Karleen Spann Perry v. Larry Spann, and Madison Riverport, LLC c/o Anthony Hammock (mem. dec.)

MEMORANDUM DECISION FILED
Feb 08 2018, 5:41 am
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be CLERK
Indiana Supreme Court
Court of Appeals
regarded as precedent or cited before any and Tax Court
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEES
Matthew J. McGovern Anthony J. Castor
Anderson, Indiana Madison, Indiana
Stephen W. Voelker
Jeffersonville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Karleen Spann Perry, February 8, 2018
Appellant-Petitioner, Court of Appeals Case No.
39A01-1708-DR-1783
v. Appeal from the Jefferson Circuit
Court
Larry Spann, The Honorable Darrell M. Auxier,
Appellee-Respondent Judge
The Honorable Jonathan N.
and Cleary, Special Judge
Madison Riverport, LLC c/o Trial Court Cause Nos.
39C01-0303-DR-124 and 39C01-
1512-MI-936
Anthony Hammock
Appellee-Garnishee Defendant
Altice, Judge.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 1 of 16
Case Summary
[1] Since the dissolution of marriage decree in 2005, Karleen Spann Perry has
struggled to recover the equalization payment of over $3.3 million due her from
her ex-husband, Larry Spann. Despite years of litigation and proceedings
supplemental, Perry has generally been unsuccessful in her pursuits. Spann,
who has since spent time in federal prison and gone through bankruptcy, still
currently owes Perry over $5 million with accumulated interest included.
[2] Perry eventually turned her collection efforts toward various businesses owned
in whole or part at various times by Spann. Relevant to this appeal, for more
than a decade, Perry has pursued Madison Riverport, LLC as a garnishee
defendant. Spann had sold his one-third ownership interest in Madison
Riverport to Anthony Hammock shortly after the dissolution of marriage.
Despite Hammock owning the property in question, Perry repeatedly failed to
individually serve Hammock or make him a party to her various proceedings
supplemental. In December 2015, Hammock’s attorney filed a special
appearance to protect Hammock’s interest in Madison Riverport, as Perry was
attempting to foreclose on this interest.
[3] After a September 2016 hearing on various pending motions, the trial court
determined that Perry could not levy execution on Hammock’s interest in
Madison Riverport. In other words, the trial court concluded that Perry did not
have an enforceable lien against this property, which had been sold to
Hammock in 2005. The trial court, therefore, ordered all funds held in an
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 2 of 16
escrow account pursuant to a previous order to once again become an asset of
Madison Riverport, with no future escrow required.
[4] Perry filed a motion to correct error in which she argued that the claims raised
by Hammock in his motions were barred by res judicata. The trial court denied
Perry’s motion following a hearing. On appeal, Perry contends that the trial
court committed clear error when it denied her motions to levy execution on
the one-third interest in Madison Riverport and when it eliminated the
associated escrow account.
[5] We affirm.
Facts & Procedural History
[6] The history of this case is long and tedious. We will focus our attention on
those parts of the record that are relevant to Perry’s attempt to execute on the
one-third interest in Madison Riverport previously owned by Spann.
[7] Perry and Spann became legally separated in March 2003, and the trial court
issued a decree of dissolution on December 22, 2005, which was amended in
February 2006. The decree set out the extensive assets of the marital estate,
which included over 400 acres of real estate and multiple business interests. The
trial court valued the assets and debts of the marital estate as of the date of
separation, resulting in a net marital estate value of over $8 million. The court
awarded the bulk of the marital assets to Spann and ordered him to pay a cash
equalization payment of $3,364,298.50 to Perry, with interest accruing at 8%
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 3 of 16
from the date of the decree. The court placed a judgment lien on all of Spann’s
assets to secure the equalization payment.
[8] On December 27, 2005, five days after the decree of dissolution was issued,
Spann sold his one-third interest in Madison Riverport and his stock in Matrans
Construction, Inc. to Hammock for $25,000. In the decree of dissolution, the
trial court had valued these assets at $27,000 and $0, respectively. This valuation,
however, was based on the date of separation, which was in March 2003. Despite
being aware of the transfer by at least July 2007, Perry did not file a fraudulent
conveyance claim against Hammock and Spann regarding this transaction.1 In
fact, she did not file any action against Hammock until at least 2013. With
respect to Spann’s prior interest in Madison Riverport, Perry proceeded against
Madison Riverport as a garnishee defendant in various proceedings supplemental
from 2006 onward.
[9] On August 12, 2009, Perry filed her second verified motion for proceedings
supplemental. Once again, she listed Madison Riverport among the long list of
garnishee defendants. The trial court held an evidentiary hearing on November
6, 2009, at which Spann was the sole witness. At the conclusion of the hearing,
Perry argued that she had a lien on the one-third interest in Madison Riverport
that followed the 2005 transfer between Spann and Hammock. Perry also
1
Perry sought to have other transactions – not involving Madison Riverport – declared void as being in
violation of the Indiana Uniform Fraudulent Transfer Act, Ind. Code § 32-18-2-1 et seq. See Appellant’s
Appendix Vol. II at 106. Transfers are voidable under this act, which generally provides for a four-year statute
of limitations. I.C. § 32-18-2-19.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 4 of 16
suggested that the transfer may have lacked consideration and been fraudulent.
Believing that a sale of Madison Riverport was imminent, Perry requested that
the trial court order any proceeds of such sale be placed in escrow. The trial
court observed that Spann had sold his interest in Madison Riverport to
Hammock and then observed: “So if [Spann’s] given it up, I don’t think he has
a dog in that fight. I could be ordering something that I get a phone call
Monday from Mr. Hammock or one of these corporations saying, Judge, what
are you doing”. Transcript Vol. II at 114. Perry’s counsel acknowledged that
“obviously this is going to have to play out in these proceedings” but requested
protection of the asset until things were sorted out. Id.
[10] On November 9, 2009, the trial court issued an extensive order that dealt with a
number of issues. With respect to the one-third interest in Madison Riverport,
the order provided as follows:
13. That at the time of the Decree of Dissolution on December
22, 2005, Larry Spann owned 20% of the stock in Matrans
Construction, Inc. and 33 1/3% of the stock in Madison
Riverport. The evidence shows that at the time of the
Decree, Matrans Inc. had significant income from work
orders with Indiana Kentucky Electric. Further, [Spann]
testified that at the time of the Decree, and currently,
Madison Riverport held property upon which
Consolidated Grain and Barge holds an option to purchase
for $600,000. Despite the clearly demonstrated value of
the stock in both Matrans Construction Inc and Madison
Riverport, [Spann] transferred all of his stock in both
entities to [Hammock] for $25,000 on December 27, 2005.
The Court finds that at the time of the transfer of such
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 5 of 16
stock, the stock was clearly subject to [Perry’s] judgment
lien, and said lien follows the stock.
14. That the Court heard testimony that there are current
negotiations between Madison Riverport and both the City
of Madison and Consolidated Grain and Barge involving
the potential sale of the property owned by Madison
Riverport. Because 1/3 of the stock in Madison Riverport
is subject to [Perry’s] judgment lien, the Court hereby
orders Madison Riverport LLC, as Garnishee Defendant
herein, to place 1/3 of proceeds of the sale or lease of such
real estate in escrow until all interested parties have had an
opportunity to argue their positions to the court as to the proper
disposition of said funds.
Appellant’s Appendix Vol. III at 20 (emphasis supplied).
[11] On December 8, 2009, Madison Riverport filed a motion for relief from the
order, arguing that Perry failed to properly serve Madison Riverport with notice
of the proceedings supplemental. Perry had served Madison Riverport in care
of Larry Spann rather than in care of Anthony Hammock, who was the
company’s registered agent.
[12] The trial court held a hearing on the motion for relief on December 23, 2009.
Perry and Madison Riverport were represented by counsel at the hearing.
Before reaching the merits of the motion, Madison Riverport’s attorney made
some observations: 1) Madison Riverport is a limited liability company and
does not have stock; 2) the court made no finding that Hammock was anything
other than a bona fide purchaser of Spann’s ownership interest in the company;
and 3) Hammock, the owner of the personal property in question and the real
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 6 of 16
party in interest, had not been made a party to this action or given an
opportunity to be heard. Counsel, thus, raised the issue of whether Hammock’s
ownership interest was “properly before the Court in order for the Court to
have jurisdiction and enter an order affecting or encumbering that interest.”
Transcript Vol. II at 147.
[13] Perry’s attorney responded that he was not prepared to address whether
Hammock was a bona fide purchaser or whether Hammock had notice.
Counsel requested a future hearing “on the substance of whether [Perry’s] lien
does in fact attach to that interest of Madison Riverport”. Id. at 154. With
respect to service on Madison Riverport, Perry argued that the service of
process was sufficient and that the company had actual knowledge of the
proceedings supplemental.
[14] At the conclusion of the hearing, the trial court found that Madison Riverport
had been properly served but that Hammock had not been individually named
or served as a party. Perry indicated a willingness to join Hammock
individually but requested that the court continue the escrowing of funds until it
could be determined whether the one-third interest was “attachable.” Id. at
166. The trial court agreed but warned, “Hammock needs to be named now.”
Id. at 169. The CCS entry further reveals that the trial court ruled in relevant
part: “Anthony Hammock individually must be named as a party and served
before the Court can exercise jurisdiction over his individual interests.”
Appellant’s Appendix Vol. II at 29. The court set the matter for a hearing on
March 5, 2010. This hearing was rescheduled multiple times and never held.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 7 of 16
Similarly, Hammock was not added as a party or served. Perry’s attorney
withdrew his appearance at the end of 2010.
[15] No activity in the case occurred until March 14, 2013, when a new attorney
entered an appearance on behalf of Perry and filed a fourth verified motion for
proceedings supplemental. Although Hammock was listed on the caption of
the motion as a garnishee defendant, Perry failed to serve Hammock as a party.
At a hearing on April 11, 2013, Perry’s new counsel admitted this “oversight”
and indicated that she would file an amended motion to formally name
Hammock as a garnishee defendant. Transcript Vol. II at 182. Perry filed an
amended motion on May 23, 2013, and it appears that Hammock may have
been served for the first time in this case.
[16] On August 2, 2013, following a hearing, the transcript of which we do not have,
the trial court entered an order denying Madison Riverport’s and Hammock’s
motions to dismiss and ordering them to respond to interrogatories. The order
provided further that Perry must seek leave of the court before Madison
Riverport or Hammock would be ordered to appear for another hearing. Perry
took no further action against Hammock or Madison Riverport for nearly two
years.
[17] On May 13, 2015, again with a new attorney, Perry filed a motion to enforce
prior order of court and for contempt. Perry sought enforcement of the
November 9, 2009 order against Madison Riverport, which she claimed had not
placed any proceeds into escrow. Later, Perry amended the motion to make
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 8 of 16
clear that she was seeking a contempt finding against Madison Riverport, not
Spann. Perry did not serve Hammock individually with this motion.
[18] The trial court held a hearing on the motion to enforce on September 4, 2015.
Once again, Madison Riverport’s attorney observed that the personal property
in question was owned by Hammock, not the company, and that Perry had
never established that Hammock obtained the property via a fraudulent
transfer. Counsel noted further that Hammock was not a party to the action
when the November 2009 order was entered and, thus, did not have an
opportunity to defend his ownership interest in Madison Riverport.
[19] Perry’s attorney acknowledged that the time had likely passed for determining
that the transfer was fraudulent. Counsel, however, continued to point to a lien
created by the November 2009 order. When the court expressed concern over
how a lien could be attached to property sold four years earlier, counsel
responded:
[T]he only argument I can have to the Court is that obviously
those arguments must have been made back in 2009. I was not
involved in the hearings back then…. I can’t go back and – and
figure out what arguments were made. All I’m looking at is I’ve
got an order from a Judge saying, yes, she has a lien on it and
we’re asking this Court to enforce that prior order of the Court.
Id. at 210-11. Counsel acknowledged that Hammock “could very well be an
interested party” and clarified that Perry simply wanted the funds held in
escrow until an evidentiary hearing could be held to determine the proper
distribution of the funds. Id. at 220.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 9 of 16
[20] Immediately following the hearing on September 4, 2015, the trial court issued
an order providing in relevant part:
1. 1/3 of the Net Ordinary Income from November 9, 2009 to
current from Madison Riverport LLC shall be placed in an
escrow account. This Order is required under paragraph 14 of
the November 9, 2009 Order…. All interested persons, including
but not limited to Anthony Hammock, may request a hearing to
argue their positions to the Court as to proper disposition of the
approximately $6,243.81 and future net income. If Karleen Perry,
Larry Spann, or Madison Riverport, LLC requests a hearing, they
shall serve Anthony Hammock by sheriff or certified mail.
2. The Court denies Karleen Perry’s request that Madison
Riverport, LLC be found in contempt of Court due to the
legal complexities that were raised concerning the differences
in the 2005 Divorce Decree and 2009 Proceedings
Supplemental Order.
****
Appellant’s Appendix Vol. III at 85 (emphasis supplied).
[21] New counsel – Perry’s fifth by our count – appeared on December 21, 2015,
filing a motion for leave to levy execution on one-third of Madison Riverport’s
stock.2 Although Perry once again failed to serve Hammock individually,
Hammock’s attorney filed a special appearance in the matter. Hammock filed
2
On this date, Perry also initiated a parallel action, Cause No. 39C01-1512-MI-936 (the Miscellaneous
Action) by filing a complaint against Spann and Madison Riverport to renew judgment lien. Perry obtained
a default judgment on April 19, 2016, which Madison Riverport promptly sought to set aside.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 10 of 16
motions and a brief arguing, among other things, that he had never been
properly made a party and that Perry had failed to timely file a complaint
alleging a fraudulent transfer.
[22] On September 23, 2016, the trial court held a hearing to address all pending
motions.3 Perry argued that the November 2009 order established that the 2005
transfer between Spann and Hammock constituted a fraudulent transfer and
that this determination could not be collaterally attacked this many years later.
Hammock disputed whether any such determination had been made and
observed that, regardless, he could not be bound by the November 2009 order,
as he was not a party to those proceedings. In sum, Hammock argued that no
valid lien attached to the personal property – the one-third ownership interest in
Madison Riverport – that he purchased from Spann in 2005.
[23] The trial court issued an order on September 30, 2016. In addition to denying
Perry’s motion to levy execution on stock, the court granted Hammock’s
motions and ordered: “the disposition of the approximately $6,243.81 and
subsequent future net income which was placed in an escrow account pursuant
to the Court’s September 4, 2015 Order shall become an asset again of Madison
Riverport, LLC and is no longer required to be escrowed or frozen.” Id. at 109.
3
In this consolidated hearing, the trial court also considered the Trial Rule 60 motion filed by Madison
Riverport in the Miscellaneous Action. The trial court ultimately set aside the default judgment. Perry does
not appeal this portion of the trial court’s order.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 11 of 16
[24] Perry filed a motion to correct error on October 31, 2016, arguing that the
issues raised by Hammock at the hearing were barred by “res judicata, trial rule
filing deadlines, laches or statutes of limitation.” Id. at 111. Following a brief
hearing, the trial court denied Perry’s motion to correct error on April 24, 2017.
Perry now appeals.4
Discussion & Decision
[25] Perry’s arguments reflect a fundamental misunderstanding of what actually
occurred below. Essentially, Perry argues that the November 2009 order
conclusively established that her lien survived the transfer between Spann and
Hammock and that Hammock was bound by this order because he did not
appeal. Further, Perry asserts that the trial court’s December 2009 order
constituted a final judgment on the issue of personal jurisdiction with respect to
both Hammock and Madison Riverport.
As the lengthy procedural history set out above reveals, critical issues remained
unresolved after the 2009 orders and no final judgment had been issued
regarding the personal property in question. In the November 2009 order, the
trial court determined that Perry’s lien survived the transfer between Hammock
and Spann. But the record unquestionably establishes that the trial court did
4
In a “motion for consideration” filed in this court, Perry expressed confusion regarding whether the relief
from judgment in the Miscellaneous Action affected the finality of the consolidated order, which also
addressed the proceedings supplemental in the dissolution action. We conclude that the consolidated order
was final, as nothing remained to be determined regarding Perry’s alleged lien against Hammock’s one-third
interest in Madison Riverport.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 12 of 16
not have personal jurisdiction over Hammock when it issued this order, which
directly affected his property. Indeed, in the December 2009 order, the trial
court ruled: “Anthony Hammock individually must be named as a party and
served before the Court can exercise jurisdiction over his individual interests.”
Appellant’s Appendix Vol. II at 29. This came after a hearing in which the trial
court warned Perry that “Hammock needs to be named now.” Transcript Vol. II
at 147. Perry indicated a willingness to join Hammock, but requested that the
funds remain escrowed until it could be determined whether the one-third
interest was “attachable.” Id. at 166. The trial court agreed and scheduled a
future hearing, which was rescheduled multiple times and never held. The case
then lingered for several years with Perry failing to serve Hammock in an
attempt to establish that her lien attached to his one-third interest in Madison
Riverport.
[26] Nearly six years later, in May 2015, Perry filed a motion to enforce the
November 2009 order against Madison Riverport. This motion overlooked the
December 2009 hearing and order, which made clear that Hammock was a
necessary party to the proceedings supplemental and that it remained to be
determined whether the lien attached to his one-third interest. When this gaffe
was raised at a subsequent hearing, Perry acknowledged Hammock’s likely
interest in the litigation and requested, as she did in 2009, that the funds be held
in escrow pending a hearing to determine their proper distribution.
Accordingly, on September 4, 2015, the trial court ordered that the funds
continue to be held in escrow and that all interested persons, including
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 13 of 16
Hammock, could request a hearing to argue the proper disposition of the funds.
The court’s order provided that if Perry requested such a hearing, she must
serve Hammock by sheriff or certified mail.
[27] In December 2015, rather than request a hearing as described above and serve
Hammock, Perry filed a motion for leave to levy execution against Madison
Riverport. Hammock’s attorney filed a special appearance to protect
Hammock’s property from execution. At a September 2016 hearing, the issue
regarding whether Hammock’s property was subject to Perry’s lien was finally
litigated between Hammock and Perry, the real parties in interest. This issue,
which had remained unresolved since December 2009, was conclusively
determined by the trial court in its September 30, 2016 order. The trial court
found in favor of Hammock.
[28] On appeal, like at the September 2016 hearing, Perry hangs her hat on an
argument that Hammock cannot collaterally attack the November 2009 order,
which found that the lien survived the transfer between Spann and Hammock.
Perry disregards the fact that Hammock was not a party to those proceedings,
and she blatantly ignores the December 2009 hearing and order. Even a
cursory review of the December 2009 proceedings reveals that no conclusive
determination had been made regarding Hammock’s property because Perry
had yet to make him a party. Thereafter, Perry failed time and again to
establish her lien against this property.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 14 of 16
[29] It has long been the law in Indiana that in order to create a lien on personal
property, as opposed to real estate, it is necessary to issue and levy execution.
See e.g., Rothchild v. State, 165 N.E. 60, 60 (Ind. 1929) (“A judgment without an
execution in the hands of an officer authorized to execute it is not a lien on
personal property.”); Ralston Purina Co. v. Detwiler, 364 N.E.2d 180, 182 (Ind.
Ct. App. 1977) (“since the evidence herein discloses that no levy was ever made
on the shares of Chapel Eggs stock specifically, the same were never
encumbered by the purported [judgment] lien”); Muniz v. U.S., 155 N.E.2d 140,
143 (Ind. Ct. App. 1958) (“to create a lien upon personal property it is
necessary to issue and levy execution , but in order to create a lien upon real
estate it is only necessary to enter and index the judgment in the county where
the real estate is located”). The record does not establish that Perry issued and
levied execution on Spann’s one-third interest in Madison Riverport before he
transferred this property to Hammock. We acknowledge that Spann acted
swiftly in selling his interest to Hammock after the dissolution decree was
entered, and Perry might have had a viable fraudulent transfer action. But she
wholly failed to properly and timely seek to have the transfer voided as a
fraudulent transfer.
[30] Perry’s general judgment lien did not survive the 2005 transfer and, thus, she
has no enforceable lien against the property held by Hammock. Accordingly,
the trial court properly rejected her belated attempt in 2015 to levy execution on
Hammock’s property.
[31] Judgment affirmed.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 15 of 16
May, J. and Vaidik, C.J., concur.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018 Page 16 of 16