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Doctrine of res judicata stops property owner’s motion

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A property owner’s attempt to file a separate action against a court-appointed receiver was derailed by the Indiana Court of Appeals under the doctrine of res judicata.

The case originated from a foreclosure action filed by PNC Bank against Luxury Townhomes, LLC and LP XXIV, LLC. As part of the foreclosure, the trial court appointed Kenneth Polsinelli of McKinley Properties, Inc. as the receiver.

After PNC and Luxury reached a settlement, they filed a joint motion requesting dismissal of the foreclosure action, and a separate motion asking that Polsinelli be discharged and the receivership estate be settled.  

Luxury also filed a request for leave to join and assert claims against Polsinelli and McKinley.

At an evidentiary hearing to review Polsinelli’s final report, Luxury objected to the report. The landlord, claiming Polsinelli had negligently performed his duties, wanted permission to recover both his bond and additional funds through a separate negligence action.

The trial court found Polsinelli did not act negligently. It accepted the final report, denied Luxury’s motion for leave, discharged Polsinelli and his bond, and closed the receivership estate.

Luxury then filed a motion to correct error which the trial court denied.

In Luxury Townhomes, LLC/LP XXIV, LLC, et al. v. McKinley Properties, Inc. and Kenneth Polsinelli, 49A05-1210-MF-514, the COA affirmed the denial of Luxury’s motion to correct error. It ruled the trial court’s actions in closing the receivership estate precluded a later determination that Polsinelli acted negligently.

 “Because the trial court has already made a factual determination on Polsinelli’s performance as receiver after a three-day evidentiary hearing and has discharged Polsinelli and closed the receivership estate, we conclude that any subsequent suit by Luxury regarding issue of whether Polsinelli faithfully carried out his duties as receiver is barred by the issue preclusion branch of the doctrine of res judicata,” Judge Cale Bradford wrote for the court.

 

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