Watson v. Auto Advisors, Inc.

• Decision Date: 18 February 2005
• Docket Number: No. 49A02-0312-CV-1053.,49A02-0312-CV-1053.
• Citation: 822 N.E.2d 1017
• Parties: Cynthia WATSON, Appellant-Plaintiff, v. AUTO ADVISORS, INC. and T.G. Klota, Appellees-Defendants.
• Court: Indiana Appellate Court

822 N.E.2d 1017

Cynthia WATSON, Appellant-Plaintiff, v. AUTO ADVISORS, INC. and T.G. Klota, Appellees-Defendants.

No. 49A02-0312-CV-1053.

Court of Appeals of Indiana.

February 18, 2005.

Clifford W. Shepard, Indianapolis, IN, Attorney for Appellant.

Forrest Bowman III, Bowman Cosby & Bowman, Indianapolis, IN, Attorney for Appellees.

OPINION

MAY, Judge.

Cynthia Watson appeals the trial court's grant of the motion to dismiss filed by Auto Advisors Inc. and Thomas G. Klota. Watson's complaint alleged the failure of Auto Advisors and Klota to be represented by an attorney in a previous small claims court action against Watson rendered the small claims court's judgment in favor of Klota void and rendered his small claims action against her malicious prosecution, abuse of process, statutory deception, a frivolous action, unauthorized practice of law, and a violation of the Federal Fair Debt Collection Practices Act ("FDCPA"). Watson raises one issue, which we expand and restate as:

1. Whether the trial court erred in dismissing Watson's claim to the extent it requested the court declare void a prior small claims court judgment in favor of Klota; and

2. Whether the trial court erred in dismissing Watson's claim to the extent she asserted the defendants brought a frivolous lawsuit, violated the FDCPA, and committed unauthorized practice of law, malicious prosecution, abuse of process, and statutory deception.

We affirm.

FACTS AND PROCEDURAL HISTORY

Auto Advisors is a corporation engaged in the business of selling used automobiles, with its primary place of business in Marion County, Indiana. On May 1, 1998, Karla T. Klota ("Karla"),¹ the Secretary/Treasurer of Auto Advisors, filed a "Corporate Resolution" in the Lawrence Township Division of Marion County Small Claims Court. The document read:

Please be advised that any and all Indiana Retail Contract[s] and Security Agreement Contracts between Auto Advisors Inc. and "Buyer" that are in Default are Assigned to T.G. Klota or Thomas G. Klota for collection and or Disposition of said Contract. All contracts are assigned WITHOUT RECOURSE and the terms as stated remain the same.

I swear or affirm that the information I have entered onto this form is correct. I understand that making a false statement on this form may constitute the crime of perjury.

//Signed//

Karla T. Klota

Secretary/Treasurer

(Appellant's App. at 23.) Klota is the "owner of and registered agent for Auto Advisors." (Id. at 9.)

Thereafter, Watson purchased a 1994 Cadillac from Auto Advisors.² On January 7, 2003, Klota filed a Notice of Claim against Watson in the Lawrence Township Division of Marion County Small Claims Court seeking damages from Watson for breach of the purchase contract for the Cadillac. Watson filed a motion to dismiss claiming: 1) Klota could not bring the suit because he was not an attorney as required by Small Claims Rule 8,³ 2) the Bureau of Motor Vehicles found the sale of the car was not a valid sale, 3) Auto Advisors had never delivered the car's title to her, and 4) the car's title still indicated the car belonged to the owner prior to Auto Advisors. The Small Claims Court denied Watson's motion to dismiss, conducted a bench trial on April 30, 2003, and entered a $4,846.00 judgment in favor of Klota that same day.⁴ Watson did not appeal that judgment.

On May 7, 2003, Klota filed a motion for proceedings supplemental in the Small Claims Court to collect the money from Watson. That day, the court issued an order for Watson to appear on June 18, 2003. The record before us does not indicate what became of the proceedings supplemental.

On July 1, 2003, Watson filed her complaint in the Marion Superior Court against Auto Advisors and Klota, alleging the Small Claims Court's judgment in favor of Klota was void.⁵ She claimed: (1) Auto Advisors improperly assigned her debt to Klota to circumvent Small Claims Rule 8, which prevented Auto Advisors from appearing pro se; and (2) Klota was acting as either a collection agency or a debt collector, both of which are required by law to be represented by an attorney. Based on her belief an attorney was required to bring the small claims action against her, Watson alleged the Small Claims Court's judgment against her was void. In one sentence she also asserted: "Auto Advisors and Mr. Klota have perpetrated various statutory torts upon many other Hoosier consumers." (Id. at 8.) Watson requested the following relief:

The judgments that Mr. Klota has taken on contracts that were purportedly assigned to him after default are void and should be held for naught and any money collected premised upon these void, illegal judgments should be disgorged, with interest, with penalties as provided for under Indiana Code 34-24-3-1⁶ or Indiana Code 34-52-1-1,⁷ or both, and attorney's fees, as provided for by these same statutes or pursuant to the Court's inherent powers.

(Id.) (formatting original) (footnotes added). In addition, she asked that the underlying cases be "dismissed, with or without prejudice." (Id. at 18) (emphasis original).

On September 2, 2003, Auto Advisors and Klota moved to dismiss Watson's complaint pursuant to Ind. Trial Rule 12(B)(6), contending she had failed to state a claim for which relief could be granted. Watson responded by asserting she had stated facts sufficient to find the small claims court's judgment void and to find defendants violated the FDCPA, brought a frivolous lawsuit, and committed malicious prosecution, abuse of process, unauthorized practice of law, and statutory deception. On October 15, 2003, the trial court granted the motion to dismiss, and Watson initiated this appeal.

DISCUSSION AND DECISION

Under T.R. 12(B)(6) a trial court's grant of a motion to dismiss is proper if the facts alleged in the complaint are incapable of supporting relief under any set of circumstances. Lawson v. First Union Mortgage Co., 786 N.E.2d 279, 281 (Ind.Ct.App.2003). In making this determination, the court must look only to the complaint and may not resort to any other evidence in the record. Id. When ruling on a T.R. 12(B)(6) motion, the court should consider all of the allegations in the complaint to be true. Detterline v. A.P. Bonaventura, 465 N.E.2d 215, 216 (Ind.Ct.App.1984), reh'g denied, trans. denied. Additionally, such a motion should be viewed in the light most favorable to the non-moving party by resolving all inferences in the non-moving party's favor. Id.

Our review of a dismissal pursuant to T.R. 12(B)(6) is de novo, requiring no deference to the trial court's decision. Sims v. Beamer, 757 N.E.2d 1021, 1024 (Ind.Ct.App.2001). Viewing the complaint in the light most favorable to the non-moving party, we must determine whether the complaint states any facts on which the trial court could have granted relief. Id. If a complaint states a set of facts that, even if true, would not support the relief requested therein, we will affirm the dismissal. Id. We may affirm the grant of a motion to dismiss if it is sustainable on any theory. Id.

1. Attempt to Invalidate Small Claims Court Judgment

Watson claims she:

has stated a claim for which relief can be granted because Ms. Watson and the putative class would be entitled to: (i) a declaration that the Judgments of the underlying Small Claims Court taken by Mr. Klota on behalf of Auto Advisors are void;... and (iii) restitution for any amounts collected as a result of the void Judgments.

(Appellant's Br. at 18.) We disagree.

Judgments of a small claims court are "subject to review as prescribed by relevant Indiana rules and statutes." S.C.R. 11(A). Ind.Code § 33-11.6-4-14 (2003), which governed appeals from Marion County Small Claims Court until its recent repeal, see P.L 98-2004, § 164, provided "All appeals from judgments of the small claims court shall be taken to the superior court of the county and tried de novo." That statute also indicates the procedural rules for the appeal are established by the superior court. Ind.Code § 33-11.6-4-14.

Marion Superior Court Rule 81.1(C)(1) provides: "Any party may appeal from the judgment of the Marion County Small Claims Court to the Marion Superior Court, within sixty (60) days from its entry...." The Small Claims Court entered judgment against Watson on April 30, 2003, and she filed her complaint against Auto Advisors and Klota on July 1, 2003, which was sixty-two days after the Small Claims Court's judgment. Therefore, Watson procedurally forfeited her right to directly challenge the Small Claims Court's judgment in favor of Klota when she failed to timely initiate an appeal in Marion Superior Court.⁸

The question before us, then, is whether Watson may attack the validity of the Small Claims Court's judgment by filing an independent action in the Superior Court. The Small Claims Rules provide: "A judgment shall be res judicata only as to the amount involved in the particular action and shall not be considered an adjudication of any fact at issue in any other action or court." S.C.R. 11(F). Our supreme court has explained:

The rule, however, does not allow a party to relitigate a claim upon which judgment has been entered in a small claims case. Cook v. Wozniak, 500 N.E.2d 231, 233 (Ind.Ct.App.1986), adopted and affirmed, 513 N.E.2d 1222 (Ind.1987) ("[to permit] a plaintiff who recovered nothing in a small claims action to sue again on the same claim in another court would be `sheer futility.'"). Instead S.C.R. 11(F) was intended primarily to "limit issue preclusion where some fact in the small claim action is at issue in another case," and to "also apply to claim preclusion to the extent that claim preclusion would ordinarily bar all matters which might have been litigated but were not actually litigated in the small claims action." Cook at 233.

In re Ault, 728 N.E.2d 869, 872 (Ind.2000) (footnote omitted). Because Watson had the opportunity to litigate in the Small Claims Court whether, pursuant to her...