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Plaintiffs' appeal of bad-faith ruling for bank costs more legal fees

April 26, 2018

Finding a couple’s appeal of a judgment in favor of a bank meritless and in bad faith, the Indiana Court of Appeals affirmed a trial court ruling and remanded the case for a determination of appellate legal fees to be awarded from the couple to the bank.

Bruce and Sybil Scheffer sued Centier Bank in a dispute over life insurance policies used to secure commercial and/or residential loans the couple and their business, Scheffer Inc., had dating to 1985 with Centier and its predecessor, First Bank of Whiting. The Scheffers alleged the life insurance policies had been assigned as collateral for a 1985 mortgage on property in Valparaiso, which the bank denied.

Lake Superior Judge Diane Kavadias Schneider ruled for the bank in August 2017, granting its motion for judgment on the evidence. Among her findings were that the assignments did not serve as collateral for the 1985 mortgage; that Centier had taken cash surrender of the policies in another lawsuit; and that “The Court was somewhat astonished when Mr. Scheffer acknowledged” that the 1985 mortgage was with another financial institution “and he had made a mistake.”

The judge found that mistake had essentially been the basis for the entire suit, and as such, “the Court would have expected [the Scheffers] to come to court … and dismiss their claim.”   

“… The Court finds that [the Scheffers] brought this action in bad faith, and continued to maintain the action when it became clearly apparent that it was frivolous, unreasonable and groundless,” the trial court found in ruling for Centier and awarding the bank $68,731.98 in legal fees.

The Indiana Court of Appeals affirmed those rulings Thursday in Bruce and Sybil Scheffer v. Centier Bank, 45A04-1709-PL-2118, and added to the couples’ legal bill in this long-running litigation.

“We conclude that Centier has shown, based on the evidence as set forth above and in the record, that the Scheffers’ appeal with respect to the trial court’s ruling on its motion for judgment on the evidence is meritless,” Judge Elaine Brown wrote for the panel. “We remand for a determination of a reasonable appellate attorney fee award under these circumstances. We decline to require the trial court to order that the Scheffers’ attorney be held jointly responsible for an attorney fee award in favor of Centier.”

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