Court Opinion

ID: 4242575
Source: CourtListenerOpinion
Date Created: 2018-02-06 16:11:21.549465+00
Date Added: 2024-06-11T13:47:08.890846
License: Public Domain

FILED
                                                                                    Feb 06 2018, 9:25 am

                                                                                        CLERK
                                                                                    Indiana Supreme Court
                                                                                       Court of Appeals
                                                                                         and Tax Court

      ATTORNEY FOR APPELLANT                                     ATTORNEY FOR APPELLEE
      Christopher P. Phillips                                    Steven Knecht
      Phillips Law Office P.C.                                   Vonderheide & Knecht, P.C.
      Monticello, Indiana                                        Lafayette, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Janet Freels,                                              February 6, 2018
      Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                                 91A02-1708-PL-1988
              v.                                                 Appeal from the White Superior
                                                                 Court
      James F. Koches and Sunset                                 The Honorable Robert B. Mrzlack,
      Builders, Inc.,                                            Judge
      Appellee-Defendant.                                        Trial Court Cause No.
                                                                 91D01-1703-PL-11

      Najam, Judge.

                                         Statement of the Case
[1]   Janet Freels appeals the trial court’s dismissal of her complaint against James F.

      Koches and Sunset Builders, Inc. (collectively, “Sunset”). Freels raises a single

      Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018                           Page 1 of 9
      issue for our review, namely, whether the trial court erred when it dismissed her

      complaint pursuant to the doctrine of res judicata. 1 We affirm.

                                   Facts and Procedural History
[2]   In February of 2016, Freels filed a small-claims action against Sunset. In her

      notice of claim, Freels alleged that Sunset had failed to properly perform certain

      construction work on her home, which resulted in water damage and mold.

      Freels sought damages in the amount of $6,000. After a fact-finding hearing, in

      May the small claims court ruled in favor of Sunset on Freels’ claim. Freels did

      not appeal that judgment.

[3]   In March of 2017, Freels filed a complaint against Sunset in the White Superior

      Court. In that complaint, Freels alleged that Sunset’s “poor workmanship” in

      its construction on her home resulted in “more than $30,000.00” in damages to

      Freels. Appellant’s App. Vol. 2 at 9-10. Freels also alleged that Sunset’s

      actions amounted to fraud and conversion, and that she was additionally

      entitled punitive damages, treble damages, and attorney’s fees.

[4]   Sunset moved to dismiss Freels’ March 2017 complaint in the trial court on the

      grounds that her complaint was barred by the doctrine of res judicata. Sunset

      1
        Freels’ brief and construction of the record on appeal conflate her appeal from the trial court’s final
      judgment in 91D01-1703-PL-11 with her appeal from the small claims court’s simultaneous denial of her
      motion for relief from judgment in 91D01-1602-SC-82. But Freels has not requested that this Court
      consolidate those two proceedings and judgments into one appeal. As such, we have separately addressed
      each appeal and have partitioned our review of the record and the briefs accordingly. We also note that
      Freels’ appendix on appeal does not include the trial court’s chronological case summary, which is contrary
      to Indiana Appellate Rule 50(A)(2)(a).

      Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018                       Page 2 of 9
      attached to its motion Freels’ February 2016 notice of claim in the small claims

      court as well as that court’s judgment on her claim. Freels responded to

      Sunset’s motion to dismiss, and the trial court held a hearing. Thereafter, the

      trial court granted Sunset’s motion to dismiss based on res judicata. This

      appeal ensued.

                                      Discussion and Decision
[5]   Freels appeals the trial court’s judgment to dismiss her complaint pursuant to

      the doctrine of res judicata. We review de novo the trial court’s ruling on a

      motion to dismiss under Indiana Trial Rule 12(B)(6). Caesars Riverboat Casino,

      LLC v. Kephart, 934 N.E.2d 1120, 1122 (Ind. 2010). “Such a motion tests the

      legal sufficiency of a claim, not the facts supporting it.” Id. “Viewing the

      complaint in the light most favorable to the non-moving party, we must

      determine whether the complaint states any facts on which the trial court could

      have granted relief.” Id. “If a complaint states a set of facts that, even if true,

      would not support the relief requested, we will affirm the dismissal.” McPeek v.

      McCardle, 888 N.E.2d 171, 174 (Ind. 2008). We may affirm the grant of a

      motion to dismiss if it is sustainable on any theory. Id.

[6]   The trial court here dismissed Freels’ complaint under the doctrine of res

      judicata. As we have explained:

              The principle of res judicata is divided into two branches: claim
              preclusion and issue preclusion.

      Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018   Page 3 of 9
        The first of these branches, claim preclusion, applies where a
        final judgment on the merits has been rendered and acts as a
        complete bar to a subsequent action on the same issue or claim
        between those parties and their privies. When claim preclusion
        applies, all matters that were or might have been litigated are
        deemed conclusively decided by the judgment in the prior action.
        The following four requirements must be satisfied for claim
        preclusion to apply as a bar to a subsequent action: (1) the
        former judgment must have been rendered by a court of
        competent jurisdiction; (2) the former judgment must have been
        rendered on the merits; (3) the matter now in issue was, or could
        have been, determined in the prior action; and (4) the
        controversy adjudicated in the former action must have been
        between the parties to the present suit or their privies.

        The second branch of the principle of res judicata is issue
        preclusion, also known as collateral estoppel. Issue preclusion
        bars the subsequent litigation of a fact or issue that was
        necessarily adjudicated in a former lawsuit if the same fact or
        issue is presented in the subsequent lawsuit. If issue preclusion
        applies, the former adjudication is conclusive in the subsequent
        action, even if the actions are based on different claims. The
        former adjudication is conclusive only as to those issues that
        were actually litigated and determined therein. Thus, issue
        preclusion does not extend to matters that were not expressly
        adjudicated and can be inferred only by argument. In
        determining whether issue preclusion is applicable, a court must
        engage in a two-part analysis: (1) whether the party in the prior
        action had a full and fair opportunity to litigate the issue, and (2)
        whether it is otherwise unfair to apply issue preclusion given the
        facts of the particular case. The non-exhaustive factors to be
        considered by the trial court in deciding whether to apply issue
        preclusion include: (1) privity, (2) the defendant’s incentive to
        litigate the prior action, and (3) the ability of the plaintiff to have
        joined the prior action.

Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018       Page 4 of 9
      Angelopoulos v. Angelopoulos, 2 N.E.3d 688, 696 (Ind. Ct. App. 2013), trans.

      denied. There is no dispute in the instant appeal that the trial court’s application

      of res judicata here was under the “branch” of claim preclusion.

[7]   Also relevant to this appeal is Indiana Small Claims Rule 11(F). That Rule

      states that a judgment of a small claims court “shall be res judicata only as to

      the amount involved in the particular action and shall not be considered an

      adjudication of any fact at issue in any other action or court.” Ind. Small

      Claims Rule 11(F). “In other words, Smalls Claims Rule 11(F) prohibits the

      application of issue preclusion based on a small claims judgment, but [it] does

      not prohibit claim preclusion.” Geico Ins. Co. v. Graham, 14 N.E.3d 854, 860

      (Ind. Ct. App. 2014) (discussing In re Ault, 728 N.E.2d 869, 872 (Ind. 2000)).

[8]   On appeal, Freels asserts that the trial court erred for three reasons when it

      dismissed her complaint. First, Freels contends that her complaint in the trial

      court alleged new claims against Sunset and, as such, res judicata does not

      apply to those new claims. Similarly, Freels’ second argument is that the trial

      court erred in dismissing her complaint because, at the time of the small-claims

      proceedings, she “had no idea that additional areas were damaged” and that

      “the actual damage caused . . . was in excess of $30,000.00.” Appellant’s Br. at

      9.

[9]   In support of those two arguments, Freels relies exclusively on this Court’s

      opinion in Biggs v. Marsh. In Biggs, we held that two prospective homebuyers’

      failed suit for specific performance against a homeowner on their apparent

      Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018   Page 5 of 9
       purchase agreement did not preclude the buyers from later bringing suit against

       the owner for fraudulent misrepresentation. 446 N.E.2d 977, 982 (Ind. Ct.

       App. 1983). In particular, we held that “[t]he evidence to establish the material

       elements of a fraudulent misrepresentation of an existing fact reasonably relied

       upon by the [buyers] to their detriment differs substantially from the evidence

       necessary to sustain” their claim for specific performance. Id.

[10]   But we have since clarified our holding in Biggs. As we more recently stated:

               Hilliard would have us follow Biggs and take a literal
               interpretation of the identical evidence test, which has since been
               called into question by the Seventh Circuit. In Atkins v. Hancock
               County Sheriff’s Merit Board, the Seventh Circuit noted that
               Indiana follows the identical evidence test, as is outlined in Biggs.
               910 F.2d 403, 405 (7th Cir. 1990). The court went on to say
               “[u]nderstood literally, that approach would confine a plea of res
               judicata to cases in which the claim in plaintiff’s second suit was
               identical to the claim in his first, and would invite piecemeal
               litigation with a vengeance. We have not thought that Indiana
               intended to confine res judicata so narrowly . . . .” Id. Hilliard’s
               argument is centered around the idea that we should apply the
               literal interpretation of this test; she contends that some evidence
               necessary to adjudicate her second set of claims was not before
               the trial court in her first set of claims, preventing the invocation
               of res judicata. However, we find this argument unpersuasive.

               Applying a practical interpretation of the identical evidence test,
               the claims at issue in the present case could have been
               adjudicated in the first case. Even though individual pieces of
               evidence may differ between the two sets of claims, . . . the same
               general evidence would be used to adjudicate all of Hilliard’s
               claims . . . . Furthermore, all of this evidence was available from the
               beginning of this litigation; Hilliard’s claims all sought the same

       Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018       Page 6 of 9
               ultimate relief and there is no claim in the second case that could
               not have been adjudicated in the first case. All of the legal
               theories of relief she puts forth in both sets of claims should have
               been adjudicated at once. Choosing to withhold evidence and
               theories of relief should not be the basis for allowing Hilliard
               another “bite at the apple.”

               Furthermore, we reject Hilliard’s argument because it was the
               conscious decision of her and her husband not to set forth all of
               the evidence and legal theories they had. A party cannot fail to
               introduce evidence in the first case and then later claim that the
               excluded evidence is necessary for the second case, barring res
               judicata under the identical evidence rule. “[A] party who
               neglects to put in the evidence that would support the withheld
               legal theory cannot later point to its own omission as justification
               for filing another suit. Such an approach would gut the rules of
               preclusion.” Wabash Valley Power Ass’n v. Rural Electrification
               Admin., 903 F.2d 445, 456 (7th Cir. 1990) (internal citations
               omitted). Allowing Hilliard’s claims to continue would be
               allowing her the possibility of endless litigation over the life
               insurance policies—as long as she withheld some piece of
               evidence or some legal theory, she could attempt to litigate her
               claims again until she got a ruling in her favor. This would
               completely eviscerate the doctrine of res judicata.

       Hilliard v. Jacobs, 957 N.E.2d 1043, 1047-48 (Ind. Ct. App. 2011) (emphasis

       added; alterations original to Hilliard), trans. denied.

[11]   We agree with Hilliard and conclude that, here, Freels’ additional claims and

       damages could have been, and should have been, litigated in her first action.

       See id.; see also Angelopoulos, 2 N.E.3d at 696 (claim preclusion prohibits the

       subsequent litigation of any matter that “was, or could have been, determined in

       the prior action”) (emphasis added). Indeed, Freels’ argument here is that this

       Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018    Page 7 of 9
       Court should apply a literal reading of Biggs, which we have already plainly

       rejected. Hilliard, 957 N.E.2d at 1047-48. As such, we likewise reject Freels’

       argument.

[12]   Moreover, Freels’ argument that she “had no idea” about the full nature and

       extent her claims against Sunset or her damages at the time of the small-claims

       action is beside the point. The question is not whether Freels had actual

       knowledge of that information at the time she filed her notice of claim in the

       small claims court, but, rather, whether a reasonably prudent person who had

       the means of that knowledge at hand would have ascertained it. Cf. Keybank

       Nat’l Ass’n v. NBD Bank, 699 N.E.2d 322, 327 (Ind. Ct. App. 1998) (discussing

       actual notice and inquiry notice). Nothing about the facts alleged in Freels’

       subsequent action in the White Superior Court demonstrates that the “new”

       information relied upon was unavailable to her at the time she filed her action

       in the small claims court. Rather, the underlying facts demonstrate that both

       litigations are “essentially the same.” Becker v. State, 992 N.E.2d 697, 700 (Ind.

       2013). As such, Freels’ second action is barred under the doctrine of claim

       preclusion.

[13]   Freels’ third argument is that, due to the informal nature of small-claims

       proceedings, res judicata simply “should not apply” to them. Appellant’s Br. at

       10. Our Supreme Court disagrees. In In re Ault, the Court held that res

       judicata—specifically, claim preclusion—attaches to the judgments of our small

       claims courts. 728 N.E.2d at 872 (discussing Cook v. Wozniak, 500 N.E.2d 231,

       233 (Ind. 1987)). Freels’ argument on this issue would also have us disregard

       Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018   Page 8 of 9
       Small Claims Rule 11(F), which, as we explained in Geico, means that claim

       preclusion applies to the judgments of our small claims courts. Geico, 14
N.E.3d at 860. Accordingly, we reject Freels’ broad assertion that the

       informality of small-claims proceedings prohibits the application of res judicata

       here.

[14]   In sum, we decline Freels’ request to apply a literal reading of Biggs. Instead,

       we follow this Court’s subsequent clarification of Biggs in Hilliard. We also

       decline Freels’ request to exempt small-claims proceedings from the doctrine of

       res judicata. Thus, we affirm the trial court’s dismissal of Freels’ complaint.

[15]   Affirmed.

       Mathias, J., and Barnes, J., concur.

       Court of Appeals of Indiana | Opinion 91A02-1708-PL-1988 | February 6, 2018   Page 9 of 9