7th Circuit Court of Appeals
Civil – Qualified Immunity
Robin Allman, et al. v. Kevin Smith and City of Anderson, Indiana
Anderson Mayor Kevin Smith lost his appeal of the finding that he is not entitled to qualified immunity regarding all of the fired government workers involved in a lawsuit alleging their discharges violated the First Amendment.
The federal court found Smith is only entitled to qualified immunity with respect to nine of the 11 plaintiffs’ claims. The 7th Circuit considered only the surviving claims of Robin Allman and Margaret Baugher.
Allman was office manager for the city’s utility department when Smith was elected. After being told she would not be retained as office manager, she moved to a cashier position in the department. After Smith took office, he “promoted” her back to office manager and immediately fired her.
The federal appeals court concluded that Smith is not entitled to interlocutory review of the question of whether Allman was entitled to be a cashier.
Baugher worked as a customer service supervisor in the same department. She mainly interacted with co-workers and members of the general public. The District Court judge found, based on the evidence, that it appeared her position falls outside the exemption of First Amendment protection. The 7th Circuit agreed that Smith is not entitled to qualified immunity on her claim as her position has no significant policy-making discretion, so she cannot be fired on political grounds.
Civil – Jurisdiction
Richard Bell v. Cameron Taylor
A lawyer and photographer’s appeal in a copyright lawsuit over unlicensed use of his photo of the Indianapolis skyline was improper, the 7th Circuit Court of Appeals ruled, dismissing the appeal.
Richard Bell has sued hundreds of defendants he claimed used his city skyline photo on websites without first paying a licensing fee. In one case, defendants were granted summary judgment by Judge Tanya Walton Pratt of the U.S. District Court for the Southern District of Indiana, and Bell appealed.
“In addition to the summary judgment ruling, Bell contests the district court’s denial of two motions to compel and a motion seeking leave to file a fourth amended complaint,” Circuit Judge Joel Flaum wrote for the panel.
“We have no jurisdiction to decide these issues. Although the court purported to issue a ‘final judgment’ after ruling on the defendants’ summary judgment motion, it did so in error; the issue of injunctive relief was never adjudicated,” Flaum wrote. “Accordingly, an appeal in this case is premature until the district court resolves Bell’s outstanding claims for injunctive relief.”
The District Court concluded that though Bell had established ownership of the photo, he was not entitled to damages. But the 7th Circuit ruled that Bell’s copyright claim remained alive because he had sought both damages and an injunction against the defendants.
Earlier this month, Pratt ordered Bell to pay defendant Charles Lantz nearly $34,000 in legal fees in a separate case. Bell named Lantz in a suit claiming he wrongly used the photo, but he did not.
Indiana Supreme Court
Discipline – Attorney Disbarment
In the Matter of: Bradley D. Hamilton
A Kokomo attorney who took nearly $60,000 from clients but never completed their legal matters – and later abruptly abandoned his law practice to move to Australia – has been disbarred by the Indiana Supreme Court.
Bradley Hamilton faced 11 counts of misconduct, which involve doing little to no work for clients who hired him on bankruptcy and non-bankruptcy cases, and misrepresenting a petition that had been filed. One count charts 22 clients identified by Hamilton’s attorney surrogate, Brent Dechert, as having been abandoned by Hamilton with legal matters still pending and to whom unearned fees are still owed.
The per curiam opinion handed down says Hamilton was paid $58,366 by the clients indentified in the 11 counts. Hamilton enlisted Dechert as his attorney surrogate two days before he left for Australia. At that time, only approximately $2,000 was in Hamilton’s attorney trust account.
The hearing officer recommended the justices disbar Hamilton, which they did. The justices found Hamilton violated eight rules of Indiana Professional Conduct – 1.3: failure to act with reasonable diligence and promptness; 1.4(a)(3): failure to keep a client reasonably informed about the status of a matter; 1.4(a)(4): failure to comply promptly with a client’s reasonable requests for information; 1.4(b): failure to explain a matter to the extent reasonably necessary to permit a client to make informed decisions; 1.16(d): failure to protect a client’s interests upon termination of representation, and failure to refund an unearned fee promptly upon termination of representation; 8.4(b): committing a criminal act (conversion or theft) that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer; 8.4(c): engaging in conduct involving dishonesty, fraud, deceit or misrepresentation; and 8.4(d): engaging in conduct prejudicial to the administration of justice.
Before leaving for Australia, Hamilton did not “reconcile his trust account; he looted all but a small portion of it and left behind no records indicating to which client(s) that remaining sum belonged. He did not notify clients of the status of their cases; when clients inquired, Respondent mostly avoided them and in some instances lied to them. Respondent did not refund unearned fees; he stole them. Most clients were not notified of his impending move out of the country, and Respondent continued to accept new clients (and their money) even as the abandonment of his law practice was imminent. Finally, while Respondent did enlist the aid of Dechert as an attorney surrogate, Respondent did so at the last minute and in a manner that precluded Dechert, despite his commendable efforts to triage the harm caused by Respondent, from being able to fully protect the interests of Respondent’s clients,” the opinion says.
The opinion notes that Hamilton is the subject of 11 separate pending show cause proceedings and is currently suspended for noncooperation, dues nonpayment and CLE noncompliance.
Discipline – Attorney Disbarment
In the Matter of: Robert E. Stochel
A northern Indiana attorney who stole trust account funds belonging to his former law partner and that partner’s clients, and embezzled hundreds of thousands of dollars from a receivership, has been disbarred by the Indiana Supreme Court.
Robert E. Stochel faced three disciplinary counts. Count I deals with his time as receiver in a dispute involving joint owners of a supermarket. The receivership assets totaled about $330,000 in a bank account, which Stochel depleted. He lied and covered up his theft. Count II stems with his theft of money from his former law partner, Thomas Hoffman. The two shared a trust account from which Stochel withdrew $30,000; only $5,600 belonged to Stochel.
Stochel has not returned funds to his ex-partner and still owes at least $230,000 to the receivership.
The third count is based on Stochel’s noncooperation with the disciplinary investigation.
The justices found 9 aggravating facts and no mitigating facts. They found he violated Indiana Professional Conduct Rules: 1.5(a): making an agreement for, charging or collecting an unreasonable fee; 1.15(a): failure to hold property of clients properly in trust; failure to safeguard property of clients; treating client funds as his own; failure to maintain and preserve complete records of client trust account funds; 1.15(d): failure to deliver promptly to clients and third parties funds they are entitled to receive and failure to render promptly a full accounting of those funds; 1.16(d): failure to refund an unearned fee promptly upon termination of representation; 3.3(a)(1): knowingly making false statements of fact or law to a tribunal or failing to correct false statements of material fact or law previously made to the tribunal by the lawyer; 3.4(c): knowingly disobeying court orders; 4.1(a): knowingly making a false statement of material fact to a third person in the course of representing a client; 8.1(b): knowingly failing to respond to a lawful demand for information from a disciplinary authority; 8.4(b): committing criminal acts (conversion, theft, deception, and criminal mischief) that reflect adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer; and 8.4(c): engaging in conduct involving dishonesty, fraud, deceit or misrepresentation.
“Respondent stole hundreds of thousands of dollars from the receivership and tens of thousands of dollars from his former law partner and that partner’s clients. In the receivership case, Respondent covered up his theft for nearly a decade, lied to all comers, deceived the court and later defied its orders, and actively obstructed the disciplinary process. Respondent throughout has expressed absolutely no remorse or intent to make restitution. In addition, he has neither challenged the hearing officer’s report nor argued any mitigating facts. Under these circumstances, the Court unhesitatingly concludes that disbarment is warranted,” the per curiam opinion states.
Indiana Tax Court
Tax – Use Tax
Asplundh Tree Expert Co. v. Indiana Department of State Revenue
A tree service properly paid Indiana use tax on its commercial vehicle purchases made outside the state, and imposition of those taxes did not violate the Commerce Clause, the Indiana Tax Court ruled.
The court granted partial summary judgment in favor of the state. Asplundh purchased more than 500 custom commercial vehicles between 2007 and 2009, and though most were never used in Indiana, they were registered, licensed and titled in the state. Asplundh paid the Bureau of Motor vehicles about $2.6 million in use tax, but later sought a full refund.
Tax Court Judge Martha Blood Wentworth wrote, “Asplundh properly paid use tax on its out-of-state vehicle purchases because it exercised its rights as an owner over those vehicles when it chose to register, license and title them in Indiana.”
“Contrary to Asplundh’s contention … the imposition of the use tax does not necessarily depend on whether the subject property is physically present in the taxing state,” Wentworth wrote.
Indiana Court of Appeals
Miscellaneous – No Smoking Ordinance
Whistle Stop Inn, Inc., and Louise Liford d/b/a Thirsty Turtle v. City of Indianapolis, Mayor Greg Ballard, Indianapolis City-County Council and Hoosier Park, LLC
An exception contained in the city of Indianapolis’ no-smoking ordinance for satellite facilities is unconstitutional and invalid, the Indiana Court of Appeals ruled. The judges voided this exception from the ordinance, but declined to void the entire ordinance.
The Thirsty Turtle sued in 2013 seeking to have the court declare Indianapolis’ no-smoking ordinance invalid. The law prohibits smoking in traditional restaurants and bars, such as the Thirsty Turtle, but has exceptions for private clubs, tobacco shops and satellite facilities. As of April 1, 2012, Hoosier Park Winner’s Circle OTB in Indianapolis was the only business that held a license to operate as a satellite facility under the ordinance.
The 7th Circuit affirmed the city’s smoking ban involving the differing treatment of bars and restaurants as compared to private clubs and tobacco shops, but did not rule on the satellite issue. That issue is what is before the Court of Appeals. The trial court ruled in favor of the city and Hoosier Park.
The judges ruled that the exception allowing smoking in Hoosier Park violates the Equal Privileges and Immunities Clause of the Indiana Constitution. “The exception treats satellite facilities differently than bars and restaurants and this disparate treatment is not reasonably related to the inherent differences between the two entities,” Judge John Baker wrote.
But the judges declined to declare the whole ordinance invalid as Thirsty Turtle sought and instead severed the exception from the ordinance. The ordinance allows for sections to be severed, leaving the rest of the ordinance intact.
The matter is remanded for further proceedings.
Criminal – Resisting Arrest/Political Speech
Lakisha Jordan v. State of Indiana
The Indiana Court of Appeals overturned a woman’s misdemeanor disorderly conduct conviction, which was based on her comments to police that she was pulled over because she was black, finding the comments were political in nature.
Lakisha Jordan was convicted of Class B misdemeanor disorderly conduct and Class A misdemeanor resisting law enforcement after police pulled over the car she was driving in because the license plate did not match the vehicle registration.
According to the record, Jordan was belligerent toward Officer Christopher Nieves and yelled at him after he asked if she had any weapons in the car. She questioned if she was being pulled over because she was black. Another officer responded to the scene and the car was towed. Jordan refused to leave the scene, and after continuing to yell at the officers, Nieves decided to arrest her. She turned and began to run. A scuffle ensued, and Nieves handcuffed her.
The Court of Appeals determined that Jordan’s overall complaint and statements to police were critical of them, and thus her speech was political. They noted that the state didn’t prove that the statements and Jordan’s shouting – which caused people in the area to pay attention to the situation – rose to the level of anything beyond fleeting annoyance. As such, the judges reversed her disorderly conduct conviction.
But there was enough evidence to support the resisting law enforcement conviction, the judges held. They remanded for acquittal on the disorderly conduct charge.
Criminal – Expungement
Sabrina Y. Dada v. State of Indiana
A trial court that rejected an expungement petition because the petitioner had not been arrested on an underage drinking charge got it wrong, the Indiana Court of Appeals ruled.
The panel reversed a ruling by Monroe Circuit Judge Kenneth G. Todd and ordered records expunged. Dada had not been arrested and sought to expunge records related to a summons for a Class C misdemeanor that was dismissed pursuant to a pretrial diversion agreement.
In interpreting I.C. 35-38-9-1, Judge John Baker wrote for the court in a four-page opinion that the Legislature could not have concluded that Dada was not entitled to relief because she was never arrested.
“We cannot conclude that the legislature intended for this result to be reached, inasmuch as it would offer relief to more problematic offenders and deny relief to more compliant ones. In other words, as Dada astutely points out, ‘if this line of reasoning is followed, it will create an unjust result for those individuals that may be non-threatening and compliant with an officer and are only issued a summons as opposed to being formally placed under arrest.’”
The court noted the statute has since been amended to allow expungement for those charged with a crime, but not arrested, and that language will go on the books July 1.
“(W)e find that Dada is entitled to relief. She was charged with a criminal offense that was eventually dismissed, and the fact that she was not formally arrested does not vitiate her right to expungement of the records related to this incident,” Baker wrote.
Civil Plenary – Mechanic’s Lien
Wells Fargo Bank, N.A. v. Rieth-Riley Construction Co., Inc.; Woodmar Hammond, LLC; The Bon-Ton Department Stores, Inc.; Build Tech, Inc.; Ziese & Sons Excavating, Inc.; et al
A trial court judgment that a mortgage company reserve money to satisfy a mechanic’s lien was reversed by the Indiana Court of Appeals.
Rieth-Riley Construction Co. repaved a parking lot at the Woodmar Shopping Center in Hammond, but didn’t get paid the $251,800 it was owed, plus interest and attorney fees. Rieth-Riley sought to foreclose a mechanic’s lien, but Wells Fargo has a senior lien on the property and also filed a foreclosure on the property.
Lake Superior Judge John R. Pera granted summary judgment in favor of Wells Fargo, in which he ruled the bank was owed more than $5.2 million by Woodmar. But he later ordered Wells Fargo to deposit the first $337,000 of any bid it may make to purchase the lot at the center of the dispute.
This was error, Judge John Baker wrote for the appeals panel.
“Wells Fargo is entitled to use the full amount of its judgment as a credit towards any bid for the purchase of Lot 1, and the judgment of the trial court requiring Wells Fargo to deposit a certain amount of that bid in cash is reversed,” Baker said. “On remand, the trial court is to determine whether removal of the parking lot is practical and, if so, allow Rieth-Riley to exercise that option in accordance with Indiana Code section 32-28-3-2. Otherwise, Rieth-Riley’s mechanic’s lien is junior to Wells Fargo’s mortgage lien and Rieth-Riley is entitled to proceeds from the sale of Lot 1 only after Wells Fargo’s mortgage has been satisfied.”
Criminal – Contracting/Poker Game
James Lee Sparks v. State of Indiana
The operator of a fundraising poker game at a Warsaw veterans lodge won an appeal of his contracting conviction at the Indiana Court of Appeals.
James Lee Sparks was charged with multiple felonies after an investigation of the games uncovered apparent violations of state law. Sparks was charged in Kosciusko Superior Court with theft, corrupt business influence, and contracting. The state dropped the theft charge, and a jury convicted Sparks only on the contracting count.
But the appeals panel reversed the conviction because the state failed to prove required elements of the contracting statute – that the Warsaw Veterans of Foreign Wars Post was a nonprofit organization and tax-exempt under IRS Section 501. The state cited to that status on the Indiana Secretary of State’s website, but this was insufficient, Judge Paul Mathias wrote in a footnote.
“(N)either of these items was admitted into evidence and tendered to the jury. Moreover, the State did not request that the trial court take judicial notice that the VFW is a qualified organization or place the issue in front of the jury through an appropriate instruction,” Mathias wrote. “Therefore, the State failed to prove all of the required elements of the VFW’s status under the statute.”
Miscellaneous – Annexation
Town of Fortville v. Certain Fortville Annexation Territory Landowners
The town of Fortville’s effort to annex more than 600 acres was wrongly blocked by a trial court, the Indiana Court of Appeals ruled, sending the matter back for further proceedings.
Fortville pared back an earlier proposal to annex nearly 6,000 acres that had riled up residents. The town passed a resolution to annex 644 acres largely surrounded by the town limits on three sides. The annexed land would essentially make Hancock County Road 300 West the town’s western boundary south of State Road 67.
The town argued the annexation was needed to square up its town limits, protect the future of the town utilities that serve the annexed area, and control future development that has sprawled in nearby Fishers and McCordsville and is expected to spread to Fortville.
Remonstrators who own 93 percent of the parcels in the annexation area persuaded Hancock Circuit Judge Richard D. Culver to rule that Fortville had not presented evidence that the area to be annexed was needed and can be used for Fortville’s development in the near future.
“Finding that the trial court erred by applying the wrong evidentiary standard when analyzing Fortville’s need to annex the area and the plans for the area’s development, we reverse and remand proceedings consistent with this opinion,” Judge John Baker wrote for the panel.
The panel ruled that the parties had jointly stipulated to facts that left only the issue of whether the annexation is needed and can be used by Fortville for its development in the reasonably near future pursuant to Indiana Code § 36-4-3-13(c)(2).
Baker wrote that the trial court applied the wrong standard in ruling that Fortville had not provided evidence that construction of schools, homes or roads was planned.
“To allow the trial court’s order to stand would be to hold that a city — if it does not have impending plans to build on land that it seeks to annex — must sit and watch the land be used and developed in ways that might harm or impede its future plans for urban management of the land, until the ‘long-term inevitability’ of annexation takes place. This result would be bad policy and likely harm both the area to be annexed and the municipality that seeks to annex it. Thus, we determine that the trial court should not have limited its analysis to evidence of physical construction or development in determining whether Fortville fulfilled the requirements of Indiana Code section 36-4-3-13(c)(2).”
“Therefore, we hold that the trial court applied the wrong evidentiary standard as a matter of law and find that, in determining whether a municipality fulfills the requirements of Indiana Code section 36-4-3-13(c)(2), a trial court may, and should, consider non-physical brick and mortar development uses, such as those – using annexed territory for ‘transportation linkages with other developing areas, to control adjacent development on its borders, and to prevent conflicting land uses – noted by our Supreme court in Hobart” (Chidester v. City of Hobart, 631 N.E.2d 908, 913 n.6 (Ind. 1994).
The COA reversed and remanded with instructions that the trial court apply the correct standard and reconsider its judgment.
The case is an example of shifting standards applied in annexations around Indiana.
Small Claim – Prima Facie Error
Linda Rosenberg v. Kenneth Robinson
A defendant who consistently failed to appear for scheduled hearings in small claims court gained a reprieve, but with an admonishment from the Indiana Court of Appeals.
Linda Rosenberg appealed the entry of default judgment against her on two causes brought in small claims court in Lake County. Her former office manager, Kenneth Robinson, alleged she failed to repay a loan he made to her in August 2011 and that she skipped paying him for about four weeks of work during his six-months of employment.
At the Oct. 30, 2013, trial, Rosenberg’s counsel requested a stay because of a federal investigation into Rosenberg.
The court rescheduled for Jan. 14, 2014, but both Rosenberg and her counsel did not appear. Consequently, the court took testimony from Robinson and entered judgment by default on both claims for $6,000 each.
Three days later, Rosenberg filed a motion to set aside the default judgment. She stated her attorney had “inadvertently omitted” the hearing from his calendar. On Jan. 22, the court granted her motion to stay and scheduled a hearing for March 20, 2014.
At the March hearing, counsel for Rosenberg requested a continuance because she had been unable to contact Rosenberg for more than two weeks only to discover Rosenberg had been in the hospital. The court granted the continuance and set the hearing for June 3, 2014.
However, on that day, Rosenberg failed to appear and her counsel was nearly 20 minutes late. The court subsequently denied Rosenberg’s motion to reconsider and to set aside the default judgment.
After her motion to correct, error was denied. Rosenberg filed an appeal, claiming the trial court erred in denying her motion to set aside default judgment.
She argued small claims court erred in entering the default judgment because the judgments were not supported by evidence in the record. Robinson did not produce any agreement or documentation supporting his contention that he loaned her money. Also, he did not provide any evidence of his pay rate or employment with Rosenberg that showed he was not compensated for all his work.
Rosenberg asserted that according to Small Claims Rule 10 (B), the court must examine that the plaintiff has a prima facie case before default judgment is entered. But based on the scant evidence in the record, the court could not have found Robinson satisfied all the necessary elements of his claims.
The Court of Appeals agreed that Robinson had not established a prima facie case for his recovery of either claim. The unanimous panel reversed and remanded with instructions in Linda Rosenberg v. Kenneth Robinson, 45A03-1407-SC-262.
The Court of Appeals did admonish Rosenberg and her counsel. In a footnote, the panel noted that although it remanded for further proceedings, it did not approve of Rosenberg’s and her counsel’s failure to appear and tardiness at scheduled hearings.
Criminal – Warrantless Search/GPS
Christopher Wertz v. State of Indiana
The warrantless search of a driver’s global positioning system after a crash in which a passenger died was unconstitutional, the Indiana Court of Appeals held.
The court reversed denial of a motion to suppress evidence collected from the search of a Garmin GPS device in Christopher Wertz’s vehicle. Wertz lost control of his vehicle and hit a utility pole in September 2011. He was severely injured in a crash that killed passenger Megan Solinski.
Wertz was later charged with Class C felony reckless homicide. After a mistrial, he sought to suppress evidence obtained from the device in a warrantless search in which Garmin International supplied access codes to authorities. The device would have stored information such as Wertz’s route and speed at the time of the crash.
“We conclude Wertz’s GPS device is not a ‘container’ under the automobile exception and that he has a reasonable expectation of privacy in the device and its contents,” Judge Margret Robb wrote for the panel.
“Therefore, the warrantless search of the GPS device violated the Fourth Amendment. We reverse and remand.”
Wertz moved to suppress the evidence after an initial denial as his retrial approached last year, and shortly after the U.S. Supreme Court ruled in Riley v. California that a warrant was required to search digital information on an arrestee’s cell phone. The trial court denied Wertz’s motion to suppress the GPS evidence in light of that opinion.
“We are not persuaded that a law enforcement officer could rely on binding precedent for the warrantless search of Wertz’s GPS device,” Robb wrote. “... We read Riley only as clarifying that electronic storage devices are not properly treated as containers, not as a new rule of law or as overruling any binding precedent previously allowing for the warrantless search of an electronic device under the automobile exception to the warrant requirement.
“Simply put, there exists no binding precedent allowing for a warrantless search of an electronic device storing historical location data. In the absence of such authority, the general rule is that a warrant is required.”•