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Trial Court could not reserve issue of spousal maintenance after finding no evidence requiring it in final order

In a divorce case, the Trial Court found insufficient evidence so as to support a finding that Wife was entitled to maintenance (i.e. Indiana’s version of alimony). Wife later received ruling for Social Security appeal that she was in fact disabled and the Trial Court modified its final order.

The Court of Appeals disagreed with this approach, finding:

it is clear that a trial court is to determine whether a spouse is entitled to maintenance at the time the dissolution decree is entered. Ind. Code §§ 31-15-7-1, -2. Indiana Code Section 31-15-7-2(1) and (2) require the court to make certain findings, before it considers whether maintenance is necessary. The spouse seeking maintenance has the burden of proving that he or she is entitled to maintenance. Matzat v. Matzat, 854 N.E.2d 918, 921 (Ind. Ct. App. 2006). If, at the time of dissolution, the trial court finds that a spouse has not satisfied the statutory criteria entitling him or her to maintenance, then that is the end of the matter. The dissolution decree is final. Ind. Code § 31-15-2-16(b).

www.in.gov/judiciary/opinions/pdf/03251401tac.pdf.

Default judgment of $500k set aside where service narrowly defective

In injury case against the American Legion, the plaintiff made service through the sheriff who left copy of summons and complaint with registered agent’s address and then mailed them to the same address, which was not an abode or dwelling, first class. 

Manner of service failed to comply with Trial Rule 4 service on individuals or business entities and setting aside of default judgment was upheld.

www.in.gov/judiciary/opinions/pdf/02281401ewn.pdf.

IN CoA sua sponte denies interlocutory appeal for lack of jurisdiction due to untimeliness

In what is now the 9th published decision (State and Federal) emanating from the Mark S. Weinberger, M.D. saga, the Indiana Court of Appeals dismissed the interlocutory appeal of Lake County Judge, Calvin Hawkins’s grant of partial summary judgment. The trial court issued its order on Nov. 19, 2012. The plaintiff then filed a motion to reconsider on January 7, 2013. On April 3, 2013, the trial court entered a stipulated order denying the motion to reconsider and certifying the matter for interlocutory appeal. The order did not cite good cause for delay for filing for interlocutory appeal nor did it include any findings for good cause.

Despite the fact that neither party raised the issue of timeliness, the Appellate Court noted Indiana Appellate Rule 14(B) which provides:

A motion requesting certification of an interlocutory order must be filed in the trial court within thirty (30) days after the date the interlocutory order is noted in the Chronological Case Summary unless the trial court, for good cause, permits a belated motion. If the trial court grants a belated motion and certifies the appeal, the court shall make a finding that the certification is based on a showing of good cause, and shall set forth the basis for that finding.

Thus, even though the certification of interlocutory appeal went uncontested at all stages, the failure to follow this appellate procedure deprives the Appellate Court of jurisdiction to hear argument on the matter. Here, the motion to reconsider could not toll the limitations date and the trial court’s order lacked any findings to go beyond the 30 day deadline to file an interlocutory appeal. Thus, the appeal was dismissed for lack of jurisdiction.

www.in.gov/judiciary/opinions/pdf/02181402cds.pdf.

IN CoA revisits and revises waiver of subrogation in AIA contracts

Not three months after the decision in Allen County Pub. Library v. Shambaugh & Son, L.P., 997 N.E.2d 48 (Ind. Ct. App. 2013) (published on Oct. 22, 2013 and authored by J. Barnes with Pyle and Crone concurring; reaffirmed on rehearing on 1-28-14), a different panel of the IN CoA revisits the waiver of subrogation clause in standard AIA contracts and comes to a far different conclusion.

To provide some background, since AIA contracts are rather standard nationwide, there has developed a majority and minority view on how to interpret the relevant provisions therein, including waiver of subrogation clauses. Indiana has long subscribed to the minority view. In Allen County Pub. Library, this view was reaffirmed and in the rehearing opinion, Judge Barnes opined that even if the majority view had applied, the result would have been the same. See Allen County Pub. Library v. Shambaugh & Son, L.P., 2014 Ind. App. LEXIS 26 (Ind. Ct. App. Jan. 28, 2014).

The contract language at issue in both cases is as follows:

Waivers of Subrogation. The Owner and Contractor waive all rights against each other and against the Construction Manager, Architect, Owner’s other Contractors and own forces described in Article 6, if any, and the subcontractors, sub-subcontractors, consultants, agents and employees of any of them, for damages caused by fire or other perils to the extent covered by property insurance obtained pursuant to this Paragraph 11.3 or other property insurance applicable to the Work, except such rights as the Owner and Contractor may have to the proceeds of such insurance held by the Owner as fiduciary . . . . (Sec. 11.3.7)

With respect to waiving subrogation, Indiana has used the “work v. non-work” approach. That is, this section “is limited to the work performed under the contract and, therefore, if a contractor causes damage to property other than the Work to be performed under the contract, the property owner (or its insurer through subrogation) may seek recovery from the contractor for that damage, regardless of whether the damage was covered by insurance.” Midwestern Indem. Co. v. Sys. Builders, Inc., 801 N.E.2d 661, 672-673 (Ind. Ct. App. 2004).

The majority view  as viewed by the Allen County Pub. Library decision considers “whether the insurance policy was broad enough to cover damages to work and non-work property and whether the policy paid for the damages. If the answer to both questions is yes, the waiver applies.” Allen County Pub. Library, 2014 Ind. App. LEXIS 26, 7 (Ind. Ct. App. Jan. 28, 2014) (citing Federal Ins. Co. v. Woodruff Const., 826 N.W.2d 516, 2012 WL 5954588, *2 (Iowa Ct. App. 2012)).

To put it in more simple terms, the minority view is that damage to property outside of the scope of “the work” is not subject to the standard AIA waiver of subrogation, regardless of whether the owner obtained insurance for all damage. The majority view is that if you have insurance on non-work items and that insurance pays, then the waiver applies to the extent insurance pays for it.

In Allen County Pub. Library, Judge Barnes noted in the rehearing opinion that the owner procured a “builder’s risk plus” policy which only provided for $5,000 in cleanup costs. The library did not therefore waive any claims for damages above and beyond what it received from insurance since the cases in the majority view allowed for recovery above what insurance provided. Thus, even applying the majority view, the AIA contract did not avail the contractor of the subrogation waiver protections.

By contrast, today’s opinion in Board of Commissioner of County of Jefferson v. Teton Corp., et al. rejects the minority view of  the AIA subrogation waiver provision as well as Judge Barnes’s interpretation of the majority view.

In this case, the owner opted to use its own existing liability policy instead of procuring a builder’s risk policy under the contract. Under those same terms, the owner was obligated to inform the contractor of its decision in writing, which the owner did not do. During the related renovations to the Jefferson County courthouse, a fire broke out and caused over $6,000,000 in damages, some of which was covered by the liability insurance and some of which fell to Jefferson County.

In adopting with the majority view, the Court focused on two sections of the AIA contract.

Section 11.3.1.2 provides that “[i]f the Contractor is damaged by the failure or neglect of the Owner to purchase or maintain insurance as described above, without so notifying the Contractor, then the Owner shall bear all reasonable costs properly attributable thereto.”

Section 11.3.7 further provides that “[a] waiver of subrogation shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise, did not pay the insurance premium directly or indirectly, and whether or not the person or entity had an insurable interest in the property damaged.

The Court read these provisions and the majority view to limit subrogation rights altogether, placing the entire onus on the Owner to obtain adequate insurance:

Section 11.3.1 of the AIA contract therefore requires owners to insure their interests in the construction project at least to the value of the underlying contract. The AIA contract expressly requires property owners to separately insure these interests and, in order to facilitate the completion of the project without delaying and debilitating litigation, to obtain an “all-risk” insurance policy that waives the carrier’s rights to be subrogated to any loss arising within the extremely broad coverage described in the contract. If the owner does not secure such insurance, then it still waives its subrogation rights for any loss described within the AIA contract that it sustains.

In so holding, the Court rejected the notion there could be any recovery above and beyond the insurance coverage secured by Jefferson County. The Court even noted that the recovery in Allen County Pub. Library should have been barred as the owner opted to insure its risk at  $5,000.

What does it mean? Two decisions reaching two very different conclusions as to what the “majority view” even means. Judge Barnes reaches the conclusion that losses beyond what was insured would still be recoverable under the majority view whereas today’s decision reads the AIA contract to put all of the risk, and the onus of obtaining adequate insurance, on the owner. Additionally, the Court’s opinion comes close to converting the waiver of subrogation section into a hold harmless agreement where the owner is left without any recourse to recover for property damage resulting from a contractor’s negligence. Obviously, there are several nuances to this issue. I would highly recommend reading the entire opinion as well as Judge Barnes’s concurring opinion referenced herein.

www.in.gov/judiciary/opinions/pdf/02041404pdm.pdf.

Stoffel v. JP Morgan Chase Bank NA, et al. (1-30-14)

IN CoA (Najam; Mathias and Brown concur). Foreclosure actions, evidence of costs

Where sheriff’s sale actually netted an amount in surplus of the agreed judgment of foreclosure, former homeowner’s motion to compel payment of surplus was treated as a Rule 13(M) motion for satisfaction of judgment or 60(B)(7) motion to vacate judgment based on satisfaction. As such, bank could not present inadmissible hearsay in affidavits and letters as evidence of costs. “Only the judgment creditor has the records that would prove or disprove the allegation that there is a surplus. When challenged, the judgment creditor must present admissible evidence to show the costs included in the winning bid.” The former homeowner was thus entitled to small surplus.

www.in.gov/judiciary/opinions/pdf/01301401ewn.pdf.

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