In the

United States Court of Appeals

For the Seventh Circuit ____________________ 

Nos. 21-2118 & 21-2307 

BIRCH|REA PARTNERS, INC., 

Plaintiff-Appellant, Cross-Appellee, 

v.

REGENT BANK, 

STONEGATE BANK, and

HOME BANCSHARES, INC., 

Defendants-Appellees, Cross-Appellants. 

____________________ 

Appeals from the United States District Court for the

Northern District of Indiana, Fort Wayne Division.

No. 18-cv-00030 — Holly A. Brady, Judge. 

____________________ 

ARGUED JANUARY 7, 2022 — DECIDED MARCH 2, 2022 

____________________ 

Before EASTERBROOK, ST. EVE, and KIRSCH, Circuit Judges. 

ST. EVE, Circuit Judge. Almost fifteen years ago, Birch|Rea 

Partners, Inc. (“Birch|Rea”) prepared an appraisal report on 

a property in Indiana. Regent Bank later acquired the property and started to doubt the report prepared by Birch|Rea. 

After consulting with independent appraisal experts, Regent 

Bank hired a law firm, and together they employed a certified 
2 Nos. 21-2118 & 21-2307

appraiser, John Potter, to prepare a new report evaluating the 

original Birch|Rea report. Potter’s report detailed several deficiencies in Birch|Rea’s 2007 appraisal of the property. 

After reviewing the Potter report, Regent Bank filed a 

complaint in federal court against Birch|Rea for various state 

law claims, but soon reconsidered and moved to dismiss the 

complaint. Birch|Rea then filed its own lawsuit against Regent Bank for malicious prosecution. Regent Bank, in turn, 

counterclaimed for attorney’s fees under the Indiana frivolous litigation statute. The district court dismissed both claims 

at summary judgment, and each side appealed. We conclude 

that Birch|Rea cannot establish the elements of a successful 

malicious-prosecution claim, but its lawsuit was not frivolous 

under Indiana law. We therefore affirm. 

I. Background

On May 16, 2007, SunTrust Bank (“Sun Trust”) hired 

Birch|Rea Partners, Inc. to perform a portfolio valuation on a 

property located in Indiana. Birch|Rea prepared the report 

(“the Birch report”) and valued the property at $3.23 million. 

PNC Bank (“PNC”) provided the financing for the mortgage 

loan, and both PNC and Sun Trust accepted the report. On 

October 19, 2007, the owner sold the property to a Sun Trust 

affiliate subject to a $2.3 million loan PNC extended to Sun 

Trust. A few years later, PNC assigned the loan to American 

Capital Group, LLC, which would later sell the loan to Regent 

Bank.1

1 Stonegate Bank and Home BancShares, Inc. are successors in interest of 

Regent Bank. “Regent Bank” refers to all three defendants in this case. 
Nos. 21-2118 & 21-2307 3 

In February 2016, Regent Bank began questioning the 

property’s valuation. Regent Bank consulted with independent appraisal experts and reviewed appraisal authorities and 

regulations. The appraisers determined that the “go-dark” 

value of the property was only $200,000. Regent Bank employed a law firm to investigate the situation further. The law 

firm and the bank together hired a certified appraiser, John 

Potter, to examine the Birch report. Potter prepared a report 

of his findings (“the Potter report”), which detailed nine deficiencies in the original Birch report. The report concluded, 

“Overall, the appraiser finds this report in non-compliance 

with USPAP [Uniform Standards of Professional Appraisal 

Practice] and [Birch|Rea] breached their duty of care by failing to apply proper methods used to appraise the subject 

property as set forth herein.”

Based on the Potter report, Regent Bank sued Birch|Rea 

for professional negligence, negligent misrepresentation, constructive fraud, and breach of contract in connection to its 

preparation of the Birch report (“the underlying action”). The 

complaint filed by Regent Bank specifically cited the Potter 

report as justification for the underlying claims. Soon after initiating the lawsuit though, Regent Bank reconsidered and 

moved to voluntarily dismiss the case. The district court dismissed the suit with prejudice. 

Believing that the underlying action was frivolous, 

Birch|Rea filed a complaint against Regent Bank for malicious 

prosecution. Thereafter, Regent Bank counterclaimed for 

damages under the Indiana frivolous litigation statute. During discovery, Regent Bank failed to disclose the names of two 

potential individuals, Doug Green and Andrew Wyman, who 

had relevant information pursuant to Federal Rule of Civil 
4 Nos. 21-2118 & 21-2307

Procedure 26(a), then later relied on affidavits submitted by 

Green and Wyman. Regent Bank moved for summary judgment on its malicious-prosecution claim, and Birch|Rea 

moved to strike Green and Wyman’s affidavits and moved for 

summary judgment on attorney’s fees under Indiana law. The 

district court granted both motions for summary judgment 

and denied the motion to strike. Both parties appealed.

II. Discussion

Birch|Rea argues that the district court erred by granting 

summary judgment for Regent Bank on its malicious-prosecution claim and that the district court abused its discretion 

by denying the motion to strike Green and Wyman’s affidavits. Regent Bank submits that the district court erred by 

granting summary judgment for Birch|Rea on its claim under 

the Indiana frivolous litigation statute. 

A. Motions for Summary Judgment

We review a grant of summary judgment de novo. 

Driveline Sys., LLC v. Arctic Cat, Inc., 936 F.3d 576, 579 (7th Cir. 

2019). On cross-motions for summary judgment, all facts and 

inferences are drawn “in the light most favorable to the nonmoving party on each motion.” Lalowski v. City of Des Plaines, 

789 F.3d 784, 787 (7th Cir. 2015) (quoting Wis. Alumni Research 

Found. v. Xenon Pharm., Inc., 591 F.3d 876, 882 (7th Cir. 2010)). 

“Summary judgment is appropriate if there is no genuine dispute as to any material fact, and the moving party is entitled 

to judgment as a matter of law.” Dunderdale v. United Airlines, 

Inc., 807 F.3d 849, 853 (7th Cir. 2015) (citing Fed. R. Civ. P. 

56(a)). A genuine issue of material fact exists only if “there is 

sufficient evidence favoring the nonmoving party for a jury to 

return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 
Nos. 21-2118 & 21-2307 5 

477 U.S. 242, 249 (1986); see also Aregood v. Givaudan Flavors 

Corp., 904 F.3d 475, 482 (7th Cir. 2018). 

1. Malicious Prosecution 

The “essence of a malicious prosecution rests” on the idea 

that the plaintiff “has been improperly subjected to legal process.” City of New Haven v. Reichhart, 748 N.E.2d 374, 378 (Ind. 

2001). Under Indiana law, a malicious-prosecution claim has 

four elements: “(1) the defendant instituted or caused to be 

instituted an action against the plaintiff; (2) the defendant 

acted with malice in doing so; (3) the defendant had no probable cause to institute the action; and (4) the original action 

was terminated in the plaintiff’s favor.” Ingram v. Diamond 

Equip., Inc., 118 N.E.3d 1, 7 (Ind. Ct. App. 2018); see also Reichhart, 748 N.E.2d at 378. The tort, however, is “not generally 

favored,” and its requirements “are construed strictly against 

the party bringing the action.” Wong v. Tabor, 422 N.E.2d 1279, 

1283 (Ind. Ct. App. 1981). Here, the parties only dispute the 

second and third elements. Regent Bank maintains that it had 

probable cause to bring the underlying action and never acted 

with malice, each of which independently defeats Birch|Rea’s 

claim. We agree with both points. 

Probable cause exists when “a reasonably intelligent and 

prudent person would be induced to act as did the person 

who is charged with the burden of having probable cause.” 

Ingram, 118 N.E.3d at 8 (quoting Reichhart, 748 N.E.2d at 379). 

In other words, “the inquiry is whether the defendant acted 

reasonably in believing the plaintiff was somehow responsible for the tortious actions.” Id. (citing Satz v. Koplow, 397 

N.E.2d 1082, 1085 (Ind. Ct. App. 1979)). 
6 Nos. 21-2118 & 21-2307

Regent Bank had probable cause to initiate the underlying 

action against Birch|Rea. Regent Bank consulted with independent appraisers, who determined that the Indiana property at issue declined in value by several million dollars. In 

response, Regent Bank retained counsel to investigate any 

possible legal action. The law firm, together with Regent 

Bank, hired a certified appraiser, Potter, with extensive experience. Potter prepared a lengthy report, which opined that 

Birch|Rea over-relied on a nonmarket sale, did not make the 

appropriate adjustments, misused the gross income multiplier, failed to properly segment size under the right approaches, drew upon a bad description, lacked the necessary 

verification and reporting, disregarded market conditions, 

and misrepresented a sale. The uncontradicted evidence 

shows that Regent Bank relied on the Potter report to sue 

Birch|Rea for professional negligence, negligent misrepresentation, common law or constructive fraud, and breach of contract as a third-party beneficiary. Indeed, Regent Bank specifically referred to the report in its complaint for the underlying 

action. Although Regent Bank withdrew its complaint, “the 

fact that a party is ultimately” unsuccessful in litigation “does 

not lead to the conclusion [that] the party had no probable 

cause to file suit.” Id.; see also Trotter v. Ind. Waste Sys., Inc., 632 

N.E.2d 1159, 1164 (Ind. Ct. App. 1994) (holding that a malicious-prosecution claim failed because one party “had probable cause to believe that it had an enforceable purchase agreement” even without a contract between the two parties). Regent Bank needed only to be reasonably induced to act, which 

it was. 

Birch|Rea contends that the Potter report itself lacks accuracy and, moreover, that the evidence in the record confirms 

Birch|Rea “valued the leased fee interest of the Property 
Nos. 21-2118 & 21-2307 7 

accurately.” The inquiry, however, is not whether Birch|Rea 

was correct in 2007 or whether Potter was accurate in 2016. See 

Ingram, 118 N.E.3d at 8. Rather, it is whether Regent Bank had 

probable cause to commence the underlying action. For this 

question, the Potter report provides the necessary answer, 

and Birch|Rea has failed to identify any glaring error that 

would discredit the report to “a reasonably intelligent and 

prudent person.” Id. 

Next, Birch|Rea argues that Regent Bank could not rely on 

its initial report as a matter of federal law. But Birch|Rea does 

not provide any legal citations to support its point. Instead, 

Birch|Rea states that its own expert witness, Ted Whitmer, 

“testified in great detail as to why Regent Bank could not have 

relied on” the report, “given the requirements of USPAP, 

FIRREA [Financial Institutions Reform, Recovery, and Enforcement Act], and the Interagency Guidelines.” At summary judgment though, only the nonmoving party’s factual

contentions are presumed correct, not its legal arguments. See

Lalowski, 789 F.3d at 787. A party cannot smuggle in legal conclusions masqueraded as factual contentions through a deposition. Nor is it “our job to do the legal research” that a party 

fails to do, particularly when presented with a complex statutory or administrative scheme. United States v. Barr, 960 F.3d 

906, 916 (7th Cir. 2020) (quoting Bretford Mfg., Inc. v. Smith Sys. 

Mfg. Corp., 419 F.3d 576, 581 (7th Cir. 2005)); see also Schaefer v. 

Universal Scaffolding & Equip., LLC, 839 F.3d 599, 607 (7th Cir. 

2016) (“Perfunctory and undeveloped arguments are waived, 

as are arguments unsupported by legal authority.”). 

For a malicious-prosecution claim under Indiana law,

malice “in fact” must be shown; malice “in law” does not suffice. Ingram, 118 N.E.3d at 8 (quoting Satz, 397 N.E.2d at 1085). 
8 Nos. 21-2118 & 21-2307

Malice can be “inferred from a total lack of probable cause 

necessary to bring suit,” but a mere failure in the original suit, 

by itself, cannot independently establish malice—rather, “that 

failure must be culpable, that is, malice that rises above the 

level of mere negligence.” Id. 

Regent Bank did not act maliciously in commencing the 

underlying action. As explained above, Regent Bank had 

probable cause based on advice from outside counsel, a detailed report by a certified appraiser, and justifiable reliance 

on this report. And Birch|Rea has failed to show any other 

malice that “rises above the level of mere negligence.” Id.

Even a failure to make a “suitable and reasonable inquiry into 

the facts,” which Birch|Rea asserts, “is not enough in itself to 

sustain an action for malicious prosecution.” Id. (citing Mirka

v. Fairfield of Am., Inc., 627 N.E.2d 449, 451–52 (Ind. Ct. App. 

1994)). 

2. Indiana Frivolous Litigation Statute

Regent Bank seeks to collect attorney’s fees under the Indiana frivolous litigation statute. A federal court sitting in diversity applies state substantive law and federal procedural 

law. See DiPerna v. Chi. Sch. Pro. Psych., 893 F.3d 1001, 1006 

(7th Cir. 2018) (citing Gasperini v. Ctr. for Humanities, Inc., 518 

U.S. 415, 427 (1996)). When a federal rule conflicts with a state 

law though, the federal rule governs. See Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 398–400 (2010). 

Courts are divided as to whether state frivolous litigation statutes conflict with Federal Rule of Civil Procedure 11. Compare

First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 

501, 529 (6th Cir. 2002) (holding that the Ohio frivolous litigation statute “conflicts with Fed. R. Civ. P. Rule 11’s safe harbor 

provision and, therefore, should not be applied in federal 
Nos. 21-2118 & 21-2307 9 

court”), with Showan v. Pressdee, 922 F.3d 1211, 1226–27 (11th 

Cir. 2019) (holding that Rule 11 does not conflict with the 

Georgia frivolous litigation statute and applying the law). We 

need not decide whether Rule 11 conflicts with the Indiana 

frivolous litigation statute because Birch|Rea’s maliciousprosecution claim is not frivolous in the first instance. See

O’Brien v. Caterpillar Inc., 900 F.3d 923, 928 (7th Cir. 2018) 

(“[An appellate court] may affirm on any ground supported 

in the record so long as it was adequately addressed below 

and the plaintiffs had an opportunity to contest the issue.”). 

Indiana law provides that “[i]n any civil action, the court 

may award attorney’s fees ... to the prevailing party” based 

on (1) a claim or defense “that is frivolous, unreasonable, or 

groundless”; (2) continued litigation after a claim or defense 

“clearly became frivolous, unreasonable, or groundless”; (3) 

or litigation “in bad faith.” Ind. Code § 34-52-1-1; see generally 

River Ridge Dev. Auth. v. Outfront Media, LLC, 146 N.E.3d 906 

(Ind. 2020). Regent Bank asserts both that Birch|Rea’s malicious-prosecution claim was frivolous, unreasonable, or 

groundless at its filing and that it engaged in bad-faith litigation. See Ind. Code § 34-52-1-1(b)(1), (3).

“A claim is ‘frivolous’ if it is made primarily to harass or 

maliciously injure another; if counsel is unable to make a 

good faith and rational argument on the merits of the action; 

or if counsel is unable to support the action by a good faith 

and rational argument for extension, modification, or reversal 

of existing law.” Staff Source, LLC v. Wallace, 143 N.E.3d 996, 

1008 (Ind. Ct. App. 2020) (quoting Kitchell v. Franklin, 26 

N.E.3d 1050, 1057 (Ind. Ct. App. 2015)). An unreasonable 

claim is one that, “based on the totality of the circumstances

... no reasonable attorney would consider the claim justified 
10 Nos. 21-2118 & 21-2307

or worthy of litigation.” Id. (quoting Kitchell, 26 N.E.3d at 

1057). And a claim is “groundless if no facts exist which support the legal claim relied on and presented by the losing 

party.” Id. (quoting Purcell v. Old Nat. Bank, 972 N.E.2d 835, 

843 (Ind. 2012)). 

Birch|Rea did not file a frivolous, unreasonable, or 

groundless lawsuit against Regent Bank. There is no evidence 

that the malicious-prosecution claim was brought to injure 

Regent Bank. Indeed, Birch|Rea made a rational argument on 

the merits, albeit an unconvincing one. See Kitchell, 26 N.E.3d 

at 1057 (“[T]he law is settled that a claim is ... [not] frivolous 

merely because a party loses on the merits.”). The Potter report potentially contained deficiencies of its own, and Regent 

Bank may have had a tenuous argument for reliance on the 

original Birch report. The fact that Regent Bank quickly 

dropped its underlying claim suggests that it may have lacked

merit. Moreover, Birch|Rea supported its action with a colorable claim that Indiana case law applied to these facts. See, e.g., 

Ingram, 118 N.E.3d at 8; Reichhart, 748 N.E.2d at 379; Satz, 397 

N.E.2d at 1085; Wong, 422 N.E.2d at 1283. 

Bad-faith litigation occurs where the party commits more 

than “bad judgment or negligence.” Staff Source, 143 N.E.3d at 

1008 (quoting Mitchell v. Mitchell, 695 N.E.2d 920, 924 (Ind. 

1998)). Instead, it “implies the conscious doing of a wrong because of dishonest purpose or moral obliquity”—in other 

words, “a state of mind affirmatively operating with furtive 

design or ill will.” Id. (quoting Mitchell, 695 N.E.2d at 924). 

Like above, Regent Bank has produced no evidence that 

Birch|Rea engaged in bad-faith litigation—that is, there is no 

support for the notion that Birch|Rea acted with a “dishonest 

purpose or moral obliquity.” Id. (quoting Mitchell, 695 N.E.2d 
Nos. 21-2118 & 21-2307 11 

at 924). Both parties seem to acknowledge the “acrimonious 

history” of this litigation, but bitter litigation is not enough by 

itself. While Birch|Rea ultimately cannot prevail, its actions 

do not rise to bad-faith litigation. 

B. Motion to Strike 

Federal Rule of Civil Procedure 26(a)(1)(A)(i) requires that 

a party disclose, without any specific request as part of the 

umbrella category of initial disclosure, “the name and, if 

known, the address and telephone number of each individual 

likely to have discoverable information—along with the subjects of that information—that the disclosing party may use to 

support its claims or defenses, unless the use would be solely 

for impeachment.” Additionally, “[a] party who has made a 

disclosure under Rule 26(a) ... must supplement or correct its 

disclosure or response.” Fed. R. Civ. P. 26(e)(1). A party that 

does not disclose a witness cannot “use that ... witness to supply evidence on a motion ... unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1); see also 

David v. Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir. 2003). We 

review the denial of a motion to strike a summary judgment 

affidavit for abuse of discretion. Cont. W. Ins. Co. v. Cnty. Mut. 

Ins. Co., 3 F.4th 308, 318 (7th Cir. 2021). 

The question of whether the district court should have excluded the affidavits is moot. The operative facts above concern the Potter report, its preparation, and Regent’s Bank reliance on the report—none of which are based on the disputed 

affidavits. Birch|Rea does not contest that the Potter report 

exists, was turned over as part of discovery, and is relevant 

for summary judgment. Nor does it challenge the admission 

of Potter’s deposition. And a different, unchallenged affiant
12 Nos. 21-2118 & 21-2307

stated that Regent Bank relied on the Potter report. Thus, the 

district court did not err by denying the motion to strike. 

III. Conclusion

For these reasons, we affirm the judgment of the district 

court.