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Wednesday, October 07, 2009

Ind. Decisions - 7th Circuit decides Illinois / Indiana bankruptcy case

In re: James E. Rose (CD Ill.) is a 10-page opinion. Judge Williams writes:

In 2005, James E. Rose filed for bankruptcy in the United States Bankruptcy Court for the Central District of Illinois. Mercantile National Bank of Indiana (“Mercantile”) filed an adversary complaint challenging the dischargeability of a debt that Rose owed to it arising from a previous judgment entered in an Indiana superior court. The judgment was based, in part, on a claim Mercantile had made under Indiana’s Crime Victims’ Compensation Act (“CVCA”), Ind. Code § 34-24-3-1. In June 2007, the Indiana Supreme Court ruled that Mercantile had not properly brought the new CVCA claim because it was filed during a proceedings supplemental to collect on an already existing judgment, rather than as a separate claim under a new cause number. Rose v. Mercantile Nat’l Bank of Hammond, 868 N.E.2d 772, 777 (Ind. 2007). As a result, the bankruptcy court agreed, ruling that the applicable two-year statute of limitations barred Mercantile’s complaint. The bankruptcy court granted Rose’s motion to dismiss Mercantile’s adversary complaint, and the district court affirmed. In re Rose, No. 08-CV-2116, 2008 WL 4055783, at *6 (C.D. Ill. Aug. 26, 2008).

After oral argument in this case, the Indiana Court of joint shareholder, Robert Underwood, was properly commenced within the statute of limitations despite being improvidently filed as part of a proceedings supplemental. Mercantile Nat’l Bank of Hammond v. Underwood, 906 N.E.2d 881 (Ind. Ct. App. 2009). Because Mercantile properly commenced its CVCA claim within the statute of limitations, we reverse the ruling of the district court. * * *

As the question involves the underlying state claim for damages, this court applies state law. Kutsugeras v. AVCO Corp., 973 F.2d 1341, 1346 (7th Cir. 1992). We concur with the reasoning of the Indiana Court of Appeals that the CVCA claim was properly commenced within the statute of limitations when Mercantile amended its complaint. This most recent Indiana Court of Appeals decision, which the Indiana Supreme Court declined to reconsider, is the final word that Mercantile’s CVCA claim did not “evaporate into the ether” when the Indiana Supreme Court ruled later that it was improvidently filed during a proceeding supplemental. Mercantile, 906 N.E.2d at 887. Therefore, Mercantile’s complaint should not have been dismissed on statute of limitations grounds.

B. Mercantile’s Motion for Certification is Denied

In light of our decision in Mercantile’s favor, we decline its request to certify a question to the Indiana Supreme Court.

III. CONCLUSION

Therefore, we REVERSE the decision of the district court and REMAND for further proceedings consistent with this opinion.

Posted by Marcia Oddi on October 7, 2009 11:02 AM
Posted to Ind. (7th Cir.) Decisions