KeyBank Nat. Ass'n v. Michael

• Decision Date: 12 June 2002
• Docket Number: No. 35A05-9912-CV-541.,35A05-9912-CV-541.
• Citation: 770 N.E.2d 369
• Parties: KEYBANK NATIONAL ASSOCIATION, Appellant-Petitioner, v. Stephen J. MICHAEL, as Receiver for New Friction Material Company, Inc., Appellee-Respondent.
• Court: Indiana Appellate Court

770 N.E.2d 369

KEYBANK NATIONAL ASSOCIATION, Appellant-Petitioner, v. Stephen J. MICHAEL, as Receiver for New Friction Material Company, Inc., Appellee-Respondent.

No. 35A05-9912-CV-541.

Court of Appeals of Indiana.

June 12, 2002.

Robert W. Eherenman, Haller & Colvin, P.C., Fort Wayne, IN, Attorney for Appellant.

James P. Fenton, Eilbacher Scott, P.C., Fort Wayne, IN, Attorney for Appellee.

OPINION

FRIEDLANDER, Judge.

We are confronted in this case with circumstances somewhat out of the ordinary. The presenting issue centers upon a pleading that KeyBank National Association (KeyBank) filed with this court entitled, "Appellant's Verified Petition for Writ in Aid of Appellate Jurisdiction and/or Writ of Mandate" (Petition for Writ). In order to understand the meaning and import of that pleading, we must backtrack and summarize the litigation from which it arose.

The lengthy and complicated facts that underlie the lawsuit culminating in this appeal were set forth by this court in KeyBank Nat. Ass'n v. Michael, 737 N.E.2d 834 (Ind.Ct.App.2000), and need not be reproduced in detail here. To summarize those facts, Friction Material Company, Inc. (FMCI) defaulted on a loan made by KeyBank. As a result, KeyBank demanded immediate repayment of the outstanding balance of the loan, plus interest and collection expenses. KeyBank then instituted proceedings requesting foreclosure and the appointment of a receiver. The court scheduled a hearing on the request for a receiver for November 4, 1999.

On November 3, 1999, New Friction Material Company, Inc. (New Friction), as the purported successor by merger to FMCI, filed its petition for voluntary dissolution and for appointment of a receiver. Also on November 3, a hearing on the dissolution of New Friction was held without notice to KeyBank. New Friction asserted that it had been incorporated "for the sole purpose of acquiring all assets and obligations of Friction Material Company, Inc., thereby domesticating its assets and operations and thus authorizing the initiation of a voluntary dissolution by court proceeding under IC XX-X-XX-X(4)." Record at 135. New Friction's articles of dissolution asserted that it was incorporated on November 2, 1999, an assertion that was not accurate. New Friction requested the appointment of a receiver to liquidate the business.

On November 3, 1999, the trial court granted New Friction's petition for dissolution and the corporation was dissolved effective as of that date. The court concluded that New Friction's business and affairs should be wound up and liquidated in accordance with the relevant statutory provisions. The court also consolidated KeyBank's action with the action commenced by New Friction. A hearing was held on November 10, 1999 and two days later, the trial court ordered the appointment of a receiver pursuant to New Friction's request. The court appointed Stephen J. Michael as receiver and then granted Michael's application to employ Grant Shipley as attorney for the receiver. Shipley had earlier appeared for New Friction and FMCI at various stages of the proceedings, as will be discussed more fully below. KeyBank, which was not consulted and certainly did not approve of Shipley's appointment, petitioned the court to disqualify Shipley on grounds of conflict of interest. The court denied the motion. KeyBank then moved for a change of judge. That motion was denied on November 17, 1999. On November 22, 1999, KeyBank filed its praecipe.

The instant controversy centers upon Shipley's representation. The record reveals that FMCI paid a retainer to Shipley sometime in the weeks leading up to the November 3 hearing. Other facts pertinent to his representation were summarized in our previous opinion as follows:

1) Shipley represented FMCI at the hearing on November 3, 1999, 2) on November 3, 1999, Shipley was aware of adversary proceedings against FMCI by KeyBank, 3) Shipley then represented New Friction, 4) no other counsel appeared at the hearing for FMCI or New Friction. The record also reveals that on behalf of New Friction, Shipley requested the appointment of Stephen J. Michael as receiver. Michael testified that he did not have experience in acting as a receiver and that he would employ others, including an attorney, to assist him. Michael implied dependence and reliance upon the attorney. After the trial court appointed Michael as the receiver, Michael then requested that Shipley be appointed as counsel for the receiver.

KeyBank Nat. Ass'n v. Michael, 737 N.E.2d at 851. We noted that Shipley was the only attorney who appeared for FMCI and New Friction at the November 3 hearing. At that hearing, Shipley believed that New Friction and FMCI had merged, and he proceeded on that assumption. The court granted New Friction's petition for dissolution on that same day. After the court consolidated KeyBank's and New Friction's respective actions, a hearing was held one week later, on November 10. Shipley again appeared as the sole legal representative for both New Friction and FMCI, apparently still believing that they had merged. It was at this hearing that the court became aware that no legal merger had yet occurred. In fact, the certificate of merger was entered and became effective on that day, and was faxed to Shipley by the Delaware Secretary of State's office during the hearing.

One of the issues addressed in the original appeal concerned Shipley's representation. KeyBank opposed Shipley's appointment on grounds that his interests as counsel for the receiver were adverse to those of his former clients, FMCI and New Friction. On May 16, 2000, we accepted the case for interlocutory appeal and the relevant materials were transmitted to the Clerk of the Courts. Shipley filed with this court a motion entitled "Motion for Leave to Seek Correction of Clerical Errors in the Chronological Case Summary." In it, Shipley asserted that certain portions of the Chronological Case Summary (CCS) listed him as the attorney for FMCI, and that such entries are erroneous and should be altered to reflect that he was acting as attorney for New Friction and the receiver.

We noted that the record reflected that Shipley represented both FMCI and New Friction at one time or another in the proceedings. We also noted that Shipley acknowledged as much. We denied Shipley's motion in footnote 2 of the opinion, stating:

On May 16, 2000, Grant Shipley, as counsel for the receiver, filed with this court a motion entitled "Motion for Leave to Seek Correction of Clerical Errors in the Chronological Case Summary." In the motion, Shipley asserted that the portions of the Chronological Case Summary (CCS) that list him as the attorney for FMCI are erroneous and should be altered to reflect that he was acting as attorney for New Friction and the receiver. For reasons more fully developed in Issue No. 4, the motion is denied.

KeyBank Nat. Ass'n v. Michael, 737 N.E.2d at 840 n. 2. In our discussion of Issue 4, wherein we explained the denial of the motion to correct the CCS, we noted, "Shipley's previous representation of two of the parties with interests adverse to KeyBank's within the same and related proceedings necessarily leads to his disqualification to act as counsel for the receiver." Id. at 852. We also stated, "Shipley's attempt to manipulate the record of proceedings constitutes tacit recognition of the perilous position upon which his appointment is perched." Id.

We turn now to the present action. After the case was remanded to the trial court "for further proceedings consistent with this opinion," Id. at 854, Shipley filed in the trial court on or about August 2, 2001 a "Motion to Correct Chronological Case Summary and Other Parts of the Record, Trial Rule 60(A)." Appellant's Appendix at 62. In that motion, Shipley acknowledged that he was formerly counsel for New Friction and Michael, and further that he was "alleged to be an attorney for Friction Material Company, Inc." Appellant's Appendix at 62. He asked the court to correct its records to reflect that "he [had] not acted as counsel in any proceedings for Friction Material Company, Inc." Id. KeyBank opposed the motion, arguing that it should be denied based upon the law-of-the-case doctrine. On November 20, 2001, the trial court granted Shipley's motion, entering the following conclusions of law:

6. KeyBank National Association has urged that this Court cannot grant the relief requested, because the Court of Appeals allegedly found as a matter of fact that Grant F. Shipley was acting as counsel for FMCI. This Court disagrees. The Appellate Court does not find facts. It reviews the factual findings of the trial court, but does not undertake to find facts on it own. Board of Trustees of Town (now City) of New Haven v. City of Fort Wayne, 268 Ind. 415, 375 N.E.2d, [sic] 1112, 1118 (1978) "Neither [sic] the Court of Appeals nor this court can make such findings of fact, but can only review such findings and conclusions and judgment by the trial court."

7. The question of which parties Mr. Shipley represented was never brought to this Court's attention before now; and in its motion to disqualify Mr. Shipley as counsel for the receiver KeyBank National Association never alleged that Mr. Shipley had represented FMCI. Accordingly, this court never made any findings of fact, express or implied, concerning the identity of Mr. Shipley's clients; and the Court of Appeals did not have the benefit of any findings of fact made by this court on the point.

Appellant's Appendix at 6. The trial court went on to conclude that in granting Shipley's ...