Court Opinion

ID: 4209012
Source: CourtListenerOpinion
Date Created: 2017-10-04 15:08:43.243679+00
Date Added: 2024-06-11T14:40:51.714717
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
                                                                       Oct 04 2017, 8:03 am
court except for the purpose of establishing
the defense of res judicata, collateral                                     CLERK
                                                                        Indiana Supreme Court
estoppel, or the law of the case.                                          Court of Appeals
                                                                             and Tax Court

ATTORNEY FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
Shawn P. Ryan                                            Robert Wyatt Mick, Jr.
South Bend, Indiana                                      Michael A. Derucki
                                                         Bingham & Loughlin, P.C.
                                                         Mishawaka, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Reodine S. Harding Revocable                             October 4, 2017
Trust, by Ryan Harding, Trustee,                         Court of Appeals Case No.
et al.,                                                  71A03-1702-PL-281
Appellant-Defendant,                                     Appeal from the
                                                         St. Joseph Superior Court
        v.                                               The Honorable
                                                         Jenny Pitts Manier, Judge
Mary Lou Wolfe, as Personal                              Trial Court Cause No.
Representative of the Estate of                          71D05-1303-PL-51
Reodine S. Harding, Deceased,
Appellee-Plaintiff.

Kirsch, Judge.

Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017           Page 1 of 19
[1]   Reodine S. Harding Revocable Trust, by Ryan Harding, Trustee, et al. (“the

      Trust”) appeals the trial court’s order in favor of Mary Lou Wolfe, as Personal

      Representative of the Estate of Reodine S. Harding (“the Estate”), declaring the

      Trust invalid because of undue influence and requiring the assets held in the

      Trust to be treated as probate assets. The Trust raises several issues for our

      review, of which we find the following to be dispositive:

                       I.      Whether the trial court erred in finding that the
                               Trust was invalid as a product of undue influence
                               and that the assets held in the Trust should be
                               treated as probate assets.

      The Estate also raises several issues on cross-appeal, which we restate as:

                       II.     Whether the trial court erred in not concluding that
                               the Trust was invalid as a product of constructive
                               fraud;

                       III.    Whether the trial court abused its discretion when it
                               did not award attorney’s fees to the Estate against
                               Ryan Harding directly as a litigant pursuant to
                               Indiana Code section 34-52-1-1(b); and

                       IV.     Whether the Estate is entitled to recover appellate
                               attorney’s fees.

[2]   We affirm.

      Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 2 of 19
                                  Facts and Procedural History
[3]   Reodine S. Harding (“Reodine”) died March 29, 2011. Her sister-in-law, Mary

      Lou Wolfe (“Mary Lou”), was appointed as personal representative of the

      Estate of Reodine S. Harding. Prior to her death, Reodine was married to

      Mary Lou’s brother, William Orville Harding (“William”). Reodine graduated

      from high school, and she and William married in 1957. Mary Lou knew

      Reodine even prior to Reodine’s marriage to William. Mary Lou and her

      husband and Reodine and William socialized as married couples with one

      another often.

[4]   William owned a business, Michiana Auto Painting. Reodine worked in the

      shop when the business first started, getting cars ready to be painted. She later

      left the shop and performed tasks in the office of the business. William died

      November 4, 1995. Prior to his death, also in 1995, Reodine executed a power

      of attorney appointing Mary Lou as her attorney in fact. This power of

      attorney was drawn up at William’s direction because he was concerned that

      Reodine would not be able to sufficiently attend to her financial affairs and the

      financial affairs of the business if he were to die.

[5]   As Reodine’s attorney in fact, Mary Lou received requests for assistance from

      Reodine a couple of times a week. Some of these tasks included helping

      Reodine to decide what to do with her certificates of deposit, arranging for sales

      of stock, assisting in making a claim to recover unclaimed property from the

      State, and managing William’s business until it was sold about a year after his

      death. When they would dine out at a restaurant, Reodine would always have
      Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 3 of 19
      Mary Lou pay Reodine’s bill with Reodine’s credit card because Reodine found

      the process confusing. Prior to 2006, Mary Lou would go to Reodine’s home to

      write checks to cover Reodine’s expenses with Reodine sometimes signing the

      checks and Mary Lou doing so at other times. Sometime in 2006, Reodine

      suffered a fall and required surgery and rehabilitation therapy. After this

      accident, Mary Lou decided to keep Reodine’s checkbook with her to handle

      Reodine’s cash assets.

[6]   Reodine had a second surgery in 2008, and when she was released from the

      hospital, she moved into the Sterling House assisted living facility to undergo

      rehabilitation therapy. Reodine never returned to her home and remained a

      resident at Sterling House, moving in because she was not able to live alone and

      needed assistance with the activities of daily living. Mary Lou and her husband

      met with the staff at Sterling House to finalize the arrangements for Reodine’s

      admission to the facility for residency. Mary Lou and her husband would visit

      Reodine at Sterling House, especially early in her residency there. However,

      walking began to become difficult for Mary Lou, and she was unable to go to

      visit Reodine as often. During the time that Mary Lou’s visits became less

      frequent, Rhonda Williams (“Rhonda”), Reodine’s step-granddaughter, was

      visiting Reodine.

[7]   While Mary Lou was Reodine’s attorney in fact, Reodine gave Rhonda

      $1,000.00 on two separate occasions to finance vacations. In 1996, Reodine

      also made gifts to her stepsons, Barry and Michael Harding, $10,000.00 per

      recipient. Other than these gifts, however, the only gifts Reodine discussed

      Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 4 of 19
      with Mary Lou were Christmas gifts, totaling less than $1,000.00 annually, for

      nieces and nephews. There is no evidence that, during the time Mary Lou

      served as Reodine’s attorney in fact, Reodine was in the habit of making large

      gifts to family or anyone else.

[8]   Mary Lou last visited Reodine on March 17, 2010. Mary Lou had not seen

      Reodine in a month due to Mary Lou being ill. The March 17 visit was not out

      of the ordinary, and the two parted amicably. Within a few days, Mary Lou

      received a message on her answering machine from Mary Ann Boulac

      (“Boulac”), who stated she was Reodine’s attorney. A few days after she left

      the telephone message, Boulac wrote a letter to Mary Lou and advised her that

      Mary Lou’s status as attorney in fact had been terminated and that Rhonda had

      been appointed as Reodine’s attorney in fact. Mary Lou had had no prior

      discussions with either Reodine or Rhonda about terminating the power of

      attorney. The power of attorney pursuant to which Mary Lou was appointed

      Reodine’s attorney in fact was terminated on March 19, 2010. Mary Lou never

      again had any contact with Reodine.

[9]   On June 25, 2010, Reodine executed the Trust, which was prepared by attorney

      Boulac. Polly Anna Pearson (“Pearson”), who was a Sterling House

      administrator, witnessed the execution of the Trust. Pearson did not read the

      Trust. The Trust was executed in the sunroom at Sterling House with Boulac

      and Reodine present and Pearson walking in and out of the room while Boulac

      spoke to Reodine. Pearson testified that she believed that Reodine understood

      what she was doing in executing the Trust. Tr. Vol. II at 104. Rhonda signed

      Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 5 of 19
       the Trust as a trustee, with both Pearson and Boulac signing as witnesses.

       Appellant’s App. Vol. II at 42. The Trust named Rhonda and Reodine as co-

       trustees during the life of Reodine and both Rhonda and Ryan Harding

       (“Ryan”) as co-trustees upon the death of Reodine. Id. at 35. The Trust made

       a testamentary distribution that differed from that of the previously-executed

       will, including a testamentary distribution to Rhonda among other persons. Id.

       at 36. Rhonda terminated the services of an accountant that Reodine and

       William had used for over thirty years after the preparation of Reodine’s 2009

       tax return.

[10]   Evidence before the trial court showed that Reodine had at least $415,262.86 in

       cash assets and at least $81,000.00 in real estate assets on March 19, 2010, the

       day that Rhonda assumed the role of attorney in fact for Reodine. Appellee’s

       App. Vol. VI at 38. Reodine had a limited number of creditors that, during the

       relevant time-period, amounted to permissible payouts of only $73,583.75.

       Appellee’s App. Vol. VII at 12-13. After becoming Reodine’s attorney in fact on

       March 19, 2010, Rhonda transferred to herself and other who were not

       creditors of Reodine $356,231.78 in assets that had belonged to Reodine and

       had been previously titled in Reodine’s name alone. Rhonda made the transfers

       as cash payouts in over 300 separate transactions, which she labeled as “gifts”

       to herself. Appellee’s App. Vol. IV at 2-20; Appellee’s App. Vol. V at 28-29.

[11]   Reodine died on March 29, 2011 at the age of 84. On April 5, 2011, Mary Lou

       as personal representative of Reodine’s estate filed the Last Will and Testament

       of Reodine S. Harding with the trial court, and the will was admitted to

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 6 of 19
       probate. Ongoing litigation ensued between the Estate and Rhonda and Ryan

       regarding the will, and as a result of the litigation, the Estate filed the present

       case with the trial court as personal representative to attempt to reclaim assets

       for the estate. On March 8, 2013, the Estate filed a complaint against the Trust,

       seeking to invalidate the Trust and for monetary damages for assets transferred

       from the estate by Rhonda. Several motions for partial summary judgment

       were filed and heard by the trial court. Partial summary judgment orders were

       entered that yielded adjudications on some, but not all, of the issues and as to

       less than all of the parties. Specifically, orders were issued that awarded the

       Estate, against Rhonda, a money judgment of $356,231.78 due to a finding that

       Rhonda committed self-dealing against Reodine. On October 9, 2015, an order

       was issued setting the issue of the validity of the Trust for a contested bench

       trial.

[12]   A bench trial was held on November 22 and 23, 2016. At the trial, the Estate

       offered the trial court records from the prior summary judgment proceedings

       that showed, in part, that Rhonda engaged in self-dealing while acting as

       Reodine’s attorney in fact. Regarding the specific time-period beginning with

       Rhonda being appointed attorney in fact for Reodine on March 19, 2010, and

       leading up to the execution of the Trust on June 25, 2010, Mary Lou testified

       that Rhonda violated her fiduciary duty by transferring to herself or to others

       who were not creditors of Reodine approximately $122,000.00 by means of at

       least 37 transactions over the relevant period of ninety-six days that Rhonda

       had the power of attorney over Reodine. Tr. Vol. II at 38; Pl.’s Ex. 1. Mary Lou

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 7 of 19
       testified that she had reviewed pertinent bank and other records to arrive at this

       information. Id. at 35-38. At the time of the trial, these transfers made by

       Rhonda had previously been adjudicated by the trial court in its prior summary

       judgment order to be unlawful and to be transactions completed by Rhonda

       without the consent and knowledge of Reodine. Appellee’s App. Vol. VIII at 26-

       28. The Estate offered evidence to show that Reodine was a frugal person who

       made only nominal gifts to family in her lifetime.1 Tr. Vol. II at 50, 53, 59-60.

[13]   Pearson testified at trial that, on June 25, 2010, she witnessed the execution of

       the Trust. Id. at 104. Pearson stated that Boulac and Reodine were present at

       that time and that she observed Reodine review the document and sign it, but

       did not actually see Reodine read every page of the document. Id. at 103-04,

       131. Pearson testified that she had met Reodine in the year 2000, at Reodine’s

       husband’s business in connection with an auto repair. Id. at 86. Pearson

       testified that, during this meeting in 2000, Reodine had counseled Pearson that

       she would be better off making a cash payment for the repair services rather

       than submitting a claim to her insurance company. Id. Evidence was presented

       that the husband’s business had closed in 1996 and was not in business in 2000.

       1
        The Estate did present evidence that, upon the 1995 death of Reodine’s spouse, William, Reodine gave a
       one-time $10,000.00 gift to Mary Lou, Mary Lou’s daughter, and to each of Reodine’s two step-sons and
       $2,000.00 in gifts to Rhonda along with yearly Christmas gifts to other family members totaling no more than
       $1,000.00. Tr. Vol. II at 50, 53, 59-60, 61-62. Therefore, from 1995 to 2010 while Mary Lou was Reodine’s
       attorney in fact, Reodine gifted no more than approximately $57,000.00 ($10,000.00 to Mary Lou, plus
       $10,000.00 to Mary Lou’s daughter, plus $20,000.00 to the step-sons plus $2,000.00 to Rhonda plus
       $15,000.00 annual Christmas gifts).

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017          Page 8 of 19
[14]   On January 9, 2017, the trial court issued its findings, conclusions, and order.

       The trial court reaffirmed, as a final judgment, the money judgment entered on

       July 31, 2015 against Rhonda in favor of the Estate and declared the Trust to be

       invalid as a product of undue influence. Appellant’s App. Vol. II at 32-33. The

       trial court further ordered the contested assets held in the Trust were to be

       treated as probate assets in the estate case dealing with Reodine’s will. Id. The

       trial court also limited the Estate’s recovery of her trial court attorney’s fees

       incurred in this case to recovery in the estate case. Id. at 33. The Trust now

       appeals, and the Estate cross appeals.

                                         Discussion and Decision

                                          I.       Validity of the Trust
[15]   The Trust argues that the trial court erred in finding the Trust to be invalid and

       finding that it was a product of undue influence. 2 When a trial court enters

       findings of fact and conclusions of law, we apply a two-tiered standard of

       review: first, we determine whether the evidence supports the findings, and

       second, whether the findings support the judgment. Supervised Estate of Allender

       v. Allender, 833 N.E.2d 529, 533 (Ind. Ct. App. 2005) (citing Freese v. Burns, 771

       2
         The Trust also contends that the trial court erred in denying its motion for involuntary dismissal that was
       filed at the conclusion of the evidence, arguing that the Estate did not establish any actual evidence of undue
       influence. However, because the trial court ruled on the Trust’s motion for involuntary dismissal in its order
       adjudicating the case on the evidence, we do not engage in a separate analysis as to whether there was error
       in denying the Trust’s motion. “When the trial court rules on a motion for dismissal after all the evidence
       has been presented, it is simply entering judgment at the conclusion of trial to the court.” Benefit Trust Life
       Ins. Co. v. Waggoner, 473 N.E.2d 646, 648 (Ind. Ct. App. 1985).

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017              Page 9 of 19
N.E.2d 697, 700-01 (Ind. Ct. App. 2002), trans. denied), trans. denied. In

       deference to the trial court’s proximity to the issues, we disturb the judgment

       only where there is no evidence supporting the findings or the findings fail to

       support the judgment. Id. We do not reweigh the evidence, but consider only

       the evidence favorable to the trial court’s judgment. Id. Challengers must

       establish that the trial court’s findings are clearly erroneous. Id. Findings are

       clearly erroneous when a review of the record leaves us firmly convinced that a

       mistake has been made. We do not defer to conclusions of law, however, and

       evaluate them de novo. Id.

[16]   The Trust contends that the trial court erroneously found that the Trust was

       invalid and was the product of undue influence. The Trust asserts that the

       common-law presumption of undue influence did not apply. It further

       maintains that the Estate failed to make any showing of the “actual exercise of

       undue influence or any implication of undue influence.” Appellant’s Br. at 10.

       The Trust also argues that the trial court’s reliance on the transactions by

       Rhonda that were previously determined to be self-dealing was erroneous

       because the transactions were not relevant to the question of whether the Trust

       was valid. Therefore, the Trust claims that the trial court clearly erred when it

       found undue influence existed.

[17]   Undue influence is defined as the exercise of sufficient control over the person,

       the validity of whose act is brought into question, to destroy his free agency and

       constrain him to do what he would not have done if such control had not been

       exercised. In re Estate of Compton, 919 N.E.2d 1181, 1185-86 (Ind. Ct. App.

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 10 of 19
       2010) (quotations omitted), trans. denied. Certain legal and domestic

       relationships raise a presumption of trust or confidence as to the subordinate

       party on the one hand and a corresponding influence as to the dominant party

       on the other. Id. (citing Hamilton v. Hamilton, 858 N.E.2d 1032, 1036 (Ind. Ct.

       App. 2006), trans. denied). When transactions occur between a dominant and

       subordinate party that benefit the dominant party, the law imposes a

       presumption that the transaction was the result of undue influence exerted by

       the dominant party, constructively fraudulent, and thus void. Id. at 1186. To

       rebut the presumption of undue influence, a dominant party must demonstrate

       to the trial court by clear and unequivocal proof that the transaction in question

       was made at arm’s length and is therefore valid. Id.

[18]   Here, Reodine executed a power of attorney in March 2010 designating

       Rhonda as her attorney in fact. A power of attorney creates a fiduciary

       relationship between a principal and her agent, or attorney in fact. Id.

       However, Indiana Code section 30-5-9-2 provides:

               (a) An attorney in fact who acts with due care for the benefit of
               the principal is not liable or limited only because the attorney in
               fact:

               (1) also benefits from the act;

               (2) has individual or conflicting interests in relation to the
               property, care, or affairs of the principal; or

               (3) acts in a different manner with respect to the principal’s and
               the attorney in fact’s individual interests.
       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 11 of 19
               (b) A gift, bequest, transfer, or transaction is not presumed to be
               valid or invalid if the gift, bequest, transfer, or transaction:

               (1) is:

               (A) made by the principal taking action; and

               (B) not made by an attorney in fact acting for the principal under
               a power of attorney; and

               (2) benefits the principal’s attorney in fact.

       In Compton, this court held that “[a] presumption of undue influence is now

       conditioned upon the attorney in fact’s actual use of the power of attorney to

       effect the questioned transaction for his or her benefit.” 919 N.E.2d at 1187.

       “The benefiting attorney in fact is freed from the presumption of undue

       influence so long as the power of attorney is unused in the questioned

       transaction.” Id.

[19]   In the Compton case, this court found no undue influence existed where the

       power of attorney was not used in the transactions at issue even where the

       attorney in fact benefited from the transaction. Id. at 1188. There, the principal

       personally signed the contracts at issue, and prior to signing them, he had

       inquired into selling his farmland by asking a bank president about real estate

       values and by discussing with a friend whether to sell his farmland and change

       his will. Id. Our court concluded that the common-law presumption of undue

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 12 of 19
       influence did not apply because the principal knew the consequences of his

       actions and took action pursuant to Indiana Code section 30-5-9-2(b). Id.

[20]   We find the present case to be distinguishable from Compton. Here, Rhonda

       benefited from the Trust as a beneficiary, which was a testamentary distribution

       that differed from that of the previously-executed will, where Rhonda was not a

       beneficiary. However, unlike in Compton, Rhonda signed the Trust as Trustee

       of the Trust, and at the time that she signed the document, Rhonda still held the

       position of attorney in fact for Reodine. There was also no testimony that

       Reodine had ever previously mentioned a desire to execute a trust or had ever

       sought advice from an attorney about doing so. Additionally, evidence was

       presented that Rhonda engaged in self-dealing while acting as Reodine’s

       attorney in fact. Specifically, from the time that Rhonda was appointed

       attorney in fact for Reodine on March 19, 2010, until the date the Trust was

       executed on June 25, 2010, evidence showed that Rhonda violated her fiduciary

       duty by transferring to herself or to others who were not creditors

       approximately $122,000.00 of Reodine’s money by means of at least 37

       transactions over the relevant period of ninety-six days. Tr. Vol. II at 38; Pl.’s

       Ex. 1. At the time of the trial, the trial court, in a summary judgment order,

       already had found these transfers to be unlawful and to be transactions

       completed by Rhonda without the consent and knowledge of Reodine.

       Appellee’s App. Vol. VIII at 26-28. Evidence was also presented that historically

       Reodine was a frugal person who made only nominal gifts to family in her

       lifetime and that she was unable or unwilling to handle tasks such as hiring an

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 13 of 19
       attorney. Tr. Vol. II at 50, 53, 59-60. We conclude that, based on the evidence,

       the trial court could conclude that Rhonda used her power of attorney in the

       execution of the Trust, which was for her benefit. Therefore, the presumption

       of undue influence applied.

[21]   To rebut the presumption of undue influence, a dominant party, here, Rhonda,

       must demonstrate to the trial court by clear and unequivocal proof that the

       transaction in question was made at arm’s length and is therefore valid.

       Compton, 919 N.E.2d at 1186. The Trust points to the testimony of Pearson to

       rebut the presumption. At trial, Pearson testified that she witnessed the

       execution of the Trust, which was done in the sunroom of Sterling House,

       while Pearson was walking in and out of the room. Pearson did not read the

       Trust and testified that she believed that Reodine understood what she was

       doing in executing the Trust. Tr. Vol. II at 104. In its order, the trial court

       found that Pearson was not a credible witness. Appellant’s App. Vol. II at 31. On

       appeal, we do not reweigh the evidence, but consider only the evidence

       favorable to the trial court’s judgment. Allender, 833 N.E.2d at 533. The Trust

       has failed to rebut the presumption of undue influence. We, therefore,

       conclude that the trial court did not err in finding that the Trust was invalid and

       that the assets held in the Trust should be treated as probate assets.

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 14 of 19
                                          Cross-Appeal Issues

                                        II.      Constructive Fraud
[22]   On cross-appeal, the Estate contends that the trial court erred in not making an

       express finding that the Trust was invalid as constructive fraud. As we have

       already concluded that the trial court did not err in its determination that the

       Trust was invalid because it was the product of undue influence exerted by

       Rhonda against Reodine, we find that this contention by the Estate is moot.

       An issue becomes moot when it is no longer live and the parties lack a legally

       cognizable interest in the outcome, or when no effective relief can be rendered

       to the parties. Aguayo v. City of Hammond Inspection Dep’t, 53 N.E.3d 551, 555

       (Ind. Ct. App. 2016). We decline to address this constructive fraud issue

       because, here, the trial court made a determination that the Trust was invalid,

       and we have affirmed that determination. We can, therefore, render no

       effective relief on this issue. Id. at 555.

                                       III. Trial Attorney’s Fees
[23]   The Estate argues that the trial court abused its discretion in denying her

       petition for attorney’s fees based on what she characterizes as the Trust’s

       continued litigation of claims that became frivolous, unreasonable, or

       groundless. Indiana Code section 34-52-1-1 reads in pertinent part:

               (b) In any civil action, the court may award attorney’s fees as part
               of the cost to the prevailing party, if the court finds that either
               party:

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 15 of 19
               (1) brought the action or defense on a claim or defense that is
               frivolous, unreasonable, or groundless;

               (2) continued to litigate the action or defense after the party’s
               claim or defense clearly became frivolous, unreasonable, or
               groundless; or

               (3) litigated the action in bad faith.

               (c) The award of fees under subsection (b) does not prevent a
               prevailing party from bringing an action against another party for
               abuse of process arising in any part on the same facts. However,
               the prevailing party may not recover the same attorney’s fees
               twice.

[24]   Our Supreme Court has observed that the legal process “must invite, not

       inhibit, the presentation of new and creative argument” and, as such, statutes

       authorizing the recovery of attorney’s fees “must leave breathing room for

       zealous advocacy and access to the courts to vindicate rights.” Mitchell v.

       Mitchell, 695 N.E.2d 920, 925 (Ind. 1998). Being sensitive to such

       considerations, a trial court must view “with suspicion” a party’s assertions that

       his opponent has raised a frivolous, unreasonable, or groundless claim or

       defense. Id. Broadly stated, the statute authorizing an award of attorney’s fees

       for frivolous lawsuits “strikes a balance between respect for an attorney’s duty

       of zealous advocacy and the important policy of discouraging unnecessary and

       unwarranted litigation.” Id. at 924 (citation and internal quotation marks

       omitted).

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 16 of 19
[25]   A claim or defense is “frivolous” if it is taken primarily for the purpose of

       harassment, if the attorney is unable to make a good faith and rational

       argument on the merits of the action, or 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. Waterfield v. Waterfield, 61 N.E.3d 314,

       335 (Ind. Ct. App. 2016), trans. denied. A claim or defense is unreasonable if,

       based on the totality of the circumstances, including the law and the facts

       known at the time of filing, no reasonable attorney would consider that claim or

       defense was worthy of litigation. Id. at 335-36. A claim or defense is

       “groundless” if no facts exist which support the legal claim presented by the

       losing party. Id. at 336. A trial court is not required to find an improper motive

       to support an award of attorney’s fees; rather, an award may be based solely

       upon the lack of a good faith and rational argument in support of the claim. Id.

       “A claim or defense is not groundless or frivolous merely because the party

       loses on the merits.” Estate of Kappel v. Kappel, 979 N.E.2d 642, 655 (Ind. Ct.

       App. 2012).

[26]   Here, although the trial court eventually determined that the Trust was invalid,

       the Estate first sought several motions for summary judgment against the Trust,

       which were denied. After being presented with arguments by the Estate via

       three summary judgment motions, the trial court found that the Estate failed to

       show the absence of material issue of fact as to whether the Trust was created

       under use of the power of attorney granted to Rhonda. Appellee’s App. Vol. IX at

       14-15. Instead, the trial court required a bench trial, at which both sides were

       Court of Appeals of Indiana | Memorandum Decision 71A03-1702-PL-281 | October 4, 2017   Page 17 of 19
       able to fully present their evidence, thus enabling the trial court to make its final

       determination regarding whether the Trust was valid. Therefore, the Trust lost

       on the merits, but this loss did not render its claims frivolous, unreasonable, or

       groundless. We conclude that the trial court did not abuse its discretion when it

       did not award the Estate attorney’s fees against Ryan directly.

                                   IV. Appellate Attorney’s Fees
[27]   The Estate also asserts that it is entitled to appellate attorney’s fees. Indiana

       Appellate Rule 66(E), provides, in part, “The Court may assess damages if an

       appeal . . . is frivolous or in bad faith. Damages shall be in the Court’s

       discretion and may include attorney’s fees.” Our discretion to award attorney’s

       fees under Indiana Appellate Rule 66(E) is limited, however, to instances when

       an appeal is permeated with meritlessness, bad faith, frivolity, harassment,

       vexatiousness, or purpose of delay. Wressell v. R.L. Turner Corp., 988 N.E.2d
289, 298-99 (Ind. Ct. App. 2013), trans. denied. Additionally, while Indiana

       Appellate Rule 66(E) provides this court with discretionary authority to award

       damages on appeal, we must use extreme restraint when exercising this power

       because of the potential chilling effect upon the exercise of the right to appeal.

       Id. at 299.

[28]   Indiana appellate courts have formally categorized claims for appellate

       attorney’s fees into “substantive” and “procedural” bad faith claims. Thacker v.

       Wentzel, 797 N.E.2d 342, 346 (Ind. Ct. App. 2003). To prevail on a substantive

       bad faith claim, the party must show that the appellant’s contentions and

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       arguments are utterly devoid of all plausibility. Id. Procedural bad faith, on the

       other hand, occurs when a party flagrantly disregards the form and content

       requirements of the rules of appellate procedure, omits and misstates relevant

       facts appearing in the record, and files briefs written in a manner calculated to

       require the maximum expenditure of time both by the opposing party and the

       reviewing court. Id. at 346-47.

[29]   For the same reasons as expressed in denying the Estate’s issue of trial court

       attorney’s fees, we cannot say that the Trust’s claims are utterly devoid of

       plausibility and the product of substantive bad faith. We also do not find that

       the Trust’s briefs flagrantly disregarded the requirements of the appellate rules

       or otherwise constituted procedural bad faith. We, therefore, decline to award

       the Estate appellate attorney’s fees.

[30]   Affirmed.

[31]   Najam, J., and Brown, J., concur.

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