MEMORANDUM DECISION
FILED
Pursuant to Ind. Appellate Rule 65(D), this Jan 17 2017, 6:55 am
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the CLERK
Indiana Supreme Court
purpose of establishing the defense of res judicata, Court of Appeals
and Tax Court
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Donald D. Levenhagen Steven E. Runyan
Landman Beatty, Lawyers, LLP Kroger, Gardis & Regas, LLP
Indianapolis, Indiana Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Wyckford SK Realty, LLC, January 17, 2017
Appellant-Defendant, Court of Appeals Case No.
49A04-1605-MF-1159
v. Appeal from the Marion Superior
Court
JPMCC 2006-CIBC14—7777 The Honorable Michael D. Keele,
Judge
Wyckford Ct LLC,
Trial Court Cause No. 49D07-1503-
Appellee-Plaintiff. MF-8255
Bradford, Judge.
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Case Summary
[1] In 2005, Appellant-Defendant Wyckford SK Realty, LLC (“Wyckford”),
former owners of Wyckford Commons, an apartment complex in Indianapolis
(“the Property”), executed a promissory note (“the Note”) in favor of a
predecessor-in-interest of JPMCC 2006-CIBC14—7777 Wyckford Ct LLC
(along with predecessors in interest, collectively, “the Bank”). The loan
evidenced by the Note (“the Loan”) was secured by a mortgage and security
agreement (“the Mortgage”), an assignment of rents, and an escrow agreement
for reserves and impounds (“the Escrow Agreement.”). The Mortgage and the
Escrow Agreement provided that Wyckford was responsible for all taxes related
to the Property, taxes would be paid by the Bank in twelve monthly
installments with transfers from Wyckford’s operating account (“the Operating
Account”), and payments to the Operating Account for taxes would be one-
twelfth of the amount that would be sufficient to pay all taxes payable or
estimated by the Bank to be payable during the next ensuing twelve months.
[2] In 2006, the Property’s value was assessed at approximately eighty percent
higher than it had been previously, resulting in a significant increase in property
tax due in 2008. Wyckford appealed the higher assessment for 2006 and for
later years. Despite Wyckford’s appeal, the Bank directed it to make the
increased tax payments based on the higher assessed value of the Property.
Throughout 2009 to 2012, however, Wyckford failed to provide funds sufficient
to make the payments the Bank directed it to make, which resulted in accrued
default interests and late fees.
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[3] Ultimately, Wyckford also failed to make a number of payments on the Loan.
At some point, administration of the Loan was assumed by C-III Asset
Management LLC (“the Special Servicer”), which took over from Berkadia
Commercial Mortgage, LLC (“the Master Servicer”). In early 2015, the Bank
filed a foreclosure action and, later, both parties moved for summary judgment
on the claim. The trial court entered summary judgment in favor of the Bank
on the foreclosure claim and awarded it some $13,000 in “Legal Costs.”
Wyckford contends that the trial court erred in entering summary judgment in
favor of the Bank and abused its discretion in awarding the Bank attorney’s
fees. While we disagree that the trial court erred in entering summary judgment
in favor of the Bank, we reverse the award of attorney’s fees and remand for a
hearing on the question.
Facts and Procedural History
[4] In 2005, Wyckford operated the Property, an apartment complex in
Indianapolis. On or about November 30, 2005, Wyckford executed the Note in
favor of the Bank, in the original principal amount of $8,127,297.00. The Loan
was administered by the Master Servicer. The Note required Wyckford to
make monthly payments of $46,247.93 from January of 2006 until November
of 2015. Inter alia, the Loan was secured and evidenced by the Mortgage and
the Escrow Agreement. The Mortgage provided, in part, that
(a) [Wyckford] shall pay all taxes, assessments, water
rates, sewer rents, governmental impositions, and other charges,
including without limitation vault charges and license fees for the
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use of vaults, chutes and similar areas adjoining the Land, now or
hereafter levied or assessed or imposed against the Property or any
part thereof (the “Taxes”)[.]
Appellee’s Addendum p. 16.
[5] The Escrow Agreement, inter alia, governed how taxes on the Property would
be paid by the transfer of funds from the Operating Account, and provided as
follows:
ARTICLE 3 – TAX AND INSURANCE IMPOUNDS
Section 3.1 THE TAX AND INSURANCE FUNDS
DEPOSIT
(a) On or before the date hereof, [Wyckford] shall make
an initial deposit of the Tax and Insurance Funds, as hereinafter
defined, of an amount which, when added to the monthly
amounts to be deposited as specified below will be sufficient in
the estimation of [the Bank] to satisfy the next due taxes, assessments,
insurance premiums, and other similar charges. Additionally, on
the first day of each calendar month, [Wyckford] shall pay [the
Bank] (a) one-twelfth of the amount that would be sufficient to pay all
Taxes payable or estimated by [the Bank] to be payable, during the
next ensuing (12) twelve months[.]
Appellee’s Addendum p. 24 (emphases added). Wyckford consented to the
payment of the monthly loan payment and tax escrow payments by the transfer
of funds from the Operating Account.
[6] For the year 2006, the Property was assessed at a value of $10,198,900.00, an
increase of almost eighty percent from the previous assessment of
$5,669,900.00. By July of 2008, when the tax payments based on the 2006
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assessment became due, Wyckford had retained counsel and filed an appeal of
that assessment. Ultimately, Wyckford appealed the 2007, 2008, and 2009
assessments as well.1
[7] Meanwhile, the Bank, through the Master Servicer, determined that
Wyckford’s tax payments would be based on the higher 2006 assessment and
continued to transfer funds from the Operating Account consistent with that
determination. In November and December of 2008, when the Master Servicer
attempted withdrawals, the funds in the Operating Account were insufficient to
cover the monthly loan and tax payments. Throughout 2009 to 2012,
Wyckford failed to provide funds to the Operating Account sufficient to cover
the monthly payments. In late 2013, administration of the Loan was
transferred to C-III Asset Management LLC (“the Special Servicer”), and Mark
Heller was assigned responsibility for the Loan. Heller sent a letter to
Wyckford’s representative Norman Schwab notifying it that the Loan had been
transferred to the Special Servicer.
[8] On March 13, 2015, the Bank filed a mortgage foreclosure action. Wyckford
denied liability and counterclaimed that the Bank had first breached the Escrow
Agreement, specifically that the Bank had taken excessive funds from the
Operations Account to satisfy Wyckford’s tax liability. On July 27, 2015, the
1
Wyckford was ultimately only partially successful in its appeals, as the assessment for 2006 was reduced
from $10,198,900 to $7,472,600, for 2007 reduced from $9,502,300 to $8,634,200, for 2008 reduced from
$9,494,400 to $8,841,200, and for 2009 reduced from $9,046,800 to $9,018,900. In any event, Wyckford’s
property tax liability increased significantly.
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trial court, pursuant to the Bank’s motion, put Wyckford into receivership. On
November 17, 2015, the Bank filed for summary judgment on its foreclosure
claim. On April 29, 2016, the trial court granted summary judgment in favor of
the Bank, denied Wyckford’s cross-motion for summary judgment, and
determined the award to be $8,935,602.48 plus accrued interest and a decree of
foreclosure in the Bank’s favor. In its order on the parties’ motions for
summary judgment, the trial court noted that the money judgment included
$13,603.50 in “Legal Fees[.]” Appellant’s App. p. 15.
[9] On May 4, 2016, the Bank filed its praecipe for Sheriff’s sale, which sale was set
for July 20, 2016. When Wyckford moved to stay foreclosure and the Sheriff’s
sale pending appeal, the trial court ordered that Wyckford post a $2,000,000
bond, which it did not pay and attempted unsuccessfully to have reduced. On
July 20, 2016, the Marion County Sheriff held an auction, at which the Bank
successfully bid for the Property.
Discussion and Decision
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I. Summary Judgment
[10] Wyckford contends that the trial court erred in granting summary judgment in
favor of the Bank because it violated the terms of the Escrow Agreement before
Wyckford did.2
When reviewing a grant or denial of a motion for summary
judgment our standard of review is the same as it is for the trial
court. Kroger Co. v. Plonski, 930 N.E.2d 1, 4 (Ind. 2010). The
moving party “bears the initial burden of making a prima facie
showing that there are no genuine issues of material fact and that
it is entitled to judgment as a matter of law.” Gill v. Evansville
Sheet Metal Works, Inc., 970 N.E.2d 633, 637 (Ind. 2012).
Summary judgment is improper if the movant fails to carry its
burden, but if it succeeds, then the nonmoving party must come
2
The Bank contends that Wyckford has waived this claim by virtue of signing and retuning a pre-negotiation
letter, which provided, in part, as follows:
The Mortgage Loan is currently in default. [The Bank] and [the Special Servicer] are
willing to have discussions (“Discussions”) with [Wyckford] concerning the Mortgage,
the Loan Documents and the Property, provided, as consideration for entering into the
Discussions, [Wyckford] executes a copy of this letter to confirm the understanding of the
parties with respect to the Discussions. Accordingly, [the Bank], [the Special Servicer]
and [Wyckford] hereby agree that:
….
2. Discussions: Any party may terminate the Discussions at any time for any or no
reason whatsoever without obligation or liability to any other party.
….
5. No Default by [the Bank][:] [Wyckford] hereby acknowledges and agrees that
there are no defaults by [the Bank], [the Special Servicer], or any other servicer, or
its/their predecessors-in-interest, if any, under or in connection with the Mortgage Loan
or any of the Loan Documents.
6. No Claim Against [the Bank][:] [Wyckford] acknowledges and agrees that it
currently possesses no claim against [the Bank], [the Special Servicer] or any other
servicer, or its/their predecessor-in-interest[.]
Appellee’s Addendum pp. 32-34. Despite the fact that Wyckford agreed with the letter’s statements that the
Bank had committed no default and that Wyckford has no claims against the Bank, the letter also provides
that the termination of negotiations (which occurred) would result in no obligations or liability by any party
to any party. Any admissions by Wyckford contained in the letter were negated by the termination of
negotiations.
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forward with evidence establishing the existence of a genuine
issue of material fact. Id. In determining whether summary
judgment is proper, the reviewing court considers only the
evidentiary matter the parties have specifically designated to the
trial court. See Ind. Trial R. 56(C), (H). We construe all factual
inferences in the non-moving party’s favor and resolve all doubts
as to the existence of a material issue against the moving party.
Plonski, 930 N.E.2d at 5. The fact that the parties have filed
cross-motions for summary judgment does not alter our standard
for review, as we consider each motion separately to determine
whether the moving party is entitled to judgment as a matter of
law. Hardy v. Hardy, 963 N.E.2d 470, 473 (Ind. 2012).
Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012).
Generally, construction of a written contract is a question of law
for the trial court for which summary judgment is particularly
appropriate. Mid State Bank v. 84 Lumber Co., 629 N.E.2d 909,
914 (Ind. Ct. App. 1994). However, if the terms of a written
contract are ambiguous, it is the responsibility of the trier of fact
to ascertain the facts necessary to construe the contract. Id.
Consequently, whenever summary judgment is granted based
upon the construction of a written contract, the trial court has
either determined as a matter of law that the contract is not
ambiguous or uncertain, or that the contract ambiguity, if one
exists, can be resolved without the aid of a factual determination.
Id.
Rogier v. Am. Testing & Eng’g Corp., 734 N.E.2d 606, 613 (Ind. Ct. App. 2000),
trans. denied.
[11] Specifically, Wyckford contends that the trial court erred in entering summary
judgment in favor of the Bank on the foreclosure claim because the designated
evidence establishes that the Bank violated the terms of the Escrow Agreement
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by demanding that it make tax payments based on the higher, 2006 assessed
value. As previously mentioned, Section 3.1(a) of the Escrow Agreement
provides as follows:
On or before the date hereof, [Wyckford] shall make an initial
deposit of the Tax and Insurance Funds, as hereinafter defined,
of an amount which, when added to the monthly amounts to be
deposited as specified below will be sufficient in the estimation of
[the Bank] to satisfy the next due taxes, assessments, insurance
premiums, and other similar charges. Additionally, on the first
day of each calendar month, [Wyckford] shall pay [the Bank] (a)
one-twelfth of the amount that would be sufficient to pay all Taxes
payable or estimated by [the Bank] to be payable, during the next
ensuing (12) twelve months[.]
Appellee’s Addendum p. 24 (emphases added).
[12] Wyckford’s argument is that the second excerpt of emphasized language above
gave it the option to pay into the Operating Account only the amount it was
obligated to by operation of Indiana Code section 6-1.1-15-10,3 which obligated
3
This section provides, in part, that
(a) If a petition for review to any board or a proceeding for judicial review in the tax court
regarding an assessment or increase in assessment is pending, the taxes resulting from the
assessment or increase in assessment are, notwithstanding the provisions of IC 6-1.1-22-9,
not due until after the petition for review, or the proceeding for judicial review, is finally
adjudicated and the assessment or increase in assessment is finally determined. However,
even though a petition for review or a proceeding for judicial review is pending, the
taxpayer shall pay taxes on the tangible property when the property tax installments come
due, unless the collection of the taxes is enjoined under IC 33-26-6-2 pending a final
determination in the proceeding for judicial review. The amount of taxes which the
taxpayer is required to pay, pending the final determination of the assessment or increase
in assessment, shall be based on:
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it to pay taxes in an amount based on the assessment previous to the 2006
assessment it was appealing. In other words, Wyckford argues that it had the
option to decline to pay the Bank’s estimated taxes if it saw fit. We conclude
that this argument is without merit. The language at issue clearly gives the Bank
the option to require Wyckford to pay an amount it estimates to be payable.
First, if we were to interpret this section to give the option to Wyckford to
decline to pay the Bank’s estimate, then that language would be rendered
meaningless. “[W]e must interpret the language of a contract so as not to
render any words, phrases, or terms ineffective or meaningless.” Bowen v.
Monroe Guar. Ins. Co., 758 N.E.2d 976, 980 (Ind. Ct. App. 2001) (citation and
quotation marks omitted). If the Bank’s estimate had no “teeth,” the language
allowing it to make the estimate would be surplusage, an interpretation we
cannot make. Moreover, it makes no sense that the Bank would have the
power to set the initial tax payment based on its estimate (which the first
emphasized excerpt clearly allows it to do) but lack that power for all
subsequent tax payments. Wyckford has failed to establish that the Bank
breached the Escrow Agreement and so has also failed to establish that the trial
court erred in entering summary judgment in favor of the Bank on the
foreclosure claim.
(1) the assessed value reported by the taxpayer on the taxpayer’s personal
property return if a personal property assessment, or an increase in such an
assessment, is involved; or
(2) an amount based on the immediately preceding year’s assessment of real
property if an assessment, or increase in assessment, of real property is involved.
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II. Attorney’s Fees
[13] Wyckford also contends that the trial court’s award of $13,603.50 in attorney’s
fees to the Bank was unsupported by any designated evidence, thereby
rendering the award unreasonable. “We review the amount of an award of
attorney fees under an abuse of discretion standard.” Brademas v. South Bend
Cmty. Sch. Corp., 783 N.E.2d 745 (Ind. Ct. App. 2003), trans. denied. “An abuse
of discretion occurs when the trial court’s decision is clearly against the logic
and effect of the facts and circumstances before the court, or if the court has
misinterpreted the law.” Id.
[14] We agree with Wyckford that the trial court’s award of “Legal Costs” to the
Bank was an abuse of discretion under the circumstances of this case. The
Bank contends that it designated an affidavit from Heller that it had incurred
$13,603.50 in legal costs as of October 7, 2015. The Bank, however, does not
identify where this alleged affidavit may be found in the record on appeal. “As
we have often noted, we will not, on review, sift through the record to find a
basis for a party’s argument.” Haddock v. State, 800 N.E.2d 242, 245 (Ind. Ct.
App. 2003).
[15] Nor are we convinced by the Bank’s argument that we may affirm the trial
court’s award of legal costs by taking judicial notice of reasonable fees in this
case. We have held that “save for routine cases involving relatively small
amounts, awards of attorney’s fees in cases of this nature must be supported by
evidence.” Berkemeier v. Rushville Nat. Bank, 438 N.E.2d 1054, 1058 (Ind. Ct.
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App. 1982). We are not prepared to say that this is a routine case involving
relatively small amounts of alleged attorney’s fees. We therefore remand for a
hearing on the question of attorney’s fees.
[16] We affirm the judgment of the trial court in part, reverse in part, and remand
for further proceedings.
Vaidik, C.J., and Brown, J., concur.
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