Hilliard v. Jacobs

• Decision Date: 17 February 2012
• Docket Number: No. 28A04–1106–CT–284.,28A04–1106–CT–284.
• Parties: Bonita G. HILLIARD, in her capacity as Trustee of The H. David and Bonita G. Hilliard Living Trust, Appellant–Plaintiff, v. Timothy E. JACOBS, Appellee–Defendant.
• Court: Indiana Appellate Court

957 N.E.2d 1043

Bonita G. HILLIARD, in her capacity as Trustee of The H. David and Bonita G. Hilliard Living Trust, Appellant–Plaintiff,

v.Timothy E. JACOBS, Appellee–Defendant.

No. 28A04–1106–CT–284.

Court of Appeals of Indiana.

Dec. 6, 2011.Rehearing Denied Feb. 17, 2012.

Edward W. Harris III, Abram B. Gregory, Taft Stettinius & Hollister, LLP, Indianapolis, IN, Attorneys for Appellant.

Peyton L. Berg, Bose McKinney & Evans LLP, Indianapolis, IN, Attorney for Appellee.

OPINION

VAIDIK, Judge.

Case Summary

Bonita Hilliard appeals the trial court's decision to grant summary judgment in favor of Timothy Jacobs in this attempted second lawsuit over the disposition of life insurance policy proceeds. We find that res judicata applies since the issues have already been decided adversely to Hilliard. We also find Hilliard's due process and fundamental fairness concerns to be without merit. Finding no error in the trial court's ruling, we affirm the granting of summary judgment in favor of Jacobs.

Facts and Procedural History

This action is the latest installment in an ongoing series of legal proceedings concerning the disposition of life insurance policies. This case has spanned eight years, with proceedings in this Court, the Indiana Supreme Court, the Monroe Circuit Court, the Greene Circuit Court, and the Greene Superior Court. We, however, recite the facts relevant only to this appeal.

Jacobs and Hilliard's husband, David, were business partners from 1997 until they sold their company in 2002. In 1999 they executed a Cross–Purchase Agreement that required each of them to take out a life insurance policy on the other so that if one partner died, the other could use the proceeds of the insurance policy to buyout the other's interest in the company. After the sale of the company in 2002, David suggested that he and Jacobs swap the insurance policies that they held on each other's lives. Jacobs declined and continued paying the premiums, but David stopped paying the premiums for the policy on Jacobs' life.

David filed the first lawsuit in January 2003, requesting that the trial court order Jacobs to terminate the policy or convey it to David. He allegedly feared for his life during the litigation of the first lawsuit, so he did not assert all of his theories of relief so that he could have a speedy resolution. Appellant's Br. p. 23–24. The theories that he did assert were based on the Cross–Purchase Agreement, which he argued required that the life insurance policies be terminated upon dissolution of the business. Jacobs v. Hilliard, 829 N.E.2d 629, 632 (Ind.Ct.App.2005), trans. denied. The trial court granted summary judgment in favor of David, requiring Jacobs to terminate the policies that he held on David's life. Id. at 631. Jacobs appealed the trial court's ruling in April 2004 and David died in July 2004. On appeal, we reversed and remanded the case, holding that nothing in the Cross–Purchase Agreement or in equity required Jacobs to terminate the policies that he held on David's life. Id. at 634.

On remand, Hilliard filed a motion for leave to file a third amended complaint that asserted seven more theories of recovery—nearly identical to the theories asserted in this second lawsuit. The trial court denied Hilliard's motion. ¹ Hilliard v. Jacobs, 927 N.E.2d 393, 397 (Ind.Ct.App.2010), trans. denied. Jacobs filed a motion for summary judgment, which was granted. Hilliard v. Jacobs, 874 N.E.2d 1060, 1063 (Ind.Ct.App.2007), trans. denied. Hilliard appealed the granting of summary judgment, and we again held that Jacobs was entitled to the insurance policies; the Cross–Purchase Agreement only required that the life insurances policies no longer had to be maintained after the sale of the company, not that they be terminated, id., and Jacobs only needed to have an insurable interest in David's life when the policy was issued, which he did have as his business partner. Id. at 1065.

Hilliard filed this second lawsuit in October 2008 in a different court, attempting to re-litigate the disposition of the life insurance policy and asserting previously-stricken claims based on the same facts and transaction as the first lawsuit. Hilliard asserted breach of contract, breach of fiduciary duty, constructive fraud, promissory estoppel, and quasi-contract. Appellant's App. p. 4–17. She filed an amended complaint in December 2010, adding two additional counts: criminal conversion and a request for declaratory judgment. Id. at 24–43. All of these claims suggest that Jacobs was in violation of the Cross–Purchase Agreement, that Jacobs had deceived David in order to retain possession of the life insurance policy, and that Jacobs was taking property that did not belong to him. These theories of relief, like the ones in the first lawsuit, were again centered around the language of the Cross–Purchase Agreement, as well as the interpretation of oral agreements between Jacobs and David and the question of who was the rightful owner of the policies— issues that have already been resolved in previous litigation.

Jacobs filed a motion for summary judgment later in December 2010. The trial court granted Jacobs' motion for summary judgment in May 2011, finding that “the issues raised in this case have already been decided, adversely to Plaintiff.” Id. at 208.

Hilliard now appeals.

Discussion and Decision

Hilliard contends that the trial court erred in granting summary judgment in favor of Jacobs. When reviewing the entry or denial of summary judgment, our standard of review is the same as that of the trial court: summary judgment is appropriate only where there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Ind. Trial Rule 56(C); ² Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1269 (Ind.2009). All facts established by the designated evidence, and all reasonable inferences from them, are to be construed in favor of the nonmoving party. Naugle v. Beech Grove City Sch., 864 N.E.2d 1058, 1062 (Ind.2007).

Hilliard makes multiple arguments against the trial court's granting of summary judgment, which we consolidate and restate as: (1) whether res judicata applies and (2) whether undue delay and prejudice support summary judgment in favor of Jacobs.

I. Res Judicata

Hilliard contends that res judicata does not apply in this case and the trial court erred in not giving her the opportunity to adjudicate her second set of claims. Res judicata serves to prevent repetitious litigation of disputes which are essentially the same. MicroVote General Corp. v. Ind. Election Comm'n, 924 N.E.2d 184, 191 (Ind.Ct.App.2010). The doctrine of res judicata consists of two distinct components: claim preclusion and issue preclusion. Dawson v. Estate of Ott, 796 N.E.2d 1190, 1195 (Ind.Ct.App.2003). 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. MicroVote, 924 N.E.2d at 191. Claim preclusion applies when the following four factors are satisfied:

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. Hilliard argues that the record does not support a finding that the third element of res judicata is satisfied, namely that the matters now in issue could not have been determined in the prior action. We disagree.

A. Identical Evidence Test

This Court recently discussed this third element of res judicata, stating that “the most critical question for the application of res judicata is whether the present claim was within the issues of the first or whether the claim presents an attempt to split a cause of action or defense.” MicroVote, 924 N.E.2d at 192 (citing Biggs v. Marsh, 446 N.E.2d 977, 982 (Ind.Ct.App.1983)). The test generally used for determining whether or not the issue could have been decided previously is the identical evidence test: “whether identical evidence will support the issues involved in both actions.” Id.

Hilliard argues that the result of the identical evidence test shows that the evidence used to adjudicate her two sets of claims is different. In making this argument, she relies heavily on Biggs. In Biggs, after their first claim failed, this Court allowed the Biggses to bring a second claim against homeowners when their purchase agreement fell through and the home was sold to a third party. 446 N.E.2d at 982. This Court held that the first claim for specific performance of the purchase agreement required different evidence than the second set of claims for fraud, negligence, and tortious interference with a contract, preventing the invocation of res judicata. Id.

Hilliard would have us follow Biggs and take a literal interpretation of the identical evidence test, which 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's argument is centered around the idea that we should apply the literal interpretation of this test; she contends that some evidence necessary to adjudicate her second set of claims was not before the trial court in her first set of claims, preventing the invocation of res...