In Re the Estate of James E. Hurwich, Scott D. Hurwich v. Stacey MacDonald (mem. dec.) ( 2019 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any FILED
court except for the purpose of establishing May 28 2019, 9:14 am
the defense of res judicata, collateral CLERK
estoppel, or the law of the case. Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR ATTORNEY FOR
APPELLANT/CROSS-APPELLEE APPELLEE/CROSS-APPELLANT
James M. Lewis Timothy J. Maher
Michael J. Hays Barnes & Thornburg LLP
Tuesley Hall Konopa LLP South Bend, Indiana
South Bend, Indiana
IN THE
COURT OF APPEALS OF INDIANA
In Re the Estate of James E. May 28, 2019
Court of Appeals Case No.
Hurwich,
19A-EU-38
Scott D. Hurwich, Appeal from the St. Joseph Probate
Court
Appellant/Cross-Appellee/Plaintiff,
The Honorable Jeffrey Sanford,
v. Special Judge
Trial Court Cause No.
Stacey MacDonald, 71J01-0412-EU-56
Appellee/Cross-Appellant/Defendant.
Bradford, Judge.
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Case Summary
[1] James Hurwich was the father of Scott Hurwich (“Hurwich”) and Stacey
MacDonald (“MacDonald”). Following his death in 2004, the Estate of James
Hurwich (“the Estate”) was administered by MacDonald and closed in 2007. In
2013, Hurwich moved to reopen the Estate, which motion the probate court
granted. In 2014, Hurwich filed a complaint against MacDonald, alleging that
she had breached her fiduciary duties as the Estate’s personal representative and
mismanaged its assets. MacDonald moved to dismiss Hurwich’s complaint,
which motion the probate court granted. Hurwich then moved for leave to
amend his complaint, which motion was denied by the probate court. In 2018,
we affirmed that denial and remanded for reasons that are not relevant to this
appeal. On remand, MacDonald requested that she be awarded attorney’s fees.
The probate court awarded MacDonald $44,444.00 in attorney’s fees. Hurwich
appeals, contending that because his claims were not frivolous, unreasonable,
or groundless, the probate court erroneously awarded MacDonald attorney’s
fees. MacDonald cross-appeals, contending that the probate court should have
awarded her approximately $40,306.50 more in attorney’s fees and requesting
that we award her appellate attorney’s fees and costs. Because we disagree with
both Hurwich’s and MacDonald’s contentions, we affirm.
Facts and Procedural History
[2] We stated the underlying facts of this case in a prior appeal as follows:
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The Estate was opened in 2004. MacDonald was appointed
administrator of the Estate, and she administered it unsupervised
until it was closed in 2007. Apparently, MacDonald failed to
distribute approximately 600 items and assets belonging to her
father before the Estate was closed. On March 6, 2013, Hurwich
petitioned to reopen the Estate; the probate court granted
Hurwich’s petition. On June 18, 2013, the probate court
appointed Paul Cholis as successor personal representative for
the Estate. On October 3, 2014, Hurwich filed a complaint
against MacDonald, under the Estate cause number EU–56,
alleging that she had mismanaged the Estate’s assets and
breached her fiduciary duties. On November 14, 2014,
MacDonald filed a motion to dismiss Hurwich’s complaint
under Indiana Trial Rule 12(B)(6), alleging that it had been
untimely filed after the applicable statute of limitations had run.
On June 12, 2015, the probate court granted MacDonald’s
motion and dismissed Hurwich’s complaint with prejudice.
On June 22, 2015, Hurwich filed a motion to reconsider. On July
27, 2015, a hearing on the motion to reconsider took place, and
the probate court took the issue under advisement. Then, on
February 9, 2016, while the motion to reconsider was still
pending, Hurwich filed a motion for leave to amend his
complaint. In his proposed amended complaint, he alleged that
MacDonald had committed fraud when, in closing the Estate,
she represented that she had fully administered the Estate and
properly distributed all assets; he also alleged that she had taken
personal property from the Estate for her own use.
On May 6, 2016, Cholis filed a petition for instructions for
“recovery of assets formerly owned by the decedent or in his
possession at the time of his death.” Appellant’s App. Vol. II p.
42. In this petition, Cholis:
• Stated that MacDonald testified at her deposition that
she had received gifts, including paintings, necklaces,
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diamond rings, and liquor bottles, from her father within
five years of his death.
• Stated that MacDonald “testified that she, as the former
Personal Representative of the estate, did distribute to
herself certain items of tangible personal property which
[Cholis] believe[d] constituted partial distributions to her
and which should be taken into account by charging her
with the value of such items so distributed upon the final
distribution of the remaining tangible personal property;
...” Id. at 43.
• Stated that there were “numerous items of tangible
personal property” located at the decedent’s former
residence that Cholis “believe[d] can and should be
distributed among the three residuary beneficiaries of the
estate” through an in-kind selection process and a public
auction. Id.
• Requested the probate court to direct him to not attempt
to recover items of tangible personal property that
MacDonald identified as gifts that she received from her
father before his death. Cholis cited to time limits in the
probate code for proceedings against personal
representatives and to case law in which a petition to re-
open an estate was time-barred.
On June 24, 2016, Hurwich filed a response to Cholis’s petition
in which Hurwich stated that the parties wanted instruction from
the probate court about how to determine whether the items that
MacDonald testified were gifts were actually gifts from their
father or whether they were self-distributed items. Hurwich
requested, among other things, that Cholis identify and catalog
each of the individual items in question. Hurwich also argued
that the issue was not time-barred.
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A hearing took place on July 27, 2016. On July 29, 2016, the
probate court denied Hurwich’s motion for leave to amend his
complaint, finding that Hurwich was not entitled to amend a
complaint that had been properly dismissed pursuant to the
statute of limitations for relief against fraud. The probate court
also found that Hurwich’s complaint was not a valid cause of
action because Hurwich filed it as part of the estate
administration, rather than a separate cause of action, and
therefore failed to pay a filing fee or have a summons issued. The
probate court ordered for Hurwich and another beneficiary to
have access to the decedent’s home for an in-kind selection
process of the 600 items located there and for all assets not
selected to be sold at a public auction. Lastly, the probate court
ordered that Hurwich’s claim against MacDonald about gifts
received before their father’s death was time-barred under the
statute of limitations.
Throughout the fall of 2016, Cholis distributed the Estate’s assets
as ordered by the probate court. On March 10, 2017, Cholis filed
a Supplemental Report of Distribution (“the Report”) in which
he summarized the distribution of the Estate’s assets; listed the
value of the assets that Hurwich, MacDonald, and another
beneficiary received; requested that he be discharged as personal
representative; and requested that the court order the Estate
closed. That same day, the probate court approved the report and
entered an order closing the Estate. On March 20, 2017, Cholis
served a copy of the Report and the probate court’s signed order
to Hurwich and other interested parties. On March 30, 2017,
Hurwich filed a motion to correct error, asking the probate court
to vacate its order approving the Report because there was
neither service nor an opportunity to object to the Report. On
April 10, 2017, the probate court denied his motion.
In re Estate of Hurwich, 103 N.E.3d 1135, 1137–38 (Ind. Ct. App. 2018), reaff’d on
reh’g In re Estate of Hurwich, 109 N.E.3d 416 (Ind. Ct. App. 2018). In the
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previous appeal, we concluded that the probate court did not err by denying
Hurwich’s motion to amend his complaint. Although we noted that the
dismissal should have been without prejudice, we found that Hurwich’s appeal
of that decision two years after it was decided was untimely and unavailing.
[3] On remand, MacDonald sought to recover attorney’s fees. On December 13,
2018, the probate court awarded her attorney’s fees in the amount of $44,444.00
after finding that Hurwich’s complaint was frivolous, unreasonable, or
groundless pursuant to Indiana Code section 34-52-1-1.
Discussion and Decision
I. Award of Attorney’s Fees
[4] Hurwich contends that the trial court erroneously awarded MacDonald
attorney’s fees pursuant to Indiana Code section 34-52-1-1. A probate court
may award attorney’s fees if the court finds that a party brings a claim that is
frivolous, unreasonable, or groundless. Ind. Code § 34-52-1-1(b)(1).
The trial court’s decision to award attorney’s fees under § 34-51-
1-1 is subject to a multi-level review: the trial court’s findings of
facts are reviewed under the clearly erroneous standard and legal
conclusions regarding whether the litigant’s claim was frivolous,
unreasonable, or groundless are reviewed de novo. Finally, the
trial court’s decision to award attorney’s fees and any amount
thereof is reviewed for an abuse of discretion. A trial court abuses
its discretion if its decision clearly contravenes the logic and
effect of the facts and circumstances or if the trial court has
misinterpreted the law.
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Purcell v. Old Nat. Bank, 972 N.E.2d 835, 843 (Ind. 2012) (internal citations
omitted). A claim is frivolous if it is brought primarily for the purpose of
harassment, if the attorney is unable to make a good faith and rational
argument on the merits of the action, or if the attorney is unable to support the
action taken by a good faith and rational argument for an extension,
modification, or reversal of existing law. Yoost v. Zalceburg, 925 N.E.2d 763, 772
(Ind. Ct. App. 2010), trans. denied. A claim is unreasonable if, based on the
totality of the circumstances, including the law and facts known at the time of
filing, no reasonable attorney would consider the claim worthy of litigation. Id.A claim is groundless if there are no facts existing that support the legal claim
presented by the losing party. Id.[5] We conclude that the probate court did not err in awarding MacDonald
attorney’s fees. Hurwich brought his original complaint against MacDonald
more than seven years after the Estate was originally closed, which was far after
the applicable statutes of limitations had run. We note that the purpose of
statutes of limitations is to encourage the prompt filing of claims. This not only
prevents the litigation of stale claims but also allows Hoosiers to live their lives
without endlessly waiting for the axe to fall. See Perryman v. Motorist Mut. Ins.
Co., 846 N.E.2d 683, 689 (Ind. Ct. App. 2006) (“The general purpose of a
statute of limitation is to encourage the prompt presentation of claims…They
are practical and pragmatic devices to spare the courts from litigation of stale
claims, and the citizen from being put to his defense after memories have faded,
witnesses have died or disappeared, and evidence has been lost.”). Given that
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Indiana Code section 34-52-1-1 is written in the disjunctive, Hurwich’s claims
need only be frivolous, unreasonable, or groundless, but not all three. That said,
based on the totality of the circumstances in this matter, no reasonable attorney
would consider claims worthy of litigation well after the applicable statutes of
limitations have run.
[6] Hurwich specifically argues that had he been permitted to amend his complaint
to allege fraudulent concealment, his claim would not have been frivolous,
unreasonable, or groundless because it would have been within the applicable
statute of limitations. The probate court, however, denied Hurwich the
opportunity to amend his complaint, which we affirmed on appeal. Therefore,
his argument is without merit, and he has failed to establish that his claims were
not frivolous, unreasonable, or groundless.
II. Amount of Attorney’s Fees
[7] MacDonald contends that the trial court erroneously interpreted the amount of
attorney’s fees attributable to the instant action outlined in her request, and in
doing so, failed to award approximately $40,306.50 in additional fees. We
review a probate court’s decision to award attorney’s fees and any amount
thereof for an abuse of discretion. Purcell, 972 N.E.2d at 843. Again, a probate
court abuses its discretion if its decision clearly contravenes the logic and effect
of the facts and circumstances or if the probate court has misinterpreted the law.
Id.
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[8] We conclude that the probate court did not abuse its discretion in awarding the
amount of attorney’s fees it did. First, it appears that the probate court took into
account the verified statements outlining the fees and MacDonald’s attorney’s
explanation of said statements made during the evidentiary hearing, finding as
follows:
After reviewing the billing of Stacey MacDonald’s attorney, the
Court finds the hourly rate to be reasonable; however, the Court
does not find that all the work submitted was related to the
lawsuit. Therefore, the Court now awards $44,444.00 in attorney
fees to Stacey MacDonald, payable by Scott Hurwich.
Appellant’s App. Vol. II pp. 13–14. The probate court was free to reject this
evidence from MacDonald’s attorney, and we will not second-guess its
evaluation of the evidence.
[9] Moreover, Indiana Code section 34-52-1-1, states that the probate court may
award attorney’s fees if a claim is frivolous, unreasonable, or groundless.
(emphasis added). The statute does not require the probate court to award
attorney’s fees nor does it require the entire amount accumulated defending the
claims be awarded if the probate court chooses to award fees. Given the
discretionary nature of the statute coupled with the probate court’s explanation
in its order, we cannot say that the amount awarded was an abuse of discretion.
III. Appellate Attorney’s Fees
[10] MacDonald requests that the attorney’s fees and costs incurred in this appeal be
awarded. Indiana Appellate Rule 66(E) provides that we “may assess damages
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if an appeal…is frivolous or in bad faith. Damages shall be in the Court’s
discretion and may include attorneys’ fees.”
Our discretion to award attorney fees under Appellate Rule 66(E)
is limited to instances when an appeal is permeated with
meritlessness, bad faith, frivolity, harassment, vexatiousness, or
purpose of delay. Moreover, while we have discretionary
authority to award damages on appeal, we must use extreme
restraint when exercising this power because of the potential
chilling effect upon the exercise of the right to appeal. A strong
showing is required to justify an award of appellate damages, and
the sanction is not imposed to punish mere lack of merit, but
something more egregious. Just as pro se litigants are required to
follow all of the rules of appellate procedure, they are also liable
for attorney fees when they disregard the rules in bad faith.
Indiana appellate courts have categorized claims for appellate
attorney fees into substantive and procedural bad faith claims. To
prevail on a substantive bad faith claim, the party must show that
the appellant’s contentions and arguments are utterly devoid of
all plausibility. Substantive bad faith implies the conscious doing
of wrong because of dishonest purpose or moral obliquity.
Poulard v. LaPorte Cty. Election Bd., 922 N.E.2d 734, 737–38 (Ind. Ct. App. 2010)
(internal quotations and citations omitted).
[11] MacDonald contends that because Hurwich’s claims were found to be
frivolous, unreasonable, or groundless by the probate court, this appeal is
likewise frivolous or in bad faith. We cannot agree with this line of reasoning,
because adopting it would render appeals of attorney’s fees which are awarded
under Indiana Code section 34-52-1-1 meaningless. Although Hurwich’s
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original complaint was frivolous, unreasonable, or groundless, his decision to
appeal a decision that requires him to pay over $40,000 in attorney’s fees is
entirely reasonable. Therefore, we deny MacDonald’s request for appellate
attorney’s fees and costs.
[12] The judgment of the probate court is affirmed.
Crone, J., and Tavitas, J., concur.
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