Borgman v. Aikens

• Decision Date: 22 May 1997
• Docket Number: No. 69A01-9611-CV-376,69A01-9611-CV-376
• Citation: 681 N.E.2d 213
• Parties: Thomas C. BORGMAN and Gloria Borgman d/b/a Borgman Farms, Appellants-Defendants, v. David AIKENS, Joseph J. Smith, Joseph S. Smith, and The Estate of Mary E. Smith, Appellees-Plaintiffs.
• Court: Indiana Appellate Court

Page 213

681 N.E.2d 213

Thomas C. BORGMAN and Gloria Borgman d/b/a Borgman Farms Appellants-Defendants, v. David AIKENS, Joseph J. Smith, Joseph S. Smith, and The Estate of Mary E. Smith, Appellees-Plaintiffs.

No. 69A01-9611-CV-376.

Court of Appeals of Indiana.

May 22, 1997.

Rehearing Denied July 17, 1997.

Neil R. Comer, Osgood, for appellants.

Joseph S. Smith, Indianapolis, for appellees.

OPINION

BAKER, Judge.

In this interlocutory appeal, we address the question of whether a party may initiate proceedings supplemental to execution on a federal court judgment in an Indiana court prior to domesticating ¹ the federal judgment. We also discuss the time period in which a party must initiate an action to domesticate a judgment and enforce a judgment through execution.

FACTS

The facts in this case are largely undisputed. On January 18, 1985, appellees-plaintiffs David Aikens, Joseph J. Smith, Joseph S. Smith and the Estate of Mary E. Smith (hereinafter Smiths) obtained an agreed judgment against appellants-defendants Thomas C. Borgman and Gloria Borgman d/b/a Borgman Farms (hereinafter Borgmans) in the United States Bankruptcy Court for the Southern District of Indiana. More than ten years later, on July 11, 1995, the Smiths filed a petition to enforce the federal judgment and a verified motion for proceedings supplemental to execution in the Ripley Circuit Court. Thereafter, on December 19, 1995, the trial court dismissed the petition on the grounds that the federal court judgment was improperly indexed pursuant to IND.CODE §§ 34-1-45-2 and 33-17-2-3.

On March 20, 1996, after properly indexing the federal court judgment, the Smiths filed another petition to enforce the federal court judgment and a motion for proceedings supplemental in the Ripley Circuit Court. In response, the Borgmans filed a motion to dismiss the petition for failure to state a claim upon which relief could be granted, arguing that the statute of limitations for bringing an action upon the judgment had elapsed. The Borgmans also argued that the Smiths were precluded from seeking proceedings supplemental to execution, pursuant to Ind.Trial Rule 69(E), because they had failed to domesticate the federal court judgment in the local court.

Thereafter, on September 23, 1996, the trial court denied the Borgmans' motion to dismiss, concluding as follows:

1) A judgment from a federal district court sitting within Indiana does not have to be domesticated through a separate cause of action in order for it to be recognized by an Indiana state court.

2) The federal court judgment becomes a state court judgment by operation of statute (IC 33-17-2-3(d)) so long as the statutory requirements are met.

3) The judgment is now a judgment of the Ripley Circuit Court by operation of statute.

4) Since the judgment is that of the Ripley Circuit Court by operation of statute, the judgment is "rendered" through the Ripley Circuit Court for purposes of Trial Rule 69(E). To rule otherwise would leave a federal judgment creditor with no method of enforcing a judgment which is permitted by both federal and state statutes.

5) This is not the commencement of a new action.

6) The procedural relief sought by plaintiffs is not barred by a statute of limitations. Plaintiffs have twenty (20) years from the date of judgment to bring a motion under Trial Rule 69(E).

7) Plaintiffs may utilize Trial Rule 69(E) upon this judgment.

Record at 101-02. This interlocutory appeal followed.

DISCUSSION AND DECISION

The controversy in the present case focuses on the question of whether a party may initiate proceedings supplemental on a federal court judgment in an Indiana court without first domesticating the judgment. According to the Borgmans, proceedings supplemental under T.R. 69(E), which may be instituted within twenty years of the date of judgment, may only be initiated in the court that rendered the original judgment. Since the Smiths' judgment was rendered by a federal court and they failed to domesticate the federal judgment in the Ripley Circuit Court, the Borgmans contend that the Smiths are precluded from instituting proceedings supplemental. The Borgmans further argue that because the Smiths are precluded from initiating proceedings supplemental, their petition to enforce the judgment was subject to the statute of limitations in IND.CODE § 34-1-2-2(6), which provides that an action on a judgment must be commenced within ten years from the date the cause of action accrues. As a result, the Borgmans argue that the Smiths were barred from maintaining the present action because they failed to file their petition for enforcement within ten years of the date of judgment.

In response, the Smiths argue that 28 U.S.C. § 1962 and IND.CODE §§ 33-17-2-3 and 34-1-45-2 allow a party to initiate proceedings supplemental on a federal court judgment in an Indiana court without first domesticating the judgment. Alternatively, the Smiths argue that even if their petition for enforcement is subject to the ten-year statute of limitations, they filed it in a timely manner. The Smiths also request attorney's fees pursuant to Ind. Appellate Rule 15(G) on the grounds that the Borgmans failed to disclose all of the facts and legal authorities pertinent to the appeal.

Initially, we note our standard of review. A trial rule 12(B)(6) motion to dismiss for failure to state a claim upon which relief can be granted tests the sufficiency of a claim, not the facts supporting it. Gray v. Westinghouse Electric Corp., 624 N.E.2d 49, 52 (Ind.Ct.App.1993), trans. denied. Therefore, we view the pleadings in the light most favorable to the nonmoving party and draw every reasonable inference therefrom in favor of that party. Hill v. Beghin, 644 N.E.2d 893, 895 (Ind.Ct.App.1994), trans. denied. When reviewing a ruling on a motion to dismiss, we stand in the shoes of the trial court and must determine if the trial court erred in its application of the law. Marsh v. Paternity of Rodgers, 659 N.E.2d 171, 172 n. 1 (Ind.Ct.App.1995). We will affirm the trial court's denial of the motion to dismiss unless it apparent that the facts alleged in the challenged pleading are incapable of supporting relief under any set of circumstances. Hill, 644 N.E.2d at 895.

I. Proceedings Supplemental

The use of legal process to enforce a judgment is generally governed by T.R. 69. Specifically, T.R. 69(E) provides that when a judgment creditor has no cause to believe that execution will satisfy a judgment, he can institute proceedings supplemental to execution to determine if the debtor has other property available to satisfy the judgment. Under the rule, "proceedings supplemental may be enforced ... in the court where the judgment is rendered...." T.R. 69(E). Although the use of the word "may" can create uncertainty about the proper court in which to file the action, the Civil Code Study Commission has interpreted the rule to specifically mean that the court rendering the underlying judgment retains jurisdiction over any proceedings supplemental. Civil Code Study Commission Comments, 4 W. Harvey, Indiana Practice 437 (2d ed.1991); Stocker v. Cataldi, 521 N.E.2d 716, 718 (Ind.Ct.App.1988). The reason behind this jurisdictional requirement is that proceedings supplemental to execution are a continuation of the original cause and not a new, independent civil action. National Mut. Ins. Co. v. Sparks, 647 N.E.2d 375, 376-77 (Ind.Ct.App.1995), trans. denied. As such, the validity of the underlying judgment has already been determined and proceedings supplemental may progress without a showing that execution has commenced or would be unavailing. Based on the language and policy behind the rule, we have previously held that a trial court properly dismissed a complaint for proceedings supplemental for lack of jurisdiction when it did not render the original judgment. See Stocker, 521 N.E.2d at 718 (Lake County Superior Court properly dismissed complaint for proceedings supplemental because judgment was rendered in Porter County Superior Court).

In the present case, the Smiths' judgment was rendered by the United States Bankruptcy Court for the Southern District of Indiana. The Smiths then sought to enforce the judgment through proceedings supplemental in the Ripley Circuit Court. However, the Smiths did not domesticate the federal judgment and, as a result, failed to obtain a judgment from the Ripley Circuit Court. Pursuant to T.R. 69(E) and Stocker, therefore, the trial court should have dismissed the Smiths' motion for proceedings supplemental.

Nevertheless, the Smiths contend that the interrelationship between 28 U.S.C. § 1962 (federal lien statute), I.C. § 34-1-45-2 (Indiana judgment lien statute) and I.C. § 33-17-2-3 (docketing statute) enables an Indiana state court to conduct proceedings supplemental to enforce a judgment of a federal court even if the federal judgment has not been domesticated. Under the federal lien statute, a judgment rendered by a federal district court within a state shall be a lien on the property located in the state to the same extent and under the same conditions as the judgment of a state court if the judgment is docketed or indexed in the same manner as a state judgment. The Indiana judgment lien and docketing statutes set forth the extent and manner in which a federal or state judgment becomes a lien in Indiana. In pertinent part, the Indiana judgment lien statute provides as follows:

All final judgments for the recovery of money or costs in the circuit court and other courts of record of general original jurisdiction sitting in the state of Indiana, whether state or federal, shall be a lien upon real estate and chattels real liable to the execution in the county where, and only where, such judgment has been duly entered and indexed in the judgment docket as provided by law....

The docketing statute describes the indexing requirements for filing a judgment on the judgment docket. Based on ...