Divided COA tosses suit against lawyers over tax sale proceeds as untimely

A divided panel of the Indiana Court of Appeals on Thursday threw out a lawsuit against two lawyers filed by their opposing party in long-running litigation, the current case over proceeds from a tax sale that the lawyers distributed to their clients. The majority ruled that the lawsuit — filed one day outside the two-year statute of limitations — should be dismissed.

The majority of the Indiana Court of Appeals panel reversed the denial of a motion to dismiss filed by attorneys in Christopher J. McElwee and Monday McElwee Albright f/k/a Monday Jones Albright, Attorneys at Law v. Michael Fish, 18A-CT-2664. The former Monday Jones Albright law firm had represented 2444 Acquisitions, which was sued in a foreclosure action by owner Michael Fish that continued through 2444’s bankruptcy proceedings.

After the property sold at a tax sale, the bankruptcy court ordered tax sale surplus proceeds deposited with 2444’s law firm when the bankruptcy case was dismissed. The firm distributed the proceeds to its clients, then notified Fish of the distribution on Feb. 29, 2016.

Fish sued the law firm on March 1, 2018, alleging negligence, breach of duty and other causes, noting the bankruptcy court dismissed his adversarial proceeding against 2444 on March 1, 2016.

Writing for the majority joined by Judge Cale Bradford, Senior Judge John Sharpnack first addressed Fish’s substantive claims, noting McElwee took custody of the disputed funds pursuant to an order of the bankruptcy court, distributed them to his client shortly after the case was dismissed, then notified Fish. The majority found no independent cause of action for Fish’s fiduciary claim, and that Fish’s claims of fraud, constructive fraud, unjust enrichment fail.

“We conclude that there is but one claim viable here and that is the tort claim,” Sharpnack wrote. “The tort claim is barred by the statute of limitations.”

But Judge Elaine Brown dissented and would affirm the trial court’s denial of Fish’s motion to dismiss, while arguing counter to the majority that Fish indeed has a case.

“While it is true that Fish’s counsel learned from McElwee on February 29th of the tax sale surplus funds’ disbursement, the judgment of foreclosure and agreed entry foreclosing the mortgages on the parcels of real estate was reinstated on March 24, 2016. The foreclosure court determined on May 9, 2016, that Fish had a substantial interest in the properties and that (2444) Acquisitions had no entitlement to the funds which had been disbursed,” Brown wrote. “Under these circumstances, I would find that Fish filed his claims within the applicable statute of limitations period.”

Thursday’s opinion is the second time the COA has ruled on the litigation. In Fish v. 2444 Acquisitions, LLC, 46 N.E.3d 1261 (Ind. Ct. App. 2015), trans. denied, the appellate court reversed the grant of Acquisitions 2444’s request for relief from judgment in the foreclosure action.