Court Opinion

ID: 4518226
Source: CourtListenerOpinion
Date Created: 2020-03-20 15:04:58.992215+00
Date Added: 2024-06-11T09:19:45.812477
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),                                           FILED
this Memorandum Decision shall not be
                                                                          Mar 20 2020, 9:51 am
regarded as precedent or cited before any
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 APPELLEES
Jeffrey O. Meunier                                       John D. Keiffner, III
Carmel, Indiana                                          Brown, DePrez & Johnson, P.A.
                                                         Shelbyville, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Reeda Short and The Short                                March 20, 2020
Irrevocable Trust, Ronald Short,                         Court of Appeals Case No.
Trustee,                                                 19A-PL-1948
Appellants-Plaintiffs,                                   Appeal from the Shelby Circuit
                                                         Court
        v.                                               The Honorable Terry K. Snow,
                                                         Special Judge
Sandra K. Johnson and K. Diane                           Trial Court Cause No.
Pennington,                                              73C01-1812-PL-50
Appellees-Defendants

Crone, Judge.

Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020                     Page 1 of 11
                                                  Case Summary
[1]   Reeda Short (“Reeda”) and the Short Irrevocable Trust, Ronald Short, Trustee

      (“the Trust”) (collectively “the Shorts”), appeal the trial court’s dismissal of

      their action against Sandra K. Johnson (“Sandra”) and K. Diane Pennington

      (“Diane”) (collectively “Daughters”) for specific performance of a land sale

      contract between the Trust and their now-deceased mother, Ruby M. Boring

      (“Ruby”), and for damages related to Daughters’ actions as attorneys-in-fact

      concerning Ruby’s bank accounts. We affirm.

                                     Facts and Procedural History
[2]   On November 9, 2017, ninety-eight-year-old Ruby executed a power of attorney

      (“POA-1”) in favor of her friend Reeda, who assisted her with personal,

      financial, and healthcare matters. Around that time, Ruby designated

      survivorship beneficiaries on her accounts at Chase Bank (“Chase accounts”) as

      Reeda (forty percent) and Daughters (thirty percent each). The Chase accounts

      had an approximate total value of $430,000. On January 23, 2018, Ruby

      executed a purchase agreement to sell her home to the Trust for $20,000.

      Reeda signed the purchase agreement on behalf of the Trust. 1 Per the contract,

      the Trust was required to pay $500 as earnest money. The contract called for a

      closing in February 2018, but the closing never occurred.

      1
          It is unclear whether Reeda is, in fact, a co-trustee with Ronald. However, we need not resolve that issue.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020                      Page 2 of 11
[3]   At some point in February 2018, Ruby was admitted to a senior living facility.

      On February 21, 2018, Ruby executed a power of attorney (“POA-2”) in favor

      of Daughters. POA-2, drafted by Ruby’s grandson Curtis Johnson

      (“Grandson”), revoked POA-1. At some point shortly thereafter, Daughters,

      acting as Ruby’s attorneys-in-fact, removed Reeda as a beneficiary in the Chase

      accounts. In mid-April 2018, Sandra, acting as attorney-in-fact for Ruby,

      quitclaimed Ruby’s home to Diane for no consideration, with Ruby retaining a

      life estate in the property. On April 29, 2018, Ruby died. On May 1, 2018, an

      affidavit of survivorship was recorded in the county recorder’s office

      transferring to Diane fee simple title to Ruby’s home.

[4]   On May 5, 2018, Reeda filed an action (“Cause 20”) against Daughters, Chase

      Bank, and Grandson, seeking an emergency temporary restraining order

      (“TRO”) and seeking to set aside POA-2. In Cause 20, Reeda alleged that

      Daughters and Grandson coerced Ruby to change her beneficiary designations

      to exclude her or simply made the changes as attorneys-in-fact under POA-2.

      She also alleged that Ruby lacked capacity to make any changes to her estate

      plan and that Daughters violated their fiduciary duty and acted for their own

      benefit. Appellants’ App. Vol. 2 at 45-46. Reeda asked for a TRO to prevent

      any loss or misuse of funds from the Chase accounts and to prevent Chase Bank

      from making any distributions. On June 4, 2018, the trial court conducted a

      hearing to resolve the issues of fact and law in Cause 20. The court issued an

      order denying Reeda’s petition for a TRO, finding POA-2 to be valid, and

      dismissing Cause 20.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020   Page 3 of 11
[5]   On December 13, 2018, the Shorts filed the current action against Daughters,

      seeking specific performance of the January 2018 contract between the Trust

      and Ruby for the purchase of Ruby’s home (Count I) and seeking monetary

      damages based on their allegations that Daughters breached fiduciary duties to

      Ruby and to Reeda concerning the Chase accounts (Count II) and treble

      damages for conversion related to the Chase accounts (Count III). Daughters

      filed a motion to dismiss under Indiana Trial Rule 12(B)(6) for failure to state a

      claim. The trial court conducted a hearing and issued an order dismissing all of

      the Shorts’ claims. The Shorts now appeal. Additional facts will be provided as

      necessary.

                                     Discussion and Decision

          Section 1 – The trial court properly dismissed the Shorts’
                        specific performance claim.
[6]   The Shorts contend that the trial court erred in dismissing their specific

      performance claim against Daughters. We review de novo a trial court’s grant

      or denial of a motion to dismiss for failure to state a claim. Freels v. Koches, 94

      N.E.3d 339, 342 (Ind. Ct. App. 2018). Such a motion tests the legal sufficiency

      of a claim, and as such, we review the complaint in the light most favorable to

      the nonmovant, determining whether the complaint states any facts upon 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.” Id. (quoting McPeek v. McCardle, 888 N.E.2d 171, 174 (Ind. 2008)).

      We may affirm the grant of dismissal if it is sustainable on any theory. Id.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020   Page 4 of 11
[7]   In Count I of the complaint, the Shorts sought specific performance of Ruby’s

      contract to sell her home to the Trust for $20,000. “Specific performance is a

      matter of course when it involves contracts to purchase real estate.” Stainbrook

      v. Low, 842 N.E.2d 386, 394 (Ind. Ct. App. 2006), trans. denied. “A party

      seeking specific performance of a real estate contract must prove that he has

      substantially performed his contract obligations or offered to do so.” Id. Ruby

      died without ever having closed the sale to the Trust. “[O]rdinarily the death of

      either of the parties to a contract does not extinguish it, if it is of such a nature

      that it may be performed by the personal representative.” Miller v. Ready, 59 Ind.

      App. 195, 108 N.E. 605, 608 (1915) (emphasis added).

[8]   Daughters assert that they are not the proper defendants for this contract claim

      against Ruby and therefore the Shorts failed to state a claim upon which relief

      can be granted. “Specific performance can not be enforced against one who is

      neither a party nor privy to the contract and on whom it is not binding, or by

      whom no duty under the contract has been assumed.” Alexander v. Dowell, 669

      N.E.2d 436, 440 (Ind. Ct. App. 1996). Daughters were not parties to Ruby’s

      land contract with the Trust. The Shorts made no claim that Daughters

      assumed a duty. The contract that the Shorts seek to enforce was executed by

      only two parties: Ruby as seller and Reeda, as trustee of the Trust, as the buyer.

      Thus, Ruby would have been the proper defendant in the Shorts’ action for

      specific performance of the contract, and when she died, her estate became the

      proper defendant. See Ind. Code Ch. 29-1-14; Ind. Code § 29-1-1-3(a)(3)

      (defining claims against decedent’s estate to include “liabilities of a decedent

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020   Page 5 of 11
       which survive, whether arising in contract or tort or otherwise”). “A claim

       against an estate cannot be enforced except in the manner provided by statute.”

       Sheldmyer v. Bias, 112 Ind. App. 522, 531, 45 N.E.2d 347, 350 (1942).

[9]    To the extent that the Shorts argue that a claim against Ruby’s estate would not

       have been appropriate because the property no longer belonged to Ruby at the

       time of her death, we disagree. The Shorts’ claim is based on their alleged

       contract rights against Ruby and must be prosecuted through her estate in the

       manner prescribed by statute. 2 The Probate Code “grants the personal

       representative complete authority to maintain any suit or demand due the

       decedent or the estate.” Inlow v. Henderson, Daily, Withrow & DeVoe, 787 N.E.2d

       385, 391 (Ind. Ct. App. 2003), trans. denied. Simply put, the Shorts were limited

       to pursuing the contract claim through Ruby’s estate, not by maintaining a

       separate contract action against Daughters individually. Based on the

       foregoing, we conclude that the trial court properly dismissed the Shorts’

       specific performance claim against Daughters.

           Section 2 – The Shorts’ claims against Daughters for damages
            related to Ruby’s Chase accounts are barred by res judicata.
[10]   The Shorts also challenge the trial court’s dismissal of their claims for damages

       based on Daughters’ alleged self-dealing and breach of fiduciary duty to Reeda,

       2
         See, e.g., Ind. Code § 29-1-14-1(a), -1(d) (contract claims against decedent’s estate barred if not filed within
       three months of published notice to creditors or will revocation or within nine months after decedent’s
       death).

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020                        Page 6 of 11
       as well as conversion related to Ruby’s Chase accounts.3 In their motion to

       dismiss, Daughters asserted that these claims were litigated in Cause 20 and are

       now barred by res judicata. They attached as exhibits two documents: Reeda’s

       petition in Cause 20 and the trial court’s order denying that petition.

       Appellants’ App. Vol. 2 at 44-49. When a Trial Rule 12(B)(6) motion is

       supplemented with affidavits or other materials outside the record, it is treated

       as a motion for summary judgment. Thomas v. Blackford Cty. Area Bd. of Zoning

       App., 907 N.E.2d 988, 990 (Ind. 2009).

[11]   We review de novo a trial court’s ruling on a summary judgment motion,

       applying the same standard as the trial court. Hughley v. State, 15 N.E.3d 1000,

       1003 (Ind. 2014). Summary judgment is appropriate if the designated evidence

       shows that there is no genuine issue as to any material fact and that the moving

       party is entitled to judgment as a matter of law. Id.; Ind. Trial Rule 56(C). The

       moving party bears the onerous burden of affirmatively negating an opponent’s

       claim. Hughley, 15 N.E.3d at 1003. “Any doubt as to any facts or inferences to

       be drawn therefrom must be resolved in favor of the non-moving party.” Buddy

       & Pals III, Inc. v. Falaschetti, 118 N.E.3d 38, 41 (Ind. Ct. App. 2019) (citation

       3
         Because these claims are precluded by res judicata, we need not discuss them in great detail. Nevertheless,
       we note that Daughters’ fiduciary duty and duty to refrain from self-dealing as attorneys-in-fact under POA-2
       extended only to Ruby, not to Reeda or the Trust. See In re Estate of Rickert, 934 N.E.2d 726, 730 (Ind. 2010)
       (“A person holding a power of attorney is in a fiduciary relationship to the person granting the power.”).
       Moreover, conversion applies only to the knowing or intentional exertion of unauthorized control over
       property owned by another and cannot be enforced by a person holding an expectancy interest stemming from a
       revocable beneficiary designation on a survivorship account. See Steiner v. Bank One Indiana, N.A., 805
       N.E.2d 421, 425 (Ind. Ct. App. 2004) (designated beneficiary of IRA account had mere expectancy interest,
       not a present property interest, in that account).

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020                    Page 7 of 11
       omitted), trans. denied. The party that lost in the trial court bears the burden of

       persuading us that the trial court erred. Biedron v. Anonymous Physician 1, 106

       N.E.3d 1079, 1089 (Ind. Ct. App. 2018), trans. denied (2019).

[12]   Daughters maintain that the doctrine of res judicata bars the Shorts’ claims

       against them concerning the Chase accounts. Res judicata prevents repetitious

       litigation of disputes that are essentially the same. Hilliard v. Jacobs, 957 N.E.2d

       1043, 1046 (Ind. Ct. App. 2011), trans. denied (2012), cert. denied. The doctrine

       consists of two distinct components: claim preclusion and issue preclusion. Id.

       “Claim preclusion applies when a final judgment on the merits has been

       rendered in a prior action, and it acts to bar a subsequent action on the same

       claim between the same parties.” Id. For claim preclusion to apply,

               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.

       Id.

[13]   The Shorts do not challenge requirements 1, 2, or 4 of claim preclusion but

       instead focus their argument on requirement 3. They assert that the issue raised

       in Cause 20 concerned Ruby’s capacity to execute POA-2, which is distinct

       from the issues raised in the current cause concerning the Chase accounts, that

       is, Daughters’ alleged breach of fiduciary duty/self-dealing and conversion.

       They rely on Biggs v. Marsh, in which another panel of this Court articulated an
       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020   Page 8 of 11
       identical evidence test for determining claim preclusion: “whether identical

       evidence will support the issues involved in both actions.” 446 N.E.2d 977, 982

       (Ind. Ct. App. 1983). In more recent cases, the following observation has been

       made concerning the application of Biggs’s identical evidence test:

               [A] literal interpretation of the identical evidence test … 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, 957 N.E.2d at 1047. We find this observation persuasive.

[14]   In paragraph 7 of the Cause 20 complaint/petition, Reeda alleged that Ruby

       “lacked capacity to sign [POA-2]” and/or “was unduly influenced to sign it.”

       Appellants’ App. Vol. 2 at 45 (Respondents’ Ex. A). The petition also alleged

       the following with respect to the Chase accounts: 4

               10. …. To Reeda’s knowledge, she was a named beneficiary on
               some or all of Ruby’s assets with Chase bank.

               11. Reeda believes Daughters or Grandson may have either
               coerced Ruby to change her beneficiary designations on the

       4
         Reeda’s Cause 20 complaint/petition uses proper names and/or different designations for the parties. For
       clarity’s and consistency’s sake, we identify the parties as designated throughout this decision.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020                 Page 9 of 11
               Chase bank accounts after she lacked capacity or, used their
               power of attorney to change the beneficiary designations either
               reducing Reeda’s share or removing her entirely as a beneficiary.

               12. Reeda alleges and asserts that any change to Ruby’s estate
               plan after her January stay in Major Hospital was either made by
               Ruby while she lacked capacity, or made by her attorney’s[sic]-
               in-fact for their own benefit, which is a violation of their fiduciary duty
               to act on behalf of Ruby.

               13. As a result, Reeda requests a hearing for the court to resolve
               the issues of fact and law.

       Id. at 45-46 (emphases added).

[15]   Reeda sought a TRO to prevent Daughters, Grandson, or Chase (as holder of

       the accounts) from spending, transferring, or making disbursements from the

       Chase accounts “until the issues asserted in the petition are resolved, …. [s]ince

       serious questions of fact, including fraud, coercion and elder abuse remain in

       this this case[.]” Id. at 46. The trial court apparently froze the accounts

       pending a hearing, afforded her a hearing and considered her issues, found

       POA-2 to be valid, dissolved the TRO, denied her petition for the continuation

       of the TRO, and dismissed her action. See Id. at 49 (Respondents’ Ex. B).

       Reeda did not appeal that order.

[16]   As noted in the italicized portions above, Reeda’s Cause 20 complaint/petition

       alleged that Daughters violated their fiduciary duty and acted for their own

       benefit, which we find to be tantamount to claims of self-dealing and

       conversion of assets rightfully belonging to another. Because these claims were

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020   Page 10 of 11
       presented and litigated in Cause 20, we conclude that the Shorts were precluded

       from relitigating them in this action. Simply put, these claims were barred by

       res judicata, and therefore Daughters are entitled to judgment as a matter of

       law. Accordingly, we affirm the trial court in all respects.

[17]   Affirmed.

       May, J., and Pyle, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1948 | March 20, 2020   Page 11 of 11