7th Circuit Courtof Appeals
Civil – Negligence/Breach of Contract
James Blasius v. Angel Automotive, Inc.
The 7th Circuit Court of Appeals overturned summary judgment in favor of a northern Indiana body shop after finding that a Michigan man has legal ground to sue the body shop for a fire that destroyed his car.
James Blasius, a Michigan resident, purchased a used 2005 Ford Excursion in July 2009 and contacted Angel Automotive Inc., located in Elkhart, for improvements to his car in the summer of 2012. AAI mechanics Thomas Angel and Daniel Fine performed the work in June 2012, going so far as to remove the vehicle’s body from its chassis and disconnecting coolant lines, brake lines and power steering hoses, consistent with Blasius’ extensive requests.
After Blasius picked the car up and drove it roughly 200 miles back to Michigan, he emailed AAI to complain of new or persisting issues. Later that night, smoke came out of the interior vents and behind the vehicle while he was driving. Blasius also said his parking, emergency and trailer brakes on his motorcycle trailer in tow were non-responsive.
The Excursion eventually came to a stop on its own, and after Blasius and his passengers had escaped, burning diesel fuel running along the bottom and sides of the vehicle destroyed the car and damaged the motorcycle trailer. When Blasius notified Angel of the fire, Angel admitted it was likely caused by a fuel leak.
Blasius filed a negligence and breach of contract suit against AAI in January 2013, and Adam Hooker, a fire expert hired by Blasius, attributed the fire to the diesel and brake fluid systems that were worked on during AAI’s overhaul of the Excursion.
However, the district court granted summary judgment in favor of AAI in March 2015, finding that Blasius “failed to present evidence showing that (AAI’s) modification to the (Excursion) caused the fire.” The district court also held that the doctrine of res ipsa loquitur did not apply.
The 7th Circuit Court of Appeals ruled for Blasius, with District Judge John Blakey, who was sitting by designation, writing that the district court had overlooked a written report submitted by Hooker in which he said the fire originated in a portion of the vehicle that AAI had “manipulated and/or removed and reinstalled.”
The district court had focused on a portion of Hooker’s testimony in which he was reluctant to say the fire was “more likely than not” caused by AAI’s work, but Blakey wrote that if the court had focused on the testimony in its entirety, it would have been clear that his reluctance reflected his confusion regarding adverse questioning and not a hesitancy regarding the probable cause of the fire.
Further, Blakey said that Hooker’s written report, combined with Angel’s admission that the fire was likely caused by a fuel leak and Blasius’ own observations at the scene, provided evidence to support a sufficient factual basis that a jury could use to find in favor of Blasius on the causation element of his negligence charge.
In regard to the district court’s rejection of the doctrine of res ipsa loquitur, the 7th Circuit wrote that although Blasius was in possession of the car at the time of the fire, the record does not show that anyone other than AAI performed any material repair on the Excursion between the time when Blasius picked it up and when it caught fire. Thus, the circuit court held that Blasius could rely on the doctrine in the case.
Indiana Supreme Court
Civil Tort – Reduced Health Care Payments
Mary K. Patchett v. Ashley N. Lee
The Indiana Supreme Court extended the admission of evidence of reduced health care payments in personal injury suits to include reimbursements from government payers. Meanwhile, two justices who concurred with the result wrote separately that they believed the underlying precedential case was wrongly decided.
Justices ruled in a closely watched case that drew amicus briefs from Defense Trial Counsel of Indiana, Indiana Trial Lawyers Association, Indiana Health Care Association, American Tort Reform Association and Indiana Legal Foundation. The ruling extends the effect of Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009), that allowed evidence of discounted payments to health care providers made under private insurance.
In this case, Ashley N. Lee was injured in a car wreck caused when Mary Patchett drove negligently into oncoming traffic in 2012, according to the record. Lee suffered injuries and her medical bills totaled $87,706.36. But because Lee was enrolled in Healthy Indiana Plan, the health care provider accepted payment of $12,051, an 86 percent discount, as payment in full.
Lee moved to prevent the jury in her personal injury suit from hearing evidence of the reduced payment from HIP, and Hamilton Superior Judge Steven R. Nation granted the motion over Patchett’s objection. The Court of Appeals affirmed on interlocutory appeal, but justices reversed.
“Today, we hold the rationale of Stanley v. Walker applies equally to reimbursements by government payers,” Justice Geoffrey Slaughter wrote in the majority opinion joined by Justice Mark Massa and Chief Justice Loretta Rush. “The animating principle in both cases is that the medical provider has agreed to accept the reduced reimbursement as full payment for services rendered. The reduced amount is thus a probative, relevant measure of the reasonable value of the plaintiff’s medical care that the factfinder should consider.
“We reverse and remand with instructions to allow Patchett to introduce evidence of the reduced HIP rates accepted by Lee’s medical providers so long as Patchett can do so without referencing their source,” the court ruled.
Slaughter wrote that the trial court misinterpreted Stanley by construing it only to apply to discounts negotiated at arm’s length between a provider and an insurer. The majority also held that the court abused its discretion by excluding the reduced HIP reimbursements under Evidence Rule 403.
The main opinion notes Indiana continues to chart a middle ground in this area, and that since Stanley was decided, six states have precluded the admission of discounted reimbursements altogether, while two states have held that only the discounted amount paid for services be admitted. Two other states have followed Indiana’s path of allowing both into evidence.
“We continue to believe this middle ground not only represents the ‘fairest approach’ … but also honors our deep, abiding faith in the jury system,” Slaughter wrote.
Meanwhile, Justice Robert Rucker wrote a concurrence joined by Justice Steven David that aligned with the rationale of the outcome but expressed his disagreement with the ruling in Stanley.
“I write separately however because I continue to believe Stanley was wrongly decided,” he wrote, citing a dissent he joined written by retired Justice Brent Dickson. “More to the point, Indiana’s collateral source statute [I.C. § 34-44-1-2(c)] could not be any clearer. It precludes admission into evidence of, among other things, ‘payments made by: i) the state or the United States; or ii) any agency, instrumentality, or subdivision of the state or the United States ...’ Payments made by HIP — a federal/state government program — unquestionably fall within this prohibition. A contrary reading endorsed by Stanley and reaffirmed today simply cannot be reconciled with the collateral source statute.”
But Rucker noted neither party nor multiple amici aligned with either side in this case asked the court to reconsider Stanley, and that the Legislature has not amended the collateral source statute in a way that disapproves of the court’s interpretation.
Discipline – No Misconduct
In the matter of: Terry Lee Smith
The Indiana Supreme Court has entered judgment in favor of a White County deputy prosecutor after finding that the Disciplinary Commission failed to prove that the attorney had violated a Rule of Professional Conduct, resulting in a man’s erroneous convictions of child molestation.
In 2011 and 2013, Terry Lee Smith represented the state during the trial and retrial of Ryan Bean, who was convicted both times on child molestation charges but whose convictions were twice overturned by the Indiana Court of Appeals. When his conviction was overturned the second time, the Court of Appeals ruled that improper vouching and prosecutorial misconduct had cumulatively amounted to fundamental error.
The Indiana Supreme Court Disciplinary Commission subsequently charged Smith with violating Indiana Rule of Professional Conduct 8.4(d) by engaging in conduct that was prejudicial to the administration of justice during the 2013 retrial. The commission alleged three instances of misconduct – that Smith had improperly elicited testimony from the county sheriff about Bean’s confession, that he had elicited improper vouching, and that he had made statements during closing arguments that were inaccurate and that placed undue emphasis on the improper vouching testimony.
However, when the hearing officer filed a report with the Indiana Supreme Court in April 2016, he concluded that the commission had not met its burden of proving that Lee had violated the professional conduct rule.
The commission then petitioned the high court to review the hearing officer’s report, arguing that the retrial, referred to as Bean II, should be given preclusive effect in the disciplinary proceeding. The question surrounding Smith’s alleged misconduct is the same in both proceedings, the commission argued, so the Court of Appeals’ conclusions should be treated as “conclusively established.”
But in its per curiam opinion, the justices agreed with the hearing officer that the commission failed to meet its burden of proof.
In regard to the improper elicitation of testimony claims, the high court noted that Smith had testified the he instructed Sheriff Shafer prior to his trial testimony not to mention the police interview. The commission argued that asking Shafer about his investigation “necessarily included the interview assuming Sheriff Shafer was going to answer the question completely and truthfully,” but the justices disagreed. Instead, they wrote that the commission’s argument “rests on the untenable proposition that (Smith)…should have anticipated that Sheriff Shafer would violate that order in responding to generally-worded questions about his investigation.”
In the commission’s second charge against Smith, it focused on the testimony of Darrel Noonkester, an investigator for the Indiana Department of Child Services who testified that he and the agency “substantiated” the allegations of child molestation against Bean. That term of art was not included in the trial court’s order in limine, and Smith testified that he had tried to craft his questions to align with the order. The hearing officer credited Smith’s testimony, and the Indiana Supreme Court once again agreed that the commission had failed to prove that Smith had elicited improper vouching testimony
Finally, in regard to the third claim regarding Smith’s closing arguments, the Supreme Court noted that there was a material difference between the Court of Appeals’ holding related to his closing arguments in Bean II and the audio recording of Smith’s actual words. The Supreme Court held that Smith accurately described Shafer’s testimony during his closing arguments by pointing out that he had arrested Bean, not that he had substantiated the claims against him.
Indiana Court of Appeals
Civil Tort – Old Convictions/Damages
Danny Sims v. Andrew Pappas and Melissa Pappas
The majority of an Indiana Court of Appeals panel held that a drunken driver’s decades-old convictions for alcohol-related offenses were irrelevant and prejudicial in a civil suit following a personal injury crash. A dissenting judge, though, wrote the admissibility of such evidence should go to its weight rather than its age.
A Lake Superior jury awarded Andrew and Melissa Pappas nearly $2 million in damages after Andrew Pappas’ car was struck in May 2013 by a car driven by Danny Sims. Sims’ blood alcohol level was nearly three times the legal limit. An ensuing civil trial awarded the crash victim $1.44 million in compensatory damages, $182,500 in punitive damages, and his wife $373,500 for loss of consortium.
During oral arguments in June, the appeals panel grappled with whether Sims’ alcohol-related driving convictions that were 17 and 30 years old should have been before the jury.
Senior Judge Randall Shepard and Judge Patricia Riley formed the majority that tossed the verdict. Sims’ dated convictions “neither proved nor disproved any facts that were central to the main question the jury decided — compensatory damages and loss of consortium,” Shepard wrote. “As they were not relevant to these issues and unfairly prejudicial (though probably not to the question of punitive damages), we reverse and order a new trial.”
The majority, however, declined to establish a rule barring evidence of convictions more than 10 years old.
“We do not say that evidence of decades-old, alcohol-related offenses can never be admissible in civil actions for damages arising from motor vehicle accidents. But in this case, in light of Sims’ admissions of fault and to being intoxicated at the time of the accident, and taking into consideration the evidence regarding the circumstances of the accident that was presented at trial, and the inferences made by the Pappases’ counsel that Sims was not punished properly for the prior convictions, the prejudicial effect of evidence of a thirty-year-old conviction for OWI and a seventeen-year-old conviction for reckless driving outweighs any probative value the evidence can serve,” Shepard wrote.
Dissenting Judge Robert Altice wrote that while the remoteness of the convictions tends to diminish their probative value, this should go to the weight of the evidence rather than its admissibility.
“On more than one occasion, the majority observes that the prior convictions had no relevance or probative value with respect to the determination of compensatory damages. This is true but beside the point,” Altice wrote. “A review of the record, especially closing arguments, makes clear that the evidence of Sims’s prior offenses was admitted for the sole purpose of establishing punitive damages. The evidence had a direct bearing on the reprehensibility of Sims’s actions and his state of mind at the time of the accident.” Altice would find no error or abuse of discretion by the trial court in admitting the evidence.
Juvenile – Expungement
T.A. v. State of Indiana
The Indiana Court of Appeals has allowed a Marion County man’s juvenile record to be expunged after finding that a criminal charge that was filed against him after he filed a petition for expungement cannot be held against him in the expungement case.
T.A. was involved in multiple cases within the juvenile justice system. One case was dismissed in 2012, three were dismissed in 2013, and he was arrested in 2008 and 2009 but no formal delinquency petitions were filed.
In December 2015, T.A., now an adult, filed a petition for expungement for each of the six cases between 2008 and 2013. Between the time of T.A.’s petition filing and a hearing in January 2016, the state filed an unspecified criminal charge against him. His petition for expungement was eventually denied in its entirety.
In his appeal, T.A. argued that his petition should have been immediately granted because he met all of the statutory requirements on the date his petition was filed. But the state argued that because there was a pending criminal charge against T.A. and because it had an interest in maintaining access to all of his records, the juvenile court did not err.
T.A. argued that state code requires a juvenile court to act upon an expungement petition immediately without scheduling a hearing, but the Indiana Court of Appeals wrote that the statute says the court “may” grant a petition without a hearing, not “must.”
However, the Court of Appeals did agree with T.A. that the statute — which reads, in part, that the petition shall be granted “upon receipt” unless there are pending criminal charges — means that the pending criminal charges must be present at the time of the filing, not at a later date.
The state did not claim that T.A.’s petition violated any other statutory requirement for expungement. Thus, the Court of Appeals reversed and remanded the case with instructions that the petition be granted.
Miscellaneous – Civil Forfeiture
State of Indiana v. Tyson Timbs and a 2012 Land Rover LR2
Civil forfeiture of a heroin dealer’s Land Rover purportedly worth about $40,000 would be an unconstitutionally excessive fine, the majority of an Indiana Court of Appeals panel ruled, but a dissenting judge wrote that it shouldn’t matter whether the dealer used a shiny new car or a “beater” to facilitate his drug trade.
Tyson Timbs of Marion pleaded guilty to two counts of Class B felony dealing in a controlled substance and one count of Class D felony conspiracy to commit theft after law enforcement agents made controlled purchases of heroin from him. Timbs used a 2012 Land Rover he purchased with proceeds from his father’s life insurance to transport the drug from a pickup point in Richmond in January 2013.
After Timbs pleaded guilty last year, the state filed a civil forfeiture action seeking to seize the Land Rover that was used to facilitate the drug deals, but the trial court denied the motion citing the statutory cap on fines of $10,000. Writing for the majority joined by Chief Judge Nancy Vaidik, Judge Paul Mathias denied the state’s appeal and said the trial court was correct: forfeiture of the vehicle would violate Eighth Amendment prohibitions on excessive fines. Forfeiture would have been grossly disproportionate to the gravity of Timbs’s offense, the majority held.
“Here, the evidence before the trial court was that Timbs’s vehicle was worth approximately four times the amount of the maximum fine. Although we do not suggest that forfeiture of any asset valued over the maximum fine is automatically a violation of the Excessive Fines Clause, it is instructive to our analysis that the value of the asset sought by the state is well in excess of the maximum fine,” Mathias wrote. “Moreover, it is undisputed that the Land Rover was not purchased with the proceeds of any criminal behavior; it was purchased with life insurance proceeds.”
Judge Michael Barnes would have decided the case for the state and allowed seizure of the Land Rover. “The vehicle did not have only a tangential relationship to the crime or the defendant. It should not matter that Timbs committed the crime using an expensive new Land Rover rather than an old, inexpensive ‘beater,’” he wrote.
Barnes noted the concern about overreach in civil forfeitures some law enforcement agencies have used. “However, it seems to me that one who deals heroin, and there is no doubt from the record we are talking about a dealer, must and should suffer the legal consequences to which he exposes himself.”•