Court Opinion

ID: 4530311
Source: CourtListenerOpinion
Date Created: 2020-04-30 15:04:44.816406+00
Date Added: 2024-06-11T09:26:58.108711
License: Public Domain

MEMORANDUM DECISION
      Pursuant to Ind. Appellate Rule 65(D),                                     FILED
      this Memorandum Decision shall not be                                 Apr 30 2020, 5:41 am
      regarded as precedent or cited before any
                                                                                 CLERK
      court except for the purpose of establishing                           Indiana Supreme Court
                                                                                Court of Appeals
      the defense of res judicata, collateral                                     and Tax Court

      estoppel, or the law of the case.

      ATTORNEY FOR APPELLANT                                   ATTORNEY FOR APPELLEE
      George P. Galanos                                        Daniel J. Zlatic
      Crown Point, Indiana                                     Rubino, Ruman, Crosmer &
                                                               Polen, LLC
                                                               Dyer, Indiana

                                                 IN THE
          COURT OF APPEALS OF INDIANA

      Matthew Dallman,                                         April 30, 2020
      Appellant-Respondent,                                    Court of Appeals Case No.
                                                               19A-DR-2115
              v.                                               Appeal from the Lake Circuit
                                                               Court
      Eunjin Choi,                                             The Honorable Marissa
      Appellee-Petitioner.                                     McDermott, Judge
                                                               Trial Court Cause No.
                                                               45C01-1602-DR-130

      Pyle, Judge.

                                        Statement of the Case
[1]   Matthew Dallman (“Husband”) appeals the trial court’s order concluding that

      the decree dissolving his marriage to Eunjin Choi (“Wife”) did not create a

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020                 Page 1 of 10
      constructive trust in favor of Husband. Finding no error, we affirm the trial

      court’s judgment.

[2]   We affirm.

                                                      Issue
                       Whether the trial court’s determination that the final
                       dissolution decree did not create a constructive trust in
                       favor of Husband is clearly erroneous.

                                                     Facts
[3]   Husband and Wife were married in July 2013 and have one child, who was

      born in August 2014. During the course of the parties’ marriage, Wife filed a

      sexual harassment lawsuit against a co-worker. In December 2015, Wife

      entered into a confidential settlement agreement in the lawsuit. Pursuant to the

      terms of the agreement, Wife was awarded $40,000 in settlement proceeds.

      Wife received a $20,000 payment in December 2015 and used $18,000 to make

      a payment on student loans that she had taken out before the marriage. Wife

      filed a dissolution petition in February 2016 and used the remaining $2,000

      from the first settlement payment to make an attorney fee deposit for the

      dissolution. Wife received the second $20,000 payment after she had filed the

      dissolution petition.

[4]   In April and May 2018, Magistrate Lisa Berdine (“Magistrate Berdine”), in the

      court of Judge Marissa McDermott (“Judge McDermott”), presided over a six-

      day dissolution hearing and took the matter under advisement. In December

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020   Page 2 of 10
      2018, Wife filed a praecipe requesting that the case be transferred to the Indiana

      Supreme Court for the appointment of a special judge pursuant to Trial Rule

      53.2 because the case had been under advisement for more than ninety days.

      While the Indiana Supreme Court was considering Wife’s praecipe, Magistrate

      Berdine issued a 68-page dissolution order in January 2019. Judge McDermott

      also signed the dissolution order.

[5]   A few days later, the Indiana Supreme issued an order on Wife’s praecipe. In

      its order, the Indiana Supreme Court noted that “[f]ailing for over seven

      months to render a decision in this case [was] unacceptable.” (App. Vol. 2 at

      49). However, pointing out that Magistrate Berdine had recently issued the

      dissolution order, the Indiana Supreme Court further noted that appointing a

      special judge would only result in further delay. The Indiana Supreme Court

      remanded the case to “the Lake Circuit Court and Judge McDermott.” (App.

      Vol. 2 at 49).

[6]   Although Wife had argued that the settlement proceeds from her sexual

      harassment settlement should not be considered as part of the marital pot, the

      January 2019 dissolution order provided in relevant part as follows:

              41.      The total marital estate, minus the settlement proceeds, is
                       Ninety Three Thousand One Hundred Fifty-Five and
                       36/100 Dollars ($93,155.36). [Husband’s] fifty-five
                       percent (55%) interest totals Fifty One Thousand Two
                       Hundred[] Thirty-Five and 45/100 Dollars ($51,235.45).
                       [Husband] has received assets totaling Eleven Thousand
                       One Hundred Forty-Six and 98/100 Dollars (11,146.98),
                       leaving a balance owed to [Husband] in the amount of
                       Forty Thousand Eighty-Eight and 47/100 Dollars

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020   Page 3 of 10
                       ($40,088.47). [Husband] shall have judgment against
                       [Wife] for said amount. [Wife] shall pay [Husband] the
                       amount of Nine Thousand and 00/100 Dollars ($9,000)
                       from the settlement proceeds being held by [Wife], within
                       seven days of the date of the Decree. . . . [Wife] shall pay
                       the remainder to [Husband] at the rate of Five Hundred
                       and 00/100 Dollars ($500.00) per month, until this
                       judgment is paid in full, beginning February 1, 2019 and
                       payable on the first of each month thereafter.

              42.      [Husband] shall receive a fifty-five percent (55%) interest
                       in [Wife’s] first settlement check totaling Twenty
                       Thousand and 00/100 Dollars ($20,000). [Wife] shall pay
                       [Husband] his fifty-five percent (55%) interest, Eleven
                       Thousand and 00/100 Dollars ($11,000.00), from the
                       monies [Wife] is holding from her second settlement
                       distribution, within seven (7) days of the date of this
                       Decree.

              (App. Vol. 2 at 118-19).

[7]   In early February 2019, Wife filed a notice of appeal in this Court. Two weeks

      later, she filed a voluntary Chapter 13 bankruptcy petition in the bankruptcy

      court and a motion to dismiss the appeal in this Court. We granted Wife’s

      motion to dismiss the appeal with prejudice. In the bankruptcy court petition,

      Wife named Husband as one of many non-priority unsecured creditors. One

      month later, in March 2019, Wife filed a proposed Chapter 13 payment plan in

      the bankruptcy court.

[8]   Husband immediately filed in Wife’s bankruptcy case a motion for relief from

      the stay and an objection to Wife’s proposed plan. Husband argued that he was

      not a non-priority unsecured creditor because the dissolution decree had created

      Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020   Page 4 of 10
       a constructive trust, which is not dischargeable in bankruptcy.1 In September

       2019, the bankruptcy court modified that automatic stay “to the full extent

       necessary for [Husband] and [Wife] to litigate on the merits . . . the discrete

       issue of whether the Lake Circuit Court granted [Husband] a constructive trust

       pursuant to same decree.” (App. Vol. 2 at 35).

[9]    Thereafter, Father filed a motion requesting the trial court to schedule a hearing

       to determine whether the dissolution decree had created a constructive trust in

       his favor. He also requested that Magistrate Berdine hear and decide the

       matter.

[10]   Judge McDermott scheduled an August 2019 hearing. At the beginning of the

       hearing, with Judge McDermott presiding, Husband pointed out that he had

       asked for Magistrate Berdine to both hear and decide the matter. Judge

       McDermott responded that the Indiana Supreme Court had remanded the case

       to her and that she would be deciding it.

[11]   Following a brief hearing, Judge McDermott issued an order concluding that

       the dissolution decree had not created a constructive trust in favor of Husband.

       Rather, according to Judge McDermott, the “final decree . . . [was] no different

       than any other divorce decree in that it decided what should be part of the

       1
        See In re Lucas, 300 B.R. 526, 533 (B.A.P. 10th Cir. 2003) (explaining that property that a debtor holds in a
       constructive trust for another is not part of the debtor’s bankruptcy estate).

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020                      Page 5 of 10
       marital estate and then divided that estate as the court deemed equitable.”

       (App. Vol. 2 at 21).

[12]   Husband now appeals the trial court’s order.

                                                   Decision
[13]   As a preliminary procedural matter, we note that Father contends that the trial

       court erroneously denied his request for Magistrate Berdine to “preside over the

       . . . hearing regarding the discrete issue of whether the Final Decree created the

       equitable remedy of a constructive trust in favor of [Husband].” (Husband’s Br.

       17). However, Judge McDermott explained that the Indiana Supreme Court

       had remanded the case to her. Notwithstanding Husband’s argument that

       Judge McDermott misinterpreted the Indiana Supreme Court’s order, that

       Court has previously explained that the presiding judge retains control of the

       proceedings although a magistrate may assist. Williams v. State, 724 N.E.2d
1070, 1087 (Ind. 2000), reh’g denied, cert. denied. Here, Judge McDermott

       retained control over the proceedings and had the authority to deny Husband’s

       request that Magistrate Berdine hear and decide the case. We find no error.

[14]   We now turn to the substantive issue in this case. Husband argues that the trial

       court erred when it determined that the final dissolution decree did not create a

       constructive trust in his favor. Specifically, Husband contends that “[s]ince

       Wife held Husband’s portion of the marital estate awarded to Husband and

       willfully and wrongly failed to turn over and pay said portion to Husband, Wife

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020   Page 6 of 10
       held said portion in a constructive trust for the benefit of Husband.”

       (Husband’s Br. at 18).

[15]   Our standard of review is well-settled where, as here, the trial court sua sponte

       entered findings of fact and conclusions thereon. Sua sponte findings and

       conclusions control only as to the issues they cover, and a general judgment

       standard applies to any issue upon which the court has not found. Nelson v.

       Marchand, 691 N.E.2d 1264, 1267 (Ind. Ct. App. 1998). In reviewing findings

       and conclusions, we first determine whether the evidence supports the findings

       and then whether findings support the judgment. K.I. ex rel. J.I. v. J.H., 903
N.E.2d 453, 457 (Ind. 2009). We will not set aside the judgment unless it is

       clearly erroneous. Id. A judgment is clearly erroneous when there is no

       evidence supporting the findings or the findings fail to support the judgment.
Id. A judgment is also clearly erroneous when the trial court applies the wrong

       legal standard to properly found facts. Id.

[16]   “A constructive trust is a creature of equity, devised to do justice by making

       equitable remedies available against one who through fraud or other wrongful

       means acquires property of another.” Kalwitz v. Estate of Kalwitz, 822 N.E.2d
274, 280 (Ind. Ct. App. 2005), trans. denied. The Indiana Supreme Court has

       further explained as follows:

               A constructive trust is imposed where a person holding title to
               property is subject to an equitable duty to convey it to another on
               the ground that he would be unjustly enriched if he were
               permitted to retain it. The duty to convey the property may rise
               because it was acquired through fraud, duress, undue influence

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020   Page 7 of 10
               or mistake, or through a breach of a fiduciary duty, or through
               the wrongful disposition of another’s property. The basis of the
               constructive trust is the unjust enrichment which would result if
               the person having the property was permitted to retain it.
Id. (quoting Melloh v. Gladis, 261 Ind. 647, 656, 309 N.E.2d 433, 438-39 (1974)

       (citing 5 SCOTT ON TRUSTS § 404.2). A constructive trust is more in the nature

       of an equitable remedy than an independent cause of action. Kalwitz, 822
N.E.2d at 280. Further, the law is firmly established that fraud, either actual or

       constructive, is a prerequisite to the imposition of a constructive trust. Id.

       (Emphasis added).

[17]   Here, in support of his argument that the final dissolution decree created a

       constructive trust in his favor, Husband directs us to Leever v. Leever, 919 N.E.2d
118 (Ind. Ct. App. 2009). There, Verna and Don Leever (“Parents”) executed a

       quitclaim deed of their home to their son, Doug (“Doug”), and his wife, Lisa

       (“Lisa”), in 1999. Parents executed the quitclaim deed so that if Parents had to

       go to a nursing home, Parents “would be able to get Medicaid while, at the

       same time, the property would remain in the family.” Id. at 123. Despite

       signing the quitclaim deed, Parents, who had lived in the house for fifty-one

       years, continued to pay the mortgage, utilities, homeowner’s insurance, and

       real estate taxes. Parents also made all home maintenance decisions.

[18]   In 2007, Lisa filed a dissolution petition. At the hearing on the petition, Lisa

       testified that it was her understanding that Parents had gifted their house to her

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020   Page 8 of 10
       and Doug and that it was a marital asset. Doug testified that he considered the

       house to belong to his parents and that it should not be taken away from them.

[19]   Following the hearing, the trial court concluded that it would be an injustice to

       allow Lisa or Doug to take a portion of the real estate when they had not taken

       a portion before their separation. Instead, the trial court ordered Doug to take

       the residence subject to a constructive trust in favor of his parents.

[20]   Lisa appealed, and this Court pointed out that when Lisa requested the trial

       court to include the home in the marital estate and divide it between her and

       Doug, Lisa had violated her oral promise to Parents to keep the home as a safe

       place for them to live. Id. at 123. This Court further concluded that “to allow

       Lisa and Doug to dispossess [Parents] of their home would be to permit them to

       be unjustly enriched by the sale price or rents and profits accruing during the

       remainder of [Parents’] life, to which they are not entitled.” Id. at 124.

       Accordingly, we affirmed the trial court’s creation of a constructive trust to

       safeguard Parents’ interests. Id.

[21]   Here, we agree with Wife that Husband’s reliance on Leever is misplaced

       because “[n]one of the elements in Leever, essential to the creation of a

       constructive trust, are present here.” (Wife’s Br. 24). First, Husband did not

       convey the disputed funds to Wife. Rather, Wife received the funds in a

       settlement of her sexual harassment claim against a party unrelated to this case.

       Further, Wife neither induced Husband, through a promise, to place himself in

       a worse position than he would have been absent such a promise, nor would be

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020   Page 9 of 10
       unjustly enriched by the disputed funds because she will not be keeping them.

       In addition, Husband has failed to show that the funds were acquired through

       fraud, duress, undue influence or mistake, or through the breach of a fiduciary

       duty or the wrongful disposition of another’s property. The trial court did not

       err when it determined that the dissolution decree did not create a constructive

       trust in favor of Husband.

[22]   We further note that the trial court properly pointed out that this “final decree .

       . . [was] no different than any other divorce decree in that it decided what

       should be part of the marital estate and then divided that estate as the court

       deemed equitable.” (App. Vol. 2 at 21). The law is well-settled that a property

       settlement in a dissolution decree is dischargeable in bankruptcy.2 Cowart v.

       White, 711 N.E.2d 523, 528 (Ind. 1999), clarified on reh’g, 716 N.E.2d 401 (Ind.

       1999) (citing 4 GOLDSTEIN ET AL., COLLIER ON BANKRUPTCY ¶ 523.11[6][c]

       (15th ed.1996). We find no error here.

[23]   Affirmed.

       May, J., and Crone, J., concur.

       2
         On the other hand, obligations to support a former spouse or child in connection with a dissolution decree
       are not dischargeable in bankruptcy. See Bean v. Bean, 902 N.E.2d 256 (Ind. Ct. App. 2009) (and authority
       cited therein). However, Husband makes no argument that the funds that he seeks to place in a constructive
       trust are in the nature of support. Even if he had, this argument would fail as well since the dissolution
       decree clearly states that these funds were distributed as part of the marital estate.

       Court of Appeals of Indiana | Memorandum Decision 19A-DR-2115 | April 30, 2020                  Page 10 of 10