Indiana Supreme Court
Civil Tort – Firearms/Liability
KS&E Sports and Edward J. Ellis v. Dwayne H. Runnels
Holding that statute immunizes firearms sellers from damages claims brought after a third party misuses a gun purchased from their stores, a divided Indiana Supreme Court dismissed a series of damages claims against an Indianapolis gun store. The justices allowed a claim for equitable relief to continue.
In October 2011, Demetrious Martin and Tarus Blackburn went to KS&E Sports in Indianapolis to browse through its collection of firearms. Blackburn, acting as a straw purchaser, bought a Smith & Wesson handgun, but, immediately upon leaving the store, gave the gun to Martin, a convicted felon who could not legally purchase or possess a firearm.
Two months later, Martin opened fire against Indianapolis Metropolitan Police Department Officer Dwayne Runnels using the gun Blackburn had purchased for him, prompting Runnels to return fire and ultimately kill Martin. For his part, Runnels suffered serious physical injuries and financial damages.
Two years later, Runnels filed a complaint against KS&E, Blackburn and Edward Ellis, director of KS&E, raising claims for negligence, conspiracy and public nuisance. Runnels’ complaint alleged that KS&E proximately caused him harm by its sale of the gun to Blackburn and its entrustment to him, and ultimately Martin. The officer also sought to “pierce the corporate veil” and hold Ellis personally liable for KS&E’s wrongdoing.
Ellis and KS&E moved for judgment on the pleadings under Indiana Trial Rule 12(C), arguing that Indiana Code 34-12-3-3(2) granted them immunity. The Marion Superior Court denied the motion, and a divided Indiana Court of Appeals affirmed, though it found that I.C. 34-12-3-3(2) “limits the seller’s exposure to liability by barring plaintiffs from holding him accountable for the portion of damages that results from the criminal or unlawful misuse of a firearm by a third party.”
The high court was similarly divided in its opinion, which affirmed and reversed in part the Court of Appeals’ decision with a 3-2 vote. In the majority opinion, Justice Geoffrey Slaughter wrote I.C. 34-12-3-3(2), which bars action against a firearms seller for “recovery of damages resulting from the criminal or unlawful misuse of a firearm … by a third party,” functions as an immunity provision for sellers such as KS&E, regardless of the seller’s culpability.
“The statute does not mince words,” Slaughter wrote. “If a plaintiff files a ‘groundless’ action – i.e., one that violates the statutory ban – ‘the court shall dismiss the claims or action and award to the defendant and reasonable attorney’s fee and costs incurred in defending the claims or action.’ Taken together, these provisions prescribe an immunity from suit.”
But Slaughter also noted that the immunity conferred is not absolute, but instead only offers immunity for damages claims, not other claims, such as those for equitable relief. Thus, the majority voted to dismiss Runnels’ negligence claims because they sought only damages as a result of his injuries from the misuse of the firearm by Martin, a third party.
Similarly, the majority also dismissed Runnels’ civil-conspiracy claim, which alleged that he sustained injuries as a result of a civil conspiracy among KS&E, its owners and employees and Blackburn to make a profit. Runnels’ claim does not allege that Martin was part of the conspiracy, Slaughter wrote, but instead alleges that KS&E was conspiring to boost profits.
However, the majority allowed Runnels’ public-nuisance claim to survive because it seeks equitable relief, which is not barred under the statute. Runnels alleged that at least 529 guns that KS&E sold between 1996 and 2000 were traced to and recovered from crimes, an allegation that is sufficient to plead a claim for public nuisance, Slaughter said. The court held that such claims could be brought against a defendant in City of Gary ex rel King v. Smith & Wesson Corp., 801 N.E.2d 1222, 1246 (Ind. 2003).
Finally, the court rejected Runnels’ claims against Ellis and the officer’s argument that I.C. 34-12-3-3(2) is preempted by federal law and is unconstitutional.
Justice Robert Rucker both concurred and dissented in part, writing in a separate opinion joined by Chief Justice Loretta Rush that he agreed the trial court erred in denying KS&E’s motion for judgment on the pleadings. However, Rucker dissented from the majority’s analysis that “the unambiguous statute operates as a limited immunity provision insulating a firearms seller from a suit for damages caused by a third party’s misuse of a firearm, regardless of the seller’s culpability.”
“It appears to me the statute was designed to protect innocent and unknowing gun sellers from the acts of third parties,” Rucker wrote. “The legislature could not have intended to protect gun sellers from their own illegal acts.”
Indiana Court of Appeals
Civil Tort – Negligence
Wyatt Severance v. New Castle Community School Corporation a/k/a New Castle Career Center and Turner Melton
The Indiana Court of Appeals has reversed summary judgment in case stemming from an altercation in a New Castle career program, finding that genuine issues of material fact remain as to whether the school was negligent.
While enrolled as students at New Castle Community School Corp.’s New Castle Career Center, Wyatt Severance, 17, and Turner Melton, 19, were working on a job site as part of a career training program when Melton stole a bag of sunflower seeds out of Severance’s hand. Melton then began ordering other students around on the job site, and when Severance confronted him about his behavior, an altercation ensued.
During the fight, the students pushed each other and hit each other with a broom, using enough force to cause Severance to black out. He ultimately suffered a tibial plateau fracture that required surgery and resulted in a permanent injury.
Severance filed a complaint against Melton and the school, alleging negligence, but the school moved for summary judgment, alleging Severance was contributorily negligent and that it had not breached its duty to him. In response, Severance designated the expert affidavit of Dr. Jean Peterson, who used the affidavit to address bully culture and presented 15 ways the altercation could have been prevented.
The school moved to strike Peterson’s affidavit, arguing that it contained “conclusory opinions unsupported by facts or evidence” and included a conclusion of law that the school was negligent. The Henry Circuit Court granted the school’s motion to strike, as well as its motion to summary judgment.
On appeal, Severance argued the motion to strike Peterson’s affidavit was untimely, and striking it was against the logic and facts before the court. The Indiana Court of Appeals agreed that striking the affidavit was error, with Judge John Baker writing, “Dr. Petersen’s expertise could assist the trial court in addressing the dispositive issues of the case.”
Severance also argued the grant of summary judgment to the school was erroneous because “the School did not negate any element of Severance’s claims and because Severance was not contributorily negligent as a matter of law.”
The appellate court agreed, with Baker noting that other students had testified they avoided Melton because of his verbally abusive nature, but they often did not take their problems to their teacher because he seemed busy. Thus, there is a genuine issue of material fact as to whether the school provided adequate supervision, Baker said.
Further, the Court of Appeals held that there are additional genuine issues of material fact as to whether Severance was contributorily negligent, also making the case inappropriate for summary judgment. Thus, summary judgment was reversed and the was remanded for further proceedings.
Domestic Relation – Child Support
Charles Cannon v. Kristy A. Caldwell
Despite a father’s untimely filing of an appeal, the Indiana Court of Appeals decided to reverse a child support modification order, finding there was an “extraordinarily compelling reason” to consider the father’s case on its merits.
Kristy Caldwell was granted custody of her two children with Charles Cannon, who was ordered to pay $20 per week in child support. Additionally, the children received a monthly derivative benefit of $93 each from Cannon’s Social Security Disability.
However, when Cannon became ineligible for SSD and began receiving Social Security Income of $773 per month instead, the children stopped receiving derivative benefits, so Caldwell filed a motion to modify child support. The Wayne Superior Court subsequently modified Cannon’s child support obligation to $35 per week on May 27, 2016, then denied his motion to reconsider on June 29.
Then on July 21, Cannon filed a notice of appeal. On appeal, he argued that the trial court erred in ordering him to pay child support because SSI does not constitute income for purposes of calculating child support obligations.
Indiana Court of Appeals Judge Terry Crone initially noted that although Cannon filed a motion to reconsider in June 2016, the 30-day window for a notice of appeal began when the child support order was modified on May 27. Thus, his July 21 notice of appeal was untimely.
However, Crone further wrote there was an “extraordinarily compelling reason” to consider Cannon’s untimely appeal on its merits – the “obvious injustice” of using Cannon’s SSI to modify the child support order.
“(The) Indiana Child Support guidelines specifically provide that means-tested public assistance programs, including SSI, are excluded from the definition of weekly gross income used to determine a parent’s child support obligation,” the judge wrote. “… Thus, the child support modification order setting Father’s child support at $35 per week is on its face in clear violation of Child Support Guidelines.”
The case was remanded for the reversal of the child support modification order.
Civil Plenary – Restrictive Covenants
Wanda Roberts, et al. v. Anthony W. Henson
Summary judgment was prematurely granted to a Clarksville homeowner sued by his neighbors for allegedly violating the neighborhood’s restrictive covenants, the Indiana Court of Appeals ruled.
Anthony Henson purchased a vacant lot in the Altra Subdivision neighborhood in November 2012 where a home had burnt down. The lot was next to Wanda and Ray Roberts, who have lived in the neighborhood since 1961. Henson filed a residential building application that indicated he was building a two-story pole barn with a four-car garage. The covenants of the neighborhood require single-family homes not exceeding one and one-half story in height and a garage for not more than two cars. The covenants also ban a barn used a residence on the property.
The town of Clarksville granted the permit, but noted he should research the neighborhood covenants. The Robertses filed a petition to enforce the covenants and for Henson to cease construction, but the judge didn’t grant the restraining order. Henson completed construction while the litigation was pending. Other neighbors joined the litigation. Henson later filed for summary judgment, which the court granted.
The Court of Appeals reversed because there are questions of material fact on two issues. Henson maintained the restriction to “one and one-half story in height” is ambiguous and that he and his expert both described the residence as such. Henson pointed to case law from other jurisdictions finding descriptions of that structure height to be ambiguous,
The judges agreed that the description of “one and one-half story in height” is ambiguous with respect to whether a particular structure exceeds that height. However, the COA also agreed with the courts that do not automatically negate a covenant simply because it is deemed ambiguous. This issue requires more evidence, so summary judgment was granted prematurely, Judge Michael Barnes wrote.
The “two-car garage” issue also requires more evidence, so the judges reversed summary judgment for Henson. He had introduced evidence that other homeowners have erected detached garages and/or converted existing garages.
“A fact-finder must carefully consider evidence and argument as to the location of Henson’s structure compared to the Appellants’ lots and other alleged nonconforming uses, the similarity of the other alleged nonconforming uses, and their frequency. It does not strike this that this is a mathematical test that can be decided on summary judgment,” Barnes wrote.
The COA did agree that although Henson’s permit says “barn” and “pole barn,” under the language of the covenant, his house is allowed because it is not being used as a barn but as the main residence.
The case was remanded for further proceedings.
Criminal – Habitual Offender Statute
Matthew L. Johnson v. State of Indiana
The Indiana Court of Appeals, after finding the language of the habitual offender statute doesn’t support either the defendant’s or the state’s interpretation, reversed the denial of the defendant’s objection to his habitual counts and ordered the trial court to review the matter.
Matthew L. Johnson faced habitual offender charges in two separate causes in 2015, ranging from Level 2 to Level 6 felonies. An identical habitual offender allegation was filed by the state in both causes, saying Johnson had been convicted of Class D felonies in 2001, 2005, 2006 and 2008. He objected on the grounds that under new legislation, all lower-level felonies must have occurred during the last 10 years. The trial court overruled his objection, leading to this interlocutory appeal.
The Court of Appeals, in an opinion authored by Senior Judge Randall Shepard, looked at the original habitual offender statute and its evolution over the years from an automatic 30-year fixed term to consideration of the level of the offense and lapse of time to reduce an habitual offender sentence length.
Johnson argued that the language of the statutes in effect at the time of his offenses requires that each lower-level unrelated felony conviction meet the 10-year requirement. The language says if a person committed a prior unrelated Level 6 or Class D felony, not more than 10 years can have elapsed between the time of release from prison, probation or parole and the time the person committed the current offense.
The state maintained that only one of the prior unrelated felony convictions needs to fall within the 10-year period in order to proceed with all of the allegations of the habitual offender determination.
“The actual words of the statute do not actually mandate either of these outcomes in any visible way,” Shepard wrote.
The long-term policy evolution is that individuals who committed lesser offenses then stayed clean for long periods do not face enhancements of the same severity as under habitual statutes in their earlier form, he noted.
The appellant judges interpreted the statute to work in this way: convictions from which the offender was released more than 10 years before the current offense do not count for habitual purposes under Indiana Code 35-50-2-8(d); those from which the offender was released less than 10 years before the current offense do count for habitual purposes.
“It is apparent that one or another of the offenses alleged in the habitual count are not available for one or more of Johnson’s ten current felonies. Thus, as this matter returns to the trial court, it will be necessary to examine each of the priors as eligible for habitual purposes as respects each of the ten current charges. This analysis will also necessitate an examination of an issue already recognized by the trial court —the dates upon which Johnson was released from each of his prior offenses,” Shepard wrote.
Criminal – OWI/Fees
Wendy Burnett v. State of Indiana
A trial court did not properly determine whether a woman had the ability to pay fees owed after being convicted of a misdemeanor drunken-driving charge, so the Indiana Court of Appeals sent the case back to the trial court. The judges also ordered her conviction reduced based on the evidence presented at trial.
Wendy Burnett was the passenger in a vehicle that struck another car. The driver drove away, but later, Burnett got behind the wheel and drove back to the scene. Officers believed she may have been intoxicated but she refused to take a breath test or certified chemical test and was arrested.
At issue is her conviction for Class A misdemeanor operating a vehicle while intoxicated endangering a person. As part of her sentence, the trial court ordered Burnett to pay $200 countermeasure fee, a $250 alcohol drug services fee, $183.50 in court costs, and a $16.50 fine.
Her sentencing order does not list any probation fees, but her probation order says she must pay all court-ordered fines, costs, fees and restitution as directed. The probation department later charged her a total of $340.50 in various fees.
Burnett appealed, challenging her conviction and the fees. Regarding her conviction, the trial judge found she was not driving at the time of the accident. Judge John Baker noted that there’s no evidence Burnett drove in a manner that endangered someone when she started driving after the accident. The COA reversed her Class A misdemeanor conviction of OWI while endangering a person and ordered the lower court to enter judgment for OWI as a Class C misdemeanor and to resentence accordingly.
The judges also reversed the imposition of the probation fees.
“Because the trial court did not impose any probation fees or costs on Burnett, it was erroneous to accept the imposition of these fees without a petition from the probation department and a showing that Burnett’s financial situation has changed since the sentencing hearing,” Baker wrote.
The trial court also erred by not conducting an indigency hearing before imposing the fees, the COA ruled.
Indiana Tax Court
Tax – Use Tax
Zimmer, Inc. v. Indiana Department of State Revenue
The Indiana Tax Court has granted summary judgment to both the Indiana Department of Revenue and an in-state manufacturer, holding that the state’s use tax applies to some of the manufacturer’s products that are stored in Indiana, but not to those products used solely for out-of-state work.
Zimmer Inc., a Warsaw corporation that designs, manufactures and distributes medical products, marketed its products at dozens of out-of-state trade shows and conventions during the 2009, 2010 and 2011 tax years. In preparation for one of the largest conventions, Zimmer hired an Illinois-based exhibit house to annually design and manufacture a new exhibition booth, which incorporated some of the original, repaired, refurbished or modified components of previous exhibition booths.
Each year, Zimmer arranged for some components of its previous exhibition booth to be shipped to the Illinois exhibit house, while other components were kept in an Indiana warehouse. Then, the components would be shipped from the Illinois location and Indiana warehouse to be set up at the out-of-state convention site.
At the conclusion of a convention, all of the components would be returned to Zimmer’s Indiana warehouse for storage. However, any components that were found to have major damage were either shipped to Illinois for immediate repair or set aside in the warehouse for subsequent in-house repair or other modification.
After Zimmer filed a claim seeking a nearly $1.1 million refund in sales tax remitted on the purchase of items used to manufacture its products, the Indiana Department of State Revenue conducted an audit on Zimmer and determined that the company owed $523,890.93 in use tax on its exhibition booth components. The department granted Zimmer’s refund claim in part, offsetting the refunded amount by the use-tax liability.
After the department denied Zimmer’s protest of the use-tax determination, the company appealed to the Indiana Tax Court, and both parties filed cross-motions for summary judgment. Indiana Tax Court Judge Martha Blood Wentworth granted each of those motions in part.
The department argued that Zimmer’s in-state storage of the exhibition booth components subjected it to the use tax “because the type of storage excluded from use tax requires permanent use outside the state, not — as here — continuous revolutions between in-state storage and out-of-state use.”
But Wentworth rejected that argument, writing “Nowhere in Indiana Code section 6-2.5-3-1(b) is there an express temporal limitation on storage or a prohibition on returning previously stored property to Indiana for continued storage.” Instead, the judge said the statutory exclusion from the tax applies when property is stored in Indiana for subsequent use solely outside of the state, as is the case with Zimmer.
However, Wentworth agreed with the department that the repair of damaged components by an in-house carpenter at Zimmer’s warehouse constituted a taxable use because the designated evidence “does not establish that those repairs were necessary for storage to occur or that the exhibition booth components (or any others) deteriorated during storage.”
Thus, the tax court granted summary judgment to Zimmer on the exhibition components that were stored in Indiana for solely out-of-state use, while granting summary judgment to the Department of Revenue on the components that were repaired in Indiana.•