FOR PUBLICATION

ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:

DONALD G. ORZESKE KAREN T. MOSES

STEPHANIE M. PAYNE SHANNON K. REED

Goodin Orzeske & Blackwell, P.C. Faegre Baker Daniels LLP

Indianapolis, Indiana Fort Wayne, Indiana

IN THE

COURT OF APPEALS OF INDIANA

JAMES R. SAPP, )

)

Appellant-Defendant, )

)

vs. ) No. 49A02-1311-PL-935

)

FLAGSTAR BANK, FSB, )

)

Appellee-Plaintiff. )

APPEAL FROM THE MARION SUPERIOR COURT

The Honorable Theodore M. Sosin, Judge

Cause No. 49D02-0606-PL-26834

June 26, 2014

OPINION–FOR PUBLICATION

BAKER, Judge 
2

This case is before us again, following an order on remand regarding appelleeplaintiff Flagstar Bank’s (FSB) cause of action against appellant-defendant James R. 

Sapp for breach of contract. In the original appeal, a different panel of this Court

determined that although the trial court erred in entering summary judgment on the 

breach of contract claim regarding a check in the amount of $125,000 that FSB 

ultimately lost, it was determined that FSB was entitled to summary judgment on the 

remaining claims that included theft and unjust enrichment. Sapp v. Flagstar Bank, 956 

N.E.2d 660 (Ind. Ct. App. 2011).

After remand and following a bench trial, Sapp now appeals the trial court’s 

judgment, challenging a number of the trial court’s findings. Specifically, Sapp alleges 

that FSB erroneously “charged back” to his account under various provisions of the 

Uniform Commercial Code and a Deposit Account Disclosure Agreement (Agreement) 

that he executed with the bank. Alternatively, Sapp asserts that the trial court 

improperly found that he suffered no loss in light of FSB’s purported unreasonable delay 

in notifying him of the lost check. Thus, Sapp argues that he is entitled to a setoff of the 

judgment in the amount of the charge back because of FSB’s loss of the check and

maintains that the trial court erroneously held him personally liable for shortages in the 

account because he was only acting in a representative capacity as a corporate 

shareholder. Finally, Sapp challenges the trial court’s decision to award FSB its attorney 

fees and costs.
3

We conclude that the evidence presented at trial supported Sapp’s liability and the 

“charge back” to the account in accordance with the UCC and the Agreement. We also 

conclude that Sapp is not entitled to a “set off” in the amount of the charge back to his 

account. Sapp is personally liable for the loss of the funds and we also find that the trial 

court properly awarded FSB its attorney fees and costs in this action. However, we 

remand this cause for further proceedings so that the trial court may decide the proper 

amount of appellate attorney fees that should be awarded to FSB in accordance with the 

Agreement. 

The judgment of the trial court is affirmed and remanded for further proceedings 

consistent with this opinion.

FACTS1

Although many of the circumstances in this case are more fully set out in the 

original Sapp opinion, the evidence at trial following remand established that sometime 

in 2004, Sapp approached Peter Joines, an FSB regional manager in charge of expanding 

FSB branches in Indiana, about renting some office space that Sapp and his family 

owned.

FSB eventually opened a branch in Castleton and negotiated lease space directly 

from Sapp. Joines became an assistant vice president and division manager of FSB. 

When Joines went to FSB, he frequently spoke with Sapp as FSB’s landlord. 

 

1 We heard oral argument in this case on June 4, 2014, in Indianapolis. We commend counsel for their 

able presentations.
4

In July 2005, Sapp formed an LLC that consisted of various members of his 

family. That year, Sapp opened an account with FSB that was termed the “SF7 

Account,” which was also part of the LLC. Appellant’s App. p. 5-51. The LLC was 

formed for the purposes of purchasing real estate in Bloomington and for other 

investments. Id. The members of the company are Sapp, his wife, and Sapp’s mother. 

Sapp initially deposited $560.53 into that account in August 2005, and he was the sole 

signor on that account. Sapp held interests in numerous other banks, including several 

out-of-state institutions. 

On August 23, 2005, Sapp deposited a check in the amount of $125,000 into the 

SF7 Account. Sapp originally claimed that he could not identify the account on which 

that check was drawn. However, while Sapp was able to “narrow it down,” he could 

still not identify “which account the $125,000 check came from” as of November 2007. 

Appellant’s App. p. 5-53. In January 2008, Sapp ultimately testified that his prior 

statements had been incorrect, and the check was actually a cashier’s check that he 

obtained from an unidentified bank “with whom he had a banking relationship.” Id. 

At the time of the transaction, Sapp presented FSB with a deposit slip that 

identified the $125,000 deposit as a check. In turn, Sapp was given a receipt informing 

him that “ALL DEPOSITS/PAYMENTS ARE SUBJECT TO PROOF. . . .” Consistent 

with the terms of the Agreement, Sapp was given provisional credit for the deposit. 

Appellant’s App. p. 5-54. Thus, the SF7 Account reflected a balance of $125,560.53. 
5

FSB lost the check, and its representatives contacted Sapp asking for his 

assistance in identifying the maker of the check. While the parties disagree as to when

FSB first notified Sapp that the check was missing, the evidence pointed to the 

conclusion that Sapp was notified about the check sometime in September or early 

October of 2005 at the latest. It was also established that Sapp wanted to move the 

money to a “safer” bank, and that occurred within two weeks of a conversation that Sapp 

had with one of the bank representatives. 

Almost all of the money in the SF7 account was withdrawn from that account on 

September 9, 2005, which was only sixteen days after Sapp deposited the $125,000 

check. On that same day, Sapp wrote a $100,000 check from the SF7 account and 

moved those funds to an A.G. Edwards account. Thus, it is apparent that Sapp 

transferred the funds shortly after the deposit was made. Sapp claims that when he was 

first notified of the missing check, the SF7 account contained only about $8,600.2 

At trial, and for the first time since this case has been pending, Sapp asserted that

FSB failed to prove that the check was actually lost. Sapp did not provide contrary 

evidence or engage in any discovery; he never deposed any agent or employee of FSB. 

Rather, Sapp listed several documents—that he stated were never received from FSB—

including a balance sheet, forensic audit, and “bad check loss sheet.” Appellee’s Br. p. 

6. Although FSB’s financial records were available for review, Sapp never sought them. 

Sapp seemed to indicate that his asserted failure to receive documentation from FSB 

 

2

It follows that if Sapp’s testimony is to be believed and he moved the funds to a “safer” bank, he did so 

within two weeks after notice by FSB, he received notice shortly after the deposit was made. Id. at 5-55.
6

should stand as proof that the check was never actually lost. Put another way, Sapp’s 

assertions seemingly indicated that FSB never actually lost the check. 

On the other hand, Joines testified via deposition solely in his capacity as a prior 

employee and fact witness. He continued to press Sapp through the fall of 2005 for 

information regarding the missing check by inquiring about the status of the 

investigation into the identification of the maker and the possibility of obtaining a 

replacement check. 

Sapp insisted that he was “working on it,” but on November 9, 2005, Sapp told 

Joines that he could still not find a copy of the missing check but stated that he was 

looking into it and “there are several possibilities, I made several calls out of town [to]

check on it.” Id. at 5-57. However, Sapp could not identify who he had contacted. 

Sapp only stated that he called two banks but never actually spoke to anyone at those 

institutions.

On November 11, 2005, FSB debited $125,000 from Sapp’s SF7 account. By 

that time, Sapp had withdrawn almost all of the funds. In addition to the $100,000 A.G.

Edwards check, Sapp also made payments to a golf resort, various telephone service 

providers, Capital One, and a Mastercard account. Thus, FSB was only able to recover 

$1,965.37 from the SF7 Account. 

Sapp repeatedly testified, both in an affidavit and at trial, that he “personally 

never received any of the funds from the $125,000 deposit.” Id. at 5-56-57. At the same 

time, however, Sapp admitted that the $100,000 check that was drawn on the account 
7

was made to A.G. Edwards. When the transaction occurred, the only A.G. Edwards 

accounts that Sapp identified were in his name. 

On November 17, 2005, Amy Martin from FSB spoke with Sapp. Sapp emailed 

Martin and stated that the check should have been drawn on one of three different 

accounts. Sapp did not identify the accounts to FSB; however, at a later point in the 

litigation, Sapp testified that each of those accounts were “possibly” FSB accounts. Id. 

Although Sapp had access to those account records, he did not review the documents in 

response to FSB’s repeated requests for information. Rather, Sapp testified that he 

reviewed his account statements only when he originally received them and again the 

week prior to his deposition in January 2008. 

Joines again asked Sapp about his efforts to identify the maker and obtain a 

replacement check. Sapp informed Joines that he had done some “research in 

Bloomington,” indicated that “the maker is out of town,” and that “they will place a stop 

payment and re-issue.” According to Sapp, he concluded that the $125,000 check had 

been written on one of the LM Sapp Trust accounts. Sapp admitted that if the check had 

been written on the LM Sapp Trust account, he, as signor on the Trust account, could 

have placed a stop payment on the missing check and reissued the check at any time. 

On December 7, 2005, Joines again emailed Sapp and asked about the status of 

Sapp’s efforts to obtain a replacement check. Sapp simply responded, “Out of state,

Will check later.” Id. Sapp testified during a deposition that he thought about it more 

and realized that the check was, in actuality, a cashier’s check comprised of monies from 
8

a variety of sources including a check from Security National Bank of Omaha for over 

$80,000; a check from a First Bank of Omaha for an amount “in the high 20s or low 

30s,” and various other checks paid to either “Sapp Leasing Company,” another 

company entitled “eSapp,” or to a company called “Chancellor Financial,” plus some 

unidentified amount of cash. Id.

Sapp still could not identify the bank that issued the cashier’s check or recall 

whether that particular bank had required him to deposit any of these out of state checks 

payable to various entities or whether the bank that he used had simply exchanged the 

checks that he provided for a cashier’s check. Moreover, Sapp could not identify the 

remitter of the check. Sapp further testified that he called someone at a bank but was not 

able to remember with whom he spoke. Appellant’s App. p. 5-58. 

Sapp testified that he made inquiry with a few banks that held some of his 

accounts. Sapp stated that he asked the Bank of Indianapolis, National City and NBD if 

they had any records of a cashier’s check provided to “[S]app or some of the entities, in 

the summer of ’05.” Id. at 5-58-59. All three banks stated that they had no records of 

providing Sapp with a cashier’s check. Sapp did nothing further to identify the bank that 

issued the cashier’s check or the possible remitter. Moreover, Sapp did not identify any 

efforts that he made to review deposit records from any of the banks.

The Agreement that Sapp executed with FSB provided in part that

AGREEMENT—This document, along with any other documents we give you 

pertaining to your account(s), is a contract that establishes rules which control our 
9

account(s) with us. Please read this carefully. If you sign the signature card or 

open or continue to have our account with us, you agree to these rules.

Appellant’s App. p. 5-60. 

Sapp executed signature cards for the ten accounts that he opened at FSB. The 

Agreement also stated that the account holder “agreed to be jointly and severally liable 

for any account shortage resulting from charges or overdrafts, whether caused by you or 

another with access to this account.” Id. at 5-60-61. The Agreement went on to note 

that “DEPOSITS—We will give only provisional credit until collection is final for any 

items, other than cash, we accept for deposit.” Id. Another section of the Agreement 

stated

LIABILITY—You agree, for yourself (and the person or entity you represent if 

you sign as a representative of another) to the terms of this account and the 

schedule of charges. You authorize us to deduct these charges directly from the 

account balance as accrued. You will pay any additional reasonable charges for 

services you request which are not covered by this agreement.

Each of you also agrees to be jointly and severally (individually) liable for any 

account shortage resulting from charges or overdrafts, whether caused by you or 

another with access to this account. This liability is due immediately, and can be 

deducted directly from the account balance whenever sufficient funds are 

available. You have no right to defer payment of this liability, and you are liable 

regardless of whether you signed the item or benefited from the charge or 

overdraft. This includes liability for our costs to collect the deficit including, to 

the extent permitted by law, our reasonable attorneys’ fees.

Id. at 5-61 (emphasis added).

UNCOLLECTED AND NON-SUFFICIENT FUNDS—Your account will be 

overdrawn if a check or an item is charged against, or a withdrawal or transfer is 

made from your account for more money than you have in your account. At the 

Bank’s discretion, we may return any such transaction if there are uncollected 

funds or an insufficient balance in your Account to pay this transaction. . . . 
10

The charges for each check or item returned or paid on an Account that has 

uncollected funds, non-sufficient funds or is overdrawn are listed in our Service 

Charge Schedule. Additionally, you agree to reimburse the Bank immediately, 

upon demand, for the dollar amount your Account is overdrawn and related costs, 

expenses and reasonable attorney’s fees (including the cost of any attorney 

employed by us).

YOUR ABILITY TO WITHDRAW FUNDS

. . .

Our policy is to delay the availability of funds from your cash and check deposits. 

During the delay, you may not withdraw the funds in cash and we will not use the 

funds to pay checks that you have written. Please remember that even after we 

have made funds available to you, and you have withdrawn the funds, you are 

still responsible for checks you deposit that are returned to us unpaid and or any 

other problems involving your deposit. 

LONGER DELAYS MAY APPLY

Funds you deposit by check may be delayed for a longer period under the 

following circumstances:

We believe a check you deposit will not be paid.

You deposit checks totaling more than $5,000 on any one day. . . .

We will notify you if we delay your ability to withdraw funds for any of these 

reasons, and we will tell you when the funds will be available. They will 

generally be available no later than the eleventh business day after the day of your 

deposit.

 On May 30, 2007, FSB filed a complaint against Sapp for breach of contract, 

theft, conversion and unjust enrichment. As noted above, we reversed the trial court’s 

grant of summary judgment in FSB’s favor on the contract claim and remanded the 

matter for trial on that issue. We affirmed the trial court’s grant of summary judgment 

as to the remaining claims. 
11

The parties agreed to bifurcate the trial that related to the issue of attorney fees,

pending a determination of liability for the purposes of the trial. Following a bench trial 

on February 27, 2013, the trial court found for FSB on the breach of contract claim. In 

addition to the facts set forth above, the trial court issued sixty-five findings of fact and 

conclusions of law, determining that 

FINDINGS OF FACT

. . .

14. In January 2008, . . . Sapp testified that his prior statements [about the check]

had been incorrect and the check was actually a cashier’s check that he obtained 

from an unidentified bank with whom he had a banking relationship.

. . .

18. Sapp contends that he was not notified until October 27, 2005. Because 

Joines and King both spoke with Sapp at least several weeks earlier than the 

October 27, 2005 date, Joines opined that October 27, 2005 date was the date on 

which the “official notice from the deposit services of the bank was delivered to 

Sapp.”

. . .

20. Almost all of the money in the SF7 account was withdrawn from that account 

on September 9, 2005, just . . . 16 days after Sapp deposited the $125,000 check. 

On September 9, 2005, Sapp wrote a $100,000 check from the SF7 account. . . . 

By the end of September 2005, well before the October 27, 2005 date, Sapp 

claims he was first notified of the missing check, the SF7 account contained only 

$8,613.73. As a result, if Sapp’s testimony is to be believed and he moved his 

funds to a “safer” bank within two weeks after notice by Flagstar, he received 

notice shortly after the deposit was made. 

. . .

26. On November 11, 2005, Flagstar debited the SF7 Account in the amount of 

$125,000. As stated, by that time, Sapp, who was the only authorized signer on 

the account, had withdrawn almost all the funds. 
12

27. Sapp repeatedly testified both in affidavit and at trial that he “personally 

never received any of the funds from the $125,000 deposit.” At the same time, 

however, Sapp admitted that the $100,000 check that was drawn on the account 

was made payable to A.G. Edwards. (Pl. Ex 10, p. 53). At that time, the only 

A.G. Edwards accounts identified by Sapp were solely in his name.

. . .

31. Sapp never did identify the maker of the check, never reissued a check, or 

otherwise paid the $123,034.63 deficiency. Despite this fact [FSB] never 

attempted to “set-off” the deficit against any other Sapp account.

. . .

33. Sapp could not identify the bank which issued the cashier’s check or recall 

whether that bank had required him to deposit any of these out of state checks 

payable to various entities or whether the bank he used had simply exchanged the 

checks he provided for a cashier’s check. Sapp could not even identify the 

remitter of the check. 

CONCLUSIONS OF LAW

. . .

9. The contract between the parties is the Disclosure. The Disclosure contains a 

number of provisions which require [FSB’s] account holders to make [FSB]

whole for losses suffered as a result of charges against a holder’s account. . . . 

[Sapp] stated that he received and agreed to the terms of the Disclosure. 

. . .

11. As the account holder, Sapp is individually liable “for any account shortage 

resulting from charges or overdrafts, whether caused by you or another with 

access to the account. . . .”

. . .

13. On November 11, 2005 [FSB] withdrew provisional credit and charged the 

SF7 account for the amount of the lost check because Sapp had already, by that 

time, written checks and made other withdrawals and the SF7 account contained 

only $1,965.37. As a result, [FSB] was only able to recover $1,965.37 of the 

$125,000 provisional credit. Under the plain meaning of the words in the 

Disclosure, the resulting negative balance of $123,034.63 was an overdraft for 

which Sapp was individually liable.

. . .
13

16. Sapp asserted at trial for the first time that there was no evidence that the 

$125,000 cashier’s check was actually lost. Sapp implied any number of 

alternate theories including that an [FSB] employee could have absconded with 

the check. Sapp did not, however, produce any evidence in support of these 

theories. 

17. Sapp also asserted at trial that he did not receive any of the $125,000 

personally and that all of the funds were spent in the ordinary course of SF7’s 

business. Sapp concluded that, as a result, he can have no personal liability for 

repayment for those funds. The Court holds that the $100,000 payment to Sapp’s 

AG Edwards account was a payment made for Sapp’s personal benefit. That 

payment was also, therefore, not in the ordinary course of business for SF7. 

Regardless, however, of the use of the funds at issue, Sapp is personally liable for 

any shortage in the account. . . . [U]nder the terms of the Disclosure, Sapp 

accepted personal liability for an account shortage.

18. Sapp has asserted that, under the terms of the Disclosure and I.C. § 26-1-4-

215, [FSB] was required to notify Sapp by no later than midnight of the 11th day 

after deposit that the check had been lost. Sapp asserts that absent timely notice 

of the loss, [FSB’s] “provisional credit” became final credit and that once the 

credit became a final credit [FSB] was without a remedy against Sapp.

19. The Court of Appeals embraced this theory based on Sapp’s assertion that the 

$125,000 check came from another one of Sapp’s accounts at [FSB]. If the 

missing check had been drawn on an [FSB] account, under the UCC, [FSB] was 

both the drawer and payor bank and, as a result, had two options. [FSB] could 

either notify Sapp by no later than midnight of the 11th day after deposit that the 

check was missing or it could notify him at a later date if it could prove that the 

delay in notification was reasonable under the circumstances. I.C. § 26-1-4-301. 

20. In this case, however, while Sapp’s trial testimony regarding the withdrawal 

of his funds from [FSB] raises a factual issue as to the date upon which he 

actually received notice of the missing check, the Court is not required to resolve 

that issue. Rather, Sapp has affirmatively stated that the $125,000 check was not 

drawn on another [FSB] account. Rather, Sapp has affirmatively stated that the

$125,000 check was a cashier’s check that was obtained from an unidentified 

bank. Sapp made a half-hearted attempt to suggest that the cashier’s check could 

have been drawn on FSB, but as the proponent of that theory, the burden was on 

Sapp to prove that the cashier’s check was drawn on [FSB]. Lacy v. White, 288 

N.E.2d 178.
14

21. Sapp introduced no evidence in support of the assertion that the cashier’s 

check could have been drawn on [FSB], but rather stated that he could not 

identify the bank from which he obtained the cashier’s check. Sapp stated that 

the check could have been drawn on any of the [14] with which he was then in a 

banking relationship. Sapp failed to prove that the cashier’s check was drawn on

[FSB].

22. Moreover, even if [FSB] was the issuer of the cashier’s check, FSB would 

still not be both the drawer and payor bank under the UCC. I.C. § 6-1-3.1-312

relates specifically to lost cashier’s checks. Under that section, the issuer of a 

cashier’s check is not called a payor bank, but rather the “obligated bank.” I.C. § 

26-1-3.1-312(a)(4) states: (4) “obligated bank” means the issuer of a cashier’s 

check or teller’s check or the acceptor of a certified check. As a result, when the 

item at issue is a cashier’s check as opposed to a personal or business check, there 

is no ‘payor” bank as that term is referenced in I.C. § 26-1-4-301.

23. [FSB] is not prohibited from taking longer than the notice period stated in the 

Disclosure within which to notify Sapp of the lost check. The only caveat is that, 

if [FSB] does take longer than the stated period, [FSB] bears responsibility for 

any damages suffered by Sapp as a result of the additional delay period. . . . 

24. In this case, Sapp asserted no damage of any kind, never mind a loss 

resulting from the alleged delay in notice to him. On the contrary, in this case, 

Sapp specifically testified that he withdrew his monies from [FSB] within two 

weeks of receipt of notice of the lost check, including almost all of the $125,000 

at issue in this case. Sapp has had the use of those monies since the fall of 2005. 

Sapp has not suffered any damage and [FSB] is not prohibited from revoking the 

settlement and obtaining a refund from Sapp.

25. Moreover, a further review of I.C. § 26-1-3,1-312 demonstrates just how easy 

it would have been to recover the missing $125,000 had Sapp simply identified 

the bank back in 2005 in response to [FSB’s] inquiries. Pursuant to I.C. § 26-1-

3.1-312, all Sapp would have had to have done was to make a claim to the issuing 

bank and, assuming the check was not cashed within 90 days, the bank would 

have reissued the check to Sapp. 

26. Sapp is in breach of the Disclosure. [FSB] is entitled to recover $123,034.63 

from Sapp.

27. [FSB] is also entitled to prejudgment interest at the rate of 8% from 

November 11, 2005 to date of entry of judgment in this matter.
15

28. In addition, pursuant to the terms of the Disclosure, FSB is entitled to 

reimbursement of reasonable attorneys’ fees incurred in this matter.

Appellant’s App. p. 5-66-20 (emphasis added). Sapp now appeals.

DISCUSSION AND DECISION

I. Standard of Review

As the plaintiff in the action, FSB has the burden of proving the elements of its 

claims by a preponderance of the evidence. PSI Energy, Inc. v. Roberts, 834 N.E.2d 

665, 667 n.5 (Ind. 2005). A judgment in favor of a party having the burden of proof will 

be affirmed if the evidence was such that a reasonable trier of fact could conclude that 

the elements of the claim were established by a preponderance of the evidence. Park 

Jefferson Apartments v. Storage Rentals, 738 N.E.2d 685, 688 (Ind. Ct. App. 2000).

Similarly, the defendant has the burden of proving alleged affirmative defenses 

by a preponderance of the evidence. Lacy v. White, 153 Ind.App. 504, 515, 288 N.E.2d 

178, 185 (1972). An affirmative defense is a defense upon which the proponent bears 

the burden of proof and which, in effect, admits the essential allegations of the 

complaint, but asserts additional matter barring relief. GKC v. Indiana Theaters, Inc. v. 

Elk Retail Investors, LLC, 764 N.E.2d 647, 653 (Ind. Ct. App. 2002). The party with 

the burden of proof may, in some instances, rely on inferences in the absence of direct 

evidence. However, those inferences must be reasonable. See Fowler v. Campbell, 612 

N.E.2d 596, 602 (Ind. Ct. App. 1993).
16

We also note that in a breach of contract case, the initial burden of proof requires 

production of the contract and a demonstration that the amount sought is derived from 

the contract’s terms. See Brown v. Guinn, 970 N.E.2d 192, 196-97 (Ind. Ct. App. 2012)

(observing that the plaintiff must demonstrate simply the existence of the contract, 

breach of contract and resulting damages). In other words, the plaintiff may rely on 

what the contract states. See id. 

Also, when the trial court enters findings of fact and conclusions of law pursuant 

to Indiana Trial Rule 52(A), we apply a two-tiered standard of review. In re Visitation 

of M.L.B., 983 N.E.2d 583, 585 (Ind. 2013). We must first determine whether the 

evidence supports the findings, and second, whether the findings support the judgment. 

K.I. ex rel J.I. v. J.H., 903 N.E.2d 453, 457 (Ind. 2009). We will set aside findings of 

fact and conclusions of law only if they are clearly erroneous, and due regard shall be 

afforded the trial court to judge the credibility of witnesses. M.S. v. C.S., 938 N.E.2d 

278, 281-82 (Ind. Ct. App. 2010). A judgment is clearly erroneous when the record 

contains no evidence supporting the findings, the findings fail to support the judgment, 

or when the trial court applies an incorrect legal standard to properly found facts. Id. at 

282. When applying the standard of review, we neither reweigh the evidence nor assess 

witness credibility and will consider only the evidence most favorable to the judgment. 

Clark v. Crow, 778 N.E.2d 835, 840 (Ind. Ct. App. 2002). 
17

II. Sapp’s Claims

A. Trial Court’s Determination of FSB’s Negligence

Sapp contends that the evidence demonstrated that FSB was the entity in control

of the check and for a significant period of time—well beyond the deadlines set forth in 

the Agreement—failed to provide him with notice or revoke the provisional credit that 

was granted for the $125,000 check. In short, Sapp argues that FSB had many 

opportunities to discover its error, and it “acted negligently” in losing the check. 

Appellant’s Br. p. 10. Moreover, Sapp asserts that the trial court erred in concluding 

that the funds from the SF7 account went into his individual accounts. Thus, Sapp 

argues that the trial court’s findings are not supported by the evidence and the judgment 

must be set aside.

Notwithstanding Sapp’s contentions, we note that the record does not reveal when 

or how the check was lost. Rather, it is apparent that Sapp is, at best, merely speculating 

about the check and the various persons or entities who might have been able to discover 

the loss. Moreover, as set forth in the FACTS and the trial court’s findings, Sapp’s own 

testimony demonstrates that he was notified of the loss earlier than he claimed. 

Appellant’s App. p. 5-55. 

Indeed, Sapp conducted no discovery in this case, and he should not be permitted 

to rely on his failure to investigate as the basis for his speculation about the check. 

Moreover, as pointed out by Joines in his testimony, the evidence established that it was 
18

more likely that the check was lost by Union Federal Bank when it processed the daily 

FSB receipts. Tr. p. 62-64, 229-30. 

If Sapp believed that FSB was negligent, it was incumbent upon him to prove that 

negligence. He did not do so and, therefore, Sapp has failed to show that the trial court’s 

ruling was clearly erroneous. See Learman v. Auto-Owners Ins. Co., 769 N.E.2d 1171, 

1174 (Ind. Ct. App. 2002).

B. Personal Liability

Sapp claims that the trial court erred in determining that he should be held 

personally liable for the shortage in the SF7 account because the transaction was final as 

defined by the Agreement. Sapp further asserts that the trial court misinterpreted the 

meaning of the Agreement because in order to constitute an overdraft, “SF7 or Sapp 

must have written a check or item, or made a withdrawal or transfer from their account 

for more money than was present in the SF7 account.” Appellant’s Br. p. 17. 

Put another way, Sapp points out that the parties agreed that the August 23, 2005 

deposit that Sapp made became final on the second business day after the deposit. Sapp 

states that to the extent that FSB desired a lengthier delay, it was entitled to do so under 

the Agreement, but only if it notified Sapp that it was doing so. As a consequence, Sapp 

maintains that he cannot be held personally liable for the shortage. 

In resolving this issue, we note that as a general rule, the interpretation, 

construction or legal effect of a contract is a question of law to be determined by the trial 

court. The unambiguous language of a contract is inclusive and binding on the parties 
19

and the court, and the parties’ intent is determined from the four corners of the 

document. Zukerman v. Montgomery, 945 N.E.2d 813, 819 (Ind. Ct. App. 2011). A 

contract should be read as a whole, and the language construed so as not to render any 

words, phrases, or terms ineffective or meaningless. Village Commons, LLC v. Marion 

Cnty. Prosecutor’s Office, 882 N.E.2d 210, 215 (Ind. Ct. App. 2008). When the terms of 

a contract are “clear and unambiguous, courts must give those terms their clear and 

ordinary meaning.” State Farm Mut. Auto Ins. Co. v. Cox., 873 N.E.2d 124, 127 (Ind. 

Ct. App. 2007).

FSB argues that Sapp should be personally liable for the shortage in the SF7 

account and directs us to his narrow interpretation of the uncollected and non-sufficient 

funds section of the Agreement. That section states, in part, that

UNCOLLECTED AND NON-SUFFICIENT FUNDS—Your account will be 

overdrawn if a check or an item is charged against, or a withdrawal or 

transfer is made from your account for more money than you have in your 

account. 

Appellant’s App. p. 2-16.

We agree that Sapp’s interpretation of this section is extremely narrow, and he

overlooks the fact that this section is entitled “uncollected and non-sufficient funds.” 

This is the situation here, in that the cashier’s check that was deposited by Sapp was 

uncollected. Indeed, absent the provisional credit represented by the uncollected check, 

there were insufficient funds in the account to pay for all of the checks that Sapp had 
20

written. Simply put, the account was “overdrawn” within the meaning of the 

Agreement.

The Agreement further states that 

As used in this document the words “we,” “our,” and “us” mean the 

financial institution and the words “you” and “our” mean the account 

holder(s) and anyone else with the authority to deposit, withdraw, or 

exercise control over the funds in the account. 

. . . 

LIABILITY—You agree, for yourself (and the person or entity you 

represent if you sign as a representative of another) to the terms of this 

account and the schedule of charges. You authorize us to deduct these 

charges directly from the account balance as accrued. You will pay any 

additional reasonable charges for services you request which are not 

covered by this agreement.

Each of you also agrees to be jointly and severally (individually) liable for 

any account shortage resulting from charges or overdrafts, whether caused 

by you or another with access to this account.

Appellant’s App. p. 5-52.

The evidence indicates that Sapp was the only signer on the account. Appellant’s 

App. p. 5-52. It follows, therefore, that he was the individual with the authority to 

deposit and withdraw or exercise control over the account. Sapp was also liable for any 

account shortage resulting from charges or overdrafts, caused by himself or another. 

Sapp testified that he was a signer on two A.G. Edwards accounts, and both were 

in his name. Hence, if Sapp wrote a $100,000 check from the SF7 account and 

deposited those funds in one of his personal A.G. Edwards accounts, the $100,000 was 

effectively transferred from the company account to his personal account. Because Sapp 

had the authority to exercise control over the account, he was liable for any account 
21

shortage resulting from charges or overdrafts, whether they were caused by him or 

another with access to the account. 

As noted above, the Agreement’s terms state that account holders agree to be 

liable for any account shortage resulting from a charge or an overdraft. An overdraft 

exists if a check or an item is charged against or a withdrawal or transfer is made for 

more money than is in the account. Contrary to Sapp’s assertions, there is nothing in the 

Agreement that limits the account holder’s liability to only those situations in which the 

account holder either wrote a check or withdrew funds from the account. Rather, the 

Agreement specifically states that liability attaches if any shortage results from any 

charge or overdraft. Also, it is considered an overdraft when an item is charged against 

the account. In other words, no check writing or money transferring is required. 

We also note that if Sapp’s interpretation of the terms of the Agreement was 

accurate, the account holder would not be liable if a check he or she deposited was 

returned by the paying bank for insufficient funds—one of the precise circumstances that 

the section titled “uncollected and non-sufficient funds” intends to protect against. 

Even accepting Sapp’s interpretation of “overdrawn” as requiring an affirmative act such 

as writing a check or making a withdrawal or transferring funds from the account, Sapp 

is liable. It is only as a result of Sapp writing checks that there was a shortage in the 

account after the provisional credit was withdrawn. Had Sapp not written any of those 

checks, the account would still have held the $125,000 provisional credit and would not 
22

have been overdrawn when that credit was revoked. As a result, we conclude that the 

trial court properly found that Sapp was liable for the shortage in the SF7 account.

We further observe that Sapp maintains that there was no evidence to support the 

trial court’s finding that he wrote a check to A.G. Edwards in response to FSB’s 

apparent threat to set off his accounts. Appellant’s Br. p. 14. Sapp contends that if he 

did not write the check to avoid FSB’s set off rights then the check was written in the 

ordinary course of business, and he can have no liability for any resulting shortage. Id.

at 14-15. 

However, we believe that Sapp misconstrues the trial court’s ruling. In particular, 

the trial court found Sapp liable for the account shortage in light of his personal liability 

because those are the terms of the Agreement that Sapp agreed to when he opened the 

account. Second, Sapp testified that, at that time, he was a signer on the two A.G. 

Edwards accounts, and both were in his name. Appellant’s App. p. 5-52-53. As a result, 

if Sapp wrote a $100,000 check from the SF7 account and deposited those funds in his 

personal A.G. Edwards account, the $100,000 was nonetheless transferred from the 

company account to his personal account. For these reasons, Sapp’s claims fail, and 

Sapp is personally liable for the shortage. 

C. Charge Back to Sapp’s Account

Sapp also argues that the trial court erred in determining that FSB preserved its 

ability to perform a charge back to the account and waited too long to notify him that the 

check had been lost. Sapp maintains that the transaction had already been “finalized” 
23

under the Agreement between the parties, and that FSB delayed the availability of the 

funds to Sapp. Appellant’s Br. p. 15.

Sapp contends that the Agreement states that the parties specifically agreed to 

deadlines relating to the availability of funds after the deposit of the cashier’s check: 1) 

the next business day; 2) or at most 11 days after the transaction. Appellant’s App. p. 6-

61; Ex. P. 108. Sapp further maintains that under the terms of the Agreement, FSB only 

had, at most, eleven days after the deposit within which to notify Sapp. In essence, Sapp 

argues that if FSB waited a longer period, it forfeited the right to seek reimbursement. 

And because FSB did not revoke the credit until November 11, 2005, Sapp maintains 

that the eighty days after the original credit had been granted would “wreak havoc within 

the business community and unfairly penalize depositors such as SF7 and Sapp.” Id. 

However, the paragraph of the Agreement on which this argument is based is 

entitled “Longer Delays May Apply” and is placed within the “YOUR ABILITY TO 

WITHDRAW FUNDS” section of the Agreement. Ex. P. 108; Appellant’s App. p. 2-20. 

This section states that 

Our policy is to delay the availability of funds from your cash and check deposits. 

During the delay, you may not withdraw the funds in cash and we will not use the 

funds to pay checks that you have written. Please remember that even after we 

have made funds available to you, and you have withdrawn the funds, you are 

still responsible for checks you deposit that are returned to us unpaid and for any 

other problems involving your deposit. 

Id. 

Contrary to Sapp’s claims, FSB did not prevent Sapp from withdrawing funds 

against the provisional credit provided. Nor did FSB delay the availability of the funds 
24

past the eleventh business day after deposit. To the contrary, FSB afforded Sapp a 

provisional credit and it did permit him to withdraw nearly the entire $125,000 before 

FSB collected on the cashier’s check. 

In light of these circumstances, Sapp erroneously asserts that once those time 

periods passed, the provisional credit became final and FSB could no longer obtain 

reimbursement for the account shortage. In short, this is precisely why this case still 

exists. If FSB had withheld the funds until collection, there would have been no account 

shortage. Therefore, the sections of the Agreement relating to delayed availability of 

funds and relied upon by Sapp are not applicable here. 

D. Lack of Eleven Day Notice Does Not Prevent a Charge Back

Under Section 26-1-4-214(a)

Notwithstanding our discussion above, Sapp asserts that pursuant to Indiana Code 

section 26-1-4-214(a) (hereinafter referred to as Section 214(a)) of the Uniform 

Commercial Code, FSB could revoke credit given if notice of the lost check was 

provided by the midnight deadline set forth in that section or “by the eleven day deadline 

set out by FSB for unusual types of deposits.” Appellant’s Br. p. 17. More particularly, 

Sapp claims that once the time periods allegedly expired, the provisional credit became 

final and FSB was simply no longer permitted to obtain reimbursement for the account 

shortage. 

In considering these claims, Section 214(a) provides that 
25

If a collecting bank has made provisional settlement with its customer for an item 

and fails by reason of dishonor, suspension of payments by a bank, or otherwise 

to receive settlement for the item which is or becomes final, the bank may revoke 

the settlement given by it, charge back the amount of any credit given for the item 

to its customer’s account, or obtain refund from its customer, whether or not it is 

able to return the item, if by its midnight deadline or within a longer reasonable 

time after it learns the facts it returns the item or sends notification of the facts. If 

the return or notice is delayed beyond the bank’s midnight deadline or a longer 

reasonable time after it learns the facts, the bank may revoke the settlement, 

charge back the credit, or obtain refund from its customer, but it is liable for any 

loss resulting from the delay. These rights to revoke, charge back, and obtain 

refund terminate if and when a settlement for the item received by the bank is or 

becomes final.

In construing the above, there is nothing in Section 214(a) that prohibits FSB 

from revoking the provisional credit. To the contrary, this section specifically states that 

FSB can revoke the credit after the midnight deadline and after a longer reasonable 

period of time has passed, so long as the item received by the bank was not finally 

settled. FSB did not receive payment for the check because it was lost. Hence, there 

was no final settlement and FSB was free to revoke the provisional credit.

That said, we reject Sapp’s interpretation of Section 214(a) that the August 23 

deposit by Sapp on behalf of SF7 had finalized because a reasonable time had passed

when applying the provisions of the statute. Thus, FSB has not forfeited its rights and 

was not prohibited on November 11 from charging back the SF7 account and seeking 

additional liability from Sapp. The cashier’s check that Sapp deposited remained 

uncollected. Therefore, absent the provisional credit represented by the uncollected 

check, there were insufficient funds in the account to pay for all of the checks that Sapp 

had written. Thus, as stated above, the account was overdrawn. 
26

Finally, it is apparent that Sapp has failed to prove that he suffered any loss in this 

instance. In fact, Sapp alleges that “the requirement of legal damages is not necessary 

under Indiana Code Section 26-1-4-214.” Appellant’s Br. p. 19. Sapp is simply 

asserting that as a result of the delay in notification, Sapp was unable to determine the 

third party on whom the cashier’s check was written. In other words, FSB points out 

that Sapp is arguing that because FSB took nearly forty days to notify Sapp of the loss, 

too much time had passed and Sapp was not able to remember the identity of the bank

that issued him the $125,000 check. 

It is axiomatic that the burden of proving damages rests with the party asserting 

the issue. Welborn v. Society for Propagation of Faith, 411 N.E.2d 1267, 1270 (Ind. Ct. 

App. 1980). Here, Sapp did not introduce any evidence that the trial court ignored or 

failed to consider, and he does not argue that he presented evidence of loss to the trial 

court. Rather, Sapp merely asserts that as a result of FSB’s delay in notification that he 

was not able to determine the third party on whom the cashier’s check was written. Put 

another way, Sapp contends that because FSB took too much time to notify Sapp of the 

loss, he was no longer able to recall the identity of the bank that issued him the $125,000 

check. 

To have prevailed on this theory, Sapp would had to have introduced evidence to 

the effect that the passage of forty days or so resulted in his loss of memory and that he 

was otherwise unable to discover the identity of the issuing bank. Here, Sapp not only 

failed to introduce evidence as to the impact of the additional forty days, but the 
27

evidence demonstrated that Sapp likely had the ability to locate the name of the issuing 

bank but simply failed to avail himself of that opportunity. 

As discussed above, Sapp maintained multiple bank accounts and his 

investigation of the identity of the issuing bank consisted of visiting only a few of those 

institutions and inquiring as to whether they had records of issuing him a cashier’s 

check. More importantly, as FSB emphasizes, Sapp did not contact those banks until 

well after he was notified of the lost check. 

The evidence also revealed that Sapp admitted that, even though he knew the 

identity of the bank that wrote the $80,000 check from which the check was created, he 

did not contact that bank to determine if that check had cleared and, if so, which bank 

had processed the check. Id. at 48. Thus, the record demonstrates that Sapp did not 

introduce any evidence in support of, or show any delay, that might have resulted in his 

loss of memory. For all of these reasons, we conclude that the trial court did not err in

issuing the charge back to Sapp’s account. 

E. Attorney Fees

Sapp argues that the trial court erred in ordering him to pay FSB’s attorney fees. 

More particularly, Sapp contends that the Agreement does not permit such an award in 

these circumstances and maintains that FSB did not provide a foundation for an award of 

its fees. Sapp also contends that he was denied the opportunity to be heard on the issue 

of attorney fees in violation of his right to due process. 
28

Although Sapp notes that FSB’s affidavit offers evidence of the specific tasks that 

the attorneys performed along with the fees that were charged, he claims that FSB

presented “no evidence as to any legal basis for such recovery.” Appellant’s App. p. 23. 

Thus, Sapp contends that there is no basis to recover under the Indiana Statutes or the 

Agreement between the parties. Id. 

We initially observe that in general, litigants must pay their own attorney fees, 

and therefore, an award of attorney fees is not permitted unless a statute, agreement, or 

stipulation authorizes such an award. Harco, Inc. of Indianapolis v. Plainfield Interstate 

Family Dining Assocs., 758 N.E.2d 931, 940 (Ind. Ct. App. 2001). Put another way,

recovery is permitted if there is a statute or legislative action that creates a right to 

attorney fees in favor of the prevailing party. Secondly, the prevailing party may 

recover attorney fees in breach of contract actions where the parties have agreed to terms 

that would give rise to an award of such fees. West Cent. Conservancy Dist. v. Burdett, 

920 N.E.2d 699, 702 (Ind. Ct. App. 2010). 

In this case, there was no statutory action raised in the trial court that would 

permit FSB to recover its fees if it prevailed in the action. However, the “Uncollected 

and Non-sufficient Funds” section of the Agreement states an account is overdrawn “if a 

check or an item is charged against or a withdrawal or transfer is made from your 

account for more money than you have in your account.” Ex. p. 104. And the 

“Liability” section provides that the account holder “agrees to be liable for any account 

shortage resulting from charges or overdrafts. . . .” Tr. p. 103. The above sections then 
29

state that the account holder will “reimburse the Bank immediately upon demand for the 

dollar amount your Account is overdrawn and related costs, expenses and reasonable 

attorney’s fees (including the cost of any attorney employed by us)” and that the account 

holder will be liable for “our costs to collect the deficit including, to the extent permitted 

by law, our reasonable attorneys’ fees.” Id. at 103 (emphases added). In light of these 

provisions, we conclude that the trial court did not err in ordering to pay FSB’s attorney 

fees that it incurred in this action. 

F. Due Process and Award of Attorney Fees

In the alternative, Sapp claims that FSB should be precluded from recovering its 

attorney fees because he was improperly deprived of the opportunity to be heard on this 

issue. Thus, Sapp argues that the trial court should have held a second hearing with 

regard to this issue. 

First, we note that Sapp not only agreed to bifurcate the attorney fee issue, but the 

record shows that he was afforded the opportunity to argue that issue both during trial 

and after the entry of judgment. Indeed, Sapp affirmatively stated that he had no 

objection to “handle [the] issue of attorney fees subsequent to the court’s findings in this 

matter.” Tr. p. 8. 

In light of the above, the only issue to be decided following the trial concerned 

the amount of fees in the event that FSB prevailed on its claim for breach of contract in 

light of the Agreement’s terms. 
30

Also, Sapp did argue the issue before the trial court because in his proposed 

findings, he maintained that

21. The provisions of the Disclosure Agreement entitled “Liability” on Page 2, 

and “Un-collected or Non-sufficient Funds” on Page 4, are the only two 

provisions that mention circumstances by which Flagstar may recover reasonable 

attorney fees. These provisions apply to specialized, identified situations and not 

applicable to the facts at bar.

Appellant’s App. p. 19. 

We further note that Sapp filed an objection to the affidavit for attorney fees in 

the trial court, where these same arguments were raised. Appellant’s App. p. 7-101. 

Similarly, Sapp cannot successfully claim on appeal that the award of attorney fees was 

unreasonable. 

More precisely, pursuant to the trial court’s order, FSB submitted its affidavit in 

support of attorney fees. Sapp subsequently filed an objection to any fee award, but he 

did not object to the reasonableness of the fees themselves. And the trial court placed no 

limitations on the content of Sapp’s response. In other words, Sapp could have objected 

to the amount of the fee request, but he chose not to do so. Sapp also did not request a 

hearing before the trial court. 

Finally, we note that the reasonableness of fees is a matter left to the trial court’s 

sound discretion. Kotsopolous v. Peters Broadcast Eng’g, Inc., 962 N.E.2d 97, 109 (Ind. 

Ct. App. 2011). Thus, while Sapp would certainly have been permitted to lodge any 

objections that he may have had to the hourly rate charged or the time incurred, the 
31

ultimate decision on the reasonableness of the overall fees fell within the trial court’s 

discretion. 

As noted above, following the bench trial on February 27, 2013, Sapp expressly 

sought a finding with regard to his liability for attorney fees under both the “uncollected 

and non-sufficient funds” and “liability” sections of the Agreement. Contrary to his 

contentions, Sapp argued whether a finding of personal liability and whether an 

overdraft occurred within the meaning of the Agreement would have obligated him to 

pay attorney fees. Appellant’s Br. p. 12-13, 24-26. Thus, Sapp’s contention that he was 

denied due process of law fails. 

Similarly, Sapp does not prevail on his claim that the trial court erroneously 

decided that FSB was entitled to an award of appellate attorney fees. See Humphries v. 

Able, 789 N.E.2d 1026, 1036 (Ind. Ct. App. 2003) (holding that when a contract term 

provides that attorney fees are recoverable, appellate attorney fees may also be 

awarded). 

While we affirm the trial court’s order of attorney fees that the trial court awarded 

in the amount of $108,423.50, we agree with FSB’s request that this cause must be 

remanded for further proceedings so that the trial court may conduct a hearing and 

calculate the proper amount of appellate attorney fees that should be awarded. 

CONCLUSION

In light of our discussion above, we conclude that the trial court properly 

determined that FSB could issue a charge back to Sapp’s account in accordance with the 
32

Agreement and the Uniform Commercial Code. We also find that the trial court 

correctly found Sapp personally liable for the amount of the check that had been lost. 

Although we affirm the amount of attorney fees that the trial court awarded to 

FSB, we remand this cause for further proceedings so that the trial court may decide the 

amount of appellate attorney fees to which FSB may be entitled. 

The judgment of the trial court is affirmed and remanded.

FRIEDLANDER, J., and BARNES, J., concur.