Great American Insurance Company v. Nextday Network Hardware Corp. et al

Filing 37

MEMORANDUM ORDER denying 24 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Theodore D. Chuang on 10/2/2015. (aos, Deputy Clerk)

UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND

GREAT AMERICAN INSURANCE
COMPANY, as subrogee/or Veclren
Corporation,

Plaintiff,
v.

Civil Action No. TDC-14-145 I
NEXTDA Y NETWORK HARDWARE
CORP., DONALD BANYONG,
MEGHAN P. McCOY, ANTHONY NGO and
JOHN/JANE DOES 1 through 10,

Defendants.

MEMORANDUM
Plaintiff Great American

ORDER

Insurance Company

("Great American"),

as subrogee

for

Vectren Corporation ("Vectren"), brought this conversion action against Defendants alleging that
they sold infonnation technology ("IT") equipment that they knew had been stolen from Vectren

by Christopher Crowe, a former Vectren employee.

See ECF No. 1. Presently pending is

Defendants' Motion to Dismiss with Prejudice Pursuant to Fed. R. Civ. P. 12(b)(I) and 12(h)(3)
("Motion to Dismiss").

ECF No. 24.

The Motion is ripe for disposition, and no hearing is

necessary to resolve the issues. See Local Rule 105.6 (D. Md. 2014).

For the reasons set forth

below, the Motion to Dismiss is DENIED.
BACKGROUND'
Great American has filed suit against Defendants seeking $669,338.05
of stolen IT equipment that Defendants purchased from Crowe.

for the conversion

Great American alleges that,

Additional facts are set forth in the Court's December 23, 2014 Memorandum Opinion on
Defendants' first Motion to Dismiss, ECF No. 13.

after purchasing the stolen equipment from Crowe, Defendants sold the equipment for profit,
even though law enforcement alerted Defendants that the equipment was stolen.
2014, Crowe pled guilty to theft in the Superior Court for Vanderburgh
Following his conviction,
American.

Crowe was ordered to pay $669,338.05

On May 29,

County, Indiana.

in restitution

to Great

Crowe made an initial payment of $51,827.00, and is required to make weekly

payments of $50.00 to the clerk of the court, which are then periodically disbursed to Great
American. As of the filing of the Motion to Dismiss, more than $617,000 of the restitution order
remains unsatisfied.
UISCUSSION
In the Motion to Dismiss, Defendants argue that Indiana Law, specifically Ind. Code
Ann. ~ 35-50-5-3(e) (West 2015), bars Great American from pursuing damages in this action and
thus deprives this Court of subject matter jurisdiction.

Fed. R. Civ. P. 12(h)(I), 12(h)(3). Any

party may raise a subject matter jurisdiction issue at any stage of the litigation.

See Arbaugh v.

Y&H Corp., 546 U.S. 500, 514 (2006).
Under Indiana law, a court can order a person convicted of a crime to pay restitution to
the victim.

Ind. Code Ann. ~ 35-50-5-3(a).

Section 35-50-5-3(e)(I)

provides that a restitution

order "does not bar a civil action for ... damages that the court did not require the person to pay
to the victim under the restitution order but arise from an injury or property damage that is the
basis of restitution ordered by the court."

S

35-50-5-3(e).

Citing this provision, Defendants

argue that the restitution order bars any civil action for the same damages covered by the
restitution order, and that the restitution order against Crowe must be given full effect in the
present case under the Full Faith and Credit Act, which provides that "records and judicial
proceedings ... shall have the same full faith and credit in every court within the United States.

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.. as they have by law or usage in the courts of such State ...
U.S.C.

9

1738.

from which they are taken."

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Defendants claim that because the restitution order requires Crowe to pay

$669,338.05. any damages incurred by Great American not covered by that amount would not
reach the $75,000 threshold for federal diversity jurisdiction.

28 U.S.c.

This argument fails. The plain language of Ind. Code Ann.

9

1332.

9 35-50-5-3

makes clear that

section 35-50-5-3(e) applies to lawsuits brought against the "person" ordered to pay restitution,
which in the context of this section refers to the defendant. See Ind. Code Ann.

9

35-50-5-3(a)

(stating that the court may order "the person" to make restitution to the victim of the crime); ~
35-50-5-3(e)(1) (referring to damages that the court did not require "the person" to pay under the
restitution order). Defendants provide no authority for their interpretation that section 35-50-53(e) would apply to civil actions brought against any party other than "the person" ordered to pay
restitution.

The case upon which Defendants rely, Kelley v. Slale, 11 N.E.3d 973 (Ind. Ct. App.

2014), did not involve multiple tortfeasors.
Defendants' position.

See id. at 974.

Indeed, Kelley undermines

In Kelley. a victim injured by a drunk driver defendant was already the

beneficiary of a criminal restitution order against the defendant when he brought a separate civil
action against the same defendant, seeking damages from the same incident. Despite referencing
section 35-50-5-3(e), the Kelley court did not preclude the civil action against the defendant, who
was actually subject to the restitution order.

See id. at 978-79.

Thus, Kelley suggests that

section 35-50-5-3(e) does not necessarily preclude civil actions even against the person subject
to the restitution order, but rather allows restitution orders to be reduced if the victim recovers
some or all of the loss in a subsequent civil action. See;d. at 980 (concluding that the criminal

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court had the discretion to grant the defendant a credit toward the restitution order in the amount
of the settlement reached in the civil suit).2
Any other interpretation would lead to the absurd result that a joint tortfeasor would
escape any liability simply because another joint tortfeasor had been convicted criminally and
ordered to pay restitution. Indeed, the facts of this case, in which Crowe is paying restitution at
the rate of $50 per month and in all likelihood will never fully pay the restitution, illustrate that
the perverse effect of Defendants' interpretation would be that a criminal conviction and
restitution order against a tortfeasor would actually penalize victims, by barring them from
seeking financial recovery from joint tortfeasors with more resources,
Because Indiana's statute does not preclude a civil action against joint tortfeasors where
one tortfeasor is subject to a restitution order, Defendants cannot shirk joint liability for their
allegedly tortious acts simply because Crowe has been ordered to pay criminal restitution. Great
American can therefore pursue its case in Maryland, where the "recovery of a judgment by the
injured person against one joint tort. feasor does not discharge the other joint tort-feasor."

Md.

Code Ann., Cts. & Jud. Proc. ~ 3-1403 (West 2015).

The other cases analyzed by the parties, Hallam v. Slate, 832 N.E.2d 969 (Ind. 2005), and
Lang v. Slate, 911 N.E.2d 131 (Ind. Ct. App. 2009), are of limited value here because they
involved situations where the victim received a civil settlement before the defendant was ordered
to pay restitution. See flaltarn, 832 N.E.2d at 971-72; Lang, 911 N.E.3d at 136-37.
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CONCLUSION

For the foregoing reasons, it is hereby ORDERED that Defendants' Motion to Dismiss,
ECF No. 24, is DENIED.

Date: October 2, 2015
THEODORE D. CHU

United States Distric

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