[CITE: McClure v. Perry & Richardson, 13 CADDNAR 96 (2013)]
[VOLUME 13, PAGE 96]
Cause #: 11-021F
Caption: McClure v. Perry & Richardson
Administrative Law Judge: Lucas
Attorneys: pro se (McClure; Perry; Richardson); Stewart (Moore)
Date: February 26, 2013
FINAL ADMINISTRATIVE JUDGMENT
Part 1. Michael McClure and Teresa McClure are granted an administrative judgment against Benjamin F. Perry, III in the amount of $40,548.09.
Part 2. Michael McClure and Teresa McClure are granted an administrative judgment against Dillon Richardson in the amount of $40,548.09.
Part 3. The liability for the administrative judgment against Benjamin F. Perry, III and against Dillon Richardson is joint and several. An amount toward the judgment paid by either Perry or Richardson shall be credited to the other. This credit includes any payment of restitution to Michael McClure or Teresa McClure through a Sentencing Order by the Fayette Superior Court in Cause No. 21D01-1011-FD-681 or in Cause No. 21D01-1011-FD-682. Satisfaction of restitution in Cause No. 21D01-1011-FD-681 or in Cause No. 21D01-1011-FD-682 does not, however, constitute satisfaction of the administrative judgment.
Part 4. The administrative judgment addresses all issues of damage and responsibility among the Parties under Ind. Code § 25-36.5 and 312 Ind. Admin. Code § 14. After completing the opportunity for judicial review under Ind. Code § 4-21.5, this judgment may be enforced in a civil proceeding as a judgment.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. Statement of the Case and Jurisdiction
1. On January 28, 2011, Michael McClure and Teresa McClure (the “McClures”) filed correspondence with the Natural Resources Commission (the “Commission”) in which the McClures contended they were entitled to compensation under Ind. Code § 25-36.5 (sometimes referred to as the “Timber Buyers Act”). The Commission identified technical deficiencies in the correspondence, including the absence of addresses needed for service and ambiguity concerning whether the McClures intended to include David Moore, doing business as DMB Hardwood (“Moore”), as a party. On January 31, 2011, the Commission wrote to the McClures seeking additional information. In correspondence filed February 7, 2011, the McClures sought to address the technical deficiencies.
2. The January 28, 2011correspondence and the February 7, 2011 correspondence referenced in Finding 1 together constituted a complaint under Ind. Code § 4-21.5-3-8 (the “Complaint”) against Benjamin F. Perry, III (“Perry), Dillon Richardson (“Richardson”), and Moore for 21 walnut trees harvested from real estate owned by the McClures at 2320 County Road 750 South, Connersville, Fayette County, Indiana (the “subject real estate”). In the Complaint, the McClures stated they learned from Indiana Conservation Officer William Browne (“CO Browne”) that Perry and Richardson made a verbal agreement to harvest timber from a neighbor’s real estate. Instead of harvesting the neighbor’s trees, the Complaint alleges Perry and Richardson crossed fence lines to enter the subject real estate, harvested the 21 trees, moved the timber to the neighbor’s field, and sold the timber to Moore. The McClures stated they had “no contact with any of these people before the trees were taken.” The McClures “certified these 21 black walnut trees had a value of $14,861.03. We are asking for 3 times the amount.”
3. An administrative law judge was appointed to conduct a proceeding under Ind. Code § 4-21.5 (sometimes referred to as “AOPA”), including rules the Commission adopted at 312 Ind. Admin. Code § 3-1 to assist with implementing AOPA. On February 9, 2011, the administrative law judge issued a “Notice of Prehearing Conference” with service directed to, and made upon, the McClures, Perry, Richardson, and Moore. A courtesy copy of the notice was provided to the Department of Natural Resources (the “DNR”).
4. The initial prehearing conference was scheduled then continued and rescheduled in the DNR’s Brookville Property Office at Brookville, Indiana on March 28, 2011. The McClures, Perry, and Richardson each appeared in person for the initial prehearing conference. Eugene A. Stewart appeared as attorney for Moore. The McClures, Perry, Richardson, and Moore are collectively the “parties”. The Commission has jurisdiction over the persons of each of the parties.
5. The Commission is the “ultimate authority” under AOPA for the Timber Buyers Act and for 312 Ind. Admin. Code § 14, rules adopted to assist with implementation of the Timber Buyers Act. Davies v. Powers d/b/a Powers Logging & Hanover Ins. Co., 12 Caddnar 297 (2011).[1]
6. The Commission has jurisdiction over the subject matter and over the persons of the parties.
7. Pursuant to a “Report of Fifth Telephone Status Conference and Notice of Hearing” issued by the administrative law judge, a hearing of the facts was set for January 24, 2013 in Edinburgh, Indiana. Each of the parties appeared as scheduled and had an opportunity to provide testimony and exhibits. The proceeding is ripe for disposition.
B. Liability of the Respondents to the McClures under the Timber Growers Act
8. Ind. Code § 25-36.5-1-3.2 describes circumstances in which timber growers may recover for timber wrongfully harvested. Among these circumstances, timber growers may recover against a timber buyer or a timber cutter, when there is no written contract with the timber growers for the sale of the timber, and the timber buyer or timber cutter has cut timber or acquired timber from the timber grower without making payment.[2]
9. A “timber grower” includes the owners of Indiana real estate on which timber is located. IC § 25-36.5-1-1. For the subject real estate, the McClures are timber growers. Testimony of Michael McClure, Testimony of Duane A. McCoy, and Claimants Exhibit A.
10. A “timber buyer” means a person engaged in the business of buying timber from timber growers for sawing into limber, processing, or resale. IC § 25-36.5-1-1.
11. Perry is a “timber buyer” as defined by the Timber Buyers Act. Perry Testimony.
12. In the fall of 2010, Perry and Richardson contacted Patricia Whitecotton with the hope of purchasing and harvesting black walnut trees located on her Fayette County property. She told Perry he could “take a look at the trees.”[3] Perry did so and “made her an offer on said timber. We purchased ten trees.” Perry and Richardson harvested these trees from Whitecotton’s property and sold them to Moore.
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13. Richardson told Perry he had seen “some pretty good walnut” on the property adjacent to Whitecotton’s. Richardson said he had a friend, Howard Snyder, who “knew everybody.” Richardson was later directed to John Snyder who Perry understood to be a cousin of Howard Snyder. Richardson told Perry that John Snyder told him timber was recently harvested from his real estate, and he doubted there was additional timber worthy of harvest. Richardson told Perry that he informed John Snyder “there was pretty decent trees on his property.” Richardson and John Snyder later talked and “negotiated out a 50-50 [share] on cutting trees.” Perry and Richardson harvested trees from the site during a four-day period in October 2010. Perry testified he believed the land was owned by John Snyder but learned after the harvest that it was the subject real estate and instead owned by the McClures. Perry Testimony.
14. Based on the sale to Moore of logs harvested by Perry and Richardson from the subject real estate, Perry received $2,500, Richardson $2,000, and John Snyder $4,500[4]. Perry estimated his profit from the sale was approximately $2,000. Testimony of Perry on cross examination by McClures.
15. With respect to timber purchased and harvested from Whitecotton’s property and from the subject real estate in the fall of 2010, Perry acted as a timber buyer. Perry Testimony, Claimants Exhibit A, and Claimants Exhibit B.
16. A “timber cutter” means a person who cuts timber but is not a timber buyer. IC § 25-36.5-1-3.2.
17. In the fall of 2010, Richardson assisted Perry with harvests from land owned by Whitecotton and from the subject real estate. He was a “timber cutter” as defined by the Timber Buyers Act. Perry Testimony and Claimants Exhibit A.
18. The McClures were uninterested in selling timber from the subject real estate. They neither approached nor were they approached by Richardson or Perry to purchase their timber. Michael McClure testimony. The harvest of timber by Richardson and Perry from the subject real estate was unauthorized.
19. Under the Timber Buyers Act, both Richardson and Perry are liable to the McClures for timber harvested from the subject real estate.
20. Moore testified he is a “logger slash log-buyer” and had been in this business for more than ten years. He sometimes purchases standing timber and once purchased standing timber from Whitecotton. He is a “timber buyer” as defined by the Timber Buyers Act. Moore Testimony and Claimants Exhibit A.
21. Moore did not act in the capacity of a timber buyer with respect to the harvest at issue on the subject property. Moore purchased logs from Perry at a site outside the subject real estate. He was informed the logs were harvested from John Snyder. Moore had no involvement in cutting the timber, and he did not direct either Perry or Richardson in their enterprise. Testimony of Conservation Officer William Browne. Moore had no role in negotiations for the purchase of timber from John Snyder. Moore was not contacted until Perry and Richardson pulled the trees from the woods and laid them in a field owned by John Snyder. Cross examination of Perry by Moore and Moore Testimony.
22. With respect to the timber harvested from the subject property, Moore did not act as a timber buyer.
23. On cross examination by Michael McClure, Moore testified he initially made a profit from the sale of logs that were harvested by Perry and Richardson from the subject real estate (and which Moore had purchased from Perry and Richardson). He offered the McClures $1,500, an amount which Moore believed was his approximate profit from the sale. The McClures rejected the offer. With expenses incurred in defending the McClures’ claim in this proceeding, and for loss of business opportunity, Moore believed he no longer enjoyed a profit.
24. Moore’s involvement with logs harvested from the subject real estate does not place him within a category that is identified in IC § 25-36.5-1-3.2(e) as potentially liable under the Timber Buyers Act. The McClures do not offer a legal basis on which the Commission may hold him liable. The evidence does not support a finding that Moore was unjustly enriched by his purchase of timber harvested from the subject real estate and later sold as lumber. The McClures have not established Moore is liable for any amount under the Timber Buyers Act.
C. Valuation of Harvested Timber
25. The Timber Buyers Act authorizes compensation for unauthorized timber harvests. “Timber” refers to “trees, standing or felled, and logs which can be used for sawing or processing into lumber for building or structural purposes or for the manufacture of any item.” IC § 25-36.5-1-1. Following a harvest, compensation can be based properly on a determination of stumpage value. Fletcher v. A & S Logging, et al., 10 Caddnar 315 (2006) and IC § 25-36.5-1-3.2.
26. Duane A. McCoy is the Timber Buying Licensing Forester for the Division of Forestry of the Department of Natural Resources. On November 3, 2010, McCoy examined trees that were cut from the subject property. He identified 21 black walnut trees and estimated these trees contained 6,632 board feet with a total stumpage value of $14,861.03. The valuation was “based on the 2010 Price Report for Delivered Saw logs by Dr. William Hoover of Purdue University.” McCoy Testimony and Claimants Exhibit C.
27. When McCoy examined the 21 black walnut trees, the logs were gone. He observed the tops and stumps of the trees. He measured the tops, the distance from the butt marks or the stumps to the tops, and the stumps. The calculations of board feet are estimates. McCoy cross examination by Moore.
28. Ronald T. Urdal, Judge of the Fayette Superior Court, entered on February 21, 2012 a Sentencing Order in State of Indiana vs. Dillon Richardson, Cause No. 21D01-1011-FD-681. Richardson pleaded guilty to theft, and to acting as a timber agent without a license under the Timber Buyers Act, both Class D Felonies, with respect to harvest of the black walnut trees from the subject real estate. As restitution, the Fayette Superior Court ordered Richardson to pay the McClures $15,961. Richardson was to pay $8,000 by August 18, 2012 and the balance by February 21, 2013. Commission Exhibit I. See to the same effect is a Plea Agreement signed by Richardson on November 29, 2011. Commission Exhibit II.
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29. The Fayette Superior Court entered on June 26, 2012 a Sentencing Order in State of Indiana vs. Benjamin Perry III, Cause No. 21D01-1011-FD-682. Perry pleaded guilty to cutting timber not purchased, a Class D Felony, with respect to harvest of the black walnut trees from the subject real estate. As restitution, the Fayette Superior Court ordered Perry to pay the McClures $14,861.03. The deadline for paying restitution to the Fayette County Clerk was set at 30 days before the end of probation. Commission Exhibit IV.[5]
30. A reasonable inference is that the Fayette Superior Court adopted McCoy’s November 3, 2010 appraisal in determining appropriate restitution in the criminal actions against Richardson and Perry.
31. Perry and Richardson harvested more timber than was sold by Perry to Moore. Browne Testimony and Michael McClure Testimony. Their testimonies did not include comparative numbers, either in terms of trees or board feet. Perry testified he and Richardson together cut what Perry believed were 20 trees on the subject real estate. “It must have been 21, and we ended up leaving a log in the woods by mistake.” Perry Testimony.
32. Perry and Richardson harvested more trees from the subject real estate than they sold to Moore. The valuation of logs purchased by Moore from Perry and Richardson is irrelevant to determining the valuation of trees harvested from the subject real estate.
33. Perry testified he intended to obtain an independent appraisal of the timber harvest from the subject real estate, but he did not.
34. The only creditable evidence for the value of timber harvested from the subject real estate is the estimate of $14,861.03 made by Duane McCoy.
35. The value of timber harvested by Perry and Richardson from the subject real estate is found to be $14,861.03.
D. Triple Stumpage Value
36. The McClures seeks relief under Ind. Code § 25-36.5-1-3.2(f)(2) for “Damages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriated without payment.” This remedy is sometimes referred to as the “treble-damages clause”.
37. Before 1993, the treble-damages clause provided a timber buyer who cuts “any timber which he has not previously purchased shall, in lieu of the normal penalties” must pay the timber grower “three (3) times the stumpage value of the timber.”
38. The purpose of the treble-damages clause is “to insure that timber buyers will exercise care in cutting of timber and to protect landowners from careless felling of their timber.” Wright v. Reuss, 434 N.E.2d 925, 929.
39. Amendments to the Timber Buyer Act in 1993 made several changes. Among these was to replace the mandatory structure for treble stumpage damage with a new arrangement, by which a timber grower may seek treble damages, through an adjudicative proceeding before the Commission. O’Neal v. Bowers and Spurgeon, 13 Caddnar 64, 67 (2012) and Stell v. Allen, d/b/a, A& S Logging, 12 Caddnar 124, 136 (2009).
40. Since 1993, the Commission has required less than the full impact of the treble-damages clause only if treble damages would cause an injustice. O’Neal v. Bowers and Spurgeon citing Hagan, et al. v. Lewis, Cincinnati Insurance Co., Martin and US Fidelity & Guaranty Co., 7 Caddnar 146 (1996); Guy W. Pollock v. Dale Coats, 8 Caddnar 124 (1999); Gallien v. Sloan Logging, Pendley & Zurich N. Am., 9 Caddnar 40 (2002); and Booker, et al v. Mason and Shorter, 10 Caddnar 1 (2005).
41. Perry and Richardson contend their harvest of timber from the subject real estate was not done with the intent to deprive the McClures of their property and was not malicious. Their positions are difficult to square with guilty pleas in the Fayette Superior Court to felonies in association with the harvest. But even construing the evidence most favorably to Perry and Richardson, they are not relieved from liability under the treble-damages clause of the Timber Buyers Act.
42. The treble damages clause does not allow a timber buyer the defense of mistake of fact as to ownership of real estate where timber is located. Neither is a timber grower required to show the person who wrongfully cut timber acted with malicious intent. Beeman v. Marling, 646 N.E.2d 382 (Ind. App. 1995).
43. A timber buyer is responsible to apply due diligence in determining whether a described parcel of real estate is the site where a timber harvest is to occur. If the services of a registered land surveyor, a licensed attorney, or another professional are required to be assured the timber buyer knows who owns a parcel of real estate, then obtaining those services is an element of due diligence. O’Neal v. Bowers and Spurgeon, p. 67.
44. The record is devoid of evidence on which a reasonable conclusion could be drawn that Perry exercised due diligence to determine John Snyder was the owner of the subject real estate. Perry never met with Snyder and relied entirely upon Richardson, a timber cutter, to communicate with Snyder and to negotiate a contract for the purchase and sale of timber. Nothing in the record identifies any effort by Richardson to determine ownership of the subject real estate. If any inference can be drawn from Richardson’s conversation with John Snyder, the inference is that Snyder was not the owner. Snyder told Richardson his land had been recently harvested, and he doubted marketable black walnuts remained. On cross examination by McClure, Perry conceded the determination by Richardson and he to conclude Snyder was the owner and to harvest timber from the subject real estate was “careless on our part.”
45. Perry and Richardson are jointly and severally liable to the McClures for three times the value of timber harvested from the subject real estate. The value of the timber was $14,861.03. Perry and Richardson are jointly and severally liable to the McClures in the amount of $44,583.09.
46. The parties stipulated the McClures have received $4,020 which should be credited to the liability described in the previous Finding. For a history of the $4,020 amount, see Footnote 4. During the hearing, Michael McClure referenced an additional $15 that should be credited. The amount of $4,035 should be credited to the liability of Perry and Richardson. With this credit, the McClures should be granted an administrative judgment against Perry and Richardson, which is joint and several, in the amount of $40,548.09. Any subsequent amount received and delivered to the McClures as restitution, through a Sentencing Order by the Fayette Superior Court in Cause No. 21D01-1011-FD-681 or in Cause No. 21D01-1011-FD-682, should be credited to both Perry and Richardson.
[1] As provided in IC § 4-21.5-3-32, an agency is required to index final orders and may rely upon indexed orders as precedent. The Commission adopted Caddnar in November 1988 as its index of agency decisions.
[2] IC § 25-36.5-1-3.2(e) also identifies the following as other persons who may be joined in a proceeding: another landowner, an adjacent landowner to the land from which timber was cut, a consultant receiving a fee for services related to the timber, a land surveyor, and the DNR if the agency has a relationship to the site or to the subject of a complaint. No person identified by these descriptions was a party here.
[3] The court reporter has not been requested to prepare a transcript of the hearing. If a witness is quoted in these Findings, the statement is as nearly verbatim as the administrative law judge could determine. A stutter or verbal misdirection may be omitted. If a transcript is subsequently prepared that indicates different wording, the transcript constitutes the record and a quotation here shall be considered to paraphrase witness testimony.
[4] Snyder informed CO Browne on October 25, 2010 that he received $4,020 and “still had the money available in the original envelope given to him” by Richardson. On instructions from the Fayette County Deputy Prosecutor to “seize the $4,020 given to John Snyder from Dillon Richardson”, CO Browne went to Snyder’s residence the following day and took possession of the envelope and the $4,020. In an incident report, CO Browne wrote “Snyder was very cooperative in handing over the $4,020, stating that if the trees were not his, he had no right to the money. He was issued a property receipt.” Claimants Exhibit A. Upon order of the Fayette Superior Court, the DNR subsequently delivered the $4,020 to the Fayette County Clerk. Claimants Exhibit IV. John Snyder is not a party and did not testify at hearing. There was no evidence that Snyder profited ultimately from the timber harvest on the subject real estate.
[5] During a telephone status conference, the parties suggested the difference between $15,961 ordered from Richardson and $14,861.03 ordered from Perry, in restitution to the McClures, was that the Fayette Superior Court considered damages caused by Richardson to the subject real estate during the timber harvest. No direct evidence was received concerning the reason or reasons for differing amounts, and the McClures did not offer evidence at hearing concerning damages to the subject real estate during the harvest. With respect to this proceeding, the difference in restitution ordered from Richardson and that ordered from Perry is immaterial.