7th CircuitCourt of Appeals
March 26 (Decided March 25)
Civil Tort — Fair Debt Collection Practices Act/Repossession ‘Breach of Peace’
Nichole L. Richards v. PAR, Inc., and Lawrence Towing, LLC
The 7th Circuit Court of Appeals reversed in favor of an Indianapolis woman who was restrained by law enforcement while her car was being repossessed.
After Nichole Richards defaulted on her car loan, her lender hired PAR, Inc., to repossess the vehicle through its subcontractor, Lawrence Towing. When the towing company arrived on the front lawn of her Indianapolis home to repossess the vehicle, Richards protested and ordered them off her property.
The towers called the police, who then handcuffed Richards and threatened her with arrest, not releasing her until after the vehicle had been towed.
Richards subsequently sued PAR and Lawrence Towing for violating §1692f(6)(A) of the Fair Debt Collection Practices Act, conceding that although she did default on her loan and that the security interest was valid, the defendants lacked a present right to possess the vehicle because Indiana law authorizes nonjudicial repossession only if the repossession “proceeds without breach of the peace.”
The U.S. District Court for the Southern District of Indiana, however, found the claim to be an improper attempt to repackage a state-law violation as a violation of the FDCPA and entered summary judgment for PAR and Lawrence Towing. But the 7th Circuit Court of Appeals reversed in Nichole L. Richards v. PAR, Inc., and Lawrence Towing, LLC, 19-1184.
“Drawing inferences in Richards’s favor, a reasonable jury could conclude that a breach of the peace occurred during the repossession attempt. At that point the towing company no longer had a present right to possession, but its employees took Richards’s Tahoe anyway. The record is factually and legally sufficient to proceed on a claim for violation of § 1692f(6)(A),” Circuit Judge Diane Sykes wrote for the 7th Circuit.
Specifically, the 7th Circuit found Richards’ case similar to Seeger v. AFNI, Inc., 548 F.3d 1107, 1111 (7th Cir. 2008) and Suesz v. Med-1 Sols., Inc., 757 F.3d 636 (7th Cir. 2014) (en banc), noting that a repossession of property without judicial process violates § 1692f(6)(A) unless the property is collateral under an enforceable security interest and the repossessor has a “present right to possession.”
“The statute doesn’t supply its own rule for determining whether a repossessor had a present right to possess the property when it was seized; that question can be answered only by reference to state law. In Indiana a repossessor has a present right to take possession of collateral without judicial process only if he proceeds without a breach of the peace,” the 7th Circuit concluded. “Richards has a sound legal theory and enough evidence to present her § 1692f(6)(A) claim to a jury.”
Civil Plenary — Police Shooting/Summary Judgment
Matthew King v. Hendricks County Commissioner
A father who sued a Hendricks County deputy and others after his mentally ill son was fatally shot during a welfare check did not convince the 7th Circuit Court of Appeals that judgment entered in the defendants’ favor was wrong.
Bradley King, a 29-year-old resident of Hendricks County who suffered from paranoid schizophrenia, was killed by a police officer in November 2016, after two officers responded to a welfare check. Responding to Bradley’s 911 call, deputy Jason Hays returned with another deputy, who both saw Bradley in the backyard, with his hands “awkwardly” in his pockets.
The events that occurred after Bradley revealed he was holding a 10-inch knife are disputed, but they resulted in Bradley being killed by a single bullet fired by Hays. Bradley’s father, Matthew King, disputed the officers’ account and asserted that his son was never violent, even when suffering a psychotic episode, and would not have charged at the police with a knife. But the Southern District Court of Indiana granted summary judgment for Hays and the other defendants, dismissing King’s federal and state claims.
In affirming the district court, the 7th Circuit first found that King’s broad assertion that Bradley did not generally show an inclination toward violence did not negate the evidence that he behaved violently in this instance.
It likewise found that despite King’s claim that Bradley would not have carried a knife in his left hand because he was right-handed, the record evidence suggests that he had a large kitchen knife in his left hand.
“King cannot make anything of the lack of fingerprint evidence: no evidence is no evidence,” Chief Judge Diane Wood wrote for the 7th Circuit. “It is not affirmative evidence that contradicts the officers’ testimony. We have previously warned in criminal cases that ‘successful development of latent prints on firearms is difficult to achieve.’ ‘In reality, very few identifiable latent prints are found on firearms, a fact that has been discussed in both literature and the judicial system.’ The same logic applies to knives used as weapons. And it is far too great a leap to infer from the lack of fingerprints on the knife that the police planted it after the shooting.”
The 7th Circuit further noted that there was no evidence that the officers planted the knife after the fact, leaving the court to conclude that King did not present enough evidence to raise a genuine dispute of fact for trial. Thus, it found summary judgment for Hays on the section 1983 claim was appropriate.
On King’s section 1983 municipal liability claim against the Hendricks County Commissioners, the Sheriff’s Department, and Sheriff Brett Clark, the 7th Circuit found there was no underlying Fourth Amendment violation and therefore summary judgment on that claim was also proper.
Lastly, it concluded that the district court did not err in granting summary judgment to the defendants on Americans with Disabilities Act and Rehabilitation Act claims.
“Bradley’s death at the hands of police officers whom he called for help when he was suffering a mental-health crisis is undoubtedly heartbreaking for his family, as well as a sobering reminder about the difficulties of dealing with the mentally ill. Nonetheless, the record before us does not indicate that Hays was deliberately indifferent to Bradley’s disability or that Hendricks County was deliberately indifferent to the needs of community members suffering from mental illness and failed adequately to train officers in how to handle such persons,” the 7th Circuit concluded. “Finally, there is no evidence that but for alleged discrimination on the basis of his disability, Bradley would still be alive.”
The case is Matthew King v. Hendricks County Commissioner, 19-2119.
Indiana Supreme Court
Civil Tort — Employment/Duty to Testify
Forrest Perkins v. Memorial Hospital of South Bend
Indiana Supreme Court justices split in a dispute involving an employee who was fired after testifying at an unemployment compensation hearing, with the majority reversing in his favor. A dissenting justice would have affirmed, arguing the man didn’t have a reasonable belief of a duty to cooperate with an unissued, non-existent subpoena.
Forrest Perkins, a former police officer at Memorial Hospital South Bend, wrongly believed he had been subpoenaed to testify at an unemployment hearing for a former co-worker and was subsequently fired from his job in 2015. According to the hospital, Perkins was fired because he repeatedly stole food from the hospital cafeteria, though he had never been disciplined before his termination.
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.
Ultimately, the St. Joseph Superior Court accepted as true the claim that Perkins was fired for testifying, but nevertheless granted summary judgment to the hospital after concluding that Perkins did not qualify for an exception to the at-will employment doctrine.
A split Indiana Court of Appeals affirmed, with the majority finding Perkins’ “sincere yet mistaken belief that he had been subpoenaed does not fall within the public policy exception.” A dissenting appellate judge disagreed, arguing that the decision was “not good law.”
Indiana Supreme Court justices likewise split in the case, with a majority reversing in Perkins’ favor in Forrest Perkins v. Memorial Hospital of South Bend, 20S-CT-233. Although it found no “clear statutory expression of a right or a duty,” to appear voluntarily at unemployment hearings without a subpoena’s coercion, the majority agreed with Judge James Kirsch’s dissenting appellate opinion.
“In sum, even absent an explicit statutory protection, in the context of an unemployment hearing, a witness first has a clear duty to cooperate with service of process from the moment he first believes he is being served with a subpoena,” Justice Mark Massa wrote for the majority. “Second, once a witness has been subpoenaed by the hearing officer, he has a duty to appear and testify. And third, once a witness is testifying under oath, he has a duty to answer truthfully and generally cannot refuse to answer questions or leave the hearing to avoid questioning. Since he would be personally responsible for violating any of these duties, the person giving testimony at an unemployment hearing may be protected by the public policy exception to the at-will employment doctrine.”
Additionally, the high court concluded that though Perkins complied with his duty to “cooperate” with service by appearing at the unemployment office, he still could have been compelled to testify without a physical subpoena and was under a duty to testify completely and honestly after taking the stand.
“Viewing the evidence in the light most favorable to Perkins, we can view his decision to attend the unemployment hearing as a reasonable attempt at cooperation with service of process. But we cannot conclude, given the outstanding subpoena request, that Perkins did not face legal jeopardy if he refused to testify once at the hearing,” the majority wrote. “To prevail on summary judgment, Memorial needed to show that Perkins voluntarily chose to testify and that he would not have been immediately compelled to testify if he had refused.”
Dissenting in a separate opinion from the majority’s reversal and remand, Justice Geoffrey Slaughter noted that it’s “disposition is not only wrong but needlessly blurs what had been a clear, bright-line rule.”
“Of course, in both fact and law, there was no subpoena, and thus no duty of any kind arose concerning it — no duty to cooperate, no duty to attend the hearing, no duty to testify at the hearing. I would hold, as a matter of law, that Perkins did not (and could not) have a reasonable belief of a duty to cooperate with an unissued, non-existent subpoena. With no such duty, the public policy exception to Indiana’s employment-at-will doctrine does not apply,” the dissenting judge wrote.
IndianaCourt of Appeals
Juvenile — Probation Violation/Placement in DOC
A.C. v. State of Indiana
In an unsuccessful challenge to a trial court’s authority to send him to the Indiana Department of Correction, a Hendricks County juvenile learned the juvenile justice system gives courts wider latitude because the goal is to rehabilitate the offending youth.
A.C. was given probation and placed in a residential treatment facility for one count of battery by bodily waste, a Class B misdemeanor, which resulted from his spitting in his father’s face during an altercation. Two separate times the state filed motions to modify supervision after A.C. was found to have violated the dispositional order and conditions of his probation.
At the hearing when the second motion to modify was filed, the CEO of the treatment facility said A.C. was a risk to others because he had a “very short fuse” and became verbally and physically aggressive. The CEO said A.C. could not remain at the facility and recommended he be placed in the Department of Correction.
The Hendricks Superior Court awarded wardship of A.C. to the DOC.
A.C. appealed, arguing the juvenile court had no authority to order him committed to the Department of Correction for a probation violation. He asserted that because a portion of his original “sentence” was not suspended, the court cannot revoke probation and send him to prison.
In A.C. v. State of Indiana, 19A-JV-2510, the Indiana Court of Appeals disagreed and affirmed the trial court.
The unanimous panel pointed to the difference between the juvenile and criminal systems. Namely, the juvenile justice system is focused on rehabilitation so the young person does not grow up to become a criminal. Consequently, the juvenile court can choose from several dispositions including probation, outpatient treatment, community service, confinement in a juvenile detention facility and wardship to the DOC.
Citing Bratcher v. State, 999 N.E.2d 864, 873 (Ind. Ct. App. 2013), trans. denied, Senior Judge Ezra Friedlander noted the distinction with the juvenile system is that in the criminal setting, probation is a given as a sanction in lieu of imprisonment.
“Pursuant to the juvenile statutory scheme, probation and wardship to the DOC are just two of several statutory disposition alternatives available to the juvenile court,” he wrote. “(Indiana Code) Section 31-37-19-5(b)(1), under which the court may order supervision of the juvenile by the probation department, does not require a suspended sentence as a prerequisite to the imposition of probation; rather, a term of probation stands alone as a distinct disposition and is treated as any other disposition alternative in the juvenile setting.”
Criminal — Armed Robbery/Motion to Suppress
Tony Bethel Atkins v. State of Indiana
A man charged with armed robbery won a reversal from the Indiana Court of Appeals after the appellate panel found the trial court erred in concluding that he was not in custody when officers searched his backpack and was not entitled to be advised of his rights.
After locating a suspect in a Bloomington armed robbery in which electronics were stolen, officers began questioning Tony Atkins and asked to search his backpack for weapons.
When Atkins complied, the officers found three laptops inside, one of which was later discovered to belong to the man who reported the robbery. As Atkins continued to deny involvement, the officers again asked to see Atkins’ laptops, and he continued to ask why the officers needed to go through his personal items.
Atkins was eventually arrested and charged with Level 1 felony burglary, Level 2 felony robbery and Level 3 felony armed robbery. He filed a motion to suppress, arguing that his rights under Pirtle v. State, 263 Ind. 16, 323 N.E.2d 634 (1975), and Miranda v. Arizona, 384 U.S. 436, 444, 86 S. Ct. 1602 (1966), were violated. He also asserted that he did not feel free to leave during the encounter with police, was not given Miranda warnings, was not informed that he had the right to refuse to consent to a search of his property and was not informed that he had a right to an attorney.
A now-retired Monroe Circuit Court judge initially granted Atkins’ motion to suppress, but a second judge later granted the state’s motion to correct error and reversed. The trial court concluded Atkins’ consent to search the backpack was not the result of duress or coercion and found no violation of Pirtle or Miranda.
Atkins filed this interlocutory appeal, contesting the grant of the state’s motion to correct error and denial of his motion to suppress the results of the search of his backpack, as well as his statements to the officers. In determining whether Atkins was in custody at that time, the Indiana Court of Appeals concluded that he was, reversing and remanding in Tony Bethel Atkins v. State of Indiana, 19A-CR-00951.
“There is no bright line rule to determine whether Atkins was merely subjected to a Terry stop or whether he was in custody. The State argues that Atkins was not in custody until he was handcuffed. Atkins argues that, at some point, the interaction went from a Terry stop to a custodial situation. After considering the totality of the circumstances and the factors identified by our Supreme Court in State v. Ruiz, 123 N.E.3d 675, 679 (Ind. 2019) and Meredith v. State, 906 N.E.2d 867, 873-74 (Ind. 2009), we conclude that Atkins was in custody,” Judge Elizabeth Tavitas wrote for the appellate court.
It further found that because Atkins did not receive a Pirtle warning before the search of the laptop in his backpack, was entitled to one and did not explicitly waive his right to counsel prior to the search, the trial court erred by granting the state’s motion and reversing the earlier grant of Atkins’ motion to suppress the evidence obtained as a result of the search.
“Earlier in the interaction, when Detective (Jacob) Hunter asked if Atkins had any weapons in his backpack, Detective Hunter said, ‘You can say no, request a warrant, or ask for a lawyer if you want.’ Atkins, however, was not in custody at that time. Even if this statement applies to the later search of Atkins’ backpack, Detective Hunter’s statement fails to explicitly inform Atkins that he was entitled to the presence and advice of counsel prior to consenting to the search, and the statement fails to comply with the Pirtle advisement requirement for a person in custody,” the appellate court wrote.
Lastly, it determined that because he was in custody, Atkins was entitled to an advisement of his Miranda rights prior to the police questioning him. The appellate court therefore concluded the trial court erred by granting the state’s motion to correct error and reversing the earlier grant of Atkins’ motion to suppress his statements to the police.
Juvenile Paternity — De Facto Custody
In the Paternity of M.S., L.S. and S.S. Maria Arriaga v. State of Indiana as Next Friend; Gabriela Ivonne De Landa, (Mother), and Samuel Salazar, (Father)
A split Indiana Court of Appeals has reversed for the reconsideration of a father’s granted motion to modify custody after finding that a woman who raised one of his three children was, in fact, the child’s de facto custodian.
In the case of In the Paternity of M.S., L.S. and S.S. Maria Arriaga v. State of Indiana as Next Friend; Gabriela Ivonne De Landa, (Mother), and Samuel Salazar, (Father), 19A-JP-1595, a dispute arose between Maria Arriaga and Samuel Salazar regarding one of his children, who was raised by Arriaga after the child’s mother, Gabriela De Landa, left her with Arriaga when the child was 6 months old.
Several years later, Salazar filed a petition to modify the existing custody and child support order regarding his children with De Landa, alleging that the child raised by Arriaga had been in Arriaga’s care “for the past year” but that the child should be in the care of a parent instead of a third party.
A trial court entered a provisional order giving custody of two of the three children to Salazar but continued placement of the third child with Arriaga, who then filed a motion to intervene and alleged that she was the child’s de facto custodian.
The trial court later denied Arriaga’s motion when it determined she was not a de facto custodian and ultimately granted Salazar’s motion to modify custody, issuing an order awarding custody of all three children to him. Although a split Indiana Court of Appeals panel concluded that the trial court did not abuse its discretion by denying Arriaga’s motion to reopen the evidence, the panel found the trial court did err when it found Arriaga was not a de facto custodian and misinterpreted Indiana Code Section 31-9-2-35.5.
“The trial court’s finding would mean that, after a child custody proceeding has been commenced, the required minimum period for a de facto custodian determination is forever tolled and cannot be restarted. Under that interpretation, once a child is subject to an initial custody determination, the child could never have a de facto custodian. We hold that the six-month required minimum period under Indiana Code Section 31-9-2-35.5 can be established either before a child custody proceeding has been commenced or after such an initial proceeding has been concluded,” Judge Elizabeth Tavitas wrote for the appellate majority.
Additionally, the majority concluded that that the time period relevant to establishing a de facto custodianship excludes any period of time after a child custody proceeding has been commenced and while it is pending.
“After a child custody proceeding has been commenced and has concluded, however, the calculation of the time relevant to a de facto custodian determination is not tolled. Indeed, to interpret the statute otherwise would lead to an absurd result,” the majority wrote.
“Here, because the Child began living with Arriaga in June 2011, after the Title IV-D proceeding had concluded and the trial court had granted custody of the Child to Mother, the entire time the Child has lived with Arriaga counts toward the statutory time requirement. The Child lived with Arriaga from the age of six months, and she was eight years old when Father filed his petition for modification of custody, which is more than enough time to prove Arriaga’s de facto custodian status,” it wrote, concluding that the trial court erred by determining that Arriaga was not a de facto custodian and therefore abused its discretion by denying her motion to intervene.
The majority ultimately reversed and remanded for the trial court to reconsider its custody modification determination and apply the relevant statutes and cases pertaining to de facto custodians. In a footnote, the appellate court noted it would “express no opinion on the outcome of this custody modification determination.”
Despite concurring in part with the appellate court’s finding on Arriaga’s motion to reopen the case, Judge Nancy Vaidik dissented from the majority’s reversal of the custody decision.
“At the outset, I have no qualms with the general propositions that a de facto custodian is entitled to intervene in a paternity lawsuit, that such an intervention sets up procedural hoops that must be jumped through, and that in some cases failing to abide by those rules may result in reversible error. I dissent because Arriaga simply does not make this de facto-custodian argument on appeal, and given the facts, she wisely concedes that denying her intervention did not have any bearing on the court’s ruling,” Vaidik wrote in a separate opinion.
The dissenting judge concluded that the issue was not raised on appeal, that Arriaga conceded the issue and that she was not prejudiced by the trial court’s procedure.
“I understand that the majority may not agree with the decision of the trial court. But we are a court miles and months away from the courtroom and testimony in this case,” Vaidik opined. “We should not disturb a judgment that is not clearly erroneous on arguments not raised by the parties.”
Post-Conviction — Murder/Ineffective Assistance of Counsel
Harold Warren v. State of Indiana
A man convicted of slaying an Indianapolis storekeeper in 1999 lost his post-conviction relief appeal, even as the appellate panel acknowledged his since-suspended defense counsel failed to properly investigate alternate suspects, among other shortcomings.
Harold Warren was convicted of murder and Class B felony robbery in 2000 for the shooting death of Jack Dorfman, who operated a small business that dealt in precious metals and cashed checks. Warren, who subsequently was sentenced to 85 years in prison, had been in the store a day earlier and was escorted out after Dorfman declined to buy some rings Warren sought to sell. Warren told Dorfman, “I’ll be back.”
The next day, Dorfman was found dead in his shop from a .22 caliber gunshot wound to the head. That same day, Warren used Dorfman’s credit cards at a liquor store, a Meijer, a Kmart and a Radio Shack.
Three days after the murder, a man named Paul Fancher purchased a .22 caliber handgun from Warren’s brother Ron, but upon learning of Harold Warren’s arrest, Fancher turned the gun over to police.
Among other things connecting Harold Warren to the killing was a pawn ticket left on the counter of Dorfman’s store that bore Warren’s fingerprint.
Nevertheless, Warren in his defense sought to point to alternate potential suspects, including Dana Roberson, who had dated his brother Larry. Among other things, Roberson owned a black truck, and a witness had placed a black truck at the scene of the crime the day Dorfman’s body was found.
The witness said a man seen getting out of the truck and walking toward Dorfman’s shop did not resemble Harold Warren.
Larry told a detective that Roberson had appeared “very anxious” in the days after the killing and suddenly had a lot of money. She used the money to buy an RV, take herself and Larry to Florida, and paint her truck gray, Larry told authorities. When called to testify at Harold Warren’s PCR hearing, Roberson took the Fifth and provided no testimony, the appellate panel noted.
Harold Warren had been represented in his 2000 criminal case by Carl L. Epstein, who in 2017 was suspended from the practice of law for, among other things, implying to a client that he had the ability to improperly influence judges and suggested his client flee to avoid prosecution.
Epstein admitted in testimony at Warren’s PCR hearing that he failed to adequately investigate potential alternate suspects at Warren’s trial in 2000.
“Epstein acknowledged he was not able to invest as much time into preparing Warren’s case as he would have liked because he expended a lot of time and resources preparing and trying a multi-week federal criminal trial, which concluded shortly before Warren’s trial, and because his medical problems, including Type 2 diabetes and a heart problem, limited the amount of time Epstein could devote to preparing for Warren’s trial,” Judge Melissa May wrote for the COA panel in Harold Warren v. State of Indiana, 19A-PC-1604.
“Epstein testified that if he had had more time, he would have taken Roberson’s deposition,” May wrote. “Epstein did not talk with Roberson informally or take a taped statement from her before Warren’s trial. Epstein acknowledged receiving Indianapolis Police Department inter-department communications about fingerprint evidence in the Dorfman murder, and he testified that he should have used the evidence in his arguments at Warren’s trial.” In a footnote, the panel observed that the police internal communication about the fingerprint evidence was offered as evidence in Warren’s PCR case but was not admitted.
The COA didn’t agree with the state’s assertion that evidence pertaining to Larry and to Roberson was speculative. “(I)t raises several red flags,” the panel found. “Had Epstein interviewed Larry, he would have discovered substantial information that casts suspicion on Roberson. Epstein then could have deposed, interviewed, or subpoenaed Roberson. He could have asked her where she was the morning of the murder, how many conversations she had with law enforcement about the murder, how she was able to purchase the recreational vehicle, why she decided to take a trip to Florida with Larry shortly after the murder, whether she repainted her truck grey, and if so, why she repainted her truck. Roberson might have invoked her Fifth Amendment right against self-incrimination, denied Larry’s allegations, or provided innocent explanations, but Epstein did not find out. Therefore, we agree with Warren that Epstein’s performance was deficient regarding his investigation of Roberson.”
The panel also found the possible presence of someone else at the crime scene as established by the presence of fingerprints from another person was a lead worth investigation.
Despite Epstein’s deficient performance in defending Harold Warren, the panel found Warren had not met the high bar required for post-conviction relief — that but for counsel’s unprofessional errors, the outcome of his trial would have been different.
The panel pointed to the evidence against Warren that, among other things, included his fingerprinted pawn ticket found at Dorfman’s shop, his denial to police of ever pawning anything at the shop, filling out a pawn card or using any of Dorfman’s credit cards, and the .22 caliber handgun conveyed from Warren’s brother to Fancher.
“Warren’s trial counsel acknowledges he did not adequately investigate a potential alternative suspect or follow-up on a lead that another individual’s fingerprints were present at the scene of Dorfman’s murder. However, despite trial counsel’s deficient performance, we cannot say there was a reasonable probability the outcome of Warren’s trial would have been different because of the overwhelming evidence of Warren’s guilt presented at trial,” the panel concluded. “We accordingly affirm.”
Trust — Beneficiary Status After Adoption/First Impression
Raquel Walters v. Brittany M. Corder, et al.
Three children who were provided for under terms of a trust established for their father by their great-grandmother remain entitled to their share of proceeds despite their adoption out of the family, the Indiana Court of Appeals ruled.
In a matter of first impression that involved interpretation of the meaning of the word “children” in the Indiana trust statutes, an appellate panel affirmed the Marion Superior Court’s grant of summary judgment for three biological children of the late David Walters. Those children born in the 1990s — Brittany M. Corder, Matthew T. O’Brien, and Molly L. O’Brien, referred to collectively by the court as “the O’Brien children” — were adopted at young ages by their stepfather after Walters and the children’s mother, Joan, divorced and she later remarried.
David Walters’ grandmother, Mildred Goodman, established a trust for him in 1991 that provided upon his death that trust property passed to “his then living children, share and share alike.” The Walters’ divorce came a year after Goodman died in 1994. Walters also remarried and had a daughter, Raquel, with his new wife.
After David Walters died in 2017, Raquel filed this lawsuit, seeking to invalidate the trust beneficiary claims of Walters’ children from his first marriage.
“On this issue of first impression, we hold that under these facts where the children were adopted out of the family after the settlor’s death, the adopted out children retained their status as beneficiaries of Mildred. We therefore affirm the trial court,” Senior Judge John Sharpnack wrote for the panel in Raquel Walters v. Brittany M. Corder, Matthew T. O’Brien, and Molly L. O’Brien, 19A-TR-1069.
Raquel argued the children’s adoption out of the family severed their status as beneficiaries. She looked for support to Indiana Code § 31-19-15-1 (2009), but the panel rejected the proposed application of that law to designations of trust beneficiaries.
The panel cited caselaw noting that the purpose of that section is to shield an adoptive family from unnecessary instability and uncertainty arising from unwanted intrusions by the child’s biological family.
“Here, the O’Brien Children are all adults, and the biological family is not trying to interfere with any aspect of the relationship between them and their adoptive family. Rather, their biological great grandmother, with whom two of the three O’Brien Children had contact and a relationship from their birth until her death, included them as beneficiaries of her trusts.” The court noted that at the time of her death, Mildred also was aware the children’s mother was pregnant with the third child.
“Although Raquel claims that a determination that the O’Brien Children are beneficiaries under the terms of Mildred’s trusts would ‘undermine the purpose of the adoption statutes,’ we disagree,” the panel held.
“The objective of Section 31-19-15-1 is not advanced by depriving the O’Brien Children of their status as beneficiaries merely because their biological father consented for them to be adopted after the death of the settlor of the trusts. The statute was designed as a shield to protect new adoptive families, not as a sword to prohibit adopted children from receiving a trust distribution, per the settlor’s wishes, from a member of the family from which the children have been adopted out. Indeed, allowing this statute to be used in such a manner would contravene one of the cardinal principles of trust law: the settlor has the right to arrange for the distribution of her estate as she sees fit.”
The panel noted that at the time Mildred established a testamentary trust for her grandson David, “the Indiana Trust Code did not define the term ‘children.’” The panel found the term embraces the first generation of offspring.•