Indiana Court of Appeals
Civil Plenary — Homeowners Association/Breach of Contract
The Village Pines at the Pines of Greenwood Homeowners’ Association, Inc. v. Pines of Greenwood, LLC, and Arbor Homes, LLC
A long-running fight over homeowner association fees and how they were assessed in a Greenwood housing development will return to the trial court to determine damages the HOA is entitled to from a developer and homebuilder that paid no assessments for several years.
The Indiana Court of Appeals affirmed a Johnson Superior Court judgment in favor of The Village Pines at the Pines of Greenwood Homeowners’ Association against the subdivision’s developer and homebuilder. But in a partial reversal, the COA found the trial court had erred by finding the HOA “did not suffer any actual damages because its budget was fully funded every year.”
The appellate panel in The Village Pines at the Pines of Greenwood Homeowners’ Association, Inc. v. Pines of Greenwood, LLC, and Arbor Homes, LLC, 18A-PL-135, reversed that portion of the trial court order and remanded the case for a hearing on damages, finding developer Pines of Greenwood and Arbor Homes “did not properly record the Second Amendment” of the HOA declaration with the Johnson County Recorder’s Office.
That second amendment came after the HOA in 2006 determined future maintenance obligations required increasing future reserve funding. In 2008, Pines and Arbor Homes recorded a second amendment to the declaration that changed procedures for the assessment and collection of annual HOA fees. However, the HOA membership had not agreed to the changes to the declaration as required under the association’s bylaws.
After Pines and Arbor Homes turned the HOA over to homeowners in late 2009, the HOA filed this complaint in 2011 alleging breach of fiduciary duty and breach of contract against Pines and Arbor.
Judge Elaine Brown wrote that Pines and Arbor were in breach, and that under a plain reading of the declaration, they should have been assessed membership dues for the lots they owned at the time.
“After due consideration of the stipulated exhibits, evidence, and testimony presented at trial, and in light of the court’s finding that Pines and Arbor Homes did not pay assessments to the Association from June 2000 to November 2009, we are not persuaded that the HOA did not suffer any damages,” Brown wrote for the panel.
“For these reasons, we affirm the court’s judgment on the breach of fiduciary claim, and because we find that Pines and Arbor Homes did not properly record the Second Amendment, we reverse and remand for a hearing on damages on the breach of contract claim,” the panel concluded.
Civil Tort — Wrongful Termination/Public Policy Exception
Forrest Perkins v. Memorial Hospital of South Bend
A former hospital police officer who wrongly believed he had been subpoenaed to testify at an unemployment hearing and was subsequently fired has lost his appeal of judgment in favor of his former boss, with a majority of the Indiana Court of Appeals finding the officer could not overcome the at-will employment doctrine. But a dissenting judge said the majority’s ruling is bad law.
In Forrest Perkins v. Memorial Hospital of South Bend, 18A-CT-1340, Forrest Perkins was fired from his job as a hospital police officer in June 2015. According to Memorial Hospital of South Bend, Perkins was fired because he repeatedly stole food from the hospital cafeteria, though he had never been disciplined before his termination.
About a month before he was fired, Perkins left his shift at the hospital early to testify at an unemployment benefits appeal for a former hospital co-worker. Perkins believed he had been subpoenaed to testify and that his subpoena would be presented at the hearing, but he never received the subpoena. Meanwhile, Perkins’ supervisors figured out where Perkins had gone by driving to the hearing location and spotting Perkins’ car in the parking lot.
In September 2016, Perkins filed a wrongful termination suit against the hospital, alleging he was fired because he had testified at the benefits hearing. The hospital responded with a summary judgment motion, arguing Perkins was an at-will employee who was terminated for a valid, lawful reason. Though the St. Joseph Superior Court accepted as true the claim that Perkins was fired for testifying, the court nevertheless granted summary judgment to the hospital because it determined Perkins did not qualify for an exception to the at-will doctrine.
A divided Indiana Court of Appeals upheld that judgment, specifically rejecting Perkins’ argument that the public policy exception to the at-will doctrine should apply.
Writing for a majority joined by Judge Elizabeth Tavitas, Judge Robert Altice said Perkins did not have a statutory right to testify at the benefits hearing, nor did he ever receive the subpoena. Those facts distinguish the instant case from Frampton v. Cent. Ind. Gas. Co., 297 N.E.2d 425 (Ind. 1973), in which the public policy exception was found to be applicable.
Instead, Altice and Tavitas likened Perkins’ situation to Baker v. Tremco, Inc., 917 N.E.2d 650 (Ind. 2009), in which an employee mistakenly believed his employer’s competitive bidding practices were illegal and, thus, refused to participate in them.
“Like the employee’s honest belief in Baker, Perkins’s honest belief that he was subpoenaed to testify at an unemployment hearing is ‘not on par with the rights and obligations’ that have been recognized as warranting an exception to the at-will employment doctrine,” Altice wrote for the majority. “Perkins has not provided us with any other compelling reason to warrant judicial expansion of the public policy exception to the at-will employment doctrine.
“Given the limited nature of the recognized exceptions to the at-will employment doctrine, we must therefore conclude that Perkins’s sincere yet mistaken belief that he had been subpoenaed does not fall within the public policy exception,” Altice continued. “The trial court did not err in granting summary judgment in favor of the Hospital.”
But in a dissenting opinion, Judge James Kirsch noted the trial court found the hospital’s reason for Perkins’ termination — theft of cafeteria food — was pretextual.
“Assuming the trial court was correct in finding that Memorial Hospital’s stated reason for termination was false, it has suffered no consequence from its wrongful behavior,” Kirsch wrote. “On the other hand, Officer Perkins testified truthfully and suffered a very significant consequence: he was terminated from his employment.
“Common sense tells us that this is not good law.”
Civil Tort — Negligence/Reversal of Summary Judgment
Paul Michael Wilkes v. Celadon Group, Inc., et al.
A semi-truck driver who was seriously injured after the contents of his trailer fell on him upon opening the door after transport won partial judgment against the trucking company responsible for loading the trailer when an appellate panel found the company owed him a duty of care.
Paul Wilkes, an over-the-road truck driver for Knight Transport, was dispatched in January 2014 to pick up a trailer full of empty reusable containers that Cummins Inc. used to house engine parts.
The “returnables,” empty and lubricated with industrial solvents, were routinely shipped from Celadon’s Columbus facility to another facility in North Carolina. The trailer Wilkes was directed to pick up for transport had been loaded by an employee of Celadon Trucking Services, Inc.
Wilkes didn’t notice anything outstanding about the way the containers were stacked prior to transport. But upon arriving at his location and opening the trailer door, Wilkes was struck by cascading trays that spilled out from the top of one of the stacks. He sustained serious injuries, including a broken neck and brain trauma.
Wilkes sued Cummins and Celadon for negligence, arguing the Celadon employee negligently loaded the trailer. Both companies were granted summary judgment when a trial court concluded neither owed a duty of care to Wilkes.
That decision was partially reversed in Paul Michael Wilkes v. Celadon Group, Inc., et al., 18A-CT-2011, when a panel of the Indiana Court of Appeals concluded Celadon did not demonstrate it owed no duty to Wilkes, and that it failed to demonstrate the absence of a genuine issue of material fact as to the remaining elements of breach of duty or proximate cause.
Celadon asserted Wilkes’ opposition to the award of summary judgment was inadequate for several reasons, including the fact that no evidence was designated that:
Celadon or Cummins assumed responsibility to secure Wilkes’s cargo;
the load had been defectively placed in the trailer;
an experienced truck driver such as Wilkes would have failed to appreciate any alleged defect;
anyone assured Wilkes that the load had been properly secured for him, or;
that Wilkes did not have an opportunity to inspect the load.
Celadon also focused on Wilkes’ duty to care for his own safety, arguing the Federal Motor Carrier Safety Regulations squarely imposed a nondelegable duty of inspection upon Wilkes under 49 C.F.R. § 392.9.
But the appellate panel instead accepted Wilkes’ version of the events, noting the circumstances did not facilitate a realistic opportunity for his inspection of the trailer contemplated by the FMCSRs or common law principles.
“We will not employ either regulations or common law to extinguish all duty on the part of Celadon, who summoned Knight to act in assisting Celadon with its duties as a carrier for Cummins, and who exclusively loaded the freight,” Judge L. Mark Bailey wrote for the panel.
The appellate court further found that Celadon did not show that it was compliant with the industry’s standard of care to block and brace the cargo, and ultimately reversed the award of judgment in favor of Celadon.
However, the panel let stand judgment for Cummins, finding that because Cummins did not have a relationship with Wilkes or any control over the instrumentality that allegedly caused him harm, it did not owe him a duty of care. The COA therefore affirmed summary judgment for Cummins and remanded the case for proceedings in Marion Superior Court.
Ordinance Violation — Relief from Judgment/“Sit-Lie” Ordinance
City of Indianapolis v. Ginger Tichy
A homeless woman challenging an Indianapolis ordinance restricting panhandling must comply with an injunction prohibiting her from violating the local code after the Indiana Court of Appeals reversed a grant of relief from judgment initially entered in her favor.
In May 2017, Ginger Tichy was permanently enjoined from violating Section 431-702 of the Indianapolis Municipal Code, which prohibits pedestrians from soliciting from or talking to a person in a vehicle that is on the road if the pedestrian is standing in a median or is within 50 feet of an intersection. The city subsequently moved to have Tichy found in contempt for allegedly violating the injunction.
Tichy responded by moving for relief from judgment under Indiana Trial Rule 60(B), arguing the injunction was overbroad and “impose(d) a serious burden on Ms. Tichy’s ability to engage in lawful, passive panhandling — an activity vital to her survival … .” Tichy also testified that on windy days she sometimes fell off of road medians but had never been hit by a car.
The Marion Superior Court granted relief to Tichy, finding the local ordinance was pre-empted by Indiana code. But the Indiana Court of Appeals reversed, with Judge Edward Najam writing “(n)othing at all about Tichy’s testimony on her motion for relief from judgment under Trial Rule 60(B)(7) demonstrates exceptional circumstances that were not reasonably foreseeable at the time of the entry of the injunction.”
“Indeed, the circumstances to which she testified at the hearing on her Rule 60(B) motion were the exact same circumstances that were the factual predicate for the injunction in the first place,” Najam wrote. “In effect, then, her motion under Rule 60(B)(7) simply sought to relitigate the merits of the original judgment, which is not an appropriate basis for relief under Trial Rule 60(B).”
The appellate court also found Tichy was not eligible for relief under Rule 60(B)(8), rejecting her argument that her lack of counsel during the original injunction proceedings was a basis for relief. Not being represented by counsel is not an “extraordinary circumstance” considered under the rule, Najam said.
Thus, the court reversed the grant of relief to Tichy, declining to reach the merits of the case because of the error under Rule 60(B). The case is City of Indianapolis v. Ginger Tichy, 18A-OV-2202.
Tichy has also brought a federal suit against Indianapolis Police Chief Bryan Roach in his official capacity, arguing Section 431-702 is unconstitutional. However, Indiana Southern District Magistrate Judge Tim A. Baker granted the chief’s motion to dismiss in March.
Nuisance/Appointment of Receiver
Towne & Terrace Corporation, et al. v. City of Indianapolis
A long-running legal battle over a deteriorating east side Indianapolis housing complex has once again led to legal defeat for the city, with the Indiana Court of Appeals upholding the appointment of a receiver over the city-owned properties.
At issue in Towne & Terrace Corporation, et al. v. City of Indianapolis, 18A-OV-2310, is the Towne & Terrace residential complex located near East 42nd Street and Post Road. Some of the units in the complex have been acquired, while others became the property of the city. The homes owned by the city are vacant and boarded up.
As crime across Indianapolis surged in recent years — especially in the vicinity where Towne & Terrace is located — the city filed a complaint against the residential complex and four members of its board, alleging excessive police runs to the complex for crimes including homicide, rape and child abuse, among several others. The city sought damages, while T&T countersued for maintenance fees.
The Marion Superior Court granted summary judgment to T&T on the city’s complaint and partial summary judgment on the counterclaim, and the Indiana Court of Appeals affirmed in July 2018.
Meanwhile, as the summary judgment motions were pending, the city moved in September 2017 to appoint a receiver over T&T because one of the board members, Walter Timmons, had died. According to the city, Timmons and his wife Jacqueline had been the only directors serving on the board, so appointing a receiver would protect the city and “the rights of all property owners and … assure the people living at T&T that basic services will be performed.”
In response, T&T said two new board members had been elected after Walters’ death. The complex also filed its own petition for a receiver, alleging Indianapolis “had not paid ‘maintenance fees, assessments, late charges, interest and attorney fees.’”
The Marion Superior Court granted both receivership motions without holding a hearing, finding that “(t)he entire complex of building in Town (sic) [&] Terrace is in a state of disrepair” and noting that the complex’s remaining residents “live in fear.”
Both parties cross-appealed, and T&T argued the trial court erred in granting the city’s receiver petition. The Indiana Court of Appeals agreed, with Judge Edward Najam writing that the city failed to comply with the requirements of the Unsafe Building Law, Indiana Code section 36-7-9-4(c)(2018).
Specifically, Najam noted the city did not issue an order requiring T&T to take action under Section 5 of the Unsafe Building Law, nor did it initiate a civil action under Section 17. Additionally, a hearing was never held.
“In any event, the trial court did not find that the common areas of Towne & Terrace are ‘unsafe premises’ as defined by Indiana Code Section 36-7-9-4(c),” Najam wrote, noting T&T owns only the common areas. “There is simply no factual basis for the appointment of a receiver over T&T pursuant to the UBL, and we reverse the trial court’s appointment of a receiver on that ground.”
Likewise, the COA also reversed the grant of the city’s receivership motion under Indiana Code section 32-30-5-1(7), finding “no evidence in the record to show that the condition of the common areas warrants the appointment of a receiver.”
But the appellate court upheld the grant of T&T’s motion for a receiver over the city’s properties. The court determined the city failed to make a cogent argument that the trial court lacked authority to appoint a receiver over a political subdivision, and that the city waived its argument that the appointment of a receiver would violate separation of powers.
“Waiver notwithstanding, our Supreme Court has held that Article 3, Section 1 (of the Indiana Constitution) ‘relates solely to the state government and officers charged with duties under one of the separate departments of the state, and not to municipal governments and officers,’” Najam wrote. “… Accordingly, the City cannot prevail on this claim.”
Finally, the appellate court rejected the city’s insufficient evidence argument.
The complex is in the same general area as the derelict Oak Tree Apartments, for which the Indianapolis City-County Council in April appropriated $1.3 million to demolish.
Civil Tort — Disclosure of STD Test Results
“F.B.C.”, a Pseudonym v. MDWISE, INC., d/b/a MDWISE, MDWISE NETWORK, INC., and MDWISE MARKETPLACE, INC.
A woman fighting for her marriage failed to convince a divided appellate panel that her insurance company ruined her chances of reconciling the relationship when it posted a list of her recent STD testing to its web portal.
While attempting to reconcile her marriage, F.B.C. was tested for various sexually transmitted diseases. Her insurer, MDwise, posted the list of the diseases F.B.C. was tested for on its portal, which her husband accessed.
After he read the list, F.B.C. alleges her husband refused to continue reconciliation and proceeded with the pending divorce as a result of MDwise’s posting of the statement. She thus filed a suit against MDwise, claiming disclosure of private facts to a particular public, intrusion and outrage.
The Marion Superior Court granted a motion to dismiss the disclosure and intrusion claims, but not the outrage claim. On appeal, F.B.C. argued the trial court erroneously dismissed her claims of disclosure and intrusion, while MDwise challenged the denial of its motion to dismiss F.B.C.’s outrage claim.
A divided Indiana Court of Appeals concluded all three claims should have been dismissed as a matter of law in “F.B.C.”, a Pseudonym v. MDWISE, INC., d/b/a MDWISE, MDWISE NETWORK, INC., and MDWISE MARKETPLACE, INC., 18A-CT-1934.
First, the majority of the appellate court disagreed with F.B.C.’s contention that the disclosure claim was erroneously dismissed, noting the tort of disclosure is not yet recognized in Indiana. Specifically, the majority referenced the 1997 case of Doe v. Methodist Hospital, 690 N.E.2d 681, 693, in which the Indiana Supreme Court declined to adopt disclosure as an actionable claim. It also noted disclosure is a sub-tort of invasion of privacy.
The appellate majority further noted the COA has specifically chosen not to recognize claims of intrusion in which the intrusion only invades a person’s emotional solace, and similarly concluded the trial court did not err in that regard.
However, the appellate court did find error in the trial court’s acceptance of F.B.C.’s outrage claim, finding MDwise’s conduct — posting the list of tested STDs online — was not extreme and outrageous.
“This is not conduct which is utterly intolerable in a civilized community but, rather, routine in today’s technologically-driven society,” Judge Cale Bradford wrote for the divided panel, with Judge Elaine Brown concurring. “Health insurance companies maintain web portals to allow policyholders instant access to their personal medical information, insurance claims, etc., and the current matter is no exception.”
But Judge L. Mark Bailey dissented from the majority in a separate opinion, arguing all three of F.B.C.’s claims were actionable. If given the chance, Bailey contended, the Indiana Supreme Court would recognize the torts of public disclosure of private facts, the sub-tort of disclosure to a particular public and intrusion into emotional solace.
Bailey further argued F.B.C. did not fail to allege facts supporting her outrage claim due to the sensitivity of the issue at hand.
“The majority endorses the alleged conduct as insurance-related and ‘routine in today’s technologically-driven society,’” Bailey opined. “Yet, it is not as though the defendants gave only general information to F.B.C.’s spouse, the primary policyholder — e.g., that ‘lab testing’ had occurred. Rather, it is the specificity of the information that, at this stage, provides adequate support for a claim of Outrage.”
“...Indeed,” he continued, “at the very least, a reasonable fact-finder could conclude that the defendants acted recklessly by sharing such specific information without F.B.C.’s permission… .”
Nonetheless, the case was reversed in part and remanded with instructions to dismiss F.B.C.’s outrage claim.
Miscellaneous — Access to Public Records/Death Investigation
Kenneth Todd Scales v. Warrick County Sheriff’s Department
The Indiana Court of Appeals has reversed a decision denying a father access to public records from the Warrick County Sheriff’s Department concerning his daughter’s mysterious death. A unanimous panel concluded that because the documents the father requested were not investigatory, they could not be withheld under an exception to the Indiana Access to Public Records Act.
An appellate panel swiftly decided Kenneth Todd Scales v. Warrick County Sheriff’s Department, 18A-MI-1590, after hearing oral arguments in the case just eight days earlier on April 9. Before the panel, Kenneth Scales argued for his right to access public records relating to the unresolved disappearance and death of his daughter, Kristy Kelley.
The case began when Kelley went missing in August 2014. Two months later, Kelley’s body was found inside the back of her car at the bottom of a Warrick County lake. Within 24 hours of recovering her body, WCSD had issued an accidental death ruling, closed her case and sealed the investigation files.
Scales was twice denied his request to access documents pertaining to her case. Authorities said that because the documents were part of an investigation, he could not view them. He contested that defense to an appellate panel, asserting the WCSD did not prove the documents fell under the investigatory records exception of APRA and that the Warrick Superior Court erred by granting the sheriff department’s motion for summary judgment.
Specifically, he contended that the term “investigatory records” under APRA is defined as “information compiled in the course of the investigation of a crime.” His daughter’s case was never a criminal investigation, Scales maintained.
The appellate panel agreed, finding the case was clearly not a criminal investigation as provided by several sources that included the WCSD, FBI and Indiana State Police, who all concurred the case was a missing-persons investigation. It likewise found that the quick declaration of Kelley’s death as accidental just 24 hours after her body was found resolutely determined that no criminal circumstances existed in the case.
“Therefore, we can only conclude that the Department did not have the statutory authority to withhold Kelley’s file pursuant to the investigatory records exception,” Judge John Baker wrote for the unanimous panel.
The sheriff’s department contended on appeal that it would make no difference if the case had been a considered a homicide rather than a missing persons investigation. It also contended the sheriff’s department properly exercised its discretion to withhold the reports because then-Warrick County Sheriff Brett Kruse was not prepared to reveal statements procured by law enforcement due to the large scale of the case and the number of individuals who assisted in the investigation.
But the panel rejected the WCSD’s argument that it should be granted broader discretion to withhold the requested documents, relying on three COA cases in which the investigatory records exception applied. Those cases include Heltzel v. Thomas, 516 N.E.2d 103 (Ind. Ct. App. 1987); Althaus v. Evansville Courier Co., 615 N.E.2d 441 (Ind. Ct. App. 1993), and; Lane-El v. Spears, 13 N.E.3d 859 (Ind. Ct. App. 2014).
“… [O]ne key fact distinguishes Kelley’s case from these cases. In Heltzel, the investigative reporter was seeking documents about the condition and location of a body that may have been part of a criminal investigation. In Althaus, a newspaper was denied access to records about a police officer’s suicide even though it was unclear whether there was a criminal investigation after the coroner’s office issued its report. And in Lane-El, the defendant, a convicted sex offender, was denied access to records surrounding the investigation into his crimes because the documents were clearly compiled in the course of a criminal investigation,” the panel wrote.
“In other words, unlike these three cases where there may have been or there was a criminal investigation, Kelley’s case was decisively not a criminal investigation.”
Finding that the circumstances in Scales did not neatly fit within the investigatory records exception analyses laid out in the WCSD’s examples, and that the case did not meet APRA’s precise definition of investigatory records, the appellate panel concluded the trial court erred in its denial of Scales’ request.
It therefore reversed and remanded the case with instructions for judgment to be entered in Scales’ favor, granting the grieving father’s appeal. •