FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEES:
DAVID M. HENN CURTIS E. SHIRLEY
Stowers Weddle & Henn Indianapolis, Indiana
Indianapolis, Indiana
JAMES T. WALKER Merrillville, Indiana
JAMES W. MARTIN
Martin & Martin
Merrillville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
PAULA JO WAGNER, )
)
Appellant-Defendant, )
)
vs. ) No. 45A03-0303-CV-86
)
ROY E. SPURLOCK, JR., as Trustee of the )
ROY E. SPURLOCK, SR. IRREVOCABLE )
TRUST AGREEMENT and ROY E. )
SPURLOCK, JR., and SUSAN ERWIN-TOMA, )
Individually, )
)
Appellees-Plaintiffs. )
APPEAL FROM THE LAKE CIRCUIT COURT
The Honorable Lorenzo Arredondo, Judge
Cause No. 45C01-9908-CP-2000
February 26, 2004
OPINION - FOR PUBLICATION
BAKER, Judge
This appeal arises from an action to enforce a settlement agreement obtained through
mediation. Appellant-defendant Paula Jo Wagner (Paula) appeals the judgment entered in favor of
the appellees-plaintiffs, Roy E. Spurlock, Jr., (Roy) and Susan Erwin-Toma (collectively, the appellees)
in an amount of $139,791.98 plus post-judgment interest. The parties in this
appeal are all children of the decedent, Roy E. Spurlock, Sr. (Spurlock). Raising
a number of issues, Paula contends that (1) a general release executed by
the parties in accordance with a settlement agreement barred any additional claims by
the appellees for amounts that were allegedly owed to them under a trust
created by Spurlock; (2) the trial court erroneously entered an order for a
constructive dividend from a corporation when such a remedy was not provided for
in the settlement agreement; (3) the trial court erred in ordering Paula to
pay attorney fees to the appellees; (4) Paula was erroneously ordered to pay
Roy an amount for wages because she was not his employer and, thus,
Roys claim did not fall within the purview of Indianas wage statute; (5)
the trial court erred in ordering Paula to reimburse the appellees legal counsel
in the amount he paid Paulas attorney to settle a claim for malicious
prosecution that had been lodged against him; and (6) the finding that Paula
perpetrated a fraud upon the appellees was not supported by the evidence.
Concluding that the trial court erred in ordering Paula to reimburse the appellees
counsel for the settlement amount that was paid to Paulas attorney on the
malicious prosecution claim, we reverse that portion of the judgment. We also
remand this case to the trial court so that it may hear additional
evidence as to the amount of appellate attorney fees to which the appellees
may be entitled and to calculate the post-judgment interest that is due and
owing. Finding that no reversible error occurred with respect to the remaining
issues, we affirm in part, reverse in part, and remand this cause to
the trial court for further proceedings consistent with this opinion.
FACTS
The facts most favorable to the judgment are that Spurlock, a resident of
Lake County, died on June 2, 1998. He was a widower and
is survived by his three children, Paula, Roy and Susan.
During Spurlocks lifetime, he owned the majority stock in B & B Corporation,
Fabricators Corp. (Fabricators), and Schererville Steel Corp. (Schererville). Spurlock had executed a
will that called for distribution of his property into a testamentary trust for
15 years in equal shares to his three children. Spurlock also funded
a 1990 irrevocable trust that contained majority control of B & B.
This corporation owned the real estate that Schererville and Fabricators used. Spurlock
signed this irrevocable trust agreement on October 29, 1990, wherein he appointed Paula
as trustee. The terms of the trust provided that all of his
children were to be treated equally.
Spurlock funded this trust with sixty shares of B & Bs common stock,
and the trust was to provide quarterly income to Spurlocks children along with
a right to invade the trust for their health, maintenance and support.
When trouble brewed regarding Paulas handing of the assets, the appellees filed
a petition for the removal of Paula as the trustee, and to require
an accounting. The Lake Circuit Court ultimately granted the petition on July
29, 1999, and Paula was removed.
Spurlock funded a July 17, 1997 trust for the benefit of Susan with
two shares of Schererville Steels common stock. Attorney R. Brian Woodward and
his law firm had represented Spurlock and his corporations. Specifically, Woodward drafted
and supervised the signing of Spurlocks estate planning documents and supervised the legal
operations of the corporations. Woodward also represented Paula by drafting her power
of attorney for Spurlock, by representing the trust over which Paula was the
trustee, and by representing her interests as the beneficiary of Spurlocks estate plans
and agreements.
On April 1, 1998, Spurlock purportedly signed a new revocable trust agreement with
Paula as trustee. Additionally, in accordance with a stock purchase agreement, Spurlock
purportedly sold all of his stock in Fabricators to Paula for $150,000, to
be paid in equal installments over twenty-five years and bearing interest at the
rate of 8%. Under this agreement, Paula purportedly sold to herself all
of the stock in Schererville Steel for $1,294,995, to be paid in equal
installments over a period of twenty-five years and bearing interest at the rate
of eight percent. Spurlock apparently rendered his approval, and both stock purchase
agreements were to be secured by a promissory note and pledge agreement. Susan
and Roy apparently had no knowledge that Paula executed any of the documents.
Thereafter, on May 7, 1998, Woodward wrote Susan stating that the two shares
of Schererville Steel were valued at $10,000. Then, on July 1, 1998,
approximately one month after Spurlocks death and two months after the letter had
been written, Paula offered to purchase Roys three and one-third shares for $6,666.66.
On August 11, 1999, the appellees filed a complaint against Paula and others
for breach of trust, conversion, negligence of an attorney and an accountant, and
for the rescission of a stock purchase agreement that gave Paula control of
Spurlocks corporations.
See footnote The allegation for breach of trust complained that Paula, Woodward and
others wrongfully depleted trust assets, damaged the trust, and deprived the appellees of
income that was owed to them. The complaint further alleged that Paula,
along with others, misappropriated Spurlocks property, committed waste, engaged in self-dealing and committed
fraud. All of Paulas actions were allegedly accomplished with the assistance of
Woodward and the accountant who worked with the Spurlock finances.
It was eventually revealed that Spurlock funded various trusts that afforded Paula control
over corporate assets for much less than their fair market value. Specifically,
Shererville Steel was valued at nearly $2,464,983, and Paula purchased it for $1,294,995
with payment terms over the next twenty-five years at an interest rate of
8%. Fabricators was worth nearly $417,650, and Paula bought that corporation for
$150,000 under the same terms.
After the complaint was filed, the parties appeared for mediation and signed a
handwritten agreement, with settlement contingent on Paula obtaining the necessary financing to pay
Roy and Susan $1.7 million. The parties adjourned the mediation upon memorializing
the settlement that was signed by all the parties. The agreement also
contained mutual releases, dismissals, non-compete agreements, and other standard provisions. As part
of the agreement, Paula agreed to continue paying Roy his salary as a
full-time employee in Scherervilles shop. Once Roy and Susan received their inheritance,
however, the agreement provided that Roy would resign or retire from Schererville Steel
and forego any grievances that he may have had against the union.
On July 25, 2000, the parties signed a typed settlement agreement, and Paula
transferred $1,642,500 to the appellees. Of this amount, the appellees legal counsel,
Curtis Shirley, retained $200,000 in his trust account in the event that additional
taxes would be assessed. Although Paula eventually transferred the money, the settlement
agreement contained a number of provisions that required further attention.
It was determined that the appellees were to receive $200,000 when the IRS
sent a closing letter showing that Spurlocks estate did not owe any additional
taxes. While the letter from the IRS was sent on October 30,
2000, indicating that no further taxes were due and owing, the appellees did
not receive that correspondence until December 28, 2000. While Paula was aware
that the estate tax amount was final, she did not disclose that information
to the appellees. Instead, Paula had sent a new settlement proposal to
Roy as to how the amount held in escrow should be distributed.
In essence, Paula wanted to be paid $100,000 and in exchange, Roy, Jr.
and Susan [would] not be responsible for any increase in the net estate
taxes, interest or penalties. Appellees Br. p. 3. By then, however,
Paula was aware that there would be no increase in estate taxes, interest
or penalties. In light of Paulas actions, the appellees did not receive
the $200,000 disbursement until January 4, 2001, instead of on November 1, 2000.
As set forth above, Paula agreed to continue paying Roy the amount of
$1,000 per week for his employment at Schererville until the $1.7 million was
fully paid. Roy was owed $2,098.80 which was payable by August 8,
2000. However, Paula did not pay Roy until May 16, 2001.
The parties were also to docket the grandchildrens trust, choose new trustees, and
divide the cash on hand and trust property among the children.
The appellees subsequently filed a petition to enforce the agreement on September 11,
2000, and the trial court ultimately entered an order compelling the parties to
comply with the negotiated settlement agreement. Thereafter, a bench trial was conducted
that concluded on October 4, 2002. Shortly before the trial commenced, however,
Woodward threatened to sue Roy and his attorneys for malicious prosecution. In
response, Shirley and Woodward negotiated a written release, whereby Shirley was to pay
a sum of $6000 to Woodward. On the first day of trial,
Paulas legal counsel delivered a check in the amount of $57,500, purportedly representing
her redemption or purchase of the shares of stock that was required for
Paulas distribution of the trust assets to Spurlocks grandchildren. In accordance
with the trial courts judgment that was issued on February 7, 2003, Paula
was ordered to pay the following amounts to the appellees:
$2,667.00 for lost interest, and a punitive amount of $8,001.00 because of the
issues involving the $200,000.00 held in escrow;
$5,917.78 in penalties and interest, and $5,000.00 in attorney fees because of the
issues involving [Paulas] failure to timely pay Spurlock his wages;
$7,667.00 in interest on [Paulas] failure to timely pay the $57,000.00 held in
escrow;
$59,239.20 as the Spurlock childrens share of the dividends that should have been
(and perhaps are) in the grandchildrens trust;
$6,000.00 paid to Mr. R. Brian Woodward (and $300.00 in interest) for what
was otherwise covered under the Agreement; and
$30,000.00 in other attorney fees for those matters that did not involve the
Wage Payment Statute.
Appellants App. p. 15.
In sum, judgment was entered against Paula in favor of Roy and Susan
in the amount of $72,885.78 plus post judgment interest at the rate of
eight percent. Additionally, judgment was awarded to Roy for the benefit of
his childrens share of the grandchildrens trust in the amount of $66,906.20 plus
post judgment interest. That amount was to be used along with the
$57,500 that had already been transferred to fund the childrens share of the
grandchildrens trust. Appellants App. p. 16. Paula now appeals.
DISCUSSION AND DECISION
I. Standard Of Review
When, as here, the trial court enters findings of fact and conclusions thereon
upon the request of a party pursuant to Indiana Trial Rule 52, we
apply the following standard of review: we must determine whether the evidence
supports the findings and whether the findings support the judgment. CSX Transp.,
Inc. v. Rabold, 691 N.E.2d 1275, 1277 (Ind. Ct. App. 1998), trans. denied.
The courts findings and conclusions will be set aside only if they
are clearly erroneous, that is, that the record contains no facts or inferences
supporting them. Id. A judgment is clearly erroneous when a review
of the record leaves us with a firm conviction that a mistake has
been made. Id. We neither reweigh the evidence nor assess the
credibility of witnesses, but consider only the evidence most favorable to the judgment.
Ahuja v. Lynco Ltd. Medical Research, 675 N.E.2d 704, 707 (Ind. Ct.
App. 1996), trans. denied. Special findings, even if erroneous, do not warrant
reversal if they amount to mere surplusage and add nothing to the trial
courts decision. Baker v. R. & R. Const., Inc., 662 N.E.2d 661,
666 (Ind. Ct. App. 1996), trans. denied.
II. Wagners Contentions
A. Total Bar of Claims Against Wagner
Paula argues that the trial court erred in awarding damages to the appellees
because the judgment was in derogation of the settlement agreement. In essence,
Paula claims that the general release language contained in the agreement barred any
subsequent claims for additional funds that were allegedly owed to the trust.
In resolving this issue, we note that if the language of a contract
is unambiguous, the intent of the parties is determined from the four corners
of the document. Stemm v. Estate of Dunlap, 717 N.E.2d 971, 975
(Ind. Ct. App. 1999). A contract is ambiguous only where a reasonable
person could find its terms susceptible to more than one interpretation. Id.
Further, it is only where a contract is ambiguous and its interpretation
requires extrinsic evidence that the fact finder must determine the facts upon which
the contract rests. Zollman v. Geneva Leasing Assoc., Inc., 780 N.E.2d 387,
391-92 (Ind. Ct. App. 2002).
In this case, Paula points to the following provisions set forth in the
settlement agreement that purportedly operate to release her from the claims brought by
the appellees in this action:
4. Roy and Susan accept the foregoing property in full and complete
settlement of all allegations which were or could have been raised against Paula
and Joel Wagner, any companies named herein, the estate, all trusts named herein
and Paula in her capacity as officer and director of any corporations named
herein and reasonable documents in the decedents Estate, Trust and corporations herein presented
by a party which are reasonably calculated to minimize any tax consequences to
the presenting party so long as such documents do not compromise the signing
partys tax position.
5. Roy and Susan release and discharge forever, jointly and severally, Paula,
Joel Schererville Steel Corporation, R.E. Spurlock, Inc., Fabricators Corporation, all trusts named herein
and the estate of Roy E. Spurlock, Sr., together and including all partners,
employees, agents, representatives, successors and assigns, from any, every and all claims, demands
or causes of action accruing, arising, growing out of, or connected with the
allegations made in the above captioned cases. Paula releases and discharges forever,
jointly and severally, Roy and Susan, their spouses, their agents, representatives, successors and
assigns, from any, every and all claims, demands or causes of action accruing,
arising, growing out of, or connected with the allegations made in the above
captioned cases.
Appellants App. p. 29-30.
While Paula makes much of the above general release language, it is apparent
that such provisions did not release Paula from her obligations under the settlement
agreement. To be sure, the evidence showed that Paula failed to satisfy the
terms of the settlement, and she is therefore estopped from arguing that she
did not have to comply with the original terms. To support her
argument, Paula posits that the appellees, with the assistance of counsel, knowingly and
voluntarily entered into a valid settlement agreement, but now are requesting that they
be permitted to renew their attack on Paula. Appellants Br. p.
10. Inasmuch as the appellees agreed to settle and release all claims,
Paula contends that the trial court erred in awarding damages.
Contrary to Paulas argument, this court has previously determined that we have jurisdiction
to consider and address breaches of settlement agreements. See Gary v. Peters,
583 N.E.2d 1213, 1215-16 (Ind. Ct. App. 1991). This court has held
that the remedy of specific performance is appropriate in some instances. Germania
v. Thermasol, 569 N.E.2d 730, 731-32 (Ind. Ct. App. 1991). Here, the
evidence at trial demonstrated that Paula failed to comply with the trial courts
order of December 11, 2000, regarding the terms of the agreement and the
direction that the parties were to comply with it. As the
instant case pertained to the enforcement of the settlement agreement, Paula may not
successfully complain that the trial court lacked the authority to enter a judgment
as to her noncompliance with that agreement. Thus, there was no error with
respect to this issue.
B. Claim For Constructive Dividend
Moving to the specifics, Paula argues that the appellees claim for a constructive
dividend may not stand because the settlement agreement specified only that the parties
were to divide the cash on hand in the trust. Thus, Paula
urges that the appellees claim for this amount improperly extended the scope of
the settlement agreement beyond that which the parties had intended.
Again, we note that the intent of the parties is determined from the
four corners of the contract so long as the language of the instrument
is unambiguous. Stemm, 717 N.E.2d at 975. Here, Paula urges that
the division of cash on hand as set forth in the Settlement Agreement
was limited to ready moneyassets that are liquid, on hand and available for
delivery. Appellants Br. p. 13. That said, Paula maintains that the
trial court erroneously determined that she was liable for a constructive dividend from
Schererville in the amount of $148,098. Notwithstanding this contention, there is no evidence demonstrating
that the trial court compelled any of the corporations to declare a dividend.
When Spurlock established the trust for the benefit of his grandchildren in
1992, he funded that trust with shares of Schererville stock that had declared
dividends in the past.
Under the settlement agreement, Paula agreed to divide the trust property equally among
the grandchildren. After the settlement, Paula became the majority shareholder and president
of Schererville without any threat of the shares being returned to the estate
and without the trial court having to appoint a receiver. Additionally, the
parties could not do anything to compromise the grandchildrens trust.
It was established that while Fabricators had a minimal value, that corporation issued
several times that amount in dividends over the years. There was testimony
at trial suggesting that the dividends should be distributed from Fabricators so dividends
would not have to be paid to the shareholders of Schererville Steel.
Appellees App. p. 262. Under the circumstances, it was reasonable for the
trial court to infer that Paula orchestrated the issuance of dividends from Fabricators
instead of Schererville to effectively diminish the grandchildrens inheritance.
We also note that Shirley testified during cross-examination that:
The dividends are due from Paula. Paula was trustee of the grandchildrens
trust. Paula is a party to this agreement. Paula owes the
money, Paula has to sign the check. Now, if she wants to
take it from the corporation or from her personal checking account, I dont
care. Its her signature and her agreement. She owes the money.
Appellees App. p. 473. Shirley went on to acknowledge that cash on
hand included whatever property was in the grandchildrens trust. Appellees App. p.
480. The settlement agreement mentioned that the grandchildrens trust had such cash
on hand. For these reasons, we cannot say that the trial court
erred in determining that Paula was liable to pay the constructive dividend from
Schererville.
C. Liability of Corporate Officer For Wage Claim
Paula next contends that the trial courts award to Roy in the amount
of $5,917.78 representing his lost wage claim from Schererville along with statutory penalties
and interest plus $5,000 in attorney fees with respect to that claim must
be set aside. In essence, Paula claims that she is not liable
for Roys wages, liquidated damages or attorney fees because she was not Roys
employer and because he was not engaged in employment in return for his
weekly payment.
Indiana Code section 22-2-5 et. seq. requires employers in this State to pay
their employees wages in full, regularly, and on time. This court has
determined that wages are something akin to the wages paid on a regular,
periodic basis for regular work performed by the employee. Wank v. St.
Francis College, 740 N.E.2d 908, 912 (Ind. Ct. App. 2000), trans. denied.
To qualify as a wage, the compensation must be connected to the work
performed by the employee. Id. Relevant to our resolution of this
issue is Indiana Code section 22-2-5-2 which provides as follows:
Every such person, firm, corporation, limited liability company, or association who shall fail
to make payment of wages to any such employee as provided in section
1 of this chapter shall, as liquidated damages for such failure, pay to
such employee for each day that the amount due to him remains unpaid
ten percent (10%) of the amount due to him in addition thereto, not
exceeding double the amount of wages due, and said damages may be recovered
in any court having jurisdiction of a suit to recover the amount due
to such employee, and in any suit so brought to recover said wages
or the liquidated damages for nonpayment thereof, or both, the court shall tax
and assess as costs in said case a reasonable fee for the plaintiffs
attorney or attorneys.
(Emphasis added).
The portion of the settlement agreement dealing with Paulas obligation to pay Roy
his wages states:
Paula shall pay Roy $1,000 for the week of July 10-14, 2000, and
shall pay Roy $1,000 per week afterwards, prorated until the day the Agreement
is signed and $1.7 million (less $57,5000) is transferred. The payment shall
be made within fourteen (14) days hereof.
Appellants App. p. 33. Under this paragraph, Roy asserts that he is
entitled to statutory liquidated damages and attorney fees incurred in pursuing the unpaid
amount because he should have received a paycheck in accordance with the agreement.
On the other hand, Paula claims that the payments were to come
from Schererville, who was actually Roys employer. Thus, Paula maintains that the claim
should have been lodged against the corporation and not her personally.
Contrary to Paulas argument on appeal, she acknowledged in the settlement agreement that
she understood that she was to send Roy a weekly paycheck until the
settlement was finalized. Paula does not dispute that she owed Roy $2,098.80
on or before August 8, 2000. It is apparent that the
purpose was continued employment so that if Paula failed to fund or
finalize the settlement, Roy had not waived any right to continued employment and
benefits. Moreover, Paula signed the mediation agreement, thus obligating herself to assure
that Roy would continue to receive a check and his benefits on a
regular basis. Paula personally guaranteed this performance, and the settlement agreement established
that Wagner should have continued to pay Roy his wages. That said,
the evidence showed that Paula failed to pay Roy his wages that were
due and owing. As a result, the $5917.78 award to Roywhich included penalties
and interestfell within the ambit of Indiana Code section 22-2-5-2. Therefore, the
trial court did not err in awarding Roy this amount on his claim
for unpaid wages.
D. Paulas Payment to Opposing Counsel for Settlement of a Malicious
Prosecution Action
Paula next contends that the trial court erred in ordering her to reimburse
Shirley for the sums he paid to Paulas counsel to settle a claim
of malicious prosecution against Shirley. In support of this contention, Paula points out
that it is illogical and legally impossible that [she] somehow is responsible for
any attorney committing the tort of malicious prosecution, let alone the attorney opposing
her. Appellants Br. p. 19.
In Bowling v. Popp, we discussed the duty of a private citizen to
control the conduct of another :
[T]he courts of Indiana generally follow the principles set forth in the Restatement
(Second) of the Law on Torts. See, e.g., Sports, Inc. v. Gilbert
1982), Ind.App., 431 N.E.2d 534. The basic principle of this duty is
stated as follows:
There is no duty to control the conduct of a third person
as to prevent him from causing physical harm to another unless
(a) a special relation exists between the actor and the third person which
imposes a duty upon the actor to control the third persons conduct, or
(b) a special relation exists between the actor and the other which gives
to the other a right to protection.
536 N.E.2d 511, 515 (Ind. Ct. App. 1989).
Here, the trial court made the following entry with respect to this portion
of the judgment: 92. For breach of the Agreement, and failure
to comply with the Courts December 11, 2000 order granting the petition to
enforce the Agreement, Paula must pay . . . the additional $6000
as compensatory damages. . . . Appellants App. p. 14. In
examining this particular entry, we do not see that any special relation existed
between Shirley and Paula that might impose a duty upon Paula to control
Shirleys conduct. To be sure, Shirleys relationship to Paula was adversarial.
Shirley was not a party to this litigation and never filed a
complaint in his own name for the claim against Paula for his malicious
prosecution settlement. No evidence was offered at trial as to how Paulas delay
in complying with the settlement agreement allegedly forced Shirley into committing the tort
of malicious prosecution. That said, we must conclude that there was no
basis in law or fact for the judgment against Paula in the amount
of $6000 plus interest for Shirleys payment of funds to Woodward for settlement
of the malicious prosecution claim. As a result, we reverse this portion
of the judgment.
E. Fraud
Finally, Paula argues that the trial courts determination that she perpetrated a fraud
upon the appellees must be set aside. While Paula does not challenge the
amount of the award for these damages, she maintains that the evidence compels
a different result because no evidence was offered to support a finding that
Paula had instructed the bank to withhold certain information from the appellees regarding
the trust.
In addressing this issue, we note that constructive fraud arises by operation of
law from a course of conduct that, if sanctioned by law, would secure
an unconscionable advantage, irrespective of the actual intent to defraud. Drudge v.
Brandt, 698 N.E.2d 1245, 1250 (Ind. Ct. App. 1998). This theory of
fraud is based on the premise that there are situations that might not
amount to actual fraud, but which are so likely to result in injustice
that the law will find a fraud despite the absence of fraudulent intent.
Scott v. Bodor, Inc., 571 N.E.2d 313, 324 (Ind. Ct. App. 1991).
Additionally, to maintain an action for actual fraud, there must be: (1)
a material misrepresentation of past or existing fact; (2) which is made with
knowledge of or reckless disregard for the falsity of the statement; and (3)
resulting reliance upon the misrepresentation to the detriment of the relying party.
Drudge, 698 N.E.2d at 1250.
With respect to the judgment for fraud that had been entered against Paula,
the trial court made the following findings and conclusions:
20. [Paula] defrauded [Roy] by failing to inform him of the IRS
closing letter, by sending settlement proposals which attempted to compromise the $200,000 amount
on the assumption that the estate taxes could be in dispute when they
were already settled, and by telling the Bank not to disclose information to
[Roy].
21. [Paula] also violated the Courts December 11, 2000 order granting the
petition to enforce the Agreement by attempting to take $100,000 from [Roy] under
new terms.
22. For this fraud [Paula] is assessed punitive damages of three (3)
times the amount of compensatory damages, or an additional $8,001.
Appellees App. p. 89-92.
As set forth in the FACTS, the settlement agreement required counsel for the
appellees to escrow $200,000, which they were to receive if the estate did
not owe additional taxes. On October 30, 2000 the Internal Revenue Service
sent a closing letter to the executor of Spurlocks estate, Mercantile National Bank,
indicating no additional estate tax, penalty or interest was due. Appellees App.
p. 920. The following day, the Bank faxed the closing letter to
Paula and her legal counsel. Then, on November 1, 2000, Paula sent
a new settlement proposal to Roy regarding how to dispose of the funds
held in escrow. Appellees App. p. 758.
In light of this evidence, the trial court inferred that Paula sent the
new proposal on November 1, 2000, for the appellees to receive $100,000 at
a time when she already was aware that they were entitled to $200,000
under the agreement. Moreover, Paula did not dispute that on December 28,
2000, the Bank sent a copy of the closing letter concealing the date
the IRS sent the letter and the date the Bank received it.
The evidence also showed that after a brief inquiry with Bank personnel as
to why the closing letter had concealed the dates, a follow-up copy was
sent showing the dates that the letter was sent as well as the
day that the Bank received it. Shirley acknowledged that the appellees had
relied upon the previous representation that there had been no closing letter.
Inasmuch as the Mercantile Bank had nothing to gain by concealing the relevant
dates, the trial court could properly infer from this evidence that Paula had
the dates concealed so that the appellees would not learn that they had
been entitled to the $200,000 that was held in escrow. Therefore, we
reject Paulas attempt to place blame upon the appellees by asserting that
because Paula paid attention to matters and took care of her own affairs
does not amount to fraud. To find that it does would be
to punish those who take affirmative actions and reward those who rest on
their rights. Appellants Br. p. 27. As the trial court had
ordered Paula on December 11, 2000, to specifically perform under the terms of
the settlement agreement, it was her obligation to pay the $200,000 once she
learned that the estate was not liable for additional taxes. The evidence
supports the trial courts determination that Paulas actions amounted to fraud. Thus,
there was no error with respect to this issue.
F. Recovery of Attorney Fees
Paula next alleges that the trial court erred in awarding attorney fees
to the appellees in the amount of $30,000. Specifically, Paula asserts that
this judgment was erroneous because there was no statute or contract provision on
which to base the award.
Generally, litigants must pay their own attorney fees, and therefore, an award of
attorney fees is not permitted unless a statute, agreement, or stipulation authorizes the
same. Brademas v. South Bend Comm. School Corp., 783 N.E.2d 745, 750
(Ind. Ct. App. 2003), trans. denied. We note that Indiana Alternative Dispute
Resolution Rule 2.7(E)(3) provides that in the event of any breach or failure
to perform under the agreement, upon motion and after hearing, the court may
impose sanctions, including entry of judgment on the agreement. Additionally, Indiana Alternative
Dispute Resolution Rule 2.10 states the court may impose sanctions against any
attorney, or party representative who fails to comply with these mediation rules, limited
of mediation costs and/or attorney fees relevant to the process. Inasmuch as
the trial court appropriately considered and applied these provisions to the circumstances in
this case, Paula may not complain that the trial court was without authority
to award these fees.
We embrace the notion that this court will use extreme restraint when exercising
our discretionary power to award attorney fees that are authorized in accordance with
former Indiana Appellate Rule 15(G) (now App. R. 66(E)). See Lakes and
Rivers Transfer v. Rudolph Robinson Steel Company, 795 N.E.2d 1126, 1135 (Ind. Ct.
App. 2003). That is, under this rule, we will not impose such
sanctions to punish lack of merit unless the appellants contentions and argument are
utterly devoid of all plausibility. D.S.I. v. Nature Corp., 742 N.E.2d 15,
28 (Ind. Ct. App. 2000) trans. denied.
While it is evident here that Paulas appeal is not frivolous or in
bad faith, we observe that no damages were awarded in accordance with this
rule. Rather, as indicated above, the trial court awarded the challenged attorney
fees as part of the appellees damages pursuant to our Alternative Dispute Resolution
Rules. Simply because attorney fees may not be appropriately awarded by this
court under our appellate rules, a trial court is not precluded from awarding
reasonable fees for an appeal based upon another statute, rule, or agreement allowing
for such an award. Lakes and Rivers Transfer, 795 N.E.2d at 1135.
Inasmuch as the Alternative Dispute Resolution rules apply in this instance and
control the award of attorneys fees, Paula has failed to establish error with
regard to this issue. Additionally, because the appellees are entitled to be
made whole given the settlement agreement provisions, we grant their request for the
trial court to hear further evidence regarding entitlement to appellate attorneys fees and
to award the same if the circumstances so warrant.
CONCLUSION
In light of the issues discussed above, we conclude that the trial court
properly awarded damages against Paula because she failed to comply with the settlement
agreement. That said, the trial court acted within its discretion in ordering
Paula to distribute the assets in the trust, including the declaration and payment
of constructive dividends from Schererville. We further conclude that the award of
attorneys fees to the appellees was proper and that Paula was liable for
the payment of Roys wages pursuant to the settlement agreement.
Additionally, we note that the evidence was sufficient to support a finding of
fraud against Paula, but conclude that the portion of the judgment compelling her
to reimburse the sum of $6000 for settlement of the malicious prosecution claim
may not stand. The judgment of the trial court is therefore affirmed
in part, reversed in part and remanded for further proceedings consistent with this
opinion for the calculation of interest and for the purpose of hearing evidence
regarding an additional amount of attorneys fees to which the appellees may be
entitled in accordance with our Alternative Dispute Resolution Rules.
NAJAM, J., and MAY, J., concur.
Footnote:
The complaint was amended on September 13, 1999.