[CITE: McClure v. Fidelity & Deposit, 13 CADDNAR 201 (2013)]
[VOLUME 13, PAGE 201]
Cause #: 13-084F
Caption: McClure v. Fidelity & Deposit
Administrative Law Judge: Lucas
Attorneys: pro se (McClures); Schroeder (Fidelity); Boyko (DNR)
Date: September 19, 2013
FINAL ORDER OF SUMMARY JUDGMENT
Summary judgment is granted in favor of the Department of Natural Resources as sought in “Respondent DNR’s Motion for Summary Judgment”. Fidelity & Deposit Co. of Maryland must, under Ind. Code § 25-36.5-1 and 312 Ind. Admin. Code § 14, forfeit the amount of Five Thousand Dollars ($5,000) to the Department of Natural Resources in favor of Michael McClure and Teresa McClure for timber wrongfully harvested by Benjamin F. Perry, III from the McClures’ real estate in the fall of 2010. Forfeiture is directed to Surety Bond 4124129 entered on March 9, 2001, including Rider LPM4124129 that became effective on March 9, 2004.
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1. Michael McClure and Teresa McClure (the “McClures”) filed an administrative complaint (the “complaint”) with the Natural Resources Commission (the “Commission”) on April 24, 2013 naming Benjamin F. Perry III (“Perry”) and Fidelity & Deposit Co. of Maryland (“Fidelity”). In the complaint, the McClures averred they were “granted an administrative judgment against [Perry] in the amount of $40,5483.09 [sic.]” in Administrative Cause No. 11-021F. “We ask that you would join Fidelity & Deposit Co. of Maryland to this judgment. Bond #4124129.” The complaint initiates a proceeding that is governed by Ind. Code § 4-21.5 (sometimes referred to as the “Administrative Orders and Procedures Act” or “AOPA”) and AOPA rules at 312 Ind. Admin. Code § 3-1. Also applicable is Ind. Code § 25-36.5 (sometimes referred to as the “Timber Buyers Act”) and Timber Buyers Act rules at 312 IAC Ind. Admin. Code §14.
2. An administrative law judge was appointed to conduct a proceeding for the Commission under AOPA. Ind. Code § 14-10-2-2. Because the Department of Natural Resources (the “DNR”) is the agency authorized to forfeit bonds under the Timber Buyers Act, the administrative law judge joined the DNR as a party needed for just adjudication. The McClures, Fidelity, and the DNR are collectively the “parties”. The administrative law judge issued a “Notice of Prehearing Conference” and served each of the parties. The initial prehearing conference was conducted as scheduled on June 10, 2013. The McClures participated in person, and Fidelity and the DNR were both represented by attorneys. Perry also attended.
3. The Commission is the “ultimate authority” under AOPA for the Timber Buyers Act and for 312 Ind. Admin. Code § 14. Davies v. Powers d/b/a Powers Logging & Hanover Ins. Co., 12 Caddnar 297 (2011).[1]
4. The Commission has jurisdiction over the subject matter and over the persons of the parties.
5. Attached to the “Notice of Prehearing Conference” as Exhibit Two were “Findings of Fact and Conclusions of Law with a Final Administrative Judgment” entered by the Commission through its Secretary on February 26, 2013 in Michael McClure and Teresa McClure v. Benjamin F. Perry, III; Dillon Richardson; and David Moore, d/b/a, DMB Hardwood (Administrative Cause No. 11-021F). The decision is also known as McClure v. Perry & Richardson, 13 Caddnar 96 (2013) and is referenced in this proceeding as “McClure v. Perry & Richardson”. The decision is kept in the ordinary course of business of the Commission. Under AOPA, the administrative law judge takes official notice of the decision. In the decision, the McClures obtained an administrative judgment against Perry for the transaction that is at issue in this proceeding. Another action under AOPA against Perry for the same transaction would be duplicative and could lead to an inconsistent result. The decision in Administrative Cause No. 11-021F is res judicata as to the McClures and Perry, and another adjudication of his responsibility would not serve administrative or judicial economy. But Fidelity was not a party to Administrative Cause No. 11-021F. Administrative Cause No. 13-084F is appropriate to determining any responsibility of Fidelity as a surety.
6. During the prehearing conference, the parties agreed and the administrative law judge then ordered the following schedule for filing and responding to a DNR motion for summary judgment for bond forfeiture in favor of the McClures:
(1) The DNR shall file and serve any motion for summary judgment by July 22, 2013.
(2) Fidelity and the McClures shall file and serve any response to the motion for summary judgment by August 22, 2013.
7. On July 22, 2013, “Respondent DNR’s Motion for Summary Judgment” and “Respondent DNR’s Filing and Designation of Affidavits and Exhibits in Support of Motion for Summary Judgment” were filed timely. Attached as Exhibit A was a July 18, 2013 “Affidavit of Duane A. McCoy” (the “McCoy Affidavit”). Attached as Exhibit A-1 was Surety Bond 4124129 entered on March 9, 2001 for Perry by Fidelity in the amount of $2,500 (the “original Surety Bond”). Attached as Exhibit A-2 was Rider LPM4124129 increasing the penal sum of the original Surety Bond to $5,000 effective March 9, 2004. Attached as Exhibit A-3 was Rider LPM4124129 increasing the penal sum of the original Surety Bond to $6,500 effective March 9, 2011. Attached as Exhibit B was a July 19, 2013 “Affidavit of Michael McClure and Teresa McClure” (the “McClures Affidavit”).
8. In McClure v. Perry & Richardson the Commission found Perry and Dillon Richardson wrongfully harvested timber from the McClures’ real estate in the fall of 2010. At page 98, the Commission concluded:
[VOLUME 13, PAGE 202]
43. A timber buyer is responsible to apply due diligence in determining whether a described parcel of real estate is the site where a timber harvest is to occur. If the services of a registered land surveyor, a licensed attorney, or another professional are required to be assured the timber buyer knows who owns a parcel of real estate, then obtaining those services is an element of due diligence….
44. The record is devoid of evidence on which a reasonable conclusion could be drawn that Perry exercised due diligence to determine John Snyder was the owner of the subject real estate. Perry never met with Snyder and relied entirely upon [Dillon] Richardson, a timber cutter, to communicate with Snyder and to negotiate a contract for the purchase and sale of timber. Nothing in the record identifies any effort by Richardson to determine ownership of the subject real estate. If any inference can be drawn from Richardson’s conversation with John Snyder, the inference is that Snyder was not the owner. Snyder told Richardson his land had been recently harvested, and he doubted marketable black walnuts remained. On cross examination by McClure, Perry conceded the determination by Richardson and he to conclude Snyder was the owner and to harvest timber from the [McClures’] real estate was “careless on our part.”
45. Perry and Richardson are jointly and severally liable to the McClures for three times the value of timber harvested from the subject real estate. The value of the timber was $14,861.03. Perry and Richardson are jointly and severally liable to the McClures in the amount of $44,583.09.
46. The parties stipulated the McClures have received $4,020 which should be credited to the liability described in the previous Finding…. During the hearing, Michael McClure referenced an additional $15 that should be credited. The amount of $4,035 should be credited to the liability of Perry and Richardson. With this credit, the McClures should be granted an administrative judgment against Perry and Richardson, which is joint and several, in the amount of $40,548.09. Any subsequent amount received and delivered to the McClures as restitution, through a Sentencing Order by the Fayette Superior Court in Cause No. 21D01-1011-FD-681 or in Cause No. 21D01-1011-FD-682, should be credited to both Perry and Richardson.
9. The granting of summary judgment is appropriate if no genuine issue of material fact exists and if the moving party is entitled to judgment as a matter of law. Auto-Owners Insurance Co. v. United Farm Bureau Insurance Co., 560 N.E.2d 459 (Ind. App. 1990). Despite conflicting facts and inferences on some elements of a claim, summary judgment may be proper if there is no dispute or conflict regarding a fact that disposes of the litigation. Marsym Development Corp. v. Winchester Econ. Devel. Comm’n, 447 N.E.2d 1187 (Ind. App. 1983). As noted in Marsym, the party moving for summary judgment has the burden to show there is no genuine issue of material fact. Summary judgment is made application to AOPA by Ind. Code § 4-21.5-3-23.
10. The requirement in the Timber Buyers Act for a timber buyer to post bond is addressed generally in Ind. Code § 25-36.5-1-3, with forfeiture of a bond addressed in subsection (g):
(g) If a timber buyer fails to pay when due any amount due a timber grower for timber purchased, or fails to pay legally determined damages for timber wrongfully cut by a timber buyer or his agent, or commits any violation of this chapter, an adjudicative proceeding on the bond for forfeiture may be commenced, and notice of the proceeding shall be provided, under [Ind. Code §] 4-21.5-3-6. A surety or person in possession of the security provided under subsection (a) or (b) is entitled to notification of the proceeding. If a final agency action is entered by the department under this subsection against the timber buyer, the surety or other person in possession of the security shall deliver the amount of the security identified in the order. A proceeding for forfeiture of a timber buyer’s bond under [AOPA] is the exclusive remedy under law for the forfeiture of the bond.
11. Ind. Code § 25-36.5-1-3.2(f)(2) authorizes a timber grower or landowner to seek “[d]amages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriated without payment” while Ind. Code § 25-36.5-1-3.2(g) provides that ‘[n]otwithstanding subsection (f), the liability on the surety bond of a timber cutter is limited to the value of any timber wrongfully cut or appropriated.”
12. Duane A. McCoy is the Timber Buyer Licensing Forester for the State of Indiana. He maintains records pertaining to surety bonds required under the Timber Buyers Act and 312 IAC Ind. Admin. Code §14. The records of the Timber Buyer Licensing Forester show Perry had a surety bond through Fidelity in the amount of $5,000 at the time of the wrongful timber harvest in the fall of 2010. Finding 7 supra and McCoy Affidavit.
13. Neither Fidelity nor the McClures filed a response to “Respondent DNR’s Motion for Summary Judgment”.
14. No genuine issue of material facts exists, and summary judgment should be granted to the DNR for forfeiture of Fidelity’s surety bond. The value of the timber wrongfully harvested by Perry from the McClures’ real estate was $14,861.03. Finding 8 supra. The McClures have received approximately $7,785 as payment towards the amount of $14,861.03. McClures Affidavit. The amount of $7,076.13 remains an outstanding indebtedness from Perry to the McClures for the value of timber wrongfully harvested, without addressing Perry’s responsibility to the McClures for three times stumpage value. Fidelity is liable to the McClures in the amount of $5,000 on the surety bond for the value of timber wrongfully harvested. Fidelity should be required to forfeit the amount of $5,000 to the DNR in favor of the McClures.
[1] As provided in Ind. Code § 4-21.5-3-32, an agency is required to index final orders and may rely upon indexed orders as precedent. The Commission adopted Caddnar in November 1988 as its index of agency decisions.