Lake County Trust v. Advisory Plan Com'n

• Decision Date: 20 March 2008
• Docket Number: No. 37A03-0705-CV-230.,37A03-0705-CV-230.
• Citation: 883 N.E.2d 124
• Parties: LAKE COUNTY TRUST COMPANY, Trustee under Trust Agreement dated November 1, 2002 and known as the DSK Family Trust No. 5400; Lake County Trust Company, Trustee under Trust Agreement dated December 18, 2002 and known as Trust No. 5390; Lake County Trust Company, Trustee under Trust Agreement dated February 18, 2003 and known as P & M Land Trust No. 5444; Thomas N. Simstad, Maria K. Simstad and Kenneth Bachorski, Appellants-Petitioner, v. ADVISORY PLAN COMMISSION OF LAKE COUNTY, INDIANA, Appellee-Respondent.
• Court: Indiana Appellate Court

883 N.E.2d 124

LAKE COUNTY TRUST COMPANY, Trustee under Trust Agreement dated November 1, 2002 and known as the DSK Family Trust No. 5400; Lake County Trust Company, Trustee under Trust Agreement dated December 18, 2002 and known as Trust No. 5390; Lake County Trust Company, Trustee under Trust Agreement dated February 18, 2003 and known as P & M Land Trust No. 5444; Thomas N. Simstad, Maria K. Simstad and Kenneth Bachorski, Appellants-Petitioner, v. ADVISORY PLAN COMMISSION OF LAKE COUNTY, INDIANA, Appellee-Respondent.

No. 37A03-0705-CV-230.

Court of Appeals of Indiana.

March 20, 2008.

Stephen M. Maish, Patrick A. Mysliwy, Maish & Mysliwy, Hammond, IN, Attorneys for Appellants.

Anthony W. Overholt, Maggie L. Smith, Locke Reynolds, Indianapolis, IN, Attorneys for Appellee.

OPINION

SHARPNACK, Judge.

Lake County Trust Company, Trustee under Trust Agreement Dated November 1, 2002 and Known as the DSK Family Trust No. 5400, et al. ("Trust Company"), appeals the trial court's order concluding that the Advisory Plan Commission of Lake County ("Plan Commission") acted in bad faith but is immune from sanctions. Trust Company raises two issues, which we revise and restate as:

I. Whether the trial court erred by concluding that the Plan Commission is immune from the imposition of sanctions under Ind. Alternative Dispute Resolution Rules 2.7 and 2.10; and

II. Whether Trust Company may recover attorney fees under Ind.Code § 36-7-4-1010(a).

On cross appeal, the Plan Commission raises three issues, which we consolidate and restate as:

II. Whether the trial court erred when it concluded that the Plan Commission acted in bad faith.

We affirm in part and reverse in part.

The relevant facts follow. In 2004, Trust Company, seeking to develop a parcel of land as a residential subdivision, filed an Application for Primary Subdivision Approval with the Plan Commission requesting primary plat approval. The Plan Commission denied primary approval, and on December 15, 2005, Trust Company filed a Verified Petition for Writ of Certiorari with the Lake County Superior Court seeking judicial review of the Plan Commission's decision. On June 5, 2006, the trial court ordered the parties to mediate.

On July 24, 2006, after mediation, the parties signed a settlement agreement, which provided in part:

[Trust Company] shall submit a clean revised primary and sketch plan encompassing all of the agreements set forth [in the settlement agreement] and the [Plan Commission] shall at its next regular meeting, August 16, 2006, or a special meeting to be called, sooner and before August 4, 2006, shall [sic] approve this agreement and its engineering[.]

Appellant's Appendix at 66. On August 1, 2006, Trust Company submitted a clean, revised primary and sketch plan purporting to encompass "all of the agreements that were called for in [the] settlement agreement." September 6, 2006 Hearing Transcript at 21. However, at the meeting on August 16, 2006, the Plan Commission failed to approve the plan, deciding instead to defer its decision. Days later, Trust Company filed its Motion to Enforce Mediated Settlement Agreement and requested costs and attorney fees from the mediation.

On September 6, 2006, at a hearing on the motion, an attorney who had represented the Plan Commission at the mediation argued that attorneys of a public body under Indiana's Open Door Law are authorized only to "go to the mediation and to take back to a public body the recommendation [of a settlement agreement] and receive its vote." Id. at 25. The Plan Commission produced evidence that its attorneys had informed the Trust Company's attorneys that any agreement reached would have to "be approved by the Plant ] Commission in, an executive Session and then in a public meeting." Id. at 44. The Trust Company, on the other hand, argued that the Plan Commission's attorneys had the authority to bind it to a settlement and noted that the settlement agreement the parties signed made no mention of Indiana's Open Door Law, providing instead that the Plan Commission "shall[] approve" the settlement agreement. Id. at 30. A trustee of the. Trust Company testified that a Plan Commission attorney had informed him that the Plan Commission attorneys had "authority to settle" and that they would "have to have a public meeting where . . . the Board will let the public know that [the parties] reached a settlement . . . and they will have to approve it." Id. at 13-14. The Trust Company produced a letter dated July 11, 2006, from the Plan Commission's attorneys, which stated, "[we] also have full and complete settlement authority at this time to discuss a resolution of this matter." Appellant's Appendix at 121. Trust Company also produced an email sent on July 20, 2006, in which an attorney for the Trust Company asked, "Did you get settlement authority?" January 12, 2007 Hearing Respondent's Exhibit F. An attorney for the Plan Commission responded, "Yes. We are prepared to attend on [July 24, 2006]." Id.

After the hearing, the trial court issued findings of fact and conclusions thereon, concluding that "George C. Patrick [an attorney for the Plan Commission] had full inherent, apparent, and actual authority to bind the Plan Commission to the Settlement Agreement." Appellant's Appendix at 22. Accordingly, the trial court ordered the Plan Commission "to approve the primary plat and engineering and issue any necessary permits" and scheduled a hearing on monetary damages, costs of mediation, and attorney fees, which was later continued to January 12, 2007. Id. At a meeting on October 24, 2006, the Plan Commission approved the primary plat.

At the hearing on damages, sanctions, and attorney fees on January 12, 2007, the Plan Commission raised its immunity as a governmental entity from sanctions and punitive damages as an affirmative defense. The Plan Commission also presented evidence that the revised plat the Trust Company had submitted pursuant to the settlement agreement did not entirely conform to the terms of the agreement. Trust Company, however, claimed that its revised plat complied with the terms of the settlement agreement and noted further that the Plan Commission had never notified it of any deficiencies in its revised plat or in the performance of its obligations.

After the hearing, the trial court entered the following findings of fact and conclusions thereon:

1. The [Trust Company] and the Plan Commission entered into the written Settlement Agreement dated July 24, 2006 (Petitioners' Exhibit No. 5) (hereinafter "Settlement Agreement") during a court-ordered mediation.

2. The [Trust Company] submitted a revised primary and sketch plan (Respondent's Exhibit A) that encompassed all of the agreements set forth in the Settlement Agreement by August 1, 2006, and thereby fully complied with their obligations under Section 1.g. of the Settlement Agreement.

3. On or about August 1, 2006, employees of the Plan Commission reviewed the revised primary and sketch plan submitted by the [Trust Company] and determined that said plan complied with the Settlement Agreement and the applicable ordinances.

4. Under Section 1.f. of the Settlement Agreement, the Plan Commission withdrew all of its findings against the primary approval of the Deer Ridge South Subdivision in Lake County, Indiana (hereinafter "Subdivision"), and thereby agreed that the Subdivision, as modified by all of the agreements in the Settlement Agreement, fully complied with all applicable ordinances.

5. Section 1. g. of the Settlement Agreement stated that the Plan Commission "shall at its next regular meeting, August 16, 2006, . . . approve this agreement and its engineering."

6. The withdrawal of the findings under Section 1.f. of the Settlement Agreement and the mandatory language of Section 1.g. of the Settlement Agreement used mandatory language requiring the Plan Commission to give primary approval to the Subdivisions and to approve the engineering for the Subdivision by no later than August 16, 2006.

7. As shown in its minutes of the meeting (Petitioners' Exhibit No. 1), the Plan Commission met on August 16, 2006, and voted 7-0 to defer any action on the Subdivision for 30 days.

8. The [Trust Company] filed a Motion to Enforce the Mediation Agreement on August 21, 2006, which was ruled upon favorably by this Court on September 25, 2006.

9. The Court, in its order of September 25, 2006, specifically found that George C. Patrick (attorney for the [Plan Commission]) had ["]full inherent, apparent, and actual authority to bind the Plan Commission to the Settlement Agreement" See Order of 9/25/06, p. 4.

10. The Court set the matter for further hearing on damages, sanctions and costs under the Alternative Dispute Resolution Rules of Indiana.

11. At the hearing on damages and sanctions, the Plan Commission for the first time introduced evidence that the Petitioners had not fulfilled their obligations under the mediation agreement — this evidence was not presented at the hearing to enforce the mediation agreement.

12. The [Trust Company] contend[s] that . . .

". . . the Plan Commission and its attorneys violated the Indiana Rules for Alternative Dispute Resolution, intentionally disobeyed the mediation order to this Court, adversely affected the judicial process, misused the mediation process for improper purposes, including the purposes of delaying the approval of the Subdivision, intentionally causing the [Trust Company] to incur additional costs, and ascertaining the settlement concessions that [Trust Company] w[as] willing to make to reach a settlement by false pretenses (i.e., a representation that its attorney had actual authority to bind the Plan Commission), and otherwise engaged in bad faith and conduct that is calculatedly oppressive, obdurate, and obstreperous by their various actions, including but not limited to, the following:

a. By providing actual authority to bind the Plan Commission to its...