INDIANAPOLIS DOWNS, LLC v. HERR

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Docket Number

No. 49A02-0501-CV-71.

Attorney(S)

Mary F. Schmid, James W. Brauer, Sonia S. Chen, Stewart Irwin, P.C., Indianapolis, for Appellant. Gene R. Leeuw, John M. Mead, Leeuw Oberlies Campbell, P.C., Indianapolis, for Appellees.

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Smart Summary

Factual and Procedural Background

The Trust owns land, including a lake, located at the southwest corner of Interstate 74 and Fairland Road in Shelby County, Indiana. For many years prior to 2002, the Fairland Recreation Club, Inc. ("FRC"), whose sole shareholders are the Herrs, operated a recreation center known as Fairland Recreation Center on that land, offering swimming, fishing, camping, and other seasonal outdoor activities. In 2002, Indianapolis Downs constructed a horse racing facility at the northwest corner of the same intersection.

The construction site was in a flood plain, requiring soil elevation by digging two deep ponds and "de-watering" the soil. The water initially pumped toward Interstate 74 flowed onto the Trust's land, significantly raising the level of Fairland Lake. After complaints, Indianapolis Downs diverted the water away, causing depletion of the lake.

In May 2002, FRC sued Indianapolis Downs for damages caused by the pumping and diversion of water, alleging intentional conduct that forced FRC to delay and cancel its beach season and caused substantial harm. The jury awarded FRC compensatory damages of $26,800 and punitive damages of $120,000. The issue of unjust enrichment was raised but not submitted to the jury. Neither party appealed this verdict.

Subsequently, the Trust filed this action against Indianapolis Downs alleging damage to their real estate and seeking damages for trespass and unjust enrichment. Indianapolis Downs moved for summary judgment, arguing the Trust's claims were barred by collateral estoppel and res judicata. The trial court denied this motion, and Indianapolis Downs appealed that denial.

Legal Issues Presented

Whether the trial court properly denied Indianapolis Downs' motion for summary judgment on the Trust's complaint, specifically whether the doctrines of res judicata and collateral estoppel bar the Trust's claims.

Arguments of the Parties

Appellant's Arguments (Indianapolis Downs)

The Trust's complaint is barred by the doctrine of res judicata, as the issues were or could have been litigated in the prior FRC lawsuit.
The Trust's claims are also barred by collateral estoppel because issues such as unjust enrichment and damages to the real estate were allegedly adjudicated in the prior case.

Appellees' Arguments (The Trust)

This information was not available in the provided opinion.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Am. Home Assurance Co. v. Allen, 814 N.E.2d 662 (Ind. Ct. App. 2004)	Standard for summary judgment review	Confirmed that summary judgment is appropriate only when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.
Tack's Steel Corp. v. ARC Const. Co., Inc., 821 N.E.2d 883 (Ind. Ct. App. 2005)	Burdens of proof in summary judgment motions	Outlined that the moving party must make a prima facie showing and the nonmoving party must designate specific facts showing a genuine issue.
Best Homes, Inc. v. Rainwater, 714 N.E.2d 702 (Ind. Ct. App. 1999)	Scope of evidence review in summary judgment	Held that courts may consider only evidence designated to the trial court and must construe facts in favor of the nonmoving party.
Shambaugh Son, Inc. v. Carlisle, 763 N.E.2d 459 (Ind. 2002)	Interpretation of facts in summary judgment	Reinforced that doubts are resolved against the moving party.
Sizemore v. Erie Ins. Exch., 789 N.E.2d 1037 (Ind. Ct. App. 2003)	Presumption of validity on summary judgment rulings	Established that appellate courts presume trial court orders on summary judgment are valid and the appellant bears the burden to show error.
French v. French, 821 N.E.2d 891 (Ind. Ct. App. 2005)	Doctrine of res judicata and its branches	Explained claim preclusion and collateral estoppel as branches of res judicata and their applicability.
Dawson v. Estate of Ott, 796 N.E.2d 1190 (Ind. Ct. App. 2003)	Effect of final judgment for claim preclusion	Confirmed that all matters that were or could have been litigated are conclusively decided by prior judgment.
Small v. Centocor, Inc., 731 N.E.2d 22 (Ind. Ct. App. 2000)	Requirements for claim preclusion under res judicata	Set forth four requirements for claim preclusion to apply, including jurisdiction, final judgment on merits, identity of issues, and parties.
Richter v. Asbestos Insulating Roofing, 790 N.E.2d 1000 (Ind. Ct. App. 2003)	Test for claim preclusion regarding evidence identity	Suggested inquiry into whether identical evidence supports both actions to determine claim preclusion.
Indiana State Highway Comm'n v. Speidel, 392 N.E.2d 1172 (Ind. Ct. App. 1979)	Prohibition on splitting causes of action	Held that causes of action should not be pursued piecemeal to avoid multiple suits.
Gorski v. Deering, 465 N.E.2d 759 (Ind. Ct. App. 1984)	Distinction between separate causes of action arising from same occurrence	Clarified that separate claims requiring different proofs are not barred by prior judgments.
Millenium Club, Inc. v. Avila, 809 N.E.2d 906 (Ind. Ct. App. 2004)	Collateral estoppel bars relitigation of necessarily adjudicated issues	Established that issues actually litigated and determined in prior case are binding in subsequent litigation.
Sullivan v. American Casualty Co. of Reading, Pa., 605 N.E.2d 134 (Ind. 1992)	Collateral estoppel applies even if claims differ	Confirmed that collateral estoppel applies to issues, not claims, and bars relitigation of those issues.
Wedel v. American Elec. Power Serv. Corp., 681 N.E.2d 1122 (Ind. Ct. App. 1997)	Limitations on collateral estoppel	Held collateral estoppel applies only to issues actually litigated and decided, not to issues inferred by argument.
Pritchett v. Heil, 756 N.E.2d 561 (Ind. Ct. App. 2001)	Scope of collateral estoppel	Reinforced that collateral estoppel does not extend to matters not expressly adjudicated.
Meridian Ins. Co. v. Zepeda, 734 N.E.2d 1126 (Ind. Ct. App. 2000)	Two-part analysis for collateral estoppel application	Outlined factors including full and fair opportunity to litigate and fairness considerations for applying collateral estoppel.

Court's Reasoning and Analysis

The court began by reaffirming the standard for summary judgment review: summary judgment is proper only where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. The appellant, Indianapolis Downs, bore the burden to demonstrate entitlement to summary judgment.

Regarding res judicata, the court analyzed both claim preclusion and collateral estoppel. Claim preclusion bars subsequent actions on the same claim between the same parties after a final judgment on the merits. The court found that the prior FRC lawsuit and the current Trust lawsuit involved distinct claims: the FRC action sought damages for harm to the FRC’s business, while the Trust’s action seeks damages for harm to the Trust’s real estate. Because the two claims require different proofs and involve separate legal interests, claim preclusion did not apply.

The court noted that although FRC and the Trust share common individuals, they are separate entities and the FRC lacked legal interest to claim damages to the real estate. The prior jury instructions and verdict were limited strictly to damages to FRC’s business, with no adjudication of damages to the real estate. Consequently, the Trust’s claims are not barred by claim preclusion.

As to collateral estoppel, which bars relitigation of issues actually litigated and determined in a prior case, the court recognized that only issues actually decided in the prior lawsuit are preclusive. Indianapolis Downs argued that the issue of unjust enrichment was litigated and should bar the Trust’s claim. However, the court found that while unjust enrichment was raised in the FRC case, it was not submitted to the jury and therefore was not adjudicated. Furthermore, the issue of unjust enrichment at the Trust’s expense had not been litigated. Similarly, any claims regarding damage to the real estate were not presented to the jury in the prior case.

The court emphasized that collateral estoppel requires a full and fair opportunity to litigate and fairness in application, and that the trial court has discretion in applying the doctrine. Given these considerations, the trial court did not err in denying summary judgment based on collateral estoppel.

Holding and Implications

The trial court's denial of Indianapolis Downs' motion for summary judgment is affirmed.

The court held that the doctrines of res judicata and collateral estoppel do not bar the Trust’s claims because the claims in the Trust’s lawsuit differ materially from those in the prior FRC lawsuit and the relevant issues were not actually litigated or adjudicated previously. The case is remanded for further proceedings consistent with this opinion.

This decision directly affects the parties by allowing the Trust to proceed with its claims. The opinion does not establish new legal precedents but applies established doctrines to the facts at hand.

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INDIANAPOLIS DOWNS, LLC, d/b/a Indiana Downs, Appellant-Defendant, v. Richard S. HERR and A. Geraldine Herr As Trustees of the Richard S. Herr and A. Geraldine Herr Trust, Appellees-Plaintiffs.

OPINION

ROBB, Judge.

Indianapolis Downs, LLC, doing business as Indiana Downs ("Indianapolis Downs") appeals from the trial court's denial of its motion for summary judgment in an action instituted against it by Richard S. Herr and A. Geraldine Herr, as trustees of the Richard S. Herr and A. Geraldine Herr Trust (the "Trust"). We affirm.

Issue

Indianapolis Downs raises one issue for our review, which we restate as whether the trial court properly denied summary judgment to Indianapolis Downs on the Trust's Complaint.

Facts and Procedural History

The Trust owns land, including a lake, on the southwest corner of Interstate 74 and Fairland Road in Shelby County, Indiana. For many years prior to 2002, the Fairland Recreation Club, Inc. ("FRC"), of which the Herrs are the sole shareholders, operated a recreation center on that land known as Fairland Recreation Center. Fairland Recreation Center provided swimming, fishing, camping, and other seasonal outdoor entertainment areas. In 2002, Indianapolis Downs constructed a horse racing facility at the northwest corner of that intersection.

Indianapolis Downs' racing facility was to be built in a flood plain. In order to raise the soil level, two deep ponds were dug on the property and the soil therefrom was "de-watered" and spread over the property. The water that was removed from the soil was initially pumped toward Interstate 74, where it traveled to the Trust's land and significantly increased the level of Fairland Lake. After complaints were made, Indianapolis Downs diverted the water away from the Trust's land, causing the depletion of the lake.

In May of 2002, FRC filed a lawsuit against Indianapolis Downs, seeking damages from Indianapolis Downs' allegedly intentional conduct in first pumping water into Fairland Lake and then diverting water from the Lake. Specifically, FRC alleged that as a result of Indianapolis Downs' intentional actions, Fairland Recreation Center was forced to delay and ultimately cancel its beach season and was substantially and irreparably harmed. FRC also alleged that Indianapolis Downs was unjustly enriched by its conduct; however, the trial court did not allow FRC to present the issue of unjust enrichment to the jury. The jury returned a verdict for FRC awarding compensatory damages of $26,800 and punitive damages of $120,000. Neither party appealed the verdict.

Thereafter, the Trust instituted this action, alleging damage to their real estate and seeking damages for trespass and unjust enrichment. Indianapolis Downs filed a motion for summary judgment, alleging that the Trust's complaint was barred by collateral estoppel and res judicata. The trial court denied Indianapolis Downs' motion, and Indianapolis Downs thereafter properly initiated this interlocutory appeal. Additional facts will be provided as necessary.

The Trust also filed a motion for partial summary judgment, alleging that Indianapolis Downs was estopped from relitigating the issues of causation and liability. The trial court granted this motion. Indianapolis Downs appeals only the denial of its own motion for summary judgment.

Discussion and Decision I. Summary Judgment Standard of Review

On appeal from the grant or denial of a motion for summary judgment, our standard of review is the same as that of the trial court: summary judgment is appropriate only where the evidence shows there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C); Am. Home Assurance Co. v. Allen, 814 N.E.2d 662, 666 (Ind.Ct.App. 2004). A party seeking summary judgment bears the burden of making a prima facie showing that there are no genuine issues of material fact and that the party is entitled to judgment as a matter of law. Tack's Steel Corp. v. ARC Const. Co., Inc., 821 N.E.2d 883, 888 (Ind.Ct.App. 2005). Once the moving party satisfies this burden through evidence designated to the trial court pursuant to Trial Rule 56, the non-moving party may not rest on its pleadings, but must designate specific facts demonstrating the existence of a genuine issue for trial. Id. Neither the trial court nor the reviewing court may look beyond the evidence specifically designated to the trial court. Best Homes, Inc. v. Rainwater, 714 N.E.2d 702, 705 (Ind.Ct.App. 1999). The court must accept as true those facts alleged by the nonmoving party, construe the evidence in favor of the nonmovant, and resolve all doubts against the moving party. Shambaugh Son, Inc. v. Carlisle, 763 N.E.2d 459, 461 (Ind. 2002).

On appeal, the trial court's order granting or denying a motion for summary judgment is cloaked with a presumption of validity. Sizemore v. Erie Ins. Exch., 789 N.E.2d 1037, 1038 (Ind.Ct.App. 2003). A party appealing from an order granting summary judgment has the burden of persuading us that the decision was erroneous. Id. at 1038-39.

II. Res Judicata

The doctrine of res judicata prevents the repetitious litigation of disputes that are essentially the same. French v. French, 821 N.E.2d 891, 896 (Ind.Ct.App. 2005). The principle of res judicata is divided into two branches: claim preclusion and issue preclusion, also referred to as collateral estoppel. Id. Indianapolis Downs' appeal raises both claim preclusion and collateral estoppel issues.

A. Claim Preclusion

Claim preclusion applies where a final judgment on the merits has been rendered and acts as a complete bar to a subsequent action on the same issue or claim between those parties and their privies. Id. When claim preclusion applies, all matters that were or might have been litigated are deemed conclusively decided by the judgment in the prior action. Dawson v. Estate of Ott, 796 N.E.2d 1190, 1195 (Ind.Ct.App. 2003). The following four requirements must be satisfied for a claim to be precluded under the doctrine of res judicata: (1) the former judgment must have been rendered by a court of competent jurisdiction; (2) the former judgment must have been rendered on the merits; (3) the matter now in issue was, or could have been, determined in the prior action; and (4) the controversy adjudicated in the former action must have been between the parties to the present suit or their privies. Small v. Centocor, Inc., 731 N.E.2d 22, 26 (Ind.Ct.App. 2000), trans. denied. In determining whether claim preclusion should apply, it is helpful to inquire whether identical evidence will support the issues involved in both actions. Richter v. Asbestos Insulating Roofing, 790 N.E.2d 1000, 1003 (Ind.Ct.App. 2003), trans. denied.

"A party is not allowed to split a cause of action, pursuing it in a piecemeal fashion and subjecting a defendant to needless multiple suits." Indiana State Highway Comm'n v. Speidel, 181 Ind.App. 448, 392 N.E.2d 1172, 1175 (1979). However, two or more separate causes of action may arise from the same occurrence, and in such case a judgment on one action does not bar suit on the second. Gorski v. Deering, 465 N.E.2d 759, 762 (Ind.Ct.App. 1984).

In Gorski, a vehicle driven by Deering collided with a truck driven by Gorski in which Gorski's son and daughter were passengers. Gorski sued Deering for injuries sustained by his daughter in the accident. A jury returned a verdict in Deering's favor. Gorski thereafter sued Deering for his own injuries, lost wages, and property damage. The trial court granted Deering's motion for summary judgment on the basis of res judicata. On appeal, we reversed, noting that the first action sought damages for the daughter's injuries and the second for Gorski's injuries. Although both claims arose from the same incident, each required proof of injury and damages the other did not require, and therefore the second action was not barred by claim preclusion. Id.

Here, we have a similar situation. Although both the claims raised in the FRC lawsuit and the claims made in this lawsuit arose from the same incidents, they are separate claims: the first for damage to FRC's business and the second for damage to the Trust's real estate. Each claim requires proof that the other does not. Moreover, although the Herrs are involved in both FRC and the Trust, FRC and the Trust are two separate entities with separate, if complementary, interests. FRC, having no legal interest in the real estate, could not pursue a claim for damage to that real estate in its action. Certainly, FRC and the Trust could have joined as plaintiffs in one action and consolidated their claims, but they were not required to do so. See Ind. Trial Rule 20(A)(1) ("All persons may join in one [1] action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law and fact common to all these persons will arise in the action.") (Emphasis added.)

It is clear from the record that the judgment of the first cause was limited solely to damages caused to FRC's business by Indianapolis Downs, and decided nothing with regard to damage to the Trust's real estate. The trial court instructed the jury that in determining FRC's damages, it was to consider the "loss of value to" and "lost profits of" FRC.App. of Appellant at 205. The trial court further instructed the jury that "[w]hen an established business is injured, interrupted, or destroyed, the measure of damages is the diminution in value of the business, with interest, by reason of the wrongful act. The diminution may be measured by loss of profits." Id. at 206. FRC was not entitled to claim and the jury was not instructed in any way regarding damage to the real estate itself. Therefore, the claim preclusion branch of res judicata is inapplicable in the instant litigation.

B. Collateral Estoppel

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. Millenium Club, Inc. v. Avila, 809 N.E.2d 906, 911 (Ind.Ct.App. 2004). Where collateral estoppel is applicable, the former adjudication will be conclusive in the subsequent action even if the two actions are on different claims. Sullivan v. American Casualty Co. of Reading, Pa., 605 N.E.2d 134, 137 (Ind. 1992). However, the former adjudication will only be conclusive as to those issues that were actually litigated and determined therein. Wedel v. American Elec. Power Serv. Corp., 681 N.E.2d 1122, 1131 (Ind.Ct.App. 1997), trans. denied. Collateral estoppel does not extend to matters that were not expressly adjudicated and can be inferred only by argument. Pritchett v. Heil, 756 N.E.2d 561, 565 (Ind.Ct.App. 2001).

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. Meridian Ins. Co. v. Zepeda, 734 N.E.2d 1126, 1129 (Ind.Ct.App. 2000), trans. denied. The factors to be considered by the trial court in deciding whether to apply collateral estoppel include privity, the defendant's incentive to 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.

Indianapolis Downs contends that the issue of whether the Trust is entitled to damages for unjust enrichment is collaterally estopped because that issue was already litigated in Indianapolis Downs' favor in the FRC lawsuit. In the FRC lawsuit, FRC tendered jury instructions on the issue of damages for unjust enrichment and the trial court refused to give those instructions. Indianapolis Downs contends that FRC nonetheless argued the issue of unjust enrichment damages to the jury in closing argument. Assuming that the issue of unjust enrichment damages was fully and fairly litigated in the FRC lawsuit, the only issue that is now precluded is the issue of whether Indianapolis Downs was unjustly enriched at FRC's expense. It may be that the evidence at trial in this lawsuit will not support an instruction on unjust enrichment just as it did not in the FRC lawsuit; however, the issue of whether Indianapolis Downs was unjustly enriched at the Trust's expense has not yet been litigated and the Trust is not precluded from proceeding on this issue.

Indianapolis Downs also argues that the issue of whether the Trust is entitled to damages to the real estate is collaterally estopped because that issue was already presented to the jury in the FRC lawsuit. As noted in the section above, any claims as to the real estate are new to this action.

Conclusion

The trial court properly denied Indianapolis Downs' motion for summary judgment, as res judicata does not bar the Trust's claims. The trial court's order is affirmed and this cause is remanded for further proceedings.

Affirmed.

BAILEY, J., and VAIDIK, J., concur.