Nancy L. Beeman v. Robert E. Wyman (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), FILED
this Memorandum Decision shall not be
Aug 27 2019, 9:13 am
regarded as precedent or cited before any
court except for the purpose of establishing CLERK
Indiana Supreme Court
the defense of res judicata, collateral Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Richard E. Bryant Susan R. Corwin-Cripe
The Law Office of Richard E. Bryant, Elkhart, Indiana
P.C.
Goshen, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Nancy L. Beeman, August 27, 2019
Appellant-Plaintiff, Court of Appeals Case No.
18A-PL-2392
v. Appeal from the Elkhart Circuit
Court
Robert E. Wyman,1 The Honorable Michael A.
Appellee-Defendant. Christofeno, Judge
Trial Court Cause No.
20C01-1401-PL-7
Mathias, Judge.
1
Kenneth L. Wyman was also named as a defendant in the amended complaint but did not appear or
otherwise participate in the trial court proceedings or this appeal.
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[1] The Elkhart Circuit Court entered judgment in favor of Robert Wyman
(“Wyman”) on September 4, 2018, finding that Nancy Beeman (“Beeman”)
failed to establish that Wyman was liable for check deception. Beeman appeals,
arguing that Wyman waived his affirmative defenses. We affirm.
Facts and Procedural History
[2] Wyman opened Cozy Traveler, Inc. (“Cozy Traveler”) in 2008 to manufacture
small RVs. Beeman, who knew Wyman through her late husband, began
loaning Cozy Traveler money in 2010. The first loan of $30,000 was issued in
June 2010 and was to be repaid in 24 months, with monthly interest payments
made in the interim. Ex. Vol., Plaintiff’s Ex. 1. Starting in November 2010,
Beeman also issued several smaller loans to Cozy Traveler. The loans were
used to finance units to be built. Ex. Vol., Plaintiff’s Ex. 2–5, 7–12. In exchange
for a loan, Cozy Traveler issued Beeman a promissory note and check for the
amount of the loan. Once the RV was sold, Wyman would tell Beeman that she
could cash the check for the principal amount of the loan. Cozy Traveler would
then issue a check for the interest on the loan. Id. Beeman issued Cozy Traveler
ten loans for a total of $91,583 between November 15, 2010 and February 1,
2011, which were paid in a timely manner with interest. Id.
[3] Beginning on February 9, 2011, Beeman issued Cozy Traveler five additional
loans for a total of $47,150. Cozy Traveler began experiencing financial
difficulties, and Wyman never told Beeman that she could cash the checks for
repayment. Tr. p. 51–52. Wyman sent Beeman a note in 2011 to alert her of
Cozy Traveler’s financial difficulty and explain that her repayments would be
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delayed. Ex. Vol, Plaintiff’s Ex. 19. In 2013, Beeman sent Cozy Traveler a note
giving them thirty days to repay the loans. Ex. Vol, Plaintiff’s Exhibit 21. The
initial $30,000 loan and the last five loans were never repaid.
[4] Beeman filed a complaint against Wyman in his individual capacity on January
10, 2014 for (1) an unpaid promissory note for $30,000 plus 12% interest, and
(2) check deception for five checks and promissory notes produced in exchange
for five good checks from Beeman in violation of Indiana Code section 35-43-5-
5.
[5] At the close of the bench trial, both parties stipulated to filing memorandums of
law and closing arguments. Tr. pp. 61–63. In Wyman’s written brief, he
asserted the affirmative defense that Beeman knew that Cozy Traveler had
insufficient funds in its checking account when the five bad checks were issued.
Beeman filed a motion to strike Wyman’s affirmative defense, claiming that
Wyman’s failure to assert the affirmative defense in his responsive pleadings
waived the defense. The trial court denied Beeman’s motion to strike and
entered judgment in favor of Wyman on September 4, 2018.2
[6] Beeman now appeals, arguing that the affirmative defenses of check deception
as listed in Indiana Code section 35-43-5-5(f) are affirmative defenses under
2
The trial court found that the facts of Beeman’s case did not “rise to the level established in Aronson v. Price,
644 N.E.2d 864 (Ind. 1994)” and thus did not allow the court to pierce the corporate veil of Cozy Traveler.
Neither Robert Wyman nor Kenneth Wyman, a representative of Cozy Traveler, can be held individually
liable for the corporate debt.
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Indiana Trial Rule 8(C), and that Wyman waived his right to these affirmative
defenses when he failed to plead them in his responsive pleadings.
Discussion and Decision
[7] “A person does not commit a crime under subsection (a) when the payee or
holder knows that the person has insufficient funds to ensure payment or that
the check, draft, or order is postdated[.]” I.C. § 35-43-5-5(f)(2). This is an
affirmative defense under Indiana Trial Rule 8(C).
[8] Under Trial Rule 8(C), “A responsive pleading shall set forth affirmatively and
carry the burden of proving…affirmative defense[s].” Wyman first set forth the
affirmative defense of shared knowledge of insufficient funds in his
memorandum at the close of trial. Beeman argues that Wyman waived his right
to the affirmative defense when he failed to include it in his responsive
pleadings.
[9] Although Wyman failed to include the affirmative defense in his pleadings, the
affirmative defense is not automatically waived.
When issues not raised by the pleadings are tried by express or
implied consent of the parties, they shall be treated in all respects
as if they had been raised in the pleadings. Such amendment of
the pleadings as may be necessary to cause them to conform to
the evidence and to raise these issues may be made upon motion
of any party at any time. . .but failure so to amend does not affect
the result of the trial of these issues.
T.R. 15(B).
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[10] Thus, an affirmative defense may still be properly before the trial court if it has
been tried by implied consent of the parties, as “where the evidence presented at
trial is such that a reasonably competent attorney would have recognized that
the unpleaded issue was being litigated.” State Exchange Bank of Culver v. Teague,
495 N.E.2d 262, 270 (Ind. Ct. App. 1986). This court has also previously noted
that an affirmative defense is properly before the court when a party fails to
object to the admission of evidence related to the affirmative defense. Whisler v.
Bank of Henry County, 554 N.E.2d 17, 20 (Ind. Ct. App. 1990).
[11] In this case, consent to litigate the unpleaded affirmative defense will be found
if Beeman had overt or implied notice that evidence was being presented that
she knew that Cozy Traveler had insufficient funds to cover the checks, and she
failed to object to the admission of this evidence.
[12] Our review of the record of the proceedings reveals that Wyman presented
evidence as to Beeman’s knowledge of the funds in Cozy Traveler’s account
such that a reasonably competent attorney would have recognized that the
unpleaded issue was being litigated. First, Wyman sought information about
Beeman’s knowledge of Cozy Traveler’s financial situation in his request for
admissions. The first five requests asked Beeman to admit she “knew and
understood when she received [each of the last five unpaid checks]. . . that [they
were] unfunded.” Appellant’s App. Vol. II, p. 149. Beeman denied each request
but did not object. These five requests notified Beeman that her knowledge of
Cozy Traveler’s insufficient funds could be an issue at trial.
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[13] Testimony at trial also revealed that Wyman told Beeman that the money
would be used to manufacture the RVs, and thus the checks were unfunded
when issued. Wyman was asked:
Q: Was it your understanding – did you believe that Mrs.
Beeman understood, when you gave her each one of these
checks, that they were not funded checks?
A: That’s correct. They were – they were to be used to, um, to
manufacture.
Q: So you believed that Mrs. Beeman understood that.
A: Correct.
Q: And did you tell her that?
A: Correct.
Tr. p. 50.
[14] Beeman did not object. Wyman and Beeman both testified that Beeman only
cashed the first ten checks after Wyman instructed her to, but Beeman would
cash the interest checks immediately after they were issued. Id. at 50, 60.
Wyman testified that he ran into financial difficulties and thus never told
Beeman to cash the last five principal checks; Beeman did not cash the last five
principal checks. Id. at 50–51. Again, Beeman did not object to this line of
questioning that suggested Beeman waited to cash the principal checks because
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she knew that Wyman could not pay back the principal loans until the RVs
were sold.
[15] Although the affirmative defense was not pleaded, Wyman presented evidence
of the shared knowledge of insufficient funds at trial. He submitted a request for
admissions, testified as to his own knowledge of the plan and what he
communicated to Beeman, and asked Beeman why she waited to cash the
checks. Beeman failed to object to these questions and testimony.
[16] The purpose behind Trial Rule 15(B) is to “provide parties with some flexibility
in litigating a case, and to promote justice by permitting evidence brought in at
trial to determine the liability of the parties.” Baker v. Midland-Ross Corp., 508
N.E.2d 32, 37 (Ind. Ct. App. 1987), trans. denied. The evidence presented clearly
indicates an issue regarding Beeman’s knowledge of the sufficiency of the funds
in Cozy Traveler’s accounts, and Beeman failed to object to evidence relevant
to the affirmative defense. The issue was therefore tried by consent under Trial
Rule 15(B), and the affirmative defense was properly before the trial court.
Conclusion
[17] Wyman did not waive his affirmative defense by failing to assert it in his
responsive pleadings. Affirmed.
May, J., and Brown, J., concur.
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