Another Indiana Decision Concerning Attorney’s Fees In A Foreclosure Action

Lesson. A claim for attorney’s fees should not be disproportionate to the amount in controversy.

Case cite. Garber v. Blair, 224 N.E.3d 970 (Ind. Ct. App. 2023)

Legal issue. Whether the trial court’s award of attorney’s fees was erroneous.

Vital facts. The Garber opinion arose out of a loan enforcement action involving a promissory note and mortgage. The essential terms of the loan were that the borrower would pay the lender $180K in monthly installments of $2K with no interest. There were also late fee and attorney’s fees provisions. The borrower defaulted on the loan, and the lender’s counsel sent multiple demand letters that, in part, outlined the amounts owed. Much of the dispute both pre-suit and during the litigation surrounded an interpretation of the loan documents as it related to what the lender could and could not recover from the borrower. After about a year, the lender had incurred approximately $61,000 in attorney’s fees.

Procedural history. The trial court entered judgment against the borrower on the lender’s claim for $105,200, consisting of $97,000 in principal, $3,200 in late charges and $5,000 in attorney’s fees. In its order, the trial court stated, in part, that the heart of the dispute centered only on the late charges claim. The lender appealed the attorney’s fees calculation.

Key rules. Indiana courts have held that "a trial court may consider the amount involved in determining the reasonableness of the requested fees.” Indiana appellate courts review a trial court’s award of attorney’s fees “for an abuse of discretion.”

My 10/5/23 post entitled Lender’s Recovery Of Attorney’s Fees Related To Collateral Actions Denied further outlines Indiana law related to a recovery of fees.

Holding. The Indiana Court of Appeals affirmed the trial court.

Policy/rationale. The lender contended the trial court incorrectly found that the attorney’s fees incurred - $61,000 - were disproportionate to the actual amount in controversy - $105,200. The Court of Appeals disagreed and felt that the fees arose mainly out of the lender’s misinterpretation of his rights under the loan documents. Both the trial court and the Court of Appeals concluded that the true amount in controversy was only $3,200 – the late fee claim. Also, the Court of Appeals concurred with the trial court’s finding that the lender had waived certain claims for damages and/or failed to provide the borrower with notice and an opportunity to cure.

Related posts.

• Indiana Court Discusses Test For Recovery Of Attorney's Fees In Action Against Guarantor
• Attorney Fee Awards in Indiana

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Part of my practice involves representing parties in disputes arising out of loans in default.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at [email protected]. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.