ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
DONALD K. MCCLELLAN JEFFREY A. MODISETT
McClellan, McClellan & Arnold Attorney General of Indiana
MARY ANN WEHMUELLER
Deputy Attorney General
AUTO-OWNERS INSURANCE COMPANY, ) ) Appellant-Respondent, ) ) vs. ) No. 27A05-9612-CV-487 ) STATE OF INDIANA, ) ) Appellee-Petitioner. )
APPEAL FROM THE GRANT CIRCUIT COURT
insurance policies for new and used motor vehicles and acquires thousands of vehicles that
have been declared a total loss. In 1995 the consumer protection division of the Attorney
General's office received a complaint that Auto-Owners had sold a total loss vehicle to a
consumer without first obtaining a certificate of salvage title.See footnote
The vehicle, a 1991 GMC
Safari van, was originally owned by Bruce Getts. Getts was insured by Auto-Owners. After
Getts damaged the vehicle he entered a settlement with Auto-Owners which took possession
of the vehicle declaring it a total loss. On March 6, 1992 Auto-Owners sold the van to Allan
Abramow. Thereafter Abramow sued Getts for issuing a faulty odometer disclosure
statement on the van. Apparently, as a part of that litigation Getts ordered a title history on
the vehicle and discovered that Auto-Owners had failed to apply for a salvage title; that
Auto-Owners did not appear in the title history of the vehicle; and that the title history
indicated that Getts had sold the vehicle to Abramow. In February 1995 Getts filed a written
complaint with the Attorney General's office.
On April 18, 1995 the State issued a Civil Investigative Demand (hereafter referred to as the Demand or a C.I.D.) addressed to Auto-Owners consisting of a request for the production of documents and a set of eleven interrogatories. The interrogatories dealt with the identification of each total loss motor vehicle Auto-Owners had acquired since January 1, 1992. The request for documents included copies of all documentation pertaining to the
loss and acquisition of the vehicles referred to in the interrogatories including loss reports,
engineering reports, purchase orders, and odometer disclosure statements. The Demand
indicated that it was issued pursuant to Ind. Code § 4-6-3-3 to determine whether Auto-
Owners had violated Ind. Code § 24-5-0.5-1 et seq. (Deceptive Consumer Sales Act) or Ind.
Code § 9-22-3-1 et seq. (Salvage Motor Vehicles Act). In response Auto-Owners objected
to ten of the eleven interrogatories on the grounds that the information sought was over broad
and placed an undue burden and expense on Auto-Owners and that the information sought
was not calculated to lead to the discovery of admissible evidence. Auto-Owners did
respond to one interrogatory stating that it had sold one vehicle to Allan Abramow since
January 1, 1992, and that was on March 6, 1992 when he purchased a 1991 GMC Safari van
previously owned by Bruce Getts. With respect to the request for production of documents
Auto-Owners gave the same response that it had given to the interrogatories. Auto-Owners
did, however, produce all documents pertaining to the sale of the Safari van. Auto-Owners
also provided the State with a computer printout of 6,790 total loss vehicles it had acquired
since January 1, 1992. However there was no identifying information on the printout such
as vehicle identification numbers. Thereafter on April 14, 1996 the State filed a petition with
the trial court to enforce the C.I.D., and Auto-Owners countered with a motion for protective
order. After conducting a hearing the trial court issued an order denying Auto-Owners'
motion and granting the State's petition. This interlocutory appeal followed.
Auto-Owners first contends the trial court abused its discretion by enforcing the C.I.D. because there is no evidence of a violation of law within the applicable statute of limitations.
More specifically Auto-Owners points out that the State has a two-year limitation period
within which to bring an action under the Deceptive Consumer Sales Act.See footnote
act in this case, according to Auto-Owners, occurred on March 6, 1992, and thus the outside
date for bringing an action was March 6, 1994. Therefore, the argument continues, because
the State no longer has a remedy for any alleged violation of the Act, the trial court abused
its discretion by enforcing the C.I.D. In essence Auto-Owners contends that the State should
not be able to investigate a matter where it cannot bring sanctions even if a violation is found.
We first observe this issue is waived. At the trial court level Auto-Owners objected to the enforcement of the C.I.D. on grounds that the interrogatories as well as the request for production of documents were over broad, placed an undue burden and expense on Auto- Owners, and the information sought was not calculated to lead to discovery of admissible evidence. Auto-Owners did not object to the C.I.D. on statute of limitation grounds. A party who does not raise an issue or argument at the trial court level may not raise that issue or argument for the first time on appeal. Ansert v. Indiana Farmers Mutual Insurance Co., 659 N.E.2d 614 (Ind. Ct. App. 1995), trans. dismissed. Waiver notwithstanding Auto-Owners still cannot prevail.
First, not only is the State investigating potential violations of the Deceptive Consumer Sales Act, but it is also investigating potential violations of the Salvage Motor Vehicles Act. The two year limitation period applicable to violations of the Deceptive
Consumer Sales Act is not necessarily applicable to violations of the Salvage Motor Vehicles Act.See footnote 4 Second, and perhaps more importantly, Auto Owners' argument is based on a faulty premise, namely: that the only purpose or the primary purpose of conducting an investigation is to file legal action. That is not necessarily the case. Should the State determine that a party "has engaged in, is engaging in, or is about to engage in [a] deceptive act" the Attorney General may "accept an assurance of voluntary compliance" from the offending party with respect to any deceptive practice. Ind. Code § 24-5-0.5-7. No "legal action" is necessary except that the voluntary compliance must be filed with and subject to the approval of the trial court. Id. Third, nothing in the wording of Ind. Code § 4-6-3-3 limits the State's authority to issue a C.I.D. based upon the statute of limitations for the act triggering an investigation. Among other things I.C. 4-6-3-3 provides that the Attorney General may conduct an investigation to determine if a person "is or has been" engaged in a violation of any statute enforced by the Attorney General. Here, the Attorney General was seeking at least to determine if Auto-Owners has been violating the Deceptive Consumer Sales Act and the Salvage Motor Vehicles Act. That the act triggering the investigation may fall outside the limitation period does not prohibit the State from conducting an investigation in the first instance.
In a related argument, Auto-Owners contends that I.C. 4-6-3-3 also provides that the
Attorney General must first have "reasonable cause" to believe that there has been a statutory
violation. The argument continues that because the State received only a single complaint
concerning a statutory violation and has no evidence of any violation occurring within the
limitation period, the trial court erred in enforcing the C.I.D. We reject the limitations
argument for reasons previously discussed. As for the "reasonable cause" contention we
disagree with Auto-Owners' reading of I.C. 4-6-3-3. In pertinent part the statute dictates:
"If the attorney general has reasonable cause to believe that a person may be in possession, custody, or control of documentary material, or may have knowledge of a fact that is relevant to an investigation conducted to determine if a person is or has been engaged in a violation of [various statutory provisions] or any other statute enforced by the attorney general . . . the attorney general may issue in writing . . . an investigative demand . . . ."
Id. The plain wording of the statute shows that the "reasonable cause" requirement is not
addressed to the commission of a violation of law. Rather it is addressed to whether a person
may have certain information relevant to an investigation. In this case, after Getts filed his
consumer complaint the State contacted Auto-Owners and confirmed that it had not applied
for a certificate of salvage title as required by the Salvage Motor Vehicles Act. Once the
State decided to conduct an investigation to determine whether Auto-Owners may have
violated the Act, it was certainly reasonable and logical to believe that Auto-Owners
possessed information relevant to the investigation.
One of the tenets of statutory construction provides that statutes are to be construed so as not to produce an absurdity. Family and Social Services Admin. v. Calvert, 672 N.E.2d 488, 491-92 (Ind. Ct. App. 1996), trans. denied. Interpreting I.C. § 4-6-3-3 as requiring
reasonable cause to believe that a statutory violation occurred before an investigation is even
initiated would produce an absurdity. The very purpose of an investigation under the statute
is to determine if in fact a violation has occurred. If the State had reasonable cause to believe
that a violation already existed, there would be no need for investigation in the first place.
Next, Auto-Owners contends the trial court abused its discretion by enforcing
the C.I.D. because the State's request for production of documents is unreasonable. Auto-
Owners directs our attention to Ind. Code § 4-6-3-5 which provides in relevant part "an
investigative demand may not: (1) contain a requirement that would be unreasonable if
contained in a subpoena or subpoena duces tecum issued by a Court in a grand jury
investigation. . . ." The standard of reasonableness for purposes of a grand jury subpoena
duces tecum requires that the subpoena be sufficiently limited in scope, relevant in purpose,
and specific in directive so that compliance will not be unreasonably burdensome. State ex
rel. Pollard v. Criminal Court of Marion County, 263 Ind. 236, 329 N.E.2d 586 (1975). In
this case the State sought documents extending over a three-year period. Auto-Owners'
unreasonableness claim is based solely on its statute of limitations argument. "How can the
State of Indiana have a right to obtain documents extending over a three and one-half [year]
period, when it only has a two-year statute of limitations under which to bring an action for
a violation under I.C. 24-5-0.5-5(b)?" Brief of Appellant at 19-20. We have already
addressed this issue and decline to explore it further.
SHARPNACK, C.J., and DARDEN, J., concur.
(2) Answer under oath and in writing written interrogatories.
(3) Appear and testify under oath before the attorney general or the attorney general's duly authorized representative.
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