Court Opinion

ID: 2779881
Source: CourtListenerOpinion
Date Created: 2015-02-18 15:03:16.00304+00
Date Added: 2024-06-11T11:28:13.609955
License: Public Domain

MEMORANDUM DECISION
                                                                 Feb 18 2015, 9:17 am

Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANTS                                   ATTORNEY FOR APPELLEES
Scott E. Yahne                                            Adam J. Sedia
Yahne Law, P.C.                                           Rubino Ruman Crosmer & Polen
Munster, Indiana                                          Dyer, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

Fuel Fitness Winfield, Inc., and                          February 18, 2015
Jared Tomich,                                             Court of Appeals Cause No.
                                                          45A03-1406-CC-190
Appellants-Defendants,
                                                          Appeal from the Lake Superior
        v.                                                Court

                                                          The Honorable Calvin D. Hawkins,
Boro Baloski, Lubinka Baloski,                            Judge
Goran Baloski, Fitness 1, Inc.,                           Cause No. 45D02-1210-CC-741
B&B Regional Development,
LLC,
Appellees-Plaintiffs.

Barnes, Judge.

Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015   Page 1 of 10
                                             Case Summary
[1]   Fuel Fitness Winfield, Inc., (“Fuel Fitness”) and Jared Tomich (collectively

      “the Appellants”) appeal the denial of their motion to correct error and the

      denial of their motion to amend their answer following the trial court’s grant of

      summary judgment in favor of Boro Baloski, Lubinka Baloski, Goran Baloski,

      Fitness 1, Inc., and B&B Regional Development, LLC., (“B&B”) (collectively

      “the Appellees”) in the amount of $484,345.00. We affirm.

                                                     Issues
[2]   The Appellants raise seven issues, which we consolidate as:

                       I.      whether the trial court properly denied their
                               motion to amend their answer; and

                       II.     whether the trial court properly denied their
                               motion to correct error.

                                                     Facts
[3]   Boro is the manager of B&B and the President and majority shareholder of

      Fitness 1. Goran is a member of B&B and the Vice-President and a shareholder

      of Fitness 1. Fitness 1 is a gym located in Crown Point. B&B owned the

      building where the gym is located and leased the building to Fitness 1. In

      November 2009, Fitness 1 and Fuel Fitness entered into multiple agreements

      for the lease and sale of Fitness 1, including a management agreement, signed

      by Tomich as the President of Fuel Fitness, and an asset purchase agreement,

      also signed by Tomich as the president of Fuel Fitness.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015   Page 2 of 10
[4]   The management agreement called for Fuel Fitness to:

              retain all net profits in excess of the sum of Two Thousand Three
              Hundred Seventy-Five and 00/100ths Dollars ($2,375.00) per month
              (the “Business Fee”) which are generated by the Business during the
              term of this Agreement; provided, however that [Fuel Fitness] shall be
              permitted to retain all net profits without payment of the Business Fee
              for the months of November and December, 2009 and the month of
              January, 2010. [Fuel Fitness] shall remit the monthly Business Fee to
              Fitness 1 on or before the first (1st) day of each calendar month
              commencing on February 1, 2010 and each calendar month thereafter
              while this Agreement remains in effect. Should [Fuel Fitness] fail to
              pay the Business Fee within ten (10) days of the date it is due, [Fuel
              Fitness] shall in addition to the Business Fee pay a late charge of Two
              Hundred and 00/100ths Dollars ($200.00).
      Appellees’ App. p. 39. Fuel Fitness also agreed to pay $8,500.00 per month in

      rent to B&B. According to Goran and Boro, Tomich personally guaranteed the

      “performance and payments” required by Fuel Fitness under the agreements.

      Id. at 6, 8. Fuel Fitness took possession of the premises on November 1, 2009.

      The Appellants stopped making payments pursuant to the terms of the

      agreements and, on September 3, 2010, Fuel Fitness was administratively

      dissolved.

[5]   On October 3, 2012, the Appellees filed a complaint against the Appellants

      jointly and severally alleging that they failed to make payments as required by

      the terms of the agreements beginning on February 1, 2010. The Appellees

      sought combined monthly payments of $10,875 for rent and the Business Fee,

      plus interest and attorney fees. Paragraph 7 of the complaint alleged:

              Defendant Jared Tomich agreed to personally guarantee the
              performance related to the terms of the Management Agreement as

      Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015   Page 3 of 10
              well as the Asset Purchase Agreement executed by his co-Defendant,
              the business entity Fuel Fitness Winfield, Inc.
      Id. at 11. On November 5, 2012, the trial court granted the Appellees’ motion

      for default judgment. On November 21, 2012, the Appellants filed a motion to

      set aside the default judgment, which the trial court granted.

[6]   On October 18, 2013, the Appellees filed a motion for summary judgment on

      the basis that the Appellants admitted to being in breach of the agreements. In

      support of their motion for the summary judgment, the Appellees designated,

      among other things, the management agreement, the asset purchase agreement,

      affidavits by Goran and Boro, and deposition testimony from Goran and

      Tomich.

[7]   On November 18, 2013, the Appellants responded to the motion for summary

      judgment by arguing that the amounts due were verbally revised, that the

      Appellants made some payments directly to the bank holding the mortgage on

      the property, and that there were genuine issues of material fact relating to

      payments made to the Appellees and the bank. On November 27, 2013, the

      Appellants filed their first answer to the complaint. In the answer, they

      admitted to the allegations in Paragraph 7 of the complaint.

[8]   On January 29, 2014, the trial court granted the Appellants’ attorney’s request

      to withdraw. The Appellees appeared for the February 20, 2014 summary

      judgment hearing, but the Appellants did not, and the hearing was held without

      them. At the hearing, the Appellees offered an exhibit showing a calculation of

      damages of $10,875.00 per month for unpaid rent and Business Fee from June

      Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015   Page 4 of 10
       6, 2011 through January 2014, interest, attorney fees, and treble damages for

       bounced checks, totaling $484,345. On February 20, 2014, the trial court

       granted the motion for summary judgment and entered judgment in that

       amount for the Appellees and against the Appellants jointly and severally,

       including Tomich in his individual capacity.

[9]    On March 24, 2014, the Appellants, represented by another attorney, filed a

       motion to correct error alleging that judgment against Tomich in his individual

       capacity was improper because the Appellees did not designate evidence of a

       written personal guarantee executed by Tomich, that the designated evidence

       did not establish the Appellants owed the Business Fee, and that only Fitness 1

       and Fuel Fitness were in privity with each other precluding liability in favor of

       or against any other party. The Appellees responded by arguing that Tomich

       admitted to the personal guarantee in his answer and that these issues were

       waived because they were not raised in response to the motion for summary

       judgment.

[10]   In response, the Appellants filed a motion for leave to amend their answer to

       show the denial of the allegations in Paragraph 7. The Appellees objected to

       this request and, following a hearing on the motion to correct error and the

       motion to amend, the trial court denied both requests. The Appellants now

       appeal.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015   Page 5 of 10
                                                       Analysis
                                                I. Motion to Amend

[11]   A party may amend his or her pleadings once as a matter of course within

       certain time frames. Ind. Trial Rule 15(A).1 “Otherwise a party may amend his

       pleading only by leave of court or by written consent of the adverse party; and

       leave shall be given when justice so requires.” Id. “Although amendments to

       pleadings are to be liberally allowed, the trial court retains broad discretion in

       granting or denying amendments to pleadings.” Hilliard v. Jacobs, 927 N.E.2d

       393, 398 (Ind. Ct. App. 2010), trans. denied. We will reverse only upon a

       showing of an abuse of that discretion, which occurs if the trial court’s decision

       is clearly against the logic and effect of the facts and circumstances before the

       court or if the court has misinterpreted the law. Id. In reviewing a trial court’s

       ruling on a motion to amend, we evaluate a number of factors, including undue

       delay, bad faith, or dilatory motive on the part of the movant; repeated failure

       to cure deficiency by amendment previously allowed; undue prejudice to the

       opposing party by virtue of the amendment; and futility of the amendment. Id.

[12]   The Appellants attribute what they describe as a “mistake” in their answer to

       the failure to include the allegations from the complaint in the answer so the

       1
         Portions of the Appellants’ argument are based on Trial Rule 15(B), which permits amendment to conform
       to the evidence when issues not raised by the pleadings are tried by express or implied consent of the parties.
       Their reliance on Trial Rule 15(B) seems misplaced here, where no trial was held and the motion to amend
       was filed in conjunction with a motion to correct error following the grant of summary judgment. Moreover,
       the Appellants do not identify any properly designated evidence that would have supported amendment to
       conform with the evidence.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015           Page 6 of 10
       responses could be read in conjunction with the allegations. Appellants’ Reply

       Br. p. 9. Even if such is standard procedure, Tomich admitted he did not have

       the opportunity to review the answer before it was filed. Thus, it can hardly be

       said that he was confused by the manner in which the answer was drafted, and

       we decline to speculate as to whether the Appellants’ former attorney was

       confused by the manner in which the answer was drafted.

[13]   The Appellants also contend that they were not acting in bad faith, that the time

       of the motion to amend is “largely inconsequential” because the Appellees’

       motion for summary judgment was filed before the Appellants’ answer, and

       that the Appellees will not be prejudiced by the amendment because they took

       no action based on the answer. Appellants’ Br. p. 28. Even if the Appellants

       were not acting in bad faith when they filed their motion to amend, we cannot

       overlook the fact that the Appellees filed their complaint in October 2012 and

       the Appellants did not file an answer until November 2013. In the meantime,

       default judgment against the Appellants had been granted and set aside and the

       Appellees had moved for summary judgment, which was later granted. Only

       after the Appellees relied on the answer in response to the Appellants’ motion

       to correct error did the Appellants seek to amend the answer. Moreover, the

       amendment sought by the Appellants did not relate to issues raised in response

       to summary judgment; rather, it related to issues raised by the Appellants for

       the first time in their motion to correct error.

[14]   In Jacobs, we concluded that, where summary judgment had been ruled on,

       reversed by a panel of this court, and the transfer of that decision denied,

       Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015   Page 7 of 10
       waiting three years to assert claims that could have been raised in the original

       complaint constituted undue prejudice. See Jacobs, 927 N.E.2d at 400. We

       reasoned, “If allowed, Hilliard’s tactic of asserting new theories of recovery

       only after the original claims have proven unsound would place an undue

       burden on Jacobs to defend such piecemeal litigation and would result in

       potentially endless ‘bites at the apple.’” Id. As in Jacobs, the Appellees’ ability

       to prosecute their case is severely hampered by the timing of the motion to

       amend, which occurred after judgment had already twice been granted in their

       favor. Under these circumstances, the Appellants have not shown that the trial

       court abused its discretion in denying their motion to amend.

                                          II. Motion to Correct Error

[15]   The Appellants also argue that the trial court erroneously denied their motion

       to correct error. We review a trial court’s ruling on a motion to correct error for

       an abuse of discretion, and the trial court’s decision is afforded a strong

       presumption of correctness. Santelli v. Rahmatullah, 993 N.E.2d 167, 173 (Ind.

       2013) (quotation omitted).

[16]   In their motion to correct error and on appeal, the Appellants claim that the

       Appellees were not entitled to summary judgment against Tomich because they

       failed to prove Tomich executed a written personal guarantee,2 that the

       2
         Notably, the statute of frauds must be pled in a responsive pleading. See T.R. 8(C). The Appellants did not
       plead the statute of frauds as an affirmative defense in either the original answer or the proposed amended
       answer.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015         Page 8 of 10
       Appellees were not entitled to the monthly Business Fee pursuant to the terms

       of the management agreement because there was no evidence of profitability,

       and that the various parties did not have privity to pursue their claims against

       Tomich and/or Fuel Fitness. It is undisputed that these issues were not raised

       in any pleadings prior to the filing of the motion to correct error or in response

       to the Appellees’ motion for summary judgment. “It is well established that a

       party may not raise issues for the first time in a motion to correct error.”

       Shepherd Properties Co. v. Int’l Union of Painters & Allied Trades, Dist. Council 91,

       972 N.E.2d 845, 849 n.3 (Ind. 2012) (agreeing that failure to raise issues in

       pleadings and motions, including its motion for summary judgment, that were

       filed before the trial court entered its judgment results in waiver); Troxel v.

       Troxel, 737 N.E.2d 745, 752 (Ind. 2000) (“A party may not raise an issue for the

       first time in a motion to correct error or on appeal.”).

[17]   In an attempt to avoid waiver, the Appellants rely on Astral Electric Co. v. Bob

       Wells Construction Co., 538 N.E.2d 986, 988 (Ind. Ct. App. 1989), trans. denied, in

       which a panel of this court determined the trial court did not abuse its discretion

       by considering a motion to correct error that raised an issue of law not

       addressed in the movant’s response to summary judgment. Given our supreme

       court’s authority on this matter, we simply are not convinced that Astral,

       assuming it is still good law,3 requires us to consider the arguments raised by the

       3
         The Astral court relied on now repealed Indiana Code Section 33-1-6-3, which provided that a trial court
       retains jurisdiction over its judgment for ninety-days, and a previous version of Trial Rule 59. The
       Appellants offer no analysis showing that Astral is relevant despite these differences.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015          Page 9 of 10
       Appellants for the first time in their motion to correct error. Further, because

       the Appellants do not contend that the novation argument raised in response to

       the motion for summary judgment is a basis for granting the motion to correct

       error, they have not established that the trial court abused its discretion in

       denying their motion to correct error.4

                                                   Conclusion
[18]   The Appellants have not established that the trial court abused its discretion in

       denying their motion to amend their answer or in denying their motion to

       correct error. We affirm.

[19]   Affirmed.

       May, J., and Pyle, J., concur.

       4
        The Appellants specifically assert, “no claim has been advanced in either this appeal or the underlying
       Motion to Correct Errors that in any way relates to an alleged novation.” Appellants’ Reply Br. p. 7.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1406-CC-190 | February 18, 2015         Page 10 of 10