Dave Stafford for www.theindianalawyer.com

Lawyers for a gun store sued for making an illegal straw sale of a firearm that was used to shoot an Indianapolis police officer argued Wednesday that Indiana gun sellers are shielded from civil lawsuits even when they break the law.

“The General Assembly made that decision. It drew that bright line because it wanted to reach that legislative goal,” argued Chicago attorney James Vogts, who represents the National Shooting Sports Foundation. That group is a friend of the court supporting the KS&E Guns store in defense of a lawsuit brought by Indianapolis Metropolitan Police Department officer Dwayne Runnels.

Vogts told justices shielding gun sellers and manufacturers was “a policy decision (the General Assembly) had the authority to make, they had to the right to make, and they did make it.”

Runnels’ civil case to date far has survived KS&E’s motion for judgment on the pleadings, in which its primary defense was Indiana Code 34-12-3-3(2). Passed in 2004, the immunity statute aimed to shield gunmakers and sellers from civil liability. But the majority of an Indiana Court of Appeals panel ruled in Runnels’ favor in March, holding the law doesn’t provide immunity to gunmakers or sellers from lawsuits resulting from their own unlawful acts.

The statute “must be construed the way the Court of Appeals construed it,” argued Jonathan Lowy of the Brady Center to Prevent Gun Violence in Washington, D.C., who represented Runnels. Lowy told justices that reading the statute as KS&E suggests to shield gun dealers from liability for criminal acts would produce an absurd result, derogate common law, overturn 130 years of precedent, and potentially deprive Runnels of his constitutional rights. He said under KS&E’s reading, gun sellers would be protected “even if their business model is supplying guns to criminals.”

Runnels was shot in 2011 by Demetrious Martin, a suspect in a shooting and robbery. Runnels returned fire, killing Martin, whose gun was traced to its purchase from KS&E Guns in Indianapolis a couple months prior.

A felon, Martin could not have purchased the gun, but KS&E sold it to Tarus Blackburn after he and Martin visited the store together, where Martin told store personnel it was the weapon he wanted. Blackburn later bought the gun and sold it to Martin for a $50 markup in the store parking lot. Blackburn later pleaded guilty to falsifying documents to buy the gun.

Runnels’ case has drawn the amicus support of police chiefs, police unions, and the city of Gary.

Justices Steven David and Robert Rucker provided extreme scenarios, such as a gun dealer knowingly selling firearms to someone supplying a terrorist or a person intent on carrying out mayhem. Rucker used the example of a school shooting during the argument that served as an educational program for about 60 teachers from around the state. They pressed Christopher Renzulli, who also argued for KS&E, on whether a gun seller in such cases would ever face civil liability under KS&E’s reading of the law.

Such scenarios represented the “ultimate extreme,” Renzulli said, acknowledging his client’s position there would be “no exception” in the immunity statute even if a gun sale was illegal.

“The plain language of the statute requires immediate dismissal of this case,” Renzulli said. He said to read the statute otherwise would “eviscerate” its purpose.

Chief Justice Loretta Rush focused on other charges in Runnels’ complaint, such as nuisance and conspiracy, implying these should not be read out of immunity statute. Justices Mark Massa and Geoffrey Slaughter raised the most questions for Runnels’ counsel, Lowy.

Massa said Runnels doesn’t have a claim for damages until the gun is criminally misused and the law says a person cannot maintain an action against a gunmaker or seller. “How is that not clear?” Massa said.

Lowy said actions for the criminal actions of a seller aren’t specifically barred, and reading the law so would raise “serious constitutional issues” for victims such as Runnels.

Wednesday’s oral argument in KS&E Sports, et al. v. Dwayne H. Runnels, 49S02-1606-CT-00349, may be viewed here.

Kayleigh Colombo for www.theindianalawyer.com

The legal battle between the Indiana Alcohol & Tobacco Commission and Spirited Sales LLC — an affiliate of Monarch Beverage Co. — is escalating, despite a Marion County judge’s ruling last week that Spirit is entitled to become a liquor wholesaler in the state.

The state, represented by the Indiana Attorney General’s Office, filed a motion on Tuesday asking Special Judge Heather Welch to stay her decision while it appeals. In her Aug. 24 ruling, Welch ordered the ATC to grant Spirited a liquor permit, finding that the commission was “arbitrary and capricious” in its decision to deny Spirited Sales the permit in 2014.

The state argues that granting Spirited Sales a permit to wholesale liquor would “effectively grant Spirited Sales a competitive market advantage not enjoyed by all other similarly situated industry stakeholders.”

“The ATC will be placed in the impossible position of trying to evaluate and act on current and future permit applications which would have been unmeritorious … while the legal questions in this case remain undecided by an appellate court,” according to the state’s filing.

The parties — which have been at odds for years as Monarch and its affiliate tried to enter the liquor wholesaling business — are scheduled to face off at an emergency hearing scheduled for Wednesday.

In a filing Thursday, Spirited asked the court to hold the ATC in contempt, saying it is “deliberately delaying its execution of the court’s order and ultimately … failing to comply with it.”

Spirited said that after last week’s court decision, the ATC refused to grant the permit that would have allowed it to start its business — instead saying that first Spirited needed to comply with an inspection by the Indiana State Excise Police. Days after Spirited’s lawyers scheduled the inspection, the state filed the motion to stay the ruling.

“Based on the Commission’s and its counsel’s misleading representations, Spirited declined to seek the Court’s assistance with enforcing its Order, participated in good faith in the inspection, and was prevented at every turn from obtaining its permit and commencing business as a liquor wholesaler,” according to Spirited’s filing.

The filing added: “Despite the Court’s clear directive to the Commission, the Commission has ignored and misled Spirited’s counsel, reneged on its own counsel’s promises, and let the curtain slip on its ruse to further delay its obligation to issue Spirited the permit while it prepared its filings requesting a stay of the Court’s Order and noticing its appeal.”

The latest developments follow an already rocky history between Monarch, the state and Monarch’s competitors.

Monarch Beverage has for years tried to get into the spirits business — including unsuccessful lobbying attempts at the Legislature to change Indiana’s alcohol regulations that forbid a beer wholesaler from also wholesaling liquor.

Spirited contends it does not violate that prohibition because it is a separate corporate entity from Monarch.

The two firms do have a lot in common, however. The same shareholders who own Monarch also own EF Transit Inc., a transportation firm that owns Spirited Sales. Phil Terry is CEO of both Monarch and EF Transit.

The ATC shot down Spirited’s permit request in 2014, arguing that state law prevents wholesalers “from directly or indirectly having an interest in both a beer wholesaler’s permit and a liquor wholesaler’s permit.”

But in her ruling, Welch said the ATC’s decision seemed “disingenuous,” since it had a long history of granting various types of alcohol permits to companies in similar situations.

Emails released as part of the latest court case show how Monarch’s attempts over the years to wholesale liquor often met with disapproval by officials at the ATC and in the Indiana Governor’s Office.

In Welch’s ruling, the court called emails between the state, the ATC and Monarch’s competitors “disturbing and inappropriate,” and said they “challenge the integrity of the application process and raise questions about the [ATC’s] willingness to serve all citizens of Indiana equally, fairly, and without bias.”