Court of Appeals of Indiana | Opinion 29A02

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A TTORNEY FOR A PPELLANT Peter S. Kovacs Peter Kovacs Law PC Fishers, Indiana A TTORNEY S FOR A PPELLEE Jeffrey M. Bellamy Stephen R. Donham Thrasher Buschmann & Voelkel, P.C. Indianapolis, Indiana


### I N T H E 

# COURT OF APPEALS OF INDIA NA
Craig D. Severance and Catherine Severance , Appellant s - Defendant s /Cross

- Appellees , v. 

### The Pleasant View Homeowners Association, Inc. , Appellee

- Plaintiff / Cross

- Appellant February 27, 2018 Court of Appeals Case No. 29A02

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- 1695 Appeal from the Hamilton Superior Court The Honorable Jonathan M. Brown, Judge The Honorable Daniel J. Pfleging, Judge Trial Co urt Cause No. 29D02

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- 2764

Crone, Judge .Court of Appeals of Indiana | Opinion 29A02

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### Case Summary
[1] The Pleasant View Homeowners Association, Inc. (“the HOA”) , filed a complaint to enjoin Craig and Catherine Se verance from using their residential lot in a manner inconsistent with Pleasant View subdivision’s covenants and restrictions by parking commercial vehicles, limousines, on their lot or in the street in front of and adjacent to their home located in the su bdivision

. Following an evidentiary hearing, the trial court issued a preliminary i njunction prohibiting the Severances from continuing to park the vehicles in such a
manner . However, the trial court subsequently declined to enter a permanent injunction based upon the Severances’ affirmative defense that the HOA lacked the authority to sue the Severances for an injunction because the HOA’s b oard of d irectors was not properly constituted or operating in accordance with its own rules of corporate gove rnance . The court set a future date for a hearing on the Severances ’ cl aimed damages.

[2] P rior to the trial court’s entry of a final judgment , the HOA directed the trial court to the passage of new statutory law regarding the governance of Indiana homeowners ass ociations. The HOA claimed that the new law nullified the Severances’ affirmative defense regarding the HOA’ s authority to seek an injunction

. The trial court held a hearing and thereafter entered its final judgment determining that it could not reconsid er its prior denial of the permanent injunction and that the Severances were entitled to no damages

. The Severances now appeal the trial court’s denial of t heir request for damages

. The HOA cross - appeals the trial court’s denial of its request for a per m anentCourt of Appeals of Indiana | Opinion 29A02

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injun ction . Concluding that our resolution of the cross

- appeal is dispositive, we reverse and remand to the trial court for further proceedings.



### Facts and Procedural History
[3] The HOA is an Indiana not

- for

- profit corporation with the primary purpose t o manage the residential subdivision kn own as Pleasant View in Hamilton County. The Severances are the owners of recor d of a lot within that subdivis i on . The affairs of the HOA and its members are governed by three documents: (1) t he Declaration of Coven ants, Conditions and Restrictions for Pleasant View (“t he Covenants and Restric t i ons”); (2) the Artic les of Incorporation; and, (3) the By

- Laws of the HOA (“t he Bylaws”). The Covenants and Restrictions provide in relevant part,
Section 10.4. Parking and P rohibited Ve hicles. (a) Parking. Vehicles shall be parked only in the garages or on the driveways, if any, serving the Lots or in appropriate spaces or designated areas in which parking may be assigned and then subject to such reasonable rules and regulat ions as the Board may adopt. Garages shall be used for parking of vehicles and no other use or modification thereof shall be permitted which would reduce the number of vehicles which may be parked therein below the number for which the garage was original ly developed. The [HOA] may designate certain on

- street parking areas for visitors or guests subject to reasonable rules

.

.... (b) Prohibited Vehicles. Commercial vehicles, vehicles with commercial writing on their exteriors, [and] vehicles primarily use d or de signed for commercial purposes ... shall be parkedCourt of Appeals of Indiana | Opinion 29A02

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only in enclosed garages or areas, if any, designated by the Board. Appellants’ App. Vol. 2 at 64

- 65.

[4] On April 6, 2015 , the HOA filed a complaint for injunctive relief against the Severances alleging that the Severances operated a commercial limousine business at their lot and parked commercial v ehicles on their lot or in the adjacent street in violation of the Covenants and Restrictions

. 1 Following an evidentiary hearing, the trial court issued an or der granting a preliminary injunction against the Severances. The court found that the Severances had violated the Covenants and Restrictions and enjoined them from parking their business vehicles in the subdivision unless stored indoors. The trial court ordered the HOA to maintain bond in the amount of $2500 to cover any estimated damages incurred by the Severances “to the extent of an entry of a wrongful preliminar y injunction.” Id

. at 127. The court further stated, “[i] f this injunction is later deem ed improper, [the HOA] and [the Severances] shall have an opportunity to dispute the proper amount of damages at that time. ” Id

.
[5] On December 4 and 28, 2015, the Severances objected to the preliminary injunction based on alleged irregularities in the electi on and/or appointment of the HOA’s board of d irectors . In sum, the Severances argue d that the b oard of d irectors was without authority to exercise corporate power (including the

1 The record indicates that the Severances own and operate Indy Limo Transport LLC.Court of Appeals of Indiana | Opinion 29A02

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power to sue for injunctive relief to enforce the Covenants and Restrictions ) on behalf of the HOA. On January 15, 2016, the Severances made a similar arg ument by way of a counterclaim that was subsequently struck by the trial court on the HOA’s motion . On March 16, 2016, the Severances filed a “Re quest for a Hearing to Rule on a ll Pretrial Ev idence” again arguing that the b oard of d irectors was not properly constituted or operating within its own Bylaws . The trial court took no action on the request.

[6] On July 1, 2016, the HOA requested a permanent injunction hearing. An evidenti ary hearing was held on August 4 and 31, 2016. On November 1, 2016, the trial court entered its findings of fact, conclusions thereon, and order d eclining to enter a permanent injunction. Specifically, the trial court incorporated its findings of fact an d conclusions thereon supporting its order of preliminary injunction but then found and concluded in relevant part: 7. [The Severances] contend that the Directors of [the HOA] are not legitimate and therefore cannot exercise the powers and duties of [the H OA] because they were not installed according to [the HOA’s] Bylaws. 8. The evidence received at the hearings support [the Severances’] contention....

.... 11. In short, [the HOA] is clearly a dysfunctional entity because it has, and continues to oper ate ou tside of its Bylaws.... 12. [The HOA] seems to have strayed significantly from theCourt of Appeals of Indiana | Opinion 29A02

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language of the Bylaws. While the Directors’ testimony at the Hearing describing the time and effort they devoted to ensuring the operation of [the HOA] was laudable, this does not make it legal according to the Bylaws. Volunteering is not a qualification by itself to assume the mantle of director. The Court recognizes the effort put forth [by the HOA], and [its] attempt in this situation to remedy a nuisance. The limousi nes being park[ed] on the streets of the subdivision merited the granting of the preliminary in

junction and could have possibly resulted in a permanent injunction being issued, if there was a legally constituted Board of Directors.

.... 13. Because the [H OA’s] Board of Directors is not legitimate due to the Directors neither being properly elected nor properly appointed, they could not exercise the corporate powers found in the [Covenants and Restrictions], Articles of Incorporation, or Bylaws, including t he power to file the instant lawsuit against the Severances see k ing to enforce the [Covenants and Restrictions].
Id

. at 19 5

- 97

. Accordingly, the trial court ordered the preliminary injunction dissolved and declined to enter a permanent injunction

. T he tr ial court scheduled a damages hearing for a later date

.
[7] Shortly thereafter, the HOA held a special m eeting in an attempt to cure its corporate governance deficiencies . O n December 1, 2016, the HOA filed a motio n requesting the trial court to reconsider i ts denial of the permanent injunction. The HOA supported its motion with an affidavit informing the trial court that a properly constituted board of d irectors was now in place and that the HOA’s membership had voted to ratify and approve all prior actions o f theCourt of Appeals of Indiana | Opinion 29A02

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board of d irectors, including institution of the current lawsuit. The trial court denied the motion on December 22, 2016.

[8] A damages hearing was held on February 9, 201 7, during which the Severances argued that they were entitled to recover damag es , specifically the attorney’s fees t hey incurred in def ending the injunction. Prior to the trial court issuing any ruling regarding damages , the HOA filed a “Notice of Emergency Change in Law and Request for Hea ring” asking the trial court to reconsider its denial of the permanent injunction , this time based on the passage of new legislation , Indiana Code Section 32

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- 11, regar ding corporate governance for homeowners associations

. The HOA argued that the new legislation nullified the Severances’ af

firmative defense regarding the HOA’ s authority to enforce the Covenants and Restrictions

. The trial court held a final hearing and on June 5, 20 17, issued an order reiterating its prior denial of the permanent injunction and further determining that the S everances were not entitled to re cover damages

. This appeal and cross

- appeal ensued

.



### Discussion and Decision
[9] Because we find it dispositive, w e address only the HOA’s cross

- appeal challenging the trial court’ s denial of its request for a permanent injunct ion against the Severances based upon the trial court’s conclusion that the HOA lacked the authority to enforce the Covenants and Restrictions due toCourt of Appeals of Indiana | Opinion 29A02

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irregularities in how the board of d irectors was constituted

. 2 Our review of the convoluted procedural hi story in this case reveals that, prior to the entr y of its judgment on June 5, 2017, the trial court declined to entertain certain arguments advanced by the HOA or consider certain legal authority or evidence because the court genuinely believed that it co uld not “go back and reopen” and consider the merits of its November 2016 3 order denying the permanent injunction because that order was a final judgment

. Id. at 19. This belief was mistaken

.
[10] It has long been recognized that a final judgment disposes of all issues as to all parties , thereby ending the particular case and leaving nothing for future determination. John C. & Maureen G. Osborne Revocable Family Tr. v. Town of Long Beach , 78 N.E.3d 680, 692 (Ind. Ct. App. 2017) (citations and quotation marks omitted), trans. denied . Indiana Appellate Rule 2(H) formalizes this principle and “defines a judgment as a ‘final judgment’ if among other things, it disposes of all claims as to all parties or the trial court determines in writing that there is no just reason for delay and expressly directs entry of judgment” to fewer than all the claims or parties pursuant to Indiana Trial Rule 54(B) or 56(C). Town of Ellettsville v. Despirito , 87 N.E.3d 9, 11

- 12 (Ind. 2017). Contrary

2 The Severances have filed a motion to dismiss the HOA’s cross

- appeal claimin g tha t the trial court’s November 2016 order dissolving the preliminary injunction and denying the HOA’s request for a permanent injunction constituted a final appealable judgment , and that the HOA’s failure to timely appeal that order has deprived this Co urt of jurisdiction to consider the HOA’ s challenge of that ruling

. As we will explain further, w e disagree with the Severances and deny their motion to dismiss by separate order issued conte mporaneously with this decision

. 3 Although the trial court refer s to the date of its order as October 28, 2016, the actual date is November 1, 2016.Court of Appeals of Indiana | Opinion 29A02

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to the trial court’s belief, it s N ovember 2016 order was not a final judgment because it spe cifically reserved the issue of damages for future determination and did not otherwise expressly direct entry of judgment as to fewer than all the claims between these parties

. No order of the tria l cour t prior to the judgment issued on Ju ne 5, 2017, finally disposed of all claims as to all parties. 4

[11] It is well settled that a trial court has inherent power to reconsider an order or ruling if the action remains in fieri , or pending resolutio n. Po nd v. Pond , 700 N.E.2d 1130, 1135 (Ind. 1998). The trial court’s June 2017 judgment contains erroneous findings and conclusions referencing the November 2016 ruling as a final appealable judgment, thus limiting the issues available for the trial court’s
c onsideration. A judgment is clearly erroneous “if it applies the wrong legal standard to properly found facts.” Johnson v. Wyso c ki , 990 N.E.2d 456, 460 (Ind. 2013). Because much of the trial court’s resolution of this case appears to be hinged on its mi staken belief that it was precluded from considering the merits of its prior order denying the permanent injunction , the appropriate remedy is to reverse the trial court’s judgment and remand this case for an evidentiary hearing to consider the merits of i ssuing a permanent injunction

4 Following the trial court’s November 2016 order dissolving the preliminary injunction and declining to enter a permanent injunction against the Severances, the HOA filed what it called a “Motion to Correct Error or in the Alternative Motion to Reconsider.” Appellants’ App. Vol. 2 at 199. Regardless, because there was no final judgment, the HOA’s self

- styled motion was in fact a motion to reconsider and, contrary to the t rial court’s conclusion here, its subsequent ruling on that motion could not itself be considered a final judgment pursuant to Indiana Appellate Rule 2(H)(4). Guardianship of Hurst , No. 45A03

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- 2790, 2018 WL 627290, at *2 (Jan. 31, 2018), opinion on reh’g ; see Snyder v. Snyder , 62 N.E.3d 455, 458 (Ind. Ct. App. 2016) (“motions to correct error are proper only after the entry of final judgment; any such motion filed prior to the entry of final judgment must be viewed as a motion to reconsider).Court of Appeals of Indiana | Opinion 29A02

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against the Severances based on the facts and circumstances as they stand today and pursuant to current Indiana law

. 5 Accordingly, we reverse the trial court’s June 5, 2017 judgment and remand to the trial court for proceedin gs consistent with this opinion.

[12] Re versed and re manded.
Robb, J., and Bradford, J., concur.

5 On re mand, we direct the trial court to consider Indiana Code Section 32

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- 11, effective upon passage on April 12, 2017, which protects the authority of homeowners associations by preventing collat eral attacks based upon specific board irregularities and n ullifying affirmative defense s to covenant violations under certain circumstances

.