Browning v. Walters

• Decision Date: 06 July 1993
• Docket Number: No. 77A01-9207-CV-214,77A01-9207-CV-214
• Citation: 616 N.E.2d 1040
• Parties: Melvin A. BROWNING, Appellant-Plaintiff, v. Bayard H. WALTERS and Great Country Communications, Inc., Appellees-Defendants.
• Court: Indiana Appellate Court

Page 1040

616 N.E.2d 1040

Melvin A. BROWNING, Appellant-Plaintiff, v. Bayard H. WALTERS and Great Country Communications, Inc. Appellees-Defendants.

No. 77A01-9207-CV-214.

Court of Appeals of Indiana,

First District.

July 6, 1993.

Robert F. Hellman, Hellman, Cook & Alexander, Terre Haute, for appellant.

Michael H. Hagedorn, Tell City, for Great Country Communications, Inc.

David D. Haynes, Terre Haute, for Bayard H. Walters.

STATEMENT OF THE CASE

NAJAM, J.

Melvin Browning, the minority shareholder of Great Country Communications, Inc. ("Great Country"), brings this action against Bayard Walters, the majority shareholder and president of Great Country. Browning's complaint alleged both a derivative action on behalf of Great Country and a personal action against Walters. Browning appeals the trial court's dismissal of his complaint for failure to comply with Trial Rule 23.1 and for failure to file his treble damages claim under Indiana Code Sec. 34-4-30-1 within the two-year statute of limitations.

We affirm.

ISSUES

We restate the issues presented on appeal as:

1. Whether the trial court erred by dismissing Browning's derivative action with prejudice for Browning's failure to comply with Trial Rule 23.1.

2. Whether an action under our treble damages statute, Indiana Code Sec. 34-4-30-1, is governed by the statute of limitations for the predicate criminal offense or by the two-year statute of limitations applicable to the forfeiture of a statutory penalty.

3. Whether Browning stated a separate common law cause of action on the face of his complaint.

FACTS

Browning filed a three-count complaint on December 21, 1987. Count I alleged a derivative action on behalf of Great Country against Walters and sought actual damages for Walters' fraudulent misappropriation of corporate funds. Browning alleged that these purportedly fraudulent transfers occurred in 1981 and 1982. In Count II, Browning incorporated the rhetorical paragraphs from Count I and claimed that Walters' acts were in violation of Indiana Code Sec. 35-43. Thus, Browning sought three times Great Country's pecuniary loss, the costs of the action and reasonable attorney's fees pursuant to Indiana Code Sec. 34-4-30-1. In Count III, Browning also incorporated the rhetorical paragraphs from Count I and alleged that, due to Walters' fraudulent acts, Browning had personally suffered a pecuniary loss as a result of his inability to satisfy a judgment he obtained against Great Country in the Clay Circuit Court in 1985. Browning requested judgment for three times his own pecuniary loss, costs, and attorney's fees pursuant to Indiana Code Sec. 34-4-30-1.

Walters and Great Country filed motions to dismiss pursuant to Trial Rule 12(B)(6). In its supporting briefs, Great Country maintained that Browning's treble damages claims were barred by the two-year statute of limitations which applies to the forfeiture of a statutory penalty. See IND.CODE Sec. 34-1-2-2(1). Great Country also argued that Browning failed to comply with the requirements of Trial Rule 23.1. Specifically, Great Country maintained that Browning neither verified his derivative action complaint nor alleged with particularity his efforts, if any, to obtain the action desired from the directors or comparable authority and the reasons for his failure to obtain the action or not make the effort. The trial court granted the motions and entered the following order:

"The Court now grants the Defendant's [sic] Motion to Dismiss, the Plaintiff having failed to comply with Trial Rule 23.1 of the Indiana Rules of Trial Procedure and the Defendant [sic] having failed to file this action within the required two year statute of limitations.

IT IS THEREFORE ORDERED, this cause be dismissed with prejudice."

Record at 187. Browning appeals. ¹

DISCUSSION AND DECISION

Standard of Review

We review a trial court's dismissal of a complaint pursuant to Trial Rule 12(B)(6) to determine if the complaint stated any set of allegations upon which the trial court could have granted relief. Furno v. Citizens Insurance Co. of America (1992), Ind.App., 590 N.E.2d 1137, 1139, trans. denied. The allegations in a complaint are sufficient to withstand a motion to dismiss unless it appears that the plaintiff is not entitled to relief under any circumstances. Id. A plaintiff is required to make nothing more than a clear and concise statement in his complaint to put the defendant on notice that he has a justiciable claim and is entitled to relief under some legal theory. Roberts v. State (1974), 159 Ind.App. 456, 460, 307 N.E.2d 501, 504.

Issue One: Derivative Action Complaint

Browning first contends the trial court erred when it dismissed his action with prejudice for his failure to comply with the requirements of Trial Rule 23.1 which controls derivative actions by shareholders. We find no error in the court's order dismissing Counts I and II on these grounds.

Verification of a complaint, when required under our Trial Rules, is jurisdictional. Gary Community Mental Health Center, Inc. v. Indiana Department of Public Welfare (1986), Ind.App., 496 N.E.2d 1345, 1347. If a litigant fails to verify a pleading as required by any civil or special statutory proceeding, a trial court may dismiss the proceeding for lack of subject-matter jurisdiction. Id. Browning did not comply with Trial Rule 23.1 and verify his derivative action complaint, and the trial court properly dismissed Count I and Count II of his complaint for failure to state a claim pursuant to Trial Rule 12(B)(6).

Browning contends generally that the trial court erred because it should have allowed him a reasonable amount of time to amend his complaint before dismissal. When a party fails to comply with a condition precedent to jurisdiction, the complaint will be subject to dismissal for failure to state a claim pursuant to Trial Rule 12(B)(6), after which the plaintiff can amend. Matter of Adoption of H.S. (1985), Ind.App., 483 N.E.2d 777, 780-81. Dismissal for lack of jurisdiction based on a failure to comply with the requirements of our Trial Rules is a final, appealable judgment. Ind.Trial Rule 41(B) and (E). However, that dismissal does not usually operate as an adjudication on the merits and is not res judicata. See City of Hammond v. Board of Zoning Appeals (1972), 152 Ind.App. 480, 484, 284 N.E.2d 119, 123. A plaintiff is entitled either to amend his complaint pursuant to Trial Rule 12(B)(6) and Trial Rule 15(A), or to elect to stand upon his complaint and to appeal from the order of dismissal. ² England v. Dana Corp. (1970), 147 Ind.App. 279, 284, 259 N.E.2d 433, 436, trans. denied. When a plaintiff elects the latter option and appeals the dismissal, the order of dismissal becomes an adjudication on the merits. Id.

Thus, it was Browning's procedural right, and it was incumbent upon him as plaintiff, to file or tender an amended complaint which would withstand a motion to dismiss. Browning did not attempt to cure the jurisdictional defect in his complaint by utilizing Trial Rule 12(B)(6) either to amend the complaint as of right or to seek leave from the court to amend under Trial Rule 15(A). Instead, Browning appealed the trial court's order dismissing his complaint, which rendered the trial court's order an adjudication upon the merits. By electing that course, Browning waived his right to amend his complaint and cannot now claim that the trial court erred in dismissing his complaint with prejudice.

While we have endeavored to consider Browning's argument on its merits, we note that the extent of Browning's appellate argument on this issue is that, "modern pleading standards indicate that the dismissal should be conditioned on a failure to cure the defect within a reasonable period of time." Appellant's Brief at 16-17. He then refers us to one page in a treatise on federal practice and procedure. See 7C C. WRIGHT & A. MILLER, FEDERAL PRACTICE AND PROCEDURE Sec. 1827, at 58 (1986). Browning provides no other citation to authority and no further argument or explanation. Appellate Rule 8.3(A)(7) governs the contents of the appellant's brief and provides, in pertinent part:

"The argument shall contain the contentions of the appellant with respect to the issues presented, the reasons in support of the contentions along with citations to the authorities, statutes, and parts of the record relied upon, and a clear showing of how the issues and contentions in support thereof relate to the particular facts of the case under review."

Failure to present cogent argument and citation of authority in support of an issue raised on appeal may result in waiver of that issue. Corn v. City of Oakland City (1981), Ind.App., 415 N.E.2d 129, 134.

Without more from Browning, we cannot discern any error in the court's order dismissing Counts I and II of the complaint with prejudice. Because we have determined that Counts I and II failed for lack of proper verification, we need not address other alleged deficiencies in the pleading requirements for a shareholder's derivative action under Trial Rule 23.1.

Issue Two: Statute of Limitations for Treble Damages

In Count III of the complaint, Browning alleges a personal action against Walters for his own pecuniary loss and treble damages, costs and attorney's fees pursuant to Indiana Code Sec. 34-4-30-1. Browning contends that because his claim in Count III is based upon fraud, the six-year limitation on actions seeking relief against frauds under Indiana Code Sec. 34-1-2-1 applies to his claim rather than the two-year limitation which governs the forfeiture of a penalty given by statute. See IND.CODE Sec. 34-1-2-2(1). Therefore, Browning alleges that the trial court erred by applying the two-year statute of limitations and dismissing Count III. We cannot agree.

The applicable statute of limitations for an action under Indiana's treble damages statute, Indiana Code Sec. 34-4-30-1, is a question of first impression for our co...