Court Opinion

ID: 4099071
Source: CourtListenerOpinion
Date Created: 2016-11-17 16:07:50.807649+00
Date Added: 2024-06-11T14:49:05.548033
License: Public Domain

MEMORANDUM DECISION
      Pursuant to Ind. Appellate Rule 65(D),
      this Memorandum Decision shall not be                                      FILED
      regarded as precedent or cited before any                             Nov 17 2016, 9:20 am
      court except for the purpose of establishing
                                                                                 CLERK
      the defense of res judicata, collateral                                Indiana Supreme Court
                                                                                Court of Appeals
      estoppel, or the law of the case.                                           and Tax Court

      ATTORNEY FOR APPELLANTS                                 ATTORNEY FOR APPELLEES
      Julie A. Camden                                         Michael A. Barranda
      Camden & Meridew, P.C.                                  Burt, Blee, Dixon, Sutton &
      Fishers, Indiana                                        Bloom, LLP
                                                              Fort Wayne, Indiana

                                                IN THE
          COURT OF APPEALS OF INDIANA

      Aaron and Stephanie Muir,                               November 17, 2016
      Appellants-Defendants,                                  Court of Appeals Case No.
                                                              02A04-1605-PL-1247
              v.                                              Appeal from the
                                                              Allen Superior Court
      Matthew and Tara McWilliams,                            The Honorable
      Appellees-Plaintiffs.                                   Craig J. Bobay, Judge
                                                              Trial Court Cause No.
                                                              02D02-1305-PL-178

      Kirsch, Judge.

[1]   Aaron and Stephanie Muir (“the Muirs”) appeal the trial court’s order denying

      their motion for summary judgment, granting summary judgment in favor of

      Matthew and Tara McWilliams (“the McWilliamses”), and finding that the

      Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016       Page 1 of 9
      Muirs were not entitled to attorney fees. The Muirs raise one issues on appeal,

      which we restate as: whether the trial court erred when it determined that the

      Muirs were not a “prevailing party” in an underlying claim by the

      McWilliamses when the McWilliamses’ claim was dismissed as a result of a

      discharge in bankruptcy.

[2]   We affirm.

                                 Facts and Procedural History
[3]   In August 2011, the Muirs entered into a Purchase Agreement with the

      McWilliamses for the purchase of the Muirs’ home in Fort Wayne, Indiana. In

      April 2012, after the sale of the home, the Muirs filed for Chapter 7 Bankruptcy

      and received a discharge of their debts in July 2012. On May 10, 2013, the

      McWilliamses filed the underlying cause of action in the Allen Superior Court

      against the Muirs for actual fraud, constructive fraud, and criminal deception

      due to alleged false and misleading statements regarding the condition of the

      home made on the Sellers’ Real Estate Disclosure Form (“Disclosure Form”).

[4]   After the Muirs were notified of the complaint, they reopened their bankruptcy

      and added the McWilliamses as a creditor. The Muirs also filed a counterclaim

      against the McWilliamses, asserting that they violated the post-bankruptcy

      discharge injunction by filing the fraud action and asserting a claim for attorney

      fees pursuant to Paragraph 21 of the Purchase Agreement, which stated:

      “ATTORNEY’S FEES: Any party to this Agreement who is the prevailing

      party in any legal or equitable proceeding against any other party brought under

      Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016   Page 2 of 9
      or with relation to the Agreement or transaction shall be additionally entitled to

      recover court costs and reasonable attorney’s fees from the non-prevailing

      party.” Appellant’s App. at 57. The Muirs requested that the Bankruptcy Court

      stay the proceedings in the case filed in Allen Superior Court, which the

      Bankruptcy Court denied, reasoning that the Allen Superior Court had

      concurrent jurisdiction to determine dischargeability of the debt potentially

      owed to the McWilliamses. The Muirs appealed this denial of their motion to

      stay, and the United States District Court (“the District Court”) reversed the

      Bankruptcy Court’s decision, holding that the Bankruptcy Court had exclusive

      jurisdiction to determine dischargeability of the McWilliamses’ claim. Based

      on this ruling, the claims brought by the McWilliamses in the Allen Superior

      Court were dismissed. The Bankruptcy Court subsequently discharged the debt

      owed by the Muirs to the McWilliamses and deferred a determination of the

      Muirs’ counterclaim for attorney fees to the Allen Superior Court.

[5]   After the resolution of the bankruptcy proceedings, the Muirs filed a motion for

      summary judgment with the Allen Superior Court, claiming they were the

      “prevailing party” in the action filed by the McWilliamses and that the Muirs

      were, therefore, entitled to attorney fees. The McWilliamses filed a cross-

      motion for summary judgment, which was later stricken as being untimely. A

      hearing was held on the Muirs’ summary judgment motion, where two issues

      were argued: whether an action based on the Disclosure Form was “related to”

      the Purchase Agreement; and whether the Muirs were a “prevailing party” in

      the litigation and, therefore, entitled to attorney fees pursuant to Paragraph 21

      Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016   Page 3 of 9
      of the Purchase Agreement. At the conclusion of the hearing, the trial court

      issued an order denying the Muirs’ motion for summary judgment and granting

      summary judgment in favor of the McWilliamses. In making this

      determination, the trial court concluded that an action based on the Disclosure

      Form was related to the Purchase Agreement, and thus, if a party prevailed on

      an action on the Disclosure Form, it would be entitled to attorney fees;

      however, the trial court concluded that the Muirs were not a “prevailing party”

      in the litigation and were not entitled to attorney fees. The Muirs now appeal.

                                     Discussion and Decision
[6]   When reviewing the grant of summary judgment, our standard of review is the

      same as that of the trial court. FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d
1167, 1173 (Ind. Ct. App. 2012) (citing Wilcox Mfg. Grp., Inc. v. Mktg. Servs. of

      Ind., Inc., 832 N.E.2d 559, 562 (Ind. Ct. App. 2005)), trans. denied. We stand in

      the shoes of the trial court and apply a de novo standard of review. Id. (citing

      Cox v. N. Ind. Pub. Serv. Co., 848 N.E.2d 690, 695 (Ind. Ct. App. 2006)). Our

      review of a summary judgment motion is limited to those materials designated

      to the trial court. Ind. Trial Rule 56(H); Robson v. Tex. E. Corp., 833 N.E.2d
461, 466 (Ind. Ct. App. 2005), trans. denied. Summary judgment is appropriate

      only where the designated evidence shows there are no genuine issues of

      material fact and the moving party is entitled to judgment as a matter of law.

      T.R. 56(C). For summary judgment purposes, a fact is “material” if it bears on

      the ultimate resolution of relevant issues. FLM, 973 N.E.2d at 1173. We view

      the pleadings and designated materials in the light most favorable to the non-

      Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016   Page 4 of 9
      moving party. Id. Additionally, all facts and reasonable inferences from those

      facts are construed in favor of the non-moving party. Id. (citing Troxel Equip.

      Co. v. Limberlost Bancshares, 833 N.E.2d 36, 40 (Ind. Ct. App. 2005), trans.

      denied).

[7]   A trial court’s grant of summary judgment is clothed with a presumption of

      validity, and the party who lost in the trial court has the burden of

      demonstrating that the grant of summary judgment was erroneous. FLM, 973
N.E.2d at 1173. Where a trial court enters specific findings and conclusions,

      they offer insight into the rationale for the trial court’s judgment and facilitate

      appellate review, but are not binding upon this court. Id. We will affirm upon

      any theory or basis supported by the designated materials. Id. When a trial

      court grants summary judgment, we carefully scrutinize that determination to

      ensure that a party was not improperly prevented from having his or her day in

      court. Id.

[8]   The Muirs argue that the trial court erred in denying their motion for summary

      judgment and granting summary judgment in favor of the McWilliamses.

      Specifically, the Muirs contend that the trial court erred when it determined

      that they were not a “prevailing party” and were, therefore, not entitled to

      attorney fees under Paragraph 21 of the Purchase Agreement. The Muirs assert

      that they were a “prevailing party” because they successfully defended against

      all claims brought by the McWilliamses, including a dismissal with prejudice of

      the McWilliamses’ complaint by the trial court. The Muirs claim that this

      dismissal ensured that the McWilliamses can no longer pursue a claim against

      Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016   Page 5 of 9
       the Muirs, which made the Muirs a “prevailing party.” Because the trial court’s

       grant of their motion to dismiss disposed of the case in its entirety, the Muirs

       maintain that they were the “prevailing party” in the litigation related to the

       Purchase Agreement, and the trial court acted in error when it denied their

       motion for summary judgment.

[9]    Here, the McWilliamses filed a complaint against the Muirs alleging fraud

       regarding statements on the Disclosure Form. Before any evidence was heard

       in the trial court, the District Court determined that the Bankruptcy Court had

       exclusive jurisdiction to determine dischargeability of the McWilliamses’ claim.

       Based on this ruling, the McWilliamses’ claims brought in the trial court were

       subsequently dismissed. Therefore, the merits of the McWilliamses’ claims

       against the Muirs were never heard by the trial court, and judgment was never

       entered.

[10]   Paragraph 21 of the Purchase Agreement provides: “ATTORNEY’S FEES:

       Any party to this Agreement who is the prevailing party in any legal or

       equitable proceeding against any other party brought under or with relation to

       the Agreement or transaction shall be additionally entitled to recover court

       costs and reasonable attorney’s fees from the non-prevailing party.” Appellant’s

       App. at 57. Therefore, in order to recover attorney fees from the McWilliamses,

       the Muirs must have been a “prevailing party” in the litigation with the

       McWilliamses. The term “prevailing party” was not defined in the Purchase

       Agreement.

       Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016   Page 6 of 9
[11]   In Reuille v. Brandenberger, 888 N.E.2d 770 (Ind. 2008), the parties entered into a

       contract for the construction of a new home, which provided that: “In any

       action at law or equity, including enforcement of an award from Dispute

       Resolution, or in any Dispute Resolution involving a claim of $5,000 or more,

       the prevailing party shall be entitled to reasonable costs and expenses, including

       attorney fees”; however, the contract did not define “prevailing party.” Id. at

       771. Reuille brought a cause of action against Brandenberger, which was

       subsequently settled after mediation, and Reuille requested attorney fees as a

       result of the settlement. Id. Reuille argued that he was entitled to attorney fees

       because in the mediated settlement, he received all of the relief he demanded in

       his complaint; Brandenberger contended that Reuille was not a “prevailing

       party” under the contract because he did not receive a judgment. Id. Because

       the term “prevailing party,” was not defined in the contract, our Supreme Court

       turned to the ordinary meaning of the term at the time the contract was

       executed. Id. The term “prevailing party was defined in Black’s Law

       Dictionary as: “The party to a suit who successfully prosecutes the action or

       successfully defends against it, prevailing on the main issue, even though not

       necessarily to the extent of his original contention. The one in whose favor the

       decision or verdict is rendered and judgment is entered.” Id. Our Supreme

       Court concluded that “[t]his definition appears to contemplate a trial on the

       merits and entry of a favorable judgment in order to obtain prevailing party status.”

       Id. at 771-72 (emphasis added).

       Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016   Page 7 of 9
[12]   As our Supreme Court held in Reuille, when a contract does not contain a

       definition for the term “prevailing party,” we must turn to the ordinary

       meaning of such term “at the time the contract was executed.” Id. at 771 (emphasis

       added). Here, the Purchase Agreement did not contain a definition for

       “prevailing party.” Therefore, we must define the term using the ordinary

       meaning at the time the Purchase Agreement was signed, which was August

       2011. At the time the Purchase Agreement was signed, Black’s Law Dictionary

       defined “prevailing party” as: “A party in whose favor a judgment is rendered,

       regardless of the amount of damages.” Prevailing Party, Black’s Law Dictionary

       (9th ed. 2009).

[13]   The Muirs contend that they meet the definition of a “prevailing party” both

       because they successfully defended against the claims by the McWilliamses and

       because the trial court entered judgment in their favor when it dismissed the

       McWilliamses’ claims with prejudice. We disagree. During the trial court

       proceedings, the McWilliamses’ claims were never decided on the merits.

       Rather, after the McWilliamses filed their complaint, due to the fact that the

       Muirs had filed bankruptcy, the McWilliamses’ claims were eventually

       discharged in the Bankruptcy Court and dismissed by the trial court. Thus, the

       trial court never heard the merits of the claims filed by the McWilliamses, and

       no judgment was entered in favor of the Muirs on the merits of the original

       action filed by the McWilliamses. Instead, the claims by the McWilliamses

       were discharged and dismissed due to the Muirs’ bankruptcy filing. We,

       therefore, conclude that the Muirs were not a “prevailing party” in the litigation

       Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016   Page 8 of 9
       at the trial court because no judgment was rendered in their favor, and they

       were not entitled to attorney fees pursuant to the Purchase Agreement. The

       trial court did not err in denying the Muirs’ motion for summary judgment and

       in granting summary judgment in favor of the McWilliamses. 1

[14]   Affirmed.

       May, J., and Crone, J., concur.

       1
         The McWilliamses did not file their claims before the Bankruptcy Court closed the Muirs’ bankruptcy and
       discharged all of their debts known at that time. The McWilliamses were added as creditors to the
       previously-closed bankruptcy after they had filed their claim in the Allen Superior Court. A different result
       from the one reached in the present case may have occurred if the McWilliamses’ claims had been included
       in the bankruptcy proceedings prior to closing of the proceedings because the Bankruptcy Court would have
       been required to determine the merits of the McWilliamses’ fraud claims in order to place the debt in the
       proper priority order for discharge under the bankruptcy.

       Court of Appeals of Indiana | Memorandum Decision 02A04-1605-PL-1247 | November 17, 2016           Page 9 of 9