December 12, 2017

No Appellate Jurisdiction Without Magic Language; Indy Auto Man, LLC v. Keown & Kratz, LLC

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This decision highlights a split on the Court of Appeals regarding what constitutes a final, appealable order. Given this split, this is probably not the last we’ve heard on this issue.

Indy Auto Man (IAM) sells cars. Two of IAM’s customers sued it after purchasing vehicles, and IAM retained Stohler to defend it in those suits. At the time, Stohler was working “of counsel” at Keown & Kratz (K&K), who insisted that IAM was not a client of the firm.

At some point, Stohler stopped showing up for work and K&K let his mail pile up on his desk unopened. Stolher failed to respond to discovery and a motion for default judgment.

IAM found out about Stohler’s disappearance when it received a notice of default judgment (which included treble damages). It then hired another attorney to represent it in these cases, both of which eventually settled.

IAM then sued both K&K and Stohler for legal malpractice. Stohler never responded to the lawsuit. But K&K defended itself and eventually moved for summary judgment, claiming it had no duty of care to IAM, as it was not a client of K&K. The trial court granted that motion, and IAM appealed.

On appeal, however, the Court sua sponte considered whether it had jurisdiction over the matter. No judgment had been rendered for or against Stohler, so the judgment granted to K&K was not a final order. And the trial court’s order did not contain Rule 56(C)’s “magic language,” i.e. that “there is no just reason for delay.” The Court noted that the Indiana Supreme Court adopted a “bright line” rule with regard to this language in Rule 54(B), and found no reason to reach a different result under Rule 56(C). So the order is not deemed final for purposes of appeal.

Of note is the Court’s second footnote, reproduced in full below:

We recognize that another panel of this court read our supreme court’s recent case of In re D.J. v. Indiana Dep’t of Child Servs., 68 N.E.3d 574, 578 (Ind. 2017), as “effectively overrul[ing]” its prior holdings in Ramsey v. Moore, 959 N.E.2d 246 (Ind. 2012), and Georgos v. Jackson, 790 N.E.2d 448 (Ind. 2003). Manley v. Zoeller, 77 N.E.3d 1227, 1230–31 (Ind. Ct. App. 2017).

In Georgos, the court held that neither the parties nor the trial court can confer appellate jurisdiction over an order that is not appealable either as a final judgment or under deemed final under the “magic language” provision of Trial Rule 54(B). Georgos, 790 N.E.2d at 451. And in Ramsey, the court dismissed for lack of appellate jurisdiction even though a portion of the trial court’s order contained the “magic language” from Trial Rule 54(B), because the “magic language” applied only to one portion of the trial court’s order. Ramsey, 959 N.E.2d at 253.

In In re D.J., the parents filed their notice of appeal from the trial court’s non-final CHINS determination as opposed to the final dispositional order. 68 N.E.3d at 577. The court held that this rendered the parents’ notice of appeal untimely, thereby forfeiting their right to appeal. Id. At 578. But this forfeiture did not deprive the appellate court of subject matter jurisdiction. Id. at 578–79. The court exercised its discretion to consider the merits of the appeal despite this forfeiture. Id. at 579.

Unlike the court in Manley, we do not read In re D.J. as altering the longstanding rule that appellate courts have no jurisdiction to consider nonfinal orders. See John C. & Maureen G. Osborne Revocable Family Tr. v. Town of Long Beach, 78 N.E.3d 680, 691 (Ind. Ct. App. 2017) (citing Georgos for the proposition that appellate courts have no jurisdiction over non-final orders, but concluding that the order before it was a final appealable order). Instead, we read In re D.J. as merely applying our supreme court’s existing rule that the timeliness of a notice of appeal does not affect an appellate court’s jurisdiction. See In re Adoption of O.R., 16 N.E.3d 965, 970 (Ind. 2014).

I would not be surprised if the dispute highlighted in this footnote comes to a head sometime in the near future (though not in this case, as neither party sought transfer). In the meantime, it would be wise to avoid relying on Manley too much, and being a stickler for the rules. Better safe than sorry.

Lessons:

  1. An order that resolves the claims as to some, but not all, parties is not final if it does not include the necessary “magic language.”
  2. There appears to be a split within the Court of Appeals regarding whether the Indiana Supreme Court’s recent decision in In re D.J. has altered the rules regarding appellate jurisdiction.