B.J.'s Auto Wholesale, Inc., and John L. Medeiros a/k/a John Medeiros v. Automotive Finance Corporation d/b/a AFC Automotive Finance Corporation d/b/a AFC (mem. dec.)
49A05-1704-CC-885
| Ind. Ct. App. | Dec 7, 2017Background
- AFC financed inventory purchases for B.J.’s Auto and took a purchase-money security interest; John Medeiros personally guaranteed the Agreement.
- Agreement required B.J.’s Auto to hold proceeds from inventory sales in trust for AFC and to remit amounts equal to unpaid purchase-money obligations.
- AFC sued B.J.’s Auto and Medeiros for breach of contract and conversion (seeking treble damages under the CVRA) after alleged failure to hold/remit proceeds; AFC moved for summary judgment.
- B.J.’s Auto (a Florida corporation) was repeatedly warned it must be represented by Indiana counsel; Medeiros (pro se) continued to file pleadings for the corporation.
- The trial court struck the corporation’s appearance and an affidavit offered in opposition as untimely, proceeded with AFC’s summary judgment hearing (no defense counsel appeared), and entered judgment for AFC; defendants’ subsequent motion to correct error was denied.
Issues
| Issue | Plaintiff's Argument (AFC) | Defendant's Argument (B.J.'s Auto / Medeiros) | Held |
|---|---|---|---|
| Whether judgment was properly entered on AFC’s motion for summary judgment vs. default-procedure requirements | Proceedings were summary-judgment based; judgment may be entered on summary judgment evidence | Trial court should have treated judgment as default and defendants should have used Rule 60(B) relief | Court: proceedings were on AFC’s motion for summary judgment; Rule 60(B) not required—appeal via Motion to Correct Error proper |
| Whether treble damages under CVRA and conversion were supportable | AFC alleged defendants knowingly/ intentionally converted proceeds and had security interest; failure to answer admitted complaint allegations | Defendants argued lack of mens rea per Klinker and that conversion cannot rest on unpaid debt alone | Court: default/admissions meant allegations taken as true; conversion requires knowingly/intentionally (a lower mens rea than fraud); summary judgment for AFC affirmed |
| Whether the trial court erred by striking the affidavit of Terry Medeiros as untimely | AFC: affidavit filed after the response deadline (Dec 29 file stamp) and no clear proof of timely certified/reg’d mailing | Defendants: affidavit was mailed Dec 27 under T.R.5(F) and should have been considered | Court: shipping/receipt evidence insufficient and not clearly certified; affidavit was untimely; striking was not erroneous |
| Whether B.J.’s Auto was denied a fair opportunity to retain Indiana counsel | AFC: court provided warnings and time; corporation persisted pro se and failed to retain counsel until after judgment | Defendants: court allowed insufficient time and should have been more lenient per precedent | Court: multiple warnings over months and an opportunity to hire counsel were afforded; trial court did not abuse discretion |
Key Cases Cited
- Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332 (Ind. 1983) (Rule 60(B) is the appropriate initial procedure to seek relief from default/default judgment)
- Anderson v. Broadmoor Corp., 363 N.E.2d 1042 (Ind. Ct. App. 1977) (use of "default" terminology does not convert proceedings that were conducted on summary-judgment grounds)
- Klinker v. First Merchants Bank N.A., 964 N.E.2d 190 (Ind. 2012) (fraud-based treble damages require proof of specific intent to defraud; summary judgment is rarely appropriate when mens rea is at issue)
- Heartland Res., Inc. v. Bedel, 903 N.E.2d 1004 (Ind. Ct. App. 2009) (allegations in a complaint taken as true when a party fails to file a responsive pleading or is defaulted; supports treble damages under CVRA in that posture)