Filing Claim, Albeit In Improper Proceeding, Is Nevertheless Commencement Of Action For Limitations Purposes
IN RE: ROSE (October 7, 2009)
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Mercantile National Bank of Indiana sued Jasper- Newton Utility in state court for breach of contract and specific performance. Judgment was entered in Mercantile's favor for approximately $160,000. James Rose was a 50% shareholder in Jasper- Newton. A few weeks later, Rose and the other shareholder sold Jasper-Newton to WSCI. The shareholders indemnified WSCI for the liability to Mercantile. In proceedings to collect on the judgment, Mercantile sought leave to amend its complaint to add a claim under the Indiana Crime Victim Compensation Act. The court entered judgment in Mercantile's favor of almost $600,000. The state appellate court affirmed on the merits. The state Supreme Court reversed, holding that Mercantile could not assert a new CVCA claim in supplemental proceedings to collect the judgment. Rose filed a petition for bankruptcy in the meantime. Mercantile filed an adversary proceeding in the bankruptcy court challenging the dischargeability of its CVCA claim. The bankruptcy court granted Rose's motion to dismiss Mercantile's complaint, concluding that the CVCA claim was barred by the statute of limitations. The district court affirmed the bankruptcy court. Mercantile appeals. During the appeal, the state appellate court ruled that the CVCA claim was commenced within the appropriate limitations period.
In their opinion, Judges Flaum and Williams and District Judge Kapala reversed. The Court looked to the various opinions of the state courts to decide whether Mercantile filed within the statutory period. Although the state Supreme Court reversed the trial court's order granting Mercantile leave to amend, it did so because it was improper to file the claim in supplemental proceedings. The court, in its opinion, specifically stated that Mercantile could pursue the claim in some other manner. After remand, the state Court of Appeals concluded that the claim was commenced when Mercantile moved to amend its complaint and was therefore filed within the limitations period. The Court concurred with the reasoning of the state appellate court in concluding that the claim was properly commenced within the limitations period.
