Indiana Supreme Court: Expert’s Professional Discipline History May be Admissible

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Today marks the 200th entry on the Hoosier Litigation Blog. In honor of that achievement, this is the first of three posts today and one of two that revisit prior discussions and stem from recent rulings out of the Indiana Supreme Court. First up, we return to two cases we discussed before: Morrison v. Vasquez and Indiana University Health Southern Indiana Physicians, Inc. v. Noel. Decided just over two months apart from each other, the divergence in rulings created a split in panels from the Court of Appeals of Indiana on the question of whether the location of a company’s registered agent could serve as a basis for preferred venue under Indiana Trial Rule 75(A)(4) in light of the enactment of Indiana Code § 23–0.5–4–12, which states, “The address of the agent does not determine venue in an action or a proceeding involving the entity.” Following transfer and consolidation of both cases to the Indiana Supreme Court, we now have a definitive answer.

Before we delve into the Indiana Supreme Court’s decision, there are a handful of other recent cases that merit some attention.

Other Notable Decisions

In IBM v. State of Indiana, the Indiana Supreme Court, the court’s majority took up only the issue of when interest on IBM’s judgment against the state should have begun to accrue. Although the State of Indiana had obtained a higher judgment against IBM than it had against the State, the issue turned on at what point interest began to accrue. The Indiana Supreme Court concluded that interest did not accrue as of the 2012 judgment, rather, it began to accrue only after remand from a prior appeal that addressed that judgment.

In Brewer v. PACCAR, Inc., the Indiana Supreme Court ruled that an Indiana Products Liability Act claim could advance against the manufacturer of a semitruck glider kit for failure to include safety features even though the manufacturer did not sell the finalized semitruck because the kit did not include the engine, transmission, and exhaust system.

The Indiana Court of Appeals also handed down many important decisions. Estate of Benefiel v. Wright Hardware Co. concluded that it was reversible error for a defense expert to be permitted to read verbatiman email with a person from the entity that drafted applicable safety codes that concerned a disputed definition because the expert was not calling upon his expertise and was merely serving as a conduit for admission of hearsay testimony.

Also presenting to the court of appeals was a case stemming from apparent food poisoning at a restaurant. The three most important takeaways from the decision were: (1) that the trial court correctly provided a spoliation instruction advising the jury that it may presume that any evidence within the control of the restaurant that was not produced to the plaintiff would have been unfavorable to the defendant because the restaurant was timely on notice of its obligation to preserve even though there was no evidence of intentional destruction or suppression of the evidence; (2) that the doctrine of res ipsa loquitor can be applied to food poisoning actions; and (3) that the Indiana Products Liability Act does not apply to a restaurant that merely receives a chicken wing and heats it before serving it to its customers.

At issue in Martinez v. Oaklawn Psychiatric Ctr., Inc. was whether an altercation between an employee of an inpatient mental-illness treatment facility and a patient was governed by the Indiana Medical Malpractice Act. Notably, the patient died as a result of the altercation. After thoroughly analyzing Indiana caselaw on the question of what is and what is not governed by the Act and noting the often hairline distinctions that define that line, the court of appeals concluded that this instance was subsumed by the Act.

Finally, the decision in River Ridge Development Authority v. Outfront Media, LLC provides excellent commentary from the Indiana Court of Appeals on an extremely common practice:

We note that the trial court adopted Appellees’ proposed findings of fact and conclusions of law verbatim. “This practice weakens our confidence as an appellate court that the findings are the result of considered judgment by the trial court.” It is not uncommon or per se improper for a trial court to enter findings that are verbatim reproductions of submissions by the prevailing party. “Although we by no means encourage the wholesale adoption of a party’s proposed findings and conclusions, the critical inquiry is whether such findings, as adopted by the court, are clearly erroneous.”

We have significant concerns about some of the trial court’s findings. There was no weighing of the evidence demonstrated in the findings. Rather, many of the findings are merely unsupported accusations, argumentative, and inappropriate. Although the trial court has wide discretion in weighing evidence and entering findings, the completely one-sided nature of the findings of fact and conclusions of law in this case gives us pause.

Can the Registered Agent Dictate Venue?

We turn now to the Indiana Supreme Court’s ruling in the consolidated Morrison and Noel cases. Our prior discussions thoroughly outlined the backdrop of Indiana law. Put simply, the question is whether the provision of Indiana Trial Rule 75(A)(4), permitting preferred venue in a “county where either the principal office of a defendant organization is located or the office or agency of a defendant organization or individual to which the claim relates or out of which the claim arose is located, if one or more such organizations or individuals are included as defendants in the complaint[.]” Following the Indiana Supreme Court’s 2006 decision in American Family Insurance Co. v. Ford Motor Co., the answer was clear that “principal office” meant the location of the registered agent. With the recent, massive overhaul of Indiana’s business statutes, a new provision of the Indiana Codenow states, “[t]he address of the agent does not determine venue. . . .”

If you think the change in the statute terminates the issue, then you are in good company with the Indiana Supreme Court majority. If, however, you think that the General Assembly cannot alter the Indiana Trial Rules by passage of a statute, then you are in the company of me and dissenting Justice Slaughter.

A key to the majority’s decision was to distinguish American Family as applying only to foreign companies without an office in Indiana. The majority then determined that the new statute applies to both foreign and domestic corporations. Put succinctly, the majority “h[e]ld that in light of new business corporation statutes, the location of the registered agent no longer determines preferred venue for either domestic or foreign corporations.”

The decision drew an ardent dissent from Justice Slaughter, with which I fully agree:

The Court holds that a defendant organization’s “principal office” for preferred-venue purposes should be the county where it maintains its headquarters, not where its registered agent is located. As a policy matter, that outcome makes eminent sense to me, especially in light of recent changes to Indiana’s business-organizations law. I am unable to join the Court’s opinion, however, because the better way to effectuate that policy change is by formally amending our trial rules and not reinterpreting them by judicial fiat with retroactive application. But until that happens—until we amend our rules to provide for such change—I would continue to follow the understanding of “principal office” that has prevailed for nearly fifty years. On this record, that means both plaintiffs should be able to proceed with their respective suits in Marion County. Thus, I would affirm the trial court in Noel and reverse in Morrison.

Since 1970, litigants and lower courts have understood “principal office” in Trial Rule 75 to refer to the location of a defendant organization’s registered agent. Years later, we reinforced this understanding in American Family Insurance Company v. Ford Motor Company, in holding that Ford’s principal office for venue purposes is Marion County because that is where its registered agent is located. Despite this longstanding application, the Court today reverses course. It says that American Family applied only to foreign corporations, as if “principal office” in Rule 75 means one thing for a domestic organization and something else for a foreign organization. That conclusion finds no support in the text of Rule 75 and is contrary to both the rationale of American Family and the opinion’s opening words: “We hold that the term ‘principal office’ as used in subsections (4) and (10) of Trial Rule 75(A) refers to a domestic or foreign corporation’s registered office in Indiana.”

Nothing in Rule 75 compels today’s decision. The rule nowhere says “principal office” means something different depending on an organization’s foreign or domestic status. What prompts today’s about-face, rather, is a 2018 legislative change that now defines “principal office” to refer to an organization’s “principal executive office”. Elsewhere, the statute purports to dictate to us that the address of an organization’s registered agent “does not determine venue in an action or a proceeding involving the [organization].”

As we have long held, our rules governing the practice and procedure in our courts prevail over any conflicting statute. “On matters of procedure, to the extent a statute is at odds with our rule, the rule governs.” The Court acknowledges that the disputed venue statutes here are “procedural in nature.” But it nevertheless concludes that these statutes somehow “do not conflict with our trial rules.” The conflict is self-evident. Our longstanding interpretation of “principal office” refers to the registered agent’s location, which on this record is Marion County for both plaintiffs. The statutes, however, purport to dictate the opposite result—that Marion County is not a county of preferred venue for either plaintiff because, according to the statute, “[t]he address of the [registered] agent does not determine venue in an action or a proceeding” involving an organization. These irreconcilable results mean the statutes must yield to our rule. I would apply Rule 75 as it has long been understood and hold that Marion County—where IU Health’s registered agent is located—is a preferred venue in both Noel and Morrison.

Despite my continued agreement with Justice Slaughter, the simple fact is that the majority’s holding is now the law of the land: registered agents are no longer a basis for determining preferred venue under Trial Rule 75(A)(4).

Join us again next time for further discussion of developments in the law.

Sources

• Morrison v. Vasquez, 124 N.E.3d 1217 (Ind. 2019) (David, J.; Slaughter, J., dissenting).
• IBM v. State, 138 N.E.3d 255 (Ind. 2019) (David, J.; Slaughter, J., concurring in part and dissenting in part).
• Brewer v. PACCAR, Inc., 124 N.E.3d 616 (Ind. 2019) (Rush, C.J.).
• Estate of Benefiel v. Wright Hardware Co., 128 N.E.3d 485 (Ind. Ct. App. 2019) (Riley, J.).
• Golden Corral Corp. v. Lenart, 127 N.E.3d 1205 (Ind. Ct. App. 2019) (Altice, J.).
• Martinez v. Oaklawn Psychiatric Ctr., Inc., 128 N.E.3d 549 (Ind. Ct. App. 2019) (Mathias, J.).
• River Ridge Dev. Auth. v. Outfront Media, LLC, 129 N.E.3d 239 (Ind. Ct. App. 2019) (Tavitas, J.).
• Am. Family Ins. Co. v. Ford Motor Co., 857 N.E.2d 971 (Ind. 2006) (Boehm, J.).
• Ind. Code § 23–0.5–4–12.
• Colin E. Flora, Indiana Court of Appeals Rules Location of Registered Agent No Longer Basis for Preferred Venue, Hoosier Litig. Blog (Aug. 31, 2018).
• Colin E. Flora,Indiana Court of Appeals Now Split on Whether Location of Registered Agent Sufficient for Preferred Venue, Hoosier Litig. Blog (Nov. 8, 2018).

*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.