                                                                           FILED
                                                                      Sep 26 2017, 7:22 am

                                                                           CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court




ATTORNEY FOR APPELLANT                                    ATTORNEY FOR APPELLEE
Christopher J. McElwee                                    Abraham Murphy
Monday McElwee & Albright                                 Indianapolis, Indiana
Indianapolis, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

2444 Acquisitions, LLC,                                   September 26, 2017
Appellant-Defendant,                                      Court of Appeals Case No.
                                                          49A02-1606-MF-1315
        v.                                                Appeal from the Marion Superior
                                                          Court
Michael Fish,                                             The Honorable Michael D. Keele,
Appellee-Plaintiff.                                       Judge
                                                          Trial Court Cause No.
                                                          49D07-1103-MF-10806



Riley, Judge.




Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017                  Page 1 of 11
                                STATEMENT OF THE CASE
[1]   Appellant-Defendant, 2444 Acquisitions, LLC (2444 Acquisitions), appeals the

      trial court’s Order granting Appellee-Plaintiff’s, Michael Fish (Fish), motion for

      turnover.


[2]   We affirm.


                                                     ISSUE
[3]   2444 Acquisitions raises five issues on appeal, which we consolidate and restate

      as the following single issue: Whether the trial court properly granted Fish’s

      motion for turnover of the tax sale surplus funds.


                      FACTS AND PROCEDURAL HISTORY
[4]   In 2008, Fish loaned a certain amount of money to 2444 Acquisitions in

      exchange for a mortgage security interest in several parcels of real estate. On

      July 5, 2011, the trial court entered a default judgment of foreclosure and

      agreed entry against 2444 Acquisitions and in favor of Fish in the amount of

      $263,308.73. On January 24, 2012, Fish filed his praecipe for sheriff’s sale of

      the real estate and the following month, on February 23, 2012, Fish filed his

      motion for proceedings supplemental. However, on March 5, 2012, 2444

      Acquisitions filed a Chapter 11 petition for bankruptcy protection with the

      bankruptcy court. This cause was dismissed on July 31, 2012.


[5]   On March 5, 2014, Fish again filed his praecipe for sheriff sale of the real estate.

      The next day, 2444 Acquisitions filed a second Chapter 11 petition for

      Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 2 of 11
      bankruptcy protection under cause no. 14-01578-RLM-7. On September 19,

      2014, Fish filed his adversarial complaint for turnover property in the

      bankruptcy court under cause no. 14-50173. After a hearing on Fish’s

      complaint, the bankruptcy court ordered the Marion County Auditor to turn

      over the tax sale surplus funds to counsel for 2444 Acquisitions to be held in

      counsel’s trust account. On October 15, 2014, 2444 Acquisitions’ counsel filed

      a motion to approve procedure for interim fee payments, to which Fish objected

      on October 17, 2014. Over Fish’s objection, the bankruptcy court granted

      counsel’s motion for payment of interim fees. On March 19, and again on

      November 2, 2015, counsel for 2444 Acquisitions filed a notice of draw seeking

      payment of attorney fees and expenses in the amount of $14,707.95 and

      $9,224.22 respectively. The bankruptcy court approved each notice over Fish’s

      objections.


[6]   On February 3, 2016, Fish filed a motion to dismiss 2444 Acquisitions’

      bankruptcy case based upon his contention that the business was not operating

      or earning income. The bankruptcy court dismissed the case on February 26,

      2016, which also resulted in the dismissal of Fish’s adversarial complaint for

      turnover property. Following the dismissal, 2444 Acquisitions’ counsel

      transferred the tax sale surplus funds from his trust account to his client.


[7]   On March 29, 2016, Fish filed with the trial court his motion for turnover of

      surplus funds from the tax sale that are in the possession of 2444 Acquisitions,

      and for a request to issue an order preserving the status quo pending an

      expedited hearing. 2444 Acquisitions filed its response in opposition on April

      Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 3 of 11
      12, 2016. On May 9, 2016, after conducting a hearing, the trial court granted

      Fish’s motion for turnover, concluding that “[a]s a matter of law, [Fish] has a

      substantial interest in said aforementioned properties; [Acquisition 2444] has no

      entitlement to said tax surplus funds and no protectable interest relative to the

      use of those funds; and equity requires disbursement of the tax surplus funds

      [sic] to [Fish].” (Appellant’s App. Vol. II, p. 14).


[8]   2444 Acquisitions now appeals. Additional facts will be provided as necessary.


                               DISCUSSION AND DECISION
[9]   2444 Acquisitions contends that the trial court erred in granting Fish’s motion

      for turnover on the basis that 2444 Acquisitions had no entitlement to the tax

      sale surplus funds. Actions seeking payment of a tax sale surplus are essentially

      ones for a declaratory judgment. Beneficial Ind. Inc. v. Joy Props. LLC, 942

      N.E.2d 889, 891-92 (Ind. Ct. App. 2011), reh’g denied, trans. denied. Declaratory

      orders have the force and effect of a final judgment, and we review them in the

      same manner as other judgments. Id. Here, the trial court entered findings of

      fact and conclusions of law when it rendered its judgment. Ember v. Ember, 720

      N.E.2d 436, 438 (Ind. Ct. App. 1999). In reviewing the judgment, we first

      determine whether the evidence supports the findings, and then whether the

      findings support the judgment. Id. Findings of fact are clearly erroneous when

      the record lacks any evidence or reasonable inferences from the evidence to

      support them. Id. The judgment will be reversed only when clearly erroneous,

      that is, when the judgment is unsupported by the findings of fact. Id. We


      Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 4 of 11
       consider only the evidence most favorable to the judgment and all reasonable

       inferences flowing thereform. Id. We will not reweigh the evidence or assess

       the credibility of witnesses. Id.


[10]   The tax sale process is a purely statutory creation and requires material

       compliance with each step of the applicable statutes. See I.C. §§ 6-1.1-24-1

       through -15; 6-1.1-25-1 through -19. Indiana Code Chapter 6-1.1-24 governs

       the sale of real property when taxes or special assessments become delinquent.

       If a real estate owner fails to pay property taxes, the property may be sold to

       satisfy the outstanding tax obligation. See In re 2005 Tax Sale Parcel No. 24006-

       001-0022-01, 898 N.E.2d 349, 353 (Ind. Ct. App. 2008). After a tax sale, the

       county treasurer “shall apply” the amount paid to taxes, assessments, penalties,

       costs, and other delinquent property taxes; thereafter, any balance is to be

       placed in a tax sale surplus fund. I.C. § 6-1.1-24-7(a). In the event of a tax sale

       surplus, the statute authorizes that a verified claim for refund can be made by


               (c) The:


               (1) owner of record of the real property at the time the tax deed is
               issued who is divested of ownership by the issuance of a tax
               deed; or


               (2) tax sale purchaser or purchaser’s assignee, upon redemption
               of the tract or item of real property[.]


               [] If the claim is approved by the county auditor and the county
               treasurer, the county auditor shall issue a warrant to the claimant
               for the money due.

       Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 5 of 11
        (d) If the person who claims money deposited in the tax sale
        surplus fund under subsection (c) is:


        (1) a person described in subsection (c)(1) who acquired the
        property from a delinquent taxpayer after the property was sold
        at a tax sale under this chapter; or


        (2) a person not described in subsection (c)(1), including a person
        who acts under a power of attorney executed by the person
        described in subsection (c)(1);


        The county auditor may issue a warrant to the person only as
        directed by the court having jurisdiction over the tax sale of the
        parcel for which the surplus claim is made.


I.C. § 6-1.1-24-7(c). Interpreting this statute, we noted in Brewer v. EMC

Mortgage Corp., 743 N.E.2d 322, 326 (Ind. Ct. App. 2001), trans. denied, and

CANA Investments, LLC v. Fansler, 832 N.E.2d 1103, 1105 (Ind. Ct. App. 2005),

that


        only the owner, at the time of a tax sale, of real estate sold at a
        tax sale and the tax sale purchaser may use the administrative
        procedure provided by statute to claim a tax sale surplus, but the
        administrative procedure is not the only avenue for making such
        a claim.


Accordingly, persons “with an interest in the real estate, including those who

did not own the real estate at the time of the tax sale or who did not purchase

the real estate at the tax sale, may assert a claim for a tax sale surplus directly

with the trial court.” CANA Investments, LLC, 832 N.E.2d at 1107.


Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 6 of 11
[11]   As 2444 Acquisitions does not dispute that Fish holds a valid mortgage over the

       real estate, Fish must be considered a person with a substantial property interest

       of public record and thus is allowed to petition the trial court for the tax sale

       surplus funds. See Brewer, 743 N.E.2d 325-26 (a mortgagee qualifies as a person

       with a substantial property interest of public record). Thus, because the trial

       court had issued a foreclosure judgment with respect to the real estate in favor

       of Fish on July 5, 2011, which resulted in a lien against the real estate subject to

       the tax sale, Fish’s interest in the property had priority over the interest of the

       owner, 2444 Acquisitions. See CANA Investments, LLC, 832 N.E.2d at 1107.


[12]   Contesting Fish’s entitlement to the tax sale surplus funds, Acquisition 2444

       raises several challenges. First, 2444 Acquisitions contends that Fish’s

       procedural vehicle of a motion for turnover to claim the tax sale surplus funds is

       incorrect as he should have pursued his claim by using proceedings

       supplemental, provided by Indiana Trial Rule 69. However, I.C. § 6-1.1-24-7

       merely specifies that a person with a substantial interest in real property can

       assert a claim for tax surplus funds directly with the trial court, without

       indicating the procedural conduit to file the claim. Accordingly, by bringing a

       motion for turnover with the trial court, Fish asserted his claim “directly with

       the trial court.” I.C. § 6-1.1-24-7. Moreover, assuming arguendo that Fish

       utilized the incorrect procedure to bring his claim, we note that actions seeking

       payment of a tax sale surplus are in essence actions for a declaratory judgment,

       which are “generally equitable in nature, although it may take on the color of

       either equity or law, depending on the issue presented.” Beneficial Ind., Inc., 942


       Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 7 of 11
       N.E.2d at 892 (citing 10 I.L.E., Declaratory Judgments § 15 (2005)). Equity

       cannot acquiesce in a party’s pursuit of unconscionable results and will look to

       substance rather than form while seeking the avoidance of a windfall. Id. As

       Fish has a more substantial interest in the tax sale surplus funds than 2444

       Acquisitions, we find that equity requires the disbursement of the funds to Fish.


[13]   Next, 2444 Acquisitions claims that Fish was collaterally estopped from

       pursuing his motion for turnover because the turnover of the tax sale surplus

       funds had been litigated previously in the bankruptcy court. Collateral estoppel

       bars the subsequent litigation of a fact or issue that was necessarily adjudicated

       in a former lawsuit if the same fact or issue is presented in the subsequent

       lawsuit. Indianapolis Downs, LLC v. Herr, 834 N.E.2d 699, 704 (Ind. Ct. App.

       2005), trans. denied. Where collateral estoppel is applicable, the former

       adjudication will be conclusive in the subsequent action even if the two actions

       are on different claims. Id. However, the former adjudication will only be

       conclusive as to those issues that were actually litigated and determined therein.

       Id. Collateral estoppel does not extend to matters that were not expressly

       adjudicated and can be inferred only be argument. Id.


[14]   In determining whether to allow the use of collateral estoppel, the trial court

       must engage in a two-part analysis: (1) whether the party in the prior action

       had a full and fair opportunity to litigate the issue, and (2) whether it is

       otherwise unfair to apply collateral estoppel given the facts of the particular

       case. Id. at 705. The factors to be considered by the trial court in deciding

       whether to apply collateral estoppel include privity, the defendant’s incentive to

       Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 8 of 11
       litigate the prior action, and the ability of the plaintiff to have joined the prior

       action. Id. These factors are not exhaustive but provide a framework for the

       trial court. Id. A trial court is afforded great deference to disallow the offensive

       use of collateral estoppel because it is the trial court that will devote the time to

       try the case. Id.


[15]   On September 19, 2014, Fish filed his adversarial complaint for turnover

       property in the bankruptcy proceedings. After a hearing on Fish’s complaint,

       the bankruptcy court ordered the Marion County Auditor to turn over the tax

       surplus funds to counsel for 2444 Acquisitions to be held in counsel’s trust

       account “until further order of the court.” (Appellant’s App. Vol. II, p. 88).

       During the hearing in the current proceedings, the uncontradicted testimony by

       Fish’s counsel revealed that 2444 Acquisitions’ counsel was specifically

       instructed “to keep it in his trust account pending an adjudication of who is

       entitled to the tax surplus funds.” (Transcript p. 5). Although the bankruptcy

       court granted Fish’s motion “in part,” and later dismissed the Chapter 11

       bankruptcy proceedings altogether, no final adjudication as to the ownership of

       the tax sale surplus funds was ever reached by the court. Accordingly, as the

       issue was not decided, Fish’s current action is not estopped. 1




       1
         In a similar argument, 2444 Acquisitions contends that the trial court erred by granting Fish’ motion for
       turnover because his motion was moot as the “bankruptcy court already heard and ruled on Fish’s motion for
       turnover of the tax sale proceeds[.]” (Appellant’s Br. p. 14). However, because we find that the bankruptcy
       court did not make a final decision as to the party entitled to the funds, we also deny 2444 Acquisitions’
       argument based on mootness.

       Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017                  Page 9 of 11
[16]   In a related argument, 2444 Acquisitions argues that Fish waived his right to

       pursue the tax sale surplus funds by failing to appeal the decision of the

       bankruptcy court. Specifically, 2444 Acquisitions claims that “[b]y

       affirmatively taking action to have [Acquisition 2444’s] bankruptcy case and his

       own adversary proceeding for turnover dismissed, Fish ha[s] relinquished any

       right that he may have had to turnover the tax sale proceeds.” (Appellant’s Br.

       p. 17). Waiver is the intentional relinquishment of a known right; an election

       by one to forego some advantage he might have insisted upon.” Lafayette Car

       Wash, Inc. v. Boes, 282 N.E.2d 837, 839 (Ind. 1972), reh’g denied. “A person who

       is in a position to assert a right or insist upon an advantage may, by his own

       words or conduct, and without reference to any act or conduct of the other

       party affected thereby, waive such right.” Id. “[B]ecause waiver is an

       affirmative act, a party’s mere silence, acquiescence or inactivity does not

       constitute waiver unless the party has a duty to speak or act.” Pohle v.

       Cheatham, 724 N.E.2d 655, 659 (Ind. Ct. App. 2000). The uncontradicted

       testimony of 2444 Acquisitions’ counsel at the hearing reflects that on the same

       day the bankruptcy court dismissed the cause at the request of the Office of the

       United States Trustee and Fish, Fish’s counsel requested the bankruptcy court

       “to make a subsequent order regarding the funds and what she said was I can’t,

       the case is dismissed, I no longer have jurisdiction over the funds.” (Tr. p. 6).

       After the case was dismissed by the bankruptcy court, Fish continued to pursue

       the cause before the trial court. Accordingly, we find that Fish did not waive

       this right.


       Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 10 of 11
[17]   Lastly, 2444 Acquisitions asserts that the trial court erred when it failed to take

       into account the amounts already previously distributed to its attorney by order

       of the bankruptcy court and the amount owed by Fish to a former member of

       2444 Acquisitions. However, 2444 Acquisitions fails to cite to any authority or

       evidence to support this argument, and accordingly, we find its claim to be

       waived. See Appellate Rule 46(A)(8)(a).


                                              CONCLUSION
[18]   Based on the foregoing, we hold that the trial court did not err in granting

       Fish’s motion for turnover.


[19]   Affirmed.


[20]   Robb, J. and Pyle, J. concur




       Court of Appeals of Indiana | Opinion 49A02-1606-MF-1315 | September 26, 2017   Page 11 of 11
