Court Opinion

ID: 2729883
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:49:58.432834+00
Date Added: 2024-06-11T09:54:57.706501
License: Public Domain

FOR PUBLICATION

APPELLANT PRO SE:                           ATTORNEY FOR APPELLEE:

J. MICHAEL KUMMERER                         JOHN A. STROH
Nashville, Indiana                          Sharpnack, Bigley, Stroh & Washburn, LLP
                                            Columbus, Indiana

                                                                          FILED
                                                                     Jul 26 2012, 9:14 am
                            IN THE
                  COURT OF APPEALS OF INDIANA                                CLERK
                                                                           of the supreme court,
                                                                           court of appeals and
                                                                                  tax court

J. MICHAEL KUMMERER,                        )
                                            )
     Appellant-Defendant,                   )
                                            )
            vs.                             )      No. 03A01-1201-CT-33
                                            )
C. RICHARD MARSHALL,                        )
                                            )
     Appellee-Plaintiff.                    )
                                            )

              APPEAL FROM THE BARTHOLOMEW SUPERIOR COURT
                  The Honorable Bruce A. MacTavish, Special Judge
                          Cause No. 03D02-1010-CT-927

                                   July 26, 2012

                            OPINION - FOR PUBLICATION

VAIDIK, Judge
                                      Case Summary

         J. Michael Kummerer appeals the trial court’s failure to award him prejudgment

interest and its failure to grant his motion to correct errors. He contends that the decision

to deny him prejudgment interest was contrary to law because contract damages could be

determined by simple mathematical calculations. He also contends that the trial court

abused its discretion in denying his motion to correct errors because the trial court did not

make any findings of fact about whether damages were able to be determined by simple

calculations before denying him prejudgment interest. Finding that prejudgment interest

was not appropriate in this case because the trial court had to exercise its judgment in

calculating damages, we affirm the trial court.

                              Facts and Procedural History

         On April 11, 2007, Kummerer, an attorney, was arrested and charged with

possession of cocaine and aiding, inducing, or causing dealing in cocaine. As a result, he

was subject to a six-month disciplinary suspension from the practice of law and was

required to transfer his open cases. Kummerer contracted with C. Richard Marshall

before the effective date of his suspension to transfer to him all of his contingency-fee

cases under the agreement that the parties would share equally in any fee recovered

without a trial. Appellant’s App. p. 25.

         Marshall accepted four of Kummerer’s cases; he settled three of them before trial

and split the fee equally in those cases. The fourth case settled during mediation for

$750,000.00. The parties agreed to a compromised fee with the client of $275,000.00.

Marshall paid himself $125,000.00 of that fee and an additional $12,500.00 two weeks

later.
                                             2
       After settlement, Marshall proposed a different contract fee split for the fourth

case – 10% to Kummerer and 90% to Marshall. Marshall argued that paying Kummerer

50% of the fee would violate the proportionality provision of Rule 1.5 of the Rules of

Professional Conduct that requires that a contingent fee division must be based on the

apportionment of work actually done by each lawyer. Marshall argued that since he had

done almost all of the work on the case, he should receive almost all the fee. Id. at 27.

Marshall threatened suit under this proportionality rule if Kummerer did not renegotiate

the contract. Id. Kummerer continued to demand payment of his equal share of the fee.

       Marshall filed a complaint against Kummerer, alleging that he had been

defrauded; he claimed Kummerer made a statement during negotiations that he had done

“considerable,” “significant,” or “a lot” of work in the assigned case. Id. at 30. Marshall

argued that this was an intentionally made false representation of fact that induced him to

accept the case. Kummerer then made a request for findings of facts and conclusions of

law.   Meanwhile, Marshall moved to have the contested amount of $137,500.00

deposited with the Clerk of Bartholomew County so that it could earn interest. Id. at 19.

Kummerer objected, and the trial court took the matter under advisement, but the funds

were never deposited with the Clerk. Id. at 23-26, 28.

       In making its findings of fact and entering its judgment based on those findings,

the trial court found that there was no fraud present, and even if there were, Marshall’s

delay in acting equitably estopped him from bringing suit. Id. at 15. The trial court

further specifically found that Kummerer’s work on the case “justified the contract,” id.

at 17; it “was as represented in his Affidavit in this case and . . . was both adequate and

appropriate.” Id. at 19. The trial court found that under Rule 1.5 of the Rules of
                                         3
Professional Conduct that the contract between the parties was a forecast allocation of

fees, meaning that it must “reasonably forecast[] the amount and value of effort that each

would expend.” Id. at 16. After reviewing the work that Kummerer had completed

before the contract was signed, the trial court found that the equal fee split was a

reasonable forecast of the work that each attorney would perform on the case. Id.

       Judgment was entered for Kummerer in the amount of $137,500.00, one-half of

the recovered fee for the case, as was indicated in the contract and warranted by Rule 1.5

of the Rules of Professional Conduct. Id. at 23. However, the trial court denied any

prejudgment interest on the recovered fee, as requested by Kummerer. Id. Kummerer

filed a motion to correct errors, alleging that the trial court needed to make special

findings regarding whether the contract damages were determined by simple

mathematical calculations when making its decision to deny prejudgment interest; the

trial court denied the motion.

       Kummerer now appeals.

                                 Discussion and Decision

       Kummerer raises two issues on appeal: (1) whether the trial court’s denial of

prejudgment interest is contrary to law and (2) whether the trial court abused its

discretion in denying his motion to correct errors.

                                 I. Prejudgment Interest

       Kummerer contends that the trial court’s decision to deny him prejudgment

interest is contrary to law. We disagree.

       Since Kummerer did not prevail in receiving prejudgment interest at trial, he is

appealing from a negative judgment. When a party appeals from a negative judgment, it
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must demonstrate that the trial court’s decision is contrary to law; that is, the evidence

points unerringly to a conclusion different from that reached by the trial court. Hopper

Res., Inc. v. Webster, 878 N.E.2d 418, 422 (Ind. Ct. App. 2007) (citing Bennett v.

Broderick, 858 N.E.2d 1044, 1048 (Ind. Ct. App. 2006), trans. denied), reh’g denied,

trans. denied.

       Prejudgment interest is appropriate in a breach of contract action when “the

amount of the claim rests upon a simple calculation and the terms of the contract make

such a claim ascertainable.” Olcott Int’l & Co. v. Micro Data Base Sys., Inc., 793 N.E.2d
1063, 1078 (Ind. Ct. App. 2003), trans. denied. The award of prejudgment interest is

considered proper when the trier of fact does not have to exercise judgment in order to

assess the amount of damages. Town of New Ross v. Feretti, 815 N.E.2d 162, 170 (Ind.

Ct. App. 2004) (citing Noble Roman’s, Inc. v. Ward, 760 N.E.2d 1132, 1140 (Ind. Ct.

App. 2002)). Examples of such cases where prejudgment interest is appropriate include

those for breach of contract when the damages were principal payments made under a

promissory note, Tracy v. Morell, 948 N.E.2d 855, 867 (Ind. Ct. App. 2011), the amount

of a mechanics’ lien for a contractor’s unpaid bills for a remodeling project, Hayes v.

Chapman, 894 N.E.2d 1047, 1054-55 (Ind. Ct. App. 2008), trans. denied, and an amount

stipulated to at a damages hearing, Noble Roman’s, Inc., 760 N.E.2d at 1140. In all of

these cases, the amount of damages was clear and did not require any interpretation or

judgment on the part of the trier of fact.

       However, in this case, attorneys’ fees were at issue, a monetary amount that is

governed by Rule 1.5 of the Rules of Professional Conduct and requires a reasonableness

determination. Rule 1.5 states in relevant part:
                                             5
       (a) A lawyer shall not make an agreement for, charge, or collect an
       unreasonable fee or an unreasonable amount for expenses. The factors to
       be considered in determining the reasonableness of a fee include the
       following:
              (1) the time and labor required, the novelty and difficulty of the
              questions involved, and the skill requisite to perform the legal
              services properly;
              (2) the likelihood, if apparent to the client, that the acceptance of the
              particular employment will preclude other employment by the
              lawyer;
              (3) the fee customarily charged in the locality for similar legal
              services;
              (4) the amount involved and the results obtained;
              (5) the time limitations imposed by the client or by the
              circumstances;
              (6) the nature and length of the professional relationship with the
              client;
              (7) the experience, reputation, and ability of the lawyer or lawyers
              performing the services; and
              (8) whether the fee is fixed or contingent.
                                      *     *      *      *        *
       (e) A division of a fee between lawyers who are not in the same firm may
       be made only if:
              (1) the division is in proportion to the services performed by each
              lawyer or each lawyer assumes joint responsibility for the
              representation;
              (2) the client agrees to the agreement, including the share each
              lawyer will receive, and the agreement is confirmed in writing; and
              (3) the total fee is reasonable.

       Therefore, under Rule 1.5 there are two different ways that a fee division is

permissible between lawyers who are not in the same firm; either the fee is divided based

on services performed or each lawyer assumes joint responsibility, meaning each can be

held liable in a malpractice suit. If the fee is divided based on the services performed, the

division must be reasonable, and the factors that are considered when determining

reasonableness are outlined in Rule 1.5(a). Additionally, if attorneys decide to divide the

fee based on services performed, there are two ways in which they may do so: (1)

reasonably forecasting the amount of work each will do at the outset and allocating the
                                         6
fee at the beginning of the representation and (2) splitting the fee after work on the case

has finished to reasonably correspond to the amount of work each attorney has

performed. See Restatement (Third) of Law Governing Lawyers (2000) § 47(c).

       In this case, Kummerer and Marshall had a contract that allocated the fee between

the two attorneys at the beginning of the representation. The trial court had to determine

whether the two attorneys’ forecast of the amount of work each would do was reasonable.

This determination could not be made by looking at the face of the contract; rather, the

trial judge had to consider the eight factors outlined in Rule 1.5(a) to determine whether

the equal fee split outlined in this contract was reasonable. Although the court ultimately

found that the forecast was reasonable, that determination necessarily involved the

court’s judgment in order to assess the damages. As a result, the trial court did not err in

refusing to grant prejudgment interest.

       Additionally, Indiana Code section 24-4.6-1-103, which governs prejudgment

interest in contract cases, states that “[i]nterest at the rate of eight percent (8%) per

annum shall be allowed: . . . (b) . . . for money had and received for the use of another

and retained without his consent.” (emphasis added). Here, however, the money was not

retained without Kummerer’s consent. By objecting to the money being placed in an

account at the Bartholomew County Clerk’s Office, Kummerer was consenting to

Marshall retaining the money and placing it in his own IOLTA account. Kummerer had

the opportunity to have the money placed in a third party’s interest-bearing account but

chose not to. Therefore, Marshall kept the money with Kummerer’s consent, rendering

Indiana Code section 24-4.6-1-103 inapplicable in this case.

       The trial court’s denial of prejudgment interest was therefore not contrary to law.
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                              II. Motion to Correct Errors

       Kummerer also contends that the trial court abused its discretion in denying his

motion to correct errors when the trial court failed to make special findings of fact in

support of its denial of prejudgment interest. A trial court has considerable discretion to

grant or deny motions to correct error. Young v. Ind. Dep’t of Natural Res., 789 N.E.2d
550, 554 (Ind. Ct. App. 2003), trans. denied. We review the trial court’s ruling on a

motion to correct errors for an abuse of discretion. Id.

       Kummerer filed his motion to correct errors, claiming the trial court committed

reversible error by failing to make Trial Rule 52 findings of facts when making its ruling

denying prejudgment interest. Trial Rule 52 states in relevant part:

       (A) In the case of issues tried upon the facts without a jury . . . [u]pon its
       own motion, or the written request of any party filed with the court prior to
       the admission of evidence, the court . . . shall find the facts specially and
       state its conclusions thereon.

Kummerer made a request for findings of facts and conclusions of law, and the trial court

made its findings and entered its judgment based on those findings. Kummerer contends,

however, that the trial court’s only finding regarding prejudgment interest was:

“Prejudgment interest is hereby denied.” Appellant’s App. p. 23. He argues that in order

to reach that conclusion, the trial court needed to make special findings regarding whether

the contract damages were determined by simple mathematical calculations. Appellant’s

Br. p. 15. We disagree.

       In the findings of fact, the trial court found that the parties decided to engage in a

“forecast allocation” of the attorneys’ fee. Appellant’s App. p. 17. The trial court also

specifically found that Kummerer’s “work on the file was as represented in his Affidavit in

                                             8
this case and . . . was both adequate and appropriate,” id. at 19, and that “the contract has

been found to be proportional based on the parties’ reasonable forecast division of the fee

under § 47 of the Restatement Third.” Id. at 22. Therefore, the trial court did make

specific findings of fact that the fee division was reasonable under Rule 1.5 for the

circumstances of this case.

       Because of these findings, it is clear that the trial court exercised its judgment in

determining damages and that the calculations of those damages were not merely a simple

mathematical evaluation. The findings of fact made by the trial court were therefore

sufficient to support its denial of prejudgment interest.

       The trial court did not err in denying Kummerer’s motion to correct errors.

       Affirmed.

CRONE, J., and BRADFORD, J., concur.

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