7th Circuit Court of Appeals
Civil Plenary-Sex Offender Registry/Right to Travel
Brian Hope, et al. v. Commissioner of Indiana Department of Correction, et al.
A split en banc 7th Circuit Court of Appeals has reversed a decision from an original three-judge panel that ordered the removal of six names from the Indiana sex offender registry, finding that the state’s sex offender registration law doesn’t discriminate based on residency. However, the case was remanded for further consideration of an equal-protection claim.
Judge Amy St. Eve — a member of the original panel who dissented from the January ruling — wrote for the en banc majority Aug. 16 in Brian Hope, et al. v. Commissioner of Indiana Department of Correction, et al., 19-2523. She was joined by Chief Judge Diane Sykes and judges Frank Easterbrook, Michael Kanne, Michael Brennan, Michael Scudder and Thomas Kirsch.
Judge Ilana Rovner penned a partial dissent, which was joined by judges Diane Wood and David Hamilton.
Sex offenders in Indiana are required to register at least once per year in every county where they live, work or study under Indiana’s Sex Offender Registration Act. The law, known as SORA, went into effect in 1994 and was amended in 1996 to require registration by anyone convicted elsewhere of a state offense that was “substantially equivalent” to an Indiana offense requiring registration.
SORA was amended again in 2006, this time to apply to a “person who is required to register as a sex offender in any jurisdiction.” But offenders convicted pre-SORA don’t have to register as such, pursuant to the Indiana Supreme Court’s holding in Wallace v. State, 905 N.E.2d 371 (Ind. 2009).
According to the 7th Circuit, if an offender was under no registration requirement before SORA’s passage, courts have held that imposing a registration requirement in the first instance is impermissibly punitive. But that’s not the case for sex offenders who were previously required to register in another state. For those individuals, being required to register as a sex offender in Indiana isn’t punitive.
“Indiana caselaw thus has the peculiar effect of permitting the State to treat similarly situated offenders differently based solely on whether an offender had an out-of-state registration obligation,” St. Eve wrote.
The case was brought on behalf of six sex offenders living in Indiana who were convicted before SORA.
Brian Hope, Gary Snider, Joseph Standish, Adam Bash, Patrick Rice and Scott Rush challenged the constitutionality of SORA, arguing that it violated their rights to travel under the privileges or immunities clause, their rights to equal protection under the 14th Amendment and Article I’s prohibition on ex post facto laws. The men also argued that absent their out-of-state registration obligations, Indiana’s Constitution would prohibit SORA’s application to them in the Hoosier State.
Indiana Southern District Court Judge Richard Young previously granted summary judgment to Hope and Snider, and their case was consolidated with one brought by Rice, Bash and Rush. The 7th Circuit panel affirmed in January, ordering the removal of the men’s names from the sex offender registry. Rovner authored the January majority opinion, in which she was joined by Wood.
But in its Aug. 16 decision, the en banc majority of the 7th Circuit reversed for the state, holding that SORA doesn’t violate the right to travel because it doesn’t expressly discriminate based on residency. It also held that SORA is not “so punitive either in purpose or effect” as to surmount Indiana’s nonpunitive intent for the law.
“But because the district court did not address whether SORA passes rational basis scrutiny under an equal protection analysis, we remand for consideration of the equal protection claim,” the majority wrote.
In its analysis, the 7th Circuit majority found that while SORA may affect newer residents disproportionately, it doesn’t discriminate based on residency. However, it agreed with the plaintiffs that the right to travel should be understood to go beyond prohibiting only durational-residency requirements that place a waiting period on benefits.
“The dissent takes issue with this feature of SORA but concedes that unlike (Saenz v. Roe, 526 U.S. 489, 500 (1999)) and its predecessors, SORA has neither a durational-residency requirement nor a true, fixed point residency scheme. That distinction is fatal to the plaintiffs’ claim,” St. Eve wrote. “Right to travel violations under the third component of the right exist only when a law expressly differentiates between residents based on their length or timing of residency. SORA does neither.”
The majority also found the dissent’s approach to the issue expands the right to travel to “an unprecedented extent” through a legal analysis that “the Court has rejected repeatedly in the analogous Fourteenth Amendment equal protection context.”
“The Privileges or Immunities Clause of the Fourteenth Amendment simply does not prohibit a state from incidentally burdening travel to or from the state. … Because both old and new Indiana residents are treated equally under SORA and Indiana’s Ex Post Facto Clause, we hold that the law does not violate plaintiffs’ right to travel,” it wrote.
But the majority remanded to the district court for the purpose of addressing whether SORA satisfies rational basis review.
“In doing so, we stress that this review should be undertaken with care and that the district court should thoroughly develop the factual record on this score. Rational basis review favors the State but does not ensure an automatic win,” St. Eve cautioned.
Lastly, the majority held that because SORA is not a punitive statute, it doesn’t violate the federal ex post facto clause. It found the men were unable to carry their heavy burden of proving that SORA is so punitive in effect as to override the Indiana Legislature’s intent to enact a civil law.
Judge Scudder concurred but wrote separately to opine that rather than stopping short of fixing the tension of the 7th Circuit’s caselaw, its Aug. 16 opinion should be used to align with Supreme Court precedent.
“There is no question that the obligations imposed by Indiana’s SORA on the six plaintiffs in this case apply retroactively, and we should use today’s decision to say so,” Scudder wrote.
But Judge Rovner, joined by judges Wood and Hamilton, said she remains convinced that Indiana’s other-jurisdiction provision deprives the plaintiffs of state citizenship on equal terms with other Indiana residents and, in doing so, violates their rights to travel.
“It is thus only their travel — in this case, relocation from another state to Indiana — that renders them subject to a registration obligation in Indiana,” Rovner wrote. “This sets up the very sort of tiered classes of state citizenship that the Supreme Court’s travel jurisprudence forbids.
“… None of the six plaintiffs in this case has done a single thing to distinguish himself from a similarly-situated Indiana offender who, by virtue of the timing of his residency in Indiana, cannot be required to register under Wallace — except relocate (i.e., travel) from another state that had different registration rules. The right to travel, as conceived and applied by the Supreme Court, forbids such inconsistent and discriminatory treatment of Indiana’s citizens,” the dissent continued.
“The express logic, if not the fact-specific holdings, of the Supreme Court’s right-to-travel precedents, call upon us to affirm the district court’s decision to grant the plaintiffs declaratory and injunctive relief on this point.”
Indiana Court of Appeals
Civil Plenary-Unemployment Benefits/CARES Act
Eric Holcomb, in his official capacity as Governor, and Frederick Payne, in his official capacity as Commissioner of Workforce Development v. T.L., J.C., L.C., S.A.S., J.H.S., and Concerned Clergy of Indianapolis
A decision issued Aug. 17 by the Indiana Court of Appeals is allowing the state to again stop the federally enhanced unemployment benefits which Gov. Eric Holcomb had tried to end in June, saying the extra money was hurting the Hoosier economy by encouraging workers to stay out of the job market.
The unanimous appellate panel found the plaintiffs in the lawsuit had not shown a “reasonable likelihood of success at trial” and the Marion Superior Court, which issued the preliminary injunction that prevented the state from opting out of the federal program, had abused its discretion.
However, the decision may have little impact.
The Indiana Department of Workforce Development said the enhanced benefits will be ending Sept. 4, regardless of the court’s ruling. As required by the U.S. Department of Labor, the state has already sent the claimants a 30-day notice that the federal payments will be ending the first Saturday of this month.
The plaintiffs had argued Indiana Code § 22-4-37-1 required the state to participate in the enhanced benefits that were coming through the Coronavirus Aid, Relief, and Economic Security Act program. They pointed to unique language in the statute which requires Indiana to participate, in part, in federal benefits conferred under the provisions of 42 U.S.C. 1101 through 1109.
The Marion Superior Court agreed and issued a preliminary injunction that forced the state to restart the extra federal payments.
But in Eric Holcomb, et al. v. T.L., et al, 21A-PL-1268, the Court of Appeals held the state statute does not require participation in the CARES Act program.
The 16-page ruling notes the CARES Act benefits were conferred under different sections of the United States Code than those enumerated in the Indiana statute. Specifically, CARES Act unemployment benefits are conferred under 15 U.S.C. sections 9021, 9023 and 9025, which are not included in I.C. 22-4-37-1. The sections under 42 U.S.C. that are highlighted in the Indiana statute established the system for the federal treasury to hold and transfer monies to the individual states for use in unemployment programs.
“When the CARES Act benefits were created, Congress chose to use the existing accounting system, that was already in place to direct federal funds to the States for use in the area of unemployment, to efficiently distribute funds for the CARES Act benefits,” Judge James Kirsch wrote for the court. “Utilizing this established accounting system and specifying how funds should be moved around and made available for distribution is entirely different from creating a new federal benefit program, which the CARES Act is.”
The ruling comes more than a month after the appellate court denied the state’s emergency motion to stay the preliminary injunction. That two-page ruling, signed by Chief Judge Cale Bradford, did not provide any commentary to explain the decision.
Indiana had already stopped the flow of federal benefits in mid-June, but to comply with this earlier ruling, the state had to resume distributing the extra payments. The CARES Act programs provided an additional $300 weekly benefit, extended the unemployment payments longer than the traditional 26 weeks and allowed assistance to flow to the self-employed, independent contractors and others who normally do not qualify for such support.
In the Aug. 17 opinion, the Court of Appeals emphasized the federal benefits were always meant to be offered for a limited time and not designed to create long-term changes.
“Congress needed an efficient way to distribute the CARES Act benefits, and such a system was already in place under the statutes enumerated in Indiana Code section 22-4-37-1,” Kirsch wrote. “But utilizing the same system to distribute the CARES Act benefits is not evidence that Congress intended to change or amend the traditional (unemployment insurance) scheme through the CARES Act. The CARES Act is intended to be temporary, provides different benefits to more types of people and for different amounts of time, and serves as a supplement to traditional UI benefits during an unprecedented pandemic.”
Rebecca J. Denman, M.D. v. St. Vincent Medical Group, Inc., St. Vincent Carmel Hospital, Inc.
A trial court will need to recalculate pre- and post-judgment interest in a case in which a doctor was awarded millions in damages after suing a Carmel hospital, the Indiana Court of Appeals has ruled.
On Aug. 18, the appellate court affirmed, remanded and reversed in part in Rebecca J. Denman, M.D. v. St. Vincent Medical Group, Inc., St. Vincent Carmel Hospital, Inc., 20A-PL-1236.
In December 2017, a nurse employed by St. Vincent Carmel Hospital reported that, the prior evening, she had smelled alcohol on the breath of Dr. Rebecca J. Denman while Denman was on call and stopped at the hospital to check on a patient. About 10 days later, Denman’s employer, St. Vincent Medical Group, placed her on leave and required her to submit to an alcohol assessment, which ultimately led to an evaluation and six weeks of treatment.
Denman sued the hospital, nurse and SVMG collectively for, among other things, defamation, fraud, constructive fraud, negligent misrepresentation, tortious interference with an employment relationship and civil conspiracy.
Following the Marion Superior Court’s denial of the defendants’ motions for summary judgment and directed verdict, the jury found in Denman’s favor on all claims except civil conspiracy, awarding her $4.75 million.
After a hearing in May 2020, the trial court on June 19, 2020, issued a consolidated order addressing various pending post-trial motions. The court granted Denman’s request for an award of prejudgment interest, but at a rate of 8% rather than her requested 10%, and awarded her $235,726.04 — 8% on a reduced award of $3.5 million accruing through the date of judgment. But the court denied her request to add that award to the original money judgment, finding that a trial court “can award interest as part of overall judgment” but was not required to do so.
The trial court granted Denman’s motion for an award of prejudgment interest, but tolled accrual of post-judgement interest for several months pursuant to a COVID-19-related Indiana Supreme Court emergency order.
Defendants in the case then filed a motion to correct error or for remittitur, which the trial court granted in part, finding that the fraud/constructive fraud and negligent misrepresentation damages were duplicative.
In a consolidated appeal, the defendants raised three issues: whether the trial court should have granted a directed verdict on Denman’s defamation claim, three reliance-based claims of fraud, constructive fraud and negligent misrepresentation, and her claim of tortious interference with an employment relationship.
The Court of Appeals found no error in the trial court’s handling of the three issues and turned to appellate issues raised by Denman post-trial:
Did the trial court err when it reduced the verdict and judgment against SVMG for fraud, constructive fraud and negligent misrepresentation from $2.25 million to $1 million?
Was Denman entitled to post-judgement interest on the trial court’s award of prejudgment interest and, if so, was the trial court required to amend the original judgment to add the award of prejudgment interest to it?
Did the trial court err when it temporarily suspended the accrual of post-judgment interest pursuant to the emergency order?
The Court of Appeals sided with trial court on the first issue but remanded the second.
“At issue in this appeal is Subsection 7 of the Statute,” Judge Robert Altice wrote, which states: “The court may award prejudgment interest as part of a judgment.”
Denman contended that the trial court, in refusing to amend the judgment as requested, misinterpreted Subsection 7, Altice wrote. She argued that the word “may” in Subsection 7 was intended to attach only to the clause “award prejudgment interest” and not to the latter phrase “as part of a judgment,” such that, while a trial court has discretion as to whether to award prejudgment interest, once it does so, it must add the prejudgment interest award to the judgment, upon which post-judgment interest then accrues.
“We agree with Dr. Denman to the extent that she is entitled to accrue post-judgment interest on her award of prejudgment interest, but disagree that the trial court was required to amend the judgment in the manner she suggests,” Altice wrote. “… We find that the June 18, 2020 award of prejudgment interest, upon which the trial court expressly entered judgment, constituted a ‘judgment for money’ within the meaning of Section 101, such that post-judgment interest automatically began to accrue on that date.”
The COA directed the trial court on remand to recalculate the prejudgment interest award based on the $4.75 million verdict, which award shall accrue post-judgment interest beginning June 19, 2020.
On the final issue brought by Denman, the Court of Appeals reversed the trial court’s remitter of damages, as it found that the Supreme Court’s emergency orders did not toll the accrual of post-judgement interest. It reversed and remanded to the trial court to recalculate post-judgment interest pursuant to statute.
Shortly after judgment was entered, the COVID-19 pandemic prompted the Supreme Court to enter a series of emergency orders. On March 13, 2020, the Supreme Court issued an order granting Marion County’s petition for emergency relief. Among other things, the order stated that “no interest shall be due or charged during the tolled period[,]” beginning March 16, 2020.
The Supreme Court reiterated this same provision 10 days later in a generally applicable order.
On March 30, 2020, the trial court applied the emergency orders to Denman’s case, stating “any post-judgment interest accruing on the final judgment is tolled during the pendency of the judicial emergency as declared by the Indiana Supreme Court, which shall last at least through May 1, 2020.”
“Dr. Denman contests as unconstitutional the trial court’s order tolling the accrual of post-judgment interest,” Altice wrote. “Her argument, as well as the trial court’s ruling, assumes the emergency orders mandated that post-judgment interest be tolled. But the emergency orders cannot reasonably be construed in such a manner.
“… The post-judgment interest statute is substantive rather than procedural, meaning it ‘creates, defines, and regulates rights’ rather than ‘prescrib[ing] the method of enforcing a right or obtaining redress’ for its invasion,” Altice continued “… An appellate court cannot change a rule of substantive law without a case before it.”
Altice continued, “Despite the potential breadth of the term ‘interest’ in the emergency orders, we do not interpret that language to include post-judgment interest. The words ‘tolled period’ are instructive, because post-judgment interest — being automatic and continuous — cannot be tolled. Our conclusion is in keeping with our practice of presuming that each branch of our government acts within their constitutionally prescribed boundaries.”
The Court of Appeals ruled that, in this case, the trial court erred in interpreting the emergency orders to apply to post-judgment interest because doing so would give the emergency orders effect beyond the power constitutionally and statutorily allocated to the courts.
“This seems particularly likely in light of other, less invasive measures available to the Court if it intended to grant temporary post-judgment interest relief, i.e., requiring the deposit of post-judgment interest into clerks’ office or escrow accounts,” Altice wrote.
Permitting grants of prejudgment interest, Altice said, would have cost litigants for a delay they did not cause.
“Post-judgment interest, on the other hand, arises just as automatically during a pandemic as it does any other time — and it will continue to do so until the legislature decides otherwise. For all these reasons, we find that the trial court erred in tolling the accrual of Dr. Denman’s post-judgment interest.”
Small Claims-Fraud/Unlicensed Legal Consultant
Trina M. Spainhower v. Smart & Kessler, LLC (f/k/a Smart Kessler & Lowe, LLC), Smart Kessler Lowe (a/k/a Smart & Kessler), John M. Smart, III, Douglas W. Kessler, and Brian K. Lowe
A Greenwood law firm did not commit fraud when an unlicensed representative consulted with an Indianapolis woman for legal services, the Indiana Court of Appeals has ruled. However, the appellate panel opined that disciplinary grievances filed as a result of the alleged fraud were dismissed too quickly.
On Aug. 24, the COA affirmed the Johnson Circuit Court’s decision in Trina M. Spainhower v. Smart & Kessler, LLC (f/k/a Smart Kessler & Lowe, LLC), Smart Kessler Lowe (a/k/a Smart & Kessler), John M. Smart, III, Douglas W. Kessler, and Brian K. Lowe, 20A-SC-1629.
In late 2013, Trina Spainhower called the firm “seeking … legal representation for a domestic matter” and a receptionist told her “they had an attorney on staff.” The initial consultation required a $100 fee, which Spainhower paid, and the firm issued her a receipt “[f]or Matt Boehning consultation.”
Spainhower met with Boehning for the initial consultation, but about one year later she dismissed the law firm because her case “was not moving forward at all.” Thereafter, she learned “pretty randomly” that Boehning was not actually licensed to practice law.
In 2016, Spainhower contacted the firm about Boehning and spoke with Douglas Kessler. Kessler informed her that the law firm had learned around the summer of 2015 that Boehning had passed the bar exam in 2013 but had not completed “certain course requirements” from law school, so the law firm had terminated him.
Spainhower then wrote a letter stating that the firm had “failed in its due diligence” and sought a refund of $6,640 paid by her mother, as well as a refund of the $100 initial consultation fee. Kessler responded to Spainhower’s letter by stating there would be no refund unless she hired another attorney and executed a release of any and all claims against the firm.
In November 2019, Spainhower initiated a small claims proceeding, arguing at a hearing that she had “… paid the fee for a service I didn’t receive.” But the law firm argued that Spainhower’s fraud claim was instead a claim for legal malpractice that was barred by the two-year statute of limitations, and that the six-year statute of limitations for fraud claims was not applicable.
The trial court sided with the firm, denying Spainhower’s claim on two grounds: that her fraud claim was instead a claim for legal malpractice and, as such, was not timely filed, and that she had failed to meet her burden of proof to show fraud.
While the COA agreed with the trial court that fraud didn’t take place, Judge Edward Najam Jr. wrote that the trial court erred in not making the six-year statute of limitations applicable.
The appellate court found that Spainhower’s claim was not a claim for legal malpractice because the misrepresentation occurred before she met with Boehning and did not occur within an attorney-client relationship.
“The primary and essential factual predicate for a legal malpractice claim is an attorney-client relationship,” Najam wrote. “Thus, we question the premise that a potential client can even establish an attorney-client relationship with an individual engaged in the unauthorized practice of law. But we need not decide that precise question because, here, the fraud alleged in Spainhower’s claim occurred before an attorney-client relationship could have been established with the firm.”
The COA also found that there was no evidence that the firm “had actual knowledge that Boehning was not licensed to practice law when it held Boehning out as an attorney and a member of the firm.”
“This case illustrates the perils of proceeding pro se. Spainhower did not allege constructive fraud, and it would be inappropriate for this Court to decide this appeal under that theory,” Najam wrote. “… (W)e hold that Spainhower stated a claim for actual fraud, which was not barred by the statute of limitations, but that the small claims court did not err when it concluded that she had failed to meet her burden of proof on that claim. Therefore, we affirm the judgment.”
Spainhower’s experience also prompted her to file grievances against the firm’s partners with the Indiana Supreme Court Disciplinary Commission, which dismissed two of the grievances within three days of receipt. The third was dismissed four days after receipt, each because the commission “determined that [they did] not raise a substantial question of misconduct.”
The COA expressed displeasure with that outcome in the Aug. 24 opinion.
“Here, the firm enabled a non-lawyer to engage in the unauthorized practice of law, which was a breach of its obligations under the Rules of Professional Conduct and Rules for Admission and Discipline. As the Rules of Professional Conduct recognize, ‘[t]he legal profession is largely self-governing,’” Najam wrote. “… Thus, a law firm has an affirmative duty to make certain that its members held out to the public as lawyers are, in fact, licensed to practice law and in good standing. It is not too much to expect such due diligence.
“Given these obligations, we think the Commission was too quick to dismiss Spainhower’s grievances without a further inquiry.”
State of Indiana v. Kristine E. Barnett and Michael P. Barnett
While the state failed in its attempt to reinstate criminal charges against a couple who adopted then abandoned a female who they believed was actually an adult, the Indiana Court of Appeals has another option for prosecuting the defendants.
While living in Hamilton County, Michael and Kristine Barnett adopted Natalia in 2010. After their petition for adoption was granted in Hamilton Superior Court, the couple began to believe Natalia, who was born with a form was dwarfism, was older than her date of birth suggested.
The Barnetts then filed a petition in the Marion Superior Court, Probate Division, to have Natalia’s birthyear changed. Based on age estimates provided by a primary care physician and a social worker, the petition was granted and Natalia’s birthyear was switched from 2003 to 1989.
With Natalia’s age changed, the Barnetts moved her first into her own apartment in Hamilton County then into an apartment in Tippecanoe County. The couple paid the first year’s rent and left. Natalia never saw Kristine again and only saw Michael once at a court hearing.
Subsequently, Tippecanoe County Adult Protective Services and the Tippecanoe County Sheriff’s Department conducted their own investigations into the situation. Then in September 2019, the state charged Michael and Kristine each with six counts of neglect of a dependent and two counts of conspiracy to commit neglect of a dependent.
The Tippecanoe Superior Court dismissed the counts of neglect of a dependent against both the Barnetts.
On interlocutory appeal, the appellate court affirmed in State of Indiana v. Kristine E. Barnett and Michael P. Barnett, 20A-CR-1967.
The state argued, in part, that the Tippecanoe Superior Court erred in applying issue preclusion to exclude evidence that Natalia was a minor when the Barnetts adopted her. The state asserted it did not have a full and fair opportunity to litigate her age because it was not a party to the age-change order proceedings.
However, the Court of Appeals noted a Marion County deputy prosecutor did file an appearance in the original age-change case and filed a petition for appointment of a guardian ad litem for Natalia on behalf of Marion County Adult Protective Services. When the petition was denied, MCAPS did not appeal.
Also, when Antwon and Cynthia Mans, a Tippecanoe County couple who befriended Natalia, filed in Marion County Probate Court a combined motion to vacate the probate court’s 2012 age-change order and motion for relief from judgment, the deputy prosecutor did not appear at the hearing on behalf of MCAPS. At the conclusion of the hearing, the probate court determined Natalia’s birthyear would remain 1989.
Consequently, the Court of Appeals determined the Tippecanoe County Prosecutor’s Office had a full and fair opportunity to litigate Natalia’s age through its privy, MCAPS.
But the appellate panel pointed out the state still has options.
“… (O)ur conclusions in the case before us do not prevent the TCPO from pursuing prosecution of the Barnetts for neglect of Natalia under the theory that she was a dependent because of physical disability,” Senior Judge Ezra Friedlander wrote for the court. “Our conclusions prevent the TCPO from litigating Natalia’s age.”•