Indiana Court of Appeals
Civil Plenary – Zoning Misrepresentation
Cheng Song v. Thomas Iatarola and Theresa Iatarola
After affirming the denial of summary judgment to northern Indiana landowners who misrepresented a property zoning to a potential buyer, the Indiana Court of Appeals also reversed the denial of attorney fees and prejudgment and post-judgment interest to the buyer.
In 1998, Thomas and Theresa Iatarola purchased 34 acres of land zoned for agricultural use that was used to warehouse equipment and inventory from his telecommunications and classic car sales business. However, when the couple decided to sell part of their land, their real estate agent provided them with a form that showed the property zoned as I-2 industrial.
Theresa Iatarola discovered the zoning error, and her husband assured her that he had asked the real estate agent to correct the problem. But when the agent began advertising the real estate online in September 2010, the advertisements showed an I-2 industrial zoning.
New Jersey resident Cheng Song saw the advertisement and he met with the Iatarolas and their real estate agent. He signed a contract called “Purchase Agreement Commercial – Industrial Real Estate” to buy 10 acres of their property. However, after learning of an adjacent airport’s plans to impose a runway protection zone on the property, Song exercised his right to terminate the purchase agreement.
A new agreement, also called “Purchase Agreement Commercial – Industrial Real Estate,” was signed in 2011 for the purchase of 16 acres. The agreement required $150,000 in earnest money, which Song deposited in the bank, and included a provision for liquidated damages of $150,000 if either party breached the contract.
A few months after the contract was signed, Thomas Iatarola and the real estate agent discovered the zoning error was still in the advertisement and corrected it, but failed to inform Song of the error for another two months. When Song learned the property was zoned agricultural, his attorney advised the real estate agent Song would not continue with the purchase unless the property was rezoned and he was given a price reduction.
The Iatarolas refused both requests, so Song exercised his rights to terminate the purchase agreement within a 180-day due diligence period. He also demanded the return of his $150,000 earnest money, which was being held in escrow at Horizon bank, but the Iatarolas once again refused.
Song then filed a complaint against the Iatarolas, alleging actual and constructive fraud, breach of contract and contract rescission. The Iatarolas filed a counterclaim, and both parties moved for summary judgment, which the Porter Superior Court denied.
After a jury trial in May 2016, Song filed a motion for judgment on the evidence, which was denied. The jury returned a verdict in his favor, and the trial court entered judgment in Song’s favor for $150,000.
The Iatarolas then filed a motion to correct errors and Song moved for an award of attorney fees and prejudgment and post-judgment interest, as well as post-trial attorney fees. The trial court denied those motions, and both parties filed cross-appeals.
The Iatarolas argued the trial court erred in denying their motion for summary judgment because the second purchase agreement did not permit Song to terminate the agreement because the land was zoned differently than he had expected. But Judge John Baker, writing for a unanimous panel of the Indiana Court of Appeals, wrote the Iatarolas had failed to present a cogent argument on that issue to the trial court and, thus, had waived appellate review of that argument.
Further, waiver notwithstanding, Baker wrote the Iatarolas’ argument failed.
The appellate panel affirmed the denial of summary judgment to the Iatarolas on Song’s actual fraud claim because Song “had a right to rely on the Iatarolas’ representations regarding the zoning of the property and did, in fact, rely on them.” Similarly, the panel affirmed the denial of summary judgment on the constructive fraud charges because the fact that the zoning information was public record is not sufficient to preclude a constructive fraud claim, and because the Iatarolas did not present evidence to negate an element of Song’s constructive fraud claim.
Finally, the Iatarolas did not present a cogent argument or legal authority to support their claim that Song had caused a breach of contract, Baker said, so the trial court correctly denied their motion for summary judgment on that issue. However, Baker said the trial court did err in declining to consider Song’s petition for attorney fees, so judgment on that issue was reversed and remanded for the court to consider the issue of attorney fees, as provided for in the purchase agreement.
Similarly, the appellate court found that prejudgment interest was warranted because the trial court was not required to defer to the jury on that motion. Thus, judgment on the issue of prejudgment interest was reversed and remanded with instruction to calculate both prejudgment and post-judgment interest owed to Song.
Criminal – Protective Order
Shelly M. Phipps v. State of Indiana
A woman who sent an email to the board of elders of her former church did not violate the church pastor’s protective order against her because the email was intended for the elders, not the pastor, a divided Indiana Court of Appeals ruled.
Shelly Phipps and her husband attended a church in Solsberry, where K.G. was the pastor. After providing marital counseling to the couple, K.G. shared what he had learned from the counseling sessions with the church’s board of elders, which, in turn, met with Phipps and her husband to discuss the information K.G. had shared.
Phipps sought an apology from K.G. for the alleged breach of confidentiality and sent letters to him and the elders demanding the apology, though she never received one. Phipps was also upset that K.G. had hugged her on two occasions – once during an individual counseling session and once on the day she was baptized.
K.G. obtained a protective order against Phipps in 2008, prohibiting her from “harassing, annoying, telephoning, contacting, or directly or indirectly communicating with” the pastor. The order also required Phipps to stay away from K.G.’s residence and the church, but she violated the order by speaking to him at the church in 2009 and sending him a letter in 2010. As a result of her violations, Phipps twice pleaded guilty to Class A misdemeanor invasion of privacy.
Then in 2016, K.G. moved to extend the protective order, which the Greene Superior Court agreed to do through February 2018. However, in February 2016, Phipps sent an email to the church elders saying she was going to “go public” with her story and once again demanded an apology from K.G. for breaking her trust and for “sexual harassment” when he hugged her and said he loved her. She also wrote K.G. had “until Tuesday evening to comply.”
The email was forwarded to K.G., who contacted police. Phipps was subsequently charged with two counts of invasion of privacy, one as a Class A misdemeanor and one as a Level 6 felony. A jury found her guilty as charged, and the trial court merged the two verdicts and entered judgment of conviction for the Level 6 felony.
After being sentenced to 2 ½ years, with a one-year placement in work release and the remainder suspended to probation, Phipps appealed, arguing there was insufficient evidence to prove she committed invasion of privacy. A divided panel of the Indiana Court of Appeals agreed, with Judge Paul Mathias writing that Phipps’ email was “a request to the church elders to take action,” not an attempt to contact K.G.
Thus, the majority reversed her conviction and remanded for further proceedings. But in a dissenting opinion, Judge Rudolph Pyle noted the protective order prohibited indirect communication with the pastor.
“The jury believed that when a person sends an email to a supervising authority with an ultimatum directed at a third party, the natural and probably consequence is that the email will be communicated to the third party,” Pyle wrote, noting he would have affirmed Phipps’ conviction.
Civil Collection – Medical Malpractice
David Oaks v. Timothy R. Chamberlain, M.D.
In a case of first impression, the Indiana Court of Appeals ruled a patient in a medical malpractice case should have been able to cross-examine the medical expert about his personal medical practices.
David Oaks filed a malpractice complaint after he suffered a perforated colon which required surgery to repair, the removal of his spleen and a long rehabilitation that included more operations. He argued that his surgeon Timothy Chamberlain should have ordered an X-ray after the surgery to remove his gallbladder which would have shown a problem in the colon.
At trial in Whitley Circuit Court, Chamberlain offered the testimony of Wayne Moore, M.D., who testified that the defendant did not violate the standard of care when treating Oaks. Outside the presence of the jury, Oaks elicited testimony from Moore that he would have obtained a post-operative X-ray.
However, the trial court did not allow the jury to hear those statements by Moore. The jury returned a verdict in favor of Chamberlain.
Oaks appealed, raising the question of whether cross-examination of an adversary medical expert on his or her personal practices can be used to impeach the expert’s credibility regarding his or her opinion on the standard of care.
Arguing the Court of Appeals should allow evidence of personal medical practices to attack testimony about the standard of care, Oaks and amicus curiae Indiana Trial Lawyers Association noted a majority of other states to address this issue have held an expert can be impeached with his personal practices when they differ from the accepted practices.
Chamberlain maintained Moore’s testimony should have been excluded because it only showed that the expert would have gone beyond the common medical treatment. It did not conflict with what he told the jury about the standard of care.
The Court of Appeals reversed the trial court and remanded the case for a new trial. The judges found Moore’s testimony was incomplete because he only stated he would have gotten an X-ray but did not give a reason why he would have done so.
“Dr. Moore’s testimony about his personal practices was in conflict with his testimony on the standard of care,” Judge Edward Najam wrote for the court. “Therefore, he personal practice testimony was relevant and admissible. … The disparity in Dr. Moore’s testimony was relevant for impeachment purposes.”
Chamberlain countered with two additional arguments. First, he asserted even if personal practices testimony was relevant, it should have been excluded under Indiana Rule of Evidence 403. The testimony’s probative value was substantially outweighed by its potential to cause unfair prejudice and confuse the jury.
Second, even if it was an error to exclude testimony about Moore’s personal practices, he contended the error was harmless.
The Court of Appeals disagreed with both arguments.
The appellate panel found the jury is capable of understanding that the standard of care and a witness’s credibility about the standard of care are not one and the same. Also, it ruled that the exclusion of Moore’s personal practices testimony had a probable impact on Oaks’ substantial rights.
Criminal – Domestic Violence
Larry C. Perry, Jr. v. State of Indiana
Multiple domestic violence convictions against a man accused of repeatedly beating and choking his wife were vacated by the Indiana Court of Appeals, along with his adjudication as a habitual offender.
Larry C. Perry was convicted of five domestic violence-related counts by an Allen County jury, and several of the counts were merged due to double jeopardy concerns. Perry was sentenced to an aggregated 14½ years in prison.
But the appeals panel ruled only one of those convictions, for Level 6 felony domestic violence, was supported by the evidence.
Judge Terry Crone wrote for the court that the jury speculated that Perry had caused injuries his wife, Lydia, sustained several days before police found her with a bloody lip after a fight with Perry — the lone conviction the COA affirmed.
Perry was arrested after Lydia told police he hit and choked her in the Fort Wayne hotel where they were staying, as well as days earlier, but she later recanted. She changed her story and said her earlier injuries were the result of a car crash.
“Her statements to police that Perry had committed those crimes were not admitted as substantive evidence. The jurors saw the photographs of Lydia’s injuries and heard conflicting stories about how and by whom they were caused. The jurors were entitled to disbelieve those stories, but they were not entitled to infer that Perry caused Lydia’s injuries based solely on the couple’s lack of credibility. This would amount to speculation, which is insufficient to sustain a conviction,” Crone wrote.
Likewise, the panel held the state lacked evidence to prove proper venue for four of the five counts against Perry. “Any inference that the offenses were committed in Allen County because Lydia sought treatment at a hospital in that county would be purely speculative,” the panel held in rejecting the charges against Perry based on the earlier incident in which his wife was injured and sought treatment at Parkview Hospital.
Perry failed to convince the COA that his 2-½-year sentence for the remaining conviction was inappropriate based on his character and the nature of the offense.
“Perry committed the instant offense against Lydia in December 2015. He violated a no-contact order by calling her over 170 times before and during his trial. He was ultimately charged with and pled guilty to four violations of that order. At the sentencing hearing, Perry claimed to be innocent of the battery and strangulation charges, which he had every right to do, but he also refused to sign and indicated a willingness to violate the new no-contact orders issued by the trial court. Perry contends that he is not the ‘worst of the worst’ deserving of a maximum sentence ... but his extensive criminal history (including multiple battery convictions), his failure to respond to more lenient treatment, and the troubling facts of this case overwhelmingly demonstrate otherwise,” Crone wrote.
He noted the case “highlights the difficulties and frustrations encountered by members of the law enforcement community who investigate and prosecute domestic violence cases in which the victim recants her accusations against the abuser, an unfortunate and all-too-common occurrence.”
Criminal – Statute of Limitations
Peter T. Dvorak v. State of Indiana
An Indiana trial court must dismiss charges brought against a man accused of selling unregistered securities in 2007 after the Indiana Court of Appeals found the statute of limitations had expired before he was charged.
The judges held the man did not make any positive acts to conceal his offenses, so the five-year statute of limitations to bring charges against him began running in 2007.
Peter Dvorak was accused of knowingly offering or selling an unregistered, non-exempt promissory note and agreement to lend and borrow money to Todd Wahl in 2007. Further, Dvorak, who was also not registered to sell the note and agreement, was accused of concealing his actions from Wahl by structuring the note and agreement to not mature until July 2010, making Wahl unaware of the fact that his investment was not valid until then.
Wahl filed a complaint with the Indiana Secretary of State, Securities Division in September 2011, and Dvorak was formally charged with Class C felony offer or sale of an unregistered security and Class C felony acting as an unregistered agent in June 2015. Dvorak moved to dismiss, arguing the charges against him were barred by the five-year statute of limitations, which he said began running when the offenses occurred in 2007.
The Monroe Circuit Court denied the motion to dismiss, finding “the statute of limitations was tolled because Defendant’s structuring of the security was a positive act by the defendant that was calculated to conceal the fact that a crime had been committed.” The court certified the order for interlocutory appeal in which Dvorak challenged the denial of his motion to dismiss.
In a unanimous opinion, the Indiana Court of Appeals reversed the denial of Dvorak’s motion, with Judge Michael Barnes writing for the panel that Indiana Code 35-41-4-2(h)(2) holds the statute of limitations does not begin to run during any time in which “…the accused person conceals evidence of the offense, and evidence sufficient to charge the person with that offense is unknown to the prosecuting authority and could not have been discovered by that authority by exercise of due diligence.”
In this case, Barnes wrote Dvorak “did not engage in any positive act calculated to conceal the fact that he was not registered and the security was not registered with the Secretary of State.” Such a “positive act” is required under the precedent of State v. Chrzan,693 N.E.2d 566 (Ind. Ct. App. 1998).
The denial of Dvorak’s motion to dismiss was reversed and the case was remanded.
Miscellaneous – Civil Forfeiture
Edgar Ariel Gonzalez v. State of Indiana and Pace Team
The state must return funds seized from a man convicted of possession of marijuana after the Indiana Court of Appeals found no proof linking the cash to any drug crimes.
Hancock County Sheriff’s Deputy Nicholas Ernstes was patrolling traffic on I-70 in Henry County when he saw a vehicle following too closely to the car in front of it. Ernstes received a “wanted/stolen hit on the license plate,” initiated a traffic stop and smelled the odor of marijuana as he approached the vehicle.
When Edgar Gonzalez, one of four occupants in the vehicle, opened the glove box to retrieve the rental agreement, Ernstes saw a marijuana dispensary container and marijuana residue throughout the vehicle. After backup officers arrived, police pried open the center console and found what was believed to be heroin. Officers then discovered one of the passengers had cocaine in her purse and another had hid cocaine in her body.
The three other occupants pleaded guilty to felonies related to possession of a narcotic, while Gonzalez pleaded guilty to possession of marijuana as a Class B misdemeanor. The state filed a complaint for forfeiture, alleging $810 had been seized from Gonzalez and further alleging “said currency had been furnished or was intended to be furnished in exchange for a violation of a criminal statute … as provided in I.C. 34-24-1.”
The Henry Circuit Court entered judgment for forfeiture, so Gonzalez appealed. The Indiana Court of Appeals reversed the forfeiture, finding it was outside “the letter and spirit of the law,” a standard found in Hughley v. State, 15 N.E.3d 1000, 1005 (Ind. 2014).
Specifically, Judge L. Mark Bailey wrote, “the State did not produce any evidence that the cash found in Gonzalez’s pants pocket was in any way connected to his commission of that crime. Instead, the State focused upon the acts giving rise to the convictions of other persons, apparently under the theory that ‘the underlying offense’ connected to the currency was a conspiracy to deal narcotics.”
“There is no evidence, physical or testimonial, that Gonzalez ever procured, touched, or used the contraband found in the vehicle,” Bailey wrote. “In short, there is a lack of evidence that Gonzalez was a co-conspirator with the other vehicle occupants or that his money facilitated their offenses.
“Without the establishment of a nexus between Gonzalez’s currency and an underlying offense, the civil forfeiture order is outside the ‘letter and spirit of the law,’’ Bailey continued. “Lacking the requisite proof, the forfeiture order must be reversed.”•