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ATTORNEY FOR APPELLANTS Kathryn D. Schmidt Merrillville, Indiana

ATTORNEY FOR APPELLEES Michael L. Muenich Highland, Indiana

In the

Indiana Supreme Court
No. 56S03-0608-CV-303 JAMES ROSE AND ROBERT UNDERWOOD, Appellants (Defendants below), v. MERCANTILE NATIONAL BANK OF HAMMOND, A CORPORATION, AS TRUSTEE UNDER THE PROVISIONS OF A CERTAIN TRUST AGREEMENT DATED THE 25TH DAY OF JUNE, 1975, KNOWN AS TRUST NUMBER 3346; J.R. CONSTRUCTION CO.; AND JOSEPH RAMACCI, Appellees (Plaintiffs below).

Appeal from the Newton Superior Court, No. 56D01-9512-CP-44 The Honorable Daniel J. Molter, Judge

On Petition to Transfer from the Indiana Court of Appeals, No. 56A03-0405-CV-235

June 20, 2007 Shepard, Chief Justice.

Judgment creditor pursued the two shareholders of the judgment debtor through a proceeding supplemental contending fraudulent transfer, then amended the complaint to bring a new tort claim, as well. The trial court allowed the amendment and granted summary judgment to the creditor, awarding attorneys' fees and treble damages far in excess of the original judgment. Proceedings supplemental are only for collecting existing judgments, not for seeking new ones, so we reverse the trial court's grant of leave to amend the complaint.

Facts and Procedural History

Appellees Mercantile National Bank of Hammond, J.R. Construction Co., and Joseph Ramacci (collectively "Mercantile") sued Jasper-Newton Utility Company, Inc. in 1995 based on an agreement to provide water and sewer services. Jasper-Newton is a subchapter S corporation owned in equal shares by appellants James Rose and Robert Underwood. Jasper-Newton

successfully moved for a change of judge in 1996 and the court held a bench trial in May 1999. On November 15, 2001, the trial court entered judgment against Jasper-Newton for $159,581. Jasper-Newton appealed, and the Court of Appeals affirmed. Jasper Newton Util. Co., Inc. v. Mercantile Nat'l Bank of Hammond, No. 56A03-0203-CV-71, slip op. (Ind. Ct. App. Feb. 12, 2003).

Meanwhile, in the spring of 2000, an agent for Utilities, Inc. ("Utilities") contacted Rose about the possibility of acquiring Jasper-Newton. Later that fall, Jasper-Newton and Utilities began negotiating a sale, and on January 12, 2001, Rose executed an agreement for the sale of Jasper-Newton's assets to Utilities for $475,000. Utilities transferred its rights and obligations under the agreement to Water Services Company of Indiana, Inc. ("WSCI"), a wholly owned subsidiary of Utilities.

Jasper-Newton and WSCI closed the sale on December 18, 2001, after necessary approval from the Indiana Utility Regulatory Commission; Jasper-Newton, Rose, and Underwood indemnified WSCI for all claims asserted in Mercantile's complaint. Acting on behalf of Jasper-Newton, Rose deposited the $475,000 sale proceeds into Jasper-Newton's bank account and, within three days, issued checks to Underwood and himself for $237,500.

Mercantile moved for proceedings supplemental on March 15, 2002. After Mercantile's motion to show cause, the court found Jasper-Newton in contempt for failing to comply with the November 15, 2001, judgment and awarded fees and costs of $6,324.85 to Mercantile.

On November 26, 2002, Mercantile filed fraudulent transfer claims against JasperNewton, Utilities, WSCI, Rose, and Underwood and sought attorneys' fees under Ind. Code

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Indiana Law