Indiana Court Decisions: Sept. 8-21, 2022

7th Circuit Court of Appeals
Sept. 12
Tonca Watters and Terence Watters v. The Homeowners’ Association at the Preserve at Bridgewater, Kathryn Mamaril, and Edward Mamaril
19-3499

Split 7th Circuit allows racial housing-discrimination claims to proceed against individuals but not Kokomo HOA

A Black couple subjected to racist harassment from their neighbors may proceed to jury with their racial housing discrimination claims, a split 7th Circuit Court of Appeals has ruled. A dissenting judge, however, argued that a nexus between discriminatory treatment and an adverse housing action was lacking in their claims.

When Tonca and Terence Watters, a Black couple, built their home in Kokomo’s Preserve at Bridgewater, they were immediately met by confrontations from their homeowners association president and neighbors, Ed and Kate Mamaril. At the time the Watters built their home, Kate was the HOA president. Her husband, Ed, took over the position in 2015.

Conflict with the Mamarils started as soon as the Watters began construction on their home. In one incident, Ed told the Watters they were not welcome, referred to them with profanity, asked why “you people” moved here, and told them he had them investigated and suggested they live “somewhere else.”

Other run-ins occurred between the two families, including when the Watters attempted to keep the Mamarils’ free-roaming cats off of their property in compliance with their HOA and city ordinances. When the HOA refused to enforce the rules, the Watters called the local humane society to catch the cats and return them.

In response, Kate approached Tonca and used profanity and racial slurs against her. In another incident, the Maramils also used racial slurs against the Watters’ grandchildren at a local restaurant.

The Watters also had a series of conflicts with their HOA, including being denied access to copies of the restrictive covenants and rejecting their request to install a privacy fence, which was against the HOA rules. The Watters wanted the fence to accommodate Terence’s post-traumatic stress disorder, which stemmed from his military service.

The Watters eventually sued the HOA and the Maramils, alleging two claims of race discrimination: one under the Fair Housing Act and another under 42 U.S.C. § 1982, as well as a third claim against only the HOA for failure to accommodate Terence’s PTSD.

The Indiana Southern District Court granted summary judgment to the defendants on all claims, but the 7th Circuit vacated that decision in part.

On the racial discrimination claim, the majority noted the defendants did not dispute that Kate’s “repeated, flagrant use of racial epithets” established discriminatory intent.

It noted that despite the defendants’ assertion that Ed’s “you people” comment only referred to the Watters as a specific family and not their race, Ed had never met the Watters before they moved into the neighborhood.

“Rather, the record reflects that Ed saw the first Black couple who chose to live in the Preserve and told them that ‘you people’ should live somewhere else,” 7th Circuit Judge Candace Jackson-Akiwumi wrote, joined by Circuit Judge Frank Easterbrook. “Moreover, based on his wife’s blatant racist comments, a reasonable factfinder can infer in the light most favorable to the Watters — as we must do at the summary judgment stage — that Ed’s ‘you people’ comment carried the stain of racial animus.”

7th Circuit Judge Amy St. Eve dissented from the majority on that point, writing separately that while the Watters were “subjected to degrading and offensive comments” on account of their race, a nexus between discriminatory treatment and an adverse housing action was lacking in their claims.

“Viewed holistically, the majority can point to only two instances (over a year apart) where Kathryn used racial epithets, and Edward’s single use of the phrase ‘you people,’” St. Eve wrote. “Without any link to an adverse housing action, the Watters’ claims fail. Therefore, in my opinion, the district court properly awarded summary judgment in favor of the Mamarils.”

In a footnote, the majority rejected St. Eve’s suggestion that the court could not infer Ed’s use of the phrase “you people” referred to the Watters’ race because there was no surrounding context that suggested his comment referenced the their race.

“Putting aside the fact that Kate’s repeated use of the N-word provides such additional context, the dissent ignores the fact that the phrase ‘you people’ is well recognized racial code in our society,” the majority wrote.

Turning to the Watters’ housing-rights concerns, the 7th Circuit ruled that a reasonable factfinder could conclude the Mamarils’ pattern of harassment interfered with the Watters’ post-acquisition enjoyment of their property, “even if the Mamarils could not or did not actually force the Watters to leave.”

The appellate court rejected the Maramils’ assertion that the incidents involving their insults and epithets “are simply personal in nature and have no relationship to the Watters’ housing.”

“The problem with this argument is that it ignores the forest for the trees,”Jackson-Akiwumi wrote. “While it is true that isolated incidents of racial slurs may not be enough on their own, this case involves the same defendant making two separate uses of one of the most horrendous slurs in our language, and her husband adding his own racially hostile innuendo.

“… A reasonable factfinder can infer that being treated with racial disdain and hostility by the head of the HOA and his wife, who herself held the same position only recently, can directly affect how safe a family feels in their own home,”she continued. “More importantly, as discussed above, a reasonable factfinder can infer that the Mamarils’ repeated harassment undermined the Watters’ ability to enjoy the basic living conditions one expects when they purchase a home.”

A key omission was found in the Watters’ evidence, however, in that the Mamarils were sued only in their individual capacities when they made their discriminatory statements and not in their roles with the HOA.

“As such, the Watters cannot provide any evidence of the HOA’s discriminatory intent or interference in their FHA rights,” Jackson-Akiwumi wrote.

The 7th Circuit also denied the Watters’ claim that the HOA violated the FHA by failing to accommodate for Terence’s PTSD, finding that he failed to include any reference to it in his accommodation request.

“The Watters have presented sufficient evidence to try their claims against the Mamarils under the FHA and § 1982 before a jury,” the court concluded. “They do not, however, provide any evidence directly linking the Mamarils’ actions to the HOA as a whole, nor do they provide any evidence to support their failure to accommodate claim.

“We, therefore, affirm the district court judgment as to the HOA and almost all of the individual defendants, but vacate the judgment as to the Mamarils on the FHA and § 1982 claims, and remand for further proceedings consistent with this opinion.”

Court of Appeals of Indiana

Sept. 14

Jose L. Izaguirre v. State of Indiana

21A-CR-2258

Stepdad waives arguments against comfort animal in court, loses child molesting appeal

The Indiana Court of Appeals has affirmed a trial court’s decision to allow a child molestation victim to testify in court with a comfort animal at her side. The ruling means the defendant’s child molesting convictions will stand.

In Jose L. Izaguirre v. State of Indiana, 21A-CR-2258, appellant-defendant Jose L. Izaguirre was convicted of two counts of Level 1 felony child molestation against his stepdaughter.

Before Izaguirre’s jury trial, the state moved to permit a comfort animal to sit with the victim while she testified, and the Kosciusko Circuit Court granted the motion over Izaguirre’s objection. As such, the child testified with a canine sitting near her, pursuant to Indiana Code § 35-40-5-13.

After he was convicted, Izaguirre was handed an aggregate sentence of 40 years behind bars, with five years suspended.

After the trial court denied his subsequent motion to correct error regarding the child’s ability to testify with a comfort animal, Izaguirre appealed.

He argued the trial court erred by following I.C. 35-40-5-13 because the law “permits a Court to prejudice a Defendant’s Constitutional rights with no findings at all that the action to be taken, i.e. use of a comfort animal, is necessary.” He also argued the statute’s use of “shall” means “that the legislature controls how Trial Courts conduct trials[,]” which he argued contravenes Evidence Rule 611 and constitutional separation of powers.

The Court of Appeals found Izaguirre waived both arguments, however, by providing no standard of review for the issue presented, no separate cogent arguments for his two grounds for reversal, and no discussion of the legal standard for analyzing due process, separation of powers or conflicts between statutes and rules of court.

“In fact, he cites only one case to support his arguments on these complex legal issues,” Judge Melissa May wrote for the appellate panel. “Where an appellant fails to support an argument with cogent reasoning and citations to authorities, an argument is waived.”

Waiver notwithstanding, the appellate court said it failed to see how Izaguirre could have been prejudiced by the presence of the support dog in the courtroom.

It pointed specifically to the state’s “very damning” evidence against Izaguirre and the trial court’s jury instruction regarding the dog, which said, “Neither sympathy nor prejudice for or against either the victim or the Defendant in this case should be allowed to influence you in whatever verdict you may find.”

“In light of the weight of the evidence against Izaguirre and the instructions given by the trial court to minimize any impact of the dog’s presence, Izaguirre cannot demonstrate he was prejudiced by the trial court’s decision to allow Child to testify with a support animal,” May concluded.

Paul Svindland, Kathryn Wouters, Chase Welsh, and Jon Russell v. TA Dispact, LLC
22A-CT-774

COA rules dispute over agreement with former Celadon Group must move to Delaware courts

The Court of Appeals of Indiana has reversed a decision against the now-bankrupt Celadon Group, forcing a trucking company that tried to purchase certain assets from the Indianapolis-based business to refile its complaint in the state of Delaware.

TA Dispatch sued four former executives from the Celadon Group, including CEO Paul Svindland, after an agreement to purchase certain commercial interests from Celadon fell apart. The parties entered into their contract in April 2019, and Celadon filed for Chapter 11 bankruptcy in December of that year.

In the complaint filed in March 2021, TA Dispatch claimed the purchase agreement was doomed to fail because the defendants wanted a cash infusion to pay the business’s debt and, therefore, “painted a picture of the Celadon Companies during negotiations that had little basis in reality.”

The plaintiff alleged the former Celadon officials engaged in negligent misrepresentation of several facts relating to the sale of Celadon’s commercial interests to TA Dispatch; statutory suppression of various relevant material facts; and tortious interference with a contractual relationship.

However, the executives — Svindland, CEO from July 2017 to January 2020; Kathryn Wouters, vice president of finance and treasurer; Chase Welsh, vice president of risk management, general counsel and corporate secretary; and Jon Russell, president and chief operating officer until September 2019 — pushed back using the forum-selection clause contained in the purchase agreement. Under that provision, the parties had agreed that if any legal dispute arose over the purchase contract, the case would be handled by either a federal or state court in the state of Delaware.

The executives filed a motion to have the matter transferred to the Delaware state court system or, in the alternative, to dismiss the complaint.

In a one-page order issued in January, Hamilton Superior Judge Jonathan Brown denied the defendants’ motion.

Celadon officials then turned to the Court of Appeals, which reversed and instructed the trial court to grant the motion without prejudice so that TA Dispatch has the opportunity to refile the case in Delaware.

Before the Indiana appellate panel, TA Dispatch argued the forum-selection clause did not apply. Namely, the company asserted, the underlying lawsuit raises tort claims that are outside the reach of the purchase agreement.

The Court of Appeals pointed to precedent from other courts, including American Patriot Insurance Agency, Inc. v. Mutual Risk Management, Ltd., 364 F.3d 884, 888 (7th Cir. 2004), which rejected similar arguments in other disputes over forum-selection clauses.

Specifically, the appellate court noted that even though TA Dispatch and Celadon could have included limits on the types of claims covered by their forum-selection clause, they did not. In fact, Article 5 of the purchase agreement encompasses all claims and not just contact claims.

“TA Dispatch’s claims, which alleged inaccurate representations made during the negotiation of the Purchase Agreement that were allegedly relied on by TA Dispatch in agreeing to the Purchase Agreement, undoubtedly relate to the subject matter of the Purchase Agreement and the sale of the Celadon property,” Chief Judge Cale Bradford wrote for the court. “TA Dispatch’s claims were therefore brought pursuant to the Purchase Agreement and are covered by the forum-selection clause.”

The case is Paul Svindland, Kathryn Wouters, Chase Welsh, and Jon Russell v. TA Dispatch, LLC, 22A-CT-774.

This is the second court victory for former leaders of the Celadon Group. In August, federal fraud charges against two executives — Eric Meek and Bobby Peavler — were dismissed in the U.S. District Court for the Southern District of Indiana.

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Sept. 19
Performance Services, Inc. v. Randolph Eastern School Corporation
22A-CP-361

Split COA reverses against school corporation in unpaid wind turbine usage dispute

A divided Court of Appeals of Indiana has reversed for a construction company that sued an Indiana school corporation after it failed to pay $1.5 million in damages for its access to a wind turbine.

In 2009, the Randolph Eastern School Corporation entered into a contract with Performance Services Inc. for the construction and operation of a wind turbine in Union City.

Under the parties’ contract, the school corporation was given physical access to the wind turbine as well as access to data generated by the turbine for educational purposes for its students. The school corporation also had the option to purchase the turbine after five years of payments.

In exchange for access to the turbine, the school corporation agreed to pay $154,000 per year to Performance. However, they didn’t pay and Performance sued in 2021 seeking $1.5 million in damages on the unpaid fees.

The school corporation responded, not with a check, but with a lawsuit, filing for declaratory judgment and seeking to have the contract declared void.

Among its proposed legal reasons to void the contract were theories that the contract reflected an illegal investment by a political subdivision, was an illegal lease, and that it violated Indiana’s Public Works Act, among other arguments.

Performance countered with its own suit against the school corporation for breach of contract, suit on account, and equitable entitlement to the reasonable value of services provided.

The Randolph Circuit Court ultimately entered summary judgment to the school corporation, concluding that the contract reflected an illegal investment by a political subdivision under state law.

But in a split reversal, an appellate panel majority concluded that the parties’ contract does not reflect an investment by the school corporation. Rather, it found the school corporation agreed to make semiannual payments to Performance of $77,000 each in exchange for certain access to the wind turbine and its data, but simply never paid or sought to exercise its purchasing options.

“Thus, on this undisputed, designated evidence, the relationship between the School Corporation and Performance never amounted to more than the School Corporation owing payments for services rendered by Performance,” Judge Paul Mathias wrote, joined by Judge Terry Crone.

The majority noted that the plain definition of “invest” applies the hoped-for financial return to the same person or entity that provides the initial commitment of money, not to the recipient of that money.

“Therefore, the Contract here does not reflect an illegal investment by a political subdivision, and the trial court erred when it entered summary judgment for the School Corporation on this issue,” Mathias wrote.

Neither was the contract an illegal lease, the majority found. They concluded that the parties’ relationship did not create a property right of the school corporation in the wind turbine, but rather a contract right that Performance could have revoked based on the school corporation’s nonperformance.

In finding that the contract was not a lease, the majority concluded that the Public Leasing Act was also not applicable to the parties’ contract. Neither did the contract violate Indiana Public Works Act. Finally, it noted that the purported indefiniteness of the number of semiannual payments due from the school corporation in the original contract is not a basis for declaring the contract void.

“We reverse the trial court’s judgment and remand with instructions to deny the School Corporation’s motion for summary judgment, to grant Performance’s motion for summary judgment, and to hold a hearing on Performance’s damages in accordance with this opinion,” the majority concluded.

Judge Elaine Brown dissented from the majority, parting ways with the majority’s conclusion that the contract does not reflect an investment by the school corporation.

“The Contract between the School Corporation and Performance reflects an illegal investment by a school corporation in which the School Corporation sought a financial return,” Brown opined. “Based upon the record, and for the reasons stated in the trial court’s order, I would affirm the trial court’s grant of summary judgment to the School Corporation.”

The case is Performance Services, Inc. v. Randolph Eastern School Corporation, 22A-CP-361.

State of Indiana v. $2,435 in United States Currency and Alucious Kizer
22A-CR-578

COA reversal: Jury trial was not required in civil forfeiture proceeding

A jury trial was not required for an Allen County man’s civil forfeiture case, the Court of Appeals of Indiana has concluded in a reversal.

Alucious Kizer was pulled over by police for a traffic stop in September 2021, but Kizer fled from the vehicle. In the process, Kizer allegedly attempted to dispose of more than 74 grams of methamphetamine, 67 grams of fentanyl, 12 grams of powder cocaine, 10 grams of crack cocaine and 10 grams of a synthetic cannabinoid.

Once Kizer was apprehended, officers seized $1,410 from his person and another $1,025 from his car. A complaint was subsequently filed in the Allen Circuit Court for the forfeiture of the $2,435 seized from Kizer and his vehicle. In his answer, Kizer denied the allegations and requested a jury trial on the forfeiture complaint.

Although it initially struck Kizer’s demand for a jury trial, in January 2022, the trial court reconsidered its order, vacated it, and, citing Article 1, Section 20 of the Indiana Constitution, set the matter for a jury trial. It then stayed the proceedings and certified its January order for interlocutory appeal.

In a reversal, the Court of Appeals found that the trial court erred when it concluded that Article 1, Section 20 of the Indiana Constitution requires a jury trial on the state’s in rem forfeiture complaint.

“The Indiana Supreme Court has long held that a complaint by the State for the forfeiture of illegal property is ‘not a civil case under the common law when the Constitution was adopted . . . and so it has been uniformly held in this state that… [the] parties are not entitled to trial by jury as a constitutional right.’ We have similarly recognized that, ‘[b]y denying individuals the ability to profit from ill-gotten gain, an action for forfeiture resembles an equitable action for disgourgement or restitution,’” Judge Paul Mathias wrote.

“It is well-settled that the State’s civil forfeiture complaints are outside of Article 1, Section 20, and are instead equitable claims to be tried by the court,” the appellate court concluded. “We therefore reverse the trial court’s order setting the State’s complaint here for a jury trial and remand for further proceedings consistent with this decision.”

The case is State of Indiana v. $2,435 in United States Currency and Alucious Kizer, 22A-CR-578.

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Sept. 21
S.D. v. G.D.
22A-PO-521

Split COA reverses protective order against father in ‘close case’

An Indiana woman who secured a protective order against her ex-husband stemming from an incident with their daughter was unable to convince the Court of Appeals of Indiana that the order was necessary. However, a dissenting judge opposed reversal, opining that the appellate court should not reweigh the evidence.

Issues relating to the protective order between S.D. and G.D. began in late December 2021, when G.D. alleged that her ex-husband, S.D., had attempted to take their daughter during his supervised parenting time visit.

In S.D. v. G.D., 22A-PO-521, G.D. filed for an order of protection against S.D. in Starke Circuit Court, alleging that she was a victim of domestic or family violence and that S.D. had caused physical harm to their daughter.

Specifically, G.D. alleged that while she was at the house of S.D.’s mother for S.D. to have supervised parenting time with the child, H.D., S.D. informed her that he was leaving with the child. When G.D. “told him no” and said his parenting time was almost over, S.D. allegedly screamed at her and “snatched [H.D.] up by her arm digging his nails into her arm.”

G.D. testified that she wedged herself between S.D. and H.D., so S.D. grabbed the child by the rib cage to take her, prompting G.D. to grab S.D. by the throat to make him release the child. The mother then testified that S.D. smacked H.D. in the mouth when the child cried but “let[] [H.D.] go” when G.D. “choked him.”

An ex parte order for protection was issued against S.D. in January, and the Starke Circuit Court later concluded that while both parents were engaging in acts of domestic violence as defined in the protective order statute, G.D. had more credibility then S.D.

The trial court also found that S.D. represented a credible threat to the safety of G.D. or a member of her household and that G.D. had shown by a preponderance of the evidence that domestic or family violence has occurred sufficient to justify the issuance of an order.

For his part, S.D. claimed that when he picked up the child, G.D. took her from him, pushed him and choked him. He also argued that G.D. was charged with domestic violence for the incident and that the protective order “is more or less a career ender” for his military career.

A majority of the Court of Appeals of Indiana reversed, finding it undisputed that S.D. had parenting time without incident after the December 2021 incident and before the issuance of the ex parte order of protection.

“Based on the record, we conclude that the altercation on December 26, 2021, as described by the testimony and for which Mother was charged, is insufficient to establish that S.D. represents a present, credible threat to her safety or the safety of H.D.,” Judge Elaine Brown wrote for the majority, joined by Judge Elizabeth Tavitas.

“There was insufficient evidence of any present intent by S.D. to harm the petitioner or the parties’ child,” Brown wrote. “… Further, there was no balancing of any need for protection against the burden imposed by the protective order as required by (S.H. v. D.W., 139 N.E.3d 214 (Ind. 2020)).”

But in a separate dissent, Judge Robert Altice wrote that while the issues at hand presented “a close case,” the trial court “is the one to make that call.”

“Father provided a differing account of the incident and denied grabbing Child by the arm or hitting her during the dispute with Mother, but the trial court expressly found Father’s testimony in this regard to lack credibility,” Altice wrote. “Based on the domestic violence, which occurred only about six weeks before the hearing, the trial court found that Father remained a present, credible threat to Mother and/or Child and, thus, issued the order of protection, at least for the time being.

“On this record, I cannot conclude that the trial court abused its discretion,” he concluded. “I would, therefore, affirm the trial court.”

Mammoth Solar, a/k/a Starke Solar LLC v. Connie Ehrlich, Daniel Knebel, Jennifer Knebel, John Masterson, Larry Lambert, Gail Lambert, Keith Davis, Gale Davis, and Dean Cervenka
21A-PL-2060

COA finds ‘shall’ is unambiguous in requirements for solar farm application

The Court of Appeals of Indiana has affirmed that the plug must be pulled on the first phase of what has been described as one of the largest commercial solar farms in the world because the developers failed to follow the instructions on the application seeking permission to build the project.

Mammoth Solar filed an application in 2020 to build a 4,511-acre commercial solar energy farm in Pulaski County. This was to be the first phase of a three-phase plan to build and operate one of the largest commercial solar energy systems in the world. When completed, the farm would expand across 12,000 acres and generate up to one gigawatt of electricity to serve 80,000 people.

The construction and operation of the first phase was governed by the Unified Development Ordinance, which the Pulaski County Board of Commissioners adopted in 2019. Specifically, Section 2.3(R)(3) details the information that must be included in applications for commercial solar energy systems.

Despite Mammoth’s lack of a fire safety plan and the decrease in property values of at least 220 homes, the Pulaski County Board of Zoning Appeals approved the solar farm.

Neighbors to the proposed farm filed a petition for judicial review in September 2020. In part, they claimed the application did not contain the required information, including an engineering certification, site layout plan, topographical map and communication study.

The Pulaski Superior Court reversed the BZA’s approval in a 28-page order issued in August 2021. Specifically, the trial court highlighted that the application submitted by Mammoth failed to comply with the minimum legal requirements of the Unified Development Ordinance.

While the zoning appeals board was satisfied with Mammoth’s explanation that the required information would be provided at a different time, Special Judge Kim Hall ruled state law prohibited the board from approving the application.

“The BZA was required to act in accordance with the law and was not at liberty to ignore clearly defined legal procedures,” Hall wrote.

Before the Court of Appeals, Mammoth asserted the BZA properly interpreted the ordinance when approving the application.

However, the appellate panel agreed with the trial court that the approval of the application was arbitrary and capricious and thus reversed in Mammoth Solar, a/k/a Starke Solar, LLC v. Connie Ehrlich, Daniel Knebel, Jennifer Knebel, John Masterson, Larry Lambert, Gail Lambert, Keith Davis, Gale Davis, and Dean Cervenka, 21A-PL-2060.

The Court of Appeals found the ordinance used “plain and unambiguous” language in stating that “an application for a (commercial solar energy system) shall include the specific information set forth in sections 2.3(R)(1) and (3).”

“… (T)he clear import of sections 2.3(R)(1) and (3) is that the specific information set forth in these sections is required to be in a CSES application. Because Mammoth Solar’s application did not include the required information, the BZA should not have approved the Application. Specifically, the BZA’s incorrect interpretation of the UDO is entitled to no weight, and we are required to reverse the BZA’s approval of the Application as being arbitrary and capricious,” Judge Rudolph Pyle wrote citing Chambers v. Delaware-Muncie Metropolitan Board of Zoning, 150 N.E.3d 603 at 608 (Ind. Ct. App. 2020).

In a footnote, the Court of Appeals pointed out that Mammoth tried to argue an appointed administrator had the authority to establish the requirements for the content of each development application. Also, the information that was to be put into the application was not required until the building permit application process, Mammoth argued.

But the appellate court found nothing in the Unified Development Ordinance to support either contention.•