Centier Bank v. Bruce and Sybil Scheffer, and Edward P. Grimmer (mem. dec.) ( 2019 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Aug 29 2019, 7:06 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Paul B. Poracky EDWARD P. GRIMMER
Koransky, Bouwer & Poracky, P.C. Vincent P. Antaki
Dyer, Indiana Reminger Co., LPA
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Centier Bank, August 29, 2019
Appellant-Defendant, Court of Appeals Case No.
19A-PL-337
v. Appeal from the Lake Superior
Court
Bruce and Sybil Scheffer, The Honorable Bruce D. Parent,
Appellees-Plaintiffs, Judge
and Trial Court Cause No.
45D11-1212-PL-106
Edward P. Grimmer,
Appellee-Intervenor.
Bradford, Judge.
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Case Summary
[1] This is the third appeal in the litigation between Centier Bank and Bruce and
Sybil Scheffer (“the Scheffers”). In the prior proceedings, it became clear that
there was never a good faith basis for the Scheffers to have proceeded with the
lawsuit and attorney’s fees were awarded to Centier. On remand, the trial court
ordered the Scheffers to pay $68,731.98 in trial attorney’s fees and $31,911.60 in
appellate attorney’s fees, for a total of $100,643.56. The trial court initially
determining that the Scheffers’ counsel, Edward P. Grimmer, should be jointly
liable for the fees. However, after considering the Scheffers’ motion to correct
error, the trial court determined that Grimmer should not be jointly liable.
Centier challenges the trial court’s order on appeal, arguing that the trial court
abused its discretion by relieving Grimmer of joint liability for the fee award.
Concluding that the trial court did not abuse its discretion in this regard, we
affirm the judgment of the trial court and deny Centier’s request for additional
appellate attorney’s fees.
Facts and Procedural History
[2] The facts and procedural history, as set forth in our opinion in the second
appeal in this case, are as follows:
In December 2012, the Scheffers filed a complaint against
Centier alleging that they had obtained a loan from Centier’s
predecessor, The First Bank of Whiting, in 1985 for the purchase
of residential real property located on Wexford Road in
Valparaiso, Porter County, Indiana, and that the loan had been
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secured by a mortgage on the real property and by an assignment
of insurance policies on the Scheffers’ lives. The life insurance
policy assignments, which were dated in November of 1985 and
attached to the complaint, provide: “It is understood that this
assignment is for the sole purpose of using the policy as collateral
security for existing or future loans made by the assignee to the
owner.” Appellants’ Appendix Volume 2 at 35–36. The
Scheffers alleged “[t]hat mortgage loan was the only loan that
Scheffer had personally with Centier at that time of November
1985,” “[t]he assignments were not given or received as collateral
for any loan or debt obligation other than that mortgage loan on
that residential property,” and they paid Centier “all remaining
balances on that mortgage loan on or about December 17, 2010.”
Id. at 31. The Scheffers requested a judgment including an order
that Centier execute releases of the assignments of the life
insurance policies.
Centier filed an answer denying that the life insurance policy
assignments related in any way to a mortgage loan on residential
real estate. Centier also stated that it entered into a mortgage and
note on Wexford Road property in 2002 and that the loan had
been paid off in December 2010, and it denied that the loan dealt
with any type of mortgage or loan arrangement dating back to
1985. Centier also answered that it had not released the
assignments of the life insurance policies because the loan
obligations for which they served as collateral had not been
satisfied.
The Scheffers moved for summary judgment and designated their
own affidavit which alleged that they had owned life insurance
policies since 1985 and had assigned the policies as collateral on
a promissory note and mortgage on their residential property in
1985. The Scheffers did not designate any documentary evidence
of a 1985 residential mortgage or loan with Centier or its
predecessor. Centier filed a response and cross-motion for
summary judgment and designated the affidavit of Brian Miller,
a vice-president for Centier, which stated that Centier had a
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business relationship with the Scheffers and Scheffer, Inc., dating
before 1985; Centier did not have a residential mortgage loan on
the Wexford Road property at that time; in 1985 the Scheffers as
owners of Scheffer, Inc., assigned several life insurance policies
to Centier as the assignee for the benefit of the commercial loan
relationship between the parties; and that the first residential
mortgage relationship between Centier and the Scheffers
regarding Wexford Road occurred in 2002. The trial court
granted Centier’s cross-motion for summary judgment and
denied the Scheffers’ motion for summary judgment. The
Scheffers appealed, and Centier cross-appealed.
On March 12, 2015, this Court issued a memorandum decision
which reversed the trial court’s entry of summary judgment. See
Scheffer v. Centier Bank, No. 45A03-1410-PL-367, 2015 WL
1142940 (Ind. Ct. App. Mar. 12, 2015).… We concluded that
the Scheffers’ affidavit, although lacking any documentary
support, “was enough to create a genuine issue as to whether the
assignments related to a 1985 mortgage on their personal
residence rather than loans to their business, Scheffer, Inc.,” and
that consequently summary judgment was improper. Id. at 5.
We remanded to the trial court for further proceedings. Id.
The trial court held a bench trial over several days in July and
August of 2017 at which it admitted documentary evidence and
testimony. The Scheffers introduced the life insurance policy
assignments which indicated they were executed by them in
November of 1985. The Scheffers also introduced a promissory
note dated September 18, 2002, signed by them evidencing a loan
from Centier in the original principal amount of $225,000 and a
satisfaction of mortgage dated December 20, 2010, executed by
Centier stating that this mortgage had been fully paid and
satisfied and was released.
****
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Centier’s counsel then introduced exhibits containing a warranty
deed, a mortgage, and a satisfaction of mortgage, and the court
admitted the exhibits. The warranty deed, dated July 22, 1985,
evidences the conveyance of the Wexford Road property to the
Scheffers, and a file-stamp on the deed indicates it was recorded
with the Porter County Recorder on July 25, 1985. The
mortgage was signed by the Scheffers and granted a security
interest in the Wexford Road property to Indiana Federal
Savings and Loan Association as the mortgagee to secure
repayment of a debt of $175,000, and a file-stamp on the
mortgage indicates it was recorded with the Porter County
Recorder on July 25, 1985. Finally, the satisfaction of mortgage,
dated January 19, 1987, states that the debt secured by the
mortgage executed by the Scheffers in favor of Indiana Federal
Savings and Loan Association in July of 1985 was paid and the
mortgage was released.
****
Bruce acknowledged that the allegation in his complaint that he
obtained a loan from the First Bank of Whiting in 1985 for the
purchase of the residential property on Wexford Road was a
mistake. He also indicated that the allegation that Centier
required the Scheffers to assign the life insurance policies as a
term of that loan was a mistake.… When asked “I just want to
make sure I understand. You’re not claiming in 2002 there
actually is a residential mortgage with Centier Bank that there
were life insurance assignments made at that time, are you,”
Bruce answered “I'm not—no longer claiming that.” Id. at 158–
159.
Centier filed a motion for judgment on the evidence. The motion
asserted that there is no evidence that the Scheffers had a
residential mortgage loan on their Wexford Road property with
First Bank of Whiting at any time during 1985, that the Scheffers
had a residential mortgage loan contract with Indiana Federal
Savings and Loan Association on the house which transaction
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was consummated in July 1985, and that the life insurance
assignments were given for commercial loans because those were
the only type of loans the Scheffers had with First Bank of
Whiting in 1985.
On August 17, 2017, the trial court issued an order granting
Centier’s motion for judgment on the evidence, providing in part:
****
11. The Court was somewhat astonished when Mr.
Scheffer acknowledged that the mortgage on the
Wexler property was with Indiana Federal Savings
and he had made a mistake.
12. His mistake was the very foundation of [the
Scheffers’] claim. The Court finds it difficult to
believe that such a successful businessman would not
have accurate knowledge of his personal financial
dealings.
13. Upon Mr. Scheffer’s testimony, the Court would
have expected [the Scheffers] to come to Court today
and dismiss their claim.
14. [The Scheffers] have failed to sustain their burden
of proof in their case in chief and judgment on the
evidence is appropriate.
15. This matter has pended since 2012 and has
involved much court time and a great amount of
attorney time and expense to both [the Scheffers] and
[Centier].
16. There was never a good faith basis to have
proceeded with this lawsuit as no 1985 residential
mortgage contract with First Bank of Whiting ever
existed.
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17. The Court finds that [the Scheffers] brought this
action in bad faith, and continued to maintain the
action when it became clearly apparent that it was
frivolous, unreasonable and groundless.
Appellants’ Appendix at 24–26. Centier submitted an attorney
fee request together with an affidavit of attorney fees and costs.
The court issued an order awarding attorney fees to Centier in
the amount of $68,731.98.
Scheffer v. Centier Bank, 101 N.E.3d 815, 817–22 (Ind. Ct. App. 2018) (“Scheffer
II”).
[3] The Scheffers appealed, claiming that the trial court erred in granting Centier’s
motion for judgment on the evidence. We affirmed, concluding that the record
demonstrated that (1) the Scheffers intended to secure the repayment of the
loans advanced to them and their companies by Centier’s predecessor and (2)
“it was not [the Scheffers’] intent that the policies would secure solely the
repayment of personal or residential debts which did not exist at the time and
would not exist for seventeen years.” Id. at 825. The Scheffers also claimed
that the trial court erred in ordering them to pay attorney’s fees. Again, we
affirmed, concluding that the evidence supported the trial court’s determination
that there was never a good faith basis to have proceeding with this lawsuit as
no 1985 residential mortgage with Centier’s predecessor ever existed. Id. at
826.
[4] We also considered Centier’s request for appellate attorney’s fees, concluding as
follows:
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Centier has shown, based on the evidence as set forth above and
in the record, that the Scheffers’ appeal with respect to the trial
court’s ruling on its motion for judgment on the evidence is
meritless. We remand for a determination of a reasonable
appellate attorney fee award under these circumstances. We
decline to require the trial court to order that the Scheffers’
attorney be held jointly responsible for an attorney fee award in
favor of Centier.
Id. at 827.
[5] On November 28, 2018, the trial court imposed appellate attorney’s fees “in the
sum of $31,911.60, which shall be added to the outstanding judgment in the
amount of $68,731.98, for a total sum of $100,643.56.” Appellant’s App. Vol.
II pp. 194–95. The trial court ordered that “the [Scheffers’] attorney, Edward P.
Grimmer, shall be jointly responsible with the plaintiffs for the judgment
entered herein.” Appellant’s App. Vol. II p. 195. The Scheffers filed a motion
to correct error, alleging that the November 28, 2018 order contained four
errors: (1) trial court erred by finding Grimmer jointly and severally liable on
remand because the only question on remand was the amount of appellate
attorney’s fees to be imposed; (2) the trial court “went beyond the motions,
beyond the briefing, and without any evidence about what might be held
reasonable fees, which denied the Scheffers and their attorney due process to
contest the award of $31,911.60;” (3) “there is no common law or statutory
authority for the award post-judgment collection fees recoverable;” and (4) the
trial court abused its discretion by imposing a duty upon Grimmer that was
outside the scope of his ability or power. Appellant’s App. Vol. II pp. 196–97.
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On January 15, 2019, the trial court granted the motion to correct error and
amended the November 28, 2018 order by eliminating its prior order that
Grimmer be jointly and severally liable for payment of the fees, making the
Scheffers solely liable for payment of the sum of $100,643.56 plus interest.
Discussion and Decision
I. Motion to Correct Error
[6] Centier challenges the trial court’s decision to grant the Scheffers’ motion to
correct error. Specifically, it argues that the trial court abused its discretion by
relieving Grimmer of liability for payment of the attorney’s fees. “A trial court
has discretion to grant or deny a motion to correct error and we reverse its
decision only for an abuse of that discretion.” Hawkins v. Cannon, 826 N.E.2d
658, 661 (Ind. Ct. App. 2005), trans. denied. “An abuse of discretion occurs
when the trial court’s decision is against the logic and effect of the facts and
circumstances before the court or if the court has misinterpreted the law.” Id.
[7] In Scheffer II, we declined Centier’s request that we “require the trial court to
order that the Scheffers’ attorney be held jointly responsible for an attorney fee
award in favor of Centier.” 101 N.E.3d at 827. By declining Centier’s request,
we left the question of whether Grimmer should be jointly responsible for the
fee award to the trial court’s discretion. The trial court ultimately determined
that Grimmer should not be jointly liable.
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[8] Centier argues that the trial court abused its discretion in considering the
motion to correct error. In making this argument, Centier asserts that because
Grimmer was conflicted, he lacked standing to file the motion on behalf of the
Scheffers. Essentially, Centier claims that “Grimmer should not have been
allowed to file” the motion to correct error and the trial court should have
disqualified Grimmer from filing motions and making arguments on behalf of
the Scheffers because Grimmer had a conflict of interest as to whether the
Scheffers should be solely or jointly liable for the fees. Appellant’s Br. p. 21. It
is undisputed that at the time he filed the motion to correct error, Grimmer was
the Scheffers’ counsel of record. While a conflict may have arisen during this
representation that would warrant the termination of the attorney-client
relationship, neither the Scheffers nor Grimmer had taken any steps to
terminate their relationship prior to the filing of the motion to correct error.
Further, while Centier argues that the trial court should not have ruled on the
motion to correct error, Centier has cited to no relevant authority in support of
this argument. In addition, nothing in the record suggests that the trial court
had been divested of jurisdiction to rule on the motion.1 As such, we cannot
1
A review of relevant case law indicates that “[o]nce a trial court acquires jurisdiction, it retains jurisdiction
until it enters a final judgment in the case.” Hubbard v. Hubbard, 690 N.E.2d 1219, 1221 (Ind. Ct. App. 1998).
We have held that a trial court does not lose jurisdiction by committing prejudicial error, applying the wrong
principle of law, or making an erroneous decision. Matter of Adoption of H.S., 483 N.E.2d 777, 781 (Ind. Ct.
App. 1985). Likewise, the withdrawal of an attorney for a party does not affect the trial court’s jurisdiction
over the party. State ex rel. Durham v. Marion Circuit Court, 240 Ind. 132, 136, 162 N.E.2d 505, 507 (1959).
Further, our review of relevant authorities has revealed only three situations where a trial court is divested of
jurisdiction. First, when a party files a motion for a change of judge pursuant to Trial Rule 76, the trial court
“is divested of jurisdiction except to grant the change of venue or act on emergency matters.” Bedree v.
DeGroote, 799 N.E.2d 1167, 1172 (Ind. Ct. App. 2003). Second, absent a few exceptions, a trial court is
divested of jurisdiction following the death of one of the parties in divorce proceedings. Riggs v. Riggs, 77
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conclude that the trial court abused its discretion by considering a motion filed
by counsel of record in a pending case before it.
[9] Furthermore, in arguing that the trial court abused its discretion in granting the
motion to correct error, Centier presents numerous allegations of attorney
misconduct by Grimmer. While we acknowledge these allegations, we limit
our review to the question of whether the trial court abused its discretion in
granting the motion to correct error.
II. Request for Additional Appellate Attorney’s Fees
[10] Centier requests that this court impose an award of additional attorney’s fees. 2
However, given our conclusion that the trial court did not abuse its discretion in
granting the Scheffers’ motion to correct error, we decline this request because
Centier’s contentions did not prevail on appeal. See Houston v. Booher, 647
N.E.2d 16, 22 (Ind. Ct. App. 1995) (“A losing party is not entitled to attorney
fees.”).
[11] The judgment of the trial court is affirmed.
Vaidik, C.J., and Riley, J., concur.
N.E.3d 792, 794 (Ind. Ct. App. 2017). Third, a trial court is largely divested of jurisdiction over a case
following the initiation of an appeal. Clark v. State, 727 N.E.2d 18, 21 (Ind. Ct. App. 2000).
2
In making this request, Centier requests that we hold Grimmer solely liable for payment of these additional
appellate attorney’s fees.
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