Centurion Federal Credit Union v. Michael Trible

• Court: Indiana Court of Appeals
• Decided: August 7, 2013
• Docket: 82A01-1210-PL-482
• Status: Unpublished

Opinion

Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be Aug 07 2013, 5:35 am regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:

KURT ECKERT JOHN ANDREW GOODRIDGE Evansville, Indiana Evansville, Indiana

IN THE COURT OF APPEALS OF INDIANA

CENTURION FEDERAL CREDIT ) UNION, ) ) Appellant-Plaintiff, ) ) vs. ) No. 82A01-1210-PL-482 ) MICHAEL TRIBLE, ) ) Appellee-Defendant. ) )

APPEAL FROM THE VENDERBURGH SUPERIOR COURT The Honorable Robert J. Pigman, Judge Cause No. 82D03-1108-PL-3673

August 7, 2013

MEMORANDUM DECISION - NOT FOR PUBLICATION

VAIDIK, Judge Case Summary

Centurion Federal Credit Union (“Centurion”) erroneously withdrew money from

Michael Trible’s IRA account, causing Trible to incur additional state and federal tax

liability. Trible sought to recover damages from Centurion. The trial court held for

Trible and awarded damages based on loss of use of the money and the increased tax rate

he had to pay due to his increased income from the erroneous withdrawal. Centurion’s

motion to correct errors was denied and it now appeals, contending that the trial court

erred in holding that Trible did not ratify Centurion’s actions and that Trible suffered

damages as a result of Centurion’s conduct, Trible failed to properly mitigate his

damages, and the trial court did not properly compute damages. We find that the trial

court did not err in its holdings or in computing damages and that Trible did not fail to

mitigate damages. We therefore affirm.

Facts and Procedural History

Trible borrowed money from Centurion to purchase real estate. Trible would

make annual withdrawals from his IRA (“account”) with Centurion to pay back the loan.

On January 5, 2010, Trible withdrew $45,000 from the account and applied $40,000

toward his existing loan and $5,000 toward his federal withholding tax. In error,

Centurion made an additional $40,000 withdrawal from Trible’s account on February 4,

2010, and transferred the money to Trible’s savings account.

Trible did not learn of the erroneous withdrawal until he received his quarterly

statement in April 2010. He immediately contacted Centurion and the IRS to try to have

the money returned to his account. However, because more than sixty days had elapsed

2 since the withdrawal of the money, Centurion was unable to replace the funds in Trible’s

account. The IRS told Trible that he could pay a $500 fee and apply for a letter ruling

which might authorize the return of the funds to the account without penalty. Trible

declined to do so. Instead, he used $30,000 of the money to pay down his loan with

Centurion, and then he paid the income tax due on the erroneous withdrawal, which was

an additional $12,499 in combined state and federal income taxes. Pl. Ex. C. On May

14, 2010, Centurion made one interest payment of $680.65 to Trible’s account, the

amount calculated as if the erroneous withdrawal had not taken place. Appellant’s App.

p. 52.

Trible filed suit against Centurion, seeking recovery of the additional taxes he paid

as a result of the erroneous withdrawal from his account. Centurion admitted that it made

the erroneous withdrawal, but it claimed: (1) Trible suffered no damages as a result of the

withdrawal; (2) Trible consented to, waived, or ratified the withdrawal by his later use of

the money; and (3) Trible failed to mitigate his damages. A bench trial was held, and the

trial court held that Trible did suffer damages, did not waive, consent to, or ratify the

withdrawal, and acted reasonably in mitigating his damages. In calculating damages, the

trial court found that Trible was entitled to the loss of use of the money and the difference

in the tax rate applied to the withdrawn money, for total damages of $5,227.48.

Centurion filed a motion to correct errors, which was denied.

Centurion now appeals.

3 Discussion and Decision

Centurion makes four arguments on appeal, which we consolidate and restate as:

(1) the trial court erred in holding that Trible did not ratify Centurion’s actions; (2) the

trial court erred in holding that Trible suffered damages as a result of Centurion’s

conduct; (3) Trible failed to properly mitigate his damages; and (4) the trial court did not

properly compute damages. We disagree, finding that the trial court did not err in its

holdings and that Trible did not fail to mitigate damages. We also find that there was a

minor mathematical error made in calculating damages, making the total $0.40 less than

what it should have been. However, we cannot say that the trial court erred in this

damage calculation, and we therefore affirm the trial court’s judgment in all respects.

I. Trial Court’s Findings

Centurion first contends that the trial court erred in its findings of facts. Because

the trial court entered findings of fact and conclusions of law, we apply a two-tiered

standard of review. Mueller v. Karns, 873 N.E.2d 652, 657 (Ind. Ct. App. 2007), reh’g

denied. We determine first whether the evidence supports the findings and second

whether the findings support the judgment. Id. We will not reverse the trial court’s

findings or the judgment unless clearly erroneous. Ind. Trial Rule 52(A); Mueller, 873

N.E.2d at 657. A finding is clearly erroneous when the record lacks any evidence or

reasonable inferences from the evidence to support it. Mueller, 873 N.E.2d at 657. The

judgment is clearly erroneous when it is unsupported by the findings and the conclusions.

Id. In conducting this review, we neither reweigh evidence nor judge witness credibility

and consider the evidence in a light that is most favorable to the judgment. Id. While we

4 defer to the trial court substantially on its findings of facts, we owe no deference to the

trial court’s conclusions of law, and we review them de novo. Id.

A. Ratification of Conduct

Centurion first argues that the trial court erred in finding that Trible did not ratify

the withdrawal from his account by later using the money to pay off his loan with

Centurion. We disagree.

Ratification is “the adoption of that which was done for and in the name of another

without authority.” Maxitrol Co. v. Lupke Rice Ins. Agency, Inc., 924 N.E.2d 179, 183

(Ind. Ct. App. 2010). Ratification is a question of fact, and an act of an agent will be

found to be ratified by the principal when he “knowingly accept[s] the benefits of an

unauthorized transaction . . . .” Id. Centurion argues that Trible accepted the benefits of

the unauthorized withdrawal by spending the money instead of rolling it over into another

IRA account and rejecting the benefits.

The trial court, however, held that Trible’s conduct was not ratification of

Centurion’s erroneous withdrawal; rather, it held that Trible was “acting as prudently as

he could under the circumstance to minimize the economic impact of the bank’s error.”

Appellant’s App. p. 30. We agree with this characterization of his conduct. We find that

Trible was simply attempting to make the best of the situation. Rather than doing nothing

with the erroneously withdrawn money, Trible attempted to reduce his financial liabilities

with money that he was not able to return to his account. We cannot say that this amounts

to a ratification of Centurion’s unauthorized withdrawal, and we therefore find that the

trial court did not err in this finding.

5 B. Damages

Centurion next argues that Trible did not suffer any damages from its actions and

that he actually received a net benefit from the erroneous withdrawal. It argues that

because Trible used the withdrawn money to pay off his loan earlier than expected, he

saved interest he would have had to otherwise pay on that loan. Additionally, Centurion

compensated Trible $680.65 for the error on May 14, 2010. Taking those two facts

together, Centurion argues that Trible received a net benefit as a result of the error rather

than suffering from a loss of use. We disagree.

The trial court held that while the full amount of tax liability that Trible was

responsible for was not the correct measure of the damages, Trible still did suffer actual

damages as a result of Centurion’s withdrawal. Id. We agree. When Centurion

erroneously withdrew the funds from Trible’s account, Trible had income that was taxed

in a higher tax bracket than it would have been had the withdrawal not taken place.

Additionally, Trible was deprived of the use of the withdrawn money for the next five

years, at which point it would have been authorized to be withdrawn. Although Trible

would not have used the money in those five years, he would have earned interest in the

account, so he was deprived of that income.

While it is true that Trible did use the withdrawn money to pay off his loan with

Centurion, he still suffered specific, identifiable damages as a result of Centurion’s

erroneous withdrawal. We therefore cannot say that the trial court’s finding on this issue

was clearly erroneous.

6 II. Mitigation of Damages

Centurion next contends that Trible failed to mitigate his damages. “[T]he

principle of mitigation of damages addresses conduct by an injured party that aggravates

or increases the party’s injuries.” Deible v. Poole, 691 N.E.2d 1313, 1315 (Ind. Ct. App.

1998) (citations omitted). In other words, a plaintiff has a duty to mitigate his post-injury

damages, and the amount of damages a plaintiff is entitled to recover is reduced by those

damages that would have been prevented through reasonable care. Id. The burden is on

the defendant to show that the plaintiff has not used reasonable care to mitigate his

damages. Id. at 1315 (quoting Colonial Disc. Corp. v. Berkhardt, 435 N.E.2d 65, 67

(Ind. Ct. App. 1982)). “The defendant’s burden includes proof of causation, that is, the

defendant must prove that the plaintiff’s unreasonable post-injury conduct has increased

the plaintiff’s harm, and if so, by how much.” Willis v. Westerfield, 839 N.E.2d 1179,

1187 (Ind. 2006).

Centurion argues that Trible should have paid $500 for an IRS ruling and rolled

over the account withdrawal rather than paying the $12,499 in tax liability. Appellant’s

Br. p. 28. As a result, Centurion contends that it owes no damages to Trible, because if

he had properly mitigated his damages, he would not have owed any of the $12,499 in tax

liability. We disagree.

Once Trible became aware that Centurion had made the erroneous withdrawal, he

immediately contacted both Centurion and the IRS to try to have the funds transferred

back into his account. Since sixty days had elapsed, the funds could not be automatically

transferred back, and Trible would have to pay the IRS to determine if he could transfer

7 the funds back into his account without penalty. Instead, Trible left the money where it

was and used it to pay off his outstanding loan from Centurion so he could eliminate that

financial liability.

After reviewing his actions, the trial court specifically found that Trible did

nothing to increase his damages, and that no action he took was unreasonable. We agree

with that finding. Requiring Trible to pay $500 to the IRS in order to get a letter ruling

that had no guarantee of authorizing the return of the funds to the account without penalty

is not reasonable. This would guarantee to increase the damages suffered by Trible with

no guarantee that the erroneously withdrawn funds would be returned to his account and

tax liability avoided. As a result, Trible’s failure to get a letter ruling did not necessarily

increase his damages. It was also reasonable for Trible to use the money to pay off the

loan that he had from Centurion. He had already incurred the penalty for the withdrawal

of the funds, so he used them in a way that decreased his financial liabilities. This did

nothing to increase his damages and was not an unreasonable course of action.

Every action that Trible took was reasonable and did not increase the damages that

he sustained. We therefore cannot say that Centurion has showed that Trible increased

his harm through unreasonable post-injury conduct. The trial court correctly concluded

that Trible did not fail to mitigate his damages.

III. Calculation of Damages

Finally, Centurion contends that the trial court erred in calculating the amount of

damages Trible sustained. In reviewing the trial court’s calculation of damages, we use a

limited standard of review. See Whitaker v. Brunner, 814 N.E.2d 288, 296 (Ind. Ct. App.

8 2004), trans. denied. “No degree of mathematical certainty is required in awarding

damages as long as the amount awarded is supported by evidence in the record.” Gasway

v. Lalen, 526 N.E.2d 1199, 1203 (Ind. Ct. App. 1988). “We do not reweigh evidence or

judge the credibility of witnesses, and we will consider only the evidence favorable to the

award.” Crider & Crider, Inc. v. Downen, 873 N.E.2d 1115, 1118 (Ind. Ct. App. 2007).

We will not reverse an award of damages unless “it is not within the scope of the

evidence before the finder of fact.” Id.

Centurion contends that the trial court erred by including compensation for loss of

use in its damages calculation because it was not consistent with Trible’s prayer for relief

in his complaint. We disagree. In his complaint, Trible asks to be compensated for the

additional tax liability he incurred and “all other relief just and proper.” Appellant’s App.

p. 2. If Centurion had not made the erroneous withdrawal from Trible’s account, Trible

would have continued to earn interest on that money for the next five years until he made

the authorized withdrawal. That interest therefore is lost money that Trible would have

had if Centurion had not made the erroneous transfer. We find this amount to be

appropriate under “all other relief just and proper,” as pled in the complaint. The trial

court therefore did not err in including compensation for loss of use in the damages

amount.

However, while we find that the figures considered in the calculation of damages

were correct, we do find that there was a minor mathematical error in the overall

calculation. When determining the total amount of money lost due to the erroneous

withdrawal, a subtraction error was made, making that total one dollar less than it should

9 have been. The eight percent interest lost on that one dollar over five years results in the

total damages being just $0.40 less than Trible is entitled to. Since this is a de minimis

amount, we cannot say that the trial court erred in this damage calculation, so we affirm

the damage amount of $5,227.48.

Affirmed.

KIRSCH, J., and PYLE, J., concur.