Indiana Law Update

NOTE: The contents of this handout consist primarily, but not completely, of words taken directly from the appellate court opinion with citations generally omitted. Anyone intending to rely upon the opinion should consult the published decision.

In the News: Really, Fewer Hourly Bills

From the National Law Journal, December 21, 2009, by Jeff Jeffrey

For some 40 years, corporate lawyers could be hired one way – by the hour. They doled out their working lives in six-minute increments. Oh, industry visionaries nattered on about “alternative billing arrangements.” Lawyers mostly nodded and went back to their time sheets.

Until this past decade. Bookended by major recessions – i.e., periods when potential clients push to cut costs – this decade looks to be the one in which alternate fee structures finally took root, even in Am Law 100 firms.

Orrick, Herrington & Sutcliffe set an enviable example in May 2009 when the firm inked a contract with Levi Strauss & Co. that gives it almost all the denim giant’s legal work for a flat annual fee, to be paid out in monthly increments.

Other firms are also making the switch. Among those that answered the question in this year’s NLJ 250 billing survey, 57% said alternative fee arrangements represented 10% or more of their revenue in 2009.

Pressure from clients has been the driving force behind these real cracks in the hourly billing model. Legal entrepreneurs are also offering clients more options. So-called virtual law firms—officeless groups of lawyers with little overhead—offer much lower rates than traditional firms.

Hildebrant consultant Lisa Smith said she doesn’t see Big Law losing much ground to virtual rivals, and the billable hour is far from dead. But alternative arrangements are gunning for it now.

1. Contributory negligence of children; the meaning of “may”: Clay City v. Timberman, 918 N.E.2d 292 (Ind. 11/30/2009)(Sullivan)

Thirteen-year-old Kodi Pipes attended Clay Jr. High School in the Clay City Consolidated School Corporation (“Clay City Schools”). On Monday, November 17, 2003, Kodi blacked out during basketball practice. On Tuesday and Wednesday of the same week, Kodi attended school without incident. Though a doctor had not cleared Kodi to practice, he participated in Wednesday night's practice without restrictions. During Wednesday night's practice, Kodi's coach required the players to perform a running drill. Early in the drill, Kodi collapsed and died.

Kodi's parents, Ronna Timberman and John Pipes II, filed a complaint against Clay City Schools, alleging that the school was negligent under Indiana's Child Wrongful Death Statute, Ind.Code § 34-23-2-1. The School defended, arguing that Kodi's own negligence contributed to his death. (Under Indiana law, “contributory negligence” has been considered an absolute defense available to governmental entities, including public schools.) Nevertheless, the jury returned a verdict and damage award in favor of Kodi's parents. The School appealed.

The standard of care for a child between the ages of seven and 14 is well-established. Our cases have consistently declared that a child between seven and 14 is required to exercise due care for his or her own safety under the circumstances and that the care required is to be measured by that ordinarily exercised under similar circumstances by children of the same age, knowledge, judgment, and experience.

How substantive law measures whether a child between the ages of seven and 14 has been negligent is a different inquiry from whether legal procedure erects a presumption that such a child cannot be guilty of contributory negligence. Indiana Evidence Rule 301 governs the application of presumptions in civil actions. It provides:

In all civil actions and proceedings not otherwise provided for by constitution, statute, judicial decision or by these rules, a presumption imposes on the party against whom it is directed the burden of going forward with evidence to rebut or meet the presumption, but does not shift to such party the burden of proof in the sense of the risk of nonpersuasion, which remains throughout the trial upon the party on whom it was originally cast. A presumption shall have continuing effect even though contrary evidence is received.

We now confirm: Indiana law recognizes a rebuttable presumption that children between the ages of seven and 14 are incapable of contributory negligence. We believe this accords with the unquestioned obligation that the alleged tortfeasor bears of proving contributory negligence. In point of fact, given the extraordinary protection that the doctrine of contributory negligence provides alleged tortfeasors, this presumption in favor of youthful alleged victims is a very modest benefit at best.

We emphasize that this holding relates only to an evidentiary presumption in the contributory negligence cases, defining the state of the presumed fact of (no) contributory negligence at the outset of the litigation and, in the words of Evid. R. 301, the “burden of going forward.” This holding has no impact on the standard of care applicable to a child between the ages of seven and 14; that standard of care is as set forth above and it applies in all negligence settings, i.e., in cases against a child alleging negligence; in cases involving contributory negligence; and in cases involving comparative fault.

Clay City Schools contends that the trial court committed reversible error when it instructed the jury that it “may” find for the defendant if it found any negligence on the part of Kodi. The school corporation argues that it would be entitled to a judgment as a matter of law if the jury found Kodi guilty of contributory negligence; therefore, the instruction should have directed the jury that it “must,” rather than “may,” find for the defendant in such a circumstance. In other words, Clay City Schools asserts that “may” was permissive and not mandatory, and that “must” should have been used when instructing the jury.

We agree that the use of “may” in place of “must” was not the most appropriate language based on Indiana law. However, the jury was otherwise instructed in Final Instruction No. 14 that if “Kodi Pipes was contributorily negligent or incurred the risk, your verdict should be for the defendant.” Considering the instructions together, the law on the contributory negligence of Kodi was stated with substantial accuracy.

Black's Law Dictionary provides three definitions for the verb “may.” The first two accord with Clay City Schools' argument: “to be permitted to” and “to be a possibility.” But the third definition accords to what we believe the trial court had in mind here: “Loosely, is required to; shall; must.” The entry goes on to say that “[i]n dozens of cases, courts have held may to be synonymous with shall or must.” Though it might have been more precise if words like “shall” or “must” had been used in the jury instruction instead of “may,” such substitution does not constitute reversible error in this case.

Lessons:
1. Indiana law recognizes a rebuttable presumption that children between the ages of 7 and 14 are incapable of contributory negligence.

2. “May” sometimes means “must” or “shall.” It is not always permissive.

2. The fireman’s rule: Babes Show Club v. Lair, 918 N.E.2d 308 (Ind. 12/15/2009)(Boehm)

On November 30, 2005, Patrick Lair, an Indianapolis police officer, responded to a report of an unruly customer at Babes Showclub, an adult entertainment business. Lair claims that shortly after he arrived, he was injured in an assault by an underage male who had been consuming alcohol at Babes. Lair sued Babes Showclub and related defendants, alleging that Babes maintained a nuisance and was negligent in failing to provide adequate security. Lair also alleged that Babes's violation of Dram Shop laws and statutes prohibiting the sale of alcohol to minors caused his injuries.

Babes filed a motion to dismiss for failure to state a claim on which relief could be granted, citing Indiana's fireman's rule. The trial court denied Babes's motion but certified its order for interlocutory appeal. The Court of Appeals reversed, holding that the fireman's rule precluded any recovery by Lair.

Both Lair and Babes ask us to reconsider aspects of the fireman's rule in Indiana, and both rely on a series of prior Indiana decisions. The fireman's rule was initially established in Indiana in 1893 by this Court's decision in Woodruff v. Bowen, 136 Ind. 431, 34 N.E. 1113 (1893). In that case, a firefighter died fighting a fire in a building in downtown Indianapolis. We held that the property owner had no liability to the firefighter for injuries incurred in responding to a fire caused by the owner's negligence.

Over the ensuing century the “fireman's rule” was upheld and expanded in a number of decisions by the Court of Appeals. The rule was also applied to police officers and other professional emergency responders in addition to firefighters. This Court last addressed the fireman's rule in Heck v. Robey, where we invoked the exception to the rule that permitted recovery for “positive wrongful acts.” 659 N.E.2d 498, 500 (Ind.1995).

We think the fireman's rule is best understood as reflecting a policy determination that emergency responders should not be able to sue for the negligence that created the emergency to which they respond in their official capacity. Many emergencies are caused by the negligence of some party. The public employs firefighters, police officers, and others to respond to emergencies, and these responders knowingly combat the effects of others' negligence.

In summary, the fireman's rule allows no claim by a professional emergency responder for the negligence that creates the emergency to which he or she responds. However, the emergency responder remains free to sue for damages if an injury is caused by negligent or intentional tortious conduct separate and apart from the conduct that contributed to the emergency. The negligent conduct need not occur after the officer arrives on the scene, but must be separate from and independent of the negligence that caused the situation necessitating the officer's presence.

Lair's complaint alleged nothing suggesting that Babes was negligent in any respect apart from the negligence that produced the emergent situation with the unruly patron. Without any such allegation, the complaint fails to state a claim against Babes in the face of the fireman's rule. The complaint was therefore properly dismissed for failure to state a claim.

Lessons:
1. Emergency responders are barred from making claims for negligence that created the emergency to which they responded in their professional capacity.

2. They are not barred from asserting a claim for negligent conduct that is separate and apart from the situation to which they responded.

3. Constructive retaliatory discharge: Baker v. Tremco Incorporated, 917 N.E.2d 650 (Ind. 12/1/2009)(Shepard)

Tremco, Inc. manufactures and sells various products for construction and maintenance of roofing systems. On July 19, 1991, Brennan Baker and Tremco entered into an agreement in which Tremco employed Baker to sell and promote the sale of Tremco's products. Baker resigned from his employment on January 5, 2004, after a dispute arose between Baker and Tremco regarding Tremco's sales and bidding practices. Baker alleges that he concluded that the schools in the Association of Educational Purchasing Agencies (“AEPA”) were being overcharged for products and services, and after informing his immediate supervisor Rick Gibson, he refused to continue using company policies and the AEPA contract as a means of selling Tremco's products.

Baker filed a complaint for damages against Tremco asserting claims for wrongful termination, defamation, and violation of Indiana's blacklisting statute. Baker argues that he was wrongfully discharged for refusing to participate in illegal activity—refusing to participate in Tremco's scheme to sell its roofing products and other services by violating public bidding laws and defrauding Indiana public schools. Tremco argues that Baker's employment was not involuntarily terminated, noting that Baker tendered his own resignation.

Indiana follows the doctrine of employment at will, under which employment may be terminated by either party at will, with or without reason. This Court has recognized only three exceptions to the doctrine.

First, if an employee establishes that “adequate independent consideration” supports the employment contract, the Court generally will conclude that the parties intended to establish a relationship in which the employer may terminate the employee only for good cause. Adequate independent consideration is provided when the employer is aware that the employee had a position with assured permanency and the employee accepted the new position only after receiving assurances guaranteeing similar permanency, or when the employee entered into a settlement agreement releasing the employer from liability on an employment related claim against the employer.

Second, we have recognized a public policy exception to the doctrine if a clear statutory expression of a right or a duty is contravened.

Third, this Court has recognized that an employee may invoke the doctrine of promissory estoppel by pleading the doctrine with particularity, demonstrating that the employer made a promise to the employee, that the employee relied on the promise to his detriment, and that the promise otherwise fits within the Restatement test for promissory estoppel.

In this case, Baker argues the second of these, saying that when he refused to participate in Tremco unlawful activities in using the AEPA contract to violate public bidding laws and defraud public schools in Indiana, he was advised that he would be terminated.

In McClanahan v. Remington Freight Lines, Inc., 517 N.E. 2d 390 (Ind. 1988) we extended the public policy exception to include a “separate but tightly defined exception to the employment at will doctrine” when an employer discharges an employee for refusing to commit an illegal act for which the employee would be personally liable. The decision in McClanahan flowed from Frampton v. Cent. Ind. Gas Co., 260 Ind. 249, 297 N.E.2d 425 (1973), where this Court first recognized the public policy exception to the employment at will doctrine. Frampton had filed a claim under workers compensation, and Central Indiana Gas fired him for doing so. We declared that “when an employee is discharged solely for exercising a statutorily conferred right[,] an exception to the general rule must be recognized.”

In Tony v. Elkhart County, 851 N.E. 2d 1032 (Ind.Ct.App. 2006) , the employee argued that “the court should recognize the doctrine of constructive discharge as a claim under Frampton that an employee at will can raise in the context of a common law retaliatory discharge claim brought against his employer.” The Court of Appeals held that “a constructive discharge in retaliation for filing a worker's compensation claim falls within the Frampton public policy exception and that a cause of action for constructive retaliation discharge exists for an employee that can show that he has been forced to resign as a result of exercising this statutorily conferred right.”

The court reasoned that an employer's acts of creating working conditions so intolerable as to force an employee to resign in response to exercise of the employee's statutory right to file a worker's compensation claim also “creates a deleterious effect on the exercise of this important statutory right and would impede the employee's ability to exercise his right in an unfettered fashion without being subject to reprisal.”

We find this discussion convincing and conclude that a constructive retaliatory discharge falls within the ambit of the narrowly drawn public policy exception to the employment at will doctrine. Depending on the facts, it is merely retaliatory discharge in reverse. The constructive discharge doctrine acknowledges the fact that some employee resignations are involuntary and further prevents employers who wrongfully force an employee to resign to escape any sort of liability for their actions.

Still, the fulcrum of the discharge must fit within the exception as recognized by Frampton and McClanahan. Baker’s claim is not within the ambit of the recognized exceptions to the general doctrine of at-will employment. The alleged misconduct is not on par with the rights and obligations recognized as a basis for discharge complaints in Frampton and McClanahan.

Lessons:
1. The public policy exception to the employment at-will doctrine extends to constructive retaliatory discharges.

2. The courts will, nonetheless, continue to narrowly apply this exception to situations that clearly fall within either the Frampton precedent (where the termination was for exercising a statutorily conferred right, e.g., the right to worker’s compensation) or the McClanahan precedent (where the termination was for refusing to commit an illegal act for which the employee could held liable, e.g., driving an overweight truck)

4. Fixed Fee: In the matter of Daniel E. Moore, 915 N.E.2d 973 (Ind. 11/3/2009)(Shepard)

In May 2004, Respondent was retained by a client (“Client”) to represent her in a dissolution of marriage action. Client paid Respondent $15,000 pursuant to an agreement that this would be his total “flat” or “fixed” fee. Respondent diligently and competently worked on Client’s case. In May 2005, Respondent requested Client pay him an additional $5,000 which Client paid. In April 2006, Respondent requested Client pay him an additional $1,500, which Client paid in two installments. In neither instance did Respondent advise Client to consult with independent counsel before agreeing to amend the fee agreement to his advantage.

The parties agree that Respondent violated these Indiana Professional Conduct Rules prohibiting the following misconduct:

Rule 1.5(a) (2004): Charging an unreasonable fee.

Rule 1.8(a)(2) (2005): Entering into business transactions with a client (amendments of a fee agreement) unless the client is advised in writing of the desirability of seeking, and is given reasonable opportunity to seek, advice from independent counsel.

For Respondent’s professional misconduct, the Court imposes a public reprimand.

Lessons:
1. As a general rule, stand by your fixed fee contracts even when it requires more time than you expected.

2. If you want to change a fixed fee contract, make sure the change is justified and that you advise the client in writing of the desirability of seeking advice from independent counsel and give the client a reasonable opportunity to do so.

5. The reasonableness of contingency attorney fees: City of New Albany v. Cotner, 919 N.E.2d 125 (Ind.Ct.App. 12/30/2009)(Vaidik)

In 1992 the City of New Albany and the Town of Georgetown entered into a Sewage Treatment Agreement (“sewage contract”) in which the City agreed to treat wastewater generated or transported by Georgetown's sewer system. In 1999 the City retained Fox & Cotner to represent the City in collecting sewer fees from Georgetown. The fee contract provided: “We will charge the City a contingent attorney fee of one third of whatever we are ultimately able to collect from Georgetown.”

Fox & Cotner subsequently filed a complaint for breach of the sewage contract against Georgetown on behalf of the City in August 1999 seeking the recovery of back sewer fees, penalties as a result of Georgetown sending an average daily flow in excess of the amount to which it was entitled under the sewage contract, unpaid connection fees, and attorney's fees. In 2003 the City hired Greg Fifer as the attorney for the New Albany Sewer Board (“Sewer Board”) and paid him on an hourly basis with regards to the sewer litigation (in addition to Fox & Cotner).

In 2004 the City and Georgetown submitted the case to mediation, and Fifer and Fox & Cotner appeared at the mediation as representatives of the City. The parties reached an agreement in March 2005. In December 2005 the City filed, in the underlying case, a complaint against Fox & Cotner, which sought a determination of whether a valid fee contract existed, and if so, whether the fee was reasonable. In February 2006 Fox & Cotner answered the complaint and counterclaimed for enforcement of the fee contract, that is, its contingent fee of one-third of the entire settlement proceeds.

The settlement agreement was amended in August 2006. Taking both the March 2005 settlement agreement and August 2006 amendment together, Georgetown had a total payment obligation to the City of $900,000: $100,000 as payment for back sewer fees and $800,000 as payment for its “remaining payment obligations.”

The trial court granted summary judgment in favor of Fox & Cotner and ordered the City to pay Fox & Cotner $300,000, one-third of the entire amount the City collected from Georgetown, with interest. The City now appeals.

The City first contends that the scope of Fox & Cotner's representation did not include claims for capital improvements. The fee contract stated that Fox & Cotner would provide representation of the City “in its sewer fee dispute with Georgetown.” Without looking outside the four corners of the contract, it is impossible to determine whether capital improvements to the sewer system are included in charges for sewer services. We thus conclude that “sewer fee dispute” is ambiguous.

This ambiguity, however, may be resolved by looking to the undisputed evidence designated by the parties. All of the designated evidence points to the fact that “sewer fee dispute” generally involved the enforcement of the sewage contract; specifically, the collection of back sewer fees, unpaid connection fees, and penalties for excess flow under the terms of the contract. The purpose of the fee contract was to enforce the sewage contract, and under the undisputed terms of the sewage contract, Georgetown's excess flow could be addressed by either paying penalties or contributing money toward capital improvements. Thus, penalties and capital improvements are two sides of the same coin.

Finally, the City contends that the fee is unreasonable. A contingent fee agreement in a collection case that is the product of a bargain between the attorney and the client is presumed to be reasonable as between them. “The whole point of contingent fees is to remove from the client's shoulders the risk of being out-of-pocket for attorney's fees upon a zero recovery. Instead, the lawyer assumes that risk, and is compensated for it by charging what is (in retrospect) a premium rate.”

The factors used in determining the reasonableness of a contingent fee contract must be evaluated at the time it was entered into, and to hold that a contingent fee contract can be “re-examined by hindsight” would “encourage almost certain and endless second guessing in all contingent fee contract situations” and thus destroy the concept of contingent fee contracts. The City does not argue that the fee contract was unreasonable when it was entered into. It has been recognized that, as a general matter, a one-third contingent fee is a standard and customary fee in collection cases.

Although the City highlights affidavits from attorneys involved in the dispute between the City and Georgetown stating that the $300,000 requested by Fox & Cotner is unreasonable and points to these affidavits and other designated evidence to persuade us that Fox & Cotner did not expend enough effort to justify such a high fee, we note that none of its evidence addresses the dispositive issue of whether the contingent fee was unreasonable at the time the fee contract was entered into. Without more, 20/20 hindsight is simply not enough to overcome the presumption that the contingent fee is reasonable.

Finally, the City argues that Fox & Cotner is not entitled to the full $300,000 fee because the City paid for the services of Fifer and the City should not be responsible for two fees. The City chose to retain Fifer on an hourly basis at the same time it was retaining Fox & Cotner on a contingency basis. The retention of Fifer did not alter the City’s obligations to Fox & Cotner. [The outcome would likely have been different if the City had discharged Fox & Cotner and replaced them with Fifer.]

Lessons:
1. The reasonableness of a contingency fee is to be assessed at the time the fee agreement is entered into.

2. A party who later hires additional counsel on an hourly basis, while retaining the original contingent fee lawyer, will not reduce its obligation to comply with its contingency fee agreement.

6. Determining reasonable attorneys fees in a dissolution case: Reeder v. Reeder, 917 N.E.2d 1231 (Ind.Ct.App. 12/9/2009)(Hoffman)

Petitioner-Appellant Stephanie Reeder appeals the trial court's award of attorney fees to the law firm of Appellee Coots, Henke, & Wheeler (“the Coots firm”) in a dissolution action involving Respondent-Appellee John Reeder.

In one of the numerous hearings on the petition, Stephanie stated that she owed approximately $245,000.00 in attorney fees and expenses to the Coots firm; and she requested that John be ordered to pay the fees and expenses. In support of her request, Stephanie presented an affidavit summarizing the claim for expenses and an attachment setting forth the details of the claim.

The trial court determined that John should pay Stephanie $1,269,234.00 as part of the marital distribution. The trial court further determined that Stephanie should pay the attorney fees and expenses owed by her to the Coots firm.

Stephanie argues that the trial court failed to hold an evidentiary hearing on the reasonableness of the fees that the Coots firm was owed and attempting to collect. Stephanie cites numerous cases that discuss the determination of attorney fee awards. For example, she cites Stepp v. Duffy, for the proposition that when the “amount of the fee is not inconsequential, there must be objective evidence of the nature of the legal services and the reasonableness of the fee.” She notes that we have held as a general rule that “the reasonableness of the attorney fee is a matter resolved in an evidentiary hearing.”

We understand the wisdom of the general rule, and we hold that the goal of the rule--the determination of a reasonable attorney fee award--is achieved in this case. First, and most importantly, Stephanie made the original claim that the attorney fees claimed by the Coots firm were reasonable, albeit in an effort to have John pay the fees. We cannot fail to see the irony of her present position that she was requesting that John pay an unreasonable amount of attorney fees. Second, the fee award was discussed in a telephone hearing before the evidentiary hearing on the Coots firm's motion to correct error. Third, the attorney fees seem to have been discussed in the evidentiary hearing. Finally, the trial court specifically determined that the fee request was reasonable under the factors set forth in Rule 1.5(a) of the Indiana Rules of Professional Conduct.

We cannot say that the trial court, which is deemed an expert on the question of the propriety of fees and which may judicially know what constitutes a reasonable fee award, abused its discretion in determining that Stephanie made a request that John pay reasonable attorney fees. See Canaday v. Canaday, 467 N.E.2d 783 (Ind.Ct.App.1984) (holding that the trial court may make a determination as an expert and upon judicial knowledge). Furthermore, given the facts of this case, we cannot conclude that a separate hearing on the issue of reasonableness was required.

Lessons:
1. An evidentiary hearing is not always required on the reasonableness of requested attorney’s fees.

2. Don’t challenge the reasonableness of fees charged by your counsel after requesting and losing on a motion to have your opponent pay the same fees.

7. Doctrine of invited error; vehicle storage fees: Northwest Towing & Recovery v. State of Indiana, 2010 WL 86140 (Ind.Ct.Appeals 1/11/2010) (Baker)

Sometimes actions that are merely tangential in nature can produce Solomonic judicial actions and results. Today we are called upon to review the resolution of a dispute regarding a vehicle that was towed to and stored at Northwest Towing & Recovery's (Northwest) facility at the Muncie Police Department's request following a deadly traffic accident that ultimately resulted in a criminal conviction against the driver of the vehicle. The vehicle's owner, who was not a party to the criminal proceedings, requested the return of the vehicle, and Northwest sought to recover its unpaid storage fees in excess of $3600.

Appellant, Northwest appeals the denial of its motion to correct error after the trial court limited its storage-fee lien to $1500 in accordance with Indiana Code section 32-33-10-5(b) against appellee Frances Brinkley, the owner of the vehicle. Northwest first argues that the trial court's order cannot stand because Frances was not a party to the criminal proceedings and had not properly intervened in the case. Therefore, Northwest contends that the judgment must be vacated because it was improperly “dragged into a criminal proceeding by a person not a party to that proceeding,” in violation of Trial Rule 17(A).

Under the doctrine of invited error, a party may not take advantage of an error that he or she commits or invites or that is the natural consequence of his or her own neglect or misconduct. In this case, both Northwest and Frances were represented by counsel throughout the proceedings and at the February 2, 2009, hearing. The trial court permitted the parties to present evidence, and it issued orders regarding the storage of the vehicle throughout the proceedings. Northwest made no objection under Trial Rule 17(A) until the trial court ruled against it. Thus, to the extent that there was any error pursuant to Trial Rule 17, Northwest expressly and implicitly invited the alleged error by participating in the proceedings and failing to make a timely objection. Therefore, Northwest has waived the issue and we decline to review the alleged error.

Northwest next claims that even if this matter was properly before the trial court, the order limiting its storage charges to $1500 was erroneous. Northwest argues that the trial court failed to acknowledge that there is no limit on vehicle storage charges in light of Indiana Code section 9-22-5-15(a). However, another statute, Indiana Code section 32-33-10-5(b), which became effective in 2005, provides that: “(b) The costs of storing a motor vehicle may not exceed one thousand five hundred dollars ($1,500).”

Indiana code section 32-33-10-5 controls, and Northwest may only recover up to $1500 in storage fees from Frances.

Frances asserts in her cross-appeal that she should not be liable for any amount of the storage fees that were incurred. In essence, Frances claims that she can avoid liability for storage fees because it was her son's conduct that caused the fees to be incurred.

It was the Muncie Police Department that made the initial request for Northwest to store the vehicle. And it was Steven who made the subsequent request to store it prior to trial. However, neither Steven nor Frances requested the vehicle's return at the sentencing hearing, even though they both knew that Northwest was continuing to store it. The trial court could reasonably infer that both Frances and Steven acquiesced in and permitted the continued storage of the vehicle. Therefore, we cannot say that the trial court abused its discretion in ordering Frances to pay the storage fees from August 27, 2007— the date on which Steven was sentenced--until the trial court ordered Northwest to return the vehicle to her on October 28, 2008.

Lessons:
1. The doctrine of invited error may apply by participating in a proceeding and failing to make a timely objection.

2. There is now a statutory cap of $1,500 on storage fees.

3. Courts, like arbitrators, will sometimes “cut the baby in half.”

8. Sanctions for violating motion in limine: Allied Property and Casualty Insurance Company v. Good, 919 N.E.2d 144 (Ind.Ct.App. 12/31/2009)(Vaidik)

A fire occurred at Linda and Randall Good's home in Wabash, Indiana, on March 16, 2003. Allied had issued a Homeowners Policy to Linda which provided coverage for the property. In March 2004 Linda filed a complaint against Allied alleging that it breached the policy by failing to pay proceeds following the fire and that it breached its duty to act in good faith.

At the final pretrial conference, the trial court orally issued orders on some of Linda's motions in limine. Specifically, the court ordered that Randall's criminal history was inadmissible during Phase I of the trial, subject to Indiana Evidence Rule 609. Randall's criminal history includes at least one theft conviction from approximately thirty years ago. Further, the court ordered that no mention be made of the Goods' prior fires.

On the third day of trial, Allied witness Arvin Copeland, a fire investigator, responded to a cross-examination question about previous fires he had investigated. He answered that he had investigated a previous fire at the Goods' home in 2000. Mr. Marshall (Randall’s counsel) immediately objected because this was in violation of the trial court's order in limine. The trial court reminded Copeland of the order in limine (of which Mr. Jennings (Allied’s counsel) assured the court that Copeland had been informed) and instructed Copeland that he was coming very close to being found in contempt of court. The trial court then gave the jury a curative instruction.
Allied's attorneys then called Natalie Hornung as a witness. Hornung testified on direct examination that in 2003 she was a manager for Allied's underwriting department. The following exchange then occurred:

Q: And would you tell the jury some of those representations that you believe were not truthful based upon what you were told, and the information you acquired?

A: Okay. Some of the representations that I believe were incorrect were regarding the prior cancellations for the Goods and the prior felony convictions as well as-

Mr. Guenin (Linda’s counsel) informed the court that Linda was “regrettably” moving for a mistrial. The trial court granted the motion for mistrial and awarded sanctions. The new trial proceeded in January 2009. Linda was successful in both phases of trial and was also awarded attorneys' fees. In total, Linda recovered $1,052,977.19 from Allied.

Allied raises one issue in this interlocutory appeal: whether the trial court erred in ordering Allied to pay more than $26,000 in sanctions, including attorneys' fees, expert witness fees, and costs for the jury, when its own employee, Hornung, apparently after having been warned, violated the trial court's order in limine by testifying on direct examination about felony convictions, which resulted in the mistrial.

A ruling on a motion in limine is not final on the admissibility of evidence and instead is designed to prevent mention of prejudicial material to the jury before the trial court has had the opportunity to consider its admissibility. That is not to say that a party who violates an order in limine may do so with impunity. The sanction is within the discretion of the trial court and under appropriate circumstances might extend to declaration of a mistrial and/or punishment for contempt. As for a mistrial, declaration of a mistrial is generally within the discretion of the trial court. It is “an extreme remedy invoked only when no other measure can rectify the perilous situation.”

In responding to Allied's argument that the trial court erred in imposing more than $26,000 in sanctions against it, neither Linda nor Randall cites any Indiana case in which a trial court has awarded sanctions--including attorney's fees, expert witness fees, or costs for the jury--against a party for violating an order in limine and causing a mistrial. This case is about our trial courts' inherent authority to enforce their own orders and not about their statutory contempt power. Our Supreme Court has recognized on multiple occasions that our courts have inherent authority.
It is clear that Indiana trial courts possess inherent power to sanction for discovery violations, contempt, and the government's wrongful conduct pursuant to Trial Rule 65(C). But the question presented in this appeal is whether this inherent power extends to imposing sanctions for violating an order in limine and causing a mistrial. We conclude that Indiana trial courts possess the inherent power to sanction parties and attorneys for violating orders in limine and causing mistrials. This power is designed to protect the integrity of the judicial system and to secure compliance with the court's rules and orders.

Because the trial court determined that Allied intentionally violated the order and such violation required a mistrial, the evidence supports the conclusion that Allied's conduct was egregious and caused a mistrial. Furthermore, the sanctions imposed by the court against Allied were compensatory in nature to reimburse the Goods, their attorneys, and the county for costs incurred as a direct result of Allied's violation of the order in limine. The trial court did not abuse its discretion in sanctioning Allied.

Lessons:
1. Indiana trial courts have the inherent power to sanction attorneys, witnesses and parties for violating orders in limine and causing mistrials.

2. Be forceful and clear in advising witnesses to comply with orders in limine. Warn them about what happened to Allied.

9. Partnership by estoppel: Reinhart v. Boeck, 918 N.E.2d 382 (Ind.Ct.App. 12/18/2009) (Najam)

In October of 2005, Ronald G. Thomas began a scheme to lure David Nick Reinhart into a phony real estate business as a “partner” and stalking horse for other marks. In early November of 2005, Thomas invited Reinhart to join the business that Thomas called [TRG]. Reinhart agreed to enter real estate transactions with Thomas for purposes of attempting to realize profits. Reinhart also began to solicit investors for TRG.

In his first contact with Boeck, Reinhart told Boeck that “we are looking for investors in our real estate business[”;] that there were three partners including him; that “we buy properties ... in foreclosure ... and in volume from banks[”;] that “we do two things with these properties; short sale and lease to own[”;] that the partners concentrated on various aspects of the business; that “we make between $12,000 and $15,000 profit on each house sold in a short sale (there were 100 short sales for the partnership in the previous year)[”;] and that “we made in excess of $1,000,000 last year.” Boeck, thinking that he liked what he heard and wanted to hear more, agreed to meet Reinhart and Thomas at a restaurant for breakfast.

On December 22, 2005, a meeting occurred with Boeck, Thomas and Reinhart. Thomas spun a tale of his great real estate experience, acumen and success, and yet it was a sad tale inasmuch as his partners' business was so good that even with the prodigious credit of the partners it was short on capital and needed money. That's why they were looking for five or six more investors--they'd already had found three. On February 16, 2006, and again on February 23, 2006, Boeck invested money with Thomas. In both transactions, Boeck was told by Thomas that he was investing in the partnership and that the partnership would in turn lend the money to two individuals who could turn fast profits and pay back a return. The deadlines for Boeck's splendid returns came and passed without realization. Boeck called Thomas daily. Thomas stonewalled.

On or about May 2, 2006, Boeck got a check for $60,000 from Thomas, albeit from a different account [than the one] into which he had wired the money. Boeck never got another dime out of TRG or Thomas. He thus lost $137,000.00 in principal and further was never repaid any return.

On September 21, 2007, Boeck filed his complaint against Reinhart, in which Boeck alleged that Reinhart was liable for Boeck's lost February 16 and February 23 investments. Specifically, Boeck alleged five theories of liability against Reinhart including “vicarious liab[ility]” for the unlawful and fraudulent acts of a “business partner.” Reinhart filed a timely answer and moved for summary judgment on all counts. Boeck then filed a cross-motion for summary judgment on the counts alleging derivative and vicarious liability. After a hearing, the court granted summary judgment for Boeck on those two allegations, as well as the remaining alternative theory of unjust enrichment. The court then entered money judgments for Boeck on each of the three counts. The court capped that monetary award at $229,806.20, the amount Boeck sought on his first theory of liability.

The theory of partnership by estoppel has been recognized in our common law since 1859 and was codified by our General Assembly in 1949 (currently codified at I.C. § 23-4-1-16):

[w]hen a person, by words spoken or written or by conduct, represents himself, or consents to another representing him ..., as a partner in an existing partnership or with one (1) or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made.
That is, a person cannot deny the existence of a partnership when that person holds himself out to be in a partnership with another, although no partnership in fact exists, and a third party detrimentally relies on that representation.

Reinhart conceded that he represented himself as Thomas' partner and consented to
Thomas representing them as partners in an existing partnership. Reinhart argues that only “managing partners” under the Indiana Securities Act are derivatively liable for the acts of others. However, Reinhart cites law that is not applicable to this case. Reinhart quotes language from the current version of the Act, specifically, Indiana Code Section 23-19-5-9(d) (2008), but in recodifying the Act in 2007 our General Assembly expressly declared that the “predecessor act governs all actions ... pending on June 30, 2008.” P.L. 27-2007 § 38(b) (effective July 1, 2008). This action was filed and pending before that date. And, under the prior statute, all “partner[s]” are jointly and severally liable. Accordingly, Reinhart is estopped from using TRG's corporate identity as a shield from personal liability, and the trial court properly concluded that the undisputed designated evidence showed that Reinhart was Thomas' partner for purposes of the Act.

Lesson:
1. If you hold yourself out as a partner in a business, you may have individual liability even when you are not a partner and even if the business is incorporated.

2. If you share a law office with other lawyers who are not your partners, be sure to publicly disclaim any partnership.

10. Summary judgment procedure: Miller v. Yedlowski, 916 N.E.2d 246 (Ind.Ct.App. 11/20/2009)(Vaidik)

In the interlocutory appeal of this medical negligence case, Marvin Jay Miller, M.D., appeals the trial court's denial of his motion for summary judgment. According to established Indiana law, when a nonmoving party fails to respond to a motion for summary judgment within thirty days by either filing a response, requesting a continuance under Indiana Trial Rule 56(I), or filing an affidavit under Indiana Trial Rule 56(F), the trial court cannot consider summary judgment filings of that party subsequent to the thirty-day period.

In this appeal we clarify that when a nonmoving party has received an enlargement of time pursuant to Trial Rule 56(I), any response, including a subsequent motion for enlargement of time, must be made within the additional period granted by the trial court. Because the nonmovants in this case filed their second motion for enlargement of time six days after the deadline set by the trial court, the trial court's order granting their second motion for enlargement of time was a nullity, and the court was precluded from considering their response to Dr. Miller's motion for summary judgment. Because this leaves no evidence to oppose Dr. Miller's motion for summary judgment, we remand this case with instructions for the trial court to enter summary judgment in favor of Dr. Miller.

We acknowledge that prior case law has been somewhat inconsistent regarding the authority of a trial judge to consider affidavits filed after the thirty-day deadline in Rule 56(C).

When a nonmoving party fails to respond to a motion for summary judgment within 30 days by either filing a response, requesting a continuance under Trial Rule 56(I), or filing an affidavit under Trial Rule 56(F), the trial court cannot consider summary judgment filings of that party subsequent to the 30-day period.

Our Supreme Court has established a bright line rule that prohibits a trial court from considering summary judgment filings after the thirty-day period. The rationale behind the rule requiring a nonmoving party to respond to a motion for summary judgment--by either filing a response, requesting a continuance under Trial Rule 56(I), or filing an affidavit under Trial Rule 56(F)--within thirty days does not vanish because the trial court has happened to grant one extension of time. That is, the nonmoving party should not be rewarded and relieved from the restriction of responding within the time limit set by the court because he or she has had the good fortune of one enlargement of time. Therefore, any response, including a subsequent motion for enlargement of time, must be made within the additional period granted by the trial court.

Lessons:
1. When opposing a motion for summary judgment, don’t miss the deadline for responding.

2. Being late will be fatal; even a sympathetic trial judge won’t be able to save you.

11. Equal Protection Clause and sewer taxes; legislative history: City of Indianapolis v. Armour, 918 N.E.2d 401 (Ind.Ct.App. 12/18/2009)(Najam)

In this appeal, we are asked to determine whether a resolution (“the Resolution”) passed by the Indianapolis Board of Public Works (“the Board”) violates the Equal Protection Clause of the United States Constitution, as applied to forty-five property owners in Northern Estates, an Indianapolis neighborhood. The Resolution was designed to move the City of Indianapolis (the “City”) from the Barrett Law method of financing sewer projects to a different method under the Septic Tank Elimination Program (“STEP”). The Resolution forgave all Barrett Law assessments due and owing as of November 1, 2005. The Homeowners had already paid their assessments in full prior to that date, and they sought a refund equivalent to the amount the Resolution had forgiven their neighbors, who were making installment payments. The City and the Board refused, and the Homeowners filed a complaint seeking a refund, declaratory relief, or a writ of mandamus.

The Homeowners moved for summary judgment on their federal constitutional claims. The City filed a cross-motion seeking a summary judgment of its own. Following a hearing on both motions, the trial court granted the Homeowners' summary judgment motion, denied the City's motion, and entered judgment against the City in the amount of $380,914.16, including attorney's fees. This appeal ensued.
The dispositive question is whether the City's refusal to issue a refund to the Homeowners in an amount equivalent to the amount forgiven similarly situated Northern Estates property owners violated the Equal Protection Clause.

The City, having made findings and declared its purpose in the Resolution, is foreclosed from offering other subsequent explanations. See Allied Stores, 358 U.S. at 530 (“[when the text of a law] specifically declare[s][its] purpose, the [law leaves] no room to conceive of any other purpose for [its] existence”).

Here, the City's reasoning has failed to take into account the particular facts of the Homeowners' case. The Homeowners each paid 100% of their assessment. The other Northern Estates property owners paid between 3.33% and 10% of the identical assessment before the Resolution forgave their remaining debt. Stated another way, the Homeowners have paid from ten to thirty times more than each of their similarly situated neighbors. And the City forgave well over ninety percent of the total assessment against the Northern Estates residents who chose to pay by installment but gave no relief to the Homeowners.

It was the City's burden to demonstrate a plausible policy reason for its disparate treatment of the Homeowners, but the City has failed to demonstrate a rational basis for the differential treatment. We agree with the Homeowners that the Resolution's only stated policy justification--to alleviate financial hardship on middle- to lower-income property owners--bears no rational relation to the Homeowners' equal protection claim. Thus, we must affirm the trial court's grant of summary judgment to the Homeowners.

In addition to the text of the Resolution, the City attempts to satisfy its burden of proof by designating the Garrard Affidavit, which was prepared for litigation, in response to the Homeowners' showing of disparate treatment. But the opinion of one Board member is not the opinion of the Board. With respect to statutes, our Supreme Court has established a clear “policy that[,] in interpreting statutes, we do not impute the opinions of one legislator, even a bill's sponsor, to the entire legislature unless those views find statutory expression.”

We cannot impute Garrard's personal opinions, which are not expressed in the language of the Resolution, to the entire Board. The City may not backfill with parol evidence after-the-fact. The City has failed in its burden to demonstrate that its difference in treatment rationally furthers a legitimate state interest. Consequently, the City's differential tax treatment of the Homeowners violates the Equal Protection Clause.

Lessons:
1. If a governmental entity wants to forgive the outstanding balance owed by installment payers, the Equal Protection Clause requires similar forgiveness to lump sum payers.

2. When the text of a law publicly declares its purpose, the government will not be allowed to defend the law by asserting other purposes.

3. An affidavit stating the purposes of a legislative act when signed by only one member of a governmental body, even the sponsor, will be given little weight by Indiana courts.

4. You can fight City Hall and sometimes win.

P.S. The City has moved for rehearing on the issue of whether a refund is the proper remedy.

12. Voicemail as evidence; personal knowledge foundation; lay opinion: Dunn v. State of Indiana, 2010 WL 152169 (Ind.Ct.App. 1/15/2010) (Crone)

Michael P. Dunn appeals his conviction for battery causing serious bodily injury, a class C felony, arguing that the trial court abused its discretion in admitting evidence. Dunn punched Kellen Rollins in the face as they were leaving Shooter’s Bar in New Albany. The punch fractured the orbital bone and Rollins now has a permanent metal plate under his right eye.

At trial, Rollins testified that Brittany Mathys, Dunn’s girlfriend, called him approximately one hour after the incident and left a voicemail message. When Mathys later testified on Dunn's behalf, the prosecutor asked her whether she apologized to Rollins for Dunn's behavior. She testified that she did not remember. The prosecutor asked her whether she remembered making a phone call to Rollins about an hour after the incident and leaving a voicemail message, and she again stated that she did not remember.

Outside the presence of the jury, the State played the voicemail message to Mathys to refresh her memory. The jury was brought back into the courtroom, the prosecutor asked Mathys whether it was her voice on the voicemail message, and she testified that it was. The trial court then admitted the voicemail message over Dunn's objection, and it was played to the jury. In the voicemail, Mathys said:
Kellen, it's Brittany. I'm so sorry for what Mike did to you. There's no reason for him to do that. He's just-just jealous and there's no point. I really do apologize for the way that he treated you and he owes you an apology, too. But hopefully you're all right. I'm really sorry about what he did. I'm so sorry.

Dunn admitted to hitting Rollins but claimed self-defense as a justification. Dunn contends that the voicemail message was inadmissible pursuant to Indiana Rules of Evidence 602 and 701. Evidence Rule 602 provides: “A witness may not testify to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.”

Evidence Rule 701 states: “If the witness is not testifying as an expert, the witness's testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to the clear understanding of the witness's testimony or the determination of a fact in issue.”

Dunn concedes that “[i]t is well settled in Indiana law that a lay witness may express an opinion on numerous subjects if based upon personal knowledge and the proper factual basis for the opinion has been established.” However, he asserts that Mathys did not have personal knowledge that Dunn hit Rollins because she testified that she “did not witness it.” Although Mathys's testimony does not establish that she had personal knowledge of the incident, Evidence Rule 602 does not require that personal knowledge be established by the witness's testimony. Here, other evidence establishes that Mathys had personal knowledge of the incident. Courtney Anderson, who was with Mathys at the bar, testified that “[Mathys] was out there, she did see [Dunn] hit [Rollins] and she was trying to stop him from doing so, so she was saying, Mike, stop.” As such, we conclude that a proper foundation was laid to establish that Mathys had personal knowledge of the incident.

Dunn also challenges the admissibility of the voicemail message based on Mathys' statement that Dunn was “just jealous.” Dunn asserts that there was no foundation laid to show that Mathys knew anything about Dunn's thinking, his intent, or his motive for acting. We disagree. We observe that “[t]he requirement that proffered opinion testimony be rationally based on the witness's perception means simply that the opinion must be one that a reasonable person normally could form based on the perceived facts.” Here, Mathys testified that she had dated Dunn “off and on for a couple of years.” Further, there is no dispute that she was at Shooter's that evening and that she went there with Dunn. Her personal knowledge of Dunn's personality over the course of a couple of years and her presence at Shooter's that evening and at the scene of the incident constitute a rational basis for her perception of Dunn's emotional state.

In addition to requiring that a witness's opinion or inference be rationally based on the perception of the witness, Evidence Rule 701 requires that the opinion or inference be helpful to the clear understanding of the witness's testimony or the determination of a fact in issue. Here, whether Dunn or Rollins initiated the first act of aggression was disputed. Mathys's statement that “[t]here's no reason for [Dunn] to do that. He's just-just jealous and there's no point[,]” is helpful to the determination of whether Dunn provoked, instigated, or participated willingly in the violence. Accordingly, we conclude that the admission of the voicemail message did not violate either Evidence Rule 602 or 701.

Lessons:
1. The personal knowledge required for admission of a statement under Evid.R.602 may be established by other evidence even when the witness denies knowledge.

2. A lay opinion that the defendant was “just jealous” is admissible under Evid.R.701 when evidence is of record that the witness had personal knowledge as the defendant’s girlfriend over the course of a couple of years and witnessed the defendant’s emotional state.

13. Guaranties; dicta: Grabill Cabinet Company, Inc. v. Sullivan, 2010 WL 129795(Ind.Ct.App. 1/14/10) (Bradford)

Appellant/Plaintiff Grabill Cabinet Company appeals from the trial court's grant of summary judgment in favor of Appellee/Defendant Debra Sullivan. On May 18, 2006, Kitchens, Bath & More, LLC (“KBM”) submitted a credit application to Grabill, which application listed Sullivan as president and accounts payable contact for KBM. Also on May 18, 2006, Sullivan and Richard Knoll signed a personal guaranty of any KBM debt that it might accrue to Grabill.

In September of 2006, Sullivan assigned her interest in KBM to Knoll and resigned from the company. Sullivan did not send notice to Grabill of termination of her personal guaranty. In May and June of 2008, KBM ordered cabinets and accessories from Grabill, accumulating a balance of $52,212.26. On August 10, 2008, Grabill filed suit against KBM, Knoll, and Sullivan, seeking to collect the balance from KBM or, failing that, from Knoll and Sullivan pursuant to their personal guaranty. On October 10, 2008, the trial court entered default judgment in favor of Grabill against KBM and Knoll.

On January 23, 2009, Grabill filed a summary judgment motion against Sullivan, which the trial court denied on April 17, 2009, on the basis that the guaranty was defective because it was not signed by KBM or Grabill. On April 27, 2009, Grabill filed a motion to reconsider, to which Sullivan responded with a summary judgment cross-motion on May 7, 2009. On July 31, 2009, the trial court granted summary judgment in favor of Sullivan, again on the ground that the personal guaranty was “defective on its face pursuant to Indiana law.”

Indiana's Statute of Frauds provides in part as follows: “A person may not bring any of the following actions unless the promise, contract, or agreement on which the action is based, or a memorandum or note describing the promise, contract, or agreement on which the action is based, is in writing and signed by the party against whom the action is brought or by the party's authorized agent:…(2) An action charging any person, upon any special promise, to answer for the debt, default, or miscarriage of another.”

Sullivan contends that the guaranty is invalid because Grabill never signed it.
Sullivan relies on the proposition that Indiana case law, although in conflict with the Statute of Frauds, requires three parties to “execute” a guaranty for it to be valid.

The Statute of Frauds makes it clear that only the guarantor's signature is necessary to render a guaranty a complete instrument. The proposition that three parties must execute a guaranty, even if one assumes that “execution” requires a signature, has only ever appeared three times in Indiana case law and then only as dicta. It is worth noting that all three of the opinions arguably grafting a signing requirement onto guaranties came from this Court and conflict not only with the plain language of the Statute of Frauds but also with consistent Indiana Supreme Court precedent.

The Indiana Supreme Court has never wavered from the statutorily-mandated proposition that a guaranty need only be in writing and signed by the guarantor in order to be valid. In light of the clear language of the Statute of Frauds and Indiana Supreme Court precedent regarding guaranties, we are compelled to reverse the trial court's entry of summary judgment in favor of Sullivan and its denial of Grabill's motion to reconsider the denial of Grabill's summary judgment motion. We remand for entry of summary judgment in favor of Grabill on the issue of the enforceability of the guaranty and for calculation of Grabill's award.

Lessons:
1. To be effective, a guaranty need only be signed by the guarantor.

2. Dicta, even when recited three times by the Court of Appeals, remains dicta and is not binding.

14. Statute of limitation for claim against general contractor: Powers & Sons Construction Company, Inc. v. Healthy East Chicago, 919 N.E.2d 137 (Ind.Ct.App. 12/30/2009)(Robb)

Healthy East Chicago hired Powers & Sons pursuant to a contract to serve as the construction manager for the construction of a health service facility in East Chicago, Indiana. On February 15, 2007, Healthy East Chicago filed a complaint against Powers & Sons alleging breach of contract. Specifically, Healthy East Chicago alleged Powers & Sons knew or should have known the proposed building site contained toxic and organic materials and a high water table, it failed to have the toxic and organic materials removed, failed to properly supervise the installation of the concrete slab underlying the building, and failed to warn Healthy East Chicago of the presence of the toxic and organic materials and/or improper installation of the concrete slab could damage the floors, walls, and ceilings of the building.

On July 21, 2008, Powers & Sons filed a motion for summary judgment, contending Healthy East Chicago's complaint was governed by a two-year statute of limitation, and further contending there was no genuine issue of material fact that Healthy East Chicago knew of the damage more than two years prior to February 15, 2007. Following a hearing, the trial court entered an order denying Powers & Sons's motion for summary judgment.

This case turns upon resolution of which statute of limitation applies to Healthy East Chicago's cause of action. Powers & Sons contends the two-year statute of limitation found in Indiana Code section 34-11-2-4 applies. Indiana Code section 34-11-2-4(2) provides “[a]n action for ... injury to personal property ... must be commenced within two (2) years after the cause of action accrues.”

Powers & Sons characterizes Healthy East Chicago's complaint as a “request for damages suffered as a result of Powers & Sons's alleged negligent performance which caused injury to the personal property of Healthy East Chicago.” Indiana courts “have consistently viewed ‘personal property’ in its broad and natural sense” to include goods and chattels as well as “violations to a person's rights and interests in or to such property.” Even in the broad and natural sense of the term, Healthy East Chicago's building is not “personal property,” however. “Personal property” refers to property of a “personal or moveable nature as opposed to property of a local or immovable character.” Permanent structures erected on land are ordinarily considered part of the real estate. We therefore reject Powers & Sons's contention the two-year statute of limitation applies.

We turn then to the question of whether the substance of Healthy East Chicago's action is in contract--allowing for a ten-year statute of limitation--or in tort--imposing a six-year statute of limitation. Powers & Sons contends the action is in tort, citing Whitehouse, 477 N.E.2d 270. In Whitehouse, the trial court dismissed the plaintiff's complaint alleging his attorney breached a contingent fee contract by failing to secure all relief available to him in a personal injury action by applying the two-year statute of limitation for injury to personal property. The court, holding the essence of the plaintiff's claim was not for injury caused by breach of a promise contained in the contingent fee contract but for injury caused by the lost right to receive money from defendants who were not sued during the attorney's representation; in other words, a lost right to personal property.
“[C]ertain professionals, by virtue of the nature of their business, make representations, render opinions, and give advice in the course of performing a contract.” Such professionals may be held liable in tort if they fail to exercise reasonable care in fulfilling their contractual duties. Powers & Sons casts itself in the same class and claims the basis of Healthy East Chicago's complaint is professional negligence. We have never held the responsibility of a general contractor to be akin to that of an attorney or a doctor, however.

The relationship between the parties and Powers & Sons's duties and responsibilities as general contractor arose from the contract rather than from a standard of care imposed by law. Healthy East Chicago's complaint seeks to recover damages sustained as a result of Powers & Sons's failure to perform according to the contract; that is, to hire and supervise subcontractors and construct a building conforming to the plans and specifications suitable for Healthy East Chicago's needs. We therefore hold Healthy East Chicago's complaint is governed by the ten-year statute of limitation applicable to written contracts.

We also note that “[w]here either of two statutes of limitations may apply to a claim, any doubt should be resolved in favor of applying the longer limitation.”
Healthy East Chicago's claim is for breach of contract and a ten-year statute of limitation applies. As Healthy East Chicago's complaint was filed within ten years after construction was completed, it was timely filed. The trial court's denial of Powers & Sons's motion for summary judgment is affirmed.

Lessons:
1. The statute of limitations for injury to personal property does not apply to injury to a building because it is real property.

2. The statute of limitations for beach of contract applies to a claim against a general contractor for negligence.

3. Unlike doctors and lawyers, the law imposes no standard of care on general contractors.

15. Intervening/Superceding cause: Scott v. Retz , 916 N.E.2d 252 (Ind.Ct.App. 11/10/2009)(Robb)

George Scott, a Clarian Health Partners, Inc. (“Clarian”) safety and security investigator, was stuck by a used uncapped syringe while investigating missing narcotics at Indiana University Hospital, which is operated by Clarian. Scott sued Malissa Retz, R.N., for negligence and Indiana University (“IU”), Retz's employer, for respondeat superior and negligent retention and supervision.

On May 31, 2007, Retz stole morphine from an AccuDose room at the Hospital, injected herself with the morphine (in an apparent suicide attempt), and disposed of the used uncapped needles, syringes, and empty vials in the trash container of a women's restroom at the Hospital. The used, uncapped needles ended up in a brown paper bag that was delivered to the Hospital's emergency department and given to the emergency department physician attending Retz.

On June 1, 2007, Scott was told a package relating to the narcotics investigation was available for him to pick up. Scott arrived at the dispatch center and saw the brown paper bag with an incident report attached. Scott picked up the bag to read the report, and he was stuck by a needle inside the bag. Upon opening the bag, Scott found four or five uncapped needles.

On January 30, 2008, Scott filed his complaint for damages against Retz and IU, alleging Retz's liability for negligence and IU's liability under separate counts of 1) respondeat superior and 2) negligent retention and supervision. On January 29, 2009, the trial court granted summary judgment to Retz and IU. This appeal followed.
In general, a defendant's act is a proximate cause of an injury if the injury “is the natural and probable consequence of the act and should have been reasonably foreseen and anticipated in light of the circumstances.” However, under the doctrine of superseding causation, a chain of causation may be broken if an independent agency intervenes between the defendant's negligence and the resulting injury. The key to determining whether an intervening agency has broken the original chain of causation is to determine whether, under the circumstances, it was reasonably foreseeable that the agency would intervene in such a way as to cause the resulting injury.

When assessing foreseeability in the context of proximate cause, courts evaluate the particular circumstances of an incident after the incident occurs. In determining whether an intervening agency is unforeseeable and therefore superseding, this court has looked to various factors. First, we have looked to whether the intervening actor is independent from the original actor, or, in other words, whether the intervening actor is an “independent agency.” e.g., Carter v. Indianapolis Power & Light Co., 837 N.E.2d 509, 521 (Ind.Ct.App.2005) (motorist's reckless driving was superseding cause of accident, precluding liability for utilities' allegedly negligent placement of utility poles). Second, we have looked to whether the instrumentality of harm is under the complete control of the intervening actor. Third, this court has looked to whether the intervening actor, as opposed to the original actor, is in the better position to prevent the harm.

Here, it is undisputed that Clarian acted as an intervening agency between Retz's alleged negligence and Scott's injury. The undisputed facts are that Retz deposited used, uncapped needles in the restroom trash, and subsequently the needles were placed in a brown paper bag and delivered to the Hospital's emergency department operated by Clarian. It is undisputed the bag containing the needles arrived in the emergency department, was given to an emergency room physician, and following that time was in the custody and control of Clarian employees. Higginson, a Clarian nurse, observed the bag, called Clarian safety and security, and delivered the bag to Harris, a Clarian safety and security employee. Both Higginson and Harris were aware the bag contained the needles Retz used to inject herself, and Harris was aware the needles had been left uncapped by Retz. The bag was then transported to the Clarian safety and security dispatch center, where Scott was telephoned the following day and directed to examine the bag. Based on these facts, this case differs meaningfully from one where someone is injured while retrieving uncapped needles from the restroom trash. Rather, the actions of Clarian employees in transporting the needles intervened between Retz's disposal of the needles in the restroom trash and Scott's exposure to them at the dispatch center.

When applied to the undisputed facts, the superseding cause factors discussed above lead to the further conclusion that Clarian's actions are a superseding cause of Scott's injury, releasing Retz from liability. First, Clarian and its employees were at all times independent from Retz, an IU employee. Retz, who was the subject of Clarian's missing narcotics investigation, could hardly have an expectation of controlling what the Clarian employees did with the used vials, syringes, and uncapped needles once Clarian took custody of the bag.

Second, the bag, which was the instrumentality of harm, came under the complete control of Clarian the day before the needle stick and remained in Clarian's exclusive control. Clarian employees were aware of the bag's contents and did not take precautions to secure the needles, despite having the opportunity to do so.
Third, once Clarian took custody and control of the bag, it was Clarian, not Retz, that was in the better position to prevent a needle stick injury. Therefore, we conclude Clarian and its employees' actions were a superseding cause of Scott's injury, such that Retz's alleged negligence in improperly disposing of the needles was not a proximate cause of Scott's injury. As a result, the trial court properly granted Retz summary judgment.

Lesson:
In assessing a defense of intervening/superceding cause, the court should look to whether
(1) the intervening actor is an independent agency,(2) whether the instrumentality of harm is under the control of the intervening actor, and (3) whether the intervening actor is in a better position to prevent the harm.

16. Intervening/Superceding cause: Humphrey v. Duke Energy, 916 N.E.2d 287 (Ind.Ct.App. 11/12/2009) (Najam)

Kristy Humphrey, as personal representative of the estate of Charles Mandrell, Jr., appeals from the trial court's summary judgment for Duke Energy Indiana, Inc. (“Duke Energy”). At about 6:00 a.m. on June 17, 2005, Mandrell was driving southbound on Graham Road in Franklin. Mandrell stopped at the four-way stop at the intersection with Earlywood Drive and then proceeded into the intersection. At the same time, John Albertson, Jr., was driving eastbound on Earlywood Drive. Albertson disregarded the four-way stop and collided with the passenger's side of Mandrell's vehicle. Albertson's vehicle pushed Mandrell's vehicle through and out of the intersection, off the road, and into Duke Energy utility Pole 817-001. Mandrell sustained fatal blunt force trauma as a result of the secondary collision with the Pole and was pronounced dead at the scene. Albertson admitted to the officer that he had smoked marijuana the night before.

In 1981 Duke Energy's predecessor-in-interest took ownership of the Pole. In 1998, Duke Energy replaced the Pole, and the new Pole was placed substantially near to the original location. That location is 6.6 feet southeast of the Earlywood Drive-Graham Road intersection.

Duke Energy asserts that Albertson's acts constituted an intervening cause that relieved Duke Energy of any liability it may have otherwise had in the placement of the Pole. Specifically, Duke Energy notes that Mandrell's vehicle collided with the Pole only after Albertson, with marijuana in his system, disregarded the four-way stop sign and his vehicle struck Mandrell's vehicle. Thus, Duke Energy continues, it was Albertson's conduct and not Duke Energy's placement of the Pole “that set in motion the chain of circumstances that contributed to, or caused, Mandrell's death.”
Duke Energy's argument misconstrues Indiana law. There is no dispute here that Mandrell, the injured party, was traveling the roadway with reasonable care at the time of the accident. And Duke Energy cannot rely on the illegal or reckless conduct of a third party to defeat Humphrey's action at the summary judgment stage in the litigation. Rather, the fundamental test of proximate cause remains reasonable foreseeability where there is an independent intervening act. Hence, the proper question at summary judgment is whether Duke Energy could have reasonably foreseen Mandrell's collision with its Pole, not whether Albertson's conduct was an ordinary and normal use of the highway.

Here, we hold it is a question of fact for the jury whether Duke Energy could have reasonably foreseen that a motorist would collide with its Pole given its location. A question of material fact exists as to whether the location of the Pole within the curve radius of the intersection was a reasonably foreseeable hazard. Thus, we cannot say, as a matter of law, that the location of the Pole was not a proximate cause of and did not contribute to Mandrell's death. It is for a jury, not a court, to determine whether Duke Energy could have reasonably foreseen a motorist's collision with the Pole.

Lesson: Reasonable foreseeability is the fundamental test for assessing a potential intervening/superceding cause.

ADVOCACY TIP OF THE MONTH: Don’t overuse italics; don’t use bold type except in headings; don’t use underlining at all.

Excerpt from Making Your Case: The Art of Persuading Judges by Antonin Scalia and Bryan A. Garner

Italicize to emphasize, but do it sparingly. Remember that when too much is emphasized, nothing is. Constant italicizing gives your brief the tone of an adolescent diary, which is not what you should be striving for.

Whenever possible, replace your italics with the device that provides the usual means of emphasis in written English: word order. In phrasing sentences, try to put the punch word at the end. Instead of writing “She held a knife in her hand,” write “What she held in her hand was a knife.” The latter formulation gives equivalent prominence to the desired word but sounds less excited. But when the only means of making your thought clear is to italicize a word or phrase, do it.

Some brief writers ill-advisedly use boldface type within normal text. The result is visually repulsive. Reserve bold-face for headings.

As for underlining, it’s a crude throwback: that’s what writers used in typewriting—when italics weren’t possible. Nobody using a computer in the 21st century should be underlining text. To the extent that The Bluebook suggests otherwise, it should be revised.

Indiana Law Update

IN THE NEWS: Black’s Law Dictionary Now in iTunes
Posted April 24, 2009 from the ABA Journal
By Molly McDonough
Adding to the ever-expanding toolbox for the wired lawyer who needs to work while on the go, West has launched a Black's Law Dictionary in iTunes. “The idea that you can have a very full, elaborate, complex and richly-textured book like Black’s available at your fingertips is fantastic,” the dictionary's editor Bryan A. Garner said in a statement.
Before heading to the app store, be forewarned that the price is a bit steep compared to most of the freebies or less-than-a-dollar applications many are used to seeing. The Federal Rules of Evidence are available on The Law Pod app for 99 cents. And the U.S. Constitution is available in a number of apps for free or for a nominal price. So what’s West’s price for the Black's Law Dictionary? $49.99.

P.S. Indiana Law Update is also now available in iTunes

1. Continuing objections: Hayworth v. State of Indiana, 2009 WL 1058612 (Ind.Ct.App. April 20, 2009) (Vaidik)

At trial, Hayworth's attorney attempted to lodge a continuing objection to the evidence seized pursuant to the search warrant. However, after asking for a continuing objection, Hayworth affirmatively said “No objection” to the vast majority of the evidence. We take the opportunity here to clarify that once counsel lodges a sufficiently specific objection to a particular class of evidence and the trial court grants a continuing objection, the proper procedure is to remain silent during the subsequent admission of that class of evidence. We therefore find that Hayworth has waived her objection to the evidence seized during the search warrant for which she affirmatively stated “No objection.”
Indiana recognizes continuing objections. This is because continuing objections serve a useful purpose in trials. That is, they avoid the futility and waste of time inherent in requiring repetition of the same unsuccessful objection each time evidence of a given character is offered.
However, as this case illustrates, there are dangers to using continuing objections. As such, the proper procedure must be carefully followed if attorneys wish to use continuing objections and still properly preserve the admission of specific evidence as an issue on appeal. First, objecting counsel must ask the trial court to consider the same objection to be made and overruled each time a class of evidence is offered. It is within the trial court's discretion to grant counsel a continuing objection. If the trial court grants the continuing objection, then counsel does not have to object each time the class of evidence is subsequently offered. If, however, the trial court does not specifically grant the right to a continuing objection, it is counsel's duty to object to the evidence as it is offered in order to preserve the issue for appeal.
Objecting counsel must ensure, however, that the continuing objection fully and clearly advises the trial court of the specific grounds for the objection. If so, the issue is sufficiently preserved for appeal.
Hayworth’s counsel stated: “Judge, I need to make a continuing objection to all this evidence because there was a Motion to Suppress filed prior to this with regard to all of the things they've found and they wanted-Just note my continuing objection to any of this evidence, pursuant to that motion.”
The trial court did not specifically grant Hayworth a continuing objection. Because the court did not grant Hayworth a continuing objection, she must have objected to each and every piece of evidence in order to preserve her challenge to that evidence on appeal.
Even though Hayworth repeated her continuing objection to several exhibits, there were other exhibits to which Hayworth inexplicably said, “No objection.” On appeal, Hayworth asserts that “No objection” really meant “no objection other than the continuing objection.” However, we will not read “No objection,” a simple and powerful two-word phrase, to have such meaning. We thus find that Hayworth has waived her objection to the admission of the evidence seized during the execution of the search warrant.
Although we determined that Hayworth waived her objection to some of this evidence by stating “No objection,” we conclude that the admission of this evidence amounts to fundamental error. Given the misleading statements in Detective Southerland's affidavit and the police's utter lack of corroboration of the informant's statements of criminal activity, we find the error to be so prejudicial to the rights of Hayworth as to make a fair trial impossible.

Lesson: To make a continuing objection: (1) Ask the trial judge to allow a continuing objection to a specific class of evidence; (2) Get a clear ruling on the record allowing the continuing objection; and (3) thereafter, remain silent when evidence in the class is offered.

2. The doctrine of completeness: Donaldson v. State of Indiana, 2009
WL 997088 (Ind.Ct.App. April 13, 2009) (Riley)

Appellant-Defendant, Jacob A. Donaldson (Donaldson), appeals his conviction for operating a motor vehicle while privileges are suspended, as a Class A misdemeanor. Donaldson argues that the trial court abused its discretion by admitting State's Exhibit 1 as evidence because it did not contain his complete driving record. Donaldson contends that State's Exhibit 1 “purported to be a complete driving record.” However, this contention is erroneous. The request for record by the State was entitled “Request for HTV Packet.” Donaldson makes no contention that State's Exhibit 1 was not a complete HTV packet. As such, we cannot say that the trial court abused its discretion by determining that State's Exhibit 1 was a complete record.
Moreover, the remedy which Donaldson seeks, reversal of the conviction, would not be the correct remedy even if State's Exhibit 1 was an incomplete record. Donaldson cites to Ind. Evidence Rule 106 for support, which provides: “When a writing or recorded statement or part thereof is introduced by a party, an adverse party may require at that time the introduction of any other part or any other writing or recorded statement which in fairness ought to be considered contemporaneously with it.” When applying this rule, we have stated that, “[u]nder the doctrine of completeness, when one party seeks to admit a portion of a document or recorded statement into evidence, the opposing party can place the remainder of the statement into evidence.” Donaldson has access to his own driving record, just as the State does, and was at liberty to admit any portion thereof which promoted his defense.

Lessons:
1. To preserve a Rule 106 objection, the objecting party should offer the remainder of the incomplete record into evidence.
2. A subset of a file can be a complete record for purposes of Rule 106.

3. Jurors reading text messages: Hape v. State of Indiana, 903 N.E.2d 977 (Ind.Ct.App. March 31, 2009) (Vaidik)

Darby L. Hape was convicted by a jury of Class A felony possession of methamphetamine with the intent to deliver and Class D felony resisting law enforcement and was found to be a habitual offender. After trial, the parties learned that the jury, during deliberations, read text messages saved in Hape's cellular telephone that were previously undiscovered by the State and the defense. The cellular telephone was admitted into evidence during trial as part of an exhibit showing the items confiscated from Hape at the time of his arrest.
Hape contends that the trial court erred in denying his motion to poll the jury about the effect that the text messages had upon the verdict. He argues that the trial court's denial of this motion “deprived [him] of his ability to question and poll jury members on the issue of prejudicial error.”
Indiana Evidence Rule 606(b) provides for the polling of a jury as part of an inquiry into the validity of a verdict in limited circumstances. The rule provides, in part:
Inquiry into Validity of Verdict or Indictment. Upon an inquiry into the validity of a verdict or indictment, a juror may not testify as to any matter or statement occurring during the course of the jury's deliberations or to the effect of anything upon that or any other juror's mind or emotions as influencing the juror to assent to or dissent from the verdict or indictment or concerning the juror's mental processes in connection therewith, except that a juror may testify ... on the question of whether extraneous prejudicial information was improperly brought to the jury's attention[.]
Thus, as a general matter, a jury's verdict may not be impeached by evidence from the jurors who returned it. However, “extrinsic or extraneous material brought into deliberation may be grounds for impeaching a verdict where there is a substantial possibility that such extrinsic material prejudiced the verdict.”
The defendant’s cellular telephone was admitted into evidence without objection. Turning on the telephone did not constitute an extrajudicial experiment that impermissibly exposed the jury to extraneous information. First, the text messages themselves are not extraneous to the cellular telephone. We agree with the State that text messages are intrinsic to the cellular telephones in which they are stored. “Intrinsic,” as defined by Black's Law Dictionary, means “[b]elonging to a thing by its very nature; not dependent on external circumstances; inherent; essential.” We conclude that the text messages at issue here are part and parcel of the cellular telephone in which they were stored, just as pages in a book belong to the book by their very nature, and thus they are intrinsic to the telephone. Hape may not impeach the jury's verdict with affidavits regarding the text messages.
To lay a foundation for the admission of evidence, the proponent of the evidence must show that it has been authenticated. “The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” Ind. Evidence Rule 901(a).
We see no reason why the writings or recordings generated and saved inside of a cellular telephone should be exempted from the same authentication requirement. The proponent of a piece of evidence has to decide the purpose for which the evidence is offered. Even though we have determined that a text message stored in a cellular telephone is intrinsic to the telephone, a proponent may offer the substance of the text message for an evidentiary purpose unique from the purpose served by the telephone itself. Rather, in such cases, the text message must be separately authenticated pursuant to Indiana Evidence Rule 901(a).
Nevertheless, the presentation of the text messages to the jury without proper authentication did not rise to the level of fundamental error because the jury's exposure to the text messages was harmless error.

Lessons:
1. Be careful when admitting electronic evidence; make sure you know what’s on it or in it.
2. Text messages should be authenticated separately from the telephone on which they may be found.

4. Jurors reading newspapers: Jackson v. State of Indiana, 903 N.E.2d 542
(Ind.Ct.App. March 31, 2009) (Bradford)

A jury was sworn and impaneled on April 23, 2007. That same day, a local newspaper ran an article about the trial which contained an excerpt from a letter the defendant Jackson had written to Jefferson County's chief deputy prosecutor. Jackson was quoted as writing “I know my life to you doesn't mean anything, just another poor black man the [S]tate can clean up the book on.”
First thing the next morning, the State requested a mistrial. The trial court asked the jury if any members knew of the article and five acknowledged they did. The trial court then held voir dire with each of those five jurors individually to determine what they knew about the newspaper article.
• The first juror questioned stated that he saw the article and read the first couple of sentences, but remembered that he had been instructed to stay away from newspaper articles or radio coverage of the trial, and stopped reading. He testified that what he read would not influence his determination of guilt or innocence.
• The second juror that was questioned stated that he read the article. He stated that he did not know the facts of the case and the article did not influence him to lean toward either side.
• The third juror questioned stated that his wife started reading the article aloud, but he told her to stop.
• The fourth juror stated that her husband started reading the article but she told him to stop. Her husband stopped reading, but told her he knew “that person in [the] article.” She testified that she heard nothing that would cause her to form an opinion either way, and that her husband knowing Roberts would not influence her either.
• The fifth and final juror who knew of the article stated that he had read the article. He testified that the part about the letter to the chief deputy prosecutor meant nothing to him because he did not know the facts of the case. He said the article would not influence him in any way.
After voir dire and taking argument from the State and Jackson, the trial court granted the State’s motion for a mistrial.
Before addressing Jackson's contention, we address the State's contention that Jackson has waived this issue for review by failing to object to the grant of the mistrial. Although Jackson's attorney never uttered the words “I object,” he did explain to the trial court that all of the jurors questioned about reading the article have “indicated it has not had any impact upon their ability to be fair and impartial jurors in this case, and for that reason we believe a mistrial would not be appropriate.” We conclude that this is a sufficient objection to preserve this issue for appeal.
The fact that a juror has read a newspaper article pertaining to a case is not grounds for a mistrial, new trial, or reversal unless it is shown that the jurors were influenced thereby. A mistrial is an extreme remedy in a criminal case and should be granted only when nothing else can rectify the situation.
We conclude that an admonition from the trial court would have been sufficient considering the limited nature of the jury's exposure to the passage from the article and lack of evidence that the article influenced any juror. As such, the trial court abused its discretion by granting the mistrial.
Once jeopardy has attached, the trial court may not grant a mistrial over a defendant's objection unless “manifest necessity” for the mistrial is found. We conclude that the discharge of the jury at Jackson's second trial operated as an acquittal and the subsequent trial of Jackson was a violation of his right to be free from double jeopardy.

Dissent by J. Bradford: The prosecutor argued that the State's case was irretrievably compromised, both because the prosecutor had been branded a racist and because Jackson had been permitted to allege unfairness by the State without risk of cross-examination. Although the jurors had reassured the court that they had not been influenced by the article, the trial court was not required to accept their claims on this point. I would affirm the trial court on the grounds that a “high degree” of necessity existed justifying the State's request for mistrial such that retrial did not violate double jeopardy.

Lessons:
1. Expect some jurors to read (or be told) what’s in the newspapers even when instructed otherwise.
2. Declaring a mistrial is not always the safe course in a criminal case where double jeopardy creates risks that are not present in civil cases.
3. You needn’t use the word “object” to preserve an objection but your opposition to the motion should be stated clearly on the record.




5. Jurors watching the news: Morgan v. State of Indiana, 903 N.E.2d 1010
(Ind.Ct.App. April 7, 2009) (Brown)

The State charged Morgan with murder, felony murder, and robbery as a class A felony. Ocie Brasher was Morgan's friend, and in March 2008, they were incarcerated in the Marion County Jail at the same time. Morgan told Brasher that he and Price had robbed and killed Hager.
Brasher informed the police about Morgan's statements. Brasher was subpoenaed to testify at Morgan's trial. He appeared as required, and the victim's advocate escorted him to the witness waiting room. However, he disappeared from the witness waiting room before he testified. Various agencies and approximately fifty officers attempted to locate Brasher. Over Morgan's objection, Brasher's deposition was read to the jury.
During the trial, the trial court learned that several jurors had been exposed to publicity and information concerning Brasher's disappearance. Seven jurors indicated they had been exposed to such information, and the trial court questioned those jurors individually. Morgan argued at trial and on appeal that Juror Jackson and Juror Peyton should have been dismissed.
Juror Jackson indicated that she heard on the 10:00 p.m. news the night before that a witness was missing and Morgan's name was mentioned. Juror Peyton informed the trial court that his mother had called him that morning and told him that a witness was missing in a murder trial. Other jurors indicated that Juror Jackson and Juror Peyton had mentioned the missing witness in the jury room.
Both jurors indicated that they could disregard the information and base their decision solely upon the evidence presented at trial, and the jurors were admonished that their decision must be “exclusively, solely based on the evidence that [they heard] from the witness stand” and that they were not to consider outside sources.
Given our deference to the trial court in these matters, we conclude that the trial court did not abuse its discretion by denying Morgan's request to dismiss the two jurors.

Lessons:
1. Expect some jurors to watch the news on television even when instructed otherwise.
2. Watching the news need not lead to disqualification if the jurors say that the broadcast will not influence their decision and they’ll make their decision solely on the evidence from the witness stand.

6. Waiving challenges for cause; individual voir dire: Ward v. State of Indiana, 903 N.E.2d (Ind. April 7, 2009)(Shepard)

The defendant, Roy Lee Ward, appeals his death sentence for the 2001 rape and murder of fifteen-year-old Stacy Payne in Dale, Spencer County, Indiana. The defendant presents two discrete claims of trial court error regarding the conduct of voir dire, the trial court's jury selection process. He contends that the trial court erred (a) in failing to strike ten prospective jurors for cause, and (b) by changing the method of questioning potential jurors about the death penalty from initially speaking with one juror at a time to later discussing the issue with small groups of jurors. To support these claims, the defendant argues that he was forced to use his peremptory challenges on prospective jurors who should have been removed for cause, thus compelling him to accept other jurors who, though not challengeable for cause, held biases favorable to the death penalty for the pleaded-to offenses and unfavorable to dispassionate consideration of his mitigation evidence.
The United States Supreme Court addressed a similar claim in Ross v. Oklahoma, 487 U.S. 81, 108 S.Ct. 2273, 101 L.Ed.2d 80 (1988). The Ross Court found that any claim that the jury was partial must focus not on the removed juror, but rather “on the jurors who ultimately sat.” The Court stated:
Petitioner was undoubtedly required to exercise a peremptory challenge to cure the trial court's error. But we reject the notion that the loss of a peremptory challenge constitutes a violation of the constitutional right to an impartial jury. So long as the jury that sits is impartial, the fact that the defendant had to use a peremptory challenge to achieve that result does not mean the Sixth Amendment was violated.
The Court concluded that failing to dismiss the juror for cause, while error, “did not deprive petitioner of an impartial jury or of any interest provided by the State.”
In light of this reasoning, it is irrelevant whether the trial court erred in denying any of the defendant's challenges for cause. Of the jurors who were selected to serve, only one was challenged for cause by the defendant, and this challenge was denied by the trial court. The defendant does not question this ruling on appeal. We therefore decline the defendant's request for reversal of his death penalty sentence premised on the trial court's failure to grant his challenges for cause with respect to jurors he later removed by peremptory challenge.
The defendant also contends that the trial court erred by changing the mode of voir dire from individual to group questioning of prospective jurors. This change, he asserts generally, “exposed members of the jury panels to grossly prejudicial opinions and statements.”
Two days before the trial began, the trial judge informed counsel that, in light of the broadcast publicity regarding unidentified “events of last week,” the questioning of prospective jurors regarding the death penalty and publicity would be done individually, away from other prospective jurors. But the trial judge quickly recognized that “[a]t the rate we[']re going, it will be months, not days, before we get a jury picked,” and modified that plan following lunch recess on the first day of voir dire. The court explained that henceforth the “only individual voir dire will be on the issue of pretrial publicity” and that “everybody else will be voir dired together on the death penalty questions.”
Other than his general trial objection to the judge's change in format, however, the defendant does not identify any particular objection made during the ensuing voir dire asserting improper exposure of prospective jurors to prejudicial statements. He does not assert on appeal any claim that specific jurors were permitted to serve following a trial court failure to grant a defense challenge for cause arising out of any such incidents.
A trial court has broad discretionary power to regulate the form and substance of voir dire. Individually sequestered voir dire is not mandated in any case under Indiana law, including capital cases, absent highly unusual or potentially damaging circumstances. The defendant has not established reversible error in the trial court's modification of the format for questioning potential jurors in this case.

Lessons:
1. The improper denial of a challenge for cause is waived by use of a peremptory challenge.
2. There is no right to voir dire individually, separate from other jurors, even in a death penalty case.

7. Just cause for termination due to personal emails: Coleman v. Review Board of Indiana, 901 N.E.2d 1176 (Ind.Ct.App. Feb. 11, 2009) (Barnes)

Garry Coleman appeals the denial of unemployment compensation benefits by the Department of Workforce Development (“DWD”) following the termination of his employment with the Indiana Department of Local Government Finance (“DLGF”). We address only one dispositive issue, which is whether there is sufficient evidence that the DLGF terminated Coleman's employment for “just cause.”
We are reminded that emails last forever and can come back to haunt the writer. The DLGF hired Coleman as a systems analyst in June 2005. Coleman signed an “Information Resources Use Agreement” providing a “De Minimis Personal Use” policy that required Coleman to “make every effort to minimize personal use of Information Resources.”
On January 25, 2008, the DLGF Commissioner sent Coleman a letter stating that his employment was terminated for violating the “de minimis” exception and for distributing inappropriate comments or messages via his DLGF email account. The letter listed six dates on which Coleman allegedly had violated these policies, and claimed he had wasted a total of sixteen hours sending improper or excessive emails.
We conclude the record here lacks substantial evidence to support a finding that Coleman knowingly violated a uniformly enforced rule. There might be a situation where email usage is so inordinate that it should be clear to any reasonable person that it exceeded a “de minimis” amount, thus justifying immediate termination. This is not such a case. What is in this record are ten email conversations that Coleman participated in over the course of many months. Coleman did not initiate many of them, and none of them were lengthy dissertations.
On that point, we observe that the termination letter also alleged that Coleman sent “inappropriate” material through email at work. It is abundantly clear that to the extent the DLGF has a ban on sending “inappropriate” messages or items through email, the DLGF does not uniformly enforce that ban. The most explicit sexual material in the record is the emailed photograph appearing to depict two persons having sex atop a bridge. The DLGF employee who originally sent that photograph to numerous recipients, instead of being fired, was given a raise after Coleman was terminated.
Certainly, the DLGF is entitled to restrict the amount of personal emailing that its employees do during work hours. The DLGF could have confronted Coleman about his email usage if it felt that usage exceeded the vague “de minimis” boundary. The DLGF also was entitled to fire Coleman when it did, particularly given his apparent dislike of his superiors at the agency; this is not a wrongful termination case. But the DLGF failed to establish that Coleman's firing, with no advance warning regarding his email usage, was for just cause as that term applies in the context of unemployment insurance.

Lessons:
1. An employer may limit personal email usage on office computers to a de minimis level.
2. Ten email conversations over many months does not clearly exceed that level.



8. Buyer’s duty to inspect real property: Dickerson v. Strand and German, 2009 WL 1124453 (Ind.App.Ct. April 24, 2009) (Riley)

In 1995, Strand and German purchased a house in Ladoga, Indiana. At that time, S S Pest Control inspected the house and noted visual evidence of active termite infestation in the “crawl space north foundation wall and base sill plate.” In early 2000, Strand and German wanted to sell the house and hired Central Indiana Home Inspections to inspect it. In its report, under the heading “Major Structural Defects,” Central Indiana Home Inspections stated, “Some floor joists & the box sill on the north side by the deck have termite damage. Some re-enforcement has been done to the joists but not the box sill.”
On March 17, 2000, after having toured the house “a couple of times” with Strand and German’s agent, the Dickersons signed an agreement to purchase the house. The agreement gave the Dickersons the right to have the house inspected. The Dickersons never had their own inspection done.
In October of 2003, the Dickersons hired Rob Wethington to replace the siding on the house. Wethington uncovered significant termite damage.
On April 12, 2004, the Dickersons filed a Complaint against Strand and German alleging, among other things, fraud. The Dickersons contend that Strand and German made fraudulent statements in two different documents: in the Seller’s Residential Real Estate Sales Disclosure form, where they indicated that the house had no structural problems at the time of closing, and in the Purchaser’s Response Regarding Inspection, where they indicated that Dawson had re-enforced the floor and wall on the north side of the house.
We need not decide whether Strand and German’s representations were fraudulent because, under Indiana law, the Dickersons had no right to rely on those representations. In Cagney v. Cuson, 77 Ind. 494, 1881 WL 6689 (1881), the plaintiff alleged that the defendant made certain fraudulent statements in order to induce the plaintiff to buy land and farm equipment. The plaintiff had “a suitable opportunity of examining both the lands and the personal property” but failed to do so. Our supreme court held that, even as to fraudulent representations operating as an inducement to the sale or exchange of property, “the purchaser has no right to rely upon the representations of the vendor as to the quality of the property, where he has a reasonable opportunity of examining the property and judging for himself as to its qualities.”
Though we had to dust it off, Cagney is still good law, and the Dickersons offer us no way around it. The Dickersons, like the plaintiff in Cagney, had a reasonable opportunity to inspect the house. The fact that the Dickersons did not actually inspect the house is irrelevant; under Cagney, it is the opportunity to inspect that matters. We encourage our supreme court to reevaluate the social value of a rule allowing a seller of property to lie with impunity as long as the prospective buyer had a reasonable opportunity to inspect the property. But until then, we are bound by that rule.
Fn.: We might have reached a different result if the Dickersons had directed us to evidence tending to show that a reasonable inspection of the house would not have revealed the termite damage in question.

Lessons:
1. A buyer of real estate cannot sue a seller for misrepresentations about the property if the buyer could have learned the truth by inspection.
2. In light of Judge Riley’s urging that the Supreme Court to reevaluate the rule and the dissent by Judge Vaidik based on the disclosure statute, this rule could change soon.
3. In the meantime, if you’re a buyer, get an inspection.

9. Insurance agent liability: Mintz v. Connecticut General Life, 903 N.E.2d (Ind. March 25, 2009) (Rucker)

By March 1995, then sixty-four-year-old Dr. Jerome Mintz had been a professor at Indiana University for over thirty years. On March 22, 1995, the University sent Mintz a letter advising him that his total life insurance coverage would be reduced from $178,000 to $115,700 on his sixty-fifth birthday unless he exercised a conversion option. The letter also instructed Mintz to contact Wayne Gruber with any questions regarding the conversion. Gruber was a servicing agent for the University.
Mintz and his wife Betty telephoned Gruber to make arrangements to convert the group coverage into individual policies. They informed Gruber that Mintz was terminally ill with lung disease and leukemia and wanted to convert the entire value of the group coverage to individual policies. According to Mrs. Mintz, Gruber responded, “Absolutely. Just leave it to me. I will do everything.”
In February 1996, Mrs. Mintz discovered that the entire value of the group coverage had not been converted into individual policies; but rather, only coverage worth $62,300 had been converted. On April 21, 1997, Mintz filed a complaint against Gruber and Connecticut General alleging negligence, breach of contract, and intentional infliction of emotional distress.
The trial court concluded Gruber was entitled to summary judgment on the Estate's negligence claim because Mintz’s injuries “were not proximately caused by Gruber’s negligence ...” Pointing in part to the letters the Estate received from both Indiana University and Gruber, and characterizing Gruber’s representation that he would “take care of everything” as an “initial general statement to offer the Mintzes help through the process of conversion,” the Court of Appeals' majority also concluded that “Gruber’s actions were not the proximate cause of the Mintzes’ loss of insurance coverage.”
We make two observations. First, “summary judgment is generally inappropriate in negligence cases because issues of contributory negligence, causation, and reasonable care are more appropriately left for the trier of fact.” Whether Gruber’s actions proximately caused the Mintzes’ injuries is highly fact sensitive and more appropriately left for resolution by a fact-finder than resolved by summary disposition. We conclude therefore that the trial court erred in granting summary judgment in Gruber’s favor on the basis of a lack of proximate cause.
The Estate contends the trial court erred in granting summary judgment in Connecticut General’ s favor because genuine issues of material fact remain as to whether Gruber was an agent of Connecticut General such that it is liable for Gruber's negligence. The term “insurance agent” is often used loosely. Depending on whose interests the “insurance agent” is representing, he or she may be a “broker” or an “agent.” A critical distinction exists.
A representative of the insured is known as an “insurance broker.” As a general rule, a broker is the agent of the insured, and not the insurer. As such the insurer is not liable for the broker's tortious conduct. A broker represents the insured by acting as an intermediary between the insured and the insurer, soliciting insurance from the public under no employment from any special company, and, upon securing an order, places it with a company selected by the insured, or if the insured has no preference, with a company selected by the broker. In contrast, an “insurance agent” represents an insurer under an employment agreement by the insurance company. Unlike acts of a broker, “acts of an [insurance] agent are imputable to the insurer.”
But the undisputed facts in this case demonstrate that Gruber was not the agent of Connecticut General. There was simply nothing before the trial court showing that the relationship between Gruber and Connecticut General, their actions, or their usual course of dealing, made Gruber Connecticut General's insurance agent.
The trial court properly granted summary judgment in Connecticut General's favor.

Lessons:
1. An insurance agent is usually an employee of the insurer and his acts are imputed to the insurer.
2. An insurance broker represents the insured and usually deals with several insurers. A broker’s negligent acts are not imputed to the insurer.
3. A broker who promises to “take care of everything” may be liable for negligence if he does not.
4. The insurer will not have vicarious liability for such negligence by a broker.
5. “Summary judgment is generally inappropriate in negligence cases,” so sayeth the Indiana Supreme Court and this time, they meant it, reversing the trial court and the Court of Appeals which had found no genuine issue on proximate cause.

10. Insurance agent liability: Brennan v. Hall, 2009 WL 1085625
(Ind.Ct.App. April 21, 2009)(Barnes)

Terence Brennan and Burt Insurance Agency (“Burt”) appeal a jury's verdict in favor of Patricia and Harry Hall. The sole restated issue is whether the jury properly found Brennan and Burt liable for negligently failing to procure insurance for the Halls.
The evidence most favorable to the verdict is that in late 2002, Patricia contacted Brennan, an insurance broker working at Burt, and asked him to look into homeowner's insurance policies for the Halls. Patricia told Brennan she had three specific concerns she would want the policy to address: coverage for her dogs, earthquake coverage, and coverage for a wood burning stove. Brennan later informed Patricia that he had found a suitable policy through Buckeye State Mutual Insurance Company (“Buckeye”).
In August 2004, one of the Halls' dogs, a Doberman Pinscher, bit their niece. When the Halls made a claim on the Buckeye policy, Buckeye denied coverage for the claim and additionally declared the policy null and void for “material misrepresentation,” i.e. the application's failure to disclose that the Halls had a Doberman Pinscher.
On December 20, 2006, the Halls filed suit against Brennan and Burt, alleging negligence. On October 21, 2008, a jury found that Brennan and Burt were liable to the Halls based on negligent failure to procure a policy.
The salient issue we will consider is whether Brennan was negligent in procuring insurance for the Halls, where Patricia specifically advised that she wanted coverage for her dogs, Brennan filled out the application and indicated the Halls had no dogs after Patricia specifically stated that they had dogs, but Patricia signed the application, which included a statement that the application was complete and accurate.
The Halls are not seeking any recovery against Buckeye. They are suing only Brennan and Burt for their alleged negligence in the application process, which left the Halls without any homeowner's insurance generally, and without specific coverage for the dog bite. No Indiana state court case has addressed precisely this question.
We hold that if an agent is negligent in assisting a client complete an insurance application, and such negligence leads to a basis for the insurance company to deny coverage to the applicant and/or revoke the policy, the applicant may seek damages from the agent, even if the applicant signed or ratified the application after having a chance to review it.
There is sufficient evidence from which the jury could have concluded that Brennan's actions amounted to a breach of his duty to procure insurance requested by the Halls. Such breach led to the Halls being damaged because they lack coverage for the dog bite claim. To the extent Patricia herself might share some of the blame for the inaccurate application and subsequent denial of coverage, it would be more appropriate to assess her fault in accordance with the Comparative Fault Act, just as would be the case in another ordinary negligence action; it is not a basis for completely barring the Halls' action.

Lessons:
1. An insurance agent may be held liable for negligently filling out an application form if it leads to denial of coverage.
2. The agent may still be liable even if the insured signs the application, indicating that she read it and the contents were “true, complete and correct.”
3. The fault of the insured will be assessed in accordance with the Comparative Fault Act.

11. Golf outing liability: Clary v. Dibble, 903 N.E.2d 1032 (Ind.Ct.App.
April 9, 2009) (Darden)

Odetta Clary, individually and as personal representative of the Estate of Kevin Dale Clary, and Kasey Dale Clary, a minor, by his mother and natural guardian, Odetta Clary (collectively, “Clary”), appeal the trial court's entry of summary judgment in favor of K & P Roofing Siding & Home Improvement, Inc. (“K & P”).
In 2006, Patrick H. Dibble worked as a salesperson for K & P pursuant to a Commissioned Salesperson's Agreement. He used his own tools and drove his own vehicle, a Ford pick-up truck. Dibble was considered to be an independent contractor.
On July 16, 2006, Shelter Distribution, Inc., a materials supplier for K & P, sponsored a golf tournament for several companies at the Covered Bridge Golf Club, located in Sellersburg. Since he had been invited to participate in the tournament, Dibble “felt obligated to go play[.]”
Dibble had taken a prescription pain reliever the morning of the golf tournament and had a hangover from drinking the previous night. Dibble played in a foursome along with Ron Cogburn, K & P's owner, James Reynolds, K & P's General Manager, and John Survance, a K & P salesperson. While playing, Dibble “was tired and felt a little bit nauseous, but for the most part tired.” He started falling asleep during the last nine holes and stayed in the golf cart. He had one beer after the 9th hole and drank water throughout the day. He informed the others in his foursome that he was tired.
Dibble left the golf club at approximately 6:30 p.m. and drove west on Perry Crossing Road in Clark County. At some point, he either fell asleep or blacked out, allowing his vehicle to cross the centerline. His vehicle struck a motorcycle on which Kevin and Kasey were riding, resulting in Kevin's death and injuries to Kasey.
Clary filed a complaint for damages against Dibble on September 25, 2006. She alleged that Dibble had negligently operated his vehicle. In Count II, she alleged that K & P was liable under the theory of respondeat superior.
Clary asserts that the trial court erred in granting K & P's motion for summary judgment. She raises several issues, one of which we find dispositive: whether “K & P owed [Clary] a duty not to allow ... Dibble to leave the golf course impaired.”
Whether the defendant must conform his conduct to a certain standard for the plaintiff's benefit is a question of law for the court to decide. Courts will generally find a duty where reasonable persons would recognize and agree that it exists. This analysis involves a balancing of three factors: (1) the relationship between the parties, (2) the reasonable foreseeability of harm to the person injured, and (3) public policy concerns.
1. Relationship: Dibble was not an employee of K & P but an independent contractor, and therefore, not under K & P's influence and control. Also, the accident did not involve a vehicle of K & P; did not occur on K & P's property; and did not occur after an event sponsored, hosted, or required by K & P. More importantly, K & P did not in any way contribute to Dibble's impairment, where Dibble had been drinking on his own the night before the tournament and had taken a prescription medication prior to the tournament.
2. Foreseeability: We disagree with Clary that it was foreseeable that a person, who had been feeling ill or tired during the day but was coherent and had not been observed drinking alcohol or taking drugs, would, after resting and proclaiming to feel better, later cause an automobile accident. Accordingly, we do not conclude that there was a high degree of foreseeability that failure to prevent such a person from driving would result in an accident.
3. Public Policy: It would be unreasonable to find it sound public policy to impose a duty on persons to determine the extent of their perceived influence and control over a person; surmise whether that person is too ill or tired to drive; and based on their conjecture, prevent that person from driving. “Ultimately, sound public policy dictates that the responsibility for negligent driving should fall on the driver.”
Upon balancing the three factors necessary in determining whether a duty exists, we conclude that K & P did not owe a duty to Clary.

Lesson: There’s no duty on a company to prevent an impaired golfer from driving home after a golf outing when (1) the golfer was an independent contractor; (2) the outing was not sponsored by the company; (3) the company didn’t contribute to the impairment; and (4) he wasn’t driving a company vehicle.

12. Payday loans and usury: Payday Today v. Defreeuw, 903 N.E.2d 1057 (Ind.Ct. App. April 9, 2009) (Barteau)

On June 5, 2004, Defreeuw applied for a $200.00 loan from Payday. The stated term of the loan was for fourteen days and the finance charge was $25.00. Defreeuw presented security to Payday in the form of a postdated check in the amount of $225.00 to cover the principal and the finance charge. Defreeuw did not pay off the loan within fourteen days, and when her check was presented by Payday, it was returned by Defreeuw's bank stamped “closed account.”
Payday sued Defreeuw in small claims court for fraud and requested treble damages in the amount of $675.00, attorney fees in the amount of $500.00, and a one-time statutory fee in the amount of $20.00, totaling $1,195.00 plus court costs in the amount of $46.00. In the alternative, Payday also requested damages in the amount of $2,100.00 to represent the 325.89% interest it believed it was charging over the 84 bi-weekly periods when the loan was unpaid.
The trial court ordered Defreeuw to pay the $1,195.00 plus court costs because she “provided false information on her loan application when she failed to disclose to [Payday] other outstanding payday loans.” However, the court did not order the payment of the interest accrued at the 325.89% rate. Payday now appeals.
Payday contends that the trial court erred in not awarding the $2,100.00 that represents the 325.89% interest rate applied to the $200 loan made to Defreeuw. In responding to this contention, we initially note that the “Small Loans” statute under which Payday asserts its protection from usury laws, conflicts with both statutory law as developed throughout American jurisprudential history and the common law. Accordingly, the statute must be strictly construed.
At the time Payday made a loan to Defreeuw, finance charges on a $200.00 loan were limited to the $25.00 charged by Payday. The statute made no reference to continuing to assess this original finance charge every two weeks until the loan is paid. Upon the bank's dishonoring of Defreeuw's check, Payday was allowed to charge a fee not to exceed $20.00. The Small Loans Act stated that finance charges made on small loans were exempt from both, which limited a loan finance charge for supervised loans to 36%, and Ind.Code § 35-45-7, which stated that a person committed loansharking when he contracted to receive an APR exceeding 72%.
We assume that Payday believes that the Small Loans Act frees it from both the usury and loansharking statutes and is licensed to ignore the historically moral and practical foundations for usury statutes and charge any amount of interest that the so-called payday loan “free market” will bear. In this case, Payday believes that rate to be based upon the transformation of its initial two-week 15% finance charge into an APR of 325.89%. We disagree.
We do not believe our legislature intended to free lenders to assess the unconscionable interest rate sought by Payday against Defreeuw. The question then, is how high the APR on a payday loan can rise. The Small Loans Act tells us only that it may exceed 36% and that the charging of greater than 72% will not result in the prosecution of the lender. The Act does not explicitly cap the APR on the loan, but given that it is in derogation of both statutory and common law, we cannot say that it authorizes what can only be described as an astronomical deviation from established law.
If Payday wants to collect interest, it must include that interest as part of the agreement between itself and the payday borrower. Because Payday failed to do so, it cannot recover any interest.

Lessons:
1. Payday lenders can collect only for the fees specifically authorized in the Small Loans Act.
2. The Act does not protect continuing interest charges at a rate of 325.89%.
3. When you get a $1,200.00 judgment on a $200 loan, don’t appeal for more.
• “Pigs get fat; hogs get slaughtered.”

13. Governmental immunity: City of Bloomington v. Walter, 2009 WL 1035091 (Ind. Ct.App. April 15, 2009) (Kirsch)

The City of Bloomington Utilities Department (“CBU”) brings this interlocutory appeal challenging the trial court's denial of its motion for summary judgment. CBU raises the following restated issue: whether the trial court erred in failing to find that CBU is immune from liability under the Indiana Tort Claims Act, Indiana Code chapter 34-13-3 (“ITCA”), for damage caused by sewage flowing from its sewer pipes into the home of one of its customers.
Here, Homeowners alleged that CBU negligently maintained and controlled the sewer lines by failing to clear severe root invasion from the sewer pipes. As a proximate result of this negligence, the Homeowners' sewer line became blocked, sewage flowed into the home, and the sewage caused damage to the Homeowners' real and personal property. In its motion for summary judgment, CBU argued that its conduct qualified for governmental immunity as a discretionary function under Section 3 of the ITCA. The trial court denied CBU's motion for summary judgment.
“A governmental entity ... is not liable if a loss results from ... [t]he performance of a discretionary function....” Ind. Code § 34-13-3-3(7). CBU asserts that, contrary to the trial court's findings, it is entitled to immunity for the discretionary function of enacting and following its Capacity, Management, Operations and Maintenance (“CMOM”) Program-a program that set forth guidelines for CBU to inspect, clean, and repair the City's sewer system.
We note that, in Peavler v. Monroe County Bd. of Comm'rs, 528 N.E.2d 40 (Ind.1988), our Supreme Court adopted the “planning/operational” test as the standard for defining discretionary acts under the ITCA. The essential inquiry is whether the challenged act is the type of function that the legislature intended to protect with immunity. Discretionary immunity is provided to governmental units for undertaking a policy-oriented decision-making process.
CBU engaged in policy-oriented decision-making when it determined which part of the system it would maintain (public gravity sewers equal to or greater than eight inches in diameter and public force mains) and that it would not use chemicals for root control. However, much of the CMOM Program merely set forth “things that [CBU has] been doing for years.”
The planning/operational test allows us to “‘distinguish between decisions involving the formulation of basic policy, entitled to immunity, and decisions regarding only the execution or implementation of that policy, not entitled to immunity.’”
While the decisions regarding sewer cleaning required CBU and its employees to exercise professional judgment, these decisions may be evaluated under traditional tort standards of reasonableness. We find no designated evidence in the record here on appeal to convince us that CBU's actions involved the formulation of policy that would entitle it to immunity under Indiana Code section 34-13-3-3(7).

Lessons:
1. A governmental entity is entitled to immunity for the performance of discretionary policy-oriented decisions, but not for decisions regarding the execution or implementation of a policy.
2. The line between the two is often gray.

14. Unjust enrichment; constructive trust; Zoeller v. East Chicago Second
Century, Inc., 2009 WL 987170 (Ind. April 13, 2009) (Shepard)

In 1993, Showboat Marina Partnership initiated the process of applying for a riverboat casino license in the City of East Chicago pursuant to Indiana's Riverboat Gambling Act. Showboat entered into a local development agreement with East Chicago. Under the agreement, Showboat agreed to “contribute annually to and for the benefit of economic development, education and community development in the city” an amount of total contribution equal to 3.75% of its adjusted gross receipts.
Showboat proposed that of the total contribution 1% be allocated directly to East Chicago; 1% to the Twin City Education Foundation, a non-profit corporation; 1% to the East Chicago Community Foundation, another non-profit; and 0.75% to East Chicago Second Century, Inc., a for-profit corporation. The agreement also included promises that Second Century would undertake development activities at sites within East Chicago, that all projects pursued by Second Century would conform to the City's development and master plans, and that all Second Century projects would require approval from the City.
The Commission issued a gaming license to Showboat on January 8, 1996, based in part on these representations, and the Commission incorporated the terms of the agreement as conditions to Showboat's receipt and maintenance of the license. The gaming operation commenced in April 1997. Between this commencement and June 2006, Second Century received about $16 million from the casino operation.
The Commission subsequently asked the Attorney General to investigate the agreement; the Attorney General found that much of the $16 million could not be accounted for and could be traced to Second Century's principals.
On April 15, 2005, Second Century sought a declaratory judgment that Resorts would be required to continue the payments to Second Century. In November 2005, the Attorney General intervened, seeking imposition of a constructive trust for public benefit and an accounting over the money paid to Second Century and its principals. Second Century moved to dismiss the Attorney General's claims, and the trial court did so. The Attorney General appealed, and the Court of Appeals affirmed.
Second Century moved to dismiss on grounds that its status as a for-profit corporation took it out from under the provisions in the trust code that describe the Attorney General's supervisory role as respects charitable activity. The people’s interest in the rectitude of entities created in the name of public good, such as charities, has long led to regarding the Attorney General as an officer with authority to enforce those interests. The notion was hornbook law even in the time of Blackstone, who wrote:
The king, as parens patriae, has the general superintendence of all charities; which he exercises by the keeper of his conscience, the chancellor. And therefore whenever it is necessary, the attorney general, at the relation of some informant, (who is usually called the relator) files ex officio an information in the court of chancery to have the charity properly established.
Given the broad common law and statutory authority conferred upon the Attorney General to protect the public interest in charitable and benevolent instrumentalities, we conclude that it was error to dismiss the Attorney General's counterclaim on grounds that Second Century is a for-profit corporation.
Second Century has argued that the unjust enrichment claim is unavailable because the local development agreement specifically addressed the subject matter of the funds that Second Century should receive. There are three general types of contracts-express, implied-in-fact, and constructive contracts. Express and implied-in-fact contracts are traditional contracts, while constructive contracts, “also referred to as quantum meruit, contract implied-in-law, [unjust enrichment], or quasi-contracts[,]” are not contracts at all.
Indiana’s Court of Appeals has declared, “The existence of express terms in a valid contract precludes the substitution of and the implication in law of terms regarding the subject matter covered by the express terms of the contract. When the rights of parties are controlled by an express contract, recovery cannot be based on a theory implied in law.”
There was an express contract in this transaction, but it was not one to which the Attorney General or the State were parties. Showboat entered into the local development agreement with East Chicago. That transaction is thus not a bar to the Attorney General's claim for unjust enrichment, an equitable remedy. Its terms were intended to control the rights and duties of East Chicago and the casino licensee in relation to each other; they were not intended to control the rights of any non-parties. The Attorney General's claim for unjust enrichment is actionable.
Second Century has argued that the claim for imposition of a constructive trust is defective because the Attorney General has not pleaded any allegations of fraud. The general notion of constructive trust is succinctly outlined in the Restatement (Second) of Trusts:
[A] relationship with respect to property subjecting the person by whom the title to the property is held to an equitable duty to convey it to another on the ground that his acquisition or retention of the property is wrongful and that he would be unjustly enriched if he were permitted to retain the property.
“A constructive trust is imposed where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.” This type of trust is more in the nature of an equitable remedy rather than an independent cause of action.
While Indiana courts have certainly said on occasion that fraud is a prerequisite, the meaning of this declaration is not confined to fraud as one might define it for purposes of criminal law. Rather, the remedy is available where there is standard fraud (i.e., misrepresentation, reliance, etc.) or a breach of duty arising out of a confidential or fiduciary relationship. The Attorney General's allegations against Second Century and its principals on this point are: Upon information and belief, the monies paid to Second Century under the Showboat Agreement have not led to public benefit commensurate with the monies paid out under said agreement, but instead have led mainly to the unjust enrichment of the directors and officers of Second Century. This allegation states a claim for constructive trust.

Lessons:
1. The Attorney General has authority to protect the public interest in charitable and benevolent instrumentalities, including, asserting a claim against a for-profit company if it took money on a promise to perform a public purpose, such as the economic development of East Chicago.
2. Having an express contract will usually preclude a claim for unjust enrichment but not so as to claims by non-parties to the contract.
3. Standard fraud is not required to assert a claim for imposition of a constructive trust; such a claim may arise out of a confidential or fiduciary relationship if the defendant’s retention of the property in question is wrongful and he would be unjustly enriched if he were permitted to retain the property.

P.S. Attorney General Greg Zoeller said: “It is our belief that this lawsuit will shine the spotlight of public attention onto the historic problems of corruption that have plagued East Chicago and parts of Lake County. Gambling proceeds from the riverboat were supposed to benefit the citizens of East Chicago; now we have the opportunity to find out how those $16 million really were spent.”


ADVOCACY TIP OF THE MONTH: Avoid taking extreme positions.

In Westfield Insurance v. Sheehan Construction (7th Cir. April 29, 2009), Chief Judge Easterbrook writes:
Sheehan’s insistence that it is entitled to punitive damages because Westfield’s denial of coverage was “in bad faith” is the sort of argument that calls into question the bona fides of all other contentions. How can an insurer exhibit “bad faith” by taking a position that not only follows the policy’s language but also is endorsed by a district judge? We can imagine a procedural form of bad faith—refusal to take any stance on the policy’s coverage while leaving the insured to fend for itself in the underlying litigation—but Westfield addressed Sheehan’s claim with dispatch and filed a prompt declaratory-judgment suit to have the dispute resolved. Sheehan’s insistence, even after losing on the merits in the district court, that the insurer acted “in bad faith” implies that its strategy has been to strong-arm a settlement by in terrorem claims, rather than to vindicate its legal entitlements. Lawyers should think carefully about the message that their contentions convey to the court, as well as the effect they may have on the other litigants.