7TH CIRCUIT COURT OF APPEALS
Civil – Requirements Contract
BRC Rubber & Plastics Inc. v. Continental Carbon Company
The 7th Circuit Court of Appeals vacated judgment in favor of a company that sued its carbon black supplier after it was unable to fulfill orders, holding the lower court erred in ruling in favor of the purchaser after finding the agreement between the companies was a requirements contract.
BRC Rubber & Plastics Inc. entered into a contract with Continental Carbon Co. for Continental to supply carbon black to the rubber products manufacturer. Continental was unable to complete orders for BRC in April 2011 based on high demand for carbon black and refused to fill subsequent orders by BRC. BRC sued, arguing that Continental had to fill every order BRC placed because it had a requirements contract with Continental. This type of contract is one in which the purchaser agrees to buy all of its needs of a specified material exclusively from the particular supplier and the supplier in turn agrees to fill all of the purchaser’s needs during the contract period.
The District Court agreed with BRC that the companies had a requirements contract, so Continental’s refusal to confirm and ship some orders was a breach and repudiation of the agreement. It awarded BRC nearly $1 million in damages.
“The parties’ agreement was not a requirements contract unless BRC was both obligated to buy some amount of carbon black from Continental and prohibited from buying carbon black from any other seller. In our view, neither condition is met, so we hold that the parties’ agreement was not a requirements contract,” Judge Ann Claire Williams wrote in vacating the lower court.
The 7th Circuit rejected BRC’s claims that certain language in the contract supported the requirements contract finding. The judges also declined to address BRC’s cross-appeal regarding the exclusion of certain testimony from the damages trial because it is premature. The District Court will need to revisit the lawsuit and make a decision that isn’t premised on the agreement being a requirements contract.
INDIANA SUPREME COURT
Criminal – Murder/Aggravated Battery
Latoya Lee v. State of Indiana
The Indiana Supreme Court acquitted the woman involved in a planned beatdown that resulted in one man dying and she, her son and another man being convicted of attempted aggravated battery. The justices previously this year ordered the other two perpetrators’ convictions reversed and said the “basic principle of justice” requires the same result in the woman’s case.
Latoya Lee; her 16-year-old son, Marquise Lee; her 23-year-old cousin, Billy Young; and another unidentified man went to the apartment of Ramon Gude to beat up him in retaliation for striking Latoya Lee in her face during a previous argument. During the melee, the unidentified male shot and killed Gude. Lee, her son and Young all were charged with murder, based on the shooting, and conspiracy to commit murder. They moved for involuntary dismissal for failure of proof, which the trial court granted. But the judge, without objection, invited arguments on the lesser included battery offenses based on a plan to beat up Gude. He then convicted the three of that charge and sentenced each to 15 years.
All appealed, and the Lees’ convictions were upheld; Young’s panel reversed on grounds he lacked fair notice of the attempted aggravated battery charge and the error was fundamental. The Lees then petitioned for rehearing, which was denied, and Latoya Lee did not pursue her appeal further. But after the Supreme Court reversed the other two’s convictions, she filed a belated appeal, which the justices took.
“Here, Latoya faces opposite results than her son and Young on the very same issue originating from the very same trial. She now stands convicted while the others stand acquitted, despite being identical in every way except their procedural postures. Even more significantly, Latoya stands convicted and Marquise acquitted, despite being identical in every way, including their procedural posture on the included-offense issue. To avoid that serious injustice, we therefore choose to address Latoya’s case on its merits and reverse her conviction, consistent with our decision in Young,” Chief Justice Loretta Rush wrote.
Charging murder by shooting does not, without more, give fair notice of lesser included charges based on a beating, the court wrote. The justices also found it was fundamental error to convict Lee, like her co-defendants, based on a critical operative fact the state never pleaded and in fact disclaimed at trial. The murder charge was based on the shooting, so the defense was also based on the charged shooting.
The case is remanded with instructions to acquit Lee.
Civil Plenary – BMV/Personalized License Plates
Commissioner of the Indiana Bureau of Motor Vehicles in his Official Capacity v. Rodney G. Vawter, et al.
The Indiana Supreme Court upheld the Bureau of Motor Vehicles’ process for approving or denying requests for personalized license plates after finding the plates are government speech. A Marion County judge ruled last year the statute governing personalized license plates is unconstitutional.
The class-action lawsuit stems from the BMV’s revocation of Rodney Vawter’s “0INK” license plate after he had been issued the plate for several years. When the BMV in 2013 rejected an Indiana Association of Chiefs of Police personalized license plate reading “O1NK,” the BMV’s computer system flagged Vawter’s plate as similar to a rejected plate. Vawter is a corporal in the Greenfield Police Department. The BMV then revoked Vawter’s personalized plate. After this lawsuit was filed, the BMV suspended its PLP program.
The BMV, citing the Supreme Court of the United States decision in Walker v. Tex. Div., Sons of Confederate Veterans, Inc., 135 S.Ct. 2239, 192 L.Ed.2d 274 (2015), argues its decision-making process on PLPs is constitutional because personalized plates are government speech.
In Walker, the Supreme Court identified a three-factor standard for identifying government speech: whether the government has historically used the medium to speak to the public; whether the message is closely identified in the public mind with the state; and the degree of control the state maintains over the messages conveyed.
Using these factors, the Indiana justices concluded that Indiana’s PLPs are government speech.
“While the alphanumeric combinations on PLPs are individually chosen instead of created by the state, this difference is secondary and does not change the principal function of state-issued license plates as a mode of unique vehicle identification,” Justice Brent Dickson wrote.
Indiana speaks through its license plates, Dickson wrote, noting the slogans and images included on the plates over the years. There is an association of the message of the personalized plate with the state by the public and the BMV has effective control over the PLPs, the court held.
The justices also addressed the plaintiffs’ argument that PLPs are private speech in a forum provided by the state, but found that argument misplaced because Indiana’s PLPs do not fit into any type of government forum for private speech.
Criminal – Jury Instruction
John Hernandez v. State of Indiana
The Indiana Supreme Court ordered a new trial for a man convicted of a misdemeanor gun charge after finding he presented sufficient evidence to have the jury instructed on his defense of necessity.
John Hernandez was convicted of Class A misdemeanor carrying a handgun without a license after police stopped the vehicle he was a passenger in on a traffic violation. Hernandez reluctantly accepted a ride from Oliver Gray to a liquor store. Police then pulled the vehicle over because there was no license plate on the back of the car. According to Hernandez, Gray told him he wasn’t going to go back to jail and ordered Hernandez to take his gun “or else.” Hernandez said he was scared of what Gray would do if the handgun was in his possession and he put it in his pocket at Gray’s insistence.
When getting out of the vehicle, Hernandez told officers he had the gun, put his hands in the air and was arrested because he had no permit for the gun.
He wanted to give a tendered final jury instruction on necessity, but the trial court refused. The Court of Appeals affirmed.
“After review of the record, we hold that there was some evidence, even if not overwhelming, that warranted giving the defense of necessity instruction. And since there was no instruction, the jury could have found Hernandez guilty, even if they believed necessity had been proven. We also hold that the error prejudiced Hernandez. We vacate Hernandez’s conviction and remand to the trial court for a new trial. We summarily affirm the Court of Appeals on the evidentiary issue raised by Hernandez,” Justice Steven David wrote.
INDIANA COURT OF APPEALS
Agency Action – Modification of Facilities
Citizens Action Coalition of Indiana, Inc., Sierra Club, Inc., and Valley Watch, Inc. v. Southern Indiana Gas and Electric Co. d/b/a Vectren Energy Delivery of Indiana, Inc., Ind. Utility Regulatory
Even though a utility company completed many of the projects it received approval for regarding modifications of coal-powered generating stations, that does not render an appeal by various environmental groups moot, the Indiana Court of Appeals held.
Vectren Energy Delivery of Indiana filed a petition with the Indiana Utility Regulatory Commission for approval of projects to modify four coal-powered generating stations to meet new EPA standards. It sought modifications instead of construction of new natural-gas powered generators. The petition also asked for financial incentives and reimbursement from ratepayers for costs associated with the projects.
Citizens Action Coalition of Indiana Inc., Sierra Club Inc. and Valley Watch Inc. intervened and opposed the action, claiming replacing the current coal-powered generators with new natural gas-powered ones was a more cost-effective plan than the one Vectren proposed.
The commission found the proposal reasonable and necessary, approved it, and granted the company’s request for reimbursement and project costs. The environmental groups appealed, but Vectren argued the appeal is moot because the projects have been completed and in use since the beginning of this year and the appellants should have sought a stay preventing Vectren’s use of its new environmental controls.
The Court of Appeals rejected Vectren’s argument, finding it began work on the projects while the appeal was pending at its own risk. It cannot “singlehandedly prevent Appellants’ ability to pursue an appeal by building the environmental controls at issue while the appeal is pending and then claim that the appeal is moot because they have already built those controls,” Judge Cale Bradford wrote.
The judges found that the commission erred in failing to make findings on the nine factors listed in I.C. 8-1-8.7-3 in granting Vectren’s request, such as project costs and reduction of pollutants that can be achieved, and remanded for the commission to do so.
“Here … the Commission did not mention Chapter 8.7 in its order and maintains on appeal that Chapter 8.7 does not apply and that it ‘did not make any Chapter 8.7 findings.’ As we have already found, Chapter 8.7 does apply to certain projects within Vectren’s proposal. Accordingly, it was not harmless error for the Commission to ignore the statutory factors outlined in Section 8-1-8.7-3(b),” Bradford wrote.
Civil Tort – Underinsured Motorist Coverage
State Farm Mutual Automobile Insurance Company v. Carol Jakubowicz, Individually, and as Parent and Legal Guardian of Jacob Jakubowicz and Joseph Jakubowicz, Minors
A woman was required under her insurance policy to file a lawsuit to recover underinsured motorist coverage within three years of the car accident, and because she did not, the Indiana Court of Appeals reversed summary judgment in her favor on the issue.
Carol Jakubowicz and her two sons were in a car accident on Aug. 2, 2007. In December 2009, Jakubowicz notified her insurer, State Farm Mutual Automobile Insurance Co., she intended to pursue underinsured motorist claims in her lawsuit against the other driver. But Jakubowicz did not amend her complaint to include the underinsured motorist claim until July 27, 2011.
State Farm filed a motion for summary judgment, claiming that the amended complaint was filed after the expiration of a three-year contractual limitation period. The trial court denied the motion, leading to this interlocutory appeal.
The Court of Appeals acknowledged that Jakubowicz’s coverage contains similar language as that in Wert v. Meridian Security Ins. Co., 997 N.E.2d 1167 (Ind. Ct. App. 2013), a case with a similar issue in which the judges found the policy insurance to be ambiguous.
“While Jakubowicz’ coverage contains similar language, none of the language in State Farm’s policy would support Jakubowicz’ argument that she was required to wait before filing her claim against the underinsured motorist coverage until the limits of (the other driver’s) insurance had been exhausted,” Judge Patricia Riley wrote.
“[U]nlike Wert, which included a categorical prohibition of legal action unless there was exhaustion of the limits of liability ‘by payments of judgments or settlements,’ State Farm’s policy encourages a negotiation between the insurance company and Jakubowicz. However, the absence of an agreement does not prevent Jakubowicz from filing a lawsuit within three years following the automobile collision. Therefore, we cannot say that State Farm’s policy was ambiguous.”
Because the insurance policy requires both the notification of the claim and the lawsuit to be filed within the three-year contractual limitation period, summary judgment should have been granted to State Farm, the COA held in remanding the matter to the trial court.
Domestic Relation – Prenuptial Agreement/Child Support
Tina Carmer v. Scott Carmer
A father’s monthly annuity payments from a structured settlement agreement should have been counted as income when calculating his child support obligation, the Indiana Court of Appeals has ruled.
The Marion Superior Court had ordered Scott Carmer to pay his ex-wife Tina $151 each week to support the couple’s two minor children. It determined the amount of child support only based on Carmer’s weekly income of $450.
Carmer’s ex-wife appealed, arguing the trial court abused its discretion because it failed to consider the $6,500 he was receiving each month from a structured settlement. The trial court relied on Section 104(a)(2) of the Internal Revenue Code when it decided not the include the settlement payments.
However, the Court of Appeals found Carmer’s settlement funds were income. The judges noted the money was used by the family during the marriage to pay household expenses. Also Knisely v. Forte, 875 N.E.2d 335, 340 (Ind. Ct. App. 2007), held payments for personal injury could be included in gross weekly income calculation.
The Court of Appeals remanded with instructions the trial court include the settlement payments in calculating Carmer’s gross income or to provide justification for deviating from the Indiana Child Support Guidelines.
Judge Margret Robb concurred in result with the majority’s decision on the exclusion of the monthly structured settlement payments when determining child support.
She argued there is no indication the payments made to Carmer each month were meant to replace income. Rather the money was intended to cover his medical bills, disability, pain and suffering and other expenses arising from his injury.
If the trial court had not based its decision to exclude the payments solely on the Internal Revenue Code’s definition of “gross income,” the trial court would not have abused its discretion.
Civil Tort – Rules of Professional Conduct/Client Contract
Timothy Devereux v. Rene DiBenedetto
The contract a client signed to have the Conour Law Firm represent her contained a clause limiting her ability to sue the firm to one year, which the Indiana Court of Appeals found violated public policy and the Indiana Rules of Professional Conduct. The lawsuit seeking to recover settlement funds stolen by William Conour continues against his former colleague.
Rene DiBenedetto entered into a contract with the Conour Law Firm in April 2010 to have the firm represent her in an automobile accident. Her case settled, but she never received any of the settlement money. Timothy Devereux at that time worked at the law firm and met with DiBenedetto about her case. He left the firm at the end of 2011, and in April 2012, Conour was charged with wire fraud for stealing millions from clients. DiBenedetto filed her lawsuit against Devereux in October 2013.
She alleged Devereux breached a “duty to make sure that the law firm would make reasonable efforts to ensure that the firm had in effect measures giving reasonable assurance that all lawyers and non-lawyers in the firm conform to the Rules of Professional Conduct.” She contended Devereux “is liable for Rene DiBenedetto’s loss of settlement proceeds” by virtue of his employment relationship with Conour.
Devereux moved for summary judgment, which the trial court denied. He argued that DiBenedetto was bound by the one-year limitation in her contract with the law firm as to when she could bring a lawsuit, and she had one year after Conour’s arrest to file the suit.
There have been no Indiana decisions addressing shortening the period of limitations for legal action against an attorney. The judges looked to Charnay v. Cobert, 51 Cal. Rptr. 3d 471, 481 (Cal. Ct. App. 2006), a legal malpractice decision regarding a clause in a billing contract requiring the client to contest the bill within 10 days or be bound by it. That court noted a contractually shortened limitations period has not been upheld outside of straightforward transactions.
“We agree with the Charnay analysis and find it consistent with Indiana Rule of Professional Conduct 1.8(h). The clause in DiBenedetto’s contract with the Firm that shortens the time for filing a lawsuit violates public policy and is void. Therefore, the trial court properly denied Devereux’s motion for summary judgment. We expressly decline to comment on the merits of DiBenedetto’s action against Devereux. The opinion should be read to address the issue of the limitations clause found in the contract between DiBenedetto and the Firm, and nothing else.
Civil Plenary – Attorney Fees
Dean Vander Woude and Timothy Koster v. First Midwest Bank, Successor in Interest to Bank Calumet, N.A.
A trial court has the discretion to determine whether and how much to award in attorney fees, but a Porter Superior Court incorrectly determined what attorney fees the prevailing party was entitled to in a slander of title action, the Indiana Court of Appeals held.
Dean Vander Woude and Timothy Koster purchased a Porter County property at a tax sale. But a mortgage on the property, which was later defaulted on, was incorrectly recorded in Lake County. The two then entered into an agreement to sell the property, and that is when a title search revealed a foreclosure action by Bank Calumet, the bank that recorded the property in Lake County.
Vander Woude and Koster had to put $96,000 in escrow in order to obtain a clean title and title insurance for sale to the third party. The two sued First Mortgage Bank in 2006, alleging slander of title, intentional interference with a contract, and conversion. The trial court granted summary judgment to Vander Woude and Koster on the slander of title claim and awarded damages, but the COA reversed and ordered further proceedings on the matter. After a bench trial, the two were successful again, but the trial court did not award any attorney fees to Vander Woude or Koster based on the first trial.
“While a plaintiff must prevail in a slander of title action to be awarded attorney’s fees under Indiana Code Section 32-20-5-2, nothing in the statute requires the apportionment of attorney’s fees based on a plaintiff’s intermediate success or failure at various stages of the proceedings leading up to the final judgment in his favor. At the end of the day, Vander Woude and Koster secured a final judgment on their claim against the Bank,” Judge Edward Najam wrote. “The score at halftime may be worth noting, but the final score is what counts. Our review of relevant case law does not reveal any basis for the trial court’s categorical exclusion from Vander Woude and Koster’s attorney’s fee award those fees related to the summary judgment, jury trial, or first appeal. Instead, the trial court shall determine the attorney’s fee award based on reasonableness, guided by Professional Conduct Rule 1.5(a).”
The trial court is within its discretion to determine how much in attorney fees a party is awarded, but since the court in this case relied on a faulty premise, the COA reversed and remanded for a new determination of attorney fees.
The judges affirmed the denial of prejudgment interest to Vander Woude and Koster because they failed to comply with the Tort Prejudgment Interest Statute.
Guardianship – Termination
In the Matter of the Guardianship of B.W.; E.W. v. L.G.
The Indiana Court of Appeals reversed the award of custody of a young girl to her great aunt, finding the woman did not overcome the presumption in favor of placement with the girl’s biological mother.
B.W. was born in 2009 with methadone in her system. Her grandmother was granted guardianship with mother’s consent because B.W.’s mother had a history of drug abuse and was unable to care for the girl.
B.W.’s great aunt lived with grandmother for a time, and great aunt watched B.W. because grandmother worked. B.W. eventually moved in with great aunt because she was able to watch the girl and grandmother was going through a divorce. B.W.’s mother had another baby, became sober and obtained employment.
Great aunt petitioned for custody of B.W. a month before grandmother asked the court to end the guardianship so B.W. could move in with the girl’s mother. The court ended the guardianship, then took great aunt’s petition into consideration and granted it. The court noted great aunt is a de facto custodian of B.W., had the young girl baptized with mother’s consent, that mother and great aunt have had little contact with each other, and mother’s drug and criminal history.
The COA cited three reasons in reversing the lower court. First, the trial court’s findings do not specifically state why placement with great aunt is necessary or how B.W.’s best interest will be significantly served by that placement. Second, none of the trial court’s findings suggest mother is presently unfit, and third, while it is undisputed that B.W. has formed a strong bond with her great aunt, this generalized finding is insufficient to overcome the presumption in favor of mother, Judge Margret Robb wrote.
“We do not wish to minimize Great Aunt’s relationship with B.W., but we cannot conclude Great Aunt has rebutted the presumption in favor of Mother,” she wrote in ordering the lower court to vacate the guardianship.•