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:
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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