RCM Phoenix Partners, LLC v. 2007 East Meadows, LP

FILED
Jan 11 2019, 8:37 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
F. Anthony Paganelli Stephen J. Peters
Thomas D. Perkins David I. Rubin
Stephanie L. Grass PLUNKETT COONEY, P.C.
PAGANELLI LAW GROUP Indianapolis, Indiana
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
RCM Phoenix Partners, LLC, January 11, 2019
Appellant-Plaintiff, Court of Appeals Case No.
18A-PL-1355
v. Appeal from the Marion Superior
Court
2007 East Meadows, LP, The Honorable James B. Osborn,
Appellee-Defendant. Judge
Trial Court Cause No.
49D14-0807-PL-34494
Bailey, Judge.
Court of Appeals of Indiana | Opinion 18A-PL-1355 | January 11, 2019 Page 1 of 13
Case Summary
[1] This case involves a ten-year-old lawsuit arising from a real estate transaction
that did not close. The seller was appellant, RCM Phoenix Partners, LLC
(“Phoenix”), and the potential buyer was appellee, 2007 East Meadows, LP
(“Meadows”). Phoenix sued Meadows for, among other things,1 slander of title
based on the filing of a lis pendens notice and resulting damages. Phoenix
appeals from the trial court decision denying its slander of title claim.
[2] We affirm.
Issues
[3] Phoenix raises two issues on appeal which we restate as follows:
1. Whether Meadows waived its claim of absolute privilege
regarding its lis pendens notice by raising it for the first time
on appeal.
2. Whether the trial court erred in denying Phoenix’s slander
of title claim.
1
Phoenix also sued to retain the earnest money deposited by Meadows. The trial court granted that claim,
and Meadows did not appeal.
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Facts and Procedural History
[4] In July of 2007, Phoenix entered into a written Purchase and Sale Agreement
(“Purchase Agreement”) with Eureka Holdings Acquisitions, LLP (“Eureka”),
under which Eureka would purchase an apartment community in Indianapolis
(“the Property”) from the owner/seller, Phoenix, for $9.05 million. In
September of 2007, Eureka assigned the Purchase Agreement to Meadows. As
Eureka’s assignee, Meadows was required to pay the purchase price through a
combination of cash at closing and assumption of Phoenix’s existing mortgage
on the Property with Wachovia Bank (“Wachovia”).
[5] Because Meadows experienced delays in obtaining approval from Wachovia for
Meadows to assume the mortgage on the Property, the parties agreed to several
extensions on the closing date specified in the Purchase Agreement.
Meanwhile, in December of 2007, the Indiana Housing Authority (“IHA”)
began an enforcement proceeding against Phoenix regarding the condition of
the apartments located on the Property. In early-to-mid December of 2007,
Paul Morris (“Morris”), a co-owner of the Property, informed Harris Block
(“Block”), an employee of Meadows, about the IHA civil enforcement action.
[6] By January of 2008, Wachovia still had not approved Meadows to assume the
mortgage on the Property. Meadows requested from Phoenix another
extension of time on the closing date, but Phoenix denied that request. On
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January 22, 2008, Meadows filed a lawsuit in Texas,2 alleging Phoenix
breached the Purchase Agreement and committed fraud, based on the pending
enforcement action on the Property. On January 25, 2008, Meadows filed in
Texas its first lis pendens notice in which it gave notice of the pending Texas
lawsuit related to the Property.
[7] On July 31, 2008, Phoenix filed a lawsuit in Indiana in which it claimed
Meadows breached the Purchase Agreement and, therefore, Phoenix was
entitled to keep the earnest money deposit made by Meadows. That lawsuit
was subsequently stayed pending the outcome of the lawsuit in Texas. On
August 15, 2008, Meadows filed in the Indiana court an amended lis pendens
notice of both the pending Texas and Indiana lawsuits.
[8] On April 14, 2010, the Court of Appeals of Texas affirmed the Texas trial
court’s dismissal of Meadows’ lawsuit for lack of personal jurisdiction over
Phoenix. 2007 East Meadows, 310 S.W.3d at 208-09. In July 2011, Meadows
moved to lift the stay in the Indiana case and that motion was granted. On
August 15, 2011, Meadows filed its answer and counter-claims against Phoenix
for breach of contract and fraud but did not raise any affirmative defenses. On
September 17, 2012, Phoenix filed a supplemental complaint adding a claim
against Meadows for slander of title and the resulting damages. On October 17,
2
Eureka is a Texas entity, and Meadows is an Indiana limited partnership with its principal place of business
in Dallas, Texas. 2007 East Meadows, L.P. v. RCM Phoenix Partners, L.L.C., 310 S.W.3d 199, 202 (Tex. App.-
Dallas 2010, pet. denied).
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2012, Meadows filed its answer to the supplemental complaint and also raised
its counter-claims for breach of contract and fraud and raised seven affirmative
defenses—none of which alleged its lis pendens notice was privileged as a matter
of law. Appellant’s App., Vol. II, at 238-39.
[9] On December 6, 2013, after learning that Phoenix was in negotiations to sell
the Property to a third party, Meadows filed its third amended lis pendens notice
regarding the pending Indiana case. On March 31, 2014, both parties moved
for summary judgment as to Meadows’ counter-claims for breach of contract
and fraud. In an order dated June 26, 2014, the trial court granted summary
judgment in favor of Phoenix and dissolved Meadows’ pending lis pendens
notice. Appealed Order at 7, Finding of Fact 32; Tr. Vol. III at 70. Meadows
appealed.
[10] In 2007 East Meadows, LP v. RCM Phoenix Partners, LLC, No. 49A05-1407-PL-
300 (Ind. Ct. App. Jan. 20, 2016), trans. denied, a panel of this court affirmed the
June 26, 2014, order granting Phoenix summary judgment on Meadows’
counter-claims for breach of contract and fraud. On July 28, 2016, our
Supreme Court denied transfer on that decision. 2007 East Meadows, LP v. RCM
Phoenix Partners, LLC, 57 N.E.3d 816 (Ind. 2016). On remand, the trial court
issued an order noting that the only remaining claims were Phoenix’s claims for
retainer of the earnest money and slander of title. Following a two-day bench
trial, on May 14, 2018, the trial court entered an order in favor of Phoenix
regarding its claim for retention of the earnest money but found in favor of
Meadows regarding Phoenix’s slander of title and damages claim. In doing so,
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the trial court issued findings of fact and conclusions of law. Regarding the
slander of title claim, the trial court concluded that “[a]lthough Meadows made
what eventually were found to be incorrect statements regarding Phoenix’s
ownership of the land in question, it did not do so maliciously and had a good
faith basis for believing the statements were correct.” Appealed Order at 12-13.
Phoenix now appeals the denial of its slander of title claim.
Discussion and Decision
Standard of Review
[11] At the parties’ requests, the trial court entered findings and conclusions
pursuant to Indiana Trial Rule 52, and our standard of review in that situation
is well settled:
First, we determine whether the evidence supports the findings
and second, whether the findings support the judgment. In
deference to the trial court’s proximity to the issues, we disturb
the judgment only where there is no evidence supporting the
findings or the findings fail to support the judgment. We do not
reweigh the evidence but consider only the evidence favorable to
the trial court’s judgment. Challengers must establish that the
trial court’s findings are clearly erroneous. Findings are clearly
erroneous when a review of the record leaves us firmly convinced
a mistake has been made. However, while we defer substantially
to findings of fact, we do not do so to conclusions of law.
Additionally, a judgment is clearly erroneous under Indiana Trial
Rule 52 if it relies on an incorrect legal standard. We evaluate
questions of law de novo and owe no deference to a trial court’s
determination of such questions.
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Estate of Kappel v. Kappel, 979 N.E.2d 642, 651-52 (Ind. Ct. App. 2012)
(quotation marks and citations omitted). Moreover, “[w]e may affirm a
judgment on any legal theory, whether or not relied upon by the trial court, so
long as the trial court’s findings are not clearly erroneous and support the
theory adopted.” Id. at 652 (citing Mitchell v. Mitchell, 695 N.E.2d 920, 923-24
(Ind. 1998)).3
[12] And, because Phoenix did not prevail at trial on its slander of title claim, it
appeals from a negative judgment.
A judgment entered against a party bearing the burden of proof is
a negative judgment. Smith v. Dermatology Assocs. of Fort Wayne,
977 N.E.2d 1, 4 (Ind. Ct. App. 2012). On appeal from a negative
judgment, this Court will reverse the trial court only if the
judgment is contrary to law. Comm’r, Ind. Dep’t. of Envtl. Mgmt. v.
RLG, Inc., 755 N.E.2d 556, 559 (Ind. 2001). A judgment is
contrary to law if the evidence leads to but one conclusion and
the trial court reached an opposite conclusion. Infinity Prods., Inc.
v. Quandt, 810 N.E.2d 1028, 1032 (Ind. 2004) (citation omitted).
In determining whether the trial court’s judgment is contrary to
law, we will consider the evidence in the light most favorable to
the prevailing party, together with all reasonable inferences
therefrom. Smith, 977 N.E.2d at 4. We neither reweigh the
evidence nor judge the credibility of witnesses. See Brand v.
Monumental Life Ins. Co., 275 Ind. 308, 417 N.E.2d 297, 298
(1981). Further, “[w]hen appealing from a negative judgment, a
3
Phoenix cites to Plummer & Co., Inc. v. Cole, 613 N.E.2d 481, 483 (Ind. Ct. App. 1993), for the proposition
that a reviewing court may not affirm the judgment on any legal basis—whether relied upon by the trial court
or not—when Rule 52 findings have been entered upon request of the parties. For that conclusion, Plummer
relied upon Vanderburgh Cty. Bd. of Comm’rs v. Rittenhouse, 575 N.E.2d 663 (Ind. Ct. App. 1993); however,
Rittenhouse—and, therefore, Plummer—have since been abrogated on those grounds by Mitchell, 695 N.E.2d at
920, 923-24.
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party has a heavy burden to establish to the satisfaction of the
reviewing court that there was no basis in fact for the judgment
rendered.” Ind. & Mich. Elec. Co. v. Schnuck, 260 Ind. 632, 298
N.E.2d 436, 440 (1973).
Burnell v. State, 56 N.E.3d 1146, 1149-50 (Ind. 2016).
Waiver
[13] Phoenix contends that the trial court erred in holding that Meadows did not
slander Phoenix’s title to the Property by filing a lis pendens notice that clouded
the title. In response, Meadows maintains that its filing of a lis pendens notice
was absolutely privileged and, therefore, cannot constitute slander of title.
However, before we reach the merits, we must address Phoenix’s claim that
Meadows has waived its privilege argument by failing to raise it in the trial
court.4
[14] It is the general rule that an argument or issue raised for the first time on appeal
is waived for appellate review. See, e.g., Plank v. Cmty. Hosp. of Ind., Inc., 981
N.E.2d 49, 53 (Ind. 2013). However, as another panel of this court has recently
noted, “our [S]upreme [C]ourt has signaled a shift away from this rule, at least
as far as appellees are concerned.” Ind. Bureau of Motor Vehicles v. Gurtner, 27
N.E.3d 306, 312 (Ind. Ct. App. 2015) (citing Drake v. Dickey, 12 N.E.3d 875,
4
Phoenix also contends that Meadows has waived its privilege argument on appeal by failing to make
cogent argument and citation to the record, in violation of Appellate Rule 46(A). We disagree. Meadows
cited to relevant portions of the record in its Statement of Facts, and it extensively analyzed relevant case law
in its argument section.
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875 (Ind. 2014), and Citimortgage v. Barabbas, 975 N.E.2d 805, 813 (Ind. 2012)).
For example, in Citimortgage, the Supreme Court held that a party who has
prevailed in the trial court, i.e., the appellee, “may defend the trial court’s ruling
on any grounds, including grounds not raised at trial.” 975 N.E.2d at 813.
Thus,
[u]nder Citimortgage, an appellant may not present an argument
that was not presented to the trial court, but this limitation does not
apply to an appellee who seeks to affirm the trial court’s judgment. This
rule is consistent with the presumption in all appeals that a trial
court’s judgment is correct as well as the general rule that on
appeal we will affirm a judgment on any theory supported by the
record. See J.M. v. Review Bd. of Ind. Dep’t of Workforce Dev., 975
N.E.2d 1283, 1289 (Ind. 2012) (“[O]n appellate review the trial
court’s judgment will be affirmed if sustainable on any theory or
basis found in the record.”).
Gurtner, 27 N.E.3d at 312 (emphasis added).
[15] Here, appellee Meadows seeks an affirmance of the trial court’s judgment in its
favor regarding Phoenix’s slander of title claim. Therefore, Meadows may raise
any argument in support of that judgment, even if the argument was not raised
in the trial court. Id. Meadows has not waived its privilege argument for
purposes of appellate review.5
5
Meadows has filed a Motion to Strike the portions of Phoenix’s response brief that argue waiver.
Meadows points out that it did argue below that a properly filed lis pendens notice cannot constitute slander of
title, and it cites to its argument in support of its motion for involuntary dismissal and its proposed findings of
fact and conclusions of law. However, we deny that motion as unnecessary, since we hold that Meadows
may raise its privilege argument on appeal regardless of whether it raised it below.
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Slander of Title
[16] Phoenix asserts that Meadows slandered the title to the Property—thereby
causing Phoenix $1.1 million in damages—by filing a lis pendens notice
regarding the Property when Meadows knew it would not be able to fulfill the
Purchase Agreement by assuming the mortgage on the Property. Indiana Code
Section 32-30-11-3 contains the requirements for when a lis pendens notice must
be filed:
(a) This section applies to a person who commences a suit:
(1) in any court of Indiana or in a district court of the United
States sitting in Indiana;
(2) by complaint as plaintiff or by cross-complaint as defendant;
and
(3) to enforce any lien upon, right to, or interest in any real estate
upon any claim not founded upon:
(A) an instrument executed by the party having the legal title to
the real estate, as appears from the proper records of the county,
and recorded as required by law; or
(B) a judgment of record in the county in which the real estate is
located, against the party having the legal title to the real estate,
as appears from the proper records.
(b) The person shall file, with the clerk of the circuit court in each
county where the real estate sought to be affected is located, a
written notice containing:
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(1) the title of the court;
(2) the names of all the parties to the suit;
(3) a description of the real estate to be affected; and
(4) the nature of the lien, right, or interest sought to be enforced
against the real estate.
The purpose of the lis pendens notice is:
to provide machinery whereby a person with an in rem claim to
property which is not otherwise recorded or perfected may put his
claim upon the public records, so that third persons dealing with
the defendant ... will have constructive notice of it. ([o]riginal
emphasis.)
Curry v. Orwig, 429 N.E.2d 268, 272-73 (Ind. Ct. App. 1981) (quoting 4 W.
Harvey and R. B. Townsend, Indiana Practice § 63.1(B) at 340 (1971)).
[17] A party who has a claim to title of real estate under a contract for the real
estate’s purchase “has the kind of interest that requires filing a lis pendens notice
under the statute to protect third parties.” Trotter v. Ind. Waste Sys., Inc., 632
N.E.2d 1159, 1163 (Ind. Ct. App. 1994). That is, an interest in property based
upon a purchase agreement—which is not publicly recorded—is similar to an in
rem interest in property through either an unrecorded deed or an unrecorded
mortgage; in all three instances, the filing of a lis pendens notice is required in
order to inform interested third parties of the potential cloud upon the title of
the property. Id.; see also Guzzo v. Goodrich Quality Theaters, Inc., 679 N.E.2d
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166, 169 (Ind. Ct. App. 1997) (holding a complaint seeking specific
performance as to a land purchase agreement has the potential to convey
ownership of the land, and the potential to convey ownership “causes the relief
to be in rem”), trans. denied.
[18] Furthermore, statements made in a properly-filed lis pendens notice are
absolutely privileged, and, therefore, defendants who file such a notice may not
be held liable for slander of title. Trotter, 632 N.E.2d at 1163-64; Curry, 429
N.E.2d at 274. Similarly, a pertinent and relevant statement regarding title to
property made in a judicial proceeding is absolutely privileged; therefore, “no
right of action [for slander of title] accrues even though the statement would
otherwise have been actionable.” Trotter, 632 N.E.2d at 1162 (citing Stahl v.
Kincade, 135 Ind. App. 699, 192 N.E.2d 493 (1963)).
[19] In this case, the trial court correctly found that, in 2007 and 2008, both parties
in this case filed lawsuits in Texas and Indiana regarding their respective
interests in the Property that was the subject of a Purchase Agreement. Thus,
Meadows was required by Indiana law to file a lis pendens notice as to the
Property, I.C. §32-30-11-3 and Trotter, 632 N.E.2d at 1163, and it properly did
so. Therefore, the statements Meadows made regarding the Property in the lis
pendens notice and the related lawsuits were absolutely privileged, and
Meadows cannot be held liable, on the basis of those statements, for slander of
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title. Id. The trial court judgment was not contrary to law, and the trial court
did not err in denying Phoenix’s claim for slander of title.6
Conclusion
[20] Because Meadows is an appellee seeking an affirmance of a judgment in its
favor, it may raise any argument on appeal in support of the judgment,
including arguments it did not raise in the trial court. Gurtner, 27 N.E.3d at
312. And Meadows’ lis pendens notice was absolutely privileged as a matter of
law, Trotter, 632 N.E.2d at 1163-64; therefore, the trial court did not err in
denying Phoenix’s claim for slander of title based on the lis pendens notice.
[21] Affirmed.
Bradford, J., and Brown, J., concur.
6
Because we find that Meadows’s properly-filed lis pendens notice cannot, as a matter of law, constitute
slander of title, we do not address the merits of Phoenix’s slander of title claim or the trial court’s finding that
Meadows lacked the “malice” necessary to slander title. Appealed Order at 12-13. Nor do we address the
damages claim related to the alleged slander of title.
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