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COA reverses ruling in right of contribution case

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The Indiana Court of Appeals used common law today to reverse a judgment in favor of a man suing his business partner for failing to contribute to guarantee payments.

Frank Rogers co-owned two businesses with Equicor Development, in which Gregory Small is president – Plainfield Place and Patriot’s Place. In Plainfield Place, Equicor owned about 40 percent membership interests, Rogers had nearly 54 percent and another man had nearly 6 percent. Equicor and Rogers each owned a 50 percent membership interest in Patriot’s Place.

The men purchased property to develop and entered into loan agreements with Busey Bank on the Plainfield Place land and with Monroe Bank for the Patriot’s Place land. The men executed personal guaranties as security for the promissory notes.

They defaulted on the notes; Rogers paid some money to the banks, but Small did not. Rogers sued Small, asserting a “right of contribution” against him for the amount paid by Rogers in excess of his pro rata share and for the disproportionate benefit received by Small through Equicor’s management fees and real estate commissions. Both men filed for summary judgment; the trial court ruled in favor of Rogers, finding it wasn’t necessary for Rogers to have paid the liability in full and the law finds the right of contribution when one party pays more than his share of the common obligation. It awarded $43,050.47 in damages to Rogers.

But the trial court erred in ruling in favor of Rogers, the appellate court held in Gregory M. Small v. Frank A. Rogers, No. 29A02-1001-PL-30. Using common law because Indiana Code is silent as to the liability between co-guarantors, the Court of Appeals applied the same theory of contribution that has been applied to co-sureties – “the right of contribution operates to make sure those who assume a common burden carry it in equal portions.”  

In order to be entitled to contribution, Rogers had to have paid the debt or more than his proportionate share of it. But the evidence showed he only paid a portion of the amounts due under the promissory notes and far less than his share of the debts.

Judge Carr Darden wrote that Rogers’ reliance on Balvich v. Spicer, 894 N.E.2d 235, 243 (Ind. Ct. App. 2008), is misplaced. In Balvich, the banks reduced the co-guarantors’ debt to two judgments and the Spicers had paid more than their proportionate share, thereby satisfying the judgments. In the instant case, the debt owed by Rogers and Small hadn’t been reduced to judgment, so there can be no satisfaction of the judgment and no discharge of the debt, wrote Judge Darden.

“Rather, in this case, the debt still exists. Rogers did not discharge the debt, either by paying the debt or a judgment on the debt. Furthermore, the amounts paid by Rogers do not constitute more than his proportionate share of the more than $5,000,000.00 of debt incurred,” wrote the judge.

“To hold otherwise would result in a claim for contribution being asserted upon each and every payment made toward a debt until the debt is discharged,” he wrote in a footnote. “Of course, this is not to say that the amounts paid toward a debt cannot, or will not, be credited to the party asserting the right of contribution once the guaranteed debt is discharged.”
 

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  1. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  2. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  3. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

  4. I am the mother of the child in this case. My silence on the matter was due to the fact that I filed, both in Illinois and Indiana, child support cases. I even filed supporting documentation with the Indiana family law court. Not sure whether this information was provided to the court of appeals or not. Wish the case was done before moving to Indiana, because no matter what, there is NO WAY the state of Illinois would have allowed an appeal on a child support case!

  5. "No one is safe when the Legislature is in session."

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