Indiana Court decisions – Sept. 27–Oct. 10, 2017

Indiana Supreme Court

Oct. 2

Criminal – Dissemination of Matter Harmful to Minors

State of Indiana v. Sameer Girish Thakar

29S02-1705-CR-284

A 38-year-old man who sent an explicit photo to a 16-year-old girl must face a felony charge after the Indiana Supreme Court ruled that it is illegal for adults to send sexually explicit photos to any person under the age of 18. The high court also overruled a 2009 Court of Appeals decision that had reached the opposite conclusion.

In 2014, Sameer Girish Thakar, then 38, sent a photo of his genitals to a 16-year-old girl in Oregon. After learning about the photo, the Oregon FBI contacted the Fishers Police Department, who went to Thakar’s house and arrested him.

Thakar was charged with Class D felony dissemination of matter harmful to minors under Indiana Code 35-49-3-3(a)(1) (2008), also known as the dissemination statute. In response, Thakar moved to dismiss the charge, claiming the statute was void for vagueness and pointing to the decision in Salter v. State, 906 N.E.2d 212 (Ind. Ct. App. 2009) for support.

In Salter, a divided panel of the Indiana Court of Appeals determined the dissemination statute was void for vagueness as applied because the age of consent to sexual activity is 16. In a footnote to Monday’s opinion, Justice Mark Massa explained the Salter Court determined the statute was unconstitutionally vague as applied “because the activity in question would not be understood…as ‘patently offensive to prevailing standards in the adult community as a whole with respect to what is suitable matter for or performance before minors.’”

The Hamilton Superior Court agreed with Thakar’s argument, as did the Indiana Court of Appeals, which relied on Salter in its February affirmation of the dismissal of the charge. But after hearing arguments in Thakar’s case in June, the high court unanimously determined the dissemination statute is not unconstitutionally vague.

Under I.C. 35-49-1-4 (2008), a “minor” is defined as any person under the age of 18, while I.C. 35-49-2-2 (2008) defines “harmful to minors” as, among other things, something that meets the “patently offensive to prevailing standards” benchmark explored in Salter. Thakar argued that because a 16-year-old girl could see his genitals in person, the “prevailing standards” benchmark should allow him to send photos of his genitals to her as well.

But Massa wrote Thakar was merely trying to impute ambiguity into the dissemination statute by claiming the consent and dissemination statutes are in conflict with each other and should be read consistently.

“But there is no conflict between these two statutes requiring such resolution, because Thakar was capable of complying with both simultaneously; with respect to a 16-year-old, consensual sexual activity in person is permitted, the dissemination of a sexually-explicit photograph (consensually or otherwise) is not,” Massa wrote.

The justice also pointed to an element of I.C. 35-49-2-2 that describes matter as harmful if “it describes or represents … nudity, sexual conduct, (or) sexual excitement,” noting Thakar’s photo would fall into that category. But that element doesn’t work against the “patently offensive element,” he said, because it would be up to a trial court or jury to decide if something is considered patently offensive.

“Whether this inconsistent statutory treatment of minors aged 16 and 17 is advisable with respect to sexually-related activity is a matter for the legislature, and whether Thakar’s alleged conduct violated the Dissemination Statute is a matter for the jury,” he wrote.

Massa also wrote that the fact the General Assembly had taken no action in response to Salter is irrelevant, noting “’the hierarchy of interpretive principles moots the concept of legislative acquiescence.’” Thus, the high court also overturned Salter in its decision.

Indiana Court of Appeals

Sept. 28

Agency Action – Utility Rate Increase

Hamilton Southeastern Utilities, Inc. v. Indiana Utility Regulatory Commission; Indiana Office of Utility Consumer Counselor; and Apartment Association of Indiana, Inc.

93A02-1612-EX-2742

The Indiana Court of Appeals ruled in favor of a Hamilton County public utility seeking to have affiliate expenses included in its sewer utility rate calculation.

Hamilton Southeastern Utilities Inc. provides sewage collection and treatment services. It relies on affiliate company Sanitary Management & Engineering Co. to carry out the maintenance, operation, and engineering functions of HSE’s sewage operations, and the two companies operate pursuant to a utility services agreement.

HSE had an approved rate increase of 9.8 percent in 2010, but because of maintenance and repair costs, it got a rate of return just below 2 percent for 2009-2015. The company sought to increase its rates and charges for sewage disposal service by 8.42 percent. It also sought an increase to its system development charge that new development pays.

After a hearing with the Indiana Utility Regulatory Commission, the commission authorized a rate increase of 1.17 percent and approved a $450 increase for all service areas regarding its system development charge for new development. At the hearing, the Office of Utility Consumer Counselor testified it believed HSE’s rates should instead be reduced and the utility could save money by having in-house employees handle necessary tasks instead of contracting with SAMCO to perform those duties.

Instead of waiting for the IURC to rule on HSE’s petition for reconsideration and clarification, the utility filed a notice of appeal. The IURC did not rule on the petition before the COA assumed jurisdiction.

The judges first ruled that the IURC is not a proper party on appeal from its own decision and should be dismissed, granting HSE’s motion.

In addressing the issues raised on appeal, the COA found the IURC acted arbitrarily in excluding HSE’s affiliate expenses from HSE’s rate calculation by relying on National Association of Regulatory Utility Commissioners guidelines without explanation. The utility services agreement between SAMCO and HSE includes a 10 percent management fee and 3 percent increase to contracted billing rates. In HSE’s prior rate case, the IURC found SAMCO’s rates to be reasonable without regard to evidence of SAMCO’s fully allocated costs, as required under the guidelines.

The judges upheld the IURC’s consideration of evidence and excluded the paid-in-arrears affiliate expenses from HSE’s calculation of working capital, as well as the IURC’s conclusion regarding HSE’s system development charge based on the evidence presented.

The judges also found the IURC properly permitted S-Corporation HSE to recover its passed-through income tax liability in its rates, which the OUCC had challenged on cross-appeal.

“[E]vidence was presented that the shareholders of HSE actually paid income taxes at their personal rates for income attributable to HSE. The Commission clearly recognized that ratepayers would be subjected to higher rates to compensate for increased operating costs if the utility had to pay the higher tax rates of a C Corporation. The Commission exercised its discretion to calculate a just and reasonable rate,” Judge Patricia Riley wrote in remanding the matter for further proceedings.
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Criminal – Resisting Law Enforcement

Dori J. West v. State of Indiana

02A04-1704-CR-783

A Fort Wayne woman’s conviction for misdemeanor resisting law enforcement was overturned by the Indiana Court of Appeals after the judges determined the state didn’t prove she fled from the police officers.

Fort Wayne Police’s Emergency Services Team executed a warrant on Dori West’s home resulting from an investigation into a major drug ring involving the sale of synthetic drugs. West’s 18-year-old son had previously delivered Spice to a confidential informant in front of West’s home.

At the time police entered the home, West’s 2-year-old grandson was in a bedroom asleep; other children were in the home getting ready for school. Police shouted several commands for people to come out of the home as the officers broke through the window into the living room.

An officer saw West look at the them then turn her back and begin going to the bedroom where the boy was sleeping. An officer fired a foam baton at her. Afterward, she left the home and was detained. The officers then removed the 2-year-old and an 11-year-old boy from the home.

The state charged West with Class A misdemeanor resisting law enforcement by fleeing in November 2014 but didn’t go to trial until March 2017, where she was found guilty.

West, in her appeal, raised several claims, but the Court of Appeals addressed the sufficiency of evidence claim only. Judge Robert Altice noted that in the 20 seconds of chaos during which West is alleged to have fled, there was no evidence West was ordered to stop. The officers instead shouted for everyone to exit.

“Directing West to exit her home was not the same thing as ordering her to stop,” Altice wrote. “[T]here is no evidence from which a reasonable factfinder could conclude that West intended to flee, escape, or even unnecessarily prolong her exit from the home.”

West’s conviction was reversed and her case remanded with instructions to vacate the conviction and sentence.
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Sept. 29

Domestic Relation – 529 Savings Account

David K. Miller v. Joy A. (Miller) Brown

03A01-1703-DR-512

An Indiana trial court erred when it ordered two divorced parents to become co-owners of the ex-husband’s 529 savings account in post-dissolution proceedings, finding the account was the man’s property, so the trial court lacked authority to make his ex-wife a co-owner.

David Miller opened two 529 college saving accounts in his name for his sons, Z.M. and N.M., with each son designated as beneficiary of one of the accounts. After Miller and his wife, Joy Brown, divorced in 2010, he continued contributing to the accounts, while Brown opened two new 529s in her name and designated each of her sons as beneficiaries of one of the accounts.

In June 2014, Brown filed a petition indicating Z.M. had started college and asking the Bartholomew Superior Court to order Miller to pay a share of the expenses. Miller objected, noting Z.M. was 19 and, thus, was emancipated when Brown filed her petition. While that petition was still pending, Brown filed a similar motion as to N.M., who had “plans” to attend college after his graduation.

At a subsequent hearing, Brown claimed she had paid up to $25,000 for Z.M.’s college, but that he had “failed” and dropped out. The trial court then dismissed Brown’s petition as to Z.M., agreeing with Miller that she had waited too long to file the petition because he was 19 years old at the time of the filing. The court also denied her request for reimbursements from Miller’s 529 account for Z.M.

Brown renewed her petition as to N.M. when he enrolled in college in the fall of 2016, testifying that Miller had not paid any portion of N.M.’s tuition. By the time of the second hearing, Brown had consolidated her 529s into a single account consisting of $11,400 for N.M., while Miller’s accounts held balances of $21,000 and $25,000, respectively.

After the second hearing, the trial court ordered the parties to consolidate the 529 funds into one account, with Miller and Brown as equal co-owners. All of N.M.’s college expenses were to be paid from that account, and any additional expenses were to be paid 55 percent by Brown and 45 percent by Miller.

Miller appealed, challenging only the portion of the trial court’s order that created a single, jointly owned 529 account. The Indiana Court of Appeals agreed that portion of the order was erroneous and reversed the trial court’s decision.

Chief Judge Nancy Vaidik, writing for the unanimous court, first noted that the two 529 accounts opened by Miller were legally Miller’s property, even though they were intended to benefit his sons. Further, Vaidik wrote the trial court’s order went against the meaning of Indiana Code 31-16-6-3, which holds that a court “may set apart the part of the property of either parent or both parents that appears necessary and proper for the support of the child.”

“But the trial court did not merely order part of Father’s property ‘set apart’ for the future support of Z.M. and N.M.,” the chief judge wrote. “Rather, it purported to make Mother a co-owner of Father’s property. The text of Section 31-16-6-3 does not authorize such a post-dissolution division of property.”

“But this is not the end of the line for Mother,” Vaidik continued. “While we are constrained to vacate the order requiring the parties to create a single, jointly owned 529 account, we must also remand this matter for a new ruling on Mother’s petition for payment of N.M.’s college expenses.”
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Oct. 4

Civil Tort – Securities Fraud

Cardinal Health Ventures, Inc. v. Michael Scanameo, M.D., Carol Scanameo, and Michael Scanameo, M.D., Inc.

18A02-1703-CT-487

A claim of securities fraud against an Indiana health company must proceed to trial after the Indiana Court of Appeals determined the trial court erred by striking a request for a jury trial without the consent of both parties.

On two occasions between 2007 and 2008, Cardinal Health Ventures sold shares of two medical clinics to Dr. Michael Scanameo, Carol Scanameo and Michael Scanameo, M.D. Inc. for roughly $542,400. But in 2013, the Scanameos sued Cardinal Health for securities fraud, alleging the health company knew the shares were “worthless” when it sold them.

In their complaint, the Scanameos sought to recover the sum paid, plus interest and attorney fees, and requested a jury trial. The Scanameos later moved to strike their request for a jury trial, arguing “that while a prior version of Indiana Code section 23-19-5-9 explicitly stated that claims brought under that statute could be decided by either a jury or the trial court, the amended version of the statute was not clear as to whether claims could still be determined by a jury or should only be tried by the court.”

After taking the matter under advisement, the Delaware Circuit Court granted the motion to strike. Cardinal Health brought an interlocutory appeal of that decision on the basis that it did not consent to the motion to strike, and the Indiana Court of Appeals agreed that the case should be re-set for a jury trial.

In the opinion, Judge Cale Bradford pointed to language in I.C. 23-19-5-9 that allows a purchaser to recover the amount they paid for a security and “interest…, costs, and reasonable attorney’s fees de-termined by the court or arbitrator, … .” The language relating to attorney fees is set off by commas, which means that the option of using a court or arbitrator applies only to that section, not the statute as a whole, Bradford wrote.

Further, Bradford noted that United States district courts and the Supreme Court of the United States have previously held that securities fraud claims and claims seeking monetary compensation are appropriate for jury trials. That, coupled with the fact that Cardinal Health did not consent to the request to strike the jury trial, as is required by Indiana Trial Rule 38(D), made it erroneous for the trial court to grant the motion to strike.

The case was remanded to be reset on the jury trial calendar.
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Oct. 5

Criminal – Double Jeopardy Violations

Marquell M. Jackson v. State of Indiana

82A04-1609-CR-2074

A man convicted on eight charges related to an attempted robbery will have his sentencing enhancement vacated and two of his convictions reduced after the Indiana Court of Appeals found multiple errors in the trial court’s handling of the case.

Logan Orth periodically stayed in in Jeremy Herbert’s apartment above an Evansville tavern and sold marijuana from the apartment. When Marquell Jackson and Diego Thomas learned about Orth’s marijuana, they developed a plan to rob the apartment. However, when they arrived and saw a surveillance camera above the door, the men abandoned their plan.

Jackson and Thomas then solicited the help of three friends to carry out their robbery plan, deciding to don face masks and use two firearms to get the marijuana. But when the group entered the apartment, they found Orth, Herbert and eight other people inside smoking marijuana.

A gunfight then ensued between the apartment occupants and the would-be robbers, resulting in Orth and other participants being shot. Though no one was killed in the shootout, the invaders eventually drove to the hospital to visit one of their wounded friends and were arrested.

While in jail, Jackson made several phone calls that were recorded, with his knowledge, in which he stated that he expected to be convicted of burglary and that he ran from the scene when the gunfire ensued. He was eventually charged with 16 offenses and a criminal gang enhancement. Three days before Jackson’s trial was scheduled to begin, the state amended the charging language related to the gang enhancement to no longer exactly track the language of the applicable statute, but Jackson did not object.

Jackson was then found guilty as charged in a trial bifurcated between the substantive offenses and the criminal gang enhancement. The jailhouse phone recordings were admitted into evidence over Jackson’s objections, and some of his accomplices testified against him.

The trial court entered judgment against Jackson for Level 1 felony burglary, Level 2 felony attempted robbery, four counts of Level 3 felony attempted robbery and two counts of level 3 felony aggravated battery, as well as the gang enhancement, and sentenced him to an aggregate term of 60 years. However, the Indiana Court of Appeals reversed part of Jackson’s convictions and sentence, finding fundamental error occurred in the case.

Specifically, Judge Edward Najam, writing for the unanimous appellate panel, noted the state’s amended language of the criminal gang enhancement omitted the mens rea language from the applicable statute, Indiana Code 35-50-2-15(b) (2015). It also added an element not within the statute — being “a known member” of a criminal gang versus “knowingly or intentionally” being in a gang, Najam wrote.

As a result, the amended charge “carries a wholly different meaning,” he wrote, so the trial court committed fundamental error by allowing the state to amend the charging information in this manner. The case was remanded on that issue with instructions for the Vanderburgh Circuit Court to vacate the enhancement and the sentence imposed in it.

The appellate panel then found two of Jackson’s convictions — robbery as a Level 2 felony and aggravated battery as a Level 3 felony — violated double jeopardy protections. That’s because each of those offenses was enhanced based upon the same bodily injury inflicted on Orth during the gunfight. Those convictions were reversed and remanded with instructions to enter judgment on lesser-included offenses of Level 5 felony robbery and Class B misdemeanor battery.

However, the appellate judges upheld the admission of the jailhouse phone calls and the trial court’s jury instruction on accomplice liability, finding no abuse of discretion on fundamental error in regard to either of those issues. Finally, Najam wrote there was sufficient evidence to support Jackson’s Level 1 felony burglary conviction.
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Oct. 10

Infraction – Blocked-Crossing Statute

State of Indiana v. Norfolk Southern Railway Company

02A03-1607-IF-1524

A Virginia-based rail company must face the state of Indiana in court in a conflict over whether state-issued citations for blocking grade crossings were proper. The Indiana Court of Appeals determined that federal law does not preempt state law governing how long a train can block a crossing, so summary judgment to the rail company was not appropriate.

Norfolk Southern Railway Co. challenged 23 citations the state of Indiana issued against it for violations of Indiana’s blocked-crossing statute. Norfolk does not dispute that its trains blocked crossings for more than 10 minutes on each occasion, a direct violation of the statute, yet moved for summary judgment on the grounds the statute, Indiana Code 8-6-7.5-1, was preempted by the Interstate Commerce Commission Termination Act and the Federal Railroad Safety Act.

The Allen Superior Court agreed and granted summary judgment to Norfolk, finding that on some occasions, such as when switching operations were being performed, the rail company could not prevent blocking crossings for more than 10 minutes. Further, while the trial court wrote Norfolk could “cut” its trains to open grade crossings for motor vehicles, it would take more than 10 minutes to reassemble the trains when crew members are ready to move on.

However, the Indiana Court of Appeals reversed the grant of summary judgment, with Judge Melissa May writing on an issue of first impression that the ICCTA does not bar the blocked-crossing statute because its “silence as to obstruction of traffic bars facial preemption.” She pointed to the decisions in Fayus Entreprises v. BNSF Ry. Co., 602 F.3d 444 (D.C. Cir. 2010) and Adrian & Blissfield R. Co. v. Village of Blissfield, 550 F.3d 533 (6th Cir. 2008), in which circuit courts held that “the care of grade crossings is … within the police power of the states” and, thus, not subject to preemption.

“The ICCTA does not include language regarding regulation of a blocked crossing for traffic regulation purposes,” May wrote. “Without state action, railroads would be allowed to block major thoroughfares for an infinite amount of time because the federal regulation is silent.”

Similarly, the appellate court adopted the holding in the Ohio case of State v. Wheeling & Lake Erie Ry. Co., 743 N.E.2d 513 (Ohio Ct. App. 2000), to find the FRSA does not preempt Indiana’s blocked-crossing statute. The holding in Wheeling, which also addressed FRSA preemption, found that “(n)either the trial court nor appellee has indicated any federal regulation governing this issue, let alone demonstrated the ‘clear and manifest purpose of Congress’ to preempt local regulations on how long a stopped train can block an intersection.”

The appellate court did not address conflict or field preemption in its opinion, as Norfolk did not discuss the application of either. The case was remanded for further proceedings consistent with the opinion.•

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