KS&E Sports and Edward J. Ellis v. Dwayne H. Runnels , 66 N.E.3d 940 ( 2016 )

FILED
Mar 17 2016, 9:00 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
Vincent P. Antaki Roger L. Pardieck
Reminger Co., LPA Karen M. Davis
Indianapolis, Indiana The Pardieck Law Firm
Seymour, Indiana
Christopher Renzulli
Renzulli Law Firm, LLP Jonathan E. Lowy
White Plains, New York Robert B. Wilcox, Jr.
Brady Center to Prevent Gun Violence
Legal Action Project
Washington, DC
Michael D. Schissel
Arnold & Porter, LLP
New York, New York
Aarash Haghighat
Arnold & Porter, LLP
Washington, DC
Amici Curiae
Indiana Trial Lawyers Association
Nicholas F. Baker
The Hastings Law Firm
Indianapolis, Indiana
Law Enforcement and Municipal
Organizations
Shana D. Levinson
Levinson & Levinson
Merrillville, Indiana
Scott M. Abeles
Stephen R. Chuk
Proskauer Rose, LLP
Washington, DC
IN THE
COURT OF APPEALS OF INDIANA
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 1 of 32
KS&E Sports and Edward J. March 17, 2016
Ellis, Court of Appeals Case No.
49A02-1501-CT-42
Appellants-Defendants,
Appeal from the Marion Superior
v. Court
The Honorable John F. Hanley,
Judge
Dwayne H. Runnels,
Cause No. 49D11-1312-CT-44030
Appellee-Plaintiff.
Riley, Judge.
STATEMENT OF THE CASE
[1] Appellants-Defendants, KS&E Sports and Edward J. Ellis (Ellis) 1 (collectively,
KS&E) appeal the trial court’s denial of their motion for judgment on the
pleadings against Appellee-Plaintiff, Dwayne H. Runnels (Runnels), in which
KS&E Sports asserted immunity from suit pursuant to Indiana Code section 34-
12-3-3(2), arguing that Runnels’ damages resulted from the criminal misuse of a
firearm by a third party.
[2] We affirm. 2
ISSUE
1
Ellis is an officer, director, shareholder, and/or owner of KS&E Sports, as well as an employee.
2
We held oral argument in this cause on December 15, 2015 at the Indiana Court of Appeals Courtroom in
Indianapolis, Indiana. We commend and thank counsel for their excellent advocacy.
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[3] KS&E Sports raised one issue on interlocutory appeal, which we restate as:
Whether Runnels’ Complaint stated a claim on which relief can be granted.
FACTS AND PROCEDURAL HISTORY
[4] On December 12, 2011, Runnels, a patrol officer for the Indianapolis
Metropolitan Police Department, initiated a traffic stop of a vehicle allegedly
involved in a recent armed robbery and shooting. As Runnels approached the
vehicle, Demetrious Martin (Martin) exited the driver side of the vehicle with a
handgun and fired two shots. One bullet missed Runnels but struck his patrol
car. The second bullet pierced Runnels’ hip and lodged in his upper pelvis.
Runnels returned fire, killing Martin.
[5] An ATF trace on the Smith & Wesson handgun used by Martin revealed that it
was purchased at the KS&E Sports retail store in Indianapolis on October 10,
2011, two months prior to the shooting. It is alleged that Martin, a convicted
felon who could not legally purchase a gun, obtained the handgun through an
unlawful straw sale. Martin and Tarus E. Blackburn (Blackburn) entered the
KS&E Sports store together and Martin selected the handgun in the presence of
Blackburn and a KS&E Sports’ employee. Martin and Blackburn then left the
store only to return later that afternoon. Upon their return, only Blackburn
entered KS&E Sports and completed the firearms purchase paperwork of the
handgun previously selected by Martin. Blackburn paid the purchase price of
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$325 in cash. Once outside the store, Blackburn transferred the handgun to
Martin for $375. 3
[6] On December 10, 2013, Runnels filed his Complaint against KS&E Sports,
Ellis, and Blackburn for “damages resulting from KS&E’s negligent, reckless,
and unlawful sale of a Smith & Wesson .40 caliber handgun to ‘straw buyer’
Blackburn and the negligent entrustment of that firearm to Blackburn and
[Martin], who used the Smith & Wesson Handgun to shoot and harm
[Runnels].” (Appellant’s App. p. 10). Runnels asserted claims of negligence,
negligent entrustment, negligence per se, negligent hiring/training/supervision,
conspiracy, public nuisance, and piercing the corporate veil.
[7] On June 4, 2014, after answering the Complaint, KS&E filed its motion for
judgment on the pleadings pursuant to Indiana Trial Rule 12(C) “on the
grounds that [Ind. Code] § 34-12-3-3(2) requires immediate dismissal of this
case.” (Appellant’s App. p. 36). Following a hearing, the trial court summarily
denied KS&E’s motion on October 21, 2014. The trial court subsequently
granted KS&E’s motion to certify its ruling for interlocutory appeal. This court
accepted jurisdiction on February 20, 2015.
[8] Additional facts will be provided as necessary.
DISCUSSION AND DECISION
3
Blackburn later pled guilty to one Count of making a false and fictitious written statement in connection
with the acquisition of a firearm, in violation of federal law. He was sentenced to twelve months in prison.
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[9] KS&E contends that the trial court erred when it denied its motion for
judgment on the pleadings pursuant to Ind. Trial Rule 12(C). A motion for
judgment on the pleadings pursuant to T.R. 12(C) attacks the legal sufficiency
of the pleadings. Davis ex rel. Davis v. Ford Motor Co., 747 N.E.2d 1146, 1149
(Ind. Ct. App. 2001), trans. denied. In reviewing a trial court’s decision on a
motion for judgment on the pleadings, this court conducts a de novo review. Id.
The test to be applied when ruling on a T.R.12(C) motion that raises the
defense of failure to state a claim upon which relief can be granted is whether,
in the light most favorable to the non-moving party and with every intendment
regarded in his favor, the complaint is sufficient to constitute any valid claim.
Id. In applying this test, the court may look only at the pleadings, with all well-
pleaded material facts alleged in the complaint taken as admitted, supplemented
by any facts of which the court will take judicial notice. Id. at 1149. “The
‘pleadings’ consist of a complaint and an answer, a reply to a counterclaim, an
answer to a cross-claim, a third-party complaint, and an answer to a third-party
complaint.” Consol. Ins. Co. v. Nat’l Water Servs. LLC, 994 N.E.2d 1192, 1196
(Ind. Ct. App. 2013) (quoting Waldrip v. Waldrip, 976 N.E.2d 102, 110 (Ind. Ct.
App. 2012)). “Pleadings also consist of any written instruments attached to a
pleading.” See T.R. 10(C) (“A copy of any written instrument which is an
exhibit to a pleading is a part thereof for all purposes.”). As such, a motion for
judgment on the pleadings theoretically is directed towards a determination of
the substantive merits of the controversy. Davis, 747 N.E.2d at 1150. We will
affirm the trial court’s grant of a T.R.12(C) motion for judgment on the
pleadings when it is clear from the face of the pleadings that one of the parties
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cannot in any way succeed under the operative facts and allegations made
therein. Id. at 1149.
[10] In our de novo review of the trial court’s denial of a motion for judgment on the
pleadings, then, we must consider whether Runnels’ Complaint is legally
sufficient to support relief under any circumstances. In his Complaint, Runnels
advances several claims, sounding in negligence and nuisance, and focuses on
the harm that KS&E proximately caused through their alleged wrongful and
unlawful conduct by entrusting a handgun to a straw purchaser.
[11] In total, Runnels’ Complaint presents KS&E with seven claims for relief.
Specifically, Runnels asserts that KS&E breached its “duty to exercise
reasonable care on selling firearms and to refrain from engaging in any activity
that would create reasonably foreseeable risks of injury to others.” (Appellant’s
App. p. 21). As such, KS&E knew or reasonably should have known that
Blackburn was not the intended purchaser of the handgun. In a similar light,
Runnels brings a claim of negligent entrustment, contending that “KS&E and
its employee(s) wantonly permitted Blackburn to acquire possession of the
Smith & Wesson handgun under circumstances in which it knew or should
have known that Blackburn would use the handgun in a manner that would
create a substantial and unacceptable risk of physical injury to others.”
(Appellant’s App. p. 15). As a third Count, Runnels asserts that based on the
illegal straw sale, KS&E committed negligence per se, followed by a claim of
negligent hiring, training and supervision because “KS&E placed its
employee(s) in a position to cause foreseeable harm to the public by wantonly
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failing to implement adequate protocols for training and supervising its
employee(s) to prevent unlawful straw sales to individuals such as Blackburn[.]”
(Appellant’s App. p. 28). Runnels also claims to have incurred damages
resulting from a conspiracy “to unlawfully and unreasonably sell firearms
without exercising ordinary care in order to make a profit.” (Appellant’s App.
p. 29). Besides claims based on negligence, Runnels presents a public nuisance
assertion because “[b]y negligently, recklessly, and/or intentionally selling vast
quantities of firearms in a manner that ensures a steady flow of firearms in large
quantities to illegal traffickers, the illegal secondary market, criminals,
juveniles, and others prohibited by law from having firearms and/or persons
with criminal purposes, KS&E has negligently and/or knowingly participated
in creating and maintaining an unreasonable interference with the rights held in
common by the general public, constituting a public nuisance under Indiana
law[.]” (Appellant’s App. p. 21). Finally, Runnels attempts to pierce the
corporate veil because the company was used by its owner to promote illegal
activities in violation of state and federal law.
I. Negligence Claims
[12] The elements of a negligence action which have long been recited by courts in
Indiana and elsewhere are duty, breach, causation, and harm. Estate of Heck v.
Stoffer, 786 N.E.2d 265, 268 (Ind. 2003). Following Webb v. Jarvis, 575 N.E.2d
992 (Ind. 1991), the duty issue became viewed in terms of the balance of
foreseeability, public policy, and the relationship between the parties. Where a
duty is already recognized, it is to be followed and we need not turn to a
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balancing test of factors to determine whether a duty exists. N. Ind. Pub. Serv. v.
Sharp, 790 N.E.2d 462, 465 (Ind. 2003). “Here, precedent has established that a
custodian of firearms owes a duty to act with reasonable care to see that the
weapons do not fall into the hands of people known to be dangerous.” City of
Gary ex rel. King v. Smith & Wesson Corp., 801 N.E.2d 1222, 1241-42 (Ind. 2003).
In Estate of Heck, our supreme court recognized a duty on the part of an owner
of a gun to exercise reasonable care to prevent the weapon from falling into
hands known to be dangerous. Estate of Heck, 786 N.E.2d at 270. As such,
KS&E had a duty to Runnels to ensure that the Smith & Wesson handgun did
not fall into the hands of convicted felons.
[13] However, at the time the handgun was used, it was no longer in the control of
KS&E. Under standard negligence doctrine, in order for a defendant to be
liable for a plaintiff’s injury, the defendant’s act or omission must be deemed to
be a proximate cause of that injury. City of Gary, 801 N.E.2d at 1243.
Proximate cause in Indiana negligence law has two aspects. The first—
causation in fact—is a factual inquiry for the jury. If the injury would not have
occurred without the defendant’s negligent act or omission, there is causation in
fact. Id. at 1243-44. A second component of proximate cause is the scope of
liability. That issue, which is also within the province of the trier of fact, turns
largely on whether the injury “is a natural and probable consequence, which in
the light of the circumstances, should have been foreseen or anticipated.” Id.
(citing Bader v. Johnson, 732 N.E.2d 1212, 1218 (Ind. 2000)). Under this
doctrine, liability may not be imposed on an original negligent actor who sets
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into motion a chain of events if the ultimate injury was not reasonably
foreseeable as the natural and probable consequence of the act or omissions.
Control Techniques, Inc. v. Johnson, 762 N.E.2d 104, 108 (Ind. 2002). Under this
comparative fault theory, the trier of fact can allocate fault to multiple
contributing factors based on their relative factual causation, relative
culpability, or some combination of both. Id. at 109.
A crime involving the use of a gun may be attributable in part to an
unlawful sale, but it also requires an act on the part of the criminal.
Among the defendants, the retailers are the closest link in the causal
chain to the criminal act. But even these dealers may not be the sole
cause of the injuries from the illegal use of the weapon, and in many
cases will not bear any share of the fault.
City of Gary, 801 N.E.2d at 1244.
[14] Runnels contends that KS&E and its employees were aware that Blackburn was
an illegal straw purchaser and the ultimate recipient of the handgun was
Martin, a convicted felon. Therefore, Runnels claims that it was reasonably
foreseeable that this unlawful and negligent sale would cause injuries and harm
to him. While there may be issues of proximate cause, or, as some courts put it,
“remoteness” of damage, we cannot say that Runnels stated an insufficient
claim. City of Cincinnati v. Beretta U.S.A. Corp., 768 N.E.2d 1136, 1144 (Ohio
2002). However, whether the claim can be substantiated is an issue left for
another day. We reach a similar conclusion with respect to Runnels’
contention of negligent supervision of employees and negligent entrustment.
[15] With respect to Runnels’ negligence per se allegation, we turn to Rubin v.
Johnson, 550 N.E.2d 324 (Ind. Ct. App. 1990). In Rubin, we noted that “[t]he
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unexcused or unjustified violation of a duty proscribed by statute constitutes
negligence per se if the statute is intended to protect the class of persons in
which the plaintiff is included and to protect against the risk of the type of harm
which has occurred as a result of its violation.” Id. at 329. Also, where a
statute is enacted to ensure the safety of others, its violation constitutes
negligence per se. Id.
[16] The Indiana statutes regulating the transfer and possession of handguns were
enacted by the legislature to protect the public from those who would use such
weapons in a dangerous or irresponsible manner. See I.C. §§ 35-47-2-7; 35-47-
2.5-16; Matthews v. State, 148 N.E.2d 334, 338 (Ind. 1957). The legislature’s
enactment of these statutory provisions reflects a strong public policy against
entrusting certain individuals with handguns. Rubin, 550 N.E.2d at 329. The
purpose of this policy is to safeguard the general public from the incompetent,
irresponsible or criminal use of such weapons. Id. at 330. Clearly, as a member
of the general public, Runnels was among the persons intended to be protected
by these statutes. While Runnels will incur similar problems to establish
proximate cause and remoteness of damages as with his negligence claims, we
do find his Complaint sufficient with respect to his negligence per se contention
to survive KS&E’s motion for judgment on the pleadings.
II. Nuisance
[17] The Indiana Statute section 32-30-6-6 defines nuisance as “[w]hatever is (1)
injurious to health; (2) indecent; (3) offensive to the senses; or (4) an obstruction
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to the free use of property; so as to essentially interfere with the comfortable
enjoyment of life or property, is a nuisance, and the subject of an action.” The
essence of a nuisance claim is the foreseeable harm unreasonably created by the
defendants’ conduct. City of Gary, 801 N.E.2d at 1235. In this light, our
supreme court has interpreted the statute as:
A nuisance is an activity that generates injury or inconvenience to
others that is both sufficiently grave and sufficiently foreseeable that it
renders it unreasonable to proceed at least without compensation to
those that are harmed. Whether it is unreasonable turns on whether
the activity, even if lawful, can be expected to impose such costs or
inconvenience on others that those costs should be borne by the
generator of the activity, or the activity must be stopped or modified.
Id. at 1231 (citing W. Page Keeton, Prosser and Keaton on The Law of Torts § 88 at
629-30 (5th ed. 1984)). “There is no requirement that the activity involve an
unlawful activity or use of land.” Id. at 1233. Thus, if an activity meets the
requirements of an unreasonable interference with a public right, it may
constitute a public nuisance. Id. Also, a public nuisance may exist without an
underlying independent tort. Id. at 1234.
[18] Runnels asserts that by negligently selling firearms “in a manner that ensures a
steady flow of firearms in large quantities to illegal traffickers,” and “others
prohibited by law from having firearms,” KS&E created an unreasonable
interference with the public’s health and use in public facilities, resulting in
substantial and ongoing human and financial harm. (Appellant’s App. p. 21).
These allegations state a claim and survive KS&E’s motion.
III. Piercing the Corporate Veil
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[19] In general, the doctrine of “piercing the corporate veil” holds individuals liable
for corporate actions based on the failure to observe corporate formalities.
Fairfield Development, Inc., v. Georgetown Woods Sr. Apartments Ltd. Partnership,
768 N.E.2d 463, 468 (Ind. Ct. App. 2002), trans. denied. As a general rule,
Indiana courts are reluctant to disregard corporate identity and do so only to
protect third parties from fraud or injustice when transacting business with a
corporate entity. Four Seasons Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d 494,
504 (Ind. Ct. App. 2007). A party seeking to pierce the corporate veil bears the
burden of establishing that the corporation was so ignored, controlled, or
manipulated that it was merely the instrumentality of another and that the
misuse of the corporate form would constitute a fraud or promote injustice. Id.
[20] In deciding whether the party seeking to pierce the corporate veil has met its
burden, Indiana courts consider whether the party has presented evidence
showing: (1) undercapitalization; (2) absence of corporate records; (3)
fraudulent representation by corporation shareholders or directors; (4) use of
the corporation to promote fraud; (5) payment by the corporation of individual
obligations; (6) commingling of assets and affairs; (7) failure to observe required
corporate formalities; or (8) other shareholder acts or conduct ignoring,
controlling, or manipulating the corporate form. Aronson v. Price, 644 N.E.2d
864, 867 (Ind. 1994). This list of factors is not necessarily exhaustive, and all
factors need not be shown to support a decision to pierce the corporate veil.
D.S.I. v. Natare Corp., 742 N.E.2d 15, 27 (Ind. Ct. App. 2000), reh’g denied, trans.
denied.
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[21] Runnels’ Complaint advances that Ellis, as owner of KS&E Sports, used the
store as its alter ego to promote the illegal activities and participate in the sale of
the Smith & Wesson handgun in violation of state and federal laws, causing
physical injury and associated harm to Runnels. Although the allegations in
the Complaint in support of piercing the corporate veil are weak as “the
corporate veil is pierced only where it is clear that the corporation is merely a
shell for conducting the defendant’s own business and where the misuse of the
corporate form constitutes a fraud or promotes injustice,” we are mindful that
the determination of whether there are sufficient grounds for piercing the
corporate veil is “a complex economic question” and should not be disposed of
lightly. Aronson, at 867. As such, we conclude that Runnels’ Complaint with
respect to piercing the corporate veil is sufficient to survive KS&E’s motion for
judgment on the pleadings.
IV. Indiana Code section 34-12-3-3(2)
[22] Despite the sufficiency of the allegations in Runnels’ Complaint, KS&E
contends that the trial court should dismiss these claims because Indiana Code
section 34-12-3-3 provides the company with immunity from civil liability. The
statute relied upon by KS&E to support its argument provides that:
Sec. 3. Except as provided in section 5(1) or 5(2) of this chapter, a
person may not bring or maintain an action against a firearms or
ammunition manufacturer, trade association, or seller for:
(1) Recovery of damages resulting from, or injunctive relief or
abatement of a nuisance relating to, the lawful:
(A) design;
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(B) manufacture;
(C) marketing; or
(D) sale;
of a firearm or ammunition for a firearm; or
(2) recovery of damages resulting from the criminal or unlawful
misuse of a firearm or ammunition for a firearm by a third party.
Focusing on subsection (2), KS&E posits an expansive interpretation of the
enactment, claiming that “the plain language of the statute evidences an intent
by the General Assembly to remove liability for actions over which firearm
sellers have no control (i.e., the criminal acts of third parties). When read in the
context of the entire statute, I.C. § 34-12-3-3(2) provides a separate layer of
protection to firearm sellers in the event that a third party’s criminal or unlawful
actions caused the harm at issue.” (Appellant’s Br. p. 5). Accordingly, KS&E
maintains that because Martin, a third party, caused Runnels’ injuries, the
retailer is immune from suit. In other words, regardless of the perceived illegal
strawman sale, KS&E cannot be held liable because the injuries were inflicted
by the intervening criminal acts of a third party.
[23] The rules of statutory construction require courts to give the words of a statute
their plain and ordinary meaning unless the statute otherwise provides
definitions, or unless the construction is plainly repugnant to the intent of the
legislature. Ind. Bureau of Motor Vehicles v. Orange, 889 N.E.2d 388, 390 (Ind. Ct.
App. 2008). However, if a statute is susceptible to more than one
interpretation, it is ambiguous. Id. If a statute is ambiguous, then courts must
give effect, and implement the intent of the legislature. Id.
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[24] Reviewing the plain language of the statutory enactment, it is clear that the
statute provides two distinct layers of protection for firearm sellers. Section 1
bars victims of gun violence from pursuing claims against firearms sellers who
are alleged to have done nothing wrong beyond lawfully selling a firearm,
whereas section 2 provides that even where a firearm seller has acted
unlawfully, the section limits the seller’s exposure to liability by barring
plaintiffs from holding him accountable for the portion of damages that results
from the criminal or unlawful misuse of a firearm by a third party.
[25] Runnels’ Complaint expressly alleges liability based on the harm that KS&E
proximately caused Runnels through their own wrongful and unreasonable
misuse of a firearm; the Complaint does not couch its allegations in terms of
unlawful conduct by Martin. Accordingly, considering the unambiguous
language in light of our limited scope of review under a T.R. 12(C) motion, we
cannot conclude that under the operative facts and allegations made in the
Complaint, Runnels cannot in any way succeed. See Davis, 747 N.E.2d at
1149. Therefore, we conclude that within the boundaries of this review, the
Complaint is sufficient in setting forth valid claims and, at this point in time,
I.C. § 34-12-3-3 does not bar further proceedings before the trial court. 4
CONCLUSION
4
To be sure, we reiterate that based on the scope of our review, we do not decide whether I.C. § 34-12-3-3
should be characterized as an immunity statute, as proposed by KS&E. A decision on that issue is better left
for another day and should be made outside the province of an initial T.R. 12(C) analysis.
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[26] Based on the foregoing, we hold that Runnels’ Complaint stated a claim on
which relief can be granted.
[27] Affirmed.
[28] Brown, J. concurs with separate concurring opinion
[29] Altice, J. dissents with separate opinion
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IN THE
COURT OF APPEALS OF INDIANA
KS&E Sports and Edward J. Court of Appeals Case No.
49A02-1501-CT-42
Ellis,
Appellants-Defendants,
v.
Dwayne H Runnels,
Appellee-Plaintiff.
Brown, Judge, concurring.
[30] I concur with the reasoning and the result reached by the majority, but I write
separately to clarify my view of the issue. Initially, it is important to consider
that to the extent Ind. Code § 34-12-3-3 operates in derogation of the common
law, this court must strictly construe it. See JPMorgan Chase Bank, N.A. v.
Claybridge Homeowners Ass’n, Inc., 39 N.E.3d 666, 671 (Ind. 2015). When the
legislature enacts a statute in derogation of common law, we presume that the
legislature is aware of the common law and does not intend to make any
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change beyond what is declared in express terms or by unmistakable
implication. Preferred Prof’l Ins. Co. v. West, 23 N.E.3d 716, 727 (Ind. Ct. App.
2014). Also, in construing a statute, “[i]t is just as important to recognize what
the statute does not say as it is to recognize what it does say.” Goodrich Quality
Theaters, Inc. v. Fostcorp Heating and Cooling, Inc., 39 N.E.3d 660, 665 (Ind. 2015)
(quoting N.D.F. v. State, 775 N.E.2d 1085, 1088 (Ind. 2002)).
[31] As the majority notes, Ind. Code § 34-12-3-3 provides two categories under
which a person may not bring or maintain an action against a firearms seller.
Subsection 1 precludes actions seeking to recover damages, injunctive relief, or
the abatement of a nuisance regarding lawful activity related to designing,
manufacturing, marketing, or selling firearms or ammunition. Subsection 2
bars actions seeking to recover damages which were the result of the criminal or
unlawful misuse of a firearm or ammunition by a third party. Importantly,
however, Section 3 does not bar bringing an action seeking damages relating to
unlawful activity on the part of the firearms seller. The implication of the
absence of such language is obvious: the legislature did not intend to bar actions
against firearms sellers relating to their own unlawful activity.
[32] That the legislature did not intend to provide firearms sellers the extent of
immunity argued by KS&E is demonstrated by comparing the legislature’s
actions following two 2003 decisions of the Indiana Supreme Court. First, the
Court handed down City of Gary ex rel. King v. Smith & Wesson Corp., 801 N.E.2d
1222 (Ind. 2003). In that case, the City of Gary brought a comprehensive
lawsuit “against a number of participants at various stages in the manufacture
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and distribution of handguns,” alleging “claims for public nuisance and
negligence against manufacturers, wholesalers, and distributors of these
products.” City of Gary, 801 N.E.2d at 1227. The City “sued for injunctive
relief and money damages for the harm it alleges is caused by the unlawful
marketing and distribution of handguns.” Id. Its complaint alleged claims of
public nuisance, negligence in distribution of guns, and negligent design. Id. at
1228. The Court held that most of the allegations in the City’s complaint stated
a claim and reversed the trial court’s dismissal of such claims. Id. at 1228-1229.
[33] That same year, the Court issued its decision in Estate of Heck v. Stoffer, 786
N.E.2d 265 (Ind. 2003), reh’g denied. In Heck, the Court examined whether a
plaintiff could bring a negligence action against a gun owner related to the
storage of a firearm. Heck, 786 N.E.2d at 266. The facts underlying Heck
involved Timothy Stoffer, who was the son of the defendants and was a fugitive
felon, shooting and killing Allen County Police Officer Eryk Heck using his
parents’ firearm, which he took without their permission. Id. at 266-267.
Heck’s Estate brought the negligence action, and the Stoffers moved to dismiss
the claim and alternatively for summary judgment, and the trial court granted
their motion both as a dismissal and an entry of summary judgment. Id. at 267.
On transfer, the Court reversed the trial court on both grounds. Id. at 271-272.
Specifically, the Court reasoned that “the Stoffers had a duty to exercise
reasonable and ordinary care in the storage and safekeeping of their handgun”
and that accordingly the action should be reinstated. Id. at 270.
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[34] In the legislature’s 2004 session, it passed Pub. L. No. 80-2004 which amended
Ind. Code § 34-12-3-3, changing the text in the preamble of the statute from
“[e]xcept as provided in section 5” to read “[e]xcept as provided in section 5(1)
or 5(2) . . . .” 5 Pub. L. No. 80-2004, § 3 (eff. March 17, 2004). That same
session law also contained Section 5, which codified Ind. Code § 34-30-20-1,
titled “Immunity for Misuse of a Firearm or Ammunition by a Person Other
Than the Owner,” and which provided:
A person is immune from civil liability based on an act or omission
related to the use of a firearm or ammunition for a firearm by another
person if the other person directly or indirectly obtained the firearm or
ammunition for a firearm through the commission of the following:
(1) Burglary (IC 35-43-2-1).
(2) Robbery (IC 35-42-5-1).
(3) Theft (IC 35-43-4-2).
(4) Receiving stolen property (IC 35-43-4-2).
(5) Criminal conversion (IC 35-43-4-3).
Pub. L. No. 80-2004, § 5 (eff. March 17, 2004) (emphasis added).
[35] The legislature demonstrated in Pub. L. No. 80-2004 that it knew how to write
a statute expressly derogating the common law and granting immunity from
civil liability, and it chose not to do so regarding the unlawful sale of firearms
for firearms sellers in Ind. Code § 34-12-3-3. I am persuaded by an argument
made by Runnels’s counsel at oral argument regarding how to interpret the
5
Ind. Code § 34-12-3-3 was originally added to the Indiana Code by Pub. L. No. 19-2001, § 1 (eff. April 18,
2001). As discussed below and in the dissent, the effective date of Section 3 was amended by Pub. L. No.
106-2015, § 4 to August 26, 1999.
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 20 of 32
legislature’s actions regarding Section 3 as follows: “What the legislature was
trying to do was they were codifying existing Indiana comparative fault law and
freezing the common law relating to gun companies to prevent this expansion
to novel theories that would impose . . . liability such as absolute liability.”
Oral Arg. at 26:58-27:22, available at
https://mycourts.in.gov/arguments/default.aspx?&id=1874&view=detail&yr=
&when=&page=1&court=&search=&direction=%20ASC&future=True&sort=
&judge=108&county=&admin=False&pageSize=20. If the legislature wished
to abrogate over 100 years of Indiana common law regarding the potential to
impose liability on gun sellers for their own unlawful actions, it would have
expressly done so. See Binford v. Johnston, 82 Ind. 426, 427-428, 431 (Ind. 1882)
(holding that a firearm seller could be held civilly liable for negligently selling
pistol cartridges loaded with powder and ball to two minors, in which one of
the minors was shot and killed by a ball, because “we can not deny a recovery if
we find that the injury was the natural or probable result of appellant’s original
wrong”); see also City of Gary, 801 N.E.2d at 1227 (holding that the City of
Gary’s claims for public nuisance and negligence against manufacturers,
wholesalers, and distributors of handguns were valid claims under Indiana law);
Rubin v. Johnson, 550 N.E.2d 324, 326, 331-333 (Ind. Ct. App. 1990) (denying
the defendant gun seller’s motion for summary judgment on the plaintiff’s
wrongful death action, in which the plaintiff alleged that defendant Rubin
knowingly transferred a firearm to a person who Rubin knew or reasonably
should have known was of unsound mind, holding that Rubin’s argument that
the shooter’s act constituted an intervening criminal act which should relieve
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 21 of 32
him of any liability is erroneous and that “because the criminal, irresponsible,
and unpredictable use of handguns is the very risk sought to be avoided under
I.C. 35-47-2-7 [which prohibits sales or transfers of firearms to certain
individuals], the realization of this risk cannot stand as a bar to recovery”).
[36] The claims alleged by Runnels in his complaint allege damages resulting from
KS&E’s own actions. Counts I-V each sound in negligence, in which Runnels
alleges that KS&E’s sale to Blackburn was a proximate cause of Runnels’s
injuries. Count VI, alleging a claim of damages resulting from a conspiracy,
also directly concerns the actions of KS&E in causing Runnels’s injuries.
Count VII, public nuisance, is specifically concerned with the nuisance created
by KS&E itself as a result of the store’s unlawful activities. Finally, Count VIII
seeks to pierce the corporate veil and sue Edward Ellis individually for his role
in committing unlawful acts. I believe that none of these counts are barred by
Ind. Code § 34-12-3-3.
[37] I also believe it improper to consider the legislature’s amendment to Ind. Code
§ 34-12-3-3 to change its effective date, seemingly so as to apply that statute to
the issues being litigated in City of Gary, as reason to conclude that the
legislature intended Ind. Code § 34-12-3-3 to immunize gun sellers from liability
stemming from the unlawful sale of firearms. As noted, the nature of that case
is far different from the facts presented by Runnels. Indeed, much of the
Court’s analysis pertained to the City’s claim “that handgun manufacturers,
distributors, and dealers conduct their business in a manner that unreasonably
interferes with public rights in the City of Gary, and therefore have created a
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 22 of 32
public nuisance,” in which it was seeking in part injunctive relief to abate or
enjoin the nuisance. 801 N.E.2d at 1229, 1238. The Court noted that “a public
nuisance may exist without an underlying independent tort,” that “[h]ere the
complaint does allege negligence and resulting predicable injury,” but that “a
nuisance claim may be predicated on a lawful activity conducted in such a
manner that it imposes costs on others.” Id. at 1234. The Court observed that
“[n]uisances may arise from a lawful activity” and pointed to Yeager & Sullivan,
Inc. v. O’Neill, 163 Ind. App. 466, 324 N.E.2d 846 (1975), in which this court
“held that ‘[w]hile the keeping of hogs, being a lawful enterprise, cannot be
characterized as an absolute nuisance or a nuisance, per se, such an activity can
become a nuisance per accidents by reason of the manner in which the hogs are
kept, the locality or both.’” Id. at 1234 n.9 (quoting Yeager, 163 Ind. App. at
474, 324 N.E.2d at 852). The Court specifically stated in examining a defense
raised by the firearms manufacturers and distributors that “an activity can be
lawful and still be conducted in an unreasonable manner so as to constitute a
nuisance.” Id. at 1234. In addition, the negligence claim alleged that the
defendants in that action had “acted negligently in the distribution, marketing,
and sale of handguns.” Id. at 1241 (emphasis added). Such a claim
encompasses a far wider range of activity than the specific negligence claim
alleged by Runnels.
[38] Thus, it is unclear which, if any, of the City of Gary’s allegations would be
impacted by the language of Ind. Code § 34-12-3-3, and it is not before this
Court to decide the statute’s impact in that case. The action brought by
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Runnels contains specific allegations of a straw sale which caused his personal
injuries. Indeed, the Court in City of Gary observed that “[i]n this procedural
posture the City cites no specific transaction in which its damages are traceable
to use of a gun obtained in an unlawful sale.” Id. at 1244. I do not believe the
fact that the legislature may have acted to apply Ind. Code § 34-12-3-3 to some
yet-to-be-discerned aspect of the City of Gary litigation necessarily leads to the
conclusion that the statute is intended to provide complete immunity to gun
sellers for unlawful sales of firearms.
[39] For the reasons stated, I concur with the majority opinion.
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 24 of 32
IN THE
COURT OF APPEALS OF INDIANA
KS&E Sports and Edward J. Court of Appeals Case No.
49A02-1501-CT-42
Ellis,
Appellants-Defendants,
v.
Dwayne H. Runnels,
Appellee-Plaintiff.
Altice, Judge, dissenting.
[40] I respectfully dissent. The issue before us, one of first impression, is whether
Ind. Code § 34-12-3-3(2) immunizes firearms sellers, like KS&E, against civil
actions for damages where the plaintiff was injured by the criminal misuse of a
firearm by a third party regardless of whether the firearm was sold lawfully by
the firearms seller. This is purely an issue of statutory interpretation.
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 25 of 32
[41] I.C. § 34-12-3-3 provides:
Except as provided in section 5(1) or 5(2) of this chapter,[6] a
person may not bring or maintain an action against a firearms or
ammunition manufacturer, trade association, or seller for:
(1) recovery of damages resulting from, or injunctive relief or
abatement of a nuisance relating to, the lawful:
(A) design;
(B) manufacture;
(C) marketing; or
(D) sale;
of a firearm or ammunition for a firearm; or
(2) recovery of damages resulting from the criminal or unlawful
misuse of a firearm or ammunition for a firearm by a third party.
In conjunction with this statute, I.C. § 34-12-3-4(a) provides for dismissal and
the award of attorney’s fees and costs to the defendant if a plaintiff brings an
action under a theory of recovery described above.
[42] KS&E’s argument is straightforward: Runnels’s claims fit squarely within the
plain language of I.C. § 34-12-3-3(2) prohibiting actions against firearms sellers
6
I.C. § 34-12-3-5 provides the following exceptions, which are not applicable in this case:
Nothing in this chapter may be construed to prohibit a person from bringing or maintaining
an action against a firearms or ammunition manufacturer, trade association, or seller for
recovery of damages for the following:
(1) Breach of contract or warranty concerning firearms or ammunition purchased
by a person.
(2) Damage or harm to a person or to property owned or leased by a person caused by a
defective firearm or ammunition
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 26 of 32
for “recovery of damages resulting from the criminal…misuse of a firearm…by
a third party.” Pursuant to this provision, KS&E contends that a firearms seller
is immune from liability if a third party’s criminal use of the firearm damaged
the plaintiff. This is true regardless of whether the firearm was sold lawfully or
unlawfully.
[43] I agree with the majority, as would KS&E, that I.C. § 34-12-3-3(1) acts, in part,
to bar victims of gun violence from pursuing claims against firearms sellers
engaged in lawful sales. This subsection is not applicable here because KS&E is
alleged to have engaged in an illegal straw sale.
[44] Subsection (2) of the statute, the one applicable in this case, makes no reference
to the lawfulness of the sale. Its focus, rather, is on instances where a firearm is
criminally or unlawfully misused by a third party. The majority interprets this
subsection as simply “limit[ing] the seller’s exposure to liability by barring
plaintiffs from holding him accountable for the portion of damages that results
from the criminal or unlawful misuse of a firearm by a third party.” Slip op. at
15. I believe this is a strained interpretation of the statute and certainly not
representative of the statute’s plain language.
[45] In relevant part, the statute provides that a person may not bring an action
against a firearms seller for recovery of damages resulting from the criminal
misuse of a firearm by a third party. If a plaintiff brings such an action, the
defendant is entitled to dismissal and an award of attorney fees and costs
pursuant to I.C. § 34-12-3-4(a). This is a quintessential immunity provision.
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 27 of 32
[46] The majority, however, relegates it to a recodification of comparative fault
principles. That is, according to the majority, subsection (2) makes a gun seller
liable for only a portion of the plaintiff’s damages – the part attributable to the
seller’s fault. But that was the law as it existed prior to enactment of the statute.
See City of Gary v. Smith & Wesson Corp., 801 N.E.2d 1222 (Ind. 2003).
[47] The City of Gary case involved a complaint filed by the City asserting, inter alia,
negligence claims against various firearms dealers, distributors, and
manufacturers. The trial court dismissed the City’s claims for failure to state a
claim. The Supreme Court reversed.
[48] Relevant here, the City’s complaint generally alleged that the firearms dealers
had knowingly sold to illegal buyers through intermediaries in straw purchases.
With respect to the negligence claims, the Court addressed the defendants’
argument that at the time a gun is used in a crime it is no longer under their
control. The Court indicated that this is an issue of proximate cause and
comparative fault.
[L]iability may not be imposed on an original negligent actor
who sets into motion a chain of events if the ultimate injury was
not reasonably foreseeable as the natural and probable
consequence of the act or omission. Under comparative fault,
the trier of fact can allocate fault to multiple contributing factors
based on their relative factual causation, relative culpability, or
some combination of both.
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 28 of 32
[49] Id. at 1244 (citations omitted). The Court discussed the difficulty of
establishing proximate cause in these types of cases. 7 Despite recognizing that
substantial barriers to recovery of any or all of these damages may exist, the
Court held that it could not say as a matter of law that no damages were
recoverable. Id. at 1244. The Court concluded: “Here we have bald
allegations of liability and a claim of resulting damages. That is sufficient to
state a claim. Whether the claim can be substantiated is an issue for another
day.” Id. at 1245.
[50] I.C. § 34-12-3-3 had not been enacted when the City filed its complaint in
1999. 8 In 2015, the legislature retroactively amended I.C. § 34-12-3-3 (and the
other sections within the chapter), changing its effective date to August 26, 1999
and adding the phrase “or maintain” to the statute to bar people from bringing
or maintaining certain actions against firearms sellers. The legislature also
amended I.C. § 34-12-3-4—the statute awarding fees and costs for such actions.
Specifically, another subsection was added applying to actions commenced on
or before August 27, 1999 that are subsequently dismissed pursuant to I.C. § 34-
12-3-3. In those cases, the amended statute provides that “no award for
7
Even in the case of unlawful sales, “dealers may not be the sole cause of the injuries from the illegal use of
the weapon, and in many cases will not bear any share of the fault.” Id. This may be due to the passage of
time or a wide variety of intervening circumstances. “In some cases the fault allocated to the user may
overwhelm or even eliminate fault of the seller.” Id.
8
The precise date the City filed its case is not clear. The Supreme Court generally referenced the case being
filed in “September 1999”, but the date was not important to the disposition of that case. See City of Gary, 801
N.E.2d at 1227. KS&E asserts, without citation, that the complaint was “filed on August 30, 1999 – and was
signed and dated on August 27, 1999”. Appellants’ Brief at 6.
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 29 of 32
attorney’s fees or costs incurred shall issue”. I.C. § 34-12-3-4. Finally, the
legislature amended I.C. § 34-12-3-0.1 to indicate that the chapter also applies
to actions filed on or before the original effective date of the statute (April 18,
2001), not just after that date (as it existed prior to the amendment).
[51] The clear purpose of these amendments was to effect a dismissal of the City’s
case, which lingered unresolved in the trial court after yet another unsuccessful
appeal by the gun industry, Smith & Wesson Corp. v. City of Gary, 875 N.E.2d 422
(Ind. Ct. App. 2007), trans. denied (2009). I agree with KS&E’s argument that
the 2015 amendment and its connection to the City of Gary case, which included
claims of unlawful straw sales, “suggests that the General Assembly was keenly
aware of the import of the language used in 34-12-3-3 and thus further
strengthens the argument that the General Assembly intended what the
language in section 34-12-3-3 clearly states.” Appellants’ Brief at 13. Further, if
I.C. § 34-12-3-3(2) was intended to be interpreted as a comparative fault
provision, there would have been no reason for the legislature to amend the
statute to make it retroactively applicable to the City of Gary case.
[52] Moreover, I am uncertain how the statute would work under the majority’s
interpretation. The statute clearly prohibits a plaintiff from bringing certain
actions – in this case bringing actions against firearms sellers for “recovery of
damages resulting from the criminal…misuse of a firearm…by a third party.”
I.C. § 34-12-3-3(2). So what actions would be barred under the majority’s
interpretation of the statute?
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 30 of 32
[53] In my mind, actions are not defined by comparative fault principles. Rather,
they are based on a defendant’s alleged liability for a plaintiff’s
injuries/damages. Whether a defendant is liable generally turns on questions of
duty, breach, proximate cause, and harm. A determination regarding
apportionment of damages does not occur until these threshold liability issues
are determined in favor of the plaintiff.
[54] I.C. § 34-12-3-3(2) looks to the harm alleged and excludes actions against
firearms sellers where the plaintiff’s injury resulted from the criminal misuse of
the firearm by a third party. In this case, Runnels claims that the illegal straw
sale was a proximate cause of his injury. Of course, it cannot be disputed that
Blackburn and the shooter’s actions were also proximate causes. Regardless of
the number of bad actors, the injury was the same. A comparative fault
analysis would simply apportion the damages “among persons whose fault
caused or contributed to causing the loss in proportion to their percentage of
‘fault’”. Control Techniques, Inc. v. Johnson, 762 N.E.2d 104, 109 (Ind. 2002).
[55] Under the plain language of the statute, KS&E cannot be found liable for the
alleged harm regardless of its degree of fault. Runnels complains that this
interpretation would confer blanket immunity on firearms sellers engaged in the
illegal and negligent sale of guns to straw purchasers. As observed by KS&E,
the potential for significant criminal liability and regulatory penalties remains a
deterrent to discourage firearms sellers from engaging in unlawful sales.
Regardless, while the legislature could have – and arguably should have –
Court of Appeals of Indiana | Opinion 49A02-1501-CT-42 | March 17, 2016 Page 31 of 32
carved out an exception for straw purchases in subsection (2), it did not.9 The
policy arguments ably advanced by Runnels and the various amici curiae, no
matter how valid, should be directed to the legislature, not this court.
9
Other states have expressly carved out such an exception. See, e.g., Ark. Code § 16-116-202(d)(1) (firearms
dealer “may be sued in tort for any damages proximately caused by an act of the…dealer in violation of a
state or federal law or regulation”); Colo. Rev. Stat. § 13-21-504.5(4) (same); N.H. Rev. Stat. § 508:21(1)(d)
(barred actions “shall not include an action brought against a…seller…convicted of a felony under state or
federal law, by a party directly harmed by the felonious conduct”).
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