Court Opinion

ID: 4309836
Source: CourtListenerOpinion
Date Created: 2018-09-05 15:07:59.113092+00
Date Added: 2024-06-11T14:43:05.200108
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),                                    FILED
this Memorandum Decision shall not be
regarded as precedent or cited before any                            Sep 05 2018, 9:24 am

court except for the purpose of establishing                              CLERK
                                                                      Indiana Supreme Court
the defense of res judicata, collateral                                  Court of Appeals
                                                                           and Tax Court
estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT                                  ATTORNEYS FOR APPELLEE
Wayne C. Turner                                          Dawn R. Rosemond
Kenneth J. Munson                                        Lisa D. Starks
Hoover Hull Turner LLP                                   Barnes & Thornburg LLP
Indianapolis, Indiana                                    Fort Wayne, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

David Richman and Lynette                                September 5, 2018
Gridley, as Trustee of the                               Court of Appeals Case No.
Hartunian Family Trust (u/d/t                            18A-PL-727
dated November 8, 1989),                                 Appeal from the Dearborn
Appellants-Third Party Defendants,                       Superior Court
                                                         The Honorable Jonathan N.
        v.                                               Cleary, Judge
                                                         Trial Court Cause No.
JPMCC 2006-CIBC14 Eads                                   15D01-0904-PL-12
Parkway, LLC,
Appellee-Third Party Plaintiff

Baker, Judge.

Court of Appeals of Indiana | Memorandum Decision 18A-PL-727 | September 5, 2018              Page 1 of 7
[1]   David Richman and Lynette Gridley, as Trustee of the Hartunian Family Trust

      (collectively, the Guarantors), appeal the trial court’s order granting the request

      for attorney fees made by JPMCC 2006-CIBC14 Eads Parkway, LLC

      (JPMCC). The Guarantors raise multiple arguments, one of which we find

      dispositive: that the trial court erred by awarding all of JPMCC’s requested

      attorney fees, including those fees that related to claims that JPMCC lost.

      Finding the award erroneous, we reverse and remand with instructions.

                                                         Facts
[2]   The lengthy underlying history of litigation in this case began in April 2009,

      when DBL Axel, LLC (DBL), filed a complaint for a declaratory judgment

      against JPMCC and the Guarantors, among others. DBL had received a loan

      that was secured by a mortgage on real property in Dearborn County. The

      Guarantors had guaranteed the mortgage,1 which was eventually assigned to

      JPMCC. DBL defaulted on the loan. DBL and the City of Lawrenceburg

      engaged in litigation related to the property, pursuant to which the City

      ultimately obtained portions of the mortgaged property and easements in

      exchange for an award paid to DBL and JPMCC. After that, DBL filed the

      declaratory action to determine how the settlement proceeds would be applied

      to its mortgage.

      1
       The guaranty included a fee-shifting provision allowing JPMCC to recover certain losses, including
      attorney fees. Appellants’ App. Vol. III p. 4. It is undisputed that the provision applies to this case.

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-727 | September 5, 2018                     Page 2 of 7
[3]   In addition to filing an answer to DBL’s complaint, JPMCC filed a

      counterclaim and third-party complaint asserting five counts against DBL and

      one count against the Guarantors.2 JPMCC later amended its counterclaim and

      third-party complaint, asserting ten counts against DBL and the Guarantors.3

      All parties filed summary judgment motions and, on June 3, 2011, the trial

      court entered summary judgment in favor of JPMCC (as to liability only) and

      against DBL on JPMCC’s claims for breach of contract, replevin, and

      foreclosure. It ruled against JPMCC and in favor of DBL on the remaining

      counts and against JPMCC and in favor of the Guarantors as to the sole claim

      asserted against them. The trial court subsequently awarded JPMCC damages

      against DBL of approximately $13.2 million and attorney fees in the amount of

      approximately $488,000.

[4]   JPMCC appealed the summary judgment order. This Court ruled as follows:

          • We reversed the trial court’s order in favor of DBL on its declaratory
            judgment claim, holding that summary judgment should have been
            granted in JPMCC’s favor on that count.
          • We affirmed summary judgment for DBL and against JPMCC on each
            of JPMCC’s five tort claims.

      2
       The first appeal in this litigation occurred when DBL appealed the trial court’s order directing it to
      immediately turn over its funds. This Court eventually reversed on rehearing. DBL Axel, LLC v. LaSalle Bank
      Nat’l Ass’n, 946 N.E.2d 1173 (Ind. Ct. App. 2011).
      3
        The claims were as follows: (1) breach of contract against DBL; (2) theft and conversion against DBL;
      (3) constructive fraud against DBL; (4) actual fraud against DBL; (5) fraudulent conveyance against DBL
      and other parties not relevant to this appeal; (6) criminal mischief against DBL; (7) breach of guaranty
      against the Guarantors; (8) replevin against DBL; (9) foreclosure against DBL; and (10) appointment of a
      receiver against DBL. Appellants’ App. Vol. II p. 91-108.

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-727 | September 5, 2018                 Page 3 of 7
          • We reversed summary judgment for the Guarantors only as to the breach
            of the guaranty agreement with respect to two installments of certain
            payments and affirmed summary judgment for the Guarantors as to their
            liability on the balance of the debt owed by DBL to JPMCC.

      JPMCC 2006-CIBC14 Eads Parkway, LLC v. DBL Axel, LLC, 977 N.E.2d 354 (Ind.

      Ct. App. 2012), trans. denied. In relevant part, this Court concluded that

      JPMCC’s tort claims “are not viable against any party,” id. at 367 n.11, and

      that the Guarantors “are not liable under the guaranty for the balance of the

      debt,” id. at 368.

[5]   On August 23, 2017, nearly five years after this Court’s decision, the trial court

      directed JPMCC to file a motion for fees and costs and for Guarantors to

      respond. JPMCC filed its motion on October 4, 2017, seeking a total amount

      of $431,651.50 in attorney fees from the Guarantors. Guarantors objected to all

      but $57,769 of the requested attorney fees, arguing that the remainder related to

      claims upon which JPMCC did not prevail. Following briefing and a hearing,

      on March 5, 2018, the trial court entered an order summarily awarding, in

      relevant part, attorney fees to JPMCC in the amount of $430,994.68.4 The

      Guarantors now appeal.

      4
       The reason for the approximately $1,000 discrepancy between the amount requested by JPMCC and the
      amount ordered by the trial court is unclear.

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-727 | September 5, 2018           Page 4 of 7
                                   Discussion and Decision
[6]   The Guarantors argue that the trial court erred by ordering them to pay nearly

      all attorney fees requested by JPMCC. We will reverse a trial court’s attorney

      fee award only if the decision clearly contravenes the logic and effect of the

      facts and circumstances or if the trial court has misinterpreted the law. E.g.,

      Kitchell v. Franklin, 26 N.E.3d 1050, 1056 (Ind. Ct. App. 2015).

[7]   As a general rule, Indiana follows the American Rule, which requires each

      party to a lawsuit to pay its own attorney fees. E.g., Gerstbauer v. Styers, 898

      N.E.2d 369, 379 (Ind. Ct. App. 2008). Parties may, however, shift the

      obligation by agreement. Id. It is well established that such fee-shifting

      provisions will only be enforced for claims on which the fee-seeking party

      prevailed. Willie’s Constr. Co. v. Baker, 596 N.E.2d 958, 963 (Ind. Ct. App.

      1992). The rationale for this policy is as follows:

              “While a contractual provision allowing recovery of attorney’s
              fees by a party is not of itself violative of public policy, a
              construction of such provision allowing a recovery in
              unsuccessful actions would create an unnecessary likelihood of
              frivolous or oppressive lawsuits. The purpose of allowing an
              award of attorney’s fees in a civil action is to more fully
              compensate a party who has successfully enforced his legal rights
              in court rather than to provide that person with free access to the
              courts at the expense of his opponent.”

      Id. (quoting Rauch v. Circle Theatre, 176 Ind. App. 130, 141, 374 N.E.2d 546, 554

      (Ind. Ct. App. 1978)); see also Gerstbauer, 898 N.E.2d at 379 (holding that the

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-727 | September 5, 2018   Page 5 of 7
      purpose of allowing attorney fee awards is to more fully compensate the party

      who has successfully enforced his legal rights in court).

[8]   As noted above in the Facts section, there is a lengthy history of litigation

      between these parties and others. JPMCC alleged ten counterclaims and third-

      party claims, and ultimately prevailed (at least in part) on only three of them.

      JPMCC failed on its seven other claims, including the most vigorously

      contested ones. But JPMCC’s fee request, which was granted nearly in full by

      the trial court, encompasses all of the litigation—including the claims it lost.

[9]   As attorney fee-shifting provisions are applied only to claims on which the fee-

      seeking party prevailed, the trial court erred by awarding nearly all the attorney

      fees requested by JPMCC.5 We reverse and remand with instructions to revise

      the fee award such that it includes only the attorney fees clearly and specifically

      related to the claims on which JPMCC prevailed. 6

      5
       JPMCC spends much of its brief focusing on the trial court’s detailed and methodical approach to
      calculating attorney fees, as well as the wealth of evidence before it regarding those fees. However broad the
      evidence and however detailed and methodical the process may have been, it is nonetheless true that the trial
      court made an error of law by awarding fees related to claims that JPMCC lost.
      Moreover, JPMCC maintains that the Guarantors are attempting to get a second bite of the apple by making
      many of the same arguments they made to the trial court—but that is, quite simply, the point of a direct
      appeal. We are evaluating the arguments made to the trial court, as well as its rulings thereon. We expect
      that both parties to an appeal will “rehash” the arguments made to the trial court. Appellee’s Br. p. 15.
      6
        Many of JPMCC’s time entries are quite general; for example, some state that an attorney “worked on
      summary judgment” or “worked on appellate brief” or “prepared for depositions[.]” Appellants’ App. Vol.
      III p. 17-141. These general descriptions do not suffice to establish that the fees for that time clearly and
      specifically relate to the claims on which JPMCC prevailed. On remand, if JPMCC hopes to recoup some of
      its fees for these general entries, it will have to find a way to establish which entries are related to its winning
      claims and which are not.

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-727 | September 5, 2018                        Page 6 of 7
[10]   The judgment of the trial court is reversed and remanded with instructions.

       May, J., and Robb, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-727 | September 5, 2018   Page 7 of 7