Arkla Industries, Inc. v. Columbia Street Partners, Inc. and Columbia Street Partners Remediation Trust , 95 N.E.3d 194 ( 2018 )

ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEES
Daniel J. Deeb G. Daniel Kelley
Schiff Hardin LLP Samuel B. Gardner
Chicago, Illinois Ice Miller LLP
Indianapolis, Indiana
William R. Peterson
Craig Stanfield David Miller
Morgan, Lewis & Bockius LLP Newburgh, Indiana
Houston, Texas
FILED
ATTORNEYS FOR DEFENDANT BELOW Mar 08 2018, 10:52 am
John W. Woodard, Jr. CLERK
Jordan M. White Indiana Supreme Court
Court of Appeals
and Tax Court
Wyatt, Tarrant & Combs, LLP
Louisville, Kentucky
IN THE
COURT OF APPEALS OF INDIANA
Arkla Industries, Inc., Arkla Inc. March 8, 2018
by and through its successor by Court of Appeals Case No.
mergers CenterPoint Energy, 87A01-1709-CC-2140
Inc., Appeal from the Warrick Circuit
Appellants-Defendants, Court
The Honorable Greg A. Granger,
Bendix-Westinghouse Judge
Automotive Air Brake Trial Court Cause No.
Company, by and through its 87C01-1608-CC-905
successor by mergers Honeywell
International, Inc.
Defendant below,
v.
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 1 of 12
Columbia Street Partners, Inc.
and Columbia Street Partners
Remediation Trust,
Appellees-Plaintiffs.
Robb, Judge.
Case Summary and Issue
[1] The trial court denied the motion of Arkla Industries, Inc., and Arkla, Inc. by
and through its successor by mergers CenterPoint Energy, Inc. (collectively,
“Centerpoint”), to transfer this case to a preferred venue pursuant to the
provisions of Indiana Trial Rules 12 and 75. Centerpoint appeals, raising the
sole issue of whether the trial court clearly erred in concluding it waived its
right to seek a preferred venue. Concluding the trial court’s order denying
Centerpoint’s motion was clear error because Centerpoint made a proper
motion raising the defense of improper venue, we reverse and remand to the
trial court to grant the motion and transfer this case to a preferred venue.
Facts and Procedural History
[2] On August 4, 2016, Columbia Street Partners, Inc., and Columbia Street
Partners Remediation Trust (collectively, “Columbia”), filed in Warrick Circuit
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 2 of 12
Court a complaint for damages for environmental contamination on real
property it owns in Evansville. Columbia named the following as defendants
who allegedly caused or contributed to the contamination: Centerpoint and
Bendix-Westinghouse Automotive Air Brake Company, by and through its
successor by mergers Honeywell International, Inc. (“Honeywell”). The trial
court granted two unopposed motions for extension of time for the defendants
to respond to the complaint, giving them until October 21, 2016, to do so. In
seeking Columbia’s agreement to an extension, Centerpoint informed
Columbia it might be filing a motion to transfer venue. On October 20, 2016,
however, before Centerpoint had filed any responsive pleading or other motion
in the trial court, Honeywell removed the case to the United States District
Court for the Southern District of Indiana. Honeywell alleged as grounds for
removal the complete diversity of the parties and the amount in controversy.
Honeywell also alleged that it had “met and conferred with” Centerpoint,
which consented to removal. Appellants’ Appendix, Volume II at 62. The only
document Centerpoint filed in federal court was its answer to the complaint as
required.
[3] Columbia filed a motion to remand the case to Warrick County challenging the
complete diversity of the parties. Centerpoint did not oppose the motion. On
May 23, 2017, the district court issued an order finding it did not have diversity
jurisdiction over the case and granting the motion to remand to state court. The
district court also ordered Honeywell to pay Columbia’s attorney fees, which is
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 3 of 12
allowed “only where the removing party lacked an objectively reasonable basis
for seeking removal.” Id. at 131.
[4] On May 25, 2017, Centerpoint filed a motion in Warrick Circuit Court to
transfer the case to Vanderburgh County, a preferred venue pursuant to Indiana
Trial Rule 75(A). Columbia objected to the transfer of venue because
Centerpoint “agreed to and did engage in baseless litigation . . . and other
tactics to delay this case . . . and by such conduct have waived and are estopped
to now 9 months later seek to transfer venue.” Id. at 133.
[5] Following a hearing on the motion to transfer venue and the submission of
proposed findings and conclusions by the parties, the trial court largely adopted
Columbia’s proposed order and denied the motion to transfer venue:
4. Centerpoint, like Honeywell, chose to pursue venue in federal
court. Centerpoint could have refused to consent to the removal
(which removal could not have been filed without such consent
. . .) and then back in September-October 2016 they could have
filed their Motion to Transfer to Vanderburgh County. Instead
Centerpoint chose to acquiesce in the pursuit of venue in federal
court, not in Vanderburgh County.
***
6. Despite the fact Centerpoint knew or should have known that
the removal was baseless, Centerpoint did not reconsider its
decision nor did it withdraw its consent over the next seven
months. The day after remand . . ., Centerpoint filed its eight
page Motion to Transfer.
***
13. The facts demonstrate that Centerpoint Defendants and
Honeywell Defendants sought venue in federal court, and did not
intend to return to state court. Centerpoint waived its right to
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 4 of 12
seek a new venue by not filing a Rule 75 Motion to Transfer
Venue to Vanderburgh [County] before the removal, by
consenting to the removal rather than filing to transfer venue and
by not withdrawing its consent. Centerpoint demonstrated that it
did not intend to seek venue in state court. Centerpoint was not
an innocent bystander in the pursuit of federal jurisdiction. They
were a knowing participant.
Id. at 12-15. Centerpoint appeals from the denial of its motion.1
Discussion and Decision
I. Standard of Review
[6] We review factual findings on an appeal from a ruling on a motion for transfer
of venue for clear error and review conclusions of law de novo. Am. Family Ins.
Co. v. Ford Motor Co., 857 N.E.2d 971, 973 (Ind. 2006). Where factual
determinations are made from a paper record, however, those determinations
are also reviewed de novo. Id.
II. Improper Venue
[7] Trial Rule 75(A) allows a case to be filed in any county in Indiana. However,
the rule also sets forth criteria establishing ten “preferred” venues. The rule
does not create a priority among the subsections establishing preferred venue,
and there may be multiple preferred venues in a given case. Salsbery Pork
1
Pursuant to Appellate Rule 14(A)(8), an order transferring or refusing to transfer a case under Trial Rule 75
is an interlocutory order appealable as a matter of right. See also T.R. 75.
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 5 of 12
Producers, Inc. v. Booth, 967 N.E.2d 1, 5 (Ind. Ct. App. 2012). A motion to
transfer venue cannot be granted when an action has been filed in a preferred
venue, but if the complaint is not filed in a preferred venue, the court is required
to transfer the case to a preferred venue upon a proper request from a party.
Am. Family Ins. Co., 857 N.E.2d at 974.
[8] Here, there seems to be no dispute that Warrick County is not a preferred
venue, as Columbia does not defend Warrick County as a preferred venue 2 and
does not dispute that Vanderburgh County would be a preferred venue. 3 The
question, therefore, is not whether transfer of this case to Vanderburgh County
is improper because the case is already in a proper venue, but whether
Centerpoint is entitled at this point in the litigation to have the case transferred
to a preferred venue. The rule states:
Any case may be venued, commenced and decided in any court
in any county, except, that upon the filing of a pleading or a motion to
dismiss allowed by Rule 12(B)(3), the court, from allegations of the
complaint or after hearing evidence thereon or considering
affidavits or documentary evidence filed with the motion or in
opposition to it, shall order the case transferred to a county or court
selected by the party first properly filing such motion or pleading
if the court determines that the county or court where the action
was filed does not meet preferred venue requirements or is not
2
In fact, counsel for Columbia stated in a letter to counsel for defendants in September 2016 that he “chose
to file this in Warrick County because of the chances of getting one of two good judges (by reputation) which
was achieved. The odds of getting a good judge in Vanderburgh County were not great . . . .” Appellant’s
App., Vol. II at 159.
3
On the other hand, Vanderburgh County, as “the county where the land or some part thereof is located . . .
if the complaint includes a claim for injuries thereto . . .” is a preferred venue. T.R. 75(A)(2).
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 6 of 12
authorized to decide the case and that the court or county
selected has preferred venue and is authorized to decide the case.
T.R. 75(A) (emphasis added). Trial Rule 12, in turn, provides how the defense
of incorrect venue must be asserted and the circumstances under which the
defense may be waived:
(B) How presented. Every defense, in law or fact, to a claim for
relief in any pleading . . . shall be asserted in the responsive
pleading thereto if one is required; except that, at the option of
the pleader, the following defenses may be made by motion:
***
(3) Incorrect venue under Trial Rule 75 . . . . The
disposition of this motion shall be consistent with Trial
Rule 75.
***
A motion making [this] defense[] shall be made before pleading if
a further pleading is permitted or within twenty (20) days after
service of the prior pleading if none is required. If a pleading sets
forth a claim for relief to which the adverse party is not required
to serve a responsive pleading, . . . the defense[] in section
[(B)(3)] is waived to the extent constitutionally permissible unless
made in a motion within twenty [20] days after service of the
prior pleading.
***
(G) Consolidation of defenses in motion. A party who makes a
motion under this rule may join with it any other motions herein
provided for and then available to him. If a party makes a
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 7 of 12
motion under this rule but omits therefrom any defense or
objection then available to him which this rule permits to be
raised by motion, he shall not thereafter make a motion based on
the defense or objection so omitted. . . .
(H) Waiver or preservation of certain defenses.
(1) A defense of . . . improper venue . . . is waived to the
extent constitutionally permissible:
(a) if omitted from a motion in the circumstances
described in subdivision (G),
(b) if it is neither made by motion under this rule
nor included in a responsive pleading or an
amendment thereof permitted by Rule 15(A) to be
made as a matter of course.
[9] Centerpoint argues the Trial Rules require the trial court to transfer this case to
a preferred venue upon its motion; Columbia contends Centerpoint has waived
any objection to venue by its conduct surrounding the removal to federal court.
[10] Columbia’s arguments for waiver rely heavily on its characterizations of
Centerpoint’s motivations during the litigation. Columbia’s brief is rife with
references to Centerpoint’s “trick[ing]” Columbia into consenting to an
extension of time for Centerpoint to answer the complaint in state court;
Centerpoint’s “complicit[y]” in the “baseless” removal to federal court and
violations of the Indiana Trial Rules; and Centerpoint’s “attempts to wash its
hands” of the removal in now seeking to transfer to a preferred venue. See
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 8 of 12
Appellees’ Brief at 10-11. Columbia also posits that Centerpoint’s actions and
inactions with respect to removal “demonstrated its intent not to seek venue in
Vanderburgh County [or] to return to state court.” Id. at 11. Essentially,
Columbia argues the right to a preferred venue may be waived as a sanction for
misconduct during the litigation. This argument, however, misapprehends the
plain language of the trial rules.
[11] Centerpoint’s motivations and intent—even if they are as Columbia alleges—
are irrelevant. Transfer from a non-preferred venue to a preferred venue is
mandatory if the movant meets the provisions of Trial Rules 12 and 75. The
issue of improper venue must be raised in a responsive pleading as an
affirmative defense or must be raised by motion prior to the filing of the
responsive pleading. City of Carmel ex rel. Redevelopment Comm’n v. Crider &
Crider, Inc., 988 N.E.2d 808, 810 n.1 (Ind. Ct. App. 2013), trans. denied. Thus,
entitlement to a change of venue is a matter of timing not intent; if the movant
makes a proper and timely motion, the trial court has no discretion to deny it.
Trial Rule 12(H) states the circumstances under which a defense of improper
venue may be waived. Alleged misconduct in the course of litigation is not one
of those circumstances.4
4
Moreover, as Centerpoint states, arguing in the alternative is common litigation tactic and not a trick.
There is nothing inherently contradictory in agreeing to a co-defendant’s efforts to remove a case to federal
court while still maintaining that if the case is tried in state court, it should be tried in a preferred venue.
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 9 of 12
[12] Here, Centerpoint was not yet required to file an answer to Columbia’s
complaint when the case was removed to federal court. The general rule is that
removal of a case to federal court divests the state court of jurisdiction. Peoples
Trust & Sav. Bank v. Humphrey, 451 N.E.2d 1104, 1108 (Ind. Ct. App. 1983).
An order remanding an action to the Federal court . . . merely
suspends or holds [state] jurisdiction in abeyance either until the
action is terminated in Federal court or until the latter court
remands the action to the state court; and in the event of a
remand, the state court’s continuous, though dormant,
jurisdiction is revived . . . .
Id. at 1108 (quoting Doerr v. Warner, 76 N.W.2d 505, 512 (Minn. 1956)).5 In
Humphrey, the defendants in a foreclosure action filed their answer,
counterclaim, and a petition to remove the case to federal court on May 1,
1980. On May 28, 1980, the federal court remanded the case to state court. On
May 30, 1980, the defendants moved for a change of venue from the county
pursuant to Trial Rule 76. Trial Rule 76(C) requires an application for a change
of venue to be filed not later than ten days after the issues are first closed on the
merits. Id. Because the defendants had attempted to remove the case to federal
court, their motion for change of venue was filed more than ten days after their
5
A handful of states have adopted a narrow exception to this general rule and concluded that the state court
does not lose jurisdiction if the “notice of removal is insufficient on its face to raise even a colorable claim of
removability.” McDonald v. Zions First Nat’l Bank, N.A., 348 P.3d 957, 961-62 (Colo. App. 2015) (adopting the
narrow exception for Colorado and noting courts in New York, Vermont, Florida, Oklahoma, and
Connecticut had also adopted the exception). Indiana has not adopted this exception, and we decline to do
so here, especially where, despite Centerpoint’s “consent,” it was not Centerpoint’s removal petition that was
ultimately determined to be without merit.
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 10 of 12
answer. The plaintiff filed an objection to the motion for change of venue,
arguing it was untimely. This court disagreed, holding the time limit in Rule 76
is tolled during removal of an action to federal court. “Otherwise, when a
removal petition is filed, the moving party is subjected to a game of chance with
the outcome dependent on the federal court’s decision on the removal petition.
In contrast, tolling the time period eliminates uncertainty, preserves the status
quo, and is easily applied.” Id. at 1109. Because the defendants filed their
motion for change of venue within ten days after remand, we determined the
motion was timely and the trial court did not err in granting the change of
venue. Id. at 1108-09.
[13] Similarly here, when the case was removed to federal court, Centerpoint had
not yet filed an answer, and thus the time allowed under Rule 12 to either assert
improper venue in a responsive pleading or to file a motion asserting the
defense of incorrect venue had not yet run. While the case was in the federal
court, the time period for raising the defense of improper venue was tolled. See
Humphrey, 451 N.E.2d at 1109; cf. Ex Parte Burr & Forman, LLP, 5 So. 3d 557,
568 (Ala. 2008) (noting that a defense of improper venue was not waived for
failure to raise it in an answer filed in federal court during removal because
there is nothing in the state rule of civil procedure governing asserting the
defense of improper venue “that would operate to penalize a defendant for
failing to raise in an answer filed in an action removed to federal court a state-
law, procedural defense that would be available to the defendant only if the case
were pending in state court”). The motion Centerpoint made on May 25, 2017,
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 11 of 12
asserting improper venue was the first motion Centerpoint had made in
response to the complaint. The defense was not omitted from a motion in the
circumstances described in subsection (G) of Rule 12 and it was made by a
motion under the rule. Therefore, there is no basis in Trial Rule 12 upon which
to conclude Centerpoint has waived the defense of improper venue.
Conclusion
[14] The trial court clearly erred in concluding that Centerpoint’s conduct
surrounding the removal of this case to federal court waived its right to object to
the improper venue upon return to the state court. The trial court’s denial of
Centerpoint’s motion to transfer to a preferred venue is reversed, and this case
is remanded to the trial court for further proceedings consistent with this
opinion.
[15] Reversed and remanded.
Crone, J., and Bradford, J., concur.
Court of Appeals of Indiana | Opinion 87A01-1709-CC-2140 | March 8, 2018 Page 12 of 12