Senior Mkt. Dev. LLC v. Titan Fin. Grp. LLC, 82A01-1103-PL-138

CourtCourt of Appeals of Indiana
PartiesSENIOR MARKET DEVELOPMENT, LLC and AHREN BAUMGART, Appellants-Defendants, v. TITAN FINANCIAL GROUP, LLC, Appellee-Plaintiff.
Docket NumberNo. 82A01-1103-PL-138,82A01-1103-PL-138
Decision Date22 December 2011

SENIOR MARKET DEVELOPMENT, LLC and AHREN BAUMGART, Appellants-Defendants,
v.
TITAN FINANCIAL GROUP, LLC, Appellee-Plaintiff.

No. 82A01-1103-PL-138

COURT OF APPEALS OF INDIANA

December 22, 2011


Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of establishing
he defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEYS FOR APPELLANTS:

ALLYSON R. BREEDEN
RHETT D. GONTERMAN
Ziemer, Stayman, Weitzel & Shoulders
Evansville, Indiana

ATTORNEYS FOR APPELLEE:

CATHY A. NESTRICK
CHAD M. SMITH
Bamberger, Forman, Oswald & Hahn, LLP
Evansville, Indiana

APPEAL FROM THE VANDERBURGH CIRCUIT COURT
The Honorable Carl A. Heldt, Judge
Cause No. 82C01-1002-PL-76

MEMORANDUM DECISION - NOT FOR PUBLICATION

CRONE, Judge

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Case Summary

Senior Market Development, LLC ("SMD"), and Ahren Baumgart appeal the trial court's judgment awarding $11,712.48 in attorney's fees and expenses to Titan Financial Group, LLC ("Titan"), on Titan's complaint for breach of contract. On appeal, SMD and Baumgart contend that the trial court erred when it awarded attorney's fees to Titan despite concluding that Titan had failed to prove it suffered other damages as a result of the breach. Titan responds that a contract between the parties provides the legal justification for an award of attorney's fees under the circumstances presented. We agree with Titan and affirm the trial court's judgment. We remand to the trial court for an assessment of appellate attorney's fees against SMD and Baumgart.

Facts and Procedural History1

In March of 2008, Baumgart and Andrew Rice were co-owners of two separate entities, SMD and Titan, which operated as field marketing organizations ("FMOs"). An FMO markets products for companies with which it has contracted and recruits and trains brokers to sell products for the companies. SMD and Titan entered into a contract with US Healthcare Holdings, LLC (hereinafter referred to as "Welborn"), 2 pursuant to which SMD and Titan together agreed to act as the FMO for Welborn's Medicare Advantage healthcare

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and prescription drug plans. Welborn agreed to pay SMD and Titan a commission of $200 the first year for each new customer's plan and $100 each plan year that a customer renewed.

In August of 2009, Baumgart and Rice decided to sever their business relationship. They entered into an "Agreement for Exchange of Limited Liability Company Interests" (the "Agreement") on August 6, 2009. Appellants' App. at 15-25. Pursuant to the Agreement, Baumgart would own 100% of SMD and Rice would own 100% of Titan. In addition, Titan assigned to SMD all of its right, title, and interest in the Welborn contract. As consideration for such assignment, SMD agreed to pay Titan 40% of the FMO commission received from Welborn for all members enrolled prior to March 31, 2010. Pursuant to Paragraph 4(f) of the Agreement, during the time period that net commission is owed to Titan, SMD agreed that it would neither terminate the current and future Welborn contracts nor take any action which would cause Welborn to terminate the contracts. Id. at 17.

On December 17, 2009, Baumgart, on behalf of SMD, sent a letter to Welborn resigning as FMO effective April 1, 2010. SMD was dissatisfied with Welborn and Welborn was dissatisfied with SMD for what was viewed as a "bad selling season." Tr. at 72. After SMD terminated the Welborn contract, Titan filed a complaint against SMD and Baumgart for breach of contract and seeking declaratory judgment on February 10, 2010.3 In the breach of contract action, Titan sought damages for "the lost commission resulting from the breach

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of the Agreement by Baumgart and SMD" as well as "reasonable attorneys' fees." Appellants' Br. at 1. On April 12, 2010, SMD and Baumgart filed their answer and affirmative defenses, including the defense that Titan had not suffered any damage as result of their breach of the Agreement. The trial court held a bench trial on December 2, 2010. Thereafter, on December 30, 2010, the trial court entered the following judgment:

The Court having heard the evidence and argument of counsel, and being duly advised, now finds that the Plaintiff proved by a preponderance of the evidence that the Defendants breached paragraph 4(f) of the August 6, 2009 Agreement. The Court further finds that the Plaintiff failed to prove damages by a preponderance of the evidence, with the exception of attorney fees and expenses.
IT IS, THEREFORE, CONSIDERED, ORDERED, ADJUDGED AND DECREED BY THE COURT that the Plaintiff recover of and from the Defendants the amount of Eleven Thousand Seven Hundred Twelve Dollars Forty-Eight Cents ($11,712.48) in attorney fees and expenses.
IT IS FURTHER ORDERED that the Defendants recover no attorney's fees or expenses.

Appellants' App. at 1. SMD and Baumgart filed a motion to correct error which the trial court denied following a hearing on March 8, 2011. This appeal ensued. We will state additional facts in our discussion when necessary.

Discussion and Decision

Here, the trial court entered a general judgment in favor of Titan. We will affirm a general judgment "if it can be sustained upon any legal theory consistent with the evidence." UFG, LLC v. Southwest Corp., 784 N.E.2d 536, 543 (Ind. Ct. App. 2003), trans. denied. We do not reweigh the evidence or judge witness credibility, but we consider only the evidence

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most favorable to the judgment along with all reasonable inferences that can be drawn therefrom. Id.

Moreover, our scope of review when considering a damage award in a breach of contract case is limited. Coffman v. Olson & Co., 906 N.E.2d 201, 210 (Ind. Ct. App. 2009), trans. denied. We do not reweigh evidence or judge witness credibility, and will consider only the evidence favorable to the award. Id. The award cannot be based on speculation, conjecture, or surmise, and must be supported by probative evidence. Id. We will reverse the trial court's award only when it is not within the scope of the evidence of record. Id. at 210-11.

The parties do not dispute that SMD and Baumgart breached Paragraph 4(f) of the Agreement when SMD terminated the Welborn contract during the time period that net commission was owed to Titan. Nevertheless, SMD and Baumgart maintain that Titan cannot prevail on a claim for breach of contract, and consequently recover attorney's fees, merely because it proved breach of a term of the Agreement. Specifically, SMD and Baumgart contend that Titan was required to prove that it suffered damages as a direct result of the breach before Titan could also recover attorney's fees.

SMD and Baumgart correctly state that to recover for breach of contract, a plaintiff must prove that (1) a contract existed; (2) the defendant breached the contract, and (3) the plaintiff suffered damage as a result of the defendant's breach. Collins v. McKinney, 871 N.E.2d 363, 370 (Ind. Ct. App. 2007). Consequential damages may be awarded on a breach of contract claim when the non-breaching party's loss flows naturally and probably from the

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breach and was contemplated by the parties when the contract was made. Indianapolis City Market Corp. v. MAV, Inc., 915 N.E.2d 1013, 1024 (Ind. Ct. App. 2009). However, SMD and Baumgart erroneously assume that attorney's fees and expenses are not recoverable in this case in the absence of an award of other damages. Specifically, SMD and Baumgart argue that attorney's fees cannot be considered "damages arising from the defendant's breach." Appellants' Reply Br. at 3. Despite their urging, we need not decide whether the attorney's fees and expenses incurred by Titan in pursuing its breach of contract claim should be considered damages that flowed naturally and probably from the breach.4 Instead, the Agreement of the parties specifically provided for the recovery of attorney's fees incurred in connection with any breach, nonfulfillment, or default in the performance of any covenant of the Agreement, and neither the trial court nor this Court need look any further than the Agreement itself.

We begin by recognizing that generally, Indiana follows the American Rule, which requires each party to pay his or her own attorney fees. Steward v. TT Commercial One, LLC, 911 N.E.2d 51, 58 (Ind. Ct. App. 2009), trans. denied. However, the parties may shift the obligation to pay such fees through a contract or agreement, and courts will enforce the agreements as long as they are not contrary to law or public policy. Id. We agree with Titan

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that Paragraph 10 of the parties' Agreement entitled "Indemnification" supports the trial court's award of attorney's fees to Titan in this case. Appellant's App. at 20.

Indemnity has been defined as "[t]he right of an injured party to claim reimbursement for its loss, damage or liability from a person who has such a duty." BLACK'S LAW DICTIONARY 784 (8th ed. 2004). Rights of indemnification can arise in three contexts: (1) express contractual obligation, (2) statutory obligation, or (3) common law implied indemnity. Sears, Roebuck, & Co. v. Boyd, 562 N.E.2d 458, 461 n.2 (Ind. Ct. App. 1990). Generally, an indemnity agreement...

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