William Pond appeals the trial court's grant of summary judgment to Paul McNellis and Linda Chrzan and denial of his motion for summary judgment. Pond raises one issue, which we revise and restate as whether the trial court erred by granting McNellis and Chrzan's motion for summary judgment and denying Pond's motion for summary judgment concerning his request for restitution for attorney fees paid to McNellis and Chrzan, his ex-wife's attorneys. We affirm in part, reverse in part, and remand.
The relevant facts follow. This is the fourth appeal concerning the dissolution of marriage between Pond and Brenda Armentrout (formerly Pond). See Pond v. Pond, No. 02A03-9710-CV-379, 698 N.E.2d 886 (Ind. Ct.App. June 22, 1998), trans. denied; Pond v. Pond, 700 N.E.2d 1130 (Ind.1998); Armentrout v. Pond, No. 02A04-0008-CV-348, 747 N.E.2d 79 (Ind. Ct.App. April 19, 2001), trans. denied. On August 14, 1993, Pond and Brenda Armentrout entered into a postnuptial agreement, Paragraph 25 of which states:
Appellant's Appendix at 92. On November 17, 1993, Armentrout filed for dissolution. McNellis and Chrzan represented Armentrout in the dissolution proceedings, in which Armentrout challenged the validity of the postnuptial agreement.
On September 8, 1995, in the dissolution proceeding, the trial court approved the parties' postnuptial agreement and ordered the parties to perform its terms except for Paragraph 25, which the trial court held to be unconscionable. Pond v. Pond, 700 N.E.2d 1130, 1134 (Ind.1998). After rejecting Paragraph 25, the trial court ordered that Pond "should be responsible for the payment of attorney fees on behalf of [Armentrout] in the sum of $69,000.00 which is ordered paid in full by
Pond appealed the trial court's dissolution decree and raised the following issue, "whether the trial court erred by holding paragraph 25 of the postnuptial agreement, requiring the party unsuccessfully attacking the agreement to pay the attorney's fees incurred, unconscionable." In re Marriage of Pond, 676 N.E.2d 401, 405 (Ind.Ct.App.1997), affirmed in part and reversed in part, 700 N.E.2d 1130 (Ind. 1998).
While the appeal was pending, on October 16, 1995, McNellis and Chrzan filed a notice of intent to file and hold an attorney fee lien, which stated:
Appellant's Appendix at 120-121.
At some point, Pond and Armentrout received an offer to sell their real estate. Pond filed an emergency motion to escrow the proceeds of the sale of real estate and for a stay of the proceedings. On October 18, 1996, the trial court entered a ruling on Pond's motion, which stated:
Appellant's Supplemental Appendix at 123. Pond also filed with this court a petition
Appellant's Appendix at 161. Pond's petition was denied. At the closing, the gross amount due to the Ponds was reduced by $69,000.00 for the release of the attorney lien to Paul McNellis.
This court handed down its opinion regarding Pond's appeal on February 24, 1997 and affirmed the trial court's decision regarding Paragraph 25. In re Marriage of Pond, 676 N.E.2d at 401. The Indiana Supreme Court granted transfer and addressed the enforceability of Paragraph 25, the provision shifting attorney fees. The Indiana Supreme Court held:
Pond, 700 N.E.2d at 1137 (footnote omitted).
On December 2, 1998, Pond filed a request for a pre-trial conference, which listed only Armentrout as the respondent, and argued:
Appellant's Appendix at 69-70.
On October 5, 1999, the trial court entered the following order:
Id. at 197-199.
On November 2, 1999, Pond filed a motion to correct error and alternative request for certification of the trial court's order for interlocutory appeal. On November 29, 1999, the trial court entered the following order:
Id. at 205-206. Thus, the trial court refused to certify the order for interlocutory appeal.
On October 15, 2002, Husband and Wife filed a "stipulation and agreed judgment," which the trial court approved and entered. Id. at 109. The agreed judgment contained, in pertinent part:
STIPULATION AND AGREED JUDGMENT
------------------------------- Date of Award Award Amount ------------------------------- 28-Jul-94 $ 12,000.00 ------------------------------- 8-Sep-95 $ 69,000.00 ------------------------------- 27-Jun-97 $ 36,000.00 _______________________________ Total $117,000.00 -------------------------------
Id. at 109-119.
On October 10, 2003, Pond filed a complaint against Paul B. McNellis and Linda Peters Chrzan for recovery of attorney fees wrongfully paid. McNellis and Chrzan filed a motion to dismiss in which they argued that: (a) the trial court did not have jurisdiction to vacate the order awarding attorney fees with the agreed entry; (b) Pond's claim was barred under the doctrine of res judicata because Pond failed to join McNellis and Chrzan as parties needed for just adjudication in the previous action; (c) Pond and Armentrout could not stipulate to questions of law in the agreed entry; and (d) Armentrout was the proper party from whom Pond should seek restitution of any attorney fees wrongfully paid. The trial court ruled that McNellis and Chrzan's motion to dismiss would be treated as a motion for summary judgment. Pond filed a motion for summary judgment in which he argued that: (a) he was entitled to recovery of $117,000 from McNellis and Chrzan as a matter of law; and (b) his lawsuit was not barred. On June 9, 2005, the trial court issued an order that denied Pond's motion for summary judgment and granted McNellis and Chrzan's motion for summary judgment.
The sole issue is whether the trial court erred by granting McNellis and Chrzan's motion for summary judgment and denying Pond's motion for summary judgment concerning his request for restitution for attorney fees paid to his ex-wife's attorneys, McNellis and Chrzan. Our standard of review for a trial court's grant or denial of a motion for summary judgment is well settled. Summary judgment is appropriate only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C); Mangold ex rel. Mangold v. Ind. Dep't of Natural Res., 756 N.E.2d 970, 973 (Ind. 2001). All facts and reasonable inferences drawn from those facts are construed in favor of the nonmovant. Id. Our review of a summary judgment motion is limited to those materials designated to the trial court. Id. We must carefully review a decision on summary judgment to ensure that a party was not improperly denied its day in court. Id. at 974.
The fact that the parties made cross-motions for summary judgment does not alter our standard of review. Hartford Acc. & Indem. Co. v. Dana Corp., 690 N.E.2d 285, 291 (Ind.Ct.App.1997), trans. denied. Instead, we must consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law. Id.
A. McNellis and Chrzan's Motion for Summary Judgment
In McNellis and Chrzan's motion for summary judgment, they raised the following arguments: 1) Pond's claim was barred under the doctrine of res judicata because Pond failed to join McNellis and Chrzan as parties needed for just adjudication in the previous action; 2) Pond and Armentrout could not stipulate to questions of law; and 3) Armentrout was the proper party from whom Pond should seek restitution of any attorney fees wrongfully paid. We will address each argument separately.
1. Res Judicata
McNellis and Chrzan argue that the trial court's October 5, 1999, order precludes Pond from seeking restitution from them in this action due to res judicata. "For principles of res judicata to apply, there must have been a final judgment on the merits and that judgment must
We first discuss whether the October 5, 1999, order, which concluded that McNellis and Chrzan were not liable, constituted a final judgment on the merits in a court of competent jurisdiction. Pond argues that the October 5, 1999, order was "at best, an interlocutory order." Appellant's Reply Brief at 3. In the context of res judicata, Indiana courts have discussed the definition of a final judgment. "Final judgments dispose the subject matter of the litigation as to the parties so far as the court in which the action is pending has the power to dispose of it." Adams v. Marion County Office of Family and Children, 659 N.E.2d 202, 205 (Ind.Ct.App. 1995). Ind. Trial Rule 54 defines a "judgment" as "a decree and any order from which an appeal lies."
Here, after the trial court issued its October 5, 1999, order, Pond filed a motion to correct error and an alternative request for certification of the order for interlocutory appeal. The trial court denied Pond's motion to correct error and denied Pond's request for certification. The October 5, 1999, order was not appealable because the trial court denied Pond's request for the certification of the order for interlocutory appeal. See INB Nat'l Bank v. 1st Source Bank, 567 N.E.2d 1200, 1202 (Ind.Ct.App.1991) (interlocutory orders not appealable by right are not appealable at all in the absence of the certification of both the trial and appellate court). Further, "[t]he filing of or ruling on a motion to correct error cannot transform an interlocutory matter into a final judgment for purposes of appeal." Doperalski v. City of Michigan City, 619 N.E.2d 584, 585 (Ind.Ct.App.1993). Thus, the fact that the trial court denied Pond's motion to correct error does not transform an interlocutory matter into a final appealable judgment. See, e.g., Bayless v. Bayless, 580 N.E.2d 962, 966 (Ind.Ct.App.1991) (holding that the denial of a motion to correct errors did not transform the matter into a final judgment), reh'g denied, trans. denied. Under the circumstances, we conclude that the October 5, 1999, order was not a final judgment.
2. Agreed Judgment
McNellis and Chrzan argue that the trial court properly granted them summary judgment because Pond and Armentrout could not stipulate to a question of law. Specifically, McNellis and Chrzan argue that "Pond cannot, by mutual agreement with his former wife, among themselves, bind McNellis and Chrzan to repayment of attorney fees." Appellee's Brief at 14. "Because `questions of law are beyond the power of agreement by the attorneys or parties,' any agreement purporting to stipulate to a question of law is a nullity." Price v. Freeland, 832 N.E.2d 1036, 1043 (Ind.Ct.App.2005) (quoting Yelton v. Plantz, 226 Ind. 155, 165, 77 N.E.2d 895, 899 (1948)).
Pond counters that the "[s]tipulated [j]udgment does not (and, because the Trial Court refused to make them a party to the action below, could not) address Defendant's liability — that is the purpose of this action." Appellant's Reply Brief at 5. We agree with Pond.
The agreed judgment, as McNellis and Chrzan concede, did not address the "critical issue of restitution." Appellee's Brief at 14. The agreed judgment's only mention of any third parties stated, "[Armentrout] shall further provide such cooperation as [Pond] may reasonably require in connection with any claim against third parties for the reimbursement of attorney's fees, including providing to [Pond] a current financial statement." Appellant's Appendix at 119. Because the agreed judgment did not bind McNellis and Chrzan to repayment of attorney fees, we cannot say that Pond and Armentrout stipulated to a question of law regarding the restitution of fees by McNellis and Chrzan in the agreed judgment. See, e.g., Battershell v. Prestwick Sales, Inc., 585 N.E.2d 1, 4 (Ind.Ct. App.1992) (holding that the parties did not stipulate to a question of law in their agreed entry), trans. denied. Thus, McNellis and Chrzan's argument fails.
3. Restitution from Attorneys
Because the trial court had jurisdiction to modify the October 5, 1999, order, Pond's claim is not barred by res judicata, and the stipulation and agreed judgment did not stipulate to a question of law, we will address Pond's argument that McNellis and Chrzan are obligated to make full restitution to Pond for the fees improperly paid. The issue of whether a party can recover attorney fees paid to the other party's attorneys pursuant to a judgment that is reversed appears to be an issue of first impression in Indiana.
a. P.B. v. T.D.
The closest case on point appears to be P.B. v. T.D., 561 N.E.2d 749, 751 (Ind. 1990). In P.B., the Indiana Supreme Court addressed the issue of: "When a dissolution court orders one party to pay fees to the other's attorney, the fees are then paid, and the fee award reversed on appeal, must the party seeking reimbursement file a separate action against the lawyer?" P.B., 561 N.E.2d at 749. The court held "that the party seeking reimbursement need not start a second lawsuit
The court interpreted Ind.Code § 31-1-11.5-16 (West Supp.1990)
The Indiana Supreme Court stated,
Id. at 750-751. While the Indiana Supreme Court noted that "[w]hether the husband could have sought reimbursement from the wife's lawyer in the dissolution proceeding is not presented by the facts of this case," the court held that "one who received any benefit from the judgment must make as full restitution to the claimant as the circumstances permit." Id. at 751, 751 n. 3 (emphasis added).
b. Recovery from a Party
A review of Indiana law that addresses whether a party can recover money paid on a judgment from another party reveals that "[w]hen a party to an action pays a judgment that is later reversed on appeal, that party is entitled to restitution." P.B., 561 N.E.2d at 751 (relying on Thompson v. Reasoner, 122 Ind. 454, 24 N.E. 223 (1890)). See Dickensheets v. Kaufman, 29 Ind. 154, 154 (1867) (holding that "[m]oney voluntarily paid upon a judgment may, if inequitably retained after reversal of the judgment, be recovered back"); Chicago & S.E. Ry. Co. v. Adams, 26 Ind.App. 443, 445, 59 N.E. 1087, 1088 (1901) ("When appellant shows that the judgment which was the consideration for the payment has been declared a nullity, the law raises an obligation against appellee, who received the benefit of the judgment, to make restitution.").
"[T]he equitable concept of unjust enrichment necessarily inheres any time the remedy of restitution is sought by a litigant, and we read our Indiana precedent accordingly." Community Care Centers, Inc. v. Sullivan, 701 N.E.2d 1234, 1239 (Ind.Ct.App.1998), reh'g denied, trans. denied. "To prevail on a claim of unjust enrichment, a plaintiff must establish that a measurable benefit has been
While Indiana law has addressed restitution against another party, Indiana law has not specifically addressed whether a party can obtain restitution from the party's attorney. However, as the parties suggest, the Restatement of Restitution is instructive.
The Restatement of Restitution § 74 addresses judgments subsequently reversed and provides:
The comments to § 74 reveal that a "judgment creditor" and a "real party in interest" are liable for restitution. Comment d of § 74 states, in pertinent part: "Restitution of money from judgment creditor. If payment has been made to the judgment creditor or to his agent, or to an officer who has paid the judgment creditor, upon reversal of the judgment the payor is entitled to receive from the creditor the amount thus paid with interest." Comment k of § 74 states:
Comment h of § 74 addresses restitution from an attorney of a judgment creditor and indicates that an attorney as a "bona fide purchaser" is not liable for restitution. Comment h states:
Pond argues that McNellis and Chrzan are liable because they are judgment creditors and real parties in interest. McNellis and Chrzan argue that Comment h should govern because they were bona fide purchasers. Thus, to determine whether McNellis and Chrzan are liable for restitution, we will discuss whether McNellis and Chrzan are: (a) bona fide purchasers; (b) judgment creditors; or (c) real parties in interest.
1. Bona Fide Purchaser
The Restatement of Restitution § 172 addresses a bona fide purchaser and states:
Indiana law has also addressed the concept of a bona fide purchaser. "[T]o qualify as a bona fide purchaser, one has to purchase in good faith, for a valuable consideration, and without notice of the outstanding rights of others." Keybank Nat'l Ass'n v. NBD Bank, 699 N.E.2d 322, 327 (Ind.Ct.App.1998). "The law recognizes both constructive and actual notice." Bank of New York v. Nally, 820 N.E.2d 644, 648 (Ind.2005).
The relevant inquiry here is whether McNellis and Chrzan had notice of Pond's outstanding rights. On September 8, 1995, the trial court rejected Paragraph 25 as unconscionable and ordered that Pond "should be responsible for the payment of attorney fees on behalf of [Armentrout] in the sum of $69,000.00 which is ordered paid in full by [Pond] sixty (60) days from the date hereof." Appellant's Appendix at 104-105. Pond appealed the trial court's ruling that refused to enforce Paragraph 25 of the postnuptial agreement. See Pond v. Pond, 700 N.E.2d 1130 (Ind.1998).
On October 16, 1995, while the appeal was pending, McNellis and Chrzan filed a notice of intent to file and hold an attorney fee lien. Appellant's Appendix at 120-121.
Appellant's Appendix at 128.
On October 18, 1996, the trial court ruled on Pond's motion as follows:
Appellant's Supplemental Appendix at 123. Pond also filed with this court a petition for immediate temporary stay, which was denied. Appellant's Appendix at 161.
Based on Pond's appeal of the trial court's failure to enforce Paragraph 25 and his attempts to prevent the payment of the $69,000 directly to McNellis and Chrzan, we conclude that McNellis and Chrzan had notice of the potential of Pond's outstanding rights. Thus, McNellis and Chrzan were not bona fide purchasers for value. See Dunnington v. Elston, 101 Ind. 373, 374-375 (1885) (holding that where the only title of a purchaser rests upon a judgment of a court of record, he is bound to take notice of the source of his title, and he is charged with notice of all the incidents to which the judgment is subject); Smith v. Cottrell, 94 Ind. 379 (1884) (holding that one who purchased while there was a right to a new trial outstanding was not a purchaser in good faith); Grubb v. Childers, 705 N.E.2d 180, 182 (Ind.Ct.App. 1998) (holding that knowledge supports the inference that a third party had constructive notice of appellee's potential interest), reh'g denied; see also Twogood v. Franklin, 27 Iowa 239 (1869) (holding that defendants made their purchases and received their deeds while the appeal was pending, "and therefore with knowledge of the plaintiff's rights and equities").
2. Judgment Creditor
We next examine whether McNellis and Chrzan were judgment creditors. A "judgment creditor" is defined as "[a] person in whose favor a money judgment has been entered by a court of law and who has not yet been paid. One who has obtained a judgment against his debtor, under which he can enforce execution. A person in whose favor a money judgment is entered or a person who becomes entitled to enforce it. Owner of an unsatisfied
Pond relies on In the Matter of the Marriage of Mason, 48 Wn.App. 688, 740 P.2d 356 (1987), for the proposition that McNellis and Chrzan were judgment creditors. In Mason, the court addressed the issue of whether the trial court could order restitution of sums paid to an attorney under a judgment when that judgment and the award of attorney fees is subsequently reversed on appeal. Mason, 740 P.2d at 357. McNellis and Chrzan argue that Mason is not persuasive because the underlying reason for the restitution in Mason was a rule of appellate procedure that mandated repayment of sums paid to an attorney when a judgment is reversed on appeal and that Indiana has no such rule. The Mason court did hold that "restitution of the attorney's fees ordered in this case is a matter of right under RAP 12.8;" however, the court also held that the trial court "had discretion under general equitable principles to enter its restitution order after this court's decision vacating the earlier award of attorney's fees." Id. at 358. In addition, the court held that an attorney was "a judgment creditor in his own right pursuant to the trial court's order under RCW 26.09.140," which provided, "The court may order that the attorney's fees be paid directly to the attorney who may enforce the order in his name." Mason, 740 P.2d at 357-358.
We find the reasoning in Mason persuasive. At the time that the trial court awarded McNellis and Chrzan attorney fees, Ind.Code § 31-1-11.5-16 (Supp. 1995),
Ind.Code § 31-1-11.5-16 provided that McNellis and Chrzan could enforce the order awarding attorney fees from Pond. The dissolution court's September 8, 1995 order stated, "[Pond] should be responsible for the payment of attorney fees on behalf of [Armentrout] in the sum of $69,000.00 which is ordered paid in full by [Pond] sixty (60) days from the date hereof." Appellant's Appendix at 105. Further, McNellis and Chrzan filed an attorney lien. Thus, McNellis and Chrzan meet the definition of a "judgment creditor." See BLACK'S LAW DICTIONARY 844 (6th ed. 1990) (A "judgment creditor" is defined as "[o]ne who has obtained a judgment against his debtor, under which he can enforce execution. A person in whose favor a money judgment is entered or a person who becomes entitled to enforce it."); see also State ex rel. McNabb v. Allen Superior Court No. 2, 225 Ind. 402, 406-409, 75 N.E.2d 788, 791-792 (1947) (holding that as a general rule an attorney is not a party to litigation however "[t]here are circumstances . . . when an attorney's right to a fee may be protected, such as where a lien is provided by statute"). Here, like in Mason, McNellis and Chrzan were judgment creditors under Ind.Code
B. Pond's Cross Motion for Summary Judgment
Pond filed a motion for summary judgment in which he argued that: (a) he was entitled to recovery from McNellis and Chrzan as a matter of law; and (b) his lawsuit was not barred. Pond asked that judgment be entered against McNellis and Chrzan in the amount of $117,000.
Because we have already determined that Pond could seek restitution from McNellis and Chrzan, we need only address the effect of the agreed judgment on McNellis and Chrzan. Pond argues that McNellis and Chrzan were not necessary parties to the dissolution action for the purpose of determining the fees that were improperly paid because the determination of the proper amount of attorney fees is a question of fact.
Courts in this state have repeatedly held that, absent fraud or lack of consent, a trial court must approve an agreed judgment. State ex rel. Prosser v. Indiana Waste Systems, Inc., 603 N.E.2d 181, 186 (Ind.Ct.App.1992). Further, in State v. Huebner, 230 Ind. 461, 468, 104 N.E.2d 385, 388 (Ind.1952), the Indiana Supreme Court precluded the review of such agreements:
Pond cites Mercantile Nat'l Bank of Indiana v. Teamsters Union Local No. 142 Pension Fund, 668 N.E.2d 1269 (Ind. Ct.App.1996), for the proposition that the terms of an agreed order are binding on a creditor of one of the parties. In Mercantile Nat'l Bank of Indiana, Highland Lumber & Supply, Inc. ("Highland") and the Union were parties to a collective bargaining agreement that obligated Highland to pay pension fund contributions to the Union on behalf of its members. Mercantile Nat'l Bank of Indiana, 668 N.E.2d at 1271. Two lenders commenced a foreclosure action against Highland. Id. at 1270. The lenders and Highland entered into an agreed judgment, which provided:
Id. The Union was unaware of the agreed judgment. Id. Highland failed to pay pension fund contributions through March 20, 1995. Id. at 1271. The Union unsuccessfully attempted to collect the pension fund arrearage from Highland. Id.
On March 30, 1995, the Union filed a motion to intervene and a motion for relief from judgment and urged the trial court to find that the direction to "pay all payroll" included payment of delinquent pension fund contributions. Id. The trial court granted the Union's motion and interpreted the agreed judgments to require Lenders
On appeal, we held that by intervening, the Union is treated as an original party and is bound by the prior agreed judgments between the lenders and Highland. Id. at 1272. We also held:
On the other hand, this court has found agreed judgments nonbinding as to a nonparty. In GKN Co. v. Starnes Trucking, Inc., 798 N.E.2d 548 (Ind.Ct. App.2003), this court addressed the issue of whether a defendant could be held to an agreed judgment when the defendant was not a party to that judgment. In GKN, Larry Magness, a truck driver employed by subcontractor Starnes, fell while working on a construction project for which GKN was the general contractor. GKN, 798 N.E.2d at 549. Magness sought recovery from GKN, and the trial court approved an agreed judgment between Magness and GKN, wherein Magness accepted responsibility for 20% of the negligence and GKN accepted responsibility for 80% of the negligence. Id. at 551. After settling with Magness, GKN brought an indemnity complaint against Starnes. Id. at 550. On appeal from the grant of summary judgment to Starnes, this court recognized that a material issue of fact remained regarding Magness's negligence, reasoning as follows:
Id. at 555-556. We find GKN instructive and conclude that it would be unfair to hold McNellis and Chrzan liable for the amount of attorney fees determined in the agreed judgment and that a genuine issue of material fact exists regarding the amount of attorney fees incurred directly from the challenge to the validity of Pond and Armentrout's postnuptial agreement. See, e.g., Tack's Steel Corp. v. ARC Const. Co., Inc., 821 N.E.2d 883, 889 (Ind.Ct.App.
In summary, the trial court should have denied McNellis and Chrzan's motion for summary judgment. The trial court should have granted Pond's motion for summary judgment to the extent that McNellis and Chrzan were liable for restitution, but denied summary judgment regarding the amount of attorney fees, which remains an issue to be decided by the trial court.
For the foregoing reasons, we reverse and remand the trial court's grant of summary judgment to McNellis and Chrzan and affirm in part, and reverse in part, the trial court's denial of summary judgment to Pond.
Affirmed in part, reversed in part, and remanded.
DARDEN and BAILEY, JJ. concur.
Because we conclude that the October 5, 1999, order was interlocutory, the trial court did not lose jurisdiction after ninety days. See State v. Collier, 165 Ind.App. 239, 247, 331 N.E.2d 784, 789 (1975) (holding that trial court's order that stated that the trial court "finds against plaintiff as to the following defendants ..." was not a final judgment and trial court was not deprived of jurisdiction to modify entry after ninety days). Thus, the trial court had jurisdiction to modify the October 5, 1999, order, and McNellis and Chrzan's summary judgment argument to the contrary fails.