Klebes v. Forest Lake Corp.

Citation607 N.E.2d 978
Decision Date28 January 1993
Docket NumberNo. 32A01-9206-CV-167,32A01-9206-CV-167
PartiesJoseph M. KLEBES and Patricia Klebes, Appellant-Plaintiffs, v. FOREST LAKE CORPORATION, An Indiana Corporation, Charles Rehn, Richard Billings, Diane Billings, Paul Schmalz, Pat Schmalz, Sue Lollar, Robert Lollar, Tania Doran, Charles James, Lita James, and Charles L. Falvey, Appellee-Defendants.
CourtCourt of Appeals of Indiana

Frank E. Spencer, James C. Spencer, Indianapolis, for appellant-plaintiffs.

George W. Hopper, Mark R. Galliher, Hopper, Wenzel & Galliher, Indianapolis, for appellee-defendants.

BAKER, Judge.

Today we descend into the supposedly tranquil waters of settlement agreements in an effort to explore and clarify the effect and enforceability of these agreements. 1 Our descent is occasioned by the apparent settlement of a nuisance action involving a private lake situated upon real estate owned by defendant-appellee Forest Lake Corporation, a not-for-profit corporation formed to maintain and control Forest Lake for the benefit of homeowners in the Forest Lake subdivision. The individual defendant-appellees, Dr. Charles Rehn, Richard and Diane Billings, Paul and Pat Schmalz, Robert and Sue Lollar, Tania Doran, Dr. Charles and Lita James, and Charles L. Falvey, all own homes surrounding Forest Lake in the Forest Lake subdivision, and are members of the Forest Lake Corporation (we will collectively refer to Forest Lake Corporation and the individual defendants as the Corporation). Plaintiff-appellants Joseph and Patricia Klebes own a house on the west end of Forest Lake adjacent to the Forest Lake subdivision.

Even though their property was situated outside the Forest Lake subdivision, the Klebeses sued the Corporation claiming (1) they should be considered members of the Corporation, and (2) the Corporation breached a contractual duty to remove silt which had accumulated in the lake abutting the Klebeses' property. In response, the Corporation first asserted, inter alia, that the Klebeses had no claims against it because the Klebeses were not members of the Corporation and second, filed a counterclaim for attorney fees arguing the Klebeses' lawsuit was frivolous. The case was set for bench trial to be held on June 11, 1991.

The two parties engaged in extensive settlement negotiations, which we will recount below in detail. On June 6, 1991, after the Klebeses' attorney advised the court that the case had been settled, the court cancelled the trial scheduled for the next week. Record at 9. Two months later, however, the Klebeses filed a pro se notice advising the court the case had not been settled.

The Corporation disagreed, and on October 25, 1991, it filed a motion seeking to enforce the settlement agreement it believed it had reached and to impose sanctions. Following a hearing, the court found the parties had amicably settled their lawsuit and granted the Corporation's motion. The court awarded the Corporation $10,000.00 pursuant to the settlement agreement and $8,447.03 for attorney fees the Corporation incurred after the settlement agreement was reached.

The Klebeses appeal that judgment and raise three issues for our review, which we consolidate and restate as:

I. Whether sufficient evidence supports the trial court's judgment that the parties had entered into a complete and final settlement agreement.

II. Whether the trial court erred in awarding attorney fees to the Corporation.

The Corporation raises a third issue, which we restate as:

III. Whether the Corporation is entitled to recover appellate attorney fees from the Klebeses pursuant to Ind. Appellate Rule 15(G).

Statement of Facts

At the outset, we note our recitation of the facts is sprinkled with references to Forest Lake, silt, and real estate. We have included this background information in order to clarify the genesis of the action; we emphasize, however, that this appeal is primarily about settlements. With this in mind, the facts most favorable to the judgment follow.

The Klebeses' original complaint was prepared and filed by their attorney Danny Meek, who represented the Klebeses until his withdrawal as counsel on March 22, 1991. Shortly thereafter, the Klebeses retained attorney William Harrington. On several occasions during May of 1991, Harrington discussed various settlement proposals with the Corporation's attorneys.

On June 4, 1991, Harrington offered to settle the Klebeses' claims and the Corporation's counterclaim during a telephone conversation with Mark Galliher, an attorney for the Corporation. Later that day, Galliher confirmed by letter that the settlement offer included the following terms:

1. The Klebeses' amended complaint and the Corporation's counterclaim would be dismissed with prejudice;

2. The Klebeses would execute a release of all claims against the Corporation;

3. The Klebeses would pay $10,000.00 to the Corporation; and

4. The Klebeses would discontinue their request to be admitted as members of the Corporation.

Record at 422, 457.

At the hearing on the Corporation's motion to enforce the settlement agreement, Harrington testified the Klebeses had authorized him to settle the case on these terms. Harrington memorialized this authorization in his June 4, 1991 letter to the Klebeses, which stated, in pertinent part:

This letter confirms our last telephone conversation this afternoon. At the conclusion of that conversation, you authorized us to make a settlement offer to the defendants on the following terms:

1. You pay $10,000.00 toward the defendants' attorney fees; and

2. Both parties agree to a joint stipulation of dismissal with prejudice.

Shortly after speaking with you, I conveyed that offer to Mark Galliher. Mark assured me that he would convey our offer to George Hopper [counsel for the Corporation] so that George could speak with the defendants about that offer tonight.

Also at the conclusion of our last conversation today, I informed you that if this settlement proposal is not accepted, we will withdraw from this case. You then indicated that, in that case, you would represent yourself at next week's trial. I informed you that I felt it was not in your best interest to proceed to trial, particularly without counsel.

The Klebeses concede they authorized Harrington to settle under the terms of the June 4, 1991 letter. They contend, however, that they did so with the stipulation that "all parties would resolve the disputes." Record at 444, 445. On the basis of this stipulation, the Klebeses argue the settlement agreement should have included provisions for (1) their membership in the Corporation, and (2) the removal of silt from the lake abutting their property.

On June 5, 1991, Hopper orally accepted the Klebeses' settlement offer during a telephone conversation with Harrington. This agreement was memorialized in a letter sent later that day from Hopper to Harrington, which stated, in pertinent part:

To confirm our telephone conversation of this afternoon, I wish to confirm that my clients have authorized me to accept your clients' settlement offer. Specifically, I understand that our clients have mutually agreed to a full and complete settlement of any and all claims upon the following terms and conditions:

(a) Mr. and Mrs. Klebes will pay to the defendants the sum of $10,000.00;

(b) the parties agree to file a stipulation with the court setting forth that the parties have reached a full and complete settlement of any and all claims and that the court should enter an order dismissing the amended complaint and the counterclaim, with prejudice;

(c) Mr. and Mrs. Klebes will execute a release of any and all claims, whether known or unknown, which have been or could have been asserted in the above referenced action or otherwise concern the subject matter of the above referenced action.

Finally, it is my understanding that the parties have agreed to settle any and all disputes between them concerning Forest Lake, the Forest Lake Corporation, and its members. As we discussed, I will be preparing draft settlement documents for your review and approval.

The court cancelled the June 11, 1991 trial after Harrington advised the court on June 6, 1991, that the Klebeses' lawsuit had been settled. Record at 9. Thereafter, when the Klebeses received the settlement documentation, they refused to execute the agreement. Instead, Alvin Katzman, the Klebeses' third attorney, contacted Hopper and suggested an "addition" to the Klebeses' settlement offer under which the Klebeses would pay an additional $5000.00 to dredge the Klebeses' portion of the lake; in return, the Klebeses wished to become members of the Corporation. Katzman also proposed changing the language of the release clause so that the claims being released by the Klebeses included only presently existing claims, not future ones.

After receiving the Klebeses' proposal, Hopper responded by letter dated June 24, 1991, as follows:

Thank you for your letter of June 19, 1991. As you requested, I forwarded your letter containing your clients' new offer to settle the case to my clients for their consideration and response. Nevertheless, I wanted to clarify that your clients previously made a settlement offer which was accepted by my clients. For some reason, your clients have elected not to execute the settlement documents and proceed forward to consummate the settlement. Instead, your clients now wish to supplement the previously accepted settlement offer and have retained you as their new attorney. Obviously, the actions of your clients following acceptance of their offer of settlement forces my clients to incur additional attorney fees and expenses which my clients believe should be justly born by Mr. and Mrs. Klebes.

After sending this letter, Hopper spoke to Katzman and Hopper orally agreed to the changes in the releases concerning the presently existing and future claims language.

Whether the Klebeses thought no...

To continue reading

Request your trial
37 cases
  • Koval v. Simon Telelect, Inc., 94S00-9710-CQ-552
    • United States
    • Supreme Court of Indiana
    • March 31, 1998
    ...policy in favor of settlement agreements. Manns v. State, Dep't of Highways, 541 N.E.2d 929, 932 (Ind.1989); Klebes v. Forest Lake Corp., 607 N.E.2d 978, 982 (Ind.Ct.App.1993). II. "Protection" of Subrogees Under the Workers' Compensation The second certified question is: Under the portion ......
  • Hefty v. All Other Members of the Certified Settlement Class, 61S05-9507-CV-799
    • United States
    • Supreme Court of Indiana
    • June 2, 1997
    ...Court, 621 N.E.2d 1113 (Ind.1993).2 The judicial policy of Indiana strongly favors settlement agreements. See Klebes v. Forest Lake Corp., 607 N.E.2d 978, 982 (Ind.Ct.App.1993), trans. denied; Germania v. Thermasol, Ltd., 569 N.E.2d 730, 732 (Ind.Ct.App.1991). Cf. Manns v. State of Indiana ......
  • Mitchell v. Mitchell
    • United States
    • Supreme Court of Indiana
    • June 12, 1998
    ...precisely this sort of needless drain on the resources of the prevailing party and the judicial system. Cf. Klebes v. Forest Lake Corp., 607 N.E.2d 978, 983-84 (Ind.Ct.App.1993) (affirming award of attorney's fees under the statute against plaintiffs who refused for several months to honor ......
  • Koval v. Simon-Telelect, Inc.
    • United States
    • U.S. District Court — Northern District of Indiana
    • August 14, 1997
    ...contained language that appears to signal a retreat from the historic breadth of an attorney's agency. In Klebes v. Forest Lake Corp., 607 N.E.2d 978 (Ind.Ct.App.1993), the clients had authorized their attorney to attempt to settle a case. The attorney did so, but the clients disliked the s......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT