Court Opinion

ID: 4028428
Source: CourtListenerOpinion
Date Created: 2016-08-25 15:05:49.783429+00
Date Added: 2024-06-11T14:49:48.591240
License: Public Domain

FILED
                                                              Aug 25 2016, 8:30 am

                                                                  CLERK
                                                              Indiana Supreme Court
                                                                 Court of Appeals
                                                                   and Tax Court

      ATTORNEYS FOR APPELLANT                                    ATTORNEY FOR APPELLEE
      James M. Lewis                                             Timothy J. Maher
      Michael J. Hays                                            Barnes & Thornburg
      Tuesley Hall Konopa LLP                                    South Bend, Indiana
      South Bend, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      In re the Scott David Hurwich                              August 25, 2016
      1986 Irrevocable Trust                                     Court of Appeals Case No.
                                                                 71A03-1602-TR-301
      Scott D. Hurwich,
                                                                 Appeal from the St. Joseph Probate
      Appellant-Plaintiff,                                       Court
              v.                                                 The Honorable James N. Fox,
                                                                 Judge
      Stacey R. MacDonald,                                       Trial Court Cause No.
                                                                 71J01-1410-TR-16
      Appellee-Defendant.

      Bradford, Judge.

                                           Case Summary
[1]   Appellant-Plaintiff Scott Hurwich is the settlor and beneficiary of the Scott

      David Hurwich 1986 Irrevocable Trust (“the Trust”). Appellee-Defendant

      Stacey R. MacDonald served as trustee of the Trust until her removal at

      Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016              Page 1 of 13
      Hurwich’s request on November 28, 2012. Hurwich filed a complaint against

      MacDonald which alleged that MacDonald mismanaged Trust assets while

      acting as trustee. MacDonald filed a motion to dismiss Hurwich’s complaint

      which the probate court granted. Hurwich filed a motion to reconsider which

      he later requested to be treated as a motion to correct error. Over the following

      six months, the probate court held two hearings on the motion to reconsider

      and the parties submitted several briefs in support of their positions. The

      probate court never made a ruling on the motion and Hurwich filed his appeal

      in February of 2016. On appeal, the parties dispute (1) whether Hurwich timely

      filed his notice of appeal, and (2) whether the probate court erred in granting

      MacDonald’s motion to dismiss. We reverse the probate court’s order

      dismissing Hurwich’s claims.

                             Facts and Procedural History
[2]   Hurwich is the settlor and beneficiary of the Trust. MacDonald served as

      trustee of the Trust until November 28, 2012. On October 2, 2014, Hurwich

      filed a complaint against MacDonald alleging that she mismanaged Trust

      assets, comingled Trust assets with her own funds, converted Trust assets,

      committed waste of Trust property, and otherwise breached her fiduciary duties

      to Hurwich. On November 14, 2014, MacDonald filed a motion to dismiss

      Hurwich’s complaint arguing that (1) Hurwich’s claim was barred by the

      applicable statute of limitations, (2) the language of the Trust limited

      Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016   Page 2 of 13
      MacDonald’s liability as trustee, and (3) Hurwich’s complaint lacked sufficient

      factual allegations.

[3]   On June 12, 2015, the probate court issued an order dismissing Hurwich’s

      claim with prejudice. Hurwich filed a motion to reconsider on June 22, 2015.

      On July 17, 2015, the probate court scheduled a hearing on Hurwich’s motion

      to reconsider for July 27. At the hearing, MacDonald argued that the probate

      court no longer had jurisdiction to rule on Hurwich’s motion to reconsider

      because the motion was automatically denied five days after it was filed

      pursuant to Indiana Trial Rule 53.4(B). Hurwich asked the probate court to

      treat his motion to reconsider as a motion to correct error. Following the

      hearing, the probate court issued an order indicating that it would take the

      matter under advisement and “allow[] [MacDonald] to file a motion regarding

      lack of jurisdiction [] within two (2) weeks, a response by [Hurwich] to be filed

      within two (2) weeks thereafter and [MacDonald] an additional one (1) week

      for final response.” Appellant’s App. p. 47.

[4]   On August 11, 2015, MacDonald filed a brief arguing that the probate court

      lacked jurisdiction and objected to further action by the probate court on the

      motion to reconsider. On August 18, 2015, Hurwich filed a responsive brief

      arguing that the probate court had jurisdiction and in support of his motion to

      reconsider. After receiving an extension of time, MacDonald filed a reply brief

      on September 8, 2015. On October 7, 2015, a notice of hearing on all pending

      matters was set for November 6, 2015. At the hearing, ultimately held on

      December 14, 2015, the parties made arguments regarding (1) whether the

      Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016   Page 3 of 13
      probate court had jurisdiction to address Hurwich’s motion to reconsider and

      (2) the merits of Hurwich’s motion. The probate court took the matter under

      advisement but took no further action. Hurwich filed his notice of appeal on

      February 9, 2016.

                                  Discussion and Decision
[5]   The parties presented the following issues for our review: (1) whether Hurwich

      timely filed an appeal following the denial of his motion to reconsider, and (2)

      whether the probate court erred in granting MacDonald’s motion to dismiss.1

                     I. Whether Hurwich’s Appeal was Timely
[6]   MacDonald argues that Hurwich failed to timely appeal the denial of his

      motion to reconsider. Hurwich filed his motion to reconsider on June 22, 2015.

      MacDonald argues that Hurwich’s motion was denied on June 27 under

      Indiana Trial Rule 53.4(B), which provides that a motion to reconsider is

      automatically denied if it is not ruled on within five days. The probate court

      took no action on the motion until July 17, 2015, when it set a hearing on the

      motion for July 27.

      1
        In support of her motion to dismiss, MacDonald argued that Hurwich’s claim was barred by the applicable
      statute of limitations. However, MacDonald has made no such argument on appeal. As such, she has
      waived the issue for our review. Appellate Rule 46(A)(8); Burnett v. Cincinnati Ins. Co., 690 N.E.2d 747, 749
      (Ind. Ct. App. 1998) (“Failure of a party to present a cogent argument in his or her brief is considered a
      waiver of that issue.”).

      Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016                        Page 4 of 13
[7]   Hurwich argues that his motion to reconsider was not automatically denied

      because it should have been treated as a motion to correct error. We agree.

      The probate court’s June 12, 2015 order dismissing Hurwich’s claim with

      prejudice was a final judgment. As such, the probate court no longer had the

      power to rule on a motion to reconsider. “Our review of the trial rules reveals

      that motions to reconsider are properly made and ruled upon prior to the entry

      of final judgment.” Hubbard v. Hubbard, 690 N.E.2d 1219, 1221 (Ind. Ct. App.

      1998) (citing Ind. Trial Rule 53.4(A)). In Hubbard, this court found that a

      party’s motion to reconsider, filed after issuance of final judgment, should have

      been treated as a motion to correct error. “[A]lthough substantially the same as

      a motion to reconsider, a motion requesting the court to revisit its final

      judgment must be considered a motion to correct error. We decline to favor

      form over substance and, despite its caption, Mother’s motion in the instant

      case should have been treated as a motion to correct error.” Id. Because

      Hurwich’s motion should be treated as a motion to correct error, it was not

      automatically denied five days after its filing.2

[8]   MacDonald argues that even if Hurwich’s motion is treated as a motion to

      correct error, the probate court’s inaction amounted to a denial of Hurwich’s

      motion and Hurwich did not timely file his appeal. MacDonald contends that

      2
          We will hereafter refer to Hurwich’s motion to reconsider as the motion to correct error.

      Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016                       Page 5 of 13
Hurwich’s thirty-day window to appeal the denial of his motion to correct error

expired on September 25, 2015. Indiana Trial Rule 53.3 provides as follows:

        (A) Time limitation for ruling on motion to correct error. In
            the event a court fails…to rule on a Motion to Correct Error
            within thirty (30) days after it was heard…the pending
            Motion to Correct Error shall be deemed denied. Any appeal
            shall be initiated by filing the notice of appeal under
            Appellate Rule 9(A) within thirty (30) days after the Motion
            to Correct Error is deemed denied.
        (B) Exceptions. The time limitation for ruling on a motion to
            correct error established under Section (A) of this rule shall
            not apply where:
              (1)   The party has failed to serve the judge personally; or
              (2) The parties who have appeared or their counsel stipulate
              or agree on record that the time limitation for ruling set forth
              under Section (A) shall not apply; or
              (3) The time limitation for ruling has been extended by
              Section (D) of this rule.
        (C) Time of ruling. For the purposes of Section (A) of this rule, a
            court is deemed to have set a motion for hearing on the date
            the setting is noted in the Chronological Case Summary, and
            to have ruled on the date the ruling is noted in the
            Chronological Case Summary.
        (D) Extension of time for ruling. The Judge before whom a
            Motion to Correct Error is pending may extend the time
            limitation for ruling for a period of no more than thirty (30)
            days by filing an entry in the cause advising all parties of the
            extension. Such entry must be in writing, must be noted in
            the Chronological Case Summary before the expiration of the
            initial time period for ruling set forth under Section (A), and
            must be served on all parties. Additional extension of time
            may be granted only upon application to the Supreme Court
            as set forth in Trial Rule 53.1(D).
Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016    Page 6 of 13
[9]    On July 27, 2015, the probate court held a hearing on Hurwich’s motion to

       correct error. MacDonald argues that the deadline for the probate court to rule

       on the motion was August 26, thirty days after the July 27 hearing. The only

       ways this deadline could have been extended were if (1) the trial judge was not

       personally served, (2) the parties agreed to extend the deadline, or (3) the

       probate court sua sponte extended the time limit by a maximum of thirty days.

       T.R. 53.1.

[10]   On record at the July 27, 2015 hearing, and with the acquiescence of both

       parties, the probate court set specific time limits for the parties’ submissions of

       briefs on the issue of jurisdiction.

               The Court: How much time do you think each party needs?...
               Counsel for MacDonald: Two weeks to get mine on file, then we
               just follow –
               Counsel for Hurwich: Two weeks to respond – that’s fine.
               The Court: Okay, and then I’ll give you, how about just another
               week after that final response, because you’ll have the interim to
               continue to prepare…Is that good? Two weeks, two weeks, and
               then a week. Is that fair enough?
               Counsel for Hurwich: Yes.
               Counsel for MacDonald: Yes, Your Honor.
       Tr. pp. 28-29. This is a valid time limitation exception under Rule 53.3(B)(2).

       See Santelli v. Rahmatullah, 993 N.E.2d 167, 172 (Ind. 2013) (Trial court’s order

       granting motion to correct error granting a new trial was timely where,

       although the court issued the order forty days after a motion hearing was

       conducted, “[o]n the record, and with the acquiescence of both parties, the trial

       Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016    Page 7 of 13
       court set a specific date for the parties’ submissions of twenty-eight days after

       the hearing and stated its ruling would follow as soon as possible thereafter.”).

[11]   Following the hearing, the probate court issued an order indicating that it

       would take the matter under advisement and “allow [MacDonald] to file a

       motion regarding lack of jurisdiction [] within two (2) weeks, a response by

       [Hurwich] to be filed within two (2) weeks thereafter and [MacDonald] an

       additional one (1) week for final response.” Appellant’s App. p. 47. The

       parties filed their respective briefs according to these time limits with

       MacDonald’s final response filed September 8, 2015. On October 7, the

       probate court set a hearing on all pending matters. The question then is

       whether the probate court’s decision to set a subsequent hearing functioned as

       an additional extension of the deadline to rule on the motion to correct error.

[12]   It could be argued that, at the latest, the deadline to rule on Hurwich’s motion

       to correct error was October 8, 2015, thirty days after the final brief was filed by

       MacDonald, and that because the probate court did not rule on the motion

       prior to this date, it was automatically denied. However, the probate court’s

       decision to hold a second hearing indicates that the motion to correct error was

       still being “heard” for purposes of Rule 53.3(A). Consequently, the motion

       cannot be automatically denied if it is still being heard. To find otherwise

       would lead to unfair and irrational results where (1) trial courts would be

       precluded from holding subsequent hearings where such are necessary to reach

       an accurate resolution, and (2) in cases such as this, parties like Hurwich would

       be denied their right to appeal through no fault of his own.

       Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016   Page 8 of 13
[13]   The final hearing on Hurwich’s motion to correct error was held on December

       14, 2015, and the probate court took the matter under advisement. Because the

       probate court made no rulings on the motion and took no further action,

       Hurwich’s motion was automatically denied thirty days later, on January 13,

       2016. As such, Hurwich had until February 12, 2015 to file an appeal.

       Hurwich’s appeal was timely filed on February 9.

             II. Whether Dismissal of Hurwich’s Complaint was
                               Appropriate
[14]           In reviewing a motion to dismiss granted pursuant to Trial Rule
               12(B)(6), our standard of review is well settled. Burke v. Town of
               Schererville, 739 N.E.2d 1086, 1090 (Ind. Ct. App. 2000). A
               12(B)(6) motion to dismiss for failure to state a claim upon which
               relief can be granted tests the legal sufficiency of a claim, not the
               facts supporting it. Id. Therefore, we view the complaint in the
               light most favorable to the non-moving party, drawing every
               reasonable inference in favor of that party. Id. at 1091. In
               reviewing a ruling on a motion to dismiss, we stand in the shoes
               of the trial court and must determine if the trial court erred in its
               application of the law. Id. The trial court’s grant of a motion to
               dismiss is proper if it is apparent that the facts alleged in the
               complaint are incapable of supporting relief under any set of
               circumstances. Id. In determining whether any facts will support
               the claim, we look only to the complaint and may not resort to
               any other evidence in the record. Id.

       Godby v. Whitehead, 837 N.E.2d 146, 149 (Ind. Ct. App. 2005).

       Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016   Page 9 of 13
         A. Whether the Trust Provision Precluding Actions Against
                      the Trustee Justifies Dismissal
[15]   MacDonald briefly argues that dismissal was appropriate because the Trust

       “expressly precludes any judicial review of the Trustee’s actions in her capacity

       as Trustee. It also exempts the Trustee from any liability for exercising her

       discretion as Trustee.” Appellee’s Br. p. 9. The Trust provides as follows:

               [T]he Trustee shall have (to the extent the power of election is
               not otherwise vested in a person other than the Trustee) the right,
               power and privilege to make elections….The actions of the
               Trustee in making any election shall be binding upon all
               beneficiaries and the Trustee shall not be liable to anyone for exercising
               a right, power of privilege to elect. The Trustee may make
               distributions and allocations without regard to the income tax
               basis of any property distributed or allocated to any beneficiary.
               No compensating adjustments between principal and income,
               nor with respect to any trust, need be made even though the
               actions of the Trustee may affect (beneficially or adversely) the
               interests of the beneficiaries. The actions of the Trustee in
               making distributions and allocations shall be binding upon all
               beneficiaries and the Trustee shall not be liable to anyone for exercising
               the Trustee’s discretion in this regard.

       Appellant’s App. p. 17 (emphases added). While this language generally limits

       the trustee’s liability when making certain discretionary decisions, it clearly

       does not give the trustee a free pass to convert, waste, or mismanage Trust

       assets, or otherwise breach its fiduciary duties. In other words, there is no

       scenario where stealing money from the Trust could be viewed as a valid

       discretionary decision. MacDonald’s claim that the Trust “expressly precludes

       any judicial review of the Trustee’s actions” is wholly inaccurate. Any notion
       Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016       Page 10 of 13
       that the probate court could properly dismiss Hurwich’s claim based on this

       Trust language is without merit.

          B. Whether Hurwich’s Complaint Could be Dismissed for
                       Lack of Factual Specificity
[16]   MacDonald argues that dismissal of Hurwich’s complaint was justified because

       he failed to allege in his complaint, or since, any specific misdeed by

       MacDonald or any specific trust asset which has been detrimentally affected.

       Notice pleading under Indiana Trial Rule 8(A) merely requires “a short and

       plain statement of the claim showing that the pleader is entitled to relief.” In

       other words, a plaintiff must only plead “the operative facts so as to place the

       defendant on notice as to the evidence to be presented at trial.” Noblesville

       Redev. Comm’n v. Noblesville Assocs. Ltd. P’ship, 674 N.E.2d 558, 563 (Ind. 1996).

       “A complaint’s allegations are sufficient if they put a reasonable person on

       notice as to why a plaintiff sues.” Shields v. Taylor, 976 N.E.2d 1237, 1245 (Ind.

       Ct. App. 2012). “Under notice pleading, we review the granting of a motion to

       dismiss for failure to state a claim under a stringent standard, and affirm the

       trial court’s grant of the motion only when it is ‘apparent that the facts alleged

       in the challenged pleading are incapable of supporting relief under any set of

       circumstances.’” Trail v. Boys & Girls Clubs of Nw. Ind., 845 N.E.2d 130, 135

       (Ind. 2006) (quoting McQueen v. Fayette Cnty. Sch. Corp., 711 N.E.2d 62, 65 (Ind.

       Ct. App. 1999)).

[17]   Hurwich’s complaint reads as follows:

       Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016   Page 11 of 13
               4. Until 2013, Stacey served as Trustee of the Trust.
               5. The Trust was created under Indiana law and holds assets
               primarily located in St. Joseph County, Indiana.
               6. During the period she served as Trustee, Stacey mismanaged
               Trust assets, co-mingled them with her own funds, converted
               Trust assets to her own use, committed waste to Trust property,
               and otherwise breached her fiduciary duties to Scott.
               7. When Scott learned of Stacey’s conduct regarding the Trust,
               he appointed a successor Trustee.
               8. Stacey’s conduct regarding the Trust has caused Scott
               damages.

       Appellant’s App. pp. 10-11. MacDonald claims that these are conclusory

       assertions without any specific factual support. However, specific factual

       support is not required under Rule 8(A). Furthermore, with claims such as

       those alleged here, factual specifics may be unavailable until discovery is made.

       Hurwich may be of the belief that there is some undetermined amount of

       money or other Trust assets missing or unaccounted for, but be unaware as of

       yet how those assets were specifically misappropriated by the trustee. As it is,

       the complaint contains the operative facts sufficient to put MacDonald on

       notice as to why Hurwich is suing.

[18]   Even if we assume that Hurwich’s complaint was properly dismissed for failure

       to offer a sufficient factual basis for his claim, the probate court should have

       dismissed his claim without prejudice and allowed him the opportunity to

       amend his complaint pursuant to Indiana Trial Rule 12. “When a motion to

       dismiss is sustained for failure to state a claim under subdivision (B)(6) of this

       Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016   Page 12 of 13
       rule the pleading may be amended once as of right pursuant to Rule 15(A)

       within ten [10] days after service of notice of the court’s order sustaining the

       motion.” T.R. 12(B). “‘[A] T.R. 12(B)(6) dismissal is without prejudice, since

       the complaining party remains able to file an amended complaint within the

       parameters of the rule.’” Baker v. Town of Middlebury, 753 N.E.2d 67, 74 (Ind.

       Ct. App. 2001) (quoting Platt v. State, 664 N.E.2d 357, 361 (Ind. Ct. App. 1996),

       trans. denied.). Accordingly, even if a Rule 12(B)(6) dismissal was appropriate,

       the probate court erred by dismissing Hurwich’s complaint with prejudice.

[19]   The judgment of the probate court is reversed.

       Pyle, J., and Altice, J., concur.

       Court of Appeals of Indiana | Opinion 71A03-1602-TR-301 | August 25, 2016   Page 13 of 13