7th Circuit Court of Appeals
Civil Tort — Attorney Fees/Social Security Disability
Staci Harrington v. Nancy A. Berryhill and Andrew A. Banks v. Nancy A. Berryhill
Attorneys who successfully represented two clients seeking Social Security disability benefits won’t get paid, the 7th Circuit Court of Appeals ruled, because their indigent clients owed debts to the federal treasury.
Ruling jointly on two Indiana cases posing the same question, the appellate panel affirmed district court rulings that withheld attorney fees for the de la Torre Law Office LLC. The cases are Staci Harrington v. Nancy A. Berryhill, 17-3179, and Andrew Banks v. Nancy A. Berryhill, 17-3194.
The firm represented Banks and Harrington beginning in 2014, who were both initially denied benefits but who prevailed on judicial review of Social Security’s administrative decision. The firm then was awarded $11,001 in fees in Banks’ case and $11,851 in Harrington’s, as provided by the Equal Access to Justice Act.
But when Social Security submitted payment vouchers to the Treasury Department, it claimed the awards of fees as a payment intercept or offset allowed by the Debt Collection Improvement Act of 1996 (“DCIA”), 31 U.S.C. § 3716. Banks had been delinquent on child support in Allen County, and Harrington had an outstanding debt to the Department of Education that exceeded the sum of her attorney fees. The award of legal fees instead was applied toward those debts.
Both plaintiffs appealed, asking the 7th Circuit “to do what the district courts would not do: compel the government to reverse Treasury’s administrative offsets, reinstate their prior debts, and pay their lawyers.” But the panel declined.
Judge Michael S. Kanne wrote for the panel that found the district courts properly awarded attorney fees, but didn’t wade into broader questions the cases pose.
“…(W)e hold that a reduction of a litigant’s prior debts to the government by administrative offset constitutes payment to the prevailing party under EAJA,” Kanne wrote.
The panel declined to exercise ancillary jurisdiction to reach a determination on whether the offset was lawful or constitutional. “A new suit under the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq., is the proper vehicle for this litigation,” it found.
“We stress that our decision today indicates no opinion on the merits of the various legal theories the plaintiffs have proposed to us. These are important questions that deserve their day in court. In particular, we sympathize with the practical effects that administrative offsets have on the ability of indigent petitioners to bring meritorious lawsuits before federal courts,” Kanne wrote. “… Nevertheless, Justice Sotomayor and her colleagues determined that regardless of the policy outcomes, the text of the law clearly required upholding the offsets. They left questions of policy to Congress.
“… Another court sitting under another statutory grant of jurisdiction may determine that some provision of the Constitution or a statute forbids administrative offsets of EAJA awards. But this case is not a suitable vehicle in which to assess those questions, and we will not do so,” the panel concluded.
Civil Tort — Mortgage Foreclosure/Race Discrimination
Mario Sims v. New Penn Financial LLC
The 7th Circuit Court of Appeals affirmed summary judgment for a lender after it found an African-American couple failed to prove they were denied a loan based on racial discrimination under the Equal Credit Opportunity Act.
Mario and Tiffiny Sims, an African-American couple, purchased a home in South Bend from John Tiffany for $185,000 in October 2008. In Dec. 2009, the Bank of New York Mellon notified the Simses that it was foreclosing on the property, as Tiffany had stopped paying his mortgage on the home earlier that year and still owed $126,000.
After four years of fruitless pursuit to assume the mortgage, the Simses acquired a quitclaim deed for the property from Tiffany in 2012. New York Mellon foreclosed on the home in 2013 and nine months later, loan servicer Shellpoint advised the Simses of what information they needed to provide in order to apply to assume the loan.
The Simses alleged that Shellpoint frequently rebuffed their inquiries as to their application’s status over the following months and further insisted Shellpoint personal sometimes hung up on them or sent their calls to voicemail and did not call back.
According to an affidavit prepared by one of Shellpoint’s representatives, however, the Simses never submitted an application that Shellpoint deemed complete enough to warrant review.
Eventually the Simses spoke with Shellpoint employee K’tia Cox, who they believed to be African American and who allegedly told them, “These people, you know how they treat us.”
After several unsuccessful attempts at assuming the loan, the Simses sued Shellpoint under the Equal Credit Opportunity Act, claiming it discriminated against them based on race by delaying their effort to assume Tiffany’s loan.
The district judge granted summary judgment to Shellpoint, finding that the Simses “probably were not ‘applicants’” under the Act because they were seeking to assume a line of credit, rather than to “exten[d], renew, or continu[e]” one.
The judge further found that Cox’s statement was “ambiguous and lacked foundation” and was thus insufficient to show race discrimination, finding the Simses failed to present evidence of discrimination under either a disparate impact or disparate treatment theory.
“In the end, the ‘dearth of evidence from the Simses’ precluded them from calling into question Shellpoint’s conduct or conclusion that they did not complete the prerequisites for assuming the loan.”
On appeal, the Simses argued that they presented enough evidence to withstand summary judgment. Specifically, they advanced a disparate treatment theory and asserted that Cox’s uncontroverted statement shows that Shellpoint discriminated against them based on race by delaying the assumption process and requiring them to bring the loan current before assuming it.
In a brief explanation, the 7th Circuit found the district court’s judgement to be correct, noting that “no reasonable jury could find that Shellpoint discriminated against the Simses based on their race” in Mario Sims v. New Penn Financial LLC, 18-1710.
“For their suit to survive summary judgment, the Simses needed to put forth enough evidence of discrimination to establish a dispute of material fact,” the panel wrote in the per curiam opinion. “But their only evidence is Cox’s statement, which is vague and requires too much speculation to conclude that their race motivated Shellpoint to require them to satisfy Tiffany’s outstanding loan payments.”
“Rather, that requirement is consistent with the loan agreement, which conditions assumption on Shellpoint’s determination that its security would not be impaired. Moreover, the Simses do not point to evidence countering the Shellpoint representative’s statement that they never produced a complete application.”
Indiana Supreme Court
Juvenile Delinquency — Attempted Aggravated Battery/Seymour School Threats
B.T.E. v. State of Indiana
The Indiana Supreme Court upheld the juvenile delinquency adjudication of a sophomore who was found to have plotted to shoot up and blow up Seymour High School during the 2015-2016 school year.
B.T.E. was adjudicated as a delinquent for what would have been Level 3 felony attempted aggravated battery for a plot hatched in his sophomore year that he intended to carry out during his senior year, on April 20, 2018 — the anniversary of the 1999 Columbine High School massacre.
In the fall of 2015, B.T.E. and fellow student M.V. began planning an attack on the school, specifically targeting two of their peers, J.R. and G.M. The two students frequently discussed their plans via Facebook, and B.T.E. drew a diagram of one of his classrooms, specifically pointing out J.R.’s seat.
The Jackson Superior Court eventually entered true findings for conspiracy to commit aggravated battery and attempted aggravated battery. B.T.E. was sentenced to probation until his 18th birthday, with a suspended commitment to the Indiana Department of Correction.
After hearing oral argument in the case in January, the justices affirmed the attempted aggravated battery finding in B.T.E. v. State of Indiana, 36S05-1711-JV-711. Justice Geoffrey Slaughter wrote for the unanimous court that concluded B.T.E. had taken a substantial step toward completion of the underlying offense.
The court reached its conclusion by weighing five factors: whether B.T.E.’s acts strongly corroborate his criminal intent; the severity of the charged crime; the proximity to the underlying crime; the examples listed in the Model Penal Code; and whether the defendant’s multiple acts, viewed together, indicate he attempted a crime.
“B.T.E. did more here than simply think evil thoughts,” Slaughter wrote for the court. “What may have begun as mere ruminations about his hatred for J.R. turned into a plot to kill him along with another classmate, and then extended beyond mere planning and preparation. The planning, the solicitations, the bomb research, the drawings depicting the target classroom, and the death note together justify the trial court’s conclusion that B.T.E.’s affirmative conduct amounts to a substantial step toward the commission of aggravated battery. For these reasons, we affirm the trial court’s judgment.”
Justices aligned with the dissenting opinion of Court of Appeals Judge Cale Bradford after the majority of the panel partially reversed B.T.E.’s attempted aggravated battery adjudication, finding that he had not taken a substantial step toward the crime.
Civil Tort — Default Judgment/Excusable Neglect
Cember Wamsley, as Personal Representative of the Estate of Genia Wamsley v. Tree City Village, New Generation Mangement, Inc., and Matthew Joseph
A Greensburg apartment complex and its property manager will no longer be considered in default after the Indiana Supreme Court reinstated a trial court ruling that found excusable neglect justified setting aside a default judgment.
After Matthew Joseph accidentally discharged a firearm in his unit at the Tree City Village Apartment complex and significantly injured his neighbor, Genia Wamsley, Wamsley’s counsel informed the property management company, New Generation Management, Inc., that she intended to sue and asked the property manager to place its insurer on notice. The attorney then began communicating with an insurance specialist, who denied the claim.
Wamsley then sued Joseph, the apartment complex and New Generation, which acknowledged the lawsuit by pointing out a factual error to Wamsley’s counsel. The president of the management company then placed the suit in storage and took no further action, leading to the initial entry of default judgment against the complex and property manager.
The Decatur Superior Court later set aside the default judgment on the grounds of excusable error, but the Court of Appeals reversed and reinstated the default. Judge Paul Mathias wrote in February that the property management president’s explanation – that she thought she had done all she needed to do when she informed Wamsley’s counsel of the factual error in the suit – was unpersuasive.
The Supreme Court, however, disagreed, granting transfer and once again setting aside the default in Cember Wamsley, as Personal Representative of the Estate of Genia Wamsley v. Tree City Village, New Generation Management, Inc., and Matthew Joseph, 18S-CT-502.
“Our deferential standard of review compels us to affirm the trial court,” the justices wrote in a three-page per curiam opinion. “There exists evidence of excusable neglect in this case — although that evidence is indeed exceedingly slight — and Landlords have made the requisite showing under Trial Rule 60(B)(1) or a meritorious defense.”
The case was remanded for further proceedings.
Attorney Discipline — Disbarment—Disobeying Subpoena/Neglecting Cases
In the Matter of Edward R. Hall
A Florida-based attorney who was found to have violated a dozen of Indiana’s professional conduct rules has lost his Indiana law license, effective immediately.
The Indiana Supreme Court disbarred North Fort Myers attorney Edward R. Hall on Oct. 18, more than one year after the Indiana Supreme Court Disciplinary Commission filed a three-count complaint against him in March 2017. Count 1 of the complaint relates to a parcel of land that was once owned by Hall but was later transferred to a land trust in 1995.
Hall’s girlfriend and Indiana legal secretary Laura Hanus was named the beneficiary of the land trust, which became subject to a 2012 tax sale for nonpayment of property taxes. Hall represented the land trust in the subsequent legal proceedings, but his failure to comply with discovery prompted the Lake County auditor to move for sanctions and to disqualify Hall.
Both Hall and Hanus were subpoenaed to appear for a sanctions hearing in September 2014, but Hall falsely told his girlfriend that the hearing would not happen and she did not need to honor the subpoena. However, both parties complied with the subpoena after a magistrate judge called Hall’s law office and spoke with Hanus.
Count 2 against Hall alleges that while representing a manufacturer, known as Client 2, in an action against a seller and a rival, Hall accepted a $9,000 trailer as a retainer, then asked the client to pay an additional $5,0000. When Hall asked the client to pay an additional $5,000 six months later, the client indicated he could not pay, so Hall said he would convert an existing fee agreement to a contingency agreement. However, the agreement was never reduced to writing, so the percentage contemplated for Hall’s fee is unknown.
Meanwhile, Hall began failing to forward discovery requests to Client 2 and stopped responding to the client’s inquiries. He then did not timely inform the client of subsequent sanctions and an order to comply, nor did he inform the client of the dismissal of his suit and the order for the client to pay attorney fees. The defendant-seller sought to place a hold on Client 2’s bank account, but Hall advised the client not to worry.
While the original legal action was still pending, Hall represented Client 2 in a separate legal matter in which he took no action, leading to judgment against the client and another hold on his bank account. Hall lied to Client 2 about his actions in the second case, and the client eventually settled the matter on his own.
Client 2 then sued Hall for malpractice, and a $353,000 judgment was entered against the attorney after he failed to answer or appear for a default hearing. Hall relocated to Florida while the malpractice suit was pending, and he has not made any payments to Client 2 toward that judgment.
Finally, Count 3 alleges a client known as Client 3 hired Hall after another attorney failed to file a suit against a contractor and other defendants in connection with construction defects in the client’s home. Hall falsely told Client 3 that he had filed four cases on his behalf and that the case against the general contractor had gone to arbitration.
When Client 3 discovered Hall’s lies, he submitted a disciplinary grievance in March 2015, prompting Hall to file two suits on Client 3’s behalf. Hall then settled one of those suits without the client’s knowledge and failed to appear at a scheduled meeting with Client 3 related to the second suit. Judgment was ultimately entered in favor of the defendant in the second suit.
In light of all this, Hall was found to have violated 12 Indiana Rules of Professional Conduct, including: Rule 1.2(a), Rule 1.3, Rule 1.4(a)(2), (3) and (4), Rule 1.4(b), Rule 1.5(c), Rule 1.8(a), Rule 3.4(c), Rule 4.4(a), and Rule 8.4(c) and (d).
Finding no mitigating factors but several aggravators — including prior discipline, with three disciplinary actions listed against Hall on the Roll of Attorneys — the justices determined in an Oct. 18 per curiam opinion that disbarment was the appropriate sanction.
“In Count 1, Respondent disobeyed a subpoena and caused Hanus, his girlfriend and legal secretary, to do the same by lying to her, actions that placed both of them in legal peril,” the court wrote. “Respondent significantly neglected his representations of Clients 2 and 3, lied to both of them at multiple junctures, and during the pendency of the disciplinary investigation fabricated an email purportedly sent to Client 3.”
“Respondent’s dishonesty and neglect severely harmed Client 2 and led to a six-figure default judgment against Respondent for legal malpractice,” the court continued.
The justices further noted Hall is already under an order of suspension for failure to fulfill CLE requirements. His disbarment is effective immediately, and the costs of the proceeding are assessed against him.
Indiana Court of Appeals
Juvenile Child in Need of Services — Hearing Deadline
In the Matter of: T.T. and M.M., Children in Need of Services: C.Y. (Mother) v. The Indiana Department of Child Services
The Indiana Court of Appeals reversed two CHINS petitions when it ruled fact-finding hearings must be completed within 120 days of filing, regardless of any act or agreements of the parties involved.
In August 2017, DCS filed petitions alleging C.Y.’s two children, M.M. and T.T., were in need of services after C.Y. was arrested following a domestic disturbance involving M.M.’s father.
The juvenile court began a fact-finding hearing in October 2017 but continued the hearing to November 2017 after both parties consented to an additional 60 days for completion. On the day of the November fact-finding hearing, DCS requested the hearing be continued, which the Tippecanoe Superior Court granted and rescheduled to January 2018.
C.Y. moved to dismiss the proceedings during the January 2018 hearing, arguing that the fact-finding hearing had not been completed within the statutorily mandated time after the filing of the CHINS petitions. Her motion was denied, and the juvenile court found M.M. to be a CHINS, dismissing T.T.’s case.
On appeal, C.Y. contended the juvenile court erred in denying her motion to dismiss pursuant to Indiana Code section 31-34-11-1. The appellate court agreed and reversed the CHINS petition without prejudice in In the Matter of: T.T. and M.M., Children in Need of Services: C.Y. (Mother) v. The Indiana Department of Child Services, 18A-JC-1216.
In its decision, the appellate court noted that in a recent conclusion regarding the statute, it found that “if we were to allow the deadline to be ignored here, trial courts could habitually set these matters outside the time frame and there would be no consequence whatsoever.”
The appellate court rejected DCS’s argument that dismissal was not necessary because it did not believe that Indiana Code section 31-34-11-1 created “a hard and fast deadline.” It noted that both parties agreed that the 120-day deadline for concluding the fact-finding hearing was December 2017.
“… (W)hile subsection (a) provides that the parties may waive the initial 60-day deadline by agreeing to a continuance, subsection (b) does not include any such provision,” Judge Cale Bradford wrote for the court. “This lack of allowance for an additional extension of time indicates that the General Assembly intends to require that a fact-finding hearing must be completed within 120 days of the filing of a CHINS petition regardless of any act or agreements of the parties.”
The appellate court continued that “to allow the parties to agree to dates beyond the maximum 120-day limit would thwart the legislative purpose of timely rehabilitation and reunification of families that are subject to CHINS proceedings.” Thus, the case was remanded with instructions to dismiss the CHINS petitions without prejudice.
Criminal — Nonsupport of a Dependent Child/Right to be Present
Tervarus L. Gary v. State of Indiana
The Indiana Court of Appeals affirmed a father’s sentence for failing to pay child support when it found he failed to meet his burden of proof. However, the court split on whether the defendant had a right to be physically present at his sentencing.
For nearly four years, Tervarus Gary paid nothing toward his child support obligation for his daughter T.R. After being found in contempt in 2015 and 2016 for failure to pay, Gary was ordered into civil commitment to the Elkhart County Correctional Facility with a recommendation that he participate in Elkhart County Community Corrections.
A few months after entering a work release program, Gary was terminated from the program for causing disciplinary issues. By December 2017, his child support arrearage exceeded $8,000.
Gary was charged with Class D felony nonsupport of a dependent child for failing to pay child support between May 1 and August 31, 2014. Gary twice appeared via video conference at trial court hearings and received a two-year sentence minus earned credit time.
On appeal, Gary argued his sentence was inappropriate in light of the nature of the offense and his character. However, the appellate court disagreed in Tervarus L. Gary v. State of Indiana, 18A-CR-1101.
“The trial court has given him the past benefit of participating in work release through community corrections so that he could support his child, but rather than support T.R., he chose to start ‘raising hell’ and was terminated from the program,” Judge Terry Crone wrote for the court.
The appellate court additionally found Gary unable to support his second argument that the trial court erred in allowing him to appear for his sentencing hearing via video conference without first obtaining a written waiver of his right to be present in person.
Despite the trial court’s failure to obtain the written waiver for the sentencing hearing under Indiana Administrative Rule 14(A)(2)(c), the appellate court concluded that “such error did not run afoul of underlying basic due process itself.”
“Although we disapprove of the trial court’s failure to follow proper procedure, we cannot say that Gary’s sentencing via video conference absent a proper written waiver constituted a clearly blatant violation of basic and elementary principles of due process,” Crone continued. “The record establishes that Gary was represented by counsel and had more than an adequate opportunity to be both seen and heard at the sentencing hearing and to present his argument, albeit via video conference.”
In a separate opinion, Judge Rudolph Pyle dissented from the majority on the grounds that the violation of common law and statutory right provides the basis for fundamental error.
“Our supreme court has noted that the right of a defendant to be physically present at sentencing is well settled,” Pyle wrote. Citing Hawkins v. State, 982 N.E.2d 997 (Ind. 2013), Pyle added that a trial court’s “failure to follow such a well-established law is a blatant violation of basic and elementary principles of due process.”
“Unlike the dissent, we will not make the leap from our supreme court’s careful cautioning in Hawkins to the conclusion that all irregularities are per se fundamental errors,” the majority concluded.
Civil Plenary — Insurance/Uninsured Motorist Coverage
Progressive Southeastern Insurance Co. v. Gregory Smith, et al.
A man who won a judgment that he was covered by his auto insurance’s uninsured motorist policy after a crash that left him a quadriplegic lost the ruling in his favor. The Indiana Court of Appeals decision could cost him millions of dollars that a jury awarded in a separate trial.
The appellate panel ruled for Gregory Smith’s insurer in Progressive Southeastern Insurance Co. v. Gregory Smith, et al., 18A-PL-312, in a case in which Smith was a passenger in his own insured truck. According to court records from the underlying litigation, Smith and Nolan Clayton were intoxicated after drinking at an Indianapolis Stacked Pickle bar in February 2016, and the bar called a cab for them. However, as their ride was pulling into the parking lot, Smith and Clayton decided to drive themselves, with Smith asking Clayton to drive his truck. Clayton crashed, permanently disabling Smith.
Smith sued Clayton and his insurer, Allstate, and a Marion County jury in December awarded Smith $35 million.
In the instant case, Smith’s insurer, Progressive, filed a complaint for declaratory judgment, asking Marion Superior Judge Timothy Oakes for a determination that, according to the terms of its insurance policy with Smith, he was not entitled to coverage under the policy’s uninsured-motorist provisions for injuries sustained during an accident while being a passenger in his vehicle.
Oakes granted summary judgment in favor of Smith. “On December 14, 2017, without a hearing, the trial court signed Smith’s proposed findings and summarily granted judgment to him and against Progressive,” appellate Judge Patricia Riley noted. “On January 16, 2018, Progressive filed its motion to correct error, which the trial court denied the following day.”
But the COA panel found the trial court erred in ruling for Smith. The panel noted that he had settled out of court with Nolan’s insurer, Allstate, which tendered its full policy limits to Smith for the damages Clayton caused in the crash.
“(T)he unambiguous language of the policy does not extend UM coverage to Smith’s bodily injuries sustained in an accident caused by his own truck because Smith’s truck is a covered auto as defined by the policy, and thus not included in the uninsured motor vehicle definition which would trigger coverage of the policy,” Riley wrote. “In other words, no vehicle that Smith owns or insures can ever be an ‘uninsured motor vehicle’ for UM coverage purpose.
“(W)e hold that the trial court erred by concluding that Smith is entitled to receive payment from Progressive for his bodily injury under his insurance policy’s UM coverage, where his injury arose from a single-vehicle accident involving his insured vehicle and the driver’s liability insurance covered Smith’s bodily injury damages,” Riley wrote for the panel.
The COA found Smith’s policy unambiguously excluded Smith’s truck from UM coverage and “the trial court incorrectly applied the law to the facts.” The unanimous opinion was joined by Chief Judge Nancy Vaidik and Judge James S. Kirsch.•