Opinion
23A-CT-1490
05-29-2024
Pedro Modesto Velazquez, Appellant v. Medloh Development, LLC, et al., Appellees
ATTORNEY FOR APPELLANT Amy L. Cueller Striebeck Law P.C. Indianapolis, Indiana ATTORNEY FOR APPELLEES Graham T. Youngs Steuerwald, Witham, & Youngs, LLP Danville, Indiana
Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision is not binding precedent for any court and may be cited only for persuasive value or to establish res judicata, collateral estoppel, or law of the case.
Appeal from the Marion Superior Court The Honorable Timothy W. Oakes, Judge Trial Court Cause No. 49D02-1412-CT-39332
ATTORNEY FOR APPELLANT
Amy L. Cueller
Striebeck Law P.C.
Indianapolis, Indiana
ATTORNEY FOR APPELLEES
Graham T. Youngs
Steuerwald, Witham, & Youngs, LLP
Danville, Indiana
Crone and Pyle Judges concur.
MEMORANDUM DECISION
Bailey, Judge.
Case Summary
[¶1] Pedro Modesto Velaquez sued Medloh Development, LLC ("Medloh"), and its sole members, Jeffrey M. Rudolf and Russell E. Cunning, (collectively, "Sellers") to rescind a Purchase Agreement for real estate and recover damages. Velaquez appeals the trial court's order reducing the amount of his attorney fee award, and Sellers cross-appeal the trial court's denial of their motions for directed verdict and summary judgment.
[¶2] We affirm in part, reverse in part, and remand with instructions. Issues
[¶3] Velazquez raises the issue of whether the trial court erred in determining the amount of his attorney fee award.
[¶4] On cross-appeal, we address the following restated issues raised by Sellers: I. Whether the trial court erred when it denied Sellers' motion for a directed verdict.
II. Whether the denial of Sellers' motion for partial summary judgment on Velazquez's breach of contract claim is moot.
III. Whether the trial court erred when it awarded attorney fees to Velazquez. Facts and Procedural History
[¶5] In January 2008, Medloh was formed by Rudolf and Cunning as a limited liability company, with Rudolf and Cunning as its only members, each with a "50%" interest. Ex. at 207-08. In January 2011, Rudolf and Cunning obtained proposals from two different companies for work needed on the foundation of property located at 6845 Doris Drive, Indianapolis, IN ("the Property"), which they considered buying. Each of the two proposals indicated proposed work to be done, including installation of "wall anchors" or "Fortress carbon fiber straps" to all four basement walls, to fix the Property's foundation problems. Ex. v. I at 115, 117. However, neither proposal was accepted by Rudolf or Cunning.
[¶6] In April 2011, Medloh purchased and obtained title to the Property. Rudolf and Cunning subsequently made repairs to the Property but did not obtain permits for doing so.
[¶7] In connection with a January 2012 listing of the Property for sale, Rudolph and Cunning executed a Seller's Residential Real Estate Sales Disclosure form ("Sales Disclosure"). The Sales Disclosure was first executed on January 20, 2012, and represented that there were no "foundation problems with the structure," no "structural problems with the building," and no "moisture and/or water problems in the basement, crawl space area, or any other area." Id. at 5-6. The Sales Disclosure was provided to Velazquez, who was considering the purchase of the Property.
[¶8] On May 12, 2012, Velazquez entered into a Purchase Agreement ("the Agreement") with Rudolf and Cunning to purchase the Property. The Agreement does not refer to Medloh at all. The Agreement contains an "Inspection" clause under which Velaquez may obtain an independent inspection of the Property and has fourteen days from the date of the Agreement ("the Inspection/Response Period") within which to respond to the inspection report in writing to the Sellers. Id. at 168. The Inspection clause further provides, in relevant part,
If the Buyer does not comply with any Inspection/Response Period or make a written objection to any problem revealed in a report within the applicable Inspection/Response Period, the Property shall be deemed to be accepted. A REASONABLE TIME PERIOD TO RESPOND IS REQURED TO PREVENT MISUSE OF THIS ACCEPTANCE PROVISION. Factors considered in determining reasonable time periods include, but are not limited to, availability of responding party to respond, type and expense of repairs requested and need of responding party to obtain additional opinions to formulate a response."Id. (emphasis in original).
[¶9] The Agreement also contains an "Attorney's Fees" provision stating, in full:
Any party to this Agreement who is the prevailing party in any legal or equitable proceeding against any other party brought under or with relation to the Agreement or transaction shall be additionally entitled to recover court costs and reasonable attorney's fees from the non-prevailing party."Id. at 170.
The parties both assert that an Amendment to Purchase Agreement they executed on June 14, 2012, provided that "Sellers Jeff Rudolf and Russell E. Cunning have authority to be able to enter into a sales contract for property as representatives of Medloh Development, Ind." Appellant's App. v. II at 109. However, it does not appear that document was admitted into evidence at the trial. See Ex. v. I at 166-172.
[¶10] On May 15, 2012, Acapulco Home Inspections LLC inspected the Property for Velazquez and prepared a "Property/Building Inspection Report." Id. at 7. Concerning the Property's foundation, Tim Foddrill, the Acapulco Home inspector, noted that the basement inspection was "limited due to finished or partially finished surface(s)." Id. at 19. Foddrill also noted that the Property's basement/crawl space "was dry but has signs of serious water problems, . . . [m]ultiple [s]ump pumps in use (including a battery backup) probably indicating that the basement has had water issues in the past and may again in the future." Id. Foddrill also observed: "[T]he back wall of the basement in the mechanical room has been stabilized to prevent collapse. It is not known to what extent the wall was leaning or how effective this remedy has been. It is also not known what other walls may have been addressed in this or some other manner as inspection is not possible due to the finishes." Id.
[¶11] Rudolf and Cunning had provided Valezquez and his realtor a list of work that Rudolf and Cunning had purportedly performed as part of their renovation of the Property which included "Waterproofing for basement walls," and "New sump pump system." Id. at 38. Further, Rudolf and H&R Excavating-which was owned by Rudolf-presented an Invoice to Valezquez and his realtor for work on the Property that included "Installation perimeter drain, and sealed basement walls." Id. at 39.
[¶12] On May 21, 2012-in reliance on Rudolf's and Cunning's Sellers Disclosure and "assurances"-Valezquez executed an "Independent Inspection Response - Buyer's Inspection Response #1" ("Inspection Response"). Tr. v. III at 100; Ex. v. 1 at 23. Because Valezquez had been assured by Rudolf and Cunning by way of their Sales Disclosure that there were no moisture or water issues in the basement and no foundation or structural issues, and because Valezquez relied on those "assurances," he did not request any action from Rudolf and Cunning concerning the Acapulco Home inspector's observation regarding the back wall of the basement and past water issues in the basement. Id. Rather, Valezquez listed five more minor conditions to be corrected, following which he would "release[] and hold[] harmless the Seller[s], ... from any and all liability, including attorney's fees and costs, arising out of or related to any inspection, inspection result, repair, disclosed defect or deficiency affecting the Property..." Ex. v. 1 at 23.
Valezquez frequently cites to his Verified Complaint in support of his Statement of Facts. However, "it is necessary for the verified complaint to be introduced into evidence in order for it to become a part of the evidence," and Valezquez's complaint was not admitted into evidence. Indianapolis Dairymen's Co-op. v. Bottema, 79 N.E.2d 409, 411 (Ind. 1948) (quotation and citation omitted). Similarly, both parties cite to materials they designated for summary judgment but did not subsequently admit as evidence at trial; such materials would only be relevant to Sellers' cross-appeal of the denial of summary judgment. Our citations to the facts in this opinion are to the evidence presented at trial, as contained in the appellate record.
[¶13] On June 27, 2012, Rudoph signed a certification at the end of the Sales Disclosure stating that "the condition of the [P]roperty is substantially the same as it was when the Seller's Disclosure was originally provided to the Buyer." Id. at 27. Valezquez closed on the Property on that same date.
[¶14] In August 2012, Valezquez began to notice water on the floor of the basement. In January of 2013, the basement was "flood[ed]" with water due to a sump pump failure. Tr. v. 3 at 108. In correcting that problem, Valezquez had the saturated first two feet of the drywall on all four basement walls removed and discovered "foundation defects" that were not visible before the drywall was removed. Id. at 113. Specifically, Valezquez could see that "the foundation ... got shifted" on the south and west walls. Id. at 116.
[¶15] In January 2013, Matthew Holbrook, a structural engineer, inspected the Property while the basement walls were still exposed. Holbrook observed that the west wall had a "significant bow inward" with a lot of patching on the wall but no reinforcement, and it required "significant repair." Id. at 228; Ex. v. 1 at 109. Holbrook stated that, prior to his January 2013 inspection, someone had done a "partial fix" to the basement walls, but "they didn't do anything with that west wall." Tr. v. 4 at 14. He testified that "whoever[] cover[ed] those basement walls had to have known that the west wall was in bad shape . . . because the repair material was not original to the wall." Tr. v. III at 235. Holbrook observed that, "at several locations in all walls around the perimeter of the basement[,] the first full block above the slab had displaced into the basement as much as 2"." Ex. v. 1 at 109. In his January 28, 2013, report regarding his inspection findings, Holbrook stated: "It is obvious that whoever built or contracted the finished basement walls to be built kn[e]w they were covering a structural defect that at a minimum requires the ability to be visually monitored occasionally." Id.
Holbrook's December 21, 2020, Affidavit, which Velazquez filed as evidence designated for summary judgment, was not admitted into evidence at trial. Therefore, we disregard Velazquez's numerous citations to that document in his Statement of Facts.
[¶16] On December 3, 2014, Velazquez filed his Verified Complaint for Recission of Purchase Agreement in which he raised: Count I, alleging fraud and deception; Count II, alleging negligence; Count III, alleging breach of contract; and Count IV, alleging breach of warranty. For his claims of fraud and deception, Velazquez requested, among other relief, treble damages under the Crime Victims Relief Act ("CVRA") and an award of his attorney fees pursuant to the attorney fee provision of the Purchase Agreement.
[¶17] On September 6, 2016, the Sellers filed a motion for summary judgment on all claims asserted in the Complaint. Velazquez filed his response in opposition to the motion. The court conducted a hearing on the motion for summary judgment on December 12, 2016. The trial court issued its order on January 6, 2017, granting summary judgment in favor of the Sellers on Velazquez's negligence and breach of warranty claims and denying summary judgment on his claims of fraud and deception, and breach of contract. On September 29, 2019, Velazquez filed a motion for summary judgment on his fraud, deception, and breach of contract claims. In support of that motion, Velazquez filed, among other things, his attorney's Affidavit noting that his hourly rate was $220.00 and his fees as of that date were $76,397.15. On December 2, 2019, Velazquez filed a stipulation withdrawing his motion for summary judgment. On January 6, 2021, Velazquez filed another motion for summary judgment on his fraud and deception claims, and Sellers filed a response and cross-motion for summary judgment. Following a hearing, on May 21, 2021, the trial court denied the motion and cross-motion for summary judgment.
[¶18] Velazquez pursued his claims of fraud and deception at a jury trial beginning on July 26, 2022, and concluding on July 29, 2022. Velazquez elected not to pursue his breach of contract claim. Prior to trial, the parties stipulated that the trial court would address the issue of attorney's fees after the trial was concluded.
[¶19] At the conclusion of Velazquez's case in chief, Sellers moved for a directed verdict which was denied by the trial court, and the case proceeded with the jury. At the conclusion of the trial, the jury returned a verdict in favor of Velazquez on his claims of fraud and deception against the Sellers and awarded him damages in the amount of $60,000.00. The jury crossed out the following language on the verdict form:
We, the Jury, further decide that additional damages, as punishment to the Defendants, are $ 0 . (These additional damages may not exceed two times (2X) the actual amount and the total amount of damages may not be greater than three times (3X) than the actual damages sustained for Plaintiff.)[.]
[¶20] Thereafter, Velazquez submitted documents in support of his requested costs and attorney's fees at an hourly rate of $275, all of which totaled $241,465.70. The supporting documents included an affidavit of Velazquez's lawyer, S. Christopher Striebeck, a summary of attorney "and legal support staff" time spent on the case, and a detailed Time/Billing Report. Appellant's App. v. III at 149. The trial court conducted a hearing on that request on September 27, 2022, at which counsel presented arguments and Rudolf and Cunning briefly testified about efforts to settle the case. The trial court took the matter under advisement and subsequently set the matter for another hearing "regarding contemplation of an award of attorney's fees." Appellant's App. v. III at 204. Following the February 23, 2023, hearing which the trial court did not put on the record, it made the following notation in its Chronological Case Summary ("CCS"):
Parties in person and by counsel. Court instructs as to attorney fees award. Plaintiff has 30 days to submit a new order without paralegal and administrative fees in them at original $220/hour. Defendant has 15 days to respond and Plaintiff another 15 days for a reply. Court notes Defendants' continued objection over any attorney fees being awarded, and notes continued objection from Plaintiff over rate awarded by the Court and the exclusion of paralegal and administrative fees. -Judge OakesAppellant's App. v. II at 32.
[¶21] On March 23, 2023, Velazquez filed his submission in accordance with the trial court's February 23 order and in support of his right to an award of reasonable attorney's fees as a result of the jury's verdict in his favor. Velazquez's submission included an affidavit of Striebeck and a Time and Fee Entries Report which reflected a reduced total attorney's fees of $191,576.00 (in accordance with the court's order to use an hourly rate of $220.00 and remove paralegal and administrative fees from the overall calculation of attorney's fees). Sellers filed their response, and Velazquez filed his Reply in which he broke down the allocation of fees associated with his deception claim. Sellers then filed a surreply.
[¶22] On May 31, 2023, the trial court entered final judgment against Sellers and in favor of Velazquez in "the total amount of $87,030.26, (consisting of $60,000 awarded by the jury, attorneys' fees of $27,000, and costs of $30.26)." Appealed Order at 2. This appeal and cross-appeal ensued.
Discussion and Decision Denial of Motion for Directed Verdict
We address Sellers' cross-appeal claims first because Velazquez's claim on appeal-i.e., a challenge to the amount of attorneys' fees and costs-is only at issue if the trial court's rulings challenged by Sellers in their cross-appeal are correct.
[¶23] At the close of Velazquez's case, Sellers moved for a directed verdict (also known as a judgment on the evidence) under Indiana Trial Rule 50(A). A directed verdict is only "proper where all or some of the issues are not supported by sufficient evidence." Think Tank Software Devel. Corp. v. Chester, Inc., 30 N.E.3d 738, 744 (Ind.Ct.App. 2015), trans. denied. On appeal,
[w]e will examine only the evidence and the reasonable inferences that may be drawn therefrom that are most favorable to the nonmovant, and the motion should be granted only where there is no substantial evidence supporting an essential issue in the case. If there is evidence that would allow reasonable people to differ as to the result, judgment on the evidence is improper.Id. (citations omitted).
[¶24] Sellers moved for a directed verdict on the grounds that Velazquez had released Sellers from "all liability relating to the foundation and moisture conditions" by failing to object to such conditions before signing the Inspection Response, which contained a Release from liability. Appellee's App. v. IV at 157. There is no question that Velazquez signed such a release. Moreover, such exculpatory agreements are not against public policy and will be enforced, with certain exceptions. See, e.g., Ransburg v. Richards, 770 N.E.2d 393, 396 (Ind.Ct.App. 2002), trans. denied. One such long-standing exception is where the release from liability is obtained by fraud. See Shumate v. Lycan, 675 N.E.2d 749, 752 (Ind.Ct.App. 1997) (noting a release will be void as against public policy "when there is evidence of fraud or misrepresentation."), trans denied. Under those circumstances, the release will be held void. Id.; see also Dawson v. Hummer, 649 N.E.2d 653, 660 (Ind.Ct.App. 1995) (quotations and citation omitted) (noting exculpatory clauses "are only enforceable so long as they are knowingly and willingly made and free from fraud").
[¶25] Here, Sellers claim that Velazquez presented insufficient evidence that the Release he signed in the Inspection Response was void because it was obtained based on Seller's fraudulent misrepresentations. The elements of fraudulent misrepresentation are: (i) a material misrepresentation of past or existing facts by the party to be charged (ii) which was false, (iii) which was made with knowledge or reckless ignorance of the falseness, (iv) which was relied upon by the complaining party, and (v) which proximately caused the complaining party injury. Johnson v. Wysocki, 990 N.E.2d 456, 460-61 (Ind. 2013).
[¶26] Velazquez presented evidence that Rudolf and Cunning knew about the structural, foundation, and water problems with the Property as early as January 2011 when they obtained proposals regarding the extensive repairs necessary to all four basement walls; those proposals were admitted into evidence as Plaintiff's Exhibits 25 and 26. Velazquez also presented evidence through testimony and a report by Holbrook that Rudolf and Cunning did not do all the repairs necessary to fix the foundation, structural, and water problems of which they were aware before they covered up the walls with drywall. Yet, on the January 30, 2012, Sales Disclosure and again on the June 27, 2012, recertification of the accuracy of the Sales Disclosure, Rudolf and Cunning clearly represented to Velazquez that there were no "foundation problems with the structure," no "structural problems with the building," and no "moisture and/or water problems in the basement, crawl space area, or any other area." Ex. v. 1 at 6, 27.
[¶27] Velazquez also presented evidence that Sellers' assurances on the Sales Disclosure could not be confirmed through independent inspection because Sellers had covered up with drywall the defects they knew to exist; therefore, Velazquez was left to rely on Sellers' fraudulent misrepresentations in the Sales Disclosure that there were no foundation, structure, or water problems with the Property. And Velazquez presented evidence that he suffered damages to the Property as a result of Sellers' fraudulent misrepresentations in the Sellers Disclosure and his reliance thereon.
Sellers contend that Velazquez may not rely, as a matter of law, on assurances in the Sellers Disclosure regarding the condition of the property, citing Indiana Code Section 32-21-5-9 (providing that a Sellers Disclosure is not a warranty and may not be used as a substitute for a later inspection) and Dickerson v. Strand, 904 N.E.2d 711 (Ind.Ct.App. 2009). However, Sellers fail to acknowledge our Supreme Court's more recent decision agreeing with the Dickerson dissent and clarifying that, although the Disclosure Statutes bar a claim for breach of warranty, they do not similarly bar a claim of fraudulent misrepresentation of the condition of the property on a Disclosure Statement. Johnson, 990 N.E.2d at 463.
[¶28] Velazquez presented sufficient evidence that he completed the Release in the Inspection Response in reliance, to his detriment, on Sellers' fraudulent misrepresentations, and, therefore, the Release is void as a matter of public policy. See Shumate, 675 N.E.2d at 752. The trial court did not err when it denied Sellers' motion for a directed verdict/judgment on the evidence.
Denial of Cross-Motion for Partial Summary Judgment
[¶29] Sellers also challenge the trial court's denial of their cross-motion for partial summary judgment on Velazquez's breach of contract claim. However, Velazquez abandoned that claim in the trial court; therefore, it is moot. See, e.g., Spells v. State, 225 N.E.3d 767, 777 (Ind. 2024) (noting a matter becomes moot "when the controversy at issue has been ended, settled, or otherwise disposed of so that the court can give the parties no effective relief"); see also Bookwalter v. Indiana Election Commission, 209 N.E.3d 438, 443 (Ind.Ct.App. 2023) (noting a case is moot "when it is no longer live and the parties lack a legally cognizable interest in the outcome or when no effective relief can be rendered"), trans. denied; Matter of A.C., 198 N.E.3d 1, 9 (Ind.Ct.App. 2022) ("An issue is moot when no effective relief can be rendered to the parties before the court."), trans. denied.
We address below Sellers' claim that attorney fees under the contract may not be awarded when there is no claim for breach of contact.
Entitlement to Attorney's Fee and Costs Award
[¶30] Sellers challenge the trial court order granting attorney fees and costs to Velazquez pursuant to a provision in the Purchase Agreement and as allowed under CVRA. Because we uphold the award of attorney fees as allowed under the Purchase Agreement, we do not address the parties' claims regarding attorney fees under CVRA.
We note that Velazquez has not waived this claim by failing to raise it in the trial court, as Sellers seem to claim. Rather, as Sellers concede, Velazquez raised his right to attorney fees under the Purchase Agreement provision in his briefing on the request for such fees, and Sellers had the opportunity to, and did, respond to that claim in their surreply.
[¶31] The Purchase Agreement contains an Attorney's Fees provision which states: "Any party to this Agreement who is the prevailing party in any legal or equitable proceeding against any other party brought under or with relation to the Agreement or transaction shall be additionally entitled to recover court costs and reasonable attorney's fees from the non-prevailing party." Ex. v. 1 at 170. As a panel of this Court recently held, this precise attorney's fees language in a Purchase Agreement not only applies to breach of contact claims, but also to any legal proceeding brought in relation to the Agreement or transaction. Zitzka v. Brogdon, 222 N.E.3d 1025, 1030-31 (Ind Ct. App. 2023), trans. denied. Zitzka further noted that the Sellers Disclosure form is "a key part of the overall 'transaction,' i.e., the sale of the house." Id. at 1030. Thus, Velazquez was entitled to seek attorney fees under the Purchase Agreement for his fraud and deception claims related to the Sellers Disclosure even though he abandoned any breach of contract claim.
[¶32] However, Sellers note that the attorneys fee provision only applies to parties to the Purchase Agreement, and they contend-without citation to any relevant legal authority-that only Medloh, not Rudolf and Cunning, is the selling party. This argument ignores the undisputed fact that, under the plain and clear language of the Purchase Agreement itself, the only "Sellers" were Rudolf and Cunning. Ex. v. I at 172. In fact, the Purchase Agreement signed by Rudolf and Cunning as "Sellers" and Velazquez as "Buyer" on May 11 and 12, 2012, does not mention "Medloh" anywhere in the entire contract, much less in the section where "Sellers" Rudolf and Cunning accept Velazquez's offer to buy. Id.
[¶33] The parties agree that they signed an Amendment to the Purchase Agreement on June 14 and 15, 2012, which states, "Sellers Jeff Rudolf and Russell E. Cunning have authority to be able to enter into a sales contract for property as representatives of Medloh Development, LLC," although that Amendment does not appear to have been admitted at trial. However, even if there is evidence that Medloh is the Seller and Rudolf and Cunning signed the Purchase Agreement as members of the LLC, that does not affect Rudolf's and Cunning's liability; as Velazquez points out, Rudolf and Cunning are still liable under Indiana law for their own fraudulent misrepresentations in the Sellers Disclosure that was made during the sale of the Property. See I.C. § 23-18-3-3(a) ("A member, a manager, an agent, or an employee of a limited liability company may be personally liable for the person's own acts or omissions.").
[¶34] The trial court did not err when it found that Velazquez, as the prevailing party, is entitled to his costs and reasonable attorney's fees from Rudolf and Cunning, per the attorney's fee provision of the Purchase Agreement. Amount of Attorney's Fee and Costs Award
[¶35] Velazquez appeals the trial court's reduction of his attorney's fee award from the requested amount.
Any request for an award of attorney fees must be reasonable, and "[t]he determination of reasonableness of an attorney's fee necessitates consideration of all relevant circumstances." Bruno v. Wells Fargo Bank, N.A., 850 N.E.2d 940, 950 (Ind.Ct.App. 2006). Trial courts enjoy wide discretion in awarding attorney fees, and we generally review a trial court's decision to award attorney fees and the amount of the award for an abuse of discretion. Cavallo v. Allied Physicians of Michiana, LLC, 42 N.E.3d 995, 1008 (Ind.Ct.App. 2015). An abuse of discretion occurs "when the trial court's decision is clearly against the effect of the facts and circumstances before the court." Id.R.K.W. Homes, Inc. v. Hutchinson, 198 N.E.3d 405, 414 (Ind.Ct.App. 2022), trans. denied.
[¶36] In determining a reasonable amount of attorney's fees, consideration should be given to the nature and difficulty of the litigation; the time, skill, and effort involved; the fee customarily charged for similar legal services; the amount involved; the time limitations imposed by the circumstances; and the result achieved in the litigation. R.L. Turner Corp. v. Wressell, 44 N.E.3d 26, 39 (Ind Ct. App. 2015), trans. denied; see also Rules of Prof. Conduct, Rule 1.5(a) (listing similar, non-exclusive factors to consider in determining reasonableness of attorney fees). While the "trial judge possesses personal expertise he or she may use when determining reasonable attorney's fee[,]" Ponziano Const. Serv. Inc. v. Quadri Enter., LLC, 980 N.E.2d 867, 876-77 (Ind.Ct.App. 2012), the "amount [of the attorney fee award] must nonetheless be reasonable and supported by the evidence[,]" In re Eiteljorg, 951 N.E.2d 565, 571 (Ind.Ct.App. 2011) (citation omitted), trans. denied. The reasonableness determination "must be based upon the facts of each particular case." Citizens Action Coalition of Ind., Inc. v. PSI Energy, Inc., 664 N.E.2d 401, 410 (Ind.Ct.App. 1996). Reasonable attorney fees may include a paralegal's time, so long as there is evidence that the paralegal "is performing legal services that involve professional legal skills." Daimler Chrysler Corp. v. Franklin, 814 N.E.2d 281, 287 (Ind.Ct.App. 2004) (citing Ind. Code § 1-1-4-6). "However, it is error to award support staff costs as an element of reasonable attorney's fees." Id.
[¶37] Following the jury verdict in his favor, Velazquez filed with the court supporting documentation for the costs and attorney's fees to which he was entitled as the prevailing party. The supporting documents included an affidavit of his lawyer stating the number of attorney hours spent on the case at an hourly rate of $275, and the number of "legal support staff time" at hourly rates between $95-135. Appellant's App. v. III at 149. The affidavit attached a document referred to as "Exhibit B," which was described as a "Time/Billing Report" and which "detail[ed] each and every entry by date, legal professional, task or tasks completed, time spent, time billed, billing rate, and billable amount from March 28, 2016, through September 11, 2022, the total of which [was] $216,465.70." Id. at 149, 155. However, Exhibit B did not state which legal professionals were lawyers, paralegals, or other legal support staff.
[¶38] At the September 27, 2022, hearing on attorney fees, counsel for each party presented arguments. Rudolf and Cunning also presented testimony regarding efforts to settle the case, but no additional evidence was submitted. That is, other than the documentation submitted by Velazquez, there was no evidence of reasonable hourly rates within the local community for similar work by similarly experienced legal counsel, and there was no evidence disputing the number of hours of legal work claimed by Velazquez. Nevertheless, following another hearing that was not placed on the record, the trial court entered on the Chronological Case Summary ("CCS") a "hearing journal entry" in which it ordered Velazquez to submit a new attorney's fees request without including "paralegal and administrative fees" and using an hourly attorney's fee rate of $220. Appellant's App. v. II at 32. Based on this order entered in the CCS, it appears the trial court found $220 to be the reasonable hourly attorney fee rate.
[¶39] On March 23, 2023, Velazquez submitted an updated attorneys' fee request with supporting documentation seeking $196,856.00 in attorney's fees, based on an hourly rate of $220.00, for all time spent on the case, and seeking $9,191.33 in court costs. Medloh submitted a response to that request in which it asserted, among other claims, that Velazquez was only entitled to time spent on the claims on which he prevailed-i.e., Count I, fraud and deception.
[¶40] In an updated affidavit dated April 24, 2023, Velazquez's counsel submitted documentation distinguishing time spent on his fraud and deception claim. According to that documentation, Velazquez incurred $141,671.64 in attorneys' fees on his Count I claim. The included attorney's affidavit noted that the fee total for the Count I claim on which he prevailed was calculated as follows:
* 59% of all attorney time from the inception of representation of Velazquez up to and including the date the trial court issued its order in favor of Medloh on the claims of negligence and breach of warranty;
* 79% of total attorney fees billed thereafter and up to the time Velazquez decided to proceed to trial solely on Count I;
* 100% of attorney time billed thereafter.
[¶41] The trial court's final order awarded Velazquez only $27,000 in attorney fees, without any explanation for the drastic reduction in the amount of fees requested on April 24, 2023. Given the evidence presented, we hold the trial court abused its discretion when it entered that fee amount. Under the plain terms of the Purchase Agreement, Velazquez was entitled to his "court costs and reasonable attorney's fees" incurred on the claims for which he was the "prevailing party." Ex. v. I at 170. Velazquez prevailed on his Count I claim, and there is no evidence to contradict his documentation regarding the time spent on that claim. Therefore, Velazquez is entitled to an attorney fee award of $141,671.64.
While Medloh filed a "Surresponse" to Velazquez's updated fee request, it did not argue or show that Velazquez's calculation of time spent on Claim I was erroneous. App. v. V at 157. Moreover, to the extent the trial court's award included paralegal fees, Velazquez was entitled to such fees as the Purchase Agreement fee provision does not exclude them. See Shell Oil Co. v. Meyer, 684 N.E.2d 504, 525 (Ind.Ct.App. 1997) (noting it is reasonable to include paralegal fees in an attorney fee award), aff'd in part, vacated in part on other grounds, 705 N.E.2d 962 (Ind. 1998).
[¶42] The trial court also erred to the extent it awarded Velazquez only $30.26 in costs, again without explanation. The Purchase Agreement clearly entitles the prevailing party to not only his attorney fees but also his "court costs." Ex. v. I at 170. And Velazquez's costs are not limited by statute, as Medloh argued in the trial court, because he is not seeking costs pursuant to a statute but pursuant to the Purchase Agreement. Velazquez sought costs totaling $9,191.33, and he submitted documentation in support of that total. There is no evidence in the record showing that those costs are not reasonable.
See Appellant's App. v. IV at 206.
[¶43] Additionally, Velazquez requests that he be awarded his appellate attorney fees. The language of the Purchase Agreement fee provision allows such a recovery as Velazquez is the "prevailing party" in this appeal and cross-appeal. Ex. v. I at 170; see also Humphries v. Ables, 789 N.E.2d 1025, 1036 (Ind.Ct.App. 2003) (citations omitted) ("When a contract provision provides that attorney fees are recoverable, appellate attorney fees may also be awarded."). Therefore, we remand to the trial court for a determination of reasonable appellate attorney fees to be recovered from Medloh.
Conclusion
[¶44] The trial court did not err when it denied Sellers' motion for a directed verdict as Velazquez provided sufficient evidence that he completed the Release in the Inspection Response in reliance, to his detriment, on Sellers' fraudulent misrepresentations, and, therefore, the Release is void as a matter of public policy. The denial of summary judgment on Velazquez's breach of contract claim is moot. And the trial court did not err when it held Velazquez is entitled to his reasonable attorney fees and costs per the attorney fee provision of the Purchase Agreement. However, the trial court abused its discretion when it drastically reduced the amount of the attorney fee award, as there was no evidence to support such a reduction. Therefore, we reverse and remand with instructions for the trial court to issue an attorney's fee and costs award of $150,862.97 ($141,671.64 in attorney's fees and $9,191.33 in costs) to Velazquez and to make a determination of the amount of reasonable appellate attorney fees and award the same to Velazquez.
[¶45] Affirmed in part, reversed in part, and remanded with instructions.
Crone, J., and Pyle, J., concur.