Appellate Trial

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 Court of Appeals reversed the trial court and held that student loan funds that are deposited into a personal bank account are exempt from being attached by a judgment creditor.

Nikki Brindle and Patrick J. Arata entered into an agreed judgment whereby Brindle would pay Arata for legal services provided. Arata initiated proceedings to seek funds from Brindle’s bank account at National City Bank, at which time contained $3,367.01. A week later, Brindle filed an exemption claim and requested a hearing. At the hearing, Brindle introduced a voucher from the Academy of Art University stating that she would receive a check in the amount of $3,268.00 which was the amount left over after her tuition was paid to the university. The trial court denied Brindle’s exemption claim and ordered all funds except $300.00 to be transferred. The court stated the funds lost their exempt status when they were deposited into her bank account. Brindle appealed.

In Nikki Brindle v. Patrick J. Arata, No. 02A05-1004-SC-239, the Court of Appeals held that under U.S.C. Title 20 section 1095a, regarding wage garnishments, the plain language of the statute was clear that student loan funds and property traceable to those funds were exempt from garnishment or attachment. Furthermore, because there were no provisions to terminate this status, a contrary decision would render section 1095a meaningless, which the Court doubted was Congress’ intent. It stated that almost every recipient of student funds deposits their funds into a personal bank account and that it “could not imagine that Congress wishes those who receive student loans to stuff their mattresses with their rent money to prevent judgment creditors from attaching it.” Additionally, it distinguished the garnishment of retirement funds after they were deposited from the garnishment of student loan funds. The federal statutes are only extended to protect from the collection of student loans. The Court stated that "not being able to give something away is quite different from having it protected from being taken away." Retirement fund statutes do not apply to student loans. Therefore, the trial court’s holding was erroneous because the student loan funds that Brindle deposited into her bank account were protected, and Arata was prohibited from attachment. Trial court’s holding is reversed.
 

     In insurance law, the insured has the initial burden to make accurate representations in the application.  If an insurance policy is issued, the insurer then has the burden to issue a policy with clear language and provide insurance according to the policy's terms.  Because the insurer is charged with writing an unambiguous policy, if a dispute between the insured and insurer turns on a term that is deemed ambiguous the policy is interpreted in favor of coverage. 

     In Allied Property & Casualty Ins. Co. v. Good, the Court of Appeals held that a policy is void ab initio and summary judgment should be entered in favor of the insurer when the insured makes a material misrepresentation on the application for insurance.  Specifically, the Court held:  "Because the uncontradicted evidence indicates Linda misrepresented the Goods' cancellation history on the application for homeowners insurance and Allied would not have issued the policy if it had known the truth about their history, the trial court erred by denying Allied's motion for summary judgment."

     Of note, Indiana appellate courts have stated that an ambiguity does not exist merely because the parties proffered differing interpretations of the policy language.  In this case, no ambiguity was found even though one of the three judges on the appellate panel interpreted the disputed language in the policy differently.  In dissent, Judge Bailey opined that the insured may not have provided misinformation in the application.  Judge Bailey further stated that, even if the insured provided misinformation, an insurer's use of a self-serving affidavit may not be sufficient to prove the materiality of the misrepresentation.

The Indiana Court of Appeals held that a master homeowners’ association was required to be established by the controlling ordinances for a planned unit development (“PUD”) and that a swimming pool was within the scope of the association’s responsibilities.

The City of Greenwood adopted a zoning ordinance for planned unit developments which provided “there shall be established a homeowners association to provide for the control and maintenance of all common areas.” A developer submitted the Master Plan for The Pines of Greenwood’s PUD, and it consisted of five communities with two types of homes and densities, the Pines of Greenwood (“POG”) and the Village Pines (“VP”). The Master Plan did not contain any definitions, but was approved by the Greenwood Common Council in an ordinance that amended the city’s zoning ordinance (“Master Plan Ordinance”). Later, covenants and restrictions were recorded establishing two separate homeowners’ associations for the POG and VP communities. However, a master homeowners’ association was never established for The Pines as a whole. 

A swimming pool was built in the POG community, but not in the VP community. The POG covenants stated that only POG property owners could use the pool. The VP community filed a complaint seeking to reform the POG covenant because it “mistakenly omitted a provision whereby the residents of VP would be permitted to use the community swimming pool” located in the POG area. The VP community argued that a master homeowners’ association should be established for maintenance and operation of the common areas. The trial court held that the creation of a master homeowners’ association to control the common areas was not expressly stated in the documents reflecting the development of The Pines. VP appealed.

The issue in The Village Pines at the Pines of Greenwood Homeowners' Assn. Inc. v. The Pines of Greenwood Homeowners' Assn. Inc., Case No. 41A01-0912-CV-568, was whether the Master Plan Ordinance required a master homeowners’ association, and if required, what areas this association would control. The Court read the PUD zoning ordinance and the Master Plan Ordinance together because they contained the same subject matter and, thus, should be read together to come to a “harmonious statutory scheme.” Both the PUD ordinance and Master Plan Ordinance discussed a master homeowners’ association. Thus, a master homeowners’ association was required for The Pines. Furthermore, when deciding if the master homeowners’ association responsibilities included the swimming pool, it looked at the terms “amenities” and “park area” contained in the ordinances. Although the terms were not defined, it used the plain, ordinary and usual meanings of the words. It held that the swimming pool was within the definition of the terms because a pool is an “amenity or park area available as a recreation area to all residents.” Therefore, it was within the master homeowners association’s responsibilities to properly control, maintain and operate it. The Court reversed the trial court’s holding and ordered the parties to engage in mediation.

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.
 

The Indiana Court of Appeals held, as a matter of first impression, that the definition of a “courthouse” for a notice statute can be a temporary courthouse in which the courts convene while a permanent county courthouse is undergoing repairs.

In August 2009, the Grant County Courthouse was undergoing repairs. Due to the repairs, the court was relocated to a temporary site. Around this time, Claudette Gee’s home was ordered into foreclosure. The Grant County Sheriff’s Department posted notice of the foreclosure on a bulletin board located next to the door of the temporary courtroom. A week after Gee’s property was purchased, Gee moved to set aside the sheriff’s sale. She argued that the sheriff’s office failed to post notice of the sale “at the door of the courthouse” as required by Indiana statute. The trial court denied Gee’s motion and Gee appealed to the Indiana Court of Appeals.

In Claudette Gee v. Green Tree Servicing LLC, No. 27A02-1003-MF-304, the issue on appeal was whether the sheriff followed the correct procedure when the sheriff posted notice of the sale at the temporary county court offices and not at the permanent county courthouse. The Court held that the sheriff complied with Indiana’s notice statute because a “courthouse” is defined as a place where judges convene to adjudicate disputes and administer justice. The Court relied on Black’s Law Dictionary for this definition, as it was not defined in a statute. Because the temporary courtroom was the place where three of the four county courts convened during renovations, the Court determined that the plain meaning of the statute also applied to temporary courtrooms. Therefore, the sheriff followed the proper notice procedure and the foreclosure sale was valid. The court noted, however, that Gee did not argue that the sheriff was required to post notice at both sites, and thus, the Court did not consider this issue. Affirmed.

The Indiana Supreme Court split in a 3:2 decision on the issue of whether an “occurrence” under a commercial general liability (CGL) policy covered a subcontractor’s faulty workmanship under the insured’s contract.

Sheehan Construction Company was a general contractor on the Crystal Lake residential project, and was responsible for hiring subcontractors to build the houses. During the period when the houses were being built, Sheehan was insured by Continental Insurance Co. under a CGL policy that covered all damages the insured was legally obligated to pay because of “bodily injury” or “property damage” that were caused by an “occurrence” in the coverage territory. This policy excluded coverage for damages to the insured’s property and work that arose out of work performed on “your behalf by a subcontractor.” Sheehan was also insured by Somerville Construction, one of Sheehan’s subcontractors, under their CGL policy through Indiana Insurance Company.

In April 2000, Vincent B. Alig and his wife Mary Jean Alig purchased a home in Crystal Lake. A few years later, the Aligs experienced leaking windows, water damage, and other issues in their home and notified their homeowner insurance carrier, who later found that the problems resulted from faulty workmanship of Sheehan’s subcontractors. In November 2004, the Aligs filed suit against Sheehan alleging violation of Indiana Code sections 32-27-3-1 to 14 (concerning cause of action for construction defects). Later, more homeowners in the Crystal Lake subdivision joined and created a class-action suit. The class and Continental Insurance settled.   Continental filed for declaratory judgment claiming that Sheehan’s claims were not covered under the policy. Sheehan and the class filed a third-party complaint against Indiana Insurance and MJ Insurance, Sheehan’s insurance broker. The trial court granted summary judgment in favor of Continental, MJ, and Indiana Insurance. The Court of Appeals affirmed.

In Sheehan Construction Co., Inc., et al. v. Continental Casualty Co., et al., No. 49S02-1001-CV-32, Justices Robert Rucker, Brent Dickson, and Theodore Boehm held that CGL policies can cover an insured’s liability for a subcontractor’s faulty workmanship. The issue the Court grappled with was whether faulty workmanship is an “accident” within a standard CGL policy’s definition of an “occurrence.” The majority determined that faulty workmanship is an accident if the damage is the result of an unexpected or unforeseeable event. The Court defined an “accident” as an unexpected happening without intention or design. Implicit in this definition is a lack of intent. If the faulty workmanship was the product of unintentional conduct, then the resulting damage would be unforeseeable and would be an accident within the CGL policy’s definition of an “occurrence.” This analysis is fact specific and should be determined on a case-by-case basis. In this case, the trial court did not conclude on the issue of whether the faulty workmanship was intentional or unintentional and the trial court’s judgment was reversed and remanded for further proceedings.

Dissent:

Chief Justice Shepard: This opinion leads Indiana to the wrong result because CGL policies are not designed or priced to cover any demand an insured may face. Oral argument suggested that an insurance product that covers an insured’s faulty work may not even exist. Therefore, CGL policies should not cover faulty subcontractor work as an accident within standard coverage of a CGL policy’s definition of an “occurrence.”  

Justice Sullivan: An “occurrence” under a CGL policy is an accidental damage caused by an insured or an insured’s subcontractors, to property owned by third-parties, but not the costs of repairing work performed. Instead, a party who wishes to insure against damages from faulty workmanship should obtain protection from a performance bond.

            Lost Creek is a not-for-profit organization that has been operating a shooting range since 1934 in a rural area of Vigo County, Indiana. Shooting activities at Lost Creek’s shooting range increased after September 11, 2001, because members of Vigo County’s law enforcement began using their range. On July 17, 2007, the homeowners who lived near Lost Creek filed a complaint for injunctive relief seeking to abate the nuisance of the shooting range. 

            In Phyllis Woodsmall, et al. v. Lost Creek Township Conservation Club, Inc., Case No. 84A01-1001-PL-33, the trial court refused to enjoin Lost Creek because the homeowners failed to establish their burden of proof. Accordingly, the homeowners appealed, from a negative judgment, and the case was reviewed by the Indiana Court of Appeals under the clearly erroneous standard. To prevail under this standard, the homeowners had to establish that the conclusion reached by the trial court was contrary to the law.

            In Indiana, the statute defines an actionable nuisance as: “Whatever is (1) injurious to health; (2) indecent; (3) offensive to the senses; or (4) an obstruction to the free use of property; so as essentially to interfere with the comfortable enjoyment of life or property [.]” IC § 32-30-6-6. The homeowners’ statutory nuisance complaint concerned the legal use of land that affected a finite number of people. Thus, they alleged a private, per accidens nuisance against Lost Creek.

In February 2000, Commercial Coin entered into a ten-year written real estate lease agreement with an owner of an apartment complex. However, the lease agreement was never recorded. In 2005, Park P purchased the apartment complex where Commercial Coin’s coin-operated laundry machines had been previously installed pursuant to the lease agreement. Since the installation of its laundry machines, Commercial Coin has had signs on the laundry room walls and labels on each machine displaying that the machines were owned and operated by Commercial Coin pursuant to a written lease agreement. After Park P’s purchase, Commercial Coin continued to maintain the facilities. 

In 2008, Park P filed a complaint to quiet title and sought declaratory judgment alleging that the lease agreement was void because it was never recorded as required by Indiana statute. Trial court granted summary judgment in favor of Park P and held that there was not a genuine issue of material fact because the lease agreement was not properly filed. Commercial Coin appealed.

In Crown Coin Meter Company, et al. v. Park P, LLC, Case No. 34D04-0802-PL-229, the issue was whether Park P was a bona fide purchaser, and therefore, bought the apartment complex without notice of Commercial Coin’s lease agreement with the previous owner. To qualify as a bonafide purchaser in Indiana, one has to purchase in good faith, for valuable consideration, and without notice of the outstanding rights of others. If Park P did not have notice, the agreement would be void as a matter of law. In Indiana, a lease in excess of three-years that is not recorded is void against a bona fide purchaser. 

By George T. Patton, Jr. and Kellie M. Barr

      In May, the Indiana Supreme Court issued six civil opinions and granted transfer in two civil appeals. The Indiana Court of Appeals issued twenty-three published civil opinions, seven of which are briefly summarized in this column. The full text of each decision is available via Casemaker at www.inbar.org.    
 

INDIANA SUPREME COURT

Dispute between Internet marketing firm and company for website design is not for "goods and services" pursuant to Indiana's Article 2 of the Uniform Commercial Code and, under the facts of this case, the company could not sustain conversion claim for website's removal

      The Indiana Supreme Court tackled numerous issues of first impression to resolve a dispute between a company and an Internet marketing firm that created and hosted the company's website.  Conwell v. Gray Loon Outdoor Mktg. Group, Inc., 906 N.E.2d 805 (Ind. 2009). Although the parties fulfilled their obligations under their written agreement, the company later refused to pay for hosting fees and additional changes it requested to the website. The marketing firm sued the company for payment, and the company counterclaimed that the marketing firm committed conversion by taking down the original website for which the company had already paid.

      The Supreme Court first addressed whether Article 2 of Indiana's Uniform Commercial Code ("U.C.C.") or common law principles of contract law governed the parties' transaction. By applying the "predominant thrust" test to determine whether the transaction involved the transfer of goods or the performance of service, the Court held that "[a] website created under arrangements calling for the designer to fashion, program, and host its operations on the designer's server is neither tangible nor moveable in the conventional sense." Id. at 812. Because agreement of the parties "contemplated a custom design for a single customer and an ongoing hosting relationship[,]" the U.C.C. did not apply. Id.

      The Court examined the marketing firm's claim for payment under common law principles and determined that although the website modifications were not contemplated by the parties' original agreement, the company requested the changes without inquiring into the amount the changes would cost. The marketing firm's invoice was the only evidence submitted to the trial court regarding the reasonableness of the charges, and there was evidence that a representative of the company accepted the price after receiving the invoice. Because there was no evidence that the marketing firm "participated in an unconscionable effort to 'strong arm' [the company] into paying an unreasonable fee," the Court affirmed the trial court's decision to enforce the parties' agreement, even though the marketing firm had not provided a cost estimate. Id. at 813.

      Turning to the company's counterclaim that the marketing firm committed conversion by taking down the website for which the company paid, the Court analyzed how copyright law affected the legal status of the website. For the company's counterclaim to succeed, the website either had to be a "work made for hire" where the company was the original owner or the marketing firm had to have transferred ownership of the website to the company. The Court determined that the website was not a work made for hire because the marketing firm was an independent contractor, not the company's employee. The Court also concluded that language in the marketing firm's proposal that the company inherently owned the product was insufficient to transfer ownership of the website from the marketing firm to the company. The marketing firm did, however, have a nonexclusive license because the "parties intended to transfer a copyright, but failed to do so in writing." Id. at 816. Because a nonexclusive license is not an ownership interest under copyright law, however, the marketing firm did not commit conversion by removing the website, and the company's counterclaim failed.

      Concurring in result, Justice Boehm wrote separately to explain that, in his view, a website is "property" for the purposes of tortious or criminal conversion. Id. at 817. Although the company was a licensee that could not sustain a conversion claim, Justice Boehm emphasized that licensees are not without remedy. In this case, the marketing firm arguably "created the problem that the licensed code no longer existed" and "had no right to seize both phases [of the website design] as collateral for its unpaid work on the second phase." Id. 818-19. Although the company's damages were "a matter of speculation on this record," Justice Boehm noted that the company could have asserted breach of license as either an affirmative defense or set-off. Because it did not, he concurred with the majority's result.

Evidence of discounted payments healthcare providers accept from insurance carriers on behalf of injured plaintiffs can be introduced into evidence to determine the reasonable value of the services to the extent it can be done without referencing insurance

      The Indiana Supreme Court confronted "the question of how to determine the reasonable value of medical services when an injured plaintiff's medical treatment is paid from a collateral source at a discounted rate." Stanley v. Walker, 906 N.E.2d 852, 855 (Ind. 2009). In an opinion authored by Justice Sullivan, the Court held that evidence of a healthcare provider's acceptance of a reduced amount of compensation for services provided to a plaintiff may be introduced to help a jury determine the reasonable value of the services "[t]o the extent the discounted amounts may be introduced without referencing insurance." Id. at 853. The Court analyzed Indiana Rule of Evidence 413 and the "complexities of health care pricing structures[, which] make it difficult to determine whether the amount paid, the amount billed, or an amount in between represents the reasonable value of medical services." Id. at 857. Ultimately, the Court held that Indiana's collateral source statute does not bar evidence of discounted payments accepted by healthcare providers to determine the reasonable value of services. "Given the current state of the health care pricing system where . . . authorities suggest that a medical provider's billed charges do not equate to cost, the jury may well need the amount of the payments, amounts billed by medical providers, and other relevant and admissible evidence to be able to determine the amount of reasonable medical expenses." Id. at 858. 

      Justice Dickson authored a dissenting opinion, joined by Justice Rucker, arguing that the majority's rule "contravenes the express requirements of the collateral source statute." Id. at 860 (citing Ind. Code § 34-44-1-2). The dissent also disagreed that the collateral source statute abrogated the common law collateral source rule because "the statute's precise language appears to create a limited exception to the common law rule, which is otherwise left intact." Id. at 862. "Under today's new rule, the existence and extent of any improvement to the accuracy of verdicts seems overwhelmed by the significant probability of incompleteness, confusion, and resulting unfairness, all further compounded by detrimental effects on the fairness and efficient administration of justice." Id. at 865.

      Justice Boehm, joined by Chief Justice Shepard, wrote separately to respond to points made by the dissent and emphasized that "we hold today only that the discounted price actually paid for medical services is admissible evidence as to the reasonable value of those services. We do not hold that it is conclusive." Id. at 859.

Although claim against mother's estate was timely, daughter failed to rebut presumption that services rendered to her incapacitated mother were gratuitous because no evidence that daughter had an express or implied contract with mother's guardian

      The Indiana Supreme Court unanimously reversed the trial court's denial of an estate's motion for summary judgment on a daughter's claim against her mother's estate for reimbursement for various expenses and personal services that the daughter rendered to her mother while the mother was subject to a guardianship. Estate of Prickett v. Womersley, 905 N.E.2d 1008 (Ind. 2009). First, the Court addressed the Estate's argument that the daughter's reimbursement claim was time-barred because she had not filed her claim in the guardianship proceeding. Interpreting the Guardianship Code, the Court held that Indiana Code § 29-3-10-1(d) does not require a claim to be filed against the guardianship estate and "in the absence of legislative direction mandating a guardian's approval, we are apprehensive of the administrative and other practical consequences of ordering a guardian's review of all claims filed in a probate estate that accrue during a decedent's guardianship." Id. at 1012. Therefore, the daughter's claim for reimbursement was not time-barred because she was not required to pursue it in the guardianship proceeding and she properly filed it against her mother's estate.

      The Court reaffirmed the rebuttable presumption that services rendered by a family member are gratuitous. Although the daughter designated evidence that her mother signed a statement in front of two witnesses that she wanted her estate to compensate her daughter for her services, the Court held that the mother could not enter into a contract at the time she executed the statement and, consequently, "when the provider is a family member the implied contract must exist between that person and the incapacitated person's guardian." Id. at 1013. Because the daughter failed to produce evidence that she had an express or implied contract with her mother's guardian, she failed to rebut the presumption that her services were gratuitous as a matter of law.

An insurance company's policy was consistent with Indiana's uninsured motorist statute and insureds were not entitled to uninsured motorist benefits for the death of their unmarried adult son because they did not suffer bodily injury

      The Indiana Supreme Court unanimously held that named insureds who brought an action against their automobile insurer to recover uninsured motorist benefits for the death of their unmarried adult son were not persons "legally entitled to recover damages" for their son's death. Bush v. State Farm Mut. Auto. Ins. Co., 905 N.E.2d 1003, 1008 (Ind. 2009). For purposes of its uninsured motorist coverage, the parents' insurance policy defined "insured" to include the named insureds and their relatives, which were defined as related persons primarily residing with the named insureds. Because their adult son no longer lived with his parents, he was not an insured under his parents' policy.

      The insured parents argued that they were entitled to uninsured motorist benefits because their policy was inconsistent with Indiana's uninsured motorist statute-Indiana Code § 27-7-5-2-and, thus, unenforceable. The Court disagreed and emphasized that "the statute itself makes clear that it contemplates uninsured motorist coverage only for the 'insured's' bodily injury." Id. at 1005. The insurance company's policy was "consistent with the uninsured motorist statute by requiring that the insured sustain bodily injury to trigger uninsured motorist coverage." Id. Reaffirming a previous holding, the Court held that the definition of bodily injury includes emotional distress "only if it arises from a bodily touching." Id. (citing State Farm Mut. Auto. Ins. Co. v. Jakupko, 881 N.E.2d 654 (Ind. 2008)). "Indiana's uninsured motorist statute requires coverage only for bodily injuries sustained by an insured." Bush, 905 N.E.2d at 1007-08. Because the parents did not suffer bodily injury, they did not have uninsured motorist coverage for their adult son's death.

For purposes of the Family and Medical Leave Act, the 1250-hour requirement applies to an employee's overall service, not service in any particular position, and a trial court's exercise of equitable jurisdiction to award an employee front pay had to be discounted to reflect present day value

      The Indiana Supreme Court addressed issues of first impression surrounding a full-time teacher, part-time football coach's claims against his school corporation employer under the Family and Medical Leave Act ("FMLA"). Gary Cmty. School Corp. v. Powell, 906 N.E.2d 823 (Ind. 2009). Although the school reinstated the employee to his full-time teaching position after his medical leave, it did not reinstate him to his head coaching position. Additionally, the school rejected him as head football coach in subsequent years, which the teacher argued was retaliatory conduct for comments he made to a local newspaper regarding the school's failure to restore him to his coaching position following his medical leave.

      The Court held as an issue of first impression that "an employee filling multiple positions with the same employer is eligible for FMLA leave as to all positions if that employee has completed 1,250 total hours of service to that employer in the twelve months preceding the request for leave." Id. at 828. As the Court noted, "the test for [FMLA] eligibility is phrased in terms of 'hours of service' to an 'employer,' not service in any particular position." Id. Therefore, because the 1,250-hour requirement applies to an employee's overall service, the school corporation was required to reinstate the employee to both the full-time teaching position and the part-time coaching position. Additionally, the Court concluded that the employee presented sufficient evidence to support the jury's conclusion that the school corporation retaliated against him for voicing his complaints to a local newspaper, which were not permissible grounds for retaliation under FMLA.

      The school corporation presented numerous arguments challenging the trial court's award of damages. As an issue of first impression, the Court concluded that although the trial court did not abuse its discretion by exercising equity jurisdiction and awarding front pay, "front pay should be discounted to present value. Without discounting, [the employee] would receive a windfall in the form of the use of the money years before it would have been earned." Id. at 834. The Court remanded the action to the trial court to discount the front pay award to present day value, but otherwise affirmed the trial court in all respects.

Employees' damages award for backpay after employer's violation of Indiana Civil Rights Act should not have been reduced by amount of unemployment benefits received

      Two employees filed a complaint with the Michigan City Human Rights Commission ("Commission"), alleging that their employer violated the Indiana Civil Rights Act when it discriminated against them on the basis of race and terminated them for timecard fraud. Filter Specialists, Inc. v. Brooks, 906 N.E.2d 835 (Ind. 2009). The Commission concluded that race was the motivating factor behind the firings and awarded the employees damages for backpay and fringe benefits. The Indiana Supreme Court concluded that the employees proved their claim even though they did not introduce evidence of the ordinance establishing the Commission because the ordinance "has no bearing on whether [the employer] discharged [the employees] on the basis of race in violation of the Indiana Civil Rights Act." Id. at 845. Additionally, the employees presented substantial evidence to support the Commission's conclusion that they had suffered unlawful discrimination, even though there was "no smoking gun" regarding the employer's mental processes. Id. at 848.

      Regarding damages, the Court agreed with a majority of federal circuit courts that "unemployment benefits should not be deducted from backpay awards in discrimination cases." Id. at 849. Consequently, the trial court erred by ordering the case remanded to the Commission because "the damages awarded to [the employees] should not have been affected by their receipt of unemployment compensation." Id. at 850.

INDIANA COURT OF APPEALS

> Father had independent cause of action against Indiana Patient's Compensation Fund for negligent infliction of emotional distress after he witnessed the death of his son, which was caused by the negligent conduct of healthcare providers. Ind. Patient's Comp. Fund v. Patrick, 906 N.E.2d 194 (Ind. Ct. App. 2009).

> Oral findings and conclusions that are "thoroughly detailed in the record" satisfy the purpose of special findings under Indiana Trial Rule 52(A). Nunn Law Office v. Rosenthal, 905 N.E.2d 513 (Ind. Ct. App. 2009). Additionally, an attorney employed under a contingency fee contract who is discharged prior to occurrence of the contingency is limited to quantum meruit recovery. 

> Trial court should have granted party's request for a hearing on motion to change venue pursuant to Indiana Trial Rule 75(A) because of conflicting evidence and the lack of evidence regarding the location of plaintiff's principle office. Painters Dist. Council 91 v. Calvert Enter. Electronic Servs., Inc., 906 N.E.2d 254 (Ind. Ct. App. 2009).

> The Indiana Motor Vehicle Protection Act, commonly known as the Lemon Law, "obligates a consumer to demonstrate that the vehicle was subject to repair at least four times and that the same defective condition remained unresolved after the fourth attempt." Metro Health Profs., Inc. v. Chrysler, LLC, 905 N.E.2d 1026, 1033 (Ind. Ct. App. 2009). Once a consumer has met the four-repair requirement and files a claim shortly after the fourth attempt, as a matter of law, the automobile manufacturer is obligated to either refund the amount the buyer paid or provide a replacement vehicle of comparable value.

> Employee's claim against political subdivision employer is governed by the three-year statute of limitations contained in the Federal Employers' Liability Act instead of the two-year statute of limitations governing Indiana personal injury claims. Januchowski v. N. Ind. Commuter Trans. Dist., 905 N.E.2d 1041 (Ind. Ct. App. 2009).

> Bureau of Motor Vehicles' policy of revoking driving privileges after class members whose recorded personal information did not match information on file with the Social Security Administration violated federal due process because the BMV failed to articulate ascertainable standards for current identification holders. Leone v. Ind. Bureau of Motor Vehicles, 906 N.E.2d 172 (Ind. Ct. App. 2009). The policy did, however, have the rational basis of preventing identity theft, and the trial court properly denied the class members' request for a preliminary injunction because the class failed to show an injunction would be in the public interest. 

> Jim Mansfield was initially declared the winner of the Muncie mayoral election but his opponent, Sharon McShurley, was declared the winner after a recount. Mansfield v. McShurley, --- N.E.2d ---, No. 18A02-0804-CV-375 (Ind. Ct. App. 2009). The trial court dismissed Mansfield's statutory challenge to the election as well as his amended complaint asserting a quo warranto action. On appeal, the Court of Appeals held that a statutory contest action "may not be brought outside the statutorily prescribed time frames even if, as in the case before [the Court of Appeals], the election result changes by virtue of a recount." Additionally, the trial court did not err by dismissing the quo warranto complaint because the recount commission did not act unlawfully by declining to count certain absentee ballots.

TRANSFER ORDERS

> Babes Showclub v. Lair, 901 N.E.2d 44 (Ind. Ct. App. 2009) (whether a police officer's claims for injuries he suffered responding to a complaint on the club's premises were barred by the Fireman's Rule), transfer granted on May 7, 2009.

> Ind. Family & Soc. Servs. Admin. v. Meyer, 900 N.E.2d 74 (Ind. Ct. App. 2009) (whether the trial court had discretion to respond to procedural error by granting a belated extension of time), transfer granted on May 14, 2009.

      George T. Patton, Jr., is a partner at Bose McKinney & Evans LLP, Indianapolis/Washington, D.C. and co-chair of its Appellate Group. He was the first chair of the ISBA Appellate Practice Section, served as an Adjunct Assistant Professor of Appellate Advocacy and Procedure at the Indiana University School of Law-Bloomington for five years, and has written four articles on recent developments in Indiana appellate procedure for the Indiana Law Review. George's book on the 2001 Indiana Appellate Rules is 24 Indiana Practice-Appellate Procedure (3d Ed. West Publishing Co. 2001 & 2006 Supp.). 

      Kellie M. Barr is an associate at Bose McKinney & Evans LLP, Indianapolis, and works on business, commercial, and appellate litigation. Upon graduating from the Indiana University School of Law-Bloomington, Kellie served as a law clerk to Chief Judge John G. Baker at the Indiana Court of Appeals. Kellie is the co-author of an article on recent developments in Indiana appellate procedure to be published in the Indiana Law Review later this year.

by Steven M. Badger 

In Indiana zoning law, the doctrine of "vested rights" protects developers who have made large investments in a construction project from having those investments thwarted by changes in zoning requirements while the development project is underway.  City of New Haven v. Flying J. Inc., No. 02A03-0902-CV-74, Ind. Ct. App. (August 31, 2009), recently addressed the question of what steps a developer must take in reliance on a set of existing zoning standards before that developer enjoys the protection of such "vested rights."

Flying J involved a tortuous litigation path including two appeals (and even a diversionary foray by the developer into federal court).  Flying J proposed to build a travel plaza (including a gas station, convenience store, 24-hour restaurant and other amenities) on a 17-acre site.  The initial BZA decision rejected the development, but that decision was overturned in the first appeal because the Indiana Court of Appeals concluded the travel plaza involved permitted uses under the New Haven zoning ordinance.  After that decision, however, New Haven amended its zoning ordinance to impose new restrictions on the size (by acerage) of service stations.  The size and scale of Flying J's planned travel plaza exceeded the limitations of the amended ordinance.  The issue addressed by the Indiana Court of Appeals in the second appeal was whether Flying J had a "vested right" to proceed with its development plans under the earlier version of New Haven's ordinance.

The Indiana Court of Appeals affirmed the trial court's decision finding that Flying J's vested right in its planned development precluded application of the amended ordinance.  The Court rejected the BZA's argument that Flying J had no vested right because it had not yet begun construction on the travel plaza.  Quoting an earlier decision in Pinnacle Media LLC v. Metropolitan Dev. Comm'n, 868 N.E.2d 894, 900 (Ind. Ct. App. 2007), the Court stated that "there is no bright-line rule that construction must have commenced in order to show a vested right."  The Court elaborated:

We read the Pinnacle cases to mean that, while construction definitely does establish a vested right, mere preliminary work, including filing of a building permit, does not.  In situations falling between these two extremes, courts must engage in a fact-sensitive analysis to determine whether vested rights have accrued prior to application for a building permit or construction.

The Court of Appeals concluded that the $4 million-plus spent by Flying J gave rise to a vested right (or at least the trial court did not err in so concluding).  By far the largest portion of the $4 million was the purchase price of the property -- a point pressed vigorously by the BZA.  (The BZA no doubt pointed out that if the cost of acquiring a property alone created vested rights under the zoning regulations in existence at the time the property was acquired, then zoning changes would be enforceable only against those property owners who happen to acquire their properties after the zoning ordinance is changed.  Such a rule would make it virtually impossible to update zoning regulations.)  Without directly addressing that argument, the Court of Appeals held that Flying J's other expenses, "including tens of thousands of dollars on engineering and surveying, constitute more than mere 'preliminary' work or expenses," and were sufficient to give Flying J a vested right under the original ordinance.
 

By Steven M. Badger

Whether a law suit involves a zoning dispute, property appeal or business litigation question, the Indiana law firm handling the matter must be familiar with the unique procedural aspects of Indiana law.  Two decisions issued this week by the Indiana Appellate Courts focus on questions of Indiana procedure when a property owner initiates a court challenge to a decision by a local Board of Zoning Appeals.
 
In Thomas v. Blackford County Area Board of Zoning Appeals and Oolman Dairy, LLC, the Indiana Supreme Court affirmed the trial court's conclusion that Thomas, a property owner who remonstrated against locating a confined animal feeding operation one-third of a mile from Remonstrator Thomas' property, failed to show she had standing to challenge a Board of Zoning Appeals' ("BZA's") decision granting a special exception for the feeding operation. 
 
The standing question itself and the Indiana Supreme Court's affirmance of the trial court's findings are neither novel nor surprising to an Indiana appellate lawyer.  The interesting aspect of the decision is the Supreme Court's approval of the procedure followed by the trial court to reach the result.
 
The question of Thomas' standing was first raised by the owner of the feed operation in a motion to dismiss under Indiana Trial Rule 12(B)(6).   The trial court correctly denied that motion because it was based on matters outside the four corners of the Complaint.  The trial court, nevertheless, held an evidentiary hearing on the question of whether Thomas had standing as an aggrieved party.  Based on the testimony and evidence at the hearing (principally relating to the impact of the feeding operation on the value of Thomas' property), the trial court determined that Thomas failed to establish she had standing to challenge the BZA's decision.

The decision was first reviewed by the Indiana Court of Appeals, which reversed the trial court's decision.  The Court of Appeals reasoned that the trial court should have treated the Motion to Dismiss as a Motion for Summary Judgment.  See Ind. Trial Rule 12(B) (when "matters outside the pleading are presented to and not excluded by the court" on a motion under Rule 12(B)(6), "the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56.").  That procedural determination by the Court of Appeals was outcome determinative because the evidence as to Thomas' standing (i.e., the impact the feeding operation would have on her property's value) was conflicting, thereby creating genuine issues of material fact.

The Indiana Supreme Court granted transfer, vacated the Indiana Court of Appeals decision, and affirmed the trial court's decision finding Thomas lacked standing.  The Indiana Supreme Court agreed with the trial court and Court of Appeals that dismissal was not appropriate under Indiana Trial Rule 12(B)(6).  However, departing from the Court of Appeals' analysis, the Supreme Court concluded that the procedure for summary judgment under Trial Rule 56 did not apply.  Instead, the Supreme Court compared the situation to a motion to dismiss for lack of personal jurisdiction in which a trial court may hold an evidentiary hearing to determine the jurisdictional question.  Thus, the Supreme Court approved of the procedure followed by the trial court in holding an evidentiary hearing and deciding whether the Plaintiff had standing based on the conflicting evidence presented.
 
There is no specific provision in Trial Rule 12(B) that the Indiana Supreme Court relied upon in holding that the trial court may determine the Plaintiff's standing on a motion to dismiss.  Implicit in that result is the notion that standing is a legal issue for the judge, not the jury, to decide.
 
A novel procedural issue was also addressed in Edward Rose of Indiana, LLC v. Metropolitan Board of Zoning Appeals, Indianapolis-Marion County.  In Edward Rose, an apartment owner challenged the Indianapolis-Marion County BZA's denial of a variance sought by the apartment owner to maintain a pole sign on the premises of the apartment complex.  Like Thomas, the decision is noteworthy for the Indiana property law attorney not because of the Court's conclusion that the variance was properly denied to the apartment owner, but rather for the Court of Appeals' dictum regarding the procedure followed by the trial court.
 
Specifically, the Indiana Court of Appeals addressed under what circumstances a landowner who had unsuccessfully petitioned for a variance in the local BZA may challenge that decision based on evidence the landowner failed to offer in the zoning hearing.  The issue hinged on an Indiana statute that provides in relevant part:  "If the court determines that testimony is necessary for the proper disposition of the matter, it may take evidence to supplement the evidence and facts disclosed by the return to the writ of certiorari, but the review may not be by trial de novo."  Indiana Code section 36-7-4-1009.  The apartment owner sought to buttress its case in court with testimony and evidence that had not been submitted to the BZA.  The trial court admitted that testimony and evidence, but ruled nevertheless that the BZA's decision was not clearly erroneous or illegal.
 
Although the Indiana Court of Appeals affirmed the trial court's decision on the merits finding no clear error in the BZA's decision, the Court disagreed with the trial court's decision to hear new evidence offered by the apartment owner.  The Indiana Court of Appeals reasoned that allowing the apartment owner to present new evidence was "tantamount to conducting a trial de novo" -- in essence relitigating the merits of the variance petition from scratch.  Such an approach would directly violate Indiana Code section 36-7-4-1009's proscription that the trial court's review of BZA decisions "may not be a trial de novo."
 
The Indiana Court of Appeals elaborated to provide guidance in future cases by listing circumstances when it may be appropriate for a trial court reviewing a BZA decision to consider new evidence.  Such situations arise, for example:
 

1) when the record before the BZA is incomplete because the aggrieved party was refused an opportunity to be fully heard or the BZA excluded relevant evidence;

 2) when good and sufficient cause is shown for the failure to have offered the evidence to the BZA;

 3) when the record presented to the trial court does not contain all the evidence actually presented to the BZA;

 4) when the BZA’s record fails to present the hearing in sufficient scope to determine the merits of the appeal; and 

 5) when new evidence is discovered after the BZA’s proceedings.

An Indiana litigation law firm's understanding of Indiana procedure can be as important as knowledge of the substantive law in obtaining a positive outcome in Indiana litigation matters.  The Indiana appellate decisions summarized above guide Indiana lawyers on important procedural questions in Indiana property appeals.

by Steven M. Badger

In all litigation, but particularly in Indiana business litigation, it is important for the litigants to know the reasons for the judge's decision on the merits of the dispute.  Those reasons also become a focal point in any appeal to the Indiana appellate courts.  Indiana Trial Rule 52 serves these purposes by requiring that upon the timely written request of any party, "the court in all actions tried upon the facts without a jury or with an advisory jury . . . shall find the facts specially and state its conclusions thereon."

In Nunn Law Office v. Rosenthal, the Court of Appeals of Indiana addressed whether Trial Rule 52(A) is satisfied when a trial court makes findings orally rather than in writing.  At issue was the share of plaintiff's attorney fees that should be paid to the attorney who originally filed a personal injury action, but who was discharged by the plaintiff before the case was resolved.

The Court of Appeals observed that nothing in Trial Rule 52(A) specifies that the trial court's findings and conclusions must be in written form, although the Court of Appeals notes that written findings and conclusions are preferred.  Further, the Court reasoned that oral findings and conclusions serve the purposes of Trial Rule 52(A) "so long as they are thoroughly detailed in the record."  Therefore, the Indiana appellate court held that the trial court's failure to enter written findings and conclusions, in and of itself, does not constitute reversible error.

As to the sufficiency of the trial court's oral findings, the Indiana appellate court determined that the trial judge's oral explanation of how she determined the amount of attorneys' fees awarded to co-plaintiff's counsel was sufficient.  Among other things, the trial judge stated the number of hours, billable rates and service descriptions of the professional services for which the fees were earned.

Finally, the Court of Appeals affirmed the trial court's use of a quantum meruit or equitable measure to determine the amount of the fees, rather than a contingency basis, because the fee contract in question failed to specify the measure of fees upon a pre-contingency termination of the representation.

This aspect of the case relating to how the fee award was determined, however, merely reaffirms existing Indiana law.  The real lesson for the Indiana appellate lawyer is that a trial court's failure to enter written findings and conclusions even when properly requested may not constitute reversible error if the trial court stated somewhere in the record the reasons for its decision.