Indiana Judgment Creditor Not Entitled To Post-Judgment Order Transferring Ownership Of Defendant’s Real Estate
August 04, 2022
Lesson. In the post-judgment collection phase of a case, the plaintiff creditor is not entitled to an order transferring title to the defendant debtor’s real estate for purposes of satisfying the judgment. For that to happen, the creditor must follow the process for an execution (sheriff’s) sale.
Case cite. Conroad Assocs., L.P. v. Castleton Corner Owners Ass'n, 187 N.E.3d 885 (Ind. Ct. App. 2022).
Legal issue. Whether a trial court, in post-money judgment collection proceedings, can transfer a judgment debtor’s interests in real estate to a judgment creditor.
Vital facts. The parties to the Conroad dispute were a building owner (Owner) and a party contracted to maintain the building (Association). The Association’s responsibilities included the maintenance of its own sewer lift station at the building. The lift station failed, resulting in a flood of sewage at a tenant’s location in Owner’s building. The flooding caused the tenant to terminate its lease with Owner.
Owner obtained a money judgment against Association for breach of contract (the Judgment). The procedural history that followed was complicated and involved proceedings supplemental, an appeal and a bankruptcy. Today’s post focuses on the motion for proceedings supplemental (post-judgment collection effort) filed thirteen days after the entry of the Judgment. Specifically, Owner requested that the Association’s lift station and related real estate rights be transferred to Owner to satisfy the Judgment. The trial court granted the motion (the Divest Order).
The trial court later reduced the amount of the Judgment, and the Association tendered money to the trial court to fully satisfy the amount owed. The Association then moved to vacate the Divest Order.
Procedural history. The trial court vacated the Divest Order, finding that it was erroneous in the first place. Owner appealed.
Key rules. Conroad has an in-depth analysis of Indiana Trial Rules 70(A) and 69(A), which deal with judgments and post-judgment remedies. (Please click on each for the full text of the rules.) The trial court relied upon Rule 70(A) when it entered the Divest Order.
Holding. The Indiana Court of Appeals affirmed the trial court and concluded that the court did not err when it vacated the Divest Order.
Policy/rationale. The Court reasoned that, under Rule 70(A), the only way a trial court can divest a defendant/judgment debtor of ownership in real estate is if the underlying judgment itself directs the judgment debtor to execute the conveyance. Because the Judgment in Conroad had no such direction (it was only a money judgment), the Divest Order was inappropriate under Indiana law. The Court pointed to Rule 69(A), which essentially provides that, in money judgment enforcement proceedings, the sale of real estate must be conducted in the same manner as a mortgage foreclosure (i.e. a sheriff’s sale). Indiana law does not permit a judgment creditor to simply file a motion to acquire title to a judgment debtor’s real estate.
- The Difference Between An Execution Sale And A Foreclosure Sale In Indiana
- Judgment Lien Principles Courtesy Of The Indiana Supreme Court
- Indiana Follows The Lien Theory Of Mortgages
Part of my practice relates to post-judgment collection proceedings. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at [email protected] Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.