7th Circuit Court of Appeals
Civil Tort — Inmate Death/Qualified Immunity
Lucinda Lovett and Michael Lovett, Co-Personal Representatives of the Estate of Daniel J. Martin v. Landon Herbert and Zachary Overton
The 7th Circuit Court of Appeals reversed a grant of judgment in favor of a deceased inmate’s estate, finding two officers who placed the inmate in a cell while he was intoxicated were entitled to qualified immunity.
In December 2013, Daniel Martin was arrested for driving while intoxicated and taken to the Clay County jail. When he arrived at the jail, Martin was booked by Officers Landon Herbert and Zachary Overton and subsequently placed inside a jail cell occupied by another inmate. Only the top bunk was available, as the other inmate required a bottom bunk for medical reasons.
Martin, whose blood-alcohol content was 0.16 percent per his booking paperwork, allegedly told Herbert that he was too drunk to get up to the upper bunk. As shown on surveillance video, shortly after being placed in the cell, Martin climbed onto the upper bunk. About 30 minutes later, he fell while attempting to climb down, hitting his head on a table on the opposite wall, damaging his spinal cord and paralyzing him permanently. He died five months later.
After Martin’s estate sued, the Indiana Southern District Court denied the officers’ qualified immunity claim, when it could not decide whether “their action clearly violated established law.” But the 7th Circuit reversed and remanded that decision with instructions to enter judgement for the officers on the estate’s Fourth Amendment claim in Lucinda Lovett and Michael Lovett, Co-Person Representatives of the Estate of Daniel J. Martin v. Landon Herbert and Zachary Overton, 17-1668.
On appeal, the estate had argued the officers violated Martin’s Fourth Amendment right to “objectively reasonable” treatment by giving a severely intoxicated person access to an upper bunk. The officers, however, contended that only analogous precedent could have put them on notice that their conduct was unreasonable, but no such precedent existed.
Martin’s estate also argued there was a lack appellate jurisdiction because the district court found material factual disputes, but the 7th Circuit concluded it had jurisdiction over the case and could determine whether “providing a severely intoxicated person access to an upper bunk, in a cell where the lower bunk was occupied, violated clearly established law for qualified immunity purposes.”
In its decision, the 7th Circuit noted that because Martin was able to communicate with the officers and move around, his severe intoxication “did not necessarily indicate imminent or ongoing danger, such that giving access to an upper bunk was patently unreasonable.” It also found the specific facts of the case showed numerous events took place between the time Martin was placed in his cell and the time of his fall from the upper bunk, none of which were “obviously foreseeable (such) that the Fourth Amendment’s requirement of reasonable conduct would have given the Officers’ notice that their actions violated that standard.”
The 7th Circuit added that district court cases cited by the estate were found to have “no weight as precedents” and, therefore, could not clearly establish a constitutional right.
“Therefore, even drawing all factual inferences in its favor, the Estate has failed to show that the Officers’ conduct violated clearly established law,” Judge Thomas M. Durkin, sitting by designation from the Northern Illinois District Court, wrote for the panel. “For that reason, the Officers are entitled to qualified immunity.”
Civil Plenary — Discrimination/Americans with Disabilities Act
Mycal L. Ashby v. Warrick County School Corp
A Warrick County woman who uses a wheelchair and was unable to attend her son’s school Christmas concert two years in a row lost her argument of discrimination under the Americans with Disabilities Act after it was determined the concert was not provided by the school corporation.
Mycal Ashby has transverse myelitis, a condition that renders her paralyzed from the chest down. She cannot stand or walk and relies on a motorized wheelchair for mobility. Ashby’s son attended Loge Elementary School in Boonville and participated in an extracurricular choir offered by the school during the 2014 and 2015 school years.
Both years, the choir performed a Christmas concert at the Warrick County Museum, a building with no elevator or ramp for wheelchair accessibility. In 2014, upon arriving for the concert with her husband and son, Ashby realized there was no access and could not enter the building.
The following year, arrangements were made to install an elevator at the museum in time for the 2015 Christmas concert. However, despite the assurances that she had received that she would be able to get in the building, the concert was inaccessible to Ashby as no elevator had been installed.
Ashby, represented by the American Civil Liberties Union of Indiana, filed a federal discrimination suit. She sought compensatory damages for intentional disability discrimination under Title II of the ADA and Section 504 of the Rehabilitation Act, alleging that the Warrick School Corporation had violated both statutes by allowing the choir to perform at a building that was inaccessible to persons with disabilities.
Both parties filed for summary judgment, and the district court ultimately ruled in favor of the school corporation when it found that the concert was not an activity “of” the school corporation. The 7th Circuit Court of Appeals similarly affirmed the district court’s decision in Mycal L. Ashby v. Warrick County School Corp., 18-1371.
Based on an amicus brief filed by the Department of Justice per request, the 7th Circuit found that there was a “loose framework” to work with in making its decision. It looked to a spectrum provided by the Department for its answer, resolving that “the public entity does not engage in a joint endeavor with the private entity, but instead participates in an event of the private entity.”
“Having undertaken such an examination, we agree with our colleague in the district court that there is no dispute about a material issue of fact. It is also clear, even when we construe those facts in the light most favorable to Ms. Ashby, that the event was part of the museum’s own programming,” Judge Kenneth Ripple wrote for the court.
“Here, the district court properly understood the statutory and regulatory command and properly determined that the event, organized, sponsored, and maintained by the private museum, was not subject to the strictures of the statutes,” Ripple continued. “The children of the School Corporation participated solely as the invitees of the museum. Accordingly, the judgment of the district court must be affirmed.”
Civil Tort — Deputy Sexual Assault/Respondeat Superior
Rebecca Zander v. Samuel Orlich, Jr., et al.
The 7th Circuit Court of Appeals has overturned summary judgment for a former Lake County sheriff sued after a local woman alleged a sheriff’s deputy sexually assaulted her while in her home, with the court finding the woman’s respondeat superior claim against the sheriff can proceed. However, the appellate court upheld the grant of summary judgment to former Sheriff John Buncich on the woman’s negligent hiring claim, finding no evidence that the sheriff should have known about the deputy’s misconduct.
Lake County resident Rebecca Zander sued Buncich and Deputy Samuel Orlich after Orlich allegedly entered her home without permission and forced her to perform oral sex. Orlich had been with Zander on Sept. 19, 2013 after receiving a call about domestic violence between her and her husband and transporting Zander to her second home for a “cool-down period.”
According to Zander, Orlich left her second home after dropping her off, and she went into the bathroom. However, when she came back out, she found Orlich standing in her bedroom with no clothes on. She then claims the sheriff’s deputy forced her onto the bed before forcing her to perform sexual acts. Orlich, however, has said the encounter was consensual.
Zander responded by filing claims against Orlich in his individual and official capacities, though the Northern Indiana District Court agreed to dismiss the official capacity claims against the deputy. She also filed state law tort claims against Buncich, alleging he was vicariously liable for the alleged assault under the theory of respondeat superior and that he had negligently hired, trained and retained Orlich.
Magistrate Judge Paul Cherry, however, granted summary judgment to the then-sheriff on both of those claims, finding that because Orlich was not acting within the scope of his employment when he re-entered the home without authorization and allegedly assaulted Zander, his employer could not be held liable. The 7th Circuit Court of Appeals disagreed with that ruling as it related to the respondeat superior claim, finding in Rebecca Zander v. Samuel Orlich, Jr., et al., 17-2792, that “Orlich abused his employer-conferred power when he assaulted Zander.”
“Orlich exploited ‘unique institutional prerogatives of his police employment,’” Judge William Joseph Bauer wrote for the unanimous appellate panel. “Because of this connection, Buncich is not entitled to summary judgment. Whether Orlich’s employment gave rise to the abuse of that power is a question of fact for the jury.”
However, the appellate panel also found “there was no evidence that Buncich should have known that Orlich was likely to assault a member of the public.” Thus, summary judgment for Buncich on the negligent hiring claim was appropriate, Bauer said.
The case was remanded for further proceedings.
Indiana Supreme Court
Certified Question — Fantasy Sports/Right of Publicity Statute
Akeem Daniels, Cameron Stingily, and Nicholas Stoner v. FanDuel, Inc. and DraftKings, Inc.
The Indiana Supreme Court answered a certified question posed by the 7th Circuit Court of Appeals on how Indiana’s right-to-publicity statute affects the fantasy sports industry, finding sites such as DraftKings and FanDuel are shielded by an exception for material with newsworthy value.
Justices ruled in Akeem Daniels, Cameron Stingily, and Nicholas Stoner v. FanDuel, Inc. and DraftKings, Inc., 18S-CQ-134, answering the question of whether online fantasy-sports operators that condition entry on payment, and distribute cash prizes, need the consent of players whose names, pictures, and statistics are used in the contests, in advertising the contests, or both. The 7th Circuit Court requested guidance in March.
Former Indiana University receiver Nick Stoner joined ex-University of Northern Illinois players Akeem Daniels and Cameron Stingily in suing two daily fantasy sports sites. They claimed DraftKings and FanDuel used their names and likenesses without their consent, and they sought damages under Indiana’s right-of-publicity statute.
The athletes alleged Indiana’s law gave them control over the commercial use of their names, but the Indiana Southern District Court disagreed and dismissed their case.
The high court concluded that Indiana’s right of publicity statute contains an exception for material with newsworthy value that includes online fantasy sports operators’ use of college players’ names, pictures, and statistics for online fantasy contests. Justices noted the “considerable weight” of its ultimate decision, prompting its cautiously narrow focus.
“We begin by addressing two arguments advanced by plaintiffs in this case. First, we are not persuaded that the statutory exception for newsworthiness does not apply in the context of commercial use,” Justice Steven David wrote for the court. “The statute itself does prohibit the use of a person’s right of publicity ‘for a commercial purpose.’”
“Second, whether Defendants are media companies or news broadcasters is immaterial in the context of the newsworthiness exception. The plain language of the statute only speaks to the use of a personality’s right of publicity in ‘[m]aterial that has political or newsworthy value,’” David continued. “The statute is silent on whether there are any restrictions on who publishes or uses the material. Conversely, there is a different exception that applies specifically to a ‘news reporting or an entertainment medium.’
“Considering the genesis and evolution of the right of publicity, and presuming the General Assembly was aware of the right of publicity, its origins, and the definitions available from caselaw in this area, we find that the term ‘newsworthy’ was meant to be construed broadly.”
The high court determined that based on arguments presented in the case, the fantasy sports sites’ use of players’ names, images, and statistics in conducting fantasy sports competitions “bears resemblance to the publication of the same information in newspapers and websites across the nation.” Therefore, it would be “strange law that a person would not have a first amendment right to use information that is available to everyone.”
“This information is not stripped of its newsworthy value simply because it is placed behind a paywall or used in the context of a fantasy sports game,” the court wrote. “It is difficult to find that the use of this otherwise publicly available information is somehow drastically different such that it should be placed outside the definition of ‘newsworthy.’”
Regarding the argument of advertisement, the high court deferred making any factual determination to its federal colleagues at the risk of overstepping the bounds of the certified question.
Personal Injury — Indiana Product Liability Act/Misuse
Campbell Hausfeld/Scott Fetzer Company v. Paul Johnson
The Indiana Supreme Court has upheld the grant of summary judgment to a tool manufacturer sued after a man lost his eye while using one of the manufacturer’s products, finding the man’s misuse of the tool in question was the cause of his injuries and was a complete defense to his product liability claim.
The justices unanimously restored the grant of summary judgment to Campbell Hausfeld/Scott Fetzer Company on Paul Johnson’s defective design claim in Campbell Hausfeld/Scott Fetzer Company v. Paul Johnson, 18S-CT-548. The Indiana Court of Appeals had reversed the Porter Superior Court’s grant of partial summary judgment to Campbell Hausfeld, but the justices agreed with the trial court’s decision.
The case began when Johnson purchased a mini air die grinder from Campbell Hausfeld and used it to help a friend do some work on the headlights on a truck. The grinder came with various instructions, including instructions to wear safety glasses, to only use attachments that were rated for a minimum of 25,000 RPM and not to use a cut-off disc mandrel on the grinder without a safety guard. The instructions also warned of the risk of personal injury if the user did not follow the prescribed safety protocols.
Despite those warnings, Johnson used a mandrel to attach a cut-off disc, which was rated lower than 25,000 RPM. Further, he wore only his prescription glasses as he used the grinder. The cut-off disc eventually came apart and struck the left side of Johnson’s face, causing him to lose his left eye.
Johnson sued Campbell Hausfeld, raising failure to warn and defective design claims under the Indiana Products Liability Act. The tool manufacturer moved for summary judgment, which the trial court granted on the defective design claim.
Though the COA found Campbell Hausfeld’s summary judgment motion should have been denied in its entirety, the justices disagreed, finding that misuse is a complete defense to a product liability action, but must be proven.
“Prior to and since the 1995 Amendments, the other two statutory defenses that remain — incurred risk and alteration — have been treated as complete ones,” Justice Steven David wrote, referencing amendments to the IPLA. “… It does not make sense that these two defenses are complete bars, even after the amendments, but that misuse is only a consideration after the amendments. This would violate the doctrine of in pari materia — that statutes relating to the same subject matter should be construed together to produce a ‘harmonious statutory scheme.’”
Here, the misuse defense was proven, David said. He pointed to Johnson’s failure to wear proper safety glasses and use of a cut-off disk without a safety guard and below the minimum RPM rating. Those missteps were the cause of his injuries, David said, and those injuries were not reasonably expected by Campbell Hausfeld.
“We find that while Campbell Hausfeld could have perhaps reasonably expected a user to not use proper eyewear or for a user to attach a cut-off disc without a guard, or for a user to attach something with an improper RPM rating, it was not reasonably expected for a user to disregard the safety instructions in all three of these ways,” he wrote.
The case was remanded for proceedings.
Trust — Declaratory Relief/Propriety of Land Transfers
Brenda Sue Gittings and Marc Richmond Gittings v. William H. Deal
A bitter dispute between stepsiblings — including a woman who was written out of her inheritance of mineral-rich property — has resulted in the Indiana Supreme Court ruling that a decades-old transfer of the land to her stepbrother was improper.
“Sibling squabbles are commonplace and can be mild. But when disagreements arise over property after parents’ deaths, rifts may become serious, with lengthy litigation separating family members. That is the case for stepsiblings Brenda Sue Gittings and William Deal,” Chief Justice Loretta Rush wrote at the opening of a 21-page Spencer County trust decision with potentially multi-million-dollar ramifications for the parties involved.
A unanimous Indiana Supreme Court ruled in Brenda Sue Gittings and Marc Richmond Gittings v. William H. Deal, 18S-TR-231, that transfers of mineral-rich land to William Deal in the 1990s were improper, and he is therefore not entitled to court approval of those transfers. The court also found his stepsister, Brenda Sue Gittings, and her son Marc Gettings’ claims were not tolled by fraudulent concealment, and that their claims are subject to statutes of limitations to the extent they seek affirmative relief, but not to the extent they diminish or defeat Deal’s request for declaratory relief.
The suit arises from trusts established by Brenda Gittings’ father, Nile Richmond, and Deal’s mother, Georgia Richmond, after they married in 1985. Each parent established trusts in their own names that mirrored each other. After Nile died in 1995, Georgia had Brenda sign deeds and assignments that purported to convey her one-half interest in the real property from her father’s trust to Georgia’s. But Georgia had not disclosed that she had removed Brenda, who since had become mother to Marc, as an heir to her established trust.
After Georgia died, Brenda and William each received almost $91,000 apiece from the distribution of the remainder of Niles’ trust, and Marc received $22,710, but Brenda sued after she received no benefit from the property that by 2010 “began producing significant income — hundreds of thousands of dollars annually — from oil and gas leases,” Rush wrote.
While the justices affirmed the Spencer Circuit Court findings that fraudulent concealment had not tolled the statute of limitations, it found the Gittings’ claims are subject to statutory time limits to the extent that they seek affirmative relief, but not to the extent they function as defenses.
Further, Rush wrote for the unanimous court, “We agree with the trial court that (Nile’s) Trust Agreement and (Georgia’s) Trust Agreement did not create a single, implied trust and that Georgia’s amendment of (her) Trust Agreement — removing Brenda and Marc as beneficiaries — did not violate the terms of either trust agreement. But based on our de novo review of the trust terms and Indiana statutes, we disagree with the trial court that the transfers of property … were proper. So (Deal) is not entitled to court approval.”
The Indiana Court of Appeals had previously affirmed the trial court, despite Judge Michael Barnes writing that the panel had “significant concerns” about the conduct of the trustees.
So did the justices, for whom Rush concluded, “Here, the transfer was not defensible on grounds of consent: Georgia had an adverse interest in the transaction, and Brenda lacked material information about her rights when she signed the deeds.
“In sum, the transfers of property … required court authorization and took place without all material facts disclosed to Brenda, a trustee and beneficiary under (Nile’s) Trust Agreement. William is therefore not entitled to a court order approving those transfers.”
The case is remanded to the courthouse in Rockport for proceedings.
Post-Conviction — Murder/Death Penalty
Jeffrey A. Weisheit v. State of Indiana
The Indiana Supreme Court has upheld the denial of post-conviction relief for a convicted child murderer and arsonist sentenced to death, finding that while the man’s counsel did make mistakes, those mistakes did not rise to the Strickland level of deficient performance. However, Chief Justice Loretta Rush dissented and would have allowed the case to proceed to a new penalty phase.
The justices upheld the denial of Jeffrey A. Weisheit’s PCR bid in Jeffrey A. Weisheit v. State of Indiana, 10S00-1507-PC-413, with Justice Geoffrey Slaughter concurring in part and with the judgment and Chief Justice Loretta Rush concurring and dissenting in part. Justice Steven David authored the majority opinion, which was joined in all respects by justices Mark Massa and Christopher Goff.
Weisheit was convicted in 2013 of two counts of murder and one count of Class A felony arson resulting in serious bodily injury after he set fire to his house in 2010 and left his girlfriend Lisa Lynch’s 8- and 5-year-old children — Alyssa and Caleb — inside. Both children died in the fire. Caleb had been bound and gagged.
Weisheit was subsequently sentenced to death, and his convictions and sentence were first upheld on direct appeal in 2015. He then sought post-conviction relief, alleging his trial and appellate counsel were ineffective, but the Clark Circuit Court denied his petition in November 2016.
The Supreme Court heard Weisheit’s case on direct appeal for the second time in September 2017, this time considering the denial of his PCR petition. Specifically, Weisheit pointed to six areas of ineffective assistance of trial counsel: “1) errors during the penalty phase; 2) failures regarding the admissibility of expert testimony; 3) failure to appropriately question jurors; 4) failure to adequately present evidence in support of suppressing pretrial statement; 5) failure to object to opinion testimony about the nature and origin of the fire; and 6) cumulative errors.” Additionally, he claimed his appellate counsel failed to “sufficiently identify objectionable jurors on direct appeal.”
Looking first to Weisheit’s trial counsel, David wrote for the majority that Weisheit’s attorney was not deficient for not making multiple attempts to obtain mental health records from the Indiana Boys School; failing to call certain witnesses; failing to ask certain jurors follow-up questions about the death penalty during voir dire; failing to introduce an officer’s testimony about Weisheit’s lack of response to a Miranda waiver form in order to support a pretrial suppression motion, and; failing to object to the admission of statements from the fire chief and fire marshal. The majority also found Weisheit’s cumulative error claim failed.
Further, though the majority noted Weisheit’s trial counsel could have better prepared a witness and that the trial court erred in excluding an expert witness under Indiana Evidence Rule 702(b), the justices also determined Weisheit failed to demonstrate prejudice.
“Indeed, he has not shown that he would be given a different sentence even if counsel had committed none of the alleged errors in light of the nature of this particular crime — the murder of two small children — and the overwhelming evidence of his guilt,” David wrote.
The majority likewise rejected Weisheit’s argument that his appellate counsel was deficient when he failed to cite to “the clearest expression that Juror 7 would automatically vote for the death penalty” in the appellant’s brief. The justices noted the appellate attorney did cite to Juror 7’s preference for the death penalty, and also noted Juror 7 “was not presented with all the facts at the time the quoted statements were made.”
“Finally, we note that in the post-conviction court’s 81-page order, some of its findings seem to contradict its ultimate conclusions,” David wrote at the end of the 22-page majority opinion. “However, after an exhaustive review of the record and in light of our standard of review that requires us to affirm the post-conviction court unless there’s no way within the law it could have come to the result it did … we believe the post-conviction court came to the right conclusion on all issues.”
Writing separately in a four-page partial concurrence, Slaughter agreed that Weisheit is not entitled to post-conviction relief but said he also believed Weisheit’s trial counsel performed deficiently during the penalty phase. But despite that deficiency, Slaughter said Weisheit failed to show prejudice.
“As we held on direct appeal, the State proved the existence of aggravating circumstances beyond a reasonable doubt, and the jury was entitled to conclude the aggravating circumstances outweighed the mitigating circumstances,” Slaughter wrote. “The fact that trial counsel should have presented some additional mitigating evidence at Weisheit’s penalty phase does not establish a reasonable probability on this record that the outcome would have been different if they had.”
But in a 40-page partial dissent, Chief Justice Rush said she believed Weisheit met his burden on his cumulative-effect claim. While she agreed that Weisheit is not entitled to a new trial, she would have remanded the case for a new penalty phase.
“It is entirely possible that without counsel’s performance deficiencies Weisheit would still have received a death sentence — again, these murders were brutal,” Rush wrote. “But there is also a reasonable probability that he wouldn’t have.
“So the outcome of his penalty phase does not meet the required level of reliability,” she continued. “… Weisheit was thus denied his Sixth Amendment right to effective assistance at the penalty phase — though not at the guilt phase — of trial.”
Specifically, Rush said Weisheit’s counsel was deficient when he failed to ask Dr. Philip Harvey to testify about Weisheit’s mental health; failed to further pursue mental health records from the Boys Schools; and failed with regard to a desired expert, “to point the trial court to the proper foundational requirements and to make an adequate offer of proof.”
“This is not a case where the new evidence presented at the post-conviction proceeding ‘would barely have altered the sentencing profile presented’ at Weisheit’s penalty phase,” the chief wrote. “… Rather, the jurors were denied an accurate picture of Weisheit’s mental health issues and troubled youth. Nor did they encounter any expert testimony about Weisheit’s past adjustment to imprisonment, which might have served as a basis for a sentence less than death.”
“I believe that the majority’s cumulative-effect holding misapplies Strickland and deviates from our standard of review,” Rush wrote. “In my view, Weisheit was denied his Sixth Amendment right to effective assistance of counsel at the penalty phase of trial. And he has carried his burden to show that there is no way within the law that the post-conviction court could have arrived at its cumulative-effect conclusion.
“Though Weisheit’s offenses were horrific and his guilt is clear, he should be afford a penalty phase untainted by constitutional error.”
Indiana Court of Appeals
Criminal — Belated Notice of Appeal
Eran D. Haddock v. State of Indiana
The Indiana Court of Appeals reversed the denial of an inmate’s permission to file a belated notice of appeal when it found he was an eligible defendant under to Post-Conviction Rule 2.
In January 2016, Eran Haddock pleaded guilty in Huntington Superior Court to one count of Level 3 felony dealing in a narcotic drug and received an aggregate 14-year sentence. In exchange for Haddock’s guilty plea, the state agreed to dismiss his second count and informed him of his rights.
Later that year, Haddock filed a pro se petition for post-conviction relief in which he alleged that he had not received effective assistance of trial counsel. Thereafter, on September 29, a deputy public defender filed an appearance on Haddock’s behalf. But, on the same day, that attorney filed a notice in which he indicated that, due to his caseload, he could not currently investigate Haddock’s claims. As a result, the court stayed the post-conviction proceedings.
In April 2018, Haddock, with counsel, filed a petition for permission to file a belated notice of appeal. In the petition, Haddock asserted that his sentence was illegal because the trial court had used an improper aggravator when it sentenced him. He argued the trial court’s finding of fact that Haddock had committed the offense while in the presence of a child was an improper aggravator because that was also an element of the offense to which he had pleaded guilty.
Haddock included as attachments to his petition his plea agreement and the transcripts from the guilty plea and sentencing hearings, including his affidavit, which stated he was previously informed of his rights. However, Haddock stated that his initial trial counsel did not advise him that the waiver of appellate rights did not apply if the judge failed to follow sentencing procedure and guidelines. Haddock was informed of that information two years later with his current counsel, but the trial court denied Haddock’s petition without a hearing.
The appellate court agreed in Eran D. Haddock v. State of Indiana, 18A-CR-1362, finding his failure to timely file a notice of appeal was not due to any fault of his own and that he had been diligent in requesting permission to file the belated notice of appeal.
“Haddock is an ‘eligible defendant’ pursuant to Post-Conviction Rule 2 because he would have had the right to challenge his purportedly illegal sentence in a timely appeal notwithstanding the waiver provision of his plea agreement. Further, the undisputed facts show that Haddock’s failure to file a timely notice of appeal was not due to his own fault and that he was diligent in requesting permission to file a belated notice of appeal,” Judge Edward Najam wrote for the court.
“As such, the trial court erred when it denied his petition to file a belated notice of appeal. We reverse the trial court’s judgment and remand with instructions for the trial court to grant Haddock’s petition for permission to file a belated notice of appeal.”
Civil Plenary — Legal Malpractice/Summary Judgment
Indy Auto Man, LLC v. Keown & Kratz, LLC, and Dustin Stohler
The Indiana Court of Appeals has reversed and remanded summary judgment for an Indianapolis law firm in a legal malpractice case after finding a question of fact as to whether an auto company had a reasonable belief that its attorney was acting as an agent for the law firm.
Yevgeniy Gorin, a principal member of Indy Auto Man, LLC, was the named defendant in two lawsuits and attempted to retain friend and longtime attorney Mario Massillamany to represent him. Massillamany declined, but referred Gorin to Dustin Stohler, whom he knew to be affiliated with the Indianapolis law firm Keown & Kratz, LLC.
The firm and Stohler agreed to a partnership in which Stohler would work on some cases for Keown & Kratz. Stohler was given rent-free office space, Keown & Kratz business cards and letterhead, and a Keown & Kratz email address, among other things.
At some point, the relationship between Stohler and the firm began to sour. Kratz and Keown found that Stohler was tardy, provided pleadings rife with errors, missed deadlines, failed to return calls to clients and often failed to apprise anyone of his whereabouts. They found him to be unprofessional and became concerned that he was abusing alcohol and eventually learned Stohler had accepted an in-house position at a collections firm.
Meanwhile, Stohler failed to respond to discovery within the appropriate timeframe on each of the two IAM cases. In one of those cases, a default judgment and damages award of $60,000 were entered against IAM. Gorin was unsuccessful in making contact with Stohler about the damages and filed a legal malpractice complaint against him and the firm in July 2015. Stohler never appeared, and Keown & Kratz filed for summary judgement claiming it owed IAM no duty of care. Judgment was granted in the firm’s favor in March 2017.
On appeal, IAM argued Keown & Kratz assumed a duty of care because Stohler was acting as the firm’s agent and because Stohler had apparent authority to act as the firm’s agent. Similarly, the appellate court found that although Keown & Kratz argued IAM was not familiar with it or its arrangement with Stohler when IAM retained him, Gorin’s testimony contradicted that he did in fact know of the affiliation, but couldn’t remember when he found out about it.
“In other words, Massillamany believed Stohler worked for the Firm, Wabash College published an advertisement announcing that Stohler worked for the Firm, and the court system was sending mail to the Firm on behalf of Stohler — all third parties who relied on manifestations made by the Firm …,” Judge John Baker wrote.
“At the very least, there is a question of fact as to whether IAM had a reasonable belief that Stohler was acting as the Firm’s agent based on the Firm’s manifestations,” Baker continued. “It is clear that this evidence must be weighed and evaluated by a trier of fact.”
Thus, the grant of summary judgment to Keown & Kratz in Indy Auto Man, LLC v. Keown & Kratz, LLC, and Dustin Stohler, 18A-PL-1154, was reversed and remand for further proceedings.
Civil Tort — Medical Malpractice/Venue Statute Nullified
Indiana University Health Southern Indiana Physicians, Inc., et al. v. Charlene Noel
The Indiana Court of Appeals has held that a statute concerning preferred venue in corporate lawsuits is void because it conflicts with an Indiana Supreme Court-adopted trial rule. The appellate court’s ruling upheld the denial of a change of venue motion in a medical malpractice case based on the statute being a nullity.
Charlene Noel filed a Marion County medical malpractice action against IU Health Southern Indiana Physicians, Inc., Dr. Carlito Sabandal and nurse practitioner Sarah Whiteman, among other defendants, alleging the malpractice that occurred at IU Bedford in Lawrence County. Noel filed the case in Marion County because that’s where IU Health’s registered agent has an address, making Indianapolis the preferred venue under Indiana Trial Rule 75(A)(4). But the defendants moved to transfer the venue to Lawrence County under Indiana Code section 23-0.5-4-12, noting the registered agent’s principal office was in Bedford.
The Marion Superior Court denied the transfer motion, prompting the instant appeal in Indiana University Health Southern Indiana Physicians, Inc., et al. v. Charlene Noel, 18A-CT-1299. In affirming the denial of the motion to transfer venue, the Court of Appeals looked to the Indiana Supreme Court case of American Family Ins. Co v. Ford Motor Co., 857 N.E.2d 971 (2006), which held that Trial Rule 75(A)(4) “establishes preferred venue in the county of the defendant organization’s registered office.”
However, on Jan. 1, I.C. 23-0.5-4-12 took effect, holding that “(t)he address of the agent does not determine venue in an action or a proceeding involving the entity.” On appeal, the defendants and the Defense Trial Counsel of Indiana, acting as amicus, argued that under the new statutory scheme, “(t)he Indiana legislature not only eliminated the legal basis for the Supreme Court’s ruling in American Family, it also affirmatively and unambiguously determined that the location of the resident agent was not a basis for preferred venue.”
But the appellate court disagreed, finding instead that I.C. 23-0.5-4-12 conflicts with Trial Rule 75 and, thus, is a nullity. Judge Robert Altice, writing for the unanimous panel, noted corporations are still required to ‘designate and maintain a registered agent in this state” under I.C. 23-0.5-4-1(a).
“Thus, although the statutes have changed, a corporation still must have a registered agent in Indiana authorized to receive service of process,” Altice wrote. “The address of the corporation’s registered agent more closely comports with the meaning of ‘principal office’ as the term was understood in 1970 than the current statutory definitions of ‘principal office,’ one of which was expressly rejected in American Family.”
“Laws in conflict with rules promulgated by the Court ‘have no further force or effect.’ Further, procedural rules adopted by the Court are regularly interpreted by the Court, and these cases also ‘take precedence over any conflicting statutes,’” Altice continued. “… We hold that I.C. 23-0.5-4-12 conflicts with T.R. 75(A)(4) as interpreted by the Indiana Supreme Court and that the statute is, therefore, a nullity.
“American Family remains controlling law in Indiana,” Altice said. “If the Indiana corporate community is dissatisfied with the Court’s interpretation of the rule, recourse lies with the Indiana Supreme Court Committee on Rules of Practice and Procedure, not the legislature.”
Indiana Tax Court
Tax — Unpaid Sales Tax/Contempt
Sahara Mart, Incorporated v. Indiana Department of State Revenue
The Indiana Tax Court dismissed a case and ordered sanctions when it found a store owner committed perjury and witness tampering by attempting to influence his employees’ testimony in an investigation against him.
In May 2016, after completing an audit, the Indiana Department of State Revenue determined that Bloomington grocery store owner Sahara Mart had underreported its taxable sales during 2013, 2014 and 2015 and failed to remit the proper amount of sales tax to the state. The department ultimately issued Proposed Assessments against Sahara Mart, including penalties and interest, in the amount of $1.5 million.
At deposition, Sahara Mart’s majority owner, Javad Noorihoseini, testified that Sahara Mart had no employees and occasionally paid for the services of independent contractors and consultants. Noorihoseini also testified that 40 percent of the beer and alcohol Sahara Mart purchased annually for resale was never sold because it went bad and had to be destroyed.
A department-led investigation found four individuals who worked for Sahara Mart between 2013 and 2015 who said they were paid per hour worked, mostly in cash. They also said they knew of other workers like them and had never witnessed any destruction of alcohol.
The employees told investigators that after his deposition, Noorihoseini contacted them and attempted to secure their “cooperation” in the event they were contacted by the Department. One affiant said that Noorihoseini offered to pay her $1,000 “to cooperate.”
In May 2018, the Department filed a motion asserting that Sahara Mart and Noorihoseini were “engaged in a fraudulent scheme to avoid paying taxes” and had committed perjury and witness tampering. Sahara Mart did not deny, explain, or excuse the facts underlying the department’s contempt charge, but moved to dismiss the motion on the basis that the department violated Indiana Rule of Evidence 408. Sahara Mart also moved to strike Noorihoseini’s deposition, and strike the affidavits submitted by the department.
The Tax Court denied Sahara Mart’s arguments in Sahara Mart, Incorporated v. Indiana Department of State Revenue, 49T10-1709-TA-17, finding the store “attempted to avoid the charges of perjury and witness tampering merely by making a series of poorly-developed — and ultimately unsuccessful — evidentiary objections.”
First, Sahara Mart contended that the Department violated the Rule 408 by twice referring in its written brief to a settlement conversation that occurred between the parties and by “using [the] settlement conference as a preliminary step to proving witness tampering.”
“This information does not fall within Rule 408’s evidentiary prohibition because the Department provided the references not to prove or disprove the validity of Sahara Mart’s claim, but to inform the Court that it had notified Sahara Mart of its recent discovery activities,” Judge Martha Wentworth wrote.
The Tax Court then denied the motion to strike Noorihoseini’s deposition when it found that neither Sahara Mart nor Noorishoseini moved to suppress the deposition with reasonable promptness or presented argument that there were inaccuracies in the transcribed testimony. The court further declined to strike the affidavits on the basis that their content was irrelevant.
“Noorihoseini testified that one of the affiants, Brooke Henry, was never paid for her services, but she testified that she was paid by Sahara Mart for her services as a full-time nutritional adviser and alcohol purchaser at Sahara Mart for approximately 17 years,” Wentworth continued. “Neither Noorihoseini nor Sahara Mart rebutted this evidence.”
“At the outset of the show cause hearing, Sahara Mart informed the Court that it took the charges against it seriously and that it ‘d[idn’t] come to th[e] courtroom throwing whatever [it] c[ould] at the wall to see what st[uck.]’ But as described throughout this opinion, that is exactly what Sahara Mart did,” Wentworth concluded.
The court thus dismissed the cause with prejudice and ordered Sahara Mart to pay the department’s attorney fees in the amount of $45,000.•