Court Opinion

ID: 4270230
Source: CourtListenerOpinion
Date Created: 2018-04-26 15:07:13.696927+00
Date Added: 2024-06-11T14:05:49.277195
License: Public Domain

FILED
                                                                    Apr 26 2018, 8:56 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court

ATTORNEYS FOR APPELLANT                                    ATTORNEY FOR APPELLEE
Edward P. Grimmer                                          Paul B. Poracky
Daniel A. Gohdes                                           Koransky, Bouwer and Poracky, P.C.
Edward P. Grimmer, P.C.                                    Dyer, Indiana
Crown Point, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

Bruce and Sybil Scheffer,                                  April 26, 2018
Appellants-Plaintiffs,                                     Court of Appeals Case No.
                                                           45A04-1709-PL-2118
        v.                                                 Appeal from the Lake Superior
                                                           Court
Centier Bank,                                              The Honorable Diane Kavadias
Appellee-Defendant.                                        Schneider, Judge
                                                           Trial Court Cause No.
                                                           45D11-1212-PL-106

Brown, Judge.

Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018                    Page 1 of 22
[1]   Bruce and Sybil Scheffer appeal the trial court’s order granting the motion for

      judgment on the evidence of Centier Bank (“Centier”). The Scheffers raise

      several issues which we consolidate and restate as whether the trial court erred

      in granting Centier’s motion for judgment on the evidence and request for

      attorney fees. Centier requests appellate attorney fees and costs. We affirm the

      trial court’s ruling on Centier’s motion for judgment on the evidence and for

      attorney fees and remand for a determination of reasonable appellate attorney

      fees.

                                        Facts and Procedural History

[2]   This is the second appeal in this case. In December 2012, the Scheffers filed a

      complaint against Centier alleging that they had obtained a loan from Centier’s

      predecessor, The First Bank of Whiting, in 1985 for the purchase of residential

      real property located on Wexford Road in Valparaiso, Porter County, Indiana,

      and that the loan had been secured by a mortgage on the real property and by

      an assignment of insurance policies on the Scheffers’ lives. The life insurance

      policy assignments, which were dated in November of 1985 and attached to the

      complaint, provide: “It is understood that this assignment is for the sole purpose

      of using the policy as collateral security for existing or future loans made by the

      assignee to the owner.” Appellants’ Appendix Volume 2 at 35-36. The

      Scheffers alleged “[t]hat mortgage loan was the only loan that Scheffer had

      personally with Centier at that time of November 1985,” “[t]he assignments

      were not given or received as collateral for any loan or debt obligation other

      than that mortgage loan on that residential property,” and they paid Centier

      Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 2 of 22
      “all remaining balances on that mortgage loan on or about December 17,

      2010.” Id. at 31. The Scheffers requested a judgment including an order that

      Centier execute releases of the assignments of the life insurance policies.

[3]   Centier filed an answer denying that the life insurance policy assignments

      related in any way to a mortgage loan on residential real estate. Centier also

      stated that it entered into a mortgage and note on Wexford Road property in

      2002 and that the loan had been paid off in December 2010, and it denied that

      the loan dealt with any type of mortgage or loan arrangement dating back to

      1985. Centier also answered that it had not released the assignments of the life

      insurance policies because the loan obligations for which they served as

      collateral had not been satisfied.

[4]   The Scheffers moved for summary judgment and designated their own affidavit

      which alleged that they had owned life insurance policies since 1985 and had

      assigned the policies as collateral on a promissory note and mortgage on their

      residential property in 1985. The Scheffers did not designate any documentary

      evidence of a 1985 residential mortgage or loan with Centier or its predecessor.

      Centier filed a response and cross-motion for summary judgment and

      designated the affidavit of Brian Miller, a vice-president for Centier, which

      stated that Centier had a business relationship with the Scheffers and Scheffer,

      Inc., dating before 1985; Centier did not have a residential mortgage loan on

      the Wexford Road property at that time; in 1985 the Scheffers as owners of

      Scheffer, Inc., assigned several life insurance policies to Centier as the assignee

      for the benefit of the commercial loan relationship between the parties; and that

      Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 3 of 22
      the first residential mortgage relationship between Centier and the Scheffers

      regarding Wexford Road occurred in 2002. The trial court granted Centier’s

      cross-motion for summary judgment and denied the Scheffers’ motion for

      summary judgment. The Scheffers appealed, and Centier cross-appealed.

[5]   On March 12, 2015, this Court issued a memorandum decision which reversed

      the trial court’s entry of summary judgment. See Scheffer v. Centier Bank, No.

      45A03-1410-PL-367 (Ind. Ct. App. Mar. 12, 2015). We acknowledged that the

      Scheffers designated no documentary evidence of a 1985 personal residential

      loan between the Scheffers and Centier or its predecessor that could have been

      connected with the life insurance policy assignments. We nevertheless noted

      that the Indiana Supreme Court had “recently clarified that even perfunctory,

      self-serving affidavits are enough to create a genuine issue of material fact for

      summary judgment purposes.” No. 45A03-1410-PL-367, slip op. at 4 (citing

      Hughley v. State, 15 N.E.3d 1000, 1004 (Ind. 2014) (stating that “Indiana

      consciously errs on the side of letting marginal cases proceed to trial on the

      merits, rather than risk short-circuiting meritorious claims” and concluding that

      a designated affidavit was “sufficient, though minimally so, to raise a factual

      issue to be resolved at trial, and thus to defeat the State’s summary-judgment

      motion”). We concluded that the Scheffers’ affidavit, although lacking any

      documentary support, “was enough to create a genuine issue as to whether the

      assignments related to a 1985 mortgage on their personal residence rather than

      loans to their business, Scheffer, Inc.,” and that consequently summary

      Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 4 of 22
      judgment was improper. Id. at 5. We remanded to the trial court for further

      proceedings. Id.

[6]   The trial court held a bench trial over several days in July and August of 2017 at

      which it admitted documentary evidence and testimony. The Scheffers

      introduced the life insurance policy assignments which indicated they were

      executed by them in November of 1985. The Scheffers also introduced a

      promissory note dated September 18, 2002, signed by them evidencing a loan

      from Centier in the original principal amount of $225,000 and a satisfaction of

      mortgage dated December 20, 2010, executed by Centier stating that this

      mortgage had been fully paid and satisfied and was released.

[7]   The Scheffers then called their witnesses. Donald Kiszka testified that he

      worked for Centier Bank from 2008 until 2012 as a senior commercial workout

      or risk management officer. He indicated that, sometime around April of 2009,

      he began to work on Scheffer International loan accounts and that there were

      debts of Scheffer, Inc., that were owed to Centier. When asked if there was a

      line of credit, a commercial loan, and another commercial loan secured by a

      mortgage on the real estate of a commercial building, Kiszka replied that he

      believed he remembered that. He stated that he worked to maximize Centier’s

      recovery from Scheffer, Inc., and that the recovery included an inventory and

      disposal of property in which Centier had a security interest. Kiszka testified

      that “key man insurance” is insurance which a “bank might typically take for

      collateral in order [to] recover money if the principal or key man in the business

      was no longer available for some reason, death, whatever.” Transcript Volume

      Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 5 of 22
      2 at 25. When asked if key man insurance is similar to life insurance

      assignments, Kiszka replied affirmatively. He stated that it is typical for banks

      to use life insurance assignments as collateral security to minimize the risk of

      default in the event of death of a key person. Kiszka indicated that the

      assignments in this case, by their language, secured any existing or future loans,

      and that, when a bank receives an assignment of a life insurance policy, the

      bank is the intended recipient of the benefit of the policy.

[8]   Thomas Wilk testified that he joined Centier in 1994 and was a vice president

      and chief lending officer, that he was a commercial account officer for Scheffer,

      Inc., and that in 2009 the loans to Scheffer, Inc., went into distress. He

      indicated that the life insurance assignments do not mention Scheffer, Inc., or

      the words “commercial loans.” Id. at 67. Wilk testified “[w]e regularly take

      assignments of life insurance to support business that – especially when you

      have individuals that are key people in running the company. So in the event

      that something were to happen to them, you would have the benefit of the life

      insurance policy.” Id. at 53-54. When asked, “[i]f the only loans starting in

      1983 through 1985 are commercial loans, no residential loans, can we assume

      that the language from the assignment that says ‘existing loans’ means

      commercial loans,” Wilk responded “[y]es.” Id. at 59. Wilk indicated there

      was no residential mortgage loan from Centier or First Bank of Whiting in

      November of 1985 for the Wexford Road property. He further testified that the

      commercial loans were also secured by business assets, equipment, inventory,

      Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 6 of 22
      accounts receivable, intellectual property, general intangibles, and commercial

      real estate.

[9]   Upon taking the stand, Bruce Scheffer indicated initially that the assignments

      “reference our residence in Valparaiso.” Id. at 77. When asked the name of the

      first bank with which he did business “when [he] started in ‘78, ‘80,” Bruce

      replied “American Trust and Savings of Whiting.” Id. He stated that he stayed

      with American Trust and Savings of Whiting for the first few years and that he

      purchased the Wexford Road property in 1985. When asked if he had

      transitioned his banking relationship from American Trust and Savings of

      Whiting to First Bank of Whiting, he replied that he had a relationship with

      both banks. Bruce stated that he obtained a loan from Centier in 2002 which he

      used to refinance his Wexford Road house and that a satisfaction of mortgage

      instrument dated in 2002 indicated that a previous mortgage dated September

      22, 1995, was satisfied. When asked where he obtained the financing for his

      house in 1985, he replied it was from First Bank of Whiting. He testified that

      he was asked to give the life insurance policies as extra collateral with the

      understanding the policies would be released when the house was paid off and

      that the house was paid off in 2010. The Scheffers also introduced evidence

      that they received notifications that the life insurance policies had been

      surrendered and distributed.1

      1
       The notifications stated in part: “The above policy was assigned to Centier Bank and has been
      surrendered.” Appellants’ Appendix Volume 2 at 148-149.

      Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018                        Page 7 of 22
[10]   Centier’s counsel then cross-examined Bruce who indicated that he and his wife

       were the sole owners and shareholders of Scheffer, Inc. He stated that he did

       not have any documents to support the claim that he entered into a residential

       mortgage with First Bank of Whiting in 1985. Centier’s counsel asked Bruce if

       he had “ever done any banking transactions with Indiana Federal Savings and

       Loan Association out of Valparaiso, Indiana,” and he replied “I may have.” Id.

       at 126-127. When asked “[a]nd as you sit here . . . it’s still your testimony, after

       all this time, that the financing of the house, which price you don’t know, was

       done through First Bank of Whiting; is that right,” Bruce replied “I don’t

       recall.” Id. at 127.

[11]   Centier’s counsel then introduced exhibits containing a warranty deed, a

       mortgage, and a satisfaction of mortgage, and the court admitted the exhibits.

       The warranty deed, dated July 22, 1985, evidences the conveyance of the

       Wexford Road property to the Scheffers, and a file-stamp on the deed indicates

       it was recorded with the Porter County Recorder on July 25, 1985. The

       mortgage was signed by the Scheffers and granted a security interest in the

       Wexford Road property to Indiana Federal Savings and Loan Association as

       the mortgagee to secure repayment of a debt of $175,000, and a file-stamp on

       the mortgage indicates it was recorded with the Porter County Recorder on July

       25, 1985. Finally, the satisfaction of mortgage, dated January 19, 1987, states

       that the debt secured by the mortgage executed by the Scheffers in favor of

       Indiana Federal Savings and Loan Association in July of 1985 was paid and the

       mortgage was released.

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 8 of 22
[12]   Centier’s counsel showed Bruce the warranty deed and mortgage in favor of

       Indiana Federal Savings and Loan Association recorded in July of 1985 and the

       following exchange occurred:

               Q. Now, go back to the first page, if you would, just to make
               sure we’re talking about the right house. The house that’s at
               issue in your verified complaint, what’s the address?
               A. 504 Wexford.
               Q. And this warranty deed, which was issued based upon a
               promissory note and mortgage from Indiana Federal Savings and
               Loan Association, in July of 1985 is what house?
               A. Same.
               Q. The same house. So the information in your verified
               complaint, Mr. Scheffer, that’s all a lie, isn’t it?
               A. No. It’s a mistake.
               Q. Oh, it’s a mistake based on your belief; correct?
               A. Well, looking at this, this is a fact, all right, you didn’t make
               this up. So I was going by my recollection 35 years ago without
               any files. And if it’s a mistake, it’s a mistake.
               Q. Well, sir, you filed a complaint, and you sued Centier Bank,
               and you’ve put them through four and a half, almost five years of
               litigation because you made a mistake?
                                                      *****
               Q. So between the time of the deed being transferred to you,
               which was on July 22, 1985, through January 19th of 1987, you
               had a mortgage on your 504 Wexford property in Valparaiso,
               Indiana, with Indiana Federal Savings and Loan Bank; is that
               true?
               A. Yes.
               Q. Nothing with First Bank of Whiting, was there?
               A. No.

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018      Page 9 of 22
       Id. at 130, 133.

[13]   Bruce acknowledged that the allegation in his complaint that he obtained a loan

       from the First Bank of Whiting in 1985 for the purchase of the residential

       property on Wexford Road was a mistake. He also indicated that the allegation

       that Centier required the Scheffers to assign the life insurance policies as a term

       of that loan was a mistake. When asked “you didn’t have a lending

       relationship for 504 Wexford with the First Bank of Whiting on November 4th,

       1985, did you,” Bruce responded “I’ll give you that.” Id. at 142. When asked if

       he had commercial loans with First Bank of Whiting at that time, he replied

       that he believed he did. He testified: “I made a mistake. It was 35 years ago.

       We’re trying to guess. I don’t know what that – from that form, I can’t tell, and

       you can’t tell it, either . . . . You cannot tell me of looking at that what that

       refers to.” Id. at 157. Centier’s counsel asked “[s]o you guessed in this case is

       what you’re saying to the Court,” and Bruce responded:

               It was my opinion. It was not a guess. It was an educated
               opinion. We looked back 35 years ago. We don’t have any files.
               We’re saying what cost about that much in that time frame, and
               what was the possibility, and that’s what we thought it was.

               All right. You’ve got a horse on me. All right. It is not related
               to the house.

       Id. at 158. When asked “I just want to make sure I understand. You’re not

       claiming in 2002 there actually is a residential mortgage with Centier Bank that

       there were life insurance assignments made at that time, are you,” Bruce

       answered “I’m not – no longer claiming that.” Id. at 158-159.

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 10 of 22
[14]   Centier filed a motion for judgment on the evidence. The motion asserted that

       there is no evidence that the Scheffers had a residential mortgage loan on their

       Wexford Road property with First Bank of Whiting at any time during 1985,

       that the Scheffers had a residential mortgage loan contract with Indiana Federal

       Savings and Loan Association on the house which transaction was

       consummated in July 1985, and that the life insurance assignments were given

       for commercial loans because those were the only type of loans the Scheffers

       had with First Bank of Whiting in 1985.

[15]   On August 17, 2017, the trial court issued an order granting Centier’s motion

       for judgment on the evidence, providing in part:

               9. Since the life insurance assignments did not serve as collateral
               for any mortgage with First Bank of Whiting in 1985, they were
               given to cover existing and future commercial loan obligations
               for their company, the only type of loan [the Scheffers] had with
               First Bank of Whiting in 1985.
               10. In another lawsuit related to the commercial loans between
               the parties, Centier took cash surrender of the insurance policies
               prior to dismissal of its claims for the outstanding balance of
               those loans.
               11. The Court was somewhat astonished when Mr. Scheffer
               acknowledged that the mortgage on the Wexler property was
               with Indiana Federal Savings and he had made a mistake.
               12. His mistake was the very foundation of [the Scheffers’]
               claim. The Court finds it difficult to believe that such a
               successful businessman would not have accurate knowledge of
               his personal financial dealings.

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 11 of 22
               13. Upon Mr. Scheffer’s testimony, the Court would have
               expected [the Scheffers] to come to Court today and dismiss their
               claim.
               14. [The Scheffers] have failed to sustain their burden of proof in
               their case in chief and judgment on the evidence is appropriate.
               15. This matter has pended since 2012 and has involved much
               court time and a great amount of attorney time and expense to
               both [the Scheffers] and [Centier].
               16. There was never a good faith basis to have proceeded with
               this lawsuit as no 1985 residential mortgage contract with First
               Bank of Whiting ever existed.
               17. The Court finds that [the Scheffers] brought this action in
               bad faith, and continued to maintain the action when it became
               clearly apparent that it was frivolous, unreasonable and
               groundless.

       Appellants’ Appendix at 24-26. Centier submitted an attorney fee request

       together with an affidavit of attorney fees and costs. The court issued an order

       awarding attorney fees to Centier in the amount of $68,731.98.

                                                     Discussion

[16]   The Scheffers claim that the trial court erred in granting Centier Bank’s motion

       for judgment on the evidence and ordering them to pay attorney fees. Ind. Trial

       Rule 50 provides that a motion for judgment on the evidence shall be granted

       “[w]here all or some of the issues in a case . . . are not supported by sufficient

       evidence or a verdict thereon is clearly erroneous as contrary to the evidence

       because the evidence is insufficient to support it . . . .” Ind. Trial Rule 50(A).

       The standard of review for a challenge to a ruling on a motion for judgment on

       the evidence is the same as the standard governing the trial court in making its

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 12 of 22
       decision. Cavens v. Zaberdac, 849 N.E.2d 526, 529 (Ind. 2006). Judgment on the

       evidence is appropriate where all or some of the issues are not supported by

       sufficient evidence. Id. “Where the issue involves a conclusion of law based on

       undisputed facts, the reviewing court is to determine the matter as a question of

       law in conjunction with the motion for judgment on the evidence, and to this

       extent, the standard of review is de novo.” Id.

[17]   The Scheffers assert that the cause of action before the trial court was

       conversion of the life insurance policies and that Centier did not produce any

       bank records showing that any corporate loan was secured by the life insurance

       policy assignments. They argue that the issue litigated was not whether there

       was a mortgage in 1985 but rather “whether Scheffers’ ownership of the life

       insurance policies was, after December 17, 2010, subject to any security interest

       of Centier” and that “[c]entral to the analysis was . . . whether, under the

       language of the pled and attached [assignments], the assignment was limited to

       loans personal to the policy ‘Owner’, or the language was extensive enough to

       be assigned to secure debts of Scheffer, Inc.” Appellants’ Brief at 20. They

       contend that “[t]he Assignments were never amended to extend from loans to

       the owners to ‘loans to the owners as well as their corporation.’” Id. at 21. They

       also argue that the argument advanced by Centier that the assignments may

       have been “key man” insurance is speculative.

[18]   Centier maintains that, by providing the assignments, the Scheffers agreed to

       become sureties for existing and future commercial loans made to Scheffer,

       Inc., up to the cash surrender value of the policies. It argues that it, as the

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 13 of 22
       assignee, had the right to direct the insurance company to provide the cash

       surrender value of the life insurance policies on default of payment.

[19]   To the extent we must interpret the life insurance policy assignments and

       instruments admitted into evidence, we observe that, if the terms are clear and

       unambiguous, we must give those terms their clear and ordinary meaning.

       Jernas v. Gumz, 53 N.E.3d 434, 444 (Ind. Ct. App. 2016), trans. denied. We will

       make all attempts to construe the language of a contract so as not to render any

       words, phrases, or terms ineffective or meaningless. Id. A contract will be

       found to be ambiguous only if reasonable persons would differ as to the

       meaning of its terms. Id.; see McDivitt v. McDivitt, 42 N.E.3d 115, 117 (Ind. Ct.

       App. 2015) (observing that a contract may be ambiguous if its terms are

       susceptible to more than one interpretation and reasonably intelligent persons

       would honestly differ as to its meaning), trans. denied. When interpreting a

       contract, our paramount goal is to ascertain and effectuate the intent of the

       parties. Jernas, 53 N.E.3d at 444. This requires the contract to be read as a

       whole, and the language construed so as not to render any words, phrases, or

       terms ineffective or meaningless. Id. When a contract is ambiguous, extrinsic

       evidence may be examined to determine the parties’ reasonable expectations.

       McDivitt, 42 N.E.3d at 117 (citing Bicknell Minerals, Inc. v. Tilly, 570 N.E.2d

       1307, 1310 (Ind. Ct. App. 1991) (“Rules of contract construction and extrinsic

       evidence may be employed in giving effect to the parties’ reasonable

       expectations. If the ambiguity arises because of the language used in the

       contract and not because of extrinsic facts, its construction is purely a question

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 14 of 22
       of law to be determined by the trial court.”) (citing First Fed. Sav. Bank of Ind. v.

       Key Markets, Inc., 559 N.E.2d 600, 604 (Ind. 1990)), reh’g denied, trans. denied).

[20]   It is well settled that an insurance policy is a type of property which may be

       assigned as collateral. Auburn Cordage, Inc. v. Revocable Tr. Agreement of

       Treadwell, 848 N.E.2d 738, 750 (Ind. Ct. App. 2006) (citing In re Estate of Devine,

       628 N.E.2d 1227, 1229 (Ind. Ct. App. 1994) (citing 43 AM. JUR.2d Insurance §

       803 (1982))).2 When an insured assigns an insurance policy, the beneficiary is

       not divested of his or her general interest in the proceeds, but instead a lien is

       created in favor of the assignee to the extent of the debt owed. Id. (citing In re

       Estate of Devine, 628 N.E.2d at 1229 (citing 43 AM. JUR.2d Insurance § 802)

       (1982)).3 Once the debt has been paid, the policy continues in effect as if there

       had been no assignment, and it is the assignee’s duty to account to the

       beneficiary or the debtor’s representative for the excess proceeds. Id. (citations

       omitted). An assignment of an insurance policy is to be construed in

       accordance with the intention of the assignor where ascertainable. 44 AM.

       JUR.2d Insurance § 796 (2018). The course of conduct by the parties to the

       assignment may be relevant. Id. An assignment of a life insurance policy to a

       creditor as collateral security for a debt is valid to the extent of the debt. 44 AM.

       JUR.2d Insurance § 803 (2018). Further, after an insured has made an absolute

       2
        The Court in Auburn noted these sections may now be found at 44 AM. JUR.2d Insurance §§ 784-791 (2003).
       See Auburn, 848 N.E.2d at 750 n.15.
       3
        The Court in Auburn noted this section may now be found at 44 AM. JUR.2d Insurance §§ 807, 809 (2003).
       See Auburn, 848 N.E.2d at 750 n.16.

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018                    Page 15 of 22
       assignment of a life insurance policy, the assignee is entitled to recover the cash

       surrender value of the policy by surrendering the policy to the insurer during the

       insured’s lifetime. 44 AM. JUR.2d Insurance § 809 (2018). The assignee of a life

       insurance policy as collateral security has the right to surrender the policy and

       receive its cash value. Id.

[21]   Turning to the life insurance policy assignments in this case, we observe that

       the Scheffers do not assert that they did not execute the assignments in 1985 or

       that the assignments were invalid. Rather, they challenge the scope of the debt

       the assignments were intended to secure. Centier elicited testimony from Wilk

       and from Bruce Scheffer that the Scheffers had not received a personal loan in

       connection with the purchase of the Wexford Road property from Centier or its

       predecessor in 1985. Further, Centier produced evidence of a mortgage

       executed by the Scheffers in favor of Indiana Federal Savings and Loan

       Association—not the First Bank of Whiting or Centier—which had been

       recorded on July 25, 1985, the same day the warranty deed conveying the

       Wexford Road property to the Scheffers was recorded, which secured

       repayment of the Scheffers’ personal debt. The Indiana Federal Savings and

       Loan Association loan documents corroborate the testimony of Wilk, as

       ultimately acknowledged by Bruce Scheffer, that the Scheffers’ residential loan

       in 1985 was not advanced by or secured by a residential mortgage in favor of

       the First Bank of Whiting.

[22]   While the life insurance policy assignments do not expressly state that the

       policies secured the repayment of the debts of Scheffer, Inc., or other

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 16 of 22
       commercial loans extended by Centier’s predecessor, the language of the

       assignments is broad and states generally that the policies were intended to

       serve “as collateral security for existing or future loans made by the assignee to

       the owner.” Appellants’ Appendix Volume 2 at 71-74. To the extent the

       language is ambiguous as to whether the collateral was intended to secure the

       repayment of the debts of the Scheffers in their individual capacities only or of

       the Scheffers and the companies which they owned including Scheffer, Inc., we

       observe that the evidence presented at trial established that the Scheffers did not

       have a residential loan with Centier or its predecessor in 1985 when the

       assignments were executed as they alleged in their complaint and in fact did not

       have a residential loan with Centier until seventeen years later in 2002.

[23]   In addition, the evidence established that the Scheffers were the sole

       shareholders of Scheffer, Inc., and that the commercial loans extended by

       Centier and its predecessor were also secured by business assets, equipment,

       inventory, accounts receivable, intellectual property, general intangibles, and

       commercial real estate. The court heard the testimony of Kiszka and Wilk

       regarding the function of life insurance policies on the lives of company owners

       or key persons serving as collateral or additional collateral to secure the

       repayment of commercial loans and the typical or customary practices of

       obtaining assignments of such policies by commercial lenders. The court also

       heard the testimony of Bruce Scheffer that his allegation that Centier required

       the life insurance policy assignments as a term of a residential loan in 1985 was

       a mistake and that he was no longer claiming that in 2002 there was a

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 17 of 22
       residential mortgage with Centier for which he had made life insurance policy

       assignments.

[24]   The language of the assignments together with the course of conduct of the

       parties established that it was the Scheffers’ intention that the policies serve as

       collateral to secure the repayment of the loans advanced to them and their

       companies by Centier’s predecessor which existed at that time and which would

       be subsequently advanced. It is clear that it was not their intent that the policies

       would secure solely the repayment of personal or residential debts which did

       not exist at the time and would not exist for seventeen years. The Scheffers did

       not produce evidence demonstrating that Centier as the assignee was not

       entitled to recover the surrender value of the life insurance policies. The trial

       court did not err in granting Centier Bank’s motion for judgment on the

       evidence.

[25]   In addition, the Scheffers challenge the trial court’s award of attorney fees and

       argue that their claim was not frivolous and that the court’s order does not

       identify when it should have been apparent their claim was frivolous. They also

       argue the affidavit of attorney fees is not sufficiently itemized. In response,

       Centier argues that the Scheffers’ attorney should be jointly responsible to pay

       its attorney fees and expenses as there was never any support for the Scheffers’

       legal theory and the case should never have been filed, and it also requests

       appellate attorney fees.

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[26]   Ind. Code § 34-52-1-1 provides in part that the court in a civil action may award

       attorney fees as part of the cost to the prevailing party if it finds that either party

       brought an action or continued to litigate an action that is frivolous,

       unreasonable, or groundless or litigated the action in bad faith. With respect to

       an attorney fee award under Ind. Code § 34-52-1-1, we first review the trial

       court’s findings of fact under the clearly erroneous standard, and we then

       review de novo its legal conclusions. Knowledge A-Z, Inc. v. Sentry Ins., 857

       N.E.2d 411, 423 (Ind. Ct. App. 2006), reh’g denied, trans. denied. We review the

       trial court’s decision to award attorney fees and the amount of fees under an

       abuse of discretion standard. Id. A claim is frivolous under Ind. Code § 34-52-

       1-1 if it is made primarily to harass or maliciously injure another, if counsel is

       unable to make a good faith and rational argument on the merits of the claim,

       or if counsel is unable to support the action by a good faith and rational

       argument for extension, modification, or reversal of existing law. Id. at 424. A

       claim is unreasonable if, based upon the totality of the circumstances, including

       the law and facts known at the time of filing the claim, no reasonable attorney

       would consider the claim justified or worthy of litigation. Id. A claim is

       groundless if no facts exist which support the legal claim relied upon and

       presented by the losing party. Id. A claim is litigated in bad faith if the party

       presenting the claim is affirmatively operating with furtive design or ill will. Id.

[27]   The trial court found there was never a good faith basis to have proceeded with

       this lawsuit as no 1985 residential mortgage with First Bank of Whiting ever

       existed and that the Scheffers brought the action in bad faith and continued to

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       maintain the action when it became clearly apparent that it was frivolous,

       unreasonable, and groundless. With respect to Bruce Scheffers’s testimony the

       court also found it difficult to believe that such a successful businessman would

       not have accurate knowledge of his personal financial dealings” and that “[t]his

       matter has pended since 2012 and has involved much court time and a great

       amount of attorney time and expense.” Appellant’s Appendix at 26.

[28]   The evidence establishes that the warranty deed conveying the property to the

       Scheffers and the mortgage signed by the Scheffers granting a security interest

       in the Wexford Road property to Indiana Federal Savings and Loan

       Association were both recorded with the Porter County Recorder on July 25,

       1985, and thus the 1985 deed and mortgage have been part of the public record

       since that date. The Scheffers nevertheless filed this lawsuit, designated their

       own affidavit in response to Centier’s summary judgment request stating that

       they had assigned the life insurance policies as collateral on a promissory note

       and mortgage on their residential property in 1985, and did not dismiss their

       action even after Centier produced evidence and Bruce Scheffer acknowledged

       that the life insurance policy assignments were not given in connection with a

       1985 residential loan from Centier’s predecessor. Bruce Scheffer testified in

       some detail regarding his business and various business dealings over the years.

       Based upon the evidence and testimony, we cannot conclude that the trial

       court’s findings are clearly erroneous or that the court abused its discretion in

       ruling that an award of attorney fees in favor of Centier is appropriate.

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[29]   The affidavit of attorney fees produced by Centier’s counsel is sufficiently

       itemized to assist the court in determining a reasonable amount of attorney fees.

       We have noted that the hours worked and the rate charged are a common

       starting point for determining the reasonableness of a fee. Stewart v. TT

       Commercial One, LLC, 911 N.E.2d 51, 59 (Ind. Ct. App. 2009). The affidavit

       states the total number of hours as 270.70, the rate as $250 per hour, and

       includes separate lines for legal research, postage, copies, and mileage. It

       alleges that the fees are reasonable based upon the attorneys’ experience, skill

       required, and fees customarily charged in Lake County. The lawsuit has

       pended since 2012 and the total $68,731.98 fee awarded by the trial court

       appears reasonable.

[30]   As for Centier’s request for appellate attorney fees, Appellate Rule 66(E)

       provides in part that this court “may assess damages if an appeal, petition, or

       motion, or response, is frivolous or in bad faith. Damages shall be in the

       Court’s discretion and may include attorneys’ fees.” We may award appellate

       attorney fees in our discretion where an appeal is permeated with meritlessness,

       bad faith, frivolity, harassment, vexatiousness, or purpose of delay. Thacker v.

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

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

       arguments are utterly devoid of all plausibility. Id. We conclude that Centier

       has shown, based on the evidence as set forth above and in the record, that the

       Scheffers’ appeal with respect to the trial court’s ruling on its motion for

       judgment on the evidence is meritless. We remand for a determination of a

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 21 of 22
       reasonable appellate attorney fee award under these circumstances. We decline

       to require the trial court to order that the Scheffers’ attorney be held jointly

       responsible for an attorney fee award in favor of Centier.

                                                     Conclusion

[31]   For the foregoing reasons, we affirm the trial court’s orders granting Centier’s

       motion for judgment on the evidence and granting its request for attorney fees

       and remand for a determination of reasonable appellate attorney fees consistent

       with this opinion.

[32]   Affirmed and remanded.

       Baker, J., and Riley, J., concur.

       Court of Appeals of Indiana | Opinion 45A04-1709-PL-2118 | April 26, 2018   Page 22 of 22