Mann v. Russell's Trailer Repair, Inc.

• Decision Date: 07 May 2003
• Docket Number: No. 49A02-0208-CV-686.,49A02-0208-CV-686.
• Parties: Herbert Michael MANN and Mitch Corbett, Appellants-Defendants, v. RUSSELL'S TRAILER REPAIR, INC., Appellee-Plaintiff.
• Court: Indiana Appellate Court

787 N.E.2d 922

Herbert Michael MANN and Mitch Corbett, Appellants-Defendants, v. RUSSELL'S TRAILER REPAIR, INC., Appellee-Plaintiff.

No. 49A02-0208-CV-686.

Court of Appeals of Indiana.

May 7, 2003.

T. Reg Hesselgrave, Indianapolis, IN, Robert Lutz, Speedway, IN, Attorneys for Appellants.

Lynne D. Lidke, Christopher R. Whitten, Craig J. Helmreich, Scopelitis Garvin Light & Hanson, Indianapolis, IN, Attorneys for Appellee.

OPINION

SHARPNACK, Judge.

Herbert Michael Mann and Mitch Corbett appeal the trial court's judgment in favor of Russell's Trailer Repair, Inc. ("Russell"). Mann and Corbett raise seven issues, which we consolidate and restate as:

I. Whether the trial court abused its discretion by denying Corbett's motion for a change of judge; and II. Whether the trial court abused its discretion by considering evidence that was never introduced and admitted at the evidentiary hearing.¹

We reverse and remand.

The relevant facts follow. McCord Manufacturing, Inc. was incorporated as an Indiana corporation in 1995 for the purpose of manufacturing trailers with Mann, Corbett, and Michael and Pamela McCord as shareholders. On May 1, 1998, Russell filed a complaint against McCord Manufacturing. On June 4, 1998, the trial court entered default judgment against McCord Manufacturing in the amount of $118,200.00, plus prejudgment interest at the rate of eight percent per annum, attorney fees, and postjudgment interest at the rate of ten percent per annum.

On September 21, 2000, Russell filed a motion for proceedings supplemental, which named Mann, Corbett, and the McCords as garnishee defendants. On October 25, 2000, Mann filed a response to the motion for proceeding supplemental. On October 31, 2000, Corbett appeared pursuant to an Order to Appear. On May 15, 2001, Corbett filed an answer and motion for change of judge. The trial court denied Corbett's motion for a change of judge.

In November of 2001, Russell filed a motion to pierce the corporate veil with numerous exhibits attached, including deposition testimony, hearing testimony from other actions, and discovery responses. Mann filed a motion to clarify the briefing schedule in which he noted that "the brief filed by Russell appears to contemplate that the court's decision on piercing the corporate veil can be made in a summary manner." Appellee's Appendix at 5. However, Mann argued that "the proper time to brief the issue of piercing the corporate veil is after a full evidentiary hearing where the parties have the opportunity to present witnesses and documentary evidence and to cross-examine witnesses." Id. at 6. Further, Mann contended that Russell's motion appeared to be "a request for summary judgment, without filing a motion for summary judgment or calling it a summary judgment." Id. Thus, Mann requested that the trial court either order Russell to file a motion for summary judgment or grant a full evidentiary hearing. The trial court denied Mann's motion to clarify.

Corbett then filed a brief and designation of evidence in opposition to Russell's motion to pierce the corporate veil. Mann also filed a response and designation of evidence in opposition to Russell's motion. On March 5, 2002, the trial court held a hearing and the parties again disagreed regarding the format of the proceedings. The trial court stated that it was inclined to view the proceeding as a "quasi summary judgment." Transcript at 18. Mann and Corbett argued that issues of fact existed precluding summary judgment. At the end of the hearing, the trial court noted some of the options available, including "summary judgment, some sort of summary order, or ... a series ... of partial summary orders." Id. at 83. The trial court later issued an order finding "issues of fact and law regarding the actions of garnishee defendants and the commingling of funds by [Mann]." Appellant's Appendix at 18. The trial court set the matter for an evidentiary hearing "to allow any party the opportunity to offer evidence before the Court entered Findings of Fact and Conclusions of Law." Id.

At the evidentiary hearing on May 28, 2002, the trial court discussed the previous hearing and noted that it had "assumed a summary judgment standard" because the earlier hearing was a "summary hearing." Transcript at 92. The trial court further stated that "after hearing the arguments and reviewing the pleadings ... the Court decided to hold or have this occasion for [an] evidentiary hearing." Id. However, the trial court viewed the hearing as "supplemental" to the March hearing and earlier briefs. Id. at 97. Thus, the trial court stated that, in rendering its decision, it would consider all of the evidence that had been previously submitted and would decide the case after the evidentiary hearing. Id. at 97, 102.

Mann and Corbett objected to the process set forth by the trial court. Specifically, Mann argued that Russell had to present evidence in the form of testimony. Corbett objected that the use of the previously submitted documents did not comport with the rules of evidence.

Russell did not present any witnesses or introduce any evidence. Rather, it presented arguments regarding the documents that had been submitted with its motion to pierce. After Russell's arguments, Mann and Corbett moved for involuntary dismissal of Russell's claim pursuant to Ind. Trial Rule 41(B). Mann and Corbett argued that Russell had failed to present any evidence at the evidentiary hearing and, thus, had failed to meet its burden of proof. The trial court denied the motion for involuntary dismissal. Mann and Corbett did not present any witnesses or new evidence at the evidentiary hearing, but, like Russell, presented arguments to the trial court.

The trial court later issued findings of fact and conclusions thereon granting Russell's motion to pierce the corporate veil. The trial court relied upon the documents attached to Russell's motion to pierce and found that Russell had met "its burden to show sufficient evidence to pierce the corporate veil" of McCord Manufacturing. Appellant's Appendix at 27.

I.

The first issue is whether the trial court abused its discretion by denying Corbett's motion for a change of judge.² A motion for change of judge is governed by Ind. Trial Rule 76, which provides, in pertinent part, that:

(B) In civil actions, where a change may be taken from the judge, such change shall be granted upon the filing of an unverified application or motion without specifically stating the ground therefor by a party or his attorney.

* * * * *

(C) In any action except criminal no change of judge or change of venue from the county shall be granted except within the time herein provided. Any such application for change of judge (or change of venue) shall be filed not later than ten [10] days after the issues are first closed on the merits. Except:

(1) in those cases where no pleading or answer may be required to be filed by the defending party to close issues (or no responsive pleading is required under a statute), each party shall have thirty [30] days from the date the same is placed and entered on the chronological case summary of the court;

Thus, Ind. Trial Rule 76 provides that the granting of a motion to change judge is automatic if made within the time limitations established by the rule. If the motion is not within the time limitations, we review the trial court's ruling on a motion for change of judge for an abuse of discretion. See Moore v. Liggins, 685 N.E.2d 57, 62 (Ind.Ct.App.1997)

. An abuse of discretion occurs when the trial court's decision is against the logic and effect of the facts and circumstances before it. Ind. Univ. Med. Ctr., Riley Hosp. for Children v. Logan, 728 N.E.2d 855, 859 (Ind.2000).

Corbett argues that his motion for a change of judge was timely and he was entitled to an automatic change of judge. Although the language of Ind. Trial Rule 69(E)³ which governs proceedings supplemental indicates that a responsive pleading is not required, our supreme court has held that when a new issue arises in a proceeding supplemental, responsive pleadings are required. Am. Underwriters, Inc. v. Curtis, 427 N.E.2d 438, 442-443 (Ind.1981). New issues were raised in this proceeding supplemental regarding the shareholders' liability for McCord Manufacturing's debt. Thus, responsive pleadings were required in this proceeding supplemental. Accordingly, Ind. Trial Rule 76 required that Corbett's motion for a change of judge be filed "not later than ten [10] days after the issues are first closed on the merits." T.R. 76(C). Normally, "the issues are first closed on the merits when the defendant files an answer." Lake County Juvenile Det. Center v. J.M.D., 704 N.E.2d 149, 150 (Ind.Ct.App. 1999). However, "[i]n multiple-defendant lawsuits, the issues are first closed with the filing of the first answer on the merits." Id.

This case has multiple defendants, and, thus, the issues were closed with the filing of the first answer. The motion for a proceeding supplemental was filed on September 21, 2000. Mann filed his response on October 25, 2000. Thus, the issues were closed on October 25, 2000, and Corbett had ten days after this date to file his request for a change of judge. Corbett did not file his motion for change of judge until May 15, 2001. Consequently, Corbett's motion was not timely.⁴

To obtain a change of judge after expiration of the period allotted for an automatic change of judge under Ind. Trial Rule 76, a party must comply with the following procedure:

if the moving party first obtains knowledge of the grounds for change of venue from the county or judge after the time above limited, he may file said application, which must be verified personally by the party himself, specifically alleging when the cause was first discovered, how discovered, the facts showing the grounds for a change, and why such cause could not have been discovered before by the exercise of due diligence.

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