Indiana Law Attorney

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.

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 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 Law Review recently published a law review article co-authored by Bryan H. Babb and Kellie M. Barr regarding developments in Indiana appellate procedure during 2008.  The article summarizes rule amendments, examines appellate court opinions affecting appellate procedure, and synthesizes case law to provide tips for practitioners to improve their appellate practice.  The Indiana Law Review publishes an annual survey about developments in Indiana law, and Bryan and Kellie have been asked to co-author the appellate procedure article again next year.

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.

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UNPUBLISHED

For the underlying proceedings in the trial court, appellant Carolynda Applebury-Todosichuk was represented by local Indiana counsel and an out-of-state attorney granted pro hac vice status by the trial court. Although out-of-state counsel failed to seek permission to proceed pro hac vice on appeal, both attorneys signed Applebury-Todosichuk’s Notice of Appeal. Out-of-state counsel then filed an Appellant’s Brief bearing only her signature; local counsel did not sign the brief. Here, we are faced with the threshold question of whether we may even consider the brief.

Conclusion (slip op. at 2): We cannot consider the merits of a brief improperly filed by an attorney not licensed to practice law in Indiana and not granted temporary permission to proceed in this Court. Because Applebury-Todosichuk has failed to timely file an appellate brief pursuant to Indiana Appellate Rule 45(B), we dismiss this appeal.

Key Analysis (slip op. at 5): Although we will exercise our discretion to reach the merits when violations are comparatively minor, if the parties commit flagrant violations of the Rules of Appellate Procedure we will hold issues waived, or dismiss the appeal . . . This is a flagrant violation of the Rules of Appellate Procedure, and we therefore dismiss the appeal

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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." We find that Respondent, Robert E. Lehman, engaged in attorney misconduct by committing the federal felony of willfully making a false tax return.

Conclusion (slip op. at 4):  For Respondent's professional misconduct, the Court disbars Respondent from the practice of law in this state effective immediately.

Key Analysis (slip op. at 3):  Respondent pled guilty to a federal felony involving false swearing and misrepresentation, he acted out of a selfish motivation, and he has a substantial disciplinary history. In addition, he has neither challenged the hearing officer's report nor argued any mitigating facts. Under these circumstances, the Court concludes disbarment is warranted.

Sullivan and Rucker, JJ., concur, except that they would impose a three-year suspension without automatic reinstatement.

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UNPUBLISHED

Appellant "S&H" appeals from the denial of its request for a preliminary injunction against Appellees "LTSB", Ronald F. Layer, Andrew R. Tanzillo, Larry D. Stassin, and Michael D. Babcock (collectively, "Appellees").  In the case, Appellees, who had been attorneys employed by S&H, left to form LTSB. Approximately 550 cases, of which approximately 292 were contingency-fee cases, transferred from S&H to LTSB as a result of the quartet's leaving. Over the course of the next several months, LTSB attempted on numerous occasions to convince S&H to discuss the matter of what share of fees earned on cases resolved by LTSB, but originated by S&H, would be paid to S&H. No agreement on the matter of division of fees was reached, although all agree that S&H is entitled to collect a portion of the fee earned from any resolved LTSB case originated at S&H. On November 21, 2007, S&H filed an amended motion for preliminary injunction against Appellees requesting that LTSB deposit all past and future fees collected from cases that originated at S&H in a joint account (to which LTSB would not have unilateral access) until the trial court could enter a judgment as to their distribution.  Following a hearing, the trial court denied S&H's motion for a preliminary injunction.

Conclusion (slip op. at 10):  The judgment of the trial court is affirmed.

Key Analysis (slip op. at 5, 9):  We conclude that S&H has failed to establish irreparable harm . . . S&H seems to concede that it would suffer, at worst, economic harm from the activity it seeks to have enjoined. As a general rule, "a party suffering mere economic injury is not entitled to injunctive relief because damages are sufficient to make the party whole" . . . S&H points to no authority that a Rule violation by itself is unlawful conduct, which would establish per se irreparable harm, or that the Rule violation it alleges, even if true, would give rise to anything beyond purely economic damages, denying it an adequate remedy at law. Even assuming, arguendo, that LTSB has violated Indiana Rule of Professional Conduct 1.15(e), that violation, by itself, does not support the imposition of a preliminary injunction.

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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, Douglas W. Patterson, engaged in attorney misconduct by his conversion of client funds, deceit in concealing his misconduct, and dishonesty with the Disciplinary Commission.

Conclusion (slip op. at 6):  Respondent violated Rule 1.15(a), Rule 8.4(b), and Rule 8.4(c) of the Rules of Professional Conduct. For this 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 31, 2008.

Key Analysis (slip op. at 4):  Respondent's justification of his withdrawal of funds from the Trust Account is that he believed the firm owed him additional compensation and that one check was repayment of a loan. Yet he took the funds out secretly, did not use the established procedure for taking funds out of the Trust Account, took steps to conceal the withdrawals, and initially lied to his partner about writing the checks. His actions are not consistent with how a partner would assert a claim for additional compensation from his firm . . . We also find that the hearing officer did not improperly presume the converted funds were client funds and thus shift to Respondent the burden of proving they were not . . . even if some of the funds in the Trust Account were not client funds, it does not change the character of Respondent's withdrawals. They still constitute conversion, only from the firm or a third party other than clients.

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Hank Johnson, Jr., appeals the judgment in favor of American Classic Mortgage Corporation ("American Classic") on his counterclaim seeking damages arising from American Classic’s alleged violation of Indiana Code Section 23-2-5-20. Johnson raises two issues, which we consolidate and rephrase as follows: Whether the trial court’s judgment in favor of American Classic and against Johnson on his counterclaim is clearly erroneous.

Conclusion (slip op. at 6):  We reverse the judgment of the trial court and remand to determine the amount of actual damages, interest, and attorney’s fees to which Johnson is entitled as a result of American Classic’s violation of IC 23-2-5-20.

Key Analysis (slip op. at 5):  We agree with Johnson that the trial court erred in concluding that he was required to prove by a preponderance of the evidence that American Classic intentionally violated IC 23-2-5-20.  IC 23-2-5-15 contains no scienter requirement. It is undisputed that American Classic filed a lawsuit against Johnson claiming that he owed it a 5% commission for obtaining a loan for him, that the loan was never closed, and that it took a default judgment against Johnson for $35,000. These facts establish that American Classic violated Indiana Code Section 23-2-5-20.

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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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Prime Mortgage USA, Inc. (“Prime”), and David Law (referred to collectively as the “Defendants”) appeal following the trial court’s order of default judgments in favor of Delie Nichols as a penalty for the Defendants’ discovery violations. The trial court held a hearing on damages, and awarded roughly eight million dollars to Nichols. In a subsequent proceedings supplemental, the trial court issued an order of garnishment on a life insurance policy held by Law.  The issues here are:

1. Whether Nichols’s claim under Indiana Code section 34-24-3-1 (the “Crime Victims Statute”) is barred by the statute of limitations;
2. Whether the Defendants were entitled to a jury trial on the amount of damages under the Crime Victims Statute;
3. Whether the trial court abused its discretion in ordering default judgments as a sanction for discovery violations;
4. Whether the trial court’s award of damages was proper and supported by the evidence;
5. Whether sufficient evidence existed to hold the Defendants liable under the Crime Victims Statute;
6. Whether the trial court’s award of attorney’s fees was improper;
7. Whether the trial court improperly determined that Nichols’s unpaid compensation constituted “wages” under Indiana Code sections 22-2-5-1 and –2;
8. Whether Nichols’s claims are barred by the doctrine of unclean hands; and 
9. Whether the trial court’s garnishment order was improper under either Indiana Code section 27-1-12-14(e) or Indiana Code section 27-1-12-17.1(f).

Conclusion (slip op. at 66-67):  We conclude that Nichols’s claims were not barred by the statute of limitations or the doctrine of unclean hands and that the trial court did not abuse its discretion in denying the Defendants’ request for a jury trial or in entering a default judgment based on the Defendants’ discovery violations. We further conclude that the trial court’s award of damages was within the scope of the evidence. We also conclude that Nichols’s compensation constitutes a “wage” for purposes of the Wage Payment Statute. However, we conclude that it was improper to grant a judgment against Prime on Nichols’s claim for breach of fiduciary duty, and reverse the trial court’s order in this regard. Finally, we remand with instructions that the trial court determine whether any of Law’s life insurance policy is exempt from execution.  Affirmed in part, reversed in part, and remanded.

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In this interlocutory appeal, AGS Capital Corporation, Inc., AGS Capital, LLC (collectively "AGS"), Fast Tek Group, LLC ("Fast Tek"), Superior Metal Technologies, LLC ("Superior Metal"), Alan G. Symons, Scott A. Weaver, Anthony Roark, and Chan Chanthaphone (collectively "Appellants") appeal the trial court’s grant of preliminary injunction to Product Action International, LLC ("Product Action").  The Appellants raise numerous issues, which we reorder and restate as:

(1) Whether Indiana’s Uniform Trade Secrets Act preempts Product Action’s claim under Indiana’s Racketeer Influenced and Corrupt Organizations ("RICO") statute;
(2) Whether the trial court’s ruling that Product Action established a prima facie case that the Appellants misappropriated trade secrets was clearly erroneous;
(3) Whether the trial court’s ruling that Product Action established a prima facie case that the Appellees violated Indiana’s RICO statute was clearly erroneous;
(4) Whether the trial court’s finding that Fast Tek and AGS are "alter egos" is clearly erroneous;
(5) Whether the trial court erred in concluding that Product Action would suffer irreparable harm without an injunction;
(6) Whether the preliminary injunction is overbroad; and
(7) Whether the $2000 injunction bond to be posted by Product Action is unreasonably low.


Conclusion (slip op. at 38):  In sum, we hold that IUTSA does not preempt a civil RICO claim because such a claim is an additional punishment made available by our General Assembly for particular schematic violations of Indiana’s criminal law. Product Action presented a prima facie case under IUTSA and RICO, supporting the trial court’s imposition of a preliminary injunction. We also affirm the trial court’s alter ego determination as to AGS and Fast Tek. While the majority of the terms of the preliminary injunction are not overbroad, the provision prohibiting the participation of AGS, Symons and Weaver in the operation of Fast Tek is overbroad. Accordingly, we reverse that particular provision of the preliminary injunction and affirm the remaining provisions. We reverse the award of attorney’s fees to Product Action as the prevailing party has yet to be determined by a trial on the merits. Finally, the Appellants have not carried their burden to establish that the injunction bond is inadequate.  Affirmed in part, reversed in part, and remanded for further proceedings.

BAKER, C.J., concurs.

VAIDIK, J., concurs in part and dissents in part with opinion:  "I respectfully concur in part and dissent in part . . . I write to express my disagreement with the majority’s conclusions regarding whether the duration of the preliminary injunction issued by the trial court is overbroad and whether the $2000 injunction bond is unreasonably low . . . "

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UNPUBLISHED

Rubertha Johnson and 317 other former employees of Guide Corporation (collectively, the "Employees") appeal the trial court’s grant of Guide’s motion for summary judgment and denial of their motion for summary judgment. On appeal, the Employees raise four issues, one of which we find dispositive and restate as whether the trial court properly concluded the Labor Management Relations Act (the "LMRA") preempted the Employees’ claims for liquidated damages and attorney fees under the Indiana Wage Payment Statute.

Conclusion (slip op. at 14):  The trial court properly concluded that section 301 of the LMRA preempts the Employees’ claims for liquidated damages and attorney fees under the Indiana Wage Payment Statute. Accordingly, we affirm and remand for further proceedings consistent with this opinion. On remand, the trial court should determine whether the CBA’s grievance and arbitration procedures apply to the Employees’ claims pursuant to federal labor law and, if so, whether the Employees failed to exhaust those procedural remedies.  Affirmed and remanded.

Key Analysis (slip op. at 5, 8, 13):  Section 301 of the LRMA has complete preemptive force, which means that it will displace entirely any state cause of action for violation of contracts between an employer and a labor organization . . . preemption also applies where the state law claim, though not alleging violation of a collective bargaining agreement, nevertheless requires interpretation of one . . . section 301 preemption still applies if the claims are substantially dependent on analysis of the CBA . . . We conclude the Employees’ claims are substantially dependent on analysis of the CBA.

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Supreme Court - 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". The Commission charged Respondents with violating the following Indiana Professional Conduct Rules: 7.2(b); 7.2(c)(3); 7.2(d)(2); and 7.3(c).

Conclusion (slip op. at 5): Respondents' use of the phrase "commitment to obtaining the best possible settlement" did not violate the Rules of Professional Conduct and finds for Respondents on this charge. However, the Commission has demonstrated by clear and convincing evidence that Respondents committed the remaining violations as charged.

Key Analysis (slip op. at 3, 4, 5): It is improper for an attorney to say he or she can obtain the best possible settlement for clients. Respondents, by contrast, promised prospective clients only a commitment to their cases, which clients have every right to expect . . . Respondents clearly used a public communication that contained information based on past performance, which is prohibited by Rule 7.2(d)(2) . . . Respondents admit that their use of the phrase "Legal Advertisement" rather than "Advertising Material" was a rule violation, but they contend that it was merely technical and inadvertent. Although the violation was inadvertent, we do not consider it to be a mere technicality . . . Respondents' lack of warning that their advertising material appeared to contain rule violations did not deny them due process of law or otherwise prejudice them.

Shepard, C.J., and Dickson, and Boehm, JJ., concur. Sullivan and Rucker, JJ., concur except that they would find no violation of Indiana Professional Conduct Rule 7.2(d)(2).