                                                                                  FILED
                                                                             Jul 13 2020, 8:25 am

                                                                                  CLERK
                                                                              Indiana Supreme Court
                                                                                 Court of Appeals
                                                                                   and Tax Court




ATTORNEYS FOR APPELLANT                                     ATTORNEYS FOR APPELLEES
Kevin M. Forde                                              Kathleen A. DeLaney
Kevin R. Malloy                                             Annavieve C. Conklin
Brian P. O’Meara                                            DeLaney & DeLaney LLC
Forde & O’Meara LLP                                         Indianapolis, Indiana
Chicago, Illinois                                           Shaw R. Friedman
Thomas F. Godfrey                                           Friedman & Associates P.C.
Michigan City, Indiana                                      LaPorte, Indiana



                                             IN THE
     COURT OF APPEALS OF INDIANA

Charles J. Dempsey, on behalf of                            July 13, 2020
himself and all others similarly                            Court of Appeals Case No.
situated,                                                   19A-PL-2683
Appellant-Plaintiff,                                        Interlocutory Appeal from the
                                                            LaPorte Superior Court
        v.                                                  The Honorable Mary R. Harper,
                                                            Special Judge
LaPorte County Auditor Joie                                 Trial Court Cause No.
Winski and LaPorte County                                   46D02-1507-PL-1373
Treasurer Nancy Hawkins,
Appellees-Defendants.



Bailey, Judge.




Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020                              Page 1 of 16
                                            Case Summary
[1]   In 2015, Charles J. Dempsey (“Dempsey”) filed a complaint against the

      LaPorte County Auditor (“the Auditor”) and LaPorte County Treasurer (“the

      Treasurer”) (collectively, “the County”) to obtain interest upon his

      overpayment of real property taxes. Dempsey sought to be the class

      representative of LaPorte County taxpayers who had, since 2006, been given a

      tax refund or credit against future taxes without an interest payment.

      Dempsey’s motion for class certification was denied and, on December 20,

      2019, this Court accepted jurisdiction of Dempsey’s interlocutory appeal. He

      presents a single, consolidated issue for review: whether the trial court abused

      its discretion in denying class certification.1 We affirm.



                             Facts and Procedural History
[2]   The instant litigation has been pending for approximately five years and, to

      date, no evidentiary hearing has been conducted. The trial court conducted a

      hearing on Dempsey’s second amended motion for class certification, at which

      argument of counsel was heard, and reference was made to some discovery




      1
        Dempsey articulates a second issue for appeal, that is, whether the County can defeat a class action by
      destroying public records or failing to maintain records adequate to permit him to ascertain members of the
      proposed class. This purported issue was not developed in litigation in the trial court. The County, in
      response to Interrogatories propounded by Dempsey, referred to a policy of destroying records after seven
      years. The sole County employee deposed denied knowledge of the policy. The trial court did not conduct
      an evidentiary hearing, and Dempsey did not present any evidence of destruction of public records, nor did
      he offer testimony to explain or challenge the record-keeping procedures. Absent factual development, we do
      not address Dempsey’s contention that the County was rewarded for a lack of diligence in record-keeping.

      Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020                              Page 2 of 16
      materials, including the deposition of Eleanor McFatridge (“McFatridge”), who

      was employed in the Auditor’s office to process refunds. In these

      circumstances, where we presume that the case has merit for purposes of

      determining class certification, our recitation of the alleged facts is derived from

      the pleadings, attachments to the pleadings, and assertions of the parties’

      respective counsel.2


[3]   On May 1, 2008, the LaPorte County Department of Government Finance

      ordered a county-wide reassessment of real property for taxation purposes,

      pursuant to Indiana Code Section 6-1.1-4-9 and Resolution 2008-01. During

      the reassessment, LaPorte County taxpayers were issued provisional bills, and if

      a taxpayer did not promptly pay the provisional bill, a penalty would be

      assessed. After the reassessment was completed, taxpayers received

      reconciliation bills. Some property tax assessment values were reduced,

      resulting in the affected taxpayers owing less tax than that which had been

      provisionally paid. In those cases, a taxpayer would typically receive a check,

      but if the taxpayer owed delinquent taxes, a credit would be applied to the

      delinquency.3 Accrued penalties would be waived upon posting of the credit.




      2
        “Class certification is essentially a procedural order and carries no implication about the merits of the case.”
      NIPSCO v. Bolka, 693 N.E.2d 613, 617 (Ind. Ct. App. 1998), trans. denied. Designations may be made to
      prove the requirements for class certification rather than to prove the truth of the matter asserted. See id. At
      the outset of the hearing conducted on May 30, 2019, the trial court judge clarified that the matter was “fully
      briefed” and confirmed that she “went through every pleading” in a pre-hearing review. (Tr. Vol. II, pg. 27.)
      3
          Also, a taxpayer could expressly request that a refund be applied to future taxes.


      Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020                                    Page 3 of 16
[4]   Indiana Code Section 6-1.1-37-11 [repealed effective July 1, 2017] then

      provided that a taxpayer whose taxes were reduced because of a reassessment

      was due interest. Apparently, the countywide reassessment prompted a

      question of statutory application within the Auditor’s office and clarification

      was sought with respect to provisional bills issued for 2006, payable in 2007.

      Discovery materials indicate that the Auditor received a responsive letter, dated

      August 2, 2011, jointly signed by Brian Bailey, Commissioner of the

      Department of Local Government Finance, and Bruce Hartman, State

      Examiner, State Board of Accounts. The letter provided in pertinent part that a

      taxpayer would be “entitled” to statutory interest of 4% for “a refund or credit

      but not because of an assessment appeal.” (App. Vol. II, pg. 27.) (emphasis in

      original.)4


[5]   Up until 2015, County employees purportedly hand calculated reconciliation

      bills and credits stemming from the reassessment, but they did not add interest.

      In the case of a credit due a delinquent taxpayer, the Auditor would post a

      credit or issue a check to the Treasurer but, according to McFatridge, “we can’t

      pay ourselves interest because we have to account to the State for interest

      paid.”5 (App. Vol. III, pg. 101.) However, the internal offset typically did not




      4
        Purportedly, on July 21, 2016, the Auditor received an email communication from Michael Duffy, General
      Counsel of the Department of Local Government Finance, stating that the August 2011 letter was not
      intended to waive any interest due a taxpayer.
      5
       Notwithstanding any discovery materials, McFatridge testified in her deposition that she did not rely upon
      an external communication such as the Brian Bailey letter in performing her duties.

      Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020                               Page 4 of 16
      favor the County, because the statutory interest rate was 4% and the

      delinquency charge was 5% in the first 30 days and 10% thereafter. When the

      Auditor implemented a new computer system in 2015, the software

      representative informed the Auditor’s employees that “they should be paying

      interest.” (App. Vol. III, pg. 106.) The Auditor agreed, and the office “started

      paying” interest and issuing a W-9 “to account to the State for interest paid.”

      Id. at 101, 106.


[6]   On July 17, 2015, Dempsey filed his complaint titled “Class Action Complaint

      Based on Statutory Rights of Taxpayers” (“the Complaint”). (App. Vol. II, pg.

      27.) According to Dempsey, he sought “to recover unpaid statutory interest on

      property tax appeal refunds and credits” that were obtained “as a result of

      successful assessment appeals.” Id. He alleged that he had personally paid real

      estate taxes on a parcel of property located on Lake Shore Drive in Michigan

      City, in LaPorte County (“the Property”), the taxes on the Property were

      lowered due to a reduced assessment, and he had received a refund without

      interest. Over time, Dempsey filed an Amended Complaint, Second Amended

      Complaint, and Third Amended Complaint, eventually reciting that the

      Property had been sequentially owned by himself, a trust for his benefit, and a

      trust for the benefit of his ex-wife (the Stacy R. Dempsey Trust).6 Regardless of




      6
       Dempsey was deposed regarding his ownership of the Property. He and his then-wife purchased the
      Property in 1998 for $250,000.00. On August 29, 2009, the Property was transferred to the Stacy R.
      Dempsey Revocable Trust. On September 11, 2012, the Property was transferred to the Charles J. Dempsey
      Revocable Trust. On October 24, 2016, the Property was sold for approximately $950,000.00.

      Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020                          Page 5 of 16
      deed transfers, Dempsey claimed to have consistently paid the real estate taxes

      on the Property, something the County did not dispute.


[7]   Over the next few years, the parties litigated several matters. The County

      moved to dismiss the Complaint for lack of a Tort Claims Notice; the motion to

      dismiss was denied on September 24, 2015, with the trial court finding that

      Dempsey had not alleged a tort. Dempsey filed an amended complaint in

      October of 2015, and the County unsuccessfully attempted to perfect an

      interlocutory appeal. Dempsey removed the matter to the United States

      District Court, Northern District of Indiana, to pursue a federal Constitutional

      claim. On September 27, 2016, the federal court found that the “class-of-one

      equal protection claim has no basis in law,” dismissed Dempsey’s Fourteenth

      Amendment claim, and remanded the case to state court. (App. Vol. II, pg.

      101.) Dempsey sought to file a Second Amended Complaint; the trial court

      granted leave on April 3, 2017. The County obtained a change of venue from

      the judge and moved to dismiss the Second Amended Complaint. At a hearing

      conducted on August 28, 2017, the County argued that exclusive jurisdiction

      was in the Indiana Tax Court and Dempsey had failed to exhaust available

      administrative remedies. On February 12, 2018, the trial court denied the

      motion to dismiss, concluding that resolution did not involve interpretation of a

      tax law and the Complaint was not subject to dismissal for lack of compliance

      with an administrative review mechanism.


[8]   The parties engaged in discovery, propounding and answering interrogatories,

      and conducting two depositions, one of Dempsey, and one of McFatridge. In

      Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020       Page 6 of 16
       response to interrogatories, the County offered Dempsey an opportunity to

       conduct a records inspection upon request, apparently something that Dempsey

       did not pursue.


[9]    On May 30, 2019, the parties appeared for a hearing on two motions. First, the

       trial court heard argument on Dempsey’s motion for leave to file a third

       amended complaint. As amended, the Complaint alleged three counts related

       to the omission of interest: (1) statutory violation; (2) violation of common law;

       and (3) disparate treatment under Article 10, Section 1 of the Indiana

       Constitution.


[10]   Dempsey also requested class certification under Indiana Trial Rule 23, which

       the County opposed. Dempsey sought to be the named representative of the

       following described class:


               All persons or taxpayers [entities] who own or owned real
               property in LaPorte County, Indiana, and whose property taxes
               were reduced since January 1, 2006, and were either paid a
               refund or were issued a credit against future taxes but were not
               paid interest on any such refund or credit.


       (App. Vol. III, pg. 9.) The trial court heard brief argument from counsel.

       Referring to McFatridge’s deposition testimony that refunds were a common

       occurrence, Dempsey estimated that numerous taxpayers would fall within the

       proposed class. None had been specifically identified as of the hearing date, but

       he proposed that the trial court order one of the parties to comb the Auditor’s

       records that had been compiled prior to digitization.


       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020          Page 7 of 16
[11]   The County observed that ownership of the Property “had moved around.”

       (Tr. Vol. II, pg. 39.) The County argued that the proposed class was overbroad,

       class membership could be determined only through an onerous procedure of

       sorting and scrutinizing paper records, and “[Dempsey] doesn’t even fall within

       his own class.” Id. at 43. Counsel advised the trial court that the sole check

       “produced in discovery” was payable to the Stacy R. Dempsey Trust in the

       amount of $2,799.20, relative to tax year 2011. Id. at 38. According to the

       County, no County check had been issued to Dempsey, but there had been an

       adjustment made relative to the Property in the amount of $892.00. 7

       Purportedly, because taxes were delinquent when the credit was processed, the

       Auditor had posted a credit to the Treasurer for the Property and waived a late

       penalty of $235.90. In other words, Dempsey had not received a “refund or

       credit against future taxes,” as referenced in the class description. Rather, he

       had been given (or benefitted collaterally from) a credit against delinquent

       taxes. Notwithstanding the deed transfers and penalty waiver, Dempsey

       maintained that he was an appropriate class representative because he had

       actually overpaid taxes and failed to receive interest thereon.




       7
        County personnel described the posting of a credit to an account for a particular parcel of property, as
       opposed to refunding a particular payor, regardless of whether the payor had satisfied his or her own tax
       obligation or that of another.

       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020                                 Page 8 of 16
[12]   On October 16, 2019, the trial court issued its order denying class certification. 8

       Dempsey sought permission to pursue an interlocutory appeal, and this Court

       accepted jurisdiction.



                                   Discussion and Decision
[13]   Indiana Trial Rule 23 governs class action suits, providing in relevant part:


               (A) Prerequisites to a Class Action. One or more members of a
               class may sue or be sued as representative parties on behalf of all
               only if:


               (1) the class is so numerous that joinder of all members is
               impracticable;


               (2) there are questions of law or fact common to the class;


               (3) the claims or defenses of the representative parties are typical
               of the claims or defenses of the class; and


               (4) the representative parties will fairly and adequately protect the
               interests of the class.




       8
         On the same day, the trial court granted Dempsey leave to file his Third Amended Complaint. In
       determining the matter of class certification, the trial court had considered the Second Amended Complaint.
       However, the Third Amended Complaint was amended to clarify ownership of the Property. The trial court
       made a notation that the granting of leave to file the Third Amended Complaint did not change its analysis
       relative to class certification.

       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020                               Page 9 of 16
        (B) Class Actions Maintainable. An action may be maintained
        as a class action if the prerequisites of subdivision (A) are
        satisfied, and in addition:


        (1) the prosecution of separate actions by or against individual
        members of the class would create a risk of:


        (a) inconsistent or varying adjudications with respect to
        individual members of the class which would establish
        incompatible standards of conduct for the party opposing the
        class, or


        (b) adjudications with respect to individual members of the class
        which would as a practical matter be dispositive of the interest of
        the other members not parties to the adjudications or
        substantially impair or impede their ability to protect their
        interests; or


        (2) the party opposing the class has acted or refused to act on
        grounds generally applicable to the class, thereby making
        appropriate final injunctive relief or corresponding declaratory
        relief with respect to the class as a whole; or


        (3) the court finds that the questions of law or fact common to
        the members of the class predominate over any questions
        affecting only individual members, and that a class action is
        superior to other available methods for the fair and efficient
        adjudication of the controversy. The matters pertinent to the
        findings include:


        (a) the interest of members of the class in individually controlling
        the prosecution or defense of separate actions;




Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020          Page 10 of 16
               (b) the extent and nature of any litigation concerning the
               controversy already commenced by or against members of the
               class;


               (c) the desirability or undesirability of concentrating the litigation
               of the claims in the particular forum;


               (d) the difficulties likely to be encountered in the management of
               a class action.


       As such, the foregoing rule specifies that each of the prerequisites enumerated

       in section (A) must be satisfied and one of the grounds in section (B) must be

       shown.


[14]   Although Trial Rule 23 does not address it, in addition to the express

       requirements of that Rule:


               there is an implicit “definiteness” requirement. A properly
               defined class is necessary at the outset because a judgment in a
               class action has a res judicata effect on absent class members.
               The class definition must be specific enough for the court to
               determine whether or not an individual is a class member.


       Wal-Mart Stores, Inc. v. Bailey, 808 N.E.2d 1198, 1201 (Ind. Ct. App. 2004),

       trans. denied.


[15]   Dempsey elected to proceed under Rule 23(B)(3), arguing that common

       questions of law or fact predominate over individual ones and a class action is

       superior to other available methods for fairly and efficiently adjudicating the

       controversy. The language of subsection (B)(3) stating the requirement that

       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020           Page 11 of 16
       certain questions “predominate over any questions affecting only individual

       members” has been referred to as the “predominance requirement,” and the

       language requiring that “a class action is superior to other available methods for

       the fair and efficient adjudication of the controversy” has been referred to as the

       “superiority requirement.” Associated Medical Networks, Ltd. v. Lewis, 824 N.E.2d

       679, 682 (Ind. 2005). Dempsey argues that he met his burden to show both

       predominance and superiority; the County argues that Dempsey established

       neither.


[16]   Trial Rule 23 does not require a potential class representative to show a

       likelihood of success on the merits in order to have his or her claim certified as

       a class action. LHO Indianapolis One Lessee, LLC v. Bowman, 40 N.E.3d 1264,

       1268 (Ind. Ct. App. 2015). Rather, assuming the merits of an action, a trial

       court must determine whether the plaintiff has satisfied the requirements for

       class certification. Id. But failure to meet any one of the requirements results in

       the denial of class status. Id. Whether the prerequisites have been met is a

       factual determination to be made by the trial court. Id. The trial court has

       broad discretion in determining whether an action is maintainable as a class

       action, and thus we review its class certification for an abuse of discretion. Id.

       An abuse of discretion occurs when the trial court’s decision rests upon a clearly

       erroneous finding of fact, an errant conclusion of law, or an improper

       application of law and fact. Id. We will affirm the trial court’s decision if it is

       supported by substantial evidence. Associated Medical Networks, Ltd., 824 N.E.2d

       at 682.

       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020          Page 12 of 16
[17]   In the order denying Dempsey’s second amended motion for class certification,

       the trial court observed that Dempsey had made no contact with another class

       member and could not make a representation to the court as to whether a class

       member wished to control a separate action. The court was persuaded that

       direct requests to the Auditor for interest payments were preferable to class

       action litigation. The court reviewed the factual background underlying the

       Complaint, together with the definition of the proposed class, but did not enter

       an express conclusion as to whether common questions of law and fact

       predominate over individual ones. Indeed, the concepts of commonality and

       predominance are difficult, if not impossible, to apply when Dempsey at best

       received one taxpayer credit on his own behalf and has identified no other

       individual in like circumstances.


[18]   “Predominance requires more than commonality. Predominance cannot be

       established merely by facts showing a common course of conduct, but the

       common facts must also actually ‘predominate over any questions affecting

       only individual members.’” Id. at 684 (citing T.R. 23(B)(3)). There is not a

       precise test for determining whether common questions of law or fact

       predominate. Id. at 686. “Instead, the Rule requires a pragmatic assessment of

       the entire action and all the issues involved. In making that assessment, courts

       have enunciated a number of standards, finding ... predominance if:


               ● The substantive elements of class members’ claims require the
               same proof for each class member;




       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020       Page 13 of 16
               ● The proposed class is bound together by a mutual interest in
               resolving common questions more than it is divided by individual
               interests.


               ● The resolution of an issue common to the class would
               significantly advance the litigation.


               ● One or more common issues constitute significant parts of each
               class member’s individual cases.


               ● The common questions are central to all of the members’
               claims.


               ● The same theory of liability is asserted by or against all class
               members, and all defendants raise the same basic defenses.


       Id.


[19]   We assume that Dempsey paid a tax obligation for the Property (whether

       deeded in himself or another entity at that time), the underlying assessment was

       reduced, this caused an overpayment, and Dempsey (or a trust) received the

       benefit of a credit without a disbursement of interest on the overpayment.

       Apparently, the County had a policy of internal off-set when a taxpayer who

       had overpaid on a provisional bill became delinquent on other taxes. Dempsey

       did not dispute the contention that taxes for the Property were delinquent, but

       he claims that the internal offset did not satisfy the County’s obligation. This

       alleged inadequacy of County action is the issue to be litigated to resolve the

       merits of Dempsey’s claim against the County. But Dempsey’s circumstances

       do not mirror those of the proposed class, a broad class of taxpayers who, post-

       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020            Page 14 of 16
       2006, for any reason, received a refund or credit against future taxes without

       interest.


[20]   Despite the breadth of class description, Dempsey has not identified a person

       (other than arguably himself) falling within the proposed class. He implicitly

       argues that the Auditor’s office responded to an external communication by

       denying interest in all cases where the refund was traceable to the reassessment.

       He then offers argument based upon statistical probability, that is, with 88,000

       parcels of real estate in LaPorte County, someone would surely fall within his

       proposed class. This is a logical proposition, but it stops short of Dempsey

       meeting his burden of proof to show that common issues predominate.


[21]   For the same reason–the purported class is devoid of additional members--

       Dempsey cannot show the superiority of a class action to resolve claims.

       Despite some reference to one taxpayer recouping interest upon a written

       request, it appears that there is not a readily identifiable and efficient

       administrative remedy for a taxpayer to request the calculation and payment of

       interest that arguably should have been paid before the 2015 automation. But

       the County did not have to come forward with a user-friendly form. Dempsey

       had to show that the proposed class action was the superior method of

       resolution. He insists that the broad class description can be modified, and he is

       willing to strenuously represent anyone who can be identified as an aggrieved

       person after examination of the relevant paper records. However, he did not

       accept the invitation to review records in discovery. At bottom, Dempsey has

       not identified any person he expects to vigorously represent. He suggests that

       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020            Page 15 of 16
       other taxpayers are ignorant of their rights and are not participating in other

       litigation. But he simply does not know what taxpayers, if any, have initiated

       individual litigation or are interested in doing so. With the core deficit of

       information, Dempsey could not by bald assertions meet his burden of showing

       that class action litigation was superior to other methods for the fair and

       efficient adjudication of the controversy.



                                                 Conclusion
[22]   Dempsey has not shown an abuse of the trial court’s discretion in denying class

       certification.


[23]   Affirmed.


       Crone, J., and Altice, J., concur.




       Court of Appeals of Indiana | Opinion 19A-PL-2683 | July 13, 2020        Page 16 of 16
