7th Circuit Court of Appeals
Habeas — Death Penalty
Frederick Michael Baer v. Ron Neal
Despite the “atrocious” nature of a murderer’s crimes, the 7th Circuit Court of Appeals reversed his death sentence in a habeas petition, finding prosecutorial misconduct and misleading jury instructions likely influenced the jury’s decision to sentence him to death.
Fredrick Baer approached Cory Clark on her front porch near Lapel and asked to use her phone. He then followed her into the home with the intent to rape her, but later cut her throat instead. He then inflicted the same fate on Clark’s 4-year old daughter, Jenna, before stealing money from Clark’s purse and leaving the apartment.
Baer was eventually arrested and admitted to the crimes, and the trial proceeded on the issue of whether he was guilty but mentally ill, or just guilty. During voir dire, Madison County Prosecutor Rodney Cummings repeatedly stated the incorrect legal standard for a guilty but mentally ill conviction and incorrectly told prospective jurors that such a conviction might preclude a death sentence, the 7th Circuit found.
Baer’s counsel failed to object to these statements, and the jury eventually found Baer guilty as charged.
He was sentenced to death in Marion Superior Court, and the Indiana Supreme Court upheld that sentence on direct appeal. The court also upheld the denial of his petition for post-conviction relief in 2011.
Baer then moved for habeas corpus in the Indiana Southern District Court, which denied the petition and also denied him a certificate of appealability. The 7th Circuit Court of Appeals, however, granted a certificate of appealability, and Baer brought three arguments before the court, two of which were addressed in an opinion reversing the denial of his petition for habeas corpus in Fredrick Michael Baer v. Ron Neal, 15-1933.
Specifically, Baer argued his counsel was ineffective for failing to object to jury instructions that likely precluded the jury from considering mitigating evidence, and for failing to object to numerous instances of prosecutorial misconduct.
During the sentencing phase of the trial, the jury was instructed to consider that Baer’s “capacity to appreciate the criminality of (his) conduct or to conform that conduct to the requirements of the law was substantially impaired as a result of mental disease or defect” as a mitigator. However, this instructor excluded the words “or intoxication” – germane here because Baer claimed he had been using methamphetamine on the day of the murders.
Baer’s counsel failed to object to the modification of that instruction or to a “voluntary intoxication” instruction that allowed intoxication to be a defense if the intoxication was involuntary. Those failures constituted prejudicial ineffective assistance of counsel because “a reasonable juror could have understood the complete penalty phase jury instructions as foreclosing the evidence of voluntary intoxication from consideration…,” Judge Ann Claire Williams wrote in a 37-page opinion Thursday.
Similarly, defense counsel’s failure to object to the prosecutor’s prejudicial comments at trial was prejudicially ineffective, Williams wrote. In addition to his incorrect statements during voir dire, Williams said the prosecutor also told prospective jurors that Clark’s family wanted Baer to be sentenced to death, and inserted his personal opinion and facts that were not in evidence into other portions of the trial.
“Can we be certain that Baer would not have been sentence to death if given a fair trial and effective counsel? No,” the judge wrote. “But, it is ‘reasonably likely’ that without the prosecutor’s injection of impermissible statements and incorrect law the jurors would not have recommended death.”
Thus, the Indiana Supreme Court unreasonably applied Strickland v. Washington, 466 U.S. 668 (1984), to Baer’s claims, Williams wrote, so the 7th Circuit reversed the denial of his district court habeas petition and remanded his case for further proceedings and resentencing.
Criminal — Securities Fraud
United States of America v. Jeffrey J. Wilson
An Indiana businessman convicted in a securities fraud scheme lost his federal appeal after the 7th Circuit Court of Appeals determined there was sufficient evidence to prove he had at least some knowledge of the ongoing fraud.
Jeffrey Wilson was in charge of Imperial Petroleum, Inc., which acquired e-Biofuels, LLC in May 2010. Before being acquired by Wilson’s company, e-Bio had developed a fraud scheme called “Alchemy” that purchased biodiesel from a third party, then sold it to customers as e-Bio’s original product.
Alchemy allowed e-Bio to take advantage of government renewable-energy production incentives — renewable identification numbers and the blender’s tax credit — without investing funds in production costs. Producers could generate and attach a set number of RINs to each gallon of biofuel they create and then sell it to customers, while the $1 per gallon blender’s tax credit was awarded to the taxpayer that first blended biodiesel with petroleum diesel.
Specifically, E-Bio would buy RIN-less, blended biodiesel, or B99, and resell it as RIN-valued, unblended biodiesel, or B100. The company used a third-party middleman to purchase the RIN-less B99 and resell it to e-Bio with fake invoices for feedstock, a substance used to create biodiesel.
Meanwhile, Imperial filed a report with the Securities Exchange Commission indicating that e-Bio manufactured its biodiesel from feedstock, even though earlier emails indicated Wilson knew that was not the case. Additionally, evidence was presented that Wilson attended a meeting that discussed the Alchemy conspiracy.
As e-Bio’s scheme generated more money, the value of Imperial’s stock rose, and Wilson paid off more than $5 million in company debt and wrote more than $100,000 in company checks to himself using Imperial stock. However, Wilson did not disclose those payments in SEC filings, but instead reported that he had deferred his salary.
Wilson was eventually indicted on 21 counts of securities fraud and false statements offenses. While other defendants who were indicted pleaded guilty, Wilson proceeded to trial, where the other defendants testified against him. A jury found Wilson guilty as charged after an eight-day trial.
The former Imperial head then moved for a renewed judgment of acquittal, arguing the government failed to prove beyond a reasonable doubt that he met the requisite mens rea of the charged offenses because he was unaware the scheme was going on. The district court denied that motion, and the 7th Circuit Court of Appeals affirmed in United States of America v. Jeffrey J. Wilson, 17-1076
Judge Kenneth Ripple pointed to trial evidence of the meeting at which the Alchemy scheme was discussed in Wilson’s presence, emails in which Wilson acknowledged potential investors’ concerns about ineligible RINs, and a spreadsheet sent to Wilson that compared the cost of producing biodiesel to purchasing it from third parties. Based on that evidence, a reasonable jury could have found that Wilson knowingly and willfully made false statements in his SEC reports, to his outside accountant and to government agents about e-Bio’s business practices, Ripple wrote.
“The Government has pointed to ample circumstantial evidence that Mr. Wilson knew about the Alchemy scheme, or at least knew that e-Bio was not producing its own biodiesel …,” Ripple wrote. “… It was up to the jury to evaluate the witnesses’ credibility, weigh the evidence, and draw reasonable inferences. That it did, and we will not disturb its finding.”
Indiana Court of Appeals
Civil Plenary — Insurance/Unpaid Claim
John Pelliccia, M.D. v. Anthem Insurance Companies, Inc.
Indianapolis-based Anthem Insurance has lost a ruling in its favor after the Indiana Court of Appeals reversed and determined the insurer should have covered a doctor’s medical expenses incurred during his grace period for late premium payments.
In John Pelliccia, M.D. v. Anthem Insurance Companies, Inc., 49A02-1705-PL-1080, Dr. John Pelliccia purchased an Anthem health insurance policy for coverage in 2014. Anthem’s policies provided that coverage would terminate if a member failed to pay their premium within a specific grace period.
Due to an apparent issue with Pelliccia’s banking institutions, only 11 payments were made for his policy, rather than the required 12. Meanwhile, Anthem preapproved Pelliccia for a December 2014 surgery, provided that his premium payments were up to date.
Pelliccia then received a letter on Dec. 3 notifying him that his premium due Dec. 1 was late. The letter also informed him that he could make the necessary payments through Jan. 3, 2015, though no claims would be paid during that grace period.
Pelliccia did not send any payments to Anthem in response to the letter, but instead underwent his planned surgery in December 2014. He then received a letter on Jan. 9 informing him that his coverage had been canceled on Dec. 1 due to nonpayment, so his surgery expenses would not be covered.
The doctor filed a complaint alleging Anthem had improperly retroactively canceled his policy. He moved for partial summary judgment, while Anthem moved for full summary judgment, and the Marion Superior Court ruled in favor of the insurer. But the Indiana Court of Appeals reversed that decision Jan. 4, finding that the language of Pelliccia’s insurance policy did not permit Anthem to terminate the policy.
Specifically, Judge Michael Barnes pointed to Indiana Code Section 27-8-5-3(a)(3), which allows for insurance payment grace periods and holds that “during which grace period the policy shall continue in force.” Further, Anthem’s policy held that coverage would be canceled for non-payment “on the last day of the grace period,” which here was Jan. 3, 2015. That language is unambiguous, the court held.
“Additionally, the policy expressly requires an insured to reimburse Anthem for claims payments for services incurred after the grace period and is silent with respect to claims payments for services incurred during the grace period,” Barnes wrote. “The reasonable inference to be made is that an insured does not have to reimburse Anthem for any claims payments made for services incurred during the grace period.”
Thus, Anthem should have paid Pelliccia’s surgery claims incurred during his grace period that ended on Jan. 3, 2015, when his coverage also ended, Barnes wrote. The court reversed summary judgment for Anthem on those grounds, and remanded for entry of partial summary judgment in favor of Pelliccia. However, pursuant to I.C. 27-8-5-3(b)(7), the court also permitted Anthem to deduct its owed unpaid premium from Pelliccia’s claim payment.
Criminal — Modification of Fixed Sentence
Alberto Baiza Rodriguez v. State of Indiana
A divided panel of the Indiana Court of Appeals has ordered a trial court to reconsider a sentence modification for an offender who agreed to a fixed-sentence plea agreement, a ruling that goes against proposed legislation currently pending before an Indiana Senate committee. However, in his first writing as an appellate senior judge, former Indiana Supreme Court Justice Robert Rucker dissented from the majority ruling.
After being charged with multiple charges related to drunken driving, Alberto Rodriguez pleaded guilty to Class A misdemeanor operating while intoxicated and to being a habitual vehicular substance offender. The agreement required Rodriguez to serve six years on the Elkhart County Work Release program in exchange for the state dropping all other charges against him.
The Elkhart Superior Court accepted the agreement in January 2016, but Rodriguez moved for a modification one year later, alleging his placement had caused undue hardship on his family. The trial court denied Rodriguez’s motion, finding Indiana statute deprived the court of authority to modify the fixed-sentence plea agreement.
But a divided panel of the Indiana Court of Appeals reversed that denial in Alberto Baiza Rodriguez v. State of Indiana, 20A03-1704-CR-724, with Judge Terry Crone writing for the majority joined by Judge Paul Mathias that Indiana Code section 35-38-1-17(l) does not permit a person to “waive the right to sentence modification under this section as part of a plea agreement.” Crone also noted the agreement allowed the trial court to modify Rodriguez’s sentence only if he became incarcerated, which he did not.
“The trial court essentially concluded that by entering into a plea agreement with a fixed sentence to be served on work release, Rodriguez waived the right to modification of that sentence,” Crone wrote. “But that is precisely what Section 35-38-1-17(l) prohibits in no uncertain terms as a violation of public policy; it does not distinguish between implicit or explicit waivers, and we may not read such a distinction into the statute.”
Thus, the majority determined section (l), when harmonized with sections 35-35-3-3(e) and 35-38-1-17(e) preserves a defendant’s right to modification in fixed plea agreements. The majority remanded Rodriguez’s case for further proceedings, also drawing on precedent from State v. Stafford, 86 N.E.3d 190, 193 (Ind. Ct. App. 2017).
The Stafford court held that, “Unless and until the General Assembly clarifies the statute at issue, it clearly and unambiguously states that offenders ‘may not waive the right to sentence modification … as part of a plea agreement.’” The General Assembly is currently taking steps to offer that clarification through Senate Bill 64, which would allow modifications of fixed-sentence agreements only with prosecutorial consent.
Former Justice and now Senior Judge Robert Rucker also disagreed with the ruling that fixed plea agreements may be modified, pointing to language in section (l) that holds the statute “does not prohibit the finding of waiver of the right to sentence modification for any other reason” not included “as part of the plea agreement.”
“In particular, the trial court lacked the authority to modify Rodriguez’s sentence from work release not because of a ‘waive(r) to the right of sentence modification … as part of a plea agreement,’” Rucker wrote. “Instead, the trial court lacked such authority for a wholly different reason – or in the language of the statute, ‘for any other reason’ – namely: because of the bargain Rodriguez struck with the State of Indiana that his sentence would be served with a specific entity.”
“In essence, it does not appear the Legislature intended to repeal long-standing statutory authority or to overrule long-standing judicial precedent by the enactment of (section (l)),” Rucker wrote, echoing the arguments put forth by supporters of SB 64.
The Senate Corrections and Criminal Law Committee is currently considering SB 64, while the Indiana Supreme Court will hear arguments in Stafford on Jan. 25.
Juvenile — Right to Be Present
R.R. v. State of Indiana
A divided panel of the Indiana Court of Appeals has upheld additional delinquency adjudications and findings of probation violations against a Lawrence County teen after determining the teen was in procedural default when he failed to appear for his fact-finding hearings. Chief Judge Nancy Vaidik, however, dissented on statutory grounds.
In September 2014, R.R. admitted to being a juvenile delinquent for committing what would be Class 5 misdemeanor criminal mischief if committed by an adult, and he was placed on supervised probation for one year. After his release from the Southwest Indiana Regional Youth Village in June 2016, R.R. was ordered to serve an additional six months of supervised probation.
Then in September 2016, the state alleged R.R. was a delinquent for committing new offenses including auto theft and false informing. The trial court later granted the state’s request to take R.R. into custody, but he remained at large for more than two months and failed to appear at factfinding hearings related to the new allegations against him.
R.R.’s counsel, who was present alongside his mother, objected to holding the hearing without R.R., but the Lawrence Circuit Court allowed the hearing to proceed because R.R.’s whereabouts were unknown. The court then entered true findings on the allegations against R.R. and on violations of his probation.
When R.R. was finally detained in March 2017, he told the trial court he had been hanging out at the Bedford Boys Home, but offered no reason for his failure to appear at the fact-finding hearing. The court then awarded wardship of R.R. to the Department of Correction, and he appealed in R.R. v. State of Indiana, 47A04-1705-JV-944.
R.R. argued on appeal that the trial court violated his constitutional right to be present at the factfinding hearings by holding them in his absence. While the Indiana Court of Appeals agreed that such a constitutional right exists, the majority held that under the circumstances of R.R.’s case, the trial court was justified in holding the hearings without him.
Judge Terry Crone, writing for the majority, noted R.R. was present when the fact-finding hearings were scheduled, yet at the same time was not complying with his probationary requirements. Crone also pointed to his mother’s testimony that R.R. “took off” when she tried to take him to an appointment one week before the hearings, and did not return to his mother’s home during the ensuing week.
Thus, R.R.’s absences from the fact-finding hearings was knowing and voluntary, the majority joined by Judge Paul Mathias found. His absence also constituted a default on a court-ordered obligation to appear, they said.
But Vaidik dissented on the issue of R.R.’s default, writing that Indiana Code section 31-32-5-1 sets out certain factors that must be met for a juvenile to waive constitutional rights. Those factors were not met here, she said, so she would reverse the juvenile court and remand for further proceedings.
“At the end of the day, this is the call of our legislature, and if this is not what they intended (as my colleagues believe), then ‘(a)ny change must … fall to the legislature’s corrective pen,’” Vaidik wrote, quoting Calvin v. State, 02S03-1709-CR-611 (Ind. Dec. 21, 2017).
Civil Tort — Insurance/Fraud, Bad Faith
Kimberly Earl, Individually and as Personal Representative of the Estate of Jerry Earl v. State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company, and Sarah Smith Vinnedge
A fraud suit against State Farm Insurance brought by one of its insured will continue in trial court after the Indiana Court of Appeals ruled there were genuine issues of material fact precluding the grant of summary judgment to the insurer.
After Jerry Earl was injured in a hit-and-run motorcycle accident, State Farm Mutual Automobile Insurance Company offered to settle the claim for $40,000. Earl and his wife, Kimberly, rejected that offer and instead sued State Farm for uninsured motorist coverage benefits and loss of services, society and companionship.
In response to the Earls’ interrogatories, Sarah Vinnedge, State Farm’s counsel, answered that the couple was covered under an uninsured motorist policy of $250,000. Jerry Earl later died of unrelated causes, and a jury awarded $175,000 to his estate and $75,000 to Kimberly Earl.
After the verdict, State Farm’s counsel divulged information about a Personal Liability Umbrella Policy, which provided an additional $2 million in uninsured motorist coverage. Earl then moved for a modification of the verdict based on the insurer’s failure to produce information about the PLUP policy in discovery, but later withdrew that motion to pursue other remedies.
Meanwhile, State Farm appealed the trial court’s decision to allow evidence of the UM policy limits before the jury, a decision the Indiana Court of Appeals affirmed in 2015. Earl then filed a fraud, bad faith and breach of contract claim against State Farm and Vinnedge, requesting damages and attorney fees.
The defendants moved for summary judgment, which the Jackson Superior Court granted on the grounds that Earl’s claims were impermissible collateral attacks on the UM litigation, and that the claims were unsuccessful. But the Indiana Court of Appeals reversed that decision, with Judge Melissa May writing Earl’s claims were not impermissible collateral attacks.
Specifically, May said the UM litigation was a contract action against State Farm, while the fraud claims against State Farm and Vinnedge sound in common law.
The appellate court also found there was a question of fact as to whether the Earls reasonably relied on the defendant’s representations of their insurance coverage, making summary judgment inappropriate. Further, there is a question of fact as to whether State Farm acted in bad faith, considering the existence of a “fact pattern” that implies State Farm knew about the PLUP coverage as early as 2008.
Thus, summary judgment was improper, and the case of Kimberly S. Earl, Individually and as Personal Representative of the Estate of Jerry L. Early v. State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company, and Sarah Smith Vinnedge, 36A01-1703-CT-542, was remanded for further proceedings.•