Land sale proceeds ordered released in long-running Bloomington dispute

The Monroe Circuit Court’s latest orders in a real estate dispute dating to 2002 were largely affirmed Friday, but the Indiana Court of Appeals ordered the trial court to release proceeds of a land sale that it had been retaining.

The ruling is a partial victory for Cheryl Underwood, a real estate broker who 17 years ago was retained by Sheree Demming to help purchase two properties on East Sixth Street in Bloomington. Instead, Underwood approached Kenneth Kinney about buying the land as partners, which they did. Demming later successfully sued both of them for breach of fiduciary duty and constructive fraud, winning a judgment of more than $154,000 against Underwood and Kinney, for which both were jointly and severally liable.

After Underwood satisfied the Demming judgment on her own, Kinney died in 2014, and a few months later, Underwood sued the estate seeking equal contribution to satisfy its share of the judgment. She also later filed a fraudulent transfer action against the estate, alleging that Kinney had conveyed certain properties to his wife, Judith Fulford, in violation of the Indiana Uniform Fraudulent Transfer Act.

Meantime, Underwood filed a partition action to compel the sale and division of proceeds from another Bloomington property, this one on Eighth Street, that was owned jointly by her, Fulford and Kinney’s estate. The sale netted more than $204,000, which the trial court retained after consolidating Underwood’s actions into this case.

The trial court ruled against Underwood and for the estate, and the Indiana Court of Appeals largely affirmed Friday in Cheryl Underwood v. Judith M. Fulford, et al., 18A-PL-1744. However, the COA did find the trial court erred in retaining about $102,000 due to Underwood from the Eighth Street property sale and about $51,000 due the estate. The court had previously released about $51,000 due to Fulford.

“In conclusion, the trial court did not clearly err in finding that the Estate was entitled to indemnification from Underwood for the Demming Judgment and entering judgment in favor of the Estate in the Contribution Action and Fraudulent Transfer Action. Accordingly, we affirm the Indemnification Order,” Judge Rudolph R. Pyle III wrote for the panel.

“However, the trial court did clearly err in the Partition Order, as the trial court’s findings (specifically the respective ownership percentages it determined) do not support its continued retention of the respective shares of the Partition Proceeds belonging to Underwood and the Estate. Therefore, we remand for the trial court to disburse the Partition Proceeds according to the parties’ ownership interests.”