Indiana Court Decisions – March 11-24, 2021

7th Circuit Court of Appeals

March 12

Civil Plenary — Abortion/Parental Notification Law

Planned Parenthood of Indiana and Kentucky Inc. v. Kristina Box

17-2428

A sharply divided 7th Circuit Court of Appeals has upheld for the second time an injunction blocking a 2017 Indiana law requiring parental notification of a minor seeking an abortion. The ruling sets up an almost certain second appeal to the United States Supreme Court, which had already sent this case back for review.

The March 12 opinion in Planned Parenthood of Indiana and Kentucky Inc. v. Kristina Box, 17-2428, lets stand Southern Indiana District Court Senior Judge Sarah Evans Barker’s injunction that blocked Senate Enrolled Act 404 from taking effect in July 2017. That law requires parental notification of minors seeking abortions, but Judge David Hamilton explained, “Only one amendment is at issue in this appeal: a new requirement that a minor’s parents be notified that she is seeking an abortion through the (judicial) bypass procedure — unless the judge finds that such parental notice, as distinct from requiring parental consent, is not in the minor’s best interests.”

The U.S. Supreme Court remanded the case in light of June Medical Services LLC v. Russo, 140 S. Ct. 2103 (2020), which struck down a Louisiana law regulating abortion providers, but without a single majority opinion.

In such instances, Hamilton wrote for the majority joined by Judge Ilana Rovner, “We apply the predominant and most sound approach to the ‘narrowest ground’ rule in Marks v. United States, 430 U.S. 188 (1977), for assessing the precedential force of Supreme Court decisions issued without a majority opinion. The opinions in June Medical show that constitutional standards for state regulations affecting a woman’s right to choose to terminate a pregnancy are not stable, but they have not been changed, at least not yet, in a way that would change the outcome here.”

The composition of the court has changed since June Medical was decided, however, with former 7th Circuit Judge and Notre Dame Law School professor joining the court as a potential deciding vote in favor of abortion restrictions.

In June Medical, a plurality of the court struck down a Louisiana law because it posed “a ‘substantial obstacle’ to women seeking an abortion [and] offers no significant health-related benefits.’” Chief Justice John Roberts in a concurrence found that the substantial obstacle alone was sufficient to find the law unconstitutional under Planned Parenthood of Southeastern Pennsylvania v. Casey, 505 U.S. 833 (1992).

“The Chief Justice’s concurring opinion in June Medical offered the narrowest basis for the judgment in that case, giving stare decisis effect to Whole Woman’s Health v. Hellerstedt, 136 S. Ct. 2292 (2016), on the essentially identical facts in June Medical,” Hamilton wrote. “The Marks rule does not, however, turn everything the concurrence said — including its stated reasons for disagreeing with portions of the plurality opinion — into binding precedent that effectively overruled Whole Woman’s Health. That is not how Marks works. It does not allow dicta in a non-majority opinion to overrule an otherwise binding precedent. We applied those binding standards from Whole Woman’s Health in our earlier decision, and that decision has not been overruled by a majority decision of the Supreme Court. We therefore again affirm the district court’s preliminary injunction barring enforcement of the challenged law pending full review in the district court.”

Dissenting Judge Michael Kanne, who also dissented in the 7th Circuit’s original ruling in this case, said the majority was largely correct in its Marks analysis, but he disagreed with the result. “The majority gives an expanded reading to the Chief Justice’s June Medical concurrence, but viewing that narrow concurring opinion — as written, in conjunction with the plurality’s opinion — compels a different outcome,” Kanne wrote.

“I do not believe that the Supreme Court is directing us to reassess our prior decision ‘in light of’ a case that sheds no light on the matter whatsoever,” he wrote. “Rather, I do believe that June Medical does have a real effect. The Supreme Court knows it, other circuits accept it, and a faithful application of the Marks rule requires us to accept it, too.

“… The other reasons for my prior dissent remain unchanged. The Supreme Court has confirmed that parental-notification requirements are constitutional time and again. And Planned Parenthood has failed to show that requiring mature minors to notify their parents that they intend to have an abortion (where a judge has found that avoiding notification is not in their best interests) constitutes an undue burden,” Kanne wrote. “This court should reverse the district court’s injunction and let Indiana exercise its legislative judgment that a parental-notification law best serves the interests of its citizens.”

“We are disappointed with the Seventh Circuit’s opinion,” Indiana Solicitor General Thomas Fisher said in a statement on behalf of the Indiana Attorney General’s Office. “Our office is considering the best next option as we continue to defend these laws to protect the unborn.”

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March 17

Civil Plenary — Habeas/Remand for Ineffective Assistance of Counsel Proceedings

Jeffery Bridges v. United States of America

20-1623

A man who received an enhanced federal sentence for robbery convictions has been granted a hearing on his ineffective assistance of counsel claim. The 7th Circuit Court of Appeals ruled that under the facts of this case, defense counsel may have been required to anticipate future developments in caselaw.

The case of Jeffery Bridges v. United States of America, 20-1623, began over a two-day period in March 2017 when Jeffery Bridges robbed four Indianapolis retail stores. He later pleaded guilty to all four robberies, stipulating to the application of a career offender enhancement based on two prior robbery convictions in state court and the assumption that his federal Hobbs Act robbery convictions were crimes of violence.

Using the enhancement, Bridges’ sentencing guidelines range was 151 to 188 months. His counsel did not object, and the Indiana Southern District Court ultimately imposed a 140-month sentence.

Bridges had waived his appellate rights, so he later sought habeas relief from his sentence on the grounds of ineffective assistance of counsel. He claimed his counsel should have known Hobbs Act robbery was not a crime of violence under the sentencing guidelines, but the district court denied his petition without holding a hearing. Specifically, the court ruled that even if Hobbs Act robbery was not a crime of violence, there was no binding 7th Circuit precedent on that issue, so his counsel was not required to anticipate a future development in caselaw.

In a 28-page reversal, the 7th Circuit agreed with Bridges that Hobbs Act robbery is not a crime of violence. Judge David Hamilton pointed to the decision in Johnson v. United States, 576 U.S. 591 (2015), which prompted an amendment to the definition of crime of violence.

“Even though Hobbs Act robbery is one of the two most common federal robbery crimes … it does not qualify as ‘robbery’ within the meaning of the new guideline definition of crimes of violence,” Hamilton wrote. “The heart of the problem is that a person may commit Hobbs Act robbery by threatening physical violence against any ‘person or property.’ 18 U.S.C. § 1951(b)(1). The guideline definition is narrower, as it is understood to require a threat of physical violence against a person.”

Every federal appellate court to address the issue has concluded that, under the amended definition, Hobbs Act robbery is not a crime of violence, Hamilton continued. Under the “categorical approach,” the 7th Circuit reached the same conclusion, finding Hobbs Act robbery is not a categorical fit for either robbery or extortion under the amended definition.

“In sum, Hobbs Act robbery criminalizes threats against property, and both generic robbery and guideline extortion reach only threats against persons,” Hamilton wrote for the panel. “Hobbs Act robbery is not a categorical fit, so Bridges was not convicted of a crime of violence as the Guidelines define the phrase. The career offender guideline should not have been applied.”

Turning next to Bridges’ ineffective assistance of counsel argument, the 7th Circuit determined his counsel should have known that Hobbs Act robbery was not a crime of violence at the time of sentencing in 2018. Thus, the appellate panel remanded for an evidentiary hearing on defense counsel’s performance.

“The district court reasoned that the lack of controlling precedent in this circuit defeated Bridges’ Sixth Amendment argument,” Hamilton wrote. “We respectfully disagreed. In some circumstances, defense counsel may be required to anticipate arguments foreshadowed but not yet adopted by existing case law.”

While there was no binding 7th Circuit precedent on the crime-of-violence issue, “case law sufficiently foreshadowed this argument … ,” Hamilton wrote. He continued, “Competent counsel would also know that the categorical approach frequently produces counterintuitive results and has been the subject of much judicial handwringing.”

Thus, the need to investigate whether Bridges could raise a viable categorical approach argument was “crucial,” the panel held, entitling him to an evidentiary hearing. If on remand Bridges can demonstrate that he pleaded guilty on the advice of counsel that fell below constitutional standards, he should not be held to his pleas.

The panel pointed specifically to the 10th Circuit Court of Appeals’ ruling in United States v. O’Connor, 874 F.3d 1147 (10th Cir. 2017), which held that Hobbs Act robbery was not a crime of violence. O’Connor was handed down well before Bridges was sentenced, Hamilton wrote, and “(w)ith modern methods of legal research, it would not have taken long in 2018 for counsel to have found” that decision.

“We cannot say that the record ‘conclusively shows’ that reasonable counsel would not have found this noteworthy published opinion, one of the few at the time of Bridges’ plea that considered the effects” of the amendment, Hamilton wrote. It was also not “conclusive” that defense lawyers in the 7th Circuit were not raising the crime of violence issue in 2018, he said.

“To be clear: we are not holding as a matter of law that counsel was ineffective,” the panel noted. “It is possible that defense counsel had a reasonable sentencing strategy that deserves deference.”

Finally as to the issue of prejudice, the panel held that “(i)f the court had computed the counterfactual guideline range properly, counsel’s possibly deficient performance might well have withstood scrutiny.” However, “(t)he court … mistakenly thought that the 140-month sentence it imposed would have been within the guideline range if the career offender enhancement had not applied.”

“We recognize that this decision further elevates the abstract and artificial categorical approach over the known facts of the case,” Hamilton concluded. “But this method ensures that dramatic sentencing enhancements are applied to only those defendants who clearly fall within their intended scope.”

Indiana Supreme Court

March 16

Criminal — Guilty Plea Waiver/Notice to Trial Courts

Danny Lee Williams v. State of Indiana

21S-CR-113

Although it upheld a man’s six-year executed sentence for drug convictions, the Indiana Supreme Court issued a per curiam opinion reminding trial court about the importance of clarity during guilty-plea sentencing hearings that involve a waiver of a defendant’s right to appeal.

The court granted transfer to Danny Lee Williams v. State of Indiana, 21S-CR-113. Appellant-defendant Danny Williams was sentenced to an aggregate six years on felony charges of dealing in methamphetamine and a narcotic drug.

At his sentencing hearing, Williams was advised that he was waiving his right to appeal his conviction, but the Clark Circuit Court did not clarify that he was also waiving his right to appeal his sentence. The sentencing order, however, specified that Williams was waiving his right to appeal “the sentencing imposed by the Court that is within the range set forth in the agreement.”

But the trial court also appointed a public defender to prepare and file an appeal in Williams’ case, and Williams proceeded with the argument that his sentence was inappropriate. The Indiana Court of Appeals, however, granted a motion to dismiss the appeal because of the waiver.

“In Johnson v. State, 145 N.E.3d 785, 786-87 (Ind. 2020), we held that a plea agreement’s generalized statement that the defendant ‘waives right to appeal,’ without more, was insufficient to establish the knowing and voluntary waiver of the defendant’s right to appeal his sentence,” the Supreme Court noted. “Here, it is not apparent from the plea agreement or the colloquy at the sentencing hearing that Williams knowingly and voluntarily waived the right to appeal his sentence.

“We grant transfer for the sole purpose of reminding trial judges that the plea agreement, guilty plea and sentencing hearing colloquy, and sentencing order must be clear and consistent as to whether a defendant waives only the right to appeal the conviction or the right to appeal the conviction and sentence,” the high court continued. “We affirm the sentence imposed by the trial court, which allows Williams to seek a sentence modification upon his successful completion of a substance abuse treatment program and is not one of the outliers Appellate Rule 7(B) is intended to leaven.”

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March 18

Civil Tort — Education/Dual-Credit Dispute

Michael and Mary Poore, Individually and on Behalf of J.P. v. Indianapolis Public Schools and its Board of Education

21S-CT-105

The Indiana Supreme Court has upheld judgment for Indianapolis Public Schools in a negligence case brought by a student’s parents in a dual-credits dispute, noting that it was affirming the ruling from the Indiana Court of Appeals despite an error in reasoning.

The high court handed down a unanimous per curiam opinion in Michael and Mary Poore, Individually and on Behalf of J.P. v. Indianapolis Public Schools and its Board of Education, 21S-CT-105.

Parents Michael and Mary Poore sued the school district after its refused to pay for their son, J.P., to take an advanced math class at Butler University. The Marion Superior Court entered judgment in favor of IPS on the Poores’ claims alleging breach of contract, negligence and violation of the Indiana Deceptive Consumer Sales Act, and the Indiana Court of Appeals affirmed.

The Poores sought transfer, joined by the state of Indiana as amicus curiae, and the high court granted transfer. In its opinion, the justices noted that all parties agreed the COA’s opinion contained one incorrect statement: that International Baccalaureate, or IB, courses satisfied the requirements of the Dual Credit Statute, Indiana Code § 20-30-10-4.

The Poores also challenged the Court of Appeals’ finding that IPS was not negligent because it complied with its duty to provide J.P. with dual-credit classes.

“The Poores’ negligence claim in trial court was premised on IPS’s duty to provide their son with the classes necessary to graduate with a Core 40 Academic Honors Diploma – a duty the Poores conceded that IPS fulfilled,” the justices held. “They therefore waived the more specific claim that IPS was negligent for failing to satisfy the Dual Credit Statute. … Accordingly, we grant transfer and summarily affirm the Court of Appeals opinion but for Section II, 155 N.E. 3d at 650-651, which we vacate.

“… And while we agree with the Court of Appeals’ conclusion that ‘IPS was not negligent,’ 155 N.E.3d at 655, we vacate its stated reasoning,” the justices held. “Judgment in IPS’s favor is warranted not ‘because [it] did not deny J.P. the benefit of early college credits,’ but because IPS fulfilled the duty the Poores claimed it breached and the Poores otherwise waived their Dual Credit Statute argument.”

Civil Plenary — Insurance/Cyberattack Coverage

G&G Oil Co. of Indiana, Inc. v. Continental Western Insurance Co.

20S-PL-617

Neither an insurer nor a claimant was entitled to summary judgment in a dispute over coverage of a ransomware attack, the Indiana Supreme Court has ruled, sending the case back to the trial court.

For a one-year period beginning June 1, 2017, G&G Oil Co. of Indiana was covered under a commercial insurance policy from Continental Western Insurance Co. The police included “Commercial Crime Coverage,” which provided that Continental would “pay for loss or damage to ‘money’, ‘securities’ and ‘other property’ resulting directly from the use of any computer to fraudulently cause a transfer of that property from inside the ‘premises’ or ‘banking premises’” to a person or place outside those premises.

Thus, after G&G Oil paid nearly $35,000 to release its servers from a ransomware attack in November 2017, it submitted a claim for coverage with Continental. But Continental denied coverage, finding, among other things, that the $35,000 in Bitcoin was voluntarily transferred to the hacker, so the hacker did not “transfer funds directly” from G&G Oil.

G&G Oil responded with a lawsuit in the Marion Superior Court, and both parties moved for summary judgment. The trial court ruled in favor of the insurer, and the Indiana Court of Appeals affirmed.

After granting transfer, the Indiana Supreme Court issued a partial reversal, overturning the judgment in favor of Continental but affirming the denial of G&G Oil’s motion for summary judgment

Focusing on the policy language “fraudulently cause a transfer,” Justice Steven David first wrote for the unanimous court that the phrase was unambiguous. He pointed to various definitions of “fraud” in both dictionaries and caselaw, including “knowing misrepresentation,” “material misrepresentation” and “intentional perversion of truth,” among others.

“Ultimately, we do not think reasonably intelligent policyholders would disagree over this term’s definition,” David wrote. “… The definitions from caselaw and dictionaries are not that far apart, and the term ‘fraudulently cause a transfer’ can be reasonably understood as simply ‘to obtain by trick.’”

Applying that definition to the parties’ cross-motions, the court determined neither party was entitled to summary judgment.

“Resolving all questions and construing this evidence in the light most favorable to Continental … we cannot say with confidence G&G Oil has designated reliable evidence to entitle it to summary judgment,” David wrote for the court. “We do not think every ransomware attack is necessarily fraudulent.

“For example, if no safeguards were put in place, it is possible a hacker could enter a company’s servers unhindered and hold them hostage,” the justice continued. “There would be no trick there. G&G Oil’s belief of a spear-phishing campaign does not entitle it to summary judgment.”

Likewise as to Continental, the justices reversed based on the finding that “there is a question as to whether G&G Oil’s computer systems were obtain by trick.”

“Though little is known about the hack’s initiating event, enough is known to raise a reasonable inference the system could have been obtained by trick. Resolving this question in G&G Oil’s favor precludes summary judgment for Continental,” David wrote.

The high court also grappled with a second question: whether G&G Oil’s loss “resulted directly from the use of a computer.” The justices ultimately answered that question negatively, thus defeating summary judgment for the insurer.

“In order to obtain coverage under this provision, G&G Oil must demonstrate that its loss resulted either ‘immediately or proximately without significant deviation from the use of a computer,’’’ David wrote. “We think that G&G Oil has satisfiedthat definition.

“Analyzing G&G Oil’s actions in this case, its transfer of Bitcoin was nearly the immediate result — without significant deviation — from the use of a computer,” the court concluded. “… Under those circumstances, the ‘voluntary’ payment was not so remote that it broke the causal chain. Therefore, we find that G&G Oil’s losses ‘resulted directly from the use of a computer.’”

The court remanded the case, G&G Oil Co. of Indiana, Inc. v. Continental Western Insurance Co., 20S-PL-617, for further proceedings.

Indiana Court of Appeals

March 11

Civil Plenary — Will Contest/Reversal

In the Matter of the Estate of Dean C. Kreiger, Deceased, Jerry J. Finton, Jr. v. Nancy Wigent, Administrator of the Estate of Dean C. Kreiger, Deceased

20A-PL-1661

A will contest between a man’s daughter and his grandson will continue in Huntington Circuit Court after the Indiana Court of Appeals determined the trial court erred in granting summary judgment to the daughter.

At issue is a 2003 will executed by Dean Kreiger naming his daughter, Nancy Wigent, the personal representative of his estate. After Kreiger’s death in February 2015, the trial court issued an order for unsupervised administration, but Kreiger’s other daughter, Roberta Stellar, requested supervised administration and an accounting of her father’s assets.

Stellar also filed a complaint contesting the will and objecting to its probate, arguing Kreiger was under undue influence and was not of sound mind when the will was executed. She requested her father’s medical records from 2002 until his death, but Wigent refused. Stellar moved to compel discovery, and while that motion was pending her son, Jerry Finton Jr., was substituted as a party after Stellar’s death.

Like his mother, Finton moved for an accounting, asked the trial court to rule on the objection to unsupervised administration and sought payment for attorney fees and expenses. The court ultimately denied the accounting and payments but granted supervised administration of the estate.

Wigent eventually responded to discovery, but the medical releases only applied to Kreiger’s treatment before Jan. 16, 2003, the date the will was executed. Also, she stated in interrogatories that her father had never been diagnosed with dementia, Alzheimer’s disease or diminished mental capacity.

Finton responded with a motion for rule to show cause and a motion to remove Wigent as administrator, arguing that he time limitation on the medical releases went against the trial court’s orders and that her statement that Kreiger did not have dementia or Alzheimer’s was “demonstrably false.” The trial court denied those motions.

Wigent then moved for summary judgment, and Finton on the same day filed a motion for relief pursuant to Indiana Trial Rule 56(F). He argued his aunt had not provided the proper medical release until December 2019 — one month before her summary judgment motion — and that he had not yet received all of Kreiger’s medical records. He also pointed to evidence that Kreiger as early as 2000 did not recognize Finton or Stellar, was repeating himself and often contradicted himself.

The trial court did not address Finton’s motion under Rule 56(F) but granted summary judgment to Wigent. She was also awarded summary judgment on his request for attorney fees.

Finton appealed, and the Indiana Court of Appeals reversed in In the Matter of the Estate of Dean C. Kreiger, Deceased, Jerry J. Finton, Jr. v. Nancy Wigent, Administrator of the Estate of Dean C. Kreiger, Deceased, 20A-PL-1661. Writing for a unanimous appellate panel, Court of Appeals Judge Elizabeth Tavitas noted that only a week passed between Wigent finally providing the requested medical releases and filing her motion for summary judgment. Further, Finton had not received all of the requested records because of the holidays, the relocation of some providers and the additional time needed to find older records.

“Under these circumstances, we conclude that Finton showed ‘good cause’ for the trial court to grant the motion,” Tavitas wrote. She added that Finton was prejudiced by the trial court’s failure to grant the motion, citing to Erwin v. Roe, 928 N.E.2d 609 (Ind. Ct. App. 2010).

“Finton contested the will based upon alleged undue influence and Kreiger’s alleged unsoundness of mind. Finton accurately argued that the ‘date of onset of [Kreiger’s] mental decline is the key issue in this case,’” Tavitas continued. “… Kreiger’s medical records were essential to determining when Kreiger’s dementia manifested and determining Kreiger’s state of mind when he executed the 2003 will. Because discovery was not complete as a result of Wigent’s delay in providing the medical releases, Finton’s ability to designate evidence in response to Wigent’s motion for summary judgment was hindered here.

“Therefore,” she concluded, “Finton was prejudiced.”

Thus, the COA reversed and remanded with instructions that the trial court either “’refuse the application for judgment or … order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or … make such other order as is just’ pursuant to Trial Rule 56(F).”

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March 17

Civil Plenary — Dorm Mold Class Action/Reversal

Indiana University, by and through its Board of Trustees v. Jaden Thomas, et al., individuals, each on behalf of himself and all others similarly situated

20A-PL-361

Indiana University Bloomington claimed a victory in the legal fight over mold infestation in dorms, convincing the Indiana Court of Appeals to overturn the denial of the school’s summary judgment motion on all tort claims brought by the affected students.

The lawsuit against the university began in October 2018, when several IU Bloomington students filed a tort claim notice on behalf of students suffering “due to their exposure to mold that has infested their residential dormitories at IU Bloomington[,]” including the Foster and McNutt dorms. The plaintiffs brought a class-action complaint for breach and declaratory judgment seeking remediation of the mold problem.

Remediation efforts had already begun at the time the complaint was filed, so some students were relocated from the affected dorms. Also, air filters were placed in Ashton, Wright, Collins and Hillcrest dorms as a precaution, but the filters led to noise complaints.

The university applied more than $7 million in bursar credits to the accounts of the affected students. Thus, in January 2019, IU denied the tort claim notice on the grounds that it had “already expended more than one-point-five times its aggregate statutory liability under the (Indiana Tort Claims Act) in mold-related compensation to students for this event.”

The complaint was later amended to include eight counts alleging breach of contract, breach of implied warranty of habitability, negligence, negligent failure to warn, constructive fraud, negligent infliction of emotional distress, money had and received, and unjust enrichment. After the school lost on a motion to dismiss, the plaintiffs moved to certify four proposed classes, three of which were granted certification: a “moldy dorms” class related to students living in mold-infested dorms, a “noise polluted dorms” class related to the presence of the air filters, and a “tort issues” class related to the three negligence and constructive fraud claims.

Meanwhile, IU moved for partial summary judgment on all but the breach claims, pointing to the $7.7 million it had paid to students. The Monroe Circuit Court denied that motion, finding the money had and received and unjust enrichment claims were not torts. The trial court also found a factual dispute as to whether the ITCA’s liability cap, $5 million, had been met.

The school appealed both the denial of summary judgment and the three class certifications, and the Indiana Court of Appeals reversed on all counts.

Judge Terry Crone, writing for a unanimous appellate panel, first addressed the issue of whether the moldy dorms and noise polluted dorms classes were properly certified.

“…(A)s the University points out, the amended complaint ‘asked for court-ordered remediation[,]’ but the Moldy Dorms and Noise Polluted Dorms Classes claim that the University ‘breached its contract and the implied warranty by conducting remediation,’” Crone wrote. “We agree with the University that this sets up an untenable ‘double bind’: ‘[s]ue and ask for a remedy and if the remedy is implemented then change your claims in the class papers to turn the remedy into a breach.’

“We further agree with the University that we should not condone such ‘gotcha’ tactics; instead, we should ‘encourage our institutions to take steps to swiftly remedy issues like indoor mold growth’ and not ‘disincentivize proactive responses in similar circumstances,’” the judge continued. “In other words, we refuse to perpetuate the adage that no good deed goes unpunished. Accordingly, we reverse the trial court’s certification of the Moldy Dorms and Noise Polluted Dorms Classes.”

Turning next to the issue of the tort claims, the appellate panel pointed to an affidavit from the IU bursar, who said more than $7 million in payments were made to students who were impacted or “potentially” impacted by the mold. The plaintiffs argued the word “potentially” implies a question of fact as to whether that amount satisfied the ITCA cap, but the panel pointed to prior judicial admissions that all class members were “injured” by the mold, even if the injury was not physical.

“Contrary to what the trial court’s order suggests, the ITCA does not require that a claimant prove both the existence and the amount of loss before the claim may be settled by a governmental entity,” Crone wrote for the panel. “… In sum, we hold that the University’s payments to Foster and McNutt residents exceeded its aggregate liability for the Plaintiffs’ tort claims under the ITCA and that the trial court erred in denying its motion for partial summary judgment on those claims.”

In a footnote, Crone wrote that the panel did not address IU’s argument against the certification of the “tort issues” class because it ruled that the school should have been granted summary judgment on the tort claims.

Finally, the COA reversed the finding that the money had and received and unjust enrichment claims were not tort claims, finding instead that those claims were governed by the ITCA.

“The damages, although purely economic, are the consequences of the University’s allegedly tortious conduct,” Crone concluded, remanding for further proceedings in Indiana University, by and through its Board of Trustees v. Jaden Thomas, et al., individuals, each on behalf of himself and all others similarly situated, 20A-PL-361.

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March 19

Civil Plenary — Zoning/Adult Entertainment Business

The Department of Business and Neighborhood Services of the Consolidated City of Indianapolis, Indiana, Consolidated City of Indianapolis and Marion County, Indiana, and Metropolitan Board of Zoning Appeals of Marion County, Division I v. H-Indy, LLC, and HH-Indianapolis, LLC

20A-PL-1443

The city of Indianapolis has lost its appeal in years-long litigation against Hustler Hollywood, which has been trying for more than four years to open a store in the Circle City. The Indiana Court of Appeals upheld a lower court ruling ordering the city to issue permits to the adult entertainment company.

The appellate court also remanded for further proceedings in the Marion Superior Court in The Department of Business and Neighborhood Services of the Consolidated City of Indianapolis, Indiana, Consolidated City of Indianapolis and Marion County, Indiana, and Metropolitan Board of Zoning Appeals of Marion County Division I v. H-Indy, LLC, and HH-Indianapolis, LLC, 20A-PL-1443.

In July 2016, HH-Indianapolis LLC, an affiliate of Beverly Hills-based Hustler Hollywood, entered into a lease agreement to open a retail store in the 5500 block of East 82nd Street in Castleton. The company applied for structural and sign permits with the city’s Department of Business and Neighborhood Services, but upon determining the store would be an adult bookstore, the city informed HH-Indianapolis that it would need to request a zoning variance.

HH-Indianapolis appealed to the Marion County Board of Zoning Appeals, which affirmed. The company then sued in the Indiana Southern District Court, but its motion for preliminary injunction on claims constitutional claims against the city code failed, and the 7th Circuit Court of Appeals affirmed.

Meanwhile, affiliate company H-Indy formed and launched a new concept store for the site, with adult products comprising no more than 10% of its inventory, thus satisfying zoning requirements that defined an adult bookstore as having at least 25% of its inventory dedicated to adult products. However, the Department of Business and Neighborhood Services informed H-Indy that there was a “litigation hold” on all permit requests for the site due to the HH-Indianapolis lawsuit.

H-Indy filed its own lawsuit, this time in state court, alleging the litigation hold had no basis in law. Meanwhile, the federal case moved to the Marion Superior Court on a claim challenging the BZA’s ruling that HH-Indianapolis would have to get a variance.

The cases were consolidated and all parties moved for summary judgment. In July 2020, the trial court reversed the BZA’s holding, ordered the city to issue the requested permits to HH-Indianapolis and ruled that H-Indy’s constitutional and property rights were violated by the litigation hold.

The city appealed, but the Indiana Court of Appeals affirmed.

Writing for a unanimous appellate panel, Judge Terry Crone wrote that the BZA’s decision against HH-Indianapolis was arbitrary, capricious and unsupported by substantial evidence, pointing to documentation submitted to the city by HH-Indianapolis.

“… (T)he BZA found that there was credible evidence that some merchandise was mischaracterized as non-adult to stay under the 25% threshold of adult products,” Crone wrote. “Our review of the record fails to reveal any such evidence. The City argues that the Cincinnati store and the website evidence cast doubt upon the accuracy of HH-Indianapolis’s information, but that evidence is irrelevant to the Indianapolis store.

“Here, the Indianapolis store is in the C-3 zoning district and must operate within its restrictions or face the consequences for any violations,” Crone continued. “There is no evidence to support the notion that the Site will operate in violation of the Code. To assume as much amounts to pure speculation.”

The COA panel also rejected the argument that HH-Indianapolis’ store could be classified as an adult services establishment, defined as a building that “provides a preponderance of services involving specified sexual activities or display of specific anatomical areas.”

Caselaw divides “specified sexual activity” or “specified anatomical areas” into five categories, three of which were at issue on appeal: the sale or display of written, visual or audio media with an emphasis on specified sexual activities or anatomical areas; the presentation of audio or video media with an emphasis on specified sexual activities or anatomical areas for observation by patrons; and live performances by strippers and similar entertainers with an emphasis on specified sexual activities or anatomical areas.

“There is simply no evidence relevant to the Indianapolis store that shows that its proposed use is to provide services involving specified sexual activity or display of specified anatomical areas in any category other than the first,” Crone wrote. “Accordingly, BZA’s findings related to the definition of an adult services establishment are arbitrary, capricious, and unsupported by substantial evidence.”

As for H-Indy, while the trial court did not grant its request for an order of mandate, it correctly ruled that the company’s constitutional and property rights were violated, the COA held.

“The materials designated by H-Indy in support of its summary judgment motion … constitute prima facie evidence that H-Indy had a property interest in the Site,” Crone wrote. “Further, the harm to H-Indy occurred when BNS indicated that it would not process any permit applications; any attempt by H-Indy to submit permit applications would have been futile.

“We conclude that the City has failed to carry its burden to demonstrate that the trial court erred by concluding that H-Indy’s due process rights were violated by an unauthorized litigation hold. Accordingly, we affirm the judgment granting H-Indy declaratory relief.”

March 24

Civil Tort — Pain and Suffering/Admission of Unclaimed Medical Bills

Daniel S. Gladstone v. West Bend Mutual Insurance Company

20A-CT-1499

Evidentiary rulings that led to a $0 jury verdict for a man who was injured in a car crash were upheld by the Indiana Court of Appeals.

The case of Daniel S. Gladstone v. West Bend Mutual Insurance Company, 20A-CT-1499, dates back to Dec. 17, 2016, when Christina Carli was driving east, swerved into Daniel Gladstone’s westbound lane and struck the front of his vehicle in Calumet. Gladstone suffered multiple injuries including a fracture to his right wrist, forcing him to wear a cast and attend physical therapy until March 2017.

Then in October 2018, Gladstone sued Carli for negligence, later amending his complaint to name his insurer, West Bend Mutual Insurance Company. Carli tendered her insurance policy’s limit of $50,000 and was dismissed, so Gladstone proceeded against West Bend.

In June 2020, Gladstone moved to exclude evidence of his medical bills because he was not seeking medical expenses; rather, he sought damages only for pain and suffering. The Lake Superior Court denied his motion, and the bills were admitted into evidence, showing he was billed $14,000 and paid just below $2,000 with insurance payments and discounts.

The maximum Gladstone could have recovered from West Bend was $200,000, but the jury returned a $0 verdict. He appealed, but the Court of Appeals affirmed.

Gladstone’s first argument on appeal was a challenge to the admission of his medical bills. In upholding the trial court’s decision to allow that evidence, Chief Judge Cale Bradford declined to adopt Gladstone’s proposed bright-line rule that medical bills are never relevant to the question of pain and suffering.

“Common sense and experience dictate that a more serious injury generally brings with it greater medical expenses as well as greater pain and suffering,” Bradford wrote, referencing similar holdings in other states.

“Having declined Gladstone’s invitation to adopt a bright-line rule, we conclude that West Bend has cleared the low bar for establishing the relevance of Gladstone’s medical bills in this case,” the chief judge wrote. “If the bills are low, as Gladstone apparently considers them to be, then they tend to establish that he has not experienced pain and suffering from his injuries, and that is all that Evidence Rule 401 requires. … If, in the estimation of one of the parties, the amount of the medical bills does not accurately reflect the amount of pain and suffering, that party is free to counter it with other evidence and argument, as Gladstone did in this case.”

Also, the COA held, the probative value of the medical bills in this case was not substantially outweighed by a danger of unfair prejudice. Gladstone’s trial strategy — convincing the jury that his bills were not an accurate reflection of his pain and suffering — was fully developed, but the jury did not credit his evidence, the panel held.

“While it is, of course, possible to imagine a case in which we might conclude that a trial court’s admission of medical expenses was an abuse of discretion,” Bradford wrote, “this is not one of those cases.”

In a footnote, the panel added that “because Gladstone cannot establish that the jury concluded that he was entitled to no recovery for his pain and suffering, any error the trial court might have committed in this regard can only be considered harmless. … The jury heard evidence that Gladstone had already received $50,000.00 from Carli, so it is entirely possible that the jury did, in fact, conclude that Gladstone was entitled to recover for his pain and suffering but that he had already been fully compensated for it.”

Gladstone raised two other evidentiary arguments on appeal, claiming he was entitled to a new trial because the trial court erroneously admitted evidence regarding settlement negotiations, and because the admission of his medical bills improperly contained insurance payments in violation of Indiana’s collateral source statute. The appellate court, however, determined both arguments were waived.

As for the evidence of settlement negotiations, “At no point did Gladstone request either an admonition or a mistrial, instead suggesting the remedy of being able to treat (Steven) Hines as a hostile witness going forward, which remedy was approved by the trial court.” Hines was the West Bend claims specialist who discussed the settlement negotiations at trial.

And as for the evidence of insurance payments in his medical bills, “Gladstone only objected to this evidence on relevance grounds and did not mention the collateral source statute.”

The case received interest from both the plaintiff and defense bar. The Indiana Trial Lawyers Association filed an amicus brief in support of Gladstone while Defense Trial Counsel of Indiana filed an amicus brief in support of West Bend.•