March 29, 2012 Indianapolis Law Club Presentation

(info) — Tue, 10 Apr 2012 10:08:18 -0500

On March 29th, 2012, Ron Waicukauski and Brad Catlin presented an update on Indiana law to the monthly meeting of the Indianapolis Law Club. You can download a copy of his handout at that presentation here. An audio version of his presentation can be downloaded here.

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Negligence Can Lead to Liability for the Criminal Acts of Another

(info) — Tue, 03 Apr 2012 10:54:33 -0500

April 3, 2012

The major news arising from the Indiana Court of Appeals' recent decision in Santelli v. Rahmatullah, ___ N.E.2d ___ (Ind. Ct. App. 2012), Cause No. 49A04-1011-CT-704, is hat is reflected in the title of this post: that the Court adopted Section 14 of Restatement (Third) of Torts, which deals with when a tortfeasor is liable for failing to protect another from the specific risk of an intentional tort. However, this decision deals with many other notable topics too, including post-trial procedure and evidentiary issues. It is safe to say that this case will be cited for a variety of points in years to come.

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Lessons:

A party's failure to object to object to a trial court's indication that it would take whatever time was necessary to issue a ruling is a tacit agreement that any time limitation does not apply.
A person who is liable to another based on a failure to protect the other from the specific risk of an intentional tort is jointly and severally liable for the share of comparative responsibility assigned to the intentional tortfeasor in addition to the share of comparative responsibility assigned to the person.
In an action concerning the quality of a motel's security, evidence of a police shootout at the motel six months earlier is admissible to show the foreseeability of criminal conduct at the motel.

Brad A. Catlin
Price Waicukauski & Riley, LLC
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Court Unconvinced by "You Haven't Said So Before"Argument

(info) — Tue, 03 Apr 2012 07:58:05 -0500

April 3, 2012

When I was an appellate clerk, one of my co-clerks commented on how most of the cases we dealt with were hard. My response was that the easy cases usually didn't make it to the appellate courts. For that reason, I've always felt that part of any appellate court's job in our common-law system is to make law. The Indiana Court of Appeals proved that point in Zeise & Sons Excavating, Inc. v. Boyer Const. Corp., ___ N.E.2d ___ (Ind. Ct. App. 2012), Cause No. 45A03-1104-PL-180.

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Lesson:

Equity, rather than law, governs piercing the corporate veil.

Brad A. Catlin
Price Waicukauski & Riley, LLC
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Behind the Scenes

(info) — Mon, 02 Apr 2012 15:29:25 -0500

April 2, 2012

We are currently in the process of moving the Indiana Law Update from one blogging platform to another. Our goal is to have all of the blog's internal links work on the new platform just like they work now. However, if you notice a dead link, please bring it to my attention so that we can fix it as soon as possible.

Thanks!

Brad A. Catlin
Price Waicukauski & Riley, LLC
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"Excusable Neglect" Is No Excuse for Filing an Untimely Response to a Rule 56 Motion

(info) — Mon, 02 Apr 2012 15:26:33 -0500

April 2, 2012

Trial Rule 56 provides that a response to a motion for summary judgment is to be filed within 30 days after service of the motion. Attorneys who miss this deadline try to find ways around it; the attorney in Delage Laden Fin. Servs., Inc. v. Community Mental Health Center, Inc., ___ N.E.2d ___ (Ind. Ct. App. 2012), Cause No. 15A05-1107-CC-366, is no exception. In order to save his client's case, counsel argued that Trial Rule 6(B)(2) gives him an opportunity to correct any mistake caused by excusable neglect. But while the trial court agreed, the Court of appeals did not.

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In this case, the plaintiff filed a complaint for breach of contract. On March 15, 2011, the plaintiff moved for summary judgment. On April 15, 2o11, that motion was set for a hearing on May 27, 2011. On May 27th, the defendant moved to continue the hearing date (which was granted) and moved for an enlargement of time to respond to the motion for summary judgment, citing Rule 6(B)(2), which allows a trial court to permit an act to be done upon motion made after the expiration of the time period for doing so if the failure to act was the result of excusable neglect. What was that excusable neglect? "CMHC's counsel stated that he had an inexperienced scheduling secretary who did not properly calendar the due date for the Response, and that he did not notice the failure to file a response until he reviewed his calendar for the week of May 27, 2011, and discovered the summary judgment hearing." That motion was eventually granted and the trial court denied the plaintiff's motion for summary judgment.

On appeal, the Court noted that both Rules 6 and 56 described procedures for obtaining an enlargement of time to respond to a motion. However, the Court found that Rule 56 was the more specific rule applicable to this situation.

Because Trial Rule 56 has its own enlargement of time provision, which applies only to Trial Rule 56 and is therefore the more specific of the two rules, it does not need to be exempted from Trial Rule 6(B)(2) because it is not subject to Trial Rule 6(B)(2) in the first instance. Thus, the fact that CMHC filed a motion for enlargement of time pursuant to Trial Rule 6(B)(2) and the non-movant in HomeEq did not is not a pertinent distinction because Trial Rule 6(B)(2) does not apply to summary judgment materials.

...

Because CMHC failed to file a response or request an extension within the prescribed time, the trial court had no discretion to alter the time limits in Trial Rule 56. CMHC's belated response should have been stricken and the trial court abused its discretion when it granted CMHC relief from its earlier judgment and allowed CMHC's response to be filed and considered on summary judgment.

Unsurprisingly, the Court found that once the defendant's response was stricken, there was not a genuine issue of material fact and, therefore, that the plaintiff was entitled to summary judgment.

In case it hasn't been emphasized enough, a court can't cut you slack if you fail to respond to a motion for summary judgment within 30 days.

Lesson:

A party's failure to respond to a motion for summary judgment within the time required by Rule 56 cannot be forgiven by reliance on excusable neglect.

Brad A. Catlin
Price Waicukauski & Riley, LLC
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No Summons Required When Seeking Judicial Review of Administrative Order

(info) — Mon, 02 Apr 2012 10:30:10 -0500

April 2, 2012

In Musgrave v. Squaw Creek Coal Co., ___ N.E.2d ___ (Ind. Ct. App. 2012), the Indiana Court of Appeals was asked to review a decision that originally arose from an administrative order. In doing so, it addressed an apparent issue of first impression dealing with how to initiate a review of an administrative order. To put it simply, you don't need to serve a summons with a petition for judicial review.

The Court also provided an example of when an argument is not estopped because of the manner in which a court enters its order.

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In this case, a former coal miner was challenging the DNR's decision to release certain portions of a reclamation bond on a coal mining operation. The coal miner's primary concern was with the actual or theoretical threat of pollution from industrial waste posed by the mining operation and whether the bind should be maintained to cover that threat. The DNR concluded that these threats were "not the type of impact anticipated by the bond release requirements."

The miner sought administrative review of this decision. The ALJ affirmed part of the DNR's decision, but vacated other parts of the DNR's order.

The coal company filed a verified motion for Judicial Review of the ALJ's order and served copies of that motion on the coal miner, the Indiana Attorney General, the DNR, and the Indiana Natural Resources Commission. The company sent the coal miner a summons with the petition, but did not send a summons to any of the other entities served. The trial court eventually reversed the ALJ's order and entered judgment in favor of the coal company and the DNR. The coal miner appealed.

On appeal, the coal miner argued that the trial court did not have jurisdiction because the coal company did not serve the motion for judicial review with a proper summons. The Administrative Orders and Procedures Act (AOPA) requires that a petition for judicial review be served "in the manner provided by the rules of procedure governing civil cases." I.C. § 4-21.5-5-8. The coal miner argued that this referred to the procedure to commence a civil action; the coal company argued it only referred to the procedure for properly affecting service. The Court agreed with the coal company.

AOPA states that a party shall serve “a copy of the petition for judicial review” and says nothing of a summons. The petition is therefore the only process required by AOPA. Just like Trial Rule 4, Indiana Code Section 4-21.5-5-7 lists the content requirements of the process (the petition) necessary under AOPA. Service of this process is then to be achieved in the manner provided for under the trial rule relevant to the particular party to be served, be it on an individual, organization, the Attorney General, or through a party’s attorney.

The Court went on to address the substance of the appeal. In doing so, it addressed one other topic worth mentioning, which dealt with collateral estoppel. On appeal, the coal company argued that the coal miner was collaterally estopped from challenging the bond release in question because he had challenged a different bond release on the same legal grounds. The Court held that collateral estoppel could not apply in this case because

The ALJ’s decision was clearly based upon two separate but individually sufficient grounds. The first was that the complaint challenged the release of the bond on Permit S-009 based on activities within the area covered by Permit S-008. The ALJ could have dismissed the Musgraves’ action without more. However, it went on to state that neither the DNR nor the Commission had jurisdiction to grant the requested relief over the waste that was dumped. This, too, could have independently supported dismissal. Because the jurisdictional question was one of two separate but independently sufficient grounds for dismissal, we cannot conclude that it was necessarily adjudicated in the prior proceeding. Consequently, it cannot be the basis of issue preclusion, and the trial court was correct to conclude that Musgrave is not collaterally estopped from challenging the release of the bond on Permit S-008.

Ultimately, the Court affirmed the trial court's substantive decision.

Lessons:

You do not need to issue a summons when petitioning for judicial review under AOPA.
An argument is not collaterally estopped if a court could have relied on a different argument when issuing an adverse decision.

Brad A. Catlin
Price Waicukauski & Riley, LLC
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Ambiguous Pollution Exclusion Leads to Coverage of Industrial Solvent Contamination

(info) — Sun, 25 Mar 2012 10:01:52 -0500

March 25, 2012

The Indiana Supreme Court has consistently found that pollution exclusion provisions in insurance policies are ambiguous because their definition "pollutant" encompasses "practically every substance." The question in State Auto. Mut. Ins. Co. v. Flexdar, Inc., ___ N.E.2d ___ (Ind. 2012), Cause No. 49S02-1104-PL-199, was whether the Court would enforce a pollution exclusion provision when the pollution in question was caused by an industrial chemical solvent. A very divided court found that the pollution exclusion provision was unenforceable.

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Flexdar operated a manufacturing facility in Indiana. After operating the facility for a number of years, Flexdar discovered that TCE, a chemical solvent, was present in the soil and groundwater both on and off the site. Flexdar requested that State Auto, with which it had CGL and umbrella policies, indemnify it. A lawsuit ensued.

On appeal, the Court noted that it had dealt with pollution exclusion provisions like the one at issue here before. In each of these cases, "pollutant" was defined similarly, using the following type of definition: "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed." For example, in American States Ins. Co. v. Kiger, 662 N.E.2d 945 (Ind. 1996), the Court found that this definition was ambiguous and, therefore, that leakage of gasoline from a gas station's underground storage tanks was not excluded under this provision.

State Auto argued that the Court should adopt a "common sense approach" and find that the TCE release should be covered as such a release would "ordinarily be characterized as pollution." A majority of a divided court (only two justices concurred fully with the "majority" opinion; one concurred in judgment only; two dissented) rejected this approach. While acknowledging that other courts have approached the issue differently, the Court held that "pollutant" is ambiguous and "[W]here an insurer's failure to be more specific renders its policy ambiguous, we construe the policy in favor of coverage. ... In Indiana, whether the TCE contamination in this case would 'ordinarily be characterized as pollution,' is, in our view, beside the point. The question is whether the language in State Auto's policy is sufficiently unambiguous to identify TCE as a pollutant."

The dissent found that TCE contamination

obviously meets "the ordinary understanding of pollution harms" and is clearly related "to the concerns that give rise to the exclusion." In point of fact, Flexdar's business is based on neither the sale nor the storage of trichloroethylene; enforcing the exclusion in no way deprives Flexdar of coverage for its exposure to the ordinary tort risks of its business.

I expect that many insureds will cite this case to argue in favor of coverage, given the majority's rationale. It will be interesting to see how courts apply this decision in other contexts in the future.

Lesson:

Where an insurer's failure to be more specific renders its policy ambiguous, courts construe the policy in favor of coverage

Brad A. Catlin
Price Waicukauski & Riley, LLC
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You Can Designate New Evidence in a Reply During Summary Judgment

(info) — Sun, 25 Mar 2012 08:15:25 -0500

March 25, 2012

Last week, the Indiana Court of Appeals clarified one aspect of the procedure surrounding summary judgment in Auto-Owners Ins. Co. v. Benko, ___ N.E.2d ___ (Ind. Ct. App. 2012), Cause No. 75A04-1108-CT-440. The Court also addressed the application of the statute of limitations in a UIM action.

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A woman was injured in an automobile accident when her vehicle was struck from behind. The woman sued the tortfeasor, who offered to settle for policy limits more than two years after the accident. The woman first notified her insurance company of the possible UIM claim after this. Auto-Owners argued that her claim was time-barred and filed a claim for declaratory judgment.

The woman filed a motion for summary judgment, to which Auto-Owners responded. The woman then supplemented her motion with new evidence without first seeking leave of court. The supplemental evidence consisted of portions of a deposition that was both taken after the motion for summary judgment was filed and cited in Auto-Owners' response. Auto-Owners moved to strike this evidence, but that motion was denied. The trial court then granted the motion for summary judgment.

On appeal, Auto-Owners challenged the woman's ability to designate supplemental evidence in the context of a motion for summary judgment. The Court noted that Trial Rule 56 neither authorizes nor prohibits reply briefs.

In the absence of any language in Trial Rule 56 explicitly prohibiting reply briefs and such designations and in light of these facts and circumstances, we cannot say the trial court erred in denying Auto-Owners's motion to strike.

The Court then turned to the timeliness of the woman's UIM claim. The policy contained the following provision concerning time limits:

a. TIME LIMITATION FOR ACTIONS AGAINST US

Any person seeking Uninsured or Underinsured Motorist Coverage must:

(1) present a claim for compensatory damages according to the terms and conditions of the policy; and

(2) conform with any applicable statute of limitations applying to bodily injury claims in the state in which the accident occurred.

The Court found that this provision did not require that insureds file a UIM claim within two years of the accident.

In light of the plain language of these provisions, we think that an ordinary policyholder would interpret the Provision as requiring them to bring a claim for bodily injury against the alleged tortfeasor within the applicable statute of limitations, thereby protecting Auto-Owners's subrogation rights, and reimburse Auto-Owners out of the proceeds to the extent of Auto-Owners's prior payments. Otherwise, policyholders are basically required to bring a claim against Auto-Owners at the same time that they bring a claim against the alleged tortfeasor. While we recognize that this may have been AutoOwner's intent, it should have stated so in plain English in its policy documents so that its policyholders know how to protect their interests and collect their benefits.

Given its conclusions, the Court affirmed the trial court's order granting summary judgment.

Lessons:

A party who has moved for summary judgment may file a reply brief that designates additional evidence under Trial Rule 56.
Courts will not encourage insureds to file UIM claims at the same time that they file a complaint against a tortfeasor.

Brad A. Catlin
Price Waicukauski & Riley, LLC
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Party Can Be in Contempt, Even if the Order Is Not as Clear as It Could Have Been

(info) — Fri, 23 Mar 2012 12:51:53 -0500

March 23, 2012

An attorney and his client were held in contempt for violating a court order. They challenged that finding in a variety of ways, which gave the Indiana Supreme Court an opportunity to clarify contempt law in Witt v. Jay Petroleum, Inc., ___ N.E.2d ___ (Ind. 2012), Cause No. 38S02-1110-CV-608. The decision shows that the Court approaches these issues in a practical way.

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The contempt citation arises from a lawsuit over the costs of an environmental cleanup. During the course of that litigation, the trial court issued a TRO prohibiting the plaintiffs from "conducting UST removal, soil excavation, or other environmental investigation and remediation activities on the Property" until a preliminary injunction hearing could take place. When this order was entered, the plaintiffs had already been engaged in some of the activity described in the order, which left large holes in the ground. The plaintiffs and their counsel decided that the order did not prevent them from filling in these pits for safety purposes, so they filled the pits. A defendant moved to have the plaintiffs and their counsel held in contempt and, after a hearing, the trial court granted that motion.

On appeal, the plaintiffs argued that they could not be found in contempt because the TRO was not decided under the correct legal standard. The Court rejected this argument, noting that "[a]n order of the court is only unenforceable when the court lacked jurisdiction" and that plaintiffs had not appealed the order in question.

The plaintiffs next argued that they did not willfully violate the TRO because it could have contained language that made it clear that it would be a violation to fill in th pits.

We think the terms clearly indicate that the trial court was ordering the work on the property to cease until a hearing could be held. Witt and Shere assert that a "catch-all" phrase could have been included in the TRO to ensure that there was a complete work stoppage. While this may have improved the clarity of the order, we find that its omission did not render the TRO ambiguous. The court's order explicitly enjoined and restrained Witt, Shere, and Hydrotech from "soil excavation, or other environmental investigation and remediation activities." We conclude that this was sufficiently clear and certain to unambiguously direct the cessation of all further activities by Witt, Shere, and Hydrotech at the site.

The plaintiffs then challenged the sanctions imposed, which included attorney's fees for the preliminary injunction hearing (which was separate from the contempt hearing). The Court again disagreed because "the parties chose to rely on the evidence presented at the preliminary injunction hearing in their briefs relating to the motion for contempt."

This opinion is enlightening in two respects. First, it is interesting that the Court did not reject the plaintiffs' first argument by stating that disagreement with a Court order is not a justification for failing to comply with that order. The Court's rationale would allow someone to disobey a court's order, provided that the person could either prevail on an appeal from the disobeyed order or prove that the court did not have jurisdiction to enter the order. I doubt that this is a result that the Court would like, but it did not foreclose that possibility here.

Second, the fact that the plaintiffs were held in contempt despite the fact that the order did not specifically prohibit the plaintiffs from filling in the pits shows that the Court will not apply an overly legalistic structure to contempt proceedings. Orders need not be models of clarity in order for someone to be found in contempt. Attorneys should keep this in mind when advising clients about the actions they can and cannot take pursuant to a court order.

Lessons:

The fact that a party disagrees with an order does not justify disobeying that order.
A party can be found in contempt of an order if it is sufficiently clear and certain that the conduct at issue was prohibited.

Brad A. Catlin
Price Waicukauski & Riley, LLC
Learn more about Brad and contact us

The Governor Can't Be Forced to Testify

(info) — Fri, 23 Mar 2012 12:11:27 -0500

March 23, 2012

It is common knowledge within the legal community that IBM and the State of Indiana are involved in a contractual dispute. IBM sought to depose the Governor, arguing that he had "unique personal first-hand knowledge or experience in the management of a project of such magnitude as this IBM contract." The problem is that I.C. § 34-29-2-1 provides that the Governor is "privileged from arrest on civil process, and from obeying any subpoena to testify." Despite this privilege, the trial court eventually granted a motion to compel the Governor's deposition, with limitations. That decision was appealed to the Indiana Supreme Court.

In State of Indiana v. Intern. Bus. Machines Corp., ___ N.E.2d ___ (Ind. 2012), Cause No. 49S00-1201-PL-15, the Court reversed the trial court's decision. It found the parties' semantic arguments concerning the difference between a subpoena and a notice of deposition to be "of no moment. ... We thus agree with the trial court's original declaration that the statute 'clearly precludes a deposition of a sitting governor.'" The Governor's privilege is "absolute" and the Court refused "to elevate a strict literal meaning of the word 'subpoena' over clear Legislative intent to provide a gubernatorial privilege against compelled testimony."

The Court's rationale should apply to all other people described in I.C. § 34-29-2-1, so this holding will apply outside of the limited times that a party could legitimately believe that they should be allowed to force the Governor to testify.

Lesson:

The privileges in I.C. § 34-29-2-1 are absolute and the Court will not water them down through semantic arguments.

Brad A. Catlin
Price Waicukauski & Riley, LLC
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