Koors v. Great Southwest Fire Ins. Co.

• Decision Date: 01 December 1988
• Docket Number: No. 29A02-8708-CV-00315,29A02-8708-CV-00315
• Parties: Edward H. KOORS, et al., Appellant (Plaintiff), v. GREAT SOUTHWEST FIRE INSURANCE COMPANY, Appellee (Defendant). Donald E. HEDRICK, et al., Appellant (Defendant), v. Edward H. KOORS, et al., Appellee (Plaintiff).
• Court: Indiana Appellate Court

Page 780

530 N.E.2d 780

Edward H. KOORS, et al., Appellant (Plaintiff), v. GREAT SOUTHWEST FIRE INSURANCE COMPANY, Appellee (Defendant).

Donald E. HEDRICK, et al., Appellant (Defendant), v. Edward H. KOORS, et al., Appellee (Plaintiff).

No. 29A02-8708-CV-00315.

Court of Appeals of Indiana Second District.

Dec. 1, 1988.

Michael J. Tosick, Free, Brand, Tosick & Allen, Greenfield, for Edward H. Koors, et al.

Vance Hartke, Hartke & Hartke, Falls Church, Va., for Donald E. Hedrick, et al.

Robert W. Geddes, Michael E. Simmons, Hume, Smith, Geddes & Green, Indianapolis, for Great Southwest Fire Ins. Co.

BUCHANAN, Judge.

CASE SUMMARY

This is a consolidated appeal arising from an action brought by a class of investors, Edward H. Koors, et al. (Investors), against certain directors and officers of Brown County Ski Mountain Resort (the Resort) to recover their investment, based on allegations that the sale of the securities of the Resort was in violation of the Indiana Securities Act. The trial court granted summary judgment in favor of the Investors and against Donald E. Hedrick (Hedrick), awarding $584,448.82 in damages. The Investors then sought recovery of the judgment through proceedings supplemental against Great Southwest Fire Insurance Company (the Garnishee). The trial court entered judgment in favor of the Garnishee.

We reverse.

FACTS

Hedrick served as an officer and director of the Resort, an Indiana corporation, from the time of its incorporation in June of 1979. As a means of financing the Resort, several investment notes were sold to individuals. Unfortunately, the Resort experienced financial difficulties and was unable to meet its obligations on the investment notes. The Investors filed a class action suit on January 9, 1985, claiming the investment notes were sold in violation of the Indiana Securities Act.

The procedural setting in this case is vital to our resolution and requires some elaboration. On March 12, 1985, the trial court conducted a hearing on the Investors' request for class certification. While the Investors were present and represented by counsel, Hedrick and the other named defendants failed to appear. On March 27, 1985, the trial court certified the cause as a class action pursuant to Ind. Rules of Procedure, Trial Rule 23. On April 4, 1985, Gregory F. Hahn (Hahn), a defendant, moved to set aside the class certification, claiming that no defense counsel of record received notice of the class certification hearing. The trial court denied Hahn's motion the following day. On April 9, 1985, Hedrick moved to set aside the class certification, also claiming lack of notice of the hearing. The trial court denied Hedrick's motion on November 6, 1985.

The Investors moved for summary judgment on May 1, 1985, and asserted additional grounds for summary judgment on July 12, 1985. Hedrick and James Haley (Haley), a defendant, failed to appear for the August 14, 1985, hearing on the summary judgment motion. The trial court eventually set aside its entry of summary judgment in favor of the Investors, apparently due to lack of notice to Hedrick and Haley.

The hearing on the summary judgment motion was reset for October 23, 1985. Due to scheduling conflicts of the court and counsel for the plaintiffs and defendants, the hearing on the summary judgment motion was continued on six occasions. Hedrick's counsel, John S. Pearce (Pearce) and John R. Price (Price), requested a continuance on three of the six occasions. The final continuance granted was requested by Hedrick's counsel on February 6, 1986, due to a conflict in schedule.

Pearce and Price perceived a potential conflict of interest because they knew the corporate attorney who had been hired to secure approval of the sale of the investment On Tuesday, March 11, 1986, the law firm of Hartke & Hartke (Hartke) of Falls Church, Virginia, contacted the court administrator by telephone, requesting the court to enter its appearance for Hedrick ¹ and requesting a continuance of the hearing scheduled for March 12, 1986. Hartke claims the requests were made with the court administrator because the trial judge was occupied with other business. On the morning of the hearing, Hartke again telephone the trial court to further the continuance request and was advised that the request was denied.

notes from the Indiana Securities Commissioner. Therefore, on February 24, 1986, Pearce moved for leave to withdraw his appearance as Hedrick's attorney. That same day, the trial court granted Pearce's motion. The following week, Price also requested leave to withdraw his appearance as Hedrick's attorney. The trial court approved Price's withdrawal on Friday, March 7, 1986. Nothing in the record shows that Hedrick was aware of the potential conflict of interest.

The summary judgment hearing was held and conducted without the presence of Hedrick or his counsel. Haley's attorney, by oral communications and by written motion, formally entered Hartke's appearance for Hedrick at the hearing. Hartke mailed a written request for a continuance, confirming his telephone request, which was received by the trial court two days after the summary judgment hearing. Hartke claimed that he had obtained the consent, from both the Investors' counsel and Haley's counsel, to the continuance. This allegation of fact, however, is disputed by the Investors. Hartke claimed the need for a continuance because he had not had sufficient time to become familiar with the case and needed more time to prepare for argument on the summary judgment motion. Hartke further claimed that it was physically impossible for him to appear at the hearing on March 12 on short notice because the firm's office was located in Virginia. On April 29, 1986, the trial court entered summary judgment in favor of the Investors.

ISSUES

Ten issues are presented by the parties in this consolidated appeal. Our resolution, however, necessitates review of only the following two issues:

1. Did the trial court err in certifying the class when Hedrick claimed lack of notice of the hearing on the class certification?

2. Did the trial court abuse its discretion in denying Hedrick's request for a continuance?

DECISION

ISSUE ONE--Did the trial court err in certifying the class when Hedrick claimed lack of notice of the hearing on the class certification?

PARTIES' CONTENTIONS--Hedrick contends that the trial court arbitrarily denied the motion to set aside the class certification because the trial judge allegedly ignored the minimum standards of notice to the defense counsel.

Koors replies that Hedrick failed to offer any proof of his lack of notice or that he was prejudiced.

CONCLUSION--We are compelled to dismiss the appeal on the class certification issue because the appeal of that issue was not timely.

Certification of a class action is a final and appealable order. Gulf Oil Corp. v. McManus (1977), 173 Ind.App. 147, 363 N.E.2d 223; see also T.R. 59(C) advisory committee note; 2 W. Harvey, Indiana Practice Sec. 23.5, at 296-97 (1987). The trial court certified the class by order on March 27, 1985. On November 6, 1985, the trial court denied Hedrick's motion to set aside the class certification. Almost a year later, on October 16, 1986, Hedrick filed a petition for extension of time to file the record of proceedings. Hedrick was required to file his petition to extend the time to file the record before the expiration of time in which the record was to be filed with this court. See Ind. Rules of Procedure, Appellate Rule 14(A). Any extension of time granted by this court in error is meaningless and cannot confer jurisdiction. State v. Innkeepers of New Castle, Inc. (1979), 271 Ind. 286, 392...