Indiana Appellate Law

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

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

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

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

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

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

by Steven M. Badger 

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

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

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

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

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

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

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

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

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

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

           Our First Amendment right to express ourselves is one of our most cherished freedoms.  It is a right that is sometimes abused, but the law provides free expression ample breathing space to avoid stifling that right.

            The Indiana Supreme Court and the Indiana Court of Appeals recently addressed freedom of expression in two cases where it was claimed that speakers abused their free speech rights by making defamatory misstatements that harmed another person.

            In Dugan v. Mittal Steel USA Inc., No. 45S05-1002-CV-121 (June 17, 2010), the Indiana Supreme Court concluded that certain defamatory statements made about an employee during an employer’s investigation of the disappearance of company equipment were protected by a qualified privilege and therefore not a basis for the employee’s defamation claim.  Indiana law recognizes a “privilege” or legal protection in certain circumstances where it is particularly important as a matter of public policy to encourage speech.  When such a privilege applies, speakers are liable for defamation only if they knew their statement was false or had substantial doubt about the truth of the statement.

            In Dugan, an employee claimed she was defamed by a supervisor who told the company’s chief of security that the employee had defrauded the company and stolen its equipment.  The Supreme Court had no difficulty finding that the statements were defamatory per se, because they accused the employee of criminal conduct.  However, the Court recognized that the supervisor had a duty to cooperate with his company’s investigation of theft and report what he knew or heard to his employer.  It is sound public policy to encourage such communications and therefore Indiana law applies a privilege to protect and encourage those communications.

The employee argued that the supervisor’s statements should not be protected because they were based only on second-hand information he had received from others, rather than his direct, personal observation.  The Indiana Supreme Court expressly rejected that argument. The Court explained:

“It is unreasonable and contrary to sound policy for the common interest qualified privilege for intra-company communications about theft of company property to apply only for statements made on personal knowledge and to exclude the reporting of information received from others.”

It is not hard to imagine how an intra-company investigation of theft would be hampered if employees were not encouraged to report everything they knew or heard that could assist the investigation.   Application of the qualified privilege does not depend on the source of the speaker’s information, but rather whether the speaker “lacked any grounds for belief as to the truth of the statements.”

The Indiana Court of Appeals opinion in In re Paternity of K.D., No. 49A02-0907-JV-693 (June 29, 2010) addressed a different problem – under what circumstances may a Court order a person to refrain from speaking about a particular subject.  Government bans on speech are referred to as “prior restraints” because they seek to stop or silence people before they have expressed themselves.  Prior restraints are rarely appropriate under the First Amendment because they are in effect government censorship of expression.

In K.D., the court faced a harrowing situation involving allegations by a mother that her daughter had been sexually abused by her father.  The case involved a paternity action brought before the juvenile court.  Two different judges on two different occasions found the mother’s allegations of abuse against the father to be unsubstantiated.  After the second time the court rejected the mother’s allegations of abuse, she took her story to the press.  The mother repeated her allegations in a series of newspapers and harshly criticized the father's lawyer and the judges who handled the case.

In response to the articles, the father asked the court to find the mother in contempt for allegedly violating Indiana juvenile law by discussing the proceedings with the press.  The Indiana juvenile court declined to hold the mother in contempt, but the court did expressly bar the mother from talking any further with the news media or anyone else about the case.  The mother appealed from that order.

The Indiana Court of Appeals reversed the order as an overbroad and invalid prior restraint.  In doing so, the Court of Appeals applied the well-established First Amendment rule that:  “Any system of prior restraints of expression comes to the court bearing a heavy presumption against its constitutional validity.”  That rule was established in the famous “Pentagon Papers” case in which the United States Supreme Court struck down a court order prohibiting the New York Times from reporting information received from an informant about a top secret Defense Department study about the Viet Nam War.  New York Times Co. v. United States, 403 U.S. 713 (1971).

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.