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Order that law firm pay attorney fees reversed

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The Indiana Court of Appeals reversed today an order awarding attorneys fees based on the actions of an Indianapolis law firm in a dispute involving the dissolution of another firm, finding the record didn't provide any insight into why the trial court granted the award.

In James W. Smyth v. Judy G. Hester and the Estate of Timothy P. Brazill; Plews Shadley Racher & Braun, as intervenor, No. 29A02-0803-CV-237, Plews Shadley Racher & Braun appealed the trial court order awarding attorney fees to Judy Hester and the Estate of Timothy P. Brazill. Hester, Brazill, and James Smyth practiced law together under the partnership Smyth Brazill Hester until Smyth advised the other two partners their partnership was over. A month later, Brazill died and Smyth and Hester were unable to agree as to how to end the partnership.

Smyth retained Plews as counsel to represent him in his complaint against Hester and Brazill's estate seeking damages, an accounting, and the appointment of receiver over SBH based upon alleged breach of fiduciary duties by Hester and Brazill. The estate also alleged breach of fiduciary duty and conversion against Smyth and requested an accounting and declaratory judgment. Hester counterclaimed against Smyth alleging breach of fiduciary duty, self-dealing, and conversion, and also requested for accounting.

The estate and Hester filed a motion for attorney fees and costs against Plews and Smyth because they believed Smyth and the firm were litigating a frivolous, unreasonable, and groundless claim in bad faith. The trial court found their actions in litigating the matters illustrated "their frivolous, unreasonable, and bad faith conduct in this case."

The Court of Appeals agreed in general with Plews' argument on appeal that the trial court order contained no finding of fact to support the judgment for attorney fees. None of the findings of fact contain a specific reference to a problematic litigation action and none of the conclusions of law reflect the legal authority and standard for an attorney fee award, wrote Judge Carr Darden.

"We acknowledge that the record may include some questionable litigation tactics that might support the trial court's exercise of its discretion to award attorney fees," the judge wrote. "However, our review in that regard is impaired by the fact that the order appealed does not provide us with any insight as to the trial court's reason for the award of attorney fees in this case, i.e., what the trial court found to be frivolous, unreasonable, and bad faith conduct. Accordingly, we remand to the trial court for further consideration and explanation of its judgment in that regard."

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