Daniel P. Millikan v. Lori A. Eifrid

FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
LINDSEY A. GROSSNICKLE JEREMY J. GROGG
Bloom Gates & Whiteleather, LLP MICHAEL A. BARRANDA
Columbia City, Indiana Burt, Blee, Dixon, Sutton & Bloom
Fort Wayne, Indiana
IN THE FILED
Apr 30 2012, 9:26 am
COURT OF APPEALS OF INDIANA
CLERK
of the supreme court,
court of appeals and
DANIEL P. MILLIKAN, ) tax court
)
Appellant-Defendant, )
)
vs. ) No. 92A03-1109-PL-433
)
LORI A. EIFRID, )
)
Appellee-Plaintiff. )
APPEAL FROM THE WHITLEY CIRCUIT COURT
The Honorable James R. Heuer, Judge
Cause No. 92C01-0904-PL-236
April 30, 2012
OPINION–FOR PUBLICATION
BAKER, Judge
In this case, the trial court properly determined that the plaintiff was the bona fide
and innocent purchaser for value of a parcel of property when applying the doctrine of
equitable subrogation. Thus, title to the property awarded to the plaintiff is superior to
any right, title, or interest that might be claimed by the defendant or his successors in
interest. However, because the trial court determined that the defendant had not
committed fraud that might otherwise have entitled the plaintiff to recover her attorney
fees, we reverse that portion of the judgment and vacate the award of attorney fees.
Appellant-defendant Daniel P. Millikan appeals the judgment entered in favor of
appellee-plaintiff Lori A. Eifrid, on her claims against Millikan for foreclosure, specific
performance, and promissory estoppel, regarding a certain parcel of real property.
Specifically, Millikan maintains that the trial court erred in applying the doctrine of
equitable subrogation in these circumstances and awarding the property to Eifrid.
Millikan also claims that the trial court erred in ordering him to pay Eifrid’s attorney fees.
We conclude that the trial court properly awarded the real property to Eifrid.
However, we also find that the trial court erred in ordering Millikan to pay Eifrid’s
attorney fees. Thus, we affirm in part, reverse in part, and remand this cause with
instructions that the trial court vacate the award of attorney fees.
FACTS
Eifrid owns approximately .495 acres (Parcel A) of real property in Whitley
County, and a four foot wide strip (Strip) of land directly to the east of that property.
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Millikan owns certain property adjacent to Eifrid’s Parcel A property, including
parcels that abut a right-of-way immediately to the south of Parcel A. Both Eifrid and
Millikan’s property are located near the same cul de sac. The dispute in this case
involves a parcel of land directly to the south of Parcel A (hereinafter referred to as the
Triangle). The Triangle is essential to Eifrid’s use and enjoyment of her property
because, without it, Eifrid’s ingress and egress to the cul-de-sac is effectively prevented.
On October 15, 2001, Richard Millikan and his wife, Charlene, executed a
warranty deed transferring and conveying title to the Eifrid property and the Triangle to
Roger L. Maxey. That deed was recorded in the Whitley County Recorder’s Office on
October 16, 2001, as document number 200110560. At the time of that transfer, the
Eifrid property and the Triangle were identified as single parcels of property.
That same day, Maxey executed a mortgage on the properties he acquired from the
Millikans in favor of RWG Mortgage Company, Inc. (RWG). That mortgage was
recorded on October 16, 2001, as document number 200110561. However, on October
15, the mortgage in favor of RWG was assigned and transferred from RWG to ABN
AMRO Mortgage Group, Inc. The assignment was recorded in the Whitley Recorder’s
Office on October 16, 2001, as document number 200110562.
At about the same time of the transfer, Richard’s brother, Daniel Millikan (the
appellant in this case), reached an oral agreement with Maxey to obtain the Triangle from
Maxey in exchange for the Strip. To effectuate that exchange, Millikan caused a legal
description to be determined such that the Strip would, for the first time, be described as a
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single piece of real estate. Maxey also caused a legal description to be determined such
that the Triangle would also be described as a single piece of real estate. However, the
surveys for the Strip and Triangle were not completed until February 26, 2002, at which
point, the ABN AMRO mortgage encumbered both Parcel A and the Triangle.
In June 2003, Maxey endeavored to refinance Parcel A and the Triangle through
Mortgage Electronic Registrations Systems, Inc. (MERS), as nominee for Countrywide.
The day before the closing, Maxey executed a quitclaim deed to the Triangle in favor of
Millikan on June 16, 2003. Millikan reciprocated by executing a quitclaim deed to the
Strip in Maxey’s favor. When the Triangle was quitclaimed to Millikan, the property was
encumbered by the ABN AMRO mortgage.
The transfers by and between Millikan and Maxey were undertaken without the
knowledge of, or any disclosure whatsoever to, the then lienholder, ABN AMRO, or to
the soon to be subsequent lienholder, Countrywide. The partitioning of the Triangle from
Parcel A effectively precludes Parcel A from any access to the right-of-way in the cul de
sac described above.
Millikan knew of the mortgage on the Eifrid property when he accepted the
transfer from Maxey, and he never communicated that purported transfer to Countrywide.
It was only through the refinancing, and payment by Countrywide to ABN AMRO, that
the ABN AMRO mortgage encumbering both the Eifrid Property and the Triangle was
ultimately released when Countrywide paid Maxey’s outstanding indebtedness to ABN
AMRO. Countrywide’s expectation was a security interest in the entire property, as
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evidenced by the legal description of the deed. The ABN AMRO mortgage was released
on October 16, 2003, and Maxey later defaulted on the terms of his mortgage with
Countrywide.
In consideration for the forgiveness of his financial obligation owed to
Countrywide, which was in default, Maxey executed a warranty deed in lieu of
foreclosure (Deed in Lieu) in favor of the Secretary of Veterans’ Affairs (SVA). The
Deed in Lieu from Maxey to the SVA also described and purported to transfer the
Triangle to the SVA. At all times, the documents regarding any transfer or mortgage of
property included Parcel A and the Triangle as a single tract.
Eifrid was to become the next owner of the property. When purchasing the
property from the SVA, Eifrid was provided a deed that included the description of
Parcel A and the Triangle as a single tract. On July 12, 2006, the SVA, via quitclaim
deed, transferred title of both parcels to Eifrid. Eifrid was provided with a deed that
included descriptions of Parcel A and the Triangle as a single tract. Thus, Eifrid believed
that she was purchasing property that included access to the cul de sac as a right-of-way
through the rear of the property.
Eifrid initially became aware of the issues that were caused by the attempted
“swap” of properties between Millikan and Maxey in 2008, when she received notice that
a mortgage company, Resurgent Capital Services, LP (Resurgent), was seeking to
foreclose on the Strip. At the time, the Strip remained titled in Maxey’s name.
Discussions commenced between counsel for the respective parties with regard to
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reversing the Millikan/Maxey “swap” that would result in the Triangle being owned by
Eifrid and the Strip being owned by Millikan.
In addition to the fact that the Strip remained in Maxey’s name, the Strip was also
encumbered by a mortgage in the principal amount of $26,000. Thus, in order to
effectuate the swap—or more appropriately a “swap back”—Eifrid was required to take
affirmative steps to acquire clear title to the Strip. On several occasions, Eifrid informed
Millikan of her intent to acquire the Strip to effectuate the swap.
On July 9, 2008, Eifrid’s counsel filed a complaint to foreclose the mortgage. The
trial court entered a judgment against the real estate in the amount of $38,763.23, plus
interest, and ordered the Strip sold by the Whitley County Sheriff. The Sheriff’s sale
took place and Eifrid’s counsel offered the highest bid for the Strip which was
$39,440.61. Although Eifrid was in a position to conduct the swap of the Strip,
Millikan’s counsel advised Eifrid in correspondence dated September 16, 2008, that
Millikan no longer desired to “reverse the swap.” Appellant’s App. p. 12, 21.
On November 20, 2008, the Sheriff issued a Sheriff’s Deed on Decree. On
December 4, 2008, the Strip was quitclaimed to Eifrid via a limited liability partnership
deed. As a result, Eifrid owned the Strip “free and clear” of all liens and encumbrances.
Id. at 13.
On April 10, 2009, Eifrid filed her complaint against Millikan for foreclosure,
specific performance, and promissory estoppel. Eifrid alleged, among other things, that
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41. Upon discharging the indebtedness owed by Mr. Maxey to ABN
AMRO, and which was secured by real property, including the Triangle,
MERS became equitably subrogated to ABN AMRO’s rights, title and
interest in and to the ABN AMRO mortgage executed October 15, 2001.
42. Accordingly, MERS was entitled to stand in the shoes of ABN AMRO
and retain priority over any and all interests in or to the encumbered real
property, which included the Triangle, recorded after October 16, 2001.
43. The SVA, by and through accepting a Deed in Lieu, . . . was then
equitably subrogated to any and all rights and interest of MERS.
44. Ms. Eifrid then succeeded to the interests of the SVA by and through
the quit-claim deed attached hereto as Exhibit “J.”
45. Ms. Eifrid’s interest in and to the Triangle is first and superior to any
interest that Mr. Millikan may have.
46. Mr. Millikan’s claimed interest in the Triangle constitutes a cloud upon
Ms Eifrid’s title to the Triangle.
Appellant’s App. p. 34.
In light of the above, Eifrid sought a determination from the trial court that her
legal title to the property is superior to any right, title, or interest that Millikan might
claim. Moreover, Eifrid requested the trial court to foreclose and extinguish any
purported interest in the Triangle that Millikan might have.
In the alternative, Eifrid requested that the trial court order specific performance
for Millikan to exchange the Triangle for the Strip and enter judgment against Millikan
for any and all direct, incidental, and consequential damages arising out of Millikan’s
failure to comply with the terms of the agreement reached between the parties. Eifrid
also alleged that she relied on the agreement, has performed pursuant to the agreement,
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and concluded that any repudiation of the agreement would lead to an unjust and
fraudulent result.
On March 18, 2010, a bench trial commenced. During the trial, Millikan testified
that he never had any intention of swapping or otherwise purchasing the Strip from
Eifrid. In fact, Millikan denied that he had any intent to transfer the property. More
particularly, Millikan testified that
A. The intention was that if I get the money, I wouldn’t even [have]
bought that piece of property back. I woulda never bought the strip
back. I woulda waited for it to go through a Sheriff’s sale and
everything else. I woulda never even [have] tried to buy it back.
Q. So it’s your testimony today that you offered to swap properties, that
you had no intention of acquiring that strip of property did you?
A. Well you couldn’t swap it back if you didn’t own it.
Tr. p. 15.
The trial court took the matter under advisement. On June 9, 2010, during the
pendency of the case, Millikan attempted to transfer the disputed property to Turtle Town
Plaza Rentals, LLC (Turtle Town). As of that date, the Whitley County Recorder
identified Turtle Town as the owner of the disputed parcel of property, as a result of the
sale from Millikan on June 9, 2010. Neither Eifrid nor the trial court knew of the
purported transfer of the Triangle. In fact, Millikan denied any intent to transfer the
property.
On July 2, 2010, Eifrid informed the trial court that “upon information and belief,
the Plaintiff believes that Defendant Millikan may attempt to sell the property adjacent to
8
Ms. Eifrid, which may or may not include the portion(s) of property, which is the subject
of this underlying lawsuit.” In response, Millikan falsely professed to the trial court that
“Defendant has no intention of selling any property which is the subject matter of this
litigation and Plaintiff can make no factual argument for such claim.” Appellee’s App. p.
158. That assertion was made on July 6, 2010, less than one month after Millikan had
already transferred ownership of the property to Turtle Town.
On September 29, 2010, the trial court issued judgment for Millikan and entered
findings of fact and conclusions of law and determined that Eifrid should take nothing by
way of her complaint. The trial court concluded, among other things, that
7. In correspondence dated March 11, 2008, Mr. Millikan through Mr.
Smith made an offer to sell the triangle to Ms. Eifrid through Mr. Claxton
for the sum of $35,000 on the condition that Eifrid disclaim any interest in
the Strip.
8. In correspondence dated March 26, 2008, Ms. Eifrid made a
counteroffer to purchase the triangle for $10,000 plus a disclaimer by Eifrid
of any interest in the Strip.
9. In correspondence dated March 27, 2008, Mr. Millikan rejected the
counteroffer made by Ms. Eifrid.
10. With regard to reversing the Swap there was no meeting of the minds
and thus nothing was reduced to writing to be executed by both parties, and
therefore there is no agreement to enforce.
11. Specific performance is not applicable to this case.
...
13. Ms. Eifrid is not entitled to recover on a theory of equitable
subrogation based upon a series of mortgage transactions and real estate
transfers which were executed and recorded without the benefit of current
surveys or proper title searches of the public records maintained by the
recorder of Whitley County. A proper title search would have disclosed the
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swap prior to Ms. Eifrid’s acquisition of Parcel A and put her on notice that
she was not acquiring title to the Triangle.
14. The Plaintiff shall take nothing by way of her complaint.
15. The Defendant is the owner in fee simple of the Triangle and is entitled
to the quiet and peaceful possession of said property.
16. The Plaintiff is the owner in fee simple of the Strip and is entitled to
the quiet and peaceful possession of said property.
Appellant’s App. p. 16-17 (emphasis added).
On October 27, 2010, Eifrid filed a motion to correct error and motion to conform
to the evidence. Eifrid asserted that giving “Millikan . . . clear title to the Trianagle and
Lori Eifrid title to the Strip without any damages award, results in a terrible injustice to
Lori Eifrid, an innocent purchaser of land, now encumbered by a spite strip.” Appellant’s
App. p. 45. Eifrid pointed out that
As Millikan readily admitted, neither he nor Ms. Eifrid owned clear title to
the Strip at the time he proposed the swap. Accordingly, a swap could not
occur unless or until one party actually obtained clear title to the Strip. Ms.
Eifrid, through her counsel, notified Millikan that she was taking
affirmative steps to acquire the property. Since Millikan failed to inform
Ms. Eifrid that he was unwilling to swap, at that moment, Ms. Eifrid began
to incur damages in the form of accruing attorney fees based upon
Millikan’s promise.
Id. at 48.
Eifrid also pointed out in her motion to correct error that she has lost the value of
her agreement and the value of her home. And weighing the equities, Eifrid was an
innocent purchaser, who simply failed to “obtain a title search that disclosed Millikan and
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Maxey’s plan to outwit the banks.” Id. at 49. Thus, Eifrid maintained that she is entitled
to the property through equitable subrogation.
As for the motion to conform to the evidence, Eifrid pointed out that Millikan
admitted for the first time at trial that he had no intention of actually executing the swap
that he proposed on March 27, 2008. Millikan also admitted that he was not seeking
$30,000-$35,000, in order to obtain clear title from Maxey as proposed in the letter of
March 27. Eifrid then asserted that Millikan intended to pocket the money as the
property went into foreclosure.
In light of the above, Eifrid maintained that the trial court should permit an
amendment to the pleadings to include fraud because it was apparent that Millikan “had
no intention of swapping properties.” Appellant’s App. p. 51. Moreover, Eifrid
contended that this additional element of fraud permits the recovery of treble damages
and attorney fees.
As a result, Eifrid claimed that the trial court should
1. Order specific performance of the swap, including an award of
incidental and consequential damages; and, or in the alternative,
2. Enter an award of damages in Ms. Eifrid’s favor ($78,881.22—
including treble damages) and attorney fees to be established by
supplemental affidavit, as a result of Daniel Millikan’s conduct.
Following a hearing, the trial court granted Eifrid’s motion to correct error in part
on August 19, 2011. In particular, the trial court determined that
3. Daniel Millikan was aware of the mortgage on the Eifrid property at the
time he accepted the transfer from Maxey. The attempted transfer was
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made during a clear gap period in the title commitment, and not
communicated to Countrywide.
4. As a result of the refinance through Countrywide, the ABN AMRO
mortgage was subsequently released.
5. Countrywide is entitled to application of the doctrine of equitable
subrogation, insofar as it expected to receive a mortgage on the entire
property. Indeed, it caused ABN AMRO’s mortgage to be released on
the entire property. Accordingly, Daniel Millikan’s deed on the
Triangle property was subject to Countrywide’s mortgage. . . .
6. In consideration for the forgiveness of his financial obligation owed to
Countrywide, Maxey executed a Warranty Deed in Lieu of Foreclosure
in favor of the SVA. . . . Again, Countrywide’s expectation was a
security interest in the entire property, as evidenced by the legal
description used in the deed.
7. Through the application of equitable subrogation, the SVA acquired the
entire Triangle property. The Countrywide mortgage was therefore
extinguished and released.
8. Lori Eifrid is the bona fide and innocent purchaser for value of the
parcel of property from the SVA.
9. ABN AMRO had a valid mortgage on the entire parcel, including the
Triangle property. Countrywide believed that it had acquired a
mortgage on the entire property. The SVA believed that it had acquired
the entire property. Millikan seeks to be declared the owner of the
Triangle property. However, he participated in the very transaction
made during the gap period; an effort to compromise the security of
Countrywide.
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Appellant’s App. p. 24-25. As a result, the trial court ordered judgment against Millikan
and awarded legal title of the Triangle to Eifrid that is “superior to any right, title, or
interest that may be claimed by . . . Millikan or his successors in interest and any interest
in and to the Triangle claimed by . . . Millikan or his successors in interest is foreclosed
and extinguished.” Id. at 25. Although the trial court did not find that Millikan had
committed fraud, it ordered Millikan to pay Eifrid’s attorney’s fees in the amount of
$13,343. Millikan now appeals.
DISCUSSION AND DECISION
Millikan argues that the trial court erred in granting Eifrid’s motion to correct
error and awarding her the property. Specifically, Millikan claims that the trial court
erroneously determined that the doctrine of equitable subrogation applied in these
circumstances. Millikan also claims that the trial court erred in ordering him to pay
Eifrid’s attorney’s fees.
I. Standard of Review
When the trial court enters findings of fact and conclusions of law, said findings
and conclusions control only the issues they cover. Barkwill v. Cornelia H. Barkwill
Revocable Trust, 902 N.E.2d 836, 839 (Ind. Ct. App. 2009). Where such findings and
conclusions are entered, we will apply a two tier standard of review, first determining
whether the evidence supports the findings, and second, whether the findings support the
judgment. Zukerman v. Montgomery, 945 N.E.2d 813, 818 (Ind. Ct. App. 2011). The
trial court’s specific findings will be set aside “only where they are clearly erroneous, that
13
is, when there are no facts or inferences drawn therefrom to support them.” Lechien v.
Wren, 950 N.E.2d 838, 841 (Ind. Ct. App. 2011).
The findings and conclusions must be liberally construed in support of the
judgment, and they will be considered clearly erroneous only if a review of the entire
record leaves us with a definite and firm conviction that a mistake has been made.
Skweres v. Diamond Craft Co., 512 N.E.2d 217, 219 (Ind. Ct. App. 1987). Only the
evidence favorable to the judgment and all reasonable inferences flowing therefrom is
considered, and the evidence is not reweighed, nor is the credibility of witnesses
assessed.
Any facts or issues not covered by specific findings are governed by a general
judgment standard of review, and such will be upheld on any basis supported by the
record. Nelson v. Marchand, 691 N.E.2d 1264, 1267 (Ind. Ct. App. 1998). On the other
hand, we will review questions of law de novo, and we owe no deference to the legal
conclusions drawn by the trial court. Lechien, 950 N.E.2d at 841.
II. Millikan’s Claims
A. Equitable Subrogation
In Bank of New York v. Nally, 820 N.E.2d 644, 651 (Ind. 2005), our Supreme
Court observed that the doctrine of equitable subrogation
sometimes misleadingly called ‘legal subrogation,’ has been recognized in
Indiana for over a century. Subrogation arises from the discharge of a debt
and permits the party paying off a creditor to succeed to the creditor’s
rights in relation to the debt. It arises by operation of law, that is to say it is
14
created by the legal consequences of the acts and relationships of the
parties, and thus is a legal fiction.
Additionally, one who acquires or succeeds to rights, claims, or securities through
equitable subrogation steps into the shoes of the subrogor and takes them burdened with
the defenses, limitations, and disqualifications to which they were subject. Id.
In Gibson v. Neu, 867 N.E.2d 188, 198 (Ind. Ct. App. 2007), we observed that
[T]he purpose of equitable subrogation is to avoid an unearned windfall.
Other equitable considerations include the absence of any prejudice to the
interest of junior lienholders. The court noted that “[n]either negligence
nor constructive notice of an existing lien is relevant to whether the junior
lien holder will be unjustly enriched or prejudiced. Rather, the basis for
subrogation in this context is the lender’s justified expectation of receiving
[a] security interest in the property.”
Id. (internal citations omitted).
In this case, Millikan asserts that at no time during the proceedings did Eifrid
assert that Millikan received an unearned windfall, or was somehow unjustly enriched.
Because Millikan swapped property with Maxey, he no longer has an interest in the Strip.
As a result, Millikan maintains that because there has been no allegation or proof of a
windfall, the doctrine of equitable subrogation should not apply and Eifrid should not be
awarded the property.
Notwithstanding these contentions, the evidence is undisputed that when Millikan
acquired the Triangle property from Maxey, Millikan knew that the Triangle was
encumbered by the ABN AMRO mortgage. Appellant’s App. p. 24. The doctrine of
15
equitable subrogation acts to preclude Millikan and Maxey from circumventing
Countrywide’s mortgage on the entire property.
In our view, Countrywide stepped into the shoes of ABN AMRO by paying off the
original mortgage. Therefore, Countrywide’s interest in the property was not taken
subject to Millikan’s interest, and Countrywide retained a mortgage interest in all of the
property, including the Triangle.
By way of illustration, when Maxey defaulted on his loan on the entire property,
he provided a warranty deed to Countrywide, effectively conveying to it any and all
interest that Maxey had in the property. Taking into account the fact that, through
equitable subrogation, Countrywide also held a security interest in and to the property,
including the Triangle, Countrywide then became vested with ownership of the property
in its entirety. And having discharged the Countrywide debt, the SVA stepped into
Countrywide’s shoes. Accordingly, when the SVA transferred all of its interest to Eifrid,
she acquired ownership of both Parcel A and the Triangle.
In effect, the doctrine of equitable subrogation acts to prevent Millikan’s
orchestrated transfer of the Triangle from somehow preventing the mortgage
encumbrance thereon from transferring from ABN AMRO to Countrywide. That same
effect follows through the chain of title to the Triangle that ultimately rests with Eifrid.
We note that while Millikan suggests that the doctrine of equitable subrogation
should not apply because Eifrid is not a lending institution, he directs us to no authority
for that proposition, and we have found none. Indeed, equitable subrogation is a highly
16
favored doctrine that demands liberal application, and nothing in Nally commands that
the doctrine should apply only to a lending institution. Even more compelling, we must
conclude that an innocent bona fide purchaser, such as Eifrid, should be afforded the
same, if not greater, protection that is afforded to a lending institution such as
Countrywide.
We also reject Millikan’s argument that the doctrine of equitable subrogation
should not apply because Eifrid’s receipt of a quitclaim deed from the SVA in some way
placed her on constructive notice of Millikan’s claim to the Triangle. As the trial court
observed:
ABN AMRO had a valid mortgage on the entire parcel, including the
Triangle property. Countrywide believed that it had acquired a mortgage
on the entire property. The SVA believed that it had acquired a mortgage
on the entire property . . . but that [Millikan] participated in the very
transaction made during the gap period: an effort to compromise the
security of Countrywide.
Appellant’s App. p. 25.
In our view, this factor clearly weighs in favor of applying the doctrine of
equitable subrogation. While Millikan argues that Eifrid and the SVA should have
known of the swap on June 17, 2003 through the exercise of reasonable diligence,
constructive knowledge is not sufficient to preclude the application of equitable
subrogation. See Nally, 820 N.E.2d at 655 (observing that mere negligence in the failure
to discover a particular mortgage does not rise to the level of culpability).
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There is no showing that Eifrid, Countrywide, or the SVA are culpably negligent
in failing to discover the improper June 17, 2003 swap of the property. Indeed, the trial
court did not make any finding that either Eifrid or Countrywide was negligent, and
Millikan did not present any evidence of culpable negligence. To the contrary, the trial
court found that Eifrid was an innocent purchaser. She, along with the many others
before her, all took interest to the entire property without knowledge of the purported
partition by Millikan to prevent access to the adjacent cul de sac.
Indeed, every document of conveyance beginning with Eifrid’s deed from the
SVA continuing back to the mortgage held by ABN AMRO contained the Triangle
property. Even if it could be said that Eifrid did not discover the deed to Millikan that
was recorded on the date that the refinance was closed, her failure to do so is far from the
requisite culpable negligence expressed in Nally that would prevent the doctrine of
equitable subrogation from applying.
Also, Millikan received only a quitclaim deed of the Triangle from Maxey. In
doing so, Millikan, himself, was on notice that his claim to the Triangle was subject to
ABN AMRO’s mortgage interest in Parcel A and the Triangle—then a single tract of real
property and an interest of which Millikan was well aware. Appellant’s App. p. 24.
When Millikan agreed to acquire the Triangle, he never provided any evidence of a
reasonable expectation of receiving clear title to the Triangle. Indeed, it was impossible
for the Triangle to be conveyed without being accompanied by the ABN AMRO
mortgage.
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Finally, we reject Millikan’s claim that there was no evidence that he would have
received a windfall by acquiring title to the Triangle. Again, Millikan accepted title to
the Triangle with full knowledge that the property was encumbered by the ABN AMRO
mortgage. Millikan did not extinguish the ABN AMRO or the Countrywide mortgage.
Rather, Millikan waited until the day of closing of the Countrywide refinancing before
recording his claimed interest. In light of these circumstances, it is apparent that
Millikan is now seeking the windfall of clear title and an extinguished mortgage without
any additional consideration. The trial court’s order prevents such a windfall, and we
conclude that the doctrine of equitable subrogation was properly applied in these
circumstances. Therefore, the trial court properly granted Eifrid’s motion to correct error
with respect to the ownership of the property.
B. Attorney Fees
Millikan next argues that the trial court abused its discretion in ordering him to
pay Eifrid’s attorney fees. Millikan maintains that Eifrid’s request for the award of fees
was not timely, in that the request was made for the first time in the motion to correct
error and the motion to conform to the evidence.
Notwithstanding Millikan’s contentions, Eifrid requested attorney fees that were
included in her proposed findings of fact and conclusions of law. However, as noted
above, the trial court did not find that Millikan committed fraud or conversion that might
19
warrant the award of attorney fees.1 Thus, Eifrid was not entitled to recover attorney fees
on that basis.
Finally, it is apparent that the trial court relied on Indiana Code section 34-52-1-1
as the basis for awarding of attorney fees to Eifrid, which provides that
(a) In all civil actions, the party recovering judgment shall recover costs,
except in those cases in which a different provision is made by law.
(b) In any civil action, the court may award attorney’s fees as part of the
cost to the prevailing party, if the court finds that either 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 clearly became frivolous, unreasonable, or groundless; or
(3) litigated the action in bad faith.
(c) The award of fees under subsection (b) does not prevent a prevailing
party from bringing an action against another party for abuse of process
arising in any part on the same facts. However, the prevailing party may
not recover the same attorney’s fees twice.
As noted above, the trial court initially determined that Eifrid should take nothing
by way of her complaint. However, the trial court subsequently granted Eifrid’s motion
to correct error in part. Indeed, the trial court acknowledged that it “struggled” with the
issue of whether the doctrine of equitable subrogation applied, and obviously found the
case and issues involved to be complex. Tr. p. 102. As a result, there is no showing that
1
For instance, Indiana Code section 34-24-3-1 provides in part that if a person has an “unpaid claim on a
liability that is covered by IC 24-4.6-5 or suffers a pecuniary loss as a result of a violation of IC 35-43, IC
35-42-3-3, IC 35-42-3-4, or IC 35-45-9,” the person may recover treble damages, costs of the action, and
attorney fees.
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Millikan’s defense of the matter was frivolous, groundless, or unreasonable. Millikan
only continued to litigate the matter after the issuance of the September 29, 2010 findings
of fact, conclusions of law, and judgment, because of Eifrids’s actions that involved the
filing of additional motions. And the trial court never stated or alluded to an idea that
Millikan was litigating the matter in bad faith. Thus, Indiana Code section 34-52-1-1
does not apply in these circumstances, and the trial court’s determination that Millikan
should pay Eifrid’s attorney fees cannot stand.
The judgment of the trial court is affirmed in part, reversed in part, and remanded
with instructions that the award of attorney fees in Eifrid’s favor be vacated.
KIRSCH, J., and BROWN, J., concur.
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