Appellate Trial

Intentional intervening events will break the chain of negligence in a lawsuit for the proximate cause of an individual’s death. The Court of Appeals recently upheld that the willful and malicious criminal act of a third party breaks the causal chain between the alleged negligence and the resulting harm.

In Beth Ann Johnson, Mother of: Emily Johnson, Deceased Minor Child v. Lance Jacobs, Steven J. Cummins, Stacy Cummings, Lawrence County Board of Aviation Commissioners, Tony Newbold, Lawrence Co. Comm., No. 47A01-1102-CT-35, Eric Johnson and Beth Johnson were in the midst of a divorce. Eric Johnson had been taking flight lessons and decided to take their daughter Emily in a rented plane. Eric Johnson intentionally flew the airplane into his mother-in-law’s house, killing himself and Emily. Beth Johnson sued Lawrence County Board of Aviation Commissioners (Aviation Board) and the Lawrence County Commissioners seeking damages for Emily’s wrongful death. The Aviation Board filed a motion for summary judgment claiming that any negligence that might be attributed to the Aviation Board was superseded by Eric’s intervening act of murdering Emily. The trial court granted the summary judgment motion and this appeal ensued.

On appeal Beth Johnson made two arguments; (1) the actions of the Aviation Board were the proximate cause of Emily’s death, and (2) it was foreseeable that an unauthorized person could have taken the airplane and flown off in it. The Court addressed the first argument by concluding that “Eric’s intentional criminal actions triggered the intervening, superseding cause doctrine and broke the causal chain between the Aviation Board’s alleged negligence and Emily’s death”, thus, the Aviation Board was not the proximate cause of Emily’s death. The Court addressed the second argument by questioning whether the Aviation Board should have foreseen Eric’s actions that led to Emily’s death. The record shows that none of the employees thought Eric was acting unusual and the employees did not see anything out of the ordinary that day. The Court concluded that there was nothing on record that would show that the Aviation Board should have foreseen that Eric would use the plane in the way that he did. The trial court properly granted summary judgment.  

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.

The Indiana Court of Appeals will hear oral argument on December 12, 2011, in a case of first impression in Indiana.  The Indianapolis Star v. Jeffrey M. Miller, et al., Case No. 49A02-1103-PL-234, presents the novel question of whether a litigant can compel a non-party newspaper to disclose the identity of an internet user who posted an anonymous comment on the newspaper's website.

Jeffrey and Cynthia Miller allege they were defamed by anonymous user comments posted on the Indianapolis Star's website in response to 2010 news stories about a controversy involving a charitable project Mr. Miller had managed.  The Millers sued the charitable organization (Junior Achievement) and others for defamation in connection with Mr. Miller's ouster from the organization and sent nonparty discovery requests to the Indianapolis Star demanding that the paper identify anonymous authors of allegedly defamatory material posted on the newspaper's website.  (Under the Communications Decency Act, 47 U.S.C. sect. 230, the Star itself is immune from liability for defamatory material posted by third-party users of the Star's website.)  The Star objected to the subpoena, but the trial court ordered the Star to comply.

The Star's appeal will be heard by the following panel of Indiana appellate judges:  Hon. Carr Darden, Hon. Ezra Friedlander and Hon. Nancy Vaidik.  A decision could be expected by early 2012.

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.

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.

When does a federal tax lien attach to real property? The Court of Appeals stated that it is considered attached to the property at the time of assessment, not at the time the tax lien was recorded.

In Charles David Kelly v. National Attorneys Title Assurance Fund, No. 69A04-1104-CT-215, the Kelly Oil Company issued title to real property by way of warranty deed to Kelly on February 19, 2004, and later recorded that deed on February 24, 2004. The IRS made assessments of the Kelly Oil Company for unpaid taxes on November 11, 2002. The federal tax liens were recorded on September 17, 2004. Kelly subsequently conveyed that same real property to the Grays by way of warranty deed. The deed did not disclose the federal tax lien. Attached to the deed was an affidavit stating among other things that there were no liens, orders, and encumbrances on the property. Gray’s insurance company, National Title Assurance Fund, did not find the recorded federal tax lien during the title search. Thereafter, the United States initiated an action to foreclose on the property. The Grays paid the United States $11,667 in exchange for a release of the lien on their property. National Insurance, as a subrogree of the Grays, filed suit against Kelly for breach of warranty of title. The trial court granted National Insurance's motion for summary judgment.

Kelly’s only argument on appeal was that the notices of the federal tax lien were not timely recorded with respect to the conveyance of the property by Kelly Oil Company to himself. The basis of this argument was that the federal tax lien did not attach to the property until it was recorded on September of 2004. The United States Codes sections 6321 and 6322 state that if a person neglects or refuses to pay any tax, the amount shall be a lien against the property, and the lien imposed attaches at the time of assessment. The Court of Appeals explained that the moment the tax assessment was made on November 11, 2002, the federal tax lien attached and the property became encumbered. Thus, Kelly breached his warranty by conveying title that is not free and clear from all encumbrances. The Court of Appeals affirmed.

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.

Where an attorney no longer represents a client but is still owed legal fees for prior services performed, the attorney may assert a retention lien over the files of the client’s case and is not required to turn over key documents upon the request of the client’s new counsel. If a trial court determines that the documents must be produced, it must simultaneously provide security for the payment of the former attorney’s fees.

This holding extends from Grimes v. Cockrom, No. 45A03-1008-CT-491, a Court of Appeals case in which a client’s new counsel issued a subpoena duces tecum to her client's former attorney in order to compel him to produce medical records paramount to a medical malpractice claim, a matter on which the attorney had previously worked.   The former attorney moved to quash the subpoena and argued that, similar to the right recognized by a mechanic’s lien, the common law of Indiana recognizes an attorney’s right to retain the documents of a former client until that client’s fees are paid. The trial court denied the attorney’s motion to quash, ordered him to produce the records, and an interlocutory appeal followed.

The Court of Appeals agreed with the former attorney that Indiana recognizes an attorney’s right to a retention lien that operates similar to the lien granted to a mechanic with unpaid service fees. If a client wishes to obtain key documents from a former attorney, a trial court has the authority to compel production of the documents, but must also provide a security to assure that the attorney’s fees will be paid in exchange for the documents’ production. The Court, in citing to Bennett v. NSR, Inc., 553 N.E.2d 881, 882 (Ind. Ct. App. 1990), acknowledged that “[l]awyers are merely afforded the same advantage enjoyed by workmen who labor on behalf of others. It is considered equitable that lawyers be allowed to retain documents and other personal property of their clients until paid.” In Grimes, because the client disputed the amount of fees owed to the former attorney, the Court remanded the case and ordered that a hearing be conducted to determine the proper amount of fees owed and that a security be provided to the attorney in that amount in exchange for the production of the medical records.

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.”

In many real estate transactions, the seller will agree to provide title insurance to the buyer in an attempt to assure the buyer that their title to the property is free and clear of encumbrances. The seller may contact a title insurance company who will then solicit insurance companies to cover the property after investigating its title history.

Such was the case in Meridian Title Corp. v. Gainer Group, LLC, No. 46A03-1006-PL-312, where the trust of a deceased’s estate engaged Meridian Title to procure title insurance on property it intended to sell Gainer Group, a real estate re-seller. After Meridian obtained the insurance from a third-party insurer, the trust presented the information that it had sold more land to Gainer Group than it had intended. At a mediation meeting held by Meridian Title, Meridian’s CEO told Gainer he believed that Gainer had no claim against the trust because of a provision in the contract excluding protection where the buyer does not obtain a survey, which Gainer had failed to do. The trust filed suit against Gainer to recover the portion of property that it had not intended to sell. After initially retaining its own lawyer, Gainer filed an insurance claim with the insurer procured by Meridian and the insurer agreed to provide Gainer’s defense. Gainer then filed this separate suit against Meridian, alleging that Meridian had failed to properly handle its situation and sought to recover the legal expenses it incurred before the insurer took over the defense. Meridian filed a Motion for Summary Judgment, arguing that it owed no further duty to Gainer than the general duty to exercise reasonable care, skill and good faith diligence in obtaining a policy for title insurance.  The trial court denied the motion and this interlocutory appeal followed.

In its opinion, the Indiana Court of Appeals found that an insurance agent’s (Meridian) duty “does not extend beyond merely procuring insurance for the insured unless the insured can establish the existence of an intimate, long-term relationship with the agent, or some other special circumstance.”   Due to the standard nature of the transaction performed by Meridian, the court found there to be no intimate, long-standing relationship between Meridian and Gainer Group. The court did, however, find that there was a special circumstance present that would trigger an extended duty to advise on the part of Meridian. Because of the property dispute between the seller and the buyer of the property involved, and because of Meridian’s effort to resolve the dispute by holding a mediation conference, there was enough evidence to trigger an extended duty on the part of Meridian to advise Gainer Group regarding the title for which it obtained insurance. But because Meridian offered advice to Gainer by referencing the contract provision and stating its opinion that Gainer did not have a successful claim, the Court held that Meridian met its extended duty to Gainer and reversed the trial court’s denial of summary judgment.

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.

The Court of Appeals held this week that leased employees are to be considered joint employees of all corporations involved in the leasing of the worker. As a result, leased employees injured on the job should be given the same treatment as traditional employees and cannot recover for their injuries beyond what is offered through worker’s compensation benefits.

In Taylor v. Ford Motor Co., No. 49A02-1007-CT-823, James Taylor was a thirty-year employee at an Indianapolis Ford factory before retiring in February 2007. Two years prior to his retirement, the factory was taken over by a subsidiary of Ford but Taylor remained a Ford employee. He returned to work later in August 2007 at the same factory, but as an employee of Visteon Corporation leased to work for the new subsidiary. The next year, Taylor was injured after being struck by a forklift operator who was an employee of the subsidiary. Taylor applied for and received worker’s compensation benefits before suing the employee, the subsidiary, and Ford for negligence. The trial court dismissed the suit for lack of subject matter jurisdiction and Taylor appealed.

In reviewing the dismissal de novo, the Court of Appeals agreed with the trial court decision. The defendants relied on Indiana Code Sec. 22-3-6-1(a), which provides that “[b]oth a lessor and a lessee of employees shall each be considered joint employers of the employees provided by the lessor to the lessee for purposes of [The Indiana Worker’s Compensation Act].” The Workers Comp Act provides the sole remedy for employees injured while at work and bars lawsuits brought as a result of the injuries, unless they were caused by someone who is not a fellow employee. The court determined that the language of IC § 22-3-6-1(a) was unambiguous and that it plainly stated that leased employees should be treated in the same manner that other employees are treated. The court cited to the concern of leased employees potentially recovering twice for their injuries by applying for Worker’s Compensation benefits and then suing for negligence.  The court upheld the decision and dismissed the case for lack of subject matter jurisdiction.

On appeal from a bench trial judgment in favor of a purchaser who backed out of a condominium purchase because their inspection revealed that no power was being delivered to several outlets in the condo, the Court of Appeals reversed the trial court’s judgment and determined that the problem complained of did not constitute a major defect.

In Fischer v. Heymann, No. 49A04-1004-PL-231, the seller of a condo unit entered into a purchase agreement with a buyer that allowed for the buyer to conduct an inspection of the property before closing the deal and included that the buyer could terminate the agreement if it found what could be termed a “Major Defect” that the seller was unable or unwilling to remedy. After hiring an inspector and conducting the inspection, it was found that several outlets around the residence were not receiving power. The inspection report classified this problem as a “major concern” which was the highest level of alert on the report. The buyers presented the report to the seller who, through an agent, said that she would not be able to remedy to problem by the stated closing date and requested a two-week extension. The buyers did not grant the two-week extension and instead gave the seller several extra days to fix the problem. The day before the extension was to expire, the buyers entered into a new agreement with another seller and instructed their agent not to deliver their termination letter to the first seller until the extension period had ended. The seller eventually fixed the power issue in what turned out to be a minor repair but after receiving the termination letter, and sued the buyer for specific performance or, in the alternative, damages including attorney's fees and costs.

In its opinion, the Court of Appeals cited to the language in the contract, stating that termination could be sought for a “major defect” and determined that the buyers must have “reasonably believed” that the defect was major. The court held that the defect in the condo was not of the major variety and also held that the buyers were not able to claim that they held a reasonable belief because the inspection report, despite listing the power issue as a “major concern,” also stated that it might be easily fixed. Because the buyer did not hold a reasonable belief that there was a major defect, as defined within the contract agreement, the trial court’s decision was reversed and remanded to determine the seller's fees and costs.

In a dissenting opinion, however, Judge Brown focused on the fact that the seller did not remedy the issue until after the agreed upon closing date (and subsequent extension) had passed. Because the remedy did not take place within the time frame listed in the agreement, and because the contract also contained a “time is of the essence” clause, the dissent believed that the agreement should have been struck down and the trial court's decision should have been upheld.

In a medical malpractice action based on negligence, where a juror failed to initially disclose a potential bias but later admitted the possibility that one existed, the Court of Appeals held that, if a hearing is not granted at trial to investigate the juror’s prejudice, a new trial must ensue.

In Thompson v. Gerowitz, No. 49A05-1005-CT-296, a doctor was sued for the wrongful death of a patient after the doctor’s performance of a stem cell procedure. During voir dire, the process by which prospective jurors are questioned, attorneys for the doctor asked the pool of jurors if any among them held biases against medical professionals that would affect their decision-making processes. No juror spoke up during voir dire, but after voir dire had concluded and the trial court had announced the selected jury, a juror offered up the information that she was a widow and had tried to “go after the doctor for negligence.” The trial judge, after discussing this statement with the attorneys, referenced presiding over more than 250 jury trials and said “I think the jury is a good one, and I am sure it will be just fine for both sides . . . .” After trial, the jury returned a verdict for the plaintiff and the doctor appealed.

In its opinion, the Court of Appeals acknowledged that the juror’s statement “was specific, substantial evidence showing a juror was possibly biased,” and continued, “[a]t that point, it was incumbent upon the trial court to conduct a hearing, out of the presence of the remainder of the jury” to investigate further if the juror’s statement indicated bias and if such a hearing would itself create a bias in the juror. The trial court should have then allowed the doctor’s attorneys to challenge the juror for cause and declare a mistrial if bias was found. Because the trial court judge allowed the case to continue uninterrupted, the Court of Appeals remanded the case for a new trial.

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.

The Court of Appeals held last week that a real estate agent representing a buyer in a transaction only owes the selling party a duty of honesty and a duty of not knowingly giving out false information, pursuant to Indiana statutory law.

In Likens v. Prickett’s Properties, Inc., a buyer’s agent in a real estate transaction contacted a seller independently to encourage acceptance of the buyer’s offer. The agent represented to the seller that, although closing would have to wait several months until the buyer was able to secure enough cash for the purchase, the buyer presented a good offer and would make rental payments to the seller on the property until closing. The agent also told the seller that the buyer deposited $10,000 in escrow, which was to be held in the form of a bank letter of guarantee of funds. After closing did not occur by the date specified and the bank letter was determined to be fraudulent, the seller sued the agency, the buyer, and the agent for negligence and fraud.

The trial court granted summary judgment in favor of the real estate agent on both counts, citing Indiana Code § 25-34.1-10-11, which states that a licensee (a real estate agent) representing a buyer “owes no duties or obligations to the seller or landlord except that a licensee shall treat all prospective sellers or landlords honestly and not knowingly give them false information.” The statute also states that the agent bears no responsibility to ensure the financial stability of the buyer. The Court of Appeals, in affirming the granting of summary judgment, explained that because there was no statutory duty owed to the seller, there could be no negligence claim. The seller failed to appeal the summary judgment as it related to the fraud claim, so no further investigation of the agent’s knowledge needed to be conducted.

J.K. Harris, a tax resolution company with several offices in Indiana, lost its ability to argue against a class action suit brought against it by an Indiana resident whose tax issues were not resolved by the company, the Court of Appeals of Indiana held today in J.K. Harris & Co. v. Sandlin, No. 49A05-1003-CT-184.

The rationale behind the forfeiture of argument stems from Harris’s five and a half month absence from the litigation. Harris failed to appear before the court several times before the trial court ordered locks to be placed on the doors of the Indiana locations of the business. 

In an appeal of the court’s denial to set aside default judgment against it, Harris argued that it did not receive adequate notice of the proceedings, even though it was served with the plaintiff’s complaint. The Court of Appeals concluded that because Harris did not raise the argument during trial, it waived any ability to make the argument on appeal. The court similarly dismissed Harris’s claim that the contract signed by the plaintiff stated that any disputes between the parties would be resolved in arbitration. The court held that by ignoring the pending litigation, Harris, in effect, acted as if it was not interested in pursuing the arbitration claim and, therefore, could not stand by the arbitration clause in the contract. The court remanded the case for further class determination, but sided with the plaintiff on all other accounts.