Hilliard v. Jacobs

• Decision Date: 16 November 2009
• Docket Number: No. 28A01-0904-CV-168.,28A01-0904-CV-168.
• Citation: 916 N.E.2d 689
• 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

916 N.E.2d 689

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. 28A01-0904-CV-168.

Court of Appeals of Indiana.

November 16, 2009.

Edward W. Harris, III, Mary T. Doherty, Taft Stettinius & Hollister LLP, Indianapolis, IN, Attorneys for Appellant.

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

OPINION

MATHIAS, Judge.

The Greene Circuit Court ordered Bonita G. Hilliard ("Bonita"), in her capacity as the Trustee of the H. David and Bonita G. Hilliard Living Trust, to pay post-judgment interest to Timothy E. Jacobs ("Jacobs"). Bonita appeals and argues that the trial court erred in ordering her to pay post-judgment interest because the court had not entered a money judgment subject to the post-judgment interest statute, Indiana Code section 24-4.6-1-101 (2006). We reverse and remand.

Facts and Procedural History

This is the third appeal in this case, which stems from the business relationship between H. David Hilliard ("Hilliard") and Jacobs, who each owned a 50% interest in Advance Marketing Technology, LLC ("AMT"). See Jacobs v. Hilliard, 829 N.E.2d 629, 631 (Ind.Ct.App.2005), trans. denied. To address the possibility that one of them might die unexpectedly, Hilliard and Jacobs entered into a cross-purchasing agreement requiring each to insure the life of the other in the amount of $200,000. Id. As the company grew, this amount was later increased to $2,000,000.¹ Id. Hilliard and Jacobs were the owners and beneficiaries of the policies, and AMT paid the premiums on the policies until the company was sold in 2002. Id. When AMT was sold, Hilliard and Jacobs entered into a settlement agreement to resolve all outstanding claims and demands between the two. Id.

After AMT was sold, Hilliard proposed that he and Jacobs swap the policies they held on the other's lives. Id. Jacobs declined and continued to pay the premiums on the policies he held on Hilliard's life. Id. Hilliard, however, decided to stop paying the premiums on the policies he held on Jacobs's life. Id. Hilliard then filed a complaint wherein he requested that the trial court either order Jacobs to cancel the policies he held or transfer them to Hilliard. Id. The trial court granted Hilliard's subsequent motion for partial summary judgment and ordered that Jacobs terminate the policies on Hilliard's life. Id.

Jacobs filed an interlocutory appeal and also moved to stay enforcement of the trial court's order that he terminate the policies. Id. The trial court granted Jacobs's motion for a stay pending appeal, and also granted Hilliard's request that Jacobs change the beneficiary on the policies to the trial court clerk and to physically transfer the policies to the clerk. Id. Hilliard passed away from ventricular fibrillation on July 22, 2004, while the appeal was pending. Id.

On interlocutory appeal, a panel of this court held that the cross-purchase agreement did not require Jacobs to terminate the term life insurance policy he held on Hilliard's life. Id. at 633. The court further concluded that equity did not require the termination of the policy and, therefore, reversed and remanded. Id. at 633-34.

On remand, AIG, one of the insurance companies that had issued one of the policies, filed a complaint seeking to interplead the $1,500,000 proceeds on the policy it had issued. AIG's complaint also requested that the trial court determine whether the policy was due and owing and, if so, to whom. Thereafter, West Coast Insurance, the insurance company that had issued the other policy on Hilliard's life, filed a similar complaint seeking to interplead the $1,000,000 proceeds on the policy it had issued. The trial court denied West Coast's request to interplead and never ruled on AIG's request. Eventually, both Jacobs and Bonita moved for summary judgment. After a hearing on the matter, the trial court granted summary judgment in favor of Jacobs, and Bonita appealed. The trial court stayed its summary judgment order on the condition that Bonita post a $250,000 letter of credit as security pending appeal.

On appeal, both parties agreed that Jacobs had an insurable interest in Hilliard's life when the policies were issued. See Hilliard v. Jacobs, 874 N.E.2d 1060, 1063 (Ind.Ct.App.2007), trans. denied. Bonita, however, argued that the insurable interest must continue throughout the term of the life insurance policy, whereas Jacobs argued that the insurable interest need exist only at the time the policy was issued. Id. The court on appeal held that "`a policy of life insurance or the appointment or designation of a beneficiary, which is valid in its inception, continues and remains valid, although the insurable interest or relationship of the beneficiary has ceased or terminated, unless it is otherwise stipulated or provided in the contract to the contrary.'" Id. (quoting Farra v. Braman, 171 Ind. 529, 547, 86 N.E. 843, 850 (1909)). Because the policies on Hilliard's life were valid at their inception, and because there were no contract provisions to the contrary, the court held that the policies were valid and upheld the trial court's grant of summary judgment in favor of Jacobs. Id. at 1065.

On May 2, 2008, Jacobs filed a motion to lift the stay the trial court had issued during the appeal and to order the trial court clerk to return the insurance policies to Jacobs. The trial court granted Jacobs's motion as follows:

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Greene County Clerk is hereby ordered to return to [Jacobs], through his attorney(s), the AIG Life Insurance Policy . . . and the West Coast Life Insurance Policy . . . and to relinquish and reassign to [Jacobs] all rights in respect to these policies in cooperation with [Jacobs]'s attorneys.

Appellant's App. p. 134. The clerk then returned the policies to Jacobs, who presented the policies to the insurance companies and received the full value of $2,500,000 from the insurance companies plus 3% interest, i.e., $289,771.52, pursuant to Indiana Code section 27-1-12-35.

On June 5 2008, Jacobs filed a request for damages under Indiana Trial Rule 62(D), claiming that the delay in his receiving the full value of the policies resulted in "costs, interest and damages for delay" from the date the trial court had entered summary judgment in his favor until he finally received the proceeds of the policies. Appellant's App. p. 201. Bonita responded by arguing that Jacobs had already been paid in full and also sought release of the $250,000 letter of credit she had filed during the pendency of the second appeal. Jacobs responded by claiming that, had he received the policy proceeds earlier, he would have earned more than the 3% interest rate he had received from the insurance companies.

After several filings by both parties, the trial court held a hearing on the matter on January 15, 2009. At this hearing, Jacobs argued that he was entitled to an award of 8% interest pursuant to Indiana Code section 24-4.6-1-101 ("Section 101") because the trial court's order granting him possession of the policies was effectively a money judgment. On March 6, 2009, the trial court issued an order agreeing with Jacobs's argument and awarding him 8% interest on the proceeds of the policies, less the 3% interest that the insurance companies had already paid to Jacobs, for a total of $175,503.78, payable from the $250,000 letter of credit filed by Bonita. Bonita now appeals.²

Discussion and Decision

The parties dispute the nature of the issue before us and, consequently, also disagree as to the appropriate standard of review. Bonita claims the issue before us is one of statutory interpretation, i.e., whether the trial court's award of post-judgment interest was proper under Section 101. Bonita therefore claims that we should review the trial court's order de novo. See Cox v. Cantrell, 866 N.E.2d 798, 805 (Ind. Ct.App.2007), trans. denied. Jacobs claims that we should apply an abuse of discretion standard because this is an interlocutory appeal. See In re Paternity of Duran, 900 N.E.2d 454, 462 (Ind.Ct.App. 2009) (noting general rule that we review interlocutory orders for an abuse of discretion). Although rulings on interlocutory orders are generally reviewable under an abuse of discretion standard, when the issue on appeal is a pure question of law, the matter is reviewed de novo. See Neu v. Gibson, 905 N.E.2d 465, 473 (Ind.Ct.App. 2009) (citing In re P.F., 849 N.E.2d 1220, 1223-24 (Ind.Ct.App.2006)).

Jacobs further argues that the trial court's award was justified under Indiana Trial Rule 62(D)(2), which he claims grants the trial court discretion to award interest. This rule provides in relevant part:

Whenever a party entitled thereto desires a stay on appeal, such party may present to the appropriate court for its approval an appeal bond or an irrevocable letter of credit from a financial institution. The bond or letter of credit shall be conditioned for the satisfaction of the judgment in full together with costs, interest, and damages for delay, if for any reason the appeal is dismissed or if the judgment is affirmed, and to satisfy in full such modification of the judgment and such costs, interest, and damages as the appellate court may adjudge and award.

T.R. 62(D)(2) (emphasis added). Jacobs claims that the trial court was within its discretion under Trial Rule 62(D)(2) to award interest.

We note, however, that Trial Rule 62(D) simply states that an appeal bond or letter of credit "shall be conditioned for the satisfaction of the judgment in full together with costs, interest, and damages for delay[.]" It does not set forth the manner in which interest is to be determined.

Here, both the trial court and Jacobs relied on Section 101 to calculate the amount of interest that was awarded to Jacobs, and Section 101 provides for the payment of...