INDIANA CASE LAW UPDATE: Property Tax, Preferred Venue and Survival of Remedies

Indiana Recent Case Update

Property Tax, Preferred Venue and Survival of Remedies

Stephen E. Arthur

Property Taxes

    Property taxes assessed on a single tract of land, which is later subdivided into individual lots, are due and payable with respect to the separate lots even if the tax is not assessed individually. 

In Trinity Homes, LLC v. Fang, 2006 WL 1615726 (Ind. 2006), Trinity Homes, a developer, owned a tract of land in Boone County that Trinity intended to subdivide into residential lots for individual sale.  On March 3, 2000, Trinity closed a sale of the first lot to Fang.  The agreement between Trinity and Fang stated that “[A]ll real estate taxes and assessments, if any, including penalties and interest, which are due and payable with respect to the real estate will be paid by Seller at the closing.  Seller agrees to pay first real estate installment due after settlement.  Purchaser agrees to pay taxes and assessments thereafter.” 

    Real estate, for Indiana ad valorem tax purposes, is assessed each year on March 1 for taxes which become due and payable in May and November of the following year.  Trinity’s tract, from which Fang’s lot was a part, was assessed a tax on March 1, 2000, two days before the sale to Fang.  Thereafter, Trinity paid the May and November 2000 taxes.  Fang received a bill for taxes due in May 2001.  Fang claimed the tax debt was owed by Trinity and, finding the contract to be ambiguous, the trial court and Court of Appeals agreed. 

    On transfer, the Indiana Supreme Court found the contract to be unambiguous and held that Fang was responsible for the May 2001 taxes.  The term “due and payable” describes the date when the taxes must be paid.  Thus, the May 2000 installment was the first installment of any real estate tax that was due and payable after the March 3, 2000 closing on Fang’s lot. 

The Supreme Court held the May and November 2000 installments were taxes “with respect to the real estate,” even though there had not been a separate tax assessment on Fang’s lot in March 1999.  “The fact that a separate assessment of Fang’s lot had not yet occurred did not relieve Lot 38 of its obligation for taxes for the entire tract.”  Fang had received a windfall by Trinity’s payment of the November 2000 tax, and the taxes thereafter were his responsibility.

Change of Venue

In American Family Insurance Co. v. Ford Motor Co., 858 N.E.2d 319 (Ind. Ct. App. 2006), American Family, as subrogee of its insured, filed suit against Ford based on claims arising from an automobile fire.  Suit was filed in Marion County where American Family maintains an office.  Ford filed a motion for change of venue, pursuant to Indiana Trial Rules 12(B)(3) and 75(A), claiming that preferred venue was present in Spencer County, the County where the accident had occurred and the insured was a resident.  The trial court granted Ford’s motion and American Family appealed.

The Court of Appeals disagreed with the trial court.

Trial Rule 75(A)(10) clearly and unambiguously states that preferred venue lies in the county where the plaintiff organization’s office “to which the claim relates or out of which the claim arose is located” under either of two conditions: (1) “if the case is not subject to the requirements of subsections (1) through (9)”; or (2) “if all the defendants are nonresident individuals or nonresident organizations without a principal office in the state.”  858 N.E.2d at 324. 

The Court of Appeals determined that American Family satisfied the second condition of Trial Rule 75(A) and venue was proper in Marion County. 

    Agreeing that the majority’s decision was mandated by a plain reading of Trial Rule 75(A), Judge May, in a concurring opinion, noted her concern that Trial Rule 75(A) allows forum shopping by companies that maintain offices in counties known to dispense larger jury verdicts.  Judge May suggested that modification to Trial Rule 75(A) might be appropriate. 

Survival of Remedies

A party is allowed by Trial Rule 8(A)(2) to plead relief in the alternative and to request different types of relief.  Where the party seeks both legal and equitable relief as part of its complaint, and one of those remedies fails, that party is not precluded from recovering the other remedy. 

In UFG, LLC v. Southwest Corp., 848 N.E.2d 353 (Ind. Ct. App. 2006), Buyer filed an action relating to the sale of property and requested both specific performance and monetary damages.  Each claim was stated in separate counts.  After the action was commenced, and while it was pending, the Buyer sold the property to a third party.  The trial court held that the third-party sale mooted the claim for specific performance.  Then, curiously, the court also concluded that because the Buyer had requested specific performance, it could not proceed on the alternative claim for monetary damages.   Buyer appealed claiming it had only pleaded remedies in the alternative and had never elected specific performance as a sole remedy. 
   
Affirming the trial court on the issue of specific performance, the Court of Appeals held that specific performance may not be granted where the subject matter of the contract no longer exists or is beyond the control of the parties.  A sale of the property to a third party places the property beyond the control of the parties.  The property at issue in UFG had been sold after a lis pendens had been discharged and the Buyer did not request a stay of execution under Trial Rule 62.  Thus, specific performance was unavailable.

The Court then addressed whether the Buyer could recover damages as an alternative remedy.  The court found that the Buyer had not elected specific performance as its only remedy and, therefore, the issue of damages was still in play.  “The election of remedies doctrine provides that where a party has two coexisting but inconsistent remedies and elects to prosecute one to conclusion, he may not thereafter sue on the other.”  Accord Hudson v. McClaskey, 597 N.E.2d 308 (Ind. 1992) (where a party asserts two theories of relief in his prayer, he can not be precluded from seeking relief on one theory should the other fail).  Although the UFG court recognized that specific performance was certainly the Buyer’s preferred remedy, it was not the only relief requested in the complaint.  For that reason, Buyer was permitted to pursue a claim for damages. 

                                               

Stephen Arthur (sarthur@h-mlaw.com) is a partner with Harrison & Moberly, LLP, in Indianapolis, concentrating his practice in federal and state complex commercial litigation.  Mr. Arthur authors the Civil Trial Practice and Procedure volumes of Indiana Practice and authors the pocket supplements for Professor Harvey’s Rules of Procedure.  The author thanks Paul Carroll, another Harrison & Moberly attorney, for his assistance in the preparation of this case review.   The opinions expressed in this column are those of the author.