James M. Brinkley and Stephanie L. Brinkley v. Michael Haluska, P.E., d/b/a Retro Tech

FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE,
Indiana Bureau of Motor Vehicles:
GREGORY W. BLACK
The Black Law Office GREGORY F. ZOELLER
Plainfield, Indiana Attorney General of Indiana
ELIZABETH ROGERS
FILED
Dec 28 2012, 9:48 am
Deputy Attorney General
Indianapolis, Indiana CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEY FOR APPELLEE,
Donald Gindelberger:
NORMAN L. BURGGRAF, JR.,
Elkhart, Indiana
IN THE
COURT OF APPEALS OF INDIANA
JAMES M. BRINKLEY, )
STEPHANIE L. BRINKLEY, )
)
Appellants-Plaintiffs, )
)
vs. ) No. 32A01-1204-MI-181
)
MICHAEL HALUSKA, P.E., d/b/a )
RETRO TECH, et al., )
)
Appellees-Defendants. )
APPEAL FROM THE HENDRICKS SUPERIOR COURT
The Honorable Mark A. Smith, Judge
Cause No. 32D04-0911-MI-28
December 28, 2012
OPINION - FOR PUBLICATION
BARNES, Judge
Case Summary
James Brinkley III and Stephanie Brinkley (collectively, the “Brinkleys”) appeal
the trial court’s judgment for the State of Indiana by its Bureau of Motor Vehicles
(“BMV”) and Donald Gindelberger in their action against the BMV, Gindelberger,
Michael Haluska, d/b/a Retro Tech, Retro Tech Auto Restoration, Inc., (collectively,
“Haluska”), and Mechanic’s Lien Plus, Inc. We affirm.
Issues
The Brinkleys raises several issues, which we restate as:
I. whether the trial court properly granted summary
judgment to Gindelberger because he was a bona fide
purchaser for value; and
II. whether the trial court properly granted judgment on
the pleadings to the BMV because the BMV was
entitled to immunity.
Facts
In May 2005, James was issued a certificate of title for a 1965 Chevrolet Corvette.
In September 2006, the Brinkleys entered into a contract with Haluska for the restoration
of the vehicle for $12,500 plus parts and additional expenses. Haluska is in the
automotive restoration business, not in the business of selling vehicles. The Brinkleys
paid Haluska $10,317 and spent $6,000 on parts and incidentals. However, the parties
eventually had a disagreement about Haluska’s work and the amount of money the
Brinkleys still owed. In November 2008, Haluska, who still had possession of the
vehicle, threatened to file a mechanic’s lien on the vehicle if the Brinkleys failed to pay
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an additional $1,500. The parties continued arguing about the vehicle and Haluska’s
work.
Haluska apparently hired Mechanic’s Lien Plus to file a lien on the vehicle. On
July 24, 2009, Mechanic’s Lien Plus sent a certified notice to James at a residence on
Victoria Drive in Indianapolis, which is the address listed on the BMV’s title records for
the vehicle and is the address of James’s father. James, however, lives at a residence on
East 75th Street in Indianapolis. The notice provided that the vehicle would be sold at a
public auction on August 28, 2009, if James did not recover the vehicle by paying
charges of $7,400. James did not receive the notice of the sale. The certified notice was
marked “return to sender, no such number, unable to forward” and was returned. App. p.
195. Mechanic’s Lien Plus advertised the sale in an Indianapolis newspaper on July 25,
2009, through July 31, 2009. At the August 28, 2009 auction, Haluska purchased the
vehicle for $100. However, for unknown reasons, Mechanic’s Lien Plus sent a second
certified notice to James at the Victoria Drive address on November 10, 2009, and James
did receive this notice. The second notice stated that the vehicle would be sold at public
auction on November 16, 2009, if James did not pay the charges.
On November 20, 2009, the Brinkleys filed a complaint for injunctive relief and
damages against Haluska. They requested injunctive relief to bar the sale of the vehicle
and to regain possession of the vehicle. On the same day, Haluska filed an application
for certificate of title with the BMV regarding the vehicle. Haluska stated on the
application that he purchased the vehicle on August 28, 2009, for $100. On November
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23, 2009, the BMV issued a certificate of title to Haluska for the vehicle. Haluska was
served with the Brinkleys’ complaint on December 3, 2009.
Haluska then listed the vehicle for sale on eBay. Gindelberger had substantial
experience on eBay and had purchased ten to fifteen other vehicles on eBay. On
December 13, 2009, Gindelberger bid $25,100 on the vehicle and was the winning
bidder. Gindelberger requested and received the certificate of title showing Haluska as
the owner. Gindelberger did not examine the Hendricks County court records prior to
purchasing the vehicle. The vehicle was delivered to Gindelberger on December 14,
2009, and Gindelberger paid Haluska.
After a December 17, 2009 preliminary hearing, the trial court granted the
injunction, ordered Haluska not to transfer title or deliver a signed title to the vehicle to
any third party, and ordered the BMV not to issue a new title to the vehicle until further
order. On December 18, 2009, the Brinkleys filed an amended complaint, and on
December 30, 2009, they filed a second amended complaint, adding claims against the
BMV, eBay, and Gindelberger. The amended complaint alleged that Gindelberger was
“not a bona fide purchaser for value without notice.” Id. at 50. It also requested
injunctive relief against the BMV to prevent the transfer of title. Gindelberger then filed
a cross-claim against Haluska. On May 10, 2010, the Brinkleys filed a tort claims notice
against the BMV and/or the State of Indiana.
In August 2010, the Brinkleys filed a motion for partial summary judgment
against Gindelberger. In September 2010, Gindelberger filed a response to the motion
for partial summary judgment and also filed a cross-motion for partial summary
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judgment. On October 4, 2010, the Brinkleys filed a response to Gindelberger’s cross-
motion for partial summary judgment. The Brinkleys also filed a third amended
complaint against Haluska, Retro Tech, the BMV, Gindelberger, and Mechanic’s Lien
Plus, in which the Brinkleys sought damages for breach, fraud, theft, and an injunction
against Haluska and damages for negligence against Mechanic’s Lien Plus.
On October 27, 2010, the Brinkleys filed a “Hearing Brief.” Id. at 11. After an
October 27, 2010 hearing on the motion for summary judgment, the trial court concluded
that Indiana Code Section 26-1-2-403(2) and Indiana Code Section 26-1-2-403(3) were
inapplicable because Haluska was not in the business of selling Corvettes. However, the
trial court concluded that Indiana Code Section 26-1-2-403(1) was applicable because
Gindelberger was a good faith purchaser for value. The trial court granted summary
judgment to Gindelberger and also apparently struck the Brinkleys’ Hearing Brief.
In July 2011, the BMV filed a motion for judgment on the pleadings. The BMV
argued that it was entitled to immunity pursuant to Indiana Code Section 34-13-3-3. The
Brinkleys filed a response, arguing that the BMV improperly issued a certificate of title
to Haluska because the notice to the Brinkleys was not proper or timely. After a hearing,
the trial court granted the BMV’s motion for judgment on the pleadings.
In February 2012, a bench trial was held with the remaining parties, and the trial
court entered judgment in favor of the Brinkleys and against Haluska, Retro Tech, and
Mechanic’s Lien Plus. On March 1, 2012, the Brinkleys filed a motion to correct error
regarding the summary judgment for Gindelberger and the judgment on the pleadings for
the BMV, which the trial court denied. The Brinkleys now appeal.
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Analysis
I. Claim against Gindelberger
The Brinkleys argue that the trial court improperly granted summary judgment to
Gindelberger because he was not a good faith purchaser for value. Summary judgment is
appropriate when there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. Ind. Trial Rule 56. We liberally construe all
designated evidentiary material in a light most favorable to the non-moving party to
determine whether there is a genuine issue of material fact. Bradshaw v. Chandler, 916
N.E.2d 163, 166 (Ind. 2009). The party that lost in the trial court has the burden of
persuading the appellate court that the trial court erred. Id. Our review of a summary
judgment motion is limited to those materials designated to the trial court. Mangold v.
Ind. Dep’t of Natural Res., 756 N.E.2d 970, 973 (Ind. 2001).
Legal title to a vehicle is governed by the sales provisions of the Uniform
Commercial Code (“UCC”) rather than the Indiana Certificate of Title Act. Marlow v.
Conley, 787 N.E.2d 490, 496-97 (Ind. Ct. App. 2003). Thus, the issue is whether
Gindelberger obtained good title to the vehicle from Haluska pursuant to Indiana Code
Section 26-1-2-403(1), which provides:
A purchaser of goods acquires all title which the purchaser’s
transferor had or had power to transfer, except that a
purchaser of a limited interest acquires rights only to the
extent of the interest purchased. A person with voidable title
has power to transfer a good title to a good faith purchaser for
value. When goods have been delivered under a transaction of
purchase, the purchaser has such power even though:
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(a) the transferor was deceived as to the identity of the
purchaser; or
(b) the delivery was in exchange for a check which is later
dishonored; or
(c) it was agreed that the transaction was to be a “cash
sale”; or
(d) the delivery was procured through fraud punishable as
theft under the criminal law.
We noted in Marlow, 787 N.E.2d at 493, that, under Indiana Code Section 26-1-2-403(1),
a defrauding buyer obtains voidable title and has the power to transfer good title to a
good faith purchaser for value. The Brinkleys do not dispute that Haluska had voidable,
rather than void, title. Their only argument is that Gindelberger was not a good faith
purchaser for value.
“Good faith” is defined as “honesty in fact and the observance of reasonable
commercial standards of fair dealing.”1 Ind. Code § 26-1-1-201(19). We addressed the
good faith purchaser for value requirements in Marlow, 787 N.E.2d at 495-99. There,
Conley sold a truck to the Medleys at a car show. Conley claimed that he owned a car
lot. When Conley gave the Medleys the certificate of title, Marlow was listed as the
truck’s owner, and Conley assured the Medleys that “Marlow had signed the title as part
of a deal Conley made with him.” Marlow, 787 N.E.2d at 491. The Medleys then
applied for a certificate of title in their name. Marlow later filed a complaint against
Conley and the Medleys and alleged that Conley had stolen the vehicle. At the trial,
1
This statute was amended in 2009. See Pub. L. No. 135-2009, § 1 (eff. July 1, 2009). It previously
read: “ʻGood Faith,’ means honesty in fact in the conduct or transaction concerned.”
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evidence was presented that Marlow told the police he had a business deal with Conley
involving the sale of the truck to Conley but that Conley failed to perform his end of the
deal. As between the Medleys and Marlow, the trial court entered judgment for the
Medleys.
On appeal, we affirmed, holding that the Medleys were good faith purchasers for
value under Indiana Code Section 26-1-2-403(1). Marlow’s only argument was that the
Medleys did not purchase the truck in good faith because the certificate of title was
signed by Marlow, not Conley. We noted that Conley had failed to comply with the
statutory requirements by selling the truck to the Medleys without first transferring the
title to his own name. However, we held that the Medleys’ failure to demand a proper
certificate of title did not affect their status as good faith purchasers. Although the failure
to comply with the statutory requirements regarding the certificate of title “may,
combined with other suspicious circumstances, raise questions about a purchaser’s good
faith,” we found no such other circumstances. Id. at 497-98. We also noted the purpose
of Indiana Code Section 26-1-2-403(1), which was intended to determine the priorities
between the two innocent parties:
(1) the original owner who parts with his goods through
fraudulent conduct of another and (2) an innocent third party
who gives value for the goods to the perpetrator of the fraud
without knowledge of the fraud. By favoring the innocent
third party, the Uniform Commercial Code endeavors to
promote the flow of commerce by placing the burden of
ascertaining and preventing fraudulent transactions on the one
in the best position to prevent them, the original seller.
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Id. at 498 (quoting Mowan v. Anweiler, 454 N.E.2d 436, 439 (Ind. Ct. App. 1983)).
“The policy behind the UCC is to favor the Medleys because, as between the Medleys
and Marlow, Marlow was in the best position to prevent the fraudulent transaction.” Id.We concluded that the Medleys were good faith purchasers for value. Thus, Conley, as a
defrauding buyer, possessed voidable title and transferred good title to the Medleys as
good faith purchasers for value.
Here, according to the Brinkleys, Gindelberger was not a good faith purchaser
because he had constructive notice of their lawsuit against Haluska, which was already in
progress when Haluska sold the vehicle on eBay. In support of their constructive notice
argument, the Brinkleys rely on cases involving real estate transactions. For example, in
the real estate context, a purchaser is presumed to have examined the records in the chain
of title and is charged with actual or constructive notice of all such properly recorded
instruments. See Bank of New York v. Nally, 820 N.E.2d 644, 648-49 (Ind. 2005).
Further, lis pendens notices provide constructive notice of pending lawsuits that affect an
interest in real estate. See Clarkson v. Neff, 878 N.E.2d 240, 243 (Ind. Ct. App. 2007),
trans. denied. “If a lis pendens notice is properly filed on the public records, a
subsequent purchaser will take the property subject to a judgment in the pending claim.”
Id. at 244 (quoting MDM Inv. v. City of Carmel, 740 N.E.2d 929, 934 n.3 (Ind. Ct. App.
2000)). However, we do not find the Brinkleys’ argument persuasive. There is no “lis
pendens notice” for automobiles, and the Brinkleys cite no authority requiring
Gindelberger to search pending litigation records prior to purchasing a vehicle. Likewise,
our research reveals no such requirement.
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The Brinkleys also argue that Gindelberger failed to “get to know” Haluska as
recommended by eBay. Prior to buying an automobile through an eBay auction, eBay
recommends that a purchaser should “[g]et to know your seller,” check the seller’s
“Feedback rating,” and contact “the seller with any questions.” App. p. 115. Haluska
had a 100% positive feedback rating. The Brinkleys do not explain how “getting to
know” Haluska was required to obtain status as a good faith purchaser. eBay’s
recommendations are just that—recommendations.
We conclude that the trial court properly found Gindelberger to be a good faith
purchaser for value. As in Marlow, between the Brinkleys or Gindelberger, the Brinkleys
were in the best position to prevent this allegedly fraudulent transaction. Because
Gindelberger was a good faith purchaser for value, Haluska transferred good title to him.
The trial court properly granted summary judgment to Gindelberger.2
II. Claim against BMV
Next, the Brinkleys argue that the trial court erred by granting the BMV’s motion
for judgment on the pleadings. We review de novo a trial court’s ruling on a Trial Rule
12(C) motion for judgment on the pleadings. Murray v. City of Lawrenceburg, 925
N.E.2d 728, 731 (Ind. 2010). We accept as true the well-pleaded material facts alleged in
the complaint, and base our ruling solely on the pleadings. Id. “A Rule 12(C) motion for
judgment on the pleadings is to be granted ‘only where it is clear from the face of the
2
The Brinkleys also briefly argue that the trial court abused its discretion by striking its hearing brief,
which was filed on the day of the summary judgment hearing. Even assuming the trial court erred
though, the Brinkleys have not shown that their substantial rights were affected. See Ind. Trial Rule 61.
Even if we consider the Brinkleys’ hearing brief, we still conclude that the trial court properly granted
summary judgment to Gindelberger.
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complaint [and answer] that under no circumstances could relief be granted.’” Id.(quoting Forte v. Connerwood Healthcare, Inc., 745 N.E.2d 796, 801 (Ind. 2001)).
According to the Brinkleys, the BMV improperly issued a certificate of title for
the vehicle to Haluska. The Brinkleys contend that the BMV should have been aware
that the Brinkleys did not receive proper notice of the auction and that the BMV acted
arbitrarily. The BMV argues that it is entitled to immunity pursuant to the Indiana Tort
Claims Act (“ITCA”) for issuing the certificate of title.
“ʻA traditional formulation of tort liability requires the plaintiff to establish a duty,
breach of that duty, proximate cause, and damages.’” Gary Cmty. Sch. Corp. v. Roach-
Walker, 917 N.E.2d 1224, 1225 (Ind. 2009) (quoting 1 Dan B. Dobbs, The Law of Torts
§ 114, at 269 (2001)). “Immunity trumps all of these and bars recovery even where
ordinary tort principles would impose liability.” Id. “Thus, for example, the government
and its employees are immune from liability for the ‘initiation of a judicial or an
administrative proceeding,’ even if the action was taken in breach of a duty to act
competently and in the public interest.” Id. at 1225-26 (quoting I.C. § 34-13-3-3(6)
(2008)). Whether an immunity applies is a matter of law for the courts to decide. Id. at
1226. The party seeking immunity bears the burden of establishing the immunity. Id.
The ITCA provides that governmental entities may be liable for torts committed
by their agencies and employees. Flynn v. Indiana Bureau of Motor Vehicles, 716
N.E.2d 988, 990 (Ind. Ct. App. 1999), trans. denied. However, the ITCA protects
governmental entities from liability if the tortious conduct falls within certain statutorily
enumerated exceptions found in Indiana Code Section 34-13-3-3, which provides, in part:
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A governmental entity or an employee acting within the scope
of the employee’s employment is not liable if a loss results
from the following:
*****
(11) The issuance, denial, suspension, or revocation of, or
failure or refusal to issue, deny, suspend, or revoke any
permit, license, certificate, approval, order, or similar
authorization, where the authority is discretionary under the
law.
The BMV argues that, pursuant to Indiana Code Section 34-13-3-3(11), it is entitled to
immunity because the issuance of the certificate of title was discretionary.
We addressed a similar issue in Flynn, 716 N.E.2d at 991-92. There, Flynn
purchased a vehicle and applied to the BMV for a certificate of title, which the BMV
issued. The vehicle was later confiscated because it was stolen. Flynn filed an action
against the BMV, arguing that it negligently issued the certificate of title. The BMV
moved for summary judgment, arguing that it was immune from liability under the ITCA,
and the trial court granted summary judgment to the BMV.
On appeal, we affirmed the trial court’s order. We noted, in part, that Indiana
Code Section 9-17-2-10 provides: “If the bureau is satisfied that the person applying for a
certificate of title is the owner of the vehicle, the bureau may issue a certificate of title for
the vehicle.” Id. at 991. The “[u]se of the term ‘may’ ordinary connotes discretion.” Id.Accordingly, we concluded that “the issuance of certificates of title by the BMV is
12
discretionary within the meaning of IC 34-13-3-3(10)[3] in absence of other indications to
the contrary.” Id.Flynn relied on other statutory provisions to argue that the BMV did not have such
discretion. Flynn relied, in part, on Indiana Code Section 9-17-2-8, which provided that
the BMV “shall use reasonable diligence in determining if the facts stated in an
application for a certificate of title are true.” Id. We rejected that argument and held “the
BMV may not exercise this discretion arbitrarily, and a person may seek judicial review
of an agency action that constitutes an abuse of discretion.” Id. at 992 (citing I.C. § 4-
21.5-5-14(d)(1)). Further, “the fact that the BMV is required to exercise diligence in
determining the truth of the fact stated in an application is consistent with the idea that
the BMV may not act arbitrarily.” Id. We concluded that the BMV was immune from
liability for losses resulting from the issuance or denial of a certificate of title, and the
trial court properly granted summary judgment.
The Brinkleys argue that, regardless of Indiana Code Section 9-17-2-10, the BMV
lacked such discretion due to Indiana Code Section 9-22-5-15(i), which, at the time of the
issuance of the certificate of title, provided:
A person who holds a mechanic’s lien under this section shall
execute and deliver to the purchaser of a vehicle under this
section a sales certificate in the form designated by the
bureau, setting forth the following information:
(1) The facts of the sale.
(2) The vehicle identification number.
3
See now Ind. Code § 34-13-3-3(11).
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(3) The certificate of title if available.
(4) A certificate from the newspaper showing that the
advertisement was made as required under subsection
(d).
Whenever the bureau receives from the purchaser an
application for certificate of title accompanied by these items,
the bureau shall issue a certificate of title for the vehicle
under IC 9-17.
I.C. § 9-22-5-15 (repealed by Pub. L. No. 125-2012, § 155 (eff. July 1, 2012) (emphasis
added); see now I.C. § 9-22-1-21.5(i). Although Indiana Code Section 9-22-5-15 used
the word “shall,” it also required that the BMV issue the certificate of title under Indiana
Code Article 9-17, which includes Indiana Code Section 9-17-2-10. Again, that statute
gives the BMV discretion to issue a certificate of title.
The Brinkleys also focus on our holding that the BMV may not exercise its
discretion “arbitrarily,” but they ignore the remainder of the holding, which is that the
aggrieved person may seek judicial review—not file an action for negligence, which is
the route attempted by the Brinkleys. Contrary to the Brinkleys’ argument, we find little
to differentiate this case from Flynn. Consequently, we conclude that the BMV is
immune from liability pursuant to the ITCA, and trial court properly granted the BMV’s
motion for judgment on the pleadings.
Conclusion
The trial court properly granted summary judgment to Gindelberger, and the trial
court properly granted the BMV’s motion for judgment on the pleadings. We affirm.
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Affirmed.
VAIDIK, J., and MATHIAS, J., concur.
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