ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
KAREN A. WYLE STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Bloomington, IN John D. Snethen
DEPUTY ATTORNEY GENERAL
PAUL J. WATTS Indianapolis, IN
ATTORNEY AT LAW
INDIANA TAX COURT
GARY M. NEWBY, )
v. ) Cause No. 49T10-9911-TA-215
INDIANA DEPARTMENT )
OF STATE REVENUE, )
ORDER ON PETITIONERS MOTION FOR SUMMARY JUDGMENT
April 27, 2005
Gary M. Newby (Newby) appeals the final determination of the Indiana Department of
State Revenue (Department) assessing him with controlled substance excise tax (CSET).
The matter is before the Court on Newbys motion for summary judgment.
The issues before the Court are: (1) whether double jeopardy precludes the Departments
assessment of CSET against Newby; and (2) whether the imposition of CSET violates
the provisions of Newbys plea agreement with the State of Indiana.
See footnote For
the following reasons, the Court DENIES Newbys motion for summary judgment.
FACTS AND PROCEDURAL HISTORY
On May 6, 1997, Newby was arrested after law enforcement officers, who
were executing a search warrant, seized various controlled substances from Newbys residence.
Newby was charged with several criminal offenses, including possession of the substances and
maintaining a common nuisance. On October 30, 1998, the Indiana Court of
Appeals determined that the search warrant was invalid and, as a result, all
evidence seized (i.e. the substances) was inadmissible.
Newby v. State, 701 N.E.2d
593, 604 (Ind. Ct. App. 1998). Newby subsequently entered into a plea
agreement with the State, whereby he agreed to plead guilty to maintaining a
common nuisance, and forfeit all monies and illegal property seized pursuant to the
arrest. In exchange, the State agreed to dismiss all other pending criminal
charges and seek no further fines or forfeitures. On February 12, 1999,
the plea was accepted and Newby was sentenced consistent with the terms of
On April 20, 1999, the Department assessed the CSET, including penalties and fees,
in the amount of $871,437.50 against Newby.
See footnote Newby protested the imposition of
the CSET, and the Department issued a Letter of Findings on August 23,
1999, upholding the assessment. Newby filed an original tax appeal on November
30, 1999, and filed a motion for summary judgment on May 15, 2000.
The Court conducted a hearing on October 25, 2002. Additional facts
will be supplied as necessary.
ANALYSIS AND OPINION
Standard of Review
Summary judgment is proper only when no genuine issues of material fact exist
and the moving party is entitled to judgment as a matter of law.
Ind. Trial Rule 56(C); See also Salin Bancshares, Inc. v. Indiana Dept
of State Revenue, 744 N.E.2d 588, 591 (Ind. Tax Ct. 2000). When
any party has moved for summary judgment, the [C]ourt may grant summary judgment
for any other party upon the issues raised by the motion although no
motion for summary judgment is filed by such party. T.R. 56(B).
Newby contends that his CSET assessment violates the Double Jeopardy Clause of the
United States and Indiana Constitutions and is therefore invalid. (See Petr Mot.
for Summ. J. and Mem. of Law (hereinafter, Petr Mem.) at 6.)
See also U.S. Const. amend. V; Ind. Const. art. I, § 14 (No
person shall be put in jeopardy twice for the same offense). More
specifically, Newby claims that because the criminal charges of maintaining a common nuisance
and possession of controlled substances are the same offense, the CSET assessment, which
is based on Newbys possession of controlled substances, constitutes a second jeopardy.
(See Petr Mem. at 6-8.) The Court disagrees.
Under a federal double jeopardy analysis, the determination of whether two offenses are
the same is dictated by the statutory elements test. See Blockburger v.
United States, 284 U.S. 299, 304 (1932). Therefore, the Court must decide
whether each statutory offense requires proof of a fact that the other does
not. See id. The Indiana double jeopardy analysis requires the consideration
of both the statutory elements test and the actual evidence test to determine
whether the essential elements of one challenged offense also establish the essential elements
of another challenged offense. Richardson v. State, 717 N.E.2d 32, 49-50 (Ind.
1999). As Newbys claim arises under both the federal and state constitutions,
the Court will apply both tests to the facts.
a. The Statutory Elements Test
Newby argues the two offenses are the same because possession is also used
to establish the essential elements of maintaining a common nuisance. (See Petr
Reply Br. at 4.)
Under the statutory elements test, however, the Court reaches a different result.
Indiana Code § 6-7-3-5 states that the [CSET] is imposed on controlled substances
that are delivered[,] possessed[,] or manufactured in Indiana in violation of IC 35-48-4
or 21 U.S.C. 841 through 21 U.S.C. 852. Ind. Code Ann. §
6-7-3-5 (West 1999). Indiana Code § 35-48-4-7 states [a] person who, without
a valid prescription or order of a practitioner acting in the course of
his professional practice, knowingly or intentionally possesses a controlled substance (pure or adulterated)
classified in schedule I, II, III, or IV, except marijuana or hashish, commits
possession of a controlled substance[.] Ind. Code Ann. § 35-48-4-7 (West 1999)
(amended 2001). Indiana Code § 35-48-4-11(1) states [a] person who knowingly or
intentionally possesses (pure or adulterated) marijuana, hash oil, or hashish commits possession of
marijuana, hash oil, or hashish[.] Ind. Code Ann. § 35-48-4-11 (West 1999).
Accordingly, the element of possession establishes the essential elements for the imposition
of the CSET. See Garcia v. State, 686 N.E.2d 883, 885 (Ind.
Ct. App. 1997) (assessment of CSET did not require proof of any additional
facts other than the element of possession).
On the other hand, the element of possession is not required to establish
the essential elements of maintaining a common nuisance. Indeed, Indiana Code §
A person who knowingly or intentionally maintains a building, structure, vehicle, or other
place that is used one (1) or more times:
by persons to unlawfully use controlled substances; or
offering for sale;
financing the delivery of;
controlled substances, or items of drug paraphernalia as described in IC 35-48-4-8.5; commits
maintaining a common nuisance[.]
Ind. Code Ann. § 35-48-4-13 (West 1999) (amended 2001). Hence, a person
may commit maintaining a common nuisance without having possessed controlled substances. See
Sayre v. State, 471 N.E.2d 708, 717 (Ind. Ct. App. 1984) (offense of
maintaining a common nuisance did not require proof that defendant possessed controlled substance).
Similarly, maintaining a common nuisance is not an element of the offense
of possession. See Riding v. State, 527 N.E.2d 185, 189 (Ind. Ct.
App. 1988) (stating that convictions for possession and maintaining a common nuisance required
proof of an additional fact which the other did not). As a
result, the two offenses are not the same under the statutory elements test.
b. The Actual Evidence Test
Under the actual evidence test, the Court must consider the evidence presented at
trial to determine whether each challenged offense was established by separate and distinct
facts. See Richardson, 717 N.E.2d at 53. Nevertheless, the test is
inapplicable in this case because Newby pled guilty to maintaining a common nuisance
and no trial took place. See id. at 49. (stating that
in applying the actual evidence test, a court reviews actual evidence presented at
trial when available).
Maintaining a common nuisance and possession do not constitute the same offense.
Furthermore, while the CSET assessment is a punishment for possession, it is Newbys
only jeopardy for possession of the controlled substances.
See Hall v. Indiana
Dept of State Revenue, 660 N.E.2d 319, 321 (Ind. 1995) (CSET was taxpayers
only jeopardy where she was subject to neither criminal prosecution or punishment) (footnote
added). As a result, no double jeopardy violation exists.
(2) Violation of the Plea Agreement
Newby also claims the imposition of CSET violates the terms of his plea
agreement, because it constitutes an additional punishment. Newby argues specifically that [a]ny
substantial obligation of a punitive nature is indeed a part of the sentence
and penalty and must be specified in the plea agreement. (Petr Mem.
at 11 (quoting Disney v. State, 441 N.E.2d 489, 494 (Ind. Ct. App.
1982).) Therefore, Newby contends that because the prosecutor did not include the
CSET in his plea agreement, the Department cannot subsequently impose the tax.
(See Petr Mem. at 10-14.) Again, the Court disagrees.
Indiana Code § 6-7-3-20 states, [t]he [CSET is] intended to be in addition
to any criminal penalties under IC 35-48-4 and forfeitures under IC 16-42-20, IC
34-24-1, or IC 34-24-2 (or IC 34-4-30.1 or IC 34-4-30.5 before their repeal).
Ind. Code Ann. § 6-7-3-20 (West 1999) (emphasis added). Hence, CSET
was properly imposed in addition to the criminal penalties and forfeitures delineated in
the plea agreement.
For these reasons, the Court DENIES Newbys motion for summary judgment. Instead,
summary judgment is GRANTED in favor of the Department.
SO ORDERED this 27th day of April, 2005.
Thomas G. Fisher, Judge
Indiana Tax Court
Paul J. Watts
WATTS LAW OFFICE, P.C.
85 South Main Street
Spencer, Indiana 47460
Karen A. Wyle
Attorney at Law
4475 N. Benton Court
Bloomington, Indiana 47408
Attorney General of Indiana
By: John D. Snethen
Deputy Attorney General
Indiana Government Center South, Fifth Floor
302 West Washington Street
Indianapolis, IN 46204
Newby also argues that the exclusionary rule bars the use of illegally
seized controlled substances in the CSET assessment proceedings. Nevertheless, the Indiana Supreme
Court recently held that while the exclusionary rule bars the use of illegally
obtained evidence in criminal proceedings, it does not apply to tax assessment proceedings.
See State, Indiana Dept of State Revenue v. Adams, 762 N.E.2d 728,
730-731 (Ind. 2002) (holding that the purpose of the exclusionary rule the
deterrence of police misconduct is not served by applying the rule to
CSET assessment proceedings). Based on Adams, the Court finds that the exclusionary
rule does not apply in this case. See id.
An assessment of $413,835.01 was based on 913.68 grams of cocaine and/or
liquid morphine, 22 morphine tablets, 212 Schedule IV tablets, and 106,333.66 grams of
See Joint Stipulations at Ex. G.) In addition to the
tax, the assessment included interest totaling $2,380.98, a 100% penalty of $413,835.01, a
collection fee of $41,383.50, and a clerk cost of $3.00. (See Joint
Stipulations at Ex. D.)
In the alternative, Newby argues that the CSET assessment is a second
jeopardy for the dismissed charges of possession. (
See Petr Mem. at 8-9.)
Newby suggests the dismissal of the possession charges constitutes a final disposition
resulting in a first jeopardy. (See Petr Mem. at 8-9.) This
argument also fails.
The Double Jeopardy Clause  refers to the risk that a person will,
for a second time, be convicted of the same offense. Bryant v.
State, 660 N.E.2d 290, 299 (Ind. 1995) (citation omitted). Jeopardy attaches where
there is a risk of a determination of guilt. See id.
Since the possession charges brought against Newby were dismissed, he did not face
the required risk prior to the CSET assessment. See Hall v. Indiana
Dept of State Revenue, 660 N.E.2d 319, 321 (Ind. 1995).
Furthermore, the prosecutor, acting in his criminal law enforcement capacity, does not
have the power to bind the rights of the Department.
Stump v. Indiana Dep't of State Revenue, 777 N.E.2d 799, 803 (Ind. Tax
Ct. 2002) (where the actions of two state agencies did not impact the
rights and responsibilities the Department). Consequently, the Departments right to assess CSET
was not precluded by the plea agreement.