Source: https://www.in.gov/judiciary/opinions/previous/archive/122901.jgb.html
Timestamp: 2019-04-24 17:51:22+00:00

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Appellant-plaintiff Joel Garza appeals from the trial court's grant of summary judgment in favor of appellees-defendants Kevin Lorch and Kenneth Abbott on his claims for declaratory judgment, fraud and negligence. Garza also appeals the trial court's award of attorney fees and expenses to Lorch and Abbott pursuant to Ind. Code § 34-1-32-1(b).See footnote 1 Additionally, Lorch and Abbott ask that we assess appellate attorney fees against Garza under App. R. 15(G).
The facts most favorable to Garza, an Indiana licensed real estate salesperson, reveal that on March 21, 1996, Garza entered into a Real Estate Purchase and Option Agreement with Troy Morgan. Pursuant to this agreement, Morgan acknowledged a $60,000 debt to Garza and delivered a quitclaim deed for thirty acres of real estate in Harrison County, Indiana to satisfy this debt. The agreement and deed were drafted by Abbott, Morgan's attorney. Abbott did not include a legal description of the property in either document because Morgan was to have a survey conducted and the description later attached as Exhibit A, as referred to in each document. Abbott had no contact with and provided no legal advice to Garza. Within fifteen days of the transaction, Garza received the exhibit containing the legal description. R. at 104. Upon receiving the description, Garza placed it in his desk with the other two documents. Garza never attempted to record the deed because he felt it was unnecessary as repayment of the loan was right around the corner. Record at 105.
Several months later, on August 5, 1996, Morgan executed and delivered to Lorch a quitclaim deed for twenty-eight acres, a substantial portion of the property previously deeded to Garza. Prior to purchasing this real estate for $150,000, Lorch had a title search completed, obtained a title insurance policy and paid off all recorded liens. R. at 327, 347. Lorch recorded the deed on August 12, 1996. In December of 1996, while Garza was working on part of the property that he believed Morgan still owned but had actually been deeded to Lorch, Garza and Lorch had a conversation. Lorch informed Garza that he owned all of the property and Garza responded that he had a prior deed to some of it. Lorch replied, Mine is recorded. Is yours? R. at 161-62.
On December 12, 1996, Garza filed a declaratory judgment action against Lorch. Thereafter, Garza filed an amended complaint against Lorch, Morgan and Abbott on June 12, 1997. Garza's declaratory judgment claim against Lorch alleged that Lorch had constructive or actual notice of Garza's unrecorded deed and that the deed transfer from Morgan to Lorch was a fraudulent transfer in violation of Ind.Code § 32-2-7-17. Garza asserted a claim for fraud against Morgan.See footnote 2 Finally, Garza's claim against Abbott alleged attorney negligence in the preparation of the deed and agreement between Garza and Morgan without a legal description, making the documents allegedly incapable of being recorded.
judgment in favor of both Abbott and Lorch. Specifically, the trial court found, as to the claim against Abbott, that Garza had failed to establish that: 1) an attorney-client relationship existed between Abbott and Garza; 2) he was an intended third party beneficiary; and, 3) Abbott's actions caused damage to Garza. R. at 210. The trial court also found that Garza had provided no evidence that Lorch had actual or constructive knowledge of the unrecorded deed and no evidence that Lorch was not a bona fide purchaser for value. R. at 210. Thereafter, Abbott filed a motion for attorney fees on January 2, 1998 and Lorch filed a similar motion on January 5, 1998. After finding that Garza's claims against Abbott were frivolous, unreasonable and groundless, the trial court awarded $3,940 in attorney fees to Abbott on April 1, 1998. On April 13, 1998, the trial court also awarded $4,190 in attorney fees and costs to Lorch. Garza now appeals.
1065 (Ind. Ct. App. 1995), trans. denied. The trial court's grant of summary judgment is clothed with the presumption of validity and the non-moving party has the burden of demonstrating that the trial court erred. Hottinger v. Trugreen Corp., 665 N.E.2d 593, 595 (Ind. Ct. App. 1996), trans. denied. Moreover, we will affirm the grant of summary judgment if it is based upon any legal theory which is consistent with the designated facts. Wolfe v. Stork RMS-Protecon, Inc., 683 N.E.2d 264, 267 (Ind. Ct. App. 1997).
With regard to the attorney negligence claim against Abbott, Garza contends that the trial court erroneously granted summary judgment in favor of Abbott.See footnote 3 Specifically, in approximately three sentences, Garza makes a frail attempt to refute the trial court's finding that he failed to establish himself as an intended third party beneficiary.See footnote 4 Garza simply asserts that Abbott prepared the documents for Morgan to transfer the real estate as security for the loan, and, from this, we are asked to find evidence of an intended third party beneficiary and, therefore, that Abbott owed Garza a duty.See footnote 5 We are unpersuaded.
Moreover, even if we were to agree with Garza's slender argument that he was a third party beneficiary, Garza offers no argument that his damage was proximately caused by Abbott's failure to include a legal description of the real estate in the documents.See footnote 6 Therefore, this issue is waived. See Summit Account and Computer Service, Inc. v. RJH of Florida, Inc., 690 N.E.2d 723, 729 (Ind. Ct. App. 1998), trans. denied, (failure to either develop a cogent argument or present citation to authority results in waiver of the issue); Ind. Appellate Rule 8.3(A)(7). Notwithstanding waiver, we find that as a matter of law, Abbott's alleged negligence in no way caused Garza's damage. Garza admits that he received the legal description of the real estate within fifteen days of accepting the quitclaim deed. R. at 104. After receiving the legal description, Garza had ample time, prior to Morgan's transfer to Lorch, to record the completed deed and to avoid all damage. Instead, Garza filed it in his desk drawer with the other documents because he felt there was no need to record the deed. Inasmuch as Garza brought about his own misfortune, the trial court properly granted summary judgment in favor of Abbott.
484 N.E.2d 1296, 1298 (Ind. Ct. App. 1985), trans. denied. Here, Lorch could not be charged with constructive notice because Garza candidly admits that he failed to record the deed. Therefore, Garza's claim would have to hinge on actual notice.
[A]ctual notice has been divided into two classes, (1) express and (2) implied, which is inferred from the fact that the person charged had means of knowledge which he did not use. Whatever fairly puts a person on inquiry is sufficient notice, where the means of knowledge are at hand; and if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained. This, in effect, means that notice of facts which would lead an ordinarily prudent man to make an examination which, if made, would disclose the existence of other facts is sufficient notice of such other facts.
Mishawaka St. Joseph Loan & Trust Co. v. Neu, 196 N.E. 85, 89-90 (Ind. 1935) (citations omitted); see also Lamb v. Lamb, 569 N.E.2d 992 (Ind. Ct. App. 1991). Garza offers several facts which he claims support actual knowledge. These include: Lorch is a mortgage broker who knew of Morgan's credit history; Lorch obtained a real estate appraisal of $250,000 but only paid $150,000 for the property; Lorch accepted a quitclaim deed; Morgan had staked off the portion of the land intended to be transferred to Garza; Lorch and Garza had a conversation in December of 1996 regarding ownership of the land; and, Lorch's refusal to state his current appraisal of the real estate.See footnote 7 Appellant's Brief at 11-12.
matter of law that nothing in the record indicates that Lorch had knowledge of Garza's unrecorded interest in the property.
In addition to the notice argument, Garza asserts that the trial court erred in granting summary judgment in favor of Lorch on the fraudulent conveyance claim. Specifically, Garza baldly claims that the deed from Morgan to Lorch was to avoid Garza's claims in violation of I.C. § 32-2-7-17.
Initially, we note that I.C. § 32-2-7-17 is the remedy section in the Indiana Fraudulent Transfer Act and, therefore, we assume that he intended to quote from the section that defines a fraudulent transfer as to present creditors, I.C. § 32-2-7-14. Because Garza's argument involved quoting, in its entirety, an inappropriate section of the code, without providing any independent analysis and failing to refer to any of the designated evidence to support his claim, we find that this issue is waived.See footnote 9 See Tipmont Rural Elec. Membership v. Fischer, 697 N.E.2d 83, 93 (Ind. Ct. App. 1998) (failure to make a cogent argument by citing to relevant authority and the record may result in waiver).
available for execution; 4) secret or hurried transactions not in the usual mode of doing business; 5) any transaction conducted in a manner differing from customary methods; 6) a transaction whereby the debtor retains benefits over the transferred property; 7) little or no consideration in return for the transfer; and 8) a transfer of property between family members. However, no one badge of fraud constitutes a per se showing of fraudulent intent.
Lee's Ready Mix and Trucking, Inc. v. Creech, 660 N.E.2d 1033, 1037 (Ind. Ct. App. 1996) (citations omitted). Here, the designated evidence in the record does not raise a question of material fact as to fraudulent intent. Specifically, there is no evidence that the transaction between Lorch and Morgan was out of the ordinary, as Lorch ran a title search, obtained title insurance and paid off all liens prior to the closing. Therefore, the trial court properly granted summary judgment on Garza's declaratory judgment action against Lorch.
(3) litigated the action in bad faith.
Id. (emphasis added). The decision of the trial court to award fees is reviewed under an abuse of discretion standard. Nelson v. Marchand, 691 N.E.2d 1264, 1269 (Ind. Ct. App. 1998).
investigation through pretrial discovery may be necessary to evaluate the claims. Kahn v. Cundiff, 543 N.E.2d 627, 629 (Ind. 1989). In such cases, counsel is expected to determine expeditiously the propriety of continuing such litigation and to dismiss promptly claims found to be frivolous, unreasonable or groundless.See footnote 10 Id.
Q. Do you know when you got [the legal description]?
A. Not exactly, no. It might've been the next day or two or three days afterwards. I don't know exactly.
Q. But it was within a week of this transaction?
A. I could not bet on that. It was in that -- I would say it was within 15 days, I would say. I could be wrong. It might've been the next day or the day after that or somewhere in there.
Q. When you ultimately received the legal description, what did you do with it?
A. I put it in my desk.
Q. And was that where you had kept the Quitclaim Deed?
Q. And that's where you kept the Loan Agreement?
Q. Did you ever attempt to file the Quitclaim Deed with the [County Recorder]?
A. I had -- The loan was supposedly right around the corner, and I figured why go through all this, I'll get my money back and we don't need this paperwork.
While I have substantial questions about the basis for the original filing, it is now clear that Garza's claims against Ken Abbott are frivolous, unreasonable and groundless. If you continue to litigate this action, we will be entitled to recover attorney's fees in defending this action from this point forward. This will include a motion for summary judgment which will be filed within 60 days of the date of this letter. If we have not received the voluntary dismissal within 30 days, we will aggressively begin to seek a favorable judgment with all available speed and means.
groundless because he set forth facts that raised a reasonable inference that Lorch had actual or constructive notice of the prior deed and he asserted a claim for relief pursuant to the Indiana Uniform Fraudulent Transfer Act.
Initially, we note that asserting a claim under the Act is all that Garza has done. He has designated no evidence nor made any argument as to how the transaction between Lorch and Morgan was a fraudulent transfer. Moreover, the facts that Garza relies on to establish notice are unreasonable and are based entirely on his counsel's or his own unsupported assertions. Maintenance of this lawsuit became frivolous, unreasonable and groundless at least at the point of discovery. Following discovery, it was evident that Garza chose not to record his deed and that Lorch ran the proper title search, obtained title insurance and paid off all recorded liens on the property. Further, as we noted above, Garza even admitted in his deposition: I don't know that he knew on August 5th. He might or might not have. But somewhere along the line between August 5th and December 24th, he knew. R. at 129. Based on these facts, we find that the trial court did not abuse its discretion in awarding attorney fees and costs to Lorch. Moreover, because Garza has offered nothing of substance to us in support of his claims and his appeal is meritless and frivolous, we similarly grant Lorch's request for appellate attorney fees in accordance with App. R. 15(G).
court properly granted summary judgment in favor of Lorch on Garza's declaratory judgment action because there was no designated evidence of actual or constructive notice or a fraudulent transfer. Moreover, we hold that the trial court did not abuse its discretion in granting attorney fees and costs to Abbott and Lorch for maintenance of a frivolous, unreasonable and groundless lawsuit. Finally, we grant appellate attorney fees to Abbott and Lorch pursuant to App. R. 15(G), as shall be calculated and executed by the trial court upon remand.
Judgment affirmed and cause remanded for further proceedings consistent with this opinion.
GARRARD, J., and ROBB, J., concur.
Footnote: 1 This section has since been repealed and recodified at Ind. Code § 34-52-1-1.
Footnote: 2 Morgan has not appeared or filed an answer in this cause and is not a party to this appeal.
Footnote: 3 We note that Garza does not attempt to argue in his brief that an attorney-client relationship existed between himself and Abbott.
Footnote: 4 Garza cites Walker v. Lawson, 526 N.E.2d 968 (Ind. 1988), without providing a pinpoint cite, for the general proposition that [p]rivity is no longer a requirement in suits against attorneys by third party beneficiaries. Appellant's Brief at 9. After searching the opinion for any reference to privity, we are at a loss. Moreover, we note that Walker concerned the rights of beneficiaries under a will to bring suit against the attorney who drafted the will, which is an entirely different situation than one party to a real estate transaction bringing suit against the other party's attorney with whom he had absolutely no contact. See Hacker v. Holland, 570 N.E.2d 951, 955 (Ind. Ct. App. 1991), trans. denied, (explaining that the interests involved in a real estate transaction are usually in opposition).
Footnote: 5 We reiterate the well-established rule that in order to recover under the theory of negligence, a plaintiff must establish that the defendant breached a duty owed to the plaintiff which was the proximate cause of the plaintiff's damages. City of Portage v. Lindbloom, 655 N.E.2d 84, 86 (Ind. Ct. App. 1996), trans. denied.
Footnote: 6 Garza simply states that Morgan subsequently transferred the property to Lorch. Appellant's Brief at 10.
Footnote: 7 We note that Garza relies almost exclusively on his pleadings and his attorney's argument at the summary judgment hearing to support his notice argument.
Footnote: 8 Garza's assertion that Lorch refused to reveal the current appraisal value in his deposition is also irrelevant. Moreover, we note that although Lorch's deposition was designated to the trial court and both parties made reference to it at the summary judgment hearing and in their appellate briefs, Lorch's deposition has not been included in the record for our review. We further note that on September, 25, 1998, Garza filed a motion to strike all references in Lorch's brief to the deposition. These references appear to be inconsequential. However, because we find that Garza has relied on the deposition in his brief, Appellant's Brief at 12, and he not only failed to object, but also used and quoted from Lorch's deposition during the summary judgment hearing, we deny the motion to strike. R. at 342, 349-51.
Footnote: 9 Garza appears to argue that Lorch waived the issue of the alleged fraudulent conveyance by not addressing it in the summary judgment hearing. We disagree. Lorch clearly argued that there was no evidence of a fraudulent conveyance, specifically pointing out that all known creditors were paid at the closing. R. at 346-48.
[A] claim or defense is frivolous (a) if it is taken primarily for the purpose of harassing or maliciously injuring a person, or (b) if the lawyer is unable to make a good faith and rational argument on the merits of the action, or (c) if the lawyer is unable to support the action taken by a good faith and rational argument for an extension, modification, or reversal of existing law.
[A] claim or defense is unreasonable if, based on a totality of the circumstances, including the law and facts known at the time of the filing, no reasonable attorney would consider that the claim or defense was worthy of litigation or justified.
[A] claim or defense is groundless if no facts exist which support the legal claim relied on and presented by the losing party.
Kahn v. Cundiff, 533 N.E.2d 164, 170-71 (Ind. Ct. App. 1989), adopted 543 N.E.2d 627 (Ind. 1989).
If the court on appeal affirms the judgment, damages may be assessed in favor or the appellee not exceeding ten per cent (10%) upon the judgment, in money judgments, and in other cases in the discretion of the court; and the court shall remand such cause for execution.

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