Appellate Ruling

Appellate attorneys may take it as a bad sign when their advocacy is described as "ostrich-like" by an appellate court and even worse when the court's opinion uses an unflaterring image like the one above to illustrate the point.

In a terse six-page opinion, Chief Judge Richard Posner of the U.S. Court of of Appeals for the Seventh Circuit criticized counsel for failing to address precedent directly applicable to the forum non conveiens issue presented in two appeals (addressed simultaneously by the Court). Judge Posner wrote:

When there is apparently dispositive precedent, an appellant may urge its overruling or distinguishing or reserve a challenge to it for a petition for certiorari but may not simply ignore it. We don't know the thinking that led the appellants' counsel in these two cases to do that. . . . Whatever the reason, such advocacy is unacceptable.

The ostrich is a noble animal, but not a proper model for an appellate advocate.

It is indeed difficult to imagine the reasoning underlying a strategy of ignoring applicable authority, whether cited by an opponent or not.  The Rules of Professional Conduct prohibit such a strategy, but beyond that it is poor advocacy. It may require thought and creativity, but in many instances plausible, if not meritorious, reasons can be articulated as to why existing precedent does not apply, or if all else fails, was wrongly decided.

The decision is in Monica Del Carmen Gonzalez-Servin, et al. v. Ford Motor Company, No. 11-1665, and was issued on November 23, 2011.

The Court of Appeals recently held that the fact that Indiana Supreme Court has set out different procedures in the Trial Rules for service of process when sending tax sale notices upon organizations has no authority because the delivery of tax sale notices is governed by statute.

In James K. White and Wells Fargo Bank v. Susan Orth, Allen County Treasurer, and Lisbeth A. Blosser, Allen County Auditor No.02C01-1012-MI-2025, the trial court granted the Allen County Treasurer and the Allen County Auditor (collectively, “Allen County”) an issuance of tax deeds on property with delinquent property taxes due and owing. Wells Fargo held the mortgage on the property that the issuance was served upon. Wells Fargo objected to the issuance of the tax deed and argued that Allen County did not properly serve two tax sale notices upon Wells Fargo.

The Court of Appeals cites Indiana Code section 6-1.1-25-4.5 and section 6-1.1-25-4.6 which require “tax sale notices be sent to any person with a substantial interest of public record at the address included in the public record.” Allen County complied with the statutory requirements of sending tax sale notices because they sent both of the tax sale notices by certified mail, return receipt requested, to the address listed in the mortgage document, and to another local address.  Nowhere in the statute does it require compliance with Trial Rules when sending tax sale notices, therefore, the trial court's issuance of the tax deed was affirmed.

 What constitutes just cause for terminating an employee? The Indiana Court of Appeals recently decided that precise question. The Court assessed the employer’s attendance policy in order to determine if the employee was in fact terminated for just cause.

In P.M.T., Inc. v. Review Board of the Indiana Dept. of Workforce Development and L.A., No. 93A02-1105-EX-389, L.A worked as an ambulance dispatcher at P.M.T. P.M.T. had a strict attendance policy where an employee could only miss seven days in a twelve-month period, barring some narrow exceptions. In March 2010, L.A. requested leave through the Family Medical Leave Act (“FMLA) to take care of her terminally ill husband, which accumulated to six absences. After August 19, 2010, L.A. had two emergency absences; one was due to a personal health problem and the other occurred when she was informed by her son that her husband was lying unconscious on the floor at home. After that accident L.A. spent an additional two more days with her husband at the hospital. All of these absences exceeded her seven allowed under P.M.T.'s attendance policy. P.M.T. terminated L.A. due to excessive absences. The Administrative Law Judge awarded L.A. unemployment insurance benefits based on the unreasonableness of P.M.T.’s attendance policy and the insufficiency of evidence to prove that L.A. knowingly violated the attendance policy. P.M.T. appealed the ruling to the Review Board. The Review Board affirmed the Administrative Law Judge’s ruling.

P.M.T. argued on appeal that L.A.’s termination was for just cause because the attendance policy was reasonable and L.A. knowingly violated the attendance policy. Ind. Code § 22-4-15-1 requires “just cause for the termination if the employee is to be ineligible for unemployment insurance benefits.” The Review Board concluded that P.M.T.’s attendance policy was unreasonable because there were “no exceptions for verified emergencies or situations beyond the employee’s control.” The Court agreed and supplemented that personal and family health issues are considered valid reasons for missing work. As for the “just cause” issue, the Court stated that L.A.’s absences were a result of circumstances beyond her control and therefore there was not just cause for her termination. The Court affirmed the Review Board’s decision.

by Steven M. Badger 

A deal is a deal, right?  That is not always true when the deal is a fee agreement between a lawyer and a client.  With interest in alternative fee arrangements growing among lawyers and clients, Indiana law firms should keep in mind that their fee agreements remain subject to scrutiny of the Indiana Supreme Court. 

A recent disciplinary decision of the Indiana Supreme Court teaches Indiana lawyers two lessons about non-hourly fee arrangements:  First, a deal is most definitely NOT a deal when a lawyer would obtain an unconscionable windfall.  Second, a lawyer may be required to renegotiate a fee agreement that would otherwise produce an unconscionable benefit for the lawyer.

In In re Everett E. Powell, II, No. 49S00-0910-DI-426, the Indiana Supreme Court suspended a lawyer for charging an unreasonable contingent fee. The client, T.G., engaged Powell to seek the removal of a trustee of a trust established for T.G.'s benefit.  The trust was put in place by T.G.'s first lawyer, Ross, to hold the proceeds of a personal injury settlement for T.G.  The trust was created to keep T.G. (and her domineering partner) from quickly wasting the settlement proceeds, about $42,000.  Ross was the trustee (because he could not find another qualified person to do it) and had refused T.G.'s earlier, repeated demands for the money in the trust. 

When Powell contacted Ross, he readily agreed to resign as trustee and handover those duties to Powell.  Soon after he became successor trustee, Powell withdrew the trust funds, paid two-thirds of the funds to T.G., and kept his one-third contingent fee.  As a result, Powell received a contingent fee of over $14,000 for 15 hours of work.

In his disciplinary case, Powell argued his contingent fee was reasonable considering the client was a "difficult" one, there was a heightened threat of a future malpractice suit, and there was uncertainty at the time the fee agreement was made both about the amount of funds left in the trust and whether Ross would resist giving up control of the trust.  The Court rejected that argument.  The Court observed that Powell learned very quickly the amount left in the trust and Ross' willingness to step aside as trustee.  The Court stated:

We do not suggest that a contingent fee must be reduced every time a case turns out to be easier or more lucrative than contemplated by the parties at the outset.  But collection of a fee under the original agreement is unreasonable when it gives the attorney an unconscionable windfall under the totality of the circumstances.  On the evidence before us in this case, we conclude that Respondent violated the Indiana Professional Conduct Rule 1.5(a) by collecting a fee that was clearly excessive and unreasonable under the totality of the circumstances.

The vulnerability of the client in Powell was certainly an important aspect of the case that would distinguish it from one involving a sophisticated client.  Yet, Powell is an important reminder for Indiana attorneys to think twice before keeping a contingent fee that is grossly disproportionate to the amount of work performed.

Indiana unemployment insurance contributions are determined based on the past record of unemployment claims against the Indiana employer.  When an Indiana corporation reorganizes to form a new subsidiary, the question may arise whether the subsidiary is a new employer eligible for a lower introductory contribution rate or assumes the same employment experience account rate as its parent and predecessor.  In a recent ruling the Court itself described as "narrow" or limited to the specific facts of the case, the Indiana Supreme Court decided that a company’s newly-formed subsidiaries did not constitute distinct and segregable portions of the business and therefore must pay the same employment experience account rate as their parent company.  

In Franklin Electric Company, Inc. v. Unemployment Insurance Appeals of the Indiana Dept. of Workforce Development, No. 93S02-1102-EX-89, Franklin Electric Co., Inc. formed two new wholly-owned subsidiary corporations, Franklin Electric Manufacturing, Inc. and Franklin Electric Sales, Inc., as part of an expansion and reorganization of its business. Franklin Electric transferred real estate, equipment, and other assets associated with manufacturing to Franklin Electric Manufacturing in exchange for one hundred percent ownership in the new corporation. Franklin Electric transferred all of its sales-related personal property, sales contracts, and other related items to Franklin Electric Sales in exchange for one hundred percent ownership. Subsequently, Franklin Electric started a new employment experience account with a low introductory contribution rate for each subsidiary. A few years later, Franklin Electric, without Franklin Electric Manufacturing as a party, sold a portion of the manufacturing operation to Bluffton Motor Works LLC. The Indiana Department of Workforce Development investigated Franklin Electric and determined Franklin Electric did not transfer to the new subsidiaries a distinct and segregable portion of its organization, trade, or business. Franklin Electric argued its two new subsidiaries were eligible for a 2.7% experience rate as new employers under Indiana Code § 22-4-10-6(c). 

In order for the two subsidiaries to qualify as employers separate from the parent company for purposes of Indiana unemployment insurance, they must prove that they acquired a “distinct and segregable” portion of Franklin Electric’s business. Thus, the Court focused on whether Franklin Electric Sales and Franklin Electric Manufacturing acquired a portion of the business that was separate from Franklin Electric.  The Court considered the following key facts:  Franklin Electric wrote a single check to its payroll provider to fund the wages of employees of all three companies. Also, Franklin Electric provided workers compensation, health insurance, and retirement benefits for all three entities. Finally, Franklin Electric (not Franklin Electric Manufacturing) sold assets to Bluffton Motors that it had previously transferred to Franklin Electric Manufacturing. The Indiana Supreme Court considered all these facts together and decided the two subsidiaries are not distinct and segregable from Franklin Electric and therefore are not employers entitled to a new lower unemployment insurance rate.

Non-settling parties in Indiana class action lawsuits may have a tall hill to climb when attempting to challenge partial settlements to which they are not parties. The Court of Appeals recently decided that a non-settling party must prove plain legal prejudice in order to have standing to challenge a partial settlement.

In Angela K. Farno v. Ansure Mortuaries of Indiana, LLC, et al. , No. 41A01-1007-MF-348, Angela Farno filed a class action lawsuit against Goldberg and others regarding the alleged looting of cemetery trust funds. On June 22, 2010, the trial court issued an order granting preliminary approval of the class action settlement agreement. Goldberg, a non-settling defendant, appealed. During the appeal, Farno quoted a federal court decision in a class action lawsuit that states “[t]he general rule, of course, is that a non-settling party does not have standing to object to a settlement between other parties.” Agretti v. ANR Freight Sys., Inc., 982 F.2d 242, 246 (7th Cir. 1992). The Indiana Court of Appeals held that in order to prove plain legal prejudice, a non-settling party must show that the settlement interfered with its contract rights or its “ability to seek contribution or indemnification” or that the settlement stripped “the party of a legal claim or cause of action, such as a cross-claim or the right to present relevant evidence at trial.” Agretti, 982 F.2d at 247. Goldberg failed to establish plain legal prejudice.

By Steven M. Badger

The "human cannonball," Hugo Zacchini, left an indelible impression on the law in his seminal case against Scripps-Howard 34 years ago.  Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562 (1977).  Zacchini's case affirmed his right to control viewing of his unique 15-second performance in which he was shot from a cannon. The U.S. Supreme Court ruled that the First Amendment did not grant the media the right to broadcast Zacchini's entire performance without his permission. 

 Zacchini's enduring legacy shot down a recent First Amendment challenge by Gannett to the Wisconsin Interscholastic Athletic Association's exclusive licensing of live internet streaming of high school sporting events.  In rejecting Gannett's claims, the Seventh Circuit relied heavily on the Zacchini case in ruling that "nothing in the First Amendment confers on the media an affirmative right to broadcast entire performances." Wisconsin Interscholastic Athletic Association v. Gannett Co., No. 10-2627 (Aug. 24, 2011). The Court distinguished broadcast of an entire performance from coverage of the event, and made it clear that media coverage of high school events could not be granted or restricted on a selective basis.

 The only recourse left to Gannett is to seek certiorari in the United States Supreme Court, which must be filed within 90 days of the Seventh Circuit's decision.

What if after a jury verdict was established one of the parties tries to impeach that verdict with testimony or an affidavit of the jurors who returned it? The Court of Appeals recently addressed this issue and stated that it has long been established in Indiana law that the jury’s verdict cannot be impeached by testimony or from an affidavit of a juror who returned it.

In Martha Sienkowski v. Frederick E. Verschuure No. 46A03-1101-CT-5, after the jury verdict was announced, the plaintiff tried to impeach that verdict with testimony of one juror and an affidavit from another juror in an attempt to receive a new trial. The defendant filed a motion to vacate the judgment and the request for a new trial. The trial court issued its Order, granting the defendant’s motions to strike the letter and affidavit and denying plaintiff’s motion for a new trial. The plaintiff appealed.

 The Court of Appeals reiterated that the jury verdict may not be impeached by the testimony or an affidavit of the juror who returned it. The policy behind this rule comes from Stinson v. State, 313 N.E.2d 699 (Ind. 1974). In Stinson, the Supreme Court showed concern by saying; “If this [c]ourt were to permit individual jurors to make affidavits or give testimony disclosing the manner of deliberation in the jury room and their version of the reasons for rendering a particular verdict, there would be no reasonable end to litigation. Jurors would be harassed by both sides of litigation and find themselves in a contest of affidavits and counter-affidavits and arguments and re-arguments as to why and how a certain verdict was reached. Such an unsettled state of affairs would be a disservice to the parties litigant and an unconscionable burden upon citizens who serve on juries.” The court did recognize exceptions under the Indiana Evidence Rule 606(b) where a juror may testify with respect to certain aspects of the trial. The three exceptions where testimony would be allowed concern: (1) drug or alcohol use by any juror, (2) the question of whether extraneous prejudicial information was improperly brought to the jury’s attention, or (3) whether any outside influence was improperly brought to bear upon any juror. None of those exceptions were present in this case.

Where a cause of action has both legal and equitable claims, the court will look at the essential features of the suit to decide if a jury trial is appropriate. If the claim as a whole is equitable and the legal causes of action are not “distinct and severable,” then there is no right to a jury trial because the equitable claim will integrate the legal causes of action.

In Mary Beth Lucas and Perry Lucas v. U.S. Bank, N.A., as Trustee for the C-Bass Mortgage Loan Asset-Backed Certificates, Series 2006-MH-1, No. 28S01-1102-CV-78, the loan servicer Litton charged the Lucases late fees, but the Lucases argued they timely paid all their fees. Lucases filed for bankruptcy and the following month requested that Litton discontinue their escrow account. Litton continued to charge the Lucases late fees and sent the Lucases notice that it planned on accelerating their account. The current mortgage holder, U.S. Bank National Association, filed a complaint against the Lucases seeking to foreclose on the mortgaged property for failure to make payments. The Lucases filed affirmative defenses, counterclaims, and a third party complaint, along with a demand for a jury trial on issues deemed triable. U.S. Bank filed a motion to strike the Lucases’ request for a jury trial. The trial court granted U.S. Bank’s motion asserting that seeking foreclosure is essentially an equitable claim. The Court of Appeals reversed the trial court’s order relying on the test used in Songer v. Civitas Bank, 771 N.E.2d 61 (Ind. 2002).

The Supreme Court reiterated the policy from Trial Rule 38(A): “when both equitable and legal causes of action or defenses are joined in a single case, the equitable causes of action or defenses are to be tried by the court while the legal causes of action or defenses are to be tried by a jury.” The Court looked at the facts of the case to ascertain the “essential features of the suit.” The Court implemented a multi-pronged inquiry used in Songer to determine whether a suit is essentially equitable: “The court must examine several factors of each joined claim—its substance and character, the rights and interests involved, and the relief requested. After that examination, the trial court must decide whether core questions presented in any of the joined legal claims significantly overlap with the subject matter that invokes the equitable jurisdiction of the court. If so, equity subsumes those particular legal claims to obtain more final and effectual relief for the parties despite the presence of peripheral questions of a legal nature.” Despite the presence of some legal claims and requests of legal remedies by the Lucases, the Court found that the main legal issues overlap with the foreclosure issues to a substantial degree. Since the essential features of the suit are equitable, the Supreme Court affirmed the trial court’s denial of the Lucases’ request for a jury trial.

In a dissenting opinion, Justice Dickson focused on the fact that the analysis in Songer should not be modified. The modification to include the additional test of “significantly overlap” could often exclude a defendant’s right to a jury trial on distinct and severable legal claims. Legal claims that are distinct and severable from the equitable foreclosure action should be available for trial to a jury and should not be subsumed as an equitable cause of action.

Are will contest actions exempt from Trial Rule 7, regarding filing of an answer?  The Indiana Supreme Court just recently decided this question, stating that will contest actions are subject to the Indiana Trial Rules and failure to file an answer may result in a default judgment.

In Rod L. Avery and Marshall K. Avery v. Trina R. Avery, No. 49A05-1004-PL-320, Rod and Marshall Avery filed a petition in the probate estate to remove their sister (Trina) as the personal representative and to probate their mother's will dated November 14, 2008, which named Rod as the personal representative. On February 1, 2010, Trina Avery filed a separate action to contest the 2008 will, emphasizing that it was the product of undue influence, fraud, and duress, and that her mother had executed a subsequent will on January 14, 2009, which superseded and revoked the 2008 will. Notice of the separate action was given to Rod and Marshal Avery, but neither of them filed an answer. Trina Avery moved for a default judgment, and Rod and Marshall Avery filed a motion to dismiss the default judgment maintaining that a will contest does not require an answer. The trial court denied their motion to dismiss and entered a default judgment against them.

Prior to 1970, before the Indiana Rules of Trial Procedure became effective, an answer in a will contest was not required. Post 1970, the Trial Rules became more comprehensive and now govern the practices and procedures in all areas of law in the State of Indiana.  The applicability of the Trial Rules to the statutory will contest proceeding is governed by Robinson v. Estate of Hardin, 587 N.E.2d 683, 685 (Ind. 1992), which explains that the Trial Rules “supersede statutory provisions addressing matters purely civil and procedural in nature, unless otherwise stated." The Trial Rules require a timely filing of an answer and do not exempt will contests. Rod and Marshall Avery failed to file an answer, so they are in default and the trial court’s judgment is affirmed.

In an action brought against a governmental entity, a complaining party must have suffered something more than a general concern or disagreement with a policy, the Court of Appeals held today. The holding extends to suits brought under Indiana statutes which expressly state who may bring a claim arising under the law.

In Klosinski v. Cordry Sweetwater Conservatory District, No. 07A01-1008-PL-429, the plaintiff complained that a county conservatory district was acting outside of its statutory duties and had failed to construct sanitary sewer facilities and keep the community lakes’ coves free of sediment. The plaintiffs lived within the district and the trial court found that they had standing to sue because “[t]he Klosinskis own property in the District; they and their property are subject to and affected by the District’s rules and regulations; and they pay assessments or fees for the services provided by the District.” After denying most of the plaintiff’s requests for injunctions, the trial court issued a general injunction against the conservatory, prohibiting it from establishing or enforcing any rule that does not further its statutory purpose, an issue the defendant conceded. Both parties appealed.

On appeal, the district challenged the plaintiffs’ standing to sue on the grounds that they had not been aggrieved by any actions of the district and the plaintiffs appealed the denial of several requested injunctions. In deciding the issue of standing, the Court of Appeals looked to the language of the statute which described the parties who may sue. The statute states that “[a]n interested person adversely affected by an action committed or omitted by the board in violation of this chapter may petition the court having jurisdiction over the district to enjoin or mandate the board.” After noting that no case had yet interpreted the phrase “[a]n interested person adversely affected,” the Court followed Huffman v. Office of Envtl. Adjudication, 811 N.E.2d 806 (Ind. 2004), which interpreted similar language in a different statute. The court in Huffman interpreted the phrase “aggrieved or adversely affected” and found that "to be ‘aggreived or adversely affected,’ a person must have suffered or be likely to suffer in the immediate future harm to a legal interest, be it a pecuniary, property, or personal interest.” After noting that the Klosinskis had identified “no specific controversy with the District,” the Court concluded that “[o]ur supreme court recognized in Huffman that general standing principles are inapplicable where a statute identifies who may pursue an administrative proceeding,” and that “[t]o be ‘adversely affected,’ the Klosinskis must have more than a generalized concern. They must identify a specific harm to a pecuniary, property, or personal interest. Simply arguing they are taxpayers is insufficient.” The Court reversed the trial court’s determination that the plaintiffs had standing to sue and affirmed its denial of injunctions.

In an opinion dissenting in part and concurring in part, Judge Baker expressed dissatisfaction with the Court’s determination that the plaintiffs were not an aggrieved party, as described in the statute, because as a resident of the district in question, they are directly affected by the actions of the conservatory and should be able to bring a claim against such an entity.

What if, after filing a complaint with the court, it is discovered that the defendant named in the suit is not the correct party to be served? The Indiana Court of Appeals recently addressed this issue as well as the time allowed for filing an amended complaint which will relate back to the original, pursuant to Indiana Trial Rule 15(C). 

In Raisor v. Jimmie’s Raceway Pub, Inc., No. 49A05-1010-CT-629, a dispute arose when an underage patron of a local pub allegedly assaulted another pub customer. The victim of the attack attempted to sue the owner of the pub by sending a summons to an address that was registered with the Secretary of State’s office, but the office was vacant and the summons was returned to sender. After a second unsuccessful attempt, the victim’s attorney sent a letter advising the owner of his desire to seek a default judgment against it. The mail carrier delivering the letter noticed that the office was vacant and also that the letter’s address included the name of the pub, which was a few blocks away. The carrier took the letter to the pub, where the true owner read it and asked the attorney for the complaint. The true owner also sent a copy of the suit to the purported owner of the pub, who was unaware of the action. By this time, twenty-three months had passed since the assault and 128 days had elapsed since the filing of the original complaint. The purported owner filed a motion to dismiss on the basis that it was not the true owner of the pub, which the court granted, and the plaintiff filed an amended complaint naming the true owner of the pub. A motion to dismiss/motion for summary judgment was thereafter filed by the true owner, claiming that the two-year statute of limitations for personal injury claims had run, as well as the 120-day period for filing an amended complaint to add a new party. The trial court granted this motion as well.

The Court of Appeals reversed the trial court and explained how the amended complaint rule operates by stating that “[a]s a general rule, a new defendant to a claim must be added prior to the running of the statute of limitations; however, Trial Rule 15(C) provides an exception to that rule by allowing the amendment to relate back to the date of the original complaint under certain circumstances.” The court continued, “[w]here no more than 120 days have elapsed since the filing of the original complaint and (1) where the claim arises out of the same conduct; (2) the substituted defendant has notice such that he is not prejudiced by the amendment; and (3) the substituted defendant knows or should know that . . . the action should have been brought against him,” then the amended complaint will relate back to the original complaint. This case was unique in that the original complaint was filed so far in advance of the running of the statute of limitations that the 120-day amendment rule had passed before the limitations period was over. The Court explained that “[t]he fact that the [plaintiffs] filed their original complaint earlier should not work to penalize them,” and that “we do not believe that the amended trial rule was designed to shorten the period of time that plaintiffs have to file their claims,” but “as long as Trial Rule 15(C)’s requirements are otherwise met within the statute of limitations, the last date to file an amended complaint would be 120 days after the statute of limitations has expired.”

On Tuesday the Indiana Supreme Court reversed a Court of Appeals' decision that affirmed the granting of a new trial in a case involving a jury verdict that rewarded an accident victim damages for the costs of physical therapy sessions and initial medical consultations. In its opinion in Walker v. Pullen, No. 64S05-1101-CT-0006, the Supreme Court expressed the importance of a strict application of Indiana Trial Rule 56(J).

The case arose out of a car accident that occurred in the drive-through lane of a Dunkin’ Donuts in Valparaiso, Indiana, in which the defendant’s foot slipped off the brake pedal while in line and rear-ended the plaintiff’s car. Several days later, the plaintiff saw a doctor complaining of neck pain and had several treatments over the course of a few months. He wasn’t treated for neck pain again until three years later and there was conflicting testimony as to the relationship between the drive-through accident and the cause of the later pain. One expert testified that the pain could be related to the accident while another claimed that it was caused by walking on crutches after having unrelated knee surgery. The plaintiff sought damages of $25,000 and, while the jury ruled in his favor, it only awarded him just over $10,000 for “P.T. & inital [sic] medical assessment.” The plaintiff then filed a motion to correct error, citing that his physical therapy costs and medical assessments totaled $12,500. The trial court granted the motion and ordered a new trial on the issue of damages only. The Court of Appeals affirmed.

The Supreme Court, after granting transfer, reversed the decision and directed that the jury verdict be reinstated. The Court cited to Trial Rule 56(J), which states, “when granting a new trial because the verdict does not accord with the evidence, judges must ‘make special findings of fact upon each material issue…’” and “’[s]uch findings shall indicate whether the decision is against the weight of the evidence or whether it is clearly erroneous as contrary to or not supported by the evidence….’” The trial court in this case granted the motion for a new trial because “it believed the verdict did not accord with the evidence.” This does not comply with the high standard of the rule that the verdict be “against the weight of the evidence” or that it was “clearly erroneous.” The Court made certain to explain the importance of giving due deference to the decisions of juries in this state, stating that the “arduous and time-consuming requirements [are] to assure the public that the justice system is safe not only from capricious or malicious juries, but also from usurpation by unrestrained judges.” Thus, because the jury could have reasonably believed that the damages granted were only those that were the result of the defendant’s negligence and that the remainder of the damages were unrelated to the accident, its verdict should be reinstated as the rule of the case.

In a decision handed down earlier this month, the Supreme Court refused to give a ruling on an issue that was described as being “within the special expertise of the Tax Court.” The decision comes from a rehearing of an earlier case holding that capital contributions are not automatically exempt from Indiana’s use tax.

In Indiana Dep’t of State Revenue v. Belterra Resort Indiana, LLC, No. 49S10-1010-TA-519, the Department of Revenue imposed a use tax of almost $2 million on Belterra due to its acquisition of a riverboat from its parent company. Belterra argued that the acquisition counts as a capital contribution, which the Department has ruled in the past as not subject to the tax. The court used what is called the “step transaction” doctrine to find that the acquisition constituted a retail transaction and was subject to the tax penalty. Belterra sought rehearing of that decision, arguing that, even if they were subject to the penalty, they shouldn’t have to pay because Indiana law says that a penalty for failure to pay taxes is waivable if the failure to pay is the result of a reasonably held belief that payment isn’t necessary.

The court said that that “the Indiana Tax Court was established to develop and apply specialized expertise in the prompt, fair, and uniform resolution of state tax cases” and that it “extends cautious deference” to decisions that should fall within such expertise. The court remanded the case to the Tax court to resolve the issues of whether or not Belterra exhausted all of its administrative remedies, whether they are subject to the tax, and if the penalty should be paid.

A negligence claim against CVS Pharmacy and one of its pharmacists was allowed to go forward in accordance with a ruling by the Indiana Court of Appeals today. The court ruled that a legal duty exists for a pharmacist to warn patients of risks involved with the taking of certain medications.

In Kolozsvari v. John Doe, M.D., No. 32A04-1008-CT-525, the plaintiff was prescribed OsmoPrep, a medication used in preparation for colonoscopies, and took the prescription to CVS to have it filled. While filling the prescription, the pharmacists received a warning screen on the computer stating that, because of the plaintiff’s age, there was a risk involved with prescribing the medication. The pharmacists dismissed the warning and filled the prescription without relaying the warning to the plaintiff. The following day, the plaintiff believed that the medication hadn’t prepared her well enough for the procedure and the doctor advised her to refill the prescription and try it again. She took the second prescription back to the pharmacy and relayed the information that she felt a tingling sensation in her body and asked if it was caused by the medication. The pharmacist said that it was not and refilled the prescription, ignoring a second warning relating to the risk involved with refilling the prescription so quickly. The pharmacy also had access to the plaintiff’s medication history and was on notice that she was routinely taking hypertension medication that is known to conflict with the colonoscopy drug. After taking the medication one more time, the plaintiff awoke the next morning to severe tingling and went to the hospital, which informed her that she had suffered a kidney failure and would need to be on dialysis indefinitely or receive a transplant.

In a negligence action against her doctor, nurse, CVS, and the pharmacist individually, the trial court granted summary judgment against the plaintiff, stating that there existed no duty of the pharmacist to warn patients of medication risks. The Court of Appeals reversed the trial court’s decision, stating that “CVS and [the pharmacist] had a duty of care to [the plaintiff] either to warn [her] of the side effects of OsmoPrep or to withhold the medication in accordance with Indiana Code section 25-26-13-16 and Pharmacy Board rule 1-33-2.” The Court of Appeals remanded the case to the trial court for further proceedings.

By Steven M. Badger*
email: sbadger@boselaw.com

            The United States Court of Appeals for the Seventh Circuit heard oral argument on January 14, 2011 in a case of first impression that will decide whether a high school athletic association may require media organizations to buy licenses for internet streaming of high school athletic events.

The appellate court is reviewing a lower court decision last June upholding the Wisconsin Interscholastic Athletic Association’s (the “Wisconsin Athletic Association”) policies regulating internet streaming of high school tournament events. Two Gannett newspapers in Wisconsin challenged the licensing policy on First Amendment grounds.  

            The Wisconsin licensing scheme at issue requires any media organization to pay a fee ranging from $250 to $1500 for the right to stream video of any tournament event over the internet. The Wisconsin Athletic Association also reserves to itself “sole discretion” to grant such rights without specifying any standards for the exercise of its discretion.

Under the Wisconsin licensing policy, any media organization that pays the licensing fee and receives internet streaming rights must provide a master copy its video to a private company holding exclusive broadcast rights.   That private company then may market the video and the media organization that made the video is entitled to a 20% share of the proceeds as a royalty.

The lower court observed in its June ruling that “ultimately, this case is about commerce, not the right to a Free Press.” Gannett’s appeal however argues that the Wisconsin Athletic Association’s revenue-generating motive does not trump the media’s First Amendment rights.

Gannett also focuses its constitutional arguments on the unrestricted discretion the Wisconsin Athletic Association reserves for itself to grant licenses to media organizations of its choosing. Gannett contends that if the athletic association wishes to pick and choose which media organizations may stream video over the internet, the First Amendment requires it do so on an even-handed basis without any threat of exclusion based on viewpoint.

An array of national media associations and media companies has joined in supporting Gannett’s appeal through the filing of an amicus curiae (friend of the court) brief. Those supporting organizations include the Newspaper Association of America, the American Society of News Editors, the National Press Photographers Association and The Online News Association. The supporting media companies include Sun Times Media, LLC and Lee Enterprises, Incorporated, among others.

The Wisconsin Athletic Association is supported by two amicus briefs, one by the National Federation of State High School Associations and the other by 10 state high school associations, including the IHSAA.  

            A decision by the Seventh Circuit is expected this summer or fall. Any of the parties could then seek review by the United States Supreme Court. The decisions of the Seventh Circuit Court of Appeals are binding precedent for lower federal courts in the states of Indiana, Illinois and Wisconsin.

*Steve Badger is a partner at Bose McKinney & Evans and represents media organizations and journalists in media law and First Amendment matters.

In Sheehan Construction Co. v. Continental Casualty Co., No. 49S02-1001-CV-32, the Court reconsidered its opinion by rehearing a previous decision in which the Court ruled in favor of the insured parties. The question in that case was whether the insurance policy covered faulty workmanship by a subcontractor. The Court ruled that it did, but did not address the timeliness of the insured party’s notice to the insurer.  The Court reopened its opinion in order to address this question.

The trial court granted summary judgment in favor of the insurers and the Indiana Supreme Court agreed. The Court reasoned that the basis for the timely notice of claims is to allow the insurer ample time to investigate the claim. In circumstances where the insured party fails to give notice in a timely manner, the Court presumes prejudice. The burden then shifts to the insured party to prove that the insurer was not prejudiced by the failure to report. In the case, the insured parties admitted their notice was untimely and because they produced no evidence to support the contention that the insurer was not prejudiced, the Court granted summary judgment for the insurance company.

The Court of Appeals of Indiana upheld the trial court in a decision granting summary judgment in favor of a firefighter who allegedly made malicious comments during the course of fighting a fire.

Terry Hart, Assistant Fire Chief with the Martinsville Fire Department, was overheard by the son of the plaintiff saying “let it burn” while responding in an assisting capacity to a fire in Washington Township. In a complaint against Hart, as an individual and in his capacity with the fire department, and against the Martinsville Fire Department for negligence, the family who owns the burned property alleged that Hart and the fire department didn’t take proper care in ensuring that the property was protected from the fire. The trial court granted summary judgment in favor of the defendants, citing the common law and black letter rule of governmental immunity. 

In the opinion of Ellis v. City of Martinsville, No. 55A01-1003-CT-141, the court determined that the negligence actions against Hart and the city did not have issues of material fact and granted summary judgment for the municipalities. The court sided with the argument that the fire department cannot be held liable for the decisions made by those in charge of its operations and also that the individuals in charge of making those decisions cannot be held liable as long as the decision is made in the course of employment. Because Hart arrived at the scene in firefighting gear and was paid for his time at the fire, he was determined to be acting in his capacity as a firefighter and, thus, was granted immunity from liability to the homeowners.

The Indiana Supreme Court recently held that, in an insurance dispute regarding defense and indemnification of environmental liability, the uniform approach (a single state’s law governing the entire contract) should be applied, and the state with the “most intimate contacts” will have its law pertain to the contract.

Standard Fusee Corporation (“SFC”) previously operated factories manufacturing emergency signaling flares in Maryland, Indiana, New Jersey, Ohio, California and Pennsylvania while maintaining its headquarters in Maryland. SFC purchased comprehensive general liability policies from two different brokers, holding all communication and discussions regarding the policies in Maryland. After a toxic chemical used in manufacturing its flares was detected in the groundwater near its California facility, SFC was subject to lawsuits which were eventually dismissed because it was determined that SFC didn’t emit the chemical. Afterwards, it voluntarily tested its Indiana facility and found that the chemical may have been emitted at the Indiana location. SFC was granted inclusion into the Indiana Department of Environmental Management’s Voluntary Remediation Program. SFC requested defense and indemnification from the insurers, who denied an obligation. 

SFC sought a declaratory judgment against the insurers and filed for summary judgment that Indiana law governed the policy’s interpretation and also that the insurers had a duty to defend, which the trial court granted. The insurers sought application of Maryland law, as its interpretation would be more beneficial to their position. The Court of Appeals sided with neither party and reversed the trial court’s holding, determining that a site-specific approach should apply to the policy. In National Union Fire Insurance Co. v. Standard Fusee Corporation, No. 49S04-1006-CV-318, the Indiana Supreme Court held that Indiana has long applied the uniform approach to multistate insurance policies. The Court went on to hold that, in order to determine which state’s law governed the contract, a “most intimate contacts” test should be used. Because a single event is not determinative as to which state has the most intimate contacts with the transaction, several factors must be weighed together. Because SFC was located in Maryland, all of the correspondence regarding the insurance took place in Maryland, and because the policies were retained and the premiums were paid in Maryland, the Court held that Maryland law should uniformly apply to the dispute.

The Indiana Court of Appeals encourages cooperation and conflict resolution among attorneys to resolve issues outside of court, but time extensions still require formal relief given directly by the court.

Mary Booher slipped and fell in a Hampton Inn bathtub. Her accident was the first in nearly 5 months after Hampton Inn had covered its bathtubs with a non-skid surface in compliance with safety standards. Mary and her husband filed suit. After receiving two time extensions to reply to Hampton Inn’s motion for summary judgment, another time extension was needed because the Boohers’ attorney was facing major surgery and their expert needed extra time to complete his report. The attorney contacted Hampton Inn’s counsel to explain that another extension would be needed. Hampton Inn’s counsel agreed to the extension, and relying on this out-of-court agreement, the attorney never filed a formal request with the trial court. Three weeks after the second extension deadline had passed, the Boohers submitted their reply to the trial court. Hampton Inn moved to strike based on Trial Rule 56, which the trial court granted. It later granted summary judgment in favor of Hampton Inn. The Boohers appealed.

In Mary Booher, et al. v. Sheeram, LLC, No. 20A03-1005-CT-338, the Indiana Court of Appeals held that the trial court did not err in its decision to strike the Boohers’ reply and properly entered summary judgment in favor of Hampton Inn. Under Trial Rule 56, a trial court does not have the discretion to accept late-filed documents. The Court stated that the attorney’s reliance on the out-of-court agreement was not sufficient to extend the due date, and that he should have filed a motion for a time extension with the trial court. It stated that even under the extraordinarily difficult circumstances in this case, the court’s “proverbial hands were tied” as the Supreme Court made it clear that trial courts have no discretion to accept untimely filed documents. Additionally, because Hampton Inn applied a non-skid coating which complied with industry standards, it protected its business invitees from foreseeable dangers. Hampton Inn fulfilled its duty to exercise reasonable care, and therefore, there were no issues of material fact. Thus, the Court affirmed the trial court’s holding.