Porter Development v. First Nat. Bank

• Decision Date: 23 May 2007
• Docket Number: No. 64S04-0606-CV-236.,64S04-0606-CV-236.
• Citation: 866 N.E.2d 775
• Parties: PORTER DEVELOPMENT, LLC, Appellant, Cross-Appellee (Defendant below), v. FIRST NATIONAL BANK OF VALPARAISO, Appellee, Cross-Appellant (Plaintiff below). Eagle Services Corp., Not Appealing (Defendant below).<SMALL><SUP>1</SUP></SMALL>
• Court: Indiana Supreme Court

866 N.E.2d 775

PORTER DEVELOPMENT, LLC, Appellant, Cross-Appellee (Defendant below), v. FIRST NATIONAL BANK OF VALPARAISO, Appellee, Cross-Appellant (Plaintiff below) Eagle Services Corp., Not Appealing (Defendant below).¹

No. 64S04-0606-CV-236.

Supreme Court of Indiana.

May 23, 2007.

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

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

On Petition to Transfer from the Indiana Court of Appeals, No. 64A04-0502-CV-95

DICKSON, Justice.

When a financial institution interpleads and pays into court deposited funds that are subject to an adverse claim, how does Indiana Code § 28-9-5-3 govern its entitlement to receive its costs and expenses thereby incurred? To address this question, we granted transfer.

First National Bank of Valparaiso ("the Bank") commenced this action with its complaint for interpleader pursuant to Indiana Trial Rule 22, alleging that it was the holder of a $100,000 certificate of deposit owned by defendant Porter Development, LLC; that it had received notice of a purported assignment of the certificate to defendant Eagle Services Corp., which was claiming an interest therein; and that Porter Development had requested to withdraw the funds but Eagle Services refused to consent. The Bank sought to pay the funds to the court clerk, to be relieved of responsibility for further payment, and to receive its costs and attorney fees from the defendants. On the day the complaint was filed, the trial court ordered the requested payment to the clerk and declared the Bank relieved from further responsibility as to the certificate of deposit.

In their respective answers, both defendants asserted rights to the deposit. Porter Development also counterclaimed, alleging that the Bank had converted its $100,000 deposit and had committed abuse of process and breaches of contract, trust, and fiduciary duty. The parties filed competing motions for summary judgment. The trial court granted partial summary judgment for Porter Development and against Eagle Services, establishing that the purported assignment was invalid and that Porter Development was the true owner of the certificate of deposit. The court granted summary judgment to the Bank and against Porter Development as to the propriety of the Bank's interpleader action, but with respect to the Bank's request for costs and attorney fees, the trial court granted partial summary judgment to Porter Development:

[The Bank] shares some, but hardly all of the blame. Indiana Code 28-9-5-3 allows for attorney fees for banks who utilize interpleader. But, Indiana Trial Rule 22 does not mention costs or fees. The above code section reads "is entitled," not "shall." Based on this difference, the court denies [the Bank's] claim for costs and fees....

Appellant's App'x. at 218.

Porter Development appealed the trial court's ruling affirming the propriety of the Bank's interpleader action and payment of the funds to the court. The Bank cross-appealed to challenge the trial court's denial of its claim for costs and attorney fees. The Court of Appeals affirmed the trial court's rulings. Porter Dev., LLC v. First Nat'l Bank of Valparaiso, 837 N.E.2d 558 (Ind.Ct.App.2005). Both the Bank and Porter Development sought transfer to this Court. We granted the Bank's transfer petition but denied Porter Development's petition. Pursuant to Indiana Appellate Rule 58(A)(2), we summarily affirm the Court of Appeals opinion with respect to its resolution of Porter Development's appellate challenge to the propriety of the Bank's interpleader action and all issues not addressed below.

The Bank contends that the trial court erred in not awarding it costs and expenses pursuant to Indiana Code § 28-9-5-3, which subsection is titled "Interpleader" and provides:

This article [Article 9, the Depository Financial Institutions Adverse Claims Act] 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 expenses, including attorney's fees, incurred by the depository financial institution in the interpleader action.

Ind.Code § 28-9-5-3 (emphasis added) (hereinafter the "Adverse Claim Interpleader Statute"). The Bank argues that the phrase "is entitled" mandates the award of costs and expenses, including attorney fees, if the requirements under the statute are otherwise met.

Porter Development disputes the Bank's entitlement to any relief under the Adverse Claim Interpleader Statute but does not dispute that the Bank is a "depository financial institution" covered by the statute or specifically take issue with the Bank's argument regarding the meaning of "is entitled" under the statute. In addition, Porter Development contends that the Bank should not recover its costs and expenses under general principles of common law, noting: (a) "the `American Rule'—that each party must pay his/her own attorneys' fees and expenses unless a statute provides otherwise;" (b) the expense associated with conflicting claims is "simply an ordinary and expected cost of doing business" for banks; and (c) payment of attorney fees would "senselessly deplete the fund that is the subject of preservation through the interpleader." Porter Development's Cross-Appellee's Br. at 27-28. And Porter Development alternatively asserts that, even if the Bank is found to be entitled to attorney fees and expenses, any such award should be made against Eagle Services, the unsuccessful party whose conduct precipitated the Bank's interpleader, and not against Porter Development, the depositor and successful claimant.

In the interpretation of statutes, our goal is to determine and give effect to the intent of the legislature in promulgating it. Collier v. Collier, 702 N.E.2d 351, 354 (Ind.1998). Our primary resource for this determination is the language used by the legislature, and thus our interpretation begins with an examination of the statute's language. Sales v. State, 723 N.E.2d 416, 420 (Ind.2000). We presume that the words of an enactment were selected and employed to express their common and ordinary meanings. Mendenhall v. Skinner and Broadbent Co., Inc., 728 N.E.2d 140, 142 (Ind.2000). Where the statute is unambiguous, the Court will read each word and phrase in this plain, ordinary, and usual sense, without having to resort to rules of construction to decipher meanings. Sees v. Bank One, Indiana, N.A., 839 N.E.2d 154, 157 (Ind.2005). In this case, the trial court believed that the statutory phrase "is entitled" did not mean "shall receive." The interpretation of a statute, however, is an issue of law, which we determine de novo on appeal. Horseman v. Keller, 841 N.E.2d 164, 168 (Ind. 2006); Shell Oil Co. v. Meyer, 705 N.E.2d 962, 976 (Ind.1998).

We find no ambiguity in the Adverse Claim Interpleader Statute's declaration that "the depository financial institution is entitled to recover and collect the costs and expenses, including attorney's fees, incurred by the depository financial institution in the interpleader action." Ind.Code § 28-9-5-3. As defined by dictionary editions contemporaneous with this 1987 enactment, the verb "entitle" means "to furnish with a right or claim to something," THE AMERICAN HERITAGE DICTIONARY 457 (2d ed.1985); see also WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 416 (1987) ("to furnish with proper grounds for seeking or claiming something"). Similarly, the phrase "is entitled to" is defined to mean "has a right to," in Bryan A. Garner's A DICTIONARY OF MODERN LEGAL USAGE 942 (2d ed.1995). And "right" is defined to mean "something to which one has a just claim ... the power or privilege to which one is justly entitled ... something that one may properly claim as due." WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY at 1015. Thus the language with which the General Assembly crafted § 28-9-5-3 expresses the legislature's intention to create for the interpleading depository financial institution an enforceable right to receive costs and expenses, including attorney fees, incurred in the interpleader action. This reading of "is entitled" is consistent with the plain meaning of the term, and it advances the Depository Financial Institutions Adverse Claims Act's general policy of protecting financial institutions from liability stemming from controversies arising out of competing claims for deposited funds.

It is correct that Indiana common law generally follows the "American Rule," under which each party bears its own legal fees and expenses unless otherwise provided by statute. State Bd. of Tax Comm'rs v. Town of St. John, 751 N.E.2d 657, 659 (Ind.2001). But the Adverse Claim Interpleader Statute explicitly provides for a variation from this general rule and thus modifies the common law as to attorney fees incurred in depository institution interpleader actions that fall within the statute.

But the statute expressly identifies neither the nature and extent nor the payment source for an interpleading depository bank's recovery of costs and expenses. An interpleading party's costs and expenses could exceed the amount of the disputed funds paid to the court. And, as presumably has occurred in the present case, an interpleading financial institution may incur...