FILED
Mar 19 2019, 7:47 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
James A. Masters CINDY ANN KOBOLD
Nemeth, Feeney, Masters & Campiti, Robert J. Palmer
P.C. May Oberfell Lorber
South Bend, Indiana Mishawaka, Indiana
ATTORNEYS FOR APPELLEE-
INTERVENOR WELLS FARGO
BANK, NATIONAL
ASSOCIATION
Jared C. Helge
Andrew L. Palmison
Rothberg Logan & Warsco LLP
Fort Wayne, Indiana
ATTORNEYS FOR APPELLEE-
INTERVENOR RIETH-RILEY
CONSTRUCTION CO., INC.,
Robert G. Devetski
Mark J. Adey
Barnes & Thornburg LLP
South Bend, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Court of Appeals of Indiana | Opinion 18A-DR-893 | March 19, 2019 Page 1 of 24
James Peter Kobold, March 19, 2019
Appellant-Respondent, Court of Appeals Case No.
18A-DR-893
v. Appeal from the
St. Joseph Circuit Court
Cindy Ann Kobold, The Honorable
Appellee-Petitioner, John E. Broden, Judge
and The Honorable
William L. Wilson, Magistrate
Wells Fargo Bank, National Trial Court Cause No.
Association and Rieth-Riley 71C01-1404-DR-224
Construction Co., Inc.,
Appellees-Intervenors.
Kirsch, Judge.
[1] To divide their marital assets, James Peter Kobold (“James”) and Cindy Ann
Kobold (Hiatt) (“Cindy”) entered a property settlement agreement (“PSA”),
agreeing that James would keep their 175-acre farm and that James would pay
Cindy an equalization payment of $319,122.04 through installment payments
that would run through June of 2020. James signed a promissory note in which
he agreed that Cindy could sell marital assets if he breached the PSA. After the
dissolution was final, James failed to make any installment payments, and
Cindy obtained the trial court’s permission to sell the farm. She subsequently
sold the farm to Rieth-Riley Construction Co., Inc. (“Rieth-Riley”) for $1.63
million. James filed a motion to correct error, which the trial court denied in
part by affirming its earlier decision to let Cindy sell the farm and by denying
Court of Appeals of Indiana | Opinion 18A-DR-893 | March 19, 2019 Page 2 of 24
James’s request to rescind the sale. The trial court granted James’s motion in
part by ruling that Cindy could keep no more of the sale proceeds than was
necessary to pay the amount due to her under the promissory note at the time
the sale to Rieth-Riley had closed.
[2] On appeal, James raises the following issues:
I. Whether the trial court abused its discretion in denying
James’s motion to correct error, in part, by:
A. finding that Cindy held a judgment lien against the
farm and thus it impermissibly modified the PSA; and
B. denying James’s motion to rescind the sale to Rieth-
Riley;
II. Whether the trial court adequately adjudicated whether
Rieth-Riley had the right to possess the farm.
On cross-appeal, Cindy raises the following issues:
I. Whether trial court erred in limiting Cindy’s recovery to
only the amount James owed her under the promissory
note at the time the sale to Rieth-Riley had closed; and
II. Whether this court should remand the matter to the trial
court for an assessment of Cindy’s trial and appellate
attorney fees.
We affirm in part, reverse in part, and remand.
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Facts and Procedural History
[3] James and Cindy were married in 1996. Appellant’s App. Vol. 2 at 49. The
marital property included several parcels of farm land that totaled 175 acres. Id.
at 32, 93. Wells Fargo Bank, National Association (“Wells Fargo”) held two
mortgages on two parcels of the farm, secured by one mortgage recorded on
August 20, 2003, and another mortgage recorded on May 15, 2013.1 Id. at 20-
21.
[4] James and Cindy separated in August of 2014. Id. at 49. The PSA, filed in
May of 2016, provided that James would receive the 175-acre farm. Id. at 32,
93, 95. To equalize the property division, James executed a non-negotiable
promissory note to pay Cindy $319,122.04. Id. at 52. The promissory note set
out the following payment schedule:
a) $20,000.00 upon the closing of the refinancing of [James’s]
farming and transportation businesses, but in no event later than
90 days
b) $40,000 on or before January 15, 2017.
c) $40,000 on or before May 1, 2017.
1
James seeks no relief from Wells Fargo, explaining that he does not intend to affect “the satisfaction of the
mortgages on the real estate to Wells Fargo Bank or the other lien creditors whose debts were paid and liens
discharged at the closing of the sale of the real estate or to ask this Court to grant any relief against Wells
Fargo bank.” James’s Br. at 16. Wells Fargo acknowledges this and states that it files its brief solely to reserve
its rights and remedies if we order Wells Fargo to disgorge the proceeds from the sale of the farm to Rieth-
Riley. Wells Fargo Br. at 15. Thus, we have no issues to resolve as to James and Wells Fargo.
Court of Appeals of Indiana | Opinion 18A-DR-893 | March 19, 2019 Page 4 of 24
d) $2,000 per month beginning June 1, 2017 through May 1,
2020.
e) The remaining principal balance and all accrued interest by
June 1, 2020.
Id. at 59. The PSA said that if James failed to “abide by a term of repayment
set forth in the Promissory Note, then [Cindy] shall have the right to sell assets
to satisfy said repayment.” Id. at 52. However, the promissory note also said
that James had the right to dispose of marital assets: “Notwithstanding any
other provision in this Agreement to the contrary, [James] shall be entitled to
sell, convey or otherwise dispose of any assets.” Id. at 57. In the event of a
default by James, the promissory note stated that Cindy “shall be entitled to
recover reasonable attorneys’ fees incurred in collection.” Id. at 60.
[5] James and Cindy defaulted on the mortgage payments, and pursuant to Wells
Fargo’s request, the trial court foreclosed the mortgages on December 21, 2016.
Appellee Rieth-Riley App. Vol. 2 at 38-43; Wells Fargo Br. at 5. Even so, Wells
Fargo did not file a praecipe for a sheriff’s sale of the farm. Appellant’s App. Vol.
2 at 33.
[6] James failed to make any installment payments to Cindy as required under the
promissory note. Id. at 19. On November 1, 2016, nearly three months after
James’s first payment on the promissory note was due, Cindy filed a motion to
sell marital assets, seeking permission from the trial court to sell the farm to
satisfy the equalization payment. Id. at 64. Ten months later, the trial court
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heard the motion and granted it. Id. at 18-22. Cindy sold the farm to Rieth-
Riley. At the time of the sale, the farm’s appraised value was $1.56 million, but
Cindy sold it for more, $1.63 million. Id. at 13, 104.
[7] After Cindy sold the farm, she filed a motion for possession of real estate. On
December 6, 2017, the magistrate ordered James to make the marital real estate
“available to Wells Fargo, Rieth Riley or to any parties designated by those
entities to review and inspect the premises. . . .” Appellant’s App. Vol. 2 at 10.
The order also provided that James “acknowledges that the real estate is subject
to a Buy and Sell Agreement and that [he] will cooperate in the sale of the real
estate, including vacating the premises at the time of the closing of that sale.”
Id.
[8] On December 21, 2017, the day before the sale was to close, James moved to
stay the sale, claiming he had found other buyers who would pay $1 million for
100 acres of the farm. Id. at 65-67, 94. At the December 22, 2017 hearing on
James’s motion, James’s counsel presented a written purchase agreement from
neighboring farmers who proposed to buy the land and alleged they were ready
to close the purchase as soon as the closing documents could be prepared. Id. at
94. James said the proposed sale would let him keep seventy-five acres of the
farm, including his house and outbuildings, and that it would generate enough
funds to pay Wells Fargo, other lien-creditors, and Cindy at least $200,000.00.
Id. at 94-95. James advised the trial court that he owned farm equipment
valued at $300,000.00 that he could sell at auction at the end of January 2018 to
pay any remaining amount due to Cindy. Id. at 95.
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[9] The trial court denied the motion to stay the same day the hearing was held and
allowed the closing of the sale to proceed. Id. at 11, 24-25. In so ruling, the
trial court found “that the evidence is overwhelming and uncontroverted that
[James] is in default of the terms and conditions of the agreed upon Property
Settlement Agreement signed and filed with this Court on May 12, 2016.” Id.
at 24. The trial court also adopted and approved the September 21, 2017 order,
previously entered only by the magistrate. Id. at 24-25. The sale to Rieth-Riley
closed later that day. Id. at 32.
[10] On January 22, 2018, James filed a motion to correct error, alleging that the
trial court erred in letting Cindy sell the farm, so she could get the full
equalization payment before the payment schedule set forth in the promissory
note had transpired. Id. at 74-84. James’s motion also asked the trial court to
rescind the sale to Rieth-Riley. Id. Per the trial court’s authorization, on
January 24, 2018, Rieth-Riley intervened and moved to eject James from the
marital property, where he had continued to reside, even after Rieth-Riley had
bought the property. Id. at 11; Appellee Rieth-Riley’s App. Vol. 2 at 21-25. On
February 16, 2018, James filed a motion to strike Rieth-Riley’s request to eject
him. Appellant’s App. Vol. 2 at 12.
[11] On March 12, 2018, the trial court denied James’s motion to correct error in
part and granted it in part. Id. at 31-41. It granted it in part by concluding that
the promissory note did not contain an acceleration clause, and therefore,
Cindy was entitled to recover only what she was owed under the promissory
note on the date that the sale to Rieth-Riley had closed, December 22, 2017. Id.
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at 40. At the same time, however, the trial court ruled that Cindy had a
judgment lien on the farm, that she would not have been able to deliver
marketable title to the farm unless she released her judgment lien at the time of
closing, and that she would not have done so unless she had been paid in full.
Id. at 40-41. Nonetheless, the trial court found that James “has raised a valid
question concerning the calculation of the amount that was paid to [Cindy]
from the proceeds, particularly concerning the interest added to the principal.
[James] is entitled to ensure that the amount paid to [Cindy] was correct and
that any erroneous overpayment is returned to him.” Id. at 41.
[12] On March 14, 2018, the trial court granted Rieth-Riley’s motion for ejectment
and immediate possession, ruling that Rieth-Riley was entitled to immediate
possession of the farm where James had still been residing. Appellee Rieth-Riley
App. Vol. 2 at 70-72. On March 20, 2018, Rieth-Riley filed a motion for final
judgment of possession. Id. at 73. On March 30, 2018, the trial court granted
Rieth-Riley final possession of the farm. Appellant’s App. Vol. 2 at 46-48.
[13] After Wells Fargo and other creditors were paid2 off from the sale of the farm,
the remaining proceeds were distributed to Cindy and James, with Cindy
receiving $383,123.09 and James receiving $500,000.00. Rieth-Riley Br. at 12;
James’s Br. at 14, n.2.
2
Wells Fargo received $695,000.00, and other creditors received approximately $80,000.00. Appellant’s App.
Vol. 2 at 82.
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[14] On April 23, 2018, James asked this court to stay enforcement of the final
judgment of possession, and on May 21, 2018, we denied the request. James
now appeals, and Cindy brings a cross appeal.
Discussion and Decision
James’s Appeal
I. Motion to Correct Error Ruling
[15] James argues that the trial court’s motion to correct error ruling was erroneous
because 1) it incorrectly found that Cindy held a judgment lien against the farm;
2) in letting Cindy sell the farm, it impermissibly modified the PSA; and 3) it
wrongly denied James’s request to rescind the sale, which James had raised in
his motion to error. We will address these first two claims in the Section A,
immediately below, and the rescission claim in Section B.
[16] We review a trial court's ruling on a motion to correct error for an abuse of
discretion. Inman v. Inman, 898 N.E.2d 1281, 1284 (Ind. Ct. App. 2009). An
abuse of discretion occurs if the trial court’s decision is against the logic and
effect of the facts and circumstances before the court or if the court has
misinterpreted the law. Id.
A. Cindy Held a Judgment Lien and Trial Court Did Not Modify the PSA
[17] James contends the trial court erred in ruling that Cindy held a judgment lien
against the real estate pursuant to Indiana’s judgment lien statute (Indiana Code
Section 34-55-9-2) instead of holding a narrower secured interest pursuant to
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the PSA and the dissolution security statute (Indiana Code Section 31-15-7-8).
He argues that from this erroneous determination, the trial court impermissibly
modified the PSA by letting Cindy sell the farm to get the full equalization
payment.
[18] We apply the following principles when reviewing a property settlement
agreement:
An agreement for division of property is economic in nature - an
ordinary contract. Courts therefore interpret . . . settlement
agreements using ordinary contract principles. Thus, the goal of
courts in interpreting a settlement agreement is to ascertain and
give effect to the parties’ intent. Rules of contract construction
and extrinsic evidence may be employed in giving effect to the
parties’ reasonable expectations. When a contract’s terms are
ambiguous or uncertain and its interpretation requires extrinsic
evidence, its construction is a matter for the fact-finder.
Hindsight tells us that the parties could have negotiated terms to
resolve the present dispute, but they did not. Thus, the courts are
left to divine their likely intent.
Johnson v. Johnson, 920 N.E.2d 253, 256 (Ind. 2010) (internal citations omitted).
[19] In more specific terms, James argues the trial court erred in finding that the
dissolution decree gave Cindy a judgment lien on the farm and that such a lien
gave Cindy the right to refuse to release the judgment lien unless she was paid
in full on the promissory note. James concedes that in a dissolution case, when
one party receives a money judgment against the other, the general judgment
lien statute creates an automatic lien on the indebted party’s real estate. See
Franklin Bank & Tr. Co. v. Reed, 508 N.E.2d 1256, 1258-59 (Ind. 1987). James
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correctly observes that a trial court can overcome a judgment lien if it makes an
explicit finding that a settlement agreement creates a security interest under
Indiana Code section 31-15-7-8. See Reed, 508 N.E.2d at 1259.
[20] James argues that the trial court’s erroneous ruling that Cindy held a judgment
lien was the root of its erroneous decision to let Cindy sell the farm to get the
full equalization payment. Because the promissory note did not not include an
acceleration clause, James argues that Cindy was entitled to no more than the
amount James was in default according to the payment schedule in the
promissory note. See Hamlin v. Stewart, 622 N.E.2d 535, 539 (Ind. Ct. App.
1993) (absent an acceleration clause, the holder of a note can collect only the
payments due at the time of default and as each installment payment becomes
due). James also argues that allowing Cindy to sell the real estate violated his
right to sell marital assets, which he alleges superseded Cindy’s right to sell the
assets, even though he had breached the terms of the promissory note. In
support, he recites the following language from the promissory note:
“Notwithstanding any other provision in this Agreement to the contrary,
[James] shall be entitled to sell, convey or otherwise dispose of any assets.”
Appellant’s App. Vol. 2 at 57. Because of his purported unqualified right to sell
the real estate, James further asserts the trial court abused its discretion in
denying his proposed sale of 100 acres of the farm to neighboring farmers. That
proposed sale, he contends, would have provided enough funds to pay Wells
Fargo, other creditors, and Cindy the amount he owed her at the time, though
not the full equalization payment. James argues that in making these erroneous
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rulings, the trial court impermissibly modified the PSA. See Johnson, 920
N.E.2d at 258 (property distribution settlements approved as part of a
dissolution may be modified only where both parties consent or where there is
fraud, undue influence, or duress).
[21] Addressing James’s arguments requires us to determine if Cindy held a
judgment lien against the farm, as the trial court found, or if she held a
narrower secured interest, which was defined and limited by both the PSA and
the dissolution security statute. The judgment lien statute provides as follows:
All final judgments for the recovery of money or costs in the
circuit court and other courts of record of general original
jurisdiction in Indiana, whether state or federal, constitute a lien
upon real estate and chattels real liable to execution in the county
where the judgment has been duly entered and indexed in the
judgment docket as provided by law:
(1) after the time the judgment was entered and indexed; and
(2) until the expiration of ten (10) years after the rendition of the
judgment;
exclusive of any time during which the party was restrained from
proceeding on the lien by an appeal, an injunction, the death of
the defendant, or the agreement of the parties entered of record.
Ind. Code § 34-55-9-2. The dissolution security statute provides: “Upon
entering an order under this chapter, the court may provide for the security,
bond, or other guarantee that is satisfactory to the court to secure the division of
property.” Ind. Code § 31-15-7-8.
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[22] In dissolution cases, we presume that the judgment lien statute applies unless
the trial court explicitly states otherwise. Reed, 508 N.E.2d at 1259; Penix v.
Hicks, 618 N.E.2d 1346, 1347 (Ind. Ct. App. 1993). In Reed, the Indiana
Supreme Court held that where one party receives a money judgment against
the other party, the judgment lien statute creates an automatic lien on the
indebted party’s real estate. 508 N.E.2d at 1258-59. This is so even when one
spouse is ordered to pay the other spouse in installments. Lobb v. Hudson-Lobb,
913 N.E.2d 288, 295 (Ind. Ct. App. 2009); see also Needham v. Suess, 577 N.E.2d
965, 968 (Ind. Ct. App. 1991) (“The statute does not differentiate between a
judgment which is to be paid in installments and one which is to be paid in one
lump sum.”).
[23] The judgment lien statute applies automatically unless a trial court takes
“positive action” to alter application of the judgment lien statute. Johnson, 920
N.E.2d at 256. In other words, to avoid application of the judgment lien
statute, a trial court must use language that “specifically eliminate[s]” application
of that statute. See Reed, 508 N.E.2d at 1259 (emphasis added); see also Lobb,
913 N.E.2d at 295; Penix, 618 N.E.2d at 1347. “[S]ilence of the court does not
eliminate the automatic provision in the judgment lien statute. The court may
exercise its inherent power and eliminate a judgment lien only by positive
action.” Reed, 508 N.E.2d at 1259.
[24] James argues that the trial court did, in fact, take positive action to specifically
eliminate the judgment lien when it had earlier merged the PSA into the
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dissolution decree. Appellant’s App. Vol. 2 at 63. Thus, he claims Cindy’s
secured interest was limited to only a part of the equalization payment.
[25] We addressed what it means to “specifically eliminate” application of the
judgment lien statute in Bell v. Bingham, 484 N.E.2d 624, 627-628 (Ind. Ct. App.
1985). See Reed, 508 N.E.2d at 1259. In Bell, more than two years after the
former wife died, the former husband, who had been awarded alimony, sued
the purchasers of the former wife’s real estate. The former husband claimed he
held a judgment lien against the real estate. In rejecting this claim, and in
finding that the trial court took “positive action” to alter application of the
judgment lien statute, Bell cited the following language from the divorce decree:
“[T]he . . .real estate . . . [is] set over to [former wife] . . . [and] will be turned
over to her as her sole property and that [former husband will] have no further
interest in said real estate whatsoever.” Id. at 625-26 (emphasis in original). Thus,
Bell ruled that because the trial court explicitly withheld a lien pursuant to the
dissolution security statute, the former husband did not have a general
judgment lien against the real estate. Id. at 627.
[26] Unfortunately, the language in the motion to correct error ruling is unclear as to
whether Cindy had a judgment lien or a lien pursuant to the dissolution security
statute:
Notably, the parties did not specify whether, upon default under
the terms of the promissory note, [Cindy] had authority to collect
the entire amount to which she was entitled or whether her
recovery would be limited to only the amount unpaid at the time
of default. [James’s] point that the promissory note (which does
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indeed appear to have been cobbled together from various
sources) lacks an acceleration clause is meritorious. The Court
concludes that [Cindy] was entitled to recover only the moneys
owed to her that had not been paid as of the date of closing on
December 22, 2017.
Having reached this conclusion, the Court must determine what
relief is available to [James]. Unfortunately, it appears that little
relief is available. With the entry of the dissolution decree, a
judgment lien would have (or at least should have) appeared on
the 175 acres of land. [Cindy] and [James] would not have been
able to deliver marketable title to the land unless [Cindy] released
her judgment lien at the time of closing. [Cindy] has argued via
her counsel that she would not have done so if she had not been
paid in full. At the same time, however, [James] has raised a
valid question concerning the calculation of the amount that was
paid to [Cindy] from the proceeds, particularly concerning the
interest added to the principal. [James] is entitled to ensure that
the amount paid to [Cindy] was correct and that any erroneous
overpayment is returned to him.
Appellant’s App. Vol. 2 at 40-41.
[27] Here, the ambiguity of this language is irrelevant because we presume a
judgment lien exists unless a trial court uses language that “specifically
eliminate[s]” application of the judgment lien statute. See Reed, 508 N.E.2d at
1259. “The court may exercise its inherent power and eliminate a judgment
lien only by positive action.” Id. Here, there is no language that specifically
eliminates application of the judgment lien statute. See Appellant’s App. Vol. 2 at
31-41; 49-58; 61-63. Nowhere did the trial court take “positive action” to alter
application of the judgment lien statute. See Johnson, 920 N.E.2d at 256; Reed,
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508 N.E.2d at 1259. Indeed, even though the trial court’s ruling creates some
confusion, it did state that the dissolution decree granted Cindy a judgment
lien. Appellant’s App. Vol. 2 at 40-41.
[28] The parties could have clarified their intent by including language in the PSA
that explained whether Cindy held a judgment lien or a dissolution security
interest. They did not do so. As the trial court observed: “Notably, the parties
did not specify whether, upon default under the terms of the promissory note,
[Cindy] had authority to collect the entire amount to which she was entitled or
whether her recovery would be limited to only the amount unpaid at the time of
default.” See Joyce v. Joyce, 627 N.E.2d 825, 828 n.1 (Ind. Ct. App. 1994) (“We
would encourage the inclusion of such language in settlement agreements and
dissolution decrees so as to avoid confusion regarding the application of the
judgment lien statute and/or the security for payment statute and to show the
clear intent of the parties.”), trans. denied. The fact that the PSA called for
installment payments did not obviate the need for a clear statement about the
nature of Cindy’s security interest. See Reed, 508 N.E.2d at 1258-59 (dissolution
decree automatically creates judgment lien against indebted party’s real estate
even if indebted party is ordered to pay the other spouse in installment
payments); see also Lobb, 913 N.E.2d at 295.
[29] Therefore, we find that Cindy held a judgment lien against the farm. A
judgment lien confers title to real estate to the judgment lien holder. Cf. Rural
Acceptance Corp. v. Pierce, 157 Ind. App. 90, 97, 298 N.E.2d 499, 503 (1973). A
judgment lien “gives the judgment creditor the right to attach the judgment to
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the debtor’s property.” Judgment Lien, Black’s Law Dictionary (10th ed. 2014).
Here, the judgment lien empowered Cindy to sell the farm to procure the full
amount of the equalization payment.
[30] Because we find that Cindy held a judgment lien against the farm, the lack of an
acceleration clause in the PSA is irrelevant; that absence had no bearing on
Cindy’s right to seek full payment of the equalization payment or to sell the
entire farm. Our finding also renders meritless James’s claim that the trial court
abused its discretion in denying his request to sell 100 acres of the farm to
neighboring farmers. As holder of a judgment lien, Cindy, not James, had the
right to negotiate a sale of the real estate. Our finding also disposes of James’s
claims that the PSA gave him the unqualified right to sell the real estate even
though he had defaulted under the terms of the promissory note.
(“Notwithstanding any other provision in this Agreement to the contrary,
[James] shall be entitled to sell, convey or otherwise dispose of any assets.”)3
Appellant’s App. Vol. 2 at 57. Once again, Cindy’s judgment lien supersedes
whatever rights this language may have conferred upon James.
[31] Finally, we observe that James’s interpretation of the PSA is unworkable.
Regarding his claim that Cindy was entitled to only the amount due to her on
installment payments, James concedes that this would likely result in piecemeal
3
James’s claim that his right to sell marital assets superseded Cindy’s right defies logic. James’s
interpretation would subordinate Cindy’s interest to pursue the equalization payment, even once James had
defaulted This would have compromised or defeated Cindy’s security interest.
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sales of the farm: “the trial could have authorized Cindy . . . to sell only a
portion of [James’s] real estate sufficient to pay the creditors and the amount
actually owed to her.” James’s Br. at 22. This likely would have diminished the
value of the farm, making it less certain that Cindy and creditors like Wells
Fargo would be fully paid. Further, any proposed sale of the real estate was
subject to the approval of Wells Fargo: “[T]he authority to sell the Real Estate
granted to Cindy . . . herein is subject to the prior written approval by Wells
Fargo of all terms and conditions of such sale, including, but not limited to, the
method of sale and purchase price.” Appellant’s App. Vol. 2 at 22. Piecemeal
sales would have devalued the property; however, we will not speculate
whether Wells Fargo would have approved such sales. Indeed, Wells Fargo
indicated it would not approve James’s proposed sale of 100 acres of the farm to
neighboring farmers for $1,000,000.00 when its attorney stated: “My client has
basically instructed me if we don’t get paid off through this closing [with Rieth-
Riley] we’re simply just going to move forward and set the real estate for
sheriff’s sale and take care of ourselves and exercise the rights we need to.” Id.
at 105.
[32] By selling the real estate to Rieth-Riley, Cindy appears to have made the best of
a bad situation. Though the real estate’s appraised value was $1.56 million, she
sold it for $1.63 million. Id. at 13, 104. Not only did the sale pay off Cindy,
Wells Fargo and other creditors, it paid James $500,000.00. Rieth-Riley Br. at
12.
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[33] The trial court did not err in finding that Cindy held a judgment lien against the
farm and did not impermissibly modify the PSA by allowing Cindy to sell the
farm to collect the full equalization payment.
B. The Trial Court Properly Denied James’s Request for Rescission
[34] James first argues that the trial court should have granted his request to rescind
the sale of the farm to Rieth-Riley because the sale was based on the trial court’s
erroneous determination that Cindy had the right to sell the farm. James next
argues that Rieth-Riley’s ejectment action to remove him from the farm was not
properly before the trial court because Rieth-Riley should have instituted a
separate action instead of pursuing ejectment within the dissolution case. See
Ind. Code § 32-30-2-1, et seq.
[35] Because we decided above that the order allowing Cindy to sell the farm was
not erroneous, we reject James’s argument that the sale to Rieth-Riley should
be rescinded. We also reject his claim that the ejectment action was not
properly before the trial court. Indiana Trial Rule 24 allows a litigant to
intervene as a matter of right when disposition of a matter may impair the
litigant’s interest in the property. Here, when James asked the trial court to
rescind the sale of the farm, he necessarily threatened Rieth-Riley’s interest in
the farm, allowing Rieth-Riley to intervene as a matter of right and to pursue its
rights and remedies within the existing case.
[36] Further, allowing Rieth-Riley to seek ejectment and possession within the
existing case served judicial economy. During the hearing on James’s motion
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to correct error, James’s attorney conceded this during the following colloquy
with the trial court:
THE COURT: Why don't we talk about that. And I read through
the motion to strike, which I find to – it’s an interesting
argument, and I guess, Mr. Masters, maybe you can help by
answering this question for me. Other than the other branches of
government that collect a portion of the filing fee, is there any
real harm to having the immediate possession and perhaps final -
or the ejectment heard in this case as opposed to filing a new
action?
MR. MASTERS: Well, if you put it to me in those terms, is there
any harm. I suppose there’s no harm. In all candor to the Court,
I would say there’s probably a certain efficiency in having us all
here.
Appellee Rieth-Riley App. Vol. 2 at 113-14.
[37] Moments later, James’s attorney again conceded that allowing Rieth-Riley’s
ejectment to proceed within the existing case would serve judicial economy:
MR. MASTERS: And so, I have to tell you, you know, we’ve all
been around for a while, and I assumed that’s where we’d end up
is right back here anyway, even if there was a separate cause of
action filed.
Id. at 116. In Fultz v. Cox, 574 N.E.2d 956, 959 (Ind. Ct. App. 1991), we held
that when deciding whether to consolidate cases, a trial court should balance
the interests of convenience and judicial economy against the likelihood of
substantial prejudice to a defendant’s case. Here, James concedes there was no
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prejudice in letting the ejectment matter proceed in the dissolution case.
Therefore, allowing the ejectment case to proceed within the dissolution case
served judicial economy, did not prejudice James, and thus was not an abuse of
discretion. Cf. Emerick v. Miller, 159 Ind. 317, 64 N.E. 28, 30 (1902) (“[I]t would
be a useless and vexatious course to require the purchaser to obtain such
possession by another suit.”). Accordingly, the trial court did not abuse its
discretion in allowing Rieth-Riley to intervene to protect its interests in the farm
with an ejectment and possession action.
[38] Finally, we agree with Rieth-Riley that because rescission is an equitable
remedy, it is not available to parties like James who are in default. Under the
“clean hands” doctrine, one who seeks equity must be free of wrongdoing
before the court. Fairway Developers, Inc. v. Marcum, 832 N.E.2d 581, 584 (Ind.
Ct. App. 2005), trans. denied. For the doctrine to apply, the party must be guilty
of intentional misconduct. Foursquare Tabernacle Church of God in Christ v. Dep’t
of Metro. Dev. of Consol. City of Indianapolis, 630 N.E.2d 1381, 1385 (Ind. Ct.
App. 1994). Here, James’s wrongdoing and intentional conduct was clear; he
never denied that he defaulted on his obligations under the PSA. In fact, in his
motion to correct error he itemized the payments on which he had defaulted.
Appellant’s App. Vol. 2 at 82-83. Therefore, James lacked the requisite clean
hands to seek rescission, and the trial court did not abuse its discretion in
denying James’s request to rescind Cindy’s sale of the farm to Rieth-Riley. See
Van Bibber Homes Sales v. Marlow, 778 N.E.2d 852, 857 (Ind. Ct. App. 2002).
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II. Adjudication of Rieth-Riley’s Claim to Possess Farm
[39] James argues that the trial court did not declare that Rieth-Riley had the right to
possess the farm because the September 21, 2017 order only gave Cindy
authority to sell the farm yet did not approve a specific buyer. While it is true
the order did not identify Rieth-Riley as the buyer, the record clearly
demonstrates that the trial court declared that Rieth-Riley had the right to
possess and own the property. Once James asked the trial court to rescind the
sale of the farm, Rieth-Riley quickly sought leave to intervene pursuant to
Indiana Trial Rule 24 because it claimed an interest in the farm and that
James’s motion to rescind would impair its interests in the farm. Appellee Rieth-
Riley’s App. Vol. 2 at 21-26. The same day Rieth-Riley also filed a motion for
ejectment and immediate possession of the farm, contending that James
wrongfully and unlawfully possessed the farm and that the trial court should
order James to surrender the farm. On March 14, 2018, the trial court granted
Rieth-Riley’s motion for ejectment and immediate possession. It ruled that
“[i]mmediate possession of the [farm] . . . is granted to Rieth Riley [and that
James’s] respective rights of possession are terminated[.]” Id. at 70-71. On
March 20, 2018, Rieth-Riley filed an emergency motion for final judgment of
possession, which the trial court granted on March 30, 2018. Id. at 73;
Appellant’s App. Vol. 2 at 46-48 (“Rieth-Riley’s Motion for a Final Judgment of
Possession pursuant to Ind. Code § 32-30-3-12 is GRANTED.”). Therefore,
the trial court rendered a final adjudication of Rieth-Riley’s right to possess the
farm.
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Cindy’s Cross Appeal
I. Trial Court Erred in Limiting Cindy’s Recovery
[40] Cindy contends that the trial court erred in granting James’s motion to correct
error with respect to the amount to which she was entitled upon James’s default
of the terms of the promissory note. While conceding that the promissory note
does not contain an acceleration clause, she argues that the plain meaning of
the PSA provides for an acceleration of the full amount due upon default of any
term of the promissory note. Thus, she claims she is entitled to retain sale
proceeds to satisfy the full amount of the promissory note.4
[41] Earlier in this decision, we found that Cindy held a judgment lien against the
farm and, thus, was entitled to sell the farm to get the full equalization
payment. Therefore, we agree with Cindy that the trial court erred in ruling
that she was entitled only to that amount of sales proceeds that would cover the
amount James owed her at the time the sale of the farm to Rieth-Riley had
closed. Cindy was entitled to the full amount of the equalization payment.
II. Cindy is Entitled to Remand for Attorney Fees
[42] Cindy argues that she is entitled to attorney fees. She refers to the following
language in the promissory note: “In the event of a default, Holder shall be
entitled to recover reasonable attorneys’ fees incurred in collection.” Appellant’s
4
While the trial court limited the amount of sale proceeds that Cindy could keep, it appears that Cindy has
received $383,123.09. James’s Br. at 14, n.2; Appellant’s App. Vol. 2 at 52.
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App. Vol. 2 at 60. Because James defaulted, which required Cindy to initiate
legal action to collect the amount due, Cindy argues that she is entitled to
recover reasonable trial and appellate attorney fees. She asks us to remand the
matter to the trial court for an evidentiary hearing on the issue. See Bruno v.
Wells Fargo Bank, N.A., 850 N.E.2d 940, 951 (Ind. Ct. App. 2006).
[43] We reject James’s claim that because Cindy did not raise the issue of trial
attorney fees in the proceeding below, she is not entitled to trial attorney fees,
contending that the issue is res judicata. The Indiana Supreme Court has ruled
that “[a] request for attorney fees almost by definition is not ripe for
consideration until after the main event reaches an end. Entertaining such
petitions post-judgment is virtually the norm.’” Cavallo v. Allied Physicians of
Michiana, LLC, 42 N.E.3d 995, 1002-03 (Ind. Ct. App. 2015) (quoting R.L.
Turner Corp. v. Town of Brownsburg, 963 N.E.2d 453, 460 (Ind. 2012)).
Accordingly, we find that the matter of Cindy’s trial attorney fees is not res
judicata, and on remand the trial court shall determine the amount of trial and
appellate attorney fees that James owes Cindy. See Cole, 713 N.E.2d at 905 n.4
(hearing on remand preferred procedure to determine reasonable attorney fees).
[44] Affirmed in part, reversed in part, and remanded.
Vaidik, C.J., and Riley, J., concur.
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