Opinion ID: 852554
Heading Depth: 1
Heading Rank: 2

Heading: Proceedings Supplemental Are for Enforcing Existing Judgments

Text: Given the contorted procedural history of this case and the evident confusion about the rules in proceedings supplemental, we find it necessary first to touch on the law in this area. A. Proceedings Supplemental Generally. Judgment creditors in Indiana have long relied on proceedings supplemental to execution to help enforce judgments. See Charles Levin, An Outline of Proceedings Supplementary, 14 Ind. L.J. 353 (1938); see also Toledo, Wabash and W. Ry. Co. v. Howes, 68 Ind. 458 (1879). With roots in equity, a proceeding supplemental offers the judgment creditor judicial resources for discovering assets, reaching equitable and other interest[s] not subject to levy and sale at law and to set aside fraudulent conveyances. McCarthy v. McCarthy, 156 Ind.App. 416, 420-21, 297 N.E.2d 441, 444 (1973) (citation omitted). Proceedings supplemental are generally governed by Trial Rule 69(E). A plaintiff may move for a proceeding supplemental in the court where judgment has been rendered by alleging that the plaintiff's judgment will not be satisfied and that the defendant or another party has property that ought to be applied toward the judgment. Ind. Trial Rule 69(E). And while Trial Rule 69(E) declares [n]o further pleadings shall be required, our caselaw teaches that when a new issue arises in a proceeding supplemental, responsive pleadings are required. Am. Underwriters, Inc. v. Curtis, 427 N.E.2d 438, 443 (Ind.1981). Nonetheless, even when no new issue arises, a responsive pleading is still permitted. Id. The court must then allow discovery and conduct a hearing, after which certain property shall be applied towards the judgment. Ind. Trial Rule 69(E). B. Changes of Venue in Proceedings Supplemental. In the days before the Indiana Rules of Trial Procedure, parties to the original suit could obtain a change of judge when a proceeding supplemental was filed. See Burkett v. Holeman, 104 Ind. 6, 3 N.E. 406 (1885). Modern practice has limited the availability of a change of judge to those defendants not party to the original action. See Arnold v. Dirrim, 398 N.E.2d 442 (Ind.Ct.App.1979). Moreover, third-party defendants must make a prompt motion upon learning of the trial date or else the right to change of venue will be waived. Id. at 450. To hold otherwise would only encourage unnecessary delays occasioned by late filing of change of venue motions which have as one of their objects the postponement or avoidance of a trial. Id. The approach demonstrated by the Court of Appeals in Arnold best merges the rationale for proceedings supplemental with the right to a change of venue. Since proceedings supplemental are merely the continuation of an original action, the original parties have already been afforded the chance to move the case to another court or judge. As the Arnold court apparently realized, the only parties who stand to have their rights substantially diminished are those defendants whose first encounter with the case occurs through proceedings supplemental. We thus affirm the rule that third-party defendants in proceedings supplemental may engage the change of venue provisions in Trial Rule 76. Rose and Underwood argue that they were not parties to the original action; thus, the trial court erred in denying their motion for change of judge. We conclude the contrary. Rose and Underwood not only knew of the original action, they acted on behalf of Jasper-Newton and were the only two individuals who could have so acted. While they were not parties to the original action in a strict sense, this form will not prevent us from recognizing the substance. The prompt and equitable process contemplated in proceedings supplemental militates in favor of treating Rose and Underwood as, in effect, original parties through their ties to Jasper-Newton. The trial court properly denied their motion for change of venue from the judge. C. Jury Trial Demands in Proceedings Supplemental. Our state's approach to proceedings supplemental has likewise recognized that disputes may arise from the pleadings about which the right to trial by jury may attach. McMahan v. Works, 72 Ind. 19 (1880). Modern practice says this right pertains to issues of fact amenable to a trial by jury. McCarthy, 156 Ind.App. at 420, 297 N.E.2d at 444. The Court of Appeals reasoned in McCarthy that because proceedings supplemental derive from equity, and because Trial Rule 69(E) consistently refers to such proceedings as hearings, they should usually be conducted before the court. Id. at 419-21, 297 N.E.2d at 443-44. For all that appears, this approach developed over nearly 130 years seems to serve us well. While juries are disfavored in proceedings supplemental for their tendency to prolong matters, where the pleadings form issues of fact that a jury could reasonably decide, the parties may demand a jury trial. D. Fraudulent Transfer and Proceedings Supplemental. Judgment creditors commonly invoke proceedings supplemental to bring fraudulent transfer actions, which Justice Fansler lucidly described: [Fraudulent transfer claims] have for their sole purpose the removal of obstacles which prevent the enforcement of the judgment by the executive officers of the state through the levy of execution. . . . While the action may involve a conveyance said to be fraudulent, the recovery is not for the wrong or tort. It is not in damages. Beavans v. Groff, 211 Ind. 85, 90, 5 N.E.2d 514, 516-17 (1937). If a fraudulent transfer action is successful, [t]he conveyances continue valid as between the grantor and grantee, and the only effect of the judgment is to subject the property to execution as though it were still in the name of the grantor. Id. at 90, 5 N.E.2d at 516. Rose and Underwood contend that the evidence does not support the conclusion that they fraudulently transferred funds from Jasper-Newton's bank account to evade the original judgment. Contradicting their argument is the evidence of record demonstrating that Rose and Underwood eventually tendered $181,300 to Mercantile in satisfaction of the original judgment. This evidence aside, we agree with the Court of Appeals that the trial court did not err when it found that Rose and Underwood fraudulently transferred Jasper-Newton's assets, and we summarily affirm on this issue. Ind. Appellate Rule 58(A). E. New Claims and Proceedings Supplemental. Unlike the fraudulent transfer claims, Mercantile's attempt to seek new damages from Rose and Underwood by adding a Crime Victims' claim does not fit the purpose for proceedings supplemental. While the CVCA claim was based on the same facts as the fraudulent transfer claim, the remedy sought for the CVCA claim amounted to three times the original judgment amount, plus attorneys' fees. Allowing a new claim to be tacked on at this stage would be just as unfitting as opening up any other litigation to add new claims after judgment. Such an approach to collections would lay the groundwork for perpetual motion  a far cry from the timely and efficient system of conflict resolution the nation's judiciary strives to provide. Proceedings supplemental are appropriate only for actions to enforce and collect existing judgments, not to establish new ones. The trial court improvidently granted Mercantile leave to amend the proceedings supplemental complaint to add a claim for new damages. We think it prudent policy that any action to assist in collection of an original judgment, i.e. a proceeding supplemental, must be filed under the same cause number as the original action. Conversely, any action that may result in imposition of a new judgment should be filed under a new cause number.