Amended original judgment affirmed by COA in sewage leak case

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The Court of Appeals of Indiana has again ruled in a messy sewage case concerning proceedings supplemental between a retail property owner and an association of property owners, affirming granted motions for the association and an amendment of the original judgment.

Conroad Associates L.P., which owns an Indianapolis retail building called Castleton Corner, sued the Castleton Corner Owners Association Inc. after a lift station located at the building flooded the space with human sewage in February 2015.

Pier 1 Imports, which leased the contaminated space, had to close and eventually terminated its lease.

In its amended complaint filed in July 2017, Conroad claimed the association was negligent and had breached the terms of the Declaration of Development Standards, Covenants, and Restrictions when it failed to ensure the lift station operated properly. Conroad, a member of the association, also asserted the association had breached its fiduciary duty to its members.

The Marion Superior Court found for Conroad following a bench trial, and the Court of Appeals of Indiana affirmed that the association had breached its contract for failing to maintain the lift station.

But the COA also reversed the trial court’s calculation of damages and remanded for the trial court to award damages to Conroad in the amount of $49,656.

As an appeal in Castleton Corner I was pending, the trial court held proceedings supplemental to the execution of its judgment against the association and ordered that the association transfer title to the sewer lift and associated easements to Conroad in partial satisfaction of the judgment.

The association appealed in Castleton Corner Owners Association, Inc. v. Conroad Associates, L.P., 20A-PL-1253 (Ind. Ct. App. Jul. 6, 2020) (Castleton Corner II), but declared bankruptcy. It initiated an automatic stay of the proceedings supplemental and the Castleton Corner II appeal.

Castleton Corner I was not stayed, however, and following certification of the COA’s opinion, the association moved to amend the original judgment damages and to vacate the order in proceedings supplemental. The association also tendered payment, via the trial court clerk, in the amount of the amended judgment to Conroad.

The trial court after lifting the bankruptcy stay in May 2021 granted the association’s motions, amended the original judgment pursuant to Castleton Corner I, ordered the trial court clerk to release the tendered payment to Conroad in satisfaction of the amount of the amended judgment and vacated the original order in proceedings supplemental.

The COA affirmed Wednesday in Conroad Associates, L.P. v. Castleton Corner Owners Association, Inc. and McKinley, Inc., 21A-PL-1125, holding that the trial court’s continued exercise of jurisdiction was proper as it did not put association’s liability back into doubt, and the manner of enforcing the judgment on that liability remained in fieri in the trial court.

It further held that the association’s motion to vacate the original proceedings supplemental order did not violate the bankruptcy stay and was not untimely. The COA rejected Conroad’s reliance on Hendrix v. Page, 640 N.E.2d 1081 (Ind. Ct. App. 1994), noting that Hendrix discusses only filings and orders entered while the stay is in effect, not filings and orders entered after the stay is lifted.

It also concluded that Conroad’s earlier arguments with respect to subject matter jurisdiction were simply rehashed in the untimeliness argument concerning the January 2021 motion.

Finally, it held that the trial court did not err when it vacated the original order in proceedings supplemental.

“We agree with the Association that Trial Rule 69(A) clearly set forth the procedure for making Conroad whole, and, thus, the trial court’s assessment in the May 2021 Orders that it had no basis to depart from Trial Rule 69(A) in the first instance was correct,” Judge Paul D. Mathias wrote.

Finally, the COA also agreed with the association that by vacating the June 2020 proceedings supplemental order and the transfer itself, the trial court effectively recognized the lift station and easements “rightfully belonged” to the association.

“For all of the above reasons, we affirm the trial court’s judgments in the May 2021 Orders,” it concluded.

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