River Ridge Development Authority v. Outfront Media, LLC, David Watkins, No Moore, Inc., the Schlosser Family Limited Partnership, the Town of Utica, and the Utica Board of Zoning Appeals ( 2020 )

FILED
May 29 2020, 12:47 pm
CLERK
Indiana Supreme Court
IN THE Court of Appeals
and Tax Court
Indiana Supreme Court
Supreme Court Case No. 19S-PL-645
River Ridge Development Authority,
Appellant (Plaintiff)
–v–
Outfront Media, LLC, David Watkins, No Moore, Inc.,
the Schlosser Family Limited Partnership, the Town
of Utica, and the Utica Board of Zoning Appeals,
Appellees (Defendants)
Argued: January 30, 2020 | Decided: May 29, 2020
Appeal from the Clark Circuit Court, No. 10C02-1709-PL-99
The Honorable Richard Striegel, Senior Judge
On Petition to Transfer from the Indiana Court of Appeals,
No. 18A-PL-2347
Opinion by Chief Justice Rush
Justices David, Massa, Slaughter, and Goff concur.
Rush, Chief Justice.
The guardrails of zealous advocacy must leave ample room for a party
to make its case. But when a party veers off course by intentionally
introducing groundless arguments, harassing other parties, or acting in
bad faith, courts can punish the behavior.
Generally, the American Rule requires each party to pay its own
attorney’s fees. While this rule has narrow exceptions that allow a court to
order one party to pay another’s fees, it is a hefty burden to demonstrate
that such an award is warranted.
Today we discuss three grounds that permit a court to shift attorney’s
fees under Indiana law and find that, on this record, the parties seeking
fees failed to show that any exception applied. We thus find that the trial
court’s decision to award attorney’s fees was an abuse of discretion and
reverse.
Facts and Procedural History
River Ridge Development Authority (RRDA) oversees the construction
and development of the River Ridge Commerce Center. The Commerce
Center is a business and manufacturing park located along State Road 265
near the Ohio River and the Town of Utica.
In 2017, RRDA was in the midst of planning a $25 million expansion to
the Commerce Center, including a new entrance off the state road. During
this time, RRDA discovered that Outfront Media, LLC—an outdoor
advertising company—and its employee David Watkins had obtained
permits from both the Utica Town Council and the Indiana Department of
Transportation (INDOT) to construct seven billboards along State Road
265. The billboards would be built on parcels of land that were owned by
No Moore, Inc. and the Schlosser Family Limited Partnership. Because
each parcel was located near the Commerce Center’s planned entrance,
RRDA was concerned that the proposed billboards would harm its
investment.
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Hoping to prevent their construction, RRDA sued Outfront Media,
Watkins, No Moore, the Schlosser Family Limited Partnership, the Town
of Utica, INDOT, and the INDOT commissioner. RRDA sought, in part, a
declaration that the billboards violated Utica’s zoning ordinance. RRDA
later amended its complaint—dismissing several claims, including those
against the INDOT defendants, and adding a claim against the Utica
Board of Zoning Appeals (BZA).
During this litigation, Outfront Media completed three of its seven
proposed billboards. Before their construction, however, the Louisville–
Jefferson County KY–IN Metropolitan Planning Organization had
contacted INDOT to nominate the relevant portion of State Road 265 for
scenic-byway status. This designation would prevent Outfront from
building the four remaining billboards. Eight months later, INDOT
recommended approval for that stretch of the state road to become a
scenic byway; and RRDA voluntarily dismissed its complaint with
prejudice the same day.
Outfront Media, Watkins, No Moore, the Schlosser Family Limited
Partnership, the Town of Utica, and the Utica BZA (Defendants) all filed
motions to recover attorney’s fees, claiming RRDA’s behavior during the
lawsuit justified such an award. After a hearing, the trial court granted the
motions in full. The court concluded that three “independent bases”
permitted its $237,440.63 award: the common-law obdurate behavior
exception to the American Rule, Indiana’s statutory General Recovery
Rule, and the court’s inherent authority to sanction parties.
The Court of Appeals reversed. River Ridge Dev. Auth. v. Outfront Media,
LLC, 129 N.E.3d 239, 251 (Ind. Ct. App. 2019). We granted transfer,
vacating the Court of Appeals opinion. Ind. Appellate Rule 58(A).
Standard of Review
We review a trial court’s award of attorney’s fees for an abuse of
discretion. Purcell v. Old Nat’l Bank, 972 N.E.2d 835, 843 (Ind. 2012). An
abuse of discretion occurs when the court’s decision either clearly
contravenes the logic and effect of the facts and circumstances or
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misinterprets the law. Id. To make this determination, we review any
findings of fact for clear error and any legal conclusions de novo. Id.
Discussion and Decision
The general rule in Indiana, and across the country, is that each party
pays its own attorney’s fees; and a party has no right to recover them from
the opposition unless it first shows they are authorized. Loparex, LLC v.
MPI Release Techs., LLC, 964 N.E.2d 806, 815–16 (Ind. 2012). Known as the
American Rule, this doctrine reflects a compromise between keeping
courts open to all and allowing attorneys the freedom to contract with
clients. See id. at 815.
But the rule is not without exceptions. Statutes can authorize courts to
award attorney’s fees, and courts have carved out exceptions to the
American Rule using their inherent equitable powers. See Ind. Code § 34-
52-1-1 (2019); State Bd. of Tax Comm’rs v. Town of St. John, 751 N.E.2d 657,
658 (Ind. 2001). Today, we discuss three grounds, under Indiana law, that
enable a court to award a party attorney’s fees.
First, the common-law “obdurate behavior” exception empowers a
court to order a prevailing party, under certain circumstances, to pay the
opposition’s attorney’s fees. See Kikkert v. Krumm, 474 N.E.2d 503, 505 (Ind.
1985). Second, the General Recovery Rule, Indiana Code section 34-52-1-1,
similarly allows an award of attorney’s fees “to the prevailing party”
based on another party’s actions during litigation. I.C. § 34-52-1-1(b). And
finally, courts are inherently authorized to sanction parties by shifting
fees, even if no other exception applies. See In re Estate of Kroslack, 570
N.E.2d 117, 121 (Ind. Ct. App. 1991).
Here, the trial court concluded that it could award attorney’s fees to the
Defendants under all three grounds. We hold, however, that the trial
court’s decision was an abuse of discretion. Neither the common-law
obdurate behavior exception nor the General Recovery Rule—both of
which require a “prevailing party”—allow an award of attorney’s fees
when a party voluntarily dismisses its complaint, as RRDA did here. And
the court’s inherent authority does not authorize the award because the
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record lacks evidence to show that RRDA litigated in bad faith and that its
conduct was calculatedly oppressive, obdurate, or obstreperous. We thus
reverse the trial court’s order.
I. The common-law obdurate behavior exception and
the General Recovery Rule do not allow an award
of attorney’s fees when a party voluntarily
dismisses its complaint.
Both the common-law obdurate behavior exception and the statutory
General Recovery Rule permit a court, in certain circumstances, to award
attorney’s fees—but only to a “prevailing party.” We find that the
Defendants are not prevailing parties and thus fail to meet this threshold
requirement. And we further explain that the common-law obdurate
behavior exception remains in force, despite incorporation into the
General Recovery Rule.
A. The Defendants are not prevailing parties under either
the common-law exception or the General Recovery
Rule.
Our Court of Appeals first recognized the common-law “obdurate
behavior” exception in 1973. Saint Joseph’s Coll. v. Morrison, Inc., 158 Ind.
App. 272, 279–81, 302 N.E.2d 865, 870–71 (1973), trans. denied. And this
Court embraced it twelve years later. Kikkert, 474 N.E.2d at 505 (citing Cox
v. Ubik, 424 N.E.2d 127, 129 (Ind. Ct. App. 1981)). This exception—which
reimburses a “prevailing party”—applies when a party knowingly files or
fails to dismiss a “baseless claim” and a trial court finds the conduct
“vexatious and oppressive in the extreme and a blatant abuse of the
judicial process.” Id.
One year after we adopted the common-law exception, the General
Assembly amended the General Recovery Rule. See Pub. L. No. 193-1986,
1986 Ind. Acts 1944 (pertinent section codified at I.C. § 34-52-1-1(b)). It
now allows a court “[i]n any civil action” to award attorney’s fees “as part
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of the cost to the prevailing party” if another party “(1) brought the action
or defense on a claim or defense that is frivolous, unreasonable, or
groundless; (2) continued to litigate the action or defense after the party’s
claim or defense became frivolous, unreasonable, or groundless; or (3)
litigated the action in bad faith.” I.C. § 34-52-1-1(b). The statute balances
an attorney’s duty to zealously advocate with the goal of deterring
unnecessary and unjustified litigation. Mitchell v. Mitchell, 695 N.E.2d 920,
924 (Ind. 1998). The General Recovery Rule is strictly construed because it
“is in derogation of the American Rule observed under the common law.”
D.S.I. v. Natare Corp., 742 N.E.2d 15, 22 (Ind. Ct. App. 2000), trans. denied.
Both exceptions include the same threshold requirement: a party must
be a “prevailing party” before a court can award attorney’s fees. RRDA
argues that the Defendants are not prevailing parties because they never
obtained a favorable judgment on the merits. We agree and find that the
Defendants cannot satisfy this requirement under either the common law
or the General Recovery Rule.
We begin with the ordinary and historical legal understanding of the
term “prevailing party.” Black’s Law Dictionary defines the phrase as “[a]
party in whose favor a judgment is rendered.” Prevailing Party, Black’s
Law Dictionary 1298 (10th ed. 2014). In other words, if a party does not
receive a favorable judgment, then it is not a “prevailing party.” We find
support for interpreting this term the same way under both the General
Recovery Rule and the common-law obdurate behavior exception.
As for the General Recovery Rule, prior decisions from our Court of
Appeals interpreting the statute have already defined “prevailing party”
as “one that recovers a judgment.” In re Paternity of P.E.M., 818 N.E.2d 32,
38 (Ind. Ct. App. 2004); see also State Wide Aluminum, Inc. v. Postle Distribs.,
Inc., 626 N.E.2d 511, 517 (Ind. Ct. App. 1993), trans. denied; State ex rel.
Prosser v. Ind. Waste Sys., Inc., 603 N.E.2d 181, 189–90 (Ind. Ct. App. 1992).
Decisions from the Supreme Court of the United States construing
“prevailing party” in analogous federal statutes have reached a similar
conclusion. For example, the Court has held that a party prevails when it
obtains “actual relief on the merits” of the claim, which “materially alters
the legal relationship between the parties.” Farrar v. Hobby, 506 U.S. 103,
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111–12 (1992). And the Court, interpreting multiple federal fee-shifting
statutes, concluded that the “clear meaning” of the term requires a party
to obtain some judicial relief to prevail. Buckhannon Bd. & Care Home, Inc.
v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 606–608 (2001). We
find these decisions instructive and thus conclude that, under the General
Recovery Rule, a party must obtain a favorable judgment on the merits or
comparable relief to qualify as a “prevailing party.”
We reach the same conclusion in interpreting “prevailing party” under
the common-law exception. Though there are no decisions explicitly
defining the term as it relates to this exception, we find persuasive
support from Reuille v. E.E. Brandenberger Construction, Inc., 888 N.E.2d 770
(Ind. 2008). There, we found that the “ordinary meaning” of a “prevailing
party” requirement in a contract contemplated a party receiving a
favorable judgment on the merits. Id. at 771–72. And in Buckhannon Board,
Justice Scalia joined the majority’s opinion “in its entirety” but wrote
separately to discuss the historical meaning of “prevailing party” dating
back to the founding era. 532 U.S. at 610–11 (Scalia, J., concurring). That
concurrence observes that “‘[p]revailing party’ is not some newfangled
legal term”; rather, when used in statutes and under the common law, it
“is a term of art” referring to “the party that wins the suit,” not “the party
that ultimately gets his way.” Id. at 610, 615. In short, we see no reason to
interpret “prevailing party” differently under the common-law exception
than we did under the General Recovery Rule.
Given these identical interpretations of the term, we conclude the
Defendants cannot recover attorney’s fees under either exception—there
was never a favorable judgment on the merits due to RRDA voluntarily
dismissing its claim. While “a dismissal with prejudice is similar to a
judgment on the merits in that it precludes relitigation of the merits,” it is
“not a judgment in all respects, since it does not resolve issues of law and
fact.” Bell v. Commonwealth Land Title Ins. Co., 494 N.E.2d 997, 1001 (Ind.
Ct. App. 1986), trans. denied.
Although the Defendants cannot meet the threshold “prevailing party”
requirement under either exception, we pause to explain how the
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common-law exception continues to operate in light of its commonalities
with the General Recovery Rule.
B. Despite the broad nature of the statutory General
Recovery Rule, the common-law obdurate behavior
exception remains in force.
This litigation has spawned questions about the common-law obdurate
behavior exception’s viability in light of the General Recovery Rule.
RRDA contends that, because sanctions for obdurate behavior are now a
“part of” the statute, the common-law exception no longer exists “distinct
from the statutory framework.” The Defendants argue that, although the
statute codified the common law, it did not abrogate the obdurate
behavior exception. We agree with the Defendants.
In two opinions, we observed that the General Recovery Rule’s scope is
broader than that of the common-law exception. See Kahn v. Cundiff, 533
N.E.2d 164, 171 (Ind. Ct. App.), aff’d & adopted, 543 N.E.2d 627 (Ind. 1989)
(per curiam); Mitchell, 695 N.E.2d at 924–25. In Kahn, we adopted the
panel’s comparison of the statute and the common law—that the General
Recovery Rule does not require a party to have acted with “an improper
motive,” whereas the obdurate behavior exception does. 533 N.E.2d at
171. And, in Mitchell, we found that a plaintiff could recover attorney’s
fees for a defendant’s obdurate behavior under the General Recovery Rule
even though the common-law exception allows a court to sanction only a
party that knowingly initiates or continues a baseless suit. 695 N.E.2d at
923–25.
We have also twice acknowledged that the General Recovery Rule
“codified” the obdurate behavior exception. See Loparex, 964 N.E.2d at 816
n.5; Town of St. John, 751 N.E.2d at 659. But this is not to say that the
statute abrogated the common law. Rather, “we presume that the
legislature is aware of the common law and does not intend to make any
change therein beyond what it declares either in express terms or by
unmistakable implication.” State Farm Fire & Cas. Co. v. Structo Div., King
Seeley Thermos Co., 540 N.E.2d 597, 598 (Ind. 1989); see also Grusin v. Stutz
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Motor Car Co. of Am., 206 Ind. 296, 303, 187 N.E. 382, 385 (1933) (noting that
the common law remained “in force” when a statute was “declaratory” of
the common law, contained “nothing inconsistent with” the common law,
and made no “declarations express or implied” regarding the common
law). Here, no such declaration was made.
It’s true that we cannot imagine a situation in which the common law
would allow for attorney’s fees, while the statute would not. Yet, as
explained above, that does not mean the statute swallowed the obdurate
behavior exception and rendered it nonexistent. Rather, the common law
continues to survive. Cf. Grusin, 206 Ind. at 303, 187 N.E. at 385.
The trial court thus properly concluded that the General Recovery Rule
“did not abrogate” the obdurate behavior exception. But, because the
Defendants are not “prevailing parties,” the court abused its discretion
when it determined that it was permitted to award attorney’s fees on
those grounds.
We now examine whether a court’s inherent authority to sanction
parties could permit the trial court’s award.
II. The trial court abused its discretion when it
awarded attorney’s fees under its inherent
authority.
Courts necessarily have inherent, implied power to manage their own
affairs. This includes the authority to fashion an appropriate sanction,
such as an award of attorney’s fees. Chambers v. NASCO, Inc., 501 U.S. 32,
35 (1991).
For reasons discussed below, we find that a court may invoke its
inherent power to award attorney’s fees at any point in litigation. But,
here, the trial court’s decision to award attorney’s fees was an abuse of its
discretion—the record reveals the Defendants did not meet their burden
to show that RRDA’s actions warranted attorney’s fees.
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A. Courts have inherent authority to sanction a party
by awarding attorney’s fees at any point during
litigation.
The legislative and judicial branches of our government are co-equal
under Indiana’s Constitution. Ind. Const. art. 3, §1. Thus, courts possess
inherent powers that “spring, not from legislation, but from the nature
and constitution of the tribunals themselves.” Little v. State, 90 Ind. 338,
339 (1883). These powers include the ability to sanction, without which
“no others could . . . be effectively exercised.” Id. And the legislature
cannot deprive courts of this inherent authority, which is not governed by
rules or statutes. See id. Rather, the court’s authority “resides in a state of
dormancy until called upon to rectify conduct ‘vexatious and oppressive
in the extreme.’” Estate of Kroslack, 570 N.E.2d at 121 (quoting Saint Joseph’s
Coll., 158 Ind. App. at 280, 302 N.E.2d at 871). After all, courts must be able
to prevent abuse of the legal system. Id.
The ability to grant attorney’s fees stems from the power to equitably
sanction parties. Specifically, a court may award attorney’s fees after
finding “that a party has acted in bad-faith and such conduct is
calculatedly oppressive, obdurate, or obstreperous”—even when no
statutory or common-law exception to the American Rule applies. Id.; see
also Montgomery, Zukerman, Davis, Inc. v. Chubb Grp. of Ins. Cos., 698 N.E.2d
1251, 1254 (Ind. Ct. App. 1998) (finding inherent authority to award
appellate attorney’s fees even though no rule authorized such an award),
trans. denied. In other words, the law does not insulate a party that behaves
in extreme bad faith before voluntarily dismissing its complaint.
We now turn to the evidence and the trial court’s factual findings and
conclusions of law to determine whether its decision to award attorney’s
fees was an abuse of discretion.
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B. The trial court abused its discretion because the
Defendants did not meet their burden to show
that RRDA’s conduct warranted attorney’s fees.
Trial courts have the discretion to award attorney’s fees, but that
discretion cannot be abused. Before a court can invoke its inherent
authority to order such an award, it must conclude that the party “has
acted in bad-faith” and that the conduct was “calculatedly oppressive,
obdurate, or obstreperous.” Estate of Kroslack, 570 N.E.2d at 121.
Here, the trial court reached the ultimate conclusion that “RRDA’s
conduct was in bad faith, obdurate, harassing, and fully supports
assessing costs and attorney’s fees.” In asserting that the decision to award
fees was an abuse of discretion, RRDA takes issue with certain factual
findings and legal conclusions made in support of this ultimate
conclusion.
We first note that the court accepted verbatim the Defendants’
proposed findings and conclusions, a practice that “weakens our
confidence” that those findings were “the result of considered judgment.”
Cook v. Whitsell–Sherman, 796 N.E.2d 271, 273 n.1 (Ind. 2003). With that in
mind, we now address each of RRDA’s arguments in turn, taking a close
look at the evidence in the record.
1. The record fails to show that RRDA knew its lawsuit
lacked merit.
First, RRDA argues that the trial court improperly found that “RRDA
knew its lawsuit was without merit” to support the ultimate conclusion
that RRDA litigated in bad faith. In making the finding, the trial court
reasoned that RRDA’s “legal attack on the validity of the [p]ermits” was
“time barred” because RRDA did not file a petition for judicial review
within thirty days of when the billboard permits were ratified. And the
court further reasoned that RRDA engaged in a “pattern of negative
tactics” by advancing a “meritless” private-nuisance claim.
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A suit’s claims aren’t meritless “merely because a party loses on the
merits.” Kahn, 533 N.E.2d at 171 (citation omitted). Instead, we inquire
whether there are no supporting facts. Id.
Here, the Defendants failed to show that no facts exist to support
RRDA’s suit. It’s true that RRDA did not petition for judicial review
within thirty days of the zoning decision. But RRDA presented, at the very
least, a defensible argument that it could challenge the decision as ultra
vires and void at any time. Cf. Mies v. Steuben Cty. Bd. of Zoning Appeals,
970 N.E.2d 251, 258 (Ind. Ct. App. 2012) (holding that a BZA decision
exceeding its statutory authority is void and can be collaterally attacked at
any time), trans. denied. RRDA argued that the billboard permits were void
because Utica’s town council president lacked the authority to issue them,
and the record reveals that RRDA presented some facts in support of this
claim. Specifically, Utica’s zoning ordinance requires the town building
inspector—not the town council president—to issue all permits. And it
provides that the Utica BZA must approve all “dynamic signs,” including
“LED and EVMS signs,” such as the ones that Outfront planned to
construct. But that approval did not happen because the Utica BZA
declined to review the permits’ validity, believing it lacked authority to do
so.
Further, RRDA also alleged facts in support of its private-nuisance
claim. Although RRDA ultimately dismissed that claim, RRDA had
asserted that the billboards harmed the Commerce Center’s reputation
and marketability as well as RRDA’s “significant investment” in the
Commerce Center and its new entrance.
Given the facts that supported RRDA’s claims, it was clearly erroneous
for the trial court to find that RRDA knew the suit was meritless. And thus
the court’s ultimate conclusion on RRDA’s bad faith is unsupported by
this finding.
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2. The record fails to show that RRDA “changed its
position” about the billboards.
Second, RRDA claims that the trial court improperly found that “RRDA
pursued advertising on the Billboards,” knew “that Outfront had all
permits necessary to construct” them, and then “changed its position.”
This finding supported the trial court’s ultimate conclusion that RRDA
acted in bad faith, warranting attorney’s fees.
Neither the evidence presented, nor the associated finding, indicates
how RRDA’s conduct in this regard constituted bad faith. Presumably, the
Defendants’ concern was that RRDA acted dishonestly by falsely
expressing interest in billboard advertising.
True, RRDA did—to some extent—pursue advertising on the
billboards. But the record does not show that RRDA agreed that the
billboards were properly permitted or that RRDA unequivocally
supported their construction. And while RRDA’s executive director did
meet with Outfront Media after learning of the proposed billboards, he
also testified that he was concerned about whether there would be “any
restrictions against billboards that might be offensive” and inquired about
advertising on them because RRDA wanted to find out “what options
might be available” if the billboards were “a done deal.” RRDA also
maintains that it only later confirmed that the Town had, in fact, issued
the permits. Given the lack of clarity of the Defendants’ argument,
coupled with a lack of evidence supporting it, the trial court's finding on
this issue was clearly erroneous—and so it does not support the ultimate
bad-faith conclusion.
3. The record fails to show that RRDA lacked a basis for
naming Watkins personally as a defendant or
suggesting the Town’s attorney should recuse
himself.
Third, RRDA challenges the trial court’s findings that RRDA sought to
harass or intimidate the Defendants. The trial court found that RRDA
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named Watkins personally as a defendant to its declaratory judgment
claim, “despite knowing that he acted solely as an employee of Outfront.”
The court also found that RRDA’s request that Utica’s attorney withdraw
was “unprofessional, not credible” and “part of a strategy to financially
intimidate a small town with a small budget.” And it used these findings
to support its ultimate bad-faith conclusion. The record reveals, however,
that the Defendants failed to carry their burden to support the two
challenged findings.
Notably, Watkins—not Outfront Media—was individually listed as the
applicant for the INDOT billboard permits. And the declaratory judgment
statute requires that when “declaratory relief is sought, all persons shall
be made parties who have or claim any interest that would be affected by
the declaration.” I.C. § 34-14-1-11. Because Watkins had an interest that
would be affected by a declaration that the billboards were improperly
permitted, the record precludes a finding that RRDA named him
personally for purposes of harassment. Thus, the trial court’s finding on
this issue is clearly erroneous.
Likewise, the trial court’s finding that RRDA’s efforts to disqualify
Utica’s attorney were unprofessional and not credible is clearly erroneous.
While RRDA did send Utica’s attorney a letter requesting that he
withdraw his representation, RRDA first obtained an opinion from the
former executive secretary of the Indiana Disciplinary Commission stating
that the representation was a disqualifying conflict of interest. And RRDA
never actually moved to disqualify Utica’s attorney because the Town first
filed a motion asking the court to determine whether its attorney could
continue his representation. Given that the Defendants failed to produce
evidence to support the two findings, they are clearly erroneous and do
not support the trial court’s ultimate bad-faith conclusion.
4. The record fails to show that RRDA exploited this
lawsuit in pursuit of a scenic-byway designation.
Fourth, RRDA challenges the trial court’s finding that because RRDA
dismissed the lawsuit “the very same day the scenic byway commission
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recommended approval of the byway designation,” the purpose of the
suit “was to buy time for the approval of the scenic byway designation.”
The court continued, “The timing of the dismissal, with prejudice, is more
than coincidental. It is disconcerting.” The trial court used this finding to
support its ultimate conclusion that RRDA litigated in bad faith. We
determine, however, that the finding was clearly erroneous, given the
Defendants’ failure to produce evidence supporting it.
RRDA understood that Outfront Media would be unable to finish
constructing the billboards if the relevant stretch of State Road 265 became
a scenic byway. But although RRDA supported the scenic-byway
designation, the Louisville–Jefferson County KY–IN Metropolitan
Planning Organization initiated the process, which was outside of RRDA’s
control. And the record does not show that RRDA knew, when it filed its
complaint, that the highway would ever become a scenic byway. Rather,
the evidence demonstrates that, after discovering that the four remaining
billboards would never be built, RRDA made a business decision to
dismiss its suit. In other words, RRDA cut costs and moved on. Thus, it
was clear error for the trial court to imply that RRDA knew the scenic-
byway designation would be approved; and the finding fails to support
any resulting conclusion that RRDA’s litigation was in bad faith.
5. The record fails to show that RRDA brought its
“jurisdiction” argument in bad faith.
Finally, RRDA challenges the trial court’s conclusion that RRDA acted
in bad faith because it “persisted in arguing”—despite contrary
precedent—that the court lacked “jurisdiction” to award the Defendants
attorney’s fees.
The trial court cited R.L. Turner Corp. v. Town of Brownsburg, 963 N.E.2d
453, 459–60 (Ind. 2012), as contrary to RRDA’s “jurisdiction” argument.
And the trial court was correct to do so—that case undercuts the premise
of RRDA’s argument because the court would have been able to award
attorney’s fees had the Defendants put forth the necessary evidence.
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But even though the trial court correctly determined that RRDA’s
“jurisdiction” argument lacked merit, it was one issue among many raised
in the lawsuit. And further, bringing such an argument does not
necessarily show that a party “acted in bad-faith” and that the conduct
was “calculatedly oppressive, obdurate, or obstreperous”—conclusions
that are required for a court to grant attorney’s fees under its inherent
authority, Estate of Kroslack, 570 N.E.2d at 121. Instead, to reach that bad-
faith determination—in regard to a party’s presentation of a claim—there
must be some evidence that the party affirmatively operated with “furtive
design or ill will.” Wagler v. W. Boggs Sewer Dist., Inc., 980 N.E.2d 363, 383
(Ind. Ct. App. 2012), trans. denied. Here, the Defendants have failed to
show that, by raising its “jurisdiction” argument, RRDA’s conduct rose to
this level. Thus, the trial court’s ultimate “bad faith” conclusion is
unsupported.
Conclusion
The common-law obdurate behavior exception and the General
Recovery Rule cannot authorize a trial court to award attorney’s fees
when a party voluntarily dismisses its suit with prejudice. But a court can,
at any point in litigation, exercise its inherent authority to sanction a
party’s bad behavior by shifting fees.
Still, the guardrails of zealous advocacy are set wide, while exceptions
to the American Rule are narrow. A party must clear a high hurdle to
show that a court could exercise its inherent authority to award attorney’s
fees. Here, the hurdle was not cleared because the record lacks evidence
that RRDA acted outside the boundaries of acceptable advocacy.
Therefore, the trial court’s findings in this regard were clearly erroneous
and its conclusions unsupported. It thus abused its discretion when
awarding attorney’s fees, and we reverse.
David, Massa, Slaughter, and Goff, JJ., concur.
Indiana Supreme Court | Case No. 19S-PL-645 | May 29, 2020 Page 16 of 17
ATTORNEYS FOR APPELLANT
Anne K. Ricchiuto
Brian J. Paul
Matthew C. Olsen
Emily A. Kile-Maxwell
Faegre Drinker Biddle & Reath LLP
Indianapolis, Indiana
David A. Lewis
Jeffersonville, Indiana
ATTORNEYS FOR APPELLEES OUTFRONT MEDIA, LLC AND
DAVID WATKINS
Bryan H. Babb
Alan S. Townsend
Bradley M. Dick
Bose McKinney & Evans LLP
Indianapolis, Indiana
ATTORNEY FOR APPELLEES NO MOORE, INC. AND THE
SCHLOSSER FAMILY LIMITED PARTNERSHIP
Michael M. Maschmeyer
Jeffersonville, Indiana
ATTORNEYS FOR APPELLEE TOWN OF UTICA
Daniel E. Moore
Matthew K. Duncan
Jeffersonville, Indiana
ATTORNEY FOR APPELLEE UTICA BOARD OF ZONING APPEALS
Rebecca L. Lockard
Jeffersonville, Indiana
ATTORNEYS FOR AMICUS CURIAE DEFENSE TRIAL COUNSEL OF
INDIANA
Peter H. Pogue
Beth A. Behrens
Schultz & Pogue LLP
Indianapolis, Indiana
Lucy R. Dollens
Quarles & Brady LLP
Indianapolis, Indiana
Indiana Supreme Court | Case No. 19S-PL-645 | May 29, 2020 Page 17 of 17