Aaron v. Scott

• Citation: 851 N.E.2d 309
• Decision Date: 21 July 2006
• Docket Number: No. 46A03-0504-CV-180.,46A03-0504-CV-180.
• Parties: Jim AARON, Appellant-Plaintiff, v. Susan J. SCOTT aka Susan J. Mahl; John Nicklas; and HD Vest Financial Services, Appellees-Defendants, and Merrill Lynch, Garnishee-Appellee-Defendant.
• Court: Court of Appeals of Indiana

851 N.E.2d 309

Jim AARON, Appellant-Plaintiff, v. Susan J. SCOTT aka Susan J. Mahl; John Nicklas; and HD Vest Financial Services, Appellees-Defendants, and Merrill Lynch, Garnishee-Appellee-Defendant.

No. 46A03-0504-CV-180.

Court of Appeals of Indiana.

July 21, 2006.

COPYRIGHT MATERIAL OMITTED

Ronald D. Foster, South Bend, IN, Attorney for Appellant.

Patrick D. Murphy, Boveri Murphy Rice & LaDue, LLP, South Bend, IN, Attorney for Merrill Lynch, Pierce, Fenner & Smith, Inc.

Susan J. Mahl, aka Susan J. Scott, Bluffton, South Carolina, Appellee pro se.

OPINION

FRIEDLANDER, Judge.

Jim Aaron appeals the trial court's orders granting Susan J. Mahl's motion to quash (the March 22, 2005 order) and denying his motion for rule to show cause (the March 29, 2005 order), and presents the following restated issues on appeal:

(1) Did the trial court err when it concluded it did not have the power to compel the return of property to Indiana?

(2) Did the trial court err when it quashed the writ of execution?

(3) Did the trial court err when it concluded Merrill Lynch was not in contempt?

We affirm.

The underlying facts were set out by this court in a previous appeal, and are, in relevant part, as follows:

On September 17, 2001, [a] . . . [California] [c]ourt entered judgment against [Mahl] in the amount of $1,039,834.91 plus attorneys' fees and costs. . . . [T]his judgment [was assigned] to Aaron for purposes of collection.

Meanwhile, Mahl opened [Individual Retirement Accounts (IRAs)] with John Nicklas . . . in LaPorte, Indiana, in March and August 2000, under the names Jeanne E. Ginther and Susan J. Mahl for the benefit of Susan J. Scott. Nicklas placed the investments with HD Vest Financial Services [(HD Vest)]. Sometime after August 2001, Mahl changed her name to Susan Scott.

Mahl v. Aaron, 809 N.E.2d 953, 955-56 (Ind.Ct.App.2004) (footnotes omitted).

On December 19, 2001, Aaron filed a complaint in the LaPorte Circuit Court against Mahl, a/k/a Susan Scott,¹ Nicklas, and HD Vest, which sought to domesticate the California judgment and enjoin Mahl from removing or diminishing the value of assets in the possession of Nicklas and HD Vest. The trial court issued a temporary restraining order that day. On December 27, 2001, the trial court issued a permanent restraining order, and on October 24, 2002, entered judgment against Mahl and ordered her to pay Aaron $1,122,389.63 plus costs. In the interim, however, Mahl transferred funds in IRAs held in Indiana by HD Vest to IRAs in South Carolina held by Merrill Lynch, in violation of the trial court's permanent restraining order.

On October 31, 2002, Aaron filed proceedings supplemental and a petition for rule to show cause, claiming Mahl violated the permanent restraining order and asking the trial court to find her in contempt. The trial court issued an order on December 26, 2002 (the Freeze Order), that directed Merrill Lynch to place a 90-day hold on Mahl's accounts. Merrill Lynch did not implement the Freeze Order until January 3, 2002. By then, Mahl had liquidated approximately $9,300 of her IRAs held by Merrill Lynch. Quoting again from our previous opinion:

At the proceedings supplemental hearing, it was discovered that Mahl transferred . . . IRA funds . . . in violation of the trial court's restraining order. Aside from the discovery that Mahl violated the restraining order, the primary issue raised at the hearing revolved around choice of law . . . . After considering the post-hearing briefs, the trial court issued the following Order [on June 13, 2003]:

The court having heard the evidence and being duly informed now finds:

1. The Disposition of the Defendant's IRAs is governed by Indiana Law.

2. [Mahl] is not entitled to exemptions under IC 34-55-10-2(b).

3. The removed assets under the Restraining Order cannot be ordered back to Indiana.

4. [Mahl] is in violation of the Court Order of December 27, 2001, and after having notice and the opportunity to defend is found to be in contempt. [Mahl] may purge herself of this contempt by returning the assets to Indiana. The Court reserves imposing sanctions against [Mahl]. [Aaron] may set the issue of sanctions for hearing.

5. [Mahl's real estate] in South Carolina cannot be deeded to [Aaron].

Mahl now appeals, challenging only the trial court's resolution of the choice of law and exemption issues.

Mahl v. Aaron, 809 N.E.2d at 956-57 (internal citations omitted). Aaron did not appeal that order, including the trial court's conclusion it did not have the power to compel the return of the transferred funds.

On August 7, 2003, Aaron filed an ex parte praecipe for issuance of execution with the LaPorte Circuit Court clerk. The clerk issued an execution against property, which directed the St. Joseph County Sheriff to levy upon all of Mahl's assets held by Merrill Lynch. Merrill Lynch refused to comply with the writ on two separate occasions. On August 19, 2003, Mahl filed a motion to quash the writ of execution. In September 2003, Aaron filed suit against Merrill Lynch and Mahl in the U.S. District Court for the Northern District of Indiana, claiming Merrill Lynch violated the writ of execution. The federal district court stayed the federal action "pending resolution of nearly identical legal issues in state court proceedings . . . ." Appellant's Appendix at 211. On March 7, 2005, Aaron filed a motion for rule to show cause as to why Merrill Lynch was not in contempt of the trial court's Freeze Order prohibiting the movement of Mahl's assets in Merrill Lynch's possession. On March 22, 2005, the trial court entered a memorandum and order that clarified its June 13, 2003 order as follows: (1) it explained that it could not compel the return of assets transferred from Indiana to South Carolina in violation of the Freeze Order according to the doctrine of mobilia sequuntur personam; and (2) it concluded that the writ of execution to the Sheriff should not have been issued, and therefore quashed the writ. On March 29, 2005, the trial court denied Aaron's motion for rule to show cause and concluded Merrill Lynch was not in contempt of the Freeze Order.

1.

Aaron appeals the March 22, 2005 order, contending the trial court erred when it concluded it did not have the power, pursuant to the doctrine of mobilia sequuntur personam, to compel the return to Indiana of funds in Merrill Lynch-managed IRAs that Mahl transferred to South Carolina. This, however, was not a new "order," but rather a "clarif[ication of its] Order of June 13, 2003, . . . [when] the Court entered the following Order (in part): . . . 3. The removed assets under the Restraining Order cannot be ordered back to Indiana."² Appellant's Appendix at 10. The trial court explained:

The June 13, 2003 Order indicates that this Court could not order the funds back to Indiana. The Court was and continues to be of the opinion that the attachment of Defendant [Mahl]'s personal property should be accomplished through a court in her state of residence or an appropriate federal court. See Phillips v. Scalf, 778 N.E.2d 480[] ("Indiana Courts have recognized that under the rule of `mobilia sequuntur personam' the sit[u]s of intangible personal property is the legal domicile of the owner.")[.] Consequently, this Court does not have the ability to order the assets held by Merrill Lynch to be turned over to [Aaron] in partial satisfaction of the judgment.

Id. at 11. The portion of the March 22, 2005 order that addressed whether the trial court had the power to compel the return of transferred funds merely explained its June 13, 2003 order. Aaron did not challenge the trial court's finding in this regard in the previous appeal of the June 13, 2003 order. See Mahl v. Aaron, 809 N.E.2d 953. Aaron's claim, therefore, is procedurally defaulted. See Williams v. State, 808 N.E.2d 652, 664 (Ind.2004) ("claim that trial counsel was ineffective for not obtaining the information before trial is procedurally defaulted because the claim was not raised in the previous appeals to us").

2.

Aaron next contends it was error for the trial court to grant Merrill Lynch's motion to quash the writ of execution. Despite the trial court's determination that it did not have the power to compel funds to Indiana, the clerk of the LaPorte circuit court thereafter issued a writ of execution, directing the St. Joseph's County Sheriff to levy upon funds owned by Mahl in Merrill Lynch's possession. The trial court later concluded "the Writ of Execution to the St. Joseph County Sheriff should never have been issued." Appellant's Appendix at 11. The trial court stated at the outset of the hearing on the motion to quash the writ of execution "I neither signed nor authorized my signature on this order . . . that was dated 3-7-05 . . . . I would [] not have issued this order. . . . If I had seen this, I would have set it for hearing for today and I would not have signed that order. . . . I did not make that finding, and the record will reflect that I'm revoking and rescinding that Order dated March 7th, 2005, in its entirety." Transcript at 5. Both Aaron's and Merrill Lynch's briefs address whether Indiana has jurisdiction over the funds transferred from Indiana to South Carolina and whether such funds may be reached by the writ of execution. Neither brief, however, addresses what we believe to be the dispositive issue. That is, may the clerk of a county circuit court issue a writ of execution in contravention of a valid court order? We answer that in the negative.

Ind. Trial Rule 72(C) states, in relevant part:

All motions and applications in the clerk's office for issuing . . . final process to enforce and execute judgments . . . which do not require allowance or order of the court are grantable of course by the clerk; but his action may be suspended or altered or rescinded by the court upon cause shown.

Pursuant to this rule, a circuit court clerk may, without review by the trial court,...