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Towne & Terrace Corporation v. City of Indianapolis

Court of Appeals of Indiana

April 16, 2019

Towne & Terrace Corporation; Glen Timmons, in his capacity as President of the Towne & Terrace Corporation Board of Directors; Darren Kirkland, in his Capacity as a Member of the Towne & Terrace Corporation Board of Directors; Jacqueline Timmons, in her Capacity as a Member of the Towne & Terrace Corporation Board of Directors; and Ella Means, in her Capacity as a Member of the Towne & Terrace Corporation Board of Directors, Appellants-Defendants and Counter-Claimants,
v.
City of Indianapolis, Appellee-Plaintiff and Counter-Defendant.

          Appeal from the Marion Superior Court The Honorable Cynthia J. Ayers, Judge Trial Court Cause No. 49D04-1311-OV-42187

          ATTORNEYS FOR APPELLANTS Clifford R. Courtney Indianapolis, Indiana Frederic C. Sipe Indianapolis, Indiana Robert A. Smith SmithWade, LLC Noblesville, Indiana

          ATTORNEYS APPELLEE James J. Ammeen, Jr. Mark J. Liechty Ammeen Valenzuela Associates, LLP Indianapolis, Indiana Deborah L. Law Donald E. Morgan Office of Corporation Counsel Indianapolis, Indiana

          NAJAM, JUDGE.

         Statement of the Case

         [¶1] Towne & Terrace Corporation; Glen Timmons, in his capacity as President of the Towne & Terrace Corporation Board of Directors; Darren Kirkland, in his Capacity as a Member of the Towne & Terrace Corporation Board of Directors; Jacqueline Timmons, in her Capacity as a Member of the Towne & Terrace Corporation Board of Directors; and Ella Means, in her Capacity as a Member of the Towne & Terrace Corporation Board of Directors (collectively "T&T"), [1]appeal the trial court's order granting an unverified motion filed by the City of Indianapolis ("the City") for the appointment of a receiver over T&T. T&T presents several issues for our review, which we consolidate and restate as whether the trial court abused its discretion when it appointed a receiver to "have control over all of [T&T]'s assets, both real property and the common areas, real property owned by individual board members, and if found to be unsafe, all other privately-owned properties." Appellants' App. Vol. III at 13.

         [¶2] The City cross-appeals and contends that the trial court abused its discretion when it granted T&T's verified motion to appoint a receiver over the City-owned properties located in the Towne & Terrace complex.

         [¶3] We affirm in part and reverse in part.

         Facts and Procedural History

         [¶4] We set out some of the relevant facts and procedural history in a prior appeal:

Towne & Terrace is a residential complex near the intersection of East 42nd Street and Post Road in Indianapolis, Indiana. Incorporated in 1964 for the purpose of owning and maintaining the common areas of the condominium development, [T&T] is a private, nonprofit Indiana corporation with volunteer directors. . . . As of 2017, the City owned at least 49[2] units in Towne & Terrace. Thirteen of the units were acquired as part of a settlement in an unrelated nuisance action. The remainder of the units became the City's possession after they were not purchased at tax sales. Since being acquired, each of the City's homes in Towne & Terrace has been left vacant and boarded up.
Over the years, the East side of Marion County has suffered a major crime wave. In 2015, the Federal Bureau of Investigation, the United States Attorney's Office, the Indiana State Police, the Marion County Sheriff, and [the] Indianapolis Metropolitan Police Department conducted raids throughout Indianapolis, leading to the arrest of thirty-five criminals-the vast majority on the East side.
On December 16, 2014, the City filed an Amended Complaint against [T&T] and four members of its board in their representative capacities, alleging that [T&T] "failed to provide, maintain, and ensure that all common areas of the [] residential complex are safe from hazardous conditions, including but not limited to general lawlessness and the threat of reasonably foreseeable criminal intrusions." Specifically, the City noted that "[s]ince January 1, 2008, there have been at least excessive [sic] police runs and numerous reports filed by the Indianapolis Metropolitan Police Department at the [] residential complex involving crimes such as homicide, rape, fraud, arson, domestic battery, public intoxication, child abduction, child abuse, larceny, burglary, armed robbery, aggravated assault, vandalism, intimidation, invasion of privacy, and trespass." As such, the City requested the trial court, among other things, to
[a]ward the City compensatory damages against [T&T], jointly and severally, to compensate the City for all damages caused by [T&T's] operation, management and maintenance of the [Towne & Terrace] residential complex and individual units, including but not limited to:
i. All resources expended by the City, including but not limited to the Department of Public Safety[ and] IMPD . . . in response to the unreasonable volume of investigations, reports, and citations caused by [T&T's] neglect of the [] residential complex and individual units, and
ii. Any and all other public resource expenditures resulting from [T&T's] neglect of the [] residential complex.
On January 30, 2015, [T&T] filed an Answer and Counterclaim, denying the allegations in the Amended Complaint and asserting that the City owed [T&T] maintenance fees on the individual units owned by the City. On October 3, 2016, [T&T] moved for summary judgment on its counterclaim against the City.
Prior to the trial court issuing a ruling, [T&T] filed a second motion for summary judgment on the City's Amended Complaint[, and] the City responded on July 17, 2017. After a hearing on [T&T]'s second motion for summary judgment, the trial court issued its ruling on October 18, 2017, granting summary judgment to [T&T] on the City's Amended Complaint and partial summary judgment on [T&T]'s counterclaim.

City of Indianapolis v. Towne & Terrace Corp., 106 N.E.3d 507, 509-10 (Ind.Ct.App. 2018) (citations omitted; emphasis added) ("Towne & Terrace I"). On appeal, we affirmed the trial court's grant of summary judgment in favor of T&T on the City's amended complaint, and we affirmed the court's partial summary judgment in favor of T&T on T&T's counterclaim for the payment of maintenance charges assessed against the City. Id. at 513, 515.

         [¶5] While the summary judgment motions were pending in the trial court, on September 11, 2017, the City filed a motion for the appointment of a receiver over T&T. In that motion, the City alleged that one of T&T's board members, Walter Timmons, had died the week before, on September 7. And the City stated further as follows:

4. Mr. Timmons and his wife, Jacqueline Timmons, have been the only Directors serving on T&T's Board, and they have served as the only officers for years. Mr. and Mrs. Timmons also are defendants in this civil action with respect to City's claims of breach of fiduciary duty.
5. Under the circumstances, it is impossible for T&T to proceed in this civil action without a functioning Board of Directors and an Officer appointed to appear and act for the corporation. T&T also is in peril of not being able to discharge its obligations to its constituents and the residents living at T&T as a direct and proximate result of Mr. Timmons' untimely death.
6. Should the City prevail on its nuisance claims, [3] it likely will render T&T insolvent or in imminent danger of insolvency such that it will be unable to pay debts as they become due in the ordinary course of business.
7. A meeting of members must be called, notice given, nominations obtained, and an election held to appoint new directors and officers to succeed Mr. Timmons and fill vacancies on the Board. Without a functioning Board of Directors or Officers to direct them, T&T's attorneys are incapable of re[pre]senting the corporation effectively.
8. The immediate appointment of a receiver over T&T is necessary in order to protect City's rights, but not only to protect the City's rights. Most important, appointment of a receiver is necessary to protect the rights of all property owners and to assure the people living at T&T that basic services will be performed. It is necessary to preserve the corporation from failure caused by sudden, unexpected, and un-prepared circumstances that have befallen T&T and the Timmons family.

         Appellants' App. Vol. II at 36.

         [¶6] On September 26, T&T filed a response stating in relevant part that, following Walter Timmons' death, "the remaining [T&T] board member[s] promptly proceeded to elect two (2) new directors, bringing the total board to three (3) members as required by its By Laws." Id. at 41. And on November 20, after the trial court's entry of summary judgment but prior to our opinion on appeal, T&T filed a verified petition for appointment of a receiver alleging that the City had not paid "maintenance fees, assessments, late charges, interest and attorney fees" owed to T&T. Id. at 64. The verified petition alleged further:

14. That [T&T] is a judgment lien creditor of [the City].
15. That [I.C. §] 32-30-5-1, et seq. provides for the appointment of a Receiver in an action by a creditor to subject any property or fund to the creditor's claim.
16. That [T&T] is a creditor of [the City] within the meaning of [I.C. §] 32-30-5-1, et seq., and seeks to subject [the City]'s properties within Towne & Terrace to said lien to recover the amounts due it from the [City].
17. That [I.C. §] 32-30-5-1 provides for the appointment of a receiver in actions between persons jointly interested in any property or fund.
18. That [the City] as an owner and [T&T] as a lienholder are jointly interested in the properties within Towne & Terrace owned by [the City] that are subject to the lien of [T&T].
19. Said judgment further holds that the Towne & Terrace properties owned by [the City] are in a state of neglect and deterioration, and said properties have been deteriorating and continue to deteriorate and to be neglected by [the City].
20. That [I.C. §] 32-30-5-1 provides for the appointment of a receiver in actions when it is shown that the property, fund, rent and profits in controversy are in danger of being lost, removed or materially injured.
21. That properties within Towne & Terrace owned by [the City] that are subject to the lien of [T&T] are in danger of being lost, removed or materially injured due to the continuing ...

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