Court Opinion

ID: 4455320
Source: CourtListenerOpinion
Date Created: 2019-11-13 17:05:05.652771+00
Date Added: 2024-06-11T14:45:12.861372
License: Public Domain

FILED
                                                                    Nov 13 2019, 9:45 am

                                                                            CLERK
                                                                        Indiana Supreme Court
                                                                           Court of Appeals
                                                                             and Tax Court

ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Jon R. Pactor                                             Jeremy J. Grogg
Indianapolis, Indiana                                     Burt Blee Dixon Sutton & Bloom,
                                                          LLP
                                                          Fort Wayne, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Susan Sockrider,                                          November 13, 2019
Appellant-Defendant,                                      Court of Appeals Case No.
                                                          19A-PL-1155
        v.                                                Appeal from the Allen Circuit
                                                          Court
Burt, Blee, Dixon, Sutton, and                            The Honorable Thomas J. Felts,
Bloom, LLP,                                               Judge
Appellee-Plaintiff.                                       Trial Court Cause No.
                                                          02C01-1901-PL-4

Riley, Judge.

Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019                           Page 1 of 15
                                STATEMENT OF THE CASE
[1]   Appellant-Defendant, Susan Sockrider (Sockrider), appeals the trial court’s

      summary judgment in favor of Appellee-Plaintiff, Burt Blee Dixon Sutton &

      Bloom, LLP (Burt Blee), which concluded that no genuine issue of material fact

      exists that the parties entered into a valid contingency fee agreement.

[2]   We affirm.

                                                    ISSUES
[3]   Sockrider raises four issues on appeal, which we consolidate and restate as the

      following two:

          (1) Whether the trial court properly issued summary judgment on Burt

              Blee’s motion for summary judgment on its Complaint for recovery of

              attorney fees pursuant to a contingency fee contract entered into with its

              client, Sockrider; and

          (2) Whether the trial court properly adjudicated Sockrider’s affirmative

              defenses.

                      FACTS AND PROCEDURAL HISTORY
[4]   On June 2, 1986, Victor Sockrider (Victor), Sockrider’s husband, purchased a

      life insurance policy (Policy) from First Penn, a subsidiary of Lincoln Financial

      (Lincoln). On September 13, 2017, Victor requested Lincoln to cancel the

      Policy and pay him the Policy’s surrender value. Upon receiving Victor’s

      request, Lincoln commenced the administrative process of surrendering the

      Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019     Page 2 of 15
      Policy. Approximately one month later, on October 17, 2017, Victor

      unexpectantly passed away. Sockrider was the sole beneficiary under the

      Policy at the time Victor died.

[5]   On October 19, 2017, two days after Victor’s passing and a month after his

      surrender request, Sockrider, as the Policy’s sole beneficiary, contacted Lincoln

      to submit a claim for the entirety of the death benefits, i.e., $ 100,000, under the

      Policy. On November 16, 2017, Lincoln issued a denial of benefits. The

      insurance company asserted that it had processed Sockrider’s request on

      September 25, 2017, which was deemed to be in good order. Lincoln

      considered the agreement with Victor to surrender the Policy and pay the

      surrender value to be final and disbursed the surrender value of $1,737.87 to

      Sockrider.

[6]   On March 19, 2018, after unsuccessful attempts to procure the full Policy value

      from Lincoln, Sockrider contacted Burt Blee to discuss a potential claim against

      Lincoln. On March 22, 2018, after an initial consultation and review, attorney

      Jared Baker (Attorney Baker) emailed Sockrider, advising her that, in his

      estimation, “her claim was properly denied and that, should she proceed in

      attempting to enforce her death benefit claim, she would likely be unsuccessful

      and would have a substantial bill from [Burt Blee] to show for it.” (Appellant’s

      App. Vol. II, p. 81). Thereafter, on March 28, 2018, Sockrider and Attorney

      Baker had a discussion on the merits of the case and Sockrider “explicitly

      indicated that she could not afford that and asked whether [Burt Blee] would

      take the same on contingency.” (Appellant’s App. Vol. II, pp. 81-82). On April

      Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019      Page 3 of 15
      3, 2018, “after lengthy discussions within the firm, [Burt Blee] collectively

      decided that, as a favor to [Victor], a long time client of the firm, and because

      the case involved an interesting argument to be made, [Burt Blee] would accept

      the case on a contingency basis, despite the inherent risk of a zero recovery.”

      (Appellant’s App. Vol. II, p. 82). Attorney Baker provided Sockrider with a fee

      agreement (Fee Agreement). After some discussion, “Sockrider asked that

      [Burt Blee] reduce [the] fee from the standard one-third contingency.”

      (Appellant’s App. Vol. II, p. 82). On May 3, 2018, upon receiving Burt Blee’s

      refusal to reduce its contingency fee, Sockrider signed the contingency fee

      agreement, which provided:

              As compensation for [Burt Blee’s] services, the Client shall pay to
              [Burt Blee] a fee, contingent upon recovery, out of any monies
              recovered by or for the Client with respect to such claims, as
              follows:

              [Burt Blee] will retain Thirty-Three and One-Third Percent (33
              1/3%) of the gross recovery (33 1/3% to be calculated prior to
              the deduction of expenses, advances or litigation costs) regardless
              of whether achieved prior to the filing of suit, after the filing of a
              suit, or commencement of appellate procedures. (While this
              Agreement addresses the possibility of appellate representation,
              this Agreement does not bind [Burt Blee] to any future appellate
              representation.)

      (Appellant’s App. Vol. II, p. 29).

[7]   After researching Sockrider’s claims, Burt Blee sent a detailed demand letter to

      Lincoln, contending Victor’s life insurance benefits should be paid in full, rather

      Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019        Page 4 of 15
      than the Policy’s surrender value. On July 27, 2018, Lincoln rejected the

      demand. In light of Lincoln’s denial, Burt Blee commenced the process of

      initiating litigation on behalf of Sockrider, drafting a detailed complaint for

      relief, breach of contract, and bad faith. On September 6, 2018, prior to Burt

      Blee filing its complaint, Lincoln informed the law firm that it had reassessed its

      prior denial and now recommended to disburse the insurance proceeds in full.

      Thereafter, Lincoln issued a check in the amount of $100,906.40, representing

      the life insurance benefit plus interest calculated at 1% per annum.

[8]   Burt Blee informed Sockrider that it had recovered the funds under the Policy

      from Lincoln and provided her with a standard disbursement allocation setting

      forth the attorney fees to be paid to Burt Blee from the insurance benefits per

      the Fee Agreement and the amount to be disbursed to Sockrider. Sockrider

      refused to pay the attorney fees, asserting that the contingency fee was

      unreasonable. Burt Blee tendered the life insurance proceeds in full, subject to

      an attorney’s fee lien, to Sockrider through her present counsel.

[9]   On January 2, 2019, Burt Blee filed its Complaint for damages, contending that

      Sockrider breached the agreement with Burt Blee and demanding payment of

      its contingency fee, in the amount of $33,635.00. On February 18, 2019, Burt

      Blee filed its motion for summary judgment, memorandum in support, and

      designation of evidence. Sockrider filed an opposition to Burt Blee’s motion

      which she amended on March 20, 2019, together with a memorandum and

      designation of evidence. On April 16, 2019, the trial court conducted a hearing

      on the motion for summary judgment and granted summary judgment to Burt

      Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019      Page 5 of 15
       Blee, concluding that Sockrider “was bound to pay a contingency fee regardless

       of whether monies were received prior to [Burt Blee] filing suit.” (Appellant’s

       App. Vol. II, p. 13). Finding the contingency fee reasonable, the trial court

       entered final judgment in favor of Burt Blee.

[10]   Sockrider now appeals. Additional facts will be provided if necessary.

                               DISCUSSION AND DECISION
                                              I. Standard of Review

[11]   In reviewing a trial court’s ruling on summary judgment, this court stands in the

       shoes of the trial court, applying the same standards in deciding whether to

       affirm or reverse summary judgment. First Farmers Bank & Trust Co. v. Whorley,

       891 N.E.2d 604, 607 (Ind. Ct. App. 2008), trans. denied. Thus, on appeal, we

       must determine whether there is a genuine issue of material fact and whether

       the trial court has correctly applied the law. Id. at 607-08. In doing so, we

       consider all of the designated evidence in the light most favorable to the non-

       moving party. Id. at 608. A fact is ‘material’ for summary judgment purposes if

       it helps to prove or disprove an essential element of the plaintiff’s cause of

       action; a factual issue is ‘genuine’ if the trier of fact is required to resolve an

       opposing party’s different version of the underlying facts. Ind. Farmers Mut. Ins.

       Group v. Blaskie, 727 N.E.2d 13, 15 (Ind. 2000). The party appealing the grant

       of summary judgment has the burden of persuading this court that the trial

       court’s ruling was improper. First Farmers Bank & Trust Co., 891 N.E.2d at 607.

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019         Page 6 of 15
[12]   We observe that, in the present case, the trial court entered findings of fact and

       conclusions of law thereon in support of its judgment. Generally, special

       findings are not required in summary judgment proceedings and are not binding

       on appeal. AutoXchange.com. Inc. v. Dreyer and Reinbold, Inc., 816 N.E.2d 40, 48

       (Ind. Ct. App. 2004). However, such findings offer a court valuable insight into

       the trial court’s rationale and facilitate appellate review. Id

                                               II. Contingency Fee

[13]   Sockrider contends that the trial court erred by granting summary judgment to

       Burt Blee as there was a genuine issue of material fact that the Fee Agreement

       entered into between the parties unambiguously allowed Burt Blee to charge a

       contingency fee for a matter that did not involve litigation.

                                                 A. Interpretation

[14]   The interpretation and construction of contract provisions is a function for the

       courts. Four Winds, LLC v. Smith & DeBonis, LLC, 854 N.E.2d 70, 74 (Ind. Ct.

       App. 2006), trans. denied. Upon appeal, we will employ the same standard of

       review as applied by the trial court, that is, unless the terms of the contract are

       ambiguous, they will be given their plain and ordinary meaning. Id. Where the

       terms of a contract are clear and unambiguous, the terms are conclusive, and

       we will not construe the contract or look to extrinsic evidence, but will merely

       apply the contractual provisions. Id. The terms of a contract are not

       ambiguous merely because the parties disagree as to the proper interpretation of

       the terms. Id.

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019      Page 7 of 15
[15]   Indiana courts recognize the freedom to enter into contracts and presume that

       contracts represent the freely bargained agreement of the parties, reflecting the

       principle that it is in the best interests of the public not to unnecessarily restrict

       the freedom to contract. Valparaiso Technical Inst., Inc. v. Porter Co. Treasurer, 676
N.E.2d 416, 420 (Ind. Ct. App. 1997), reh’g denied. Accordingly, contracting

       parties may enter into any agreement they desire that is not illegal or contrary

       to public policy. Id.

[16]   The Indiana Rule of Professional Conduct 1.5(c) authorizes a contingency fee,

       requiring that the “contingent fee agreement shall be in writing signed by the

       client and shall state the method by which the fee is to be determined[.]” Here,

       the written Fee Agreement stated that upon recovery on behalf of Sockrider,

       Burt Blee is entitled to a one-third fee of the amount recovered, “regardless of

       whether achieved prior to the filing of suit, after the filing of a suit, or

       commencement of appellate procedures.” (Appellant’s App. Vol. II, p. 29)

       (emphasis added). The designated evidence reflects that, although Burt Blee

       initially refused to represent her because of the prohibitive high hourly rate that

       would be incurred, upon further research, Burt Blee offered to take the case

       upon contingency at Sockrider’s request and sent her the proposed Fee

       Agreement. One month later, Sockrider requested a reduction of Burt Blee’s

       contingency fee, and in contemplating the risk involved in Sockrider’s claim,

       combined with the possibility of recovering nothing, Burt Blee declined to

       reduce its fee. During that same two-month period of time in which Sockrider

       reviewed the terms of the Fee Agreement, Burt Blee and Sockrider entered into

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019          Page 8 of 15
       extensive discussions regarding the nature of a contingency fee agreement.

       During these discussions, it was clarified that Burt Blee’s fees would be taken

       “out of the amount recovered” and that the law firm could not “take both a

       contingency fee and [an] hourly fee[.]” (Appellant’s App. Vol. II, p. 89). Burt

       Blee explained that any attorney fees that Lincoln could be requested to pay

       “would have to be ordered by the court.” (Appellant’s App. Vol. III, p. 3). In

       the event of a settlement outside of court, Lincoln could pay attorney fees “but

       it must be by agreement.” (Appellant’s App. Vol. III, p. 3). Responding to

       Sockrider’s question as to whether the contingency fee percentage is reasonable,

       Burt Blee advised that “[i]t is the standard percentage across the nation. Many

       firms take 40%.” (Appellant’s App. Vol. III, p. 3).

[17]   Though we agree with Sockrider that Burt Blee’s Fee Agreement largely

       contemplates litigation—and the prospect of litigation was precisely the reason

       a contingency fee agreement was suggested—the Fee Agreement

       unambiguously indicates that the contingency fee is due upon recovery of any

       amount regardless of whether, as here, it was achieved prior to filing suit. If, as

       suggested by Sockrider, the contingency would only be due after litigation, then

       the subclause of the Fee Agreement—“achieved prior to filing suit”—would be

       rendered meaningless. See Forty-One Assocs. v. Bluefield Assocs., L.P., 809 N.E.2d
422, 427 (Ind. Ct. App. 2004) (Contract language must be construed “so as not

       to render any words, phrases, or terms ineffective or meaningless.”)

                                          B. Reasonableness of the Fee

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019     Page 9 of 15
[18]   A contingent fee agreement that is the product of a bargain between the

       attorney and the client is presumed to be reasonable as between them. See id.

       “The whole point of contingent fees is to remove from the client’s shoulders the

       risk of being out-of-pocket for attorney’s fees upon a zero recovery. Instead, the

       lawyer assumes that risk, and is compensated for it by charging what is (in

       retrospect) a premium rate.” City of New Albany v. Cotner, 919 N.E.2d 125, 134-

       35 (Ind. Ct. App. 2009) (citing 1 GEOFFREY C. HAZARD JR., W. WILLIAM

       HODES, & PETER R. JARVIS, THE LAW OF LAWYERING § 8.6 (3d ed. 2000),

       reh’g denied, trans. denied; see also Waxman Indus. Inc. v. Trustco Dev. Co., 455
N.E.2d 376, 382 (Ind. Ct. App. 1983) (“The benefits of a contingent fee

       contract between an attorney and client in litigation consisting of money

       demands are quite obvious. If no money is collected at all, the client is not

       obligated to pay fees, and in consideration of the absence of such risk, he is

       willing to pay the larger fee if money is collected. The attorney is willing to risk

       no recompense for his efforts in return for the possibility of a windfall.”).

[19]   As to the reasonableness of a contingent fee, “there can be no per se objection to

       contingent fees, so long as the fee was reasonable as of the time it was agreed

       to, rather than with the benefit of hindsight.” Cotner, 919 N.E.2d at 135 (citing

       HAZARD, HODES, & JARVIS, supra, § 8.6). In Vollmar ex. Rel. Vollmar v.

       Rupright, 517 N.E.2d 1240, 1244, 1245 (Ind. Ct. App. 1988) (citations omitted),

       this court reflected:

               It makes little sense to attempt a barn door closing after the fact.
               Scrutiny may only be reasonably made in consideration of the

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019       Page 10 of 15
        factors as they existed and as they were known at the time the
        contract was entered into. To require court approval of a
        contingent fee contract but countenance a second-guessing of that
        arrangement after the fact is to inject such a degree of uncertainty
        as to virtually destroy the underpinning necessity of the
        contingent fee in the first instance . . . If the inquiry is made at
        the outset and before a contract is signed, we acknowledge that
        many factors which bear upon the reasonableness of a contingent
        fee and upon the reasonableness of the particular percentage or
        percentages contemplated cannot be fully known. What may
        appear to be reasonable at the outset may appear to be
        unreasonable by reason of subsequent changes in circumstances
        or unforeseen and fortuitous events. Nevertheless, we do not
        propose that a contingent fee contract, once approved after due
        consideration, be re-examined by hindsight. To do so would be
        to encourage almost certain and endless second guessing in all
        contingent fee situations.

In Cotner, this court addressed the reasonableness of a contingency fee

agreement entered into by and between the City of New Albany and a law firm,

by which the law firm would be paid a contingency fee of one-third of any

amount recovered in the pursuit of collecting certain fees for sewage services

provided by the City. Cotner, 919 N.E.2d at 128. As a result of the work

performed by the law firm, the City collected $900,000 in sewage services. Id.

at 130. The City refused to pay the contingency fee and litigation ensued. Id.

The trial court found for the law firm on summary judgment and the City

appealed. Id. On appeal, we analyzed the contingency fee and concluded that

the fee was reasonable. Id. at 136. Recognizing that, “as a general matter, a

one-third contingent fee is a standard and customary fee,” the fact that, in

hindsight, the law firm did not have to expend much effort to earn the fee is

Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019     Page 11 of 15
       “simply not enough to overcome the presumption that the contingent fee is

       reasonable.” Id.

[20]   Likewise, here, Sockrider does not argue that the Fee Agreement was

       unreasonable when it was entered into. Pointing to affidavits and designated

       evidence in an attempt to persuade us that Burt Blee did not expend enough

       effort to justify the fee, none of its evidence addresses the dispositive issue of

       whether the contingent fee was unreasonable at the time the fee contract was

       entered into. After Victor’s surrender of the Policy and his unexpected passing,

       Lincoln repeatedly denied Sockrider’s request for payment pursuant to the

       Policy’s terms, as well as Burt Blee’s initial demand for payment. It is

       undeniable that both parties were expecting this case to proceed to litigation

       and, with this in mind, the parties agreed to the Fee Agreement. Unexpectedly,

       Lincoln nevertheless agreed to pay under the terms of the Policy on the eve of

       Burt Blee filing its complaint. Only after Lincoln paid out the Policy’s amount

       did Sockrider take issue with the contingency fee.

[21]   In support of her argument that subsequent events may render collection of a

       fee under a contingency fee agreement unreasonable, Sockrider relies on Matter

       of Powell, 953 N.E.2d 1060 (Ind. 2011); Matter of Hefron, 771 N.E.2d 1157 (Ind.

       2002); and Matter of Gerard, 634 N.E.2d 51 (Ind. 1994). Decided in the context

       of disciplinary proceedings, our supreme court concluded the attorney fees to be

       unreasonable based on the particularized circumstances in each case. Upon

       review, we are unpersuaded of their applicability. In Powell, attorney negotiated

       a contingency fee for a matter that, within two to three days of being accepted,

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019      Page 12 of 15
       he knew did not involve a complex issue, did not need a prolonged time

       commitment, or had any opposition; whereas, in the case at hand, Burt Blee

       was faced with a difficult legal matter, required an understanding of insurance

       issues, and faced stiff opposition from the insurance company which had denied

       Sockrider’s earlier requests for payment and had rejected Burt Blee’s demand

       letter. Powell, 953 N.E.2d at 1064. In Hefron, attorney who agreed to an hourly

       fee to handle estate, insisted on a contingent fee after discovering substantial

       assets upon research; whereas Burt Blee rejected the hourly fee and negotiated a

       contingency fee prior to entering into the Fee Agreement and handling the case.

       Hefron, 771 N.E.2d at 1158. In Gerard, attorney negotiated a contingency fee

       for a matter that was largely administrative and required no specific legal skill;

       whereas, here, the legal issue and its complications were well documented.

       Gerard, 634 N.E.2d at 54.

[22]   In light of the facts before us, we find the contingency fee as negotiated between

       the parties reasonable. It is undeniable that the Fee Agreement entered into

       between the parties was the product of a bargain between Burt Blee and

       Sockrider. Because of the perceived complexity of the underlying matter and

       the purported opposition by Lincoln, Burt Blee suggested a contingency fee

       arrangement to remove the financial risk from Sockrider to the law firm.

       Despite a demand letter, Lincoln refused to pay pursuant to the Policy. On the

       eve of Burt Blee filing its complaint and bringing this cause to litigation,

       Lincoln, out of the blue, agreed to pay Sockrider the entire insurance amount.

       Although Sockrider now urges this court to do so, “[w]ithout more, 20/20

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019     Page 13 of 15
       hindsight is simply not enough to overcome the presumption that the

       contingent fee is reasonable.” See Cotner, 919 N.E.2d at 136. Accordingly, we

       affirm the trial court’s summary judgment for Burt Blee.1

                                               III. Affirmative Defenses

[23]   Next, Sockrider contends that the “trial court granted summary judgment for

       Burt Blee on the affirmative defense of whether the attorney-client contract was

       invalid for fraud in the inducement. This ruling [] was egregiously wrong

       because Burt Blee did not raise it as an issue on which it sought summary

       judgment[.]” (Appellant’s Br. p. 30).

[24]   In Reisweg v. Statom, 926 N.E.2d 26, 30 (Ind. 2010), our supreme court clarified

       that “[a] party responding to a motion for summary judgment is entitled to take

       the motion as the moving party frames it.” Generally, an affirmative defense is

       waived “if not asserted in response to a motion for summary judgment that

       dispose[s] of the entire issue of liability. Id. at 32. “A non-movant is not

       required to address a particular element of a claim unless the moving party has

       first addressed and presented evidence on that element.” Id. Here, Burt Blee,

       as the moving party, moved for summary judgment on the entire issue of breach

       of contract. As such, Sockrider, as the non-moving party, had to assert all of its

       1
         Additionally, Sockrider contends that Burt Blee ended its representation and failed to pursue a bad faith
       claim against Lincoln. However, Lincoln notified Burt Blee that it would pay Sockrider pursuant to the
       provisions of the Policy prior to Burt Blee being able to file its complaint, which included a bad faith claim.
       After Lincoln fully paid Sockrider, there was no need to pursue litigation as Burt Blee successfully
       accomplished what Sockrider had engaged Burt Blee to pursue.

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019                              Page 14 of 15
       affirmative defenses or risk them being waived. Although Sockrider raised the

       affirmative defense of constructive fraud in its Answer to Burt Blee’s

       Complaint, Sockrider did not reaffirm the defense in its memorandum of law

       supporting its response to Burt Blee’s motion for summary judgment. In so far

       as Sockrider now attempts to raise its affirmative defense in her appellate reply

       brief, we find the issue waived. See id.

                                              CONCLUSION
[25]   Based on the foregoing, we hold that the trial court properly entered summary

       judgment for Burt Blee. Furthermore, due to her failure to raise the affirmative

       defenses in her response to Burt Blee’s motion for summary judgment,

       Sockrider waived the issue for our review.

[26]   Affirmed.

[27]   Baker, J. and Bailey, J. concur

       Court of Appeals of Indiana | Opinion 19A-PL-1155 | November 13, 2019    Page 15 of 15