Indiana Contract

The Worker’s Compensation Act’s handling of the statute of limitations can be a perplexing area. This is especially true when there is a medical service provider seeking payment from an employer for an outstanding bill. The Court of Appeal just recently addressed this issue.

In Indiana Spine Group, PC v. Pilot Travel Centers, LLC , on August 2003, Anthony Wetnight sustained a work-related injury while working for Pilot Travel Centers, LLC (“Pilot”). Indiana Spine Group (“ISG”) provides medical services to employees who are injured during the course of their employment. Pilot authorized Mr. Wetnight to receive two medical treatment services from ISG in 2004. ISG sent Pilot a bill for the two services totaling $38,556.00. Pilot made four partial payments to ISG, the last partial payment on June 2008, leaving an unpaid balance of $21,750.96. On June 2009, ISG filed an Application for Adjustment of claim for Provider’s fee (“Application”) with the Worker’s Compensation Board (“Board”) for the purpose to recover the remaining balance on the bill. The Board dismissed ISG’s Application due to the fact that the Application was filed outside the two year statute of limitation set forth in Indiana Code § 22-3-3-27. The Court of Appeals reversed the Board's decision, stating that Indiana Code § 22-3-3-27 and Indiana Code § 22-3-3-3 of the Worker’s Compensation Act did not apply to ISG’s Application.

On appeal, Pilot argued that the term “compensation” in Indiana Code § 22-3-3-3 included medical services, which encapsulated what ISG provided. The Court of Appeals disagreed and determined that the plain meaning of the word “compensation” referred to “employee benefits, not payment to health care providers.”  The Court of Appeals then evaluated the plain language of Indiana Code § 22-3-3-27. The Court stated that “this section establishes a two-year statute of limitation for ‘modification’ of an award due to a ‘change in conditions’.” In this situation there was never a change of conditions, which required a modification of the award of worker’s compensation benefits, which made the previous statute inapplicable. The Court determined that the appropriate statute to apply was Indiana Code § 34-11-1-2, which provided “[a] cause of action that . . . is not limited by any other statute[,] must be brought within ten (10) years.” The Court reasoned that “the legislature enacted the general statutes of limitation for the very purpose of supplying a statute of limitation when one has not otherwise been provided by a more specific statutory scheme”; therefore, ISG timely filed its Application before the Board.

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

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

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

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

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

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

by Steven M. Badger 

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

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

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

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

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

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

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

Does an Indiana County Sheriff owe a common law duty to warn the public of known hazardous conditions on a county road?  The Indiana Supreme Court recently decided that as long as the County Sheriff's Department does not own, maintain, or control the county road, the Sheriff does not have a common law duty to warn motorists of dangerous conditions.

In Putnam County Sheriff v. Pamela Price, No. 60S01-1012-CV-665, Pamela Price was driving on a county road when she encountered ice across the roadway. Price lost control of her car and suffered injuries in the resulting accident. Earlier that morning, a deputy sheriff had been called to the same location because of an earlier accident caused by the same icy conditions. The deputy contacted the Putnam County Highway Department, advised the Highway Department of the conditions on the road, but left the area without taking any further action. Price argued the deputy was negligent “in failing to take any steps to alleviate the icy and hazardous condition or warn the traveling public of the known hazard.”

The Supreme Court concluded that, absent ownership, maintenance, or control of the county road, the Sheriff had no duty to warn the public of the hazardous conditions. The duty to warn rested with the county supervisor who was specifically given the job to supervise, maintain, and repair the highways within the county. The Court wrote:  “Absent a duty, there can be no breach of duty and thus no negligence or liability based upon the breach.”

Justice David concurred with the Court's decision but was “hesitant for the subsequent application of this holding that the sheriff can escape any liability on the basis of non-maintenance and control of the county roadway.” Justice David believed that in certain circumstances a sheriff owes a duty of ordinary and reasonable care by remaining on the scene until assistance arrives.

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

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

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

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

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

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

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

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

Maintaining medical records for a patient is within the scope of the Medical Malpractice Act. The Medical Malpractice Act generally requires that actions for medical negligence against health care providers must first be submitted to, and an opinion given by, a medical review panel before commencing an action in court.

In Howard Regional Health System, et al. v. Jacob Gordon, et al. , et al. No. 34S02-1009-CV-476, the plaintiff sought damages and moved for partial summary judgment for spoliation against a hospital for lost medical records. The trail court granted partial summary judgment by concluding that the defendant had a duty to maintain the records and their failure to maintain these records breached that duty under Indiana code section 16-3-7-1. The hospital appealed, arguing that maintaining medical records is within the purview of Medical Malpractice Act and thus a medical review panel must give is opinion before an action against the hospital may commence.

The Indiana Supreme Court reasoned that ongoing maintenance of test and treatment records bears strongly on subsequent treatment and diagnosis of patients. It is a part of what patients expect from health care providers. Thus, maintaining medical records falls inside within the scope of the Act and is considered a part of the practice of medicine. The Supreme Court also rejected the plaintiff's argument that it was asserting a third-party spoliation cliam, instead finding that the plaintiff's claim was essentially a first-party spoliation claim that is disallowed under Indiana law.

In an opinion dissenting in part and concurring in part, Judge Dickson was dissatisfied with the court’s view that the maintenance of medical records claim should be governed by the Indiana Medical Malpractice Act. Rather, the maintenance of records does not involve any exercise of professional medical judgment and thus should not be subject to the act.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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