the county. The case was remanded with instructions to grant Lake County’s petition for an injunction.  

 Criminal – Probation

Jacqueline A. Jackson v. State of Indiana

34A04-1409-CR-455

The Indiana Court of Appeals reversed the revocation of a woman’s probation after two judges ruled the probation condition at issue is ambiguous regarding whether and when she had to report an arrest while on probation for a charge that allegedly occurred before the probation began.

Jacqueline Jackson was on probation in February 2014 after pleading guilty in 2012 to neglect of a dependent. While on probation, she was arrested and charged with having committed child molesting in January 2012, before she was sentenced and placed on probation for the neglect of dependent charge.

One condition of her probation says that “Violation of any law (city, state, or federal) is a violation of your probation; within forty-eight (48) hours of being arrested or charged with a new criminal offense, you must contact your Probation Officer.” Jackson did not notify her probation officer until 30 days after her arrest.

The trial court revoked her probation and ordered her to serve time in the Department of Correction.

Jackson contended that she was only required to notify her probation officer of any arrests arising from criminal offenses she committed during the probationary term; the state believed the probation condition required her to notify her probation officer within 48 hours of being arrested regardless of when the alleged offense occurred.

The majority agreed with Jackson that the probation condition is ambiguous and the use of the semicolon means the two independent clauses are closely related. The clauses would be unrelated if they had been separated by a period, Judge Edward Najam noted.

“It seems illogical for the conditions of a probation order to relate back to conduct that occurred prior to the order. Nevertheless, the condition could have been unambiguously written to require that Jackson report any arrest, even an arrest based on an ‘old criminal offense’ that first manifests itself during the probationary period. But it was not,” Najam wrote.

Judge Cale Bradford dissented based on his interpretation that the language of the condition creates two independent duties and thus, Jackson was required to report her new arrest within 48 hours to her probation officer. Jackson’s probation was revoked based on her delay in notifying her probation officer, Bradford wrote, not the new arrest. Thus, the state presented sufficient evidence she violated her probation.

Civil Tort – Breach of Fiduciary Duty/Constructive Fraud

Rapkin Group, Inc., as a minority member on behalf and for the benefit of The Eye Center Group, LLC, and Surgicenter Group, LLC v. Cardinal Ventures, Inc., successor in interest to Cardinal Health Partners LLC.

18A02-1408-CT-563

There is sufficient evidence to create genuine issues of material fact as to whether a shareholder breached its fiduciary duty owed to other shareholders and whether it committed constructive fraud by remaining silent about two businesses’ financial states, the Indiana Court of Appeals ruled.

Rapkin Group appealed summary judgment in favor of Cardinal Ventures on its claims of breach of fiduciary duty and constructive fraud in a shareholder derivative lawsuit. Cardinal Health Partners owned nearly 22 percent and 33 percent, respectively, of The Eye Center Group LLC and Surgicenter Group LLC. Other shares in EGC and SCG were owned by ophthalmologists and optometrists, including the Rapkin Group. Inconsistencies in financial reports were discovered in 2008 through an audit by Katz Sapper & Miller. It turned out that ECG/SCG’s chief executive officer, D. Frank Winconek, and chief financial officer, Stephanie Carrick, engaged in fraudulent practices with the companies’ finances. Proceeds from loans rather than from profits were used to pay salaries and dividends.

Rapkin brought its complaint in April 2010 against several defendants, and at issue in the appeal is summary judgment granted to Cardinal. Rapkin claimed that it designated evidence to show an issue of material fact with regard to Cardinal’s knowledge of the state of the finances of the LLCs. Rapkin pointed to Winconek’s affidavit in which he averred that Robert Gildersleve, the director of the LLCs appointed by Cardinal, was aware that the EGC and SCG were required to borrow money to pay dividends from 2006 to 2009. It was also at this time that Cardinal began to divest itself of shares of the LLCs. It sold shares to the doctors and did not disclose the loan information.

The COA agreed with Rapkin that a genuine issue of material fact exists on the question of whether Cardinal breached its fiduciary duty, noting that a reasonable inference could be drawn that Gildersleve was not dealing openly and honestly with the physician shareholders.

Rapkin’s designated evidence also would support an inference that Cardinal, through Gildersleve, committed constructive fraud by remaining silent about the LLCs’ financial states and encouraged fellow shareholders to purchase worthless shares.

The judges noted that its ruling is not to be taken as a comment on the strength of Rapkin’s case, but merely that there are questions as to whether Cardinal breached a fiduciary duty and committed constructive fraud. The case is remanded for further proceedings.•

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