Court Opinion

ID: 4544802
Source: CourtListenerOpinion
Date Created: 2020-06-29 15:03:20.942371+00
Date Added: 2024-06-11T08:51:33.426431
License: Public Domain

MEMORANDUM DECISION
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
                                                                                    FILED
the defense of res judicata, collateral                                     Jun 29 2020, 9:07 am

estoppel, or the law of the case.                                                   CLERK
                                                                                Indiana Supreme Court
                                                                                   Court of Appeals
                                                                                     and Tax Court

APPELLANT PRO SE                                         APPELLEE PRO SE
Luke L. Tooley, Jr.                                      Michael Ghosh
Billerica, Massachusetts                                 The Ghosh Law Office LLC
                                                         Carmel, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Luke L. Tooley, Jr.,                                     June 29, 2020
Appellant-Respondent,                                    Court of Appeals Case No.
                                                         19A-PL-3016
        v.                                               Appeal from the Hamilton
                                                         Superior Court
Michael Ghosh,                                           The Honorable Jonathan M.
Appellee-Petitioner.                                     Brown, Judge
                                                         Trial Court Cause No.
                                                         29D02-1707-PL-6437

Bradford, Chief Judge.

Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020                           Page 1 of 15
                                          Case Summary
[1]   At some point prior to the initiation of the underlying lawsuit, Michael Ghosh

      and Meleeka Clary-Ghosh divorced. Ghosh initiated a lawsuit against Clary-

      Ghosh and MCM Fashions, LLC (“MCM”), alleging that Clary-Ghosh had

      fraudulently transferred certain assets to MCM. Ghosh subsequently amended

      the complaint to include Luke L. Tooley, Jr.; Andrew L. Clary, Jr.; and TCD

      Productions, LLC (“TCD”), alleging that the additional parties participated in

      the fraudulent transfer of the assets. Ghosh subsequently obtained judgment

      liens against some of the parties, including Tooley, and petitioned for the

      appointment of a receiver to receive, retrieve, manage, protect, and sell all

      property and real estate encumbered by the liens. On December 3, 2019, the

      trial court granted Ghosh’s petition to appoint a receiver. Tooley challenges the

      appointment of the receiver on appeal, arguing that the trial court abused its

      discretion in doing so. Concluding that the trial court abused its discretion by

      failing to provide Tooley with notice of the hearing on Ghosh’s petition, we

      reverse the judgment of the trial court and remand for further proceedings.

                            Facts and Procedural History
[2]   The underlying facts of this case, as set forth in our recent decision in a related

      appeal, are as follows:

              On July 11, 2017, Ghosh filed a verified complaint (“initial
              complaint”) against Clary-Ghosh, his former spouse, and MCM
              to set aside fraudulent transfers and to pierce the corporate
              veil/alter ego of MCM pursuant to Indiana Code chapter 32-18-
      Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 2 of 15
        2. MCM’s operating agreement shows that it is composed of
        Clary-Ghosh, who served as the business’s registered agent,
        Tooley, and Clary, who is the brother of Clary-Ghosh. Schedule
        II of the MCM operating agreement, titled, “MEMBER
        INFORMATION, CONTRIBUTION & INTEREST
        PERCENTAGE” listed Tooley’s address as follows:

        Luke L. Tooley, Jr.
        11 Crawfield Street
        Dorchester, Massachusetts 02125

        Before Ghosh and Clary-Ghosh were married, Tooley and Clary-
        Ghosh had children together and Ghosh and Clary-Ghosh went
        to Tooley’s personal residence in Dorchester, Massachusetts to
        pick up Clary-Ghosh’s daughters from their visitation with
        Tooley. In the initial complaint, Ghosh sought to collect on
        judgments that had been awarded to him against Clary-Ghosh
        arising out of the divorce proceedings between him and Clary-
        Ghosh, alleging that Clary-Ghosh fraudulently conveyed all of
        her property to MCM with the actual intent to hinder, delay, or
        defraud Ghosh. On March 8, 2018, Tooley established a
        revocable trust [(“the Tooley Trust”)] into which he subsequently
        transferred, among other assets, a 2000 Mercedes-Benz CLK 430,
        a 2002 Chevrolet Venture, a 2005 Lexus GX 470, a 2007 BMV
        750i, and a 2005 Mercedes-Benz CLS 500C, vehicles that Clary-
        Ghosh owned and had previously transferred to MCM.

        On August 27, 2018, Ghosh filed a motion for leave to amend
        the complaint (“amended complaint”), seeking to add three
        additional defendants, Tooley and Clary, in their individual
        capacities, and [TCD]. TCD was created by Clary-Ghosh and
        identified Tooley as its sole corporate manager. The trial court
        granted Ghosh’s motion to amend on January 3, 2019. The
        amended complaint set forth the amounts of the judgments
        awarded to Ghosh as a result of the divorce proceedings between
        Clary-Ghosh and Ghosh, which totaled $84,567.13. It also set
        forth the vehicles that Clary-Ghosh owned and transferred to

Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 3 of 15
        MCM, which included the vehicles that Tooley had previously
        transferred to his revocable trust. The amended complaint
        sought, among other things, to hold Tooley personally liable for
        the judgments awarded to Ghosh against Clary-Ghosh in their
        divorce proceeding. Ghosh requested relief, in part, for the trial
        court to order Tooley personally liable for Clary-Ghosh’s debts
        and financial obligations due and owing Ghosh and to order
        Tooley (along with MCM, TCD, Clary-Ghosh, and Clary) to pay
        Ghosh punitive damages for their malicious and/or fraudulent
        conduct.

        Ghosh engaged a private process server to serve Tooley, a
        resident of Massachusetts, with the summons, amended
        complaint, and the order granting motion for leave to amend at
        the address for the residence listed in the MCM operating
        agreement, 11 Crawfield Street, Dorchester, Massachusetts
        02125 (“11 Crawfield”). It was discovered that 11 Crawfield did
        not exist in Dorchester, but there was an 11 Cawfield Street,
        Dorchester, Massachusetts 02125 (“11 Cawfield”). Ghosh’s
        process server made five unsuccessful attempts to serve Tooley at
        11 Cawfield throughout January 2019 but eventually successfully
        served Tooley on February 4, 2019 at 11 Cawfield with the
        summons, amended complaint, and order granting motion for
        leave to amend. The process server noted that he left the
        documents at [Tooley’s residence] and mailed a copy of the
        documents served via first class United States Mail.

        On February 7, 2019, Ghosh filed a verified notice of service of
        process on Tooley and attached the process server’s affidavit of
        service, which the trial court entered into its chronological case
        summary (“CCS”). On March 15, 2019, Ghosh filed a motion
        for default judgment against Tooley to which he attached an
        affidavit from his trial counsel in support of his motion. The
        affidavit indicated that Tooley was served with a copy of the
        summons and the amended complaint on February 4, 2019,
        failed to appear, plead, or defend himself before February 27,
        2019, which was the deadline for Tooley to respond to the
Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 4 of 15
              amended complaint, and that Tooley was not currently in the
              armed forces of the United States.

              On May 1, 2019, the trial court granted Ghosh’s motion and
              entered a default judgment against Tooley. The trial court
              awarded Ghosh a judgment against Tooley in the amount of
              $84,567.13 plus interest, a $75,000 award of punitive damages
              plus interest, and attorney’s fees and costs with the amount to be
              determined at a damages hearing.

      Clary-Ghosh v. Ghosh, 2020 WL 2503929, at *1–2 (Ind. Ct. App. May 15, 2020)

      (“Ghosh I”) (internal record quotations and citations omitted).

[3]   On May 28, 2019, Tooley filed a motion to vacate the default judgment and to

      dismiss the matter pursuant to Trial Rule 12(b)(5) (“motion to vacate”),

      claiming that he never received a summons or amended complaint either by

      hand-delivery or through the United States Mail. Id. at *2. In response to

      Tooley’s motion, Ghosh, who had been to Tooley’s residence during his

      marriage to Clary-Ghosh, averred that Tooley resided at 11 Cawfield. Id. at *3.

      “On July 2, 2019, the trial court denied Tooley’s motion to vacate, finding that

      Tooley was properly served and that the trial court had personal jurisdiction

      over Tooley.” Id. at *2. On appeal, we affirmed the trial court’s finding that

      Tooley was properly served with notice of the lawsuit and that the trial court

      had personal jurisdiction over him. Id. at *6. Specifically, we concluded that

      “the default judgment entered against Tooley is valid, and the trial court

      correctly denied Tooley’s motion to vacate.” Id. at *6.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 5 of 15
[4]   Contemporaneously, on May 22, 2019, after the trial court entered the default

      judgment against Tooley, Ghosh filed a verified petition requesting the

      appointment of a receiver. The trial court set receivership hearing for July 18,

      2019. On July 17, 2019, Clary-Ghosh filed a notice of bankruptcy and

      automatic stay, listing Clary, TCD, Tooley, and the Tooley Trust as a co-

      debtors. The hearing on Ghosh’s petition was subsequently rescheduled for

      September 9, 2019. The trial court subsequently postponed the hearing until

      either the bankruptcy automatic stay was lifted or the case was dismissed by the

      bankruptcy court. On November 27, 2019, the co-debtor bankruptcy stay was

      lifted.

[5]   On December 3, 2019, the trial court conducted a hearing on Ghosh’s petition,

      after which it granted Ghosh’s request for the appointment of a receiver. In

      doing so, the trial court found, with respect to Tooley, as follows:

                9.     Pursuant to Ind. Code § 32-30-5-9, the Court cannot
                appoint a receiver until the adverse party has appeared or had
                reasonable notice of the application for the appointment of a
                receiver.

                                                      ****

                12. [Tooley] was served with notice of the instant cause of
                action on February 4, 2019 and he has filed motions in the
                instant cause of action, and a default judgment was entered in
                favor of [Ghosh] and against [Tooley] on May 1, 2019;

                13. [Ghosh] served [Clary], [TCD], and [Tooley] with a copy
                of [Ghosh’s] Verified Petition for Appointment of Receiver via
                U.S. Mail on May 22, 2019;

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 6 of 15
        14. Defendants [Clary], [TCD], and [Tooley] have either
        appeared or had reasonable notice of the application for the
        appointment of a receiver;

        15. It is therefore ordered that [Ghosh’s] Verified Petition for
        Appointment of Receiver is GRANTED. The parties are granted
        seven days to strike from the following panel. Judgment
        Defendants [Clary], [TCD], and [Tooley] shall each strike one (1)
        no later than December 10, 2019, then Plaintiff shall strike one
        (1) no later than December 17, 2019, and the remaining
        individual will be appointed by the Court as the Receiver.
        Should a party not strike within the time allotted, the Court shall
        strike for them. The panel is as follows:

                 a.      James Young (Indianapolis)
                 b.      Debbie Caruso (Indianapolis)
                 c.      Martha Lehman (Indianapolis)
                 d.      Chris Hagenow (Indianapolis)
                 e.      Michael Hebenstreit (Indianapolis)

        16. The Receiver, once appointed, shall be able to receive,
        retrieve, manage, protect, and sell all property and real estate
        owned by Defendants, [Tooley] a/k/a [the Tooley Trust], [TCD]
        and [Clary] that are encumbered by the judgment liens of
        [Ghosh] and to hold the proceeds of said sales for the benefit of
        the parties until further order of the Court. Said receiver for the
        purposes set forth herein is specifically authorized by Ind. Code §
        32-30-5-7 as follows:

                 “The receiver may, under control of the court or the
                 judge: (1) bring and defend actions; (2) take and keep
                 possession of the property; (3) receive rents; (4)
                 collect debts; and (5) sell property; in the receiver’s
                 own name, and generally do other acts respecting the
                 property as the court or judge may authorize.”

Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 7 of 15
      Appellant’s App. Vol. III pp. 30–31. Tooley filed a notice of bankruptcy and

      motion for a stay of the proceedings on December 13, 2019. On December 19,

      2019, the trial court issued an order appointing Hagenow as the receiver with

      respect to TCD and Clary.1

                                  Discussion and Decision
[6]   Tooley challenges the trial court’s December 3, 2019 order, contending that the

      trial court abused its discretion in appointing a receiver over both his property

      and the property contained in the Tooley Trust. For his part, Ghosh argues

      that Tooley’s appeal is not ripe as the matter, as it involves Tooley, was stayed

      when Tooley filed a notice of bankruptcy on December 13, 2019. While the

      trial court may not have yet appointed a specific individual to act as the receiver

      over Tooley’s property, the trial court’s December 3, 2019 order granting

      Ghosh’s request for a receiver specifically applied to Tooley and was issued

      prior to Tooley’s request for a stay pending bankruptcy proceedings. We

      therefore conclude that Tooley’s challenge to the trial court’s December 3, 2019

      order is ripe for appeal.

      1
        The trial court’s order made no reference to Tooley, presumably due to stay requested by Tooley pending
      resolution of his bankruptcy proceedings.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020                  Page 8 of 15
          I. Overview of Law Relating to the Appointment of a
                              Receiver
[7]   Generally, “proceedings for the appointment of a receiver are ancillary in their

      nature and must be supported by a principal action.” State ex rel. Busick v.

      Ewing, 230 Ind. 188, 190, 102 N.E.2d 370, 371 (1951). “Our scope of review of

      an interlocutory order appointing a receiver is limited.” Schrenker v. State, 919
N.E.2d 1188, 1191 (Ind. Ct. App. 2010). “We will not weigh the evidence on

      appeal, and we must construe the evidence along with all reasonable inferences

      in favor of the trial court’s decision.” In re Marriage of Gore, 527 N.E.2d 191,

      195 (Ind. Ct. App. 1988). “The appointment of a receiver is in the sound

      discretion of the trial court, and therefore our standard of review is that of abuse

      of discretion.” Id.

[8]   “[T]he appointment of a receiver is an extraordinary and drastic remedy to be

      exercised with great caution.” Crippin Printing Corp. v. Abel, 441 N.E.2d 1002,

      1005 (Ind. Ct. App. 1982).

              The action affects one of man’s most cherished and sacred rights
              guaranteed by the United States Constitution—the right to be
              secure in his property. This right is fundamental to every society
              in which men are free. For these reasons the statute which grants
              such authority is to be strictly construed.

      State ex rel. Makar v. St. Joseph Cty. Circuit Court, 242 Ind. 339, 347, 179 N.E.2d
285, 289–90 (1962) (footnote omitted). Quoting the Missouri Court of Appeals’

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 9 of 15
      decision in Lynch v. Lynch, 277 S.W.2d 692 (Mo. App. 1955), we previously

      stated that

              The appointment of a receiver is essentially a prerogative of
              equity, which may be exercised as a means of conserving the
              property or assets for the benefit of all parties in interest. The
              court will be authorized to appoint a receiver if it appears that,
              through fraud, mismanagement, misconduct, or otherwise, there
              is a likelihood that the property will be squandered, wasted,
              misappropriated or unlawfully diverted without the court’s
              intervention. But, absent threatened destruction or dissipation of
              the property, or where there is no good cause to believe that
              benefit would result from the appointment of a receiver, then the
              court should decline to make such an appointment. The power to
              appoint a receiver is a delicate one which is reluctantly exercised
              by the courts.… A receiver should be appointed only when the
              court is satisfied that the appointment will promote the interests
              of one or both parties, that it will prevent manifest wrong,
              imminently impending, and that the injury resulting will not be
              greater than the injury sought to be averted.

      Gore, 527 N.E.2d at 196–97 (internal citations, quotations, and emphasis

      omitted). “The appointment of a receiver is a statutorily granted authority that

      must be strictly construed, and it cannot be sustained unless proper statutory

      grounds for the appointment are sufficiently shown.” City of South Bend v.

      Century Indent. Co., 821 N.E.2d 5, 13 (Ind. Ct. App. 2005), trans. denied.

[9]   Indiana Code section 32-30-5-1 provides, in relevant part, that a receiver may

      be appointed in the following cases:

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 10 of 15
        (1) In an action by a vendor to vacate a fraudulent purchase of
        property or by a creditor to subject any property or fund to the
        creditor’s claim.

                                                ****

        (3) In all actions when it is shown that the property, fund or rent,
        and profits in controversy are in danger of being lost, removed, or
        materially injured.

                                                ****

        (5) When a corporation:

                 (A) has been dissolved;
                 (B) is insolvent;
                 (C) is in imminent danger of insolvency; or
                 (D) has forfeited its corporate rights.

        (6) To protect or preserve, during the time allowed for
        redemption, any real estate or interest in real estate sold on
        execution or order of sale, and to secure rents and profits to the
        person entitled to the rents and profits.

        (7) In other cases as may be provided by law or where, in the
        discretion of the court, it may be necessary to secure ample
        justice to the parties.

However, “a receiver should not be appointed if the plaintiff has an adequate

remedy at law or by way of temporary injunction.” Towne & Terrace Corp. v.

City of Indianapolis, 122 N.E.3d 846, 855 (Ind. Ct. App. 2019) (internal

quotation omitted).

Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 11 of 15
                             II. Application to Instant Matter
               A. General Claims Regarding Tooley’s Status in the
                              Underlying Lawsuit
                 1. Jurisdiction & Validity of Judgment Entered Against Tooley

[10]   Tooley argues that the trial court lacks jurisdiction over him because he was

       never served with adequate notice or process of the underlying lawsuit. We

       have previously found this assertion to be without merit. See Ghosh I, 2020 WL
2503929, at *6 (concluding that Tooley was properly served with notice of the

       underlying lawsuit and that the trial court had personal jurisdiction over him).

       Tooley also argues that the judgment entered against him is invalid. Contrary

       to Tooley’s argument, we concluded in Ghosh I that the default judgment

       entered against Tooley is valid. Id. We will not revisit either of these decisions

       in the instant appeal.

                                     2. Creditor-Debtor Relationship

[11]   Tooley also argues that the appointment of a receiver would be inappropriate

       because he is not a debtor of Ghosh. This argument fails, however, as Ghosh

       holds a valid judgment against Tooley for compensatory damages in the

       amount of $84,567.13 plus interest and punitive damages in the amount of

       $75,000 plus interest. Id. at *2. With respect to the Uniform Fraudulent

       Transfer Act, the term “claim” means “a right to payment” and “debt” means

       “liability on a claim.” Ind. Code § 32-18-2-2(2) & (4). A creditor is “a person

       that has a claim” and a debtor is “a person that is liable on a claim.” Ind. Code

       § 32-18-2-2(3) & (5). As such, the entry of judgment in Ghosh’s favor against
       Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 12 of 15
       Tooley established a creditor-debtor relationship. See generally, Stroud v. Lints,

       790 N.E.2d 440, 446 (Ind. 2003) (providing that a staggering punitive damages

       award traps the plaintiff and defendant forever in a creditor-debtor

       relationship).

                                 B. Order Appointing Receiver
[12]   Tooley contends that the trial court abused its discretion in granting Ghosh’s

       petition for the appointment of a receiver. Tooley raises a number of assertions

       as to how the trial court abused its discretion, one of which we find dispositive.

[13]   Tooley asserts that the trial court abused its discretion by failing to provide him

       with notice of the December 3, 2019 hearing, during which it heard argument

       relating to Ghosh’s petition. Generally, “[r]eceivers may not be appointed in

       any case until the adverse party has appeared or has had reasonable notice of

       the application for the appointment, except upon sufficient cause shown by

       affidavit.” Ind. Code § 32-30-5-9. However, the Indiana Supreme Court has

       further held that “notice must be given of any interlocutory hearing for the

       appointment of a receiver.” State ex rel. Mammonth Dev. & Const. Consultants, Inc.

       v. Superior Court of Marion Cty., 265 Ind. 573, 576, 357 N.E.2d 732, 733 (1976)

       (citing Hawkins v. Aldridge, 211 Ind. 332, 340, 7 N.E.2d 34, 37 (1937) (“Where

       the defendants have entered a general appearance, they are entitled to be

       notified in person, or through their counsel, of any hearing where evidence will

       be taken either on the merits of the case or upon interlocutory motions or

       petitions.”)). Given the Indiana Supreme Court’s decisions in Mammonth and

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 13 of 15
       Hawkins, we conclude that Tooley was entitled to notice of the hearing on

       Ghosh’s request for the appointment of a receiver.

[14]   In this case, the trial court found, and the record demonstrates, that while

       Tooley had been given reasonable notice of Ghosh’s request for the

       appointment of a receiver, he had not been given notice of the December 3,

       2019 hearing, during which the trial court considered Ghosh’s request for the

       appointment of a receiver. The trial court acknowledged during the December

       3, 2019 hearing that Tooley had not been given notice of the hearing. Given

       the Indiana Supreme Court precedent indicating that Tooley was entitled to

       notice of this hearing, we conclude that the trial court abused its discretion by

       failing to ensure that Tooley was given notice of the hearing. We therefore

       reverse the appointment of the receivership as it applies to Tooley and remand

       for a hearing on Ghosh’s petition, a hearing of which Tooley should be

       provided with adequate notice. 2

                                                  Conclusion
[15]   In sum, we conclude that (1) the trial court has jurisdiction over Tooley, (2) the

       default judgment entered against him is valid, and (3) a debtor-creditor

       2
         Tooley also asserts that the trial court abused its discretion by extending the scope of the receivership to
       cover all of his property and property included in the Tooley Trust and that Ghosh failed to prove that a
       receivership was justified under the strict requirements of Indiana law. However, because we reverse the trial
       court’s order appointing the receiver as it relates to Tooley, we need not consider Tooley’s additional
       challenges to the trial court’s order.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020                   Page 14 of 15
       relationship exists between Tooley and Ghosh. However, we also conclude

       that the trial court abused its discretion by failing to provide Tooley with notice

       of the December 3, 2019 hearing on Ghosh’s request for the appointment of a

       receiver. We therefore reverse the appointment of the receiver as it relates to

       Tooley and remand to the trial court for a hearing with specific instructions for

       the trial court to ensure that Tooley is provided with adequate notice of said

       hearing.

[16]   The judgment of the trial court is reversed and remanded with instructions.

       Baker, J., and Pyle, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-3016 | June 29, 2020   Page 15 of 15