Michael Fish v. 2444 Acquisitions, LLC , 2015 Ind. App. LEXIS 740 ( 2015 )

Dec 09 2015, 6:06 am
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Mark J. Crandley Jon R. Pactor
Barnes & Thornburg, LLP Indianapolis, Indiana
Indianapolis, Indiana
Richard Brad Gonon
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Michael Fish, December 9, 2015
Appellant, Court of Appeals Cause No.
49A02-1502-MF-100
v. Appeal from the Marion Superior
Court
2444 Acquisitions, LLC, The Honorable Michael Keele,
Appellee. Judge
Trial Court Cause No.
49D07-1103-MF-10806
Barnes, Judge.
Case Summary
[1] Michael Fish appeals the trial court’s grant of a motion for relief from judgment
filed by 2444 Acquisitions, LLC (“Acquisitions”). We reverse.
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Issue
[2] Fish raises several issues, one of which we find dispositive and restate as
whether the trial court properly granted Acquisitions’s motion for relief from
judgment.
Facts
[3] Fish obtained a mortgage on properties owned by Acquisitions, and in March
2011, Fish filed a complaint against Acquisitions and others to foreclose the
mortgage. In July 2011, the parties entered into an agreed entry, which the trial
court approved. The agreed entry granted Fish a judgment in the amount of
$263,308.73 plus interest and foreclosed the mortgage.
[4] At some point prior to the sheriff’s sale, Acquisitions apparently filed a
bankruptcy action. In August 2014, Fish testified before the bankruptcy court.
At the time, Fish testified that, prior to 2011, he transferred the mortgage to
Indianapolis Restaurant Ventures, LLC, (“IRV”). According to Fish, Fish
owned forty percent of IRV, and Ruben Pazmino’s family trust owned sixty
percent of IRV. The bankruptcy court raised concerns over the mortgage being
held by IRV but Fish holding the judgment of foreclosure.
[5] In December 2014, Acquisitions filed a motion for relief from judgment of the
foreclosure and agreed entry. Acquisitions argued in part that the judgment
was void because “Plaintiff failed to accurately represent his interest in the
mortgage and failed to name a necessary party who holds an interest in the
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mortgage.” App. p. 9. Acquisitions requested that the judgment be vacated
and set aside.
[6] Fish filed an objection and argued that he did not “ever transfer to any other
party his mortgage interest relative to said Judgment” and that he remained the
real party in interest. Id. at 12. Fish also argued that the motion was based on
misrepresentation and was not timely under Indiana Trial Rule 60(B). Fish
further argued, with respect to Acquisitions’s position that the judgment was
void, that the motion was not filed within a reasonable time pursuant to
Indiana Trial Rule 60(B).
[7] At a hearing on the motion for relief from judgment, Fish testified that, in 2010,
Fish and Pazmino formed IRV and entered into an operating agreement. The
purpose of IRV was to hold the mortgage on the properties at issue in this case.
They later changed their minds about transferring the mortgage to IRV.
According to Fish, Pazmino paid Fish, not IRV, $118,000 as an investment in
the mortgage. Fish testified that he misspoke at the bankruptcy hearing.
[8] The trial court found that Fish testified before the bankruptcy court that “he
transferred the mortgage at issue in this case to another entity, [IRV], in late
2010 or 2011.” App. p. 6. The trial court found that IRV was a real party in
interest and should have been named as a party to this matter. Thus, the trial
court found that “the judgment and agreed entry entered by the Court on or
about July 5, 2011 is void and that Defendant’s verified motion for relief was
filed within a reasonable time per Ind. Trial Rule 60(B).” Id. Fish now appeals.
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Analysis
[9] Fish argues that the trial court abused its discretion by granting Acquisitions’s
motion for relief from judgment under Indiana Trial Rule 60(B). The propriety
of relief under Trial Rule 60(B) is a matter entrusted to the trial court’s equitable
discretion. Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 812 (Ind. 2012). An
abuse of that discretion may occur if the trial court’s decision is clearly against
the logic and effect of the facts and circumstances before it or if the trial court
has misinterpreted the law. Id. Although this court normally employs an abuse
of discretion standard in reviewing a trial court’s ruling on a motion to set aside
a judgment, when a motion for relief from judgment is made pursuant to Trial
Rule 60(B)(6) alleging that the judgment is void, discretion on the part of the
trial court is not employed because whether the judgment is void or valid is a
question of law. Deutsche Bank Nat. Trust Co. v. Harris, 985 N.E.2d 804, 813
(Ind. Ct. App. 2013). The burden is on the movant to establish grounds for
Trial Rule 60(B) relief. In re Paternity of P.S.S., 934 N.E.2d 737, 740 (Ind. 2010).
[10] Trial Rule 60(B) provides:
On motion and upon such terms as are just the court may relieve
a party or his legal representative from a judgment, including a
judgment by default, for the following reasons:
(1) mistake, surprise, or excusable neglect;
(2) any ground for a motion to correct error, including
without limitation newly discovered evidence, which by
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due diligence could not have been discovered in time to
move for a motion to correct errors under Rule 59;
(3) fraud (whether heretofore denominated intrinsic or
extrinsic), misrepresentation, or other misconduct of an
adverse party;
(4) entry of default or judgment by default was entered
against such party who was served only by publication
and who was without actual knowledge of the action
and judgment, order or proceedings;
(5) except in the case of a divorce decree, the record fails to
show that such party was represented by a guardian or
other representative, and if the motion asserts and such
party proves that
(a) at the time of the action he was an infant or
incompetent person, and
(b) he was not in fact represented by a guardian or
other representative, and
(c) the person against whom the judgment, order or
proceeding is being avoided procured the judgment
with notice of such infancy or incompetency, and,
as against a successor of such person, that such
successor acquired his rights therein with notice that
the judgment was procured against an infant or
incompetent, and
(d) no appeal or other remedies allowed under this
subdivision have been taken or made by or on
behalf of the infant or incompetent person, and
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(e) the motion was made within ninety [90] days after
the disability was removed or a guardian was
appointed over his estate, and
(f) the motion alleges a valid defense or claim;
(6) the judgment is void;
(7) the judgment has been satisfied, released, or discharged, or
a prior judgment upon which it is based has been reversed
or otherwise vacated, or it is no longer equitable that the
judgment should have prospective application; or
(8) any reason justifying relief from the operation of the
judgment, other than those reasons set forth in sub-
paragraphs (1), (2), (3), and (4).
The motion shall be filed within a reasonable time for reasons
(5), (6), (7), and (8), and not more than one year after the
judgment, order or proceeding was entered or taken for reasons
(1), (2), (3), and (4). A movant filing a motion for reasons (1),
(2), (3), (4), and (8) must allege a meritorious claim or defense.
A motion under this subdivision (B) does not affect the finality of
a judgment or suspend its operation. This rule does not limit the
power of a court to entertain an independent action to relieve a
party from a judgment, order or proceeding or for fraud upon the
court. Writs of coram nobis, coram vobis, audita querela, and
bills of review and bills in the nature of a bill of review, are
abolished, and the procedure for obtaining any relief from a
judgment shall be by motion as prescribed in these rules or by an
independent action.
[11] Acquisitions’s motion was filed more than one year after the agreed judgment
was entered. Consequently, Acquisitions could not be granted relief under
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sections (1), (2), (3), or (4), which include relief based on fraud,
misrepresentation, or other misconduct of an adverse party. Instead,
Acquisitions argued in its motion for relief from judgment that it was entitled to
relief because the judgment was “void.” App. p. 9.
[12] Fish argues that a real party in interest claim does not render a judgment void.
In general, “‘[a] void judgment is a nullity, and typically occurs where the court
lacks subject matter or personal jurisdiction.’” Seleme v. JP Morgan Chase Bank,
982 N.E.2d 299, 304 (Ind. Ct. App. 2012) (quoting 22B STEPHEN E. ARTHUR,
INDIANA PRACTICE § 60.2 (2012)), trans. denied; see also Moore v. Terre Haute First
Nat’l Bank, 582 N.E.2d 474, 477 (Ind. Ct. App. 1991) (“If a judgment is void,
whether from faulty process or otherwise, a T.R. 60(B) claimant need not show
a meritorious defense or claim.”).
[13] The parties make no argument that personal jurisdiction or faulty process is an
issue here. Rather, on appeal, Acquisitions claims that this “case does involve
the court’s jurisdiction” and argues that the real party in interest requirement is
comparable to standing. Acquisitions’s argument fails for several reasons.
First, standing and the real party in interest rule are separate concepts. Hammes
v. Brumley, 659 N.E.2d 1021, 1029 (Ind. 1995). “Standing refers to the question
of whether a party has an actual demonstrable injury for purposes of a lawsuit.”
Id. “A real party in interest, on the other hand, is the person who is the true
owner of the right sought to be enforced.” Id. at 1030. The real party in interest
“is entitled to the fruits of the action.” Id.
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[14] Neither concept implicates subject matter jurisdiction. In K.S. v. State, 849
N.E.2d 538, 540 (Ind. 2006), our supreme court clarified:
Like the rest of the nation’s courts, Indiana trial courts possess
two kinds of “jurisdiction.” Subject matter jurisdiction is the
power to hear and determine cases of the general class to which
any particular proceeding belongs. Personal jurisdiction requires
that appropriate process be effected over the parties. Where these
two exist, a court’s decision may be set aside for legal error only
through direct appeal and not through collateral attack. Other
phrases recently common to Indiana practice, like “jurisdiction
over a particular case,” confuse actual jurisdiction with legal
error, and we will be better off ceasing such characterizations.
[15] The K.S. court went on to explain, “Attorneys and judges alike frequently
characterize a claim of procedural error as one of jurisdictional dimension.”
K.S., 849 N.E.2d at 541. “‘The question of subject matter jurisdiction entails a
determination of whether a court has jurisdiction over the general class of
actions to which a particular case belongs.’” Id. at 542 (quoting Troxel v. Troxel,
737 N.E.2d 745, 749 (Ind. 2000)). “Real jurisdictional problems would be, say,
a juvenile delinquency adjudication entered in a small claims court, or a
judgment rendered without any service of process. Thus, characterizing other
sorts of procedural defects as ‘jurisdictional’ misapprehends the concepts.” 1 Id.
1
Acquisitions relies upon Pence v. State, 652 N.E.2d 486, 488 (Ind. 1995), which held “[t]he standing
requirement is a limit on the court’s jurisdiction which restrains the judiciary to resolving real controversies in
which the complaining party has a demonstrable injury.” However, Pence predated K.S., 849 N.E.2d at 540-
42, which clarified jurisdiction concepts. Consequently, Pence is not persuasive here.
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[16] The trial court here clearly had jurisdiction over the general class of actions to
which a particular case belongs, i.e., a foreclosure action. Consequently,
subject matter jurisdiction is not implicated here. Rather, “a party’s legal
capacity . . . to assert its claim” implicates legal error, not jurisdiction over the
subject matter. Family Dev., Ltd. v. Steuben Cnty. Waste Watchers, Inc., 749
N.E.2d 1243, 1255 n.10 (Ind. Ct. App. 2001) (internal citations omitted). We
reached a similar result in Warner v. Young America Volunteer Fire Department,
164 Ind. App. 140, 326 N.E.2d 831 (1975). There, a defendant argued in a
motion for relief from judgment that the plaintiff had filed its action as “The
Young America Volunteer Fire Department,” but its true name was “Young
America Vol. Fire Department, Inc.” Warner, 164 Ind. App. 147, 326 N.E.2d
at 836. Although the defendant argued that the judgment was void, we held
that the trial court had jurisdiction and that the plaintiff’s capacity to sue could
not be raised for the first time in a motion for relief from judgment “under the
guise that the judgment is void.” Id. at 149, 326 N.E.2d at 836; see also K.S. v.
R.S., 669 N.E.2d 399, 404-05 (Ind. 1996) (holding that the failure to add a
necessary party resulted in a voidable, but not void judgment).
[17] We also note that Indiana Trial Rule 17 discusses real parties in interest and
provides:
No action shall be dismissed on the ground that it is not
prosecuted in the name of the real party in interest until a
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reasonable time after objection has been allowed for the real
party in interest to ratify the action, or to be joined or substituted
in the action. Such ratification, joinder, or substitution shall have
the same effect as if the action had been commenced initially in
the name of the real party in interest.
Consequently, a real party in interest argument is capable of being waived,
unlike a subject matter jurisdiction argument. See Town Council of New Harmony
v. Parker, 726 N.E.2d 1217, 1223 n.8 (Ind. 2000) (holding that lack of subject
matter jurisdiction cannot be waived), amended on reh’g in part, 737 N.E.2d 719
(Ind. 2000).
[18] We conclude that the agreed judgment is not void under Indiana Trial Rule
60(B)(6). This is not a case where the trial court lacked subject matter or
personal jurisdiction. Consequently, the trial court erred when it determined
that Acquisitions was entitled to relief under Indiana Trial Rule 60(B)(6).
[19] Acquisitions also argues that the trial court properly voided the judgment for
misrepresentation, fraud, and fraud on the court. These allegations fall under
Indiana Trial Rule 60(B)(3), and a motion requesting relief under Rule 60(B)(3)
must be filed within one year of the judgment. Acquisitions’s motion was not
timely under Rule 60(B)(3). See, e.g., In re Adoption of Infant Female Fitz, 778
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N.E.2d 432, 436 (Ind. Ct. App. 2002) (noting that a fraud on the court claim
was subject to the one year time limit of Rule 60(B)). 2
[20] Next, Acquisitions seems to argue that it was entitled to relief under Trial Rule
60(B)(8), which provides for relief based on “any reason justifying relief from
the operation of the judgment, other than those reasons set forth in sub-
paragraphs (1), (2), (3), and (4).” Relief under Trial Rule 60(B)(8) is not limited
by the one year after the judgment limitation; rather, it must be filed within a
reasonable time. “[S]ubdivision (8) is not available if the grounds for relief
properly belong in another of the enumerated subdivision of T.R. 60(B).”
Weppler v. Stansbury, 694 N.E.2d 1173, 1176 (Ind. Ct. App. 1998). The grounds
for relief here properly belong in Rule 60(B)(3) as a misrepresentation or fraud
allegation. Acquisitions cannot bypass the one year time limitation by merely
arguing that Rule 60(B)(8) applies.
[21] Finally, Acquisitions also argues that, if we reverse the trial court’s order, we
should remand for the trial court to redetermine the balance of the judgment.
Acquisitions argued in its motion for relief from judgment that the post-
judgment interest was incorrect and that Fish had misrepresented the amount
paid by Acquisitions toward the mortgage balance. Both of these allegations
2
In Jahangirizadeh v. Pazouki, 27 N.E.3d 1178 (Ind. Ct. App. 2015), we discussed the three ways to bring a
fraud on the court claim, which include a Trial Rule 60(B)(3) claim, an independent action for fraud, and
invoking the inherent power of a court to set aside its judgment if procured by fraud on the court. There is no
indication here that Acquisitions was bringing an independent action for fraud or invoking the trial court’s
inherent power to set aside a judgment procured by fraud on the court.
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fall within Rule 60(B)’s one year time limitation. Consequently, these
allegations do not warrant relief under Rule 60(B).
Conclusion
[22] We reverse the trial court’s grant of Acquisitions’s motion for relief from
judgment pursuant to Indiana Trial Rule 60(B).
[23] Reversed.
[24] Kirsch, J., and Najam, J., concur.
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