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Flanner House of Indianapolis, Inc. v. Flanner House Elementary School, Inc.

Court of Appeals of Indiana

December 4, 2017

Flanner House of Indianapolis, Inc., Appellant-Plaintiff,
v.
Flanner House Elementary School, Inc., Aliza Anderson, Chi Blackburn, Lorri Bryant, Dr. Cathi Cornelius, Robert Dotson, Brooke Dunn, Frances L. Hudson, Tanjla Lawrence, Frances Malone, Lauren Peterson, Patricia Roe, Latika Warthaw, Marshawn Wolley, Lauren Wright, and Liberty Mutual Insurance Group, Appellees-Defendants, and State of Indiana, Appellee-Intervenor.

         Appeal from the Marion Superior Court. The Honorable John F. Hanley, Judge. Trial Court Cause No. 49D11-1508-PL-26396

          ATTORNEY FOR APPELLANT Zachary S. Kester Charitable Allies, Inc. Indianapolis, Indiana

          ATTORNEYS FOR APPELLEES Scott L. Bunnell Joshua A. Atkinson Michelle K. Floyd Hunt Suedhoff Kalamaros LLP Fort Wayne, Indiana Attorneys for Patricia Roe Linda L. Vitone Kimberly E. Howard Smith Fisher Maas Howard & Lloyd, PC Indianapolis, Indiana Attorneys for Aliza Anderson, Lorri Bryant, Dr. Cathi Cornelius, Lauren Peterson, Lauren Wright, and Robert Dotson John W. Mervilde Rick D. Meils Meils Thompson Dietz & Berish Indianapolis, Indiana Attorneys for Marshawn Wolley Jeffrey D. Hawkins Mark D. Gerth Adam S. Ira Kightlinger & Gray, LLP Indianapolis, Indiana Attorneys for Chi Blackburn, Brooke Dunn, Frances L. Hudson, Tanjla Lawrence, Frances Malone, Latika Warthaw, Flanner House Elementary School, Inc. Curtis T. Hill, Jr. Attorney General of Indiana Kyle Hunter Deputy Attorney General Indianapolis, Indiana Attorneys for the State of Indiana

          Friedlander, Senior Judge

         [¶1] Flanner House of Indianapolis, Inc. (Flanner House) appeals the trial court's entry of summary judgment in favor of Flanner House Elementary School, Inc. (Flanner School, Inc.) and its individual directors and officers (collectively "Appellees").[1] We affirm.

         [¶2] Flanner House presents three issues for our review, which we restate as:

1.Whether the trial court erred in granting summary judgment in favor of the Appellees on the issue of compliance with the notice requirement of the Indiana Tort Claims Act (the Act).
2.Whether application of the Act to charter schools and their organizers violates the equal privileges and immunities clause of the Indiana Constitution.
3.Whether application of the Act to charter schools and their organizers violates the open courts clause of the Indiana Constitution.

         [¶3] Flanner School, Inc. is a nonprofit Indiana corporation that was established in early 2002. On February 27, 2002, Flanner School, Inc. entered into a charter school agreement with the Mayor of Indianapolis to establish a charter school named Flanner House Elementary School (Elementary School). Flanner School, Inc. operated the Elementary School as a charter school under this agreement until its charter was revoked on September 11, 2014. During that time, Flanner School, Inc. leased its school building from Flanner House, a separate nonprofit Indiana corporation.

         [¶4] In August 2015, Flanner House sued Flanner School, Inc. for breach of contract, sued the Appellees for negligence and fraud, and sued Liberty Mutual Insurance Group for bad faith. In its complaint, Flanner House alleged that Flanner School, Inc. breached the lease by failing to pay monthly rent and that the Appellees owed a duty to Flanner House, which they recklessly breached by failing to hold regular meetings, operating the school without adequate oversight, and failing to adequately oversee the financial and educational activities of the school. To support its claims of fraud, Flanner House also claimed that the Appellees made false statements that caused it harm. In November 2016, on Flanner House's motion, the trial court dismissed all of the fraud claims.

         [¶5] From July through October 2016, the Appellees, some individually and some jointly, filed motions for summary judgment. All of the Appellees argued that Flanner House had not provided them with notice under the Act, and Appellee Patricia Roe additionally argued in the alternative that no duty was owed to Flanner House. Flanner House responded that the Appellees were not entitled to notice under the Act and alleged that extending the protections of the Act to the Appellees violates the Indiana Constitution. Having received notice from the court that the constitutionality of the Act was being challenged in this action, the State filed motions to intervene and to bifurcate the constitutional issues, both of which were granted. After hearing argument on the motions for summary judgment, the trial court entered final judgment for the Appellees. This appeal followed.

         [¶6] On appeal from a summary judgment, we apply the same standard of review as the trial court: summary judgment is appropriate only where the designated evidentiary matter shows there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Young v. Hood's Gardens, Inc., 24 N.E.3d 421 (Ind. 2015); see also Ind. Trial Rule 56(C). Where the challenge to the trial court's summary judgment ruling presents only legal issues, not factual ones, we review the issues de novo. Ballard v. Lewis, 8 N.E.3d 190 (Ind. 2014).

         1. "Charter School"

         [¶7] Flanner House asserts the trial court erred by granting summary judgment for the Appellees on the issue of its compliance with the tort claim notice requirement. The Act governs civil lawsuits against governmental entities and their employees. Ind. Code §§ 34-13-3-1 (1998), -3 (2016).[2] Under the dictates of the Act, a charter school is a governmental entity. Ind. Code § 34-6-2-49(a) (2013). The Act provides that a claim against a governmental entity is barred unless notice is filed with the governing body of the governmental entity within 180 days after a loss occurs. Ind. Code § 34-13-3-8 (1998).

         [¶8] In this litigation, Flanner House did not provide notice of its claims to the Appellees as required by the Act. The thrust of Flanner House's argument is that Flanner School, Inc. is not a "charter school, " as that term is used in the Act, and therefore is not entitled to the notice required under the Act. Although Flanner House acknowledges that the Elementary School is a charter school, it contends Flanner School, Inc. is not a charter school but is instead an organizer of a charter school and therefore a distinct entity from the charter school itself. Accordingly, Flanner House argues that Flanner School, Inc. is not entitled to the notice provisions of the Act because it is not a governmental entity under the Act. The question before us then is whether our legislature intended to include the nonprofit organizer of a charter school in the meaning of that term for purposes of the Act.

         [¶9] A question of statutory interpretation is a matter of law, and we are neither bound by, nor are we required to give deference to, the trial court's interpretation. Perry-Worth Concerned Citizens v. Bd. of Comm'rs of Boone Cnty., 723 N.E.2d 457 (Ind.Ct.App. 2000), trans. denied. Accordingly, our review is de novo. Ballard, 8 N.E.3d 190. When interpreting a statute, we look to the express language of the statute and the rules of statutory construction. Ind. State Teachers Ass'n v. Bd. of Sch. Comm'rs of City of Indianapolis, 693 N.E.2d 972 (Ind.Ct.App. 1998). This court is required to ascertain and execute legislative intent and to interpret the statute in such a manner as to prevent absurdity and to advance public convenience. Id. In so doing, we must be aware of the purpose of the statute, as well as the effect of such an interpretation. Id. We read the individual sections of an act as a whole and strive to give effect to all of its provisions such that no part of the act is held meaningless if it can be reconciled with the rest of the statute. Citizens Action Coal. of Ind., Inc. v. Ind. Statewide Ass'n of Rural Elec. Coops., Inc., 693 N.E.2d 1324 (Ind.Ct.App. 1998). We presume that our legislature intended its language to be applied in a logical manner consistent with the underlying goals and policy of the statute. Id. Moreover, in this case we are mindful that because the Act is in derogation of the common law, it must be strictly construed against limitations on a claimant's right to bring suit. Simpson v. OP Prop. Mgmt., LLC, 939 N.E.2d 1098 (Ind.Ct.App. 2010).

         [¶10] A charter school is a public elementary school that is established by and operates under a charter. Ind. Code § 20-24-1-4 (2005). A charter is a contract between an organizer (a nonprofit corporation and its independent board) and an authorizer (the executive of a consolidated city) for the establishment of a charter school. Ind. Code §§ 20-24-1-3 (2013), -7 (2017), and -2.5(3) (2015). In the present case, Flanner School, Inc. is the organizer, and the Mayor of Indianapolis is the authorizer.

         [¶11] To establish a charter school, an organizer may submit to the authorizer a proposal, which is a detailed implementation plan that includes both governance and educational matters, all of which are the ultimate responsibility of the organizer. The proposal must contain at least the following information:

(1) identification of the organizer,
(2) a description of the organizer's organizational structure and governance plan, (3)the following information for the proposed charter school:
(a) name,
(b) ...

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