Indiana Court decisions – June 7-20, 2018

7th Circuit Court of Appeals

June 20

Civil Tort — Breach of contract

Pain Center of SE Indiana, LLC v. Origin Healthcare Solutions LL

17-1276

A chronic pain clinic that lost more than a year’s worth of insurance claims through its billing software had its potentially multi-million-dollar breach of contract claim against the provider reinstated June 20 by the 7th Circuit Court of Appeals.

Pain Center of Indiana LLC, a clinic that treats patients who suffer from chronic pain, contracted in 2003 with SSIMED LLC, a company that provides medical-billing software and related services. Over time, problems arose with unpaid claims filed through SSIMED’s Practice Manager and EMRge software, but Pain Center nevertheless signed a second contract three years later, but Pain Center said the problems continued.

After hiring a billing specialist in 2011, the pain center discovered thousands of unpaid claims in the Client Center of Project Manager, which hadn’t been opened in 18 months. Pain Center tried to recover payment, but the insurers refused to pay the stale claims. Dr. Anthony Alexander, the sole founder and member of Pain Center, said he had never known about the Client Center or how it functioned.

The pain center sued SSIMED in 2013 for claims including breach of contract, warranty, implied duty of good faith and four tort claims. The claims arose from alleged shortcomings in SSIMED’s software and services. It also alleged that Practice Manager and EMRge software and related billing services caused the losses.

U.S. District Court Judge Richard Young previously granted summary judgment in favor of SSIMED, stating the entire suit was untimely. He held that the Uniform Commercial Code’s four-year limitations period applied, reasoning that the agreements in question were mixed contracts for goods and services in which goods predominate.

The 7th Circuit affirmed Young on all rulings except for summary judgment on the breach of contract claim, which the court reversed. The 7th Circuit found Young correctly identified the predominant thrust test in Insul–Mark Midwest, Inc. v. Inc. v. Modern Materials, Inc., 612 N.E.2d at 554, used in Indiana for resolving such a question, but erred in its application.

“The predominant thrust of the two agreements is medical billing and IT services, not the sale of goods,” Chief Judge Diane Wood wrote in Pain Center of SE Indiana, LLC v. Origin Healthcare Solutions LLC, 17-1276.

“So the UCC and its four-year limitations period do not apply. Instead, the breach-of-contract claims are subject to Indiana’s ten-year statute of limitations for written con-tracts and are timely.”

“Pain Center mounts a halfhearted effort to convince us to find as a matter of law that SSIMED breached the contracts and is liable for $15 million in damages. That’s a serious overreach,” Wood wrote. “We hold only that the breach-of-contract claims are timely.”

The case was remanded for further proceedings.

Indiana Supreme Court

June 19

Estate — Insurance/Uninsured Motorist

Erie Indemnity Company, as Attorney-in-Fact for the Subscribers at Erie Insurance Exchange v. Estate of Brian L. Harris, by Its Special Representative, Laura Harris, and Anna Marie Harris, et al.

18S-CT-114

The Indiana Supreme Court reversed a trial court ruling in favor of a Goshen man’s estate seeking recovery of damages under the uninsured motorist policy held by his employer.

While mowing the yard at his home, Brian L. Harris was struck and killed by the side of the road by Noel M. Sparks, who was driving a 1974 Chevrolet truck he had borrowed. At the time of the accident, Sparks was driving on a suspended license, so he was deemed to be an uninsured motorist.

Harris was a longtime employee of Formco, Inc., which allowed him to drive a company-owned 2004 Toyota pickup truck as his primary business and personal transportation until his death in 2010.

In 1993, Erie Indemnity Company and Erie Insurance Exchange issued a commercial auto policy to Formco, which renewed the policy every year through 2010 as the sole named insured. The policy contained an uninsured/underinsured motorist coverage endorsement that supplied coverage limits of $1 million per accident and listed Harris’ Toyota as one of Formco’s scheduled vehicles. However, Harris was never a named insured under the policy, but instead was listed as a “scheduled driver.”

Erie denied claims submitted by Harris’ estate upon his death for damages for bodily injury and MedPay benefits under the policy’s UM coverage. The Estate sued Erie seeking, in part, a declaratory judgment entitling it to uninsured motorist bodily injury coverage benefits for the accident that killed Harris and damages up to the policy limits.

Both the Elkhart Superior Court and Indiana Court of Appeals ruled in favor of the estate, but the Supreme Court reversed those rulings in Erie Indemnity Company, as Attorney-in-Fact for the Subscribers at Erie Insurance Exchange v. Estate of Brian L. Harris, by Its Special Representative, Laura Harris, and Anna Marie Harris, et al.,18S-CT-114, granting summary judgment to Erie.

The matter involves whether Formco’s commercial auto policy provides coverage for Harris’ death in a motor vehicle accident involving an uninsured motorist, when Harris was not occupying a scheduled vehicle. The sole question raised by the parties is to define the meaning of one term in “others we protect” in the policy’s UM endorsement.

The court found that Harris did not qualify as “others we protect” when it concluded the term was not ambiguous and susceptible to only one reasonable interpretation under the policy’s section that outlines qualified claimants.

“We hold the trial court erred in finding otherwise and in granting summary judgment to the Estate,” Justice Christopher Goff wrote in a June 19 ruling. “We therefore reverse the trial court’s judgment and remand with instructions to enter summary judgment for Erie.”

__________

June 20

Juvenile — Criminal Mischief/Miranda Warning

D.Z. v. State of Indiana

18S-JV-295

A 17-year-old boy adjudicated delinquent for spray painting sexual graffiti on bathroom walls at Brownsburg High School was not required to be read his Miranda rights because he was only interviewed by a school official, not by police, the Indiana Supreme Court ruled.

In March 2017, D.Z. was seen on surveillance footage vandalizing a bathroom in his school. Assistant Principal Demetrius Dowler called D.Z. into his office for a closed-door discussion. With just the two of them in the room the boy admitted to the crime and was suspended for five days. Dowler confided about D.Z.’s confession with school resource officer Nathan Flynn, who then spoke with D.Z. about the incident. After confessing again, Flynn told the boy he would be charged.

On appeal, D.Z. argued the admission of his statement to Dowler, as well as photos pulled from surveillance footage, photos of the graffiti and evidence supporting the adjudication, should have been suppressed because he had not been advised of his rights. D.Z. was adjudicated for what would be criminal mischief if committed by an adult.

The Indiana Supreme Court affirmed the adjudication in D.Z. v. State of Indiana, 18S-JV-295, finding that the juvenile court correctly denied D.Z.’s motion to suppress his incriminating statements to Assistant Principal Dowler because he was not under custodial interrogation.

“While Dowler did share D.Z.’s confession with Officer Flynn, the focus was not on criminal charges but on finding out who was doing the graffiti,” Chief Justice Loretta Rush wrote June 20. “Nor does Officer Flynn’s interview with D.Z. show an agency relationship simply because it came on the heels of Dowler’s interview.”

The court concluded D.Z. was not entitled to Miranda rights since he was interviewed only by a school official and not the police. The court also concluded sufficient evidence supported the adjudication.

A divided panel of the Indiana Court of Appeals previously reversed D.Z.’s adjudication, with each of three judges writing separately. The court aligned with the dissent of COA Judge Elaine Brown, who found no Miranda violation.

Juvenile — Bomb Threat/Miranda Warning

B.A. v. State of Indiana

49S02-1709-JV-567

A boy alleged to have written bomb threats on a bathroom wall at Decatur Middle School was deprived of his Miranda rights under police interrogation and his statements should have been suppressed, the Indiana Supreme Court ruled June 20.

Thirteen-year-old B.A. was alleged to have written the threat: “I will Got A bomb in the school Monday 8th 2016 not A Joke” on a bathroom wall in February 2016. After checking the premises on February 8, 2016, a vice principal and school resource officer removed B.A. from his school bus and escorted him to the vice principal’s office.

B.A. was interviewed by three uniformed school resource officers. Upon his confession, B.A. was suspended from school, and the school resource officers arrested him and took him to the Marion County Juvenile Detention Center.

The boy was adjudicated for committing false reporting and institutional criminal mischief, Level 6 felony and Class A misdemeanors if committed by an adult. He then moved to suppress the evidence from his interview, arguing that he was entitled to Miranda warnings because he was under custodial interrogation and officers failed to secure waiver of his Miranda rights under Indiana’s juvenile waiver statute.

The juvenile court denied the motion and found B.A. delinquent on both counts, but the Indiana Supreme Court determined his statements should have been suppressed. The court also found that the trial court abused its discretion in admitting the statements.

“As the State points out, no one yelled at or threatened B.A. Still, the consistent police presence would place considerable coercive pressure on a reasonable student in B.A.’s situation,” Chief Justice Loretta Rush wrote. “So this case lies solidly on the ‘custody’ end of the student-confinement spectrum.”

The court reversed B.A.’s delinquency adjudications in B.A. v. State of Indiana, 49S02-1709-JV-567, and remanded the case to the juvenile court.

The Indiana Court of Appeals previously reached the opposite conclusion, issuing a ruling in March 2017 affirming the juvenile court.

Agency Action — Utility Rate Increase/ TDSIC Statute

NIPSCO Industrial Group v. Northern Public Service Company

18S-EX-334

A utility rate increase to fund nearly $20 million of improvements for a northern Indiana power utility was struck down by the Indiana Supreme Court on June 20 in a ruling the court said “will likely have enormous financial consequences for utilities and their customers.”

The ruling struck down a natural gas rate increase for Northern Indiana Public Service Co. that was challenged by some of the utility’s largest industrial consumers, known as NIPSCO Industrial Group. The Indiana Utility Regulatory Commission had approved NIPSCO’s rate increase under the 2013 TDSIC Statute, which enables utilities to obtain regulatory preapproval of rate increases to pay for infrastructure improvements.

But NIPSCO Industrial Group challenged the rate increase, arguing that the statute allows for increases to pay for specific preapproved projects, rather than categories of projects, as the utility argued. The utility’s increase included costs such as estimates of a certain percentage of pipes needing repair within a seven-year period.

“We conclude the TDSIC Statute permits periodic rate increases only for specific projects a utility designates, and the Commission approves, in the threshold proceeding and not for multiple-unit projects using ascertainable planning criteria,” Justice Geoffrey Slaughter wrote for the unanimous court in NIPSCO Industrial Group v. Northern Public Service Company, 18S-EX-334. “In other words, a utility must specifically identify the projects or improvements at the outset in its seven-year plan and not in later proceedings involving periodic updates. There is an appreciable difference between designating specific ‘projects’ and ‘improvements’ up front, which the Statute requires, and describing the criteria for selecting them later, which the Commission approved.”

The legislature enacted the TDSIC statute as a means to enable utilities to fund some costly capital improvements in advance, but the court’s ruling limits the extent to which utilities may do so. A divided panel of the Indiana Court of Appeals previously affirmed the rate increase, but the justices adopted the dissenting opinion of recently retired COA Judge Michael Barnes.

In doing so, the court noted its ruling will have broad impact beyond the NIPSCO rate case.

“The stakes are much larger than just the roughly $20 million at issue between NIPSCO and the Industrial Group. The Commission, we are told, has approved billions of dollars of utility-infrastructure investments through the TDSIC process,” Slaughter wrote. “Given the favorable regulatory treatment, utilities are likely to funnel increasing amounts of infrastructure investments through this reimbursement mechanism. How we resolve these competing visions of the TDSIC Statute will likely have enormous financial consequences for utilities and their customers.”

The court ruled the TDSIC Statute requires utilities to designate, rather than describe, eligible projects in a seven-year plan. Further, the court held Section 9 update petitions cannot add new projects beyond those initially approved under Section 10 and cannot revise the seven-year plan’s budget. Finally, the court ruled NIPSCO Industrial Group was not precluded from challenging the commission’s order.

The rate case was remanded to the IURC.

Indiana Court of Appeals

June 11

Guardianship/Parental Visitation

Erica Manis v. Trista McNabb

18A-GU-96

A Madison County court wrongly refused to hear a mother’s petition for visitation with her child who is subject to a guardianship, the Indiana Court of Appeals ruled June 11.

Erica Manis appealed trial court rulings denying her petitions to terminate Trista McNabb’s guardianship of her child, J.F., and seeking visitation with the child born in 2012. Manis was convicted of drug charges during the pendency of the guardianship, and her petitions were denied in May 2017.

The appeals panel affirmed the Madison Circuit Court’s judgment denying the petition to terminate the guardianship, but overturned the ruling regarding parenting time, in which the trial court stated there was no statutory authority for ordering parental visitation during a guardianship proceeding.

Judge John Baker wrote for the panel that reversed that conclusion, deciding a matter of first impression in Erica Manis v. Trista McNabb, 18A-GU-96.

“While no statute explicitly grants trial courts this authority in guardianship proceedings, no statute precludes it, either,” the court held. “And because our General Assembly has clearly intended for noncustodial parents to have parenting time unless it would endanger or impair the physical or mental health of the child, we find that a trial court has the authority to determine and order parenting time for a parent whose child is placed with a guardian.”

The 14th Amendment ensures the rights of parents to raise their children, the court continued, and the Indiana Supreme Court has likewise ruled that parents have visitation rights to their children with noncustodial parents.

“Accordingly, we hold that a trial court has the authority to determine whether parenting time is warranted and order reasonable parenting time for a parent whose child is placed with a guardian,” Baker wrote. “In so doing, a trial court must balance a parent’s right to visit his or her child with the best interests of the child. And in ordering parenting time in these cases, it would be best practice for a trial court ‘to make specific findings to support its parenting time order.’”

The trial court ruling also was in error because it deferred to the guardian’s judgment about whether to grant mother parenting time, the appellate panel found.

“We simply do not understand why the trial court would defer to Guardian, a person with a subjective perspective and invested stake in the matter, about Mother’s constitutionally-protected right to see her son. Guardian, having disregarded Mother’s position as Child’s mother and Mother’s wishes to see Child, had already prevented Mother from seeing Child for well over a year for a reason that the trial court concluded was unfounded. And still the trial court left future parenting time to Guardian’s discretion, thereby potentially further depriving Mother and Child of time together and an opportunity to develop a meaningful relationship and bond.

“We cannot state strongly enough that a trial court should not allow a third party alone to determine a parent’s parenting time with his or her child during guardianship proceedings. If parties cannot agree on their own to a plan that is in the best interests of the child, then the trial court must take an active role in developing one,” Baker wrote.

The matter was remanded for further proceedings.

__________

June 18

Criminal/Child Molestation — Evidence

Andrew Seal v. State of Indiana

49A02-1711-CR-2547

A former Indianapolis pre-kindergarten teacher could not convince a panel of the Indiana Court of Appeals that evidence aside from his confession in his criminal case was insufficient to support his conviction of Level 1 felony child molesting.

Andrew Seal was fired in 2016 from his job at Daystar Childcare, a ministry of Englewood Christian Church, after allegations surfaced that he had inappropriately touched two children who were 3 and 4 years old at the time. Afterward, Seal also was accused of molesting his 5-year-old daughter. He was charged with molesting each of these children and faced three Level 4 felony counts and two Level 1 felony counts.

Seal had contested only the Level 1 counts, which require penetration as an element of the crime. He argued that aside from his confession, the state produced no independent evidence to prove his guilt.

The Marion Superior Court found Seal guilty of the Level 4 felony counts, but for the level 1 felony child molesting charges, the court requested that the parties submit post-trial briefs on the law as to what constitutes penetration and whether the evidence proved penetration. The court found Seal guilty of one of the Level 1 felony charges and not guilty of the other. He was sentenced to 20 years in prison, to be served consecutive to sentences imposed in two other causes.

On appeal, Seal argued the trial court abused its discretion in admitting his confession; that the corpus delicti rule requires independent evidence of penetration to sustain the higher-level felony; and that the evidence is insufficient to support his Level 1 felony conviction. The Indiana Court of Appeals rejected those arguments June 18 in Andrew Seal v. State of Indiana, 49A02-1711-CR-2547.

“(W)e conclude that Seal’s argument improperly focuses on a single element,” Judge Terry Crone wrote for the panel. “(T)he admission of a confession requires some independent evidence that supports an inference that the crime charged was committed, but the corpus delicti rule does not require the State to ‘make out a prima facie case as to each element of the offense charged,’” citing Shinnock v. State, 76 N.E.3d 841, 843 (Ind. 2017) and Jones v. State, 253 Ind. 235, 252 N.E.2d 572 (1969), cert. denied (1977).

“The paramount consideration in applying the corpus delicti rule is whether independent evidence sufficiently corroborates the confession so that a defendant is not convicted of a crime that did not occur. Here, the independent evidence sufficiently corroborates Seal’s confession,” Crone wrote. The panel also held that Seal’s argument that the evidence was insufficient to support the conviction was an impermissible request to reweigh the evidence.

__________

June 20

Criminal — OWI/Fourth Amendment

Zachariah Marshall v. State of Indiana

64A05-1710-CR-2368

A man who argued his Fourth Amendment rights were violated when he was arrested after a traffic stop prevailed before the Indiana Court of Appeals, which reversed a trial court’s denial of his motion to suppress evidence from the stop.

Deciding an issue of first impression, the court held that an officer’s testimony that he witnessed speeding is insufficient to support a traffic stop without further evidence.

After observing Zachariah Marshall’s vehicle was driving over the speed limit, a Porter County reserve officer performed a traffic stop in October 2016. Soon thereafter, the stop escalated to an investigation of operating a vehicle while intoxicated. The officer’s supervisor arrived on the scene and arrested Marshall.

The officer testified to not writing Marshall a citation for speeding because he decided to “cut him a break” upon finding Marshall would have “plenty of money problems and legal problems ahead of him.”

On August 4, 2017, Marshall filed a motion to suppress, alleging the traffic stop was unlawful. The trial court denied Marshall’s motion but granted his request for a hearing on August 17 when he filed a renewed motion to suppress.

The case moved to the Court of Appeals on interlocutory appeal after Marshall filed a motion asking the trial court to certify its denial of his renewed motion to suppress.

The COA held that while the officer had a properly calibrated radar that was working, he could not testify to Marshall’s speed, but only that he was going faster than the posted speed limit. For the traffic stop to be valid, the court held there must be reasonable suspicion a traffic law has been violated or other criminal activity is afoot. It also found that reasonable suspicion does not include general hunches or suspicions.

During a pretrial deposition, the officer could not recall the posted speed limit at the location of the traffic stop, but claimed he knew at the time of the stop what the speed limit was in the area.

“Because Reserve Officer Dolan could not testify regarding the speed of Marshall’s vehicle in more specific terms,” Judge Melissa May concluded, “we hold he did not have specific articulable facts to support his initiation of a traffic stop, and therefore the traffic stop violated Marshall’s Fourth Amendment rights.”

The panel concluded that the trial court erred when it denied Marshall’s renewed motion to suppress, and reversed and remanded for proceedings consistent with the opinion of Zachariah Marshall v. State of Indiana, 64A05-1710-CR-2368.

Criminal — OWI/Timeliness Under Criminal Rule 4(C)

State of Indiana v. Nicolas Lindauer

87A05-1709-CR-2137

The Indiana Court of Appeals ruled in favor of the State of Indiana to reverse a trial court decision dismissing charges against a Warrick County man.

On April 6, 2016 Nicholas Lindauer was charged with operating a vehicle with an alcohol concentration equivalent (ACE) of .08 or more, operating a vehicle while intoxicated, possession of marijuana and possession of paraphernalia. During his hearing on April 25, 2016, Lindauer waived the formal reading of the charges and requested the trial court authorize a specialized driving permit.

After the Warrick Circuit Court’s grant of Lindeaur’s request, progress hearings for the case were pushed back several times over the next year per Lindauer’s motion.

On April 13, 2017, Lindauer filed a motion to dismiss pursuant to Indiana Criminal Rule 4(C). He conceded that at least 56 days were attributable to him, but that he should have been brought to trial prior to June 2, 2017. On August 23, 2017, the trial court summarily granted Lindauer’s motion and dismissed the cause.

The state argued that the trial court erred by dismissing the cause, and the COA agreed. The court found that while the state has an affirmative duty to bring a defendant to trial within one year, if a defendant takes action that delays the proceeding, “that time is chargeable to the defendant and extends the one-year time limit, regardless of whether a trial date has been set at the time or not.

“Using the date the charges were filed against Lindauer, the Criminal Rule 4(C) time period began to run on April 6, 2016,” Judge Melissa May wrote June 20 in State of Indiana v. Nicolas Lindauer, 87A05-1709-CR-2137. “Barring any delay extending the time, the State was required to bring Lindauer to trial by April 5, 2017.”

However, the court determined that every extension of time that occurred between June 23, 2016, and April 10, 2017, occurred because of requests made by Lindauer.

“A defendant cannot habitually move to reset the preliminary hearing at which the trial date was to be set and then assert a meritorious claim that his right to trial within a year was violated,” May continued.

The court concluded the trial court committed clear error when it granted Lindauer’s motion to dismiss and reversed and remanded for further proceedings.

Judge Patricia Riley dissented with a separate opinion, arguing that for the majority of the continuances, the parties were engaged in ongoing plea negotiations.•