Indiana Court Decisions – April 1 to 14, 2015

Indiana Supreme Court

April 8

Civil Plenary – Law Firm/Attorney Fees

Cohen & Malad, LLP v. John P. Daly, Jr., Golitko & Daly, P.C., and Golitko Legal Group, P.C.

29S02-1504-PL-165

The Indiana Supreme Court noted that a trial court did not take into account caselaw when it denied an Indianapolis firm’s request for quantum meruit relief.

The justices reversed the denial of that relief to Cohen & Malad LLP, which sought part of the contingent fees earned in cases that were first handled by its attorneys, including John P. Daly Jr., who was employed as an associate at Cohen & Malad until he left for another firm. Although the trial court found that the Cohen & Malad attorneys – including Daly – worked a substantial number of hours on those cases and that most cases generated attorney fees, it denied Cohen & Malad’s quantum meruit relief.

The trial court found Daly wasn’t unjustly enriched where: the client in each case at issue chose to continue with Daly when he left the firm; Cohen & Malad and Daly had no agreement about what would happen if they parted ways; their employment agreement had no provision for file ownership and lacked a non-competition covenant; Cohen & Malad made a “very shrewd deal” for Daly’s services when it employed him on a salary basis; and Cohen & Malad was “very well compensated” for Daly’s time at the firm, as shown by the amount of fees Daly helped Cohen & Malad generate on other cases while he worked there.

The Court of Appeals affirmed in a 2-1 memorandum decision, but the justices reversed the lower court, citing Galanis v. Lyons & Truitt, 715 N.E.2d 858, 860 (Ind. 1999). The trial court’s findings of facts and conclusions of law did not acknowledge this case or apply its standards. The justices remanded for a determination of what proportional contributions toward the results in the cases at issue were made by attorneys working for Cohen & Malad and to enter a corresponding judgment in the firm’s favor.

The Supreme Court summarily affirmed the COA decision that the trial court erred in holding that Cohen & Malad should have sought recovery from the clients in 24 cases rather than from Daly or his new firm.

Indiana Tax Court

April 9

Tax – Sealed Records

ESPN Productions, Inc. v. Indiana Department of State Revenue

49T10-1312-TA-76

Because the records ESPN Productions Inc. seeks to keep from public disclosure in its appeal of taxes assessed against it contain trade secrets, the Indiana Tax Court granted the company’s request to put most of records at issue under seal. 

ESPN Productions is owned by ESPN Inc. and charges its parent company a production service fee. For the tax years ending in 2007 through 2010 it filed Indiana corporate income tax returns. But in 2012, the Department of State Revenue claimed that ESPN Productions owed additional taxes for those years. 

ESPN Productions appealed in 2013, and in 2015 it sought a court order that designated evidence in support of its motion for summary judgment that the records be put under seal. Those records are its Indiana Adjusted Gross Income Tax Returns filed for the years at issue, a copy of a production services agreement with ESPN, two cable television license agreements, and a copy of a document it refers to as its supplement to protest. 

Judge Martha Wentworth granted ESPN Production’s request, except as it relates to the company’s supplement to protest. The tax returns are allowed to be sealed under I.C. 5-14-3-4 and Indiana Administrative Rule 9. She held because the production services agreement and cable television licensing agreements contain trade secrets, those should also be mandatorily exempt from public disclosure under the Access to Public Records Act. 

She denied the request to put the supplement to protest under seal because it does not contain any business model or pricing information as ESPN Productions claimed; rather, it states the general purpose of the cable television license agreements themselves, which is information that is already readily ascertainable from the public documents filed in the case.

Indiana Court of Appeals

April 6

Mortgage – Foreclosure/Trial Rule 41(E)

Demetrius L. Grant, and Vickie O. Grant v. The Bank of New York Mellon Trust Co.

49A05-1404-MF-139

A bank won summary judgment in a refiled mortgage foreclosure suit against a bankrupt couple after its first complaint was dismissed, but the Indiana Court of Appeals slapped down the trial court ruling and dismissed the case.

“On the record before us, we find the Bank’s belated waiver argument disingenuous and without merit,” Judge Ezra Friedlander wrote for the panel.

The bank’s initial suit against Demetrius and Vickie Grant was dismissed after more than a year passed without prosecution. The Grants, who had lived in the house subject to the suit for more than 30 years, filed a Trial Rule 41(E) motion to dismiss the case, which a Marion Superior judge granted when the Grants appeared for a hearing but bank attorneys did not. The bank was denied a request to reinstate the suit, but two months later refiled a complaint that the appeals panel said restated identical issues.

The trial court granted summary judgment in favor of the bank on its second complaint, but the appeals court called the filing of that suit “improper. … This violated both T.R. 41 and principles of res judicata. Accordingly, the trial court erred when it granted summary judgment in favor of the Bank. The trial court is directed on remand to vacate the grant of summary judgment and dismiss the Bank’s complaint,” Friedlander wrote.

Under Trial Rule 41(B), the panel wrote in a footnote, “Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision or subdivision (E) of this rule … operates as an adjudication upon the merits. In this case … the dismissal of the First Foreclosure Action was with prejudice.”  

The panel of Friedlander and Judges Terry Crone and James Kirsch also took the bank to task in a footnote for citing to inapplicable authority.

“In support of its waiver argument, the Bank relies on a number of cases applying Indiana Appellate Rule 46(C), which provides that no new issues shall be raised in a reply brief. This rule applies to appellate briefs and, of course, has no applicability to trial court filings. We are perplexed by the Bank’s reliance on these cases with respect (to) the Grants’ summary judgment filings,” the panel concluded.
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April 8

Agency Action – Utility Rate Increase

NIPSCO Industrial Group and Indiana Office of Utility Consumer Counselor v. Northern Indiana Public Service Company, et al.

93A02-1403-EX-158

In the appeal of the Indiana Utility Regulatory Commission’s decision to approve rate increases requested by a northern Indiana utility group under a new statute, the Indiana Court of Appeals concluded the commission erred in approving a seven-year plan that only gave specifics about year one.

The commission approved two applications from Northern Indiana Public Service Co. to increase rates under I.C. 8-1-39, which allows a utility to petition for a tracker – a way to set rates – for certain proposed new or replacement electric or gas transmission, distribution or storage projects. The statute, known as a TDSIC statute, was enacted in 2013.

NIPSCO presented a seven-year plan pursuant to the statute, but only provided sufficient detail of the plan for year one. For the remaining years, the commission established a “presumption of eligibility” and required NIPSCO to annually update the plan through an informal process. The IURC also approved NIPSCO’s proposed rate increases. The Office of Utility Consumer Counselor and some of NIPSCO’s largest industrial customers appealed the IURC’s decision.

The COA agreed with the appellants that the commission erred by approving the seven-year plan given its lack of detail regarding all the years. In addition, the order established a presumption of eligibility regarding the undefined projects, and there does not appear to be any statutory support for establishing such a presumption. Judge Michael Barnes also wrote that such a presumption inappropriately shifts the burden of showing the project’s eligibility for TDSIC treatment from NIPSCO to other intervening parties.

The judges also held that the commission exceeded its statutory authority by allowing the adjustment of the rate allocation factors based on transmission and distribution considerations.  The COA affirmed in all other respects, including that the plain language of the statute allows an average 2-percent increase in a 12-month period, not during the entire seven-year plan as the appellants argued.

The case is remanded for further proceedings.
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April 10

Civil Tort – Evidence

M. Shane Faulkinbury, by his next friends/guardians John M. Faulkinbury and Olivia J. Faulkinbury v. Michael Broshears and BAM Outdoor, Inc.

29A05-1405-CT-234

A trial court abused its discretion when it did not allow a set of parents to introduce the affidavit from their son, who allegedly suffered a brain injury from an attack, after he was able to remember the night of the incident. The affidavit was submitted shortly after a final judgment was entered in their lawsuit against the alleged attacker. 

Michael Broshears and M. Shane Faulkinbury were involved in a minor traffic accident in 2005, but the parties dispute who caused the accident. Faulkinbury and his parents, who filed the lawsuit against Broshears as Faulkinbury’s guardians, claimed that Broshears exited his car and hit Faulkinbury over the head with a 2-by-4, which later rendered Faulkinbury incapacitated. Broshears disputes that he hit Faulkinbury and claims the man punched him in the face. 

The guardians sued Broshears and BAM Outdoor Inc., of which Broshears is the sole owner. He was driving a BAM truck on the night of the incident. The court record states that Broshears was romantically involved with Faulkinbury’s estranged wife. 

The lawsuit against BAM and Broshears filed in 2007 alleged that Broshears committed the torts of battery by vehicle, battery on Faulkinbury, trespass to chattel, and mischief. BAM filed a counterclaim alleging the same torts, but that Broshears was the one who was injured. BAM also argued the lawsuit was being litigated in bad faith. 

During the course of the litigation, Faulkinbury was unable to communicate or provide testimony as to the night of the incident. The trial court granted summary judgment for BAM and Broshears and entered final judgment on Feb. 7, 2014. Shortly thereafter, the guardians filed a motion to correct error asserting newly discovered evidence and attached affidavits from Faulkinbury’s doctor that he was now competent and could remember the night in question; from Faulkinbury’s mother regarding the decline in her son’s mental functions after the incident, and from Faulkinbury. 

The trial court denied the motion without holding a hearing or making findings, but the COA reversed.

“This evidence was relevant and material and was not cumulative of any other admissible evidence. Likewise, this was not merely impeaching evidence. Shane’s affidavit was the first personal, admissible affidavit that supported his version of the events on the night in question. Additionally, as set forth in the affidavits of Dr. Janicki and Mother, Shane’s mental state had prevented this evidence from being discovered until after the trial court entered its order; no amount of due diligence could have allowed Shane to swear the affidavit any sooner than he did. Furthermore, Dr. Janicki swore in his affidavit that Shane is now competent. In the absence of the trial court having made a determination that Shane is incompetent to testify, Shane’s affidavit is uncontested and worthy of credit, and at trial, he will have the opportunity to testify as to his version of the events. The factfinder will have the opportunity to weigh the evidence and judge Shane’s credibility. In light of this newly discovered evidence, we believe that Shane should have his day in court,” Judge James Kirsch wrote.

Criminal – Theft/Insufficient Evidence

Jeremy Middleton v. State of Indiana

10A04-1407-CR-317

A man accused of stealing a rangefinder from a southern Indiana Rural King had his conviction reversed by the Indiana Court of Appeals. The judges concluded there was insufficient evidence to support Jeremy Middleton’s conviction.

Employees became suspicious of Middleton and two companions who were in the Rural King, and department manager Roxanne Mundy began following Middleton. She saw him attempt to cut the security device from a product but could not identify that product. Middleton left the store and Mundy followed, as well as two other managers. Middleton claimed to have not stolen anything and an employee flagged down a police officer. Middleton took off running and was arrested.

He was convicted of Class D felony theft of a rangefinder and Class C felony intimidation, based on his pulling a knife from his pocket during the parking lot interaction with Mundy. Middleton only appeals the theft charge.

Taking out hearsay testimony, the evidence presented against Middleton amounts to Mundy’s statements that she followed him, she saw him use a knife on a security device, and he left the store. No evidence was presented to prove Middleton took a rangefinder, which was discovered under some animal feed. Employees who allegedly saw Middleton with a rangefinder were not called to testify.

Thus, there is not sufficient evidence from which a reasonable jury could infer Middleton knowingly or intentionally exerted unauthorized control over a rangefinder, the COA held.•