5200-keystone-limited-realty-llc-v-filmcraft-laboratories-inc-eric-j ( 2014 )

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 Jun 03 2014, 8:56 am
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEES:
GEORGE M. PLEWS BRADLEY R. SUGARMAN
BRIANNA J. SCHROEDER THOMAS F. O’GARA
JONATHAN PENN Taft Stettinius & Hollister, LLP
Plews Shadley Racher & Braun, LLP Indianapolis, Indiana
Indianapolis, Indiana
DONN H. WRAY
NICHOLAS K. GAHL
Katz & Korin, PC
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
5200 KEYSTONE LIMITED REALTY, LLC, )
)
Appellant-Plaintiff, )
)
vs. ) No. 49A04-1306-CT-311
)
FILMCRAFT LABORATORIES, INC., ERIC )
J. SPICKLEMIRE, PORTRAIT AMERICA, INC., )
A.C. DEMAREE, INC., RUSS DELLEN, INC., )
CLEAN CAR, INC., and THE WAX MUSEUM )
& AUTO SALES, INC., )
)
Appellees-Defendants. )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Michael D. Keele, Judge
Cause No. 49D07-0310-CT-3394
June 3, 2014
MEMORANDUM DECISION – NOT FOR PUBLICATION
RILEY, Judge
STATEMENT OF THE CASE
Appellant-Plaintiff, 5200 Keystone Limited Realty, LLC., (KLR), appeals the trial
court’s grant of summary judgment in favor of Filmcraft Laboratories, Inc. (Filmcraft)1
and Eric J. Spicklemire (Spicklemire), et al., on KLR’s property tax claim
We affirm.
ISSUE
KLR raises two issues on appeal, one of which we find dispositive and which we
restate as follows: Whether the trial court erred by concluding that KLR lacked standing
to pursue its property tax claim.
FACTS AND PROCEDURAL HISTORY
Beginning in 1974, Spicklemire and his father leased a property at 5216 North
Keystone Avenue in Indianapolis (the Site) where they operated their film developing
business, Filmcraft. On January 5, 1981, Spicklemire and his father acquired the Site and
Spicklemire became the sole owner after his father passed away in 1994. On May 26,
2000, Spicklemire obtained a loan from Apex Mortgage Corporation (Apex), secured by
a mortgage on the Site. In July 2001, Spicklemire ceased making loan payments,
Filmcraft closed its operations and vacated the Site. On September 27, 2001, Apex filed
1
At the request of the respective parties, we recently dismissed with prejudice KLR’s case against
Filmcraft. KLR’s appeal with regard to all other Appellees remains pending and shall be analyzed in this
opinion.
2
its complaint against Spicklemire, seeking foreclosure on the mortgage. The trial court
issued a foreclosure decree in April 2002. Following a sheriff’s sale on September 30,
2002, Apex obtained title, via sheriff’s deed, to the Site. In 2003, Apex hired an agency
to conduct environmental testing of the soil and groundwater at the Site and discovered
that the Site contained environmental contaminants. Thereafter, on October 9, 2003,
Apex filed another complaint against Filmcraft, requesting contribution from Filmcraft
for future environmental cleanup costs.
On August 24, 2004, the Marion County Auditor gave Apex notice of delinquent
taxes and special assessments that had become due and owing after September 30, 2002
but which had been assessed in 2001 and 2002 while Spicklemire had ownership of the
Site. On October 7, 2004, the Site was sold at a tax sale. In December 2004, KLR, a
limited liability company, acquired the Site from Apex via quitclaim deed. Thereafter,
KLR was substituted as the plaintiff in the lawsuit against Filmcraft.
On January 14, 2005, Demetrios Emmanoelides (Emmanoelides), KLR’s sole
member, paid the unpaid back property taxes in the amount of $28,294.47 by personal
check to the Marion County Treasurer to redeem the Site from the tax sale. In March
2005 and May 2005, KLR amended the original complaint to add various other
defendants who previously owned the Site and also added a claim to recover the back
property taxes for which Spicklemire was responsible. On May 24, 2005, KLR filed a
motion for summary judgment on its complaint. After a five-year stay during which the
parties unsuccessfully negotiated the claims, Filmcraft and Spicklemire filed their
respective responses to KLR’s motion and cross-moved for summary judgment. On May
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31, 2011, the trial court granted KLR’s motion for summary judgment against
Spicklemire and against Filmcraft as to Filmcraft’s obligation under a continuing
guarantee for Spicklemire’s liabilities. Filmcraft appealed; Spicklemire failed to timely
perfect his appeal. On appeal, we determined Filmcraft was not liable under the
continuing guarantee for Spicklemire’s environmental liability but affirmed the trial court
with respect to its liability for Spicklemire’s property taxes. See Filmcraft Laboratories,
Inc. v. 5200 Keystone Ltd. Realty, LLC, 969 N.E.2d 632 (Ind. Ct. App. 2012).
On January 15, 2013, KLR moved for summary judgment with respect to the
specific amount of taxes it could recover from Spicklemire. Spicklemire responded,
designated evidence in opposition to KLR’s motion, and moved to vacate the May 31,
2011 Order. After a hearing, the trial court issued its Order on April 12, 2013, vacating
its prior summary judgment ruling and entering summary judgment in favor of
Spicklemire. The trial court concluded, in pertinent part
The records of the Marion County Treasurer show that
Emmanoelides paid $28,294.47 to redeem the Site from a tax sale on
January 14, 2005. KLR testified that Emmanoelides paid this amount out
of his personal funds and was identified as the “Remitter” on the check he
used to make that payment. Moreover, after redeeming the Site the Auditor
provided Emmanoelides with a Tax Sale Redemption Worksheet and a
receipt entitled “Quietus.” The Redemption Worksheet identified Apex as
the taxpayer for the Site and Emmanoelides as the person who redeemed
the Site. Additionally, the “Quietus” receipt certified that the funds had
been paid to redeem the Site from the tax and had been “[d]eposited with
the Marion County Treasurer for [the] account of: APEX MTG CORP.”
These facts clearly establish that Emmanoelides, not KLR, paid the back
property taxes owed on the Site.
KLR testified that Emmanoelides made this payment as a capital
contribution to KLR. However, KLR has failed to designate any evidence
such as a ledger or an operating agreement. In fact, KLR testified that it
has not maintained any ledger or other record identifying any capital
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contributions to the company. KLR also testified that it has not created any
notes in favor of Emmanoelides demonstrative of KLR’s obligation to
repay the amounts he paid for property taxes at the Site out of his personal
funds. KLR’s self-serving testimony does not turn Emmanoelides’
payment into a contribution to the company. Rather, Indiana business law
requires contributions to be made to and maintained in the records of the
company.
These facts clearly demonstrate that KLR lacks standing to pursue
its property tax claim.
(Appellant’s App. pp. 19-20) (internal references omitted).
On May 13, 2013, KLR filed its motion to correct error together with new
evidence that had not been previously submitted to the trial court. On June 4, 2013, the
trial court denied KLR’s motion.
KLR now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Scope of Appeal
Initially, we turn to Spicklemire’s contention that although KLR timely appealed
the trial court’s summary judgment in favor of Spicklemire, it failed to appeal the trial
court’s subsequent denial of KLR’s motion to correct error. Consequently, Spicklemire
asserts that our appellate review is necessarily limited to the trial court’s summary
judgment and the evidence submitted in support of the parties’ respective motions for
summary judgment.
Indiana Appellate Rule 9(F) requires the appellant to include the date and time of
the judgment or order appealed in his Notice of Appeal. Here, KLR’s Notice of Appeal
specified it was appealing the trial court’s Order of April 12, 2013—Order Vacating the
Court’s May 31, 2011, Order Granting Partial Summary Judgment in Favor of Plaintiff
5
on its Property Tax Claim—and indicated that the subsequent motion to correct error had
been denied on June 4, 2013. Attached to the Notice are copies of the trial court’s April
12, 2013 summary judgment as well as the trial court’s denial of KLR’s motion to correct
error. We conclude that KLR is appealing both Orders.
Next, we determine whether we may consider the new evidence KLR submitted
with its motion to correct error. Indiana Trial Rule 59(A)(1) provides that a motion to
correct error is a prerequisite for appeal when a party seeks to address “[n]ewly
discovered material evidence . . . capable of production within thirty (30) days of final
judgment which, with reasonable diligence, could not have been discovered and produced
at trial.” To prevail on a motion to correct error premised on newly discovered evidence,
a party must demonstrate that the evidence could not have been discovered and produced
at trial with reasonable diligence; that the evidence is material, relevant, and not merely
cumulative or impeaching; that the evidence is not incompetent; that he exercised due
diligence to discover the evidence in time for the final hearing; that the evidence is
worthy of credit; and, that the evidence raises the strong presumption that a different
result would have been reached upon retrial. Matzat v. Matzat, 854 N.E.2d 918, 920 (Ind.
Ct. App. 2006).
In its summary judgment, the trial court based its conclusion that KLR lacked
standing to pursue its claim on the absence of designated evidence documenting
Emmanoelides’ capital contributions to KLR. In response, KLR submitted, by way of a
motion to correct error, the operating agreement of KLR and the minutes from the first
meeting of KLR’s member. Based on these newly discovered documents, KLR contends
6
that “[t]hese documents, verified by [Emmanoelides’] payment was a capital contribution
to KLR.” (Appellant’s App. p. 226).
The only reference pointing to KLR’s reasonable diligence in discovering these
new materials, is a statement included in Emmanoelides’ affidavit filed with its motion,
affirming
5. Since I executed the [operating] [a]greement and held the first meeting
of the LLC members in 2004, I have changed residences several times. I
have looked for these documents in the past but was unable to locate them
as they were misplaced during my moves.
6. After the [c]ourt issued its Order of April 12, 2013, I again looked for
these documents. On or about May 1, 2013, I found the documents.
(Appellant’s App. p. 263).
It is noteworthy that Spicklemire introduced his standing claim on February 22,
2013, in its response to KLR’s motion for summary judgment. Despite being put on
notice that this claim was raised, Emmanoelides did not appear to have looked for the
documents. Only after the trial court issued its summary judgment finding in favor of
Spicklemire on the standing issue, Emmanoelides was jolted into action and was able to
locate the documents. However, as alluded to by Spicklemire, this newly discovered
operating agreement and schedule of initial capital contribution contradict
Emmanoelides’ sworn testimony as KLR’s member that the company never maintained a
ledger of capital contributions.
We have long recognized that a litigant is obligated “to search for evidence in the
place where, from the nature of the controversy, it would be most likely to be found.”
Hartig v. Stratman, 760 N.E.2d 668, 671 (Ind. Ct. App. 2002). Despite being notified
7
that standing had become an issue, neither Emmanoelides nor KLR’s counsel timely
looked for documents dispelling the claim. Although he had searched for the papers in
the undefined “past,” Emmanoelides clearly was not concerned until after the trial court’s
summary judgment. (Appellant’s App. p. 263). Such an attitude is at odds with the
concept of “reasonable diligence.” See Matzat, 854 N.E.2d at 920. Where parties neglect
to follow-up, they do so at their own peril and may not later turn to the doctrine of newly
discovered evidence for relief. See Hartig, 760 N.E.2d at 671-72. As a result, we are not
now allowed to consider the newly discovered documents.
II. Standing
KLR contends that the trial court erred in concluding that it lacked standing to
pursue its claim against Spicklemire. Specifically, KLR maintains that Emmanoelides
was appointed as KLR’s sole member and acted on behalf of the company when he paid
Spicklemire’s property taxes.
A. Standard of Review
Although the final order entered by the trial court was its denial of KLR’s motion
to correct error, that motion was based on the trial court’s summary judgment; therefore,
we review this appeal using the standard applicable to summary judgment reviews. See,
e.g., Pier 1 Imps., Inc. v. Acadia Merrillville Realty, L.P., 991 N.E.2d 965, 968 (Ind. Ct.
App. 2013). Summary judgment is appropriate only when there are no genuine issues of
material fact and the moving party is entitled to a judgment as a matter of law. Ind. Trial
Rule 56(C). A fact is material if its resolution would affect the outcome of the case, and
an issue is genuine if a trier of fact is required to resolve the parties’ differing accounts of
8
the truth . . ., or if the undisputed facts support conflicting reasonable inferences.
Williams v. Tharp, 914 N.E.2d 756, 761 (Ind. 2009).
In reviewing a trial court’s ruling on summary judgment, this court stands in the
shoes of the trial court, applying the same standards in deciding whether to affirm or
reverse summary judgment. First Farmers Bank & Trust Co. v. Whorley, 891 N.E.2d
604, 607 (Ind. Ct. App. 2008), trans. denied. Thus, on appeal, we must determine
whether there is a genuine issue of material fact and whether the trial court has correctly
applied the law. Id. at 607-08. In doing so, we consider all of the designated evidence in
the light most favorable to the non-moving party. Id. at 608. The party appealing the
grant of summary judgment has the burden of persuading this court that the trial court’s
ruling was improper. Id. When the defendant is the moving party, the defendant must
show that the undisputed facts negate at least one element of the plaintiff’s cause of
action or that the defendant has a factually unchallenged affirmative defense that bars the
plaintiff’s claim. Id. Accordingly, the grant of summary judgment must be reversed if
the record discloses an incorrect application of the law to the facts. Id.
We observe that in the present case, the trial court entered findings of fact and
conclusions of law in support of its judgment. Special findings are not required in
summary judgment proceedings and are not binding on appeal. Id. However, such
findings offer this court valuable insight into the trial court’s rationale for its decision and
facilitate appellate review. Id.
B. Analysis
9
In considering whether KLR has standing to bring its claim for payment of back
property taxes, we note that the question of standing is generally one of law, not fact.
Vectren Energy Marketing & Serv., Inc. v. Executive Risk Specialty Ins., Co., 875 N.E.2d
774, 777 (Ind. Ct. App. 2007). Standing is a judicial doctrine that focuses on whether the
complaining party is the proper party to invoke the trial court’s jurisdiction. Id. The
standing requirement “is a limit on the court’s jurisdiction which restrains the judiciary to
resolving real controversies in which the complaining party has a demonstrable injury.”
Id. To establish standing, KLR must demonstrate a personal stake in the outcome of the
lawsuit and must show that it has sustained, or was in the immediate danger of sustaining,
some direct injury as a result of the conduct at issue. Id.
Turning to Emmanoelides’ status as KLR’s sole member, we are mindful that a
member may act as an agent of the company under the auspices of an agency
relationship. See Quality Foods, Inc. v. Holloway Assocs Prof’l Eng’rs & Land
Surveyors, Inc., 852 N.E.2d 27, 32 (Ind. Ct. App. 2006). Nevertheless, the existence of a
possible agency relationship alone is not sufficient for the company to incur standing,
rather, it must still satisfy the general principles of a standing requirement: personal
stake and injury. KLR failed to comply with this burden.
The evidence designated by KLR indicates that Emmanoelides intended to pay
Spicklemire’s back taxes as a capital contribution to KLR on January 14, 2005. He also
testified that because KLR, as a company, did not have any checks, he paid the taxes with
his own personal check. In his deposition testimony, Emmanoelides affirmed that KLR
did not maintain a ledger or operating agreement, nor had the company created any notes
10
in favor of its sole member demonstrating KLR’s obligation to repay the amounts
Emmanoelides had paid out of his personal funds. Pursuant to Ind. Code § 23-18-4-
8(a)(5)(A), a limited liability company must keep at its principal office, “a writing setting
out the amount of cash, if any, and a statement of the agreed value of other property or
services contributed by each member and the times at which or events upon the
happening.”
Besides Emmanoelides’ own statement that the payment of back taxes should be
characterized as a capital contribution, there is no evidence establishing that KLR has a
personal stake in the outcome of this litigation and has suffered a direct injury.
Generally, “[T]ransparent contentions, mere pleading allegations, and self-serving
unverified statements of facts cannot defeat a motion for summary judgment.”
Raymundo v. Hammond Clinic Ass’n, 449 N.E.2d 276, 282 (Ind. 1983). Therefore, in the
absence of some designated evidence that KLR sustained a demonstrable injury, we
affirm the trial court’s Order concluding that KLR does not have standing to pursue its
claim.
CONCLUSION
Based on the foregoing, we conclude that the trial court properly concluded that
KLR did not have standing to pursue its claim.
Affirmed.
MAY, J. concurs
VAIDIK, C.J. concurs in result with separate opinion
11
_______________________________________________________
IN THE
COURT OF APPEALS OF INDIANA
5200 KEYSTONE LIMITED REALTY, LLC, )
)
Appellant-Plaintiff )
)
vs. ) No. 49A04-1306-CT-311
)
FILMCRAFT LABORATORIES, INC., ERIC J. )
SPICKLEMIRE, PORTRAIT AMERICA, )
INC., A.C. DEMAREE, INC., RUSS DELLEN, )
INC., CLEAR CAR, INC., and THE WAX )
MUSEUEM & AUTO SALES, INC. )
)
Appellees-Defendants. )
VAIDIK, Chief Judge, concurring in result.
The majority concludes that 5200 Keystone Limited Realty, LLC (“KLR”) lacks
standing to pursue its property-tax claim against Eric J. Spicklemire. I respectfully
concur in result because I believe that KLR is barred from bringing a claim against
Spicklemire for the Site’s tax liabilities.
12
Under Indiana law, a foreclosure followed by sheriff’s sale terminates any claims
between a mortgagee and a mortgagor relating to the mortgaged land:
Sound equitable principles certainly require that a deed made upon a sale
pursuant to a decree of foreclosure of a mortgage on land should be as valid
as if executed by the mortgagor and mortgagee, and that it should constitute
an entire bar against each of them, and against all parties to the proceedings
therein, and against their heirs, respectively, and all persons claiming under
such heirs.
Dixon v. Eikenberry, 161 Ind. 311, 67 N.E. 915, 917 (1903) (citations omitted); see also
Armstrong v. Keene, 861 N.E.2d 1198, 1201 n.4 (Ind. Ct. App. 2007) (defining
foreclosure as a legal proceeding that terminates a mortgagor’s interest in property),
reh’g denied, trans. denied; Dipert v. Kllingbeck, 124 Ind. App. 18, 112 N.E.2d 306, 309
(1953) (a suit resulting in foreclosure of a real-estate mortgage is an in rem action and all
rights in the real estate are forever concluded by the foreclosure decree), reh’g denied.
In this case, Apex (the mortgagee) took title to the Site in 2002 after it obtained a
foreclosure judgment against Spicklemire (the mortgagor) and received a sheriff’s deed.
Two years later, KLR took title to the Site via a quitclaim deed from Apex. Applying
Dixon’s logic, when Apex received the sheriff’s deed following foreclosure, it was barred
from later pursuing a property-tax claim against Spicklemire. KLR, Apex’s heir in
ownership of the Site, is likewise barred from bringing a property-tax claim against
Spicklemire. Dixon, 67 N.E. at 917.
Because I believe KLR is barred from pursuing its property-tax claim against
Spicklemire, I respectfully concur in result.
13