Wells Fargo Bank, N.A., Successor in interest to The Money Store Investment Corp., f/d/b/a First Union Small Business Capital v. Neal A. Summers

FOR PUBLICATION
FILED
Aug 27 2012, 9:15 am

CLERK
of the supreme court,
court of appeals and
tax court

ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEES:

CRAIG D. DOYLE G. MARTIN COLE
KURT V. LAKER JEREMY J. GROGG
Doyle Legal Corporation, P.C. Burt, Blee, Dixon, Sutton & Bloom, LLP
Indianapolis, Indiana Fort Wayne, Indiana

IN THE
COURT OF APPEALS OF INDIANA

WELLS FARGO BANK, N.A., successor )
in interest to The Money Store )
Investment Corporation, f/d/b/a )
First Union Small Business Capital, )
)
Appellant, )
)
vs. ) No. 02A04-1103-CP-112
)
NEAL A. SUMMERS, et al., )
)
Appellees. )

APPEAL FROM THE ALLEN CIRCUIT COURT
The Honorable Allen N. Wheat, Judge
Cause No. 02C01-0109-CP-1341

August 27, 2012

OPINION ON REHEARING - FOR PUBLICATION

BROWN, Judge
 Wells Fargo Bank, N.A. (“Wells Fargo”), successor in interest to The Money

Store Investment Corporation, f/d/b/a First Union Small Business Capital, petitions for

rehearing following our memorandum decision dismissing its appeal. In that decision,

we concluded that the notice of appeal was untimely pursuant to Ind. Trial Rule 53.3 and

Ind. Appellate Rule 9. In its petition for rehearing, Wells Fargo acknowledges that this

court’s opinion was correct based upon the record it presented but states that the record

was not complete. Wells Fargo subsequently filed a Verified Emergency Motion for

Leave to Correct Clerk’s Record and Supplement Appendix, which this court granted.

An amended notice of completion of the clerk’s record was also filed. Based upon the

amended record, we conclude that Wells Fargo’s notice of appeal was timely, vacate our

prior decision, and proceed to determine the issues raised by Wells Fargo in its initial

brief. 1 Wells Fargo raises five issues which we consolidate and restate as whether the

trial court erred in determining the amount of Paula Phillips’s lien. We affirm in part and

remand.

CASE HISTORY

This is the third appeal in this case. The relevant facts as discussed by the Indiana

Supreme Court in the first appeal follow.

From 1992 to 1996, Neal Summers granted eleven mortgages on
three parcels of his real estate to Fort Wayne National Bank as security for
a series of loans. Three of these mortgages contained dragnet clauses.[2]

1
Wells Fargo’s forty-two page appellant’s brief does not contain a table of contents as required
by Ind. Appellate Rule 46(A).
2
Generally, a “dragnet clause” is defined as “[a] clause stating that a mortgage secures all the
debts that the mortgagor may at any time owe to the mortgagee.” BLACK’S LAW DICTIONARY 1036 (8th
ed. 2004).
2
 In February 1998, Paula Phillips sued Summers and the company in
which he was the sole shareholder, Mangy Moose Enterprises, Inc. Her
complaint raised a dispute over the ownership of the trademark/trade name
“Paula’s Seafood.” The parties entered into a written settlement agreement
on September 21, 1999, and the suit was subsequently dismissed without
prejudice.

On September 15, 2000, Summers and Mangy Moose borrowed
$508,275 from the Money Store Investment Corporation d/b/a First Union
Small Business Capital and granted a mortgage on the same three parcels
used to secure the Fort Wayne National mortgages (to which National City
succeeded), plus an additional six lots. On the same day, Mangy Moose, by
Summers as president and secretary, borrowed $471,000 from Money
Store, and granted a mortgage on the same real estate.

Prior to these loans, on August 30, National City sent to Money
Store’s title company three pay-off statements that included the daily
interest. National City assured the title company that eight mortgages and
two assignments of rents and leases would be released upon the proper
payoff of the three loans. On September 15, National City received three
payments, but one payment came up $375 short of the amount reflected on
the pay-off statements. National City did not release any of the mortgages
and was still owed some $4700 on Mangy Moose’s overdrawn checking
account.

Phillips filed a motion to enforce the settlement agreement on
August 10, 2001. Just over a month later, Money Store filed a complaint
for foreclosure and appointment of a receiver. On February 5, 2002, the
trial court in the Phillips’ action found that Summers and Mangy Moose
had failed to comply with an earlier order and granted Phillips a $205,700
judgment.

Phillips then purchased National City’s nine mortgages and two
assignments of rents and leases, and National City assigned all of its
interest to Phillips. In March 2002, Phillips filed a complaint to foreclose
these mortgages, and also moved to intervene in the Money Store
foreclosure action. Both Phillips and Money Store moved for summary
judgment.

The trial court entered its judgment and decree foreclosing both
Phillips’ and Money Store’s mortgages. It held that “dragnet” clauses
contained in three of the mortgages assigned to Phillips secured “all debts
or obligations owed to Paula Phillips by Summers,” which included
Phillips’ judgment lien against Summers, Mangy Moose’s overdrawn
3
 checking account, collection fees, attorneys fees, and interest. It granted
Phillips priority over Money Store on the three Summers’ lots used as
collateral in the mortgages assigned to Phillips.

The Court of Appeals affirmed, holding that “the mortgage dragnet
clauses support[ ] the trial court’s conclusion that the monetary judgment
resulting from Summers’ failure to comply with his written settlement
agreement was, after Phillips acquired the mortgage through assignment by
National City, ‘secured by’ the dragnet mortgages.” The Money Store Inv.
Corp. v. Summers, 822 N.E.2d 223, 229 (Ind. Ct. App. 2005) vacated.

The Money Store Inv. Corp. v. Summers, 849 N.E.2d 544, 546-547 (Ind. 2006) (“Money

Store I”) (citations and footnote omitted). We also addressed whether the trial court

committed reversible error when it failed to strike portions of affidavits submitted by

Phillips, whether the court erred in finding Summers personally liable for the debts of

Mangy Moose, and whether the court erred in granting Phillips an award of attorney fees.

822 N.E.2d at 225. With respect to the attorney fees, we observed that at least one of

Phillips’s assigned mortgages contained express authorization for attorney fees and held

that Money Store failed to meet the burden of demonstrating that the trial court’s grant of

summary judgment was erroneous. Id. at 233-234.

The Indiana Supreme Court granted transfer and summarily affirmed the

disposition of the issues regarding the admissibility of the affidavits, Summers’s personal

liability, and attorney fees. Money Store I, 849 N.E.2d at 550 n.3. With respect to the

priority of Phillips, the Court concluded as follows:

While it is true that Phillips stepped into the shoes of the mortgagee, this
entitled her to collect debts secured in accordance with the terms of the
mortgages, not her judgment lien. The debts in this case were limited to the
$375 short payment on the loan payoff and the $4700 overdrawn checking
account, plus interest, collection costs, and attorney’s fees. We reverse the
trial court’s grant of priority to Phillips over Money Store on the lots in
question.
4
Id. at 548.

After the decision of the Indiana Supreme Court, Phillips and Money Store stood

in the following order of priority: (1) Phillips as assignee of the National City mortgages

for the amounts as limited by the Supreme Court, including $5,181.25 for the debt from

Summers plus interest and attorneys fees; (2) Money Store for its foreclosure judgment,

including $569,470.28 plus interest and attorney fees; and (3) Phillips for her $205,700

judgment against Summers. The Money Store Investment Corp. v. Summers, 909 N.E.2d

450, 456 (Ind. Ct. App. 2009) (“Money Store II”), reh’g denied.

The facts relevant to the second appeal occurred for the most part between the

judgment of foreclosure by the trial court on December 4, 2003, and the affirmance of

that judgment by this court on April 18, 2005. Id. In Money Store II, we stated the

following facts:

The dispute between Phillips and Summers that led to her judgment
against him concerned a restaurant that Phillips had operated for some
years in part of the buildings on the subject property. When she began
operations, the property was owned by someone other than Summers.
After Summers acquired the property, he became more and more involved
in the operation of the restaurant, which eventually led to Phillips leaving
and suing Summers and Mangy Moose, a corporation formed by Summers.

Phillips obtained her money judgment against Summers and Mangy
Moose on February 5, 2002. By that time, Summers had apparently left the
country for New Zealand, and Money Store had filed to foreclose and have
a receiver appointed. The receivership was never consummated, but Don
Young operated the restaurant on the premises from around March 2002
until August 2003, when he abandoned the project and the restaurant was
closed.

Left empty, the one-hundred-year-old property was vandalized and
burglarized. Summers was gone and Money Store did not qualify a

5
receiver or enter the property to secure its interests. Watching the property
deteriorate, Phillips eventually decided to take remedial action to secure it.

Before beginning repairs or paying taxes, Phillips and her lawyer
had several telephone conferences with Money Store representatives
regarding the deteriorating condition of the property and the need for
repairs. The Money Store representatives agreed that something needed to
be done and indicated that Phillips should go ahead. The Money Store
people did not agree to pay for anything, or that the costs would be a part of
Phillips’ mortgage claim.

Because Phillips lacked the financial ability to make the necessary
repairs to the restaurant, she turned to Frank Casagrande, Thomas Sokolik,
and their limited liability partnership T & F, LLP. At Phillips’ request, T &
F obtained a $150,000 loan to begin the process of repairing the restaurant.
T & F provided an additional $60,000. Although there was no written
contract, Phillips agreed to repay T & F the $210,000 spent on the
restaurant repairs. Phillips, Casagrande, and Sokolik subsequently formed
412323, LLC, to operate the restaurant and a seafood market upon
completion of the repairs. The work done included repairs to the leaking
roof, broken windows, floors, unstable structure and foundation, termite
damage, water damaged ceilings, faulty electrical and HVAC systems,
unusable plumbing, and damaged drywall. The bulk of the repair work was
done in 2004. Paula’s Restaurant opened for business on November 30,
2004.

On January 4, 2006, T & F, along with Craftsman Building Services,
the contractor responsible for much of the repair, and 412323, filed a
complaint against Phillips asserting a mechanic’s lien on the real estate and
an unjust enrichment claim against Phillips. The trial court dismissed the
complaint on March 30, 2006, for failure to state a claim pursuant to Trial
Rule 12(B)(6) because Phillips was not an owner of the real estate pursuant
to the statutory definition and thus had no lienable interest in it.

Also during the pendency of the first appeal, Phillips learned that
several of the lots composing the real estate had been sold at a tax sale
because neither Summers nor Money Store had paid the taxes on them.
With the assistance of T & F and 412323, Phillips redeemed several of the
lots as well as certain outlots. She also paid the annual property taxes on all
of the parcels after she redeemed them. In addition, Phillips paid the
premiums for commercial property and casualty insurance coverage on the
property.

6
 In March 2005, a month following this court’s affirmance of the trial
court in the first appeal, Phillips filed a Petition for the Recovery of
Property Tax Payments, Insurance Payments, Utility Payments, and
Payments for Necessary Repairs to the Mortgaged Property. The trial court
decided to defer action on the petition until the appeal was concluded.
Phillips subsequently filed two petitions for post-judgment attorney fees on
appeal. Five months later, the Indiana Supreme Court granted transfer in
Money Store I. In June 2006, the Supreme Court issued its opinion
reversing the trial court’s grant of priority to Phillips over Money Store as
to her judgment against Summers and Mangy Moose. See The Money
Store Investment Corporation v. Summers, 849 N.E.2d 544 (Ind. 2006). At
the August 2007 hearing on Phillips’ March 2005 petitions, Phillips
introduced into evidence invoices and copies of checks paid for the repairs
to the building, insurance premiums, taxes, and attorney fees. Also at the
hearing, Phillips testified that insurance premium payments were for
business and commercial liability insurance, not for health or personal
injury.

Since the opening of the restaurant in November 2004, the restaurant
has taken in gross revenues between $1,000,000 and $1,250,000 per year.
These revenues have paid all of the restaurant’s ordinary operating
expenses. In addition, the restaurant has paid Phillips a salary of over
$30,000 per year and had also paid $500 per month for her health
insurance. Casagrande and Sokolik each receive a salary of $13,000 per
year. Further, the restaurant has been paying $1,500 per month on the bank
loan that funded the renovations and has paid $15,000 back to T & F.
Phillips, Casagrande, and Sokolik have also each received a $5,000
dividend from the restaurant.

In May 2008, the trial court issued a 56-page judgment, which
reviewed in detail the facts of the case as well as all of the invoices, checks,
and evidence admitted into evidence at the hearing. In essence, the trial
court found that Phillips was entitled to recover, in addition to the amounts
due with respect to the National City mortgages as held by the Supreme
Court, and with the same priority, the expenditures for repairs (excluding
those disallowed by the trial court), taxes, and insurance. The decision of
the trial court established the following priorities as to the proceeds of
foreclosure sale of the property: 1) Phillips as to the balance due on the
National City mortgages, including interest and attorney fees and the costs
of repair, taxes, and insurance, approximately $360,657.65 plus interest and
attorneys fees; 2) Money Store for its foreclosure judgment, including
$569,470.28 plus interest and attorneys fees; and 3) Phillips for her
$205,700 judgment against Summers.

7
 In addition, the trial court found Money Store liable to Phillips as
follows:

IT IS ORDERED, ADJUDGED AND DECREED
THAT, taking all of the aforementioned amounts into
consideration, Paula is awarded a total recovery and judgment
from the Money Store of $355,467.40 for total amounts
expended on the Real Estate, including attorney fees, plus
total accrued interest, all of which is secured by a first priority
lien on the Real Estate.

Id. at 456-458 (citations omitted).

In Money Store II, we noted that “the parties agree that the trial court’s judgment

in this case supplements rather than replaces the court’s December 2003 judgment

foreclosing both Phillips’ and Money Store’s mortgages.” Id. We observed that “[t]he

parties’ mortgages are still foreclosed, and the real estate should proceed to sheriff’s sale

following the accounting ordered here on remand.” Id. In part, we held that the trial

court did not err in awarding Phillips a first priority lien on the real estate, and that

Phillips was entitled to recover attorney fees by virtue of the agreements for same in the

mortgages assigned to her. Id. at 459-461. We reversed the part of the judgment that

held Money Store personally liable to Phillips and held that “it is appropriate . . . to allow

priority as to foreclosure sale proceeds but not to impose personal liability to Phillips on

Money Store.” Id. at 461.

We also addressed Money Store’s argument that the trial court erred in failing to

order an accounting and an application of the restaurant’s profits to Phillips’s first

priority lien for the cost of repairs, insurance payments, and tax payments. Id. at 462.

We ordered “an accounting for the profits of the restaurant to be applied to the amount

8
due on Phillips’ first lien” and otherwise affirmed the judgment of the trial court. Id. at

462-463. Specifically, we held:

In support of her response that she has no obligation to account for any
rents or profits from her use of the real estate, Phillips directs us to Adkins
v. Hudson, 19 Ind. 392 (1862) and White v. Redenbaugh, 41 Ind.App. 580,
82 N.E. 110 (1907). However, Adkins is not apposite because it was an
action under the occupying claimants statute where the occupying claimant
is not liable to the true owner for the value of the rent attributable solely to
improvements made by the occupying claimant in good faith. White is not
apposite either. Therein, an absolute deed to White by Redenbaugh was
held to be a mortgage. Because Redenbaugh remained in possession,
White had no claim to Redenbaugh’s rents and profits. It has nothing to do
with a claim that a mortgagee in possession must account for profits from
use of the mortgaged property against the debt owed by the mortgagee.

We find Gaskell v. Viquesney, 122 Ind. 244, 23 N.E. 791 (1890), to
be more instructive. There, in facts similar to those before us, the Indiana
Supreme Court explained as follows:

It is believed to be the universal rule, in all cases
where the mortgagee takes and retains possession of the
mortgaged premises under his mortgage that he must account
for the rents and profits received by him from the premises
while he holds the same under his mortgage. . . . This right to
compel an accounting for rents and profits extends, also, to a
junior incumbrancer. He may compel a senior mortgagee,
who has been in possession under his mortgage, to account to
the same extent and in the same manner as the mortgagor
might compel an accounting. His right to compel such an
accounting does not rest upon any obligation of the senior
mortgagee to him, for there is no contract between them, but
it rests upon the fact that the senior mortgagee is under
obligation to the mortgagor to account and that by reason of
his junior lien he has the right, in equity, to stand in the place
of the mortgagor, and compel the application of the rents and
profits to the satisfaction of the senior mortgage. . . . .

Id. at 792.

Our review of the evidence reveals that Phillips has a $355,467.40
first priority lien on the real estate based upon her repairs and work on the
restaurant. Because of Phillips’ expenditures, she was able to reopen an
9
 apparently popular restaurant that has taken in gross revenues between
$1,000,000 and $1,250,000 per year. These revenues have paid all of the
restaurant’s ordinary operating expenses, salaries and dividends for
Phillips, Casagrande, and Sokolik, health insurance for Phillips, and
payments on the bank loan that funded the renovations as well as on the
debt to T & F. To grant priority to Phillips’ investment in repairing the
restaurant, without crediting the lien amount with the profits from such
investment, has no equity in it. Money Store, the junior incumbrancer,
clearly has the right to compel an accounting and an application of the rents
and profits to the senior lien. See id. The trial court erred in failing to
order an accounting.

To sum up, we reverse the personal judgment against Money Store;
we order an accounting for the profits of the restaurant to be applied to the
amount due on Phillips’ first lien; we otherwise affirm the judgment of the
trial court; and we remand to the trial court for further proceedings
consistent with this opinion.

Id. (footnote omitted).

Wells Fargo filed a petition for rehearing in which it argued that the court should

“grant rehearing for the limited purpose of clarifying the legal standards for the

accounting to be rendered on remand.” Appellant’s Appendix at 411. In response,

Phillips argued that Wells Fargo’s petition was premature because “at no time whatsoever

have the parties briefed or otherwise argued the issue of the manner in which such rents

and/or profits should be determined or calculated.” Id. at 474. We denied rehearing.

On August 18, 2009, Phillips filed a Petition for Attorney’s Fees on Second

Appeal and a Further Supplemental Petition for Recovery of Property Tax Payments and

Insurance Payments on the Mortgaged Property. On September 18, 2009, Phillips filed

her Final Petition for Recovery, Accounting for Rents and Profits and a Supplemental

Affidavit of Legal Services with Regard to Post-Judgment Attorney Fees and Recovery

of Property Tax Payments and Insurance Payments.

10
 On August 13, 2010, Wells Fargo filed its trial brief and argued that the correct

measure for purposes of accounting was the fair rental value of the real estate as

improved. On August 24, 2010, Phillips filed her trial brief and Supplemental Affidavit

of Legal Services with Regard to Post-Judgment Attorney Fees and Recovery of Property

Tax Payments and Insurance Payments. Phillips conceded that “the simple rule is that a

reasonable rental value is the value to be charged to the mortgagee in possession, without

regard to profits or losses that may or may not have been realized,” but argued that equity

requires that the actual profit realized be the amount utilized. Id. at 567. Specifically,

Phillips argued that “[t]he logical approach is to either use rent or profit, one or the other,

not the one that works to the greatest benefit to the party that has sat back and contributed

nothing to the value, use or preservation of the Real Estate.” Id. at 568. Phillips argued

that “where a party actually occupies and uses the property for business purposes, profit

is the only true measure that accurately measures any benefit received from said use,”

and that “this is also the approach that the Court of Appeals determined to be proper

when in its most recent opinion it proscribed that this matter be remanded for ‘an

accounting for the profits of the restaurant to be applied to the amount due on Phillips’

first lien.’” Id.

On August 25 and 26, 2010, the court conducted a bench trial upon the accounting

ordered by the Court of Appeals on remand, and upon Phillips’s various applications to

recover additional attorneys’ fees, and tax and insurance payments.

On October 14, 2010, the court entered judgment finding that Phillips had a first

priority lien to be satisfied upon the real estate being sold at foreclosure sale effective

11
August 31, 2010 in the amount of $443,727.09 and that Phillips recover her costs of the

sale including but not limited to reasonable attorneys’ fees and post-judgment interest

accruing after August 31, 2010. Specifically, the court found:

A. Amount of First Priority Lien –

1. On May 30, 2008, this Court awarded to Phillips a first priority
lien in the amount of $355,476.40.

2. The Court at this time incorporates by reference all Findings of
Fact heretofore set forth in the prior Judgment of this Court and
not being in conflict with the Remand Order of the Indiana Court
of Appeals.

3. Because of the substantial lapse of time since May 30, 2008,
Phillips seeks from the Court an increase in the amount of her
first priority lien to reflect the fact that since May 30, 2008 she
has paid or accrued debt for additional taxes, insurance and
attorney fees. Further, interest continues to accrue on the
amounts comprising Phillips’ first prior lien as previously
established by the Court.

4. The Court finds that subsequent to May 30, 2008, Phillips has
incurred additional expenses, exclusive of attorney fees, as
mortgagee in possession of the real estate for which she should
have added to her first priority lien along with legal interest as
permitted by law.

5. The additional expenses incurred by Phillips are taxes in the
amount of $49,635.42 paid on or about August 3, 2009, and taxes
in the amount of $5,634.66 paid on or about May 6, 2010.

6. The Court finds that Phillips should have added to her first
priority lien these taxes along with interest computed at the rate
of ten percent (10%) per annum.

7. The Court has previously awarded to Phillips for attorney fees
and expenses the amount of $71,224.02, plus legal interest.

8. Phillips at this time seeks to have added to her first priority lien
the additional amount of attorney fees and expenses incurred
through August 31, 2010 in the sum of $92,391.70.
12
 9. The Court finds that some, but not all, of the additional attorney
fees and expenses of litigation incurred by Phillips should be
credited toward her first priority lien.

10. The amount of $20,000.00 was incurred by Phillips in arguing on
appeal that she should not be required to account for the profits
she was realizing in her capacity as mortgagee in possession.
Phillips’ argument regarding profits did not prevail on appeal.

11. The Court is aware that a mortgage appearing in the chain of title
of Phillips authorizes her, as mortgagee, to recover as costs
reasonable attorney fees in protecting her lien. This Court,
however, can look at all of the surrounding circumstances of the
litigants before it in determining what amount constitutes a
reasonable attorney fee.

12. Having done so, the Court finds that Phillips should be awarded
additional attorney fees and expenses of litigation in the amount
of $72,391.70.

13. By way of recapitulation, the Court finds that Phillips is entitled
to recover against the subject real estate as first priority lien
holder through August 31, 2010 the amount of $627,570.84
computed as follows:

Principal Interest Total

Original Judgment 28,278[.]52 15,266.47 43,544.99

Taxes
Pre 2010 payments 125,177.62 49,090.90 174,268.52
2010 payments 5,634.66 1,986.66 7,621.32

Insurance Payments 18,950.00 4,747.09 23,697.09

Repairs 149,852.57 66,096.41 215,948.98

Attorney Fees

Prior Award 71,224.02 18,874.22 90,098.34
Additional Award 72,391.70 72,391.70

13
 TOTALS 471,509.09 156,061.75 627,570.84[3]

Interest has been computed through August 31, 2010.

B. Profits –

14. The Remand Order of the Indiana Court of Appeals specifically
directed this Court to do the following:

“ . . . account for the profits of the restaurant to be
applied to the amount due on Phillips’ first lien . . .”

15. In so doing, the Indiana Court of Appeals at page 462 of its
opinion observed:

“Our review of the evidence reveals that Phillips has a
$335,467.40 first priority lien on the real estate based
upon her repairs and work on the restaurant. Because
of Phillips’ expenditures, she was able to reopen an
apparently popular restaurant that has taken in gross
revenues between $1,000,000.00 and $1,125,000.00
per year. These revenues have paid all of the
restaurant’s ordinary operating expenses, salaries and
dividends for Phillips, Casagrande, and Sokolik, health
insurance for Phillips, and payments on the bank loan
that funded the renovations as well as on the debt to
T&F. To grant priority to Phillips’ investment in
repairing the restaurant, without crediting the lien
amount with the profits from such investment, has no
equity in it. Money Store, the junior incumbrancer,
clearly has the right to compel an accounting and an
application of the rents and profits to the senior lien . .
.” (Emphasis added)

16. Phillips and Money Store take divergent views as to how the
word “profits” should be defined by this Court for purposes of
complying with the Remand Order of the Indiana Court of
Appeals.

17. Phillips contends the Indiana Court of Appeals intended for the
profits of the business to be determined through the application

3
This amount appears to be a computation error and in fact the number should be 627,570.94.

14
 of normal and customary accounting principles as one would
utilize in the preparation of an Income Statement.

18. Money Store, on the other hand, cites to this Court cases that
hold a mortgagee in possession should have charged against its
first priority lien the “fair rental value” of the mortgaged real
estate, without regard to profits, during the time it occupied the
real estate as a mortgagee in possession. Alternatively, Money
Store contends that this Court should at least reduce the amount
of Phillips’ first priority lien by the greater of the amount of net
profits earned while in possession or the fair rental value of the
business.

19. This Court finds that the Indiana Court of Appeals in its Remand
Order intended for the “profits” of the business to be computed in
the manner they would be computed if one were preparing an
Income Statement. If the Indiana Court of Appeals would have
intended otherwise there would have been no need for the
Indiana Court of Appeals, as set forth above at Finding #15, to
specifically reference the accounting concepts of gross revenue,
ordinary operating expenses, salaries, dividends and loan
repayments. Further, it appears to this Court, that if the Indiana
Court of Appeals wanted only for the “fair rental value” of the
subject real estate to be ascertained on remand by this Court it
would have simply directed this Court to do so.

20. In no event would this Court adopt the argument of Money Store
that Phillips’ first priority lien should be reduced by the greater
of the net profits earned by the business or its fair rental value.
To do so, would create a disincentive to entrepreneurs such as
Phillips to reenter, make necessary repairs and operate the
business to the potential benefit of all creditors.

21. The Court finds that Phillips earned net profits from the
operation of the restaurant in the amounts hereinafter set forth:

a) 2004 – ($13,585.93)
b) 2005 – $44,781.68
c) 2006 – $45,526.18
d) 2007 – $12,653.95
e) 2008 – $548.61
f) 2009 – $18,353.43
g) 2010 – (part year) – ($15,919.41).

15
 TOTAL NET PROFITS – $92,361.51.

22. During the course of trial, it became apparent to the Court and
counsel, that the experts selected by the litigants to testify had
twice subtracted certain expenses in their net profit calculations
for the restaurant. They were unaware that this Court had
previously calculated certain expenses and made same a part of
the first priority lien determined to be owed to Phillips in the
amount of $355,476.40.

23. Counsel stipulate, and the Court so finds, that the net profit figure
of $92,361.51 must be adjusted upward to reflect the error made
by the parties’ experts as follows:

a) Taxes – $59,198.00
b) Insurance – $18,950.00
c) Repairs – $13,334.24

TOTAL ADJUSTMENT: $91,482.24.

24. With the above and foregoing adjustments having been made, the
Court finds that the total net profits earned by Phillips as directed
to be calculated by this Court on remand are in the amount of
$183,843.75 ($92,361.51 + $91,482.24 = $183,843.75).

25. The Court finds that Phillips has a first priority lien against the
subject real estate effective August 31, 2010 in the amount of
$443,727.01[4] ($627,570.84 - $183,843.75 = $443,727.09).

IT IS THEREFORE, ORDERED, ADJUDGED AND DECREED as
follows:

1. Phillips has a first priority lien to be satisfied upon the real estate
being sold at foreclosure sale effective August 31, 2010 in the
amount of $443,727.09.

2. Additionally, she shall recover her costs of sale, including but not
limited to reasonable attorney fees and post-judgment interest
accruing after August 31, 2010.

Id. at 72-77.

4
This amount appears to be a typographical error as the calculation in the parenthetical provides
the correct amount of $443,727.09.
16
 On November 12, 2010, Wells Fargo filed a motion to correct errors alleging that

the court erred when it “treated the amount of Phillips’ profits from 2005 through 2010

(totaling $183,843.75), as if it were a payment against Phillips’ claim made on October

14, 2010,” instead of “applying each year’s profit to reduce Phillips’ claim at the end of

year, beginning December 31, 2005.” Id. at 656. Wells Fargo argued that the court

“must not allow Phillips to continue accruing interest through 2010 on portions of her

claim that she repaid herself in 2005 or 2006.” Id. at 657. Wells Fargo also argued that

the court’s judgment was “silent . . . as to Phillips’ profits for months after August of

2010” and that the court “should have ordered Phillips to continue applying her post-

judgment profits to reduce her claim until the property is sold.” Id. at 658. Wells Fargo

contended that “[i]f the Court does not revise this aspect of its judgment, Phillips will be

allowed to flout the established rule that a mortgagee in possession may not make a profit

out of her possession of the real estate” and that a “ruling that allows Phillips to keep the

profits she earns after August of 2010 violates the intent of the Court of Appeals’

decision.” Id. Lastly, Wells Fargo argued that the court’s award of $49,635.42 for 2009

real estate taxes on the mortgage property and $5,634.66 for 2010 real estate taxes was

contrary to the evidence. Specifically, Wells Fargo argued, without citation to the record,

that “Phillips’ mortgages allow her to recover taxes that she pays, but do not allow her to

recover – at [Wells Fargo’s] expense – tax payments she did not make, and is apparently

under no obligation to reimburse.” Id. at 659-660.

On January 31, 2011, the court held a hearing on Wells Fargo’s motion and at the

end of the hearing the court stated that “it would appear that counsel are willing to agree

17
and stipulate as to the matter of an increase or a decrease in the overall judgment of this

Court if the sale, at some point in time if the sale was to occur based upon the profits or

loss of this business.” Transcript at 309. That same day, the parties filed a stipulation

which stated:

The parties, by counsel, stipulate to providing a statement of account in the
form of a profit/loss statement from August 1, 2010, through the month
prior to Sheriff’s Sale of the mortgage property to be prepared by the
Accountant for Paula’s on Main, LLC, Rex Harris C.P.A. Depending on
whether the restaurant operations have generated a profit or suffered a loss,
the [judgment] shall be reduced (in the amount of any profit) or increased
(in the amount of any loss[)].

Appellant’s Appendix at 673. On February 8, 2011, the court ordered that the judgment

of October 14, 2010, be amended to incorporate the stipulation of counsel and denied the

remainder of Wells Fargo’s motion to correct error.

DISCUSSION AND ANALYSIS

The issue is whether the court erred in determining the amount of Phillips’s lien.

The trial court entered findings and conclusions sua sponte. Sua sponte findings control

only as to the issues they cover and a general judgment will control as to the issues upon

which there are no findings. Yanoff v. Muncy, 688 N.E.2d 1259, 1262 (Ind. 1997). A

general judgment entered with findings will be affirmed if it can be sustained on any

legal theory supported by the evidence. Id. We apply the following two-tiered standard

of review to sua sponte findings and conclusions: whether the evidence supports the

findings and whether the findings support the judgment. Olcott Intern. & Co., Inc. v.

Micro Data Base Sys., Inc., 793 N.E.2d 1063, 1071 (Ind. Ct. App. 2003), trans. denied.

Findings will only be set aside if they are clearly erroneous. Yanoff, 688 N.E.2d at 1262.

18
Findings are clearly erroneous only when the record contains no facts to support them

either directly or by inference. Id. A judgment is clearly erroneous if it applies the

wrong legal standard to properly found facts. Id. In order to determine that a finding or

conclusion is clearly erroneous, an appellate court’s review of the evidence must leave it

with the firm conviction that a mistake has been made. Id.

Wells Fargo argues that the trial court erred in: (A) concluding that Money Store II

constituted the law of the case; (B) calculating the profits when it deducted certain

interest expenses and salaries; (C) applying Phillips’s rents and profits or alternatively the

fair market rental value as a lump-sum credit against her claim as of the date of judgment,

rather than applying such rents and profits as they accrued; (D) allowing Phillips to

recover tax payments; and (E) allowing Phillips to recover attorney fees incurred to make

an accounting.

A. Law of the Case

Wells Fargo argues that our reference in Money Store II to profits did not establish

the law of the case with respect to whether fair rental value or profits should be calculated

on remand and that the trial court misapprehended this court’s mandate in Money Store

II. Wells Fargo contends that this court’s decision in Money Store II “clearly did not

‘conclusively decide’ the question presented here: precisely how, on remand, the Trial

Court should compute the reduction in Phillips’ claim required by her use of the Real

Estate to operate a restaurant.” Appellant’s Brief at 21. Wells Fargo asserts that

although the ruling in Money Store II “referred to ‘an accounting for the profits of the

restaurant,’ such language did not establish the law of the case, tying the Trial Court’s

19
hands on remand.” Id. at 23. Wells Fargo also contends that “it is hard to see why this

Court would have referred to the ‘application of the rents and profits’ if this Court did not

want the Trial Court to consider anything but the profits generated by the restaurant.” Id.

Wells Fargo argues that “[b]y declining to measure Phillips’ ‘rents and profits’ by the fair

rental value of the Real Estate, the Trial Court contravened the Indiana Supreme Court’s

holding that ‘a mortgagee in possession is chargeable with the rental value of the

property.” Id. at 15 (quoting Hosford v. Johnson, 74 Ind. 479, 484 (1881)). Wells Fargo

argues that “a mortgagee is chargeable with fair rent even if [the] mortgagee lost money

doing business on the real estate.” Id. at 16. Wells Fargo contends that “[t]he

requirement that a mortgagee must pay fair rent for occupying the mortgaged real estate

derives from the more basic rule that a mortgagee who takes possession of the mortgaged

property acts as a trustee or bailee for the owner and junior lienholders, and thus cannot

exploit his or her possession of the property to reap a benefit, but must use any proceeds

from the property to pay down the debt secured by the mortgage.” Id.

Phillips argues that the law of the case doctrine required that the trial court follow

the instruction that her profits be accounted. Phillips also argues that the most equitable

approach is to require her to account for the lesser of the rental value or the profit and that

“[t]his is the only approach that can be followed to prevent a sleeping party such as

Money Store from reaping a windfall born from the labors of another.” Appellee’s Brief

at 23. Phillips argues that “if she is forced to account for profit exceeding the rental value

of the property, not only will there be a disincentive to utilize the Real Estate in a

beneficial manner, Money Store will be rewarded with a windfall for contributing

20
nothing to its preservation.” Id. Phillips also argues that “[w]hat gets lost in this entire

discussion is the fact that we would not be talking about ‘fair rental value’ or ‘profits’ had

Phillips not acted in the proactive manner in which she did.” Id. at 24.

“The doctrine of the law of the case is a discretionary tool by which appellate

courts decline to revisit legal issues already determined on appeal in the same case and on

substantially the same facts.” Cutter v. State, 725 N.E.2d 401, 405 (Ind. 2000) (citing

Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817-818, 108 S. Ct. 2166

(1988); State v. Lewis, 543 N.E.2d 1116, 1118 (Ind. 1989)), reh’g denied. “The purpose

of this doctrine is to promote finality and judicial economy.” Id. “The doctrine of the

law of the case is applied only ‘to those issues actually considered and decided on

appeal.’” Id. (quoting 4A Kenneth M. Stroud, Indiana Practice § 12.10 (2d ed. 1990)

(emphasis omitted)).

As pointed out in Money Store II, the Indiana Supreme Court has held that “[i]t is

believed to be the universal rule, in all cases where the mortgagee takes and retains

possession of the mortgaged premises under his mortgage that he must account for the

rents and profits received by him from the premises while he holds the same under his

mortgage.” Gaskell v. Viquesney, 122 Ind. 244, 247, 23 N.E. 791, 793 (1890) (emphasis

added). In Money Store II, we did not mention fair market rental value and any mention

of rents was merely tangential. Rather, we emphasized an accounting of the restaurant’s

profits. Specifically, we phrased Money Store’s argument as whether the “the trial court

erred in failing to order an accounting and an application of the restaurant’s profits to

Phillips’ first priority lien for the cost of repairs, insurance payments, and tax payments.”

21
909 N.E.2d at 462 (emphasis added). We also held that “[t]o grant priority to Phillips’

investment in repairing the restaurant, without crediting the lien amount with the profits

from such investment, has no equity in it.” Id. (emphasis added). Further, we concluded

by ordering “an accounting for the profits of the restaurant to be applied to the amount

due on Phillips’ first lien . . . .” Id. at 462-463 (emphasis added). We conclude that

Money Store II constitutes the law of the case and next turn to addressing whether the

trial court correctly calculated the restaurant’s profits.5

B. Deduction of Interest Expenses & Salaries

5
We observe that other jurisdictions have held that fair market value is the appropriate measure.
Professors Nelson and Whitman addressed the issue before us as follows:

When a mortgagee occupies the premises itself instead of leasing them several
questions arise. One is whether there is any duty to work or operate it in case mortgagee
has tried with due diligence to rent it and failed. The answer should be yes and there is
authority so holding, at least in the case of a farm. If the mortgagee retains possession
when it finds that it cannot rent the property, it should have to work it or, if not, should be
held for the fair rental value. Business property would present a more difficult case and it
would seem undesirable to force a mortgagee to start a new business on it although there
may be a duty to carry on an existing business.

But when the mortgagee does operate it for how much should it be held
accountable? The prevailing view is to charge the mortgagee with the fair rental value no
matter what mortagee makes, letting it keep any excess and bear the loss if it makes less.
In support of this it is argued that “The rule is founded in sound policy, for the reason that
the particular items of expenditure, in labor or otherwise, as well as the profits received,
are wholly within the knowledge of the mortgagee, and if he is not disposed to render a
full and honest account, it would be impossible for the mortgagor to show them, or to
establish errors in the mortgagee’s account.” Another possibility is to allow the
mortgagor to hold the mortgagee for the fair rental value as a minimum but, in the
alternative, the actual net rents and profits. This would be fair enough in case it were
established that the mortgagee had intentionally falsified its accounts. It seems unduly
harsh to make the mortgagee liable for all it makes when successful but to hold it for a
fair rental even when unsuccessful. The only possible justification for it would be a very
strong policy of discouragement to mortgagees taking possession.

Grant S. Nelson & Dale A. Whitman, REAL ESTATE FINANCE LAW § 4.28 (5th ed. 2007) (footnotes
omitted). See also Annotation, Duty of Mortgagee to Account for Rents and Profits or for Use and
Occupation for Benefit of Owner of Equity of Redemption or Junior Lienor, 46 A.L.R. 138 (1927)
(“Where a mortgagee occupies the premises personally, and not by a tenant, he is liable for the fair rental
value for use and occupation.”). Because we conclude that Money Store II constitutes the law of the case,
we need not address the merits of whether profits or fair market rental value is the appropriate measure.
22
 Wells Fargo argues that the trial court erred in calculating the profits when it

deducted certain interest expenses and salaries.

1. Interest Expense

Wells Fargo argues that the trial court erred in failing to disallow a “double-

counted expense: interest paid by the Restaurant Company on funds it received from

T&F.” Appellant’s Brief at 32. Wells Fargo argues that the trial court allowed Phillips to

reduce her profits by deducting payments, which included $48,361.69 in interest paid to

Fifth Third Bank. Wells Fargo argues that the trial court had already granted Phillips a

judgment in 2008 based on her obligation to repay the T&F loan and awarded her interest

on such amounts at the rate of 8% per year from the time the repairs were made in 2004.

Wells Fargo argues that Phillips is simultaneously charging the real estate interest on the

loan she received from T&F to repair the Real Estate, and reducing her profits by

deducting $48,361.69 in interest payments on the same loan. Wells Fargo contends that

given that Phillips is already going to receive 8% interest on the money loaned from

T&F, she should not be allowed to double count a portion of such interest by deducting

the restaurant’s payments of T&F’s loan.

Phillips argues that this court’s opinion in Money Store II identified what it

considered to be acceptable expenses of the restaurant and included payments on the

bank loan. Phillips argues that Wells Fargo’s arguments carry no weight in light of this

court’s prior pronouncement. Phillips contends that the interest on the note constitutes an

ordinary business expense which should be taken into account in determining the net

profits of the restaurant.

23
 Wells Fargo cites paragraphs 30, 31, and 38 of the trial court’s 2008 order in

support of its proposition that the trial court already granted Phillips a judgment based

upon her obligation to repay the T&F loan. These paragraphs as well as the surrounding

paragraphs of the trial court’s order fall under the heading: “Findings of Fact, and

Conclusions of Law The Legal Background of the Case” and state:

30. T&F obtained a loan for $150,000.00 to begin the process of
repairing, maintaining and returning the Real Estate to a habitable
condition for use as a restaurant.

31. After it became clear to Mr. Casagrande, Mr. Sokolik and [Phillips]
that the $150,000.00 loan would not be sufficient to make all
necessary repairs to the Real Estate, T&F provided additional funds
in the amount of $60,000.

32. 412323 was established to operate the restaurant and seafood
market, once the Real Estate was renovated.

33. [Phillips] was the driving force in these renovation efforts. She
agreed that she would repay T&F for the renovations, by reason of
her mortgage and judgment liens.

34. The payments that were made, as discussed below, would not have
been made but for [Phillips] making the necessary arrangements for
them to be paid, whether they were paid by T&F or by 412323.

35. [Phillips] admitted her responsibility and liability for the repayment
to T&F and 412323 of the amounts sought herein.

36. Even if no written contract for repayment of the funds provided by
T&F and 412323 exists, such a contract could be implied as a matter
of both law and equity.

37. [Phillips] is the proper party to seek reimbursement for the monies
spent in protecting and preserving her liens on the Real Estate and
Out-lots, because the payments were made on her behalf, at her
request, and pursuant to her duty as a mortgagee-in-possession. See
Miller v. Curry, 124 Ind. 48, 24 N.E. 219, 220 (1890) allowing
recovery for payments made on behalf of mortgagee-in-possession
by third parties); and Shirts v. Irons, 28 Ind. 458, 459-460 (1867).
24
 38. The same holds true for all expenses properly reimbursable to a
mortgagee-in-possession to protect and preserve [Phillips’s]
mortgage lienhold interest in the Real Estate and judgment lienhold
interest in the Out-lots under the terms of her mortgages and as
allowed by Indiana law. See Id.; and Wise v. Layman, 197 Ind. 393,
150 N.E. 368, 371 (1926).

Appellant’s Appendix at 235, 240-241. The portion of the court’s order titled “Order”

which sets forth the amounts that Phillips should recover does not specifically include the

interest paid on the loan. Rather, that portion of the court’s order sets forth numbered

paragraphs setting forth specific amounts which total $355,476.40 and does not include

the interest paid on the loan. Further, the court in Money Store II did not indicate that

this amount included interest on this loan when the court stated:

The $355,467.40 money judgment against Money Store to Phillips consists
of the totals of the in rem judgment Phillips obtained against Summers and
Mangy Moose in December 2003 on the assigned mortgages to the extent
affirmed by the Indiana Supreme Court; the amounts paid for real property
taxes and redemptions; the amount paid for insurance premiums; the
amount paid for repairs; the amount for attorney fees in the first appeal, and
an amount for attorney fees in the trial proceedings on appeal here.

909 N.E.2d at 460-461. Accordingly, we cannot say that the 2008 order awarded Phillips

the interest payments which the court used in calculating profits in the 2010 order. Thus,

we cannot say that the trial court erred in calculating the profits on this basis.

2. Salaries

Wells Fargo also argues that the trial court erred in allowing Phillips to reduce her

claimed profits by deducting $280,700 in compensation and $118,985 in health insurance

benefits to her and her partners. Wells Fargo concedes that “Phillips worked to earn

these payments,” but argues that “the law does not license mortgagees to exploit the

25
mortgaged real estate to create employment for themselves.” Appellant’s Brief at 34.

Wells Fargo also argues that “[i]f this Court rules that mortgagees may avoid being

charged with profits merely by labeling such profits as ‘compensation’, then it will be far

too easy for mortgagees to avoid making an honest accounting to their borrowers, as the

law requires.” Id.

Phillips argues that this court’s opinion in Money Store II identified what it

considered to be acceptable expenses of the restaurant and included salaries and health

insurance. Phillips argues that Wells Fargo’s arguments carry no weight in light of this

court’s prior pronouncement. Phillips characterizes the salaries as operational expenses

and argues that a review of the compensation reveals “how meager their salaries actually

were, which actually increased the business profit as compared to a scenario where

outside parties would have been retained to perform the same service.” Appellee’s Brief

at 27. Phillips contends that Wells Fargo “is simply asserting that the toils of Phillips,

Casagrande and Sokolik should be invested as a charity to Money Store, to provide it

with an even greater windfall from its laissez-faire and lackadaisical approach it has

taken over the past six years toward the real estate.” Id. at 27-28.

The following exchange occurred during the direct examination of Rex Harris, a

certified public accountant who worked with Phillips’s restaurant:

Q. Now, in your view, um, would the salaries there be commiserate
[sic] with, ah, the work duties as you know them to have been
performed by each of the members?

A. I was not at all surprised that they took a salary. They didn’t take a
salary the first two (2) years because of financial consideration,
because they were trying to build up the cash volume, the cash flow
which is typical for a start up operation. They are part-time officer
26
 workers you might say, they do in my opinion, they serve a genuine
need that the company has. They have the expertise and the
experience of running a business and [Phillips] did not. I think it
would have been difficult not to have someone do what they do. I
think the amounts that they receive are reasonable considering their
time they spent and the amount of experience and education they
have in running a business. So I didn’t; well, I don’t find anything
significantly out of line with their receiving compensation nor the
amount that they did receive.

*****

Q. Now, putting together their salaries and the distributions received,
what is your view of the reasonableness of the compensation to the
members of the LLC?

A. Well, my view is that the distributions are not compensations, that’s
the return on their investments you might say. I think that’s
normally what you consider a dividend to be, not compensation but
rather a distribution of profits that; keep in mind these shareholders
are being taxed on profits they haven’t yet received and to not give
them the distributions so they can at least pay the taxes on the very
money that they have reported as income is a little bit a stretch. It’s
difficult to explain that to a client that you’re going to tax him on his
share of $45,000.00 and not give him any of the money right now.
So it’s typical that there are some distributions made, if nothing else
for no other reason than for that person to have some cash to pay the
taxes that are generated from the compensations being assigned to
them.

Q. And is there anything unreasonable about doing that?

A. No, no, we do it all the time.

Transcript at 175-178. Under the circumstances, we cannot say that the trial court erred

in its calculation of the profits on this basis. See Johnson v. Hosford, 110 Ind. 572, 576,

10 N.E. 407, 409 (1887) (holding that payment for the services of a watchman were

properly allowed where the property was exposed to danger and a watchman was

necessary to preserve it from destruction), reh’g denied.

27
C. Timing

Wells Fargo argues that the trial court erred when it treated the total amount of

profits “as if it were a lump-sum payment against Phillips’ claim made on October 14,

2010, the date of judgment,” and that the court should have treated the profits as a series

of payments made at the end of each year as the profits accrued. Appellant’s Brief at 34-

35. Wells Fargo argues that by allowing Phillips to pretend that the profits she earned

each year from 2005 to 2010 were not received until October 2010, the court: “(1)

disregarded the way Phillips actually handled her profits, (2) rewarded Phillips for

refusing to account for her ‘rents and profits’ as required by law, and (3) unfairly inflated

the interest accruing on Phillips’ claim.” Id. at 35. In other words, Wells Fargo argues

that “[i]f Phillips had applied her $183,843 in profits as they accrued each year to pay

down her $355,476 claim, the balance of Phillips’ claim would have gotten smaller every

year, and less interest would have been accruing.” Id. at 37.

Phillips argues that “Money Store continually asserted that it was entitled to

‘interest’ on the profits,” but that “[i]t was only after the trial court disregarded Money

Store’s argument in this regard that Money Store attempted to refashion its interest

argument to be one of timely application of profits.” Appellee’s Brief at 28. Phillips

contends that Wells Fargo “was not deprived of the use of any money, and thus its veiled

request for pre-judgment interest cannot be entertained.” Id. at 31.

To the extent that Phillips argues that Wells Fargo did not properly raise this issue

below, we disagree. Wells Fargo raised this issue in its trial brief. Specifically, it argued:

One solution to this issue is for the Trial Court to do what Phillips should
have done: debit the amount of $4,415.66 against her mortgage claim each
28
 month, beginning December 1, 2004. Alternatively, the Court can reach
about the same result by ordering that interest shall accrue at the pre-
judgment rate of 8% upon Phillips’ unapplied rents and profits from the
date they accrued, just as the Court has allowed Phillips to accrue interest
on the money invested to generate those profits.

Appellant’s Appendix at 558 (emphasis added). At the hearing on the motion to correct

error, Wells Fargo’s counsel stated “if they set off the profit against their debt that they

did at accounting of every year or in January the close of the year, . . . they would have

off set the amount so that the interest didn’t grow as rapidly . . . .” Transcript at 297. We

cannot say that Wells Fargo waived this issue, and agree with its position.

On remand, we order the court to consider on an annual basis the amount by which

Phillips’s lien would have been reduced by the profits and instruct the trial court to offset

the loss in the first year against the profit in the second year and to offset the loss in the

final year against the profit of the preceding year. See Cross v. Hepner, 7 Ind. 359, 362-

363 (1855) (addressing a mortgagee in possession and holding that the sum should have

been deducted from the amount of the note with interest from the time it became due until

the decree was rendered).

D. Taxes

With respect to taxes, the court’s order stated:

5. The additional expenses incurred by Phillips are taxes in the amount
of $49,635.42 paid on or about August 3, 2009, and taxes in the
amount of $5,634.66 paid on or about May 6, 2010.

6. The Court finds that Phillips should have added to her first priority
lien these taxes along with interest computed at the rate of ten
percent (10%) per annum.

Appellant’s Appendix at 72.

29
 Wells Fargo argues that the court erred in granting Phillips a judgment for taxes

that she did not pay. Wells Fargo argues that Phillips testified unequivocally that she did

not pay the taxes and that Phillips’s own counsel was careful to make clear to the court

that the August 2009 tax payments were made by an unnamed third party and not by

Phillips or the Restaurant Company. Wells Fargo argues that Phillips presented no

evidence that she had any obligation to repay the parties who made the tax payments.6

Phillips argues that “the trial court did not find that Phillips paid the taxes; rather,

the trial court found that the expenses were ‘incurred’ by Phillips, and, therefore,

recoverable by Phillips under the terms of her mortgages.” Appellee’s Brief at 32-33.

Phillips also argues that this issue has already been addressed in Money Store II. The

portion of Money Store II relied upon by Phillips states:

Where there is no express contract, the right to recover may rest
upon an implied contract or an implied promise to pay. Cole v. Cole, 517
N.E.2d 1248, 1250 (Ind. Ct. App. 1988). Such a contract may be inferred
from the conduct, situation, or material relations of the parties and enforced
by law. Id. The intention to pay and the expectation of compensation may
be inferred from the conduct of the parties and where equity, justice, and
fair dealing require compensation. Id.

Here, our review of the transcript reveals that Phillips requested help
from Casagrande and Sokolik. The two men borrowed money and paid
6
In its reply brief, Wells Fargo argues, without quoting the language in the mortgages or citation
to the record, that Phillips’s mortgages allow her to recover such tax payments only if she personally paid
or incurred them. The table of contents for Wells Fargo’s three volumes of appellant’s appendices does
not specify that the mortgages are contained in the appendices and the exhibits folders do not appear to
contain the mortgages. Our review of Wells Fargo’s appendices reveals that the nine mortgages Phillips
purchased from National City appear to be included on twenty-one pages of which portions are illegible.
See Appellant’s Appendix at 126-146. We remind Wells Fargo that Ind. Appellate Rule 46(A)(8)
provides that “[e]ach contention 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.” Ind. Appellate Rule
22(C) provides: “Any factual statement shall be supported by a citation to the page where it appears in an
Appendix, and if not contained in an Appendix, to the page it appears in the Transcript or exhibits, e.g.,
Appellant’s App. p.5; Tr. p. 231-32.”

30
 Phillips’ expenses for her, and she has already begun to repay them. This
evidence supports the trial court’s finding and conclusion that Phillips is the
proper party to seek reimbursement for the money spent protecting and
preserving her liens on the real estate and outlots because she agreed to be
liable and to repay Casagrande and Sokolik. See Miller v. Curry, 124 Ind.
48, 24 N.E. 219 (1890).

Money Store II, 909 N.E.2d at 459.

The record reveals that at the August 2010 hearing on remand, Phillips testified

that taxes were approximately $13,000 to $15,000 a year and that the restaurant paid the

taxes. On cross-examination, Casagrande testified that the real estate taxes were paid out

of the cash flow of the restaurant and paid by 412323 LLC. On redirect examination,

Casagrande testified that the source of the funds with respect to certain of the real estate

taxes, specifically the “$29,000.00 amount and the other amount with regard to the

quietus’,” came from “another source” and described the source as “[p]ersonal” and

“[p]rivate.” Transcript at 249-250. Casagrande also indicated that “those particular tax

amounts that show up on the quietus” did not come out of the operating expenses of the

restaurant. Id. at 249. On recross-examination, Casagrande testified that the money was

received from a personal source and “[w]e got the money and we paid it.” Id. at 250.

When asked whether the source was Phillips, Casagrande stated, “Not directly.” Id. at

251. We cannot say that the findings and conclusions of the trial court on this issue were

clearly erroneous.

E. Attorney Fees

With respect to attorney fees, the trial court found:

7. The Court has previously awarded to Phillips for attorney fees and
expenses the amount of $71,224.02, plus legal interest.

31
 8. Phillips at this time seeks to have added to her first priority lien the
additional amount of attorney fees and expenses incurred through
August 31, 2010 in the sum of $92,391.70.

9. The Court finds that some, but not all, of the additional attorney fees
and expenses of litigation incurred by Phillips should be credited
toward her first priority lien.

10. The amount of $20,000.00 was incurred by Phillips in arguing on
appeal that she should not be required to account for the profits she
was realizing in her capacity as mortgagee in possession. Phillips’
argument regarding profits did not prevail on appeal.

11. The Court is aware that a mortgage appearing in the chain of title of
Phillips authorizes her, as mortgagee, to recover as costs reasonable
attorney fees in protecting her lien. This Court, however, can look at
all of the surrounding circumstances of the litigants before it in
determining what amount constitutes a reasonable attorney fee.

12. Having done so, the Court finds that Phillips should be awarded
additional attorney fees and expenses of litigation in the amount of
$72,391.70.

Appellant’s Appendix at 73.

Wells Fargo argues that the fees awarded by the trial court “clearly included

substantial fees incurred by Phillips in preparing for the trial on remand, concerning the

amount of her rents and profits.” Appellant’s Brief at 40-41. Wells Fargo argues that the

mortgages held by Phillips do not allow her to recover attorney fees incurred in litigating

the accounting ordered by this court. Wells Fargo cites to the portion of the Court of

Appeals opinion that was summarily affirmed by Money Store I. Wells Fargo argues that

“most of the work done by Phillips’ attorneys, at a cost in excess of $70,000, was in

preparing – and defending via discovery, briefs, and trial testimony – an ‘accounting’ that

claimed Phillips’ profits from the Real Estate were only $92,361.” Id. at 41. Wells Fargo

argues that it “was obliged to incur heavy litigation costs of its own to help the Trial
32
Court see that this figure was grossly understated, an effort which led the Trial Court to

increase the profit figure to $183,843.75.” Id. Wells Fargo argues that “[t]his $91,000

victory, however, becomes Pyrrhic if Phillips’ attorneys are again allowed tens of

thousands of dollars in compensation for fighting to impose an unfair accounting on

Wells Fargo.” Id. Wells Fargo argues that “[t]his work cannot be classified as work

done ‘to protect the lien of this mortgage or any of the Mortgagee’s rights” under the

mortgage. Id. Wells Fargo requests that we remand and direct the trial court to

“reexamine the fees claimed by Phillips’s attorneys and disallow fees attributable to the

effort to create and defend Phillips’ $92,361 accounting, which was found to significantly

understate Phillips’ profits.” Id. at 41-42.

Phillips argues that “it is clear from the invoices submitted into evidence that said

$20,000.00 was for time incurred in performing the very same tasks which Money Store

now seeks to have excluded.” Appellee’s Brief at 34. Phillips argues that her counsel

“did not incur $20,000.00 in research and briefing time on the single issue of whether an

accounting was or was not required.” Id. at 35. Rather, Phillips argues that “the $20,000

in fees was with regard to actually performing and presenting the accounting.”7 Id.

7
Phillips argues that “regardless of the grounds for which the trial court discounted Phillips’
attorneys’ fees by $20,000.00, Phillips’ mortgages at the foundation of this case allow for all of Phillips’
attorneys fees, including those relating to any accounting, to be incorporated into her first priority lien
interest.” Appellee’s Brief at 36. Phillips argues that “all of [her] fees, including those relating to any
accounting, have been incurred in relation to the Real Estate, and in protecting her lien interest and, thus,
are properly awardable.” Id. To the extent that Phillips appears to suggest that the trial court erred by
excluding $20,000 from the amount of attorney fees she was entitled to recover, we observe that Phillips
also stated that “the trial court was well within its discretion in making its determination regarding the
amount of fees that should attach to Phillips’ first priority lien interest” and requests that we affirm the
trial court’s judgment. Id. at 37.
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 In its reply brief, Wells Fargo argues that Phillips’s claim is refuted by the trial

court’s judgment which explicitly states that $20,000 in fees disallowed by the court were

for work on the appeal in Money Store II, not for work on the accounting presented on

remand. Wells Fargo argues that the court’s discretion to award attorney fees is not

unfettered and that the court abused its discretion “in allowing Phillips’ [sic] all of the

$50,000 in fees sought by her attorneys for preparing and litigating an accounting that

Phillips ultimately had to stipulate was off by $91,000, nearly half of the total amount.”

Appellant’s Reply Brief at 24. Wells Fargo concludes that “[t]his Court would be

justified in denying recovery of any of the attorney’s fees requests for this ‘accounting.’”

Id.

With respect to the calculation error, the trial court found:

22. During the course of trial, it became apparent to the Court and
counsel, that the experts selected by the litigants to testify had twice
subtracted certain expenses in their net profit calculations for the
restaurant. They were unaware that this Court had previously
calculated certain expenses and made same a part of the first priority
lien determined to be owed to Phillips in the amount of $355,476.40.

23. Counsel stipulate, and the Court so finds, that the net profit figure of
$92,361.51 must be adjusted upward to reflect the error made by the
parties’ experts as follows:

d) Taxes – $59,198.00
e) Insurance – $18,950.00
f) Repairs – $13,334.24

TOTAL ADJUSTMENT: $91,482.24.

Appellant’s Appendix at 76-77.

While we acknowledge that the initial accounting was erroneous, we observe that

Wells Fargo does not argue that the trial court’s finding that the “parties’ experts” erred
34
was improper, that at least one of Phillips’s assigned mortgages contained an

authorization for attorney fees “necessarily incurred therein by the Mortgagee to protect

the lien of this mortgage or any of the Mortgagee’s rights hereunder,” 822 N.E.2d at 234,

and that this court ordered an accounting for the profits of the restaurant to be applied to

the amount due on Phillips’s first lien. See Money Store II, 909 N.E.2d at 462-463.

Under the circumstances, we cannot say that the court erred in awarding attorney fees.

For the foregoing reasons, we affirm in part and remand in part.

Affirmed in part and remanded in part.

BAKER, J., and KIRSCH, J., concur.

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