MEMORANDUM DECISION
                                                                     Mar 12 2015, 10:09 am
                                                                                 Mar 12 2015, 10:09 am




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 the defense of res judicata,
collateral estoppel, or the law of the case.



ATTORNEYS FOR APPELLANTS                                  ATTORNEY FOR APPELLEE
Edward P. Grimmer                                         Paul B. Poracky
Daniel A. Gohdes                                          Koransky Bouwer and Poracky, P.C.
Edward P. Grimmer, P.C.                                   Dyer, Indiana
Crown Point, Indiana




                                             IN THE
    COURT OF APPEALS OF INDIANA

Bruce and Sybil Scheffer,                                March 12, 2015

Appellants-Plaintiffs,                                   Court of Appeals Cause No.
                                                         45A03-1410-PL-367
        v.                                               Appeal from the Lake Superior
                                                         Court
                                                         Cause No. 45D11-1212-PL-106
Centier Bank,
Appellee-Defendant.                                      The Honorable Diane Kavadias
                                                         Schneider, Judge




Barnes, Judge.




Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015                     Page 1 of 12
                                             Case Summary
[1]   Bruce and Sybil Scheffer appeal the trial court’s denial of their motion for

      summary judgment and the trial court’s grant of summary judgment in favor of

      Centier Bank (“Centier”). We affirm in part, reverse in part, and remand.


                                                    Issues
[2]   The Scheffers raise three issues, which we consolidate and restate as:


                      I.       whether an affidavit designated by Centier was
                               admissible; and

                      II.      whether the trial court properly granted
                               Centier’s cross-motion for summary judgment
                               and denied the Scheffers’ motion for summary
                               judgment.

      Centier raises one issue on cross-appeal, which we restate as whether it is

      entitled to an award of costs and attorney fees.


                                                     Facts
[3]   In December 2012, the Scheffers filed a complaint against Centier Bank. The

      Scheffers alleged that a 1985 loan with Centier’s predecessor, The First Bank of

      Whiting, for the purchase of residential real estate was secured by a mortgage

      on the property and four assignments of life insurance policies on the lives of

      Bruce and Sybil. The assignments each provide: “this assignment is for the sole

      purpose of using the policy as collateral security for existing or future loans

      made by the assignee to the owner.” App. pp. 80, 81, 83, 84. The Scheffers




      Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 2 of 12
      alleged that they satisfied the loan in December 2010 but that Centier refused to

      release the assignments of the life insurance policies.


[4]   In its answer, Centier alleged that the assignments served as collateral for

      corporate debt of Scheffer, Inc., not a personal debt of the Scheffers, and that

      the Scheffers were sole shareholders of that company. Centier further alleged

      that Scheffer, Inc., exhausted a $1.65 million line of credit in 2009 and that an

      involuntary bankruptcy was filed against the company in 2010.


[5]   The Scheffers filed a motion for summary judgment arguing that Centier was

      required to release the assignments of the life insurance policies. Among other

      evidence, the Scheffers designated their own affidavit, which alleged that, since

      1985, they had owned, respectively, life insurance policies through United

      Farm Bureau Family Life Insurance Company. The Scheffers also alleged that

      they assigned the life insurance policies as collateral on a promissory note and

      mortgage on their residential property in 1985. The Scheffers contended that

      neither of them had given “any signed, written guarantee or undertaken any

      personal liability to Centier Bank on the corporate debt of Scheffer, Inc. to

      Centier Bank.” Id. at 77. The Scheffers did not designate any documentary

      evidence showing a 1985 residential mortgage or loan with Centier or its

      predecessor and did not designate the life insurance policies or documentary

      evidence showing the owners of the policies.


[6]   Centier responded to the Scheffers’ motion for summary judgment and filed a

      cross-motion for summary judgment. Centier argued that the Scheffers’ claim


      Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 3 of 12
      failed because the assignments related to a business loan, not a residential loan.

      Centier designated an affidavit by Brian Miller, a vice-president and “workout

      officer” for Centier Bank. Id. at 136. According to Miller, Centier did not have

      a loan or mortgage on the Scheffers’ residence until 2002 and that loan was paid

      off in 2010. Prior to 2002, the Scheffers had a mortgage on the property

      through a different bank, American Trust & Savings Bank. According to

      Miller, at the time of the 1985 assignments, Centier’s predecessor only had a

      business relationship with Scheffer, Inc., not the Scheffers individually.


[7]   The Scheffers filed a reply brief, claiming:

              The only loan that Bruce and Sybil Scheffer have had with, the only
              promissory note they have given to, Centier Bank since the time of the
              assignments as collateral was the residential mortgage debt on their
              Wexford Road property. They paid off that loan in 2010. They are
              not obligated on any ‘existing or future loans’ since 2010. Upon that
              pay off in 2010, Centier had no right to retain the assignments as
              collateral.
      Id. at 255. The Scheffers also argued that the Miller affidavit was inadmissible

      because Miller had no knowledge of the events and that Exhibit 2 of the Miller

      affidavit was inadmissible hearsay.


[8]   Centier filed a reply noting that the Scheffers appeared to have abandoned their

      argument that the 1985 assignments related to a 1985 loan and mortgage and

      that the Scheffers were now arguing that the assignments were somehow related

      to the 2002 loan and mortgage. Centier also argued that Miller’s affidavit was

      based on his personal knowledge and review of Centier’s business records and

      that it was admissible. Further, Centier argued that Exhibit 2 was admissible.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 4 of 12
[9]    The trial court granted Centier’s cross-motion for summary judgment and

       denied the Scheffers’ motion for summary judgment. The trial court concluded:

                [T]he language of the 2002 contract assigning the life insurance
               policies to the mortgage loan, submitted by Plaintiffs clearly states that
               the assignment of the life insurance policies is for ‘any existing or
               future loans.’ . . . . Therefore, Centier Bank has properly maintained
               the assignments of Plaintiffs’ life insurance policies to secure other
               loans between the Plaintiffs individually or as [Scheffer], Inc., that
               were entered into after the 2002 contract.
       Id. at 12.1 The Scheffers now appeal, and Centier cross-appeals.


                                                      Analysis
                                                I. Miller Affidavit

[10]   On appeal, the Scheffers argue that the Miller Affidavit was inadmissible.

       However, the Scheffers’ argument on appeal is not cogent. They contend that

       Miller’s affidavit “was not based upon personal knowledge, sought to opine on

       the mental impressions and motivations of person other than himself, and was

       parol evidence (at best) contradictory of the language within the four corners of

       the assignments.” Appellants’ Br. p. 26. The Scheffers do not specify which

       statements in the affidavit were not based on Miller’s personal knowledge, do

       not specify which statements opine as to mental impressions or motivations,

       and do not identify the parol evidence. Indiana Appellate Rule 46(A)(8)

       provides in part that the argument section of the appellant’s brief must “contain




       1
        The trial court appears to have misstated the designated evidence, as the assignments occurred in 1985, not
       2002.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015             Page 5 of 12
       the contentions of the appellant on the issues presented, supported by cogent

       reasoning,” along with citations to the authorities, statutes, and parts of the

       record relied upon, and a clear showing of how the issues and contentions in

       support thereof relate to the particular facts under review. The Scheffers failed

       to do so and have waived this argument. See, e.g., Reed v. Reid, 980 N.E.2d 277,

       297 (Ind. 2012) (“Failure to comply with this rule results in waiver of the

       argument on appeal.”). The Scheffers have failed to demonstrate that the trial

       court erroneously considered the Miller Affidavit.


                                           II. Summary Judgment

[11]   The Scheffers also argue that the trial court erred by granting Centier’s cross-

       motion for summary judgment and denying their motion for summary

       judgment. Summary judgment is appropriate when there is no genuine issue of

       material fact and the moving party is entitled to judgment as a matter of law.

       Ind. Trial Rule 56. We liberally construe all designated evidentiary material in

       a light most favorable to the non-moving party to determine whether there is a

       genuine issue of material fact. Bradshaw v. Chandler, 916 N.E.2d 163, 166

       (Ind. 2009). The party that lost in the trial court has the burden of persuading

       the appellate court that the trial court erred. Id. Our review of a summary

       judgment motion is limited to those materials designated to the trial court.

       Mangold v. Ind. Dep’t of Natural Res., 756 N.E.2d 970, 973 (Ind. 2001).


[12]   Where a trial court enters findings of fact and conclusions thereon in granting a

       motion for summary judgment, as the trial court did in this case, the entry of

       specific findings and conclusions does not alter the nature of our review. Rice
       Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 6 of 12
       v. Strunk, 670 N.E.2d 1280, 1283 (Ind. 1996). In the summary judgment

       context, we are not bound by the trial court’s specific findings of fact and

       conclusions thereon. Id. They merely aid our review by providing us with a

       statement of reasons for the trial court’s actions. Id.


[13]   The Scheffers argue that, pursuant to the language of the assignments, the

       assignments related only to personal loans and mortgages given to the

       Scheffers, not corporate loans given to Scheffer, Inc. The Scheffers note that

       the assignments each provide: “this assignment is for the sole purpose of using

       the policy as collateral security for existing or future loans made by the assignee

       [Centier] to the owner.” App. pp. 80, 81, 83, 84 (emphasis added). According

       to the Scheffers, they are the owners of the policies, and they do not have any

       outstanding personal loans with Centier. Thus, the Scheffers argue that Centier

       should be required to release the assignments of the life insurance policies.

       Centier counters that there is no evidence of a personal residential loan or

       mortgage in 1985, that at that time Centier only had a loan relationship with

       Scheffers, Inc., and that the assignments provided collateral for a business loan,

       not a residential loan.


[14]   The Scheffers designated their own affidavit that provided in part:

                      2.        Since 1985 through present time, Bruce A. Scheffer
                                and Sybil Scheffer, respectively, own insurance
                                policies on their respective lives, Policy 916030
                                and Policy 577523 on the life of Bruce and Policy
                                916031 and Policy 577524 on the life of Sybil, with
                                United Farm Bureau Family Life Insurance
                                Company, its successors and assigns.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 7 of 12
                      3.        Each of us assigned our respective life insurance
                                policy to The First Bank of Whiting for the sole
                                purpose to further collateralize a promissory note
                                and mortgage loan we had on our personal
                                residential real property commonly known as 504
                                Wexford Road, Valparaiso (mailing), Porter
                                County, Indiana.
       App. p. 75.


[15]   Centier countered by designating the Miller Affidavit, which provided in part:

                      4.        Centier Bank had a long standing business
                                relationship with Bruce and Sybil Scheffer and
                                their company, [Scheffer, Inc.,] dating before 1985.
                                Various loans and lines of credit were established
                                over the years to assist Plaintiffs in their exclusive
                                ownership, management and operation of
                                [Scheffer, Inc.]. As the business of [Scheffer, Inc.]
                                grew, Bruce and Sybil Scheffer called upon Centier
                                Bank to provide additional loans, lines of credit
                                and letters of credit, all of which assisted Plaintiffs’
                                national and international business relationships in
                                the web auxiliary equipment marketplace.
                      5.        On or about April 1, 2009, representatives of the
                                Plaintiffs and [Scheffer, Inc.,] advised Centier
                                Bank that there were no monies available to
                                service the various loans, lines of credit and credit
                                facilities that had been provided by the bank, such
                                that a default of more than $3.5 million existed. . .
                                .
                      6.        In 1985, the relationship between Plaintiffs and
                                their company [Scheffer, Inc.] was for business
                                purposes only. Centier Bank did not have a
                                residential mortgage loan on 504 Wexford Road,
                                Valparaiso, IN with Bruce and Sybil Scheffer at
                                that time.
       Id. at 136-37.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 8 of 12
[16]   Centier correctly notes that the Scheffers designated no documentary evidence

       of a 1985 personal residential loan between the Scheffers and Centier or its

       predecessor that could have been connected with the life insurance policy

       assignments. They also designated no documentary evidence showing that they

       were the owners of the life insurance policies. However, our supreme court

       recently clarified that even perfunctory, self-serving affidavits are enough to

       create a genuine issue of material fact for summary judgment purposes.


[17]   In Hughley v. State, 15 N.E.3d 1000, 1004 (Ind. 2014), our supreme court noted

       that “Indiana consciously errs on the side of letting marginal cases proceed to

       trial on the merits, rather than risk short-circuiting meritorious claims.” In

       Hughley, a defendant responded to the State’s summary judgment motion and

       designation of evidence in a civil forfeiture action by designating his own

       affidavit—“albeit a perfunctory and self-serving one—that specifically

       controverted the State’s prima facie case, denying under oath that the cash or

       car were proceeds of or used in furtherance of drug crimes.” Hughley, 15

       N.E.3d at 1004. Our supreme court concluded that the affidavit was

       “sufficient, though minimally so, to raise a factual issue to be resolved at trial,

       and thus to defeat the State’s summary-judgment motion.” Id. The trier of fact

       was required to “resolve the parties’ differing accounts of the truth” and

       “reconcile the credibility of those two accounts.” Id. at 1004-05.


[18]   The court noted that the “Defendant may very well lose such a credibility

       contest” and that “the State’s circumstantial evidence, though not conclusive, is

       certainly compelling.” Id. at 1005. However, summary judgment “may not be

       Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 9 of 12
       used as a substitute for trial in determining factual disputes,” and it “is not

       appropriate merely because the non-movant appears unlikely to prevail at trial.”

       Id. Thus, even though the defendant’s designated evidence was thin, it was

       enough to preclude summary judgment for the State.2 Id.


[19]   That seems to be the case here. The Scheffers have not designated any evidence

       to contravene Centier’s claims beyond what appears to be a self-serving

       affidavit. They presented no documentation as to the alleged 1985 mortgage

       and no copies of the life insurance policies showing the owner of the policies.

       However, given the guidance in Hughley, we believe the razor thin affidavits are

       enough. Should they be? Our supreme court says, “Yes.”


[20]   The Scheffers’ affidavit, although lacking any documentary support, was

       enough to create a genuine issue of material fact as to whether the assignments

       related to a 1985 mortgage on their personal residence rather than loans to their

       business, Scheffer, Inc. Consequently, summary judgment to Centier was

       improper.




       2
[1]      Our supreme court addressed the concern of an unscrupulous litigant filing a perjurous affidavit and noted
       that an oath, subject to penalties for perjury, was “an adequate deterrent against false testimony—hence the
       Rule 56(C) requirement to designate evidence, and not merely rest on unsworn pleadings.” Hughley, 15
       N.E.3d at 1005.




       Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015            Page 10 of 12
                                               III. Cross-Appeal

[21]   On cross-appeal, Centier argues that it is entitled to an award of costs and

       attorney fees. Centier notes that it requested costs and attorney fees in its cross-

       motion for summary judgment pursuant to Indiana Code Section 34-52-1-1 but

       that the trial court did not address the argument. Centier further requests costs

       and attorney fees pursuant to Indiana Appellate Rule 66(E).


[22]   In general, Indiana adheres to the “American Rule” that each party pays for its

       own attorney fees, absent agreement or statute to the contrary. Knowledge A-Z,

       Inc. v. Sentry Ins., 891 N.E.2d 581, 585 (Ind. Ct. App. 2008), trans. denied. A

       court may award attorney fees to the prevailing party if the court finds that a

       party either “brought the action or defense on a claim or defense that is

       frivolous, unreasonable, or groundless” or continued to litigate after its “defense

       clearly became frivolous, unreasonable, or groundless” or “litigated the action

       in bad faith.” Ind. Code § 34-52-1-1(b). Similarly, on appeal, we “may assess

       damages if an appeal . . . is frivolous or in bad faith. Damages shall be in the

       Court’s discretion and may include attorneys’ fees.” Ind. Appellate Rule 66(E).

       Our discretion “is limited to instances ‘when an appeal is permeated with

       meritlessness, bad faith, frivolity, harassment, vexatiousness, or purpose of

       delay.’” Knowledge A-Z, 891 N.E.2d at 586. Given our resolution of the

       Scheffers’ appeal, we cannot say that Centier is entitled to costs and attorney

       fees under either Indiana Code Section 34-52-1-1 or Indiana Appellate Rule

       66(E).



       Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 11 of 12
                                                 Conclusion
[23]   The Scheffers failed to demonstrate that the trial court erroneously considered

       the Miller affidavit. Further, the trial court’s grant of summary judgment to

       Centier was improper because genuine issues of material fact exist. We affirm

       the trial court’s denial of the Scheffers’ motion for summary judgment but

       reverse the trial court’s grant of summary judgment to Centier. Further, we

       cannot say that Centier is entitled to costs or attorney fees at this time. We

       remand for proceedings consistent with this opinion.


[24]   Affirmed in part, reversed in part, and remanded.


       May, J., and Pyle, J., concur.




       Court of Appeals of Indiana | Memorandum Decision 45A03-1410-PL-367 | March 12, 2015   Page 12 of 12
