MEMORANDUM DECISION
Aug 24 2015, 8:58 am
Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANTS ATTORNEY FOR APPELLEES
Christopher J. McElwee Steven M. Crell
Monday Jones & Albright Cohen Garelick & Glazier
Indianapolis, Indiana Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Dennis Gifford and Mary August 24, 2015
Gifford, Court of Appeals Case No.
49A05-1409-PL-427
Appellants-Plaintiffs,
Appeal from the
v. Marion Superior Court
The Honorable David A. Shaheed,
Judge
Jeffrey Wicks and James Ector,
Cause No. 49D01-1001-PL-1771
Appellees-Defendants.
Kirsch, Judge.
[1] Dennis Gifford (“Gifford”) agreed to sell his stock in a company called Face
Off, Inc. d/b/a Karma Records, Inc. (“Face Off”) to Jeffrey Wicks (“Wicks”)
and James Ector (“Ector”), and to that end the parties executed a stock
purchase agreement and various promissory notes. Disputes arose, and Gifford
and his wife Mary Gifford (together, “the Giffords”) filed a lawsuit against
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 1 of 16
Wicks, Ector, and Face Off. Following entry of summary judgment in favor of
Wicks and Ector, the Giffords now appeal and raise the following restated
issue: whether the trial court erred when it granted summary judgment in favor
of Wicks and Ector on the basis that the claims against them were barred by the
applicable six-year statute of limitations.
[2] We reverse and remand.
Facts and Procedural History
[3] On April 2, 2003, Gifford, Wicks, Ector, and Face Off entered into a stock
purchase agreement (“the Stock Purchase Agreement”), whereby Gifford
agreed to sell fifty shares of Face Off to Wicks and Ector for $77,300.00.1 The
Stock Purchase Agreement provided that Wicks and Ector would each pay
Gifford $38,650.00 payable in 240 equal monthly installments of principal and
interest “commencing one year from the date of [the] Agreement,” i.e., April 2,
2004. Appellants’ App. at 72. The Stock Purchase Agreement also required
Wicks and Ector to execute an individual promissory note for the payment of
the agreed purchase price.
[4] In accordance with this, Wicks and Ector each executed on April 2, 2003, a
promissory note (“the Wicks/Ector Notes”) payable to Gifford2 in the amount
of $38,650.00. Face Off executed an Absolute Guaranty of those promissory
1
Gifford’s wife, Mary Gifford (“Mary”), was not a party to the Stock Purchase Agreement.
2
Mary was not a payee on the Wicks/Ector Notes.
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 2 of 16
notes, and it also conveyed a security interest and executed a security
agreement to secure the payment of the Wicks/Ector Notes. The Wicks/Ector
Notes were identical in form, and they required Wicks and Ector each to pay
Gifford in 240 equal monthly installments of principal and interest in the
amount of $510.15, “beginning on the date that is one month from the date of
the execution of this Note[.]” Id. at 53-54. Thus, the first installment under the
Wicks/Ector Notes was due May 2, 2003. The Wicks/Ector Notes each
contained an acceleration clause, which stated:
In the event of a default in payment of any payment when due, the
entire unpaid balance of principal and interest shall become due and
payable immediately without notice, at the election of the holder
hereof.
Id.
[5] On April 21, 2003, Face Off executed a promissory note (“the Face Off Note”)
payable to the Giffords in the principal sum of $35,103.56. The Face Off Note
was payable in ten annual installments of interest only, at the prime interest rate
against the unpaid balance, commencing one year after the execution of the
Face Off Note, i.e., April 21, 2004. The Face Off Note provided that, after the
payment of the ten annual installments of interest, Face Off would pay the
Giffords as follows:
One hundred twenty (120) equal monthly installments of principal and
interest @ 5% rate in the amount of THREE HUNDRED AND
SEVENTY TWO and 33/100 ($372.33) DOLLARS beginning on the
date that is ten years from the execution of this Note and payable
thereafter on the same day of each of the [119] immediately succeeding
calendar months.
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 3 of 16
Id. at 58. The Face Off Note allowed prepayment in full or in part at any time
without penalty. Id.
[6] It is undisputed that Gifford received monthly payments from Face Off’s bank
account in the amount of $670.00 from May 2004 through at least October
2006. However, according to Gifford, he stopped receiving payments in July
2008, and, about a year later, on July 21 2009, the Giffords, by counsel, sent a
letter to Wicks and Ector indicating that they had not received payment “under
the promissory notes” and demanding payment pursuant to the acceleration
clause of the three promissory notes. More fully, the letter to Wicks and Ector
stated, in part:
For reasons that are not completely clear, your performance of your
obligations under the promissory notes stopped over a year ago and no
payment has been received while the interest continues to accrue. By
our calculation, your total current debt to the Giffords is
[$176,908.98]. This number includes the principal and interest as well
as the late fees that the promissory notes call for.
Id. at 55 (emphasis added). The letter requested payment within thirty days
from the date of the letter.
[7] Because the matter was not resolved, the Giffords filed a four-count complaint
on January 5, 2010. In Count I of the complaint, Gifford sought relief against
Wicks and Ector; the remaining counts sought relief against Face Off.3 As part
3
According to the record before us, Face Off was administratively dissolved in December 2007. Appellants’
App. at 17; see also Tr. at 35 (counsel stating Face Off “is out of business”).
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 4 of 16
of their affirmative defense, Wicks and Ector stated that Gifford’s claims were
barred by the six-year statute of limitations applicable to promissory notes
found in Indiana Code section 34-11-2-9.
[8] On July 11, 2011, Wicks and Ector filed a motion for summary judgment,
arguing that they were entitled to summary judgment because the six-year
statute of limitations on Gifford’s claims for breach of the Wicks/Ector Notes
had expired, and, therefore, the claims against them for breach of promissory
notes was time barred under Indiana Code 34-11-2-9. Their argument was that
Wicks and Ector never made any payments pursuant to the Wicks/Ector
Notes, and thus default occurred in May 2003 (when the first payment was
due). Because Gifford did not seek to enforce the acceleration clause until July
2009, which was more than six years after default, the claim was barred by the
applicable six-year statute of limitations. With regard to the monthly $670.00
payments, Wick and Ector argued in their motion for summary judgment that
the $670.00 payments were made by Face Off pursuant to the April 21, 2003
Face Off Note, which “reflects a separate and unrelated indebtedness of Face
Off to Gifford and Mary.” Id. at 25; see also Appellees’ Br. at 6 (“This Note was
unrelated to the Stock Purchase Agreement and was unrelated to the notes
signed by Wicks and Ector.”). That is, their position was that the $670.00
payments from Face Off had nothing to do with the Wicks/Ector Notes.
[9] In support of their motion for summary judgment, Wicks and Ector designated
an accounts payable ledger that reflected monthly payments by Geaux
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 5 of 16
Enterprises (“Geaux”), the successor company to Face Off,4 in the amount of
$670.00 from May 2004 through October 2006, payable to Gifford. Appellants’
App. at 33-34. They also submitted affidavits by Wicks and Ector, in which
each of them averred that he never made any payment on the Wicks/Ector
Notes, and the $670.00 payments received by Gifford were from Face Off
pursuant to the April 21, 2003 Face Off Note. Id. at 30-31, 59.
[10] The Giffords responded to the motion for summary judgment, arguing in their
motion that “Wicks and Ector began to pay as promised on May 2, 2003 and
made substantially all payments until July 2008.” Id. at 64. Once Gifford
“realized” that Wicks and Ector were not going to make any more payments,
he hired an attorney and demanded full payment on the three promissory notes,
i.e., the Wicks/Ector Notes and the Face Off Note. Id. In opposing the
summary judgment, the Giffords maintained that they stopped receiving
payment in 2008, they invoked the acceleration clause in July 2009, and their
January 2010 complaint was well within the six-year statute of limitations. Id.
at 66. Alternatively, they argued that there were “multiple issues of material
fact” that precluded summary judgment in favor of Wicks and Ector, including
whether, as claimed, Wicks and Ector had made no payments on the
Wicks/Ector Notes. Id. at 65. In support of their opposition, the Giffords
designated, among other things, the demand letter of July 21, 2009, sent to
4
In our decision, we will refer to Face Off, Geaux, or both, as is applicable.
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 6 of 16
Wicks and Ector, referencing the April 2, 2003 Wicks/Ector Notes and stating
“your performance of your obligations under the promissory notes stopped over
a year ago[.]” Id. at 93. They also designated an affidavit of Gifford, in which
he stated, “I invoked the acceleration clauses of all three Promissory Notes and
demanded payment in full on July 21, 2009.” Id. at 70. The Giffords also
designated an exhibit that reflected their calculations of the “Outstanding
Amounts Due” on the three promissory notes. Id. at 96. The exhibit credited
Wicks and Ector with each having paid $5,215.25 on the principal of the
Wick/Ector Notes, and did not credit Face Off with having made any
payments, such that the entire principal amount of $35,103.56 of the April 21,
2003 Face Off Note was still due and owing. Id.
[11] Following a hearing, the trial court granted summary judgment in favor of
Wicks and Ector as to Count I of the complaint in October 2011. The Giffords,
asserting that the decision was a final appealable judgment, filed a motion to
correct error on November 23, 2011. They claimed, among other things, that
there was “a material factual dispute as to the source of the [$670.00 monthly]
payments and the obligation which they were intended to satisfy.” Id. at 104.
The trial court held a hearing in January 2012 and denied the motion to correct
error that day.
[12] Almost one year later, in January 2013, the Giffords filed a Motion to
Reconsider Summary Judgment Order, asking the trial court to reconsider its
summary judgment in favor of Wicks and Ector. In contrast to their position
when seeking a Motion to Correct Error, the Giffords asserted that the order on
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 7 of 16
summary judgment was not a final appealable order, and was in fieri, and thus
the trial court still retained the authority to review and modify its prior
summary judgment order. In support of the Motion to Reconsider, they
submitted, among other things, another affidavit by Gifford stating that the
$670.00 per month that Face Off and/or its successor Geaux began paying him
in May 2004 was comprised of (1) interest on the April 2, 2003 Wicks/Ector
Notes and (2) interest on a separate $20,000 loan that Gifford had made to
Geaux on April 28, 2004. Id. at 114. As evidence of this assertion, the Giffords
submitted a 2007 Internal Revenue Service 1099-INT tax form, received by the
Giffords from Geaux, reflecting that Geaux had paid Gifford $510.15 per
month during 2007, and a portion of that payment was comprised of interest on
the Wicks/Ector Note. The 2007 1099-INT form stated, “Total Interest Paid in
2007 for Ector & Wicks Notes” was $3,417.27. Id. at 116. Gifford’s affidavit
also stated that the $670.00 was paid from May 2004 through July 2008, and he
provided copies of two $670.00 checks from Geaux to Gifford issued in June
and July 2008. Id. at 102, 115.
[13] Wicks and Ector filed an Objection to the Motion to Reconsider, arguing, first,
that the Giffords were estopped from taking the position that the summary
judgment was in fieri, and susceptible to revision, because the Giffords had
previously argued that the summary judgment was a final order at the time that
they filed a motion to correct error, upon which they received a hearing.
Second, Wicks and Ector asserted that the Giffords should be precluded from
submitting additional evidence more than a year after the summary judgment
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 8 of 16
decision was issued, especially when that evidence was not newly discovered
and was available at the time of the summary judgment hearing. The trial court
denied the Giffords’ Motion to Reconsider in March 2013.
[14] In December 2013, the Giffords filed a motion for summary judgment against
Face Off with respect to Count IV of the complaint, asserting that Face Off had
failed to pay as promised under the April 21, 2003 Face Off Note and claiming
that the $670.00 payments they received from Face Off/Geaux from May 2004
through October 2006, which totaled $20,100.00, were attributable to the
Wicks/Ector Notes. Face Off opposed the motion, maintaining that genuine
issues of material fact existed concerning if and to what extent Face Off was or
remained liable to the Giffords on the Face Off Note. The trial court granted
summary judgment in favor of the Giffords, held a damages hearing, and
thereafter entered judgment in favor of the Giffords and against Face Off in the
amount of $260,729.94, which included the entire $35,103.56 principal balance
and thus did not credit Face Off with having made any payment on the Face
Off Note.5 The trial court entered final judgment, and the Giffords now appeal.
5
We observe that the trial court’s grant of summary judgment in favor of Wick and Ector effectively was a
determination that the $670.00 payments were payments from Face Off/Geaux on the April 21, 2003 Face
Off Note, not payments on the Wicks/Ector Notes. However, the trial court’s subsequent decision on
damages, rendering summary judgment in favor of the Giffords and against Face Off in the amount of
$260,729.94, does not credit Face Off/Geaux with having made any payment on the April 21, 2003 Note.
As a result, it appears that the two summary judgment orders are inconsistent with one another.
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 9 of 16
Discussion and Decision
[15] When reviewing a summary judgment ruling, we apply the same standard as
the trial court. Auto-Owners Ins. Co. v. Harvey, 842 N.E.2d 1279, 1282 (Ind.
2006). Summary judgment is appropriate only where “the designated
evidentiary matter shows that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.” Ind.
Trial Rule 56(C). We view the pleadings and designated materials in the light
most favorable to the non-moving party. FLM, LLC. v. Cincinnati Ins. Co., 973
N.E.2d 1167, 1173 (Ind. Ct. App. 2012) (citing Wilcox Mfg. Grp., Inc. v. Mktg.
Servs. of Ind., Inc., 832 N.E.2d 559, 562 (Ind. Ct. App. 2005)), trans. denied.
Additionally, all facts and reasonable inferences from those facts are construed
in favor of the non-moving party. Id. (citing Troxel Equip. Co. v. Limberlost
Bancshares, 833 N.E.2d 36, 40 (Ind. Ct. App. 2005), trans. denied). We may
affirm a summary judgment ruling if it is sustainable on any legal theory or
basis found in the evidentiary matter designated to the trial court. W. Am. Ins.
Co. v. Cates, 865 N.E.2d 1016, 1020 (Ind. Ct. App. 2007), trans. denied.
However, we carefully review a grant of summary judgment in order to ensure
that a party was not improperly denied his or her day in court. Smither v. Asset
Acceptance, LLC, 919 N.E.2d 1153, 1156 (Ind. Ct. App. 2010).
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 10 of 16
Stock Purchase Agreement
[16] The Stock Purchase Agreement required monthly payments beginning one year
from April 2, 2003.6 Thus, the earliest that default under the Stock Purchase
Agreement could have occurred is April 2, 2004. Indiana Code section 34-11-2-
9 provides, in relevant part, “An action upon promissory notes, bills of
exchange, or other written contracts for the payment of money executed after
August 31, 1982, must be commenced within six (6) years after the cause of
action accrues.” Six years from the April 2, 2004 earliest-default date is April 2,
2010, and the Giffords filed their complaint several months before that date, in
January 2010.
[17] On appeal, the Giffords contend that “to the extent that Count I of the
complaint alleges both the breach of the stock purchase agreement and of the
Wicks and Ector promissory notes as bases for relief, summary judgment as to
all of Count I of the complaint was error.” Appellants’ Br. at 7. Wicks and
Ector maintain that Count I of the complaint sought relief only for breach of the
promissory notes, not the Stock Purchase Agreement. Appellees’ Br. at 2, 5.
[18] We recognize that the complaint was titled “Verified Complaint on Promissory
Notes, Absolute Guaranty and Security Agreement” and, therefore, does not on
6
The Stock Purchase Agreement required monthly payments beginning one year from April 2, 2003, i.e.,
April 2, 2004, whereas the Wicks/Ector Notes required monthly payment starting one month after April 2,
2003, i.e., May 2, 2003.
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 11 of 16
its face indicate an alleged breach of the Stock Purchase Agreement. Appellants’
App. at 12. However, the text of Count I specifically refers to the April 2, 2003
execution of the Stock Purchase Agreement, and its terms, including the
requirement that payment in 240 monthly installments was to commence on
May 2, 2004. The next paragraph alleges, “That the Defendants have failed to
make the payments as required by the instrument and are in breach of the
same.” Id. at 13 (paragraphs 6 and 7). Thereafter, the complaint refers to the
execution of the Wicks/Ector Notes, their terms, and the Giffords’ demand of
payment under the Notes via the July 21, 2009 letter. It then alleges breach of
the Wicks/Ector Notes. Id. at 13-14 (paragraphs 8-12). As Wicks and Ector
assert, the complaint’s demand or prayer for relief seeks recovery on the
promissory notes, but does not mention the Stock Purchase Agreement.
However, given the language of Count I of the complaint, we find that, at a
minimum, there exists a question of fact on the issue of whether the Giffords
also seek relief for breach of the Stock Purchase Agreement. Therefore, we find
that summary judgment in favor of Wicks and Ector on the entirety of Count I
was in error.
Wicks/Ector Promissory Notes
[19] The Giffords also assert that the trial court erred when it granted summary
judgment in favor of Wicks and Ector on the claim alleging breach of the
Wicks/Ector Notes. The trial court granted summary judgment on the basis
that the claim was filed beyond the applicable six-year statute of limitations
found in Indiana Code section 34-11-2-9. Where, as here, an installment loan
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 12 of 16
contract or promissory note has an optional acceleration clause, by which a
creditor may, but is not required to, declare all future installments on the loan
immediately due and payable after a debtor’s default, the statute of limitations
to collect the entire debt does not begin to run immediately upon the debtor’s
default, but when the creditor exercises the optional acceleration clause.
Smither, 919 N.E.2d at 1160 (citing Griese-Traylor Corp. v. Lemmons, 424 N.E.2d
173, 183 (Ind. Ct. App. 1981)). However, a creditor may not wait until after the
statute of limitations has passed before making demand for full and immediate
payment of a debt, as this is per se an unreasonable amount of time to wait
before invoking an optional acceleration clause. Id. at 1161-62 (summary
judgment for debtor proper where credit card bank waited more than six years
after debtor’s last payment before invoking acceleration clause to demand full
and immediate payment).
[20] In seeking summary judgment, Wicks and Ector maintained that they never
made any payment on the Wicks/Ector Notes, which required payment to
begin in May 2003, and thus their default occurred in May 2003. Therefore,
they argued, the July 2009 attempt to accelerate was more than six years after
the default, which was an unreasonable delay, and pursuant to Smither, was
barred by the statute of limitations. The trial court agreed. On appeal, Gifford
argues that the trial court erred in granting summary judgment because he was
receiving payment through July 2008, and, after determining that he was not
going to receive further payment, his attorney sent a letter in July 2009 invoking
the acceleration clause of the three promissory notes, and the 2010 complaint
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 13 of 16
was well within the six-year time frame. He also argues that, at a minimum,
genuine issues of material fact remain that preclude summary judgment in favor
of Wicks and Ector on the Wicks/Ector Notes.
[21] Wicks and Ector urge that summary judgment was proper because (1) their
affidavits, in which each swore that he did not make any payments under the
April 2, 2003 Wicks/Ector Notes, established that they defaulted in May 2003,
when their first payment was due, and (2) Gifford did not designate any
evidence that identified or created any genuine issues of material fact regarding
their nonpayment on their Notes. We disagree. While the Wicks and Ector
affidavits stated that they personally did not make payment on their Notes, this
does not establish that no payment was made on the Wicks/Ector Notes or that
the default occurred in May 2003. Furthermore, the Giffords, in opposition to
summary judgment, designated the July 2009 letter to Wicks and Ector stating
that “performance of your obligations under the promissory notes stopped over
a year ago,” suggesting that the Giffords had been receiving payment on the
Wicks/Ector Notes – from someone, in some fashion – through July 2008.
Appellants’ App. at 93. The Giffords also designated an accounting of
“Outstanding Amounts Due” under the three promissory notes as of July 2011,
and that exhibit credited Wicks and Ector with each having paid $5,215.25, but
it did not credit Face Off with having made any payments under its April 21,
2003 Note. Id. at 96.
[22] Wicks and Ector seem to suggest that, given that the payments received by
Gifford were not in the amount of $510.15, as provided in the Wicks/Ector
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 14 of 16
Notes, we should therefore infer that the $670.00 payments were made on the
Face Off Note. However, the $670.00 monthly payments were not consistent
with the terms of the Face Off Note, which required annual payments of
interest only for the first ten years following the execution of the Note, not
monthly payments. We also observe that although the Face Off Note was
payable to the Giffords, the accounts payable ledger, designated by Wicks and
Ector, reflects that the $670.00 payments were made to Dennis Gifford, who
was payee on the Wicks/Ector Notes. Thus, the $670.00 monthly payments
were not entirely consistent with the terms of either the April 2, 2003
Wicks/Ector Notes (which required payment to begin one month after
execution, on May 2, 2003) or the April 21, 2003 Face Off Note (which
required payment to begin one year later, on April 21, 2004). Construing the
inferences in favor of the non-moving party, as we must do, we find that
genuine issues of material fact exist regarding payment on the Wicks/Ector
Notes, thus precluding summary judgment, including: whether Face
Off/Geaux was making monthly payments on behalf of Wicks and Ector, and,
if so, in what amount(s); what portion of the payment, if any, was applicable to
which Note(s); and for what period of time payments were made, and to whom.
Consequently, summary judgment in favor of Wicks and Ector on their
promissory notes was in error.7
7
Because our decision was based upon the materials that were originally designated to the trial court at the
summary judgment stage, we do not reach Wicks and Ector’s arguments that the Giffords should have been
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 15 of 16
[23] Reversed and remanded.
Vaidik, C.J., and Bradford, J., concur.
precluded under estoppel principles from seeking subsequent reconsideration of the summary judgment order
or that the Giffords should not have been permitted to submit additional designated evidence that was
available, but not submitted, at the original summary judgment stage of litigation.
Court of Appeals of Indiana | Memorandum Decision 49A05-1409-PL-427 | August 24, 2015 Page 16 of 16