Indiana Court Decisions – Aug. 20 to Sept. 2, 2014

7th Circuit Court of Appeals

Aug. 20

Civil – Termination of Employment/Local Government

Robin Allman, et al. v. Kevin Smith, et al.

14-1792

The doctrine of “pendent appellate jurisdiction” allows the city of Anderson to ask the District Court to stay proceedings in a case alleging city employees were fired because of political affiliation, ruled the 7th Circuit Court of Appeals. The case against the city is directly tied to the result of the case against the city’s mayor.

Robin Allman and other former employees of the city of Anderson fired by Mayor Kevin Smith sued him and the city, claiming the firings violate their First Amendment rights. District Judge Tanya Walton Pratt granted summary judgment in favor of the mayor on nine of the 11 plaintiffs, finding the two remaining plaintiffs’ claims may not be barred by the mayor’s claim of immunity.

Pratt refused to certify the case for interlocutory appeal or grant Smith’s motion to stay the proceedings pending appeal. The city also sought a stay of the claims pending against Smith after its summary judgment motion was denied. In order to prevail, the city has to show that Smith hadn’t violated any constitutional rights, which would eliminate the city’s liability because its liability is derivative from the mayor’s.

Pratt denied both Smith’s and the city’s motions to stay.

The 7th Circuit reversed and stayed the proceedings against the mayor and the city, citing the doctrine of pendent appellate jurisdiction, which it noted is an embattled doctrine.

“The prospect of two trials involving the same facts and witnesses is not an attractive one. If the district court proceedings against the city are stayed, and the merits panel decides that the mayor did not violate the plaintiffs’ constitutional rights, there will be no trial. If (with the stays granted) the merits panel decides that the mayor did violate the plaintiffs’ constitutional rights but is entitled to qualified immunity, there will be one trial, against the city. Finally, if the merits panel rejects the mayor’s appeal, the plaintiffs can try their claims against both the mayor and the city in a single proceeding. Each of these outcomes is preferable to allowing the proceedings in the district court against the city to continue while the mayor’s appeal is under consideration by this court,” Judge Richard Posner wrote.
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Aug. 27

Civil – Disability Benefits/Methodology of Determination

Kenneth Owen Scrogham v. Carolyn W. Colvin, acting commissioner of Social Security

13-3601

The 7th Circuit Court of Appeals found an administrative law judge’s opinion denying a man Social Security disability benefits reflects a “flawed evaluation of the record of evidence,” so it ordered more proceedings on the matter.

Kenneth Owen Scrogham sought the disability benefits when he was 53 years old. He said he had to stop working because he had a variety of health problems, mostly leg and back pain. He claimed a variety of medical conditions, including degenerative discs, hypertension and restless leg syndrome, constituted a qualifying disability.

His application was initially denied, and then denied again by an administrative law judge after a hearing. Scrogham sought judicial review of the ALJ’s decision, which the District Court affirmed. Judge Tanya Walton Pratt in the Southern District of Indiana found the ALJ did not err in giving less weight to the opinion of a treating physician than to the opinions of nontreating physicians. She also held the ALJ permissibly found Scrogham not to be credible and the ALJ’s decision was otherwise supported by substantial evidence.

But the 7th Circuit disagreed, reversing the decision and ordering more proceedings after finding several flaws in the ALJ’s methodology. The ALJ “impermissibly ignored” a line of evidence demonstrating the progressive nature of Scrogham’s degenerative disc disease and arthritis, Judge KennethRipple wrote. It also seems as though the ALJ misapprehended or only partially considered some of the evidence about his daily activities, rehabilitation efforts and physicians’ evaluations.

“This lapse affected both the ALJ’s credibility determination and her residual functional capacity assessment,” Ripple wrote.

“We emphasize, however, that we do not decide here that Mr. Scrogham is entitled to benefits,” he continued. “It may be that he has exaggerated his symptoms or that more in-depth study of his condition would show that he could perform some work. These are issues for the ALJ to decide, using the agency’s expertise.”

Indiana Supreme Court

Aug. 25

Tax – Net Operating Loss Calculation

Indiana Department of State Revenue v. Caterpillar, Inc.

49S10-1402-TA-79

The Indiana Supreme Court reversed a Tax Court ruling that favored Caterpillar Inc., holding the company could not deduct foreign-source dividend income when calculating its net operating losses for the years 2000 through 2003 for Indiana tax purposes.

The Indiana Department of Revenue rejected Caterpillar’s foreign-source dividend deduction and reduced its net operating loss by about $8.3 million. The company appealed to the Indiana Tax Court, where it prevailed. The department then appealed.

“At its core, the resolution of this case is straightforward: The Indiana (net operating loss) statute does not reference or incorporate the  foreign source dividend deduction, and the Tax Court clearly erred in holding that it did,” Loretta Rush wrote in her first opinion as chief justice.

“The Department correctly recognized that the Indiana tax statutes did not authorize Caterpillar to include foreign source dividend income in its Indiana NOL calculation. We also conclude that Caterpillar has not met its burden to show the Indiana tax statutes unconstitutionally discriminate against foreign commerce,” Rush wrote for the unanimous court.

The case was remanded to the Tax Court with instructions that summary judgment be entered on behalf of the Department of Revenue and denied to Caterpillar.

The court in a footnote said the department argued that allowing the Tax Court ruling to stand would produce millions of dollars in lost revenue for the state. However, the court granted Caterpillar’s motion to strike an affidavit that confirmed the precise magnitude of the fiscal impact because it was not designated as evidence before the Tax Court. Therefore, the Supreme Court could not rely on it when reviewing the Tax Court’s decision.

“(W)e hold that the Tax Court clearly erred when it adopted a false symmetry between Indiana (adjusted gross income) and Indiana NOLs, and we decline Caterpillar’s effort to apply the foreign source dividend deduction to its NOL calculations,” the court held. 

Indiana Tax Court

Sept. 2

Tax – School Corp. Exempt Debt Service Fund

Gary Community School Corporation v. Indiana Department of Local Government Finance

45T10-1104-TA-30

The Indiana Tax Court overturned the decision by the Department of Local Government Finance to reduce the Gary Community School Corp.’s exempt debt service fund levy for the 2011 budget year. Judge Martha Wentworth found the state agency had no authority to reduce the levy.

The DLGF approved the school corporation’s lease rental agreement with the Gary Community School Building Corp. in 2003, which provided that the school corporation would lease two new elementary schools from the building corporation for a 25-year period. The school corporation used surplus money from its general fund to pay its rental obligations, but due to dwindling funds, decided to include an exempt debt service fund levy in its 2011 budget to pay for the rent.

The DLGF reduced the school corporation’s levy by removing all the amounts related to the payment of the rental obligations because it said there was no indication the school corporation had used an exempt debt service fund level to pay its rental obligations in the past. The DLGF also claimed the school corporation was using the process to circumvent taxpayer remonstrance opportunities.

Wentworth reversed and found the state agency exceeded its authority because the statutory framework for reviewing such levies did not authorize it to consider other sources of funding. There is no specific language preventing the DLGF from considering amounts that may be available to the school corporation from its other funds; however, the absence of this prohibition does not imply that the DLGF has the authority to do so, she wrote.

Wentworth also held that the 2003 order does not authorize the DLGF to consider other funding sources in reviewing the school corporation’s exempt debt service levy. She also noted that Indiana’s property tax statutes provide taxpayers with chances other than remonstrance to object to a school corporation’s request to establish an exempt debt service fund levy.

The judge remanded for action consistent with the opinion.

Wentworth also released an order related to this case granting the DLGF’s motion to strike three exhibits contained in the school corporation’s appendix and denying its motion to strike a letter from the school corporation.

Indiana Court of Appeals

Aug. 20

Civil Plenary – Construction/Breach of Contract/Attorney Fees

Goodrich Quality Theaters, Inc. and Roncelli, Inc. v. Fostcorp Heating and Cooling, Inc., Wilson Iron Works, Inc., Johnson Carpet, Inc., d/b/a Johnson Commercial Interiors

64A03-1308-PL-318

The judgments awarded against the general contractor in the construction of a Portage movie theater are supported by the evidence, the Indiana Court of Appeals affirmed. But, the trial court should not have awarded the contractors who sued attorney fees under the mechanic’s lien statute.

Roncelli served as general contractor on the project, in which Goodrich leased property to construct the theater. Roncelli hired as contractors Wilson Iron to provide the steel structure of the theater, Fostcorp to provide HVAC and Johnson Carpet to install carpet in the theater.

The roof framing plans did not use the industry standard symbol to depict that the joist girders would be modified to allow HVAC ductwork to pass through. Because the hourglass mark used on the plans was meaningless to Wilson Iron, it ignored it and created standard joist girders. Because of the joist issues, Fostcorp had to modify its plans to install the HVAC. There were also issues involving the ordering and installation of the carpet.

All of these issues led Wilson Iron, Fostcorp and Johnson Carpet to file mechanic’s liens for unpaid work. The trial court ultimately awarded more than half a million dollars to Fostcorp against Roncelli, plus nearly $100,000 in attorney fees; more than $400,000 to Wilson Iron against Roncelli, plus nearly $300,000 in attorney fees; and more than $55,000, plus pre-judgment interest in favor of Johnson Carpet against the general contractor.

Roncelli appealed, which the Court of Appeals affirmed, except with respect to the award of attorney fees. The purpose of the mechanic’s lien statutes is to make a property owner an involuntary guarantor of payments for the reasonable value of improvements made to real estate by labor or materials furnished by laborers or materialmen, Judge Margret Robb wrote.

“As Roncelli is not the owner of the real estate or the structure, a mechanic’s lien cannot be enforced against it and subsequent attorney fees under that code provision are inapplicable,” she wrote. “Therefore, each award of attorney fees based on Indiana Code section 32-28-3-14 against Roncelli must (be) reversed.”
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Aug. 26

Domestic Relation – Parenting Time

In re the Marriage of: Wade R. Meisberger v. Margaret Bishop f/k/a Margaret Meisberger

39A01-1402-DR-76

A man released to probation on a murder conviction but subsequently ordered to serve the remainder of his sentence following probation violations failed to persuade the Indiana Court of Appeals to reverse denial of his request for parenting time.

Wade R. Meisberger was sentenced to 48 years in prison in the early 1990s for murder and theft in Monroe County for the killing of Michael Sawyer. He was released to probation in 2007 and fathered a child, E.M., in 2008 with Margaret Bishop, to whom he was married briefly.

The couple divorced and, in 2012, Meisberger’s probation was revoked. But he continued to push for parenting time in pro se filings, and in December 2013 the couple appeared for a hearing after which a judge found “[Mother] is opposed to parenting time at [the DOC], is opposed to transporting [E.M.] there, and indicates [Father’s] parents do not want to transport the child either.”

The judge also found that Meisberger had been a consistent part of the child’s life for only one of his five years, “and, thus, it is not in his best interest to have in person parenting time within the confines of a prison facility.”

The Court of Appeals remanded the matter, finding the Jefferson Circuit Court did not make a finding regarding the endangerment of the child’s physical health or significant impairment of the child’s health, safety or emotional development as required under I.C. 31-17-4-2.

“Under these circumstances and recognizing that Mother did not file an appellee’s brief, we remand for the trial court to determine and make one or more findings as to whether the child’s physical health or safety would be endangered or whether there would be significant impairment of the child’s emotional development by allowing Father parenting time, or, in its discretion, to conduct other proceedings consistent with this opinion,” Judge Elaine Brown wrote for the panel.

Domestic Relation – Marriage Assets/Child Support

Jeffrey Crider v. Christina Crider

53A05-1307-DR-358, 53A04-1401-DR-26

In a divorce decree complicated by the husband’s ownership and interest in several construction and development companies, the Indiana Court of Appeals affirmed he must pay his wife more than $4.7 million as an equalization payment, plus any interest accruing after 90 days.

Jeff and Christina Crider were married for 27 years before Christina Crider filed for divorce in 2009. She was mostly a stay-at-home mom during the marriage whereas Jeff Crider is involved in a large number of business entities with his father, Robert, and his brother, Steve.

During the divorce proceedings, Jeff Crider was not very forthcoming with his annual income, but the trial court imputed he earned nearly $920,000 a year, so he should pay more than $1,200 a week in child support.

The case is complicated by “loans” either Jeff Crider made to the companies or his father made to Jeff Crider, money that was never paid back; and disputes over valuation of land and equipment owned by the companies.

Ultimately, Monroe Circuit Special Judge Frank Nardi found Jeff Crider’s business and real estate interests in 2009 totaled more than $11 million and evenly split the marital estate. Because Christina Crider received few liquid assets, the judge required Jeff Crider to make an equalization payment to her of $4,752,066. It would bear statutory interest unless paid in full within 90 days. To secure payment of the judgment, Nardi gave Christina Crider a security lien on all of her husband’s shares and ownership in the businesses. If the judgment isn’t paid in full within 180 days of the final judgment, then she retains ownership and control of the shares until the judgment is fully paid.

In a 57-page decision authored by Judge Michael Barnes, the COA found no error in granting Christina Crider security interests in Jeff Crider’s stock and membership interest, but it ruled Nardi erred in granting her automatic vested “ownership and control” in them upon Jeff Crider’s failure to pay the equalization judgment within 180 days.

The judges also affirmed the decision to delay reduction of Jeff Crider’s child support obligation for 90 days from $1,200 a week to $308 after Christina Crider receives the equalization payment. They reversed Nardi’s decision to require Jeff Crider to pay the $1,257 per week in child support because the equalization payment had not been made that was entered after an appeal was filed in this case. Jeff Crider’s child support obligation remains at $308, the COA held.

The appellate court also remanded for the trial court to enter amended garnishment, attachment and child support income withholding orders that comply with Indiana Code 24-4.5-5-105. The judges affirmed in all other respects.

Criminal – Driving Privileges/Chemical Test

State of Indiana v. Brandon Scott Schulze

73A01-1311-CR-471

A Shelby County man’s refusal to submit to a chemical test for alcohol intoxication voided his argument that his driving privileges should be reinstated because the arresting deputy was not qualified to administer the sobriety test.

Brandon Schulze was taken to jail and lost his license after he told Shelby County Sheriff’s Deputy Ian Michael he would not take the chemical test.

Schulze then requested a hearing for Judicial Review of Probable Cause on Refusal of Chemical Test for Intoxication during which Michael testified he was not certified to operate the chemical testing machine at the local jail.

Using that admission, Schulze was able to convince the Shelby Superior Court that his driving privileges should be reinstated because the arresting officer could not perform the chemical test himself.

However, the Indiana Court of Appeals reversed, finding the trial court erred in reinstating Schulze’s driving privileges.

The panel pointed out that Ind. Code 9-30-6 does not require the arresting officer to be trained on how to administer the chemical test.

“Therefore Deputy Michael’s offer of a chemical test was not illusory simply because he was not qualified to administer such a test,” Judge Melissa May wrote for the court. “If Schulze had agreed to take the test, Deputy Michael could have found another officer at the jail who was certified to give a chemical test or could have transported Schulze to a hospital or other facility for the test. As Schulze refused to submit to a chemical test, there was not reason for Deputy Michael to find a qualified person or take Schulze to a qualified person.”
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Aug. 27

Criminal – Battery/Lesser-Included Offense

Marquise Lee v. State of Indiana

A panel on the Indiana Court of Appeals did not agree with a defendant that his conviction of attempted aggravated battery should be reversed based on the reasoning of a separate appeals panel that overturned the same conviction of his co-defendant.

Chief Judge Nancy Vaidik and Judges Edward Najam and Elaine Brown granted Marquise Lee’s request for rehearing, in which he sought to have the affirmation of his Class B felony conviction of attempted aggravated battery overturned. Lee, his mother, Latoya Lee, and Billy Young were each charged with the murder of Ramon Gude after they went to his home to beat him up. An unidentified man with the three shot Gude, which resulted in his death. The three were tried jointly to the bench, and the court involuntarily dismissed murder charges. The court then found each of them guilty of attempted aggravated battery as a lesser-included offense. Lee’s mother’s conviction was affirmed as well, but Young’s conviction was reversed.

Lee never argued on appeal that attempted aggravated battery was not a lesser-included offense to murder nor did he argue the state’s evidence at trial was an impermissible variance from the charging information. In Young, the appeals panel concluded that the trial court found the alleged facts underlying the murder charge were not proved beyond a reasonable doubt, and Young’s conviction for attempted aggravated battery was based on other evidence presented at trial. As such, his conviction is not a lesser-included offense of the murder charge.

The judges noted that Lee did not preserve this issue for appellate review and disagreed with the Young panel that the trial court did not present the defendants with a clear opportunity for a timely objection. When dismissing the murder charge, the judge explicitly told the defendants he would consider lesser-included offenses.

“As the Young panel recognized, ‘[a]t first blush, it would seem attempted aggravated battery’ is an inherently included lesser offense to murder. This fact alone demonstrates that the trial court did not commit an ‘egregious’ and ‘blatant’ error,” he wrote.  

Najam then pointed to cases in which the COA has long held that attempted aggravated battery is an inherently lesser-included offense to attempted murder.

“And it should go without saying that attempted murder is an inherently lesser included offense to murder,” he continued. “Thus, the trial court did not commit fundamental error when it entered judgment against Marquise for attempted aggravated battery as an inherently lesser included offense to the charge of murder.”

A separate appeals panel also granted Latoya Lee’s request for rehearing but denied reversing its earlier decision.
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Aug. 29

Juvenile – Restitution/Evidence

C.H. v. State of Indiana

49A02-1310-JV-904

A teenager adjudicated as delinquent after it was determined he was in a stolen car was able to convince the Indiana Court of Appeals to reverse one of his adjudications due to double jeopardy. But, the teen must still pay restitution to the victims of his crimes.

Police Officer Havis Harris spotted what she believed was a reported stolen Honda Accord and followed it into a gas station parking lot. When the car stopped, she saw at least three people “bail out” of the car and run away from the gas station. She radioed for backup, and Officer James Blythe, who was just a block away, set up a perimeter. He saw two males who matched Harris’ description walk by, so he stopped them. Harris watched the gas station’s surveillance video and confirmed the two stopped were involved. One of the teens stopped was C.H.

C.H. was adjudicated for committing what would be Class A misdemeanor criminal trespass and Class B misdemeanor unlawful entry of a motor vehicle if committed by an adult. He was on probation at the time.

The juvenile court ordered he pay the owner of the Honda $500 in restitution and recommended all other probation orders be completed, including paying $500 in restitution to the victim of the C.H.’s previous crime.

The Court of Appeals rejected his claim that the stop by Blythe violated his federal or statute constitutional rights, noting Blythe had reasonable suspicion to stop him based on Harris’ description of the suspects. The judges also affirmed that he pay restitution. C.H. never raised any objection to the restitution orders when the juvenile court imposed them and, in fact, he affirmatively agreed to the imposition of restitution, Judge Rudolph Pyle III wrote. C.H.’s attorney said he had reviewed the probation department’s recommendations – which included restitution – and that C.H. was “in agreement with all of them” except two unrelated issues.

But the judges did reverse his adjudication for Class B misdemeanor unlawful entry of a motor vehicle because the state used the same evidence to establish the essential elements of both offenses. They remanded for the court to vacate that adjudication.

Criminal – Rape/Evidence

Ronald Dewayne Thompson v. State of Indiana

45A03-1401-CR-8

Because a detective’s testimony that a man on trial for committing rape was also a suspect in another case likely had a prejudicial impact on the jury finding the man guilty, the Indiana Court of Appeals ordered a new trial.

Ronald Dewayne Thompson was charged with Class A felony rape and Class B felony criminal deviate conduct, with prosecutors alleging he raped T.H. after offering to give her a ride. Thompson does not deny having sex with T.H., but claimed it was consensual.

During his trial, a Merrillville police detective testified that he was able to link Thompson to the rape of T.H. because Thompson was also a suspect in another sexual assault case that involved a similar location, vehicle and description of the suspect.

Thompson was convicted and sentenced to an aggregate 60-year sentence. He claimed the admission of the detective’s testimony violated Evidence Rule 404(b), because it did not fall under the identity or intent exceptions cited by the state.

The Court of Appeals agreed and reversed the convictions, noting that identity was not an issue because Thompson admitted to having sexual intercourse with T.H., so evidence of prior bad acts was not admissible to show modus operandi. The judges also found that the evidence is not admissible to show intent, because Thomson’s consent is not in question, just the victim’s, so contrary intent is not applicable.

“Here, the jury heard evidence suggesting that Thompson had sexually assaulted another woman. Thompson asserted that he had consensual sexual intercourse with T.H., while T.H. asserted that she had not consented. Therefore, the determination of Thompson’s guilt hinged solely on the credibility of T.H. In light of these circumstances, we find it likely that Detective Smith’s testimony had a prejudicial impact on the jury and contributed to the guilty verdict,” Judge John Baker wrote.•