Porter Dev. V. First Nat. Bank

• Decision Date: 22 November 2005
• Docket Number: No. 64A04-0502-CV-95.,64A04-0502-CV-95.
• Parties: PORTER DEVELOPMENT, LLC and Eagle Services Corporation, Appellant-Defendant, v. FIRST NATIONAL BANK OF VALPARAISO, Appellee-Plaintiff.
• Court: Indiana Supreme Court

837 N.E.2d 558

PORTER DEVELOPMENT, LLC and Eagle Services Corporation, Appellant-Defendant, v. FIRST NATIONAL BANK OF VALPARAISO, Appellee-Plaintiff.

No. 64A04-0502-CV-95.

Court of Appeals of Indiana.

November 22, 2005.

COPYRIGHT MATERIAL OMITTED

Steven W. Handlon, Margaret A. Williford, Handlon & Handlon, Portage, for Appellant.

Hugo E. Martz, Martz & Boyles, Valparaiso, Kent M. Frandsen, Carol Sparks Drake, Parr Richey Obremskey & Morton, Lebanon, for Appellee.

OPINION

RILEY, Judge.

STATEMENT OF THE CASE

Appellant-Defendant, Porter Development, LLC (Porter), appeals the trial court's grant of summary judgment in favor of Appellee-Plaintiff, First National Bank of Valparaiso (First National) and the trial court's denial of their Cross-Motion for Summary Judgment.¹ Additionally, First National appeals the trial court's denial of their claim for costs, expenses, and attorney's fees.

We affirm.²

ISSUES³

Porter raises three issues on appeal, two of which we find dispositive and consolidate into the following one issue: Whether the trial court erred in finding that interpleader was appropriate.

On Cross-Appeal, First National raises one issue, which we restate as: Whether the trial court erred in finding that First National was not entitled to recover costs and expenses, including attorney's fees, pursuant to Ind.Code § 28-9-5-3.

FACTS AND PROCEDURAL HISTORY

On September 16, 2002, Porter deposited $100,000.00 (the deposit) with First National. The deposit was evidenced by a "Certificate of Deposit." (Appellant's App. pp. 35-36). On the same day, Porter and Eagle Services executed an "Assignment of Certificates of Deposit" (the assignment), wherein Porter agreed to assign the Certificate of Deposit to Eagle Services as collateral for a debt owed to Eagle Services. (Appellant's App. p. 37-39). On or about October 21, 2002, Eagle Services sent First National a copy of the assignment and a letter claiming an enforceable security interest in the Certificate of Deposit. Eagle Services advised First National that it would seek restitution and reimbursement from First National if they allowed Porter to "transfer, withdraw[,] or distribute the Certificate of Deposit without [Eagle Services'] signature and authorization." (Appellant's App. p. 33). On or about November 1, 2002, a representative of Porter obtained copies of Eagle Services' letter and the assignment. On December 5, 2002, two representatives of Porter went to First National and requested to withdraw the deposit. First National denied the request. On the same day, Porter wrote a letter to First National demanding the release of the funds from the deposit and explaining that by refusing to release the funds to Porter, First National was committing conversion. On December 6, 2002, First National filed its Complaint for Interpleader requesting that Porter and Eagle Services be ordered to interplead together and that First National be relieved of any further responsibility. On the same day, the trial court found that interpleader was appropriate and ordered, "[First National] to pay the proceeds of [the] [Certificate of Deposit] to the Clerk of Porter County to be held until the [c]ourt determines and orders proper distribution thereof. Upon such payment over by [First National], [First National] is relieved from further responsibility as to said Certificate of Deposit." (Appellant's App. p. 41). Later that day, First National transferred the deposit to the Clerk of Porter County.

On February 13, 2003, Eagle Services filed its Answer asserting that it was entitled to the proceeds of the Certificate of Deposit. On March 6, 2003, Porter filed its Answer denying that Eagle Services had a security interest in the Certificate of Deposit and stating that it was improper for First National to file a complaint for interpleader. On the same day, Porter filed a counterclaim against First National alleging that First National's action in obtaining an interpleader order constituted conversion, breach of trust, breach of fiduciary duty, and breach of contract. On April 17, 2003, Porter filed an amended complaint alleging that First National's actions in obtaining the interpleader order also constituted an abuse of process.

On August 29, 2003, First National filed its Motion for Summary Judgment on Porter's Counterclaim. On October 15, 2003, Porter filed its Motion for Partial Summary Judgment against Eagle Services, claiming that Eagle Services did not have a valid and enforceable security interest in the Certificate of Deposit. Further, on October 17, 2003, Porter filed its Cross-Motion for Summary Judgment against First National seeking a determination that First National's Complaint for Interpleader was improper and that the Order of Interpleader should be vacated and set aside. On January 14, 2004, the trial court held a hearing on Porter's Motion for Partial Summary Judgment against Eagle Services, First National's Motion for Summary Judgment against Porter, and Porter's Cross-Motion for Summary Judgment against First National. Following the hearing, the trial court granted Porter's Motion for Partial Summary Judgment against Eagle Services, finding that the assignment of the Certificate of Deposit to Eagle Services was invalid as a matter of law, and that the Certificate of Deposit was owned by Porter and subject to no security interest. The trial court also granted First National's Motion for Summary Judgment finding that interpleader was appropriate, and subsequently denied Porter's Cross-Motion for Summary Judgment against First National. On December 23, 2004, the trial court granted Porter and First National's "Joint Motion for Modification of Order," ordering that the trial court's judgment on January 14, 2004, was final and appealable. (Appellant's App. p. 219).

Porter appeals and First National cross-appeals. Additional facts will be provided as necessary.

DISCUSSION AND DECISION

I. Standard of Review

We note that summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C); Fort Wayne Lodge, LLC. v. EBH Corp., 805 N.E.2d 876, 882 (Ind.Ct.App.2004). In reviewing a decision upon a summary judgment motion, we apply the same standard as the trial court. Fort Wayne Lodge, LLC., 805 N.E.2d at 882. We do not reweigh the evidence designated by the parties. Id.

The moving party bears the burden of showing that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Id. Once this burden is met, the non-moving party must respond by setting forth specific facts demonstrating a genuine need for trial, and cannot rest upon the allegations or denials in the pleadings. Id. Additionally, Indiana Trial Rule 56(H) provides that "[n]o judgment rendered on the motion shall be reversed on the ground that there is a genuine issue of material fact unless the material fact and the evidence relevant thereto shall have been specifically designated to the trial court." Consequently, we review only the designated evidentiary material in the record, construing that evidence liberally in favor of the non-moving party, so as not to deny that party its day in court. Id.

APPEAL

II. Interpleader

Porter contends that the trial court erred as a matter of law in finding that interpleader was appropriate. In support of this position, Porter argues that First National did not have a "real and reasonable fear" of double or multiple liability. Additionally, Porter asserts that interpleader was inappropriate because they were not provided with an opportunity to be heard prior to the trial court's Interpleader Order.⁴

An interpleader action typically involves a neutral stakeholder, usually an insurance company or a bank, seeking apportionment of a common fund between two or more parties claiming an interest in it. Euler v. Seymour Nat'l Bank, 519 N.E.2d 1242, 1245 fn. 2 (Ind.Ct.App.1988). Actions in interpleader are governed by Indiana Trial Rule 22 (emphasis added), which provides in pertinent part:

(A) Plaintiff or defendant. Persons having claims against the plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability.

(B) Extension of statutory interpleader. This rule shall extend, but not diminish or reduce the right to interpleader provided by statute.

(C) Sufficiency of complaint or answer seeking interpleader. A complaint or answer seeking interpleader under Rule 22(A) is sufficient if:

(1) it admits that a liability is owing or it states that a totally or partially unfounded liability is asserted to be owing to either one or more of the parties interpleaded;

(2) it declares that because of such claims the person seeking interpleader is or may be exposed to double or multiple liability; and

(3) it prays that the parties interpleaded assert their claims against the party seeking interpleader and against each other.

. . .

(D) Release from liability — Deposit or delivery. Any party seeking interpleader, as provided in subdivision (A) of this rule, may deposit with the court the amount claimed, or deliver to the court or as otherwise directed by the court the property claimed, and the court may thereupon order such party discharged from liability as to such claims, and the action continued as between the claimants of such money or property.

As provided in Trial Rule 22(B), a party also has a right to statutory interpleader. Specifically, the Depository Financial Institutions Adverse Claims Act provides:

This article does not prevent a depository financial institution from interpleading and paying the funds that are the subject of an adverse claim into a court. If a depository financial institution pays the funds to the court, the depository financial institution is entitled to recover and collect the costs and...