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LLC v. Luttrell

Court of Appeals of Indiana

August 3, 2017

11438 Highway 50, LLC, successor in interest to Regions Bank, successor by merger to Union Planters Bank, N.A., successor in interest to NBD Bank, N.A., Appellant-Intervenor,
v.
Timothy John Luttrell, Appellee-Plaintiff.

         Appeal from the Lawrence Circuit Court The Honorable Andrea K. McCord, Judge Trial Court Cause No. 47C01-1609-PL-1101

          Attorney for Appellant Mark J. Crandley Barnes & Thornburg, LLP Indianapolis, Indiana

          Attorney for Appellee James G. Pittman Pittman Emery & Nikirk Bedford, Indiana

          Riley, Judge.

         STATEMENT OF THE CASE

         [¶1] Appellant-Intervenor, 11438 Highway 50, LLC, successor in interest to Regions Bank, successor by merger to Union Planters Bank, N.A., successor in interest to NBD Bank, N.A. (the Lender), appeals the trial court's Default Decree and Order on Plaintiff's Motion to Award Surplus Property in favor of Appellee-Plaintiff, Timothy J. Luttrell (Luttrell).

         [¶2] We affirm.

         ISSUE

         [¶3] The Lender raises three issues on appeal, which we consolidate and restate as the following single issue: Whether the trial court erred in determining that certain pieces of equipment were not fixtures subject to the Lender's mortgage liens.

         FACTS AND PROCEDURAL HISTORY

         [¶4] In 2005, Luttrell was employed as a superintendent at Indiana Stone Works, Inc. (ISW), located at 11438 Highway 50 West, Bedford, Lawrence County, Indiana. At the time, ISW was owned by Luttrell's brother-in-law, Don Short (Short).[1] Near the end of 2005, Luttrell personally purchased a fifty-ton industrial crane with auxiliary hoist from a former co-worker for $8, 000.00.The crane was intended to be used in limestone sawing operations, so Luttrell approached Short and suggested that they partner in a new venture aside from ISW. Short agreed, and on November 1, 2005, Luttrell and Short orally formed a partnership: J&D Sawing. On November 8, 2005, J&D Sawing opened a bank account, and on November 16, 2005, the Internal Revenue Service issued an employer identification number to J&D Sawing. Using funds from his wife's retirement account, Luttrell contributed $45, 000 to the partnership, and Short added $30, 000 to the partnership's funds. These contributions were intended as loans, with the proceeds from J&D Sawing to be first used towards repayment thereof. In 2006, using either partnership funds or his personal money, Short purchased a hydraulic narrow-belt saw on behalf of J&D Sawing for the purpose of cutting slabs of limestone.

         [¶5] At the back edge of ISW's property, Luttrell and Short constructed a new building for J&D Sawing's crane and saw. The crane and the saw required electricity and water to operate, so separate utilities were established for this building. Once the equipment was assembled, the crane and saw were used daily. However, Luttrell stated that he never received any payments in connection with J&D Sawing, and Short handled all finances associated with the partnership. For tax years 2006 through 2012, J&D Sawing filed tax returns reporting only loss of income in the form of depreciating assets. According to the partnership's accountant, it was intended that ISW operate J&D Sawing's equipment for limestone fabrication and pay an equipment rental fee to J&D Sawing. However, Luttrell indicated that J&D Sawing's operations were entirely separate from ISW's business. Luttrell had hoped to eventually purchase the newly-constructed building and piece of real property from ISW, but the partners "never really got around to discussing [it] because [the business] never really got off the ground good." (Tr. p. 22).

         [¶6] On September 21, 2016, Luttrell filed a Complaint against Short and ISW, seeking, in part, to dissolve the J&D Sawing partnership.[2] Short and ISW never filed a responsive pleading or otherwise appeared before the court. Thus, on November 9, 2016, Luttrell filed a Motion for Default Decree and Affidavit of Damages, requesting a judgment in the amount of $291, 500 plus attorney fees and court costs. Luttrell also filed a Motion to Award Surplus Partnership Property to Plaintiff-i.e., Luttrell sought possession of the crane and the saw.

         [¶7] At some point, the Lender, who held the mortgages associated with ISW, foreclosed on the ISW property. On November 23, 2016, the Lender filed a Motion to Intervene in Luttrell's case against Short and ISW and filed an objection to Luttrell's motion for default judgment. According to the parties, the Lender claimed to have a first-priority security interest in the crane and the saw by virtue of its mortgage liens. A Uniform Commercial Code financing statement initially filed in 2008 indicated that the Lender had an interest, in relevant part, in "ALL EQUIPMENT, FIXTURES, INVENTORY AND OTHER TANGIBLE PROPERTY OF [ISW], AND ANY AND ALL ACCESSIONS AND ADDITIONS THERETO, ANY SUBSTITUTIONS AND REPLACEMENTS THEREFORE, AND ALL ATTACHMENTS AND IMPROVEMENTS PLACED UPON OR USED IN CONNECTION THEREWITH, OR ANY PART THEREOF." (Appellant's Exh. C).[3] On November 30, 2016, the trial court authorized the Lender's intervention in the case.

         [¶8] On December 7, 2016, the trial court conducted a hearing on Luttrell's motions. After hearing evidence, the trial court took the matter under advisement. On February 9, 2017, the trial court issued a Default Decree and Order on Plaintiff's Motion to Award Surplus Property. The trial court dissolved the J&D Sawing partnership and, by default, ordered Short and ISW to pay Luttrell's requested damages in full. The trial court further awarded the partnership assets-namely, the crane and the saw-to Luttrell over the Lender's objection. The trial court found that ...


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