ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE LORCH:
H. LLOYD WHITIS JOHN A. KRAFT
Corydon, Indiana Young, Lind, Endres & Kraft
ATTORNEYS FOR APPELLEE ABBOTT:
JOHN B. DRUMMY
RODNEY L. SCOTT
Kightlinger & Gray
New Albany, Indiana
JOEL GARZA, ) ) Appellant-Plaintiff, ) ) vs. ) No. 31A01-9804-CV-143 ) KEVIN D. LORCH, TROY D. MORGAN ) and KENNETH R. ABBOTT, ) ) Appellees-Defendants. )
Appellant-plaintiff Joel Garza appeals from the trial court's grant of summary
judgment in favor of appellees-defendants Kevin Lorch and Kenneth Abbott on his claims
for declaratory judgment, fraud and negligence. Garza also appeals the trial court's award
of attorney fees and expenses to Lorch and Abbott pursuant to Ind. Code § 34-1-32-1(b).See footnote
Additionally, Lorch and Abbott ask that we assess appellate attorney fees against Garza
under App. R. 15(G).
judgment in favor of both Abbott and Lorch. Specifically, the trial court found, as to the
claim against Abbott, that
Garza had failed to establish that: 1) an attorney-client relationship
existed between Abbott and Garza; 2) he was an intended third party beneficiary; and, 3)
Abbott's actions caused damage to Garza.
R. at 210. The trial court also found that Garza
had provided no evidence that Lorch had actual or constructive knowledge of the unrecorded
deed and no evidence that Lorch was not a bona fide purchaser for value. R. at 210.
Thereafter, Abbott filed a motion for attorney fees on January 2, 1998 and Lorch filed a
similar motion on January 5, 1998. After finding that Garza's claims against Abbott were
frivolous, unreasonable and groundless, the trial court awarded $3,940 in attorney fees to
Abbott on April 1, 1998. On April 13, 1998, the trial court also awarded $4,190 in attorney
fees and costs to Lorch. Garza now appeals.
1065 (Ind. Ct. App. 1995), trans. denied.
The trial court's grant of summary judgment is
clothed with the presumption of validity and the non-moving party has the burden of
demonstrating that the trial court erred. Hottinger v. Trugreen Corp., 665 N.E.2d 593, 595
(Ind. Ct. App. 1996), trans. denied.
Moreover, we will affirm the grant of summary
judgment if it is based upon any legal theory which is consistent with the designated facts.
Wolfe v. Stork RMS-Protecon, Inc., 683 N.E.2d 264, 267 (Ind. Ct. App. 1997).
484 N.E.2d 1296, 1298 (Ind. Ct. App. 1985), trans. denied. Here, Lorch could not be
charged with constructive notice because Garza candidly admits that he failed to record the
deed. Therefore, Garza's claim would have to hinge on actual notice.
Actual notice has been defined by our supreme court as follows:
[A]ctual notice has been divided into two classes, (1) express and (2) implied, which is inferred from the fact that the person charged had means of knowledge which he did not use. Whatever fairly puts a person on inquiry is sufficient notice, where the means of knowledge are at hand; and if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained. This, in effect, means that notice of facts which would lead an ordinarily prudent man to make an examination which, if made, would disclose the existence of other facts is sufficient notice of such other facts.
Mishawaka St. Joseph Loan & Trust Co. v. Neu, 196 N.E. 85, 89-90 (Ind. 1935) (citations omitted); see also Lamb v. Lamb, 569 N.E.2d 992 (Ind. Ct. App. 1991). Garza offers several facts which he claims support actual knowledge. These include: Lorch is a mortgage broker who knew of Morgan's credit history; Lorch obtained a real estate appraisal of $250,000 but only paid $150,000 for the property; Lorch accepted a quitclaim deed; Morgan had staked off the portion of the land intended to be transferred to Garza; Lorch and Garza had a conversation in December of 1996 regarding ownership of the land; and, Lorch's refusal to state his current appraisal of the real estate.See footnote 7 Appellant's Brief at 11-12.
We will address each of these in turn. First, the fact that Lorch is a mortgage broker who may have known of Morgan's financial history and who only accepted a quitclaim deed is irrelevant. Lorch took the necessary steps to assure his title by conducting a title search
and obtaining title insurance. Second, Garza places much emphasis on the price Lorch paid for the property as compared to the alleged appraisal. However, Garza offers no evidence in his brief that an appraisal for $250,000 ever existed.See footnote 8 He simply refers us to his amended complaint as proof of such. Appellant's Brief at 11. Moreover, his apparent, though undeveloped, argument that $150,000 is a grossly inadequate price for the twenty-eight acres which should have placed Lorch on notice is unsupported by the record, especially considering that Garza only paid $60,000 for thirty acres. Third, Garza stated in his deposition that Morgan had staked-off the portion of the property that he was deeding to Garza. R. at 158-60. However, there is no evidence in the record establishing whether the stakes were still present some four months later when Lorch purchased the property. Finally, the conversation between Garza and Lorch took place approximately nine months after the transaction between Garza and Morgan, and at least four months after Lorch obtained the property from Morgan. It offers no proof that Lorch knew of Garza's unrecorded deed prior to his transaction with Morgan. Garza even admitted in his deposition: I don't know that he knew on August 5th. He might or might not have. But somewhere along the line between August 5th and December 24th, he knew. R. at 129. Based on these facts, we find as a
matter of law that nothing in the record indicates that Lorch had knowledge of Garza's
unrecorded interest in the property.
In addition to the notice argument, Garza asserts that the trial court erred in granting summary judgment in favor of Lorch on the fraudulent conveyance claim. Specifically, Garza baldly claims that the deed from Morgan to Lorch was to avoid Garza's claims in violation of I.C. § 32-2-7-17.
Initially, we note that I.C. § 32-2-7-17 is the remedy section in the Indiana Fraudulent Transfer Act and, therefore, we assume that he intended to quote from the section that defines a fraudulent transfer as to present creditors, I.C. § 32-2-7-14. Because Garza's argument involved quoting, in its entirety, an inappropriate section of the code, without providing any independent analysis and failing to refer to any of the designated evidence to support his claim, we find that this issue is waived.See footnote 9 See Tipmont Rural Elec. Membership v. Fischer, 697 N.E.2d 83, 93 (Ind. Ct. App. 1998) (failure to make a cogent argument by citing to relevant authority and the record may result in waiver).
Notwithstanding waiver, we note that there is no evidence of fraudulent intent. We have recently explained fraudulent intent in the context of fraudulent conveyances as follows:
Fraudulent intent can be inferred from certain indicia called badges of fraud. Some of the badges from which fraudulent intent can be inferred include: 1) the transfer of property by a debtor during the pendency of a suit; 2) a transfer of property that renders the debtor insolvent or greatly reduces his estate; 3) a series of contemporaneous transactions which strip the debtor of all property
available for execution; 4) secret or hurried transactions not in the usual mode
of doing business; 5) any transaction conducted in a manner differing from
customary methods; 6) a transaction whereby the debtor retains benefits over
the transferred property; 7) little or no consideration in return for the transfer;
and 8) a transfer of property between family members. However, no one
badge of fraud constitutes a per se showing of fraudulent intent.
Lee's Ready Mix and Trucking, Inc. v. Creech, 660 N.E.2d 1033, 1037 (Ind. Ct. App. 1996) (citations omitted). Here, the designated evidence in the record does not raise a question of material fact as to fraudulent intent. Specifically, there is no evidence that the transaction between Lorch and Morgan was out of the ordinary, as Lorch ran a title search, obtained title insurance and paid off all liens prior to the closing. Therefore, the trial court properly granted summary judgment on Garza's declaratory judgment action against Lorch.
investigation through pretrial discovery may be necessary to evaluate the claims. Kahn v.
Cundiff, 543 N.E.2d 627, 629 (Ind. 1989). In such cases, counsel is expected to determine
expeditiously the propriety of continuing such litigation and to dismiss promptly claims
found to be frivolous, unreasonable or groundless.See footnote
1997. In his deposition, the following discourse took place concerning when Garza received
a copy of the legal description and whether he recorded the deed:
Q. Do you know when you got [the legal description]?
A. Not exactly, no. It might've been the next day or two or three days afterwards. I don't know exactly.
Q. But it was within a week of this transaction?
A. I could not bet on that. It was in that -- I would say it was within 15 days, I would say. I could be wrong. It might've been the next day or the day after that or somewhere in there.
. . . .
Q. When you ultimately received the legal description, what did you do with it?
A. I put it in my desk.
Q. And was that where you had kept the Quitclaim Deed?
Q. And that's where you kept the Loan Agreement?
Q. Did you ever attempt to file the Quitclaim Deed with the [County Recorder]?
. . . .
A. Never did, no.
Q. And why not?
A. I had -- The loan was supposedly right around the corner, and I figured why go through all this, I'll get my money back and we don't need this paperwork.
R. at 103-05. Moreover, Garza admitted in his deposition that he never received any advice from Abbott and could not even recall ever talking with him. R. at 155, 83. Immediately following the deposition, Abbott's attorney sent a letter to Garza's attorney demanding, pursuant to I.C. § 34-1-32-1, that Garza voluntarily dismiss the negligence claim, with prejudice. Specifically, after explaining how the deposition established a lack of duty, the letter went on to address the insurmountable causation problems. R. at 362-63. The letter closed as follows:
groundless because he set forth facts that raised a reasonable inference that Lorch had actual
or constructive notice of the prior deed and he asserted a claim for relief pursuant to the
Indiana Uniform Fraudulent Transfer Act.
Initially, we note that asserting a claim under the Act is all that Garza has done. He has designated no evidence nor made any argument as to how the transaction between Lorch and Morgan was a fraudulent transfer. Moreover, the facts that Garza relies on to establish notice are unreasonable and are based entirely on his counsel's or his own unsupported assertions. Maintenance of this lawsuit became frivolous, unreasonable and groundless at least at the point of discovery. Following discovery, it was evident that Garza chose not to record his deed and that Lorch ran the proper title search, obtained title insurance and paid off all recorded liens on the property. Further, as we noted above, Garza even admitted in his deposition: I don't know that he knew on August 5th. He might or might not have. But somewhere along the line between August 5th and December 24th, he knew. R. at 129. Based on these facts, we find that the trial court did not abuse its discretion in awarding attorney fees and costs to Lorch. Moreover, because Garza has offered nothing of substance to us in support of his claims and his appeal is meritless and frivolous, we similarly grant Lorch's request for appellate attorney fees in accordance with App. R. 15(G).
court properly granted summary judgment in favor of Lorch on Garza's declaratory judgment
action because there was no designated evidence of actual or constructive notice or a
fraudulent transfer. Moreover, we hold that the trial court did not abuse its discretion in
granting attorney fees and costs to Abbott and Lorch for maintenance of a frivolous,
unreasonable and groundless lawsuit. Finally, we grant appellate attorney fees to Abbott and
Lorch pursuant to App. R. 15(G), as shall be calculated and executed by the trial court upon
Judgment affirmed and cause remanded for further proceedings consistent with this opinion.
GARRARD, J., and ROBB, J., concur.
[A] claim or defense is frivolous (a) if it is taken primarily for the purpose of harassing
or maliciously injuring a person, or (b) if the lawyer is unable to make a good faith and
rational argument on the merits of the action, or (c) 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.
[A] claim or defense is unreasonable if, based on a totality of the circumstances, including the law and facts known at the time of the filing, no reasonable attorney would consider that the claim or defense was worthy of litigation or justified.
[A] claim or defense is groundless if no facts exist which support the legal claim relied on and presented by the losing party.
Kahn v. Cundiff, 533 N.E.2d 164, 170-71 (Ind. Ct. App. 1989), adopted 543 N.E.2d 627 (Ind. 1989).
If the court on appeal affirms the judgment, damages may be assessed in favor or the appellee not exceeding ten per cent (10%) upon the judgment, in money judgments, and in other cases in the discretion of the court; and the court shall remand such cause for execution.
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