Mark Baker, Appellant-Defendant, v. Centier Bank, Appellee-Intervenor. (2025)

MEMORANDUM DECISION

Statement of the Case

[1] Robert E. Baker appointed his son, Mark Baker, as his attorney-in-fact. Several years later, Mark transferred $783,858.60 from Robert's bank account to his own account. Robert filed suit against Mark on his own behalf and on behalf of the Robert E. Baker Trust, demanding that he return the money. The trial court granted partial summary judgment to Robert and the Trust on three claims, ordering the return of most of the money. Robert subsequently passed away, and his estate was substituted as a party.

[2] Meanwhile, Centier Bank, who had provided banking services to Robert and Mark, intervened to inform the court about the status of the disputed money and to request permission to deposit it with the clerk of the court. The court granted Centier's request and ordered Mark to pay Centier's attorney's fees.

[3] In this interlocutory appeal, Mark requests reversal of the trial court's partial grant of summary judgment and reversal of the order directing him to pay Centier's attorney's fees. We affirm the trial court's grant of partial summary judgment but remand for further proceedings, including a clearer statement of the grounds for ordering Mark to pay Centier's attorney's fees.¹

Issues

[4] Mark raises two issues, which we restate as:

I. Whether the trial court erred in granting partial summary judgment for the Estate and the Trust.

II. Whether the trial court erred in ordering Mark to pay Centier Bank's attorney's fees.2

Facts and Procedural History

[5] Robert E. Baker owned and managed Baker Machinery, Inc. He had three sons: Wally, Kent, and Mark. Mark worked for Baker Machinery. As Robert aged and spent less time managing the business, Mark gradually took over operations.

[6] Robert created the Robert. E. Baker Trust (“the Trust”) as part of his estate planning, and some of the Trust proceeds were intended for Wally's children. But Robert retained personal ownership of other property. He told his attorney and others that he wanted his lake house to go to Kent, with the remainder of his money going to Mark. On several occasions, Robert asked his accountant and his attorney about the tax implications of giving property to his sons while he was still alive, but he never asked them to carry out any transfers.

[7] In 2011, eighty-seven-year-old Robert executed a power of attorney (“POA”) designating his son Mark as his attorney-in-fact. The POA authorized Mark to make gifts of Robert's money, but Mark was not authorized to give gifts to anyone other than Robert's wife in excess of the applicable federal gift tax exclusion limit.

[8] Baker Machinery had taken out a line of credit with a bank, and the bank filed a lawsuit against the company and Robert. In early November 2020, Robert hired an attorney to advise him on protecting his assets. Robert never told the attorney he wanted to give his money to Mark to shield it from the bank.

[9] During this time, Mark consulted two attorneys who had worked for Robert (including the attorney Robert had just hired) about transferring Robert's money to him. Both attorneys advised him to refrain from any transfers.

[10] On November 16, 2020, Mark transferred $783,858.60 out of Robert's account at Centier Bank. Mark later claimed the money was a gift from Robert. In 2020, the federal gift tax exclusion limit was $15,000 per recipient. Robert did not declare any gift transactions on his tax return for 2020.

[11] Robert revoked the POA in February 2022. He later issued a new power of attorney, naming Kent as his attorney-in-fact.

[12] In April 2022, Robert and the Trust filed suit against Mark, demanding that he return the money.³ They raised the following claims: a request for an accounting; replevin; conversion; preliminary and permanent injunction; breach of fiduciary duty; and money had and received. The trial court held a hearing and issued a preliminary injunction, prohibiting Mark from “transferring, encumbering, moving, spending or otherwise disposing of the funds in dispute that are in his possession[.]” Supp. Tr. Vol 2, p. 4. Centier requested and received permission to intervene in the suit, noting that it had an interest in the case as a custodian of the money.

[13] Mark moved to compel Robert to submit to an independent medical examination. The trial court held an evidentiary hearing and denied the motion.

[14] Robert and the Trust moved for summary judgment. In response, Mark argued the money was a gift, or in the alternative, that Robert had ratified the transfer. Among other designated material, Mark provided an affidavit from a family friend, Christie Mitchell. Mitchell stated she had witnessed a conversation between Mark and Robert after Robert and the Trust had filed the lawsuit. Mitchell said Mark had offered to return the money, but Robert told him to keep it.

[15] The trial court ultimately granted partial summary judgment to Robert and the Trust on their claims of replevin, breach of fiduciary duty, and money had and received. As to those claims, the trial court determined: (1) there is a dispute of material fact as to whether $15,000 of the transferred money was a gift; but (2) there was no dispute of material fact that Mark lacked the authority to give himself money above the $15,000 federal gift tax exclusion limit. As a result, the court ordered Mark to return to Robert and the Trust $768,858.60 of the transferred $783,858.60. Mark filed a Notice of Appeal.

[16] Meanwhile, Centier moved to deposit all of the disputed money with the clerk of the court. The court granted Centier's motion, ordering Centier to: (1) deposit the money with the clerk; and (2) submit an affidavit of fees and costs, which would be paid from the deposited funds. Centier alleged it had incurred $11,860.11 in attorney's fees.

[17] During a subsequent hearing, the court stated that Mark should pay Centier's attorney's fees, instead of Centier being made whole from the deposited funds. Mark filed a second Notice of Appeal. Robert died soon thereafter, and the trial court substituted his Estate as a party. The Court consolidated Mark's appeals in this case, and trial court proceedings have been stayed.

Discussion and Decision

I. Summary Judgment Order

[18] Mark argues the trial court erred in granting partial summary judgment against him on the Estate's and the Trust's claims. “When we review a summary judgment decision, we apply the same standard as the trial court.” Wohlt v. Wohlt, 245 N.E.3d 611, 615 (Ind. 2024). Summary judgment is appropriate “ if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Indiana Trial Rule 56(C). “We construe all facts and reasonable inferences in the nonmovant's favor.” Wohlt, 245 N.E.3d at 615. “We may affirm a summary judgment ruling if it is sustainable on any legal theory or basis found in the evidentiary matter designated to the trial court.” Schon v. Frantz, 156 N.E.3d 692, 698 (Ind. Ct. App. 2020). The appellant has the burden to convince us that the trial court erred, but we carefully scrutinize the trial court's decision to make sure that a party was not improperly denied its day in court. Cahill v. Davis, 242 N.E.3d 1104, 1108 (Ind. Ct. App. 2024).

[19] We turn to the Estate's and the Trust's replevin claim. The General Assembly has provided, in relevant part:

If any personal goods, including tangible personal property constituting or representing choses in action, are ․ wrongfully taken or unlawfully detained from the owner or person claiming possession of the property ․ the owner or claimant may bring an action for the possession of the property.

Ind. Code § 32-35-2-1 (2002). This statute codified the common law cause of action for replevin. See Lou Leventhal Auto Co. v. Munns, 328 N.E.2d 734, 739 (Ind. Ct. App. 1975) (noting that the replevin statute “evolved from the common law actions”).

[20] “A replevin action is a speedy statutory remedy designed to allow one to recover possession of property wrongfully held or detained as well as any damages incidental to the detention.” United Farm Fam. Mut. Ins. Co. v. Michalski, 814 N.E.2d 1060, 1066 (Ind. Ct. App. 2004). To prevail on a claim of replevin, the plaintiff must prove a “title or right to possession, that the property is unlawfully detained, and that the defendant wrongfully holds possession thereof.” Id. at 1067.

[21] Mark did not have any ownership interest in Robert's account with Centier Bank; the bank statements for that account include only Robert's name. The POA is thus the sole source of Mark's authority to give himself gifts from Robert's account. But Robert limited Mark's authority to make gifts under the POA as follows: “this authority shall exclude the power to make gifts to any person other than my wife in excess of the then available exemption under Section 2503 of the Internal Revenue Code of 1986, as amended, or any successor code section[.]” Appellant's App. Vol. 2, p. 102.

[22] There is no dispute that in 2020, the Revenue Code's exemption limit for gifts was $15,000. As a result, Mark had no authority to give himself any amount above that limit. The trial court correctly concluded there is no dispute of material fact that Robert had ownership of the money in his bank account, and Mark unlawfully took possession of $768,858.60. That amount excludes $15,000 of the total transferred funds, about which there is a dispute of material fact as to whether Robert gifted that money to Mark.

[23] Mark argues that, due to the POA, he was Robert's agent. And he further claims that a principal can ratify an agent's act even if the agent lacked the authority to perform the act at the time. Mark further states there is a dispute of material fact as to whether Robert ratified the transfer of funds after the fact, which he reasons would eliminate Robert's replevin claim because Mark kept the money as of right. The Estate and the Trust do not dispute that Mark was Robert's agent under the POA, but they do not agree that Robert ratified Mark's transfer of his money.

[24] “Ratification is the adoption of that which was done for and in the name of another without authority.” Am. Heritage Banco, Inc. v. Cranston, 928 N.E.2d 239, 249 (Ind. Ct. App. 2010). In general, whether a principal has ratified an agent's act is a question of fact. Beneficial Mortg. Co. of Ind. v. Powers, 550 N.E.2d 793, 796 (Ind. Ct. App. 1990), trans. denied. The “essential elements” of ratification are as follows:

(1) an unauthorized act performed by an individual for and on behalf of another and not on account of the actor himself; (2) knowledge of all material facts by the person to be charged with said unauthorized act; and (3) acceptance of the benefits of said unauthorized act by the person to be charged with the same.

T.L.G. v. R.J., 683 N.E.2d 633, 635 (Ind. Ct. App. 1997).

[25] In the current case, Mark points to Mitchell's affidavit, in which she stated that Robert told Mark that he could keep the money, as proof that Robert ratified Mark's transfer. But Mark does not point to any evidence that Robert received any benefit from allegedly allowing Mark to keep the money. Cf. T.L.G., 683 N.E.2d at 635 (upon reaching adulthood, child ratified mother's agreement to child support order by consenting to a determination of how father would pay his arrearage under the order). To the contrary, Robert lost a large sum of money, potentially with negative federal tax consequences because he did not report the transfer as a gift. Under these circumstances, Mark has not demonstrated any disputes of material fact as to ratification.

[26] Next, Mark argues there are disputes of fact as to whether Robert's demands to Mark to return the funds were the “product of influence” from Kent. Appellant's Br. p. 34. The record reflects that Mark and Kent were at odds, and Robert felt like they were both “pushing [him] one way or the other.” Appellant's App. Vol. 5, p. 95. But the trial court denied Mark's request to order Robert to submit to an independent medical examination, and Robert stated in a deposition that this lawsuit was his idea, not Kent's. Id. at 14. Mark's assertions are insufficient to establish a dispute of material fact as to Robert's mental capacity. The trial court did not err in granting partial summary judgment against Mark on the Estate and the Trust's claim of replevin.⁴

II. Attorney's Fees Order

[27] Mark claims the trial court erred in ordering him to pay Centier's attorney's fees. The general rule in Indiana, known as “the American Rule,” is that each party pays its own attorney's fees. River Ridge Dev. Auth. v. Outfront Media, LLC, 146 N.E.3d 906, 912 (Ind. 2020). But “[s]tatutes can authorize courts to award attorney's fees, and courts have carved out exceptions to the American Rule using their inherent equitable powers.” Id. “We review a trial court's award of attorney's fees for an abuse of discretion.” Id. “An abuse of discretion occurs when the court's decision either clearly contravenes the logic and effect of the facts and circumstances or misinterprets the law.” Id.

[28] There is no dispute that Centier is entitled to recoup its attorney's fees. By statute, a bank that files an interpleader action and deposits funds with the court is “entitled to recover and collect the costs and expenses, including attorney's fees[.]” Ind. Code § 28-9-5-3 (1989). Mark instead argues that Centier was “not entitled” to collect its fees from him instead of from the deposited funds. Appellant's Br. p. 22.

[29] To support this position, Mark cites Porter Dev. v. First Nat'l Bank, 866 N.E.2d 775 (Ind. 2007). In that case, two parties disputed ownership of a certificate of deposit that First National Bank (“the Bank”) had issued. The Bank filed an interpleader action and requested attorney's fees. The trial court ordered the Bank to deposit the fees with the clerk of court but denied the Bank's request for attorney's fees. The Indiana Supreme Court reversed the trial court, concluding the Bank was entitled to recover its attorney's fees from the interpleaded funds. The Court stated,

We conclude that Indiana's Adverse Claim Interpleader statute is mandatory and establishes the right of a depository financial institution that pays funds subject to an adverse claim into a court to “recover and collect the costs and expenses, including attorney's fees, incurred by the depository financial institution in the interpleader action.” Ind. Code § 28-9-5-3. Applying the plain language of this enactment, such recovery extends to all reasonable costs and expenses incurred by a depository financial institution with respect to the interpleader action or proceeding. We hold, however, that such right to recovery includes only those costs and expenses that are expended in bringing a proper interpleader, or successfully defending its use of interpleader. In the event the deposited funds are insufficient, the trial court may impose such costs and expenses upon unsuccessful claimants whose claims led to the interpleader and deposit of funds with the court.

Id. at 780.

[30] Mark reads Porter Development as requiring financial institutions in interpleader actions to seek recovery of fees and costs from only the interpleaded funds unless the funds are depleted. We disagree. The Supreme Court also stated there may be “unusual circumstances, such as when the interpleading stakeholder incurs additional attorney fees and costs beyond the reasonable and ordinary expenses associated with the prosecution of an interpleader proceeding[,]” that would permit a different approach. Id. The Court also determined that one of the litigants in that case could be required to replenish the money if the trial court determined, based on the litigant's “conduct,” that fairness required it. Id. In sum, in Porter Development the Court did not hold that a bank seeking attorney's fees under the interpleader statute must always be reimbursed from interpleaded funds. To the contrary, the Court left open the possibility that a litigant's misconduct could result in the litigant being liable to pay the bank's fees through replenishment of interpleaded funds.

[31] In the current case, the trial court ordered Mark to pay Centier's attorney's fees directly, without explaining the basis for its order. Under Porter Development, the proper procedure is to order the financial institution to be made whole from the interpleaded funds and then order a litigant to replenish the funds if the litigant's conduct justifies it. In the alternative, the trial court's attorney's fees award may have been based on other grounds, such as Indiana Code section 34-52-1-1(b) (1998) or the common law equitable doctrines discussed in River Ridge. See 146 N.E.3d at 912 (discussing obdurate behavior exception and trial courts’ inherent authorization to sanction parties by shifting fees). We cannot assess whether the trial court acted within its discretion in ordering Mark to pay Centier's fees.

[32] Based on the lack of clarity in the record, we remand for the trial court to set forth the basis for its attorney's fees order and proceed accordingly. On remand, the trial court may amend the award to include Centier's appellate costs and fees in this appeal.

Conclusion

[33] For the reasons stated above, we affirm the judgment of the trial court but remand for further proceedings not inconsistent with this opinion, including explaining the grounds for the attorney's fees award and determining whether Mark shall pay Centier's appellate fees and costs.

[34] Affirmed and remanded.

FOOTNOTES

1.   The author of this opinion is not related to any of the parties within the sixth degree of consanguinity.

2.   The Estate and the Trust argue that Mark has litigated this case in an “abusive” manner that “continues to be ․ worthy of sanction.” Estate and Trust's Appellees’ Br. p. 16. They further describe Mark's arguments on appeal as “frivolous and unfounded[.]” Id. at 23. To the extent that the Estate and the Trust are requesting an award of appellate attorney's fees for themselves in addition to Centier, we deny that request.

3.   The record does not explain the Trust's interest in the money that Mark transferred from Robert's Centier account.

4.   Because we affirm the summary judgment order as to replevin, we need not address Mark's challenges to the trial court's ruling on Robert's claims of breach of fiduciary duty or money had and received.

Baker, Senior Judge.

Judges Mathias and Weissmann concur. Mathias, J., and Weissmann, J., concur.