National City Bank, Indiana v. Shortridge
| Decision Date | 31 December 1997 |
| Docket Number | No. 33S05-9712-CV-685,33S05-9712-CV-685 |
| Citation | 689 N.E.2d 1248 |
| Court | Indiana Supreme Court |
| Parties | NATIONAL CITY BANK, INDIANA f/k/a Merchants National Bank and Trust Company of Indianapolis, and Philip F. Boberschmidt, Trustee in Bankruptcy of 3200 North Meridian Medical, Limited, Appellants (Plaintiffs Below), v. Douglass R. SHORTRIDGE, Douglass R. Shortridge, P.C., James R. Martin, and Martin & Beck, an Indiana Partnership, Appellees (Defendants Below). |
Lawyers representing a personal injury plaintiff filed a lis pendens notice against real estate owned by the defendants. A trial court ruled they were not entitled to do so and ordered the notice removed. Counsel nevertheless pursued a second lis pendens, the existence of which caused a sale of the property to collapse. These facts make out a case for abuse of process sufficient to survive summary judgment.
In early 1984, a group known as 3200 North Meridian Medical borrowed money from the former Merchants National Bank and Trust Company of Indianapolis (Merchants) to finance construction of an office building on North Meridian Street in Indianapolis. For collateral, 3200 North Meridian Medical gave Merchants a mortgage on the real estate. Merchants is now known as National City Bank, Indiana.
As the project progressed, roofing laborer Frederick A. Mitcham, while at work on September 14, 1984, was injured from a 28-foot fall from the structure's roof. The fall rendered him a quadriplegic. Indianapolis attorney Douglass R. Shortridge and Kokomo attorney James R. Martin filed suit in Marion County during December 1984 alleging that 3200 North Meridian Medical was responsible for Mitcham's injuries. The case was later transferred to Johnson County.
While the litigation was pending, 3200 North Meridian Medical conducted negotiations to transfer the property to R & M Properties for $2.05 million. An offer to purchase was accepted on April 22, 1986. The purchase money would have satisfied the debt 3200 North Meridian Medical owed to National City. On March 11, 1986, Shortridge and Martin filed a lis pendens notice against the office building project property and claimed an interest in the property for Mitcham's injuries.
Of course, both the buyer and the lender wished the property to be free and clear of liens. An attorney for 3200 North Meridian Medical wrote Shortridge in November 1986 to demand that he remove the lis pendens notice. When Shortridge refused, 3200 North Meridian Medical filed a motion in the pending personal injury suit seeking to have the lis pendens notice removed. The Court scheduled a hearing on that motion for December 12, 1986.
Two days before the hearing was held, Shortridge and Martin filed a second lawsuit and a second lis pendens notice on Mitcham's behalf in Marion County. They styled this action as a claim for declaratory and injunctive relief on the grounds that the proposed sale was a fraudulent conveyance that was undertaken to "hinder, delay and defraud" Mitcham as a tort claim creditor, (R. at 27). They alleged that 3200 North Meridian Medical would render itself insolvent if it was allowed to convey away its only asset. Shortridge and Martin also alleged that two of the general partners of 3200 North Meridian Medical formed R & M Properties in order to make 3200 North Meridian Medical judgment-proof.
At the hearing on December 12, the Johnson Circuit Court ordered the first lis pendens notice removed. Shortridge and Martin refused to remove the second notice.
National City Bank says that Shortridge's continued refusal to remove the second lis pendens clouded title to the property and caused the entire sale to fail. As a result, 3200 North Meridian Medical defaulted on its obligation to the financial institution. National City Bank obtained a default judgment of $1.65 million against 3200 North Meridian Medical and then took over the property. It was later sold for $846,513, leaving the lender with a deficiency of about $807,000.
In December 1988, National City Bank sued Shortridge and Martin for abuse of process and tortious interference with a contract. It alleged that Mitcham and his attorneys acted negligently and recklessly by filing what the financial institution considered to be two baseless liens and then in refusing to remove the second lien. National City also alleged that Shortridge and Martin had wrongly interfered with the pending sales agreement. Philip F. Boberschmidt, as the trustee in bankruptcy of Meridian Medical, petitioned to be joined with National City as a plaintiff.
During the course of litigation, the second lis pendens notice was dismissed as moot on July 14, 1987.
The trial court hearing the present case entered summary judgment in favor of the defendants. On appeal, appellants have contended that genuine issues of material fact prevent summary judgment. They also contend the trial judge erred in holding that lis pendens was proper for collecting a personal injury claim before judgment. The Indiana Court of Appeals affirmed. National City Bank v. Shortridge, 662 N.E.2d 1004 (Ind.Ct.App.1996). We grant transfer.
The standard of appellate review of a motion for summary judgment is well-known:
We have stated many times that motions for summary judgment are properly granted only when the pleadings and other matters of record reveal that there is no genuine issue or dispute as to a material fact and that the moving party is entitled to judgment as a matter of law. To determine whether such issues exist, the court must accept as true those facts alleged by the nonmoving party and resolve all doubts against the moving party. The granting of a motion for summary judgment is not appropriate if the trial court must weigh conflicting evidence to reach a decision, or even if there are conflicting inferences which may be drawn from undisputed facts. "However, despite conflicting facts and inferences on some elements of a claim, summary judgment may be proper where there is no dispute or conflict regarding a fact that is dispositive of the litigation."
Raymundo v. Hammond Clinic Ass'n, 449 N.E.2d 276, 280 (Ind.1983) (quoting Barnd v. Borst, 431 N.E.2d 161, 164-65 (Ind.Ct.App.1982) (citations omitted)).
Our appellate courts apply the same standard utilized by the trial court in examining a decision to grant of summary judgment. Shuamber v. Henderson, 579 N.E.2d 452 (Ind.1991); Travel Craft, Inc. v. Wilhelm Mende GmbH & Co., 552 N.E.2d 443 (Ind.1990). The losing party in the trial court must persuade the appellate court that error was committed.
One of the central tenets of our system of law is that vigorous and full prosecution of client interests by lawyers promotes the just resolution of claims. At the same time, attorneys should avoid frivolous claims and act with fairness toward opposing party and counsel. Ind.Professional Conduct Rules 3.1, 3.4. It is unethical for an attorney to prosecute in any court a proceeding which is frivolous or has no merit. Petition of Stillabower, 246 Ind. 695, 210 N.E.2d 665 (1965); In re Harvey, 247 Ind. 23, 210 N.E.2d 859 (1965).
As part and parcel of protecting litigants' interests in legal proceedings, American lawyers acting of behalf of their clients have been given broad protection from those who believe the lawyer has made wrongful use of the judicial process.
Most American courts narrowly confine the reach of liability rules that might provide damages to an injured party against a lawyer because of the lawyer's knowing involvement in wrongful use of the judicial process. The tort theories, which are variously called abuse of process or malicious prosecution, bristle with technical requirements that are technically applied. Calls by commentators for more generous causes of action against lawyers who file groundless suits have been widely ignored....
... Beyond the technical doctrines, courts have also stated broadly that the role of lawyers in the adversary system requires that they be given a large measure of discretion to press the apparent interests of their clients.
Charles W. Wolfram, Modern Legal Ethics 232-33, 234 (1986).
Indiana law generally follows similar principles. The Court of Appeals emphasized those concepts in a case involving a malicious prosecution claim brought by a physician against the attorney who had earlier filed a medical malpractice claim on behalf of some patients. Wong v. Tabor, 422 N.E.2d 1279 (Ind.Ct.App.1981). In that case, the Court of Appeals said:
We recognize that through an effort to protect every citizen's free access to the courts some innocent persons may suffer the publicity, expense and other burdens of defending ill-founded lawsuits. While this is regrettable, the chilling effect that a broad rule of attorney liability would have upon the legal systems, and ultimately upon its popular acceptance as a means of dispute resolution, appears to outweigh the value of the protection it would afford to those who might be deemed "innocent" defendants.
On the other hand, attorneys have not been clothed with absolute protection from liability for all of the actions they take on behalf of clients. An Indiana statute subjects attorneys to criminal and civil damages if they are "guilty of deceit or collusion, or consents thereto, with intent to deceive a court or judge or a party to an action or judicial proceeding." Ind.Code Ann. § 34-1-60-9 (Michie 1986). Liability will be found to apply to attorneys who are guilty of fraud,...
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