McGuire v. Century Surety Co.McGuire v. Century Surety Co.
Case Summary
Jоhn and Ruth McGuire appeal the trial court’s entry of summary judgment in favor of Century Surety Company (“Century”). We affirm.
Issues
The issues before us are:
I. whether the trial court properly denied the McGuires’ motion for an extension of time to respond to Century’s summary judgment motion;
II. whether the entry of summary judgment in favor of Century should have been stayed by the McGuires’ filing for bankruptcy; and
III. whether the trial court properly entered summary judgment in favor of Century.
Facts
On March 11, 2004, Mortgage Electronic Registration Systems, Inc. (“Mortgage Elеctronic”), filed a complaint to foreclose a mortgage on property owned by the McGuires in Martinsville. The property included a house dating from the mid-1800’s that the McGuires had been renovating. In connection with the renovation, the McGuires had purchased a “Commercial Lines” insurance policy from Century, which included a “Builders Risk Coverage Form.” Appellee’s App. pp. 138, 203. On August 2 and 9, 2003, two walls of the house collapsed during the renovation. After invеstigating the McGuires’ claim for coverage, Century informed them that the collapses fell within a policy exclusion, based upon faulty workmanship in the renovation, and would not be covered.
On March 15, 2005, the McGuires filed an answer to Mortgage Electronic’s second amended complaint for foreclosure. In addition, the McGuires initiated a third-party action against Century, alleging it had improperly and in bad faith denied their claim for coverage. On Octоber 10, 2005, the McGuires filed a bankruptcy petition under Chapter 13 of the Bankruptcy Code in the Southern District of Indiana. On December 1, 2005, Century filed a motion for summary judgment on the McGuires’ third-party complaint.
On December 29, 2005, the McGuires filed a motion for an extension of time to respond to Century’s summary judgment motion, stating that they intended “to bring this matter to the attention of the [bankruptcy] Trustee.... ” Appellant’s App. 1 Century objected to any extension of time. The trial court did not immеdiately respond to this motion, but on January 13, 2006, it denied the McGuires’ motion.
Counsel for the McGuires apparently did not immediately receive notice of this ruling. He appeared at the scheduled summary judgment hearing on January 19, 2006, and reiterated his request for an extension to file a response to Century’s summary judgment motion. The trial court denied this request and heard argument on the merits of the motion and whether the McGuires’ bankruptcy filing should stay further proceedings in the case between the McGuires and Century. At the conclusion of the hearing, the trial court ruled that it would enter summary judg
Analysis
I. Denial of Motion for Extension of Time
The McGuires’ first argument is that the trial court should have granted their motion for an extension of time to respond to Century’s summary judgment motion. Under Indiana Trial Rule 56(C), a party has thirty days to respond to an opposing party’s summary judgment motion. Trial Rule 56(1) provides, “For cause found, the Court may alter any time limit set forth in this rule upon motion made within the applicable time limit.” We review a trial court’s action in altering the time limits on summary judgment for an abuse of discretion.
Farm Credit Servs. of Mid-America, FLCA v. Tucker,
This is a situation in which the trial court could have granted the McGuires’ motion for an extension of time, but it did not abuse its discretion in refusing to grant the motion. One of the primary reasons the McGuires sought an extension purportedly was so that they could apprise the bankruptcy trustee of the pending action between them and Century and to allow the trustee to determine whether to pursue the action. However, the third party action between the McGuires and Century already was pending when the McGuires filed for bankruptcy. There is no explanation as to why the trusteе would not or should not have been aware of this claim by the McGuires—a potential asset that could have been made available to the McGuires’ creditors—at the time of them initial bankruptcy filing.
Counsel for the McGuires did assert generally that he had not been able to prepare a response to the summary judgment motion because of time constraints caused by representing the McGuires in the bankruptcy proceeding. However, the motion did not indicate that the McGuires needed more time to gather evidence, depose witnesses, or any other legally mandated reason. A general claim of being too busy to timely respond to another party’s motion does not require a court to grant a motion for an extension of time to file a response, although it may 'permit a trial court to grant such a motion.
The McGuires also assert that the trial court’s denial of their motion deprived them of procedural due process beсause they were unable to file a formal response to Century’s summary judgment motion. This court has found it to be a violation of due process for a trial court to grant a motion for an extension of time, then later rescind that ruling after the party that had moved for the extension had acted in reliance on the granting of the motion.
See Chandler v. Dillon ex rel. Estate of Bennett,
Finally, to the extent the McGuires contend that all of them motions in this case were denied, while all of those filed by Century or Mortgage Electronic were
II. Bankruptcy Stay
Next, we address the McGuires’ contention that the filing of their bankruptcy petition should have stayed any action in the case between them and Century.. The automatic stay provision of the Bankruptcy Code provides, in- part, that the filing of a bankruptcy petition:
operates as a stay ... of ... the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced' before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencemеnt of the case under this title....
11 U.S.C. § 362(a)(1). There is no question here that the automatic stay applied to prevent any further action by Mortgage Electronic to foreclose the mortgage. Whether it applied to the third-party action between the McGuires and Century is another matter.
Century first contends that the question of whether the bankruptcy stay applied in this case is moot because in April of this year, after the summary judgment was entered, the McGuires voluntarily dismissed their bankruptcy petition. “An appeal is moot when it is no longer live and the parties lack a legally cognizable interest in the outcome or when no effective relief can be rendered to the parties.”
Lake County Sheriff’s Corrections Merit Bd. v. Peron,
It appeаrs to be the prevailing rule in numerous jurisdictions that generally, the
With respect to the propriety of continuing proceedings on a third-party complaint initiated by a debtor whо has filed for bankruptcy, one court has explained: “A third-party complaint is a separate, though related, claim brought within the context of ongoing litigation.... Its character is not changed by the fact that it was brought in the context of a suit against the debtor rather than as an independent action.”
Jefferson Ward Stores, Inc. v. Doody Co.,
The McGuires rely primarily on a case from Texas,
Dyer v. Weedon,
We need not take a position on whether we fully agree with
Dyer.
With respect to the McGuires’ third-party action against Century, Century is not pursuing any claims against the McGuires. It was not acting as a creditor of the McGuires or seeking any monetary recovery against
In keeping with cases from other jurisdictions and our own supreme court’s view that the automatic stay provision of Section 362 is clearly intended to benefit the bankrupt debtor, we hold that it does not apply to third-party complaints brought by a defendant-debtor against a party who originally was not a party to the action and on claims not directly related to the initial complaint brought by a plaintiff-creditor. This also applies to motions filed in connection with the third-party complaint.
See Jefferson Ward Stores,
III. Merits of the Summary Judgment Ruling
We now address the merits of the trial court’s summary judgment ruling. We review a summary judgment ruling by using the same standard as the trial court: summary judgment is appropriate only where the evidence shows there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Ind. Trial Rule 56(C);
Fraternal Order of Police, Lodge No. 73 v. City of Evansville,
Century contends that the McGuires’ claim for coverage clearly was excluded by the terms of the policy. If an insurance policy is clear and unambiguous, its language is given its plain meaning.
Auto-Owners Ins. Co. v. Harvey,
The “Commercial Lines Policy” issued by Century to the McGuires is lengthy and detailed. The relevant portions of the policy for purposes of this case are the “Builders Risk Coverage Form” and
2. We will pay for direct physical loss or damage to Covered Property, caused by collapse of a building or any part of a building that is insured under this Coverage Form or that contains Covered Property insured under this Coverage Form, if the collapse is caused by one or more of the following:
# ⅜ ⅜ * ⅝ *
f. Use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation....
Id. at 217-18.
In their reply brief, the McGuires focus only on Part D.2.f. of the “Causes of Loss” form in essentially arguing that the collapse of two walls on the property they were renovating should have been a covered occurrence under the Century policy, regardless of the cause of the collapse. 5 However, we believe the language of the policy as a whole clearly and unambiguously excludes coverage for any collapse that has resulted from faulty workmanship. The “Builders Risk Coverage Form” states under Part F(3), “Restriction of Additional Coverage — Collapse,” as follows: “If the Causes of Loss — Special Form is applicable tо this coverage form, Paragraph D.2.f. of the Additional Coverage — Collapse does not apply to this coverage form.” Id. at 209. Thus, because the “Causes of Loss— Special Form” was part of the McGuires’ policy, any language found in paragraph D.2.f. is not applicable here. Also, Part 3(c) of the “Causes of Loss — Special Form” states in part: “We will not pay for loss or damage caused by or resulting from ... [f]aulty, inadequate or defective ... [d]еsign, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction.... ” Id. at 215. There is an apparent exception to this “faulty workmanship” exclusion in the “Causes of Loss — Special Form” with respect to collapses of buildings, but the “Builders Risk Coverage Form” removes this exception.
We also believe it is clear that the “Builders Risk Coverage Form” was intended to take precedence over the “Causes of Loss — Special Form.” As revealed on the declarations page of the property insurance portion of the “Commercial Lines Policy” the McGuires purchased, the specific type of property coverage they purchased was “builder’s risk.” Id. at 186. The “Causes of Loss — Special Form” included in the property coverage portion of the policy also clearly appears to be a general form that could apply to various types of policies, while the “Builders Risk Coverage Form” specifically applies in this case. Finally, the “Builders Risk” form only contravenes the “Causes of Loss” form in this one regard regarding collapses resulting from two specified causes, i.e. “defective material or methods.” Id. at 218. The “Builders Risk” form does not completely, or even substantially, negate the “Causes of Loss” form or render it a nullity.
The McGuires also apparently contend that the exclusion of coverage for any collapse that has resulted from faulty workmanship renders the Century policy illusory and that coverage under the policy is dictated regardless of the plain language
Century presented uncontradicted evidence to the trial court that the collapse of the two walls was indeed caused by the faulty workmanship of the McGuires or those working for them. It introduced a report from David McClean, a forensic engineer who worked for Donan Engineering Company. 6 The report stated in part:
The north wall collapse is due to the excavation adjacent to the foundation .... This is especially risky when the excavation is allowed to partially fill with water and the soil becomes weaker due to the elevated moisture content.
The south crawlspace collapsed adjacent to the deeper excavation of the basement. The exposure of the bottom of the crawlspace foundation is very risky....
⅜ ⅜ ⅜ ⅜ ⅜ ⅜
The north and south wall collapses are caused from too deep an excavation adjacent to the shallow foundation, allowing them to collapse.
Appellee’s App. pp. 32-33. Century also introduced the affidavit of Oran Taylor, a building inspector, who stated generally, “I observed extremely faulty workmanship in the renovations that were being attempted by the McGuires and/or their contractors.” Id. at 244.
On summary judgment, the moving party bears the burden of making a prima facie showing that there are no genuine issues of material fact and .that it is entitled to judgment as a matter of law.
Chenoweth v. Estate of Wilson,
Conclusion
We cannot say the trial court abused its discretion in denying the McGuires’ motion for an extension of time to respond to Century’s summary judgment motion. We also conclude that the McGuires’ bankruptcy filing did not stay further action on their third-party complaint and that the trial court properly granted summary judgment in Century’s favor. We affirm.
Affirmed.
Notes
. The McGuires’ appendix is not paginated, as required by Indiana Apрellate Rule 51(C). Their appendix is deficient in other respects, as it failed to include copies of any of the pleadings in this case, Century’s summary judgment motion, or any of the evidence Century designated in support of their motion. Century filed a separate appendix that has allowed us to review the merits of this appeal.
. In fact, without having received immediate notice from the trial court that the motion would be granted, counsel should have assumed it would be denied and acted accordingly-
. We also note the existence of some question in our minds as to whether the bankruptcy trustee might have been the real party in interest in this case while the bankruptcy petition was pending.
See Hammes v. Brumley,
. Century, for example, did not seek to recover attorney fees from the McGuires or assert a counterclaim against them.
. In their opening brief, the McGuires failed to address any of the policy’s language.
. On appeal, the McGuires challenge the admissibility of this report. They did not challenge its admissibility before the trial court, which means they have waived any such challenge on appeal. See
Beta Steel v. Rust,