In the Matter of the Irrevocable Trust of Mary Ruth Moeder Susan R. Moeder v. Salin Bank & Trust Company

Mar 05 2015, 7:17 am
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Michael H. Michmerhuizen Brian C. Hewitt
Barrett & McNagny, LLP Mark R. Galliher
Fort Wayne, Indiana Alerding Castor Hewitt, LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
In the Matter of the Irrevocable March 5, 2015
Trust of Mary Ruth Moeder Court of Appeals Cause No.
49A05-1403-TR-142
Susan R. Moeder, Appeal from the Marion Superior
Court
Appellant-Respondent, The Honorable Gerald S. Zore
49D08-0510-TR-041012
v.
Salin Bank & Trust Company,
Appellee-Petitioner.
Bailey, Judge.
Case Summary
[1] Salin Bank and Trust Company (“Salin”), trustee of the Mary Ruth Moeder
Revocable Living Trust Agreement (the “Trust”), petitioned the probate court
to approve an accounting of the Trust and to resign as trustee. Susan Moeder
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(“Moeder”), the former trustee and current contingent remainder beneficiary of
the Trust, objected to the accounting and alleged that Salin had breached its
fiduciary duties by imprudently administering the Trust in violation of the
Indiana Uniform Prudent Investor Act. The probate court entered a judgment
in favor of Salin and ordered that Moeder personally pay the reasonable
attorney’s fees and costs Salin incurred in defending against Moeder’s objection
and claims. We affirm.
Issues
[2] Moeder presents four issues for review, which we reorder and restate as:
I. Whether the probate court abused its discretion in granting a
one-day continuance at the outset of the hearing;
II. Whether the probate court’s findings of fact were clearly
erroneous and therefore do not support the judgment;
III. Whether the probate court abused its discretion in ordering
Moeder to pay Salin’s reasonable attorney’s fees and costs
because she brought or continued to litigate a groundless claim;
and
IV. Whether the probate court abused its discretion in awarding
$106,001.28 in attorney’s fees and costs.
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[3] We also address an issue raised by Salin: whether Salin is entitled to an award
of appellate attorney’s fees.1
Facts and Procedural History
[4] Mary Ruth Moeder (“Mother”) established the Trust on November 17, 1997,
named herself the initial trustee, and named her two children, Moeder and John
Moeder (“John”), as the primary beneficiaries. The Trust provided that upon
Mother’s death, the Trust assets would be divided equally between her children.
When Mother died in 2001, the Trust became irrevocable and Moeder became
the successor trustee.
[5] On September 12, 2006, the probate court entered an order authorizing Moeder
to resign as trustee and appointing Salin as successor trustee. The court also
ordered the distribution of Moeder’s half of the Trust assets to her. John’s share
was not distributed, and thus John is the primary beneficiary of the Trust.
1
Salin also asks us to decide whether Moeder’s appeal of a separate probate court order made on October 8,
2013 is untimely and therefore forfeited. In her Notice of Appeal filed in this case, Moeder listed the October
8, 2013 order as an “Order being appealed.” (Appellee’s App. 71.) However, in a footnote on page two of
her brief, Moeder withdrew her appeal of the October 2013 order, concluding that it was not currently
appealable. As Moeder has not presented her appeal of the October 2013 order to this Court, we decline
Salin’s request to determine at this juncture whether Moeder’s appeal of that order was untimely. See In re
Estate of Rawlings, 451 N.E.2d 1121, 1122 (Ind. Ct. App. 1983) (“We do not render advisory opinions.”).
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Pursuant to the Trust terms, Moeder is the contingent remainder beneficiary of
John’s share of the Trust.
[6] When Salin took over as trustee in November 2006, the Trust assets included
cash and stocks with a total portfolio value of $686,904.65. (App.2 226.)
Among the stocks were 14,985 shares of JP Morgan Chase & Co. stock (“the
JPM stock”), which comprised approximately 85% of the total Trust assets. At
the time of the transfer, Salin was aware the Trust had a large concentration of
JPM stock.
[7] Although Moeder turned over the Trust assets to Salin in November 2006, Salin
did not immediately receive from Moeder the necessary information to allow
Salin to make investment decisions about the Trust portfolio. In April 2007,
after Salin learned that the investment cost basis of the JPM stock was $38.77
per share, Salin developed a diversification plan that called for reducing the
concentration of JPM stock and diversifying the Trust assets over two years,
2007 and 2008. Salin’s Vice-President Trust Officer and Chief Investment
Officer John Roederer (“Roederer”) testified that Salin “wanted to diversify
over two years to . . . keep the tax impact . . . reasonable.” (Tr. 286.)
2
All citations to “App.” are to the Appellant’s Appendix, unless otherwise noted.
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[8] Pursuant to the diversification plan, Roederer sold 7,000 shares of the JPM
stock on July 30, 2007 for a gain of $42,696.59 over the cost basis.
(Respondent’s Exhibit 6.) He described the timing of the sale as “a good
opportunity to reduce substantially the risk related to that position [the
concentration.]” (Tr. 286.) Salin retained the remaining shares of JPM stock
because “it still could enjoy some upside” and the plan called for diversification
over two years. (Tr. 286.)
[9] In 2008, Salin “put on hold the diversification program” because of the
widespread financial crisis. (Tr. 323.) Salin sold no shares of the JPM stock
that year, as Roederer considered JP Morgan “one of the few banks that was
reasonably fundamentally sound at that point in time” and he “didn’t want to
sell [the JPM stock] at a distressed price.” (Tr. 337.)
[10] In April 2009, as the stock market began to improve, Salin revised the Trust’s
diversification plan. The revised plan called for Salin to reduce the
concentration of JPM stock over 2009 and 2010 by selling 500 shares of the
remaining JPM stock approximately every two months. Roederer no longer
considered the prices distressed, but “improving.” (Tr. 337.) Salin made its
first two sales of 500 shares each on April 20, 2009 and June 4, 2009, for losses
of approximately $3,380 and $870 below the cost basis, respectively.
(Respondent’s Exhibit 6.) Except for these two sales, the sales made in 2009
and 2010 resulted in gains. (Respondent’s Exhibit 6.) The periodic sales
continued into early 2011 until the JPM stock concentration was reduced and
the portfolio was diversified.
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[11] On July 29, 2011, Salin filed a “Request to Redocket Trust to File Current
Report and Accounting, Resign as Trustee Upon Approval of Current
Accounting and for Appointment of Successor Trustee.” At the time Salin filed
the accounting, the diversified portfolio value was $751,214.30. (App. 234.)
[12] In response, on September 1, 2011, Moeder filed an “Objection to Trustee’s
Accounting,” in which she alleged that Salin “generally and consistently failed
to administer the Trust as a ‘Prudent Investor[.]’” (Appellee’s App. 16.)
Specifically, Moeder alleged that Salin failed to: preserve Trust property,
maintain clear records, perform a timely initial review of the Trust assets,
develop and implement an appropriate investment strategy, diversify the Trust
assets at the right time, consider the Trust’s needs for liquidity, use special skills
and expertise in investing and managing the Trust, and file an accurate
accounting.
[13] The probate court scheduled a hearing on Salin’s petition and Moeder’s
objection for December 2, 3, and 4, 2013. On December 2, 2013, both parties
appeared and discovered that Judge Zore was on medical leave. Although
Senior Judge Goodman had reviewed the case and was prepared to proceed,
Salin moved for a continuance, citing Judge Zore’s “prior involvement and
familiarity with the case.” (App. 165.) Judge Goodman contacted Judge Zore
and learned that Judge Zore was approved to return to work the next day. Over
Moeder’s objection, Judge Goodman granted Salin’s motion for a one-day
continuance. The hearing began on December 3, 2013 with Judge Zore
presiding.
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[14] On February 28, 2014, the probate court entered an order containing findings of
fact and conclusions thereon in which the court approved Salin’s tendered
accounting and entered judgment in favor of Salin on the claims raised in
Moeder’s objection. In addition, the court found that Moeder’s claims were
“time-barred or otherwise unsupported by the facts” (App. 31) and that by
bringing her objection, Moeder had “done nothing to benefit John,” who is
blind and subject to a guardianship, but rather “eroded John’s share of the Trust
by forcing Salin as Trustee [to] incur the expense of litigating [Moeder’s]
objection.” (App. 31.) Consequently, the court ordered Moeder to pay Salin’s
attorney’s fees and costs incurred in defending against Moeder’s objection
pursuant to Indiana Code section 34-52-1-1(b). The court then directed Salin to
file a supplemental accounting and an application for attorney’s fees and costs
incurred by Salin in litigating the objection. Finding that there was no just
reason for delay, the court directed the entry of a final judgment pursuant to
Indiana Trial Rule 54(B). On March 26, 2014, Moeder timely filed a Notice of
Appeal.
[15] After Salin filed its request for attorney’s fees and costs, the probate court
ordered on July 2, 2014 that Moeder personally pay to Salin $97,465 in
attorney’s fees, plus $8,536.28 in litigation costs, for a total award of
$106,001.28. (App. 34.) Moeder timely filed a Notice of Appeal from the
attorney’s fees order on July 22, 2014.
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[16] In this consolidated appeal, Moeder appeals the probate court’s judgment in
favor of Salin, award of attorney’s fees and costs to Salin, and the amount of
attorney’s fees and costs awarded.
Discussion and Decision
Continuance
[17] Moeder’s first contention on appeal is that the probate court abused its
discretion when it granted Salin’s request for a continuance made on the first
day of the hearing. Upon a party’s motion, “trial may be postponed or
continued in the discretion of the court, and shall be allowed upon a showing of
good cause established by affidavit or other evidence.” T.R. 53.5. A trial
court’s decision to grant or deny a motion to continue a trial date is reviewed
for an abuse of discretion. Gunashekar v. Grose, 915 N.E.2d 953, 955 (Ind.
2009). There is a strong presumption that the trial court properly exercised its
discretion. Id. A trial court abuses its discretion when it reaches a conclusion
that is clearly against the logic and effect of the facts or the reasonable and
probable deductions that may be drawn therefrom. Evans v. Thomas, 976
N.E.2d 125, 127 (Ind. Ct. App. 2012), trans. denied.
[18] In this case, the hearing was scheduled for December 2, 3 and 4, 2013, and both
parties appeared on the morning of December 2. Senior Judge Goodman was
presiding because Judge Zore was on medical leave. Salin moved for a
continuance, citing Judge Zore’s “prior involvement and familiarity with the
case.” (App. 165.) Over Moeder’s objection, Judge Goodman granted Salin’s
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motion for a one-day continuance. The hearing began the following day,
December 3, 2013, with Judge Zore presiding.
[19] The record reflects that the Trust is and has been since 2005 the subject of
several legal proceedings, including a prior appeal to this Court.3 We cannot
say that the court abused its discretion by granting a one-day continuance so
that a judicial officer already familiar with the particular complexities of this
Trust could hear the evidence.
[20] Moeder argues, however, that she suffered prejudice as a result of the
continuance because both she and her attorney had traveled from northern
Indiana to Indianapolis and were prepared to proceed on December 2, 2013.
Although we acknowledge the inconvenience to Moeder, we do not consider
the additional travel time and expense incurred to be prejudicial. Furthermore,
we observe that when a continuance is granted, Trial Rule 53.5 permits the
court to “award such costs as will reimburse the other parties for their actual
expenses incurred from the delay.” T.R. 53.5. Yet the record does not show
3
See In re Revocable Trust of Mary Ruth Moeder, No. 49A02-1205-TR-377, slip op. (Ind. Ct. App. Oct. 30,
2012).
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that Moeder requested that these costs be awarded, nor does she allege on
appeal that a request, if made, was erroneously denied.
[21] Moeder also argues that she was prejudiced by the continuance because the
hearing ended as originally scheduled on December 4, 2013, such that the
continuance “effectively reduced the amount of trial by a third.” (Appellant’s
Br. 26.) Moeder contends that the continuance negatively affected her ability to
present her case because Salin, as the party seeking the accounting, presented its
case first, and Moeder did not have ample time to present her supporting
evidence. She argues that she was particularly prejudiced by the “shortened”
hearing because the probate court awarded Salin attorney’s fees in part because
the court found that Moeder presented “no evidence” that Salin engaged in any
wrongdoing. (App. 31.)
[22] The record shows that, on the second day of the hearing, Moeder’s counsel
informed the court: “I don’t know that we’re going to finish today.” (Tr. 421.)
The court responded “Oh, we are going to finish today” and then elaborated
that the hearing would conclude at 4:30 p.m. (Tr. 421-22.) Moeder’s counsel
responded: “Okay, very good. All right.” (Tr. 422.) Moeder then called her
next witness and, at the conclusion of that testimony, rested her case, stating:
[Moeder’s Counsel]: Your Honor, I have no further evidence to
present in our case in chief. As entered off the record with regard to
the exhibits which we have - - are part of our book, 1, 2 and 3, 17, 18
and 19 have either been admitted through their evidence or we are not
offering those.
The Court: All right.
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[Moeder’s Counsel]: With that, we rest.
(Tr. 476-77.) Moeder rested her case enough in advance of the court’s
anticipated end time that Salin had time to present additional witness
testimony. Moeder’s contention that she was denied ample opportunity to
present her evidence is thus unsupported by the record.
[23] Furthermore, at no point did Moeder object to the probate court’s management
of its schedule or otherwise argue to the court that she was not permitted
sufficient time to present her case. Accordingly, even if Moeder’s ability to
present her case was impeded, her argument is waived. See Ansert v. Ind.
Farmers Mut. Ins. Co., 659 N.E.2d 614, 617 (Ind. Ct. App. 1995) (“Generally, a
party may not raise an issue on appeal which was not raised in the trial court.”),
trans. dismissed.
[24] The probate court did not abuse its discretion when it granted Salin’s motion
for a continuance.
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Findings and Conclusions
[25] Moeder next argues that the probate court’s findings and conclusions were
clearly erroneous and therefore do not support the judgment.4
[26] In all actions tried upon facts without a jury, the court, either sua sponte or upon
the written request of any party filed with the court prior to the admission of
evidence, “shall find the facts specially and state its conclusions thereon.” Ind.
Trial Rule 52(A). Where, as here, the court entered findings and conclusions
upon a party’s written request, we apply a two-step review. In re Riddle, 946
N.E.2d 61, 66 (Ind. Ct. App. 2011). First, we consider whether the evidence
supports the findings, and second, whether the findings support the judgment.
Id. We neither reweigh the evidence nor assess witness credibility, and we
consider only the evidence most favorable to the judgment. Id. We will set
4
At the outset, we note that the entire “Argument” section of Moeder’s brief, while it generally contains
citation to relevant law, is completely devoid of citations to the appendix or record on appeal. We direct
counsel to Indiana Appellate Rule 46(A)(8)(a), which provides that each contention made in the argument
section of an appellant’s brief “must be supported by citations to the authorities, statutes, and the Appendix
or parts of the Record on Appeal relied on, in accordance with Rule 22.” It is a complaining party’s duty to
direct our attention to the portion of the record that supports its contentions. Vandenburgh v. Vandenburgh,
916 N.E.2d 723, 729 (Ind. Ct. App. 2009). The purpose of the rule is to relieve courts of the burden of
searching the record and stating a party's case for her. Id. Although failure to comply with the appellate
rules does not necessarily result in waiver of an issue, it is appropriate where noncompliance impedes our
review. Id. Although we do our best here to address Moeder’s contentions on their merits, Moeder’s
noncompliance comes dangerously close to impeding our review. This is particularly true – and her
noncompliance is particularly mystifying – in this section of her brief, in which her argument depends on her
identification of evidence that supports her claim.
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aside the trial court’s findings and conclusions only if they are clearly
erroneous, that is, if the record contains no facts or inferences supporting them.
Id. We review conclusions of law de novo. Id.[27] In any case where special findings and conclusions are made, “the court shall
allow and may require the attorneys of the parties to submit to the court a draft
of findings of facts and conclusions thereon which they propose or suggest that
the court make in such a case.” T.R. 52(C). Here, the probate court adopted
verbatim Salin’s proposed findings of fact and conclusions thereon. As our
supreme court has observed, the practice of accepting verbatim a party’s
proposed findings “weakens our confidence as an appellate court that the
findings are the result of considered judgment by the trial court.” In re Marriage
of Nickels, 834 N.E.2d 1091, 1096 (Ind. Ct. App. 2005) (quoting Cook v. Whitsell-
Sherman, 796 N.E.2d 271, 273 n.1 (Ind. 2003)). However, it is not uncommon
or per se improper for a trial court to enter findings that are verbatim
reproductions of submissions by the prevailing party. Id. at 1095. In these
cases, we urge trial courts to scrutinize parties’ submissions for
mischaracterized testimony and legal argument rather than the findings of fact
and conclusions thereon as contemplated by the rule. Id. at 1096. This is
because the trial court, when it signs one party’s findings, is ultimately
responsible for their correctness. Id. Although we by no means encourage the
wholesale adoption of a party’s proposed findings and conclusions, the critical
inquiry is whether such findings, as adopted by the court, are clearly erroneous.
Id.
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[28] Moeder argues that the probate court’s findings that Moeder “offered no
evidence that Salin did anything wrong or that the Trust suffered any loss as a
result of Salin’s actions” were clearly erroneous. (App. 31.) Moeder insists on
appeal that she presented evidence of wrongdoing and harm and therefore the
court’s finding to the contrary was clearly erroneous.
[29] Generally, a trustee bears the burden of justifying the propriety of items in a
trust account. In re Riddle, 946 N.E.2d 61, 68 (Ind. Ct. App. 2011). But when a
trustee files specific accounts and makes a prima facie showing that the accounts
are proper, the burden of persuasion shifts to the beneficiaries to show specific
instances of impropriety. Id. Accordingly, it was Moeder’s burden to establish
the allegations she raised in her objection.
[30] The heart of Moeder’s objection was that Salin “generally and consistently
failed to administer the Trust as a ‘Prudent Investor[.]’” (Appellee’s App. 16.)
On appeal, Moeder points to several actions in which Salin engaged (or did not
engage) as evidence of imprudent trust administration. Moeder neatly sums up
the majority of this “evidence” in her argument:
[T]he initial Investment Policy Statement noted no unusual
circumstances when it should have noted a concentration. There was
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no evidence that AIRC[5] reviewed the [Trust] prior to April 24, 2008.
There was no written plan of “sound diversification” in at least 2007.
The AIRC minutes that do exist do not reflect any meaningful
consideration of the [Trust] and the testimony of [two of Salin’s trust
administrators] gave the impression that Roederer was acting
essentially without review. There were no limit orders in place to
protect the over-concentration of JP Morgan stock from entering into a
freefall. In April 2009, Salin adopted a rigid, inflexible plan to sell 500
shares of JP Morgan stock every two months which was more or less
implemented.
(Appellant’s Br. 42-43.)
[31] Despite her numerous allegations, Moeder presented at the hearing no credible
evidence that any of the actions or omissions to which she points constituted
imprudent investment practices in contravention of the Indiana Uniform
Prudent Investor Act (“the Act”). See I.C. § 30-4-3.5-1 et seq. For example, the
Act provides: “Within a reasonable time after accepting a trusteeship or
receiving trust assets, a trustee shall review the trust assets and make and
implement decisions concerning the retention and disposition of assets . . . .”
I.C. § 30-4-3.5-4. The Act therefore demands only that the initial review occur
within a “reasonable time.” Moeder points to the fact that Salin presented “no
5
AIRC is Salin’s Administrative Investment Review Committee. The committee consists of four trust
officers who periodically review the trust accounts, including annual reviews required by law. (Tr. 104, 111.)
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evidence of an initial review being conducted within 60 days” as supporting
evidence that Salin failed to meet the standards of a prudent investor.
(Appellant’s Br. 31.) Yet Moeder failed to present at the hearing any evidence
that more than sixty days is an unreasonable amount of time to conduct an
initial review.
[32] On the other hand, Salin’s former Vice President Trust Officer and the original
administrator of the Trust, Rhonda King (“King”), testified that Salin’s normal
practice was to review trust assets within sixty days of receiving them.
However, King testified that Salin was unable to do so in this case because
Moeder, the former trustee, failed to provide Salin with the relevant investment
information to permit Salin to complete the review. After receiving the
investment cost basis information from Moeder in April 2007, King testified
that she and Roederer reviewed the assets and developed a diversification plan.
Thomas Jenkins (“Jenkins”), Salin’s trust expert, testified:
Well, the initial review generally and I think Salin policy manual is
two months and [sic] sixty days or something like that, which is, I
would say, the industry standard. But in order to do that review, you
have to have all of the information available to make the decisions that
you need to make. And reviewing the documents that I was given, the
depositions and other related material, Salin didn’t have that
information to make those decisions until the following year.
(Tr. 481.) Jenkins further opined that, in light of the problems Salin
encountered in receiving the information from Moeder, Salin complied with its
fiduciary duties in conducting the initial review. Moeder presented no evidence
to refute Jenkins’s testimony.
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[33] At best, Moeder’s arguments amount to a request to reweigh the evidence,
which we decline to do. See Massey v. St. Joseph Bank & Trust Co., 411 N.E.2d
751, 753 (Ind. Ct. App. 1980) (“Upon the review of a negative judgment, this
Court will not reweigh the evidence nor resolve issues of credibility, but will
scrutinize the evidence in the record most favorable to the judgment.”). Yet our
close scrutiny of the evidence reveals that, as the probate court concluded,
Moeder presented no evidence to support her claims regarding Salin’s initial
review.
[34] Beyond Moeder’s arguments about perceived paperwork deficiencies, the
gravamen of Moeder’s appeal is that there was an “issue of fact” as to whether
Salin properly diversified the Trust. (Appellant’s Br. 30.) The facts show that,
after Salin made the initial sale of 7,000 shares of the JPM stock on July 30,
2007, no more sales were made until April 2009. Moeder points to several days
between July 31, 2007 and April 2009 when JPM stock sold on the open market
for more than $46.90 per share, the price per share on the day Salin received the
Trust assets.6 (Appellant’s Br. 31.) She thus argues that the Trust “could have
6
Moeder alleges that Salin’s diversification plan caused harm because Salin sold “all but 500 of the shares for
a price less than their initial value.” (Appellant’s Br. 42.) Throughout her argument, Moeder uses $46.90 as
the “initial value” of the JPM stock and the benchmark for gains and losses. However, taxable gains and
losses are calculated as the difference between the investment cost basis, which in this case was $38.77 per
share, and the sale price. (Tr. 295.) As such, only two sales were made for losses.
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been completely diversified in 2007-08 with no loss whatsoever.” (Appellant’s
Br. 33.) To support her arguments at the hearing, she introduced into evidence
a listing of JPM stock per share values at close from November 1, 2006 through
September 29, 2010.
[35] However, as Moeder recognizes, “[a] breach of trust does not lie simply because
the shares were sold for an amount below the value for which they were
received.” (Appellant’s Br. 37.) To satisfy her burden of proof, Moeder was
required to show that Salin’s actions did not meet the standard of a prudent
investor as outlined in the Act. To evaluate such a claim, the Act explicitly
provides that “[c]ompliance with the prudent investor rule is determined in light
of the facts and circumstances existing at the time of a trustee’s decision or
action and not by hindsight.” I.C. § 30-4-3.5-8.
[36] To that end, Moeder failed to support her objections to Salin’s investment
decisions with any competent evidence. Moeder, who is not an investment
professional or expert in trust administration, relied on her own testimony that
she believed that Salin acted imprudently in holding the stock in 2008 and then
resuming sales in 2009. Specifically, she testified that in 2009, she saw an
interview with Jamie Dimon, the Chief Executive Officer of JP Morgan Chase
& Co., which “encourage[d] me to believe that JPM will -- will weather this
situation [the financial crisis] quite well.” (Tr. 463.) She then testified that she
personally disagreed with Salin’s decision to sell the JPM stock in 2009 because
she believed it was still selling at distressed prices. In short, Moeder’s evidence
boiled down to Moeder’s own lay testimony that she believed Salin should have
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done things differently. However, she did not produce credible, expert
testimony or any other competent evidence that Salin’s diversification plan and
its steps taken in furtherance of that plan failed to meet the standard of a
prudent investor.
[37] On the other hand, in response to Moeder’s objections, Salin introduced
Jenkins’s expert testimony that Salin’s diversification plan appeared to be “a
rational plan.” (Tr. 504.) Jenkins testified that Salin’s 2007 “decision to sell
seven thousand shares was in all probability prudent. Because right out of the
box at that point, you at least only have half as big a problem as you had the
day before.” (Tr. 487.) Roederer testified that he declined to sell the remaining
stock in early to mid-2008 because the market had changed and his research
and extensive experience indicated the prices were distressed. Jenkins
confirmed that “[t]he plan of diversification . . . by its nature has to be flexible,
has to take certain things into account; market conditions, other things like
that.” (Tr. 485.) Roederer testified that he resumed sales in 2009 because JPM
stock was “improving” and no longer distressed (Tr. 337), and Jenkins
described that approach as “appropriate.” (Tr. 492.) As to the two sales made
in 2009 at modest losses, Jenkins testified that occasionally a trustee may need
to sell a stock at a loss to reduce a concentration. Overall, Jenkins described
Roederer’s process of watching the JPM stock prices daily and making sales
based on this information as “very prudent.” (Tr. 492.)
[38] More importantly, Moeder points to no evidence that the overall Trust value
was actually harmed by these sales. Moeder’s own evidence establishes that
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Salin made all but two sales for a taxable gain over the investment cost basis of
$38.77 per share. Contrary to Moeder’s contention that Salin failed to preserve
the Trust property, the total Trust portfolio value increased by $64,309.65 under
Salin’s management, despite $156,265.86 in disbursements.7 (App. 234.) In
fact, Moeder’s own objection to Salin’s accounting indicates that the Trust assets
had greater fair market value in 2011, after Salin allegedly mismanaged the
Trust assets, than when Salin’s received the Trust assets in 2006. Although
Moeder seems to allege that the value could have increased more during that
time, Moeder points to no evidence introduced at the hearing that shows how
much additional value Salin allegedly could have added. This lack of evidence
supports the probate court’s finding that Moeder “presented no competent
evidence that some other approach would have been better.” (App. 28-29.)
[39] It seems that by pointing to certain facts, or the absence of certain facts, Moeder
asks us to infer that wrongdoing occurred. Mere facts and assertions, however,
are not evidence of wrongdoing. Our review of the record shows that Moeder
failed to support her bare assertions with competent evidence of legal
wrongdoing or harm. Based on this absence of evidence, the probate court’s
7
Salin’s accounting, which was ultimately approved by the court, listed the initial portfolio value as
$686,904.65. (App. 234.) The total value on the date of filing was $751,214.30. (App. 234.)
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conclusory statement that Moeder “offered no evidence that Salin did anything
wrong or that the Trust suffered any loss as a result of Salin’s actions” was not
clearly erroneous. (App. 31.)
[40] The probate court’s findings of fact and conclusions thereon were not clearly
erroneous.
Attorney’s Fees
[41] Moeder also argues that the probate court abused its discretion when it ordered
her to pay Salin’s reasonable attorney’s fees and costs because she brought or
continued to litigate a groundless claim.
[42] The probate court’s attorney’s fees award was made pursuant to Indiana Code
section 34-52-1-1(b), which provides:
(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.
I.C. § 34-52-1-1(b).
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[43] The court’s decision to award attorney’s fees under Indiana Code section 34-52-
1-1 is subject to a multi-level review. Purcell v. Old Nat’l Bank, 972 N.E.2d 835,
843 (Ind. 2012). First, the trial court’s findings of fact are reviewed under the
clearly erroneous standard. Id. Next, the court’s legal conclusions regarding
whether the litigant’s claim was frivolous, unreasonable, or groundless are
reviewed de novo. Id. Finally, the court’s decision to award attorney’s fees and
any amount thereof is reviewed for an abuse of discretion. Id. A trial court
abuses its discretion if its decision is clearly against the logic and effect of the
facts and circumstances or if the court has misinterpreted the law. Id.[44] A claim or defense is “frivolous” if it is taken 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 lawyer is unable to support the
action taken by a good faith and rational argument for an extension,
modification, or reversal of existing law. Branham Corp. v. Newland Res., LLC,
17 N.E.3d 979, 992 n.12 (Ind. Ct. App. 2014) (citing Kahn v. Cundiff, 533
N.E.2d 164, 167 (Ind. Ct. App. 1989), aff'd, 543 N.E.2d 627 (Ind. 1989)). A
claim or defense is “unreasonable” if, based on the totality of the circumstances,
including the law and the facts known at the time of filing, no reasonable
attorney would consider that the claim or defense was worthy of litigation. Id.A claim or defense is “groundless” if no facts exist which support the legal
claim presented by the losing party. Id. “Bad faith is demonstrated where the
party presenting the claim is affirmatively operating with furtive design or ill
will.” GEICO Gen. Ins. Co. v. Coyne, 7 N.E.3d 300, 305 (Ind. Ct. App. 2014),
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trans. denied. A claim or defense is not, however, groundless or frivolous merely
because the party loses on the merits. Smyth v. Hester, 901 N.E.2d 25, 33 (Ind.
Ct. App. 2009), trans. denied.
[45] Here, the probate court did not specify under which prong of Indiana Code
section 35-52-1-1(b) it awarded the attorney’s fees, but found that the evidence
supported the award for two reasons: 1) the claims Moeder raised at the hearing
focused on Salin’s actions taken between 2007 and the spring of 2009 and
therefore the claims were barred by the two-year statute of limitations, and 2)
even if the Moeder’s claims were not time-barred, Moeder “offered no evidence
that Salin did anything wrong or that the Trust suffered any loss as a result of
Salin’s actions.” (App. 31.) The court also rejected Moeder’s claim that she
pursued the litigation “in a good-faith effort to protect the interests of her
brother,” finding her claim “not credible.” (App. 31.) The court found that
Moeder’s action “eroded John’s share of the Trust by forcing Salin as Trustee
[to] incur the expense of litigating [Moeder’s] objection.” (App. 31.) The court
concluded that “in justice, [Moeder] must be required to reimburse the Trust for
the attorney[’s] fees and other litigation costs incurred by Salin in defending
against [Moeder’s] Objection, pursuant to Ind. Code § 34-52-1-1(b).” (App.
31.)
[46] The statute lists the grounds for awarding attorney’s fees in the disjunctive;
therefore, a litigant is required to demonstrate the existence of only one ground
in order to justify an award of attorney’s fees. Charles Downey Family Ltd. P’ship
v. S & V Liquor, Inc., 880 N.E.2d 322, 328-29 (Ind. Ct. App. 2008), trans. denied.
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Because we find it dispositive of Moeder’s claims on appeal, we address only
the court’s conclusion that Moeder’s claims were “frivolous, unreasonable and
groundless, inasmuch as [Moeder] offered no evidence” of wrongdoing by Salin
or resulting harm to the Trust. (App. 31.)
[47] As discussed above, Moeder raised an objection to Salin’s accounting and
alleged that Salin breached its fiduciary duties. Although she pointed at the
hearing to several actions taken (or not taken) by Salin, she failed to provide the
court with any competent evidence that such action constituted legal
wrongdoing. Instead, Moeder relied on her own lay testimony that Salin’s
actions or omissions constituted imprudent management of the Trust assets.
Overall, the value of the Trust grew under Salin’s management, and Moeder
offered no evidence that any other approach Salin could have taken would have
resulted in a greater benefit. Because Moeder presented to the probate court no
evidence to support her objection and claims, the court did not err in
concluding that Moeder brought or continued to litigate a groundless claim.
We therefore cannot say that the probate court abused its discretion in
awarding Salin attorney’s fees and cost incurred in defending against Moeder’s
groundless objection and claim.
Amount of Attorney’s Fees
[48] Moeder’s next issue on appeal is that the probate court abused its discretion in
ordering Moeder to pay $106,001.28 in attorney’s fees to Salin.
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[49] We review the trial court’s decision to award attorney’s fees and the amount
thereof under an abuse of discretion standard. St. Mary Med. Ctr. v. Baker, 611
N.E.2d 135, 137 (Ind. Ct. App. 1993), reh’g denied, trans. denied. What
constitutes reasonable attorney’s fees is a matter largely within the trial court’s
discretion. Chicago Southshore & South Bend R.R. v. Itel Rail Corp., 658 N.E.2d
624, 634 (Ind. Ct. App. 1995). Since the judge is considered an expert, we
continue to adhere to the view that the judge may judicially know what
constitutes a reasonable fee. Id.[50] Moeder argues that the probate court abused its discretion for four reasons: 1)
the probate court did not enter findings of fact and conclusions thereon to
support its order; 2) Salin’s application for attorney’s fees was not supported by
an affidavit attesting to the reasonableness of the fees; 3) Salin chose to proceed
to the hearing rather than filing a motion for summary judgment on its
affirmative defense that Moeder’s claims were time-barred; and 4) Salin had
two attorneys present during the hearing, thus unnecessarily increasing Salin’s
litigation costs.
[51] Salin filed with the probate court a detailed list of attorney’s fees incurred in
defending against Moeder’s groundless objection. Salin also redacted fees and
costs not directly related to this litigation. On appeal, Moeder presents no
citations to authority that support her arguments that the court’s order was
deficient or that Salin’s request was unreasonable. Accordingly, these
arguments are waived. See App. R. 46(A)(8).
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[52] Because the probate court may use its expertise to determine what constitutes
reasonable attorney’s fees and Salin provided evidence of the fees it incurred,
the court did not abuse its discretion in awarding the sum of $106,001.28 in
attorney’s fees and costs. (App. 34.)
Appellate Attorney’s Fees
[53] In its brief, Salin asks this Court to award it attorney’s fees for defending against
Moeder’s claims on appeal.
[54] Indiana 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.”
App. R. 66(E). Generally, “a discretionary award of damages has been
recognized as proper when an appeal is permeated with meritlessness, bad faith,
frivolity, harassment, vexatiousness, or purpose of delay.” Orr v. Turco Mfg. Co.,
512 N.E.2d 151, 152 (Ind. 1987). In considering a request for appellate
attorney’s fees, we use extreme restraint because of the potential chilling effect
upon the exercise of the right to appeal. Thacker v. Wentzel, 797 N.E.2d 342,
346 (Ind. Ct. App. 2003).
[55] Salin argues that this Court should award it appellate attorney’s fees because
Moeder “has offered nothing but a rehash of the specious arguments that Judge
Zore rightly rejected” and that by pursing this appeal, she “is imposing huge
litigation expenses on a fund her mother placed in trust to provide care for her
disabled son John.” (Appellee’s Br. 50.)
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[56] The probate court did not err in finding that Moeder’s claims were groundless
and the court did not abuse its discretion in awarding Salin attorney’s fees and
costs because Moeder brought or continued to litigate a groundless claim.
However, we are not convinced that Moeder, facing personal liability for a
discretionary $106,001.28 attorney’s fee award, instituted this appeal with the
“meritlessness, bad faith, frivolity, harassment, vexatiousness, or purpose of
delay” our standard requires. Orr, 512 N.E.2d at 152. And we believe that an
award of appellate attorney’s fees in this case would likely create a “chilling
effect” on future litigants who also face personal liability for substantial
attorney’s fees awards made at the discretion of trial courts. Thacker, 797
N.E.2d at 346. Furthermore, we observe that Moeder, as the contingent
remainder beneficiary, also stands to benefit from the Trust, should she survive
her brother. We are thus not convinced by Salin’s argument that Moeder
brought an appeal only to drain Trust assets that would otherwise benefit her
brother.
[57] Salin’s request for appellate attorney’s fees is denied.
Conclusion
[58] The probate court did not abuse its discretion in granting Salin’s motion for a
one day continuance. The probate court’s findings and conclusions were not
clearly erroneous. The probate court did not err in concluding that Moeder
brought or continued to litigate a groundless claim and did not abuse its
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discretion in awarding Salin $106,001.28 in attorney’s fees and costs. Salin’s
request for appellate attorney’s fees is denied.
[59] Affirmed.
Robb, J., and Brown, J., concur.
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