Virginia GARWOOD and Kristen Garwood, Appellants-Plaintiffs, v. STATE of Indiana, et al., Appellees-Defendants.
Court of Appeals Case No. 31A01-1603-CT-679
Court of Appeals of Indiana.
June 5, 2017
For these reasons, we reverse the order of the trial court which concluded that nurse Swartz could not testify as an expert witness, and we remand for proceedings consistent with this opinion.
Reversed and remanded.
Kirsch, J., and Altice, J., concur.
ATTORNEYS FOR APPELLEE: Curtis T. Hill, Jr., Attorney General of Indiana, David L. Steiner, Frances Barrow, Deputy Attorney General, Indianapolis, Indiana
Mathias, Judge.
Mother and daughter Virginia and Kristen Garwood (“Virginia,” “Kristen,” collectively, “the Garwoods“) ran a dog-breeding business from their Harrison County, Indiana, dairy farm. On June 2, 2009, the Indiana Department of Revenue (“DOR“), in concert with the Office of the Indiana Attorney General (“OAG“) and the Indiana State Police (collectively, “the State“), raided the Garwoods’ farm and seized and immediately sold more than two hundred dogs in partial satisfaction of the Garwoods’ unpaid sales and income tax liability.
The Garwoods sued a large number of public and private defendants in Harrison Circuit Court for federal constitutional and state-law torts arising from the raid. The Garwoods found success against only one: Andrew Swain (“Swain“) in his personal capacity, then chief counsel for tax litigation in OAG, against whom a Harrison County jury entered a $15,000 verdict. The Garwoods now appeal and seek a new trial. The State cross-appeals and seeks reversal of the judgment against Swain.
We reverse the judgment against Swain as unsupported by sufficient evidence. We affirm the trial court in other respects.
Facts and Procedural Posture
I. The Raid of June 2, 2009, and Events Leading to It
Stated in the terms most favorable to the Garwoods and the judgment against Swain, and incorporating a decision of the Indiana Tax Court regarding the principals of this case, the events of and leading to June 2, 2009, may be summarized as follows. In 2007, dairy prices fell, and the Garwoods’ dairy farm became less profitable. The Garwoods started breeding dogs for retail sale to make up the lost income. Without malicious intent, they did not register with the Indiana Secretary of State or DOR as retail merchants. They did not collect sales tax on the dog sales or remit sales tax to DOR, and they incompletely or incorrectly reported their income from the sales. They cared for their dogs properly and sold them responsibly.
In February 2009, the Harrison County animal control officer told Swain he thought the Garwoods’ dog-breeding business was unregistered and did not collect or remit sales tax. The officer had received a complaint from one of the Garwoods’ alleged customers about a sick dog. Swain relayed the message to OAG‘s investigations section and asked DOR to investigate the Garwoods’ tax status.
It was determined that the Garwoods were in fact selling dogs through advertisements in local newspapers but had not registered as retail merchants or remitted sales tax. OAG investigators incognito purchased two puppies from the Garwoods using funds supplied by the Humane Society of the United States (“the Humane Society“), a private animal-rights organization. Swain had first worked with the Humane Society while pursuing another unregistered, non-remitting dog-breeder for unpaid tax liability. The Garwoods did not collect sales tax on the sale to the investigators.
A jeopardy assessment, as summarized by Swain,
is an extraordinary tax remedy. Normally when . . . [DOR] . . . says that you owe tax, . . . what‘s called a proposed assessment [is] issued. The proposed assessment may go through several stages of administrative and judicial review before it becomes a final, collectible judgment. . . . What a jeopardy assessment is designed to do is that if various criteria are satisfied to the Commissioner‘s satisfaction, [DOR] . . . can issue an immediate tax warrant that turns automatically into a tax judgment which is immediately collectible.
Tr. pp. 283-84. In particular, Swain‘s interpretation of the jeopardy assessment statute‘s criteria hinged on the argument that the Garwoods’ failure to register, collect, and remit in itself constituted an “act that would jeopardize the collection of . . . taxes.”
The State‘s investigation prior to this extraordinary enforcement action was not as thorough as it could have been and gave the Garwoods little or no benefit of the doubt. In estimating the Garwoods’ tax liability by the “Best Information Available” (“BIA“) assessment procedure, DOR staff used the least conservative estimate of the Garwoods’ sales and income, and assessed the maximum penalty for delinquency. The State never sought the Garwoods’ co-operation with its investigation.
DOR and OAG arrived at the Garwoods’ farm early on the morning of June 2, 2009, and demanded payment of the assessed liabilities. When the Garwoods said they could or would not pay, State officers seized around 240 dogs, including several family pets, in a dramatically staged raid involving a large media presence, a state legislator, and a group of volunteers enlisted and directed by the Humane Societies of the United States and of Missouri. The dogs were sold to the Humane Society the next day for $300, less than $2 per dog, a negligible amount relative to the nearly $300,000 figure alleged by DOR as the Garwoods’ outstanding tax liability.
II. Proceedings in Harrison Circuit Court
On June 2, 2009, the morning of the raid, a DOR investigator presented the jeopardy assessments to the Garwoods, Ex. Vol. II, Defs.‘s Ex. B., pp. 312-27, and demanded immediate payment of the amounts assessed. When the Garwoods said they could or would not pay, jeopardy tax warrants2 in those amounts were filed in Harrison Circuit Court, id. pp. 328-337, and then presented to the Garwoods before seizure of the dogs. Tr. p. 296.
The same day, DOR petitioned Harrison Circuit Court for temporary and permanent restraining orders and an injunction against the Garwoods continuing to do business in the state. See
On June 8, 2009, DOR filed in the circuit court a petition for proceedings supplemental, presumably to collect on the outstanding balance of the judgment created by the tax warrants. See
The complaint in the instant case was filed in the circuit court on May 16, 2011, the procedural history of which is detailed below. See infra Part V.
III. Proceedings in Marion Superior Court
On May 29, 2009, three days before the raid, the OAG sought a search warrant
On June 22, 2009, the State charged the Garwoods with eight counts of tax evasion by information filed in Marion Superior Court, Ex. Vol. II, Defs.‘s Ex. I. On May 18, 2010, Virginia pleaded guilty to Class D felony evasion of income tax and Class D felony failure to remit or collect sales tax; Kristen pleaded guilty to Class D felony evasion of income tax. Both women admitted that the facts contained in the probable cause affidavit and information were true and served as the factual basis for their pleas. Ex. Vol. II, Defs.‘s Ex. G, p. 360 (Kristen‘s plea agreement), Defs.‘s Ex. H, p. 364 (Virginia‘s plea agreement). The Garwoods were sentenced the same day, and their sentences were suspended to probation.3
IV. Proceedings in the Tax Court
On June 10, 2009, the eighth day after the raid and two days after DOR initiated proceedings supplemental in Harrison Circuit Court, the Garwoods protested the jeopardy assessments administratively to DOR and requested a hearing. See
On June 29, 2009, less than three weeks after they lodged their protest, and a week after DOR denied the requested hearing, the Garwoods sought judicial review of the jeopardy assessments in the tax court. On both parties’ motion, proceedings were continued until October 20, 2010, when DOR moved to dismiss for lack of subject matter jurisdiction. DOR read Deaton incorrectly, see supra p. 211 note 2, to mean that its jeopardy tax warrants had become final judgments of Harrison Circuit Court and could not be challenged in the tax court. The tax court disagreed. Garwood v. Ind. Dep‘t of State Revenue (Garwood I), 939 N.E.2d 1150, 1154 (Ind. T.C. 2010). The tax court held further that the Garwoods’ administrative remedies with respect to the jeopardy assessments
DOR and the Garwoods each moved for summary judgment. The Garwoods claimed that the jeopardy assessments were invalid because DOR had denied them constitutional due process in refusing to hold the hearing requested. On August 29, 2011, the tax court avoided the constitutional question and held instead that DOR had exceeded its authority under the jeopardy assessment statute. Garwood v. Ind. Dep‘t of State Revenue (Garwood II), 953 N.E.2d 682, 684 (Ind. T.C. 2011). The tax court held the Garwoods’ mere failure to register, collect, and remit did not in itself rise to an “act that would jeopardize the collection of taxes.” Id. at 688 (quoting
DOR sought transfer to our supreme court. On March 16, 2012, transfer was granted but vacated as improvident on May 15, 2012, after briefing and argument. Ind. Dep‘t of State Revenue v. Garwood, 966 N.E.2d 1258 (Ind. 2012) (mem.). That was the end of the jeopardy assessment protest.
On August 23, 2011, ten days after the tax court decided Garwood II and declared the jeopardy assessments void, Virginia sought a tax refund from DOR, claiming the dogs seized by DOR were worth far more than her actual tax liability and she was therefore owed the difference: more than $100,000. On May 29, 2012, two weeks after our supreme court vacated its grant of transfer in Garwood II, DOR offered Virginia a little over $100. DOR then issued proposed assessments, the normal mechanism for challenging a taxpayer‘s self-reported tax liability, see
DOR again moved to dismiss for lack of subject matter jurisdiction and on the basis that the same action, the case before us now, was pending in Harrison Circuit Court. See
V. Proceedings in This Case
The Garwoods filed their initial complaint in this case in Harrison Circuit Court on May 19, 2011, three months be-
On July 3, 2012, within two months of our supreme court‘s decision to vacate transfer in Garwood II, the Garwoods filed their second amended complaint. That complaint pleaded seven claims against fifty-six defendants. The Garwoods alleged the state-law torts of conversion, defamation, and intentional infliction of emotional distress (“IIED“). Under
These claims were brought against numerous employees of DOR and OAG, Zoeller himself, the state legislator, and state police officers, all in their personal and official capacities, as well as the state police and the State of Indiana (“the State defendants“); the Harrison County animal control officer and the county itself (“the County defendants“); employees of the Humane Societies of the United States and Missouri, and the organizations themselves (“the Humane Society defendants“); and several private parties (“the Private defendants“).
By January 2015, several State defendants and most or all the Humane Society, County, and Private defendants had been dismissed by agreement of the parties, and the remaining State defendants moved for summary judgment. The State argued the Fourth Amendment, procedural due process, equal protection, and conspiracy claims failed; the defendants were entitled to official immunity in their personal capacities and not subject to suit in their official capacities; and the tax court had exclusive jurisdiction over the subject matter of the suit. Appellee‘s App. pp. 2-41. On January 29, 2015, the trial court entered judgment as a matter of law in favor of the State on the § 1985 conspiracy claim, the defamation claim, and all official capacity claims under § 1983. The remaining issues were to be tried; the jurisdictional issue was not addressed.
The Garwoods tried their case to a Harrison County jury over six days, February 22, 2016, to February 29, 2016, against eleven State defendants; one was dismissed by agreement during trial. Between summary judgment and trial, the Garwoods appear to have abandoned their Fourth Amendment claim in favor of a substantive due process claim under the Fourteenth Amendment. All over the Garwoods’ strident objections, the trial court declined to give preclusive effect to Garwood II and admitted only the opinion‘s clear holding invalidating the jeopardy assessments; admitted the jeopardy assessments; admitted the jeopardy tax warrants; admitted the Garwoods’ plea agreements in the criminal case and a transcript of the Garwoods’ May 18, 2010, change of plea hearing in Marion Superior Court; and refused the Garwoods’ proffered final instruction that a void judgment is, “from its inception, a complete nullity and without legal effect.” Appellant‘s App. Vol. II, p. 88.
At the close of evidence, the State moved for a directed verdict in its favor as to all claims and all defendants. The court took the motion under advisement after briefing and argument, and denied it on
The Garwoods timely appealed. The State cross-appealed. The Garwoods seek a new trial against the same defendants except Swain. The Garwoods claim the trial court abused its discretion by failing to collaterally estop the State to litigate issues decided by the tax court in Garwood II, or alternatively by failing to admit the tax court‘s Garwood II decision in its entirety; by failing to exclude the jeopardy assessments or to give an instruction as to their voidness; and by failing to exclude records of the criminal proceedings against them. The Garwoods’ lawyers also seek an increase in their fee award under
Before proceeding to the merits of these claims, in light of the importance of the question and its appearance at several junctures of litigation, we first clarify our jurisdiction over them.
Discussion and Decision
I. Subject Matter Jurisdiction
We have a duty to investigate our jurisdiction over the subject matter of a case on appeal if it appears doubtful. Albright v. Pyle, 637 N.E.2d 1360, 1363 (Ind. Ct. App. 1994). Subject matter jurisdiction is jurisdiction over the general class of actions to which a case belongs. K.S. v. State, 849 N.E.2d 538, 542 (Ind. 2006). Such jurisdiction is the power of a court to decide a case. Austin Lakes Joint Venture v. Avon Utils., Inc., 648 N.E.2d 641, 645 (Ind. 1995); State ex rel. Young v. Noble Cir. Ct., 263 Ind. 353, 356, 332 N.E.2d 99, 101 (1975). A court of this state has only such jurisdiction—that is, only such power—as granted to it by statute or our constitution. State v. Sproles, 672 N.E.2d 1353, 1356 (Ind. 1996).
Upon review, we lack jurisdiction to the extent the trial court lacked it. Albright, 637 N.E.2d at 1364; 4 C.J.S. Appeal and Error §§ 50, 76 (2007). By statute, the tax court has exclusive jurisdiction over “original tax appeals.”
A case arises under the tax laws if it “principally involves collection of a tax or defenses to that collection.” Sproles, 672 N.E.2d at 1357. Our supreme court has construed the tax court‘s jurisdictional mandate broadly. State ex rel. Zoeller v. Aisin USA Mfg., Inc., 946 N.E.2d 1148, 1153 (Ind. 2011). This ensures a “single authoritative voice on state tax matters,” Bielski v. Zorn, 627 N.E.2d 880, 886 (Ind. T.C. 1994), cited in Sproles, 672 N.E.2d at 1357 n.13, by “channel[ing] tax disputes to a single specialized tribunal. . . .” Aisin, 946 N.E.2d at 1152. A case principally involves tax collection or defenses to it if the taxpayer, on statutory, constitutional, or other grounds, contests or challenges tax liability imposed on her by the tax laws.
The shared feature of similar cases directed to or kept within the tax court‘s jurisdiction was the taxpayers’ claim that controlling law prohibited the imposition of tax liability created by the tax laws. State ex rel. Att‘y Gen. v. Lake Super. Ct., 820 N.E.2d 1240 (Ind. 2005) (rejecting “distinction for [jurisdictional] purposes between a challenge to assessments, whether procedural or substantive, and any other basis to contest a tax” in constitutional challenge to real property assessments); State v. Costa, 732 N.E.2d 1224, 1225 (Ind. 2000) (state constitutional challenge to property tax levy under Health Care for the Indigent program); Bd. of Tax Comm‘rs v. Montgomery, 730 N.E.2d 680, 686 (Ind. 2000) (same); Clifft v. Ind. Dep‘t of State Revenue, 660 N.E.2d 310 (Ind. 1995) (one year before Sproles, tax court‘s jurisdiction unquestioned in challenge to CSET jeopardy assessments grounded on constitutional rights to procedural due process, equal protection, and protection against self-incrimination); Zayas v. Gregg Appliances, Inc., 676 N.E.2d 365 (Ind. Ct. App. 1997) (claim against retailer for allegedly improperly collecting sales tax on delivery fees), trans. denied, discussed in Aisin, 946 N.E.2d at 1156; UACC Midwest, Inc. v. Ind. Dep‘t of State Revenue, 667 N.E.2d 232 (Ind. T.C. 1996) (claim for tax refund grounded in disagreement over applicable tax rate), discussed in Aisin, 946 N.E.2d at 1158. By contrast, liability to DOR because of clerical error leading to unjust enrichment is not tax liability imposed by the tax laws. Aisin, 946 N.E.2d at 1155.
Harrison Circuit Court had jurisdiction over the instant case because the Garwoods did not seek to challenge tax liability imposed by the tax laws. We cannot overlook the “fundamental difference” between what the Garwoods sought to recover (damages) and what the Garwoods originally owed DOR (their tax liability). Id. To the Garwoods, it seems, this suit was basically an enforcement action: a trial on damages for injuries proved by the tax court‘s voiding of the jeopardy assessments in Garwood II, now repackaged as state and constitutional torts for a court of general jurisdiction. When the trial court failed to give Garwood II preclusive effect, the Garwoods argue on appeal, the Garwoods “lost the value of the [tax court‘s] decision. . . .” Appellant‘s Reply Br. at 7 (emphasis added). As the Garwoods’ counsel said in his opening statement after a brief recitation of the State‘s conduct, “[T]he facts that support all of this are largely undisputed.” Tr. p. 151. What was still disputed was how much those facts were worth in damages.
It is true that the Garwoods could have also challenged their tax liability in Garwood II by means of the constitutional
We conclude that the proper course is to take this case as it came to Harrison Circuit Court via the Garwoods’ second amended complaint, filed after the decision in Garwood II.6 The question presented by this case then becomes, assuming the tax-law violation, do that violation and the circumstances surrounding it give rise to tort liability of any kind? Proceeding thusly comports with the legislative purpose declared in Sproles and Aisin, and with the parties’ actual course of litigation. Through the Garwoods’ second amended complaint, the invalidation of the jeopardy assessments in Garwood II was treated and put to the jury as a fact. See Tr. pp. 129-30 (ruling on admissibility).
The settled and limited purpose of the tax court‘s exclusive jurisdiction is to ensure the uniform interpretation of the tax laws. Aisin, 946 N.E.2d at 1152. The tax court has already spoken conclusively to the statutory question at the heart of this litigation in Garwood II. Neither the jurisdictional value of finality nor that of validity, see Restatement (Second) of Judgments §§ 11 cmt. d, 12 (Am. Law Inst. 1982), would be served by returning this case to the tax court to decide the constitutional and tort-law consequences of its earlier tax-law holding. The Garwoods’ claims were validly asserted in Harrison Circuit Court, and that court‘s decision is properly and squarely in front of us.
Assured of our jurisdiction on this basis, we proceed to consider the merits of the parties’ appeals, beginning with the State‘s cross-appeal.
II. The Judgment Against Swain Was Not Supported by Sufficient Evidence
Our standard of review on a challenge to the sufficiency of the evidence supporting a jury verdict is the same in civil as in criminal cases. Auto Liquidation Ctr., Inc. v. Chaca, 47 N.E.3d 650, 654 (Ind. Ct. App. 2015). We consider only the evidence favorable to the verdict and all reasonable inferences from it. Id. We nei-
Because the Garwoods in reply address only the immunity issue, see Appellant‘s Reply Br. at 16-19 (Swain not entitled to absolute immunity), 19-22 (Swain not entitled to qualified immunity because state law clearly established), the State need only show prima facie error on the sufficiency issue, that is, error apparent “at first sight, on first appearance, or on the face of it.” Trinity Homes, L.L.C. v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006).
Though the jury verdict did not identify the theory under which the jury found Swain liable, it could only have been for a constitutional violation under
federal rights by a state actor under color of state law. Monroe v. Pape, 365 U.S. 167, 183 (1961). “[I]n any action under § 1983, the first step is to identify the exact contours of the underlying right said to have been violated.” County of Sacramento v. Lewis, 523 U.S. 833, 841 n.5 (1998) (citation omitted).
This task is more challenging than usual at the appellate stage. Six years of litigation have scarcely narrowed the issues in this case, which is characterized by the Garwoods’ continuing failure to relate specific claims to relief to the specific conduct of specific defendants.8 While we are bound to affirm a general verdict on any basis in the record, we are not bound to make counsel‘s arguments for them, particularly on review for prima facie error. See Fang, 848 N.E.2d at 1068 (“[W]e will not undertake the burden of developing an argument on [a litigant‘s] behalf.“). We take guidance from the Garwoods’ arguments before the trial judge and, to a lesser degree, from the jury instructions, jury arguments, and complaint allegations.
Concluding that evidence does not make out a claim for any of the constitutional torts alleged, we do not reach the question of official immunity.
A. Procedural Due Process
The due process clause of the Fourteenth Amendment prohibits this
The deprivation of a protected property interest “is not in itself unconstitutional; what is unconstitutional is the deprivation of such an interest without due process of law.” Zinermon v. Burch, 494 U.S. 113, 125 (1990) (original emphasis, citation omitted). In other words, a due process violation “is not complete when the deprivation occurs; it is not complete unless and until the State fails to provide due process.” Id. at 126. Due process ordinarily requires notice and a pre-deprivation hearing. Mathews v. Eldridge, 424 U.S. 319, 333 (1976). However, a post-deprivation remedy satisfies due process when “either the necessity of quick action by the State or the impracticality of providing any meaningful pre-deprivation process” excuses the state from providing such process. Parratt v. Taylor, 451 U.S. 527, 539 (1981), overruled in other part by Daniels v. Williams, 474 U.S. 327, 330-31 (1986). Here it is undisputed that the Garwoods did not receive pre-deprivation process; that is, the Garwoods did not receive notice and a hearing before their dogs were seized and sold.
The Garwoods appear to have argued three different theories of a procedural due process violation: first, that the jeopardy assessment statute itself fails to provide a constitutionally required pre-deprivation hearing; second, that DOR unconstitutionally denied the Garwoods a post-deprivation hearing by its June 22, 2009, letter; and third, that, even if the jeopardy assessment statute satisfied due process on its face, the tax court‘s voiding of the assessments in this case meant “[t]hey literally never happened,” Tr. p. 625, and therefore it was as if DOR had never issued them. We address these theories in turn.
Jeopardy assessment schemes were declared constitutional by the United States Supreme Court more than eighty-five years ago. Phillips v. Comm‘r, 283 U.S. 589, 596-97 (1931), cited in Parratt, 451 U.S. at 540 (supporting proposition that necessity of quick action excuses need for pre-deprivation hearing). Indiana‘s jeopardy assessment scheme has been declared constitutional by our own supreme court. Clifft v. Ind. Dep‘t of State Revenue, 660 N.E.2d 310, 318 (Ind. 1995) (CSET per se jeopardy assessments) (citing Phillips, 283 U.S. at 596-97). Harrison Circuit Court would not have had jurisdiction to declare otherwise even if not bound by such precedent. Against this background, the Garwoods’ first theory cannot have supported the judgment against Swain.
The Garwoods’ second theory, that they were unconstitutionally denied a post-deprivation hearing by DOR, fails because the Garwoods received the hearing to which they were entitled in the tax court. The due process clause prohibits this state from depriving a person of property without due process, not this state‘s revenue agencies. The prompt relief available in this state‘s courts satisfy its obligation to guarantee fair procedure in this context. Parratt, 451 U.S. at 544 (“The remedies [for a prison‘s loss of
So long as the tax court treated DOR‘s denial of a hearing as its final determination, thereby allowing its jurisdiction to be invoked—as in fact it did, Garwood I, 939 N.E.2d at 1155-56—the Garwoods had prompt access to the post-deprivation remedy to which they were entitled: review of DOR-assessed liabilities through the protest and refund actions, together with injunction against collection pending appeal. Clifft, 660 N.E.2d at 317-18 (such remedies together satisfy due process, notwithstanding DOR may sell seized assets even while appeal pending); see also Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 234 (1938) (“[D]ue process does not require an opportunity to be heard before judgment, if defenses may be presented upon appeal. . . . [T]his rule assumes that appellate review does afford opportunity to present all available defenses. . . .” (citations omitted)). Even if this were not so, it was never Swain‘s decision to deny the Garwoods an administrative hearing; he
therefore could not have been found personally liable for any denial of due process that may have resulted.
The Garwoods’ third theory, that the jeopardy assessments “literally never happened” as a matter of historical fact because the assessments were declared legally void by the tax court, Tr. p. 625, and that thereby, DOR was never entitled to rely on the post-deprivation process supplied by review of the jeopardy assessment statute, fails by committing a fundamental error: confusing a violation of state law with a due process violation. Charleston v. Bd. of Trustees, 741 F.3d 769, 773 (7th Cir. 2013) (“[W]e will be clear once more: a plaintiff does not have a federal constitutional right to state-mandated process.“); Ind. Land Co., 378 F.3d at 711 (“[A]n error of state law is not a violation of due process.“).
In Garwood II, a state court held that certain facts did not rise to the level required by a state statute authorizing certain state conduct. That does not and cannot state a due process violation. To accept the Garwoods’ contrary contention would in effect allow state courts to create due process violations retroactively by the act of interpreting state law. Given the Garwoods’ highly metaphysical conception of voidness in particular, the federal constitutional result would presumably depend on the state court‘s word choice9: state action declared “invalid” or “in excess of statutory authority,” for example, would not create due process violations, but declarations of “voidness” would. These contentions cannot be accepted.
B. Substantive Due Process
In addition to its guarantee of fair procedure, the due process clause encompasses “a substantive component that bars certain arbitrary, wrongful government actions regardless of the fairness of the procedures used to implement them.” Zinermon, 494 U.S. at 125 (quotation and citation omitted).10 As elsewhere, the task before us is made more difficult by the Garwoods’ refusal to state exactly what conduct by which State defendants they allege offended the standards of substantive due process. Nevertheless, the Garwoods’ substantive due process claim fails because Swain‘s conduct was rationally related to a legitimate government interest and did not shock the conscience.
In the most general terms, substantive due process protects against “all substantial arbitrary impositions and purposeless restraints” enforced by the state, Poe v. Ullman, 367 U.S. 497, 543 (1961) (Harlan, J., dissenting), quoted in Moore v. City of East Cleveland, 431 U.S. 494, 502 (1977) (plur.), is “intended to secure the individual from arbitrary exercise of the powers of government,” Albright v. Oliver, 510 U.S. 266, 272 (1994) (plur.) (internal quotation and citation omitted), and “serves to prevent governmental power from being used for the purposes of oppression.” Daniels v. Williams, 474 U.S. 327, 331 (1986) (internal citation and quotation omitted). Beyond these broad phrases, however, “guideposts for responsible decisionmaking in this unchartered area are scarce and open-ended,” and the doctrine must be applied with “utmost care.” Collins v. City of Harker Heights, 503 U.S. 115, 125 (1992). The United States Supreme Court has consistently instructed courts to demand the highest levels of culpability in this context; to demand less “would make of the Fourteenth Amendment a font of tort law to be superimposed upon whatever systems may already be administered by the States.” Paul v. Davis, 424 U.S. 693, 701 (1976).
The most familiar aspect of the doctrine is the protection afforded to “fundamental” liberty interests in the domains of bodily integrity, personal autonomy, and intimate relationships. See Washington v. Glucksberg, 521 U.S. 702, 723-24 (1997).11 The scope of protection afforded by substantive due process to property interests, and how if at all such protection is to be distinguished from that afforded to liberty interests, is an unsettled question. Some federal courts of appeals, including our Seventh Circuit,12 require a substantive due process plaintiff alleging only a property deprivation to
It is clear that “substantive due process is not a blanket protection against unjustifiable interferences with property.” Lee, 330 F.3d at 467. For example, “[n]o one thinks substantive due process should be interpreted so broadly as to protect landowners against erroneous zoning decisions.” Coniston Corp. v. Village of Hoffman Estates, 844 F.2d 461, 466 (7th Cir. 1988). Similarly, without more, it ought not be interpreted as to protect against erroneous tax assessments. Substantive due process does not require error-free public administration, nor that enforcement actions be preceded by thorough investigation or narrowly tailored to achieve compelling government interests; it requires only that the challenged conduct “be rationally related to a legitimate government interest, or alternatively phrased, that the [conduct] be neither arbitrary nor irrational.” Lee, 330 F.3d at 467.
In cases challenging executive action, “only the most egregious offi-
a loss which can easily be remedied in the [state] courts. Hence, we do not believe that the substantive due process clause applies in this instance.“), and Eighth Circuits. Ali v. Ramsdell, 423 F.3d 810, 814 (8th Cir. 2005) (adopting Justice O‘Connor‘s concurrence in Hudson v. Palmer, 468 U.S. 517, 539 (1984) (“[T]he claimant must either avail himself of the remedies guaranteed by state law or prove that the available remedies are inadequate.“)).
cial conduct can be said to be arbitrary in the constitutional sense.” County of Sacramento v. Lewis, 523 U.S. 833, 846 (1998) (quotation omitted). Executive conduct is constitutionally egregious and arbitrary when it “shocks the conscience.” Rochin v. California, 342 U.S. 165, 172 (1952). In a substantive due process challenge to executive action, “the threshold question is whether the behavior of the governmental officer is so egregious, so outrageous, that it may fairly be said to shock the contemporary conscience.” Lewis, 523 U.S. at 847 n.8. In emergency situations, the proper standard for conscience-shocking behavior is intent to harm. Lewis, 523 U.S. at 854. In situations where actual deliberation is practical, “deliberate indifference” may rise to the level of culpability that implicates the due process clause. Id. at 848-49 (citation omitted).
At the minimum, then, the Garwoods were required to show that Swain‘s and the other State defendants’ conduct was not rationally related to a legitimate government interest, and that the totality of the circumstances shocked the conscience. The Garwoods did neither. Conroe Creosoting Co. v. Montgomery County, 249 F.3d 337 (5th Cir. 2001) (dismissing appeal from denial of qualified immunity for lack of jurisdiction) is a useful point of comparison. There, a county school district obtained a roughly $75,000
Taken as true, the corporation‘s allegations established that the assessor knew the writ of execution could not be enforced by a county tax assessor under state law; the assessor ignored the corporation‘s state procedural right to designate certain essential assets as exempt from sale, and sold them anyway; the assessor sought a tax warrant affirming that the corporation‘s assets were in danger of removal from the county after revenue officials had already taken total custody of them; and the assessor selected his friends as the auctioneers. Id. at 341-42. A Fifth Circuit panel held this mix of knowing illegality, falsification, and self-dealing sufficiently arbitrary and conscience-shocking to warrant factual determination of the qualified immunity issue. Id. at 342.
Whether conduct is conscience-shocking “may be informed by a history of liberty protection,” and “necessarily reflects an understanding of traditional executive behavior, of contemporary practice, and of the standards of blame generally applied to them.” Lewis, 523 U.S. at 847 n.8; Rochin, 342 U.S. at 171-72 (distinguishing what shocks the conscience based on “considerations deeply rooted in reason and in the compelling traditions of the legal profession,” from what “offend[s] some fastidious squeamishness” and “private sentimentalism“). The historical and traditional relation of taxation and due process points the way to distinguishing Conroe Creosoting from this case.
Given a purpose or object for which taxation may be lawfully used and the extent of its exercise is in its very nature unlimited. . . . The power to tax is, therefore, the strongest, the most pervading of all the powers of government. . . . [But even this power must be substantively limited.] To lay with one hand the power of the government on the property of the citizen, and with the other to bestow it upon favored individuals to aid private enterprises . . . is not legislation. . . . Nor is it taxation. . . . We have established . . . beyond cavil that there can be no lawful tax which is not laid for a public purpose.
Citizens’ Sav. & Loan Ass‘n v. City of Topeka, 87 U.S. 655, 663-64 (1874) (original emphasis). Tax laid for a nonpublic purpose is not due process of law because it is not law. But given public purpose,
there has been no period, since the establishment of the English monarchy, when there has not been, by the law of the land,14 a summary method for the recovery of debts due to the crown . . . [T]he methods of ascertaining the existence and amount of [public revenues owed to the state by customs agents], and compelling their payment, have varied widely form the usual course of the common law on other subjects . . . The power to collect and disburse revenue, and to make all laws which shall be necessary and proper for carrying that power into effect, includes all known and appropriate means of effectually collecting and disbursing that revenue, unless
Murray‘s Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272, 277, 281, 18 How. 272, 15 L.Ed. 372 (1855) (approving “distress warrants” for collection of customs revenue from customs agents). Finally, then,
whenever by the laws of a State, or by State authority, a tax, assessment, or other burden is imposed upon property for public use, whether it be for the whole State or of some more limited portion . . ., and those laws provide for a mode of confirming or contesting the charge thus imposed, . . . with such notice to the person, or such proceeding in regard to the property as is appropriate to the nature of case, the judgment in such proceedings cannot be said to deprive the owner of his property without due process of law, however obnoxious it may be to other objections.
Davidson v. City of New Orleans, 96 U.S. 97, 104-05, 24 L.Ed. 616 (1877) (emphasis added).
Historically and traditionally, taxation has been recognized as unique among the powers of the state, substantively limited by the due process clause only by the requirement of a public purpose and by independent constitutional prohibitions. In this context, where the state‘s power nears its maximum, a complaining party that alleges the “most egregious” conduct must present an exceptionally strong case. Lewis, 523 U.S. at 846, 118 S.Ct. 1708.
In Conroe Creosoting, public purpose was vitiated by the assessor‘s levy on assets known to be valued far in excess of the debt, and by self-dealing in the selection of auctioneers. Here, by contrast, the assets levied on were thought to be worth far less than the debt, the latter figure estimated by DOR‘s regular procedures, the former negotiated by Swain with an independent nonprofit organization; and there was no suggestion of self-dealing. In Conroe Creosoting, the court noted that the claim might have been brought under the Fourth Amendment or the takings clause of the Fifth Amendment. 249 F.3d at 340 n.9. Here, by contrast, no independent constitutional limit was asserted.15 Finally, in Conroe Creosoting, the mix of knowing illegality, falsification, and self-dealing showed, or permitted a reasonable inference of, bad faith, malice, or intent to harm. Here, by contrast, there was no evidence of these and no reasonable inference of them.
Two sets of public purposes for the issuance of jeopardy tax assessments and warrants against the Garwoods were put forward, and the assessments and warrants bore enough of a rational relation to these legitimate governmental interests to withstand the most deferential standard of judicial review. See Brown v. City of Michigan City, 462 F.3d 720, 733 (7th Cir. 2006) (“To find that a government action violates the requirements of substantive due process in this context, it must be utterly lacking in rational justification.” (quotation and citation omitted)). The first set related to the uses of the tax laws generally, and the jeopardy procedure in particular, to combat unregistered, non-reporting businesses like the Garwoods‘:
[I]n general the rationale is that . . . you want to send a deterrent message because if you have businesses that are operating off the grid and not recording
their taxes then . . . you want to shut down a few in order to send a deterrent message to try to get those that are also operating and probably not remitting their taxes . . . [to] see there‘s actually teeth to the tax laws and that somebody is actually paying attention. . . . The other rationale is that when these businesses are operating improperly and they are not remitting their taxes, then they‘re essentially a drain on society [be]cause they‘re essentially using those tax monies to run their businesses. Essentially they‘re having the state subsidize their businesses. . . . [Y]ou might as well get rid of that business and try to get a better business in there . . . [which] also removes any competitive disadvantage that legitimate businesses have. . . . [A] business who doesn‘t remit their sales taxes can sell their product at a cheaper price th[a]n a legitimate business that does collect sales tax and remits it to the State.
Tr. pp. 199-200 (Swain‘s testimony); see also Ex. Vol. I, Pls.‘s Ex. 2 (Swain‘s article detailing use of tax laws to combat underground businesses). Thus, even if the jury found that the raid was undertaken as a kind of in terrorem, shock-and-awe campaign for the purpose of shutting down the Garwoods’ unregistered dog-breeding business, that conduct, while arguably harsh and overzealous, was rationally related to a legitimate government interest.
The second set of public purposes was asserted by the Garwoods themselves as a basis for their substantive due process claim. The Garwoods asserted repeatedly that the jeopardy assessments were not really done for the fiscal purpose of collecting tax; they were really done for the non-fiscal purpose of combatting the socially undesirable activity of “puppy mills.” The Garwoods may have asserted this as an attack on the State‘s deprivation of their property as arbitrary and irrational, or as a liberty interest in being free from taxation for non-fiscal purposes. In either event, the argument fails. It is neither arbitrary nor irrational to use the tax laws for social, non-fiscal purposes, and the Garwoods did not have a fundamental right “deeply rooted in this [n]ation‘s history and traditions,” Glucksberg, 521 U.S. at 721, 117 S.Ct. 2258, to be free from taxation for such purposes.
It is uncontestable that ensuring the welfare of animals and the welfare of consumers are legitimate government interests. This is reflected by Indiana‘s laws on animal cruelty, consumer protection, and the like, in particular by Indiana‘s new commercial dog-breeding, anti-puppy-mill statute, in effect since 2010. See
Furthermore, the use of tax as a means to nontax ends is allowed today and is nearly as old as taxation itself. See, e.g., Nat‘l Fed‘n of Indep. Bus. v. Sebelius, 567 U.S. 519, 132 S.Ct. 2566, 183 L.Ed.2d 450 (2012) (upholding fine exacted to incentivize purchase of health insurance under the Affordable Care Act as an exercise of Congress‘s taxing power); Idris v. City of Chicago, 552 F.3d 564, 566 (7th Cir. 2009) (“Taxes, whether on liquor or on running red lights, are valid municipal endeavors. . . . [They do] more than raise revenue: [they] also discourag[e] the taxed activity. A system that simultaneously raises money and improves compliance with the traffic laws . . . cannot be called unconstitutionally whimsical.“); Joseph T. Sneed,
Finally, whatever degree of fault may be attributed to the State‘s total course of proceeding against the Garwoods, Swain‘s personal share of that fault simply did not rise to a conscience-shocking level.
The Garwoods pointed repeatedly to Swain‘s celebratory toast with Zoeller on the evening of June 2, 2009; the award received by Swain from the Humane Society; and Swain‘s published article on the use of tax laws to combat underground businesses. We acknowledge it may have been difficult for the Garwoods to bear the sight of state officials congratulating one another over the ruin of the Garwoods’ dog-breeding business and earning public praise into the bargain. Nevertheless, the Garwoods cannot seriously allege that the substantive due process violation was only complete with the clink of the glasses in Louisville, still less with the later Humane Society ceremony in Washington, D.C.
Taken only as evidence of the actors’ state of mind, these facts give rise to no reasonable inference of malice, bad faith, or intent to harm. State agents often celebrate the success of their enforcement actions, and those enforcement actions always come at the expense of their targets. This fact does not state a due process violation. Similarly, state agents are sometimes honored or rewarded for the success of their enforcement actions. Without more—and here there was no more—that does not give rise to a reasonable inference that the action was done only for the sake of such honor or reward. Similarly, Swain‘s article, to the extent it was relevant at all, must point away from liability rather than toward it. No reasonable juror could have concluded that the article was written and published as an instruction manual for oppressing dog breeders by the arbitrary exercise of state power; if it was more than academic commentary, the article was an instruction manual for rationally using legally available means to achieve legitimate government ends.
Though Swain was presented by the State merely as a lawyer offering advice, the jury could have reasonably laid at his feet the choice of the jeopardy procedure as a tactical and strategic matter, the OMB‘s final decision to pursue the Garwoods in this fashion notwithstanding. Swain admittedly negotiated the sale of the dogs to the Humane Society for the negligible sum of $300. However, as set out above, the choice of the jeopardy procedure served legitimate ends, and no evidence showed, or gave reason to infer, that Swain made the choice for the purposes of oppression, harm, or private gain. The BIA assessments may have overestimated the Garwoods’ tax debt, but Swain was not responsible for preparing those figures. As in the context of procedural due process, the mere fact that Swain‘s good-faith interpretation of the phrase “any other act” in the jeopardy assessment statute,
Swain may have also underestimated the value of the dogs, but $300 is nevertheless $300 more than what the Humane Society thought the dogs were worth. Tr.
No reasonable jury could have concluded that Swain was actuated by malice, bad faith, or intent to harm. However, to find such a high level of culpability was not demanded of the jury in this case. The jury was instructed as follows:
Substantive due process protects an individual against the arbitrary action of government and the exercise of governmental power without reasonable justification. In deciding whether Defendants deprived Plaintiff of this right, you must determine whether . . . Defendants’ actions can be properly characterized as shocking the conscience. Conduct that shocks the conscience is reckless, deliberately indifferent, or so brutal and offensive that it does not comport with traditional ideas of fair play and decency.16
When I use the term deliberately indifferent I mean that Defendants actually knew of a substantial risk of serious harm to the Plaintiffs, and that the Defendants consciously disregarded that risk by failing to take reasonable measures to deal with it.17
Tr. pp. 905-06.
The jury was not properly instructed. To find a violation of the Garwoods’ “right” to substantive due process, the jury was told to find conscience-shocking behavior. To find conscience-shocking behavior, in turn, the jury was told to find conduct that was reckless or deliberately indifferent or unacceptably brutal and offensive. The Garwoods were never required, either before the judge or the jury, to show the absence of a rational basis for the State‘s conduct. Recklessness was never defined. The instructions thus permitted the jury to find constitutional liability for deprivation of personal property that it could characterize as “reckless” in the abstract, untethered to any independent constitutional right, fundamental liberty interest, or lack of a rational basis for the State‘s conduct. This is very far from the highest levels of culpability required to show the “most egregious official conduct,” Lewis, 523 U.S. at 846, and does precisely what the Seventh Circuit‘s rule in Lee seeks to avoid and what is prohibited by the United States Supreme Court: it “make[s] of the Fourteenth Amendment a font of tort law to be superimposed” on the tort law of this state. Paul v. Davis, 424 U.S. at 701, 96 S.Ct. 1155.
Similarly, the jury was instructed on deliberate indifference. It is true that Lewis held deliberate indifference may rise to a conscience-shocking level when deliberation is practical, 523 U.S. at 848-49, and the State‘s action in this case was obviously deliberated and deliberate. However, the standard begs
Thus, constitutional liability will lie, in the appropriate context, for deliberate indifference to life and bodily integrity, serious medical need, and substantial risk of serious physical harm. So far as we can tell, “deliberate indifference” has never been applied to mere deprivations of property interests, but this is how it was applied in the instructions here. The Garwoods’ property interest in the dogs was not a constitutional right in and of itself; it was a state-created interest protected by their constitutional right to due process of law. The instructions speak of a “substantial risk of serious harm” to the Garwoods, Tr. p. 906, but there was never any suggestion of physical harm to the Garwoods. The instruction was not founded on the evidence unless it was understood to include economic harm; but, so understood, the instruction was not founded on the law. Even under this highly permissive standard, there was no evidence that Swain “actually knew of a substantial risk” that his interpretation of the jeopardy assessment statute would work an ultra vires deprivation of the Garwoods’ property interest.18 Tr. p. 906.
In sum: the State‘s conduct was rationally related to one or more legitimate government interests. Examined in its proper historical and traditional context, the State‘s conduct, while erroneous on one point of state law, did not shock the conscience. Swain‘s personal conduct also cannot sustain the judgment against him. The uncontradicted evidence failed to show a substantive due process violation for which Swain could be held personally liable.
C. Equal Protection
The equal protection clause of the
Equal protection jurisprudence “recognize[s] . . . claims brought by a ‘class of one,’ where the plaintiff alleges that she has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment.” Village of Willowbrook v. Olech, 528 U.S. 562, 564, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (2000) (per curiam). Allegations to this effect state a claim to relief “quite apart from the [state actors‘] subjective motivation” or “subjective ill will,” the status of which the Olech Court declined to reach. Id. at 565, 120 S.Ct. 1073. Justice Breyer concurred in the result:
It might be thought that a rule that looks only to an intentional difference in treatment and a lack of a rational basis for that different treatment would work . . . a transformation [of many ordinary violations of city or state law into violations of the Constitution]. . . . This case, however, does not directly raise [that] question . . . because the Court of Appeals found that . . . [the plaintiff] had alleged an extra factor . . . that the Court of Appeals called “vindictive action,” “illegitimate animus,” or “ill will.” . . . [T]he presence of that added factor . . . is sufficient to minimize any [such] concern. . . .
Seventh Circuit authority is split as to whether animus or ill will are required, Brunson, 843 F.3d at 706 (position of Posner, J.), merely relevant, id. (position of Wood, C.J.), or entirely irrelevant. Id. (position of Easterbrook, J.). Our supreme court has said it found “most convincing” Judge Posner‘s “argument for adopting Justice Breyer‘s reasoning in Olech.” Armour, 946 N.E.2d at 565. But in Armour, our supreme court held, “[T]his is not a class-of-one case.” Id. at 566. The Armour court‘s statement on the animus question was therefore dictum; nevertheless, the dictum signals that our supreme court would adopt Judge Posner‘s position if the question were presented to it. We therefore adopt that position here.
Seventh Circuit authority is similarly unsettled as to the need for a class-of-one plaintiff to identify similarly-situated comparators; no published decisions of this state‘s courts have considered the question since Olech. In the Seventh Circuit, comparators may not be required “where the . . . facts so clearly suggest harassment by public officials that has no conceivable legitimate purpose,” because such conduct “demonstrate[s] on its own the [state agents‘] improper discriminatory purpose. . . .” Brunson, 843 F.3d at 707 (quotations and citations omitted) (discussing Geinosky v. City of Chicago, 675 F.3d 743, 748-49 (7th Cir. 2012)). Comparators may also not be required where “disparate treatment is easily demonstrated but similarly situated individuals are difficult to find.” Id. at 706. Such was the case in Brunson itself, where the plaintiff, complaining of the denial of a Class B liquor license by local government officials, operated the only package liquor store and held the only such license in a town of 2,500 people. Id. at 707. Requiring comparators there “would not [have] help[ed] distinguish between ordinary wrongful acts and deliberately discriminatory denials of equal protection.” Id. (quotation and citation omitted).
In their second amended complaint, the Garwoods alleged they were “targeted . . . because they were breeders of companion animals,” Appellant‘s App. Vol. II, p. 113, suggesting an equal protection claim for discrimination by DOR against
The equal protection claim actually put to the jury sounds as a class-of-one (more precisely, a class-of-two) claim. See Tr. p. 906 (equal protection jury instruction) (“Defendants . . . intentionally treated Plaintiffs [without qualification] differently from other[s] similarly situated. . . .“). That claim fails. As discussed above under substantive due process, DOR‘s treatment of the Garwoods survives rational-basis review in isolation. Thus, unlike the Geinosky plaintiff, the Garwoods cannot bootstrap a campaign of irrational, arbitrary treatment into its own “demonstrat[ion of] . . . improper discriminatory purpose. . . .” Brunson, 843 F.3d at 707. Further, unlike the Brunson plaintiff, the Garwoods’ claim did not operate in a restricted universe of potential comparators. Whereas Brunson was the only person subject to the town‘s Class B liquor license renewal authority, every person and business in Indiana is subject to DOR‘s revenue collection authority.
Identification of similarly situated comparators was therefore necessary to “distinguish between ordinary wrongful acts and deliberately discriminatory denials of equal protection.” Id. However, no favorable comparators were identified by the Garwoods. We cannot review whether “there [wa]s no rational basis for the difference in treatment,” Olech, 528 U.S. at 564, because no difference in treatment was shown.
In fact, Swain‘s testimony identified one similarly situated person, Tammy Gilcrest, but she was treated in precisely the same way. Like the Garwoods, “the Gilcrests were not registered to conduct sales in Indiana and they were performing numerous sales of dogs and not collecting sales tax and not remitting any tax to the State of Indiana.” Tr. p. 187. Like the Garwoods, Gilcrest was subjected to “a criminal search warrant and a jeopardy assessment” by DOR. Id. at 186. Like the Garwoods‘, Gilcrest‘s inventory of dogs was seized and sold. Id. at 201. A breeder named Darlene Clark was apparently subjected to similar treatment, id. at 202, though the facts of her case were not stated. Swain recounted other businesses enjoined, like the Garwoods,19 from doing further business until their tax liabilities were satisfied; some were shuttered as a result. Id. at 256 (“Popeye‘s Chicken went out of business. The funeral home that we did up north went out of business. Tire Barn in Kokomo went out of business. . . .“). No evidence showed any difference in treatment between the Garwoods and others similarly situated.
Finally, as discussed above under substantive due process, the record does not disclose subjective animus, ill will, or vindictiveness on the part of State officials, and on Swain‘s part in particular, towards the Garwoods. To the extent our supreme court would require such evidence to support a successful class-of-one claim, see Armour, 946 N.E.2d at 565, the Garwoods failed to carry their burden on this point.
The uncontradicted evidence failed to show an equal protection violation for which Swain could be held personally liable.
§ 1988
Under the fee-shifting provision of the federal civil rights statutes, a court hearing a
To be a prevailing party within the meaning of
IV. The Trial Court Committed No Prejudicial Error in Its Rulings on Admissibility, Preclusion, and Jury Instructions
For their appeal, the Garwoods claim the trial court abused its discretion by failing to collaterally estop the State to litigate issues decided by the tax court in Garwood II, or alternatively by failing to admit the tax court‘s Garwood II decision in its entirety; by failing to exclude the jeopardy assessments or to give an instruction as to their voidness; and by failing to exclude records of the criminal proceedings against them.
We review the trial court‘s evidentiary rulings for abuse of its broad discretion, reversing only if the ruling is clearly against the logic and effect of the facts, and the error is not harmless but affects substantial rights. Carpenter v. State, 18 N.E.3d 998, 1001 (Ind. 2014). We apply the same standard to the trial court‘s preclusion ruling, Tofany v. NBS Imaging Sys., Inc., 616 N.E.2d 1034, 1039 (Ind. 1993), and to its ruling on jury instructions that correctly state the law. Dawson v. Thornton‘s, Inc., 19 N.E.3d 337, 339 (Ind. Ct. App. 2014), trans. denied.
A. Admission of Criminal Matter
The Garwoods claim that the trial court ran afoul of Indiana Evidence Rules 609 and 403 by admitting the State‘s information charging the Garwoods with criminal tax offenses, Ex. Vol. I, Pls.‘s Ex. 31, p. 172, Ex. Vol. II, Defs.‘s Ex. I, p. 367, and the transcript of the Garwoods’ change of plea hearing. Ex. Vol. II, Defs.‘s Ex. J, p. 372. We find no error.
1. Charging Information
2. Change of Plea Hearing Transcript
For similar reasons, no error arose from the trial court‘s admission of the transcript from the Garwoods’ change of plea hearing.21 The Garwoods insist that the transcript was not “evidence that [a] witness has been convicted of a crime,”
However, the transcript was not offered only for impeachment; it was offered and admitted for its truth. “We [the State] are offering this [transcript] as substantive evidence of what the Garwoods did.” Tr. p. 693. We cannot say that its probative value, either as impeachment or as substantive evidence, was substantially outweighed by the risk of unfair prejudice to the Garwoods under
B. Failure to Apply Collateral Estoppel or to Admit Garwood II in Its Entirety
The Garwoods complain that Swain and other State defendants were heard to testify that the Garwoods were operating an unregistered dog-breeding business that failed to report its income and failed to collect and remit sales tax, and that jeopardy assessments were sought on this basis. These facts were uncontradicted, admitted by the Garwoods in the agreed order in Harrison Circuit Court, and proved at trial. The Garwoods nevertheless believe that the tax court‘s decision in Garwood II conclusively settled these issues to the contrary, and should have barred any other testimony under the doctrine of offensive collateral estoppel. In the alternative, the Garwoods argue, the tax court‘s opinion should have been admitted in its entirety.
Collateral estoppel precludes relitigation of a fact or issue necessarily decided in earlier litigation. Bartle v. Health Quest Realty VII, 768 N.E.2d 912, 917 (Ind. Ct. App. 2002), trans. denied. Collateral estoppel is defensive when asserted by a previously successful defendant against a previously unsuccessful plaintiff; it is offensive in the opposite configuration. Id.
One issue was necessarily decided in Garwood II: whether, “on . . . statutory/regulatory construction grounds,” 953 N.E.2d at 684, certain uncontested facts rose to the level demanded by the jeopardy assessment statute for a finding of exigency. That statute supplies four bases for a finding of exigency; two were not asserted by DOR before the tax court. Id. at 687 (intent to quickly leave state or remove property from state). DOR argued that the Garwoods had “intend[ed] to . . . conceal [their] property in the state,”
As to the first asserted basis, the tax court held, “Virginia‘s refusal to allow the Harrison County Animal Control Officer on her property in response to a consumer complaint is not evidence of her attempt to conceal property in the state within the meaning of” the jeopardy assessment statute. 953 N.E.2d at 688. The tax court also rejected DOR‘s speculation that the Garwoods could have set the dogs
[T]he advertisement of dogs for sale in local newspapers, the breeding and sale of dogs, the failure to register as a retail merchant, the failure to prepare and file sales tax returns, and the failure to report income earned from the retail sales of animals on their individual income tax returns . . . [do not] alone constitute a litmus test for properly issuing a jeopardy assessment. . . . [T]aken as a whole, these actions suggest that the Garwoods were not properly reporting and paying taxes allegedly due, not that they intended not to pay, or preserve the wherewithal to pay, their taxes. . . . [Moreover,] Virginia‘s tax preparer included income from the sale of dogs in her 2008 tax return. . . .
Id. at 689. The tax court concluded,
The Court holds that [DOR] did not show the presence of the statutorily prescribed exigent circumstances that the Garwoods[] intended to quickly leave the state, remove their property from the state, conceal their property in the state, or do any other act that would jeopardize the collection of taxes.
Id.
Below, DOR never disputed a single fact underlying the tax court‘s decision, nor the holding itself. DOR never argued that the jeopardy assessments were valid; it argued, correctly, that the assessments’ invalidity does not give rise to a due process violation, an equal protection violation, conversion, or IIED. The State‘s evidence did suggest that Swain‘s and others’ interpretation of the jeopardy assessment statute was done in good faith, but the tax court never found otherwise, and, because such a finding would not have been necessary to resolve the statutory construction question before the court, such a finding could have not furnished a basis for estoppel. The tax court‘s dicta about “media hype,” “a media circus roil[ing],” and DOR‘s “wield[ing] the power of jeopardy assessments as a sword,” id. at 690, stand on the same footing.
Given the uncontested nature of the tax court‘s holding and of the handful of facts on which that holding rested, the trial court did not abuse its discretion in declining to give Garwood II preclusive effect. Put differently, the Garwoods already enjoyed the benefit of the only estoppel to which they were entitled.
For the same reasons, the trial court did not abuse its discretion by excluding all of the Garwood II opinion but its square holding. Indeed, the court would have abused its discretion by admitting the entire opinion. The Garwood II dicta regarding the circumstances of the raid and its perceived nontax purpose were probative only of the tax court‘s subjective disapproval of the State‘s course of proceeding. That subjective disapproval was immaterial to the Garwoods’ case in Harrison Circuit Court. Moreover, the dicta mirrored the arguments the Garwoods put repeatedly to the jury. Their minimal or nonexistent probative value was substantially outweighed by the risk of unfair prejudice and jury confusion that would have resulted had the jury perceived the Garwoods’ arguments to have already received the judicial imprimatur of the tax court, when such imprimatur was legally meaningless. There was no abuse of discretion in the trial court‘s exclusion of most of the Garwood II opinion.
C. Failure to Give Jury Instruction on Voidness and Admission of Jeopardy Assessments
The Garwoods unsuccessfully sought an instruction that “[a] void judgment is one that, from its inception, is
The instruction was not supported by evidence, and failure to give it did not prejudice the Garwoods. It was not supported by evidence because no judgment was at issue in this case. The jeopardy assessments were declared by the tax court to be “void as a matter of law,” Garwood II, 953 N.E.2d at 690, but DOR‘s jeopardy assessments are not judgments. See
However, the instruction was inapplicable in a more fundamental sense, and giving it risked leading the jury into the same confusion under which the Garwoods labor, contrary to the purpose of instructing the jury. See Dawson, 19 N.E.3d at 339 (“The purpose of jury instructions is to inform the jury of the law applicable to the facts without misleading [it]. . . .“), trans. denied. The jeopardy assessments were declared “void as a matter of law.” Garwood II, 953 N.E.2d at 690 (emphasis added). “A void judgment is . . . without legal effect. . . .” Stidham v. Whelchel, 698 N.E.2d 1152, 1154 (Ind. 1998) (emphasis added) (quoting 46 Am. Jur. 2d Judgments § 31 (2006)). Yet the Garwoods believe this means the jeopardy assessments “literally never happened,” Tr. p. 625—as a matter of fact and history, such that the documents themselves could not even be admitted into evidence because they were “blank pieces of paper” in the eyes of the law. Id. at 624. This is incorrect.
“Voidness” is a concept of the law of procedure that has precisely one legal consequence: what is void may be collaterally attacked at any time by any person, or, what amounts to the same thing, cannot be enforced under any circumstances, waiver, consent, ratification, or procedural default notwithstanding.
A void judgment is . . . , from its inception, . . . a complete nullity and without legal effect. By contrast, a voidable judgment is not a nullity, and is capable of confirmation or ratification. Until superseded, reversed, or vacated, it is binding, enforceable, and has all the ordinary attributes and consequences of a valid judgment. . . . [Judgments rendered in the absence of personal jurisdiction must be void rather than voidable. If only voidable, a] plaintiff would be able to obtain a default judgment after serving process upon any party, no matter how remote, and place the burden on that party to seek to eradicate the record within a reasonable time or [by operation of procedural default or waiver] run the risk that a valid judgment may be outstanding in the plaintiff‘s choice of forum where it may become quite important at some indeterminate time in the future even if insignificant today. This result [is unacceptable]. . . .
Stidham, 698 N.E.2d at 1154-55 (citations and quotations omitted); see also
We do not read Garwood II to hold that the Garwoods would have been entitled simply to default on a direct challenge to the jeopardy assessments and collaterally attack future execution, because that was not the question before the tax court in Garwood II. The question before the tax court was simply whether the jeopardy assessments were erroneous, not whether such error rendered the assessments void or merely voidable.
Even if this were precisely what the tax court held, what the tax court never did, purported to do, or could conceivably do, was to blot out the jeopardy assessments from the book of life. “You cannot change history,” as the State correctly observed. Tr. p. 626. As already discussed, see supra Part II, a state procedural rule cannot blind the federal constitution to objective reality. Neither does the law of this state blinker itself:
Brooks confessed a judgment before a justice of the peace. . . . [Defendant, a constable, was issued a writ of execution on the judgment, and under that writ levied on Brooks’ property. Plaintiff, a sheriff, obtained separate writs from the circuit court and levied on the same property.] The defendant, notwithstanding, re-took the property and sold it on the execution. . . .
It is contended [by the plaintiff sheriff] that [an applicable] statute rendered the confessed judgment a nullity as to all persons not a party to it; and, therefore, the [defendant] constable committed a trespass in proceeding to sell the goods which he had seized. . . .
The premiss may be true, but the inference is not correct. The question here is not, whether the regular execution-creditors of Brooks had any means of avoiding their regular judgment confessed before the justice; but the inquiry is, whether the defendant was justified in executing the writ, under which he acted. That writ . . . [was facially regular]. The law is, that a writ, having these characteristics, however irregularly issued, even though there be no judgment on which to found it, is a justification to an officer acting under it.
Gott v. Mitchell, 7 Blackf. 270, 270-71 (Ind. 1844) (emphasis added).
Though the tendered jury instruction correctly stated the law, it was inapplicable to this case, risked misleading the jury, and could not have changed the federal- or state-law result. For these reasons, the trial court did not abuse its discretion by failing to give the Garwoods’ tendered instruction on voidness. For the same reasons, the trial court did not abuse its discretion in ruling that the jeopardy assessments were not “blank pieces of paper,” Tr. p. 624, but admissible evidence.
Conclusion
The judgment against Swain is reversed. The order as to fees and costs is vacated. The trial court is affirmed in all other respects.
Reversed in part and affirmed in part.
Baker, J., and Pyle, J., concur.