Business Law Cases

In a case involving the determination of work bonuses being paid as “wages” under Indiana law, the Indiana Court of Appeals held that in circumstances where the bonuses are not related to the amount of time an employee works, are not guaranteed to be paid regularly, and are not granted based on the employer’s financial success, the bonuses do not fall under the wage classification for purposes of Indiana statutes.

While Orlando Quezare was employed as a collections account representative for Byrider Finance, Inc., his employment agreement called for bonus payments if certain percentages were met, each week, regarding the amount of delinquency on his accounts and also if his team of account reps met certain goals.  After he was terminated, Quezare sued Byrider, alleging that the company violated Indiana law by failing to make wage payments within ten business days of the pay period ending date.  Bose McKinney & Evans attorneys Gregory Guevara and Emily Yates argued successfully that the bonus payments did not constitute wages under the statute.

In the opinion of Quezare v. Byrider Finance, Inc., the Court of Appeals held that, in order for bonus payments to be considered wages under Indiana law, the payments must be directly related to the amount of time an employee works, must be paid to the employee with regularity, and cannot be tied to the financial success of the employer.  Because Quezare’s bonuses were tied only to his individual success, were never guaranteed, and also because Indiana case law doesn’t consider team bonuses to be wages, Byrider was not in violation of Indiana law.

The Indiana Supreme Court held that a contribution by a parent corporation to the capital of its subsidiary is not automatically excluded from the Indiana sales and use tax. Instead, the Court looked at whether consideration was given for the capital contribution. If the contribution was made with consideration, then there was a retail sale, and thus, Indiana sales or use tax would be imposed.

In Indiana Department of State Revenue v. Belterra Resort Indiana, LLC, Case No. 49S10-1010-TA-519, Pinnacle Entertainment, Inc. had a riverboat casino manufactured. It bought the riverboat in Alabama for $34,689,719.00 and, in exchange, received title and possession of the riverboat. Pinnacle paid no Alabama sales tax on this transaction. The next day, while in the international waters off the Gulf of Mexico, Pinnacle transferred title and possession of the riverboat to Belterra Resort Indiana, LLC. Prior to the transfer, Pinnacle owned a 97% interest in Belterra. A couple days after the transfer, Pinnacle subsequently obtained the remaining 3%. This gave Pinnacle 100% ownership of Belterra, its subsidiary. Afterwards, the riverboat floated to its new home in Indiana. In 2002, the Indiana Department of Revenue conducted a sales and use tax audit of Belterra. It issued a use tax assessment against Belterra in the amount of $1,869,783.00 plus penalty and interest. Both parties later filed cross motions for summary judgment, and after a hearing, the Tax Court granted Belterra’s motion and denied the Department’s. Thereafter, the Indiana Supreme Court granted review.

The issue before the court was whether the transfer of the riverboat from Pinnacle to Belterra was done without either side receiving consideration. In this case, Belterra submitted an affidavit in which the Board of Directors’ Resolution declared “[ ] the company hereby approves the transfer of ownership of the Riverboat Miss Belterra from Pinnacle Entertainment, Inc. to Belterra Resort Indiana, LLC as a capital contribution and without consideration being paid to Pinnacle Entertainment…”. A question of law, such as whether consideration exists, is decided by the court. To have “consideration,” one must receive a benefit to the detriment of another. A benefit is defined as a legal right given from one person to another, where the person receiving the right would not otherwise be entitled. Money is not the only benefit one can receive from consideration. To determine whether there was any benefit, the Court evaluated the transaction closely. “A transaction structured solely for the purpose of avoiding taxes with no other legitimate business purpose will be considered a sham for taxation purposes.” To analyze the companies’ motive for the transaction, the court used the “step doctrine,” which is divided into the “end results” and “interdependence” tests. The end result of Pinnacle and Belterra’s transactions appears, from the outset, to be intended to avoid paying the Indiana use tax while maintaining complete control over the riverboat. Additionally, the series of transactions were so interdependent that it is unreasonable to conclude that the whole series would have been completed if not for the purpose of avoiding the sales and use taxes. After this application, the court determined that there was consideration and treated the acquisition of the riverboat from the manufacturer as a retail transaction subject to the Indiana use tax.   Therefore, the Tax Court’s holding was reversed and summary judgment was granted in favor of the Department.

Author:  Craig E. Pinkus

A 16 year-old at the time she listened to music through a website claiming to be “100%” lawful asked the US Supreme Court last July to review the decision of the 5th Circuit Court of Appeals against her. Petition for Writ of Certiorari, Whitney Harper, Petitioner v. Maverick Recording Company, et al. , No. 10-94 (U.S. July 16, 2010). One of thousands of young people sued for copyright infringement by downloading music, the judgment and damages awarded against her were apparently so routine for the recording industry that it waived the right to respond to the petition.

In the wake of an amicus brief filed by Harvard Law professor Charles Nesson and others, however, the Court in a simple letter from the clerk requested a response from the record industry by October 15, 2010.  For most lawyers and clients, this is a request you cannot refuse.

An “innocent infringer” defense is provided by the Copyright Act. 17 U.S.C. § 504(c). It is not a complete defense but can be considered by the court as a matter in mitigation that can reduce a damage award for the acts in question. Of particular interest in the 7th Circuit is that the denial of certiorari would arguably affirm the decision in BMG Music v. Gonzalez, 430 F.3d 888, 892 (7th Cir. Ill. 2005) which makes a showing of innocent infringement in these cases a virtual impossibility.

There is naturally no guarantee the Court will grant certiorari, but the request for a response means that it is more likely than is the case with nearly all certiorari petitions. Many observers have argued for years that the flood of lawsuits against downloaders would ultimately fail as a business strategy for the music industry in the internet world. But a cert grant holds the possibility that the legal strategy will need to be revised without waiting for the business strategy to change.

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

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.

To access case, press here

In this appeal, we are asked once again to consider what constitutes a joint venture. DLZ Indiana, LLC, ("DLZ") appeals from partial summary judgment in favor of Greene County, Indiana ("the County") on the County’s second-amended complaint alleging breach of contract. DLZ presents a single issue for our review, namely, whether the trial court erred when it concluded that DLZ was engaged in a joint venture with United Consulting Engineers, Inc. ("United") to provide architectural services for the County ("the Project").

Conclusion (slip op. at 14):  We hold that United and DLZ were not engaged in a joint venture as a matter of law. We reverse the entry of summary judgment for the County and instruct the trial court to enter partial summary judgment for DLZ on this issue.

Key Analysis (slip op. at 13, 14):  In sum, the Agreement is unambiguous with respect to whether United and DLZ were doing business as a joint venture. First, there is no evidence that they exercised joint or mutual control over the Project, which is an essential element . . . Second, and of equal significance, there is no evidence within the Agreement that United and DLZ shared profits . . . And finally, even if the Agreement were ambiguous, the designated, extrinsic evidence also demonstrates that the essential elements of joint or mutual control and shared profits are missing.

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Appellant-Plaintiff, Brad Lawson (Lawson), appeals the trial court's judgment in favor of Appellee-Plaintiff, Rodney Hale d/b/a R.H. Equipment (Hale), on Lawson's Complaint arising from the sale of a tractor. Lawson presents four issues for our review, which we consolidate and restate as the following three issues:

(1) Whether the trial court erred in ruling that Hale had not violated the Indiana Deceptive Consumer Sales Act, Ind. Code §§ 24-5-0.5-1 to 24-5-0.5-12;

(2) Whether the trial court erred in ruling that Hale effectively disclaimed the implied warranty of merchantability; and

(3) Whether the trial court erred in ruling that Lawson had failed to establish the elements of common law fraud.

Conclusion (slip op. at 14):  We conclude that the trial court did not err in entering judgment in favor of Hale on Lawson's claims for violation of the IDCSA and for breach of the implied warranty of merchantability. However, the trial court did err by entering judgment in favor of Hale on Lawson's claim for fraud. Therefore, as to that claim only, we reverse the trial court's judgment and remand this cause with instructions to enter judgment in favor of Lawson and to determine Lawson's damages.

Key Analysis (slip op. at 8-9, 13-14):  A person is a "supplier" with regard to those consumer transactions which are at least indirectly connected with the ordinary and usual course of the person's business, vocation or occupation . . . In this case, the sale of the tractor to Lawson was at least indirectly connected with the ordinary and usual course of Hale's business . . . Despite several inquiries by Lawson about any problems with the tractor, Hale failed to disclose the cracked engine block . . . This strikes us as a textbook case of fraud.

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Robert Young, doing business as Bob Young Logging ("BYL"), appeals from a decision of the full Worker's Compensation Board ("the Board") affirming the single hearing officer's decision that Glen Marling is entitled to reimbursement for certain medical treatments he received after an injury arising out of and in the course of his employment with BYL. Specifically, BYL argues that the Board's decision is erroneous because Marling is not entitled to reimbursement under the Indiana Worker's Compensation Act (the Act) because the treatments were unauthorized and the findings of fact and conclusions of law are insufficient to support the conclusion that Marling is entitled to reimbursement for these treatments.

Conclusion (slip op. at 2): Because we find that the medical treatments were authorized by a physician chosen by BYL's insurance carrier and that the Board's findings of fact and conclusions of law are sufficient to support the award, we affirm.

Key Analysis (slip op. at 11, 13, 15): We find that the Insurer's unilateral decision to stop paying for Dr. Tiwari's medical treatments after it had chosen him as an authorized provider did not transform him from an authorized to an unauthorized physician, especially in light of the policies underlying the Act. Thus, Marling was not required to prove that his case met one of the exceptions contained in Indiana Code § 22-3-3-4(d) . . . We conclude that the record contains sufficient evidence for the Board to have reasonably concluded that the pain treatments were necessary within the meaning of the statute . . . As a result, the Board's decision requiring BYL to pay for the medical treatments was proper.

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Per Curiam.

This matter comes before the Court as a result of a judicial disciplinary action brought by the Indiana Commission on Judicial Qualifications ("Commission") against the Respondent herein, Kenneth R. Scheibenberger, Judge of the Allen Superior Court. On August 19, 2007, the Respondent’s son died accidentally, a contributing factor to which was his son’s use of drugs. On November 30, 2007, a criminal defendant, whom the Respondent believed played a tangential or indirect role in his son’s drug use, was to be sentenced in the courtroom of Allen 2 Superior Court Judge Frances C. Gull on a weapons charge. On that day, the Respondent suspended his court session and attended the sentencing hearing in Judge Gull’s courtroom, sitting in the gallery wearing his judicial robe. At the conclusion of the sentencing hearing, the Respondent moved to the front of the gallery where two deputy prosecutors were standing. In response to a statement the Respondent had heard during the sentencing hearing about the defendant, the Respondent stated to the deputy prosecutors, "Law-abiding citizen, my ass!" or words to that effect, and said that the defendant was a "drug dealer." The Respondent also turned to three members of the defendant’s family, who were seated in the front row of the gallery, and said "Are you related to that piece of shit? Law-abiding citizen, my ass! He’ll get what’s coming to him" or words to that effect. The Respondent then left the courtroom.

Conclusion (slip op. at 3): The Respondent, Kenneth R. Scheibenberger, Judge of the Allen Superior Court, is hereby suspended from office without pay for a period of three (3) business days, which shall commence on Wednesday, February 11, 2009.

Analysis (slip op. at 2): The Respondent and the Commission agree that his behavior violated Canons 1(A) and 2(A) of the Code of Judicial Conduct.

SHEPARD, C.J., and DICKSON, SULLIVAN, BOEHM, and RUCKER, JJ., concur.

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UNPUBLISHED

Timothy Coughlin appeals a judgment in favor of Riggs-Ellinger, Inc. d/b/a The Winningham Insurance Group in the latter’s action for breach of contract against Coughlin. Coughlin presents the following restated issue for review: Did the trial court err in ordering the breaching buyer to pay damages to the seller in the amount of the unpaid purchase price, where the seller reacquired the business through a bankruptcy sale?

Conclusion (slip op. at 7):  The trial court’s determination that Riggs-Ellinger is entitled to the unpaid balance of the purchase price, as set out in the Purchase Agreement that was breached by Coughlin, Scott, and RPA, is not clearly erroneous. Judgment affirmed.

Key Analysis (slip op. at 6, 7):  Riggs-Ellinger’s "benefit", as identified by Coughlin in support of his claim of unjust enrichment, is that Riggs-Ellinger gets to collect the full purchase price paid by Coughlin, Scott, and RPA, while at the same time getting to re-obtain The Winningham Insurance Group, perhaps at below-market price. Clearly, Riggs-Ellinger did not ask Scott and RPA to declare bankruptcy and thereby place The Winningham Insurance Group up for bankruptcy sale. The "benefit" . . . was not requested by Riggs-Ellinger. Having not impliedly or expressly requested the "benefit", Riggs-Ellinger is not compelled to pay for it . . . Furthermore, the rights of the parties involved in the sale of The Winningham Insurance Group were controlled by the Purchase Agreement. On this basis alone, the equitable doctrine of unjust enrichment does not apply, as Coughlin’s remedy would be at law, not in equity.

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Dickson, Justice.

The plaintiff Debra A. Barnett is seeking damages from the defendant Camille Clark, Trustee of Pleasant Township in Steuben County, Indiana, for the conduct constituting rape, sexual battery, and false imprisonment committed by one of the Trustee's employees. The trial court granted summary judgment in favor of the defendant Trustee, and the Court of Appeals reversed. In appealing the grant of summary judgment, the plaintiff has contended that that the Trustee may be held vicariously liable for its employee's actions under the theory of respondeat superior for wrongful acts committed within the scope of the employment. She argues that summary judgment is improper because some of the employee's acts were authorized, and thus the question of whether the employee's injurious acts to the plaintiff, even if unauthorized, were nevertheless within the scope of employment, is a jury question. In response, the defendant Trustee contends that, because the employee's authorized job duties did not involve any physical contact with the plaintiff, the Trustee is not vicariously liable as a matter of law for acts clearly outside the scope of employment.

Conclusion (slip op. at 6):  We affirm the judgment of the trial court granting summary judgment to the defendant, Camille Clark, Trustee of Pleasant Township, Steuben County, Indiana.

Key Analysis (slip op. at 6):  We conclude here that the injurious actions of the deputy trustee were not sufficiently associated with his employment duties so as to fall within the scope of the deputy's employment by the defendant Trustee . . . Other than perhaps a greeting handshake, the employee was not explicitly or impliedly authorized to touch or confine applicants for assistance. His alleged acts of confining, sexually touching, and raping the plaintiff were not an extension of authorized physical con-tact. Such acts were not incidental to nor sufficiently associated with the deputy trustee's authorized duties. They did not further his employer's business. And they were not motivated to any extent by his employer's interests.

Shepard, C.J., and Sullivan, Boehm, and Rucker, JJ., concur.

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UNPUBLISHED

After Dan Dumoulin, Sr. (Dan Sr.) and his wife, Joan, transferred ownership of their sports bar and its alcoholic beverage permit to their son, (Dan Jr.), Dan Jr. converted the business into an adult entertainment establishment. When he later applied to renew the permit, remonstrators sought to prevent the renewal. After a hearing, the local alcoholic beverage board recommended denying the petition to renew the permit, and the Indiana ATC agreed. Dan Jr., as the owner of the permit premises, appealed the denial to the Howard Superior Court. The trial court reversed, concluding that the ATC’s decision was arbitrary and capricious and unsupported by the evidence because it was based entirely upon the nature of entertainment provided by the business, which does not, by itself, preclude the business from having an alcoholic beverage permit. The ATC now appeals, arguing that it properly denied Dan Jr.’s renewal application.

Conclusion (slip op. at 16):  The decision of the trial court is affirmed.

Key Analysis (slip op. at 15-16):  Dan Jr.’s conversion of Ultimate Place from a family sports bar to an adult entertainment business is not a legitimate basis for denying the permit renewal. Alcoholic beverage permit holders are permitted by law to allow adult-oriented dancing on the licensed premises without obtaining prior authorization from the ATC, subject to floor plan approval. Thus, the ATC’s reliance upon this basis for its decision was arbitrary and capricious.

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Per Curiam.

This matter is before the Court on the report of the hearing officer appointed by this Court to hear evidence on the Indiana Supreme Court Disciplinary Commission's "Verified Complaint for Disciplinary Action," and on the post-hearing briefing by the parties. We find that Respondent, David J. Colman, engaged in attorney misconduct by participating in preparation of a will for a non-relative that would give Respondent or his son a substantial gift, by representing a client when there was a conflict of interest due to Respondent's personal interests, by failing to hold property of a client separate from Respondent's property and failing to keep a client’s funds in a clearly identified trust account, by entering into an improper business transaction with a client, and by charging an unreasonable fee.

Conclusion (slip op. at 8):  For Respondent's professional misconduct, the Court suspends Respondent from the practice of law in this state for a period of not less than three years, beginning July 1, 2008. Respondent shall not undertake any new legal matters between service of this order and the effective date of the suspension, and Respondent shall fulfill all the duties of a suspended attorney under Admission and Discipline Rule 23(26). At the conclusion of that period, Respondent may petition this Court for reinstatement to the practice of law in this state, provided Respondent pays the costs of this proceeding, fulfills the duties of a suspended attorney, and satisfies the requirements for reinstatement of Admission and Discipline Rule 23(4).

Sullivan, Boehm, and Rucker, JJ., concur.

Shepard, Chief Justice, dissenting as to sanction:  ". . . it is hard to fashion an argument for the public that Respondent’s behavior has been such that we might at some future date want, again, to tell clients they can entrust their own dearest matters to him. I thus vote to disbar.

Dickson, Justice, dissenting as to sanction:  "When the respondent was convicted of a federal felony in 1996, this Court unanimously voted not to disbar but only to suspend his privilege to practice law for a substantial time . . . I choose, however, not to make the same mistake a third time . . . "

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Hendricks County Sheriff Dave Galloway brings this interlocutory appeal from the trial court’s Order Granting David Hadley’s Complaint for Preliminary Injunction ("Injunctive Order").1 Sheriff Galloway raises four issues for our review, which we restate as follows:

1. Whether Indiana Code Section 27-10-3-18 (the "Equal Access Law"2) creates a private cause of action.

2. Whether the trial court abused its discretion in entering the preliminary injunction.

Conclusion (slip op. at 17-18):  In sum, we hold that the Equal Access Law creates a private cause of action and that the IDOI’s jurisdiction is not implicated here. We also hold that the trial court did not abuse its discretion in granting Hadley’s request for a preliminary injunction against Sheriff Galloway’s use of the Preferred Agent List. Finally, Hadley’s complaint is not barred by the doctrine of unclean hands.  Affirmed.

Key Analysis (slip op. at 7, 13, 15, 17):  Here, the Equal Access Law does not explicitly state whether it is intended to be the basis for a private cause of action. Thus, we look to whether the Equal Access Law confers a public benefit, a private benefit, or both. See Blanck, 829 N.E.2d at 509. . . . and while the public might receive a benefit from that business, any public benefit is ancillary to the direct benefit conferred on bail agents . . . But Hadley and Lee both testified that Hadley had experienced a "[d]ramatic reduction in volume" of work since Hadley was removed from the Preferred Agent List. Appellant’s App. at 70, 146. It was within the trial court’s discretion to weigh the credibility of that testimony. The court’s conclusion that the removal of Hadley’s name from the Preferred Agent List presented Hadley with the "lost opportunity to do business" is not clearly against the facts and circumstances that were before the court . . . Sheriff Galloway’s assertion that he is not required to publish and give notice of his policies reads too much into the trial court’s statements. To be sure, it is true that "neither the Indiana Code nor Indiana Administrative Code contain provisions prescribing how sheriffs are to satisfy any supposed publication and notice requirements." . . . Here, Sheriff Galloway alleges that Hadley has unclean hands because he has knowingly participated in the use of preferred agent lists in the past without objection. Thus, Sheriff Galloway continues, Hadley’s request for an injunction on the current list is "hypocritical."  While Hadley’s position may be hypocritical, hypocrisy is not a cognizable legal issue. The only question before the court was whether Hadley was entitled to a preliminary injunction against the Sheriff’s current use of the Preferred Agent List. Prior lists that included Hadley’s name or the name of Hadley’s business had no "immediate and necessary relation to the matter being litigated."  Accordingly, Hadley’s request for injunctive relief is not barred by the doctrine of unclean hands.