Robert A. Masters v. Leah Masters

FILED
Apr 12 2018, 5:22 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Michael A. Setlak Michael H. Michmerhuizen
Perry D. Shilts Barrett McNagny, LLP
Shilts & Setlak, LLC Fort Wayne, Indiana
Fort Wayne, Indiana
Cornelius B. Hayes
Hayes & Hayes
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Robert A. Masters, April 12, 2018
Appellant-Petitioner, Court of Appeals Cause No.
02A05-1706-DR-1317
v. Appeal from the Allen Superior
Court
Leah Masters, The Honorable Charles F. Pratt,
Judge
Appellee-Respondent.
The Honorable Lori K. Morgan,
Magistrate
Trial Court Cause No. 02D07-1204-
DR-261
Riley, Judge.
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STATEMENT OF THE CASE
[1] Appellant-Petitioner, Robert Masters (Husband), appeals the trial court’s order
awarding attorney fees in favor of Appellee-Respondent, Leah Masters (Wife),
pursuant to an indemnification clause in the parties’ divorce decree.
[2] We affirm.
ISSUE
[3] Husband presents one issue on appeal, which we restate as: Whether the
indemnification clause incorporated in the parties’ dissolution decree (Decree)
permitted the reimbursement of Wife’s appellate attorney fees and costs
expended by Wife in her defense to Husband’s appeal.
FACTS AND PROCEDURAL HISTORY
[4] This is Husband’s second appeal to this court, and his prior appeal was heard
by the supreme court. See Masters v. Masters, 20 N.E.3d 158 (Ind. Ct. App.
2014), trans. granted and opinion vacated by Masters v. Masters, 43 N.E.3d 570 (Ind.
2015) (respectively, Masters I and Masters II). The underlying facts, as
previously described in Masters II, are as follows:
The parties were married in 1993 and are the parents of one
child, a daughter, born in January 2007. Dissolution proceedings
began in 2012, and a year later, the parties signed an agreement
to arbitrate under the Family Law Arbitration Act (FLAA). See
Ind. Code § 34-57-5-1 et seq. The FLAA permits parties in a
dissolution of marriage action to resolve their disputes through
arbitration rather than in a trial before a trial judge. The FLAA
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details the role and duties of the family law arbitrator in such
arbitration.
The family law arbitrator’s findings of fact in this case are
undisputed. Noting that this had “been a very contentious
divorce,” . . . the family law arbitrator entered extensive findings
of fact regarding the legal and primary physical custody of the
parties’ daughter, parenting time, child support, parochial school
expenses, healthcare expenses for their daughter, dependency
exemptions for tax purposes of the husband and the wife, spousal
maintenance for the wife, rehabilitative maintenance for the wife,
division of marital property, and the allocation of attorney’s fees
and litigation expenses. The family law arbitrator then entered
conclusions of law that in summary provided for: the marriage to
be dissolved, sole legal and primary physical custody to be
granted to the wife, parenting time to be granted to the husband,
the husband to pay certain child support obligations, the wife to
receive 60% of the assets and the husband to receive 40% of the
assets, the husband to replenish $51,000 in the parties’ bank
accounts, the wife to be awarded an equalization judgment
against the husband for $23,965.05 with an interest rate of 8%
until paid in full, the husband to pay certain spousal maintenance
costs, the husband to pay $95,000 of the wife’s attorney’s fees,
and the wife to be denied rehabilitative maintenance. The family
law arbitrator’s decision was submitted to the trial court, which
entered judgment thereon in accordance with Indiana Code
section 34-57-5-7(d)(1).
Masters II, 43 N.E.3d 571-72 (footnotes omitted). Instead of paying Wife’s
attorney fees and costs as ordered in the Decree, Husband pursued an appeal.
See Masters I, 20 N.E.3d at 158.
[5] The post-decree activity in this case covers the period between May 2014 and
December 2016, whereby the parties filed a total of twenty-nine motions,
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petitions, or citations. Following the trial court’s entry of the parties’ Decree in
March of 2014, Wife filed a motion for attachment, seeking to attach
Husband’s 40% share of assets (including Husband’s share of gold, silver and
ancient coins) so as to satisfy the $95,000 attorney fees and costs award.
Husband thereafter objected to Wife’s motion, and he requested that Wife’s
motion be stayed until his appeal in Masters I was resolved. On October 3,
2014, the trial court issued an order providing that “both the [status quo]
concerning the coins shall be maintained and the Motion to Attach Money
Judgment filed by [Wife], shall pend and shall be stayed until such time as the
Court of Appeals renders its opinion on the issues presented before it.”
(Appellant’s App. Vol. II, p. 155).
[6] Husband’s sole challenge in Masters I was that the arbitrator’s finding and
conclusion requiring him to pay $95,000 of Wife’s attorney fees and costs was
unsupported by the evidence. Masters I, 20 N.E.3d at 159. Each party also
requested appellate attorney fees pursuant to Appellate Rule 66(E). Id. at 160.
As stated, the arbitrator in this case had distributed all of the parties’ marital
assets at 60%/40% in Wife’s favor. Id. at 163. In challenging Husband’s claim
in Masters I, Wife argued that the valuation of Husband’s 40% share of certain
gold, silver, and ancient coins demonstrated Husband’s ability to pay the
$95,000 attorney fees and costs award. Id. at 164. Notwithstanding Wife’s
argument that the valuation of Husband’s 40% share of coins would
demonstrate Husband’s ability to pay her attorney fees, we found the arbitrator
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had rejected Wife’s valuation, and had concluded that the value of coins
remained “unknown.” Id. Thus, we held that
we are in no position either to speculate on a value for the coins
or to say that the arbitrator meant for Husband to sell or
otherwise collateralize them. And, at best, Wife’s evidence
regarding the value of the coins would make the arbitrator’s
findings irrational in that the arbitrator would have found that
the coins had an unknown value and then relied on that
unknown value to assess fees against Husband.
Id. In addition, we noted that although the arbitrator had expressly found that
Husband’s annual income is $80,000, we determined that the arbitrator’s
findings raised serious doubts as to Husband’s ability to pay Wife’s attorney
fees. Id. Specifically, we noted that the arbitrator had directed Husband to
immediately pay $17,735 in child support arrearage; pay Wife a cash payment
of $23,965.05 within 100 days of the arbitration award in order to equalize the
parties’ marital assets; and replenish the parties’ bank account with $51,000. Id.
Accordingly, we found that the $95,000 attorney fees and costs award was more
than Husband’s 40% valued share of the marital estate. Id. Thus, finding that
the arbitrator’s findings of fact raised grave concerns on Husband’s ability to
pay Wife’s attorney fees, we concluded that the judgment was erroneous and
reversed the trial court. Id. at 165. Also, we summarily rejected each side’s
request for appellate attorney fees pursuant to Appellate Rule 66(E). Id.
[7] On April 2, 2015, our supreme court granted transfer and ultimately reached a
different result by affirming the trial court’s award of attorney fees in favor of
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Wife. See Masters II, 43 N.E.3d at 570. The supreme court stated, in pertinent
part:
The arbitrator’s conclusions, findings, and award comprised
twenty-seven pages of single-spaced paragraphs extensively
addressing various factors. The arbitrator determined the value
of the marital estate, its division, and the economic
circumstances of each of the parties; the relative education of
each of the parties, their job opportunities, and their actual
incomes as well as their potential incomes; the behavior of the
parties, their level of cooperation in this case, and how attorney’s
fees were incurred and funded by each of the parties; and various
aspects of the education and support of the parties’ daughter.
The husband does not argue that the family law arbitrator made
improper findings of fact. Rather, his challenge is directed to the
amount of the award as compared to his ability to pay. He also
contends that the arbitration award contradicts the arbitrator’s
own findings, specifically that the arbitrator failed to
appropriately consider the wife’s potential income and the
resulting ratio of the parties’ relative incomes; that the wife
received $50,000 more than the husband in the property division;
that the wife's attorney’s fees were paid by the wife’s parents and
the potential forgiveness of the resulting promissory notes from
the wife to her parents; and that the wife’s attorney’s fees were
triple his own and were “undeserved given the results of the
case.”
The crux of the husband’s argument compares his $95,000
attorney’s fee award obligation against his share of the marital
estate, “approximately $94,000 . . . plus forty percent of some
unvalued coins.” In making this claim, the husband relies on the
fact that the family law arbitrator did not expressly assign a
particular value to the parties’ extensive coin collection. To the
contrary, we find that the sizeable coin collection and its
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disposition is highly relevant to our review. The family law
arbitrator recognized the coins in her findings and stated that
“[t]hroughout the marriage, Husband invested income earned
during the marriage in numismatic and ancient coins . . .
believ[ing] that the investment was a good retirement investment
strategy.” The arbitrator then noted that the wife had hired an
appraiser who valued the gold and silver coins at $242,954.55
and that husband had hired an appraiser who valued the ancient
coins at $60,635.00. Based on those findings, the family law
arbitrator then ordered “that the gold and silver coins be divided
by [wife’s appraiser] and the [ancient] coins be divided by
[husband’s appraiser]. . . . Husband shall receive forty percent
(40%) of the divided coins and Wife shall receive the remaining
sixty percent (60%) thereof.” These findings clearly imply that
the aggregate value of the gold and silver coins, and the ancient
coins, totaled $303,589.55, of which the husband’s 40% share
would be worth $121,435.82. Combining his coin collection
share with the additional admitted $94,000 share of the marital
estate, the husband received more than $215,000.
The husband’s resulting property share dramatically alters the
husband’s basic argument. Instead of comparing his obligation
to pay $95,000 toward the wife’s attorney’s fees to a net marital
share of $94,000, the fee award must be compared to the
husband’s receipt of over $215,000 in marital property. This fact
renders unavailing all of the husband’s arguments. Seen in this
light, the arbitrator’s attorney fee award is not against the logic
and effect of the facts and circumstances of the case. “We do not
reweigh the evidence; rather we consider the evidence most
favorable to the judgment with all reasonable inferences drawn in
favor of the judgment.” Our recalculation of the husband’s share
of the marital property provides a legal theory supported by the
findings, thus warranting our affirmance of the trial court
judgment. We conclude that the award of attorney’s fees in this
case is supported by the findings, and that the husband has failed
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to show clear error that leaves us with a definite and firm
conviction that a mistake has been made.
Masters II, 43 N.E.3d at 576-77 (internal citations omitted).
[8] On November 13, 2015, twenty-nine days after our supreme court issued its
opinion in Masters II, Wife filed a motion for indemnification pursuant to the
Decree, seeking an assessment of attorney fees and costs that she incurred while
defending herself in Husband’s appeal. Relying on the indemnity clause which
stipulated, in part, that “each party is ORDERED to indemnify the other party
from any violation of the terms and conditions of this Decree, including costs and
reasonable attorney fees,” Wife argued that Husband had “violated the terms
and conditions of the Decree . . . by choosing not to pay” her attorney fees and
costs in the amount $95,000. (Appellant’s App. Vol. II, pp.156-57). As such,
Wife contended that all her appellate attorney fees and costs that she expended
while defending herself in Husband’s appeal in Masters I, should be recovered
from Husband.
[9] The chronological case summary shows that between December of 2016 and
January of 2017, the parties appeared three times in person and by counsel to
present evidence on their numerous pending post-dissolution pleadings. On
February 23, 2017, while awaiting the trial court’s determination of the parties’
pending pleadings, Husband filed a verified petition, seeking an order on the
distribution of the parties’ gold, silver, and ancient coins. Husband also
claimed that he had already paid “$107,638.89 via a cashier’s check to satisfy
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the outstanding attorney fee judgment, which was subject to the Motion for
Attachment filed by [Wife] in 2014.” (Appellees’ App. Vol. II, p. 6).
[10] On May 17, 2017, the trial court issued a seventy-one-page Order, addressing
all of the parties’ outstanding pleadings. With regards to Wife’s motion for
indemnification, the trial court entered the following pertinent findings:
91. The [divorce decree] . . . ordered the parties to indemnify
each other, including from attorney fees, for violations of the
[d]ecree. The [c]ourt finds that the clear intent and purpose of
the provision was to ensure that one party was not aggrieved by
the other party’s efforts to avoid or delay compliance with the
orders of the [c]ourt.
92. [Wife] has incurred substantial attorney fees and thus has
been aggrieved by the [a]ppeal pursued by [Husband].
93. This Court has the “inherent authority to compensate an
aggrieved party.” Crowl v. Berryhill, 678 N.E.2d 828, 832 (Ind.
Ct. App. 1997).
94. [Wife] is requesting that the [c]ourt award her attorney fees
incurred defending the [a]ppeal initiated by [Husband] and
alleges that [Husband] misled the [c]ourt of [a]ppeals regarding
the amount of the marital estate that he was awarded thereby
alleging that he was incapable of paying the attorney fee award.
95. The [c]ourt finds and concludes that the indemnity provision
contained in the [d]ecree of [d]issolution of [m]arriage was
included in the Decree so as to ensure that any relief provided by
the [c]ourt was gross relief and not net relief.
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96. [Wife] incurred attorney fees in the sum of Thirty Thousand
Eight Hundred Ninety-Six Dollars ($30,896.00) in her defense of
the [a]ppeal leaving her net recovery in the sum of Sixty-Four
Thousand One Hundred Four Dollars ($64,104.00).
97. [Wife] contends that Indiana law supports a claim for
indemnity. [Husband] disagrees with said contention and-
maintains that the indemnity provision does not apply.
Additionally, he maintains that he was simply pursuing an
[a]ppeal which he had a right to do.
98. Indiana law supports a claim for indemnity. In Fackler v.
Powell, 891 N.E.2d 1091 (Ind. Ct. App. 2008), the dissolution
court approved a mediated settlement agreement that became an
order of the Court on March 22, 2002. Id. [at] 1095. The
agreement required Powell to make a payment to Fackler
pursuant to that agreement/order. Id. [at] 1097. Powell did not
do so and Fackler sought enforcement of the [c]ourt’s Order as
well as attorney fees on appeal pursuant to an indemnification
provision. The [c]ourt of [a]ppeals held that because the
agreement which became an order of the dissolution court
contained an indemnification clause, Fackler was entitled to
attorney fees. [Id.]
99. In L.H. Controls, Inc. v. Custom Conveyor, Inc., 974 N.E.2d
1031, 1048 (Ind. Ct. App. 2012), the [c]ourt of [a]ppeals held that
“it is clear that a divorce decree indemnity provision such as the
one in [Fackler] would cover a first-party indemnity claim, [i.e.]
where one party successfully sues the other for breach of contract
and requests attorney’s fees.”
100. The [c]ourt finds that the Fackler and L.H. Controls cases
referenced herein above make it clear that the indemnity
provision in a divorce decree covers a first party indemnity claim
and permits recovery of attorney fees.
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101. The [c]ourt finds that although [Husband] did not violate
the indemnity provision of the [d]ecree by pursuing his appellate
rights, he did violate the terms of the Decree . . . . by failing to
pay the Ninety-Five Thousand Dollar ($95,000.00) attorney fee
award as ordered by the [c]ourt.
102. In the Fackler case, the [c]ourt of [a]ppeals found that the
terms of the Order were violated when a party failed to comply
with its provisions. In this case, payment of the attorney fee
award was due immediately and payment was not made until
after the appeals process was completed and ultimately the [t]rial
[c]ourt’s award of attorney fees was affirmed. As a result, [Wife]
incurred a substantial amount of attorney fees effectively
reducing the amount of her attorney fee award. The [c]ourt finds
that the purpose of the indemnity provision is to make a party
whole.
103. [Husband] maintained during the [evidentiary hearing] that
permitting [Wife] to recover [a]ppellate attorney fees under the
indemnity provision in the Decree . . . creates a road block to a
person’s right to seek appellate relief.
104. The Indiana Court of Appeal[s] has held that when a
contract that is [the] subject of litigation contains a fee shifting
provision, appellate attorney fees are available pursuant to such a
provision. Cavallo v. Allied Physicians of Michiana, LLC, 42 N.E.3d
995, 1010 (Ind. Ct. App. 2015) (“We have previously held that
when a contract provision provided [that] the attorney fees are
recoverable, appellate attorney fees may also be awarded.”);
Radio Distributing v. National Bank and Trust, 489 N.E.2d 642, 649
(Ind. Ct. App. 1986). This [c]ourt does not find that an award of
appellate attorney fees to a party prevailing on an appeal is a road
block to a person’s right to appeal.
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105. [Husband] argued at [the evidentiary hearing] that [Wife]
waived her right to pursue collection on the judgment pre-appeal
and that he obtained a stay permitting him to pursue his
collection rights. [Wife] acknowledges that she filed a Motion
and Affidavit to Attach Property to Money Judgment on April
11, 2014, seeking to attach the coins owned by [Husband] and
that the Motion and attempt to attach the coins was stayed, but
argues that her agreement to stay the attachment on the coins
pending an appeal did not mean that she waived all collection
remedies pre-appeal or that she could not recover attorney fees
pursuant to the indemnification provision consistent with
Indiana case law.
106. The [c]ourt finds that [Wife] did not waive any collection
proceedings or her right to enforce the judgment other than as
was set forth in the very specific order regarding the coins.
However, the [c]ourt finds that even if she had, the fact that
collection efforts were stayed does not mean that the judgment
itself was stayed, that the judgment did not continue to draw
interest or that [Wife] is not entitled to recover attorney fees
under the indemnity provisions of the [divorce decree].
(Appellant’s App. Vol. II, pp. 63-66). In its conclusion, the trial court granted
Wife’s motion for indemnification, and ordered “an attorney fee award against
[Husband] in favor of [Wife]. [Husband] shall pay attorney fees to [Wife] in the
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sum of Seventy-Five Thousand Dollars ($75,000).” 1 (Appellant’s App. Vol. II,
p. 70).
[11] Husband now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
[12] When a trial court enters findings of fact and conclusions of law pursuant to
Indiana Trial Rule 52(A), we apply a two-tiered standard of review. In re
Visitation of M.L.B., 983 N.E.2d 583, 585 (Ind. 2013). We must first determine
whether the evidence supports the findings, and second, whether the findings
support the judgment. K.I. ex rel J.I. v. J.H., 903 N.E.2d 453, 457 (Ind. 2009).
We will set aside findings of fact and conclusions of law only if they are clearly
erroneous, and “‘due regard shall be given to the opportunity of the trial court
to judge the credibility of witnesses.’” M.S. v. C.S., 938 N.E.2d 278, 281-82
(Ind. Ct. App. 2010) (quoting K.I. ex rel. J.I. v. J.H., 903 N.E.2d 453, 457 (Ind.
2009)). A judgment is clearly erroneous when the record contains no evidence
1
From the trial court’s order, it appears that Wife expended $30,896.00 in her defense to Husband’s appeal,
however, the record is unclear how the trial court came up with the $75,000.00 attorney fee award.
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supporting the findings, the findings fail to support the judgment, or when the
trial court applies an incorrect legal standard to properly found facts. Id. at 282.
A. Indemnity Clause
[13] The seemingly never-ending post-dissolution litigation in this case has resulted
in this second appeal. Today we decide whether the indemnification clause in
the parties’ Decree permitted Wife to recover attorney fees expended in her
defense to Husband’s first appeal.
[14] The indemnity clause in this case was worded in a way that violations to any of
the orders stipulated in the Decree would allow an aggrieved party to recover
reasonable attorney fees and costs expended as a consequence of post-
dissolution litigation. Specifically, clause 46 directed:
46. In accordance with the findings and conclusions set forth
above and herein, each party is ORDERED to indemnify the other
party from any violation of the terms and conditions of this Decree,
including costs and reasonable attorney fees.
(Appellant’s App. Vol. II, p. 141) (emphasis added).
[15] Indemnity has been defined as “[t]he right of an injured party to claim
reimbursement for its loss, damage or liability from a person who has such a
duty.” Black’s Law Dictionary 784 (8th ed. 2004). The general legal
understanding of indemnity clauses is that they cover “‘the risk of harm
sustained by third persons that might be caused by either the indemnitor or the
indemnitee. It shifts the financial burden for the ultimate payment of damages
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from the indemnitee to the indemnitor.’” L.H. Controls, Inc. v. Custom Conveyor,
Inc., 974 N.E.2d 1031, 1047 (Ind. Ct. App. 2012) (quoting Indianapolis City
Market Corp. v. MAV, Inc., 915 N.E.2d 1013, 1023 (Ind. Ct. App. 2009)). As we
noted in L.H. Controls, other authorities recognize this general understanding.
L.H. Controls, Inc.,974 N.E.2d at 1047-48 (citing Am.Jur.2d 415, Indemnity § 1
(2005) (“In general, indemnity is a form of compensation in which a first party
is liable to pay a second party for a loss or damage the second party incurs to a
third party.”); C.J.S. 94, Indemnity § 1 (2007) (“In a contract of indemnity, the
indemnitor, for a consideration, promises to indemnify and save harmless
indemnitee against liability of indemnitee to a third person or against loss
resulting from such liability.”)). That said, we note that there is no absolute
prohibition against one party agreeing to indemnify the other party for first-
party claims arising between those parties. Id. Where the plain language of the
provision requires first-party indemnification, then such indemnification is
permitted. Sequa Coatings Corp. v. N. Ind. Commuter Transp. Dist., 796 N.E.2d
1216, 1229 (Ind. Ct. App. 2003). Further, we note that an “obligation to
indemnify does not arise until the party seeking indemnity suffers loss or incurs
damages. This may occur when the party seeking indemnity 1) pays the
underlying claim; 2) pays judgment on the underlying claim; or 3) tenders
payment in settlement of the underlying claim.” Essex Group, Inc. v. Nill, 594
N.E.2d 503, 507 (Ind. Ct. App. 1992).
[16] Following our holding in Masters I that each party should bear their own
appellate attorney fees, Wife paid her fees. In her motion for indemnification,
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Wife contended that Husband’s appeal in Masters I was an attempt by Husband
“to avoid paying” Wife’s attorney fees and costs in the amount of $95,000 as
ordered in the Decree. (Appellant’s App. Vol. II, p. 157). Wife therefore
claimed that Husband had “violated the terms and conditions of the Decree” by
failing to immediately pay her attorney fees and costs. (Appellant’s App. Vol.
II, p. 157). Accordingly, Wife maintained that all of her appellate attorney fees
and costs incurred while defending herself in Masters I, should be recovered
from Husband pursuant to the indemnity clause.
[17] In granting Wife’s motion for indemnification, the trial court found that the
Decree ordered the parties to indemnify each other, including reasonable
attorney fees and costs, for any violations of the terms and conditions of the
Decree. The trial court also found that the indemnity clause had a clear intent
and the purpose of the provision was to ensure that one party was not aggrieved
by the other party’s efforts to avoid or delay compliance with the orders of the
Decree. The trial court ultimately found that Wife had incurred substantial
attorney fees during her defense in Husband’s appeal and thus had been
aggrieved with Husband’s non-compliance with the Decree.
[18] Husband claims that the when we denied each of the parties’ request for
appellate attorney fees in Masters I, which the supreme court summarily
affirmed in Master II, both parties were barred from the recovery of any
appellate attorney fees. In his brief, Husband now argues that the Wife’s
motion for indemnification is a “blatant backdoor effort to obtain relief already
addressed and denied by our Appellate Court.” (Appellant’s Br. p. 10).
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Accordingly, Husband argues that given the clear language in the holdings in
Masters I and Masters II, we should vacate the trial court’s award of appellate
attorney fees in favor of Wife’s motion for indemnification. We disagree. The
reimbursement of attorney fees pursuant to Appellate Rule 66(E), and recovery
of attorney fees pursuant to an indemnity clause follow two separate legal
channels.
[19] Appellate Rule 66(E) provides in pertinent part that this court “may assess
damages if an appeal . . . is frivolous or in bad faith. Damages shall be in the
Court’s discretion and may include attorneys’ fees.” Our discretion to impose
damages is limited to instances when “an appeal is permeated with
meritlessness, bad faith, frivolity, harassment, vexatiousness, or purpose of
delay.” Thacker v. Wentzel, 797 N.E.2d 342, 346 (Ind. Ct. App. 2003).
[20] Indiana courts have recognized that indemnity agreements are a form of
contract and, as such, are construed according to the rules and principles of the
law of contracts. See TLB Plastics Corp. v. Procter & Gamble Paper Prods. Co., 542
N.E.2d 1373, 1377 (Ind. Ct. App. 1989); Kruse Classic Auction v. Aetna Cas. and
Sur., 511 N.E.2d 326, 328 (Ind. Ct. App. 1987); Bell v. Commonwealth Land Title
Ins. Co., Inc., 494 N.E.2d 997, 999 (Ind. Ct. App. 1986). If the words of the
indemnity agreement are clear and unambiguous, they are to be given their
plain and ordinary meaning. See Bell, 494 N.E.2d at 999.
[21] In this case, the parties contracted to arbitrate their divorce. The arbitrator
consequently included an indemnity clause that would make an aggrieved party
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whole with regard to attorney fees and costs incurred as a result of post-
dissolution litigation arising from violations relating to the Decree. Because the
recovery of appellate attorney fees under the indemnification clause follows a
separate legal route from attorney fees recoverable under Rule 66(E), the denial
of attorney fees in Masters I, and II, is irrelevant in discussing whether it was
proper for the trial court to grant Wife’s motion for indemnification.
[22] Turning to Husband’s main argument, he maintains that the order in the
parties’ Decree requiring him to pay $95,000 in attorney fees and litigation costs
in favor of Wife cannot be interpreted as a term or condition; therefore, he argues
that he did not violate the Decree by pursuing an appeal and failing to
immediately pay the judgment debt. On the contrary, Wife argues that “any
enforceable provision or obligation” in the Decree was “a term.” (Appellees’
Br. p. 27) (internal citations omitted). Wife contends that because the directive
requiring Husband to pay attorney fees was effective immediately after it was
issued, Husband violated a term and condition of the Decree, thereby triggering
the enforcement of the indemnity clause.
[23] “Term” is defined as a “an expression that has a fixed meaning in some field.”
Black’s Law Dictionary 1509 (8th ed. 2004). “Condition” is defined as “[a]
future and uncertain event on which the existence or extent of an obligation or
liability depends; an uncertain act or event that triggers or negates a duty to
render a promised performance.” Black’s Law Dictionary 313 (8th ed. 2004).
Our supreme court has held that “‘indemnification clauses are strictly construed
and the intent to indemnify must be stated in clear and unequivocal terms.’”
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L.H., 974 N.E.2d at 1047 (quoting Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1132
(Ind. 1995)). Indemnity agreements are subject to the standard rules and
principles of contract construction. L.H. Controls, 974 N.E.2d at 1047.
Interpretation of a written contract, including an indemnity provision, is a
question of law. Id. We review questions of law de novo and owe no deference
to the trial court’s legal conclusions.” Koppin v. Strode, 761 N.E.2d 455, 461
(Ind. Ct. App. 2002).
[24] The arbitration award refers to the orders it issued to the parties as “terms and
conditions.” (Appellant’s App. Vol. II, p. 157). As such, we determine that the
order requiring Husband to pay Wife’s attorney fees and costs in the amount of
$95,000, was a specific term and condition of the Decree. Contrary to
Husband’s arguments, non-compliance with that directive was a violation.
[25] Husband additionally argues that the indemnity clause at issue here was
imposed by the arbitrator and was not an agreed upon clause that the parties
intended to be included in the Decree. We note that arbitration arises through
contract, and the parties are essentially free to define for themselves what
questions may be arbitrated, remedies the arbitrator may afford, and the extent
to which a decision must conform to the general principles of law. School City of
East Chicago v. East Chicago Fed'n of Teachers, Local No. 511, 422 N.E.2d 656, 662
(Ind. Ct. App. 1981). The facts in Masters II reveal that via agreement, the
parties agreed to arbitrate, however, that agreement was not included in this
appeal. Accordingly, Husband’s waives his argument that the arbitrator
imposed the indemnity clause rather than it being a mutual clause. See Dickes v.
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Felger, 981 N.E.2d 559, 562 (Ind. Ct. App. 2012) (“A party waives an issue
where the party fails to develop a cogent argument or provide adequate citation
to authority and portions of the record.”); Ind. Appellate Rule 46(A)(8)(a).
Notwithstanding Husband’s omission to include the arbitration agreement, our
reading of the Decree reveals that through a series of six hearings, the parties
arbitrated, and the arbitrator resolved, issues including legal and primary
physical custody, parenting time, child support, parochial school expenses,
health care, tax exemption, spousal maintenance, rehabilitative maintenance,
division of marital estate, attorney fees, and litigation costs. The arbitrator also
included an indemnity clause to vindicate collection rights of attorney fees and
costs exhausted by an aggrieved party in the event the other party failed to
adhere with the directives of the Decree. Husband was ordered to pay Wife’s
attorney fees and costs relating to the arbitration.
[26] Husband then posits that the issue of whether an indemnity provision may
permit recovery of appellate attorney fees expended by judgment creditor
(Wife) while defending an appeal initiated by a judgment debtor (Husband) has
never been addressed by this court and is an issue of first impression. Wife
refutes that this is not a case of first impression and she claims that we
addressed a similar issue in Fackler v. Powell, 891 N.E.2d 1091 (Ind. Ct. App.
2008).
[27] In Fackler, the parties took part in a mediation in the final settlement of their
divorce action, resulting in an agreement. Id. at 1094. The dissolution court
approved the agreement and entered it as part of the final decree. Id. The
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agreement assigned to the ex-wife a promissory note in the amount of $23,000
plus other costs up to $80,000. Id. Ex-husband was required to guarantee
payment of the note from the conveyance of “Lot 22.” Id. Prior to the sale of
Lot 22, ex-husband then notified his ex-wife that upon sale of the lot, he would
only pay ex-wife $23,000 plus accrued interest at 8%. Id. Displeased with ex-
husband’s intentions, ex-wife brought an action seeking legal and equitable title
to the note and she sought the remaining balance on the note upon the sale of
the lot. Id. Lot 22 was subsequently conveyed for a gross selling price of
$114,900. Id. at 1095. On the same day the lot was sold, ex-husband paid ex-
wife $23,000 plus accrued interest in the amount of $179.40. Id. The balance,
$83,785.44, was thereafter placed in an escrow account. Id. Ex-wife
subsequently filed a motion for summary judgment alleging that she was
entitled to judgment as a matter of law because the settlement agreement clearly
and unambiguously awarded full ownership of the promissory note to her. Id.Ex-husband, in turn, filed a motion for summary judgment of his own, asserting
that he was entitled to judgment because the trial court did not have subject
matter jurisdiction or, in the alterative, because the settlement agreement clearly
and unambiguously awarded only $23,000 to ex-wife, leaving him the owner of
the promissory note. Id. Following a hearing, the trial court denied both of the
parties’ summary judgment motions. Id. Ex-wife filed a motion for
certification of interlocutory appeal; it was ultimately granted by the trial court,
and we accepted jurisdiction thereafter. Id. We vacated on jurisdiction
grounds, and on transfer, the supreme court determined that ex-wife should
have filed her claim in the dissolution court which retained jurisdiction to
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interpret and enforce their marital settlement agreement. Id. Ex-wife then
refiled her claim in the dissolution court. Id. A hearing was conducted, and the
trial court entered its findings of fact and conclusions of law determining that
ex-wife’s only contractual right was $23,000 from the promissory note, and it
further ordered ex-wife to pay ex-husband’s attorney fees. Id. Ex-wife
appealed. Id.[28] In her second appeal, ex-wife raised two issues. In her first claim, ex-wife
argued that the settlement agreement unambiguously awarded her full
ownership of the promissory note. Id. On this issue, we determined that ex-
husband had breached the provisions of settlement agreement requiring him to
pay $23,000 plus other costs up to $80,000, upon sale of Lot 22. Id.Accordingly, we found that ex-husband was obligated to pay Wife $103, 000—
i.e., $23,000 plus other costs up to $80,000. Id. at 1097. Ex-wife’s second
argument was that trial court’s order requiring her to pay ex-husband’s attorney
fees was contrary to the law. Id. While initially noting that Indiana adheres to
the “American Rule” with respect to the payment of attorney’s fees, i.e., each
party is required to pay their own attorney fees, we found that the rule was
inapplicable because the parties’ settlement agreement contained an
indemnification clause relating to payment of attorney fees. Id. The indemnity
clause specifically provided:
Each party agrees to indemnify and save and hold the other
harmless from all damages, losses, expenses (including attorney’s
fees), costs and other fees incurred by reason of the indemnitor's
violation or breach of any of the terms and conditions hereof.
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Id. at 1098. Because we determined that ex-husband had breached the
settlement agreement in ex-wife’s first issue, i.e., Husband was required to pay
Wife $103,000 from the proceeds from the sale of Lot 22, and considering the
indemnity clause, we reversed and remanded to the trial court for a
determination of attorney fees in favor of Wife. Id.[29] Arguing that Fackler is inapplicable and inapposite to the facts of this case,
Husband claims that the ex-wife in Fackler sued her ex-husband for breaching
the settlement agreement and for the non-payment of a fixed money judgment.
Specifically, Husband argues that, in the instant case, “Wife did not
successfully sue Husband for breach of contract, Wife merely defended
Husband’s appellate effort to have this Court review whether the Ninety-Five
Thousand Dollars ($95,000.00) attorney fee award was clearly erroneous or
not.” (Appellant’s Br. p. 21) (internal quotation marks omitted). In response,
Wife argues that the Fackler holding “could not be more clear [sic] that it was a
breach that provided the right to recover attorney[] fees under the
indemnification provision.” (Appellees’ Br. p. 30). As such, Wife maintains
that Husband’s refusal to immediately pay her attorney fees and costs when
ordered, was a breach to the terms and conditions of the Decree.
[30] Considering the holding in Fackler, we hold that no new ground is being broken
with respect to the application of an indemnity clause requiring a party to pay
attorney fees expended by another party. In our view, the rationale espoused in
Fackler controls our outcome. In Fackler, we held that the ex-husband was
required to pay his ex-wife’s attorney fees after his breach of a dissolution
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property settlement agreement, which agreement stated that each party agreed
“to indemnify and save and hold the other harmless from all . . . expenses
(including attorney’s fees) . . . incurred by reason of the indemnitor’s violation
or breach of any of the terms and conditions hereof.” Fackler, 891 N.E.2d at
1098. In this case, the triggering event requiring Husband to indemnify Wife’s
post-dissolution attorney fees and costs was when Husband failed to
immediately pay Wife’s attorney fees and costs as directed in the Decree.
Based on our determination that Husband in this case violated the Decree by
failing to immediately pay Wife’s attorney fees and costs in the amount of
$95,000, the indemnity clause was triggered when Wife defended herself in
Husband’s appeal, thereby incurring post-dissolution attorney fees and costs.
As such, we conclude that the trial court did not err in granting Wife’s motion
for indemnification.
CONCLUSION
[31] In light of the foregoing, we conclude that the trial court did not err in granting
Wife’s post-dissolution attorney fees and costs pursuant to an indemnification
clause in the parties’ divorce Decree.
[32] Affirmed
[33] Robb, J. and Pyle, J. concur
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