ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEES:
ROBERT E. STOCHEL ADAM D. DECKER
Crown Point, Indiana Austgen, Reed & Decker, P.C.
Crown Point, Indiana
CASTLEWOOD PROPERTY OWNERS ) ASSOCIATION, INC. ) ) Appellant-Defendant, ) ) vs. ) No. 45A03-9808-CV-368 ) CONNEE TREPTON and RONALD GRUSZKA, ) ) Appellees-Plaintiffs. )
APPEAL FROM THE LAKE SUPERIOR COURT
Plaintiffs, and other members of the board seeking damages for the alleged willful and
wanton conduct in denying their house plans. Before the issue proceeded to trial, Plaintiffs
settled with Echterling. In consideration of a $2,000.00 payment, Echterling executed a
covenant not to sue and dismissed Plaintiffs from the lawsuit. Plaintiffs then submitted a
written request to Castlewood seeking indemnification as corporate officers for costs in
settling the action. When Castlewood refused indemnification, Plaintiffs filed a complaint
for declaratory judgment seeking the trial court to declare the terms and conditions for
indemnification of board members acting in their official capacities. After a bench trial, the
trial court entered judgment in favor of Plaintiffs for $2,000.00. The trial court also awarded
Plaintiffs $7,509.75 in attorney fees. This appeal followed.
At Castlewood's request, the trial court entered findings and conclusions thereon in support of its judgment. When a party has requested special findings of fact and conclusions of law pursuant to Ind. Trial Rule 52(A), the reviewing court must first decide whether the evidence supports the findings and second whether the findings support the judgment. Panhandle Eastern Pipe Line Co. v. Tishner, 699 N.E.2d 731, 736 (Ind. Ct. App. 1998). The findings and judgment will be reversed only when clearly erroneous. G & N Aircraft, Inc. v. Boehm, 703 N.E.2d 665, 672 (Ind. Ct. App. 1998), reh'g denied. Findings of fact are clearly erroneous when the record lacks any evidence or reasonable inferences from the evidence to support them. Temby v. Bardach, 699 N.E.2d 775, 777 (Ind. Ct. App. 1998). The judgment is clearly erroneous when it is not supported by the findings of fact and the conclusions of law entered on the findings. G & N Aircraft, 703 N.E.2d at 672. In making
these determinations we shall neither reweigh the evidence nor judge witness credibility but
consider only the evidence and the inferences flowing therefrom which are most favorable
to the judgment. Panhandle, 699 N.E.2d at 736.
Castlewood complains that Plaintiffs did not comply with the statutory requirements for indemnification, and therefore the trial court erred by awarding them $2,000.00 in damages. The Indiana Nonprofit Corporation Act of 1991 ("the Act") provides in relevant part:
If an individual is made a party to a proceeding because the individual is or was a director, a corporation may indemnify the individual against liability incurred in the proceeding if:
(1) The individual's conduct was in good faith; and
(2) The individual reasonably believed:
(A) In the case of conduct in the individual's official capacity with
the corporation, that the individual's conduct was in the
corporation's best interests; . . . .
Ind. Code § 23-17-16-8.
A corporation may pay for or reimburse the reasonable expenses incurred by
a director who is a party to a proceeding in advance of final disposition of the
proceeding if the following occur:
(1) The director furnishes the corporation a written affirmation of the
director's good faith belief that the director has met the standard of conduct
described in [Ind. Code § 23-17-16-8].
(2) The director furnishes the corporation a written undertaking, executed
personally or on the director's behalf, to repay an advance if it is ultimately
determined that the director did not meet the standard of conduct.
Committee has acted in an arbitrary and capricious manner in denying permission to the
defendants to construct the house in question." R. at 332. The counter claim filed against
Castlewood was based on those same grounds and sought compensatory damages in excess
of $175,000 and punitive damages in excess of $350,000. Plaintiffs testified they settled in
order to keep the cost of litigation lower. This evidence is sufficient for a determination that
Plaintiffs acted in the best interests of the corporation. Further, the fact that the case would
be dismissed some years later does not mean it lacked merit at the time it was filed. We find
no error here.
Next, Castlewood contends the trial court erred in awarding Plaintiffs attorney fees. Generally, attorney fees are not recoverable from the opposing party in the absence of an agreement between the parties, statutory authority, or a rule to the contrary. City of Hammond v. Marina Entertainment Complex, Inc., 681 N.E.2d 1139, 1142 (Ind. Ct. App. 1997), trans. denied, 690 N.E.2d 1187. In this case the Act provides in relevant part:
Unless limited by articles of incorporation, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of a proceeding to which the director was a party, because the director is or was a director of the corporation, against reasonable expenses actually incurred by the director in connection with the proceeding.
Ind. Code § 23-17-16-9 (emphasis added).
Unless a corporation's articles of incorporation provide otherwise, a director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the preceding or to another court of competent jurisdiction. On receipt of an application, the court may, after giving any notice the court considers necessary, order indemnification in the amount the court considers proper if the court determines one (1) of the following:
Ind. Code § 23-17-16-11 (emphasis added). Castlewood argues that Plaintiffs did not
actually defend the Echterling-Snyder proceeding, but rather they merely paid $2,000.00 in
settlement. Thus, the argument continues, Plaintiffs were not "wholly successful on the
merits or otherwise" and therefore were not entitled to attorney fees. We disagree with
Castlewood's assessment. Faced with potential personal liability of several thousand dollars,
Plaintiffs were specifically advised by the subdivision attorney to obtain private counsel.
They did so and counsel proceeded to negotiate with the lawyers for Echterling. In exchange
for the payment of $2,000.00, Echterling executed a covenant not to sue and dismissed
Plaintiffs from the action. We fail to see how this conduct can be considered anything other
than a defense of the proceedings.
As for Plaintiffs not being "wholly successful" we observe that the law favors the voluntary resolution of disputes. Williams v. Rogier, 611 N.E.2d 189, 197 (Ind. Ct. App. 1993). Accordingly, settlement agreements, including covenants not to sue, are encouraged by the court. Scott County v. Vaughn, 704 N.E.2d 1029, 1034 (Ind. Ct. App. 1998), trans. denied. In the absence of fraud or mistake, a settlement is as determinative of the parties' rights and obligations as a judgment on the merits. 409 Land Trust v. City of South Bend, 709 N.E.2d 348, 350 (Ind. Ct. App. 1999), reh'g denied. Plaintiffs were "wholly successful"
in that although Castlewood's preliminary injunction was denied, Echterling did eventually
change the home's plan and complete the home in accordance with the Plaintiffs' decision.
Plaintiffs settled prior to the outcome so that a lengthy and costly proceeding could be
avoided, which would have cost Castlewood more than $2,000.00 to defend. Thus, because
Plaintiffs' decision was ultimately vindicated, they were "wholly successful" on the merits.
As its final point, Castlewood contends that even if attorney fees were proper, the trial
court nonetheless abused its discretion in awarding attorney fees in excess of $7,500.00 when
the settlement amount was for the relatively small amount of $2,000.00. The amount of an
award for attorney fees is left to the sound discretion of the trial court. Stepp v. Duffy, 686
N.E.2d 148, 153 (Ind. Ct. App. 1997), trans. denied. We will reverse an award of attorney
fees only in the event of an abuse of discretion. Id. The trial court abuses its discretion only
when its decision is clearly against the logic and effect of the facts and circumstances before
the court. Valadez v. R.T. Enterprises, Inc., 647 N.E.2d 331, 333 (Ind. Ct. App. 1995). In
determining the amount of attorney fees, there must be evidence supporting the trial court's
award. Posey v. Lafayette Bank and Trust Co., 583 N.E.2d 149, 152 (Ind. Ct. App. 1991)
The record shows that Plaintiffs introduced the affidavit of their attorney in order to establish the amount of attorney fees to which they were entitled. Contained in the affidavit were the hourly billing rates for attorneys and law clerks which amounted to $100 and $45, respectively. In addition, there was a detailed bill submitted as an exhibit to the affidavit which explained the time spent and charged along with a description of the project. This
evidence is sufficient to support the award of attorney fees. In re Marriage of Boren, 475
N.E.2d 690, 696 (Ind. 1985).
Citing to Trinkle v. Leeney, 650 N.E.2d 749 (Ind. Ct. App. 1995), Castlewood maintains that the award of attorney fees was unreasonable because there was no "complexity or novelty to this case." Amended Brief of Appellant at 26. The trial judge is considered an expert on the question of attorney fees, and he may or may not accept the evidence presented regarding the reasonableness of those fees. Trinkle, 650 N.E.2d at 754. Castlewood is again asking us to reweigh the evidence in its favor which we decline to do. Id. We conclude the trial court did not abuse its discretion in awarding Plaintiffs $7,509.75 in attorney fees.
STATON, J., and NAJAM, J., concur.
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