Court Opinion

ID: 4541967
Source: CourtListenerOpinion
Date Created: 2020-06-17 15:03:39.12507+00
Date Added: 2024-06-11T12:47:02.270742
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                       FILED
regarded as precedent or cited before any                               Jun 17 2020, 9:23 am

court except for the purpose of establishing                                CLERK
                                                                        Indiana Supreme Court
the defense of res judicata, collateral                                    Court of Appeals
                                                                             and Tax Court
estoppel, or the law of the case.

ATTORNEY FOR APPELLANTS                                  ATTORNEY FOR APPELLEE
James E. Ayers                                           Leanna K. Weissmann
Wernle, Ristine & Ayers, L.P.C.                          Lawrenceburg, Indiana
Crawfordsville, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

James E. Ayers and                                       June 17, 2020
Wernle, Ristine & Ayers, L.P.C.,                         Court of Appeals Case No.
Appellants/Cross-Appellees-Plaintiffs,                   19A-PL-2480
                                                         Appeal from the Putnam Superior
        v.                                               Court
                                                         The Honorable Charles D. Bridges,
Terry Huber,                                             Judge
Appellee/Cross-Appellant-Defendant.                      Trial Court Cause No.
                                                         67D01-1806-PL-24

Bailey, Judge.

Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020                   Page 1 of 12
                                            Case Summary
[1]   Appellant/Cross-Appellee James Ayers (“Ayers”) and Appellee/Cross-

      Appellant Terry Huber (“Huber”) are equal co-owners of Fleming Outfitters,

      Inc., d/b/a Gathering Lake Outfitters, Inc. (“the Corporation”), which is

      incorporated in Canada and provides bear hunting adventures in Thunder Bay

      in the Ontario Province. Ayers filed his Complaint against Huber in the

      Putnam Superior Court to collect an $80,000 debt referenced in a Security

      Agreement executed by the parties individually (“the Agreement”) and to

      recoup monies allegedly advanced to Huber to pay Huber’s personal expenses.1

      Huber alleged an affirmative defense of improper venue, citing Indiana Trial

      Rules 12(B)(3) and 75, and contemporaneously requested judgment on the

      pleadings pursuant to Indiana Trial Rule 12(C). The trial court conducted a

      hearing and heard argument of counsel, but subsequently issued an order as if a

      bench trial had been conducted. The trial court ordered Huber to pay

      1
        The Complaint is not a model of clarity. In his Complaint, Ayers referenced the Agreement, executed on
      April 20, 2009, that “memorialized in part” the alleged debt. (App. Vol. II, pg. 10.) Although Ayers named
      as an additional plaintiff his wholly-owned professional corporation, only Ayers and Huber were signatories
      to the Agreement. We refer to Ayers and his professional corporation collectively as “Ayers.”
      The Complaint sought a judgment of $195,429.49 against Huber, together with all other proper relief. The
      Agreement includes a reference to $80,000.00 “to equalize [corporate] shares” contributions. Id. at 12. At
      the hearing, Ayers stated that he was owed $200,000 by the Corporation and that he had loaned $80,000.00
      to Huber “separate from the corporation.” (Tr. at 11.) On appeal, Ayers explains that he brought suit for
      $80,000.00 “plus $195,000.00 or more advanced to or for Huber personally in Indiana.” Appellant’s Brief at
      8. Huber interprets the Complaint as a demand for $80,000.00 related to corporate investment plus
      $115,429.49 allegedly loaned for Huber’s personal expenses.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020                   Page 2 of 12
      $80,000.00 to Ayers and determined that monetary claims related to the

      Corporation must be heard in Canada.

[2]   Ayers appeals, challenging the procedural posture and the purported “dismissal

      and transfer” of some of his grounds for relief. Huber cross-appeals,

      challenging the procedural posture and the order that he pay Ayers $80,000.00.

      We reverse and remand.

                                                       Issues
[3]   Both Ayers and Huber acknowledge the lack of clarity in Huber’s trial motions

      and the fact that the order did not mirror a motion before the trial court for

      resolution. Ayers seeks remand while Huber seeks dismissal of the complaint

      as untimely or, alternatively, a remand for further proceedings.2 Huber now

      expressly concedes that the Complaint was properly filed in Indiana. The

      parties offer a proliferation of facts not reflected in the pleadings and advance

      2
        Huber claims that the action is governed by the six-year statute of limitations for promissory notes found in
      Indiana Code Section 34-11-2-9 and that the claim must be dismissed because Ayers failed to bring his claim
      within the statutory period. Huber concedes that this affirmative defense, See Trial Rule 8(C), was not
      specifically raised or litigated in the trial court but argues that the failure may be excused because the
      statutory language is plain. However, Huber also presumes that this is not an open account and no further
      advancements were made. He asserts that “no payments” were made and there was “no demand” for
      payment, asking, in effect, that we make factual findings in the absence of factual development in the record.
      Appellee’s Brief at 17. We are not in a position to make factual determinations or to find error on grounds
      not presented to the trial court. Nor is Huber defending a judgment in his favor on alternate grounds. See
      First Chicago Ins. Co. v. Dunn, 141 N.E.3d 54, 61 (Ind. Ct. App. 2020) (recognizing that, in general, appellate
      review presupposes that a litigant’s arguments have been considered in the trial court but a prevailing party
      may support the judgment on alternate grounds on appeal).

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020                      Page 3 of 12
      arguments not presented to the trial court. The parties properly articulate the

      following consolidated and restated issues. Ayers presents the following issues:

              I.       Whether remand is required because the trial court
                       rendered a judgment on the merits absent a bench trial or
                       proper conversion of the Trial Rule 12(C) motion for
                       judgment on the pleadings to a Trial Rule 56 motion for
                       summary judgment; and

              II.      Whether Huber demonstrated his entitlement to judgment
                       on the pleadings.

      Huber presents the following issue:

              whether the order that he pay $80,000.00 lacks an evidentiary
              foundation.

      Because of our disposition of the procedural issue, we need not additionally

      address the latter two issues.

                            Facts and Procedural History
[4]   Ayers and Huber have a long-standing business relationship. Purportedly, each

      owns 50% of the Corporation, with Ayers having provided a down payment of

      $250,000.00, secured by a mortgage of $200,000.00, and Huber having provided

      sweat equity. Ayers is purportedly involved in litigation in Canada to

      foreclosure upon the mortgage.

[5]   On June 18, 2018, Ayers filed his complaint against Huber in the Putnam

      Superior Court. The Complaint contained averments that: the parties had
      Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020   Page 4 of 12
      undertaken a joint venture; Huber was required to be in Canada and needed

      financial assistance in his home state of Indiana; Ayers had loaned Huber funds

      to protect and maintain his property and home in Putnam County, Indiana “as

      needed”; Huber had failed to make payments on the indebtedness; and Huber

      had retained a Canadian attorney “who has repudiated all the agreements set

      out above.” (App. Vol. II, pg. 10.) Ayers requested a judgment of $195,429.49.

[6]   Attached to the Complaint was the Agreement. Paragraph 1 of the Agreement

      recites that Ayers and Huber agreed to be “equal investors” but Huber was

      “unable to provide his portion of the funding to date, such that all the initial

      funding has been provided by Ayers with the obligation on the part of Huber to

      repay Ayers on demand. The amount owed to equalize said shares is in excess

      of $80,000.00.” Id. at 12. Paragraph 2 recited that Huber had transferred his

      LaGoda, Indiana residence to Ayers subject to a mortgage. Paragraph 3

      required Ayers to pay the residential mortgage, insurance, taxes, and expenses

      while he held title to the real estate. Paragraph 4 obligated Huber to obtain

      refinancing of his residence. Paragraph 5 provided that Ayers was to give

      notice to Huber of his intent to request payment and an accounting would be

      compiled. Huber then had thirty days to obtain financing. 3

[7]   In addition to the Agreement, Ayers attached to the Complaint copies of letters

      from a Canadian attorney, proposing settlement of all issues between Huber

      3
       Purportedly, Huber has arranged refinancing of his residence. Ayers has asserted that Huber failed to repay
      $5,000.00 Ayers advanced Huber to facilitate refinancing.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020                   Page 5 of 12
      and Ayers. The letters suggested that Huber was making a claim for wages in

      connection with the operation of the bear hunting camp and he asked that

      Ayers transfer his corporate shares to Huber.

[8]   On July 19, 2018, Huber filed his Answer, raising affirmative defenses pursuant

      to Indiana Trial Rules 12(B)(3) and 75.4 He averred that the parties were

      currently in a dispute regarding the ownership and operation of the

      Corporation.5 Huber included within his Answer a request for judgment on the

      pleadings. He attached Articles of Incorporation to show that the Corporation

      had been incorporated in Canada.

[9]   On April 1, 2019, Huber filed a “Motion for Ruling on Motion for Judgment on

      the Pleadings.” (App. Vol. II, pg. 5.) In the motion, Huber cited Trial Rules

      12(B)(3) and (75) and asserted that he was entitled to relief because of improper

      venue. Ayers filed a Response to the motion, attaching check copies

      aggregating $254,011.26. Some were cashier’s checks, and some were drawn

      on the account of Ayers’s professional corporation. Several of the checks were

      payable to HSBC Mortgage and one was payable to the Treasurer of Putnam

      4
        Indiana Trial Rule 75 provides in pertinent part: “Any case may be venued, commenced and decided in
      any court in any county, except, that upon the filing of a pleading or a motion to dismiss allowed by Rule
      12(B)(3), the court, from allegations of the complaint or after hearing evidence thereon or considering
      affidavits or documentary evidence filed with the motion or in opposition to it, shall order the case
      transferred to a county or court selected by the party first properly filing such motion or pleading if the court
      determines that the county or court where the action was filed does not meet preferred venue requirements or
      is not authorized to decide the case and that the court or county selected has preferred venue and is
      authorized to decide the case.”
      5
          He did not claim that the parties were in litigation.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020                       Page 6 of 12
       County, Indiana. One cashier’s check in the amount of $20,000.00 appeared to

       correspond to a Bill of Sale to Fleming Outfitters for an equipment purchase.

[10]   On June 17, 2019, the parties appeared for a hearing. At the outset, the parties

       clarified that they were present for a “hearing on judgment on the pleadings.”

       (Tr. at 6.) They also referenced venue. Counsel inquired as to whether outside

       evidence or testimony was expected, and the trial court responded, “fill me in

       on the 12(B)(3) motion.” Id. at 7. The trial court questioned Ayers as to

       whether he had filed an appearance as counsel of record to proceed pro-se, or

       whether he would be testifying. It was determined that Ayers would not be

       offering testimony and Huber would “not cross[examine] then.” Id. at 9.

       Finally, before the brief hearing (memorialized in approximately ten pages) was

       adjourned, it was again clarified that the hearing was “for judgment on the

       pleadings.” Id. at 11. The trial court took the matter under advisement without

       hearing evidence.

[11]   Notwithstanding the limited nature of the hearing, on July 9, 2019, the trial

       court issued its order commemorating that a bench trial had been conducted.

       In pertinent part, the order provides:

               Evidence was presented and testimony taken. The Court now
               finds the issues at hand are to be bifurcated. The Defendant is to
               pay the Petitioner 80,000 for the personal loan, within ninety (90)
               days of this Order. All issues concerning the Canadian
               Corporation are to be heard in a Court of proper jurisdiction in
               Canada.

       (Appealed Order at 1.)
       Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020   Page 7 of 12
[12]   On August 8, 2019, Ayers filed a Motion to Correct Error, arguing that the trial

       court had erroneously “dismissed a portion” of his claim. (App. Vol. II, pg.

       84.) Ayers appended to his motion the affidavit of Mike Maher, a Barrister in

       Thunder Bay, Ontario, explaining the professional relationship between Ayers

       and Huber and describing foreclosure proceedings in Canada. The motion to

       correct error was denied on September 11, 2019. Ayers now appeals and Huber

       cross-appeals.

                                  Discussion and Decision
                                         Standard of Review
[13]   At the outset, we address confusion as to Huber’s request for relief in the trial

       court. On appeal, he initially refers to his motion as one for judgment on the

       evidence but primarily argues that his motion was understood by the parties

       and the trial court to be a venue challenge. The record indicates that Huber

       filed a motion for judgment on the pleadings. His counsel provided

       clarification to the trial court, without objection from opposing counsel, at the

       June 17, 2019 hearing: “We are here for hearing on judgment on the

       pleadings.” (Tr. at 6.)

[14]   A motion for judgment on the pleadings under Trial Rule 12(C) tests the

       sufficiency of a claim or defense presented in the pleadings and should be

       granted “only where it is clear from the face of the complaint that under no

       circumstances could relief be granted.” Veolia Water Indianapolis, LLC v.

       National Trust Ins. Co., 3 N.E.3d 1, 5 (Ind. 2014) (quoting Murray v. City of
       Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020   Page 8 of 12
       Lawrenceburg, 925 N.E.2d 728, 731 (Ind. 2010)). The pleadings consist of a

       complaint, answer, reply to a counterclaim, answer to a crossclaim, a third-

       party complaint and answer to a third-party complaint. Consolidated Ins. Co. v.

       National Water Services, LLC, 994 N.E.2d 1192, 1196 (Ind. Ct. App. 2013), trans

       denied. A pleading for these purposes may also include a written instrument

       attached to a pleading pursuant to Trial Rule 9.2 (applicable when a pleading is

       founded on a written instrument). Id. Because the ruling is based solely upon

       the pleadings, we accept as true the material facts alleged in the complaint. KS

       & E Sports v. Runnels, 72 NE3d 892, 898 (Ind. 2017). We review a 12(C) ruling

       de novo. Id.

                                               Procedural Posture
[15]   Ayers observes that Huber requested judgment on the pleadings but likely

       desired to have litigated a Trial Rule 4.4 forum non conveniens issue,

       something he did not raise.6 Rather, Huber presented argument with reference

       to Indiana Trial Rules 12(B)(3) and 75, which concern when a defense may be

       6
           Indiana Trial Rule 4.4 provides in relevant part:

       Jurisdiction under this rule is subject to the power of the court to order the litigation to be held elsewhere
       under such reasonable conditions as the court in its discretion may determine to be just.
       In the exercise of that discretion the court may appropriately consider such factors as:
              (1) Amenability to personal jurisdiction in this state and in any alternative forum of the parties to the
                  action;
              (2) Convenience to the parties and witnesses of the trial in this state and in any alternative forum;
              (3) Differences in conflict of law rules applicable in this state and in the alternative forum; or
              (4) Any other factors having substantial bearing upon the selection of a convenient, reasonable and fair
                  place of trial.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020                           Page 9 of 12
       raised by motion and govern changes of venue in Indiana, respectively. Huber

       did not seek a change of venue in Indiana; his hearing argument suggested that

       he sought dismissal of Huber’s Complaint. Indiana Trial Rule 75(B) provides

       “whenever a claim or proceeding is filed which should properly have been filed

       in another court of this state, and proper objection is made, the court in which

       such action is filed shall not then dismiss the action, but shall order the action

       transferred to the court in which it should have been filed.” Thus, when a

       motion pursuant to Rules 12(B)(3) and 75 is granted, the remedy is not to

       dismiss the case but to transfer it. Hollingsworth v. Key Benefit Adm’rs, Inc., 658
N.E.2d 653, 655 (Ind. Ct. App. 1995), trans. denied. Nonetheless, on appeal

       Huber explicitly abandons any claim of improper venue.

[16]   Ultimately, the trial court granted a judgment, of an amount that corresponded

       to the amount reflected in Paragraph 1 of the Agreement, described therein as a

       sum to “equalize shares.” (App. Vol. II, pg. 12.) Bifurcating the matter, the

       trial court declined to rule upon Ayers’s entitlement to reimbursement of other

       expenditures deemed related to the Corporation. Hence, Ayers describes the

       outcome as a partial dismissal and a judgment without evidence, and he

       challenges as “most egregious” the omission of lack of evidence consistent with

       Trial Rule 4.4 to establish forum inconveniens. Appellant’s Brief at 13. Ayers

       argues that, at a minimum, the motion for judgment on the pleadings should

       have been converted to one for summary judgment with designations permitted

       before any ruling upon the merits.

[17]   Indiana Trial Rule 12(C) provides:

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020   Page 10 of 12
               After the pleadings are closed but within such time as not to
               delay the trial, any party may move for judgment on the
               pleadings. If, on a motion for judgment on the pleadings,
               matters outside the pleadings 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, and all parties
               shall be given reasonable opportunity to present all material
               made pertinent to such a motion by Rule 56.

       The trial court’s failure to give explicit notice of intent to convert a motion to

       dismiss to summary judgment is reversible error where a reasonable

       opportunity to respond is not afforded a party and the party is prejudiced.

       Lanni v. Nat’l Collegiate Athletic Ass’n, 989 N.E.2d 791, 795 (Ind. Ct. App. 2013).

[18]   The Complaint divulged a long-standing business relationship between the

       parties, with obligations at least partially memorialized in 2009 with the

       Agreement. Facially, the Complaint indicated that Huber had failed to repay

       Ayers a personal loan. The attached agreement recited a sum due to equalize

       respective contributions to the acquisition of corporate shares, but arguably

       contemplated additional loans of a personal nature. The Complaint also

       included an averment that Huber had, through counsel, communicated his

       repudiation of purported agreements between himself and Ayers. The Answer

       did not acknowledge the authenticity of the Agreement but referred to it as a

       “supposed security agreement involving property in Putnam County” and

       claimed there was a dispute regarding ownership and operation of a bear

       hunting camp. (App. Vol. II, pg. 20.) Because the trial court entered a

       monetary judgment, notwithstanding any related factual dispute or affirmative

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020   Page 11 of 12
       defense, it is apparent that matters outside the pleadings were not excluded by

       the trial court.

[19]   However, as Huber observes, the trial court did not purport to enter summary

       judgment. Rather, the court appeared to be under the impression that evidence

       had been taken at the hearing. At bottom, the parties were not afforded the

       opportunity to present summary judgment materials pursuant to Trial Rule 56

       nor to present evidence in a bench trial. We therefore reverse and remand for

       further proceedings.

                                               Conclusion
[20]   The motion before the trial court, a Trial Rule 12(C) motion for judgment on

       the pleadings, was not properly converted to a motion for summary judgment

       pursuant to Trial Rule 56. The parties did not participate in a bench trial.

       Accordingly, the judgment upon the merits lacks an evidentiary foundation.

[21]   Reversed and remanded.

       Crone, J., and Altice, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-2480 | June 17, 2020   Page 12 of 12