Neither tenant nor trustee of ‘fix-upper’ entitled to attorney fees, COA affirms

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Neither the trust that owns a ramshackle house nor the man living on the property fixing it up will be awarded attorney fees after the Court of Appeals of Indiana affirmed Marion Superior Court rulings that placed blame on both sides for the set of circumstances.

The Traub Trust owns a rental property residence at 1106 North Traub Ave. in Indianapolis.

In October 2016, Demond Welch met with Laura Zhaos Falp, the trustee, at the residence, which had been occupied by squatters. The residence was in extremely poor condition, including nonfunctional doors and locks, broken windows, a broken water line, no gas service, feces and urine throughout the residence, dead animals in the attic, holes allowing animals access into the attic, debris and clutter throughout the residence, holes in the walls and floors, and missing or malfunctioning plumbing and electrical systems.

The trust and Welch entered into an agreement that required Welch to “take the house ‘As Is, Where It Is and How It Is,’” and noted that the residence was a “handyman special/fix-upper with rent discount every month.”

Welch moved into the residence and began making repairs. He repeatedly contacted Falp about repairs to the property, and Falp “always” told Welch that “it was [his] responsibility.”

After Welch installed new piping to repair the gas furnace and the gas company turned the gas on, the company determined the furnace was “just too old and [was] leaking.”  Welch was required to use space heaters during the winter or stay in a hotel when it was too cold.

Welch texted Falp “a lot about the heat,” and every time Welch asked Falp to “do something,” she told him to “have [his] people do it.”

Welch fell behind on his rent payments, and in November 2020, the trust filed a notice of claim for possession of real estate in small claims court, alleging he had failed to pay rent and the trust was entitled to the possession of the property.

Welch filed an answer and counterclaim against the trust, and the small claims court found the matter involved a “rent to buy” contract, “which is not a rental agreement.” The small claims court informed the trust that it could request transfer to the Marion Superior Court within 10 days or the matter would be dismissed.

After the transfer occurred, Welch filed his amended answer and counterclaims.

A bench trial was held in September 2021, and the trial court ultimately found for Welch on his counterclaim, granted possession of the property to the trust, granted the Trust back rent, and denied both parties’ requests for attorney fees.

On appeal, Welch argued that the trial court erred by denying his request for attorney fees pursuant to Indiana Code Chapter 32-31-8.

Cross-appealing, the trust argued (1) the trial court erred by denying its request for attorney fees and late fees pursuant to the agreement; (2) the trial court erred by granting Welch’s counterclaim against the trust; and (3) the judgment exceeded the jurisdictional limit for a small claims court.

Upon review, the Court of Appeals in Demond Latroy Welch v. 1106 Traub Trust, 21A-PL-2888, affirmed the Marion Superior Court’s rulings on Monday.

Judges first concluded that the trial court didn’t err or abuse its discretion in either instance regarding attorney fees or in denying the trust’s request for late fees “given the Trust’s multiple statutory violations, failure to remedy the many defects in the residence, and regular acceptance of late payments … .”

Next, the COA determined the trial court did not err by granting Welch’s counterclaim.

“Welch presented evidence that he repeatedly complained to Falp regarding the conditions in the residence, especially the lack of heat, and that the Trust failed to make repairs,” Judge Elizabeth Tavitas wrote. “The Trust’s argument is merely a request that we reweigh the evidence, which we cannot do.”

Finally, the appellate court found the small claims court did not abuse its discretion by transferring the matter to the Marion Superior Court.

“Given the complex nature of the Agreement and the limited jurisdictional remedies available to the Small Claims Court, we conclude that the Small Claims Court was within its discretion to transfer the matter to the Superior Court,” Tavitas wrote.

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