Daniel L. Hess and Leanna S. Hess v. Sheryll (Durbin) Novicki, and The Board of Directors of the Cordry-Sweetwater Conservancy District ( 2020 )

FILED
Jan 31 2020, 8:36 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
R. Brock Jordan SHERYLL (DURBIN) NOVICKI
Christopher M. Trapp Dennis F. McCrosson
Katz Korin Cunningham PC Stephen R. Donham
Indianapolis, Indiana Thrasher Buschmann & Voelkel, P.C.
Indianapolis, Indiana
ATTORNEY FOR APPELLEE
THE BOARD OF DIRECTORS OF
THE CORDRY-SWEETWATER
CONSERVANCY DISTRICT
Roger A. Young
Young and Young
Franklin, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Daniel L. Hess and Leanna S. January 31, 2020
Hess, Court of Appeals Case No.
Appellants-Plaintiffs, 19A-CT-1416
Interlocutory Appeal from the Brown
v. Circuit Court
The Honorable Mary Wertz, Judge
Sheryll (Durbin) Novicki, Trial Court Cause No.
Appellee-Defendant, 07C01-0906-CT-349
and
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The Board of Directors of the
Cordry-Sweetwater Conservancy
District,
Appellee-Intervenor
Crone, Judge.
Case Summary
[1] This interlocutory appeal involves circumstances in which a trial court’s
continuing equitable authority over injunctions clashes with freedom of
contract principles. The limited issue to be resolved is whether the trial court
has the legal authority to rule on the merits of an Indiana Trial Rule 60(B)
motion to supplement/modify an agreed permanent injunction entered by the
parties to a boundary dispute and approved by the court. The trial court
concluded that it possesses such authority, and we affirm.
Facts and Procedural History
[2] Cordry Lake is a private lake owned and governed by the Cordry-Sweetwater
Conservancy District (“CSCD”), through its board of directors (“the Board”).
The Board has the authority to regulate the use of the lake and the construction
of any structures in the inlets. Daniel L. Hess and Leanna S. Hess own a lake-
front tract adjacent to the lake-front tract owned by Sheryll (Durbin) Novicki.
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A narrow inlet lies between their tracts. Per CSCD rules, each tract owner is
entitled to unobstructed use of their half of the inlet, as determined by the use of
a midpoint. In 2009, CSCD rules measured the midpoint of each inlet by using
an imaginary line extending from the shore. At that time, Novicki sought to
construct a dock/lift in the inlet. The Hesses filed an action against Novicki,
seeking declaratory and injunctive relief concerning her construction of her
dock and use of the inlet in a manner that allegedly encroached on their half of
the inlet. They also named the Board as a defendant in their complaint.
[3] In 2015, Novicki and the Hesses entered mediation. In 2016, they executed an
agreed permanent injunction that reads, in relevant part,
4. Neither party shall encroach by improvement or the regular
parking of watercraft across an imaginary line that represents
one-half of the width of the inlet on which their properties are
located. However, this shall not be construed to be a grant of
permission by either party to allow the other to encroach up to
this imaginary line if the same is not permitted by CSCD rules in
effect at the time.
Appealed Order at 2; Appellants’ App. Vol. 2 at 54. The Board was not a party
to the agreement and was subsequently dismissed from the action by stipulation
of the parties.
[4] In March 2017, the trial court approved the agreed permanent injunction and
issued an order to that effect. In November 2017, the Board amended the
CSCD rules to include a new formula for determining the midpoints of all inlets
based on property lines, not on shorelines. As a result, Novicki filed an Indiana
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Trial Rule 60(B) motion to supplement/modify the permanent injunction to
reflect the CSCD’s amended rules concerning these boundaries. The Board re-
entered the action as an intervenor, pursuant to Indiana Trial Rule 24. In the
first phase of bifurcated proceedings, the trial court heard oral argument and
limited its determination to resolving the issue of “whether the Court may [as a
matter of law] modify or supplement an injunction issued pursuant to the
agreement of the parties due to an allegation by one party that the agreed
injunction is not [sic] longer equitable.” Appealed Order at 3. At the hearing,
the Board explained its rule change and argued the importance of applying its
amended rule even where the parties have entered the injunction by agreement:
[T]he agreed injunction is flawed, incomplete and unenforceable.
The injunction acknowledges the existence of an imaginary line
but does not describe its location at all.… [T]he old method of
determining where the center line was, was to measure from the
water’s edge and find a midpoint and a point equal distance from
the shoreline, that was deemed to be the centerline of the cove.
However, and this would work great if the shoreline and property
line always precisely coincided.… The new method uses the
property line as the beginning measuring point.… The use of any
other method in our opinion would result in a functional repeal
of CSCD’s rules and two freeholders can’t agree that the rules
don’t apply to them. And also keep in mind, that d[ue] to
changing circumstances CSCD could in the future again change
the method of determining the centerline. And any judicial or
agreed judgment that purports to establish the centerline must
always acknowledge CSCD’S continuing authority to relocate
that line. That’s our position.
Tr. Vol. 2 at 19, 21-22.
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[5] Following the hearing, the trial court issued an interlocutory order concluding
that “when a judgment, including an agreed judgment, has prospective
application or effect, the Court must have the power to act to avoid an
inequitable result that is caused by a change in circumstances that was not
reasonably foreseeable at the time the judgment was entered.” Appealed Order
at 4. Having thus concluded, the court ruled that Novicki was not precluded
from pursuing relief pursuant to Trial Rule 60(B).
[6] The Hesses filed a motion to reconsider, which the trial court denied. They
sought and were granted certification of the trial court’s order for interlocutory
appeal, and we accepted jurisdiction. Additional facts will be provided as
necessary.
Discussion and Decision
[7] In framing the nature of the dispute below, we note that Novicki filed a motion
for relief from the 2017 agreed injunction that she entered with the Hesses.
Trial Rule 60(B)(7) allows relief from judgment where “it is no longer equitable
that the judgment should have prospective application[.]” “[T]o establish that it
is no longer equitable for a final judgment to have prospective application under
Rule 60(B)(7), the movant must show that there has been a change in
circumstances since the entry of the original judgment and that the change of
circumstances was not reasonably foreseeable at the time of entry of the original
judgment.” City of Indianapolis v. Tichy, 122 N.E.3d 841, 845 (Ind. Ct. App.
2019).
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[8] In this interlocutory appeal, the Hesses claim that the trial court erred in
declaring that it possesses the legal authority to grant Novicki’s motion to
supplement/modify the agreed permanent injunction should Novicki meet her
burden under Trial Rule 60(B)(7) and in denying their motion to reconsider.
Ordinarily, we apply an abuse of discretion standard to appeals involving the
trial court’s denial of a motion to reconsider or its ruling on a Trial Rule 60(B)
motion. Celadon Trucking Servs., Inc. v. United Equip. Leasing, LLC, 10 N.E.3d 91,
94 (Ind. Ct. App. 2014) (ruling on motion to reconsider), trans. denied (2015);
TacCo Falcon Point, Inc. v. Atlantic Ltd. P’ship XII, 937 N.E.2d 1212, 1218 (Ind.
Ct. App. 2010) (ruling on Rule 60(B) motion). Here, however, our review
involves only the preliminary question of whether the trial court has the legal
authority to address the merits of Novicki’s Rule 60(B)(7) claim; as such, we are
faced with a pure question of law, which we review de novo. Siwinski v. Town of
Ogden Dunes, 949 N.E.2d 825, 828 (Ind. 2011).
[9] The Hesses assert that because the injunction was entered as an agreed
judgment, it is a matter of contract, not subject to modification by the trial
court. We acknowledge the well-established principle that “[a]fter entering an
agreed judgment, the trial court has no authority to modify or change the
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judgment in any essential or material manner.” Evans v. Evans, 946 N.E.2d
1200, 1204 (Ind. Ct. App. 2011). 1
[10] In contrast, Novicki contends that this action must be resolved by application of
injunction law rather than contract law. “An injunction is a judgment of
prospective application subject to the issuing court’s continuing supervision.”
Ballard v. Harman, 737 N.E.2d 411, 417 (Ind. Ct. App. 2000). A permanent
injunction is “limited to prohibiting injurious interference with rights and must
be narrowly tailored so that its scope is not more extensive than is reasonably
necessary to protect the interests of the party in whose favor it is granted.”
Liter’s of Indiana, Inc. v. Bennett, 51 N.E.3d 285, 299 (Ind. Ct. App. 2016), trans.
denied. “[I]f an injunction is overbroad or if it becomes an instrument of wrong
through changed circumstances, it is subject to modification through the court’s
continuing equity jurisdiction.” Ballard, 737 N.E.2d at 417.
[11] In support of their argument that the trial court lacks authority to modify or
supplement the agreed injunction, the Hesses rely on Ingoglia v. Fogelson Cos.,
Inc., 530 N.E.2d 1190, 1192 (Ind. Ct. App 1988). In Ingoglia, two homeowners
experienced flooding during heavy storms and filed separate actions (in Porter
and Jasper Counties) against the developer and designer of the storm drainage
and water retention systems for money damages due to the flooding and for an
1
To the extent that Novicki points to the Hesses’ December 2017 motion to modify the agreed injunction as
evidence that the trial court has the authority to modify an agreed order, we note that the previous
modification, by nunc pro tunc order, was not material but was entered merely to correct a scrivener’s error.
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injunction to take corrective measures to prevent future flooding. Id. The two
homeowners, the developer, and the designer entered an agreed judgment for
money damages and the construction of an operational retention pond. The
two trial courts approved the settlement agreement and entered judgment
accordingly. Thereafter, the money judgment was paid in full, but the cost of
the remedial work on the retention pond, a matter not addressed in the agreed
judgment, remained in dispute. The homeowners filed separate petitions to
enforce judgment, and evidence was reopened. The Jasper County court
transferred its case to the Porter County court, which assumed jurisdiction and
denied the homeowners’ motion to enforce, finding that the developer had met
all its responsibilities under the agreed judgment. The homeowners appealed,
claiming that the Porter County court lacked the authority to modify the agreed
judgment. 2
[12] The Ingoglia court explained that an agreed judgment is, by nature, both a
contract between the parties and a judicial act in the form of an entry of
judgment. Id. at 1199. Citing United States v. Swift & Co., 286 U.S. 106, 114-15
(1932) (court has equitable power to modify agreed injunction even though
entered by consent and absent contract term allowing such) and State v.
Martinsville Development Co., 174 Ind. App. 157, 163, 366 N.E.2d 681, 685
(1977) (money judgment in condemnation proceeding lacked prospective
2
They also claimed that the Jasper and Porter County courts lacked jurisdiction to confer and assume
jurisdiction, respectively, and this Court agreed. Ingoglia, 530 N.E.2d at 1197-98.
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application), the Ingoglia court drew the distinction between an agreed judgment
over a matter of prospective application and an agreed judgment concerning a
matter that serves merely to rectify past wrongs:
Swift recognized a court of equity’s inherent power to modify a
judgment (whether by consent or after litigation) when changed
circumstances make its prospective application inequitable. The
threshold question to be determined in deciding if a consent
judgment may be modified because of changed circumstances is
whether the judgment has prospective application. Justice
Cardozo, writing for the Swift Court, stated: “The distinction is
between restraints that give protection to rights fully accrued
upon facts so nearly permanent as to be substantially impervious
to change, and those that involve the supervision of changing
conduct or conditions and are thus provisional and tentative.”
In [Martinsville Development], the court stated a judgment has
prospective application “when a person’s right to do or not to do
some act is continuously affected by the operation of the
judgment in the future; or, the judgment is specifically directed
toward some event which is to take place in the future and does
not simply serve to remedy past wrongs.” (Emphasis in original).
Id. at 1199-1200 (citations and footnote omitted).
[13] In holding that the trial court lacked the authority to modify the agreed
judgment, the Ingoglia court emphasized that the agreed judgment in that case
“served only to remedy past wrongs” and was not prospective in application.
Id. at 1200. Given these circumstances, the court concluded that “modification
was proper only if contract principles [such as the intent of the parties and
interpretation of the language] were correctly applied.” Id.
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[14] We believe that the circumstances here are more closely analogous to those in
Swift. 3 There, the government took action to dissolve a monopoly of meat
packers pursuant to 15 U.S.C. § 4 (The Sherman Anti-Trust Act). 286 U.S. at
111. The parties entered an agreed judgment enjoining the meat packers from
maintaining a monopoly and from engaging in various acts restraining trade
and competition. Two of the meat packers sought to modify the agreed
injunction, claiming that the restraints in it had become useless and oppressive
due to changes in the industry. Id. at 113. Modification was granted below
with respect to certain limited aspects of the original agreed injunction, and the
action made its way to the United States Supreme Court. The high court
analyzed the action by determining first whether the court possessed the power
to modify the agreed injunction and then whether the modification was justified
under the evidence. Id. at 114-15. With respect to the court’s power to modify,
the Swift court issued a strong statement, “We are not doubtful of the power of
a court of equity to modify an injunction in adaptation to changed conditions,
though it was entered by consent.… A continuing decree of injunction directed
to events to come is subject always to adaptation as events may shape the
need.” Id. at 114.
3
We acknowledge the Hesses’ claim that Swift is inapplicable because it was decided under federal law,
which is more amenable to treating agreed judgments as judicial acts subject to the continuing equitable
authority of the trial court. That said, like the Ingoglia court, we find instructive the U.S. Supreme Court’s
analysis of agreed injunctions, specifically with respect to its distinction between circumstances involving
rights fully accrued and impervious to change and those involving prospective application and changes in
conditions.
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[15] Here, our charge is to answer only the first question, that is, whether the trial
court possesses the legal authority to modify the agreed injunction. The dispute
between Novicki and the Hesses is not limited to remedial matters such as the
payment of money damages for a past wrong. The agreed injunction concerns
prospective matters such as the positioning of the parties’ docks/lifts and the
continued navigation of their respective watercrafts within the inlet, all of which
must be considered in conjunction with the rules and regulations promulgated
by the CSCD, the owners and regulators of the lake. Even when viewed from a
purely contractual standpoint, the agreement’s terms suggest that the parties
may have anticipated potential future judicial intervention. See Appellants’
App. Vol. 2 at 54 (paragraph 4: “if the same is not permitted by CSCD rules in
effect at the time.”). Like the Swift court, we have no doubt that this injunction,
though entered by consent, is subject to the trial court’s continuing equitable
authority. 286 U.S. at 114.
[16] This is not to say that Novicki is entitled to such modification. 4 See id., at 114-
15 (concluding that court undoubtedly has equitable authority to modify
injunction, even though entered by consent, to adapt to changed conditions, yet
holding evidence insufficient to justify court’s exercise of power to modify).
That question will be considered and resolved during the second phase of the
proceedings, under a more complete factual record. Should Novicki present
4
Without knowing the full extent of the evidence to be presented during the second phase of the
proceedings, we are mindful that the encroachment restrictions imposed by the new CSCD regulations may
prove more or less stringent than those in force when the Hesses and Novicki entered their agreed injunction.
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sufficient evidence establishing that the agreed injunction has become an
instrument of wrong due to changed circumstances and thus is no longer
equitable, the trial court, in its discretion, may grant her relief under Trial Rule
60(B)(7). Ballard, 737 N.E.2d at 417. If she fails to meet her burden of proving
an unforeseeable change in circumstances rendering the injunction inequitable,
the trial court will nevertheless retain the authority to interpret and apply the
language of the agreed judgment according to contract principles to determine
whether an ambiguity exists and to ascertain the intent of the parties. Ingoglia,
530 N.E.2d at 1200. Accordingly, we affirm.
[17] Affirmed.
May, J., and Pyle, J., concur.
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