Donald and Jennie Walker v. Glenn Sermersheim ( 2012 )

FILED
Pursuant to Ind.Appellate Rule 65(D),
this Memorandum Decision shall not
be regarded as precedent or cited
before any court except for the purpose Dec 27 2012, 8:50 am
of establishing the defense of res
judicata, collateral estoppel, or the law CLERK
of the supreme court,
court of appeals and
of the case. tax court
ATTORNEY FOR APPELLANTS: ATTORNEY FOR APPELLEE:
MICHAEL FRISCHKORN THOMAS W. BLESSING
Frischkorn Law LLC Indianapolis, Indiana
Fortville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
DONALD and JENNIE WALKER, )
)
Appellants, )
)
vs. ) No. 29A02-1204-CC-338
)
GLENN SERMERSHEIM, )
)
Appellee. )
APPEAL FROM THE HAMILTON SUPERIOR COURT
The Honorable Daniel Pfleging, Judge
Cause No. 29D02-1010-CC-1362
December 27, 2012
MEMORANDUM DECISION - NOT FOR PUBLICATION
BROWN, Judge
Dr. Donald Walker and his wife Jennie Walker appeal the court’s order in favor of
Glenn Sermersheim. The Walkers raise one issue which we revise and restate as whether
the trial court abused its discretion in denying the Walkers’ motion to correct error and in
awarding their former attorney Glenn Sermersheim $14,800.67. On cross-appeal,
Sermersheim raises one issue which we revise and restate as whether the trial court’s
award of damages was inadequate. Sermersheim also requests appellate attorney fees
pursuant to Ind. Appellate Rule 66(E). We affirm and deny Sermersheim’s request for
attorney fees.
The relevant facts follow. In late 2007, Dr. Walker met with Sermersheim, who
practices law in the areas of tax planning, tax controversies, and business transactions
with significant tax issues including mergers and acquisitions, to discuss a situation that
he had with the Internal Revenue Service (“IRS”). Scott Cole, one of the Walkers’
attorneys, informed Sermersheim that the amount of tax liability the IRS was claiming
was about $880,000. At the initial meeting, Sermersheim told Dr. Walker regarding his
fee that “[It] could be $40,000. It could be $60,000. It could be $100,000. We don’t
know. These things are very open ended, and you don’t want to go through a full trial.
You’re going to lose.” Transcript at 86.
Dr. Walker retained Sermersheim in December 2007. The fee agreement
indicated that Sermersheim would perform legal services for a fee of $275 per hour and
that Sermersheim would need a retainer of $5,000 to be paid upon execution of the
agreement. The Walkers signed the fee agreement and paid Sermersheim $5,000 as a
retainer fee.
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At some point in the spring of 2008, Sermersheim met with Dr. Walker in
downtown Indianapolis, and Dr. Walker gave Sermersheim a check for $8,545. At some
point, Sermersheim sent the Walkers invoices for his work in the matter. In an e-mail
dated March 25, 2008, Sermersheim informed Jennie Walker that there would be a “lot of
work for [him] to do in the next few weeks.” Plaintiff’s Exhibit 10. Sermersheim also
attached an invoice and stated: “Please try to pay this soon since it is now over 45 days.”
Id.
On July 3, 2008, Sermersheim called Dr. Walker regarding the status of the case
and said: “By the way, my June 11th invoice that I personally gave you at our meeting
June 12th is still not paid three weeks later.” Transcript at 110. Dr. Walker said: “Yeah,
I’ll get you a check soon.” Id. Dr. Walker then stated that “this is just getting to be a lot
of time.” Id. at 110-111. Sermersheim informed Dr. Walker that he had another $10,000
of unbilled time, and Dr. Walker stated: “What? Are you kidding me?” Id. at 111. Dr.
Walker also told Sermersheim: “I’m not paying you this. I’m not paying you another
dime.” Id.
In a letter dated July 11, 2008, Dr. Walker wrote to Sermersheim indicating that he
had decided to no longer retain him as legal counsel. The letter indicated that
Sermersheim’s direction to resolve the matter was not acceptable to him. The letter also
stated: “You have been paid more than necessary at this point in time and would [sic] like
to be reimbursed from some of the $5,000 retainer fee. Contract asked for $1000.00, then
you changed to $5,000.00 verbally.” Plaintiff’s Exhibit 7.
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On October 15, 2010, Sermersheim filed a complaint against the Walkers alleging
breach of contract and unjust enrichment and requesting damages of $18,210.67. On
December 15, 2011, the court held a bench trial. Sermersheim testified to the foregoing
facts and that he had five or six meetings with Dr. Walker and an equal number of phone
calls. When asked to summarize the complexity of the case, Sermersheim stated:
A family partnership issue is very complex just of its own nature. This one
was even more complex because the purported structure that they were
trying to set up, they didn’t even document it that way. There was never
any capital contributions to form these entities. The checking accounts
were never set up. They were co-mingled. Dad kept all of the tax refunds.
He paid all the taxes out of his checking account. Kids never paid taxes.
Nothing was followed. Apparently real estate was supposed to be
transferred and deeds were signed, but they weren’t recorded. So I said,
you’re facing a huge uphill battle in not having these LLCs disregarded.
Transcript at 78-79. Sermersheim also testified that the outstanding balance of the
Walkers’ account with him was $18,210.
Dr. Walker testified that he never received a single bill from December 2007 until
September 2010 and that he did not ever recall paying Sermersheim $8,500 or anything
beyond $5,000.1 Dr. Walker denied that certain meetings listed on the invoices occurred,
that they occurred for the length of time listed on the invoices, or that he received
communications from Sermersheim. Dr. Walker testified that he does not deal with e-
mail and did not recall providing Sermersheim with Jennie’s e-mail address, but after a
voicemail message left by Dr. Walker for Sermersheim was played, Dr. Walker admitted
that he gave Sermersheim Jennie’s e-mail address.
1
At one point, Dr. Walker testified: “It’s possible, but I don’t recall writing two checks.”
Transcript at 68.
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At the end of the trial, the court gave the Walkers’ attorney fifteen days to submit
a memorandum and gave Sermersheim’s attorney seven days to file a response. The
court stated that after the parties filed their memoranda, then “either party could request
findings, or you could just submit a straight order.” Id. at 206. Neither party requested
special findings.
In January 2012, the court entered a judgment in favor of Sermersheim in the
amount of $14,800.67. Specifically, the court’s order stated:
JUDGMENT ENTRY
On December 15, 2011, [Sermersheim] appeared in person and by
counsel, Thomas W. Blessing, and [the Walkers] appeared in person and by
counsel, Arvin R. Foland, for trial. The Court has jurisdiction over the
parties. Subject-matter jurisdiction exists under I.C. § 33-29-1-1.5(1).
Witnesses were sworn, evidence was presented and the Court requested
proposed orders and took the matter under advisement.
Each side has submitted proposed Orders and the Court having
reviewed the proposed orders, the exhibits and the trial testimony and being
duly advised in the premises, pursuant to Trial Rules 54 and 58, the Court
now enters judgment as follows:
IT IS HEREBY ORDERED, ADJUDGED AND DECREED that
judgment shall be and hereby is entered in favor of [Sermersheim] and
against [the Walkers], jointly and severally, in the principal amount of
$14,800.67 (52.3 hours x $275.00 and disbursement of $418.17) plus court
costs of $159.00; and post-judgment interest at the rate of eight per cent
(8%) per annum until said judgment is satisfied.
Appellants’ Appendix at 54.
On February 9, 2012, the Walkers filed a motion to correct error requesting that
the court modify its judgment or grant a new trial. The Walkers alleged that they
checked their records after the trial and found that they had a check evidencing a payment
of $8,545 to Sermersheim. The Walkers requested that the court “modify or grant a new
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trial on its decision herein by giving credit against the judgment amount for the $8,545.00
paid leaving $6,255.67 in the final judgment, and thus correct the error committed.” Id.
at 61. The Walkers’ motion to correct error was deemed denied in March 2012.
The issue is whether the trial court abused its discretion in denying Walker’s
motion to correct error and in awarding Sermersheim $14,800.67. We generally review
rulings on motions to correct error for an abuse of discretion. Speedway SuperAmerica,
LLC v. Holmes, 885 N.E.2d 1265, 1270 (Ind. 2008), reh’g denied; Ind. Bureau of Motor
Vehicles v. Charles, 919 N.E.2d 114, 116 (Ind. Ct. App. 2009). An abuse of discretion
occurs if the trial court’s decision is against the logic and effect of the facts and
circumstances before it, or the reasonable inferences drawn therefrom. Lighty v. Lighty,
879 N.E.2d 637, 640 (Ind. Ct. App. 2008), reh’g denied.
To the extent that the court entered findings in its January 10, 2012 order, the trial
court apparently did so sua sponte. In general, sua sponte findings control only as to the
issues they cover, and a general judgment will control as to the issues upon which there
are no findings. Yanoff v. Muncy, 688 N.E.2d 1259, 1262 (Ind. 1997). When a trial
court has made findings of fact, we apply the following two-tier standard of review:
whether the evidence supports the findings of fact, and whether the findings of fact
support the conclusions thereon. Id. Findings will be set aside if they are clearly
erroneous. Id. “Findings are clearly erroneous only when the record contains no facts to
support them either directly or by inference.” Id. A judgment is clearly erroneous if it
applies the wrong legal standard to properly found facts. Id. To determine that a finding
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or conclusion is clearly erroneous, our review of the evidence must leave us with the firm
conviction that a mistake has been made. Id.A general judgment standard applies to issues upon which the trial court made no
findings. Zukerman v. Montgomery, 945 N.E.2d 813, 818 (Ind. Ct. App. 2011). A
general judgment may be affirmed based on any legal theory supported by the evidence.
Rea v. Shrover, 797 N.E.2d 1178, 1181 (Ind. Ct. App. 2003). As we conduct our review,
we presume the trial court followed the law. Id. It is not enough that the evidence might
support some other conclusion, but it must positively require the conclusion contended
for by appellant before there is a basis for reversal. Id. Generally, “‘[a] client has a right
to discharge a lawyer at any time, with or without cause, subject to liability for payment
for the lawyer’s services.’” Galanis v. Lyons & Truitt, 715 N.E.2d 858, 861 (Ind. 1999)
(quoting Ind. Professional Conduct Rule 1.16 cmt.).
The Walkers appear to argue that the trial court failed to address the payments that
they made to Sermersheim and that the evidence presented at trial clearly established that
they were entitled to a credit of $13,545. The Walkers point out that Sermersheim
testified that the Walkers had paid the initial retainer of $5,000 on January 6, 2008, and a
later payment of $8,545 on June 10, 2008, which totaled $13,545. The Walkers also
point out that Dr. Walker claimed that he did not have any knowledge of a payment to
Sermersheim of $8,545, but that following the trial, Dr. Walker located the copy of the
check made out to Sermersheim for $8,545 that corroborated Sermersheim’s testimony.
The Walkers also allege that the court’s order did not indicate any set-offs or credits.
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Sermersheim argues that both of the payments which the Walkers contend were
overlooked were admitted into evidence. Sermersheim also argues that the Walkers’
argument rests on their belief that the court failed to include or consider the $13,545 in
payments which they made to Sermersheim, but “[t]hey do not point to anything in the
record to support this argument, which amounts to a hunch.” Appellee’s Brief at 9.
Sermersheim contends that a trial court is presumed to have based its decision on the
evidence admitted. Sermersheim also argues that the Walkers’ “accounting is backwards;
the issue at trial was the amount of unpaid fees which Sermersheim was entitled to
recover, not the total amount of his fees.” Id. at 10. Sermersheim contends that the
Walkers waived the defense of payment because it is an affirmative defense and the
Walkers did not assert it in their answer. Sermersheim also alleges that to the extent the
trial court’s alleged failure to consider these payments amounts to error, the Walkers
invited it when Dr. Walker denied making a payment beyond the $5,000 retainer.2
On cross-appeal, Sermersheim argues that he presented evidence that he had
performed legal work for the Walkers at the agreed upon rate of $275 per hour for a total
of $31,157.50 in fees and $598.17 in disbursements, that subtracting the payments of
2
Sermersheim mentions in his brief that Dr. Walker adamantly denied making the very $8,545
payment for which he now seeks credit and cites to page 180 of the transcript. The following exchange
occurred during the examination of Dr. Walker by his attorney:
Q. So, if [Sermersheim] said that you met downtown and that’s when you gave him
the $80 - $8545 check, do you deny that?
A. I deny that. That’s absolutely not true. One down – one downtown meeting and
that was it. That’s – that was enough. There’s no way I would ever have gone
back downtown.
Transcript at 180. Based upon this exchange, it appears that Dr. Walker was adamant about his statement
that there was only one meeting downtown. We also observe that, as noted earlier, Dr. Walker testified:
“It’s possible, but I don’t recall writing two checks.” Id. at 68.
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$5,000 and $8,545 from these amounts equals a balance due from the Walkers of
$18,210.67, and that the court’s judgment of $14,800.67 was inadequate.
In their reply brief, the Walkers argue that “[s]imply because Sermersheim wanted
the issue to be the unpaid balance, the testimony of the witnesses addressed the totality of
the fees, not just the unpaid portion.” Appellants’ Reply Brief at 3. The Walkers also
argue that the trial court did not address the payments that Sermersheim had already
received in its order. The Walkers contend that it is reasonable that Dr. Walker did not
remember and could not find the payment for the $8,545 after such a long period of time
and inactivity. With respect to Sermersheim’s cross-appeal, the Walkers argue that his
argument should be waived for failure to present a cogent argument and that he is asking
this court to reweigh the evidence and the credibility of the witnesses.
To the extent that the Walkers suggest that the trial court ignored the check written
by Dr. Walker in the amount of $8,545, we observe that Sermersheim’s complaint
acknowledged that the Walkers paid him for some of his services, that Sermersheim
testified that Dr. Walker gave him a check for $8,545, and that the court admitted a
document illustrating the Walkers’ current balance as of September 24, 2010, which
noted that Sermersheim had received a payment of $8,545. With respect to
Sermersheim’s cross-appeal, we observe that the Walkers and Sermersheim presented
conflicting evidence regarding the interactions between the Walkers and Sermersheim
and the hours worked. While it is not clear exactly how the trial court arrived at an award
of $14,800.67, the court’s award was within the evidence presented and neither party
requested specific findings under Ind. Trial Rule 52. We cannot say that the court’s
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findings were clearly erroneous or that the evidence positively requires the conclusion
contended for by either the Walkers or Sermersheim. See McClamroch v. McClamroch,
476 N.E.2d 514, 520 (Ind. Ct. App. 1985) (“First, Emily’s argument [that] the children
cannot complain about the specificity of the findings because they did not request
findings under T.R. 52 is well taken.”), reh’g denied, trans. denied; State ex rel. Williams
v. Lugar, 180 Ind. App. 611, 619 n.6, 390 N.E.2d 210, 215 n.6 (1979) (“Since appellants
did not request findings of fact, they cannot complain that the trial court provided
findings of fact on only some of the issues.”).
Regarding Sermersheim’s request for appellate attorney fees, Ind. Appellate Rule
66(E) provides that this court “may assess damages if an appeal, petition, or motion, or
response, 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 is limited to instances
when an appeal is “permeated with meritlessness, bad faith, frivolity, harassment,
vexatiousness, or purpose of delay.” Orr v. Turco Mfg. Co., Inc., 512 N.E.2d 151, 152
(Ind. 1987). An appellate tribunal must use extreme restraint in exercising its
discretionary power to award damages on appeal “because of the potential chilling effect
upon the exercise of the right to appeal.” Tioga Pines Living Ctr., Inc. v. Ind. Family &
Social Serv. Admin., 760 N.E.2d 1080, 1087 (Ind. Ct. App. 2001), affirmed on reh’g,
trans. denied. Indiana appellate courts have classified claims for appellate attorney fees
into substantive and procedural bad faith claims. Boczar v. Meridian St. Found., 749
N.E.2d 87, 95 (Ind. Ct. App. 2001). To prevail on a substantive bad faith claim, the party
must show that the appellant’s contentions and arguments are utterly void of all
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plausibility. Id. Substantive bad faith “implies the conscious doing of a wrong because
of dishonest purpose or moral obliquity.” Wallace v. Rosen, 765 N.E.2d 192, 201 (Ind.
Ct. App. 2002). To prevail on a procedural bad faith claim, a party must show that the
appellant has flagrantly disregarded the form and content requirements of the rules of
procedure, omitted or misstated relevant facts, and filed briefs written in a manner
calculated to require the maximum expenditure of time by the opposing party and
reviewing court. Kozlowski v. Lake Cnty. Plan Comm’n, 927 N.E.2d 404, 412 (Ind. Ct.
App. 2010), trans. denied. Appellant’s conduct need not be “deliberate or by design” to
support a procedural bad faith claim. Thacker v. Wentzel, 797 N.E.2d 342, 347 (Ind. Ct.
App. 2003) (quoting Boczar, 749 N.E.2d at 95).
While it is true that the Walkers’ arguments in this appeal were unpersuasive, the
Walkers attempted to support their argument with legal authority. Based upon our review
of the record and the briefs, we do not find the Walkers’ contentions utterly devoid of all
plausibility. See Taflinger Farm v. Uhl, 815 N.E.2d 1015, 1019 (Ind. Ct. App. 2004)
(holding that the appellee should not receive appellate attorney fees where the appellant
supported his challenge with pertinent legal authority from which an argument could
have been made and noting that the appellant’s contentions were not utterly devoid of all
plausibility). We also do not find that the Walkers flagrantly disregarded the form and
content requirements of the rules of appellate procedure or that their briefs were written
in a manner calculated to require the maximum expenditure of time both by the opposing
party and the reviewing court. Accordingly, we deny Sermersheim’s request for
appellate attorney fees.
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For the foregoing reasons, we affirm the trial court’s denial of the Walkers’
motion to correct error and award of $14,800.67 to Sermersheim, and we deny
Sermersheim’s request for appellate attorney fees.
Affirmed.
BAILEY, J., and VAIDIK, J., concur.
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