Douglas L. Krasnoff v. The Education Resources Institute
44 N.E.3d 781
Ind. Ct. App.2015Background
- In 1994 Krasnoff executed a $10,500 private student promissory note that ultimately was transferred to The Education Resources Institute (TERI).
- TERI sued Krasnoff in 2004 for collection; in 2009 the parties executed an agreement (the Agreement) altering repayment obligations.
- At a 2010 bench trial TERI’s counsel’s affidavit and the Agreement were excluded; the court granted Krasnoff’s motion for involuntary dismissal; this Court reversed and remanded (TERI I).
- TERI entered bankruptcy in 2010; in 2012 TERI executed an assignment transferring the Note to TERI Plan Trust, LLC (the Trust).
- At a 2014 bench trial the Trust’s collection agent testified and the trial court admitted the Agreement and Assignment; the court found TERI entitled to enforce the Agreement (or otherwise recover) and entered judgment against Krasnoff for $13,952.66.
- Krasnoff appealed, arguing TERI lacked standing and was not the real party in interest after the Assignment; the trial court denied his motion to correct error.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TERI had standing to pursue collection after transferring the Note | TERI was the holder when suit began and incurred litigation costs, so it had standing | Krasnoff: after the 2012 Assignment TERI lacked standing to enforce the Note | TERI had standing because it was holder and suffered a direct injury while litigation was pending |
| Whether TERI was the real party in interest after the Assignment | TERI (with Trust’s ratification at trial) could continue as named plaintiff under T.R. 17(a) | Krasnoff: Assignment transferred enforcement rights to the Trust, so TERI was not a person entitled to enforce under the UCC and not the real party in interest | TERI was not a person entitled to enforce under the UCC, but the Trust ratified/joinder/substituted under Rule 17 so TERI’s prosecution was permitted |
| Effect of U.C.C. “person entitled to enforce” after Assignment | TERI: assignment did not deprive TERI’s ability to pursue because of ratification and evidence presented | Krasnoff: Assignment moved possession/rights to the Trust; TERI no longer a person entitled to enforce under I.C. § 26-1-3.1-301 | Court agreed TERI was not a person entitled to enforce under the UCC, but that did not defeat the action due to Rule 17 remedial provisions |
| Whether trial evidence and ratification cured any Rule 17 defect | TERI: Trust’s representative testified and produced Assignment and Note, establishing ratification/joinder | Krasnoff: admission was improper and TERI could not be real party in interest | Trial court properly admitted evidence; Trust’s representative ratified TERI’s status and judgment affirmed |
Key Cases Cited
- Hammes v. Brumley, 659 N.E.2d 1021 (Ind. 1995) (distinguishes standing from real party in interest)
- Erwin v. Roe, 928 N.E.2d 609 (Ind. Ct. App. 2010) (appellate rule compliance and possible waiver for omitted materials)
- City of Indianapolis v. Hicks, 932 N.E.2d 227 (Ind. Ct. App. 2010) (standard for abuse of discretion review)
- Indiana High Sch. Athletic Ass’n, Inc. v. Schafer, 913 N.E.2d 789 (Ind. Ct. App. 2009) (purpose and review of special findings under Trial Rule 52)
- Ballard v. Lewis, 8 N.E.3d 190 (Ind. 2014) (de novo review for legal questions on contract/statute construction)