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    PLATINUM PARTNERS VALUE ARBITRAGE FUND, LIMITED PARTNERSHIP, and Platinum Partners Liquid Opportunity Fund, Limited Partnership, Plaintiffs-Appellants, v. CHICAGO BOARD OPTIONS EXCHANGE and Options Clearing Corporation, Defendants
    (Options Clearing Corporation, Defendant-Appellee).
    No. 1-17-1316
    Appellate Court of Illinois, First District, FOURTH DIVISION.
    Opinion filed March 29, 2018
    Marvin A. Miller and Andy Szot, of Miller Law LLC, of Chicago, and Sanford P. Dumain, of Milberg Tadler Phillips Grossman LLP, of New York, New York, for appellants.
    William J. Nissen, Steven E. Sexton, and Mark C. Brown, of Sidley Austin LLP, of Chicago, for appellee.
   JUSTICE GORDON delivered the judgment of the court, with opinion.

¶ 1 In the case at bar, the trial court denied a motion for summary judgment by defendant Chicago Board Options Exchange (CBOE) but granted summary judgment for defendant Options Clearing Corporation (OCC). Although this suit continues below, we have jurisdiction to hear this appeal, since the trial court entered a finding pursuant to Illinois Supreme Court Rule 304(a) ( Ill. S. Ct. R. 304(a) (eff. March 8, 2016) ) that there was no just reason to delay the appeal of the summary judgment granted in favor of defendant OCC.

¶ 2 This court previously reviewed this same case, when the trial court previously dismissed it on the ground that defendants were shielded from suit under the doctrine of regulatory immunity. Platinum Partners Value Arbitrage Fund, Ltd. Partnership v. Chicago Board Options Exchange , 2012 IL App (1st) 112903, ¶ 2, 364 Ill.Dec. 137, 976 N.E.2d 415. This court reversed the trial court's dismissal, stating: "Where defendants privately disclose information about the price adjustment of a stock option to selected market participants before that information is made publicly available, the doctrine of regulatory immunity does not apply." Platinum Partners , 2012 IL App (1st) 112903, ¶ 2, 364 Ill.Dec. 137, 976 N.E.2d 415.

¶ 3 In addition, we found that the trial court had erred in dismissing plaintiffs' complaint pursuant to section 2-615 of the Code of Civil Procedure ( 735 ILCS 5/2-615 (West 2010) ), because the complaint had stated multiple causes of action. Platinum Partners , 2012 IL App (1st) 112903, ¶ 30, 364 Ill.Dec. 137, 976 N.E.2d 415. This court found that plaintiffs had sufficiently pled a cause of action against both defendants with respect to all of their claims: (1) violation of the antifraud provision in section 12(F) of the Illinois Securities Law of 1953 ( 815 ILCS 5/12(F) (West 2002) ); (2) violation of the antifraud provision in section 12(I) of the Illinois Securities Law of 1953 ( 815 ILCS 5/12(I) (West 2002) ); (3) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ( 815 ILCS 505/10a(a) (West 2002) ); and (4) common law fraud. Platinum Partners , 2012 IL App (1st) 112903, ¶¶ 21, 26-29, 364 Ill.Dec. 137, 976 N.E.2d 415.

¶ 4 After this court remanded the case to the trial court, the trial court subsequently granted summary judgment to defendant OCC on the sole ground of regulatory immunity. The trial court stated that it "need not reach the merits of Plaintiffs' claims against OCC. Instead of determining whether Plaintiffs have proven their causes of action, this Court instead holds that the doctrine of regulatory immunity precludes liability for any cause of actions based on OCC's activities." Platinum Partners Value Arbitrage Fund v. Chicago Board Options Exchange, Inc. , No. 10-CH-54472 (Cir. Ct. Cook County Dec. 20, 2016).

¶ 5 On appeal, plaintiffs claim that the trial court disregarded this court's prior opinion in this case and erred in finding that defendant OCC's conduct in this case was entitled to regulatory immunity. For the following reasons, we reverse and remand for further proceedings.

¶ 6 BACKGROUND

¶ 7 I. Undisputed Facts and Our Prior Opinion

¶ 8 The following facts are not in dispute. Plaintiffs are Cayman Islands investment funds. Plaintiffs invested in options for shares of the India Fund, Inc. (IFN), a fund that invests in the stock of companies located in India. IFN options were traded by defendant CBOE, and defendant OCC cleared and settled the trades. At issue in the case at bar is plaintiff's investment in "put" options that gave it the right to "put" or sell IFN shares to an option seller at a predetermined price, called the "strike price." The value of the option depended on how much more the strike price was than the regular price of IFN shares.

¶ 9 On Friday, December 17, 2010, plaintiff held approximately 25,000 IFN options. After the market closed on December 17, 2010, IFN announced a capital gains distribution to its shareholders of $3.78 per share. The rules of defendants CBOE and OCC permit an adjustment to the strike price of options to account for such a distribution. To account for the negative impact that a distribution of a corporation's assets generally has on the value of its stock, an option's strike price may be adjusted downward. Defendant OCC's published guidelines state that adjustments are made on a "case by case basis."

¶ 10 On Monday, December 20, 2010, plaintiff purchased more than 50,000 additional put options for IFN stock. During the afternoon of December 20, 2010, defendants CBOE and OCC publicly announced a downward adjustment of $3.78 to the strike price of IFN options, resulting in a loss to plaintiffs. The events preceding this public announcement are the subject of this lawsuit.

¶ 11 In essence, defendant argues on appeal primarily that plaintiffs should have known that the strike price would be adjusted and that other investors already knew, while plaintiffs argue that, although an adjustment was permitted, it was not required, and that defendant OCC privately disseminated news of the adjustment to a few investors prior to the public announcement. Thus, defendant points to documents suggesting that plaintiffs should have known, while plaintiffs point to documents showing that defendant privately disseminated information.

¶ 12 However, as we discuss below, whether or not plaintiffs should have known has no impact on the question of whether defendant's acts, if any, of private dissemination are entitled to regulatory immunity. What plaintiff knew or should have known could possibly affect questions concerning damages or causation or other elements but it does not affect the threshold question of whether there were private acts of dissemination and, if there were, whether these acts were entitled to regulatory immunity. As a result, we describe below the evidence relating to these threshhold questions, which were the only questions on which the trial court ruled. The trial court stated explicitly that it did not reach the merits of plaintiffs' causes of action and that it ruled for defendant OCC solely on the ground that its acts were shielded by regulatory immunity. Platinum Partners , No. 10-CH-54472.

¶ 13 The question of whether plaintiffs knew or should have known, or should have been able to predict, the upcoming price adjustment is a question of fact that may be material to the issue of damages or causation or possibly other elements of plaintiffs' claims, but it is unrelated to (1) the factual question of whether defendant OCC privately disseminated information and (2) the solely legal question of whether private disseminations, if any, are protected by regulatory immunity. This court already answered the second, purely legal question in our last opinion: private disseminations are not protected by regulatory immunity. Platinum Partners , 2012 IL App (1st) 112903, ¶ 2, 364 Ill.Dec. 137, 976 N.E.2d 415 ("Where defendants privately disclose information about the price adjustment of a stock option to selected market participants before that information is made publicly available, the doctrine of regulatory immunity does not apply."). Thus, the only question left in this case with respect to regulatory immunity is the first, factual question of whether private dissemination occurred.

¶ 14 II. Evidence Concerning Private Dissemination

¶ 15 The subjects of this suit are statements made by employees of defendant OCC during private telephone calls or emails with investors other than plaintiffs. These employees included both members of defendant OCC's help desk and its national operations group. The national operations group administers the options adjustment process. In December 2010, when the relevant events occurred, John Peplinski was the vice president of the national operations group, and Kenneth Rypel was a director of corporate actions who reported to Peplinski. The help desk provides information about the trading of options and about defendant OCC's bylaws and adjustment rules. In December 2010, defendant OCC's website listed a toll-free number and an email address for its help desk.

¶ 16 Prior to IFN's announcement on Friday, December 17, 2010, of a capital gains distribution, employees of both the help desk and the national operations group gave varying answers to investors who contacted them, including that, if IFN announced a capital gains distribution, defendant OCC would "probably" adjust the stock price. There is no dispute about this fact on this appeal.

¶ 17 However, on Monday, December 20, 2010, after IFN announced its capital gains distribution but before defendant OCC's public announcement of a strike price adjustment, the help desk and national operations employees indicated in various private conversations with investors that defendant OCC was going to adjust the strike price, stating that the adjustment was expected or anticipated or simply, flat out, that "there will be an adjustment." Again, there is no dispute about this fact on this appeal, and we provide detailed examples below.

¶ 18 A. Help Desk

¶ 19 Disclosures made by the help desk after IFN's announcement on December 17 but before defendant's announcement on December 20 included the following.

¶ 20 An audio recording produced by defendant OCC showed that at 7:57 a.m. on December 20, 2010, a caller to the help desk spoke with Jeffrey Huddleston, a help desk employee. The caller stated that he was looking at IFN and wondered whether there was going to be an adjustment. Huddleston stated that his "guess is probably yes," but he would "see if [he] can get a confirmation." Huddleston then put the caller on hold and contacted Marla Turner in national operations, who confirmed that there would be an adjustment but she did not know whether it would be announced that day or the next. Huddleston returned to the caller and stated that, while they were not certain whether the announcement would be made that day, "there will be an adjustment." The caller then asked: "So the memo is either gonna go out today or tomorrow; but for sure, there's gonna be an adjustment?" To which, Huddleston replied: "Correct."

¶ 21 Another audio recording produced by defendant OCC shows that another caller contacted the help desk at 8:19 a.m. on December 20, 2010, and spoke with Huddleston. The caller asked about IFN and Huddleston immediately replied that "there will be an adjustment" and "we hope to have a memo out either today or tomorrow." Then the caller asked: "You knew that right off the bat. Have you been getting a lot of calls on it?" Huddleston replied, "Yes, we have." The two then had the following conversation:

"CALLER: Okay. But when-let me ask you a question. When you say, 'It's my understanding,' I'm assuming you spoke to-
HUDDLESTON: To our operations area.
CALLER: And they said. This will be adjusted.
HUDDLESTON: You know what-
CALLER: They anticipate it to be adjusted.
HUDDLESTON: Let's put the-let's use the word 'anticipate.'
CALLER: Yes.
HUDDLESTON: Because, you know, they-you know, before it actually comes out, I know they're-they're like, you know what, we don't want it-it's not official until it's official. So they anticipate adjusting for it."

¶ 22 Another audio recording produced by defendant shows that at 9 a.m. on December 20, 2010, Darren Tait, another help desk employee, informed yet another caller to "expect a memo in the near future."

¶ 23 After listening to an audio recording of Huddleston responding to a caller asking about IFN, John Peplinski, defendant's vice president of the national operations group, testified at his deposition:

"PEPLINSKI: [W]e had a clear understanding in the corporate actions area and with the Help Desk that-that-that any-prior to any-the decision having been made, that no communications was-were to take place with the-with the outside. Opinions were not to be given as to whether-the likelihood of an adjustment or not."

¶ 24 Peplinski testified: "[I]t was a violation of our understanding that [Huddleston] should not have ventured his opinion as to the adjustment to an outside investor." Peplinski explained: "His job is not to offer or to give investment guidance or to offer opinions as to corporate actions that may or may not take place."

¶ 25 Similarly, Denise Knabjian, defendant's director of internet and investor services, testified at her deposition that several help desk employees, including Huddleston and Tait, "received a warning" as a result of the events surrounding the adjustment of IFN options "[f]or failure to adhere to guidelines." With respect to Huddleston, Knabjian testified:

"KNABJIAN: Our guidelines state that you are not supposed to speculate as to whether an adjustment will or will not occur, and he gave explicit-my recollection is that he gave explicit direction that it was going to be adjusted."

With respect to Tait, Knabjian explained that he received a warning because "he didn't provide the qualifying information that says each one is handled on a case-by-case basis so, essentially, [he] didn't adhere to the spirit of the guidelines." Knabjian stated that Joseph Harwood, who was the direct supervisor for both Huddleston and Tait, also received a written warning for a "failure to manage" because "there was an opportunity to correct the problem" and he failed to do so.

¶ 26 B. Disclosures Outside the Help Desk

¶ 27 Disclosures made outside of the Help Desk included the following: Kenneth Rypel, a director of corporate actions, identified in his deposition an email that he had sent to a market participant who had asked him when defendant OCC would make the IFN price adjustment. In Rynel's email, which was sent on December 20, 2010, at 10:07 a.m., he indicated that defendant OCC would affect the price adjustment on December 29. John Peplinski, vice president of defendant's operations group, testified at his deposition that the time of this email was before the strike price adjustment of IFN options was publicly announced.

¶ 28 III. Trial Court's Memorandum Order

¶ 29 On December 20, 2016, the trial court granted defendant OCC's motion for summary judgment on the sole ground that defendant's actions were protected from suit by the doctrine of regulatory immunity. Platinum Partners , No. 10-CH-54472. The trial court explicitly and repeatedly stated that it was not reaching the merits of any of plaintiffs' causes of action against defendant OCC as a result. Platinum Partners , No. 10-CH-54472.

¶ 30 The trial court found, as a matter of law, that the only way that defendant OCC's disclosures would not be shielded by the doctrine of regulatory immunity is if the disclosures were both (1) "non-public" and (2) for defendant OCC's own corporate benefit. Platinum Partners , No. 10-CH-54472.

¶ 31 Reviewing the relevant evidence, the trial court observed that "[e]ach party points to distinct instances in which market participants and [defendant] OCC help-desk employees testified that help-desk employees informed some market participants that there would be an adjustment to the strike price of IFN options before the [p]ublic [a]nnouncement." Platinum Partners , No. 10-CH-54472. The trial court described a number of these calls and then noted that defendant "OCC does not dispute the content of any of the conversations." Platinum Partners , No. 10-CH-54472. Instead, defendant OCC disputed plaintiffs' characterization of these calls as "private disclosures for OCC's corporate benefit." Platinum Partners , No. 10CH-54472.

¶ 32 The trial court found that (1) "the disclosures were certainly non-public" and (2) they were not for defendant OCC's own corporate benefit. Platinum Partners , No. 10-CH-54472. In reaching the second conclusion, the trial court found that (1) there was "no indication that [defendant] OCC precluded non-members from reaching out and obtaining the same information at issue," (2) defendant OCC operated as a not-for-profit business, and (3) there could have been no intent to benefit OCC, since disclosures would have reduced trading. Platinum Partners , No. 10-CH-54472. Thus, the trial court concluded that the doctrine of regulatory immunity applied and granted summary judgment for defendant OCC.

¶ 33 On April 24, 2017, the trial court entered an order pursuant to Illinois Supreme Court Rule 304(a) (eff. March 8, 2016), finding that there was no just reason for delaying either enforcement or appeal or both of the judgment in favor of defendant OCC alone. On May 23, 2017, plaintiffs filed a timely notice of appeal, and this appeal followed.

¶ 34 ANALYSIS

¶ 35 On appeal, plaintiffs claim that the trial court disregarded this court's prior opinion in this case and erred in finding that OCC's conduct in this case was entitled to regulatory immunity. We agree. For the following reasons, we reverse and remand for further proceedings.

¶ 36 I. Procedural Posture

¶ 37 Although this court previously found that defendants were not entitled to regulatory immunity, the procedural posture at that time was different. At that time, we were reviewing the trial court's dismissal pursuant to section 2-615 of the Code of Civil Procedure. Platinum Partners , 2012 IL App (1st) 112903, ¶ 12, 364 Ill.Dec. 137, 976 N.E.2d 415. When we review a trial court's decision pursuant to section 2-615, we must consider all well-pled factual allegations in the complaint as true, and we must draw all reasonable inferences from those facts in favor of plaintiffs. Platinum Partners , 2012 IL App (1st) 112903, ¶ 12, 364 Ill.Dec. 137, 976 N.E.2d 415. In our prior opinion, we assumed, as we were required to do at that time, that all the factual allegations in plaintiffs' complaint were true.

Platinum Partners , 2012 IL App (1st) 112903, ¶ 12, 364 Ill.Dec. 137, 976 N.E.2d 415. Based on that assumption, we found that the complaint stated multiple causes of action. Platinum Partners , 2012 IL App (1st) 112903, ¶¶ 26-29, 364 Ill.Dec. 137, 976 N.E.2d 415.

¶ 38 By contrast, in the present appeal, we are reviewing a dismissal pursuant to section 21005 ( 735 ILCS 5/2-1005(c) (West 2016) ), which means that we consider more than just the factual allegations in the complaint. Section 2-1005 permits a trial court to grant summary judgment only "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." 735 ILCS 5/21005(c) (West 2016).

¶ 39 Summary judgment is a drastic measure that should be granted only if the movant's right to judgment, as a matter of law, is clear and free from doubt. A.M. Realty Western L.L.C. v. MSMC Realty, L.L.C. , 2016 IL App (1st) 151087, ¶ 85, 402 Ill.Dec. 681, 52 N.E.3d 602 ; Pekin Insurance Co. v. Roszak/ADC, LLC , 402 Ill. App. 3d 1055, 1059, 341 Ill.Dec. 902, 931 N.E.2d 799 (2010) ; see also 735 ILCS 5/2-1005(c) (West 2016) (summary judgment may be granted only if "the moving party is entitled to a judgment as a matter of law"). In making this determination, the court must view the relevant documents in the light most favorable to the nonmoving party. A.M. Realty , 2016 IL App (1st) 151087, ¶ 85, 402 Ill.Dec. 681, 52 N.E.3d 602 ; Pekin Insurance , 402 Ill. App. 3d at 1058-59, 341 Ill.Dec. 902, 931 N.E.2d 799. In addition, if "the grounds for the trial court's grant of summary judgment contradict our prior opinion, * * * we must reverse." A.M. Realty , 2016 IL App (1st) 151087, ¶ 94, 402 Ill.Dec. 681, 52 N.E.3d 602. If a "conclusion" by the appellate court "was a necessary step" in a prior opinion in the same case, then it is "a part of our holding" and binding on the trial court. A.M. Realty , 2016 IL App (1st) 151087, ¶ 90, 402 Ill.Dec. 681, 52 N.E.3d 602.

¶ 40 A defendant moving for summary judgment bears the initial burden of proof. A.M. Realty , 2016 IL App (1st) 151087, ¶ 86, 402 Ill.Dec. 681, 52 N.E.3d 602 ; Erie Insurance Exchange v. Compeve Corp. , 2015 IL App (1st) 142508, ¶ 15, 392 Ill.Dec. 160, 32 N.E.3d 160. The defendant may meet its burden of proof either by affirmatively showing that some element of the case must be resolved in its favor or by establishing the absence of evidence to support the nonmovant's case. A.M. Realty , 2016 IL App (1st) 151087, ¶ 86, 402 Ill.Dec. 681, 52 N.E.3d 602 ; Erie Insurance , 2015 IL App (1st) 142508, ¶ 15, 392 Ill.Dec. 160, 32 N.E.3d 160. As for the plaintiff who is trying to withstand a summary judgment motion, he " ' "need not prove his case at this preliminary stage but must present some factual basis that would support his claim." ' " A.M. Realty , 2016 IL App (1st) 151087, ¶ 86, 402 Ill.Dec. 681, 52 N.E.3d 602 (quoting Schrager v. North Community Bank , 328 Ill. App. 3d 696, 708, 262 Ill.Dec. 916, 767 N.E.2d 376 (2002), quoting Luu v. Kim , 323 Ill. App. 3d 946, 952, 256 Ill.Dec. 667, 752 N.E.2d 547 (2001) ).

¶ 41 As with the review of a section 2-615 dismissal, the review of summary judgment requires no deference to the trial court. The standard of review remains the same: de novo . A.M. Realty , 2016 IL App (1st) 151087, ¶ 87, 402 Ill.Dec. 681, 52 N.E.3d 602 ; Pekin Insurance , 402 Ill. App. 3d at 1059, 341 Ill.Dec. 902, 931 N.E.2d 799. De novo consideration means that we perform the same analysis that a trial judge would perform. A.M. Realty , 2016 IL App (1st) 151087, ¶ 87, 402 Ill.Dec. 681, 52 N.E.3d 602 ;

Erie Insurance , 2015 IL App (1st) 142508, ¶ 14, 392 Ill.Dec. 160, 32 N.E.3d 160.

¶ 42 II. Doctrine of Regulatory Immunity

¶ 43 There is no dispute in the case at bar that defendant OCC is a " 'self-regulatory organization' " as defined by the United States Code ( 15 U.S.C. § 78c(a)(26) (2012) ). "The term 'self-regulatory organization' [ (SRO) ] means any national securities exchange, registered securities association, or registered clearing agency * * *." 15 U.S.C. § 78c(a)(26) (2012). In the case at bar, defendant OCC is a clearing agency.

¶ 44 There is also no dispute that an SRO and its officers are entitled to absolute immunity when they act within the scope of their regulatory duties. Platinum Partners , 2012 IL App (1st) 112903, ¶ 15, 364 Ill.Dec. 137, 976 N.E.2d 415. This doctrine of regulatory immunity, as it is known, provides SROs with the freedom to exercise the discretion given to them without fear of retaliatory litigation. Platinum Partners , 2012 IL App (1st) 112903, ¶ 15, 364 Ill.Dec. 137, 976 N.E.2d 415.

¶ 45 However, as this court explained previously, SROs do not have complete immunity from lawsuits. Platinum Partners , 2012 IL App (1st) 112903, ¶ 15, 364 Ill.Dec. 137, 976 N.E.2d 415. Since "the law favors providing legal remedy to injured parties, grants of [regulatory] immunity must be narrowly construed." Weissman v. National Ass'n of Securities Dealers, Inc. , 500 F.3d 1293, 1297 (11th Cir. 2007). Thus, absolute immunity applies only when the acts at issue stem directly from the performance of "a delegated quasi-governmental prosecutorial, regulatory, or disciplinary function." Platinum Partners , 2012 IL App (1st) 112903, ¶ 15, 364 Ill.Dec. 137, 976 N.E.2d 415. An SRO that would otherwise enjoy absolute immunity cannot claim that immunity when performing a non-governmental function. Platinum Partners , 2012 IL App (1st) 112903, ¶ 15, 364 Ill.Dec. 137, 976 N.E.2d 415.

¶ 46 An SRO may undertake duties for reasons other than to further its governmental functions, such as when it acts for its own corporate benefit or to further a private purpose. Platinum Partners , 2012 IL App (1st) 112903, ¶ 15, 364 Ill.Dec. 137, 976 N.E.2d 415. For example, an SRO's "efforts to increase trading volume" and thereby increase "company profit" are considered a nongovernmental function. Weissman , 500 F.3d at 1297. When an SRO engages in nongovernmental functions, then a different rule of liability applies. The SRO is generally responsible for any injuries arising out of any negligent acts or omissions, to the same extent that a private corporation would be under the same circumstances. Platinum Partners , 2012 IL App (1st) 112903, ¶ 15, 364 Ill.Dec. 137, 976 N.E.2d 415. As a clearing agency, defendant OCC charges clearing fees for contracts that are traded. The more contracts that it clears, the more fees it collects. After paying for salaries, employee bonuses, and other operational expenses, OCC returns the excess of fees over expenses to its members. Platinum Partners , No. 10-CH-54472. For example, for fiscal year 2010, defendant OCC returned $38.4 million to its members.

¶ 47 Although defendant OCC claims that it is a not-for-profit business, in that it returns excess fees to its members, it admits in its brief to this court that its members were "for-profit businesses." Defendant argues that the fact that all its members were for-profit businesses has "no impact on OCC's non-profit status." However, defendant does not dispute that it had a bonus program for its employees based on the volume of its revenues. Jeffrey Huddleston, a help desk employee, testified at his deposition that the employees received bonuses "based on volume," which he explained was "the number of cleared contracts per year."

¶ 48 The test for whether an SRO's acts come under the umbrella of its regulatory immunity is objective. Platinum Partners , 2012 IL App (1st) 112903, ¶ 16, 364 Ill.Dec. 137, 976 N.E.2d 415. The subjective intent of the SRO's officers and employees is irrelevant. Platinum Partners , 2012 IL App (1st) 112903, ¶ 16, 364 Ill.Dec. 137, 976 N.E.2d 415. Immunity applies when a plaintiff's claims concern the exercise of powers that are within the scope of the governmental functions delegated to the SRO. Platinum Partners , 2012 IL App (1st) 112903, ¶ 16, 364 Ill.Dec. 137, 976 N.E.2d 415. Immunity depends only on whether the specific acts or omissions at issue were incidental to the exercise of these governmental functions. Platinum Partners , 2012 IL App (1st) 112903, ¶ 15, 364 Ill.Dec. 137, 976 N.E.2d 415. Since subjective intent is irrelevant, and immunity depends on only whether the specific acts or omissions were incidental to defendant's governmental functions, what market participants, like plaintiffs, did know or should have known is irrelevant to the question of whether defendant's acts or omissions were entitled to regulatory immunity.

¶ 49 It is undisputed in the case at bar that an SRO, like defendant OCC, is immune from litigation for the public announcement of its regulatory decisions. Platinum Partners , 2012 IL App (1st) 112903, ¶ 17, 364 Ill.Dec. 137, 976 N.E.2d 415. Reporting its regulatory actions to the public is entirely consistent with the quasi-governmental powers that it exercises. Platinum Partners , 2012 IL App (1st) 112903, ¶ 17, 364 Ill.Dec. 137, 976 N.E.2d 415. Thus, the timing and method of these public announcements enjoys absolute immunity. Platinum Partners , 2012 IL App (1st) 112903, ¶ 17, 364 Ill.Dec. 137, 976 N.E.2d 415.

¶ 50 Applying the above principles to the facts at bar, this court previously found:

"In the case at bar, plaintiff concedes that the adjustment of IFN's strike price was a regulatory decision, serving to protect investors by compensation for the fact that the extraordinary distribution declared by IFN would reduce the value of the underlying IFN shares. However, while the price adjustment itself may have been a regulatory decision, the manner in which it was disclosed-privately and prematurely-to the John Doe defendants was not." Platinum Partners , 2012 IL App (1st) 112903, ¶ 18 [364 Ill.Dec. 137, 976 N.E.2d 415].

¶ 51 In the above quote, when we found "that the manner in which it was disclosed-privately and prematurely-to the John Doe defendants was not" a regulatory decision, we were assuming the truth, as we had to at that time, of the factual allegations in the complaint, namely, that there were, in fact, disclosures made privately and prematurely to certain individuals. Platinum Partners , 2012 IL App (1st) 112903, ¶ 18, 364 Ill.Dec. 137, 976 N.E.2d 415. In the present appeal, the case has traveled further down the procedural timeline, and now we must consider whether the admissions, documents, and affidavits, which have since been made, produced, and sworn to, support this factual allegation. 735 ILCS 5/2-1005(c) (West 2016).

¶ 52 However, the public versus private distinction that we found in our prior opinion as a matter of law still applies. In our prior opinion, we explained:

"[D]efendants CBOE and OCC did not publicly announce this regulatory decision: the price reduction was privately disseminated only to certain market participants, and that disclosure did not serve any regulatory or governmental purpose. In addition to its quasi-governmental functions, defendants CBOE and OCC have a private, for-profit business, and in the private disclosure of the price-adjustment decision to the John Doe defendants, they were acting in their private capacity and for their own corporate benefit. Therefore, this nonpublic announcement cannot be construed as conduct under the delegated authority of the Securities Exchange Act of 1934 ( 15 U.S.C. § 78a (2010) ) and thus cannot be protected by the doctrine of regulatory immunity." (Emphasis in original.) Platinum Partners , 2012 IL App (1st) 112903, ¶ 18 [364 Ill.Dec. 137, 976 N.E.2d 415].

¶ 53 In the above quote, this court found that, "in the private disclosure of the price-adjustment decision," defendants "were acting in their private capacity and for their own corporate benefit." (Emphasis added.) Platinum Partners , 2012 IL App (1st) 112903, ¶ 18, 364 Ill.Dec. 137, 976 N.E.2d 415. Interpreting this quote, the trial court created its own two-part test to determine whether immunity applied, which was (1) were the disclosures non-public and (2) if so, were they intended for defendants' " 'own corporate benefit.' " Platinum Partners , No. 10-CH-54472. Applying this test, the trial court found (1) nonpublic disclosures (2) but no intent to benefit defendant OCC. The trial court found no intent because (1) there was "no indication that [defendant] OCC precluded non-members from reaching out and obtaining the same information at issue," (2) defendant OCC operated as a not-for-profit business, and (3) there could have been no intent to benefit OCC since disclosures would have reduced trading. Platinum Partners , No. 10-CH-54472. Thus, the trial court concluded that the doctrine of regulatory immunity applied and granted summary judgment for defendant OCC.

¶ 54 However, in our prior opinion, this court found that the test for whether an SRO's conduct falls within the scope of regulatory immunity is purely objective and that the subjective intent of the SRO

is completely irrelevant. Platinum Partners , 2012 IL App (1st) 112903, ¶ 16, 364 Ill.Dec. 137, 976 N.E.2d 415. We articulated one and only one test for whether regulatory immunity applies: whether the specific acts and omissions were incidental to the exercise of the SRO's regulatory power. Platinum Partners , 2012 IL App (1st) 112903, ¶ 16, 364 Ill.Dec. 137, 976 N.E.2d 415. We concluded that "the manner" in which the price adjustment was disclosed, "privately and prematurely," was simply not a regulatory decision. Platinum Partners , 2012 IL App (1st) 112903, ¶ 18, 364 Ill.Dec. 137, 976 N.E.2d 415. Thus, the question became, as the case moved along the procedural timeline, whether subsequent discovery proved the allegations in plaintiffs' complaint that disclosures about the IFN's strike price were, in fact, made privately and prematurely.

¶ 55 On this appeal, defendant OCC argues that, in addition to proving that the disclosures were made privately and prematurely, plaintiffs should also be required to prove that the disclosures were made "selectively," to only defendant's own members. However, as we explained both above and in our prior opinion, "the manner" in which the price adjustment was disclosed, "privately and prematurely," to only certain individuals was simply not a regulatory decision, even if some of those individuals were not members. Platinum Partners , 2012 IL App (1st) 112903, ¶ 18, 364 Ill.Dec. 137, 976 N.E.2d 415. Providing this information-even if it just confirmed information that the caller already suspected-encouraged a caller to sell to individuals like plaintiffs who were buying, thereby generating more fees for defendant OCC. Defendant OCC forthrightly admits in its brief that callers to its help desk called seeking assurance that they were not missing anything, in light of plaintiffs' actions, and the help desk not only provided that assurance but confirmed that the price adjustment was anticipated or expected or going to happen. Assuming that the callers were not calling just to "waste away the hours," those calls could have helped generate more fees for defendant OCC and its officers and employees.

¶ 56 Defendant argues, in essence, that the official public announcement of the price adjustment was practically an irrelevancy, and it is the private calls that should be cloaked with regulatory immunity. We decline to so find. Announcing the price adjustment privately to only certain investors undermines the fairness of one official, public announcement for all. Whether or not the public announcement was proper, defendant is immune with respect to it-not so with private announcements to a few, limited participants. Platinum Partners , 2012 IL App (1st) 112903, ¶ 16, 364 Ill.Dec. 137, 976 N.E.2d 415 (immunity does not depend on the propriety of the actions or omission but whether they were incidental to the SRO's governmental function).

¶ 57 Defendant argues on appeal that no matter what information the help desk employees pass along, their calls are entitled to regulatory immunity. That claim cannot possibly be true, otherwise they could engage in insider trading with impunity.

¶ 58 III. Supporting Documents and Affidavits

¶ 59 Next, we examine the admissions, documents, and affidavits submitted to us since our last opinion to determine whether defendant OCC satisfied its initial burden of showing the absence of evidence to support plaintiffs' allegations and whether plaintiffs have presented some evidence to support their own claims. A.M. Realty , 2016 IL App (1st) 151087, ¶ 86, 402 Ill.Dec. 681, 52 N.E.3d 602.

¶ 60 Almost three years after this court's last opinion, but a year before moving for summary judgment, defendants moved for leave to amend their answers to add the affirmative defense of regulatory immunity. In its proposed amended answer, defendant OCC admitted that some of its help desk employees disclosed pertinent information in private telephone conversations with certain market participants prior to a public announcement, including that an adjustment to the IFN strike price was "likely or anticipated." Defendant OCC admitted that these market participants called or emailed defendant OCC's help desk in response to the prices that plaintiffs were paying and in order to confirm that a downward adjustment would be made. However, in its proposed answer, defendant claimed that "OCC's Help Desk employees did not provide information concerning IFN so that OCC could profit from persons acting on that information." (Emphasis added.) As we already observed above, the subjective intent of defendant's employees is irrelevant to determining regulatory immunity. Defendant's motion for leave to amend, which was heard by a different trial judge, was denied. Platinum Partners , No. 10-CH-54472 (June 23, 2015). In denying the motion, the trial court observed that, based on the factual allegations made in its answer, defendant OCC's proposed amendment was futile. Platinum Partners , No. 10-CH-54472. We find that it was futile.

¶ 61 Since our last opinion, defendant OCC has produced audio recordings of its help desk employees privately disclosing to certain investors that defendant was about to adjust the strike price of the IFN option before that announcement was publicly and officially made. Individual callers were told that the adjustment was anticipated or expected or, flat out, that "there will be an adjustment." Supra ¶¶20-22. At their depositions, supervisors at defendant OCC testified that help desk employees were not authorized to disclose an adjustment prior to its official, public announcement. Supra ¶¶23-25. For example, John Peplinski, vice president of defendant OCC's national operations group testified that it was a clear "violation" of defendant's policy at the time. Supra ¶24. As a result, the employees involved received a written "warning" from their employer. Supra ¶25. In addition, Kenneth Rypel, a director of corporate actions, sent an email, prior to the public announcement, indicating an adjustment would be made. Supra ¶27. This evidence supports plaintiffs' prior factual allegations that defendant OCC made disclosures of the IFN strike price adjustment privately and prematurely to certain investors. In light of this evidence and other evidence like it, we must reverse the trial court's grant of summary judgment, which was based solely on the doctrine of regulatory immunity. As we previously held, defendant OCC's private and premature disclosures of the adjustment were not shielded from suit by regulatory immunity.

¶ 62 IV. Plaintiffs' Motion for Summary Judgment

¶ 63 Defendant OCC asks, in the event that this court reverses the trial court's grant of summary judgment in its favor on the ground of regulatory immunity, that we decline to consider plaintiffs' cross-motion for summary judgment on the merits of their claims. In contrast, plaintiffs ask us to consider their cross-motion as well.

¶ 64 The trial court declined to consider the merits of plaintiffs' claims, deciding the case solely on the issue of regulatory immunity. As a result, its Rule 304(a) finding concerned only the grant of summary judgment to defendant.

¶ 65 "The denial of a summary judgment motion is not a final order and is normally not appealable even where the court has made a finding pursuant to Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016)." Fogt v. 1-800-Pack-Rat, LLC , 2017 IL App (1st) 150383, ¶ 95, 411 Ill.Dec. 877, 74 N.E.3d 186 ; Eakins v. Hanna Cylinders, LLC , 2015 IL App (2d) 140944, ¶ 36, 397 Ill.Dec. 612, 42 N.E.3d 858 ("A denial of a summary judgment motion is not a final order and is normally not appealable, even with Illinois Supreme Court Rule 304(a) (eff. Feb. 26, 2010) language."); see also Clark v. Children's Memorial Hospital , 2011 IL 108656, ¶ 119, 353 Ill.Dec. 254, 955 N.E.2d 1065 ("the denial of summary judgment is not appealable, because such an order is interlocutory in nature").

¶ 66 Our supreme court has recognized an exception to this general rule, where cross-motions for summary judgment are filed, one party's motion is granted, and the trial court's "order disposes of all the issues in the case." Clark , 2011 IL 108656, ¶ 119, 353 Ill.Dec. 254, 955 N.E.2d 1065 ; Eakins , 2015 IL App (2d) 140944, ¶ 36, 397 Ill.Dec. 612, 42 N.E.3d 858. However, the order in the case at bar did not dispose of or address all the issues in the case.

¶ 67 In addition, the order did not discuss the same claims or issues as those raised in plaintiffs' motion. "[R]eview of an order denying a motion for summary judgment is proper where the order also granted a cross-motion for summary judgment on the same claim or claims * * *." Wolfram Partnership, Ltd. v. LaSalle National Bank , 328 Ill. App. 3d 207, 216 n.2, 262 Ill.Dec. 404, 765 N.E.2d 1012 (2001) ; see also In re Estate of Funk , 221 Ill. 2d 30, 85, 302 Ill.Dec. 574, 849 N.E.2d 366 (2006) ("An exception * * * has been recognized where cross-motions for summary judgment have been filed on the same claim and one party's motion is granted while the opposing motion is denied, thereby disposing of all issues in the case."). In the case at bar, defendant moved for summary judgment based on regulatory immunity, whereas plaintiffs moved for summary judgment based on the merits of their various fraud and securities violation claims.

¶ 68 Thus, we decline to review plaintiffs' cross-motion for summary judgment and remand for further proceedings consistent with this opinion.

¶ 69 CONCLUSION

¶ 70 For the foregoing reasons, we reverse the trial court's grant of summary judgment and remand for further proceedings consistent with this opinion.

¶ 71 Reversed and remanded.

Presiding Justice Burke and Justice McBride concurred in the judgment and opinion.

      Infra ¶48.

      The parties filed a secured record in order to protect the identities of third parties who are not parties to this appeal. Thus, we will refer to the callers simply as callers rather than identifying them by name.

      Huddleston testified that he had been employed with defendant OCC for 23 or 24 years and left in October 2011.

      Tait testified at his deposition that he had worked with defendant OCC since July 2005 and was still employed there and that in December 2010, when these events occurred, he was a "senior investor service specialist," whose primary job was to answer telephone calls.

      Knabjian testified at her deposition that she had been employed with defendant OCC for 18 years and that in December 2010, when these events occurred, she was the director of internet and investor services. While Harwood managed the "day-to-day" activities of the help desk, he "reported up through [Knabjian] for overall direction for the team."

      Knabjian testified that Huddleston and Tait reported to Joe Harwood who reported to her.

      Rypel testified at his deposition that he had been employed with defendant OCC for 35 years until resigning in March 2011. During December 2010, when the events of this suit occurred, he was director of corporate actions.

      Peplinski testified at his deposition that he was employed by defendant from 1981 until April 2014 and that his position in December 2010, when these events occurred, was vice president of the national operations group.

      Prior to the trial court's summary judgment ruling, a different trial judge had denied defendants OCC and CBOE leave to amend their answers to add the affirmative defense of regulatory immunity, on the ground that this court's opinion removed that issue from the case. However, the parties raise no issues on appeal with respect to this prior memorandum opinion by the trial court on June 23, 2015.

      John Peplinski, the vice president of defendant's national operations group in December 2010, explained at his deposition: "[T]he revenue of OCC was determined by fees charged per contract cleared. So the more-the more-the more volume the-that we cleared, the more fees, we were able-you know, we-we got."

      Defendant OCC reported this amount in its publicly released 2010 annual report, which is also part of the record on appeal.

      Plaintiffs dispute defendant's status as a not-for-profit business but claim that, whether defendant is or is not, the issue is not defendant's status but whether it acted to further a governmental function.

      The trial court did not explain why a not-for-profit business could not still act for its own corporate benefit and to enhance and further its own purpose-its own reason for existing.

      The trial court did not cite any evidence to support this assertion and did not explain why it believed that the disclosure of an anticipated price drop would not encourage market participants to sell to buyers, such as plaintiffs, at the temporarily elevated price. In its appellant brief, defendant argues that "the reason for the volume of trading on December 20" was the price plaintiffs were paying, rather than what defendant's employees stated to individual market participants. Defendant argues that, although its employees stated that a price drop was likely, there was no evidence that these statements increased trading, since "there was nothing said about whether or not to buy or sell the options."

      Defendant's appellate brief argues that, "if the person is performing a regulatory function by answering questions at a help desk, regulatory immunity does not depend on the propriety of the answer." Hence, even if the help desk employee was providing "investment advice," defendant argues, the employee was still clothed with regulatory immunity.


author: Mathias, Judge.

text:
    Tasima M. COLLYEAR-BELL, Appellant-Respondent, v. Dennis T. BELL, Appellee-Petitioner.
    Court of Appeals Case No. 49A05-1709-DR-2076
    Court of Appeals of Indiana.
    Filed May 11, 2018 Publication Ordered June 25, 2018
    Attorney for Appellant: Adam Lenkowsky, Roberts & Bishop, Indianapolis, Indiana
    Attorney for Appellee: Danielle L. Gregory, Indianapolis, Indiana
   Mathias, Judge.

[1] Tasima M. Collyear-Bell ("Mother") appeals the order of the Marion Superior Court awarding primary physical custody of her minor daughter, J.C.B., to the child's father and Collyear's ex-husband, Dennis T. Bell ("Father"). On appeal, Mother presents four issues, which we consolidate and restate as the following two: (1) whether the trial court abused its discretion when it granted physical custody of J.C.B. to Father, and (2) whether the trial court abused its discretion by denying Mother's motion to reopen the evidence and submit documentary evidence of her gross weekly income that would substantially reduce her child support obligation. We affirm the trial court's modification of primary physical custody in favor of Father, but reverse the trial court's child support calculation, and remand with instructions.

Facts and Procedural History

[2] Mother and Father married on January 4, 2007, and their only child together, J.C.B., was born in August 2008. The parties separated in April 2009. Thereafter, on September 6, 2011, Father filed a petition for dissolution of the marriage. The trial court dissolved the parties' marriage on December 20, 2012 and awarded primary physical custody of J.C.B. to Mother and awarded both parties joint legal custody of the child. Father was ordered to pay $174.52 per week in child support.

[3] Father exercised regular parenting time with J.C.B., and the majority of J.C.B.'s family lived in or near Indiana. On May 31, 2015, Mother moved to Texas with her boyfriend, who had family in Texas. Precisely how much Mother told Father about her plan to move to Texas is disputed by the parties. Regardless, Mother did not file the statutorily required notice of her intent to move. See Ind. Code §§ 31-17-2.2-1 to -6.

[4] After Mother moved, J.C.B. stayed with Father for the summer, then went to stay in Texas with Mother in September 2015. J.C.B. did well in Texas, where she was enrolled in a class for children with special educational needs. J.C.B. made friends at school and received good grades. But at some point, in the late fall of 2016, J.C.B. got in trouble at school for making a rude comment to another student. On December 12, 2016, Mother decided to punish J.C.B. by whipping her with a belt. Mother made J.C.B. strip down to her t-shirt, underwear, and socks and lie across the bed. Mother then hit the child several times with the belt. J.C.B. moved around during the whipping, causing Mother to strike her in several places. At one point, J.C.B. got up and ran around the room. Mother then made J.C.B. lay back on the bed to continue the whipping. Mother stopped the whipping when she noticed that J.C.B. had a bruise on her arm.

[5] The following day, J.C.B.'s teacher referred her to the school nurse after seeing that J.C.B. had a bruise on her eye. The school then reported J.C.B.'s injuries to the Texas Department of Family Protective Services ("DFPS"). The DFPS's "Allegation Detail" reported as follows:

Worker did interview [J.C.B.] She did make an outcry of getting spanked with a belt Monday for having a Yellow on her report. Worker observed during the interview a mark with a bruise [ ] under her right eye, marks and bruises on her chest, bruises on both arms from her shoulder to her wrist, bruises on both thighs, and [a] bruise on the left side of her back, she also had bruises on her stomach.

Ex. Vol., GAL Ex. 1, Attachment p. 4.

[6] The DFPS report also stated that the bruise under J.C.B.'s eye was shaped like a belt buckle. J.C.B. reported to the DFPS investigator that Mother was angry with her when she was whipped with the belt and that Mother had also hit her with a switch. J.C.B. also stated that Mother knew about the bruises and marks on her and told her, "that is what you get for putting you[r] hands and legs in the way." Id. at 22. J.C.B. also told the DFPS investigator that, if she got in trouble at school, Mother would whip her in the morning and evening. She also would get whipped if she misbehaved at home.

[7] As a result of its investigation into the physical abuse, DFPS removed J.C.B. from Mother's home and contacted Father to request that he pick up the child, take her back to Indiana, and file for custody. Mother objected and preferred her pastor to take J.C.B. DFPS closed its investigation with a determination that, by a preponderance of the evidence, Mother physically abused J.C.B. The DFPS report indicated that criminal charges were being prepared against Mother, but no criminal charges were ever filed.

[8] On March 13, 2017, Father filed a petition seeking custody of J.C.B. and to terminate his child support obligation and instead receive child support from Mother. On May 16, 2017, the parties appeared by counsel and agreed Father would have temporary physical and legal custody of J.C.B. and Father's child support obligation would terminate. The trial court issued an order granting Father temporary physical custody of J.C.B. on May 23, 2017. The following day, Father requested that the trial court appoint a guardian ad litem ("GAL"), which the trial court granted on May 26, 2017. The GAL submitted his report on July 21, 2017, and a supplemental report on July 25, 2017.

[9] The trial court held a hearing on Father's petition to modify custody on August 1, 2017. Following the hearing, Mother moved to amend her testimony concerning her income, alleging that she had misstated her weekly income during her testimony at the hearing. Father opposed the motion, and the trial court denied it on August 9, 2017.

[10] On August 21, 2017, the trial court entered findings of fact and conclusions of law granting Father's petition to modify custody. The order provides in relevant part:

10. J.C.B. has a learning disability as to math. Mother enrolled the child in a special needs class at Thurgood Marshall Elementary and arranged for private tutoring. J.C.B. was receiving A's and B's at her school in Texas.
11. Mother resides in an apartment with her boyfriend in Dallas, Texas. J.C.B. has her own bedroom in this apartment.
12. In December 2016, the Texas Department of Family and Protective Services ("DFPS") initiated an abuse investigation against Mother.
* * *
14. DFPS found there was reason to believe that physical abuse of J.C.B. by Mother had occurred.
15. The DFPS report noted that Mother had inflicted excessive corporal punishment on J.C.B., resulting in a bruise in the shape of a belt on her right cheek, a bruise under her right eye, marks and bruises on her chest, and bruises on both arms from shoulder to wrist, on both thighs, and on the left side of her back and on her stomach.
16. When interviewed by DFPS, J.C.B. reported that the bruises were the result of a "whooping" administered by her Mother as punishment for saying something inappropriate at school.
17. J.C.B. provided a detailed account of the incident in a forensic interview conducted on December 20, 2016. Her account will not be recited verbatim here but is incorporated by reference.
18. Mother initially denied physically abusing J.C.B. Her explanation of the visible injuries on J.C.B. was found to be inconsistent with the injuries sustained.
19. As found in the GAL report, Mother, Mother's boyfriend, J.C.B., and J.C.B.'s half-sister all have advised that a particular mark on J.C.B.'s face was caused by a girl at daycare. This mark notwithstanding, the evidence shows that Mother was responsible for the remaining marks and bruises.
20. Mother was more forthcoming at the hearing on August 1, 2017. Mother confirmed that she administered corporal punishment to J.C.B. on the day in question as punishment for inappropriate language the child used at school.
21. As testified to by Mother, she had J.C.B. take off her pants and lay on her bed. Mother then proceeded to strike the child with a belt. J.C.B. then attempted to run away.
22. Mother began striking the child again with the belt. Mother explained the bruising on J.C.B.'s arm was the result of the child turning away from the strikes.
23. Mother then treated the affected areas with ice packs and lotion.
24. Mother's testimony at the hearing was largely consistent with the description of events provided by [J.C.B.] on December 20, 2016.
25. Mother asserts that the child has a medical condition which causes her to bruise easily.
26. Although this may explain the bruises observed, in the Court's view, the child's medical condition does not excuse the excessive punishment administered by Mother.
27. J.C.B. advised the forensic interviewer that when she gets in trouble, she usually gets a "whooping" as punishment.
28. As reported by the GAL, Mother and her boyfriend use corporal punishment with J.C.B. when other forms of discipline have been unsuccessful. In such instances, Mother uses a belt for spankings with 5-6 "licks" for a single spanking.
29. Mother testified that she has used corporal punishment in the past with J.C.B. and with her oldest daughter. Mother denies that any discipline administered to her children has been excessive.
30. Father could not recall observing any prior instance of abuse towards J.C.B. by Mother during the marriage.
31. Father does not employ corporal punishment with J.C.B.
32. Based upon all of the evidence presented, the Court finds that this incident of corporal punishment, in which a belt was used by Mother to strike the child, was not isolated. While it is certainly not Mother's standard method of parental discipline, this is not the first time she has struck J.C.B. with a belt.
33. While there is not sufficient evidence to support a finding that prior punishments for J.C.B. have been excessive as to the resulting injuries, the Court does find that the punishment carried out here was excessive and exceeds any reasonable parental discipline of a child.
* * *
40. DFPS recommended to Mother that she take parenting classes. To date, she has not followed this recommendation.
41. Father returned J.C.B. to Indianapolis in January of 2017.
42. Father enrolled the child in Fox Hill Elementary. J.C.B.'s grades dropped to C's and D's following her transfer. Father enrolled the child in summer school so that she could advance with her class.
43. Father resides in a one-bedroom apartment. J.C.B. sleeps in Father's room while he sleeps in the family room. Father intends to get a larger apartment if he is granted physical custody.
* * *
53. [J.C.B.'s adult half-sister] advised the GAL that J.C.B. vacillates on whether she prefers to reside in Texas or Indiana. This contradicts J.C.B.'s statement to the GAL that she wanted to remain with Father in Indiana and not return to Texas.
54. Having considered the conflicting evidence, the Court finds that J.C.B. prefers to reside with Father.
55. As found in the GAL report, J.C.B. has been involved with her church choirs in both Texas and Indiana. J.C.B. does not favor one parent over another and enjoys spending time with both parents.
56. The Court agrees with the GAL's assessment that J.C.B.'s safety and stability in her home life are paramount in determining her custody.
57. The Court finds that J.C.B. has adjusted well to her home with Father and to her new school since her return to Indianapolis.
58. The Court also agrees with the GAL that both parents are capable for providing an adequate home environment for J.C.B.
59. Father did not express any concerns with Mother exercising non-supervised parenting time with J.C.B. It is the recommendation of the GAL that Mother's parenting time be unsupervised.
* * *
64. As shown above, among the factors to consider in a request to modify custody are the child's adjustment to his home, school and community. The evidence presented demonstrates that J.C.B has adjusted well to her home with Father, her new school, and her return to the community since she was placed with Father by DFPS. This substantial change in factors weighs in favor of a permanent modification of custody to Father.
65. Another factor to consider is the child's desire to remain in Indiana. While the Court would have given this factor greater weight if J.C.B. had been at least fourteen (14) years old, this change in factors is, nonetheless, substantial and weighs in favor of a permanent modification of custody to Father.
66. By agreeing to assume care of his daughter per the DFPS safety plan and by pursing modification of custody as he agreed to, Father has demonstrated a permanent change in his desire for physical custody of J.C.B.
67. Mother argues that Father has not demonstrated a pattern of domestic or family violence as contemplated by I.C. 31-17-2-8, but has merely shown a single act of abuse. The Court is mindful that a non-custodial parent must show more than isolated acts of misconduct by the custodial parent in order to warrant a modification of child custody.
68. The Court also agrees with Mother that Indiana law recognizes a parental privilege to use moderate or reasonable physical force in the discipline of a child. However, the evidence presented leads to the conclusion that Mother has used a belt in the past to discipline J.C.B., albeit as a last resort. The evidence also leads to the conclusion that in the latest instance, the discipline resulted in multiple bruising to the child's body and that this discipline was unreasonable as a means of parental discipline. The Court concludes that a pattern of domestic or family violence has been established.
69. Having considered the evidence, the Court concludes that while Mother implements corporal punishment with J.C.B. as she is entitled to do as a parent, she has resorted to the use of a belt for spankings. Further, the evidence demonstrates that the punishment carried out here was excessive and exceeds any reasonable parental discipline of a child.
70. To return J.C.B. to Mother's custody would place the child's wellbeing at substantial risk. It would not be in the best interest of the child to return J.C.B. to the custody of Mother.
71. There is a substantial change in one (1) or more of the factors listed in Indiana Code § 31-17-2-8 such that the current order for physical custody of the child is unreasonable.
72. It is in the in the best interest of J.C.B. that Father be granted sole physical custody with parties continuing to share joint legal custody of the minor child.
73. Father has requested that his support order be terminated and that Mother be required to pay child support.
74. The current child support order was temporarily vacated on May 23, 2017. There is no evidence of an arrearage in this case.
75. Father earns a weekly gross income of Five Hundred Twenty-Six Dollars ($526.00) which is based upon an hourly wage of Thirteen Dollars and Fifteen Cents ($13.15) over a forty (40) hour work week.
76. Mother earns a weekly gross income of One Thousand Dollars ($1,000.00) per week.
77. Both parties have health insurance available to them and J.C.B. Father would incur Eight Dollars ($8.00) per week on the child's portion of his weekly insurance premium. Mother would incur a weekly premium for J.C.B. around Thirty-Five Dollars ($35.00) per week.
78. Father shall maintain health insurance coverage on J.C.B. and receive credit for the weekly premium.
79. Father incurs Fifty Dollars ($50.00) per week in work-related child care expenses.
80. Mother shall exercise liberal parenting time as the parties shall agree but in no event shall Mother be entitled to less parenting time than that provided in the Indiana Parenting Time Guidelines When Distance is a Major Factor.
81. Mother's parenting time shall not be supervised.
82. Mother shall have additional parenting time, including overnight parenting time, whenever she travels to Marion County, Indiana or its contiguous counties. The parties shall provide notice to each other, as far in advance as possible, of such parenting opportunities.
83. Mother shall be entitled to reasonable weekly opportunities for additional contact with the minor child through telephone calls, texting, and video conferencing such as through Facetime or Skype.
84. The existing child support order shall be modified. Mother shall pay child support in the amount of One Hundred Sixty-Two Dollars ($162.00) per week consistent with the attached Child Support Obligation Worksheet, which is incorporated herein by reference.
* * *
88. The Court recommends, but does not order, that Mother undertake parenting classes with emphasis on proper child discipline.

Appellant's App. pp. 13-23 (citations omitted) (emphasis added). Mother now appeals.

Standard of Review

[11] The decision to modify custody is one that rests in the sound discretion of the trial court. In re Marriage of Sutton , 16 N.E.3d 481, 484 (Ind. Ct. App. 2014). On appeal, we review the trial court's decision to modify custody for an abuse of this discretion, giving wide latitude and deference to the trial court. Kirk v. Kirk , 770 N.E.2d 304, 307 (Ind. 2002).

[12] Here, the trial court entered findings of fact and conclusions sua sponte . In such cases, the trial court's specific findings control only with respect to the issues they cover, and a general judgment standard applies to issues outside the court's findings. Sutton , 16 N.E.3d at 484-85. The trial court's findings or judgment will be set aside only if they are clearly erroneous. Id. A finding of fact is clearly erroneous when there are no facts or inferences drawn therefrom to support it. Id. On appeal, we "are not to reweigh the evidence nor reassess witness credibility, and the evidence should be viewed most favorably to the judgment." Best v. Best , 941 N.E.2d 499, 502 (Ind. 2011).

I. Custody Modification

[13] Mother first argues that the trial court abused its discretion by granting Father's petition to modify custody. Pursuant to Indiana Code section 31-17-2-21, a trial court may not modify an existing custody order unless: (1) the modification is in the best interests of the child, and (2) there has been a substantial change in one or more of the statutory factors set forth in Indiana Code section 31-17-2-8. The factors a trial court is to consider under Section 31-17-2-8 are:

(1) The age and sex of the child.
(2) The wishes of the child's parent or parents.
(3) The wishes of the child, with more consideration given to the child's wishes if the child is at least fourteen (14) years of age.
(4) The interaction and interrelationship of the child with:
(A) the child's parent or parents;
(B) the child's sibling; and
(C) any other person who may significantly affect the child's best interests.
(5) The child's adjustment to the child's:
(A) home;
(B) school; and
(C) community.
(6) The mental and physical health of all individuals involved.
(7) Evidence of a pattern of domestic or family violence by either parent.
(8) Evidence that the child has been cared for by a de facto custodian....

[14] All that is required to support custody modification under Section 31-17-2-21 is a finding by the trial court that (1) change would be in the child's best interests, (2) a consideration of the factors listed above, and (3) a finding that there has been a substantial change in one of those factors. In re Paternity of P.R. , 940 N.E.2d 346, 351 (Ind. Ct. App. 2010).

A. Pattern of Domestic or Family Violence

[15] Mother first argues that the trial court erred in determining that there was evidence of a pattern of domestic or family violence. Mother notes that we have held before that a non-custodial parent "must show something more than isolated acts of misconduct by the custodial parent to warrant a modification of child custody." Wallin v. Wallin , 668 N.E.2d 259, 261 (Ind. Ct. App. 1996). Here, however, there was evidence of more than an isolated act of misconduct. There was evidence that Mother repeatedly beat J.C.B. with a belt or a switch; the incident that led to the DFPS investigation was only the most recent of Mother's beatings. Indeed, Mother herself admitted that she had previously whipped J.C.B. with a belt three times while they lived in Texas.

[16] We find Mother's citation to Willis v. State , 888 N.E.2d 177 (Ind. 2008), to be unavailing. In that case, a mother was convicted of Class D felony battery for whipping her eleven-year-old son with a belt or extension cord. Id. at 179. Our supreme court noted the existence of a parental privilege "to apply such reasonable force or to impose such reasonable confinement upon his child as he reasonably believes to be necessary for its proper control, training, or education" as a complete defense to a charge of battery. Id. at 182. The Willis court held that this parental privilege applied in the case before it, noting that the boy's injuries caused by the mother's whipping "were neither serious nor permanent," and that the mother in that case could not be guilty of battery. Id. at 184.

[17] Here, however, we are not concerned with criminal liability or even tort liability. We are concerned with whether there was a pattern of family or domestic violence sufficient to justify a change in custody. Although the parental privilege from Willis might be a defense for Mother if she were to be criminally charged in Indiana, we do not think this privilege prevented the trial court from considering Mother's violence toward her child when determining whether to modify custody in favor of Father.

[18] Mother also claims that the trial court did not find a pattern of family or domestic violence because the trial court found that there was evidence that only the most recent whipping was excessive and resulted in injuries. However, the trial court also found that Mother had repeatedly whipped J.C.B. while in Texas and that the most recent whipping resulted in injuries to the child. This is sufficient to establish that there had been a pattern of violence toward J.C.B. Accordingly, the trial court did not err in concluding that there had been a substantial change in one of the statutory factors, evidence of a pattern of family or domestic violence, sufficient to justify a change of custody to Father.

B. Child's Adjustment to Home, School, and Community

[19] Mother next argues that the trial court erred by finding that J.C.B.'s adjustment to her new home with Father, her new school, and her return to the Indianapolis community since her placement with Father by the Texas DFPS was a substantial change in factors that weighed in favor of modification of custody to Father. Mother argues that "a Trial Court may not consider a change in permanent physical custody upon evidence of changes in a child's condition occurring during the period in which the physical custody of that child has been transferred to the noncustodial parent pursuant to an emergency petition." Appellant's Br. at 11-12 (citing Joe v. Lebow , 670 N.E.2d 9, 22 (Ind. Ct. App. 1996) ).

[20] In Joe , this court held that evidence of a child's improving condition, while under the temporary emergency custody of the noncustodial parent, was admissible. 670 N.E.2d at 23. A child's improving condition may properly be considered in determining the child's best interests. Id. However, evidence of a child's improving condition cannot fall within the trial court's consideration of a substantial change in one of the statutory factors. Id. In other words, without independent evidence of a substantial change in one of the statutory factors, evidence of a child's improving condition with the noncustodial parent will not by itself support a custody modification. Wiggins v. Davis , 737 N.E.2d 437, 442 (Ind. Ct. App. 2000) (citing Joe , 670 N.E.2d at 23 ).

[21] Accordingly, the trial court should not have considered J.C.B.'s adjustment to her new home and community as evidence of a substantial change in the statutory factors. But the trial court could properly consider J.C.B.'s adjustment in determining the child's best interests. We find no reversible error, however, because here, the trial court did not base its custody decision solely based on this factor. Instead, as noted above, the trial court also based its determination on the evidence of violence toward J.C.B. by Mother.

C. The Wishes of the Child

[22] Mother also argues that the trial court erred by taking into consideration J.C.B.'s desire to remain with Father. Mother again cites to our decision in Joe for the proposition that "a change in the child's wishes, standing alone, cannot support a change in custody." 670 N.E.2d at 25. Here, however, the trial court did not base its decision to modify custody on the child's wishes alone. Moreover, the statute specifically authorizes the trial court to consider "all relevant factors" including "[t]he wishes of the child, with more consideration given to the child's wishes if the child is at least fourteen (14) years of age." I.C. § 32-27-2-8(3). That the child's wishes are to be given more consideration if the child is at least fourteen years old does not mean that the wishes of a child who is not yet fourteen cannot be considered.

[23] In summary, the trial court did not abuse its considerable discretion in modifying physical custody of J.C.B. in favor of Father based on evidence of Mother's violence directed toward the child.

II. Motion to Amend Testimony

[24] Lastly, Mother argues that the trial court abused its discretion by denying her post-hearing motion to amend her testimony concerning her weekly income. Generally speaking, evidence must be offered during the course of a trial, and it is within the discretion of the trial court to permit a party to present additional evidence or testimony once the party has rested, once both parties have rested, or after the close of all of the evidence. In re D.Q. , 745 N.E.2d 904, 908 (Ind. Ct. App. 2001).

[25] Mother testified at the evidentiary hearing that her weekly gross income was $1,000. After the hearing, Mother realized that she had misspoken, and that her income was, in fact, closer to $1,000 per paycheck , which she receives every two weeks. Mother moved to amend her testimony in this regard, providing the trial court with copies of her paychecks to corroborate her claim regarding her factually erroneous testimony. See Appellant's App. pp. 48-54. She also provided the trial court with a calculation showing that her actual gross weekly income was $705. See id. at 46-47.

[26] Father does not deny the veracity of Mother's claims regarding her actual income. He argues, however, that Mother and her counsel repeatedly misstated her income during the hearing and that the trial court was therefore within its discretion to deny Mother's motion. He also contends that Mother is not without remedy, as she may still petition the trial court to modify her child support obligation under Indiana Code section 31-16-8-1. This statute provides:

Except as provided in section 2[ ] of this chapter, modification may be made only:
(1) upon a showing of changed circumstances so substantial and continuing as to make the terms unreasonable; or
(2) upon a showing that:
(A) a party has been ordered to pay an amount in child support that differs by more than twenty percent (20%) from the amount that would be ordered by applying the child support guidelines; and
(B) the order requested to be modified or revoked was issued at least twelve (12) months before the petition requesting modification was filed.

I.C. § 31-16-8-1.

[27] Under this statute, Mother would have to wait until August 21, 2018 (twelve months after the current support order was entered) before she could file for modification. In the meantime, her child support obligation would be substantially higher than if calculated using her actual, documented weekly salary.

[28] Under these particular facts and circumstances, we conclude that the trial court abused its discretion by denying Mother's motion to reopen the evidence and submit documentary evidence of her weekly income. We therefore reverse the trial court's order regarding child support and remand with instructions that the trial court determine Mother's child support obligation based on her actual gross weekly income.

Conclusion

[29] The trial court did not abuse its discretion by granting Father's motion to modify physical custody. There was evidence that Mother engaged in a pattern of violence toward J.C.B., with the most recent incident resulting in not-insubstantial injuries to the child and the involvement of Texas child protection authorities. The trial court's consideration of the child's adjustment to her new home with Father was not reversible error, and the trial court did not err by considering the wishes of J.C.B. to live with Father. We conclude, however, that the trial court should have granted Mother's motion to reopen the evidence to submit documentary evidence of her actual gross weekly income because Mother's child support obligation would be substantially less if it is based on her actual weekly gross income. Accordingly, the judgment of the trial court is affirmed with regard to child custody, reversed with regard to child support, and remanded for proceedings consistent with this opinion.

[30] Affirmed in part, reversed in part, and remanded.

Najam, J., and Barnes, J., concur.

Order

[1] Appellant, Tasima M. Collyear-Bell, by counsel, filed a Motion for Publication.

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

1. The Appellant's Motion for Publication is granted.
2. This Court's opinion heretofore handed down in this cause on May 11, 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 6/25/2018.

[4] Najam, Mathias, JJ., Barnes, Sr.J., concur.

      Mother testified that she told Father about her plans to move prior to moving. Father gave conflicting testimony regarding whether Mother told him of her plans prior to the move. Father initially admitted that Mother told him in October 2014 that she would be moving to Texas. Tr. p. 64. He also testified that Mother told him she planned to move to Texas, but that he had not paid attention to what she had said. Id. at 65. When questioned by his counsel, Father again admitted that Mother told him about her plans to move in October of 2014, but then later stated that she did not tell him that she was moving until June 2015, after the move took place. Id. at 69-71.

      Section 2 of Indiana Code chapter 31-16-8, which is inapplicable here, pertains to health and hospitalization costs.

      Using the Indiana Supreme Court Child Support Calculator, and the figures used in the trial court's child support worksheet, corrected to show Mother's weekly income of $705, results in a weekly child support obligation for Mother of $89, almost half of the $162.00 obligation that Mother was ordered to pay based on her mistaken testimony. See Indiana Supreme Court Child Support Calculator, http://mycourts.in.gov/csc/Practitioners/.


author: Altice, Judge.

text:
    Brian K. WYNNE, Appellant-Plaintiff, v. Tyson BURRIS and Brian K. Alsip, Appellees-Defendants
    Court of Appeals Case No. 41A04-1710-SC-2363
    Court of Appeals of Indiana.
    FILED June 13, 2018
    Appellant Pro Se: Brian K. Wynne, Michigan City, Indiana
   Altice, Judge.

Case Summary

[1] Brian K. Wynne filed a small claims action against Tyson Burris and Burris's attorney, Brian K. Alsip. The trial court found in favor of Burris and Alsip and determined that Wynne's claims were brought in bad faith. Accordingly, the trial court assessed attorney fees against Wynne. Wynne now appeals pro se raising the following issues:

1. Did the trial court abuse its discretion by admitting into evidence recorded jail telephone calls between Wynne and his girlfriend, Barbara Mooney?
2. Does the evidence support the trial court's conclusion that Wynne had given Mooney actual authority to act as his agent regarding the settlement with Burris?
3. Should Alsip have been permitted to represent himself in this action?
4. Did the trial court err by rejecting Wynne's negligence claim against Alsip?

[2] We affirm.

Facts & Procedural History

[3] On January 28, 2015, Wynne began work on a home improvement project at Burris's home, which included the removal of flooring, demolition of a wall, and installation of new flooring. Wynne did not provide Burris with a written agreement or set a price but stated that the labor cost would not exceed $2500. Wynne worked over the next several days, appearing progressively later each day. Burris felt that the project was taking too long, and Burris started to notice "red flags." Transcript at 54.

[4] During the project, Wynne unexpectedly brought a set of kitchen appliances to Burris's home to sell to him and his wife. Burris began to suspect that the appliances had been stolen and decided to contact local authorities. He learned that Wynne was a suspect in a recent burglary. Burris provided a detailed statement to the Johnson County Sheriff's Office. Thereafter, on February 3, 2015, Wynne was arrested for burglary while working at Burris's home. As a result of his arrest, Wynne did not finish the project. Burris eventually hired others to complete the work.

[5] Wynne bonded out of jail and then tried to contact Burris regarding the project. Burris refused his calls but communicated with Wynne via text. They discussed a payoff amount, and Burris directed Wynne to contact Alsip, Burris's attorney, to complete the settlement. Burris provided Alsip with a cashier's check made out to Wynne. Alsip and Wynne arranged to meet at Alsip's office, and Wynne understood that he would need to sign a release in order to receive the check. This scheduled meeting, however, did not occur because Wynne was arrested on a warrant that same day.

[6] While in jail, Wynne made phone calls to Mooney, his longtime girlfriend. Wynne indicated on a number of occasions that he wanted Mooney to pick up the check, as well as handle other matters for him. In one phone call, Wynne reminded Mooney that she had his power of attorney (POA), and he referenced the POA in another recorded call. With respect to the check from Burris, Wynne directed Mooney as follows:

If you get a check from [Burris] all you do is sign my name on the back of it, take it to the ATM machine and deposit it, ok. That way you don't have to put your name on it, no one's going to question it, it's gonna go straight in and you should, in a day, you should have access to the money, ok.

Id. at 106. Mooney understood from her discussions with Wynne that the amount of the settlement check was to be $1400.

[7] The POA Wynne referenced was obtained by Mooney at the jail on February 17, 2015, in order to get Wynne's vehicle out of the tow lot. The POA form was provided by the jail, and a deputy took the form to Wynne, who had verbally assented to the POA. Wynne then printed his own name twice and Mooney's name once in the appropriate blanks on the form. Wynne, however, did not sign his name on the signature line or list his social security number. The form was returned to Mooney. She filled out the few remaining blanks and mistakenly signed the form and listed her social security number where Wynne should have done so. The form was then presented to Deann Judd, an employee of the sheriff's office who was also a notary. Judd notarized the POA form without personally observing the form being signed or completed.

[8] As directed by Wynne, Mooney contacted Burris to complete the settlement. Mooney met with Alsip on March 23, 2015, and presented him with the POA and her driver's license. She also signed an affidavit prepared by Alsip regarding the settlement agreement and the POA. Mooney then signed the Settlement Agreement and General Release (the Agreement) on Wynne's behalf, and Alsip gave her the $1400 cashier's check made payable to Wynne.

[9] On February 24, 2017, Wynne filed a small claims action against Burris for services rendered and Alsip for negligence in releasing the cashier's check to Mooney. The basis of Wynne's claims was that the POA was "invalid and possibly forged". Appendix at 9.

[10] On August 16, 2017, Wynne appeared telephonically from prison and represented himself at trial. Burris was represented by counsel, and Alsip represented himself. The trial court took the matter under advisement and then issued a detailed order on September 9, 2017.

[11] Despite concluding that the POA was invalid, the trial court determined that both Wynne and Mooney believed that Wynne had appointed Mooney as his attorney in fact and that Wynne authorized her to obtain the settlement check on his behalf. Thus, the court concluded that Wynne had provided Mooney with actual authority to act as his agent in this matter, and Wynne could not now seek to avoid the Agreement. Further, with respect to the negligence claim against Alsip, the court determined that Alsip did not owe Wynne a duty of ordinary care because he represented Burris, not Wynne. In addition to entering judgment in favor of Burris and Alsip on Wynne's claims, the court granted Burris's request for attorney fees, explaining:

Mr. Wynne empowered Ms. Mooney to act on his behalf under actual authority. After clearly instructing Ms. Mooney to accept the settlement on his behalf, Mr. Wynne now asserts that she had no authority as a result of the failure of the Johnson County Sheriff's Department to get a form properly signed and notarized. While a valid power of attorney was not created, Mr. Wynne ignores his own actions in vesting Ms. Mooney with actual authority. The litigation has been brought in bad faith.

Id . at 57-58. Wynne now appeals. Additional information will be provided below as needed.

Discussion & Decision

1. Admission of Evidence

[12] Wynne contends that the trial court abused its discretion by admitting into evidence the recorded telephone conversations from the jail between him and Mooney. He asserts that these calls were confidential and that Alsip obtained them by "undocumented means." Appellant's Brief at 13. Wynne raises a litany of specific challenges to this evidence on appeal, but he only objected on two grounds below. We will therefore limit our review to those two preserved arguments.

[13] Wynne's first objection to this evidence was that the recorded jail calls had not been disclosed to him in discovery. Contrary to Wynne's assertion below, "automatic discovery" does not occur in small claims actions. Transcript at 100. Ind. Small Claims Rule 6 pertains to discovery and provides:

Discovery may be had in a manner generally pursuant to the rules governing any other civil action, but only upon the approval of the court and under such limitations as may be specified . The court should grant discovery only upon notice and good cause shown and should limit such action to the necessities of the case.

Id . (emphasis supplied). Our review of the record, reveals that Wynne did not request discovery in this action. Accordingly, he cannot be heard to complain that he was unaware that Alsip had copies of these recorded phone conversations.

[14] Further, we remind Wynne of the informal nature of small claims hearings, as set out in Ind. Small Claims Rule 8(a) :

The trial shall be informal, with the sole objective of dispensing speedy justice between the parties according to the rules of substantive law, and shall not be bound by the statutory provisions or rules of practice, procedure, pleadings or evidence except provisions relating to privileged communications and offers of compromise.

With this in mind, Wynne's various technical claims of alleged discovery violations and his reliance on the Indiana Trial Rules are misplaced. The trial court did not abuse its discretion by admitting this relevant and probative evidence at the small claims hearing over Wynne's objection.

[15] Next, Wynne argued below that the recordings violated the "Wiretap Act of Indiana" because Alsip "illegally intercepted wiretap [sic] without authorization through a search warrant or any other means." Transcript at 101. On appeal, he makes the unsupported assertion that Mooney had to have expressly consented to the calls being recorded in order for them to be admissible.

[16] The recording of a communication with the consent of either the sender or the receiver is not an interception, as defined by the Indiana Wiretap Act. See Ind. Code § 35-31.5-2-176 ; see also Edwards v. State , 862 N.E.2d 1254, 1261-62 (Ind. Ct. App. 2007) (recipient of jail call consented to recording by accepting the call after hearing admonishment that call may be recorded or monitored), trans. denied . Here, the evidence establishes that Mooney was aware that the jail calls were being recorded, and she still accepted them. Additionally, Wynne acknowledges that the calls included "an automated voice that tells the called party that the phone call may be recorded." Appellant's Brief at 24. Under these circumstances, Mooney consented to the recording when she accepted the collect calls after being warned that the calls could be recorded. See Steinberg v. State , 941 N.E.2d 515, 523 (Ind. Ct. App. 2011), trans. denied . The recordings were, therefore, not in violation of the Indiana Wiretap Act and were admissible. See id . ; Edwards , 862 N.E.2d at 1262.

2. Actual Agency

[17] Wynne next argues that the evidence does not support the trial court's conclusion that Wynne had given Mooney actual authority to act as his agent regarding the settlement. Wynne's argument amounts to a request for us to reweigh the evidence, which we cannot do.

[18] While the trial court entered findings of fact and conclusions thereon, Ind. Trial Rule 52(A) does not apply to small claims actions. The entry of special findings is contrary to the policy enunciated in Small Claims Rules 8 and 11. See Bowman v. Kitchel , 644 N.E.2d 878, 879 (Ind. 1995). Thus, a small claims court cannot be required to enter special findings, and we do not apply a two-tiered standard of review in a small claims appeal. But where, as here, a small claims court elects sua sponte to enter findings and conclusions, they aid our review by providing us with a statement of the reasons for the trial court's decision. We, however, apply our usual standard of review: "[w]e consider evidence in the light most favorable to the judgment, together with all reasonable inferences to be drawn therefrom. We will reverse a judgment only if the evidence leads to but one conclusion and the trial court reached the opposite conclusion." See Vance v. Lozano , 981 N.E.2d 554, 558 (Ind. Ct. App. 2012) (citing Berryhill v. Parkview Hosp ., 962 N.E.2d 685, 689 (Ind. Ct. App. 2012) ).

[19] Here, the trial court determined that Wynne conferred actual authority to Mooney to act on his behalf with respect to the settlement with Burris. An actual agency relationship is established by three elements: "(1) a manifestation of consent by the principal to the agent; (2) an acceptance of the authority by the agent; and (3) control exerted by the principal over the agent." Douglas v. Monroe , 743 N.E.2d 1181, 1186 (Ind. Ct. App. 2001). "These elements may be proven by circumstantial evidence, and there is no requirement that the agent's authority to act be in writing." Demming v. Underwood , 943 N.E.2d 878, 884 (Ind. Ct. App. 2011), trans. denied . The question of whether an agency relationship exists is generally a question of fact. Id .

[20] The facts and reasonable inferences favorable to the judgment reveal that Wynne partially filled out a form at the jail in an attempt to grant Mooney a general POA, which Mooney needed in order to get his vehicle out of the tow lot. Thereafter, in phone conversations with Mooney, Wynne referred to the POA and "reiterate[d] numerous times that [she was] his power of attorney." Transcript at 99. According to Mooney, he authorized and instructed her to obtain a check for $1400 from Burris. Wynne then detailed what she was to do with the check, indicating that she should endorse it with his name and then deposit it into an ATM so that no questions are asked. Further, the record indicates that Wynne understood that in exchange for the check from Burris a release was required to be signed.

[21] As Wynne instructed, Mooney went to Alsip's office to obtain the $1400 settlement check. She presented Alsip with the POA and signed an affidavit indicating that she had full authority to settle the claims between Wynne and Burris and to accept the settlement check on Wynne's behalf. Mooney then executed the Agreement, and Alsip gave her the check made payable to Wynne.

[22] These facts amply support the trial court's conclusion that Mooney acted with actual authority. Wynne's arguments to the contrary are improper requests for us to reweigh the evidence.

3. Alsip's Self-Representation

[23] As he did below, Wynne argues that Alsip was precluded from representing himself in this small claims action pursuant to S.C.R. 8(C)(3), which states:

Corporate Entities, Limited Liability Companies (LLC's), Limited Liability Partnerships (LLP's). All corporate entities, Limited Liability Companies (LLC's), and Limited Liability Partnerships (LLP's) may appear by a designated full-time employee of the corporate entity in the presentation or defense of claims arising out of the business if the claim does not exceed one thousand five hundred dollars ($1,500.00). However, claims exceeding one thousand five hundred dollars ($1,500.00) must be defended or presented by counsel.

Wynne asserts that "Alsip as an attorney is designated as a Professional Corporation" and was required to be represented by legal counsel because Wynne's claims exceeded $1500. Appellant's Brief at 42. As the trial court observed, however, Wynne sued Alsip as an individual. Accordingly, Alsip was properly permitted to represent himself in the small claims action.

4. Negligence

[24] Finally, Wynne contends that the trial court erred in denying his negligence claim against Alsip. Wynne asserts that the POA was invalid on its face and, therefore, Alsip was negligent when he released the check to Mooney and "failed to engage in a thorough investigation of the validity of the POA". Id . at 52. Wynne's lengthy arguments on this point are difficult to follow but all boil down to a fundamental misunderstanding of duty.

[25] Acknowledging that Alsip represented Burris in the settlement, Wynne asserts that "Alsip owed a general duty to Burris to exercise ordinary skill and knowledge as an attorney when he released the check to Mooney." Id . at 49. Indeed, Alsip owed this duty to Burris-his client. See Rice v. Strunk , 670 N.E.2d 1280, 1283-84 (Ind. 1996) (setting out elements of an attorney malpractice claim, including that a client's employment of attorney creates a duty to "exercise ordinary skill and knowledge"). But Wynne's attempt to slide into the shoes of Burris is clearly untenable. Alsip did not owe a corresponding duty of care to Wynne. See generally KeyBank Nat'l Assoc. v. Shipley , 846 N.E.2d 290, 296-300 (Ind. Ct. App. 2006) (addressing the privity requirement in attorney negligence cases), trans. denied . The trial court properly entered judgment in favor of Alsip on the negligence claim.

[26] Judgment affirmed.

Najam, J. and Robb, J., concur.

      The court concluded that the POA was invalid under Ind. Code § 30-5-4-1 because it was not signed by Wynne and not properly notarized.

      This was an amount that Burris and Wynne had previously discussed, and Mooney was "just kind of middle man" due to Wynne's incarceration. Transcript at 117.

      Wynne asserts that the trial court improperly acted as an advocate for Alsip by developing a defense for him that was not pled as an affirmative defense. This argument ignores the informal nature of small claims hearings. See S.C.R. 8(A). Further, Ind. Small Claims Rule 4(A) expressly provides that "[a]ll defenses shall be deemed at issue without responsive pleadings".


text:
    Christopher J. MILLER, Appellant-Defendant, v. STATE of Indiana, Appellee-Plaintiff
    Court of Appeals Case No. 18A-CR-85
    Court of Appeals of Indiana.
    Filed June 14, 2018
    Attorney for Appellant: Alexander L. Hoover, Nappanee, Indiana
    Attorneys for Appellee: Curtis T. Hill, Jr., Attorney General of Indiana, Henry A. Flores, Jr., Deputy Attorney General, Indianapolis, Indiana
   Altice, Judge.

Case Summary

[1] Following a bench trial, Christopher Miller was convicted of Level 5 felony domestic battery resulting in serious bodily injury and sentenced to six years in prison. On appeal, Miller argues that his sentence is inappropriate because the trial court did not recommend purposeful incarceration at the Indiana Department of Correction (DOC).

[2] We affirm.

Facts & Procedural History

[3] On July 21, 2017, Christopher Miller resided with his 72-year-old father, Lawrence, in Marshall County, Indiana. Miller arrived home around 6:30 p.m., and Lawrence observed that Miller was intoxicated. Miller fixed something to eat and then went downstairs. He eventually ventured back upstairs and asked his father where the keys to his father's vehicle were located. When Lawrence replied he did not know, Miller became visibly unsettled. Miller then went back downstairs to look for the keys.

[4] Shortly thereafter, while Lawrence was standing at the kitchen sink, Miller came up behind Lawrence and threw him to the ground. The next thing Lawrence remembered was being on the ground with Miller on top of him, "choking" him. Transcript Vol. II at 23. Miller asked him, "do you want to live or die." Id. at 23. While Lawrence did not lose consciousness, he did have difficulty breathing. After the altercation, Lawrence left the house to seek help.

[5] Officers Jordan Rans and Travis Oneal of the Plymouth Police Department were dispatched. When the officers encountered Lawrence, Officer Rans observed that Lawrence had a laceration above his right eye and that the eye was swollen shut. He also had a bruised and swollen right hand, as well as a ripped and bloodied shirt. Lawrence advised the officers he had been attacked and strangled by Miller. As a result of the battery, Lawrence suffered a fracture to his orbital socket that required surgery, a fracture to his hand, a laceration above his eye that required stitches, and contusions on his hand.

[6] The State charged Miller with Level 3 felony aggravated battery and Level 5 felony domestic battery resulting in serious bodily injury. The trial court found Miller guilty of the Level 5 felony. The trial court sentenced him to the maximum term of six years executed in the DOC. See Ind. Code § 35-59-2-6. Miller now appeals. Additional facts will be provided as necessary.

Discussion & Decision

[7] This court has the constitutional authority to revise a sentence authorized by statute if, "after due consideration of the trial court's decision," we find that the sentence imposed is inappropriate in light of the nature of the offense and the character of the offender. See Ind. Appellate Rule 7(B). The question under App. R. 7(B) is "not whether another sentence is more appropriate" but rather "whether the sentence imposed is inappropriate." King v. State , 894 N.E.2d 265, 268 (Ind. Ct. App. 2008). The burden is on the defendant to persuade the appellate court that his sentence is inappropriate. Childress v. State , 848 N.E.2d 1073, 1080 (Ind. 2006). "Sentencing review under Appellate Rule 7(B) is very deferential to the trial court." Conley v. State , 972 N.E.2d 864, 876 (Ind. 2012).

[8] On appeal, Miller does not argue the length of his sentence is inappropriate in light of the nature of the offense or his character; rather, Miller simply argues that his sentence is inappropriate based on the trial court's failure to recommend purposeful incarceration as a term of his sentence. We recognize, "the place that a sentence is to be served is an appropriate focus for application of our review and revise authority." See Hole v. State , 851 N.E.2d 302, 304 n.4 (Ind. 2006) (discretionary placement is subject to Appellate Rule 7(B) review). In this case, however, Miller does not challenge the location of his incarceration but rather the failure to be recommended for a program in which he believes he is entitled to participate.

[9] The trial court's role in relation to purposeful incarceration is to identify which defendants should be flagged as individuals most likely to benefit from placement in the program. Miller did not request such a recommendation, and even if considered, entry into the program is left to the discretion of the DOC. Defendants do not have a right to placement in a program, and trial courts themselves have no authority to require the DOC to place a particular defendant into a program. See Cohn v. Strawhorn , 721 N.E.2d 342, 348-49 (Ind. Ct. App. 1999) (finding that Indiana law does not create "a statutory entitlement to educational programming for all, every, any, or each person committed to the DOC" and it "is absurd to conclude that the General Assembly could have intended that all DOC inmates be entitled to substance abuse treatment regardless of whether they in fact suffer from substance abuse"). Thus, Miller's argument fails as the appropriateness of his placement within a particular program is not an issue subject to this court's review.

[10] We affirm.

Najam, J. and Robb, J., concur.