FILED
Aug 25 2016, 8:30 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
James M. Lewis Timothy J. Maher
Michael J. Hays Barnes & Thornburg
Tuesley Hall Konopa LLP South Bend, Indiana
South Bend, Indiana
IN THE
COURT OF APPEALS OF INDIANA
In re the Scott David Hurwich August 25, 2016
1986 Irrevocable Trust Court of Appeals Case No.
71A03-1602-TR-301
Scott D. Hurwich,
Appeal from the St. Joseph Probate
Appellant-Plaintiff, Court
v. The Honorable James N. Fox,
Judge
Stacey R. MacDonald, Trial Court Cause No.
71J01-1410-TR-16
Appellee-Defendant.
Bradford, Judge.
Case Summary
[1] Appellant-Plaintiff Scott Hurwich is the settlor and beneficiary of the Scott
David Hurwich 1986 Irrevocable Trust (“the Trust”). Appellee-Defendant
Stacey R. MacDonald served as trustee of the Trust until her removal at
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Hurwich’s request on November 28, 2012. Hurwich filed a complaint against
MacDonald which alleged that MacDonald mismanaged Trust assets while
acting as trustee. MacDonald filed a motion to dismiss Hurwich’s complaint
which the probate court granted. Hurwich filed a motion to reconsider which
he later requested to be treated as a motion to correct error. Over the following
six months, the probate court held two hearings on the motion to reconsider
and the parties submitted several briefs in support of their positions. The
probate court never made a ruling on the motion and Hurwich filed his appeal
in February of 2016. On appeal, the parties dispute (1) whether Hurwich timely
filed his notice of appeal, and (2) whether the probate court erred in granting
MacDonald’s motion to dismiss. We reverse the probate court’s order
dismissing Hurwich’s claims.
Facts and Procedural History
[2] Hurwich is the settlor and beneficiary of the Trust. MacDonald served as
trustee of the Trust until November 28, 2012. On October 2, 2014, Hurwich
filed a complaint against MacDonald alleging that she mismanaged Trust
assets, comingled Trust assets with her own funds, converted Trust assets,
committed waste of Trust property, and otherwise breached her fiduciary duties
to Hurwich. On November 14, 2014, MacDonald filed a motion to dismiss
Hurwich’s complaint arguing that (1) Hurwich’s claim was barred by the
applicable statute of limitations, (2) the language of the Trust limited
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MacDonald’s liability as trustee, and (3) Hurwich’s complaint lacked sufficient
factual allegations.
[3] On June 12, 2015, the probate court issued an order dismissing Hurwich’s
claim with prejudice. Hurwich filed a motion to reconsider on June 22, 2015.
On July 17, 2015, the probate court scheduled a hearing on Hurwich’s motion
to reconsider for July 27. At the hearing, MacDonald argued that the probate
court no longer had jurisdiction to rule on Hurwich’s motion to reconsider
because the motion was automatically denied five days after it was filed
pursuant to Indiana Trial Rule 53.4(B). Hurwich asked the probate court to
treat his motion to reconsider as a motion to correct error. Following the
hearing, the probate court issued an order indicating that it would take the
matter under advisement and “allow[] [MacDonald] to file a motion regarding
lack of jurisdiction [] within two (2) weeks, a response by [Hurwich] to be filed
within two (2) weeks thereafter and [MacDonald] an additional one (1) week
for final response.” Appellant’s App. p. 47.
[4] On August 11, 2015, MacDonald filed a brief arguing that the probate court
lacked jurisdiction and objected to further action by the probate court on the
motion to reconsider. On August 18, 2015, Hurwich filed a responsive brief
arguing that the probate court had jurisdiction and in support of his motion to
reconsider. After receiving an extension of time, MacDonald filed a reply brief
on September 8, 2015. On October 7, 2015, a notice of hearing on all pending
matters was set for November 6, 2015. At the hearing, ultimately held on
December 14, 2015, the parties made arguments regarding (1) whether the
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probate court had jurisdiction to address Hurwich’s motion to reconsider and
(2) the merits of Hurwich’s motion. The probate court took the matter under
advisement but took no further action. Hurwich filed his notice of appeal on
February 9, 2016.
Discussion and Decision
[5] The parties presented the following issues for our review: (1) whether Hurwich
timely filed an appeal following the denial of his motion to reconsider, and (2)
whether the probate court erred in granting MacDonald’s motion to dismiss.1
I. Whether Hurwich’s Appeal was Timely
[6] MacDonald argues that Hurwich failed to timely appeal the denial of his
motion to reconsider. Hurwich filed his motion to reconsider on June 22, 2015.
MacDonald argues that Hurwich’s motion was denied on June 27 under
Indiana Trial Rule 53.4(B), which provides that a motion to reconsider is
automatically denied if it is not ruled on within five days. The probate court
took no action on the motion until July 17, 2015, when it set a hearing on the
motion for July 27.
1
In support of her motion to dismiss, MacDonald argued that Hurwich’s claim was barred by the applicable
statute of limitations. However, MacDonald has made no such argument on appeal. As such, she has
waived the issue for our review. Appellate Rule 46(A)(8); Burnett v. Cincinnati Ins. Co., 690 N.E.2d 747, 749
(Ind. Ct. App. 1998) (“Failure of a party to present a cogent argument in his or her brief is considered a
waiver of that issue.”).
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[7] Hurwich argues that his motion to reconsider was not automatically denied
because it should have been treated as a motion to correct error. We agree.
The probate court’s June 12, 2015 order dismissing Hurwich’s claim with
prejudice was a final judgment. As such, the probate court no longer had the
power to rule on a motion to reconsider. “Our review of the trial rules reveals
that motions to reconsider are properly made and ruled upon prior to the entry
of final judgment.” Hubbard v. Hubbard, 690 N.E.2d 1219, 1221 (Ind. Ct. App.
1998) (citing Ind. Trial Rule 53.4(A)). In Hubbard, this court found that a
party’s motion to reconsider, filed after issuance of final judgment, should have
been treated as a motion to correct error. “[A]lthough substantially the same as
a motion to reconsider, a motion requesting the court to revisit its final
judgment must be considered a motion to correct error. We decline to favor
form over substance and, despite its caption, Mother’s motion in the instant
case should have been treated as a motion to correct error.” Id. Because
Hurwich’s motion should be treated as a motion to correct error, it was not
automatically denied five days after its filing.2
[8] MacDonald argues that even if Hurwich’s motion is treated as a motion to
correct error, the probate court’s inaction amounted to a denial of Hurwich’s
motion and Hurwich did not timely file his appeal. MacDonald contends that
2
We will hereafter refer to Hurwich’s motion to reconsider as the motion to correct error.
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Hurwich’s thirty-day window to appeal the denial of his motion to correct error
expired on September 25, 2015. Indiana Trial Rule 53.3 provides as follows:
(A) Time limitation for ruling on motion to correct error. In
the event a court fails…to rule on a Motion to Correct Error
within thirty (30) days after it was heard…the pending
Motion to Correct Error shall be deemed denied. Any appeal
shall be initiated by filing the notice of appeal under
Appellate Rule 9(A) within thirty (30) days after the Motion
to Correct Error is deemed denied.
(B) Exceptions. The time limitation for ruling on a motion to
correct error established under Section (A) of this rule shall
not apply where:
(1) The party has failed to serve the judge personally; or
(2) The parties who have appeared or their counsel stipulate
or agree on record that the time limitation for ruling set forth
under Section (A) shall not apply; or
(3) The time limitation for ruling has been extended by
Section (D) of this rule.
(C) Time of ruling. For the purposes of Section (A) of this rule, a
court is deemed to have set a motion for hearing on the date
the setting is noted in the Chronological Case Summary, and
to have ruled on the date the ruling is noted in the
Chronological Case Summary.
(D) Extension of time for ruling. The Judge before whom a
Motion to Correct Error is pending may extend the time
limitation for ruling for a period of no more than thirty (30)
days by filing an entry in the cause advising all parties of the
extension. Such entry must be in writing, must be noted in
the Chronological Case Summary before the expiration of the
initial time period for ruling set forth under Section (A), and
must be served on all parties. Additional extension of time
may be granted only upon application to the Supreme Court
as set forth in Trial Rule 53.1(D).
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[9] On July 27, 2015, the probate court held a hearing on Hurwich’s motion to
correct error. MacDonald argues that the deadline for the probate court to rule
on the motion was August 26, thirty days after the July 27 hearing. The only
ways this deadline could have been extended were if (1) the trial judge was not
personally served, (2) the parties agreed to extend the deadline, or (3) the
probate court sua sponte extended the time limit by a maximum of thirty days.
T.R. 53.1.
[10] On record at the July 27, 2015 hearing, and with the acquiescence of both
parties, the probate court set specific time limits for the parties’ submissions of
briefs on the issue of jurisdiction.
The Court: How much time do you think each party needs?...
Counsel for MacDonald: Two weeks to get mine on file, then we
just follow –
Counsel for Hurwich: Two weeks to respond – that’s fine.
The Court: Okay, and then I’ll give you, how about just another
week after that final response, because you’ll have the interim to
continue to prepare…Is that good? Two weeks, two weeks, and
then a week. Is that fair enough?
Counsel for Hurwich: Yes.
Counsel for MacDonald: Yes, Your Honor.
Tr. pp. 28-29. This is a valid time limitation exception under Rule 53.3(B)(2).
See Santelli v. Rahmatullah, 993 N.E.2d 167, 172 (Ind. 2013) (Trial court’s order
granting motion to correct error granting a new trial was timely where,
although the court issued the order forty days after a motion hearing was
conducted, “[o]n the record, and with the acquiescence of both parties, the trial
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court set a specific date for the parties’ submissions of twenty-eight days after
the hearing and stated its ruling would follow as soon as possible thereafter.”).
[11] Following the hearing, the probate court issued an order indicating that it
would take the matter under advisement and “allow [MacDonald] to file a
motion regarding lack of jurisdiction [] within two (2) weeks, a response by
[Hurwich] to be filed within two (2) weeks thereafter and [MacDonald] an
additional one (1) week for final response.” Appellant’s App. p. 47. The
parties filed their respective briefs according to these time limits with
MacDonald’s final response filed September 8, 2015. On October 7, the
probate court set a hearing on all pending matters. The question then is
whether the probate court’s decision to set a subsequent hearing functioned as
an additional extension of the deadline to rule on the motion to correct error.
[12] It could be argued that, at the latest, the deadline to rule on Hurwich’s motion
to correct error was October 8, 2015, thirty days after the final brief was filed by
MacDonald, and that because the probate court did not rule on the motion
prior to this date, it was automatically denied. However, the probate court’s
decision to hold a second hearing indicates that the motion to correct error was
still being “heard” for purposes of Rule 53.3(A). Consequently, the motion
cannot be automatically denied if it is still being heard. To find otherwise
would lead to unfair and irrational results where (1) trial courts would be
precluded from holding subsequent hearings where such are necessary to reach
an accurate resolution, and (2) in cases such as this, parties like Hurwich would
be denied their right to appeal through no fault of his own.
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[13] The final hearing on Hurwich’s motion to correct error was held on December
14, 2015, and the probate court took the matter under advisement. Because the
probate court made no rulings on the motion and took no further action,
Hurwich’s motion was automatically denied thirty days later, on January 13,
2016. As such, Hurwich had until February 12, 2015 to file an appeal.
Hurwich’s appeal was timely filed on February 9.
II. Whether Dismissal of Hurwich’s Complaint was
Appropriate
[14] In reviewing a motion to dismiss granted pursuant to Trial Rule
12(B)(6), our standard of review is well settled. Burke v. Town of
Schererville, 739 N.E.2d 1086, 1090 (Ind. Ct. App. 2000). A
12(B)(6) motion to dismiss for failure to state a claim upon which
relief can be granted tests the legal sufficiency of a claim, not the
facts supporting it. Id. Therefore, we view the complaint in the
light most favorable to the non-moving party, drawing every
reasonable inference in favor of that party. Id. at 1091. In
reviewing a ruling on a motion to dismiss, we stand in the shoes
of the trial court and must determine if the trial court erred in its
application of the law. Id. The trial court’s grant of a motion to
dismiss is proper if it is apparent that the facts alleged in the
complaint are incapable of supporting relief under any set of
circumstances. Id. In determining whether any facts will support
the claim, we look only to the complaint and may not resort to
any other evidence in the record. Id.
Godby v. Whitehead, 837 N.E.2d 146, 149 (Ind. Ct. App. 2005).
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A. Whether the Trust Provision Precluding Actions Against
the Trustee Justifies Dismissal
[15] MacDonald briefly argues that dismissal was appropriate because the Trust
“expressly precludes any judicial review of the Trustee’s actions in her capacity
as Trustee. It also exempts the Trustee from any liability for exercising her
discretion as Trustee.” Appellee’s Br. p. 9. The Trust provides as follows:
[T]he Trustee shall have (to the extent the power of election is
not otherwise vested in a person other than the Trustee) the right,
power and privilege to make elections….The actions of the
Trustee in making any election shall be binding upon all
beneficiaries and the Trustee shall not be liable to anyone for exercising
a right, power of privilege to elect. The Trustee may make
distributions and allocations without regard to the income tax
basis of any property distributed or allocated to any beneficiary.
No compensating adjustments between principal and income,
nor with respect to any trust, need be made even though the
actions of the Trustee may affect (beneficially or adversely) the
interests of the beneficiaries. The actions of the Trustee in
making distributions and allocations shall be binding upon all
beneficiaries and the Trustee shall not be liable to anyone for exercising
the Trustee’s discretion in this regard.
Appellant’s App. p. 17 (emphases added). While this language generally limits
the trustee’s liability when making certain discretionary decisions, it clearly
does not give the trustee a free pass to convert, waste, or mismanage Trust
assets, or otherwise breach its fiduciary duties. In other words, there is no
scenario where stealing money from the Trust could be viewed as a valid
discretionary decision. MacDonald’s claim that the Trust “expressly precludes
any judicial review of the Trustee’s actions” is wholly inaccurate. Any notion
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that the probate court could properly dismiss Hurwich’s claim based on this
Trust language is without merit.
B. Whether Hurwich’s Complaint Could be Dismissed for
Lack of Factual Specificity
[16] MacDonald argues that dismissal of Hurwich’s complaint was justified because
he failed to allege in his complaint, or since, any specific misdeed by
MacDonald or any specific trust asset which has been detrimentally affected.
Notice pleading under Indiana Trial Rule 8(A) merely requires “a short and
plain statement of the claim showing that the pleader is entitled to relief.” In
other words, a plaintiff must only plead “the operative facts so as to place the
defendant on notice as to the evidence to be presented at trial.” Noblesville
Redev. Comm’n v. Noblesville Assocs. Ltd. P’ship, 674 N.E.2d 558, 563 (Ind. 1996).
“A complaint’s allegations are sufficient if they put a reasonable person on
notice as to why a plaintiff sues.” Shields v. Taylor, 976 N.E.2d 1237, 1245 (Ind.
Ct. App. 2012). “Under notice pleading, we review the granting of a motion to
dismiss for failure to state a claim under a stringent standard, and affirm the
trial court’s grant of the motion only when it is ‘apparent that the facts alleged
in the challenged pleading are incapable of supporting relief under any set of
circumstances.’” Trail v. Boys & Girls Clubs of Nw. Ind., 845 N.E.2d 130, 135
(Ind. 2006) (quoting McQueen v. Fayette Cnty. Sch. Corp., 711 N.E.2d 62, 65 (Ind.
Ct. App. 1999)).
[17] Hurwich’s complaint reads as follows:
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4. Until 2013, Stacey served as Trustee of the Trust.
5. The Trust was created under Indiana law and holds assets
primarily located in St. Joseph County, Indiana.
6. During the period she served as Trustee, Stacey mismanaged
Trust assets, co-mingled them with her own funds, converted
Trust assets to her own use, committed waste to Trust property,
and otherwise breached her fiduciary duties to Scott.
7. When Scott learned of Stacey’s conduct regarding the Trust,
he appointed a successor Trustee.
8. Stacey’s conduct regarding the Trust has caused Scott
damages.
Appellant’s App. pp. 10-11. MacDonald claims that these are conclusory
assertions without any specific factual support. However, specific factual
support is not required under Rule 8(A). Furthermore, with claims such as
those alleged here, factual specifics may be unavailable until discovery is made.
Hurwich may be of the belief that there is some undetermined amount of
money or other Trust assets missing or unaccounted for, but be unaware as of
yet how those assets were specifically misappropriated by the trustee. As it is,
the complaint contains the operative facts sufficient to put MacDonald on
notice as to why Hurwich is suing.
[18] Even if we assume that Hurwich’s complaint was properly dismissed for failure
to offer a sufficient factual basis for his claim, the probate court should have
dismissed his claim without prejudice and allowed him the opportunity to
amend his complaint pursuant to Indiana Trial Rule 12. “When a motion to
dismiss is sustained for failure to state a claim under subdivision (B)(6) of this
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rule the pleading may be amended once as of right pursuant to Rule 15(A)
within ten [10] days after service of notice of the court’s order sustaining the
motion.” T.R. 12(B). “‘[A] T.R. 12(B)(6) dismissal is without prejudice, since
the complaining party remains able to file an amended complaint within the
parameters of the rule.’” Baker v. Town of Middlebury, 753 N.E.2d 67, 74 (Ind.
Ct. App. 2001) (quoting Platt v. State, 664 N.E.2d 357, 361 (Ind. Ct. App. 1996),
trans. denied.). Accordingly, even if a Rule 12(B)(6) dismissal was appropriate,
the probate court erred by dismissing Hurwich’s complaint with prejudice.
[19] The judgment of the probate court is reversed.
Pyle, J., and Altice, J., concur.
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