text:
    CHINS: K.P., Appellant v. INDIANA DEPARTMENT OF CHILD SERVICES, et al.
    Supreme Court of Indiana.
    July 26, 2018
   Transfer denied. All Justices concur.


source: Caselaw Access Project

author: Transfer denied. All Justices concur.

license: Public Domain

text:
    Christopher RICHARDSON, Appellant v. Arturo AZCONA, Jr., et al.
    Supreme Court of Indiana.
    July 26, 2018
   Transfer denied. All Justices concur.


author: All Justices concur.

text:
    Termination: B.S., Appellant v. INDIANA DEPARTMENT OF CHILD SERVICES
    Supreme Court of Indiana.
    July 26, 2018
    Transfer Denied.
   All Justices concur.

Bradford, J., Baker, J., Kirsch, J.


text:
    Scott RANDALL, Appellant v. STATE of Indiana
    Supreme Court of Indiana.
    July 26, 2018
   Transfer denied. All Justices concur.


author: Kirsch, Judge.

text:
    ENGINEAIR, INC. and JMA Rail Products, Inc., Appellants-Plaintiffs, v. CENTRA CREDIT UNION, Appellee-Defendant.
    Court of Appeals Case No. 36A01-1709-CT-2177
    Court of Appeals of Indiana.
    Filed July 24, 2018
    Attorneys for Appellants: Hamish S. Cohen, Sean P. Burke, Mattingly Burke Cohen & Biederman LLP, Indianapolis, Indiana
    Attorney for Appellee: Patrick J. Ruberry, Litchfield Cavo, LLP, Chicago, Illinois
   Kirsch, Judge.

[1] After Angela Kincaid ("Kincaid"), an employee working for both EngineAir, Inc. ("EngineAir") and JMA Rail Products, Inc. ("JMA"), was convicted of having embezzled more than $500,000 from the companies' bank accounts, the companies sued Kincaid's depositary bank, Centra Credit Union ("Centra Credit"). Citing to Indiana's version of the Uniform Commercial Code ("UCC" or "the Act") and common law negligence, the companies argued that Centra Credit "failed to act with ordinary care when it cashed over 105 fraudulent checks written by Kincaid on EngineAir's, JMA's, and other related entities' accounts." Appellants' App. Vol. 2 at 10. On Centra Credit's motion, the trial court dismissed the companies' complaint for failure to state a claim pursuant to Indiana Trial Rule 12(B)(6).

[2] The companies raise one issue on appeal, which we restate as: Whether the trial court erred when it dismissed the companies' complaint for failure to state a claim under Indiana Trial Rule 12(B)(6) after concluding that (1) Centra Credit, as the depositary bank, owed the companies, as drawers, no duty of care as a matter of law for the loss the companies sustained when Kincaid deposited checks that she had stolen from the companies, made out to herself as payee, and, on which she had forged the signature of the companies' president; (2) the UCC warranties created no warranty or statutory obligation from Centra Credit to the companies; and (3) Centra Credit's failure to report Kincaid's extreme banking activity as suspicious did not constitute a breach of duty.

[3] We affirm.

Facts and Procedural History

[4] EngineAir and JMA (together, "the Companies"), acting as "sister" corporations and located in Jackson County, Indiana, are small, family-owned and-operated manufacturing and supply businesses, with similar ownership and management structures. Appellants' Br. at 6. In their complaint, the Companies pleaded the following facts. In the first quarter of 2013, the Companies and JMA Railroad Supply Company ("JMA Supply"), a related corporation, collectively hired Kincaid as their bookkeeper and internal accountant. In that position, Kincaid was responsible for billing, accounts payable, accounts receivable, handling bank deposits, as well as other "related financial matters." Appellants' App. Vol. 2 at 12.

[5] Within one month of being hired, Kincaid began embezzling money from the Companies and from JMA Supply by "cut[ting] checks to herself while fraudulently forging the [Companies'] president's signature." Id. Kincaid would then deposit those checks into her personal bank account with Centra Credit. "Kincaid started her fraudulent scheme slowly to evade detection." Appellants' Br. at 7. For example, in September, October, and December 2013, she fraudulently deposited a total of four checks drawn on JMA Supply's account, totaling $16,712. We note that any claims relating to these checks are time barred, and therefore, JMA Supply is not a party to this action. Id.

[6] Kincaid's fraudulent activity increased rapidly, and in May 2014, she deposited into her Centra Credit account seven checks totaling $13,950, all of which were written against JMA's account. Appellants' App. Vol 2 at 12. Beginning in August 2014, Kincaid began depositing numerous forged checks into her Centra Credit account on an increasingly frequent basis. For instance, in August 2014, Kincaid deposited seven checks, dated August 7, 8, 13, 20, 22, 26[,] and 26, totaling $25,300. Id. Thereafter, the rate and amount of fraudulent checks continued to increase. Id.

[7] By April 2015, the last full month before Kincaid's illegal activity was discovered, she deposited one or more checks on April 1, 2, 7, 8, 13, 15, 16, 17, 21, 24, 27, 28, and 30. Together, these checks totaled $116,300. Id. at 12-13. All of those checks were drawn on EngineAir's account and deposited into Kincaid's personal account at Centra Credit. In the ten months leading up to May 2015, Kincaid deposited more than 100 fraudulent EngineAir checks. Id. at 13. In total, Kincaid stole more than $540,450 from the Companies, all of which was in the form of checks that Kincaid deposited into her personal account with Centra Credit and then withdrew as cash immediately after each check had cleared. Id. at 10, 13.

[8] On May 18, 2015, in the routine course of transferring funds to pay a vendor, EngineAir's president learned that EngineAir's checking account had a balance of only $2,000; the financial records prepared by Kincaid reflected a balance of $178,000. Id. at 14. EngineAir evaluated the account and discovered that Kincaid had been embezzling money from the Companies' accounts. Kincaid was charged, pleaded guilty, and was sentenced to forty-one months in federal prison.

[9] On April 11, 2017, the Companies filed their complaint seeking damages from Centra Credit for the bank's negligence in having accepted and deposited dozens of fraudulent checks and allowing Kincaid to withdraw those funds from her Centra Credit account. Appellants' App. Vol. 2 at 11. The Companies sought damages under the UCC and common law negligence. Id. at 10-17.

[10] On June 2, 2017, Centra Credit filed a Trial Rule 12(B)(6) motion to dismiss for failure to state a claim. Centra Credit argued that: (1) the Companies could not proceed, since under the general rule, a bank does not owe a non-customer a duty of care; (2) negligence cases, generally, are preempted by the UCC; (3) under the UCC, Centra Credit owes no duty to the Companies, and (4) recovery of monetary damages by the Companies was precluded by the economic loss doctrine. Id. at 23-32.

[11] The Companies responded, arguing that Centra Credit owed the Companies a duty of care pursuant to the UCC, particularly, Indiana Code section 26-1-3.1-405, the UCC's warranty provisions, and Indiana negligence law generally. Id. at 63-77. The Companies argued that, even if Indiana were to adopt the general rule that banks do not owe a non-customer a duty of care, "an award of damages, is appropriate under the 'exceptional circumstances' of this case as pled in the complaint because [Centra Credit] accepted numerous checks totaling a large amount while not following its own internal policies or federal regulations." Id. at 64. The trial court heard argument on August 7, 2017, and on August 23, 2017, it entered an Order (the "Order") granting Centra Credit's motion to dismiss. The Companies now appeal.

Discussion and Decision

[12] We review de novo a trial court's grant or denial of a motion to dismiss for failure to state a claim, pursuant to Trial Rule 12(B)(6), giving no deference to the trial court's decision. Babes Showclub v. Lair , 918 N.E.2d 308, 310 (Ind. 2009). Such a motion tests the legal sufficiency of the plaintiff's claim, not the facts supporting it. Thornton v. State , 43 N.E.3d 585, 587 (Ind. 2015) ; Alford v. Johnson Cnty. Comm'rs , 92 N.E.3d 653, 659 (Ind. Ct. App. 2017).

Inasmuch as motions to dismiss are not favored by the law, they are properly granted only "when the allegations present no possible set of facts upon which the complainant can recover." Mart v. Hess , 703 N.E.2d 190, 193 (Ind. Ct. App. 1998). Put another way, a dismissal under Rule 12(B)(6) will not be affirmed "unless it is apparent that the facts alleged in the challenged pleading are incapable of supporting relief under any set of circumstances." Couch v. Hamilton Cnty. , 609 N.E.2d 39, 41 (Ind. Ct. App. 1993).

Magic Circle Corp. v. Crowe Horwath, LLP , 72 N.E.3d 919, 922-23 (Ind. Ct. App. 2017) (quoting City of E. Chicago, Ind. v. E. Chicago Second Century, Inc. , 908 N.E.2d 611, 617 (Ind. 2009) ). "In reviewing the complaint, we take the alleged facts to be true and consider the allegations in the light most favorable to the nonmoving party, drawing every reasonable inference in that party's favor." Hoosier Ins. Co. v. Riggs , 92 N.E.3d 685, 687 (Ind. Ct. App. 2018).

[13] The Companies filed their complaint seeking damages from Centra Credit "for Centra's negligence in accepting, cashing[,] and providing funds to [the Companies'] employee and Centra's customer[,] Angela Kincaid. [The Companies] sought damages pursuant to common law negligence and [UCC] provisions." Appellants' Br. at 5. The trial court, having heard the arguments of counsel and having reviewed the law, dismissed the Companies' complaint pursuant to Trial Rule 12(B)(6) concluding:

1. Indiana has not established a duty of care between a mere collecting bank and the customer of a payor bank;
2. There is no statutory law in Indiana that creates a warranty or other statutory obligation from the Defendant collecting bank to the Plaintiffs, individually or as customers of their bank, the payor bank; and
3. Any failure of the Defendant bank to act in a commercially reasonable manner or to report "Suspicious Activity" to federal authorities is not a breach of any established duty to the Plaintiffs.

Appellants' App. Vol. 2 at 8.

Duty of Care

[14] The Companies first contend that the trial court erred in dismissing their complaint because, contrary to the trial court's conclusion, a duty of care can exist between a depositary bank and a non-customer drawer. The Companies argue that "the question of whether a bank may owe a non-customer a duty has been established," and each court having addressed that issue "has found or presumed that such a duty may exist." Appellants' Br. at 13 (citing Auto-Owners Ins. Co. v. Bank One , 879 N.E.2d 1086 (Ind. 2008) ). While a depositary bank may, under certain circumstances, owe a duty of care to a non-customer, because our review is de novo, the question before this court is whether Centra Credit owed a duty of care to the Companies.

[15] In their complaint, the Companies asserted that pursuant to established Indiana law and the UCC, Centra Credit owed the Companies "a duty to exercise ordinary care in inspecting, negotiating and making a reasonable inquiry with respect to the checks submitted by Kincaid." Appellants' App. at 14. Specifically, the Companies claimed that: (1) Centra Credit failed to exercise reasonable care in paying or taking the instruments at issue; (2) it was not commercially reasonable for Centra Credit to take the checks at issue; (3) Kincaid's conduct should have raised red flags; (4) Kincaid's activity was so extreme, it should have triggered Centra Credit's Suspicious Activity Reporting requirements under applicable federal law; (5) Centra Credit knew, suspected, or should have known that the deposits and withdrawals were designed to conceal unlawful activity; (6) Centra Credit violated its duty by failing to exercise ordinary care when taking or paying the checks; and (7) the Companies were injured by that breach of duty. Appellants' App. at 14-16. The Companies cited to no specific UCC sections in their complaint; however, in their response to Centra Credit's motion to dismiss, the Companies argued that Centra Credit owed them a duty of care through Indiana Code section 26-1-3.1-405 and the UCC's warranty provisions. Appellants' Br. at 5.

[16] The Companies suggest that common law negligence and the UCC operate jointly and, therefore, the Companies can bring a common law negligence action in addition to any UCC claim. Centra Credit counters that the UCC "preempted negligence claims generally," and, since the Companies' claims fall within the provisions of the UCC, any common law claim arising from Centra Credit's conduct is "displaced." Appellee's Br. at 8. Accordingly, we begin by discussing the general applicability of the UCC and its interplay with common law negligence.

[17] The Indiana General Assembly adopted the UCC with the intent that the Act be "liberally construed and applied to promote its underlying purposes and policies," which include: (1) to simplify, clarify, and modernize the laws governing commercial transactions; (2) to permit continued expansion of commercial practices through custom, usage, and party agreements; and (3) to make uniform the law among the various jurisdictions. Ind. Code § 26-1-1-102(1), (2). Comment 1 to UCC Section 1-102 explains that the Act "is drawn to provide flexibility" so that it "will provide its own machinery for expansion of commercial practices." In other words, the UCC "is intended to make it possible for the law embodied in [that] Act to be developed by the courts in the light of unforeseen and new circumstances and practices." Ind. Code § 26-1-1-102, cmt. 1.

[18] The drafters of the UCC determined that "Negotiable Instruments" and "Bank Deposits and Collections" were proper subjects for commercial uniformity, and the Indiana General Assembly adopted those laws into what are now Indiana Code chapter 26-1-3.1 ("UCC Article 3.1") and Indiana Code chapter 26-1-4 ("UCC Article 4"), respectively. A check is subject to provisions contained in UCC Article 3.1. Ind. Code § 26-1-3.1-102(a), -104. Once deposited and transferred through the banking system for payment, a check is also subject to UCC Article 4. The legislature has determined that when the two chapters conflict, Article 4 governs. Ind. Code § 26-1-3.1-102(b).

[19] Since UCC Article 3.1 and Article 4 address complicated relationships and include specific terms of art, an introduction to the specific nomenclature is helpful. A "negotiable instrument" is an unconditional promise to pay a fixed amount of money, payable to bearer, on demand, and with no other promises from the drawer. Ind. Code § 26-1-3.1-104(a). The definition of "check" includes "a draft, other than a documentary draft, payable on demand and drawn on a bank." Ind. Code § 26-1-3.1-104(f). The checks at issue were negotiable instruments. The "drawer" is a person identified in a check as the one ordering the payment; Kincaid's use of the Companies' checks made the Companies the drawers. Ind. Code § 26-1-3.1-103(a)(5). "Drawee" means a person ordered in a draft to make a payment; here, the Companies' bank was the drawee or payor bank. Ind. Code § 26-1-3.1-103(a)(4). An "endorsement is the signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of negotiating the instrument." Ind. Code § 26-1-3.1-204. "Endorser" means the person who makes the endorsement. Ind. Code § 26-1-3.1-204(b). Kincaid became the endorser when she endorsed the back of each fraudulent check to deposit it into her Centra Credit account; and, once Kincaid deposited the forged checks, Centra Credit became the depositary bank.

[20] A check typically involves three parties: the drawer, on whose account the check is drawn; the payee, to whose order the check is made out; and the drawee or payor bank, from which the drawer's check is to be paid. In form, a check is an order to the drawee bank to pay the face amount of the check to the payee. After receiving the check, the payee typically endorses it on the back in the payee's own name and then deposits it into the payee's account at the depositary bank. The depositary bank credits the check to the payee's account and sends the check through the check clearing system to the drawee bank for payment, and if it is properly paid, the drawee then deducts the payment from the drawer's account. Any bank through which the check passes in the clearing process is an "intermediary bank." Ind. Code § 26-1-4-105(4). Any bank handling the check for collection, including the depositary bank, but excluding the payor bank, is referred to as a "collecting bank." Ind. Code § 26-1-4-105(5).

[21] Because (1) not every check or collection scenario falls within the coverage of the UCC and (2) "the proper construction of the [UCC] requires that its interpretation and application be limited to its reason," UCC Section 1-102, comment 1, the drafters included Section 1-103, which provides,

Unless displaced by the particular provisions of [the UCC], the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause, shall supplement the provisions of IC 26-1.

Ind. Code § 26-1-1-103. That being said, where the UCC addresses a specific commercial practice, the UCC displaces the common law. Cf. Farmers Loan & Tr. Co. v. Letsinger , 652 N.E.2d 63, 65 (Ind. 1995) ("Because no particular provision of the UCC governs the bank's claim on the guaranty, Indiana common law and the Indiana law of equity control."). To determine whether the common law has been displaced in the instant case, we consider the UCC scheme and common law duty as applied to the parties before us.

[22] The Companies' complaint is premised primarily on a theory that Centra Credit owed the Companies a duty of care and breached that duty when it did not alert the Companies about Kincaid's unusual deposits and withdrawals. To recover under a theory of negligence, a plaintiff must prove three elements:

(1) a duty on the part of the defendant to conform his conduct to a standard of care arising from his relationship with the plaintiff, (2) a failure of the defendant to conform his conduct to the requisite standard of care required by the relationship, and (3) an injury to the plaintiff proximately caused by the breach.

Harper v. Hippensteel , 994 N.E.2d 1233, 1237 (Ind. Ct. App. 2013) (quoting Webb v. Jarvis , 575 N.E.2d 992, 995 (Ind. 1991) ). Before reaching the questions of breach and injury, we must consider the threshold matter of whether Centra Credit owed a duty to the Companies. Absent a duty, there can be no breach and, therefore, no recovery in negligence. Williams v. Cingular Wireless , 809 N.E.2d 473, 476 (Ind. Ct. App. 2004), trans. denied .

[23] Whether a defendant owes a duty of care to a plaintiff is a question of law for the court to decide. N. Ind. Pub. Serv. Co. v. Sharp, 790 N.E.2d 462, 466 (Ind. 2003) ; Williams , 809 N.E.2d at 476. In their brief, the Companies, claiming that Centra Credit owes them a common law duty, focus on the "three-part balancing test developed by [our Supreme Court]." Yost v. Wabash Coll. , 3 N.E.3d 509, 515 (Ind. 2014). Those factors are: (1) the relationship between the parties; (2) the reasonable foreseeability of the harm to the person injured; and (3) public policy concerns. Id. ; Williams , 809 N.E.2d at 476.

Relationship between the Centra Credit and the Companies

[24] The Companies' entire argument regarding the relationship between the parties is as follows: "[T]he parties relationship[,] that of the drawer of a check and the depository bank, justifies a finding of duty, especially where, as here, the dismissed complaint alleges Centra Credit knew or should have known of the misconduct at issue and where special circumstances existed." Appellants' Br. at 23. Our court has said, "A duty of reasonable care is 'not, of course, owed to the world at large,' but arises out of a relationship between the parties." Id.

[25] Indiana courts "have a long and continuous history of recognizing negligence actions for statutory violations." Kho v. Pennington , 875 N.E.2d 208, 212 (Ind. 2007). Citing to Section 3.1-405, the Companies claim that this section creates a duty, which allows them to sue Centra Credit. In support of that claim, the Companies cite to Auto-Owners Insurance Co. v. Bank One , 879 N.E.2d 1086, 1089-90 (Ind. 2008), in which our Supreme Court, analyzing UCC Section 3.1-405, accepted that an employer could bring a cause of action, but found negligence in account opening was insufficient, by itself, to state a claim pursuant to UCC Section 3.1-405. Appellants' App. at 5.

[26] Section 3.1-405(b) provides:

For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in concert with the employee makes a fraudulent endorsement of the instrument , the endorsement is effective as the endorsement of the person to whom the instrument is payable if it is made in the name of that person. If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the person bearing the loss proves that the failure to exercise ordinary care substantially contributed to the loss.

Ind. Code § 26-1-3.1-405 (emphasis added). The plain meaning of Section 3.1-405 is that it applies only to forged endorsements and not, like here, to forged signatures . This interpretation is supported by Comment 1 UCC Section 3.1-405, which states:

Section 3-405 is addressed to fraudulent indorsements made by an employee with respect to instruments with respect to which the employer has given responsibility to the employee. ... This section applies to instruments generally but normally the instrument will be a check. Section 3-405 adopts the principle that the risk of loss for fraudulent indorsements by employees who are entrusted with responsibility with respect to checks should fall on the employer rather than the bank that takes the check or pays it, if the bank was not negligent in the transaction. Section 3-405 is based on the belief that the employer is in a far better position to avoid the loss by care in choosing employees, in supervising them, and in adopting other measures ....

We find that Centra Credit owes no duty to the Companies arising under Section 3.1-405, and therefore no cause of action against Centra Credit arises under that section.

Foreseeability and Public Policy

[27] The Companies also contend that Centra Credit owed them a common law duty of care because it was foreseeable that a fraudulent transaction could result in loss for the Companies and because public policy demands it. Appellants' Br. at 15-23. "The general stance of Articles 3 and 4 is to place losses for forged drawer's signatures initially on the payor bank and for forged indorsements or alterations on the first party to take the instrument after the theft." A. Brooke Overby, Check Fraud in the Courts after the Revisions to U.C.C. Articles 3 and 4 , 57 Ala. L. Rev. 351, 361 (2005). Naturally, a person who commits forgery by means of a negotiable instrument should be responsible for any loss; however, "when the curtain rises on the last act, the wrongdoer will either be off the scene or insolvent." 2 James J. White, Robert S. Summers, & Robert A. Hillman, Uniform Commercial Code § 19:10 (6th ed. 2013). Recognizing this principle, the drafters of the UCC contemplated the allocation of this loss. "The U.C.C. accomplishes this allocation through a rather complicated series of causes of action." Overby, supra, at 361-62. "These actions are founded upon contract-based, warranty-based, and property-based provisions scattered throughout the Code." Id. at 362.

[28] As pertinent to this appeal, that allocation takes into consideration: (1) whether the fraudulent transaction involved an unauthorized signature, Ind. Code §§ 26-1-3.1-401, 3.1-402, Ind. Code § 26-1-3.1-403, or a fraudulent endorsement, Ind. Code § 26-1-3.1-405 ; (2) whether the loss occurred as the result of a transfer to a collecting bank, Ind. Code §§ 26-1-3.1-416, 4-207, or a presentment to a payor bank, Ind. Code §§ 26-1-3.1-417, 4-208; (3) whether a fraudulent endorsement was committed at the hand of the drawer's employee who had access to the drawer's checks, Ind. Code § 26-1-3.1-405, and (4) whether the drawer was negligent in duties owed, Ind. Code § 26-1-4-406. This complex scheme reveals that the drafters of the UCC considered both foreseeability and public policy when they drafted the Act.

[29] As a general rule, under the UCC a drawer is not liable on a negotiable instrument unless the person or his agent signed the instrument. Ind. Code § 26-1-3.1-401, -402. The corollary to that rule is that a bank has the authority to "charge against the account of a customer an item that is properly payable from that account ...." Ind. Code § 26-1-4-401(a). "By implication, the section also tells when a bank 'may not' charge the account." White & Summers, supra , § 19.3. "An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and the bank." Id. A bank does not "properly pay" over a forgery. Id. If, like here, a drawee bank does not discover the forged signature, but makes a final payment on the check, the drawee, in the absence of a drawer's negligence, may not charge the drawer's account and, therefore, will bear the loss. Kincaid forged the signature of the Companies' president, and the Companies did not authorize the payment of the forged checks, so without more, the Companies would not have been liable for their losses.

[30] Under circumstances, like here, where the drawee pays over a forged signature and withdraws the money from the drawer's account, the UCC contemplates that the drawer will have an action against the drawee bank for breach of the customer's contract with the bank or a statutory claim under UCC Section 4-401. Id. Even so, the UCC "hold[s] each negligent party liable for its substantial contribution to the loss." White & Summers, supra , § 19.14. "This allocation of liability based on comparative negligence was incorporated into the [Act] as part of the 1990 amendments to Articles 3[.1] and 4."Id.

[31] That allocation occurs, in part, through UCC Section 4-406, which requires a bank to make "available to a customer a statement of account showing payment of items for the account available to a customer" sufficient for the customer to identify the items paid. Ind. Code § 26-1-4-406(a). Under UCC Section 4-406(c), the customer must then

exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.

Ind. Code § 26-1-4-406(c). If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection (c), "the customer is precluded from asserting against the bank: ... the customer's unauthorized signature ... by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature ... and after the customer had been afforded a reasonable period of time, not exceeding thirty (30) days, in which to examine the item or statement of account and notify the bank." Ind. Code § 26-1-4-406(d)(2).

[32] As Centra Credit correctly notes, imposing a duty of reasonable care on Centra Credit, as a depositary bank, to monitor checks with forged signatures, would place Centra Credit in the position of being an insurer for non-customers unfortunate enough to hire thieves and embezzlers. Appellee's Br. at 13. Furthermore, to recognize this putative duty between Centra Credit and the Companies "would ultimately undermine UCC Section 4-406, which places a duty on the account holder to "promptly report any unauthorized signature on a check or other financial instrument." Appellee's Br. at 13-14. The drafters of the UCC determined that the loss should be placed on the party best able to avoid it. The UCC's provisions reflect that Centra Credit, as the depositary bank, was not in the best position to avoid this loss when the loss arose from the forged signature of the Companies' president, a signature with which Centra Credit had no familiarity.

[33] With the goal to simplify, clarify, and modernize the laws governing commercial transactions and allow continued expansion of commercial practices through custom and usage, the drafters of the UCC intended to bring this foreseeable fraudulent commercial transaction under the UCC. Accordingly, we conclude that the Companies have no claim of negligence at common law. Instead, as non-customers, their remedy, if any, must arise from the UCC.

Transfer and Presentment Warranties

[34] Without citation to a specific UCC section, the Companies also argue that they can pursue a claim against Centra Credit for breach of "the UCC's warranty provisions." Appellants' Br. at 5. Chapter 3.1 and Chapter 4 include two types of warranties: "transfer" warranties and "presentment" warranties. The UCC addresses "transfer warranties" in Indiana Code sections 3.1-416 and 4-207 and "presentment warranties" in Indiana Code sections 3.1-417 and 4-208. These warranties "allow banks to shift all or part of the losses from forgery ... to each other or to customers." Melissa Waite, Check Fraud and the Common Law: At the Intersection of Negligence and the Uniform Commercial Code , 54 B.C. L. Rev. 2205, 2214 (2013).

[35] The Companies claim that Insurance Company of North America v. Purdue National Bank of Lafayette , 401 N.E.2d 708 (Ind. Ct. App. 1980) (hereafter, " N.A. Insurance ") is the "leading case on point" to support their claim that a depositary bank may owe a non-customer a duty of care. Appellants' Br. at 13. Of importance to the Companies is the N.A. Insurance court's reliance on the reasoning and holding set forth by the California Supreme Court in Sun 'n Sand, Inc. v. United California Bank , 21 Cal.3d 671, 148 Cal.Rptr. 329, 582 P.2d 920 (1978). Appellants' Br. at 14. Sun 'n Sand held that a drawer whose account was debited by his bank is a "payor" entitled to claim the benefits under the warranties of Sections 3-417 and 4-207, which at that time extended to "the payor bank or other payor who in good faith pays or accepts the item." Ins. Co. of N. Am., 401 N.E.2d at 712 (citing Sun 'n Sand , 148 Cal.Rptr. 329, 582 P.2d at 928 ). Under the holdings in N.A. Insurance and Sun 'n Sand , a drawer could maintain an action, under Sections 3-417 and 4-207, for breach of warranty against a collecting bank. Sun 'n Sand , 148 Cal.Rptr. 329, 582 P.2d at 928-29.

[36] In 1990, however, the drafters of the UCC amended Sections 3-417 and 4-207, removing the "payor" language upon which the California Supreme Court relied and, in so doing, expressly rejected the reasoning and holding of Sun 'n Sand . Comment 2 to Section 3.1-417 clearly states,

There is no warranty made to the drawer under subsection (a) when presentment is made to the drawee. Warranty to the drawer is governed by subsection (d) and that applies only when presentment for payment is made to the drawer with respect to a dishonored draft. In Sun 'n Sand..., the court held that under former Section 3-417(1) a warranty was made to the drawer of a check when the check was presented to the drawee for payment. The result in that case is rejected.

[37] Because the Sun 'n Sand holding was rejected by the 1990 amendment, so too was the result in N.A. Insurance . The Companies have no causes of action against Centra Credit for breach of warranty under the now superseded reasoning in N.A. Insurance .

Bank Secrecy Act and Suspicious Activity Report

[38] The Companies contend that Centra Credit's failure to comply with the reporting requirements of the Bank Secrecy Act ("the BSA"), 31 U.S.C. §§ 5311 - 5330 and 31 C.F.R. Chapter X, and Suspicious Activity Reports ("SARs) resulted in loss to the Companies because, had those reports been filed, the Companies could have stopped Kincaid's embezzlement sooner. Appellants' Br. at 10-11, 22. Underlying this argument is the Companies' assumption that the Companies are parties who should benefit from those federally mandated requirements of the BSA and, therefore, had a claim against Centra Credit for breaching its duty to the Companies when Centra Credit did not file the SARs to report Kincaid's "extreme" banking activity. Appellants' Br. at 10.

[39] While we find no discussion of this issue in Indiana law, courts that have considered the question have found that the BSA does not create or authorize a private right of action. B.E.L.T., Inc. v. Wachovia Corp. , 403 F.3d 474, 476 (7th Cir. 2005) (regulation requiring banks to notify Treasury Department of known or suspected criminal violation does not create private action for damages); AmSouth Bank v. Dale , 386 F.3d 763, 777 (6th Cir. 2004) (the BSA does not create a private right of action); Ventura v. Cent. Bank , 515 S.W.3d 680, 682-83 (Ky. Ct. App. 2017) ("[T]he BSA provides financial institutions ... immunity under its safe harbor provision from lawsuits based on the financial institutions' report or disclosure of suspicious activity. 31 U.S.C. § 5318(g)(3)(A)."); Marchak v. JPMorgan Chase & Co. , 2016 WL 3911926, at *3 (E.D.N.Y. July 15, 2016) ("The BSA does not authorize a private right of action."); Grad v. Associated Bank N.A. , 336 Wis.2d 474, 801 N.W.2d 349, 2011 WL 2184335 (Wis. Ct. App. 2011) (no private right of action created by BSA); El Camino Res., Ltd. v. Huntington Nat'l Bank , 722 F.Supp.2d 875, 923 (W.D. Mich. 2010) (BSA does not create private cause of action), aff'd by, El Camino Res. Ltd. v. Huntington Nat. Bank , 712 F.3d 917, 919 (6th Cir. 2013) (BSA does not create private cause of action); Hanninen v. Fedoravitch , 583 F.Supp.2d 322, 326 (D. Conn. 2008) (holding that neither the Patriot Act nor the BSA authorizes a private right of action). Because there can be no private right of action for a violation of the BSA and its SARs reporting requirements, Centra Credit's failure, if any, to file such reports would not support the Companies' cause of action.

[40] We find that under the facts of this case, the UCC has displaced any cause of action that the Companies may have against Centra Credit. Because the Companies have alleged no theory under which Centra Credit could be liable for the loss the Companies sustained from Kincaid's forged checks, we affirm the trial court's grant of Centra Credit's motion to dismiss for failure to state a claim.

[41] Affirmed.

Baker, J., and Bradford, J., concur.

      "Depositary bank" means "the first bank to take an item even though it is also the payor bank, unless the item is presented for immediate payment over the counter." Ind. Code § 26-1-4-105.

      It is not clear whether the Companies had the same president; however, in their complaint, the Companies refer to the "Plaintiffs' president's signature." Appellants' App. at 12.

      The Companies seek to recover damages arising from a multitude of fraudulent checks, some of which may be barred by the statute of limitations. Because this is a review of the grant of a motion to dismiss, we need only determine whether the Companies' complaint states a claim with respect to one of the checks.

      During the August 2017 hearing on Centra Credit's motion to dismiss, both parties addressed the question of whether the economic loss doctrine prevented the Companies from bringing this suit. The trial court's Order, however, made no reference to the economic loss doctrine, and the parties have not raised that issue on appeal. Furthermore, finding, as we do, that the Companies' complaint was properly dismissed for failure to state a claim, we need not address this issue.

      We discuss Auto-Owners Ins. Co. v. Bank One , 879 N.E.2d 1086 (Ind. 2008) later in our decision.

      In this decision, all citations to the Indiana Code are found in Title 26 and Article 1. For ease of reference, we will shorten any citation that appears in a sentence from Indiana Code section 26-1-1-102 to UCC Section 1-102.

      In the Indiana Practice Series, the Author's Comments to UCC Section 1-101 provide,
      Indiana did not adopt the Official Comments to the UCC as part of the 2007 revisions to its version of the UCC. Nevertheless, some courts look to the Official Comments to the UCC for guidance in applying and interpreting Indiana's version of the UCC. See Collins v. Pfizer , 2009 WL 126913, *2 (S.D. Ind. Jan. 20, 2009). "In general, Indiana courts treat the official comments as an authoritative guide to the UCC." See also In re Scott , 427 B.R. 123, 71 U.C.C. Rep. Serv. 2d 314 (Bankr. S.D. Ind. 2010) (discussing persuasive authority of Official Comments to UCC notwithstanding that Indiana did not adopt them as part of its version of the UCC).
      7 Ind. Prac., UCC Forms Annotated § 26-1-1-101 (3d ed.) )

      "Payor bank" means "a bank that is the drawee of the draft." Ind. Code § 26-1-4-105(3).

      We note that a duty can arise from a contractual relationship; however, here, the parties make no claim that a contractual relationship exists. See Harper v. Hippensteel , 994 N.E.2d 1233, 1237 (Ind. Ct. App. 2013) ("duty arises from the contractual relationship entered into between the doctor and patient").

      We note that the Indiana Code uses "endorsement," and the comments use "indorsement." We use these spellings interchangeably.

      Prior to the UCC's 1990 amendments, "some courts found drawers of stolen checks to be proper plaintiffs in conversion actions"; however, "[w]ith the 1990 addition of section 3-420, the conversion action is no longer available to drawers of stolen checks or to payees who never had actual or constructive possession of stolen instruments bearing their names." UCC Section 3.1-420(a), in pertinent part provides, "An action for conversion of an instrument may not be brought by: (1) the issuer or acceptor of the instrument; or (2) a payee or endorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee." Ind. Code § 26-1-3.1-420.

      Prior to the UCC's 1990 amendments, the transfer warranties and presentment warranties were contained in one section, Section 3-417 for negotiable instruments and Section 4-207 for bank deposits and collection. 2 James J. White, Robert S. Summers, & Robert A. Hillman, Uniform Commercial Code § 19:10 (6th ed. 2013). As part of the amendment, and to help clarify what warranties were granted, the UCC drafters "divided 'transfer' warranties from 'presentment' warranties and [gave] each of them its own section in Article 3 and Article 4." Id.

      N.A. Insurance was superseded by statute as stated in Conder v. Union Planters Bank, N.A. , 384 F.3d 397, 399 (7th Cir. 2004). Likewise, Sun 'n Sand was superseded by statute as stated in Bhaskar v. Farmers & Merchants Bank , 2017 WL 3381390, at *1 (Cal. Ct. App. Aug. 7, 2017).

      The Companies did not provide a specific citation for the SARs.

      "While not binding on Indiana courts, we observe that the Federal Rules of Appellate Procedure permit citation to unpublished opinions issued after January 1, 2007. FRAP 32.1(a)." Triplett v. USX Corp. , 893 N.E.2d 1107, 1121 n.8 (Ind. Ct. App. 2008), trans. denied .

      In their Reply Brief, the Companies raise for the first time the argument that the "UCC does not bar Plaintiffs' right to seek relief for Centra [Credit]'s aiding and abetting of intentional torts, fraudulent conduct[,] and breaches of fiduciary duty." Appellants' Reply Br. at 4. "No new issues shall be raised in the reply brief." Ind. Appellate Rule 46(C). "The law is well settled that grounds for error may only be framed in an appellant's initial brief and if addressed for the first time in the reply brief, they are waived." Monroe Guar. Ins. Co. v. Magwerks Corp. , 829 N.E.2d 968, 977 (Ind. 2005) ; see Crossmann Cmty., Inc. v. Dean, 767 N.E.2d 1035, 1044 (Ind. Ct. App. 2002) (issues raised for the first time in a reply brief are deemed waived) ). Accordingly, this issue is waived.


author: Riley, Judge.

text:
    Kyle J. WILKINSON, Appellant-Petitioner, v. Danielle A. ASSANTE, Appellee-Respondent, and Paul Assante and Jennifer Assante, Appellees-Intervenors.
    Court of Appeals Case No. 18A-DR-327
    Court of Appeals of Indiana.
    FILED July 26, 2018
    Attorney for Appellant: Jared Michel Thomas, Evansville, Indiana
    Attorney for Appellees: Jason M. Spindler, Princeton, Indiana
   Riley, Judge.

STATEMENT OF THE CASE

[1] Appellant-Petitioner, Kyle Wilkinson (Father), appeals the trial court's Order, granting Appellee-Respondent's, Danielle Assante (Mother), motion to dismiss Father's petition to modify custody of their minor children, A.W. & Ai.W. (Children), pursuant to the Indiana Uniform Child Custody Jurisdiction Act.

[2] We affirm.

ISSUE

[3] Father raises one issue for our review, which we restate as: Whether the trial court abused its discretion when it declined to continue its jurisdiction over the Children based on the application of the Indiana Uniform Child Custody Jurisdiction Act (UCCJA).

FACTS AND PROCEDURAL HISTORY

[4] Father and Mother are the biological parents of A.W., born July 2, 2009, and Ai.W., born May 16, 2010-both Children were born in New Jersey. The Parents were never married, but resided together and Father executed a paternity affidavit for both Children. During 2010 and 2011, the New Jersey Division of Youth and Family Services became involved with the family. On May 20, 2010, the Superior Court of Sussex County in New Jersey (Sussex County trial court) awarded temporary legal and physical custody of Ai.W. to Maternal Grandmother. On August 31, 2010, the Sussex County trial court continued Maternal Grandmother's temporary legal and physical custody of Ai.W. but awarded Parents supervised visitation. On February 15, 2011, the Sussex County trial court ordered physical and legal custody of Ai.W. to be transferred to Parents and on June 17, 2011, the State of New Jersey terminated its involvement with the family because the Children had been returned home and all of the conditions causing the removal of the Children had been remedied. In its Order terminating the court's involvement, the Sussex County trial court awarded primary physical custody of the Children to Mother, with joint legal custody to the Parents.

[5] In March of 2014, Parents and Children moved to Gibson County, Indiana, where they continually resided until February 2016. On February 6, 2016, Mother and the Children moved back to New Jersey, while Father continued to reside in Gibson County, Indiana. The Children have been enrolled in school in New Jersey ever since.

[6] On February 29, 2016, Father filed an emergency petition to modify custody with the Gibson County circuit court (trial court). After a hearing and by order of March 16, 2016, the trial court issued an emergency custody order, awarding emergency custody of the Children to Father. On March 18, 2016, the Sussex County trial court entered a handwritten order in docket No. FD-19-287-11, stating that the Children were to be returned to the custody of Father, and afforded Father the right to utilize law enforcement officers to enforce the trial court's order. Thereafter, Paul and Jennifer Assante (Maternal Grandparents) intervened by filing an order to show cause under a new cause number with the Sussex County trial court requesting it to temporarily restrain Father from removing the Children from the State of New Jersey. On March 21, 2016, the Sussex County trial court temporarily restrained Father from removing the Children and ruled that Maternal Grandparents had thirty days "to file in Indiana, the home state, to obtain an order as to custody issues." (Appellant's App. Vol. II, p. 83).

[7] On April 20, 2016, Mother moved the trial court to set aside the emergency custody order and, by agreement of the parties, the trial court granted Maternal Grandparents' request to intervene in the cause pending before the Indiana court. Over the next eighteen months, the parties were involved in discovery efforts "to get discovery from [Father] and [Father's] drug treatment program" from the treatment facility. (Appellant's App. Vol. II, p. 50). Ultimately, the Maternal Grandparents, as Intervenors, obtained a motion to compel the third party for failing to comply with the Indiana Rules of Trial Procedure.

[8] On October 26, 2017, Mother filed a motion to dismiss pursuant to the UCCJA, to which Father filed an objection on November 2, 2017. After conducting a hearing on Mother's motion, on November 27, 2017, the trial court dismissed Father's petition for custody, concluding, in pertinent part:

Although it is certainly arguable that the Indiana court initially had jurisdiction at the time the petition was filed on behalf of [Father] in this matter, it is evident to this [c]ourt that the State of New Jersey is now the most appropriate and most convenient forum to determine the best interest of the [C]hildren as it is now the state with the closest connections to the [C]hildren and their family.

(Appellant's App. Vol. II, p. 51). On December 27, 2017, Father filed a motion to correct error, which was summarily denied by the trial court on January 9, 2018.

[9] Father now appeals. Additional facts will be provided if necessary.

DISCUSSION AND DECISION

[10] Father contends that the trial court abused its discretion by dismissing his petition for custody based on the application of the UCCJA provisions. Where, as here, the issue at hand deals with an interstate custody determination, the UCCJA, which is codified at Indiana Code Chapter 31-21-5 governs. One purpose of the UCCJA is to prevent parents from seeking custody in different jurisdictions in an attempt to obtain a favorable result. Tamasy v. Kovacs , 929 N.E.2d 820, 825 (Ind. Ct. App. 2010). As such, "[t]he UCCJA has provisions for the determination of jurisdiction." Id. Under the UCCJA, an Indiana court has an affirmative duty to question its jurisdiction when it becomes aware of an interstate dimension in a child custody dispute. Christensen v. Christensen , 752 N.E.2d 179, 184 (Ind. Ct. App. 2001). The trial court must first determine whether it has jurisdiction, and, if it does, whether to exercise that jurisdiction. Id. at 182. In determining whether a trial court has improperly exercised jurisdiction under the UCCJA, we apply an abuse of discretion standard. Tamasy , 929 N.E.2d at 826. An abuse of discretion occurs when the trial court's decision is clearly against the logic and effect of the facts and circumstances before the court, or if the court has misinterpreted the law. Id.

[11] Where, as here, the trial court issues special findings and conclusions thereon pursuant to Indiana Trial Rule 52, "we apply the following two-tiered standard of review: whether the evidence supports the findings and whether the findings support the judgment." Staresnick v. Staresnick , 830 N.E.2d 127, 131 (Ind. Ct. App. 2005), reh'g denied . The trial court's findings and conclusions will be set aside only if they are clearly erroneous, that is, if the record contains no facts or inferences supporting them. Id. A judgment is clearly erroneous when a review of the record leaves us with a firm conviction that a mistake has been made. Id. We neither reweigh the evidence nor assess the credibility of the witnesses, but consider only the evidence most favorable to the judgment. We review conclusions of law de novo . Id.

[12] Turning to the case at hand, after the Sussex County trial court became involved with the family and granted Mother primary physical custody, with joint legal custody on June 17, 2011, the parties moved from New Jersey and made their residence with the Children in Indiana in March of 2014. Approximately two years later, in February 2016, Mother and the Children returned to New Jersey and Father filed a petition to modify custody with the trial court in Indiana. "An Indiana court may not modify a child custody determination made by a court of another state unless an Indiana court has jurisdiction to make an initial determination under section 1(a)(1) or 1(a)(2) of [Ind. Code Ch. 31-21-5] and (1) the court of the other state determines that: (A) it no longer has exclusive, continuing jurisdiction under section 2 of [I.C. Ch. 31-21-5]" I.C. § 31-21-5-3. When making a determination of custody under I.C. § 31-21-5-1(a)(1), an Indiana court gains jurisdiction when "(1) Indiana is the home state of the child on the date of the commencement of the proceeding or was the home state of the child within six (6) months before the commencement of the proceeding, and the child is absent from Indiana but a parent or person acting as a parent continues to live in Indiana." Because Indiana was the home state of the Children during the six months prior to Father's filing, and the Sussex County trial court relinquished its jurisdiction by declaring Indiana to be the Children's "home state" in its order of March 21, 2016, the Indiana trial court gained exclusive and continuing jurisdiction to preside over any custody disputes pertaining to the Children. (Appellant's App. Vol. II, p. 83); I.C. §§ 31-21-5-1(a)(1) ; -3. See also In re Custody of A.N.W. , 798 N.E.2d 556, 561 (Ind. Ct. App. 2003) (the court that first enters a custody decree on a matter gains exclusive jurisdiction, but that jurisdiction continues only until all parties and the children that were the subject of the decree have left the state), trans. denied

[13] The fundamental principle underlying the UCCJA is that once a court with a jurisdictional basis exercises jurisdiction over a "custody" issue, that court retains exclusive jurisdiction over all custody matters so long as a "significant connection" remains between the controversy and the state, and that court alone has discretion to decide whether it will defer jurisdiction to the court of another state upon the basis that the other court is a more convenient forum to litigate the issue. In re Custody of A.N.W. , 798 N.E.2d 556, 561-62 (Ind. Ct. App. 2003). A "significant connection" remains under the scheme as long as one parent continues to reside in the state rendering the initial determination. Id. Accordingly, through the passage of time and by operation of law, Indiana has now become the Children's home state.

[14] Nevertheless, the UCCJA provides that "a court with subject matter jurisdiction over a child custody dispute may nonetheless 'decline to exercise its jurisdiction any time before making a decree if it finds that it is an inconvenient forum ... under the circumstances ... and that a court of another state is a more appropriate forum.' " Stewart v. Vulliet , 888 N.E.2d 761, 766 (Ind. 2008). In making this determination, a trial court shall consider

(1) Whether domestic violence has occurred and is likely to continue in the future and which state is best able to protect the parties and the child.
(2) The length of time the child has resided outside Indiana.
(3) The distance between the Indiana court and the court in the state that would assume jurisdiction.
(4) The relative financial circumstances of the parties.
(5) An agreement of the parties as to which state should assume jurisdiction.
(6) The nature and location of the evidence required to resolve the pending litigation, including the child's testimony.
(7) The ability of the court of each state to decide the issue expeditiously and the procedures necessary to present the evidence.
(8) The familiarity of the court of each state with the facts and issues in the pending litigation.

I.C. § 31-21-5-8(b). This list is not exclusive, and courts may consider all relevant factors, including factors not listed. Tamasy , 929 N.E.2d at 827.

[15] In concluding that it was no longer the most convenient forum, the trial court considered that the Children had resided within the State of New Jersey continuously since birth, with the exception of a two-year span between March 2014 and February 2016 when they resided in Indiana. Significant family ties continue to exist in New Jersey with Maternal Grandparents and other relatives. In evaluating the case in its totality, the trial court determined that "the majority of the evidence required to resolve the pending custody litigation, would be in Sussex County, New Jersey, inasmuch as the [C]hildren themselves" continue to reside there. (Appellant's App. Vol. II, p. 49). It noted that the Children are enrolled in school in Sussex County, the Children's therapist is located in Sussex County, and "a host of prior related cases involving not only the [C]hildren but also the [M]other and [F]ather" have previously been filed and decided in Sussex County. (Appellant's App. Vol. II, p. 49). Because "the court is not limited to considering the parties' circumstances only as they existed at the time the petition was filed, but rather can evaluate the case on a continuing basis to ensure the Children's best interests are protected," we conclude that the trial court did not abuse its discretion in declining to exercise jurisdiction over Father's petition to modify custody. Stewart , 888 N.E.2d at 768.

CONCLUSION

[16] Based on the foregoing, we hold that the trial court did not abuse its discretion when it declined jurisdiction over the Children based on the application of the UCCJA.

[17] Affirmed.

[18] Kirsch, J. and Vaidik, C.J. concur

      The record is silent as to whether A.W. was included in this Order, or whether she was the subject of other proceedings.

      Jennifer Assante is the stepmother of Mother and the stepgrandmother of the Children. However, for convenience sake, maternal grandfather and maternal stepgrandmother will be collectively referred to as Maternal Grandparents.

      Indiana Code section 31-21-5-2 states:
      [ ] an Indiana court that has made a child custody determination consistent with section 1 or 3 of this chapter has exclusive continuing jurisdiction over the determination until:
      (1) An Indiana court determines that: (A) neither (i) the child; (ii) the child's parents; nor (iii) any person acting as a parent; has a significant connection with Indiana; and (B) substantial evidence is no longer available in Indiana concerning the child's care, protection, training, and personal relationships; or
      (2) An Indiana court or a court of another state determines that: (A) the child's; (B) the child's parents; and (C) any person acting as a parent; do not presently reside in Indiana.


author: Baker, Judge.

text:
    IN RE the Matter of GUARDIANSHIP OF Timothy A. ROBBINS, an Adult
    Court of Appeals Case No. 18A-GU-242
    Court of Appeals of Indiana.
    FILED July 26, 2018
    Attorneys for Appellant: Jeffrey S. Dible, Maggie L. Smith, Frost Brown Todd, LLC, Indianapolis, Indiana, Tamatha A. Stevens, Stevens & Associates, P.C., Indianapolis, Indiana, Jeffrey C. Eggers, Jeffrey C. Eggers, P.C., Franklin, Indiana
    Attorneys for Amicus Curiae Indiana Chapter of the National Academy of Elder Law Attorneys: Robert W. Fechtman, Fechtman Law Office, Indianapolis, Indiana, Elizabeth A. Homes, Law Office of Elizabeth A. Homes, LLC, Indianapolis, Indiana
   Baker, Judge.

[1] Timothy Robbins (Timothy) sustained catastrophic, permanent injuries from a car accident; he will require full-time care for the rest of his life. His father became his guardian, filed a lawsuit on Timothy's behalf, and reached a settlement agreement totaling over $17 million. Timothy's father asked that the trial court authorize the balance of the settlement agreement to be placed in a special needs trust. The trial court, expressing its disagreement with the legislative policy underlying special needs trusts, placed only $1 million into the trust and ordered the remaining funds be paid directly to the guardianship estate. Finding that the trial court exceeded the bounds of its authority and made errors of law in its ruling, we reverse and remand with instructions that the trial court direct the full, available amount of the settlement proceeds be placed into Timothy's special needs trust.

Facts

[2] In January 2013, the vehicle being driven by then-42-year-old Timothy was side-swiped by a semi truck, resulting in Timothy being ejected from his vehicle. As a result of the accident, Timothy sustained a devastating traumatic brain injury, multiple skull and facial fractures, and additional serious injuries. He remained in a coma for many weeks. Timothy was eventually transferred to a nursing home, where he remains today with full-time care. His brain injuries and resulting dementia are catastrophic and have resulted in permanent and total impairment, including impairments in "intelligence, reasoning, self-care, adaptive functioning, orientation, executive functioning, memory, language skills, psychomotor functioning, and fine motor functioning." Appellant's App. Vol. II p. 112. Timothy will never again live independently and will continue to require full-time care for the rest of his life. Additionally, his medical team believes that his condition will continue to deteriorate with time.

[3] On February 25, 2013, Timothy was adjudicated to be an incapacitated adult person. His father, Shelly Robbins (Guardian), was appointed to be the permanent guardian over Timothy and his estate. Guardian filed a lawsuit on behalf of Timothy against the tortfeasors responsible for the accident; a jury trial took place in July 2017. The jury found in favor of Timothy and awarded damages in the amount of $18.5 million. The defendants indicated an intent to appeal the verdict. Thereafter, the parties attended post-trial mediation. Guardian was willing to settle the case because Timothy had spent "almost five years now not getting some of the treatment and therapies that he needs to benefit him and [Guardian] felt it was in his best interests to get the case resolved ... to provide Tim[othy] the care and treatment he needs sooner rather than later." Tr. Vol. II p. 13. The parties agreed to settle the case for $17.75 million.

[4] After reaching the settlement agreement, Guardian retained an elder law attorney to help structure Timothy's finances to ensure that Timothy would be provided with the care he needs for the rest of his life. Guardian's concerns stemmed from the fact that following the accident, Timothy was receiving Medicaid and Supplemental Security Income (SSI). If the settlement proceeds were paid directly to Timothy, it would have caused him to lose eligibility for those benefits.

[5] As will be more fully explained below, both the United States Congress and the Indiana General Assembly have enacted statutes allowing for the creation and funding of "special needs trusts," which permit a disabled person to shield assets that would otherwise affect Medicaid and SSI eligibility. These statutes were adopted, in part, to address the problem present in this case, where a disabled adult receives a large, lump sum payment from third-party litigation that would eliminate the availability of public benefits. Allowing disabled persons to shield these litigation proceeds in special needs trusts is based on the public policy determination that it is beneficial to allow a disabled person to have both public benefits and an additional source of financial support during the person's lifetime.

[6] Special needs trusts are intended to supplement government benefits and provide for treatment, services, equipment, therapy, etc., that are not covered by Medicaid. Where a disabled person's future needs are unknown and unquantifiable, a special needs trust protects that person from a situation in which the litigation proceeds are insufficient to cover the person's medical care and needs over the course of his life. The flip side to a special needs trust is a statutory mandate that, upon the death of the disabled person, any assets remaining in the trust will be used to pay back to the State an amount equal to the total benefits paid to the disabled person. Only after the State is reimbursed in full may the remaining funds in the trust, if any, be distributed to the disabled person's heirs.

[7] On December 22, 2017, Guardian asked that the trial court approve the settlement agreement; Guardian also sought authority to pay attorney fees and litigation expenses and to satisfy the lien asserted by Medicaid for medical care already provided to Timothy. After making all those payments, the net settlement to Timothy was $11.2 million. The structured settlement agreement provided that $4.5 million of the net amount would be funded through two annuities, providing Timothy guaranteed monthly payments for twenty-five years, and that the remaining $6.75 million would be paid in a lump sum. Also on December 22, 2017, Guardian sought authority to create and fund the Timothy Special Needs Trust with the $6.75 million lump sum.

[8] The trial court held a hearing on Guardian's requests on December 28, 2017. There were no objections raised with respect to any of Guardian's requests. After hearing argument made by Guardian's attorneys, the trial court stated that it was "aware of the rules" regarding special needs trusts but that it disagreed with the legislative policy, explaining that "it's ... the legal fiction of impoverishment which I'm having trouble buying into when we have 12 million sitting here." Id. at 27.

[9] On January 8, 2018, the trial court approved Guardian's requests to compromise and settle Timothy's personal injury claim in the amount of $17.75 million, to pay the personal injury action attorney fees and expenses, and to satisfy the existing Medicaid lien. The trial court denied Guardian's request to fund the Timothy Special Needs Trust in the manner requested by Guardian. Instead, the trial court allowed only $1 million of the $6.75 million to be placed in the trust, ordering the remaining $5.75 million to be paid directly to the Guardianship Estate. The trial court provided three reasons for this decision:

• "[T]he Guardian's request to place all assets received from the personal injury settlement into a special needs trust would shift considerable expenses ... to the taxpayer."
• "The amount received for the future care of Timothy A. Robbins under the Mediated Settlement Agreement is adequate to meet his future needs without public assistance."
• The Timothy Special Needs Trust "appears to be for the benefit of the Guardian and the descendants of Timothy A. Robbins as opposed to Timothy A. Robbins."

Appellant's App. Vol. II p. 16. Guardian now brings this uncontested appeal.

Discussion and Decision

[10] In guardianship proceedings, we will reverse if a trial court's decision is against the logic and effect of the facts and circumstances before it or if the court has misinterpreted the law. E.g. , In re Guardianship of N.R. , 26 N.E.3d 97, 100 (Ind. Ct. App. 2015). As always, we apply a de novo standard of review to questions of law. E.g. , In re Guardianship of Stant , 50 N.E.3d 149, 150 (Ind. Ct. App. 2016).

I. Special Needs Trusts

[11] Special needs trusts are a creation of both federal and state legislation. We turn first to the federal program, which must begin with a brief examination of SSI and Medicaid. SSI provides a minimum level of income for disabled persons (among others). See 20 CFR § 416.1202. Medicaid is a joint federal- and state-funded program that provides certain medical services to disabled persons who meet requisite criteria. In Indiana, to qualify for Medicaid, an applicant must meet both an income eligibility test and a resources eligibility test. State v. Hammans , 870 N.E.2d 1071, 1074 (Ind. Ct. App. 2007).

[12] In 1993, Congress passed the federal Omnibus Budget Reconciliation Act of 1993 (OBRA '93). One of the primary purposes of this legislation was to curb abuses that had arisen as a result of the elderly using trusts to shield their assets. In re Abraham XX. , 11 N.Y.3d 429, 871 N.Y.S.2d 599, 900 N.E.2d 136, 139 (2008). As a general rule, therefore, OBRA '93 provides that a Medicaid applicant's trust assets are now considered available resources that count towards determining that applicant's eligibility for government-funded resources such as SSI and Medicaid. 42 U.S.C. § 1396p(d)(3).

[13] As part of the OBRA '93 discussions, however, "[d]isability advocates ... lobbied the federal government for protection[,]

... striking a balance between the tightened eligibility requirements and the heightened needs of severely disabled individuals who receive a lump sum of money sizeable enough to end their Medicaid eligibility." Abraham XX. , 871 N.Y.S.2d 599, 900 N.E.2d at 139. In response to these concerns, Congress drafted OBRA '93 to include special needs trusts as an exception to the general rule. 42 U.S.C. § 1396p(d)(4)(A). As noted above, special needs trusts allow disabled individuals to place assets into a trust without those assets factoring into the eligibility determination for SSI or Medicaid, provided that the State must be paid back from any remaining trust balance upon the death of the disabled person.

[14] With respect to the State program, our General Assembly adopted Indiana Code chapter 12-15-2 to govern eligibility for the state Medicaid program. Indiana Code section 12-15-2-17(f) incorporates the federal special needs trust provisions exempting such trusts from the eligibility determination. See also 405 Ind. Admin. Code 2-3-22. Indiana likewise has a provision requiring that upon the death of the disabled person, any amounts remaining in the trust must be repaid to the State. I.C. § 12-15-9-1. Thus, both federal and state law permit disabled individuals to place what would otherwise be available assets into a special needs trust to shield those assets for purposes of determining Medicaid or SSI eligibility, so long as the trust provides that, upon the death of the disabled person, any remaining assets will be used to pay back to the State an amount equal to the total benefits paid for the care of the disabled person.

[15] Special needs trusts serve public policy considerations that both Congress and our General Assembly have deemed important. Specifically, special needs trusts provide disabled people with the power to obtain additional healthcare services and equipment that are not covered by Medicaid, such as full-time care, wheelchairs if needed more often than every five years, dental work and dentures, eyeglasses if needed more often than every five years, home modifications, accessible vehicles, funerals, or anything to improve the quality of life of the disabled person. Amicus Br. p. 4-6.

[16] Additionally, special needs trusts mean that the disabled person no longer has to "spend down" the proceeds of a litigation settlement before SSI and Medicaid are available. The reason that this is so crucial has been explained as follows:

If the [special needs] trust had not been established, the settlement from the tort action would be available to [the disabled ward], who would then be ineligible for [M]edicaid assistance. [The guardian] would be forced to exhaust the settlement to meet [the ward's] medical needs before reapplying for [M]edicaid assistance. Without [M]edicaid providing the ward's basic medical needs, the tort settlement would be depleted much more quickly than if it were used merely to supplement [M]edicaid assistance. Once he became eligible again for [M]edicaid, [he] would receive [M]edicaid assistance but would have no assets remaining with which to provide for his supplemental needs.
By contrast, with the creation of the trust, [the ward] will retain his [M]edicaid eligibility and [the guardian] can provide for his supplemental needs from the trust assets, while [M]edicaid provides for his basic medical care.

Dep't of Social Servs. v. Saunders , 247 Conn. 686, 724 A.2d 1093, 1095-96 (1999).

[17] As the court in In re Abraham XX. explained, special needs trusts reflect "a policy decision to balance the needs of the severely disabled and the State's need for funds to sustain the system."

871 N.Y.S.2d 599, 900 N.E.2d at 140. To further Medicaid's purpose of providing medical assistance to people in need,

the State agrees to continue paying Medicaid costs-in instances where it would otherwise be relieved of this obligation-in exchange for the possibility of reimbursement upon the recipient's death. The State in a sense is like an insurer calculating risk. For every recipient who depletes the trust before death, the State can expect some trusts to have sufficient assets upon a recipient's death to offset the additional cost of continuing Medicaid payments for these severely disabled individuals who otherwise would be ineligible. Moreover, the State's right to reimbursement occurs only upon the death of the beneficiary-at a time when the life-enhancing purpose of the trust can no longer be effectuated.

Id. (emphasis original). As aptly put by Guardian,

[t]he legislative decision at the federal and state level to allow a disable[d] person to place substantial assets received from litigation proceeds in a special needs trust presents a "win-win" in situations where future needs are unknown and cannot be quantified at the outset. Ultimately, if those litigation proceeds are sufficient to cover a disabled person's medical care and needs throughout his life, then upon his death, the public benefits he received will be reimbursed in full. But if it turns out that the litigation proceeds were not sufficient to cover medical care/needs and end up being exhausted before the disabled person dies, then the litigation proceeds will go much further by allowing the disabled person to also utilize public benefits.

Appellant's Br. p. 26-27 (emphases original).

II. Trial Court's Order

[18] In this case, the trial court denied Guardian's request to put the full amount of the settlement reached on behalf of Timothy into a special needs trust. Indeed, it agreed to place only $1 million into the trust, ordering that the remaining $5.75 million be paid directly to the guardianship estate.

[19] The trial court refused to place the full amount of the settlement agreement into the special needs trust because it disagrees with the legislatively-mandated "legal fiction of impoverishment," tr. vol. II p. 27, and disapproves of the shift of the expense to taxpayers. The trial court may well have a genuine disagreement with the policy decisions of our state and federal legislators, but it is still bound to abide by them. See, e.g. , Hoagland v. Franklin Twp. Cmty. Sch. Corp. , 27 N.E.3d 737, 749 (Ind. 2015) (holding that public policy is "exclusively for the General Assembly" and "the wisdom or desirability of particular legislation is not a matter for the judiciary to determine"); S. Shore Baseball, LLC v. DeJesus , 11 N.E.3d 903, 909 (Ind. 2014) (emphasizing the well accepted principle that "under our system of limited government, the legislative branch is entrusted with decisions of public policy"); Etzler v. Ind. Dep't of Revenue , 43 N.E.3d 250, 255-56 (Ind. Ct. App. 2015) (holding that the "formulation of public policy is a task entrusted to the legislature, not the court").

[20] Here, there are no constitutional concerns preventing the legislature's policy choices from being enforced. Both our federal and state legislators have made an express policy decision to allow for a "legal fiction of impoverishment" by placing assets in a special needs trust, knowing full well that it has the potential to shift expenses to the taxpayer, but trying to ameliorate that cost by requiring that any remaining trust proceeds be repaid to the State upon the disabled person's death. While the trial court is free to disagree as to the wisdom of the legislature's policy choices, the trial court exceeded the bounds of its authority by refusing to enforce this policy choice based on that disagreement.

[21] The trial court also refused to place the full amount of the settlement proceeds into the special needs trust because it concluded that the trust was solely for the benefit of the Guardian and Timothy's descendants. This is a mistake of law. As a matter of law, a special needs trust must contain a provision declaring that, upon the death of the disabled trust beneficiary, the total amount of Medicaid benefits must be paid back first , before any distributions to heirs are made. 42 U.S.C. § 1396p(d)(4)(A) ; I.C. § 12-15-2-17(f). Additionally, the special needs trust must be administered for the exclusive benefit of the disabled individual beneficiary for his or her lifetime. In other words, so long as the disabled individual is alive, other persons such as family members-or the guardian-cannot receive a direct benefit from the trust assets, and upon the disabled person's death, the State gets repaid before anyone else inherits a dime. Consequently, it is a legal impossibility that Timothy's special needs trust is designed to "benefit" either the Guardian or Timothy's descendants, and the trial court's conclusion in this regard was erroneous.

[22] The judgment of the trial court is reversed in relevant part and remanded with instructions to direct that the full, available amount of settlement proceeds be placed in Timothy's special needs trust.

Kirsch, J., and Robb, J., concur.

      Although we reverse on other grounds, we note that the record does not support this finding. Instead, the record reveals that, as would be expected, there is no way of knowing what the cost or extent of Timothy's needs will be over the course of his lifetime. It is undisputed that his needs are extensive, his condition will further deteriorate with time, and there is no way to know how long his lifespan will be. Under these circumstances, there is no basis to conclude that the amount received pursuant to the settlement agreement will be adequate to meet Timothy's needs for the remainder of his life.

      The trial court granted Guardian's request to modify the timing of the annuity schedule and stay all settlement payments during the pendency of this appeal.


author: Robb, Judge.

text:
    In the MATTER OF the PATERNITY OF J.G.L.:
    Kenya Roberson, Appellant-Respondent, v. Quentin Lenig, Appellee-Petitioner.
    Court of Appeals Case No. 18A-JP-496
    Court of Appeals of Indiana.
    Filed July 27, 2018 Ordered Published August 16, 2018
    Attorney for Appellant: Adam J. Sedia, Hoeppner, Wagner & Evans, LLP, Merrillville, Indiana
    Attorney for Appellee: Cassandra Hine, Law Office of Cassandra Hine, P.C., San Pierre, Indiana
   Robb, Judge.

Case Summary and Issue

[1] Quentin Lenig ("Father") and Kenya Roberson ("Mother") have one child together, J.L. ("Child"). In early 2017, the parties stipulated to Father's paternity and signed an agreement on custody, support, and parenting time in the Starke County Circuit Court ("trial court"). Mother was granted primary physical custody of Child and relocated to California with Child permanently. Mother then filed a Verified Motion to Transfer Jurisdiction to California, under the Uniform Child Custody and Jurisdiction Act ("UCCJA"), and a Verified Motion for UCCJA contact between the trial court and the Superior Court of San Diego County, California ("the California Court"), where Mother now resides. The trial court denied Mother's motions. Mother now appeals, raising only one issue for our review which we restate as whether the trial court erred in denying Mother's motion to transfer jurisdiction to California. Concluding the trial court erred, we vacate the trial court's order and remand with instructions.

Facts and Procedural History

[2] Child was born on March 10, 2016, and paternity was established on February 8, 2017. The trial court granted Mother temporary physical and legal custody of Child and granted Father temporary supervised parenting time. In so doing, the court noted that Child had been living in California, and that Mother had requested permission for Child to return there, but the court ordered Child remain in Indiana pending final resolution of custody, parenting time, and support. Shortly thereafter, Father and Mother signed an agreement on custody, support, and parenting time, which the trial court adopted as its order on March 20, 2017. The order granted Mother primary physical custody of Child, and she was permitted to relocate to California permanently. The order also specified Father's parenting time schedule and addressed the payment of travel expenses.

[3] In August 2017, Father moved for a rule to show cause, arguing Mother was wrongfully interfering with his parenting time. Two months later, Mother requested supervised parenting time for Father, alleging Father had become violent, threatened her, and was using illegal drugs. Following a hearing, the trial court denied both parties' requests and entered an order providing additional parenting time for Father and stating that "All orders not modified by this order remain in full force and effect." Appendix of Appellant, Volume II at 21.

[4] Mother retained new counsel and requested the trial court transfer venue to the California Court pursuant to the UCCJA. Mother attached an exhibit titled "Restraining Order After Hearing (Order of Protection)" ("California Restraining Order"). App. of Appellant, Vol. II at 25-28; 30-39. The California Restraining Order provided that the California Court held a hearing on January 29, 2018, which Father and Mother attended, and the court ordered Father to stay at least one hundred yards from Mother and Child and restricted Father's contact for three years. The California Restraining Order also incorporated two attachments: (1) "Child Custody and Visitation Order," id. at 37; and (2) "Court[']s Findings and Orders 1/29/18," id. at 39.

[5] The Child Custody and Visitation Order ordered "[n]o visitation to ... Dad," id. at 37, while the handwritten Court's Findings and Orders provided:

(1) Court finds that Father has not been truthful with the court. The Court does not believe Father as Father has lied to the Court about the abusive text messages, threats and his behavior. Father has sought to minimize his actions and does not understand the extent or significance of his behavior.
(2) Counsel for Mother is to file a request for Order regarding modification of child custody / visitation. Court sets hearing date on custody for March 12, 2018 at 11:15 a.m.
(3) Court exercised child custody [j]urisdiction pursuant to Family Code 3424.
(4) Court finds that Mother's allegations of abuse by Father are substantiated and issues a 3 year restraining order, listing both Mother and [Child] as protected parties. Court will reassess custody and whether it retains emergency jurisdiction [sic] March 12, 2018 FO [sic] hearing.

Id. at 39.

[6] The trial court held a hearing on Mother's Motion Verified Motion to Transfer Jurisdiction to California on February 19, 2018. Both Father's and Mother's counsel attended in person, as did Father, and Mother attended by telephone. Mother rested on the verified statements in her motion. Following arguments from counsel, the trial court made the following ruling on the motion:

[The Court]: Yeah. You know, here's the deal. I'm not - I'm not losing jurisdiction over this case. From day one (1) the mother has repeatedly attempted to keep [Father] out of this child's life. We - I accepted the agreement and allowed her to remove herself and the child - at first I had to order the child to remain in Indiana and she could go back to California or wherever she was, by herself, but she chose to stay here and she just keeps doing it, and doing it, and I'm not gonna' do it. I'm not giving up jurisdiction on this case. So, I don't know where that leaves either one of you but I'm not gonna' do it. The [UCCJA] allows this Court to retain it because this is where the decree of paternity was entered. And I'm keeping it. And I'm not giving it away. So, [Mother], if you want this Court to address any issues regarding [Child], I suggest that you show up in this courtroom for hearings. Do you have any questions ma'am?
[Mother]: Um - I don't have any questions, but -
[The Court]: Okay. So, I'm denying your request to transfer the case out to California. That's all for today.

Transcript, Volume II at 8-9. The trial court then entered the following order on February 21, 2018:

[T]he Court denies the Verified Motions for the following reasons:
1. In open court on February 8, 2017, the Court was made aware of [Mother] relocating to the State of California with [Child] and being in violation of I.C. 31-17-2.2.
2. On February 8, 2017, after the submission of evidence the Court granted temporary custody of [Child] to [Mother] based upon [Mother]'s promise that she would remain in Indiana with [Child] until a final hearing could be held regarding custody, parenting time and child support.
3. Since the inception of this case, the Court has observed that [Mother] has continuously attempted to inhibit the relationship between [Father] and [Child] without reasonable justification for doing so.
4. On March 20, 2017, the Court approved the parties' agreement allowing for [Mother] to relocate to the State of California with [Child] because [Father] was given extended parenting time with [Child] ....
5. The Court would not have allowed for [Child] to relocate to California with [Mother] if there had not been a provision in the agreement allowing for reasonable parenting time for [Father] because it has been found by this Court that it is in the best of interest [sic] of the child that [Child] has a relationship with [Father].
6. The Court reaffirms [Father]'s parenting time pursuant to the agreement approved and ordered by this Court on March 20, 2017, and [Father] is entitled to parenting time with [Child] from March 26, 2018 through April 6, 2018 which is [sic] the dates for spring break for 2018 based upon the local school year.

App. of Appellant, Vol. II at 9-10. Mother now appeals.

Discussion and Decision

I. Standard of Review

[7] We review a court's decision to exercise jurisdiction for an abuse of discretion. Barwick v. Ceruti , 31 N.E.3d 1008, 1014 (Ind. Ct. App. 2015). "In reviewing the court's decision, we consider only the evidence most favorable to the decision and reverse only where the result is clearly against the logic and effect of the facts and the reasonable inferences to be drawn therefrom." Id. We review matters of statutory interpretation de novo because they present pure questions of law. Gardiner v. State , 928 N.E.2d 194, 196 (Ind. 2010).

II. Jurisdiction

[8] Mother argues the trial court abused its discretion in denying her motion to transfer jurisdiction to California. Specifically, Mother argues the trial court failed to consider the factors enumerated in Indiana Code section 31-21-5-8(b). In turn, Father argues application of the statute is unnecessary because he continues to reside in Indiana.

[9] We begin by noting that Father's argument confuses jurisdiction with an inconvenient forum. The question before us is not one of jurisdiction-the trial court's jurisdiction over this matter is undisputed. See Brief of Appellant at 11. "The fundamental principle underlying the UCCJA is that once a court with a jurisdictional basis exercises jurisdiction over a 'custody' issue, that court retains exclusive jurisdiction over all custody matters so long as a 'significant connection' remains between the controversy and the state." In re Custody of A.N.W. , 798 N.E.2d 556, 561 (Ind. Ct. App. 2003) (citation omitted), trans. denied . As long as one parent continues to reside in Indiana, a "significant connection" to Indiana remains, but a trial court has discretion to defer to another court that is a more convenient forum to litigate the issues. Id. at 561-62.

[10] In determining whether to relinquish its jurisdiction to a more convenient forum, a court is required to consider whether it is in the child's best interest that another state assume jurisdiction. Barwick, 31 N.E.3d at 1015. Indiana Code section 31-21-5-8 provides:

(a) An Indiana court that has jurisdiction under this article to make a child custody determination may decline to exercise its jurisdiction at any time if the Indiana court determines that:
(1) the Indiana court is an inconvenient forum under the circumstances; and
(2) a court of another state is a more appropriate forum.
The issue of inconvenient forum may be raised on motion of a party, the court's own motion, or request of another court.
(b) Before determining whether an Indiana court is an inconvenient forum, the Indiana court shall consider whether it is appropriate for a court of another state to exercise jurisdiction. For this purpose, the Indiana court shall allow the parties to submit information and shall consider the relevant factors, including the following:
(1) Whether domestic violence has occurred and is likely to continue in the future and which state is best able to protect the parties and the child.
(2) The length of time the child has resided outside Indiana.
(3) The distance between the Indiana court and the court in the state that would assume jurisdiction.
(4) The relative financial circumstances of the parties.
(5) An agreement of the parties as to which state should assume jurisdiction.
(6) The nature and location of the evidence required to resolve the pending litigation, including the child's testimony.
(7) The ability of the court of each state to decide the issue expeditiously and the procedures necessary to present the evidence.
(8) The familiarity of the court of each state with the facts and issues in the pending litigation.

[11] Mother argues she referenced the foregoing factors and gave verified supporting facts for each, but the trial court "completely disregarded all of the eight factors, both in its oral ruling and its written Order." Brief of Appellant at 13. Considering the statute states the court "shall consider" the factors, Mother contends the trial court abused its discretion. We agree.

[12] We have held that this "list is not exclusive, and that courts may consider all relevant factors, including factors not listed in Indiana Code section 31-21-5-8(b)." Tamasy v. Kovacs , 929 N.E.2d 820, 827 (Ind. Ct. App. 2010). And, in the few cases applying the current statute, the trial court has considered all relevant factors. See Barwick , 31 N.E.3d at 1015 (the trial court "thoroughly reviewed each of" the factors and made specific findings); Tamasy , 929 N.E.2d at 834 (the trial court made findings regarding seven of the factors, save domestic violence, as well as additional findings that supported its determination). However, whether a trial court must consider all relevant factors appears to be an issue of first impression.

[13] Statutory interpretation is a function for the courts, and our goal in statutory interpretation is to determine, give effect to, and implement the intent of the legislature as expressed in the plain language of its statutes. State v. Prater , 922 N.E.2d 746, 749 (Ind. Ct. App. 2010), trans. denied . We look first to the statutory language, and we presume that the words of the statute were selected and employed to express their common and ordinary meanings. F.D. v. Indiana Dep't of Child Servs. , 1 N.E.3d 131, 136 (Ind. 2013). "Where the statute is unambiguous, the Court will read each word and phrase in this plain, ordinary, and usual sense, without having to resort to rules of construction to decipher meanings." Id. (citation omitted). Accordingly, clear and unambiguous statutes leave no room for judicial construction.

[14] Indiana Code section 31-21-5-8(b) states that, "[b]efore determining whether an Indiana court is an inconvenient forum, the Indiana court shall consider whether it is appropriate for a court of another state to exercise jurisdiction," and that, "[f]or this purpose, the Indiana court shall allow the parties to submit information and shall consider the relevant factors." (Emphases added.) The word "shall" is presumptively treated as mandatory "unless it appears clear from the context or the purpose of the statute that the legislature intended a different meaning." Indiana Civil Rights Comm'n v. Indianapolis Newspapers, Inc. , 716 N.E.2d 943, 947 (Ind. 1999). Here, we find no indication the legislature intended a different meaning for the word "shall." Therefore, we conclude the plain language of Indiana Code section 31-21-5-8(b) requires a trial court to consider the enumerated factors as well as any additional relevant factors for which the parties submit information. This is not to say, however, that a trial court need explicitly address each enumerated factor; as the statute's use of "relevant" suggests, the trial court need not consider factors not implicated by the evidence. Ind. Code § 31-21-5-8(b).

[15] Here, the trial court neither issued findings concerning the relevant factors nor orally explained that it had considered them. Apparently, the trial court's only consideration was its finding that Mother had "continuously attempted to inhibit the relationship" between Father and Child. App. of Appellant, Vol. II at 9; see also Tr., Vol. II at 8-9. Although a permissible consideration, this alone is insufficient to satisfy the statute. Moreover, the trial court clearly stated:

I'm not gonna' do it. I'm not giving up jurisdiction on this case. So, I don't know where that leaves either one of you but I'm not gonna' do it. The [UCCJA] allows this Court to retain it because this is where the decree of paternity was entered. And I'm keeping it. And I'm not giving it away. So, [Mother], if you want this Court to address any issues regarding [Child], I suggest that you show up in this courtroom for hearings.

Tr., Vol. II at 8-9.

[16] Clearly, the trial court was determined to retain jurisdiction-regardless of whether California was a more convenient forum. Indiana Code section 31-21-5-8(b) requires a trial court consider all relevant factors before making such determination. Therefore, we conclude the trial court abused its discretion.

[17] Since Mother submitted information regarding the enumerated factors, we find it unnecessary for the trial court to conduct another hearing. On remand, we direct the trial court to consider the relevant factors before determining whether California is a more convenient forum.

Conclusion

[18] Concluding the trial court erred by failing to consider relevant factors pursuant to Indiana Code section 31-21-5-8(b), we vacate the trial court's order and remand with instructions.

[19] Vacated and remanded.

Baker, J., and May, J., concur.

Order

[1] Appellant, by counsel, filed an Appellant's Motion to Publish.

[2] Having reviewed the matter, the Court finds and orders as follows:

1. The Appellant's Motion to Publish is granted.
2. This Court's opinion heretofore handed down in this cause on July 27, 2018, marked Memorandum Decision, is now ordered published.
3. The Clerk of this Court is directed to send copies of said opinion together with copies of this order to the West Publishing Company and to all other services to which published opinions are normally sent.

[3] Ordered 8/16/2018.

[4] Baker, May, Robb, JJ., concur.

      Under the previous version of the statute, Indiana Code section 31-17-3-7 (1997), a trial court "may take into account" the section's five enumerated factors when determining whether it is an inconvenient forum. Ind. Code § 31-17-3-7(c) (1997).