Bruce and Sybil Scheffer v. Centier Bank

FILED
Apr 26 2018, 8:56 am

CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court

ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Edward P. Grimmer Paul B. Poracky
Daniel A. Gohdes Koransky, Bouwer and Poracky, P.C.
Edward P. Grimmer, P.C. Dyer, Indiana
Crown Point, Indiana

IN THE
COURT OF APPEALS OF INDIANA

Bruce and Sybil Scheffer, April 26, 2018
Appellants-Plaintiffs, Court of Appeals Case No.
45A04-1709-PL-2118
v. Appeal from the Lake Superior
Court
Centier Bank, The Honorable Diane Kavadias
Appellee-Defendant. Schneider, Judge
Trial Court Cause No.
45D11-1212-PL-106

Brown, Judge.

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[1] Bruce and Sybil Scheffer appeal the trial court’s order granting the motion for

judgment on the evidence of Centier Bank (“Centier”). The Scheffers raise

several issues which we consolidate and restate as whether the trial court erred

in granting Centier’s motion for judgment on the evidence and request for

attorney fees. Centier requests appellate attorney fees and costs. We affirm the

trial court’s ruling on Centier’s motion for judgment on the evidence and for

attorney fees and remand for a determination of reasonable appellate attorney

fees.

Facts and Procedural History

[2] This is the second appeal in this case. In December 2012, the Scheffers filed a

complaint against Centier alleging that they had obtained a loan from Centier’s

predecessor, The First Bank of Whiting, in 1985 for the purchase of residential

real property located on Wexford Road in Valparaiso, Porter County, Indiana,

and that the loan had been secured by a mortgage on the real property and by

an assignment of insurance policies on the Scheffers’ lives. The life insurance

policy assignments, which were dated in November of 1985 and attached to the

complaint, provide: “It is understood that this assignment is for the sole purpose

of using the policy as collateral security for existing or future loans made by the

assignee to the owner.” Appellants’ Appendix Volume 2 at 35-36. The

Scheffers alleged “[t]hat mortgage loan was the only loan that Scheffer had

personally with Centier at that time of November 1985,” “[t]he assignments

were not given or received as collateral for any loan or debt obligation other

than that mortgage loan on that residential property,” and they paid Centier

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 “all remaining balances on that mortgage loan on or about December 17,

2010.” Id. at 31. The Scheffers requested a judgment including an order that

Centier execute releases of the assignments of the life insurance policies.

[3] Centier filed an answer denying that the life insurance policy assignments

related in any way to a mortgage loan on residential real estate. Centier also

stated that it entered into a mortgage and note on Wexford Road property in

2002 and that the loan had been paid off in December 2010, and it denied that

the loan dealt with any type of mortgage or loan arrangement dating back to

1985. Centier also answered that it had not released the assignments of the life

insurance policies because the loan obligations for which they served as

collateral had not been satisfied.

[4] The Scheffers moved for summary judgment and designated their own affidavit

which alleged that they had owned life insurance policies since 1985 and had

assigned the policies as collateral on a promissory note and mortgage on their

residential property in 1985. The Scheffers did not designate any documentary

evidence of a 1985 residential mortgage or loan with Centier or its predecessor.

Centier filed a response and cross-motion for summary judgment and

designated the affidavit of Brian Miller, a vice-president for Centier, which

stated that Centier had a business relationship with the Scheffers and Scheffer,

Inc., dating before 1985; Centier did not have a residential mortgage loan on

the Wexford Road property at that time; in 1985 the Scheffers as owners of

Scheffer, Inc., assigned several life insurance policies to Centier as the assignee

for the benefit of the commercial loan relationship between the parties; and that

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 the first residential mortgage relationship between Centier and the Scheffers

regarding Wexford Road occurred in 2002. The trial court granted Centier’s

cross-motion for summary judgment and denied the Scheffers’ motion for

summary judgment. The Scheffers appealed, and Centier cross-appealed.

[5] On March 12, 2015, this Court issued a memorandum decision which reversed

the trial court’s entry of summary judgment. See Scheffer v. Centier Bank, No.

45A03-1410-PL-367 (Ind. Ct. App. Mar. 12, 2015). We acknowledged that the

Scheffers designated no documentary evidence of a 1985 personal residential

loan between the Scheffers and Centier or its predecessor that could have been

connected with the life insurance policy assignments. We nevertheless noted

that the Indiana Supreme Court had “recently clarified that even perfunctory,

self-serving affidavits are enough to create a genuine issue of material fact for

summary judgment purposes.” No. 45A03-1410-PL-367, slip op. at 4 (citing

Hughley v. State, 15 N.E.3d 1000, 1004 (Ind. 2014) (stating that “Indiana

consciously errs on the side of letting marginal cases proceed to trial on the

merits, rather than risk short-circuiting meritorious claims” and concluding that

a designated affidavit was “sufficient, though minimally so, to raise a factual

issue to be resolved at trial, and thus to defeat the State’s summary-judgment

motion”). We concluded that the Scheffers’ affidavit, although lacking any

documentary support, “was enough to create a genuine issue as to whether the

assignments related to a 1985 mortgage on their personal residence rather than

loans to their business, Scheffer, Inc.,” and that consequently summary

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 judgment was improper. Id. at 5. We remanded to the trial court for further

proceedings. Id.

[6] The trial court held a bench trial over several days in July and August of 2017 at

which it admitted documentary evidence and testimony. The Scheffers

introduced the life insurance policy assignments which indicated they were

executed by them in November of 1985. The Scheffers also introduced a

promissory note dated September 18, 2002, signed by them evidencing a loan

from Centier in the original principal amount of $225,000 and a satisfaction of

mortgage dated December 20, 2010, executed by Centier stating that this

mortgage had been fully paid and satisfied and was released.

[7] The Scheffers then called their witnesses. Donald Kiszka testified that he

worked for Centier Bank from 2008 until 2012 as a senior commercial workout

or risk management officer. He indicated that, sometime around April of 2009,

he began to work on Scheffer International loan accounts and that there were

debts of Scheffer, Inc., that were owed to Centier. When asked if there was a

line of credit, a commercial loan, and another commercial loan secured by a

mortgage on the real estate of a commercial building, Kiszka replied that he

believed he remembered that. He stated that he worked to maximize Centier’s

recovery from Scheffer, Inc., and that the recovery included an inventory and

disposal of property in which Centier had a security interest. Kiszka testified

that “key man insurance” is insurance which a “bank might typically take for

collateral in order [to] recover money if the principal or key man in the business

was no longer available for some reason, death, whatever.” Transcript Volume

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 2 at 25. When asked if key man insurance is similar to life insurance

assignments, Kiszka replied affirmatively. He stated that it is typical for banks

to use life insurance assignments as collateral security to minimize the risk of

default in the event of death of a key person. Kiszka indicated that the

assignments in this case, by their language, secured any existing or future loans,

and that, when a bank receives an assignment of a life insurance policy, the

bank is the intended recipient of the benefit of the policy.

[8] Thomas Wilk testified that he joined Centier in 1994 and was a vice president

and chief lending officer, that he was a commercial account officer for Scheffer,

Inc., and that in 2009 the loans to Scheffer, Inc., went into distress. He

indicated that the life insurance assignments do not mention Scheffer, Inc., or

the words “commercial loans.” Id. at 67. Wilk testified “[w]e regularly take

assignments of life insurance to support business that – especially when you

have individuals that are key people in running the company. So in the event

that something were to happen to them, you would have the benefit of the life

insurance policy.” Id. at 53-54. When asked, “[i]f the only loans starting in

1983 through 1985 are commercial loans, no residential loans, can we assume

that the language from the assignment that says ‘existing loans’ means

commercial loans,” Wilk responded “[y]es.” Id. at 59. Wilk indicated there

was no residential mortgage loan from Centier or First Bank of Whiting in

November of 1985 for the Wexford Road property. He further testified that the

commercial loans were also secured by business assets, equipment, inventory,

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 accounts receivable, intellectual property, general intangibles, and commercial

real estate.

[9] Upon taking the stand, Bruce Scheffer indicated initially that the assignments

“reference our residence in Valparaiso.” Id. at 77. When asked the name of the

first bank with which he did business “when [he] started in ‘78, ‘80,” Bruce

replied “American Trust and Savings of Whiting.” Id. He stated that he stayed

with American Trust and Savings of Whiting for the first few years and that he

purchased the Wexford Road property in 1985. When asked if he had

transitioned his banking relationship from American Trust and Savings of

Whiting to First Bank of Whiting, he replied that he had a relationship with

both banks. Bruce stated that he obtained a loan from Centier in 2002 which he

used to refinance his Wexford Road house and that a satisfaction of mortgage

instrument dated in 2002 indicated that a previous mortgage dated September

22, 1995, was satisfied. When asked where he obtained the financing for his

house in 1985, he replied it was from First Bank of Whiting. He testified that

he was asked to give the life insurance policies as extra collateral with the

understanding the policies would be released when the house was paid off and

that the house was paid off in 2010. The Scheffers also introduced evidence

that they received notifications that the life insurance policies had been

surrendered and distributed.1

1
The notifications stated in part: “The above policy was assigned to Centier Bank and has been
surrendered.” Appellants’ Appendix Volume 2 at 148-149.

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[10] Centier’s counsel then cross-examined Bruce who indicated that he and his wife

were the sole owners and shareholders of Scheffer, Inc. He stated that he did

not have any documents to support the claim that he entered into a residential

mortgage with First Bank of Whiting in 1985. Centier’s counsel asked Bruce if

he had “ever done any banking transactions with Indiana Federal Savings and

Loan Association out of Valparaiso, Indiana,” and he replied “I may have.” Id.

at 126-127. When asked “[a]nd as you sit here . . . it’s still your testimony, after

all this time, that the financing of the house, which price you don’t know, was

done through First Bank of Whiting; is that right,” Bruce replied “I don’t

recall.” Id. at 127.

[11] Centier’s counsel then introduced exhibits containing a warranty deed, a

mortgage, and a satisfaction of mortgage, and the court admitted the exhibits.

The warranty deed, dated July 22, 1985, evidences the conveyance of the

Wexford Road property to the Scheffers, and a file-stamp on the deed indicates

it was recorded with the Porter County Recorder on July 25, 1985. The

mortgage was signed by the Scheffers and granted a security interest in the

Wexford Road property to Indiana Federal Savings and Loan Association as

the mortgagee to secure repayment of a debt of $175,000, and a file-stamp on

the mortgage indicates it was recorded with the Porter County Recorder on July

25, 1985. Finally, the satisfaction of mortgage, dated January 19, 1987, states

that the debt secured by the mortgage executed by the Scheffers in favor of

Indiana Federal Savings and Loan Association in July of 1985 was paid and the

mortgage was released.

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[12] Centier’s counsel showed Bruce the warranty deed and mortgage in favor of

Indiana Federal Savings and Loan Association recorded in July of 1985 and the

following exchange occurred:

Q. Now, go back to the first page, if you would, just to make
sure we’re talking about the right house. The house that’s at
issue in your verified complaint, what’s the address?
A. 504 Wexford.
Q. And this warranty deed, which was issued based upon a
promissory note and mortgage from Indiana Federal Savings and
Loan Association, in July of 1985 is what house?
A. Same.
Q. The same house. So the information in your verified
complaint, Mr. Scheffer, that’s all a lie, isn’t it?
A. No. It’s a mistake.
Q. Oh, it’s a mistake based on your belief; correct?
A. Well, looking at this, this is a fact, all right, you didn’t make
this up. So I was going by my recollection 35 years ago without
any files. And if it’s a mistake, it’s a mistake.
Q. Well, sir, you filed a complaint, and you sued Centier Bank,
and you’ve put them through four and a half, almost five years of
litigation because you made a mistake?
*****
Q. So between the time of the deed being transferred to you,
which was on July 22, 1985, through January 19th of 1987, you
had a mortgage on your 504 Wexford property in Valparaiso,
Indiana, with Indiana Federal Savings and Loan Bank; is that
true?
A. Yes.
Q. Nothing with First Bank of Whiting, was there?
A. No.

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 Id. at 130, 133.

[13] Bruce acknowledged that the allegation in his complaint that he obtained a loan

from the First Bank of Whiting in 1985 for the purchase of the residential

property on Wexford Road was a mistake. He also indicated that the allegation

that Centier required the Scheffers to assign the life insurance policies as a term

of that loan was a mistake. When asked “you didn’t have a lending

relationship for 504 Wexford with the First Bank of Whiting on November 4th,

1985, did you,” Bruce responded “I’ll give you that.” Id. at 142. When asked if

he had commercial loans with First Bank of Whiting at that time, he replied

that he believed he did. He testified: “I made a mistake. It was 35 years ago.

We’re trying to guess. I don’t know what that – from that form, I can’t tell, and

you can’t tell it, either . . . . You cannot tell me of looking at that what that

refers to.” Id. at 157. Centier’s counsel asked “[s]o you guessed in this case is

what you’re saying to the Court,” and Bruce responded:

It was my opinion. It was not a guess. It was an educated
opinion. We looked back 35 years ago. We don’t have any files.
We’re saying what cost about that much in that time frame, and
what was the possibility, and that’s what we thought it was.

All right. You’ve got a horse on me. All right. It is not related
to the house.

Id. at 158. When asked “I just want to make sure I understand. You’re not

claiming in 2002 there actually is a residential mortgage with Centier Bank that

there were life insurance assignments made at that time, are you,” Bruce

answered “I’m not – no longer claiming that.” Id. at 158-159.

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[14] Centier filed a motion for judgment on the evidence. The motion asserted that

there is no evidence that the Scheffers had a residential mortgage loan on their

Wexford Road property with First Bank of Whiting at any time during 1985,

that the Scheffers had a residential mortgage loan contract with Indiana Federal

Savings and Loan Association on the house which transaction was

consummated in July 1985, and that the life insurance assignments were given

for commercial loans because those were the only type of loans the Scheffers

had with First Bank of Whiting in 1985.

[15] On August 17, 2017, the trial court issued an order granting Centier’s motion

for judgment on the evidence, providing in part:

9. Since the life insurance assignments did not serve as collateral
for any mortgage with First Bank of Whiting in 1985, they were
given to cover existing and future commercial loan obligations
for their company, the only type of loan [the Scheffers] had with
First Bank of Whiting in 1985.
10. In another lawsuit related to the commercial loans between
the parties, Centier took cash surrender of the insurance policies
prior to dismissal of its claims for the outstanding balance of
those loans.
11. The Court was somewhat astonished when Mr. Scheffer
acknowledged that the mortgage on the Wexler property was
with Indiana Federal Savings and he had made a mistake.
12. His mistake was the very foundation of [the Scheffers’]
claim. The Court finds it difficult to believe that such a
successful businessman would not have accurate knowledge of
his personal financial dealings.

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 13. Upon Mr. Scheffer’s testimony, the Court would have
expected [the Scheffers] to come to Court today and dismiss their
claim.
14. [The Scheffers] have failed to sustain their burden of proof in
their case in chief and judgment on the evidence is appropriate.
15. This matter has pended since 2012 and has involved much
court time and a great amount of attorney time and expense to
both [the Scheffers] and [Centier].
16. There was never a good faith basis to have proceeded with
this lawsuit as no 1985 residential mortgage contract with First
Bank of Whiting ever existed.
17. The Court finds that [the Scheffers] brought this action in
bad faith, and continued to maintain the action when it became
clearly apparent that it was frivolous, unreasonable and
groundless.

Appellants’ Appendix at 24-26. Centier submitted an attorney fee request

together with an affidavit of attorney fees and costs. The court issued an order

awarding attorney fees to Centier in the amount of $68,731.98.

Discussion

[16] The Scheffers claim that the trial court erred in granting Centier Bank’s motion

for judgment on the evidence and ordering them to pay attorney fees. Ind. Trial

Rule 50 provides that a motion for judgment on the evidence shall be granted

“[w]here all or some of the issues in a case . . . are not supported by sufficient

evidence or a verdict thereon is clearly erroneous as contrary to the evidence

because the evidence is insufficient to support it . . . .” Ind. Trial Rule 50(A).

The standard of review for a challenge to a ruling on a motion for judgment on

the evidence is the same as the standard governing the trial court in making its

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 decision. Cavens v. Zaberdac, 849 N.E.2d 526, 529 (Ind. 2006). Judgment on the

evidence is appropriate where all or some of the issues are not supported by

sufficient evidence. Id. “Where the issue involves a conclusion of law based on

undisputed facts, the reviewing court is to determine the matter as a question of

law in conjunction with the motion for judgment on the evidence, and to this

extent, the standard of review is de novo.” Id.

[17] The Scheffers assert that the cause of action before the trial court was

conversion of the life insurance policies and that Centier did not produce any

bank records showing that any corporate loan was secured by the life insurance

policy assignments. They argue that the issue litigated was not whether there

was a mortgage in 1985 but rather “whether Scheffers’ ownership of the life

insurance policies was, after December 17, 2010, subject to any security interest

of Centier” and that “[c]entral to the analysis was . . . whether, under the

language of the pled and attached [assignments], the assignment was limited to

loans personal to the policy ‘Owner’, or the language was extensive enough to

be assigned to secure debts of Scheffer, Inc.” Appellants’ Brief at 20. They

contend that “[t]he Assignments were never amended to extend from loans to

the owners to ‘loans to the owners as well as their corporation.’” Id. at 21. They

also argue that the argument advanced by Centier that the assignments may

have been “key man” insurance is speculative.

[18] Centier maintains that, by providing the assignments, the Scheffers agreed to

become sureties for existing and future commercial loans made to Scheffer,

Inc., up to the cash surrender value of the policies. It argues that it, as the

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 assignee, had the right to direct the insurance company to provide the cash

surrender value of the life insurance policies on default of payment.

[19] To the extent we must interpret the life insurance policy assignments and

instruments admitted into evidence, we observe that, if the terms are clear and

unambiguous, we must give those terms their clear and ordinary meaning.

Jernas v. Gumz, 53 N.E.3d 434, 444 (Ind. Ct. App. 2016), trans. denied. We will

make all attempts to construe the language of a contract so as not to render any

words, phrases, or terms ineffective or meaningless. Id. A contract will be

found to be ambiguous only if reasonable persons would differ as to the

meaning of its terms. Id.; see McDivitt v. McDivitt, 42 N.E.3d 115, 117 (Ind. Ct.

App. 2015) (observing that a contract may be ambiguous if its terms are

susceptible to more than one interpretation and reasonably intelligent persons

would honestly differ as to its meaning), trans. denied. When interpreting a

contract, our paramount goal is to ascertain and effectuate the intent of the

parties. Jernas, 53 N.E.3d at 444. This requires the contract to be read as a

whole, and the language construed so as not to render any words, phrases, or

terms ineffective or meaningless. Id. When a contract is ambiguous, extrinsic

evidence may be examined to determine the parties’ reasonable expectations.

McDivitt, 42 N.E.3d at 117 (citing Bicknell Minerals, Inc. v. Tilly, 570 N.E.2d

1307, 1310 (Ind. Ct. App. 1991) (“Rules of contract construction and extrinsic

evidence may be employed in giving effect to the parties’ reasonable

expectations. If the ambiguity arises because of the language used in the

contract and not because of extrinsic facts, its construction is purely a question

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 of law to be determined by the trial court.”) (citing First Fed. Sav. Bank of Ind. v.

Key Markets, Inc., 559 N.E.2d 600, 604 (Ind. 1990)), reh’g denied, trans. denied).

[20] It is well settled that an insurance policy is a type of property which may be

assigned as collateral. Auburn Cordage, Inc. v. Revocable Tr. Agreement of

Treadwell, 848 N.E.2d 738, 750 (Ind. Ct. App. 2006) (citing In re Estate of Devine,

628 N.E.2d 1227, 1229 (Ind. Ct. App. 1994) (citing 43 AM. JUR.2d Insurance §

803 (1982))).2 When an insured assigns an insurance policy, the beneficiary is

not divested of his or her general interest in the proceeds, but instead a lien is

created in favor of the assignee to the extent of the debt owed. Id. (citing In re

Estate of Devine, 628 N.E.2d at 1229 (citing 43 AM. JUR.2d Insurance § 802)

(1982)).3 Once the debt has been paid, the policy continues in effect as if there

had been no assignment, and it is the assignee’s duty to account to the

beneficiary or the debtor’s representative for the excess proceeds. Id. (citations

omitted). An assignment of an insurance policy is to be construed in

accordance with the intention of the assignor where ascertainable. 44 AM.

JUR.2d Insurance § 796 (2018). The course of conduct by the parties to the

assignment may be relevant. Id. An assignment of a life insurance policy to a

creditor as collateral security for a debt is valid to the extent of the debt. 44 AM.

JUR.2d Insurance § 803 (2018). Further, after an insured has made an absolute

2
The Court in Auburn noted these sections may now be found at 44 AM. JUR.2d Insurance §§ 784-791 (2003).
See Auburn, 848 N.E.2d at 750 n.15.
3
The Court in Auburn noted this section may now be found at 44 AM. JUR.2d Insurance §§ 807, 809 (2003).
See Auburn, 848 N.E.2d at 750 n.16.

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 assignment of a life insurance policy, the assignee is entitled to recover the cash

surrender value of the policy by surrendering the policy to the insurer during the

insured’s lifetime. 44 AM. JUR.2d Insurance § 809 (2018). The assignee of a life

insurance policy as collateral security has the right to surrender the policy and

receive its cash value. Id.

[21] Turning to the life insurance policy assignments in this case, we observe that

the Scheffers do not assert that they did not execute the assignments in 1985 or

that the assignments were invalid. Rather, they challenge the scope of the debt

the assignments were intended to secure. Centier elicited testimony from Wilk

and from Bruce Scheffer that the Scheffers had not received a personal loan in

connection with the purchase of the Wexford Road property from Centier or its

predecessor in 1985. Further, Centier produced evidence of a mortgage

executed by the Scheffers in favor of Indiana Federal Savings and Loan

Association—not the First Bank of Whiting or Centier—which had been

recorded on July 25, 1985, the same day the warranty deed conveying the

Wexford Road property to the Scheffers was recorded, which secured

repayment of the Scheffers’ personal debt. The Indiana Federal Savings and

Loan Association loan documents corroborate the testimony of Wilk, as

ultimately acknowledged by Bruce Scheffer, that the Scheffers’ residential loan

in 1985 was not advanced by or secured by a residential mortgage in favor of

the First Bank of Whiting.

[22] While the life insurance policy assignments do not expressly state that the

policies secured the repayment of the debts of Scheffer, Inc., or other

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 commercial loans extended by Centier’s predecessor, the language of the

assignments is broad and states generally that the policies were intended to

serve “as collateral security for existing or future loans made by the assignee to

the owner.” Appellants’ Appendix Volume 2 at 71-74. To the extent the

language is ambiguous as to whether the collateral was intended to secure the

repayment of the debts of the Scheffers in their individual capacities only or of

the Scheffers and the companies which they owned including Scheffer, Inc., we

observe that the evidence presented at trial established that the Scheffers did not

have a residential loan with Centier or its predecessor in 1985 when the

assignments were executed as they alleged in their complaint and in fact did not

have a residential loan with Centier until seventeen years later in 2002.

[23] In addition, the evidence established that the Scheffers were the sole

shareholders of Scheffer, Inc., and that the commercial loans extended by

Centier and its predecessor were also secured by business assets, equipment,

inventory, accounts receivable, intellectual property, general intangibles, and

commercial real estate. The court heard the testimony of Kiszka and Wilk

regarding the function of life insurance policies on the lives of company owners

or key persons serving as collateral or additional collateral to secure the

repayment of commercial loans and the typical or customary practices of

obtaining assignments of such policies by commercial lenders. The court also

heard the testimony of Bruce Scheffer that his allegation that Centier required

the life insurance policy assignments as a term of a residential loan in 1985 was

a mistake and that he was no longer claiming that in 2002 there was a

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 residential mortgage with Centier for which he had made life insurance policy

assignments.

[24] The language of the assignments together with the course of conduct of the

parties established that it was the Scheffers’ intention that the policies serve as

collateral to secure the repayment of the loans advanced to them and their

companies by Centier’s predecessor which existed at that time and which would

be subsequently advanced. It is clear that it was not their intent that the policies

would secure solely the repayment of personal or residential debts which did

not exist at the time and would not exist for seventeen years. The Scheffers did

not produce evidence demonstrating that Centier as the assignee was not

entitled to recover the surrender value of the life insurance policies. The trial

court did not err in granting Centier Bank’s motion for judgment on the

evidence.

[25] In addition, the Scheffers challenge the trial court’s award of attorney fees and

argue that their claim was not frivolous and that the court’s order does not

identify when it should have been apparent their claim was frivolous. They also

argue the affidavit of attorney fees is not sufficiently itemized. In response,

Centier argues that the Scheffers’ attorney should be jointly responsible to pay

its attorney fees and expenses as there was never any support for the Scheffers’

legal theory and the case should never have been filed, and it also requests

appellate attorney fees.

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[26] Ind. Code § 34-52-1-1 provides in part that the court in a civil action may award

attorney fees as part of the cost to the prevailing party if it finds that either party

brought an action or continued to litigate an action that is frivolous,

unreasonable, or groundless or litigated the action in bad faith. With respect to

an attorney fee award under Ind. Code § 34-52-1-1, we first review the trial

court’s findings of fact under the clearly erroneous standard, and we then

review de novo its legal conclusions. Knowledge A-Z, Inc. v. Sentry Ins., 857

N.E.2d 411, 423 (Ind. Ct. App. 2006), reh’g denied, trans. denied. We review the

trial court’s decision to award attorney fees and the amount of fees under an

abuse of discretion standard. Id. A claim is frivolous under Ind. Code § 34-52-

1-1 if it is made primarily to harass or maliciously injure another, if counsel is

unable to make a good faith and rational argument on the merits of the claim,

or if counsel is unable to support the action by a good faith and rational

argument for extension, modification, or reversal of existing law. Id. at 424. A

claim is unreasonable if, based upon the totality of the circumstances, including

the law and facts known at the time of filing the claim, no reasonable attorney

would consider the claim justified or worthy of litigation. Id. A claim is

groundless if no facts exist which support the legal claim relied upon and

presented by the losing party. Id. A claim is litigated in bad faith if the party

presenting the claim is affirmatively operating with furtive design or ill will. Id.

[27] The trial court found there was never a good faith basis to have proceeded with

this lawsuit as no 1985 residential mortgage with First Bank of Whiting ever

existed and that the Scheffers brought the action in bad faith and continued to

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 maintain the action when it became clearly apparent that it was frivolous,

unreasonable, and groundless. With respect to Bruce Scheffers’s testimony the

court also found it difficult to believe that such a successful businessman would

not have accurate knowledge of his personal financial dealings” and that “[t]his

matter has pended since 2012 and has involved much court time and a great

amount of attorney time and expense.” Appellant’s Appendix at 26.

[28] The evidence establishes that the warranty deed conveying the property to the

Scheffers and the mortgage signed by the Scheffers granting a security interest

in the Wexford Road property to Indiana Federal Savings and Loan

Association were both recorded with the Porter County Recorder on July 25,

1985, and thus the 1985 deed and mortgage have been part of the public record

since that date. The Scheffers nevertheless filed this lawsuit, designated their

own affidavit in response to Centier’s summary judgment request stating that

they had assigned the life insurance policies as collateral on a promissory note

and mortgage on their residential property in 1985, and did not dismiss their

action even after Centier produced evidence and Bruce Scheffer acknowledged

that the life insurance policy assignments were not given in connection with a

1985 residential loan from Centier’s predecessor. Bruce Scheffer testified in

some detail regarding his business and various business dealings over the years.

Based upon the evidence and testimony, we cannot conclude that the trial

court’s findings are clearly erroneous or that the court abused its discretion in

ruling that an award of attorney fees in favor of Centier is appropriate.

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[29] The affidavit of attorney fees produced by Centier’s counsel is sufficiently

itemized to assist the court in determining a reasonable amount of attorney fees.

We have noted that the hours worked and the rate charged are a common

starting point for determining the reasonableness of a fee. Stewart v. TT

Commercial One, LLC, 911 N.E.2d 51, 59 (Ind. Ct. App. 2009). The affidavit

states the total number of hours as 270.70, the rate as $250 per hour, and

includes separate lines for legal research, postage, copies, and mileage. It

alleges that the fees are reasonable based upon the attorneys’ experience, skill

required, and fees customarily charged in Lake County. The lawsuit has

pended since 2012 and the total $68,731.98 fee awarded by the trial court

appears reasonable.

[30] As for Centier’s request for appellate attorney fees, Appellate Rule 66(E)

provides in part that this court “may assess damages if an appeal, petition, or

motion, or response, is frivolous or in bad faith. Damages shall be in the

Court’s discretion and may include attorneys’ fees.” We may award appellate

attorney fees in our discretion where an appeal is permeated with meritlessness,

bad faith, frivolity, harassment, vexatiousness, or purpose of delay. Thacker v.

Wentzel, 797 N.E.2d 342, 346 (Ind. Ct. App. 2003). To prevail on a substantive

bad faith claim, a party must show that the appellant’s contentions and

arguments are utterly devoid of all plausibility. Id. We conclude that Centier

has shown, based on the evidence as set forth above and in the record, that the

Scheffers’ appeal with respect to the trial court’s ruling on its motion for

judgment on the evidence is meritless. We remand for a determination of a

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 reasonable appellate attorney fee award under these circumstances. We decline

to require the trial court to order that the Scheffers’ attorney be held jointly

responsible for an attorney fee award in favor of Centier.

Conclusion

[31] For the foregoing reasons, we affirm the trial court’s orders granting Centier’s

motion for judgment on the evidence and granting its request for attorney fees

and remand for a determination of reasonable appellate attorney fees consistent

with this opinion.

[32] Affirmed and remanded.

Baker, J., and Riley, J., concur.

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