Patrick E. Nelson, Appellant-Defendant v. Jack Smith, Appellee-Plaintiff (2025)

MEMORANDUM DECISION

Case Summary

[1] Patrick E. Nelson appeals the small-claims court's entry of a writ of possession for Jack Smith, arguing that the court lacked jurisdiction over the action, erred in denying his motion to transfer the action to its plenary docket, and erred in denying his motion for sanctions. Concluding that the court lacked jurisdiction but that Nelson was not entitled to attorney's fees, we affirm in part, reverse in part, and remand with instructions to transfer the case to the superior court's plenary docket.

Facts and Procedural History

[2] In November 2001, Nelson's girlfriend Sherri Smith bought a house in Kokomo. Sherri and Nelson lived together on the property until her death in March 2021 but never married. Sherri died intestate, and no estate was opened. Her three siblings, Jack Smith, Kathy Zowd, and Dennis Washington, each inherited a one-third interest in the Kokomo property. After Sherri's death, Nelson continued living in the house. At some point, Smith tried to get Nelson to vacate the property, but Nelson refused.

[3] On July 19, 2024, Zowd and Washington conveyed their interests in the property to Smith. Three days later, Smith brought an action against Nelson on the small-claims docket of the Howard Superior Court seeking immediate possession of the property and “up to $10,000.00 in damages.” Appellant's App. Vol. II p. 11. Nelson filed several motions in response: a motion to dismiss for lack of subject-matter jurisdiction because he and Smith did not have a landlord-tenant relationship; a motion to transfer the action to the plenary docket to hear Nelson's “claims for ownership of this property, and/or for unjust enrichment, and/or for declaratory judgment”; and a motion for sanctions and attorney's fees, on the ground that the action was frivolous because Smith's counsel filed it knowing that the small-claims court had no jurisdiction. Id. at 35.

[4] The court held an evidentiary hearing on Smith's claim for possession in August. Smith acknowledged that Nelson had lived in the house since Sherri bought the property, that the property was worth more than $10,000, and that he'd never collected rent from Nelson. Nelson testified that although the mortgage on the house was in Sherri's name, he “made all of” the mortgage payments while they lived together, and they “had an oral contract ․ that if [he] would pay the mortgage that would be [his] home.” Tr. pp. 15, 17. He explained that he'd made monthly mortgage payments “up until about a year ago” when Smith “said he was going to take the house.” Id. at 15. Nelson believed he'd “acquired equity in that real estate” based on his twenty-four years of mortgage payments and payments for repairs and upgrades. Id. at 17.

[5] In September, the court entered a writ of possession for Smith, set a hearing on Smith's claim for damages, and denied Nelson's motions to dismiss, to transfer, and for sanctions. In its order, the court rejected Nelson's argument that it lacked jurisdiction, explaining:

In this case there is no dispute that the value of the property in question exceeds ten thousand dollars. There is also no dispute that there is no lease and this case does not involve a traditional landlord/tenant dispute. However, this does not automatically mean that this court does not have jurisdiction. There are situations where the law recognizes tenancies where there is not a traditional landlord/tenant relationship. If a person is using or living on another person's land with permission but is not paying rent, the relationship is, at best, a tenancy at sufferance. Wallace v. Rogier, [395 N.E.2d 297 (Ind. Ct. App. 1979)].

The evidence clearly establishes that the Defendant is not the owner of the property and that the Defendant was permitted to live on the property without the requirement that he pay rent to either Sherri Smith, or the Plaintiff, as the subsequent owner. This represents a tenancy at sufferance for which a landlord/ tenant relationship was created by operation of law. As such, this small claims court has jurisdiction.

Appellant's App. Vol. II p. 7.

[6] Nelson now brings this interlocutory appeal as a matter of right under Appellate Rule 14(A)(4).

Discussion and Decision

I. The small-claims court lacked jurisdiction over the action

[7] Nelson contends the small-claims court lacked jurisdiction over the action and the writ of possession is therefore void. Smith did not file an appellee's brief. When an appellee does not respond to an appeal, we will not undertake the burden of developing an argument on their behalf. Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006). Rather, we will reverse the trial court's judgment if the appellant's brief presents a case of prima facie error. Id. In this context, “prima facie error” means error “at first sight, on first appearance, or on the face of it.” Id.

[8] Article 33-29 of the Indiana Code, which governs superior courts, provides that “[t]he small claims docket has jurisdiction over the following”:

(1) Civil actions in which the amount sought or value of the property sought to be recovered is not more than ten thousand dollars ($10,000)․

(2) Possessory actions between landlord and tenant in which the rent due at the time the action is filed does not exceed ten thousand dollars ($10,000).

(3) Emergency possessory actions between a landlord and tenant under IC 32-31-6.

Ind. Code § 33-29-2-4(b). And Article 32-31, which governs landlord-tenant relations, defines “tenant” as “an individual who occupies a rental unit ․ with the landlord's consent” and “for consideration that is agreed upon by both parties.” I.C. § 32-31-3-10; see also I.C. § 32-31-6-1 (providing that the definitions in Chapter 32-31-3 apply to emergency possessory actions under Chapter 32-31-6); Olympus Props., LLC v. Plotzker, 888 N.E.2d 334, 337 (Ind. Ct. App. 2008) (finding that plaintiff could not proceed in small-claims court under Sections 33-29-2-4(b)(2) or (3) where he was not a tenant as defined in Section 32-31-3-10).

[9] Smith admitted at the evidentiary hearing that the value of the property exceeds $10,000, so the small-claims court did not have jurisdiction under Section 33-29-2-4(b)(1). Despite recognizing that “there is no lease and this case does not involve a traditional landlord/tenant dispute,” the court still concluded that “a landlord/tenant relationship was created by operation of law.” We disagree. Smith acknowledged that he “attempted to get [Nelson] out of the property” but Nelson refused and that he's never collected rent from Nelson. Tr. pp. 7, 9. By Smith's own admissions, Nelson was not living on the property with Smith's consent and was not paying Smith consideration.

[10] Nelson does not dispute that Smith is the record owner of the property. Rather, he “claim[s] an interest in the property based upon his having paid the mortgage for 19 years while co-habiting [sic] with [Sherri] under a theory of unjust enrichment/palimony claims.” Appellant's Br. pp. 15-16. Given these claims, this action is more properly categorized as competing claims of ownership interests, not a landlord-tenant dispute. Our recent case Abbott v. Wegert also involved a dispute over ownership of a house, and we held that the small-claims court lacked jurisdiction over the eviction action because the parties did not have a landlord-tenant relationship:

Here, the evidence shows the house is worth more than $10,000. And this is not a possessory action between a landlord and a tenant. Rather, the Wegerts and Abbott dispute who is entitled to ownership of the house, citing competing sale documents. As a result, the parties’ dispute falls outside the jurisdiction granted to small claims courts ․ The small claims court's order of eviction is void, and the parties’ dispute must be resolved by the superior court on its plenary docket.

238 N.E.3d 710, 712-13 (Ind. Ct. App. 2024). Like the parties in Abbott, Smith and Nelson do not have a landlord-tenant relationship; this case boils down to who is entitled to ownership of the property. Because this is not a possessory action between a landlord and tenant and the property value exceeds $10,000, the small-claims court lacked jurisdiction, and thus its writ of possession is void. See Vic's Antiques and Uniques, Inc. v. J. Elra Holdingz, LLC, 143 N.E.3d 300, 309 (Ind. Ct. App. 2020) (where parties did not have landlord-tenant relationship and property value exceeded jurisdictional limit, concluding small-claims court lacked jurisdiction over eviction action and therefore its order of possession was void), trans. denied. Accordingly, the court erred in denying Nelson's motion to transfer the action to its plenary docket. We therefore vacate the court's order and remand with instructions to transfer the action to the superior court's plenary docket.¹ We express no opinion on the merits of the dispute.

II. The court did not err in denying Nelson's motion for sanctions

[11] Nelson also contends the court erred in denying his motion for sanctions because he “is entitled to bad faith attorney fees pursuant to Ind. Code § 34-52-1-1.” Appellant's Br. p. 24. Indiana Code section 34-52-1-1(b)(3) provides, in relevant part, “In any civil action, the court may award attorney's fees as part of the cost to the prevailing party, if the court finds that either party ․ litigated the action in bad faith.” Under this statute, “a party must obtain a favorable judgment on the merits or comparable relief to qualify as a ‘prevailing party.’ ” River Ridge Dev. Auth. v. Outfront Media, LLC, 146 N.E.3d 906, 914 (Ind. 2020); see also Delgado v. Boyles, 922 N.E.2d 1267, 1270 (Ind. Ct. App. 2010) (“ ‘[P]revailing party’ in the context of attorney fees denotes a party who successfully prosecutes his claim or asserts his defense.”), trans. denied.

[12] Nelson contends Smith's counsel “litigat[ed] in bad faith” because he “chose to proceed in small claims court ․ with knowledge that the court has no jurisdiction.” Appellant's Br. p. 24. But we need not determine whether Smith's counsel litigated the action in bad faith because Nelson is not a prevailing party. He did not obtain a favorable judgment or comparable relief—the small-claims court found that Smith was entitled to possession and denied Nelson's motions to dismiss, to transfer, and for sanctions. Although we are ruling in Nelson's favor on the issue of jurisdiction, this is not a determination on the merits. See, e.g., Brodnik v. Cottage Rents LLC, 165 N.E.3d 126, 129 (Ind. Ct. App. 2021) (explaining that dismissal for lack of jurisdiction is not an adjudication on the merits). And since the action will be transferred to the court's plenary docket, whether Nelson will succeed in asserting his defense has yet to be seen. See AGS Cap. Corp. v. Prod. Action Int'l, LLC, 884 N.E.2d 294, 316 (Ind. Ct. App. 2008) (in interlocutory appeal, finding plaintiffs were not prevailing party because “the parties are still in the middle of litigating this case” and “[t]hus, the prevailing party is yet to be determined”), trans. denied. Nelson is free to raise his bad-faith argument before the superior court upon transfer. But because he is not a prevailing party at this point in the litigation, the court did not err in denying his motion for sanctions.

[13] Affirmed in part, reversed in part, and remanded with instructions.

FOOTNOTES

1.   Because we find that the small-claims court lacked jurisdiction and vacate its order, we do not address Nelson's additional claim that the court denied him due process by “not allow[ing] him to present all of his defenses and argument[s] at the hearing.” Appellant's Br. p. 12. We also need not consider Nelson's alternative argument that “even if the Court of Appeals finds that the Howard Superior Court #3 small claims court had jurisdiction over this possessory action/eviction case,” the court erred by “not fix[ing] a bond to stay the eviction order as required by Indiana law in ejectment actions.” Id. at 12, 24.

Vaidik, Judge.

Judges Bailey and DeBoer concur. Bailey, J., and DeBoer, J., concur.