Insurance Co. of North America v. Home Loan
| Citation | 862 N.E.2d 1230 |
| Decision Date | 20 March 2007 |
| Docket Number | No. 49A05-0606-CV-332.,49A05-0606-CV-332. |
| Parties | INSURANCE COMPANY OF NORTH AMERICA, Appellant-Defendant, v. HOME LOAN CORPORATION d/b/a Expanded Mortgage Credit, Appellee-Plaintiff. |
| Court | Court of Appeals of Indiana |
Charles W. Linder, Jr., Sharon L. Wright, Linder & Hollowell, Indianapolis, IN, Attorneys for Appellant.
John S. (Jay) Mercer, Daniel S. Tomson, Wood Tuohy Gleason Mercer & Herrin, Indianapolis, IN, Attorneys for Appellee.
Insurance Company of North America ("INA") appeals the denial of two motions for summary judgment against Home Loan Corporation d/b/a Expanded Mortgage Credit ("Home Loan"). We reverse and remand.
The dispositive issue is whether the trial court abused its discretion in denying INA's motion for summary judgment on the issue of collateral estoppel.
The facts most favorable to Home Loan, the non-moving party, indicate that on December 7, 2001, Home Loan provided a $68,0000 first mortgage loan to Temika Graham to purchase residential real estate in Indianapolis. Capital Mortgage Group, Inc. ("Capital Mortgage"), acted as the mortgage broker. Pursuant to Indiana Code Section 23-2-5-5(b), Capital Mortgage maintained a loan broker's bond "satisfactory to the [Indiana securities] commissioner" on which INA was the surety. The bond, promulgated by the Indiana Secretary of State's Securities Division, reads in pertinent part,
Every person who has a cause of action under IC 23-2-5 may bring an action upon this bond to enforce any liability on the bond providing, however, that no suit on this bond may be maintained to enforce any liability on this bond unless brought within two (2) years after the act upon which it is based.
Appellant's App. at 75. Graham made no payments and defaulted on the loan.
On September 23, 2002, Home Loan filed a loan fraud complaint against Graham ("the Graham case") in Marion Superior Court ("the trial court"). On July 3, 2003, Home Loan filed a first amended complaint, which added Capital Mortgage, Graham's real estate agent, and two real estate appraisers as defendants and alleged that they had participated in the loan fraud.1 On January 5, 2005, Home Loan filed a second amended complaint, which added INA as a defendant in a claim against the $50,000 surety bond based on Capital Mortgage's alleged fraud.
Also on January 5, 2005, Home Loan named INA as a defendant in a similar loan fraud lawsuit against Capital Mortgage and borrower Justin Geisler ("the Geisler case"), which had been filed in Marion Circuit Court on June 23, 2003. On June 29, 2005, INA filed a motion for summary judgment in the Geisler case in which it asserted, inter alia, that the two-year limitation to bring suit on the bond had expired before Home Loan sued INA. Home Loan responded that it had sued Capital Mortgage for fraud, for which the statutory limitation period is six years,2 and that its action on the bond was therefore timely.
On July 1, 2005, INA filed a motion for summary judgment in the Graham case in which it raised the same two-year limitation argument. Home Loan offered the same response. The matter was set for hearing on October 26, 2005, before Senior Judge Steve Frank. On that date, Judge Frank recused himself because of a conflict and reset the hearing for November 2, 2005. Judge Cale Bradford replaced Judge Frank.
On September 19, 2005, the Marion Circuit Court held a hearing on INA's summary judgment motion in the Geisler case and took the matter under advisement. On October 26, 2005, the court entered final judgment3 in favor of INA "on the ground the two-year statute of limitation applies[.]" Id. at 313.4 Home Loan did not appeal that decision, and the judgment became non-appealable on November 26, 2005.
On November 2, 2005, the trial court held a hearing on INA's summary judgment motion in the Graham case and took the matter under advisement. On November 9, 2005, the trial court summarily denied the motion. INA did not seek certification for a discretionary appeal of that interlocutory order.5
On January 20, 2006, INA filed a second motion for summary judgment in the Graham case in which it asserted that Home Loan was collaterally estopped from pursuing its claim against the bond based on the final and non-appealable judgment in INA's favor in the Geisler case. On April 26, 2006, the trial court held a hearing on INA's motion. The court summarily denied the motion and ultimately certified both denials for interlocutory appeal. On July 28, 2006, this Court accepted jurisdiction.
Because the issue is both dispositive and a narrower ground for deciding this appeal, we address the trial court's denial of INA's motion for summary judgment on the issue of collateral estoppel.
Our standard of review for the denial of a motion for summary judgment is the same as that of the trial court. Summary judgment is appropriate only if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In determining whether the trial court erred in denying summary judgment, we give careful scrutiny to the pleadings and designated materials, construing them in a light most favorable to the nonmovant, while also clothing the trial court's decision with a presumption of validity.
America's Directories Inc. v. Stellhorn One Hour Photo, Inc., 833 N.E.2d 1059, 1065 (Ind.Ct.App.2005) (citations omitted), trans. denied (1996).
As we explained in Crosson v. Berry, 829 N.E.2d 184 (Ind.Ct.App.2005), trans. denied,
Collateral estoppel or issue preclusion bars subsequent litigation of an issue necessarily adjudicated in a former suit if the same issue is presented in the subsequent suit. In that situation, the former adjudication will be conclusive in the subsequent action even if the two actions are on different claims. However, the former adjudication will only be conclusive as to those issues that were actually litigated and determined therein. Collateral estoppel does not extend to matters that were not expressly adjudicated and that can be inferred from the prior adjudication only by argument. A prime consideration in the use of issue preclusion is whether the party against whom the prior judgment is asserted had a full and fair opportunity to litigate the issue and whether it would be otherwise unfair under the circumstances to permit the use of issue preclusion. A trial court's decision to refuse to apply collateral estoppel will be reversed only upon a showing of abuse of discretion. An abuse of discretion occurs when the trial court's decision is against the logic and effect of the facts and circumstances before it.
Id. at 192-93 (citations omitted). "Issue preclusion requires: (1) a final judgment on the merits in a court of competent jurisdiction, (2) identity of issues, (3) the party to be estopped was a party or the privity of a party in the prior action." Sims v. Scopelitis, 797 N.E.2d 348, 351 (Ind.Ct.App.2003), trans. denied (2004).6
Home Loan does not dispute that the judgment in the Geisler case was a final judgment on the merits for purposes of collateral estoppel7 or that the relevant issues and parties in the Graham and Geisler cases are identical. Neither does it dispute that it had a full and fair opportunity to litigate the two-year limitation issue in the Geisler case. Instead, Home Loan claims that "[a]n element of collateral estoppel is that it can only operate to bar the subsequent litigation of a fact or issue which was necessarily adjudicated in a former lawsuit if the same fact or issue is presented in the subsequent lawsuit." Appellee's Br. at 23 (). While cases like Mendenhall and Crosson often use such language to describe the typical situation in which collateral estoppel arises, this Court has previously dismissed the notion that the doctrine "operates only to bar actions initiated subsequent to prior final determinations, and that it can have no application between actions being prosecuted concurrently." Ragnar Benson, Inc. v. Wm. P. Jungclaus Co., 352 N.E.2d 817, 820 (Ind.Ct.App.1976) (emphasis in original).8
The procedural history of Ragnar Benson closely parallels that of our case. Gerald Beck "was injured while employed as an iron worker by Ben Hur Construction Company." Id. at 818. Beck sued several defendants in Hancock Circuit Court, including Ragnar Benson, the architect and general contractor, and Jungclaus, a subcontractor. Ragnar Benson cross-claimed against Jungclaus for indemnification. In July 1972, Ragnar Benson filed a summary judgment motion on its cross-claim, which the trial court denied. Both Ragnar Benson and Jungclaus then settled with Beck but did not settle the cross-claim. In November 1973, Jungclaus filed a motion for summary judgment on the cross-claim, and Ragnar Benson renewed its motion, both of which the trial court denied in January 1974.
On July 2, 1974, the court granted leave to Jungclaus to file a fourth defense to Ragnar Benson's cross-claim. Said defense asserted res judicata and collateral estoppel based upon the disposition of an indemnification claim between Ragnar Benson and Jungclaus in a companion case in the Marion Superior Court. Plaintiff in that case, William Joseph App, had sustained injuries at the same time and under the same circumstances as plaintiff Beck and had brought suit against Ragnar Benson and Jungclaus among others.[9] Therein, Ragnar Benson had filed a responsive pleading which included a cross-claim for indemnification against Jungclaus which, except for damages claimed, was identical to the cross-claim filed by Ragnar Benson in the instant action.
In the App case, Jungclaus moved to dismiss Ragnar Benson's cross-claim on the ground that it failed to state a claim upon which...
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