Aaron and Stephanie Muir v. Matthew and Tara McWilliams (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Nov 17 2016, 9:20 am
court except for the purpose of establishing
CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
estoppel, or the law of the case. and Tax Court
ATTORNEY FOR APPELLANTS ATTORNEY FOR APPELLEES
Julie A. Camden Michael A. Barranda
Camden & Meridew, P.C. Burt, Blee, Dixon, Sutton &
Fishers, Indiana Bloom, LLP
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Aaron and Stephanie Muir, November 17, 2016
Appellants-Defendants, Court of Appeals Case No.
02A04-1605-PL-1247
v. Appeal from the
Allen Superior Court
Matthew and Tara McWilliams, The Honorable
Appellees-Plaintiffs. Craig J. Bobay, Judge
Trial Court Cause No.
02D02-1305-PL-178
Kirsch, Judge.
[1] Aaron and Stephanie Muir (“the Muirs”) appeal the trial court’s order denying
their motion for summary judgment, granting summary judgment in favor of
Matthew and Tara McWilliams (“the McWilliamses”), and finding that the
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Muirs were not entitled to attorney fees. The Muirs raise one issues on appeal,
which we restate as: whether the trial court erred when it determined that the
Muirs were not a “prevailing party” in an underlying claim by the
McWilliamses when the McWilliamses’ claim was dismissed as a result of a
discharge in bankruptcy.
[2] We affirm.
Facts and Procedural History
[3] In August 2011, the Muirs entered into a Purchase Agreement with the
McWilliamses for the purchase of the Muirs’ home in Fort Wayne, Indiana. In
April 2012, after the sale of the home, the Muirs filed for Chapter 7 Bankruptcy
and received a discharge of their debts in July 2012. On May 10, 2013, the
McWilliamses filed the underlying cause of action in the Allen Superior Court
against the Muirs for actual fraud, constructive fraud, and criminal deception
due to alleged false and misleading statements regarding the condition of the
home made on the Sellers’ Real Estate Disclosure Form (“Disclosure Form”).
[4] After the Muirs were notified of the complaint, they reopened their bankruptcy
and added the McWilliamses as a creditor. The Muirs also filed a counterclaim
against the McWilliamses, asserting that they violated the post-bankruptcy
discharge injunction by filing the fraud action and asserting a claim for attorney
fees pursuant to Paragraph 21 of the Purchase Agreement, which stated:
“ATTORNEY’S FEES: Any party to this Agreement who is the prevailing
party in any legal or equitable proceeding against any other party brought under
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or with relation to the Agreement or transaction shall be additionally entitled to
recover court costs and reasonable attorney’s fees from the non-prevailing
party.” Appellant’s App. at 57. The Muirs requested that the Bankruptcy Court
stay the proceedings in the case filed in Allen Superior Court, which the
Bankruptcy Court denied, reasoning that the Allen Superior Court had
concurrent jurisdiction to determine dischargeability of the debt potentially
owed to the McWilliamses. The Muirs appealed this denial of their motion to
stay, and the United States District Court (“the District Court”) reversed the
Bankruptcy Court’s decision, holding that the Bankruptcy Court had exclusive
jurisdiction to determine dischargeability of the McWilliamses’ claim. Based
on this ruling, the claims brought by the McWilliamses in the Allen Superior
Court were dismissed. The Bankruptcy Court subsequently discharged the debt
owed by the Muirs to the McWilliamses and deferred a determination of the
Muirs’ counterclaim for attorney fees to the Allen Superior Court.
[5] After the resolution of the bankruptcy proceedings, the Muirs filed a motion for
summary judgment with the Allen Superior Court, claiming they were the
“prevailing party” in the action filed by the McWilliamses and that the Muirs
were, therefore, entitled to attorney fees. The McWilliamses filed a cross-
motion for summary judgment, which was later stricken as being untimely. A
hearing was held on the Muirs’ summary judgment motion, where two issues
were argued: whether an action based on the Disclosure Form was “related to”
the Purchase Agreement; and whether the Muirs were a “prevailing party” in
the litigation and, therefore, entitled to attorney fees pursuant to Paragraph 21
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of the Purchase Agreement. At the conclusion of the hearing, the trial court
issued an order denying the Muirs’ motion for summary judgment and granting
summary judgment in favor of the McWilliamses. In making this
determination, the trial court concluded that an action based on the Disclosure
Form was related to the Purchase Agreement, and thus, if a party prevailed on
an action on the Disclosure Form, it would be entitled to attorney fees;
however, the trial court concluded that the Muirs were not a “prevailing party”
in the litigation and were not entitled to attorney fees. The Muirs now appeal.
Discussion and Decision
[6] When reviewing the grant of summary judgment, our standard of review is the
same as that of the trial court. FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d
1167, 1173 (Ind. Ct. App. 2012) (citing Wilcox Mfg. Grp., Inc. v. Mktg. Servs. of
Ind., Inc., 832 N.E.2d 559, 562 (Ind. Ct. App. 2005)), trans. denied. We stand in
the shoes of the trial court and apply a de novo standard of review. Id. (citing
Cox v. N. Ind. Pub. Serv. Co., 848 N.E.2d 690, 695 (Ind. Ct. App. 2006)). Our
review of a summary judgment motion is limited to those materials designated
to the trial court. Ind. Trial Rule 56(H); Robson v. Tex. E. Corp., 833 N.E.2d
461, 466 (Ind. Ct. App. 2005), trans. denied. Summary judgment is appropriate
only where the designated evidence shows there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of law.
T.R. 56(C). For summary judgment purposes, a fact is “material” if it bears on
the ultimate resolution of relevant issues. FLM, 973 N.E.2d at 1173. We view
the pleadings and designated materials in the light most favorable to the non-
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moving party. Id. Additionally, all facts and reasonable inferences from those
facts are construed in favor of the non-moving party. Id. (citing Troxel Equip.
Co. v. Limberlost Bancshares, 833 N.E.2d 36, 40 (Ind. Ct. App. 2005), trans.
denied).
[7] A trial court’s grant of summary judgment is clothed with a presumption of
validity, and the party who lost in the trial court has the burden of
demonstrating that the grant of summary judgment was erroneous. FLM, 973
N.E.2d at 1173. Where a trial court enters specific findings and conclusions,
they offer insight into the rationale for the trial court’s judgment and facilitate
appellate review, but are not binding upon this court. Id. We will affirm upon
any theory or basis supported by the designated materials. Id. When a trial
court grants summary judgment, we carefully scrutinize that determination to
ensure that a party was not improperly prevented from having his or her day in
court. Id.
[8] The Muirs argue that the trial court erred in denying their motion for summary
judgment and granting summary judgment in favor of the McWilliamses.
Specifically, the Muirs contend that the trial court erred when it determined
that they were not a “prevailing party” and were, therefore, not entitled to
attorney fees under Paragraph 21 of the Purchase Agreement. The Muirs assert
that they were a “prevailing party” because they successfully defended against
all claims brought by the McWilliamses, including a dismissal with prejudice of
the McWilliamses’ complaint by the trial court. The Muirs claim that this
dismissal ensured that the McWilliamses can no longer pursue a claim against
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the Muirs, which made the Muirs a “prevailing party.” Because the trial court’s
grant of their motion to dismiss disposed of the case in its entirety, the Muirs
maintain that they were the “prevailing party” in the litigation related to the
Purchase Agreement, and the trial court acted in error when it denied their
motion for summary judgment.
[9] Here, the McWilliamses filed a complaint against the Muirs alleging fraud
regarding statements on the Disclosure Form. Before any evidence was heard
in the trial court, the District Court determined that the Bankruptcy Court had
exclusive jurisdiction to determine dischargeability of the McWilliamses’ claim.
Based on this ruling, the McWilliamses’ claims brought in the trial court were
subsequently dismissed. Therefore, the merits of the McWilliamses’ claims
against the Muirs were never heard by the trial court, and judgment was never
entered.
[10] Paragraph 21 of the Purchase Agreement provides: “ATTORNEY’S FEES:
Any party to this Agreement who is the prevailing party in any legal or
equitable proceeding against any other party brought under or with relation to
the Agreement or transaction shall be additionally entitled to recover court
costs and reasonable attorney’s fees from the non-prevailing party.” Appellant’s
App. at 57. Therefore, in order to recover attorney fees from the McWilliamses,
the Muirs must have been a “prevailing party” in the litigation with the
McWilliamses. The term “prevailing party” was not defined in the Purchase
Agreement.
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[11] In Reuille v. Brandenberger, 888 N.E.2d 770 (Ind. 2008), the parties entered into a
contract for the construction of a new home, which provided that: “In any
action at law or equity, including enforcement of an award from Dispute
Resolution, or in any Dispute Resolution involving a claim of $5,000 or more,
the prevailing party shall be entitled to reasonable costs and expenses, including
attorney fees”; however, the contract did not define “prevailing party.” Id. at
771. Reuille brought a cause of action against Brandenberger, which was
subsequently settled after mediation, and Reuille requested attorney fees as a
result of the settlement. Id. Reuille argued that he was entitled to attorney fees
because in the mediated settlement, he received all of the relief he demanded in
his complaint; Brandenberger contended that Reuille was not a “prevailing
party” under the contract because he did not receive a judgment. Id. Because
the term “prevailing party,” was not defined in the contract, our Supreme Court
turned to the ordinary meaning of the term at the time the contract was
executed. Id. The term “prevailing party was defined in Black’s Law
Dictionary as: “The party to a suit who successfully prosecutes the action or
successfully defends against it, prevailing on the main issue, even though not
necessarily to the extent of his original contention. The one in whose favor the
decision or verdict is rendered and judgment is entered.” Id. Our Supreme
Court concluded that “[t]his definition appears to contemplate a trial on the
merits and entry of a favorable judgment in order to obtain prevailing party status.”
Id. at 771-72 (emphasis added).
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[12] As our Supreme Court held in Reuille, when a contract does not contain a
definition for the term “prevailing party,” we must turn to the ordinary
meaning of such term “at the time the contract was executed.” Id. at 771 (emphasis
added). Here, the Purchase Agreement did not contain a definition for
“prevailing party.” Therefore, we must define the term using the ordinary
meaning at the time the Purchase Agreement was signed, which was August
2011. At the time the Purchase Agreement was signed, Black’s Law Dictionary
defined “prevailing party” as: “A party in whose favor a judgment is rendered,
regardless of the amount of damages.” Prevailing Party, Black’s Law Dictionary
(9th ed. 2009).
[13] The Muirs contend that they meet the definition of a “prevailing party” both
because they successfully defended against the claims by the McWilliamses and
because the trial court entered judgment in their favor when it dismissed the
McWilliamses’ claims with prejudice. We disagree. During the trial court
proceedings, the McWilliamses’ claims were never decided on the merits.
Rather, after the McWilliamses filed their complaint, due to the fact that the
Muirs had filed bankruptcy, the McWilliamses’ claims were eventually
discharged in the Bankruptcy Court and dismissed by the trial court. Thus, the
trial court never heard the merits of the claims filed by the McWilliamses, and
no judgment was entered in favor of the Muirs on the merits of the original
action filed by the McWilliamses. Instead, the claims by the McWilliamses
were discharged and dismissed due to the Muirs’ bankruptcy filing. We,
therefore, conclude that the Muirs were not a “prevailing party” in the litigation
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at the trial court because no judgment was rendered in their favor, and they
were not entitled to attorney fees pursuant to the Purchase Agreement. The
trial court did not err in denying the Muirs’ motion for summary judgment and
in granting summary judgment in favor of the McWilliamses. 1
[14] Affirmed.
May, J., and Crone, J., concur.
1
The McWilliamses did not file their claims before the Bankruptcy Court closed the Muirs’ bankruptcy and
discharged all of their debts known at that time. The McWilliamses were added as creditors to the
previously-closed bankruptcy after they had filed their claim in the Allen Superior Court. A different result
from the one reached in the present case may have occurred if the McWilliamses’ claims had been included
in the bankruptcy proceedings prior to closing of the proceedings because the Bankruptcy Court would have
been required to determine the merits of the McWilliamses’ fraud claims in order to place the debt in the
proper priority order for discharge under the bankruptcy.
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