114 N.E.3d 36
Ind. T.C.2018Background
- Sahara Mart, a two-store Bloomington grocery operator, was audited and initially assessed ~$6.8M in Indiana sales tax for 2013–2015; after a supplemental audit assessments were reduced to ~$1.5M and Sahara Mart filed an appeal.
- Department deposed owner Javad Noorihoseini; he testified the stores were run by unpaid family/volunteers, had no employees, and that substantial amounts of alcohol went unsold and destroyed.
- The Department investigated and obtained affidavits from four individuals who stated they were paid employees (mostly cash) during the years at issue and denied any alcohol destruction; some affiants said Noorihoseini later sought their “cooperation” and offered payment.
- The Department moved for sanctions and contempt, alleging perjury and witness tampering, and asked for dismissal with prejudice and attorney’s fees; a show-cause hearing was held.
- Sahara Mart largely attacked admissibility of evidence (Rule 408, unsigned deposition, affidavits) rather than rebutting substance; the court admitted the challenged evidence (with limited strikes) and found perjury and witness tampering.
- Court dismissed the case with prejudice and awarded the Department $45,000 in attorney’s fees for the period from the day after the deposition through the show-cause hearing.
Issues
| Issue | Plaintiff's Argument (Sahara Mart) | Defendant's Argument (Department) | Held |
|---|---|---|---|
| Use of settlement communications (Evid. R. 408) | Dept. violated Rule 408 by referencing settlement discussion; Motion should be dismissed | References merely notified Sahara Mart of investigation; attorney statements are not evidence and fall under Rule 408(b) exception | Denied; references were not used to prove claim value and were attorney statements, not evidence |
| Use of unsigned deposition (T.R. 30(E)) | Deposition not signed/certified by reporter; must be stricken for lack of T.R. 30(E)(4) certificate | Deposition was sent to deponent April 11; plaintiff failed to timely move to suppress and made no claim of transcription inaccuracy | Denied; objection untimely under T.R. 32(D)(4) and substance was not disputed |
| Admissibility of affidavits (hearsay, speculation, attachments, relevance) | Affidavits are hearsay, contain legal conclusions/speculation, have incomplete/unauthenticated attachments, and contain irrelevant/inflammatory material | Affidavits recount firsthand employment/pay details, attachments support tampering allegations, and statements are relevant to material facts | Mostly denied; court struck limited hearsay paragraphs but admitted remainder as relevant firsthand evidence (attachments not stricken) |
| Contempt: perjury & witness tampering; appropriate sanction | Sahara Mart disputed evidentiary use but did not rebut substance; argued fees should be limited and proposed small sanction | Evidence shows false sworn statements about no employees and attempts to influence witnesses; severe sanction warranted | Court found perjury and witness tampering, held Sahara Mart in contempt, dismissed the appeal with prejudice, and awarded $45,000 in attorney’s fees |
Key Cases Cited
- Witt v. Jay Petroleum, Inc., 964 N.E.2d 198 (Ind. 2012) (discusses contempt undermining court authority)
- Duemling v. Fort Wayne Cmty. Concerts, Inc., 188 N.E.2d 274 (Ind. 1963) (distinguishes civil vs. criminal contempt and remedies)
- Jacob v. Chaplin, 639 N.E.2d 1010 (Ind. 1994) (purpose of discovery rules)
- Whitaker v. Becker, 960 N.E.2d 111 (Ind. 2012) (discovery promotes disclosure and settlement)
- Prime Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628 (Ind. Ct. App. 2008) (forgery, false testimony and related conduct can constitute discovery failure)
- Ramirez v. T&H Lemont, Inc., 845 F.3d 772 (7th Cir. 2016) (witness tampering warrants substantial sanction)
- Brady v. U.S., 877 F. Supp. 444 (C.D. Ill. 1994) (false testimony in formal proceedings is intolerable and may justify dismissal)
- City of Gary v. Major, 822 N.E.2d 165 (Ind. 2005) (courts’ inherent power to sanction to protect judicial process)
- Noble Cty. v. Rogers, 745 N.E.2d 194 (Ind. 2001) (inherent power to enforce court orders and hold contempt)
- Montano v. City of Chicago, 535 F.3d 558 (7th Cir. 2008) (perjury may warrant dismissal as fraud on the court)