June 06, 2007

INDIANA CASE LAW UPDATE: Interpleader Actions, Service, and Newly Discovered Evidence

Interpleader Actions, Service, and Newly Discovered Evidence
Stephen E. Arthur


Interpleader Actions


The procedural devices provided by Trial Rule 22 and Ind. Code § 28-9-5-3 permit depository financial institutions to deposit funds into the court that are subject to an adverse claim. In a significant recent case, Porter Dev., LLC v. First Nat’l Bank of Valparaiso, 2007 WL 1491804 (Ind. 2007), the Indiana Supreme Court held that the statute allows the interpleading institution to recover its costs and expenses, including attorney fees. In Porter Development, a dispute arose between two parties over ownership of funds held by the Bank. The Bank initiated an interpleader action and, after depositing the funds with the court, requested its costs and expenses claiming that the Indiana Adverse Interpleader Statute, Ind. Code § 28-9-5-3, requires such a recovery. The trial court determined an award of attorney fees is not required because the Adverse Claim Interpleader Statute uses the word “entitled” and not “shall” when referring to such recovery. This decision, which was affirmed by the Indiana Court of Appeals, was reversed on transfer by the Supreme Court.


In reaching its ruling, the Supreme Court determined that the word “entitled” in the Adverse Claim Interpleader Statute mandates an award of costs and expenses, including attorney fees. Specifically, “entitle” means to furnish with an enforceable right or claim to something. This interpretation of “entitle” may ultimately be relevant to the proper interpretation of other Trial Rules and statutes that include entitlement language.


The Supreme Court then addressed who between the defendants should be responsible for paying the incurred costs and expenses. Reviewing other jurisdictions, the court stated that the interpleading party shall recover its costs and expenses directly from the deposited funds before distribution to the prevailing claimant and, as between competing claimants, the claimant whose claim to the fund is rejected must replenish the fund or reimburse the prevailing party. The right to recovery includes only those costs and expenses that are incurred in bringing a proper interpleader, or successfully defending a party’s use of interpleader. In the event the deposited funds are insufficient, the trial court may impose costs and expenses upon the unsuccessful claimants whose claims necessitated the interpleader action.




Ind. Code § 4-21.5-5-8 provides that a petitioner for judicial review of an agency action shall serve a copy of the petition upon “each party to the proceeding before an agency; in the manner provided by the rules of procedure governing civil actions in the courts.” The Indiana Court of Appeals in Lindsey v. De Groot Dairy, LLC, 2007 WL 1584583 (Ind. Ct. App. 2007), was asked to determine whether the statute mandates that service be made under Trial Rule 4 or Trial Rule 5. In Lindsey, the Lindseys sought judicial review of an Environmental Law Judge’s order by filing their petition in the trial court. A copy of the petition was sent to the Attorney General, the ELJ, an IDEM attorney, and an attorney who had represented De Groot in the administrative proceeding. De Groot, however, was not served with the petition. In response, the trial court dismissed the action finding that it lacked subject matter jurisdiction because of defective service.


On appeal, the Indiana Court of Appeals reversed. Noting the Indiana Supreme Court has previously held service upon a party’s attorney will not satisfy the requirements of Trial Rule 4, the Court of Appeals determined that Ind. Code § 4-21.5-5-8 is ambiguous as to which Trial Rule must govern service. After examining the legislative intent behind the statute, however, the court concluded that service pursuant to Trial Rule 5 will satisfy the requirements of Ind. Code 4-21.5-5-8. The court based its ruling, in part, on the court’s observation that a petition for judicial review is a continuance of the underlying agency action. Further, the court expressed an unwillingness to “create a procedural trap for unwary litigants” by requiring service in accordance with Trial Rule 4.


Continuity between Trial Rule 59 and 60(B)(2)


A motion for relief from judgment under Trial Rule 60(B) may not be used as a substitute for a direct appeal based upon a timely motion to correct errors under Trial Rule 59. Further, Trial Rule 60(B) may not be used to revive an expired attempt to take an appeal. Instead, the proper function of Trial Rule 60(B) is to afford relief from circumstances which could not have been discovered during the 30 day period mandated by Trial Rule 59. The relationship between Trial Rules 59 and 60(B)(2) was examined in Speedway SuperAmerica LLC v. Holmes, 866 N.E.2d 304 (Ind. Ct. App. 2007). In that action, Holmes commenced an action against Speedway alleging injuries caused by a slip and fall on diesel fuel. During trial, Holmes offered into evidence the jeans and boots worn by Holmes during the slip and fall incident. The trial court allowed the evidence and Speedway did not request an extension of time to conduct testing on the clothing. A jury verdict was returned in favor of Holmes.


A month after judgment was entered by the trial court, Speedway filed a Motion to Preserve Evidence and Perform Destructive Testing on the clothing as well as a combined motion under Trial Rules 59 and 60(B)(2). Both motions provided that testing of the clothing would lead to newly discovered evidence but did not specify the new evidence. As for the timing of the combined motion, Speedway argued that Trial Rule 59 requires that a motion to correct errors when “new evidence is capable of production within thirty (30) days of the final judgment which, with reasonable diligence, could not have been discovered and produced at trial.” Alternatively, Trial Rule 60 allows for relief from a judgment when newly discovered evidence “by due diligence could not have been discovered in time to move for a motion to correct errors….” Speedway concluded that it was uncertain whether the testing results theoretically could have been obtained within 30 days so it was proper to request relief under both Trial Rules because if one did not apply the other must. The trial court denied the combined motion.


On appeal, the Indiana Court of Appeals held that Speedway had failed to act diligently to discover new evidence within 30 days of the judgment. Speedway’s motion under Trial Rule 59 did not specify what the newly discovered evidence was, but only that it would be discovered after testing. Additionally, the record established that the actual testing of the clothing took less than 30 days. Therefore, had Speedway tested the clothing upon admission, it would have discovered a basis to support its Motion to Correct Error within the 30 day period. Because the newly discovered evidence could have been discovered timely, a motion to correct errors was a jurisdictional prerequisite, and Speedway could not resurrect its remedy by motion under Trial Rule 60(B)(2).




Stephen Arthur is a partner with Harrison & Moberly, LLP (

) in Indianapolis, concentrating his practice in federal and state business and tort litigation. He is the author of Indiana Civil Trial Practice, published by West Publishing, and co-author of Professor Harvey’s Indiana Rules of Procedure Annotated. The author wishes to thank Paul Carroll for his assistance. The opinions and analysis expressed in this column are those of the author.


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