Court Opinion

ID: 4243401
Source: CourtListenerOpinion
Date Created: 2018-02-08 16:10:53.551537+00
Date Added: 2024-06-11T14:44:21.540938
License: Public Domain

MEMORANDUM DECISION                                                                 FILED
                                                                               Feb 08 2018, 5:41 am
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                               CLERK
                                                                                Indiana Supreme Court
                                                                                   Court of Appeals
regarded as precedent or cited before any                                            and Tax Court

court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEY FOR APPELLANT                                   ATTORNEYS FOR APPELLEES
Matthew J. McGovern                                      Anthony J. Castor
Anderson, Indiana                                        Madison, Indiana

                                                         Stephen W. Voelker
                                                         Jeffersonville, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Karleen Spann Perry,                                     February 8, 2018
Appellant-Petitioner,                                    Court of Appeals Case No.
                                                         39A01-1708-DR-1783
        v.                                               Appeal from the Jefferson Circuit
                                                         Court
Larry Spann,                                             The Honorable Darrell M. Auxier,
Appellee-Respondent                                      Judge
                                                         The Honorable Jonathan N.
and                                                      Cleary, Special Judge

Madison Riverport, LLC c/o                               Trial Court Cause Nos.
                                                         39C01-0303-DR-124 and 39C01-
                                                         1512-MI-936
Anthony Hammock
Appellee-Garnishee Defendant

Altice, Judge.
Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018         Page 1 of 16
                                               Case Summary

[1]   Since the dissolution of marriage decree in 2005, Karleen Spann Perry has

      struggled to recover the equalization payment of over $3.3 million due her from

      her ex-husband, Larry Spann. Despite years of litigation and proceedings

      supplemental, Perry has generally been unsuccessful in her pursuits. Spann,

      who has since spent time in federal prison and gone through bankruptcy, still

      currently owes Perry over $5 million with accumulated interest included.

[2]   Perry eventually turned her collection efforts toward various businesses owned

      in whole or part at various times by Spann. Relevant to this appeal, for more

      than a decade, Perry has pursued Madison Riverport, LLC as a garnishee

      defendant. Spann had sold his one-third ownership interest in Madison

      Riverport to Anthony Hammock shortly after the dissolution of marriage.

      Despite Hammock owning the property in question, Perry repeatedly failed to

      individually serve Hammock or make him a party to her various proceedings

      supplemental. In December 2015, Hammock’s attorney filed a special

      appearance to protect Hammock’s interest in Madison Riverport, as Perry was

      attempting to foreclose on this interest.

[3]   After a September 2016 hearing on various pending motions, the trial court

      determined that Perry could not levy execution on Hammock’s interest in

      Madison Riverport. In other words, the trial court concluded that Perry did not

      have an enforceable lien against this property, which had been sold to

      Hammock in 2005. The trial court, therefore, ordered all funds held in an

      Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 2 of 16
      escrow account pursuant to a previous order to once again become an asset of

      Madison Riverport, with no future escrow required.

[4]   Perry filed a motion to correct error in which she argued that the claims raised

      by Hammock in his motions were barred by res judicata. The trial court denied

      Perry’s motion following a hearing. On appeal, Perry contends that the trial

      court committed clear error when it denied her motions to levy execution on

      the one-third interest in Madison Riverport and when it eliminated the

      associated escrow account.

[5]   We affirm.

                                       Facts & Procedural History

[6]   The history of this case is long and tedious. We will focus our attention on

      those parts of the record that are relevant to Perry’s attempt to execute on the

      one-third interest in Madison Riverport previously owned by Spann.

[7]   Perry and Spann became legally separated in March 2003, and the trial court

      issued a decree of dissolution on December 22, 2005, which was amended in

      February 2006. The decree set out the extensive assets of the marital estate,

      which included over 400 acres of real estate and multiple business interests. The

      trial court valued the assets and debts of the marital estate as of the date of

      separation, resulting in a net marital estate value of over $8 million. The court

      awarded the bulk of the marital assets to Spann and ordered him to pay a cash

      equalization payment of $3,364,298.50 to Perry, with interest accruing at 8%

      Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 3 of 16
      from the date of the decree. The court placed a judgment lien on all of Spann’s

      assets to secure the equalization payment.

[8]   On December 27, 2005, five days after the decree of dissolution was issued,

      Spann sold his one-third interest in Madison Riverport and his stock in Matrans

      Construction, Inc. to Hammock for $25,000. In the decree of dissolution, the

      trial court had valued these assets at $27,000 and $0, respectively. This valuation,

      however, was based on the date of separation, which was in March 2003. Despite

      being aware of the transfer by at least July 2007, Perry did not file a fraudulent

      conveyance claim against Hammock and Spann regarding this transaction.1 In

      fact, she did not file any action against Hammock until at least 2013. With

      respect to Spann’s prior interest in Madison Riverport, Perry proceeded against

      Madison Riverport as a garnishee defendant in various proceedings supplemental

      from 2006 onward.

[9]   On August 12, 2009, Perry filed her second verified motion for proceedings

      supplemental. Once again, she listed Madison Riverport among the long list of

      garnishee defendants. The trial court held an evidentiary hearing on November

      6, 2009, at which Spann was the sole witness. At the conclusion of the hearing,

      Perry argued that she had a lien on the one-third interest in Madison Riverport

      that followed the 2005 transfer between Spann and Hammock. Perry also

      1
       Perry sought to have other transactions – not involving Madison Riverport – declared void as being in
      violation of the Indiana Uniform Fraudulent Transfer Act, Ind. Code § 32-18-2-1 et seq. See Appellant’s
      Appendix Vol. II at 106. Transfers are voidable under this act, which generally provides for a four-year statute
      of limitations. I.C. § 32-18-2-19.

      Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018             Page 4 of 16
       suggested that the transfer may have lacked consideration and been fraudulent.

       Believing that a sale of Madison Riverport was imminent, Perry requested that

       the trial court order any proceeds of such sale be placed in escrow. The trial

       court observed that Spann had sold his interest in Madison Riverport to

       Hammock and then observed: “So if [Spann’s] given it up, I don’t think he has

       a dog in that fight. I could be ordering something that I get a phone call

       Monday from Mr. Hammock or one of these corporations saying, Judge, what

       are you doing”. Transcript Vol. II at 114. Perry’s counsel acknowledged that

       “obviously this is going to have to play out in these proceedings” but requested

       protection of the asset until things were sorted out. Id.

[10]   On November 9, 2009, the trial court issued an extensive order that dealt with a

       number of issues. With respect to the one-third interest in Madison Riverport,

       the order provided as follows:

               13.      That at the time of the Decree of Dissolution on December
                        22, 2005, Larry Spann owned 20% of the stock in Matrans
                        Construction, Inc. and 33 1/3% of the stock in Madison
                        Riverport. The evidence shows that at the time of the
                        Decree, Matrans Inc. had significant income from work
                        orders with Indiana Kentucky Electric. Further, [Spann]
                        testified that at the time of the Decree, and currently,
                        Madison Riverport held property upon which
                        Consolidated Grain and Barge holds an option to purchase
                        for $600,000. Despite the clearly demonstrated value of
                        the stock in both Matrans Construction Inc and Madison
                        Riverport, [Spann] transferred all of his stock in both
                        entities to [Hammock] for $25,000 on December 27, 2005.
                        The Court finds that at the time of the transfer of such

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 5 of 16
                        stock, the stock was clearly subject to [Perry’s] judgment
                        lien, and said lien follows the stock.

               14.      That the Court heard testimony that there are current
                        negotiations between Madison Riverport and both the City
                        of Madison and Consolidated Grain and Barge involving
                        the potential sale of the property owned by Madison
                        Riverport. Because 1/3 of the stock in Madison Riverport
                        is subject to [Perry’s] judgment lien, the Court hereby
                        orders Madison Riverport LLC, as Garnishee Defendant
                        herein, to place 1/3 of proceeds of the sale or lease of such
                        real estate in escrow until all interested parties have had an
                        opportunity to argue their positions to the court as to the proper
                        disposition of said funds.

       Appellant’s Appendix Vol. III at 20 (emphasis supplied).

[11]   On December 8, 2009, Madison Riverport filed a motion for relief from the

       order, arguing that Perry failed to properly serve Madison Riverport with notice

       of the proceedings supplemental. Perry had served Madison Riverport in care

       of Larry Spann rather than in care of Anthony Hammock, who was the

       company’s registered agent.

[12]   The trial court held a hearing on the motion for relief on December 23, 2009.

       Perry and Madison Riverport were represented by counsel at the hearing.

       Before reaching the merits of the motion, Madison Riverport’s attorney made

       some observations: 1) Madison Riverport is a limited liability company and

       does not have stock; 2) the court made no finding that Hammock was anything

       other than a bona fide purchaser of Spann’s ownership interest in the company;

       and 3) Hammock, the owner of the personal property in question and the real

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 6 of 16
       party in interest, had not been made a party to this action or given an

       opportunity to be heard. Counsel, thus, raised the issue of whether Hammock’s

       ownership interest was “properly before the Court in order for the Court to

       have jurisdiction and enter an order affecting or encumbering that interest.”

       Transcript Vol. II at 147.

[13]   Perry’s attorney responded that he was not prepared to address whether

       Hammock was a bona fide purchaser or whether Hammock had notice.

       Counsel requested a future hearing “on the substance of whether [Perry’s] lien

       does in fact attach to that interest of Madison Riverport”. Id. at 154. With

       respect to service on Madison Riverport, Perry argued that the service of

       process was sufficient and that the company had actual knowledge of the

       proceedings supplemental.

[14]   At the conclusion of the hearing, the trial court found that Madison Riverport

       had been properly served but that Hammock had not been individually named

       or served as a party. Perry indicated a willingness to join Hammock

       individually but requested that the court continue the escrowing of funds until it

       could be determined whether the one-third interest was “attachable.” Id. at

       166. The trial court agreed but warned, “Hammock needs to be named now.”

       Id. at 169. The CCS entry further reveals that the trial court ruled in relevant

       part: “Anthony Hammock individually must be named as a party and served

       before the Court can exercise jurisdiction over his individual interests.”

       Appellant’s Appendix Vol. II at 29. The court set the matter for a hearing on

       March 5, 2010. This hearing was rescheduled multiple times and never held.

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 7 of 16
       Similarly, Hammock was not added as a party or served. Perry’s attorney

       withdrew his appearance at the end of 2010.

[15]   No activity in the case occurred until March 14, 2013, when a new attorney

       entered an appearance on behalf of Perry and filed a fourth verified motion for

       proceedings supplemental. Although Hammock was listed on the caption of

       the motion as a garnishee defendant, Perry failed to serve Hammock as a party.

       At a hearing on April 11, 2013, Perry’s new counsel admitted this “oversight”

       and indicated that she would file an amended motion to formally name

       Hammock as a garnishee defendant. Transcript Vol. II at 182. Perry filed an

       amended motion on May 23, 2013, and it appears that Hammock may have

       been served for the first time in this case.

[16]   On August 2, 2013, following a hearing, the transcript of which we do not have,

       the trial court entered an order denying Madison Riverport’s and Hammock’s

       motions to dismiss and ordering them to respond to interrogatories. The order

       provided further that Perry must seek leave of the court before Madison

       Riverport or Hammock would be ordered to appear for another hearing. Perry

       took no further action against Hammock or Madison Riverport for nearly two

       years.

[17]   On May 13, 2015, again with a new attorney, Perry filed a motion to enforce

       prior order of court and for contempt. Perry sought enforcement of the

       November 9, 2009 order against Madison Riverport, which she claimed had not

       placed any proceeds into escrow. Later, Perry amended the motion to make

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 8 of 16
       clear that she was seeking a contempt finding against Madison Riverport, not

       Spann. Perry did not serve Hammock individually with this motion.

[18]   The trial court held a hearing on the motion to enforce on September 4, 2015.

       Once again, Madison Riverport’s attorney observed that the personal property

       in question was owned by Hammock, not the company, and that Perry had

       never established that Hammock obtained the property via a fraudulent

       transfer. Counsel noted further that Hammock was not a party to the action

       when the November 2009 order was entered and, thus, did not have an

       opportunity to defend his ownership interest in Madison Riverport.

[19]   Perry’s attorney acknowledged that the time had likely passed for determining

       that the transfer was fraudulent. Counsel, however, continued to point to a lien

       created by the November 2009 order. When the court expressed concern over

       how a lien could be attached to property sold four years earlier, counsel

       responded:

               [T]he only argument I can have to the Court is that obviously
               those arguments must have been made back in 2009. I was not
               involved in the hearings back then…. I can’t go back and – and
               figure out what arguments were made. All I’m looking at is I’ve
               got an order from a Judge saying, yes, she has a lien on it and
               we’re asking this Court to enforce that prior order of the Court.

       Id. at 210-11. Counsel acknowledged that Hammock “could very well be an

       interested party” and clarified that Perry simply wanted the funds held in

       escrow until an evidentiary hearing could be held to determine the proper

       distribution of the funds. Id. at 220.
       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 9 of 16
[20]   Immediately following the hearing on September 4, 2015, the trial court issued

       an order providing in relevant part:

               1. 1/3 of the Net Ordinary Income from November 9, 2009 to
                  current from Madison Riverport LLC shall be placed in an
                  escrow account. This Order is required under paragraph 14 of
                  the November 9, 2009 Order…. All interested persons, including
                  but not limited to Anthony Hammock, may request a hearing to
                  argue their positions to the Court as to proper disposition of the
                  approximately $6,243.81 and future net income. If Karleen Perry,
                  Larry Spann, or Madison Riverport, LLC requests a hearing, they
                  shall serve Anthony Hammock by sheriff or certified mail.

               2. The Court denies Karleen Perry’s request that Madison
                  Riverport, LLC be found in contempt of Court due to the
                  legal complexities that were raised concerning the differences
                  in the 2005 Divorce Decree and 2009 Proceedings
                  Supplemental Order.

                                                          ****

       Appellant’s Appendix Vol. III at 85 (emphasis supplied).

[21]   New counsel – Perry’s fifth by our count – appeared on December 21, 2015,

       filing a motion for leave to levy execution on one-third of Madison Riverport’s

       stock.2 Although Perry once again failed to serve Hammock individually,

       Hammock’s attorney filed a special appearance in the matter. Hammock filed

       2
         On this date, Perry also initiated a parallel action, Cause No. 39C01-1512-MI-936 (the Miscellaneous
       Action) by filing a complaint against Spann and Madison Riverport to renew judgment lien. Perry obtained
       a default judgment on April 19, 2016, which Madison Riverport promptly sought to set aside.

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018     Page 10 of 16
       motions and a brief arguing, among other things, that he had never been

       properly made a party and that Perry had failed to timely file a complaint

       alleging a fraudulent transfer.

[22]   On September 23, 2016, the trial court held a hearing to address all pending

       motions.3 Perry argued that the November 2009 order established that the 2005

       transfer between Spann and Hammock constituted a fraudulent transfer and

       that this determination could not be collaterally attacked this many years later.

       Hammock disputed whether any such determination had been made and

       observed that, regardless, he could not be bound by the November 2009 order,

       as he was not a party to those proceedings. In sum, Hammock argued that no

       valid lien attached to the personal property – the one-third ownership interest in

       Madison Riverport – that he purchased from Spann in 2005.

[23]   The trial court issued an order on September 30, 2016. In addition to denying

       Perry’s motion to levy execution on stock, the court granted Hammock’s

       motions and ordered: “the disposition of the approximately $6,243.81 and

       subsequent future net income which was placed in an escrow account pursuant

       to the Court’s September 4, 2015 Order shall become an asset again of Madison

       Riverport, LLC and is no longer required to be escrowed or frozen.” Id. at 109.

       3
        In this consolidated hearing, the trial court also considered the Trial Rule 60 motion filed by Madison
       Riverport in the Miscellaneous Action. The trial court ultimately set aside the default judgment. Perry does
       not appeal this portion of the trial court’s order.

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018         Page 11 of 16
[24]   Perry filed a motion to correct error on October 31, 2016, arguing that the

       issues raised by Hammock at the hearing were barred by “res judicata, trial rule

       filing deadlines, laches or statutes of limitation.” Id. at 111. Following a brief

       hearing, the trial court denied Perry’s motion to correct error on April 24, 2017.

       Perry now appeals.4

                                              Discussion & Decision

[25]   Perry’s arguments reflect a fundamental misunderstanding of what actually

       occurred below. Essentially, Perry argues that the November 2009 order

       conclusively established that her lien survived the transfer between Spann and

       Hammock and that Hammock was bound by this order because he did not

       appeal. Further, Perry asserts that the trial court’s December 2009 order

       constituted a final judgment on the issue of personal jurisdiction with respect to

       both Hammock and Madison Riverport.

       As the lengthy procedural history set out above reveals, critical issues remained

       unresolved after the 2009 orders and no final judgment had been issued

       regarding the personal property in question. In the November 2009 order, the

       trial court determined that Perry’s lien survived the transfer between Hammock

       and Spann. But the record unquestionably establishes that the trial court did

       4
          In a “motion for consideration” filed in this court, Perry expressed confusion regarding whether the relief
       from judgment in the Miscellaneous Action affected the finality of the consolidated order, which also
       addressed the proceedings supplemental in the dissolution action. We conclude that the consolidated order
       was final, as nothing remained to be determined regarding Perry’s alleged lien against Hammock’s one-third
       interest in Madison Riverport.

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018          Page 12 of 16
       not have personal jurisdiction over Hammock when it issued this order, which

       directly affected his property. Indeed, in the December 2009 order, the trial

       court ruled: “Anthony Hammock individually must be named as a party and

       served before the Court can exercise jurisdiction over his individual interests.”

       Appellant’s Appendix Vol. II at 29. This came after a hearing in which the trial

       court warned Perry that “Hammock needs to be named now.” Transcript Vol. II

       at 147. Perry indicated a willingness to join Hammock, but requested that the

       funds remain escrowed until it could be determined whether the one-third

       interest was “attachable.” Id. at 166. The trial court agreed and scheduled a

       future hearing, which was rescheduled multiple times and never held. The case

       then lingered for several years with Perry failing to serve Hammock in an

       attempt to establish that her lien attached to his one-third interest in Madison

       Riverport.

[26]   Nearly six years later, in May 2015, Perry filed a motion to enforce the

       November 2009 order against Madison Riverport. This motion overlooked the

       December 2009 hearing and order, which made clear that Hammock was a

       necessary party to the proceedings supplemental and that it remained to be

       determined whether the lien attached to his one-third interest. When this gaffe

       was raised at a subsequent hearing, Perry acknowledged Hammock’s likely

       interest in the litigation and requested, as she did in 2009, that the funds be held

       in escrow pending a hearing to determine their proper distribution.

       Accordingly, on September 4, 2015, the trial court ordered that the funds

       continue to be held in escrow and that all interested persons, including

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 13 of 16
       Hammock, could request a hearing to argue the proper disposition of the funds.

       The court’s order provided that if Perry requested such a hearing, she must

       serve Hammock by sheriff or certified mail.

[27]   In December 2015, rather than request a hearing as described above and serve

       Hammock, Perry filed a motion for leave to levy execution against Madison

       Riverport. Hammock’s attorney filed a special appearance to protect

       Hammock’s property from execution. At a September 2016 hearing, the issue

       regarding whether Hammock’s property was subject to Perry’s lien was finally

       litigated between Hammock and Perry, the real parties in interest. This issue,

       which had remained unresolved since December 2009, was conclusively

       determined by the trial court in its September 30, 2016 order. The trial court

       found in favor of Hammock.

[28]   On appeal, like at the September 2016 hearing, Perry hangs her hat on an

       argument that Hammock cannot collaterally attack the November 2009 order,

       which found that the lien survived the transfer between Spann and Hammock.

       Perry disregards the fact that Hammock was not a party to those proceedings,

       and she blatantly ignores the December 2009 hearing and order. Even a

       cursory review of the December 2009 proceedings reveals that no conclusive

       determination had been made regarding Hammock’s property because Perry

       had yet to make him a party. Thereafter, Perry failed time and again to

       establish her lien against this property.

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 14 of 16
[29]   It has long been the law in Indiana that in order to create a lien on personal

       property, as opposed to real estate, it is necessary to issue and levy execution.

       See e.g., Rothchild v. State, 165 N.E. 60, 60 (Ind. 1929) (“A judgment without an

       execution in the hands of an officer authorized to execute it is not a lien on

       personal property.”); Ralston Purina Co. v. Detwiler, 364 N.E.2d 180, 182 (Ind.

       Ct. App. 1977) (“since the evidence herein discloses that no levy was ever made

       on the shares of Chapel Eggs stock specifically, the same were never

       encumbered by the purported [judgment] lien”); Muniz v. U.S., 155 N.E.2d 140,

       143 (Ind. Ct. App. 1958) (“to create a lien upon personal property it is

       necessary to issue and levy execution , but in order to create a lien upon real

       estate it is only necessary to enter and index the judgment in the county where

       the real estate is located”). The record does not establish that Perry issued and

       levied execution on Spann’s one-third interest in Madison Riverport before he

       transferred this property to Hammock. We acknowledge that Spann acted

       swiftly in selling his interest to Hammock after the dissolution decree was

       entered, and Perry might have had a viable fraudulent transfer action. But she

       wholly failed to properly and timely seek to have the transfer voided as a

       fraudulent transfer.

[30]   Perry’s general judgment lien did not survive the 2005 transfer and, thus, she

       has no enforceable lien against the property held by Hammock. Accordingly,

       the trial court properly rejected her belated attempt in 2015 to levy execution on

       Hammock’s property.

[31]   Judgment affirmed.

       Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 15 of 16
May, J. and Vaidik, C.J., concur.

Court of Appeals of Indiana | Memorandum Decision 39A01-1708-DR-1783 | February 8, 2018   Page 16 of 16