                                                          FILED
FOR PUBLICATION                                        Jan 15 2013, 9:50 am


                                                              CLERK
                                                            of the supreme court,
                                                            court of appeals and
                                                                   tax court




ATTORNEYS FOR APPELLANT:                       ATTORNEYS FOR APPELLEES:

DEBRA H. MILLER                                MARTIN T. FLETCHER
JAMES R. FISHER                                DANIEL G. MCNAMARA
Miller & Fisher, LLC                           DAVID E. BAILEY
Indianapolis, Indiana                          Eilbacher Fletcher, LLP
                                               Fort Wayne, Indiana




                             IN THE
                   COURT OF APPEALS OF INDIANA

JOHN PICHON, JR.,                              )
                                               )
      Appellant-Defendant,                     )
                                               )
             vs.                               )       No. 76A03-1201-PL-4
                                               )
AMERICAN HERITAGE BANCO, INC., et al.,         )
                                               )
      Appellees-Plaintiffs.                    )


                    APPEAL FROM THE STEUBEN CIRCUIT COURT
                         The Honorable Allen N. Wheat, Judge
                            Cause No. 76C01-0603-PL-156



                                    January 15, 2013


                              OPINION - FOR PUBLICATION


NAJAM, Judge
                                 STATEMENT OF THE CASE

        John Pichon, Jr. appeals the trial court’s judgment in favor of American Heritage

Banco, Inc. (“AHB”)1 in the amount of $1,189,105.13 plus interest. AHB had filed a

complaint alleging that Pichon and others had conspired with the officers of First

National Bank of Fremont (“FNBF”) to commit criminal acts and seeking payment on

two promissory notes executed by Pichon. Pichon filed a counterclaim against AHB, the

successor to FNBF, alleging fraud and conversion. Following a bench trial, the trial court

entered judgment in favor of Pichon on his counterclaim for conversion and on AHB’s

claim regarding the $737,000 promissory note (“the $737K note”). And the trial court

entered judgment in favor of AHB on the $650,000 promissory note (“the $650K note”).

After initially calculating a set-off in favor of Pichon, the trial court granted AHB’s

motion to correct error and ordered that Pichon owes AHB $1,189,105.13 plus interest.

Pichon appeals and raises the following restated issues for our review:

        1.      Whether the trial court abused its discretion when it excluded from
                evidence an exhibit purporting to show that the $650K note had been
                paid.

        2.      Whether AHB had standing to enforce the $650K note.

        3.      Whether the promissory notes are unenforceable because they are
                illegal.

        4.      Whether the promissory notes were discharged under accord and
                satisfaction.

        5.      Whether the trial court erred when it found that Pichon had waived
                the issue of lack of consideration for the $650K note.



        1
           Since AHB filed its complaint in this matter, it has changed its name. We use its original name
in this opinion for ease of discussion.
                                                    2
      6.     Whether the trial court erred when it found for AHB on Pichon’s
             counterclaims of fraud and conversion.

      7.     Whether the trial court erred when it ordered Pichon to pay
             prejudgment interest on the award.

      8.     Whether the trial court abused its discretion when it ordered Pichon
             to pay $150,000 in attorney’s fees to AHB.

      9.     Whether Pichon is entitled to a set-off.

      We affirm in part, reverse in part, and remand for a new trial.

                      FACTS AND PROCEDURAL HISTORY

      On December 28, 2000, Pichon executed a promissory note to borrow $737,000

from FNBF in order to buy Growth Parkway Property (“GPP”) from MacNeachdainn

Corporation, which was owned and controlled by George McNaughton (“George”).

George’s brother Earl McNaughton (“Earl”) was the president, chairman of the board of

directors, and chief executive officer of FNBF. FNBF was a wholly owned subsidiary of

AHB from 1995 to 2005. Earl is the majority shareholder in AHB, a closely held

corporation. The $737K note had a term of one year and was secured by a mortgage on

the GPP.

      In November 2002, Earl asked Thomas Christlieb, Pichon’s loan officer at FNBF,

to ask Pichon to borrow $650,000 from FNBF and to allow the proceeds to be disbursed

to Earl. Pichon agreed and, on November 15, 2002, Pichon executed a promissory note

to borrow $650,000 from FNBF. That loan was unsecured, and the money was disbursed

to Earl with Pichon’s knowledge.

      In December 2002, Pichon sold GPP for $729,000, and FNBF received the

proceeds from that sale. Christlieb then executed a mortgage release indicating that the
                                            3
$737K note had been satisfied. However, FNBF’s computer records continued to show

an unpaid balance on the $737K note. In 2003, Earl paid funds to FNBF which were

credited towards the alleged balance of the $737K note, reducing that balance to

$575,000. And in December 2004, Pichon signed an auditor’s letter acknowledging that

the unpaid balance of the $737K note was $575,000. Thereafter, no further principal

payments were made on the $737K note, and on January 6, 2004, the loan record showed

a zero balance. However, in 2005, FNBF’s computer records were adjusted to show an

unpaid balance of $575,000. On the same date in December 2002 that FNBF received

the proceeds for the sale of GPP, credit was given on FNBF’s computer record showing

that the $650K note was fully paid.

      On March 27, 2006, AHB filed a complaint against Pichon and several other

defendants,2 and on October 16, 2006, AHB filed its second amended complaint alleging

in relevant part that Pichon had conspired with officers of FNBF to commit criminal acts.

And on June 1, 2010, AHB filed a third amended complaint adding in relevant part

allegations of non-payment by Pichon on the $737K note and the $650K note. AHB had

acquired FNBF following a merger. The two notes were payable to FNBF and its

successors and assigns. Pichon filed a counterclaim alleging fraud and conversion. In

particular, Pichon alleged that AHB was not the real party in interest; that Pichon’s

signature on the $650K note was a forgery; and that the $737K note had been satisfied

following the sale of the GPP.




      2
          Pichon was the only defendant remaining in the case at the time of trial.
                                                     4
      The trial court entered a final pretrial order (“PTO”) on February 1, 2011. A

section of the PTO entitled “Issues for Trial: On Claims of AH[B] against Pichon” stated

as follows:

      1.      Whether Pichon signed the Promissory Note of November 2002 (the
              “650K Note”).
      2.      Whether AH[B] has “standing” to enforce the 650K note against
              Pichon.
      3.      Whether there is an unpaid balance owing to AH[B] on the 650K
              Note and, if so, the amount thereof.
      4.      Whether AH[B] is entitled to recovery of reasonable attorney fees on
              the 650K Note and, if so, the amount thereof.
      5.      Whether there is an unpaid balance owed by Pichon on the
              December 2000 Promissory Note (the “737K Note”).
      6.      Whether the proceeds arising from Pichon’s sale of the [GPP] should
              have been applied to pay the balance owing on the 737K Note at the
              time of such sale.
      7.      Whether the proceeds arising from Pichon’s sale of the [GPP] were
              wrongly or incorrectly credited as paying or paying down the 650K
              Note.
      8.      Whether Pichon made any payment on the 650K Note except for
              funds arising from his sale of the [GPP].
      9.      Whether AH[B] is entitled to reasonable attorney fees if it recovers
              [on] its claim based on the 737K Note and, if so, the amount of such
              fees.
      10.     Whether, by entering into the 650K Note, Pichon was a knowing
              participant in a scheme through which funds were obtained from
              [FNBF] by or in violation of I.C. 35-43.
      11.     Whether [FNBF] suffered pecuniary loss for purposes of I.C. [§] 34-
              23-3-1 as a result of a violation of I.C. 35-43.
      12.     Whether AH[B] is entitled to an award of treble damages and
              attorney’s fees against Pichon under I.C. [§] 34-24-3-1 and, if so, the
              amounts thereof.

Appellant’s App. at 44-45. With respect to contentions to be asserted at trial by Pichon,

the PTO stated that Pichon incorporated his “Answers, Affirmative Defenses and

Counterclaims as his contentions.” Id. at 49.




                                             5
       During the two-day bench trial, Pichon sought to introduce into evidence an

original of the $650K note stamped “paid” which had been included as Plaintiff’s Exhibit

33 in AHB’s exhibit book prior to trial. Transcript at 121. AHB objected on the grounds

that Pichon had not asserted the affirmative defense of payment under Trial Rule 8(C).

Pichon argued that the exhibit was admissible because it was included in AHB’s own

exhibit book and, more importantly, because it was relevant to AHB’s own stated issue in

the PTO of “[w]hether there is an unpaid balance owing to AH[B] on the 650K Note and,

if so, the amount thereof.” Appellant’s App. at 44. AHB maintained that it was too late

for Pichon to amend his contentions as listed in the PTO, and the trial court agreed. The

trial court ruled that it would allow the evidence, but it reserved the issue of the exhibit’s

admissibility for a later determination. After trial, the trial court ruled that the proffered

exhibit, now labeled Defendant’s Exhibit A, was excluded from the evidence because

Pichon had not asserted the affirmative defense of payment in his answer and had not

asserted the issue in the PTO.

       Following the conclusion of the trial, the trial court entered findings and

conclusions as follows:

       A.     Findings of Fact –

       1.     On December 28, 2000, Pichon borrowed $737,000.00 from the First
              National Bank of Fremont (“FNBF”), to purchase a parcel of
              commercial real estate (“Growth Parkway Property”) located in
              Steuben County, Indiana.
       2.     Pichon executed a Promissory Note for $737,000.00 (“737K Note”)
              and Mortgage to serve as collateral for the loan.
       3.     Pichon, thereafter, entered into a Lease/Purchase Agreement with
              Vernous Conduit Corporation.
       4.     The Growth Parkway Property was leased to the Vernous Conduit
              Corporation for $18,425.00 per quarter.
                                              6
5.    The lease payments were to be applied by FNBF to pay down the
      737K Note.
6.    Thereafter, the Growth Parkway Property was sold. Closing
      occurred on December 23, 2002.
7.    The sale price for the Growth Parkway Property was $729,000.00.
8.    No part of the sale proceeds were applied to the 737K Note, or
      distributed to Pichon.
9.    Rather, the $729,000.00 sale proceeds were utilized in part to pay
      down an unrelated Note that Pichon had with FNBF, with the
      remainder being paid to George T. McNaughton.
10.   At some point prior to November 22, 2002, Earl F. McNaughton
      (“McNaughton”) approached Tom Christlieb (“Christlieb”) about a
      problem he was having.             The problem revolved around
      McNaughton’s need for $650,000.00. McNaughton was aware of
      Christlieb’s longstanding relationship as a bank customer with
      Pichon. McNaughton requested that Christlieb communicate with
      Pichon and see if he would be willing to borrow from FNBF the sum
      of $650,000.00 which would in some manner then be diverted from
      FNBF to McNaughton.
11.   Christlieb did so, and Pichon executed an unsecured Promissory
      Note in the sum of $650,000.00.
12.   Pichon received no consideration from his executing the
      $650,000.00 Promissory Note (“650K Note”) at the request of
      Christlieb.
13.   The 650K Note is the Promissory Note the Court made reference to
      above at Finding of Fact #9 that was credited by FNBF with being
      fully paid upon the Growth Parkway Property being sold.
14.   Pichon was unaware this was occurring.
15.   On December 23, 2002, the 737K Note had an unpaid balance in the
      amount of $575,000.00.
16.   On August 25, 2011, this Court entered its ruling on a reserved
      evidentiary issue. The Court determined that Pichon would not be
      permitted to show that any part of the 650K Note had been paid
      owing to the fact that the affirmative defense of payment had not
      been put forth by Pichon in the Pre-Trial Order as a contested issue.
17.   Additional facts will be set forth hereinafter as deemed necessary by
      the Court.

B.    Affirmative Defenses –

18.   Pichon contends that his signature on the 650K Note was a forgery.
      Pichon did not testify at trial.
19.   The Court concludes that the overwhelming weight of the evidence
      shows that Pichon’s signature on the 650K Note was genuine.
                                    7
20.   Pichon contends that FNBF committed actual or constructive fraud
      when he was induced to sign the 650K Note. The Court concludes
      that FNBF did not commit actual fraud because Pichon was well
      aware of the fact that these monies were in some manner going to be
      used personally by McNaughton, and he would be receiving no
      consideration for his executing the 650K Note. The Court concludes
      that FNBF did not commit constructive fraud. No fiduciary or other
      special relationship existed between FNBF and Pichon. Their
      relationship consisted solely of lender and borrower.
21.   Pichon contends that AH[B] lacks standing to enforce his obligation
      under the 650K Note. The Court concludes that AH[B] occupies the
      status as “holder” of the 650K Note, therefore, AH[B] has standing
      to enforce the Note according to its terms subject to any affirmative
      defenses successfully put forth by Pichon.

C.    Counterclaims—

22.   Pichon contends that FNBF breached a fiduciary duty it owed to him
      by virtue of FNBF serving as his closing agent upon the sale of the
      Growth Parkway Property which he did not personally attend.
      FNBF was Pichon’s banking institution, not his closing agent.
23.   Pichon contends that FNBF committed the criminal act of
      conversion in the manner with which it diverted monies following
      closing on the Growth Parkway Property causing him to suffer a
      pecuniary loss and, therefore, he should be entitled to treble damages
      pursuant to the Crime Victim’s Compensation Act found at Ind.
      Code [Section] 34-24-3-1.
24.   Pichon argues that on December 23, 2002, he owed FNBF the sum
      of $1,225,000.00 ($575,000.00 + $650,000.00 = $1,225,000.00).
      FNBF received $729,000.00 upon Pichon’s sale of the Growth
      Parkway Property leaving a balance owed by Pichon to FNBF on the
      $737K        Note     and      650K      Note      of      $496,000.00
      ($1,225,000.00-$729,000.00 = $496,000.00).
25.   Pichon argues that the sum of $154,000.00 ($650,000 - $496,000 =
      $154,000.00) should serve as a set off against the amount the Court
      finds owing to AH[B] on the 650K Note.
26.   Ind. Code 34-24-3-1 provides, in relevant part, as follows:
      “If a person suffers a pecuniary loss as a result of a violation of IC
      35-43, IC [§] 35-42-3-3, IC [§] 35-42-3-4, or IC [§] 35-45-9, the
      person may bring a civil action against the person who caused the
      loss for the following:
      (1) An amount not to exceed three (3) times the actual damages of
      the person suffering the loss.
      (2) The costs of the action.
                                    8
      (3) A reasonable attorney’s fee. . . .”

27.   Ind. Code [§] 35-43-4-3 provides, in relevant part, as follows:
      “(a) A person who knowingly or intentionally exerts unauthorized
      control over property of another person commits criminal
      conversion, a Class A misdemeanor. . .”
28.   Criminal conversion is a compensable offense for which treble
      damages may be awarded under Ind. Code [§] 34-24-3-1.
29.   The evidence before the Court reveals that upon closing the sale of
      the Growth Parkway Property the proceeds were not simply credited
      by FNBF to pay off the $575,000.00 unpaid balance owed it on the
      737K Note, with the $154,000.00 excess being remitted to Pichon.
      This was not done by FNBF acting through McNaughton and other
      inside agents of FNBF. Rather, the $154,000.00 was knowingly
      used by FNBF, through its agents, in a manner not authorized by
      Pichon, but, in a manner designed to personally benefit
      McNaughton.
30.   The Court concludes that FNBF did engage in an act of criminal
      conversion. Pichon, therefore, is entitled to damages pursuant to
      Ind. Code [§] 34-24-3-1 by way of set off against his debt owing to
      AH[B] on the $650K Note.

D.    Damages—

31.   The 650K Note provides for a reasonable attorney fee upon default.
      Counsel for AH[B] requests an award of attorney fees/costs in the
      amount of $150,000.00.          This amount was substantiated by
      testimony and time statements. This case was highly complex and
      required years to sort out.
32.   The Court concludes that $150,000.00 is a fair and reasonable fee.
33.   There is no evidence before the Court regarding Pichon’s attorney
      fee obligation.
34.   Pichon owes AH[B] $650,000.00; pre-judgment interest in the
      amount of $389,105.13; and, a reasonable attorney fee in the amount
      of $150,000.00.
35.   Pichon owes AH[B] the total sum of $1,189,105.13.
36.   By way of set off against the $1,189,105.13 that Pichon owes
      AH[B], Pichon is entitled to set off the sum of $154,000.00 x 3 or
      $462,000.00. Further, Pichon is entitled to set off pre-judgment
      interest from December 28, 2002[,] through October 1, 2011[,]
      calculated at the rate of eight percent (8%) per annum, or the amount
      of $323,729.02.



                                      9
      37.    The Court concludes that the total amount Pichon is entitled to set
             off against the $1,189,105.13 amount owed to AH[B] is
             $785,729.02.

      IT IS THEREFORE, ORDERED, ADJUDGED AND DECREED as
      follows:

      1.     American Heritage Banco, Inc. n/k/a American Heritage Collector,
             Inc. shall have judgment against defendant John N. Pichon in the
             amount of $403,376.11.

Appellant’s App. at 25-31.

      Thereafter, AHB and Pichon filed cross-motions to correct error. The trial court

denied Pichon’s motion, but granted AHB’s motion as follows:

      1.     In its Judgment entered on October 14, 2011, the Court concluded,
             among other things, that:
             (a) AHB was entitled to a judgment against Pichon in the amount of
             $1,189,105.13.
             (b) That the Judgment awarded to AHB had to be reduced by
             $462,000.00 ($154,000.00 x 3 = $462,000.00) owing to what the
             Court concluded were acts of conversion committed by AHB.
             (c) Pichon was entitled to recover legal interest on his monies which
             the Court determined to have been converted by AHB in the amount
             of $323,729.02.
             (d) That after these deductions were properly taken into account,
             AHB was entitled to a net judgment against Pichon in the amount of
             $403,376.11 ($1,189.105.13 - $785,729.02 = $403,376.11).
      2.     AHB argues that the Court committed error when it concluded that
             on December 23, 2002, the 737K Note had an unpaid balance of
             $575,000.00 (Finding 15) and, therefore, committed error in its
             damages calculation.
      3.     AHB is correct. The Court, in reflecting upon the evidence,
             incorrectly determined that the balance payable on the 737K Note
             effective December 23, 2002 was in the amount of $575,000.00 and,
             further, incorrectly determined that Pichon was responsible for the
             reduction in the balance which remained payable to AHB on the
             737K Note.
      4.     Effective December 23, 2002, Pichon had made no payments toward
             principal reduction on the 737K Note. The evidence clearly reflects
             that the entirety of the 737K Note was payable to AHB on December
             23, 2002.
                                          10
        5.        AHB further contends that the Court committed error in finding that
                  Pichon received no consideration from his executing the 650K Note.
                  Although not error, the Court agrees that Finding 12 is superfluous
                  the Court having previously determined by Order entered on
                  February 9, 2011, that the issue of “failure of consideration”
                  regarding Pichon’s execution of the 650K Note had been waived
                  because not specifically pleaded as an affirmative defense pursuant
                  to Ind. Trial Rule 8(c).
        6.        The Court has carefully considered each and every alleged error set
                  forth in Pichon’s Motion to Correct Error[] and at this time finds
                  said Motion should be denied.

        IT IS THEREFORE, ORDERED, ADJUDGED AND DECREED as
        follows:

        1.        American Heritage Banco, Inc. n/k/a American Heritage Collector,
                  Inc. shall have judgment against defendant John N. Pichon, Jr. in the
                  amount of $1,189,105.13, plus costs and legal interest accruing in
                  accordance with law.

        2.        The Motion to Correct Error[] filed by defendant John N. Pichon, Jr.,
                  is denied.

Id. at 22-24. This appeal ensued.3

                                   DISCUSSION AND DECISION

                                  Issue One: Exclusion of Evidence

        Pichon first contends that the trial court abused its discretion when it excluded

from evidence Defendant’s Exhibit A, which was included in AHB’s exhibit book as

Exhibit 33 prior to trial. Exhibit A is one of three original $650K notes4 that Pichon




        3
            To the extent Pichon claims that the trial court entered judgment in favor of AHB on the issue
of the $737K note, Pichon is mistaken. The trial court’s judgment against Pichon includes only:
$650,000 (for the $650K note); prejudgment interest of $389,105.13 on the $650,000 debt; and attorney’s
fees of $150,000. Accordingly, we do not address Pichon’s argument on appeal regarding whether the
trial court erred when it entered judgment on the $737K note.
        4
             As this case makes clear, the practice of executing more than one original note is fraught with
risk.
                                                      11
executed,5 and it is stamped “paid.” AHB did not seek to introduce that exhibit at trial.

Instead, AHB introduced into evidence Plaintiff’s Exhibit 34, which was an original of

the $650K note not stamped “paid.”

       We review a trial court’s decision to admit or exclude evidence for an abuse of

discretion. Franciose v. Jones, 907 N.E.2d 139, 144 (Ind. Ct. App. 2009), trans. denied.

We will reverse a trial court’s decision to admit or exclude evidence only if that decision

is clearly against the logic and effect of the facts and circumstances before the court or

the reasonable, probable, and actual deductions to be drawn therefrom. Id.                   A trial

court’s decision to admit or exclude evidence will not be reversed unless prejudicial error

is clearly shown. Id.

       Here, at trial, when Pichon sought to introduce into evidence an original of the

$650K note stamped “paid,” AHB objected on the ground that Pichon had not asserted

the affirmative defense of payment under Trial Rule 8(C). Trial Rule 8(C) provides in

relevant part that a responsive pleading shall set forth affirmatively and carry the burden

of proving payment. AHB also objected on the ground that Pichon had not asserted the

issue of payment in its statement of issues in the PTO. AHB contended that it was too

late to amend the PTO. Pichon then made two arguments in an attempt to get Exhibit A

admitted at trial. First, Pichon argued that it was admissible because it had been included

on the parties’ exhibit lists. Second, Pichon argued that he should be permitted to amend

the PTO to reflect the issue of payment. In its order on reserved issues following trial,




       5
         Pichon does not appeal the trial court’s conclusion that his signature was not forged on the
$650K note.
                                                 12
the trial court denied Pichon’s verbal motion to amend the PTO and excluded Exhibit A

from evidence.

       We conclude, however, that no amendment of the PTO was necessary because

AHB’s statement of the issues for trial did not merely allege that Pichon was liable on the

unpaid note in the amount of $650,000, in which case payment would be an affirmative

defense. Instead, AHB framed the issue in the PTO as follows: “[w]hether there is an

unpaid balance owing to AH[B] on the 650K Note and, if so, the amount thereof.”

Appellant’s App. at 44 (emphasis added). Thus, Exhibit A, a signed original of the 650K

note marked “paid,” squarely addresses whether an unpaid balance is owed on the note.

AHB opened the door, and a typical Trial Rule 8(C) affirmative defense of payment was

not required as a condition precedent to the admission of this evidence.

       Moreover, and significantly, AHB included the note marked “paid” in its exhibit

book prior to trial.6 The bank’s own records showed that the note was paid, which was

evidence relevant to the issue, framed by AHB, as to whether there was an unpaid

balance owed on the note. Indeed, AHB could not object or claim prejudice from the

admission of an exhibit showing that the note had been paid when the exhibit came from

AHB’s own exhibit book prepared for trial and was inconsistent with the unmarked note

that AHB had introduced as Exhibit 34 at trial. Accordingly, we hold that the trial court

abused its discretion when it excluded Exhibit A from evidence.

       We further hold that the exclusion of Exhibit A from evidence is reversible error.

The undisputed evidence shows that the $650K note was stamped “paid” on December


       6
          During Pichon’s cross-examination of Christlieb, Christlieb acknowledged that Exhibit A was
included in AHB’s exhibit book as Exhibit 33.
                                                 13
23, 2002. In addition, Christlieb, a bank officer, testified that the $650K note had a

maturity date of February 13, 2003, and that the note had not been listed in FNBF’s files

as delinquent. Finally, in 2005, when Pichon’s daughter, Emily, sought to transfer all of

Pichon’s accounts from FNBF to a new bank, Emily obtained a printout from FNBF

which showed that the $650K note had a zero balance. It was AHB’s burden to prove by

a preponderance of the evidence that all or any part of the $650K note remained unpaid.

Thus, Exhibit A was relevant, material, and probative on that issue.

       While AHB is correct that Pichon did not present any evidence that he made

payments towards the $650K note, it is undisputed that the loan proceeds were paid

directly to FNBF, not Pichon, and FNBF had no expectation that Pichon would make

payments on the $650K note. Pichon and FNBF conspired to execute this so-called

“nominee” loan pursuant to Earl’s request to Pichon through Christlieb. See Appellant’s

App. at 157.

       Where evidence is erroneously excluded, reversal is justified only if the error

relates to a material matter or is of such character as to substantially affect the rights of

the parties.   Manns v. State Dep’t of Highways, 541 N.E.2d 929, 936 (Ind. 1989)

superseded by statute on other grounds. Here, whether a balance on the $650K note

existed was one of the primary allegations AHB made against Pichon. Again, one of

AHB’s “Issues for Trial” in the PTO was “[w]hether there is an unpaid balance owing to

AH[B] on the 650K Note and, if so, the amount thereof.” Appellant’s App. at 44. Thus,

AHB had the burden of proof on that issue. But because the trial court excluded Exhibit




                                             14
A, Pichon was denied the opportunity to present the best evidence to rebut AHB’s

evidence that there was a balance was owing on the $650K note.

        We hold that the exclusion of Exhibit A substantially affected Pichon’s rights to

dispute AHB’s allegation that he owed anything on the $650K note. We reverse the trial

court’s judgment on the issue of the $650K note and remand for a new trial on that

claim.7 The trial court shall admit Exhibit A into evidence during the new trial. Because

the other issues Pichon raises on appeal are likely to recur on remand, we address them in

turn.

                                        Issue Two: Standing

        Pichon contends that AHB lacks standing to enforce the $650K note. The trial

court concluded in relevant part that AHB had standing to enforce the note because AHB

“occupies the status as ‘holder’ of the 650K Note[.]” Appellant’s App. at 28. We must

agree with the trial court.

        Indiana Code Section 26-1-3.1-301 provides that a “person entitled to enforce

instrument” means in relevant part the “holder” of the instrument. And Indiana Code

Section 26-1-1-201(20) defines “holder” in relevant part as the person in possession of a

negotiable instrument if the instrument is payable to an identified person if the identified

person is in possession. Here, the $650K note expressly states that the note is payable to

the FNBF or “its successors and assigns.” Plaintiff’s Exhibit 34. And in the PTO,

Pichon and AHB stipulated that FNBF was merged into AHB on November 1, 2005.




        7
           We affirm the trial court’s judgment in favor of Pichon with respect to the $737K note, and that
issue will not be retried on remand.
                                                    15
Pursuant to that merger, AHB is the successor to FNBF. The trial court did not err when

it concluded that AHB has standing to enforce the $650K note.

                                      Issue Three: Illegality

        Pichon contends that the trial court erred when it entered judgment in favor of

AHB on the $650K note because the note was illegal. AHB maintains that Pichon has

waived this issue for failure to assert it as an affirmative defense under Trial Rule 8(C).

See Willis v. Westerfield, 839 N.E.2d 1179, 1185 (Ind. 2006).8 Indeed, Pichon does not

direct us to any part of the record indicating that he asserted the issue of illegality as an

affirmative defense. Instead, Pichon insists that the issue need not be asserted as an

affirmative defense. But in support of that contention, Pichon cites to a case that pre-

dates the trial rules. Thus, the issue is waived. Regardless, Pichon’s argument in support

of this issue focuses on his counterclaims against AHB for fraud and conversion, which

we address below. Pichon has not demonstrated that the $650K note is unenforceable

under the doctrine of illegality.

                             Issue Four: Accord and Satisfaction

        Pichon next contends that he is entitled to judgment on both promissory notes

under the doctrine of accord and satisfaction. First, because Pichon prevailed on the

$737K note, we do not address this issue with respect to that note. Second, AHB

maintains that Pichon has waived the issue for failure to assert it as an affirmative


        8
          In Smithson v. Howard Regional Health System, 933 N.E.2d 1, 2 n.2 (Ind. Ct. App. 2010), this
court observed that “a plaintiff must affirmatively show prejudice to his case before [a belatedly raised
affirmative defense] can be rejected.” (Quoting City of S. Bend v. Dollahan, 918 N.E.2d 343, 349-50
(Ind. Ct. App. 2009), trans. denied). Here, Pichon makes no contention that AHB failed to show
prejudice as a result of his failure to assert the affirmative defense of illegality. Hence, we need not
address this issue.
                                                   16
defense in his answer. See Trial Rule 8(C); see also Willis, 839 N.E.2d at 1185.9 Pichon

asserts that he did raise the affirmative defense of accord and satisfaction in his answer.

Our review of the record shows that Pichon only raised that affirmative defense with

respect to the $737K note. Hence, we hold that Pichon has waived the issue of accord

and satisfaction for our review.

                                    Issue Five: Consideration

        Pichon next contends that the trial court erred when it concluded that he had

waived the issue of consideration with respect to the $650K note. But, again, Pichon did

not assert consideration as an affirmative defense in his answer, and the issue is waived.

See Trial Rule 8(C).

                                     Issue Six: Counterclaims

        Pichon asserted two counterclaims against AHB, namely, fraud and conversion.

But the only counterclaim relevant to the $650K note alleged fraud for forging Pichon’s

name on the $650K note. The trial court found, and Pichon does not dispute on appeal,

that the $650K note was not forged. Accordingly, there is no counterclaim to address on

appeal regarding the $650K note.10

        Pichon also contends that AHB misappropriated the funds from the sale of GPP

and that he suffered harm as a result of that alleged conversion. The trial court found that



        9
            Again, Pichon makes no contention that AHB failed to show prejudice as a result of his failure
to assert the affirmative defense of accord and satisfaction. Hence, we need not address this issue.
        10
           To the extent Pichon contends that AHB committed fraud and/or conversion when it did not
give him $650,000 when he executed the $650K note, the trial court found that Pichon was aware that
those funds were meant to go to Earl at the note’s inception. Pichon now claims that that finding was not
supported by the evidence, but we disagree. Pichon’s claim on this issue amounts to a request that we
reweigh the evidence, which we will not do.
                                                   17
AHB committed criminal conversion when it misappropriated $154,000 following the

sale of GPP.       And the trial court initially awarded Pichon treble damages for that

conversion. But in granting AHB’s motion to correct error, the trial court concluded that

AHB had not converted any of Pichon’s money, that Pichon had not suffered any

pecuniary loss, and that Pichon was not, therefore, entitled to treble damages under

Indiana Code Section 34-24-3-1.11 On appeal, Pichon does not direct us to any part of the

record showing that he suffered a pecuniary loss as a result of AHB’s conduct. The trial

court did not err when it granted AHB’s motion to correct error on these issues.

                              Issue Seven: Prejudgment Interest

        Pichon next contends that the trial court erred when it ordered him to pay

$389,105.13 in prejudgment interest on the $650K note. In support of that contention,

Pichon maintains that he had “tendered to FNBF full payment of all outstanding loans” in

2005. Brief of Appellant at 37. And he claims that AHB is not entitled to prejudgment

interest because the “calculation of prejudgment interest [in this case] is not a simple

mathematical computation[.]” Id. at 36. We address each contention in turn.

        First, again, because we reverse the trial court’s judgment regarding the $650K

note, whether Pichon owes anything on that note, including prejudgment interest, will be

determined on remand. Second, Pichon is correct that “the crucial factor in determining

whether damages in the form of prejudgment interest are allowable is whether the

damages were ascertainable in accordance with fixed rules of evidence and accepted

standards of valuation.” See Bopp v. Brames, 713 N.E.2d 866, 872 (Ind. Ct. App. 1999),


        11
            Indiana Code Section 34-24-3-1 provides in relevant part that if a person suffers a pecuniary
loss as a result of property offenses, such as conversion, he may bring a civil action for treble damages.
                                                   18
trans. denied.   An award of prejudgment interest is proper only where a simple

mathematical computation is required. Id. Damages that are the subject of a good faith

dispute cannot allow for an award of prejudgment interest. Id. Here, we reject Pichon’s

contention that more than a simple mathematical computation is required to determine the

amount of prejudgment interest owing on the $650K note, should Pichon be found liable

for all or some of the balance owed on the note. Accordingly, the trial court may

properly award prejudgment interest on remand, if appropriate.

                             Issue Eight: Attorney’s Fees

      Pichon contends that the trial court abused its discretion when it awarded

attorney’s fees to AHB in the amount of $150,000. In particular, Pichon maintains that

the award is unreasonable because AHB only prevailed on its claim regarding the $650K

note but claimed attorney’s fees that predated that claim.       Because we reverse the

judgment in favor of AHB on the $650K note, we also reverse the award of attorney’s

fees for AHB, which derive from the terms of that note.

                                   Issue Nine: Set-off

      Finally, Pichon contends that he is entitled to a set-off against the award to AHB

in the amount of $162,000. In particular, Pichon states that “in addition to paying off the

737K Note in its entirety from the proceeds of the sale of GPP, Earl made 2 other

payments against the Pichon loans in 2003, totaling $162,000.” Brief of Appellant at 38-

39. Pichon maintains that his liability on the $650K note should be reduced by that

amount to avoid a windfall to AHB. The evidence appears to be undisputed that Earl

made those payments totaling $162,000.


                                            19
       AHB contends, however, that Pichon has waived the issue of a set-off for failure

to assert it as a counterclaim or include it in the PTO. However, in its argument on

appeal in support of the attorney’s fee award, AHB avers that “[t]o prevail on its claim

under the 650K Note, AH[B] had to address the counterclaims filed by Pichon through

which he sought ‘set offs’ which would reduce any recovery by AH[B] on the 650K

Note.” Brief of Appellee at 34. AHB cannot have it both ways. We hold that if Pichon

is found liable on the $650K note on remand, he is entitled to a set-off in the amount of

$162,000.12 See Crider & Crider, Inc. v. Downen, 873 N.E.2d 1115, 1119 (Ind. Ct. App.

2007) (observing that the law disfavors a windfall or a double recovery).

                                             Conclusion

       While Pichon failed to raise the affirmative defense of payment in his answer,

AHB included in its statement of issues for trial in the PTO the issue of “[w]hether there

is an unpaid balance owing to AH[B] on the 650K Note and, if so, the amount thereof.”

Appellant’s App. at 44. Accordingly, Exhibit A, which is an original of the $650K note

stamped “paid,” is relevant to the issue of whether there is an unpaid balance on that note,

and the trial court should have admitted it into evidence. The trial court’s exclusion of

Exhibit A prejudiced Pichon to such an extent that we hold it was reversible error. We

reverse the trial court’s judgment with respect to the $650K note, only, and remand for a

new trial on that issue. To the extent that the remaining issues will recur on remand, we

hold that: AHB has standing to sue Pichon on the $650K note; Pichon has waived the

       12
           To the extent AHB contends that Pichon is not entitled to a set off because the payments were
made on the loans by Earl, we direct AHB to Indiana Code Section 26-1-3.1-602, which provides in
relevant part that “an instrument is paid to the extent payment is made . . . by or on behalf of a party
obliged top ay the instrument[.]” To be clear, however, because Pichon has not shown that he suffered a
pecuniary loss, Pichon is not entitled to treble damages under Indiana Code Section 34-24-3-1.
                                                  20
issues of illegality, accord and satisfaction, and consideration; the trial court did not err

when it denied Pichon an award on his counterclaims for failure to show pecuniary loss;

prejudgment interest is appropriate in this case should AHB prevail on retrial; and Pichon

is entitled to a set-off in the amount of $162,000 if he is found to be liable on the $650K

note on retrial. Finally, we reverse the trial court’s attorney’s fee award.

       Affirmed in part, reversed in part, and remanded for further proceedings consistent

with this opinion.

KIRSCH, J., and MAY, J., concur.




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