Serletic v. Noel

• Decision Date: 23 October 1998
• Docket Number: No. 46A04-9705-CV-195,46A04-9705-CV-195
• Citation: 700 N.E.2d 1159
• Parties: Joseph SERLETIC, Sr., Pearl Serletic, Husband and Wife; Joseph Serletic, Jr., d/b/a Sir Lancelot Investments, Appellants-Plaintiffs, v. Harlen M. NOEL and Nona Lovella Noel, Individually and d/b/a Noel & Noel, Attorneys at Law, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 1159

700 N.E.2d 1159

Joseph SERLETIC, Sr., Pearl Serletic, Husband and Wife Joseph Serletic, Jr., d/b/a Sir Lancelot Investments, Appellants-Plaintiffs, v. Harlen M. NOEL and Nona Lovella Noel, Individually and d/b/a Noel & Noel, Attorneys at Law, Appellees-Defendants.

No. 46A04-9705-CV-195.

Court of Appeals of Indiana.

Oct. 23, 1998.

James L. Sullivan, Lyons Sullivan & Brooks, Valparaiso, for Appellants-Plaintiffs.

OPINION

SHARPNACK, Chief Judge.

Joseph and Pearl Serletic and Joseph Serletic, Jr. ("the Serletics") appeal a judgment in their favor against Harlen and Nona Noel ("the Noels"). The Serletics raises three issues, which we consolidate and restate as:

1) whether the trial court erroneously concluded that the Serletics were not entitled to damages for loss of net profits where an apartment building they owned and operated was negligently destroyed; and

2) whether the trial court erroneously excluded equity, equity appreciation, and tax deductions from the calculation of damages.

We reverse and remand.

The facts most favorable to the judgment follow. Gary Serletic, Joseph Serletic, Pearl Serletic, and Joseph Serletic, Jr. formed a limited partnership, Sir Lancelot Investments. The sole asset of the partnership was a seven unit apartment building. Following sewer work conducted by the city on adjacent real estate, the partnership property became unstable. The city then condemned the property as unsuitable for human habitation and tore down the apartment building.

Gary Serletic hired Harlen Noel to represent the partnership in a suit against the city, and others, for the negligent destruction of the building. As a result of this representation, the Serletics filed a malpractice action against the Noels. At a trial management conference, an issue arose as to whether the Serletics could recover for lost profits. After both sides submitted briefs on this issue, the trial court ordered that

"the applicable measure of damages in this cause is the difference in fair market value of the property before and after the destruction of the real estate along with the net loss profits that plaintiffs have suffered due to the destruction of the property."

Record, p. 63. The action was then tried to the trial court, but to a different judge. The trial court found for the Serletics and awarded them damages in the amount of $2000.00. The Serletics now challenge this amount on appeal.

Before we reach the merits of this appeal, we must note that the Noels failed to file a timely appellee's brief. When the appellee fails to timely file a brief, the appellant need only establish prima facie error to obtain reversal. Valley Fed. Sav. Bank v. Anderson, 612 N.E.2d 1099, 1101 (Ind.Ct.App.1993); Ind. Appellate Rule 8.1(C). Prima facie in this context, is defined as "at first sight, at first appearance, or on the face of it." Id.

I.

The Serletics assert that the trial court erred in failing to include in the damage award net lost profits resulting from the negligent destruction of their apartment building. They raise two distinct bases for their argument. First, they contend that the judge who initially handled the case had already ruled that the measure of damages would include net lost profits and that a subsequent judge was required to abide by this ruling in calculating the damage award. Notwithstanding the effect of this earlier ruling, the Serletics also maintain that the second judge erroneously concluded that they were not legally entitled to lost profits. We will address each of these contentions in turn.

A.

The Serletics first assert that the law of the case doctrine required the trial judge entering the award of damages to follow a previous judge's ruling concerning the measurement of damages. However, their understanding of the law of the case doctrine is incorrect.

Generally, until a judgment is entered, a trial court can amend, modify or change an earlier decision. Wisconics Engineering, Inc. v. Fisher, 466 N.E.2d 745, 752 (Ind.Ct.App.1984), reh'g denied, trans. denied. Our supreme court has held:

"It often happens that the judge who originally has jurisdiction is required to rule upon a question of law, presented by demurrer or other pleading, and that thereafter, upon a change of judge, the same questions are presented during the trial. The ruling of the original judge does not become the law of the case so as to bind the judge who later has jurisdiction, nor in passing upon the question when again presented, does he review the ruling of the former judge. His authority and his duty require that he exercise his judicial discretion as though the matter were presented for the first time."

State ex rel. Williams Coal Co. v. Duncan, 211 Ind. 203, 207, 6 N.E.2d 342, 343-344 (1937). Under the law of the case doctrine, a trial court is not bound by its own earlier rulings unless they have been adopted by an appellate court's decision. Howard D. Johnson Co. v. Parkside Development Corp., 169 Ind.App. 379, 383, 348 N.E.2d 656, 659-660 (1976) (holding that "[a] judgment on appeal constitutes 'the law of the case' as to particular issues decided and is applicable throughout subsequent stages of the case."); see also Amcast Indus. Corp. v. Detrex Corp., 45 F.3d 155, 160 (7th Cir.1995) (holding that an exhaustion of appellate remedies is required to make a trial court's ruling the law of the case), cert. denied, 515 U.S. 1103, 115 S.Ct. 2248, 132 L.Ed.2d 256.

Here, the first judge's order specified that the measure of damages in the case would include lost profits. However, this ruling was not a final appealable order. As such, the second judge was not bound by the ruling and was free to decide the issue of damages as if before the trial court for the first time. See Williams, 211 Ind. at 207, 6 N.E.2d at 343-344. Therefore, we conclude that it was not erroneous for the second judge to disregard the first judge's ruling. As a result, we are left to determine whether the second judge's independent ruling on the measure of damages was erroneous.

B.

Here the trial court made special findings of fact and conclusions of law. Generally our standard of review is to determine whether the evidence supports the findings and whether the findings support the judgment. Merrill v. Merrill, 587 N.E.2d 188, 189 (Ind.Ct.App.1992). However, because we are faced only with a question of law, our review will be de novo. Mikel v. American Ambassador Casualty Co., 644 N.E.2d 168, 170 (Ind.Ct.App.1994), trans. denied.

On the issue of what damages are recoverable by the Serletics, the trial court stated the following in its findings of fact and conclusions thereon:

"As to the claim that Noel should have pursued a claim for lost profits, the Court finds that the Plaintiffs were not entitled under the law to lost profits and were limited in their recovery to the value of the improvements at the time of their destruction."

Record, p. 130. The Serletics assert that Indiana law provides for recovery of lost net profits where there has been a total destruction of real property which contained an operating business. We agree.

Contrary to the trial court's conclusion, Indiana law clearly allows recovery for lost profits in a tort action. Bamberger & Feibleman v. Indianapolis Power & Light Co., 665 N.E.2d 933, 938 (Ind.Ct.App.1996); Babson Bros. Co. v. Tipstar Corp., 446 N.E.2d 11, 15 (Ind.Ct.App.1983); Indiana Bell Tel. Co., Inc. v. O'Bryan, 408 N.E.2d 178, 184 (Ind.Ct.App.1980). Furthermore, "[w]hen an established business is injured, interrupted, or destroyed, the measure of damages is the diminution in value of the business, with interest,...