Middelkamp v. Hanewich

• Decision Date: 20 July 1977
• Docket Number: No. 3-474A54,3-474A54
• Parties: John E. MIDDELKAMP and Larain Middelkamp, husband and wife, Appellants (Plaintiffs below), v. Alex HANEWICH and Ruth Hanewich, husband and wife, Appellees (Defendants below).
• Court: Indiana Appellate Court

Page 1024

364 N.E.2d 1024

173 Ind.App. 571

John E. MIDDELKAMP and Larain Middelkamp, husband and wife, Appellants (Plaintiffs below), v. Alex HANEWICH and Ruth Hanewich, husband and wife, Appellees

(Defendants below).

No. 3-474A54.

Court of Appeals of Indiana, Third District.

July 20, 1977.

Dale W. Schwanke, Merrillville, Kenneth D. Reed, Hammond, for appellants.

William J. Moriarty, Jr., Dumas & Moriarty, Rensselaer, for appellees.

STATON, Presiding Judge.

In 1966, John and Larain Middelkamp transferred title to a parcel of land in Jasper County, Indiana, to Alex and Ruth Hanewich. The Middelkamps remained in possession of a residence, swimming pool, and other outbuildings located on the premises, and the Hanewiches took possession of the tillable land. Later, the Hanewiches transferred title to the real estate to the State Exchange Finance Company, and began to purchase the land back from the Finance Company on contract.

In 1969, after the Hanewiches demanded that the Middelkamps begin paying rent for the use of the residence, the Middelkamps sued the Hanewiches for rescission of the 1966 warranty deed on the ground of fraud. The Finance Company was joined because it held legal title to the property. Middelkamps asserted an oral agreement by the Hanewiches to reconvey the real estate to Middelkamps within five years of the 1966 transfer upon payment of $60,000.00 by Middelkamps. Later, in 1969, the Hanewiches and the Finance Company sued the Middelkamps for possession of the residence, swimming pool, and other outbuildings. The Middelkamps lost in both of these prior actions.

In 1973, the Middelkamps instituted the present action against Alex and Ruth Hanewich. Summary judgment was granted against the Middelkamps and in favor of Hanewiches. In their brief on appeal, the Middelkamps enumerate at least nine issues for our consideration. We will consolidate these issues, for purposes of discussion, into the following general issues:

(1) Was there error in the procedures followed by the trial court in granting a summary judgment?

(2) Did the trial court err in granting summary judgment in favor of Hanewiches?

We conclude that there was no reversible error, either in the procedures followed or in the trial court's decision to grant summary judgment. The evidence presented at the summary judgment hearing conclusively shows that Middelkamps' claims were barred by the defense of res judicata.

We affirm.

I. Procedure

The Hanewiches, in their answer to Middelkamps' complaint in the present action, raised several defenses: (1) the Trial Rule 12(B)(6) defense of failure to state a claim upon which relief can be granted; (2) the Trial Rule 12(B)(7) defense of failure to join a party needed for just adjudication; and (3) the affirmative defenses of statute of limitations, statute of frauds, and res judicata. On June 27, 1973, the Hanewiches requested a hearing on these defenses, and the clerk was ordered to notify the parties that a hearing date was set for July 9, 1973. At the hearing, matters outside the pleadings were presented to the trial court. On the basis of this outside evidence, the trial court granted summary judgment in favor of the Hanewiches.

Middelkamps contend that the trial court erred because, at the hearing, the trial court treated Hanewiches' answer as a motion to dismiss and then treated the motion to dismiss as a motion for summary judgment. Middelkamps contend that they had no notice that the hearing might result in a summary judgment against them. They contend that they had no reasonable opportunity to present materials made pertinent to a summary judgment motion. They contend that the evidence presented at the hearing was not appropriate for the court's consideration. They contend that the trial court erred because it failed to designate the issues or claims upon which it found no genuine issue of material fact.

A. Treatment of Motions

The trial court did not err in treating Hanewiches' answer as a motion to dismiss and then treating the motion to dismiss as a motion for summary judgment. The defense of failure to state a claim on which relief may be granted is properly raised either in a responsive pleading or by motion. Indiana Rule of Procedure, Trial Rule 12(B). This defense, as well as the defense of failure to join a party needed for just adjudication, must, upon the application of a party or by order of the court, be determined before trial "unless substantial justice requires the court to defer hearing until trial." TR. 12(D). In the present case, there is no suggestion that substantial justice required postponement of the determination of the 12(B)(6) and 12(B)(7) defenses. Thus, at Hanewiches' request, the trial court was required to hold a hearing to determine these defenses.

TR. 12(B) provides, in part:

"If, on a motion, asserting the defense number (6), to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56. In such case, all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." (Our emphasis).

Although the above-quoted paragraph refers only to Trial Rule 12(B)(6) motions, we think that the drafters of the rule intended no distinction between 12(B)(6) defenses asserted by motion and 12(B)(6) defenses asserted in a responsive pleading. For the purposes of the above-quoted rule, when a party asserts the 12(B)(6) defense of failure to state a claim for relief in a responsive pleading, that party has made a motion to dismiss which "shall be treated as (a motion) for summary judgment" if "matters outside the pleading are presented to and not excluded by the court" at the pre-trial hearing. Accord, see Alabama State Fed'n of Labor v. Kurn (D.Ala.1942), 46 F.Supp. 385. Thus, the trial court did not err when it treated the defense of failure to state a claim, asserted in Hanewiches' responsive pleading, as a motion to dismiss. Then, when matters outside the pleadings were introduced and not excluded by the trial court, the trial court was required to treat the motion to dismiss as one for summary judgment.

B. Notice

Middelkamps contend that they were without notice that the hearing might result in a summary judgment against them. However, the record establishes that Middelkamps were notified in advance of the hearing on "Defendants (') first defense (the 12(B)(6) defense of failure to state a claim), second defense (the 12(B)(7) defense of failure to join a party needed for just adjudication), third defense (statute of limitations), fourth defense (statute of frauds), and fifth defense (res judicata) to paragraphs 1, 2, 3 and 4 of Plaintiff's complaint . . .." Middelkamps apparently were confused by the trial court's reference to the affirmative defenses of statute of limitations, statute of frauds, and res judicata as being proper subject matter in a hearing, pursuant to Trial Rule 12(D), to determine the Trial Rule 12 defenses. Pursuant to developing case law, such matters in bar as the defenses of statute of limitations, Brown v. Gardner (1974), Ind.App., 308 N.E.2d 424; American States Ins. Co. v. Williams (1972), 151 Ind.App. 99, 278 N.E.2d 295, statute of frauds, see Gladis v. Melloh (1971), 149 Ind.App. 466, 273 N.E.2d 767, and res judicata, see Suckow Borax Mines Consolidated v. Borax Consolidated (9th Cir. 1950), 185 F.2d 196; 348 Bloomfield Ave. Corp. v. Montclair Mfg. Co. (D.N.J.1950), 90 F.Supp. 1020, may be raised by a motion to dismiss for failure to state a claim for relief, if such matters appear on the face of the complaint. This is a logical interpretation of the Trial Rule 12 dismissal rules, which, in essence, provide that a "complaint should . . . be dismissed for failure to state a claim . . . (when) it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson (1957), 355 U.S. 41, 45, 78 S.Ct. 99, 102, 2 L.Ed.2d 80. If a defense in bar of plaintiff's claim appears on the face of the complaint, then it is clear beyond doubt that plaintiff can "prove no set of facts . . . which would entitle him to relief." Thus, the affirmative defenses of statute of limitations, statute of frauds, and res judicata are appropriate for a court's consideration at a hearing to determine whether the complaint states a claim for relief. Middelkamps were notified that the court would hear argument on these defenses at the July 9 hearing.

At the hearing, Middelkamps did not object to the presentation of matters outside the pleadings, and, in fact, Middelkamps themselves presented to the court matters outside the pleadings. The rules of procedure clearly provide that when matters outside the pleadings are "presented to and not excluded by the court," the motion to dismiss must be treated as a motion for summary judgment. Middelkamps' contention that they were without notice that the hearing on the Trial Rule 12 defenses might result in summary judgment against them is without merit.

C. Opportunity to Present Material

Middelkamps contend that they did not have a reasonable opportunity to present material made pertinent to a motion for summary judgment. ¹ We do not agree. At the hearing, Hanewiches presented to the trial court evidence of pleadings and judgments rendered in the two previous court cases between the parties. Mr. Schwanke, Middelkamps' counsel, stated that he had seen all the offered documents and that he had no objection to their admission. Mr. Schwanke then responded to Hanewiches' argument and offered various pleadings and orders to the trial court. At the close of Mr. Schwanke's argument, the court asked:

"THE COURT: Before we proceed, Mr. Schwanke, do you have any other material pertinent to this...