Court Opinion

ID: 4368942
Source: CourtListenerOpinion
Date Created: 2019-02-19 17:04:11.650653+00
Date Added: 2024-06-11T11:49:56.831096
License: Public Domain

MEMORANDUM DECISION
                                                                             FILED
Pursuant to Ind. Appellate Rule 65(D), this                             Feb 19 2019, 8:56 am
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the                           CLERK
                                                                         Indiana Supreme Court
purpose of establishing the defense of res judicata,                        Court of Appeals
                                                                              and Tax Court
collateral estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT                                ATTORNEYS FOR APPELLEE HORIZON
Jason R. Delk                                          BANK, N.A.
Daniel J. Gibson                                       Elizabeth Flynn
Delk McNally LLP                                       Craig V. Braje
Muncie, Indiana                                        Braje, Nelson & Janes, LLP
                                                       Michigan City, Indiana
                                                       ATTORNEYS FOR APPELLEE CHICAGO
                                                       TITLE INSURANCE COMPANY
                                                       Tammy L. Ortman
                                                       Jennifer S. Ortman
                                                       Lewis & Kappes, P.C.
                                                       Indianapolis, Indiana

                                             IN THE

    COURT OF APPEALS OF INDIANA

Thomas J. Moss,                                            February 19, 2019
                                                           Court of Appeals Case No.
Appellant-Plaintiff,
                                                           18A-PL-1526
        v.                                                 Appeal from the LaPorte Superior
                                                           Court
Horizon Bank, N.A., and                                    The Hon. Richard R. Stalbrink,
Chicago Title Insurance                                    Jr., Judge
Company,                                                   Trial Court Cause No.
                                                           46D02-1710-PL-1843

Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019                Page 1 of 10
      Appellees-Defendants.

      Bradford, Judge.

                                          Case Summary
[1]   Thomas Moss is a beneficiary of two land trusts, one of which, Trust 08-1292,

      sold land to the other, Trust 08-3923, in 2005. Trust 08-1292, and Moss

      individually as a beneficiary of it, were to be paid over time and were each

      granted a mortgage by Trust 08-3923. In 2012, Moss became aware that the

      mortgages had apparently never been recorded, potentially leaving him and

      Trust 08-1292 as unsecured creditors to Trust 08-3923. In July of 2012, Trust

      08-3923 filed for bankruptcy and indeed attempted to avoid the mortgages.

[2]   In 2013, Moss sued Chicago Title Insurance Company and Horizon Bank,

      N.A. (collectively, “the Defendants”), in LaPorte Superior Court for, inter alia,

      their alleged failure to ensure that the mortgages were recorded (“the 2013

      Lawsuit”). In 2015, the parties stipulated that the lawsuit be dismissed with

      prejudice, with Moss reserving only the right to pursue claims against the

      Defendants in Trust 08-3923’s bankruptcy proceeding. In 2017, when Moss

      sued the Defendants again in LaPorte Superior Court (“the 2017 Lawsuit”),

      Chicago Title moved to dismiss on res judicata grounds, which motion the trial

      court granted. Moss contends that the trial court improperly failed to convert

      Chicago Title’s motion to dismiss to a summary-judgment motion and erred in

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019   Page 2 of 10
      concluding that the dismissal of the 2013 Lawsuit was res judicata as to the

      2017 Lawsuit. Because we disagree with both contentions, we affirm.

                            Facts and Procedural History
[3]   In 1980, Moss and a number of other investors, using a land trust designated

      Trust 08-1292, purchased a parcel of land in LaPorte County that became

      known as “Dune Top.” Through a merger, Horizon became trustee of Trust

      08-1292. In 2005, three beneficiaries of Trust 08-1292 requested a sale of Dune

      Top. Beachwalk LP, the founder and developer of the Beachwalk development

      and of which Moss was the general partner, agreed to purchase Dune Top, with

      title to be held by another land trust, Trust 08-3923, of which Horizon also

      eventually became trustee. Beachwalk agreed to pay $1,500,000 for Dune Top,

      paying $90,000 for each of six investor shares (a total of $540,000) while paying

      the balance over time and executing a promissory note and mortgage (“the

      Trust Mortgage”) in favor of Trust 08-1292. Because Beachwalk did not have

      enough ready cash to cover the $540,000 payment, it was agreed that it would

      pay the $270,000 owed to Moss over time pursuant to a promissory note

      secured by a mortgage executed in favor of Moss (“the Moss Mortgage”).

      Closing on the sale of Dune Top from Trust 08-1292 to Trust 08-3923 occurred

      on or about July 28, 2005, at Ticor Title Insurance Company, Chicago Title’s

      predecessor-in-interest.

[4]   In April of 2012, while Moss was attempting to assemble documents related to

      Beachwalk’s then-dire financial condition, he discovered that the Trust and

      Moss Mortgages (collectively, “the Mortgages”) had not been recorded in 2005.

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019   Page 3 of 10
      On July 18, 2012, Beachwalk filed for Chapter 11 bankruptcy and initiated an

      adversary proceeding to avoid the unrecorded Mortgages.

[5]   Moss filed the 2013 Lawsuit on November 1, 2013, in LaPorte Superior Court

      1. Specifically, Moss alleged breach of contract by Ticor for failure to properly

      record the Mortgages and secure title insurance, professional negligence by

      Ticor, breach of Horizon’s fiduciary duty to ensure that the Mortgages were

      properly recorded, and improper disbursement of the assets of Trust 08-3923 by

      Horizon. On February 19, 2014, the trial court granted Chicago Title’s motion

      to dismiss with prejudice. Moss filed a motion to reconsider, and that motion,

      along with other pending motions, were set for hearing on December 18, 2014.

[6]   On the date of the hearing, all parties agreed to dismiss the 2013 Lawsuit with

      prejudice. The parties filed a stipulation for dismissal on January 5, 2015, and

      an order for dismissal with prejudice (“the Order”) was entered that day:

              IT IS THEREFORE ORDERED, ADJUDGED AND
              DECREED, that all remaining claims between and among
              Thomas J. Moss, Horizon Bank, N.A., a/k/a Horizon Bancorp,
              individually and as Trustee of Trust Number 08-1292 and Chicago
              Title Insurance Company, as successor by merger to Ticor Title
              Insurance company, are hereby dismissed with prejudice excepting
              only [Moss]’s opportunity to file claims in the pending bankruptcy
              case of Debtor, Moss Family Limited Partnership, et al[.], Case
              No. 12-32540-hcd.
      Appellant’s App. Vol. II pp. 48–49. Meanwhile, on January 2, 2015, Moss had

      filed claims in bankruptcy court against the Defendants (“the Bankruptcy

      Lawsuit”). Horizon Bank moved to dismiss the Bankruptcy Lawsuit, which

      motion was granted on June 16, 2016. Moss did not appeal this dismissal.

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019   Page 4 of 10
[7]   On October 31, 2017, Moss filed a new complaint against the Defendants (“the

      2017 Lawsuit”) in LaPorte Superior Court 2, alleging that Horizon breached

      the terms of Trust 08-3923 and committed constructive Fraud by transferring

      the trust’s assets to Moss without authorization. Moss also alleged that Ticor

      breached its contractual obligations by failing to issue a title insurance policy

      and record the Mortgages and committed constructive fraud by falsely

      representing that it had secured title insurance. At the same time, Moss moved

      for relief from the Order in LaPorte Superior Court 1.

[8]   On January 21, 2018, Horizon moved to dismiss the 2017 Lawsuit pursuant to

      Indiana Trial Rule 12(B)(8), arguing that the same case was pending in another

      court, namely LaPorte Superior Court 1. On February 14, 2018, Chicago Title

      moved to dismiss the 2017 Lawsuit pursuant to Trial Rule 12(B)(6), arguing res

      judicata. Chicago Title’s motion was accompanied by four exhibits, including

      the Order. On May 31, 2018, the trial court denied Horizon’s motion to

      dismiss, granted Chicago Title’s, and ultimately granted dismissal, with

      prejudice, as to both Defendants.

                                 Discussion and Decision
[9]   Moss contends that the trial court erred in (1) considering extraneous material

      attached to Chicago Title’s motion to dismiss without converting it to a

      summary-judgment motion and in (2) concluding that Moss’s claims in the

      2017 Lawsuit are barred by res judicata.

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019   Page 5 of 10
                 I. Conversion to Summary-Judgment Motion
[10]   Chicago Title made, and the trial court granted, a motion pursuant to Trial

       Rule 12(B)(6), which allows for dismissal for “[f]ailure to state a claim upon

       which relief can be granted[.]” If, while making a 12(B)(6) motion,

               matters outside the pleading are presented to and not excluded by
               the court, the motion shall be treated as one for summary
               judgment and disposed of as provided in Rule 56. In such case, all
               parties shall be given reasonable opportunity to present all material
               made pertinent to such a motion by Rule 56.
       Ind. Trial Rule 12(B). Moss contends that the trial court erroneously failed to

       convert Chicago Title’s motion to dismiss into a summary-judgment motion

       and also failed to give him a reasonable opportunity to present material in

       opposition. It is true that we have held that a trial court’s failure to provide

       explicit notice of its intended conversion of a motion to dismiss to one for

       summary judgment is reversible error if a reasonable opportunity to respond is

       not afforded and the party is prejudiced. Lanni v. Nat’l Collegiate Athletic Ass’n,

       989 N.E.2d 791, 795 (Ind. Ct. App. 2013).

[11]   In this case, however, Chicago Title argues—and we agree—that the trial court

       was not required to convert its motion to dismiss into a summary-judgment

       motion. In Indiana, materials of which a trial court may take judicial notice

       (such as the court records from the 2013 Lawsuit) are not considered “matters

       outside the pleading.” In Davis ex relatione Davis v. Ford Motor Co., 747 N.E.2d

       1146 (Ind. Ct. App. 2001), trans. denied, we stated that when evaluating a

       12(B)(6) motion to dismiss, “the court may look only at the pleadings, with all

       well-pleaded material facts alleged in the complaint taken as admitted,

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019   Page 6 of 10
       supplemented by any facts of which the court will take judicial notice.” Id. at 1149

       (emphasis added) (citing Anderson v. Anderson, 399 N.E.2d 391, 406 (Ind. Ct.

       App. 1979)).1 We conclude that because the extraneous matters on which the

       trial court relied were matters of which it could take judicial notice,2 it was not

       required to convert Chicago Title’s action to a summary-judgment motion.

                                                II. Res Judicata
[12]   Defendants contend that the 2017 Lawsuit is barred by res judicata, specifically

       by the dismissal of the 2013 Lawsuit with prejudice. It is well-settled that a

       dismissal with prejudice is a dismissal on the merits and is conclusive of the

       1
         The Anderson court relied on George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d
       551 (2nd Cir. 1977). Frey Ready-Mixed Concrete, however, does not even mention judicial notice, much less
       explicitly state that consideration of judicially-noticed facts is proper in a motion-to-dismiss context.
       Wherever the Anderson court found their support, our research has revealed a wealth of authority—in the
       federal courts, at least—for the proposition, dating at least as far back as 1944, in another case where a
       motion to dismiss which included judicially-noticeable material was premised upon res judicata. The District
       Court for the Western District of Missouri set the scene in this way: “This venerable controversy haunts us
       like a ghost which cannot be laid. Once our colleague put an end to it. Twice we buried it. Twice the Court
       of Appeals not only refused to resurrect it, but almost spat on the grave. Here it comes again!” Kithcart v.
       Metro. Life Ins. Co., 62 F. Supp. 93, 93 (W.D. Mo. 1944). The court dismissed Kithcart’s action on the basis
       that “the amended petition shows on its face, when supplemented by facts of which judicial knowledge is taken, that
       the controversy presented is res adjudicata.” Id. at 94 (emphasis added); see also, e.g., Henson v. CSC Credit
       Servs., 29 F.3d 280, 284 (7th Cir. 1994) (“[W]e recently held that ‘[t]he district court may also take judicial
       notice of matters of public record’ without converting a 12(b)(6) motion into a motion for summary
       judgment.”) (citation omitted); MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986) (“On a
       motion to dismiss, we may take judicial notice of matters of public record outside the pleadings.”) (citations
       omitted); Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196–97 (3rd Cir. 1993) (“To
       decide a motion to dismiss, courts generally consider only the allegations contained in the complaint […] and
       matters of public record.”); Allen v. Westpoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991) (“In determining
       the adequacy of a claim under Rule 12(b)(6), consideration is limited to the facts stated on the face of the
       complaint […] and to matters of which judicial notice may be taken.”) (citation omitted).
       2
         Pursuant to Indiana Rule of Evidence 201(b)(5), “[a] court may judicially notice [….] records of a court of
       this state[,]” which includes the “Order for Dismissal with Prejudice” issued by LaPorte Superior Court 1 on
       January 5, 2015. While the record does not seem to contain any explicit statement that the trial court took
       judicial notice of the exhibits attached to Chicago Title’s 12(B)(6) motion, it seems clear that this essentially
       occurred. In any event, Moss does not claim that the attachments should not have been and/or were not
       judicially noticed, only that they qualify as extraneous.

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019                     Page 7 of 10
       rights of the parties and res judicata as to the questions which might have been

       litigated. Fox v. Nichter Const. Co., 978 N.E.2d 1171, 1180 (Ind. Ct. App. 2012),

       trans. denied.

[13]   Moss does not deny that the claims in the 2017 Lawsuit are essentially the same

       as he pursued in 2013, arguing only that the dismissal of the 2013 Lawsuit does

       not bar the 2017 Lawsuit because the Order reserved him the right to pursue

       claims against the Defendants in bankruptcy court. As mentioned, the Order

       applied to all claims between the parties subject to it “excepting only [Moss]’s

       opportunity to file claims in the pending bankruptcy case of Debtor, Moss

       Family Limited Partnership, et al[.], Case No. 12-32540-hcd.” Appellant’s App.

       Vol. II p. 49.

               When interpreting an agreed entry, we will recognize that such
               agreements are contractual in nature and binding on the parties.
               Singh v. Singh, 844 N.E.2d 516, 524 (Ind. Ct. App.
               2006)(interpreting the effect of an agreed entry in the context of a
               dissolution of marriage settlement agreement); Battershell v.
               Prestwick Sales, Inc., 585 N.E.2d 1, 4 (Ind. Ct. App. 1992), trans.
               denied. The interpretation or legal effect of a contract is a question
               of law to be determined by the court. Battershell, 585 N.E.2d. at 4–
               5. [T]he interpretation of a contract is controlled by the intent of
               the parties as expressed by the clear language of the contract.
               [Delgado v. Boyles, 922 N.E.2d 1267, 1270 (Ind. Ct. App. 2010),
               trans. denied.] Clear, plain, and unambiguous contract terms are
               conclusive of the parties’ intent, and a court will not construe the
               contract or consider extrinsic evidence, but will merely apply the
               contractual provisions as they are written. [Fid. Nat. Title Ins. Co.
               v. Mussman, 930 N.E.2d 1160, 1165 (Ind. Ct. App. 2010), trans.
               denied].

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019   Page 8 of 10
       City of Jeffersonville v. Envtl. Mgmt. Corp., 954 N.E.2d 1000, 1011–12 (Ind. Ct.

       App. 2011).

[14]   We find it difficult to imagine that the reservation of rights in the Order could

       be any more clear that Moss’s right to pursue claims against the Defendants is

       limited to one specific case in bankruptcy court. The Order explicitly provides

       that the reservation “only” applies to a particular bankruptcy case, language

       that, in our view, definitively forecloses future litigation on these claims in other

       forums or cases. Moss, no doubt recognizing that the reservation of rights is

       limited by its plain terms to bankruptcy Case No. 12-32540-hcd, urges us to

       infer that the reservation also covered possible future litigation in state court in

       the event the claims were not fully adjudicated in bankruptcy court.3 This

       interpretation of the reservation language is untenable, however, as it would

       require us to ignore the parties’ and LaPorte Superior Court 1’s use of language

       limiting Moss’s right to pursue claims to one case in bankruptcy court. If the

       parties had intended to reserve Moss’s right to further pursue his claims in state

       court under any circumstances, language to that effect could easily have been

       used. Because such language was not used, the trial court correctly concluded

       3
         Moss relies on the Alaska case of DeNardo v. Calista Corp., 111 P.3d 326 (Alaska 2005), in which a
       stipulation included language that it did “not affect plaintiff’s claims against Calista Corporation and Alaska
       Newspapers, Inc. in … A00–309 Civ …., currently pending in the U.S. District Court for the District of
       Alaska.” Id. at 332. The DeNardo court concluded that the stipulation language did not bar future
       proceedings in state court, as it referred to the claims pending in federal court being reserved, not the forum in
       which they were litigated. Id. at 333–34. Here, however, the reservation of rights preserved only Moss’s
       right to bring whatever claims he might have in a particular case in a particular forum, not any particular
       claims.

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019                    Page 9 of 10
       that the Order is res judicata as to the 2017 Lawsuit. The trial court did not err

       in dismissing Moss’s 2017 Lawsuit.

[15]   The judgment of the trial court is affirmed.

       Najam, J., and Altice, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-1526 | February 19, 2019   Page 10 of 10