Christopher J. McElwee and Monday McElwee Albright f/k/a Monday Jones Albright, Attorneys at Law, Appellants-Defendants,
Michael Fish, Appellee-Plaintiff.
from the Marion Superior Court The Honorable Gary L. Miller,
Judge Trial Court Cause No. 49D03-1803-CT-8543
ATTORNEYS FOR APPELLANTS Alice M. Morical Michael A. Dorelli
Patrick A. Ziepolt Hoover Hull Turner LLP Indianapolis,
ATTORNEYS FOR APPELLEE R. Brock Jordan Christopher M. Trapp
Katz Korin Cunningham PC Indianapolis, Indiana.
Sharpnack, Senior Judge.
of the Case
Christopher J. McElwee and Monday McElwee Albright (formerly
known as Monday Jones Albright), Attorneys at Law
(collectively "McElwee"), appeal the denial of
their motion to dismiss a complaint filed by Michael Fish
("Fish"), that challenged the distribution of
surplus tax funds to which Fish believes he is entitled. We
reverse and remand with instructions.
McElwee presents two issues, which we consolidate and restate
as the following question: Did Fish's complaint assert
any claims that were not barred by the applicable statute of
and Procedural History
Fish obtained a mortgage on properties owned by 2444
Acquisitions, LLC ("Acquisitions"). In early March
2011, Fish filed a mortgage foreclosure action against
Acquisitions and others in Marion Superior Court under cause
number 49D07-1103-MF-10806. McElwee represented Acquisitions
in the foreclosure action and in further related proceedings.
In July 2011, a default judgment of foreclosure and agreed
entry was entered against Acquisitions and in favor of Fish
in the principal amount of $263, 308.73 plus interest, and
foreclosed Fish's mortgages on various parcels of real
estate owned by Acquisitions.
On January 24, 2012, Fish filed a praecipe for sheriff's
sale. He filed his motion for proceedings supplemental on
February 23, 2012. On March 5, 2012, Acquisitions filed a
Chapter 11 petition for bankruptcy.
Fish moved to dismiss the bankruptcy petition in April 2012.
As grounds for the motion, Fish cited 11 U.S.C. § 1112
(2010), arguing that there was gross mismanagement of the
estate and a lack of good faith in the filing of
the petition. The bankruptcy court held an evidentiary
hearing in June 2012, during which Acquisitions conceded that
James Chalfant, the initial managing member of Acquisitions,
lacked the requisite corporate authority to sign the
bankruptcy petition on behalf of Acquisitions. Based on that
concession, the bankruptcy court granted the motion to
dismiss the petition pursuant to 11 U.S.C. §1112(b) on
July 31, 2012.
The litigation then returned to the foreclosure court. Fish
again filed a praecipe for sheriff's sale on March 5,
2014. The next day, Acquisitions filed a new, second, Chapter
11 bankruptcy petition under cause number 14-01578-RLM-11 in
the United States Bankruptcy Court, Southern District of
Indiana, Indianapolis Division. Meanwhile, prior to the
filing of the second bankruptcy petition two of the parcels
of real estate had been sold at a tax sale. Acquisitions
failed to redeem those parcels, and they were lost to a third
party. The tax sale, however, produced surplus funds, which
were placed into the statutory tax sale surplus
During the pendency of the second bankruptcy petition,
Acquisitions sought relief from the judgment in the
foreclosure action pursuant to Indiana Trial Rule 60(B).
Acquisitions argued that the judgment was void due to a
failure to name a necessary party. The foreclosure court
granted Acquisitions' request in February 2015. Fish
appealed, a panel of this Court reversed the foreclosure
court's decision, and our Supreme Court denied transfer
of the case on March 21, 2016. Fish v. 2444 Acquisitions,
LLC, 46 N.E.3d 1261 (Ind.Ct.App. 2015), trans.
On June 25, 2014, the United States Trustee filed a motion to
convert the bankruptcy from a Chapter 11 bankruptcy
proceeding to a Chapter 7 bankruptcy proceeding or dismiss
the petition. Appellee's App. Vol. 2, pp.
On September 19, 2014, Fish filed an adversarial complaint
for the turnover of property in the second bankruptcy
proceeding under cause number 14-50173, seeking to recover
the tax sale surplus funds. Fish also named the Marion County
Treasurer and the Marion County Auditor as parties to the
On January 20, 2015, the United States Bankruptcy Court,
Southern District of Indiana, Indianapolis Division, issued
an order as follows:
the Marion County Auditor is ordered to turn over the tax
sale proceeds to Christopher J. McElwee, counsel for Debtor.
The funds shall be made payable to '2444 Acquisitions,
LLC' c/o Christopher J. McElwee, 1915 Broad Ripple Ave.,
Indianapolis, IN 46220. The funds shall be deposited into
Debtor's counsel's trust account and held until
further order of the Court. Upon issuance of payment, counsel
for the Marion County Auditor shall file a 'Notice of
Released Funds', after which the Marion County Auditor
and Treasurer shall be dismissed from the case.
Br. p. 10. On January 29, 2015, the Marion County Auditor
transferred the funds to McElwee, who then deposited the
funds in the firm's trust account.
On July 15, 2015, the United States Trustee filed an
emergency motion to convert or dismiss the case.
Appellee's App. Vol. 2, pp. 142-144.
Referring to both the cause number in the second bankruptcy
and the cause number for the adversarial proceeding in the
caption, Fish moved to dismiss the bankruptcy proceeding on
February 3, 2016. The bankruptcy proceeding was dismissed on
February 26, 2016, on Fish's and the Trustee's
At the February 26, 2016 hearing, the bankruptcy court stated
Well, let me tell you where we sit today 23 months after
filing. It was projected to, when the case was filed, that we
have, we were supposed to have profit at this point of $58,
928. . .In fact our cash profit to date is negative $1, 628.
Our actual average monthly profit over the life of this has
been 70, losing $70 a month. It's over almost two years.
Our average is that we lose $70 a month. This is not
reorganizing a business. This isn't even resuscitating a
business. This is just really a slow death here and
that's not fair to any of the creditors.
Appellants' App. Vol. 3, pp. 56-57.
In explanation of the court's order issued after the
hearing, the following exchange occurred at the February 26,
2016 hearing between the bankruptcy court, McElwee, and
THE COURT: It's not even the long run to the advantage of
the debtor, I wouldn't think. You [sic] got to get out of
here and cut your losses at this point, would be my advice.
So I'm going to grant the motion to dismiss, both of them
and we'll dismiss the case.
[MCELWEE]: A question, Your Honor?
THE COURT: Yes?
[MCELWEE]: What's, what is the, just procedurally, the
Court issued an order today regarding the adversary and Mr.
Pazmino - -
THE COURT: It goes away.
THE COURT: Am I correct? Do you have a need for an opinion?
[FISH]: Your honor, I'd just like to address the Court.
In light of Your Honor's ruling, we have a situation
where Your Honor put Mr. McElwee under a court order with
respect to keeping over $100, 000 in his trust account. In
light of the circumstances, we'd like an order for that
money to be immediately- -
THE COURT: Case is dismissed. I don't have jurisdiction.
[FISH]: Okay. All right.
Id. at 57-58.
Next, on March 1, 2016, the bankruptcy court issued an order
stating: "With no [C]hapter 11 pending, the Court finds
that this adversary proceeding should likewise be
dismissed." Id. at 85-86. No order was ever
issued by the bankruptcy court deciding the ownership or
directing the distribution of the surplus tax sale funds held
in McElwee's trust account.
However, on February 26, 2016, McElwee used a portion of the
surplus tax funds held in the trust account to satisfy
outstanding legal fees owed to McElwee by Acquisitions. The
remaining funds were then distributed by McElwee to
On February 29, 2016, McElwee sent an email to Fish's
appellate counsel advising that the funds had been
distributed to Acquisitions the prior Friday, February 26,
2016, after Fish and the Trustee had succeeded in having the
bankruptcy case dismissed.
On March 24, 2016, the foreclosure court's chronological
case summary ("CCS") noted the decision of this
Court and that the Indiana Supreme Court had denied transfer
in the case. Appellee's App. Vol. 2, p. 10. The effect of
those decisions was the reinstatement of Fish's judgment
against Acquisitions and the same was noted in the CCS.
On March 29, 2016, Fish filed a combined motion for the
turnover of the funds from the tax surplus sale and for an
order preserving the status quo. On May 9, 2016, the
foreclosure court entered an order stating in pertinent part
5. As a matter of Indiana law, [Fish] has a substantial
interest in said aforementioned properties; [Acquisitions]
has no entitlement to those funds; and equity requires
disbursement of the tax surplus finds[sic] to the Plaintiff.
Id. at 39.
Acquisitions appealed the foreclosure court's order. A
panel of this Court affirmed the trial court's decision
ultimately concluding that "[a]s 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." 2444 Acquisitions, LLC v.
Fish, 84 N.E.3d 1211, 1216 (Ind.Ct.App. 2017). This
Court further held that Fish's claim in the foreclosure
court was not collaterally estopped as there had been no
final adjudication as to the ownership of the tax sale
surplus funds in the bankruptcy court. Id. at
On March 1, 2018, after the other actions and appeals had
been finally adjudicated, Fish filed the complaint in this
case against McElwee asserting claims for breach of fiduciary
duties and a tort claim for negligence. Those claims alleged
deposit of the tax sale surplus funds into McElwee's
trust account triggered McElwee's duty to act as a
depositary, depositary in escrow, and/or escrow agent. These
a. McElw1ee's duty to safekeep the tax sale surplus
b. McElwee's duty to act with due care regarding the tax
sale surplus funds; and
c. McElwee's duty to exercise ordinary skill and
diligence regarding the tax sale surplus funds.
Additionally, McElwee's status as a depositary of the tax
sale surplus funds created a fiduciary relationship between
McElwee and both Fish and 2444, as parties with an interest
in the tax sale surplus funds.
Further, McElwee held the tax sale surplus funds in
connection with his status as an attorney and legal
representative for 2444. Therefore, the deposit of the tax
sale surplus funds into McElwee's trust account triggered
the additional following duties:
a. McElwee's duty to safeguard the property of clients or
b. McElwee's duty to hold property of others with the
care required of a professional fiduciary;
c. McElwee's duty to refuse to surrender property to his
client until clams relating to the tax sale surplus funds are
d. McElwee's duty to file an action to resolve any
disputes regarding the tax ...