October 8, 2017

Self-Serving Testimony Doesn’t Prevent Groundless Claim Finding; Landmark Legacy, LP v. Runkle

Category: Indiana Law Review | Author: | Share:

Usually, when a case goes to trial, there’s some merit to both side’s positions. But a litigant may occasionally be so belligerent that he’s willing to take his case to trial, no matter the merit. This case shows that such a party may pay for his unreasonableness.

Fahlsing hired Runkle, the owner of Financial, to provise financial planning and asset protection advice. Runkle recommended that Fahlsing and his wife set up a family limited partnership. Attorney Wray drafted up the documents, and Fahlsing signed them.

Fahlsing later asked Runkle to set up another limited partnership. Again, Attorney Wray drafted the documents and Fahlsing signed them. Fahlsing then gave his two daughters each a 44% limited partnership interest in the second limited partnership.

After this, Fahlsing, in his role as general partner, engaged in a pattern of self-dealing. His daughters eventually filed suit against him. Fahlsing countersued. During the course of that suit, Fahlsing filed a false affidavit, and the case eventually settled.

Fahlsing then sued Runkle, Attorney Wray, and everyone else associated with giving him financial advice, claiming a breach of fiduciary duty, negligence, and malpractice. The defendants asked for attorney’s fees, arguing that the case was groundless and frivolous. Eventually, the case went to trial on the attorney-fee issue, after which the trial court awarded fees of over $55,000.

On appeal, Fahlsing argued that his claims were not groundless and frivolous. But the Court held that it was bound by the trial court’s factual findings, and the trial court found that Fahlsing was an inveterate liar. Fahlsing’s allegations were supported solely by his self-serving testimony, and he was not a credible witness. For example, Fahlsing’s testimony contradicted his interrogatory responses and was inconsistent with his own actions. He also admitted to untrue statements in his complaint and in an affidavit. Fahlsing astonishingly testified: “My attorney can lie, cheat and steal, and I can’t?” Because the trial court found that Fahlsing was not credible, the Court affirmed the finding that his claims were frivolous, unreasonable, and groundless.

The defendants sought appellate attorney’s fees, too. The Court noted that it could award appellate attorney’s fees for either procedural or substantive bad faith, and addressed each of these grounds. First, it concluded that there was no procedural bad faith because the appellate brief was truthful and forthright about Fahlsing’s credibility issues, even though this was “downplayed to an almost cursory reference.” But it did find substantive bad faith.

As noted by the trial court, a simple investigation could have revealed that Appellants’ arguments were utterly devoid of all plausibility and Appellants’ position was not consistent with reasonable advocacy grounded in established legal principles. Therefore, we conclude that this appeal was merely another attempt to harass the parties involved. Accordingly, we remand this cause to the trial court for a determination of reasonable appellate attorney fees to be awarded to Appellees.

Lessons:

  1. The fact that a case is tried does not protect a party from a finding that his claims were frivolous or groundless.
  2. An appellate court will offer great deference to the trial court’s findings of fact when reviewing an order awarding attorney’s fees under I.C § 34-52-1-1(b).