Old Plank Trail Community Bank, N.A. v. Mattcon General Contractors, Inc. (mem. dec.)

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be FILED regarded as precedent or cited before any Dec 13 2019, 7:57 am court except for the purpose of establishing CLERK the defense of res judicata, collateral Indiana Supreme Court Court of Appeals estoppel, or the law of the case. and Tax Court

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE Scott A. Pyle Zachary J. Eichel Dyer, Indiana Michael L. Einterz Zionsville, Indiana

IN THE COURT OF APPEALS OF INDIANA

Old Plank Trail Community December 13, 2019

Bank, N.A, Court of Appeals Case No. 19A-PL-1033 Appellant-Garnishee Defendant, Appeal from the Marshall Circuit v. Court The Honorable Curtis D. Palmer, Mattcon General Judge Trial Court Cause No. Contractors, Inc., 50C01-1806-PL-25 Appellee-Defendant/Counter-Plaintiff.

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Case Summary [1] Old Plank Trail Community Bank, N.A. (Old Plank), appeals the trial court’s

denial of its motions to correct error, which determined that Old Plank had waived

its right to set-off the garnished funds of its account holder, Mattcon General

Contractors (Mattcon), because it had not adequately preserved its right to a set-

off. Old Plank further contends that the trial court abused its discretion in entering

a final order in garnishment in light of its right to set-off the amounts owed. [2] We affirm.

Facts & Procedural History [3] On June 14, 2018, Burrink Commercial Services, Inc. (Burrink) filed a complaint

to foreclose a mechanic’s lien, for damages, and for breach of contract against

Mattcon General Contractors (Mattcon). Aldi Inc. was also a named defendant

because the work and materials for the construction project at issue were located

on real estate that it owned. Burrink alleged that Mattcon had paid only part of

what was owed, and an outstanding balance remained in the amount of $176,305. [4] Although the parties filed a series of claims, counterclaims, and motions from

June, 2018 through December 2018, this appeal only concerns post-judgment

collection efforts. Specifically, on December 6, 2018, the trial court entered a

judgment for $162,178.95 in Mattcon’s favor against Burrink. Thereafter, on

January 8, 2019, Mattcon’s counsel filed a series of proceedings supplemental

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pleadings directed towards Old Plank—the garnishee defendant—as the holder of

Burrink’s accounts. [5] The following day, the trial court ordered Old Plank to answer on or before

February 1, 2019, certain interrogatories that Mattcon had filed or, at its option,

appear in court and answer the interrogatories in person at a hearing scheduled for

February 8, 2019, at 8:30 a.m. The order specifically provided that “[a]ny claim or

defense to the proceedings supplemental garnishment order must be presented at

the time and place of the hearing.” Appendix Vol. II at 20-21. [6] On January 24, 2019, Old Plank answered the interrogatories, indicating that

Burrink maintained two checking accounts with it. Old Plank did not list any

deposit amounts, and a handwritten note indicated that the “Bank has claimed set-

off rights as past loans due to Bank.” Appellant’s Appendix Vol. II at 23. In its

supplemental answers to those interrogatories, Old Plank asserted that there were

amounts of deposits totaling $97,944.07 in the combined accounts, along with a

handwritten note indicating, “set-off claimed” as to both amounts. Id. at 26. No

further explanations regarding its claimed right of set-off were provided.

Additionally, even though Old Plank’s legal request coordinator remained in

contact with Mattcon’s counsel throughout the process, it did not provide any

documents in support of its claimed set-off. [7] Old Plank did not appear at the February 8, 2019 hearing, and the trial court issued

a handwritten order that was captioned, “CCS ENTRY.” Appendix Vol. II at 27.

This entry provided, among other things, that Old Plank’s failure to appear at the

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February 8, 2019 proceedings supplemental hearing waived “any defenses as to

garnished funds.” Id. [8] On February 11, 2019, Mattcon submitted a final order in garnishment. The trial

court approved the order and entered judgment that same day. The order

indicated that Old Plank had submitted answers to the interrogatories and that

Burrink had accounts with Old Plank. The trial court ordered Old Plank to pay

the balance due Mattcon in the amount of $97,943.96 to the county clerk. [9] Old Plank filed two separate motions to correct error regarding the February 8,

2019 order and the subsequent order in garnishment. Old Plank asserted that the

trial court erred in concluding that it had waived any defenses to the garnished

funds. Specifically, Old Plank argued that even though it did not appear at the

proceedings supplemental hearing, it had filed two separate pleadings with the trial

court (the interrogatories) and had adequately provided Mattcon’s counsel with the

set-off rights and claims prior to the February 8, 2019 hearing. Old Plank alleged

that it had the right, as Burrink’s depositary bank, to set-off any amounts owed

after receiving notice of the garnishment proceedings. Hence, Old Plank argued

that the trial court should vacate the garnishment order. [10] The trial court denied Old Plank’s motions to correct error and it now appeals.

Discussion & Decision [11] A trial court has broad discretion to correct errors, and we will reverse only for an

abuse of that discretion. Speedway SuperAmerica, LLC v. Holmes, 885 N.E.2d 1265,

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1270 (Ind. 2008). An abuse of discretion occurs when the trial court’s action is

against the logic and effect of the facts and circumstances before it and the

inferences that may be drawn therefrom, or if it is based on impermissible reasons

or considerations. Lighty v. Lighty, 879 N.E.2d 637, 640 (Ind. Ct. App. 2008).

Moreover, an abuse of discretion will be found only when the trial court’s

judgment is clearly erroneous. Sanders v. Sanders, 105 N.E.3d 1102, 1106 (Ind. Ct.

App. 2018). We further note that in this case, Old Plank is appealing from a

negative order in garnishment. Thus, we will not reverse a trial court’s order

unless it is contrary to law. Stoffel v. JPMorgan Chase Bank, 3 N.E.3d 548, 552 (Ind.

Ct. App. 2014). We will reverse only where the evidence leads to but one

conclusion, and the trial court reached the opposite conclusion. Smith v.

Dermatology Assoc., 977 N.E.2d 1, 4 (Ind. Ct. App. 2012). [12] A garnishment proceeding is a means by which a judgment creditor seeks to reach

property of a judgment debtor in the hands of a third person, so that the property

may be applied in satisfaction of the judgment. Fifth Third Bank v. Peoples Nat’l

Bank, 929 N.E.2d 210, 214 (Ind. Ct. App. 2010). A judgment creditor has the

initial burden of proving that funds are available for garnishment. Commercial

Credit Counseling Serv’s. v. W.W. Grainger, Inc., 840 N.E.2d 843, 847 (Ind. Ct. App.

2006). Once a creditor has made a prima facie showing, the garnishee-defendant

must demonstrate a countervailing interest in the property or assert a defense to the

garnishment. Id. [13] In general, a depositary bank has the right of set-off after receipt of notice of

garnishment. Fifth Third Bank, 929 N.E.2d at 214. However, in the particular

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context of banks as garnishee defendants, a bank may waive its right to a set-off.

First Bank of Whiting v. Samocki Bros. Trucking Co., 509 N.E.2d 187, 199 (Ind. Ct.

App. 1987), trans. denied. Waiver has been defined as the voluntary relinquishment

of a known right. Kowalskey v. State, 42 N.E.3d 97, 103 (Ind. Ct. App. 2015).

Normally, silence or failure to act will not constitute waiver unless the holder of

the right fails to speak or act when there is a duty to speak or act. Grenchik v. State

ex rel. Pavlo, 373 N.E.2d 189, 193 (Ind. Ct. App. 1978). [14] In this case, Old Plank submitted its answers to interrogatories that indicated a

potential right to a set-off as a defense to a garnishment. However, it failed to

include or reference any relevant loan documents, payment histories, statements of

outstanding balances, or notices of default that would support its claimed set-off

rights. Moreover, Old Plank had the duty, knowledge, and opportunity to present

and prove the claimed defense to garnishment at the February 8 hearing. It failed

to do so, despite the trial court’s order that the claims or defenses were to be

presented at the time and place of the hearing. Under these circumstances, we

cannot say that the trial court abused its discretion in determining that Old Plank

waived its right of set-off. See Commercial Credit Counseling Serv’s, 840 N.E.2d at

848-49 (holding that the garnishee-defendant failed to establish a security interest

in the judgment debtor’s assets and hence, a defense to garnishment, when it only

included an illegible security agreement between it and another debtor, an

unsigned blank exemplar agreement, and an uncertified financing statement in

support of its claim). The trial court’s final order in garnishment stands. [15] Judgment affirmed.

Court of Appeals of Indiana | Memorandum Decision 19A-PL-1033 | December 13, 2019 Page 6 of 7 Brown, J. and Tavitas, J., concur. Court of Appeals of Indiana | Memorandum Decision 19A-PL-1033 | December 13, 2019 Page 7 of 7