“[A] conflict of interest is not subject to a motion to compel its waiver.”
How later courts described this case
- “[A] conflict of interest is not subject to a motion to compel its waiver.”
- explaining that in such a case, insurer should not defend but should reimburse the insured’s personal counsel
Written by the judges who cited it.
The opinion
MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
FILED
regarded as precedent or cited before any Dec 21 2020, 9:02 am
court except for the purpose of establishing CLERK
Indiana Supreme Court
the defense of res judicata, collateral Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Bruce P. Clark Dirck H. Stahl
St. John, Indiana L. Katherine Boren
Evansville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Smarte Carte, Inc., December 21, 2020
Appellant/Defendant/Cross-Claim Court of Appeals Case No.
Defendant, 20A-CT-975
v. Appeal from the Vanderburgh
Circuit Court
Simon Property Group, Inc., and The Honorable David D. Kiely,
SM Eastland Mall, LLC Trial Court Judge
Appellees/Defendants/Cross-Claim Trial Court Cause No.
Plaintiffs. 82C01-1104-CT-182
Tavitas, Judge.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 1 of 20
Case Summary
[1] Smarte Carte, Inc. (“Smarte Carte”) appeals the trial court’s grant of summary
judgment to Simon Property Group, Inc. and SM Eastland Mall, LLC
(collectively, “the Simon Parties”). We affirm.
Issues
[2] Smarte Carte raises two issues, which we restate as:
I. Whether the trial court properly granted summary judgment to
the Simon Parties regarding Smarte Carte’s indemnification of
the Simon Parties.
II. Whether the trial court properly awarded $45,113.08 in
attorney fees to the Simon Parties.
Facts
[3] SM Eastland Mall, LLC, owned and operated Eastland Mall in Evansville,
Indiana. Simon Property Group, Inc., “did not own or operate Eastland Mall
or SM Eastland Mall, LLC,” but is “the owner of an entity which was the
general partner in the limited partnership that was the sole member of SM
Eastland Mall, LLC.” Appellant’s App. Vol. II p. 139. IPC International
Corporation provided security services at Eastland Mall.
[4] In January 2009, Smarte Carte entered into a lease agreement with SM
Eastland Mall (“Lease”) that allowed Smarte Carte to place massage chairs at
certain locations in the aisles at Eastland Mall. The Lease provided, in relevant
part:
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 2 of 20
10. Indemnity and Exculpation of Landlord: (a) Tenant shall
assume liability for and shall indemnify, defend, and hold
harmless Landlord and any other owners of the Shopping Center,
(and all their shareholders, partners, directors, related and
affiliated entities, ground lessors, managers, management
companies, employees, agents, guests, customers and invitees)
against and from any and all liabilities, obligations, losses,
penalties, actions, suits, claims, damages, expenses,
disbursements (including legal fees and expenses), or costs of any
kind and nature whatsoever in any way relating to or arising out
of; (i) any act or omission of Tenant (including without limitation
the acts or omissions of the Tenant’s officers, directors,
employees, agents, contractors, invitees, and/or licensees within
the Shopping Center), (ii) any occurrence which takes place in or
about the Space or, (iii) any damages to the Space. To the extent
permitted by applicable law, Tenant’s duty to indemnify
Landlord under this paragraph will apply regardless of and will
extend to cover losses caused by either Tenant’s or Landlord’s
concurrent, comparative, or contributory negligence.
*****
(e) The indemnification and waivers contained in this paragraph
10 shall survive expiration or early termination of this Lease.
Id. at 143-44. The Lease also provided:
28. Attorney’s and Collector’s Fees: If Landlord is required to
bring or defend any litigation arising out of this Lease, or to
enforce or defend the provisions hereof, Landlord shall recover
from Tenant its reasonable attorney’s fees and costs. Tenant
further agrees to pay all of Landlord’s costs of collection,
including any collection fees charged by a collection agency, in
the event of any default hereunder.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 3 of 20
Id. at 147.
[5] On January 18, 2010, John Bush was injured by a needle while sitting in a
Smarte Carte massage chair at Eastland Mall. 1 The Simon Parties’ claims
administrator notified Smarte Carte of the incident and demanded that Smarte
Carte or its insurer “defend and indemnify” the Simon Parties. Id. at 155. On
June 30, 2010, Smarte Carte’s liability insurer, Zurich American Insurance
(“Zurich”), agreed to accept the tender of the defense and indemnity of the
Simon Parties.
[6] On April 1, 2011, John Bush and Leslie Bush (“the Bushes”) filed a complaint
against Smarte Carte and IPC International Corporation for negligence related
to John Bush’s injury from the needle puncture. Smarte Carte’s amended
answer and affirmative defenses, which was filed in June 2011, provided in
part: “That the damages and/or injuries alleged to have been incurred by the
plaintiff were caused in full or in part by non-parties, Simon Property Group,
Inc. . . . and Shiatsu Plus, Inc. . . .” 2 Id. at 39.
[7] In December 2011, the Bushes filed a motion to amend their complaint to add
the Simon Parties and Shiatsu Plus as additional defendants after they were
named as non-parties by Smarte Carte. Id. at 44. The amended complaint
alleged, in part, that the defendants, including the Simon Parties, “failed to
1
The record does not contain any information regarding the nature of the needle or Bush’s injuries.
2
Shiatsu Plus, Inc., apparently manufactured the massage chair at issue here.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 4 of 20
maintain in a proper and safe manner the equipment on which the Plaintiff was
injured which negligence cause[d] injury to the Plaintiff, John Bush.” 3 Id. at
181.
[8] On December 29, 2011, the Simon Parties informed Smarte Carte of the
complaint against the Simon Parties and again demanded that Smarte Carte
defend and indemnify the Simon Parties. The Simon Parties also informed
Smarte Carte that, in the event the Simon Parties were required to obtain local
counsel to litigate the matter, the Simon Parties would expect Smarte Carte to
reimburse the Simon Parties for attorney fees and costs. The Simon Parties
asked for a response by January 13, 2012. 4
[9] In January 2012, Smarte Carte filed an answer and affirmative defenses to the
Bushes’ amended complaint and alleged that Smarte Carte “did not have
control over the area in question sufficient for the creation of a legal duty.”
Appellant’s App. Vol. II p. 56. Smarte Carte no longer asserted a non-party
defense regarding the Simon Parties or Shiatsu Plus.
[10] In March 2012, the Simon Parties filed an answer to the amended complaint
and a cross-claim against Smarte Carte. In the cross-claim, the Simon Parties
noted that, after the Simon Parties were added as defendants in the Bushes’
3
The amended complaint named the Simon Property Group, Inc., as a defendant. The Bushes later
requested to amend their amended complaint by inserting SM Eastland Mall, LLC after each place Simon
Property Group, Inc. d/b/a Eastland Mall appeared in the amended complaint.
4
The original letter lists a deadline of January 13, 2011, which is clearly a typographical error.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 5 of 20
action, Smarte Carte failed to notify the Simon Parties of any intent to defend
and indemnify the Simon Parties and took no actions to effectuate such a
defense or indemnity. The Simon Parties alleged that Smarte Carte owed a
duty to “assume liability for and indemnify, defend, and hold harmless [the
Simon Parties] . . . .” Id. at 78. Accordingly, the Simon Parties requested
judgment that Smarte Carte had the duty to defend and indemnify the Simon
Parties and for a judgment sufficient to reimburse the Simon Parties for
attorney fees and expenses incurred.
[11] In June 2012, Smarte Carte’s counsel sent a letter to the Simon Parties
requesting that Smarte Carte’s counsel also represent the Simon Parties in the
action. Smarte Carte’s counsel, however, also pointed out that, pursuant to
Rule 1.7 of the Indiana Rules of Professional Responsibility, a potential conflict
of interest existed in counsel representing both Smarte Carte and the Simon
Parties; the dual representation required a consent and conflict waiver by the
Simon Parties. The Simon Parties refused to waive the conflict of interest, and
Smarte Carte refused to pay for separate counsel for the Simon Parties.
[12] In December 2012, Smarte Carte filed an answer and affirmative defenses to the
cross-claim. Smarte Carte alleged, in part, that Smarte Carte was “not
responsible or liable for the negligence or willful conduct of” the Simon Parties.
Id. at 111. In July 2017, Smarte Carte also filed its list of witnesses, exhibits,
and specifications, which included the following contentions:
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 6 of 20
9. The defendant contends that there was no duty owed by
Smarte Carte, Inc. to the plaintiffs at the time and place alleged
in the plaintiff’s Complaint.
10. The defendant contends that the alleged incident was caused,
either singularly or jointly, by the actions and/or inactions of the
plaintiff and/or the employees of the mall and security present at
the time of the incident. Smarte Carte did not act or fail to act in
any manner that caused or contributed to cause to the plaintiff’s
alleged incident nor did Smarte Carte violate any applicable
regulations, codes or standards relative to this alleged incident.
*****
12. The defendant contends that Smarte Carte did not have
control of the subject area at the time the incident occurred
sufficient to create a legal duty.
*****
18. The defendant contends that the duty for securing and
inspecting the subject area was the responsibility of the mall
and/or its security.
Appellee’s App. Vol. II pp. 8-9.
[13] In July 2018, the Simon Parties filed a motion for partial summary judgment on
their cross-claim against Smarte Carte. The Simon Parties requested judgment
on the issue of liability regarding “the Simon Parties’ right to a defense by
independent counsel separate from counsel representing Smarte Carte, Smart
Carte’s obligation to pay for the legal fees so incurred, and Smarte Carte’s
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 7 of 20
obligation to indemnify the Simon Parties.” Appellant’s App. Vol. II p. 116.
Smarte Carte filed a response to the Simon Parties’ motion for partial summary
judgment. Smarte Carte argued that: (1) the Simon Parties did not have the
right to independent counsel because there was no conflict of interest; and (2)
the Lease did not require Smarte Carte to indemnify the Simon Parties for the
Simon Parties’ “own negligence.” Appellant’s App. Vol. III p. 14.
[14] In March 2019, the Bushes entered into a settlement agreement with Smart
Carte and the Simon Parties and requested dismissal of their claims with
prejudice, which the trial court granted. The Simon Parties’ cross-claim against
Smarte Carte, however, was not settled and remained pending.
[15] On July 29, 2019, the trial court granted partial summary judgment to the
Simon Parties. The trial court found:
1. The Simon Parties were and are entitled to independent
counsel to defend against Plaintiffs’ claims in this cause, and to
prosecute the cross-claim against Smarte Carte herein, due to a
conflict of interest between counsel for Smarte Carte and the
Simon Parties.
2. Smarte Carte is obligated to pay for that independent counsel.
3. The Simon Parties were required to incur additional legal
expense in prosecuting a cross-claim to compel Smarte Carte to
provide and pay for such independent counsel, and Smarte Carte
is obligated under the Lease to pay for those legal fees and
expenses as well.
Appellant’s App. Vol. II p. 27. The trial court further ordered:
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 8 of 20
[P]artial summary judgment is hereby GRANTED and
ENTERED in favor of the Simon Parties as to Smarte Carte’s
liability on the Cross-claim to compensate the Simon Parties for
all attorney fees and expenses they have incurred in this matter,
including such fees and expenses incurred in defending against
the underlying Plaintiffs’ claims and in prosecuting the Simon
Parties’ crossclaim to enforce the Lease, including all such fees
and expenses incurred to date and through the date of a final
judgment herein.
Id. The trial court set the matter for a hearing on the amount of attorney fees to
be awarded.
[16] The Simon Parties filed an affidavit and petition for attorney fees. Smarte Carte
filed a motion to strike and a response to the affidavit and petition for attorney
fees. Smarte Carte contested the reasonableness and appropriateness of the fees
requested in the affidavit and petition. After further briefing, on April 1, 2020,
the trial court: (1) denied Smarte Carte’s motion to strike; (2) found the Simon
Parties’ “fees and costs submitted to be reasonable”; (3) granted the Simon
Parties’ fee petition; and (4) entered final judgment for the Simon Parties. Id. at
30. Accordingly, the trial court awarded the Simon Parties “$42,972.75 in fees
and $2,140.33 in costs, for a total judgment of $45,113.08” for attorney fees and
costs. Id. Smart Carte now appeals.
Analysis
I. Partial Summary Judgment
[17] Smarte Carte first challenges the trial court’s grant of partial summary judgment
to the Simon Parties on the Simon Parties’ cross-claim. Summary judgment is
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 9 of 20
appropriate only when the moving party shows there are no genuine issues of
material fact for trial and the moving party is entitled to judgment as a matter of
law. Erie Indem. Co. for Subscribers at Erie Ins. Exch. v. Estate of Harris by Harris, 99
N.E.3d 625, 629 (Ind. 2018); see also Ind. Trial Rule 56(C). Once that showing
is made, the burden shifts to the nonmoving party to designate appropriate
evidence to demonstrate the actual existence of a genuine issue of material fact.
Schoettmer v. Wright, 992 N.E.2d 702, 705-06 (Ind. 2013). When ruling on the
motion, the trial court construes all evidence and resolves all doubts in favor of
the non-moving party. Id. at 706. We review the trial court’s ruling on a
motion for summary judgment de novo, and we take “care to ensure that no
party is denied his day in court.” Id. “We limit our review to the materials
designated at the trial level.” Gunderson v. State, Indiana Dep’t of Nat. Res., 90
N.E.3d 1171, 1175 (Ind. 2018), cert. denied, 139 S. Ct. 1167 (2019).
[18] The parties’ arguments pertain to the Lease’s indemnification clause.
“‘[I]ndemnification clauses are strictly construed and the intent to indemnify
must be stated in clear and unequivocal terms.’” BioConvergence, LLC v. Menefee,
103 N.E.3d 1141, 1169 (Ind. Ct. App. 2018) (quoting Fresh Cut, Inc. v. Fazli, 650
N.E.2d 1126, 1132 (Ind. 1995)), trans. denied. “Indemnity agreements are
subject to the standard rules and principles of contract construction.” Id. If the
words of an indemnity agreement are clear and unambiguous, they are to be
given their plain and ordinary meaning. Symons v. Fish, __ N.E.3d __, __, 2020
WL 5792115, at *6 (Ind. Ct. App. Sept. 29, 2020). We will construe an
indemnity agreement to cover all losses and damages to which it reasonably
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 10 of 20
appears the parties intended it to apply. Id. The interpretation of a written
contract, including an indemnity provision, is a question of law.
BioConvergence, 103 N.E.3d at 1169. We review questions of law de novo and
owe no deference to the trial court’s legal conclusions. Id.
A. Sole Negligence
[19] Smarte Carte argues that, under the Lease, Smarte Carte was not responsible
for the Simon Parties’ sole negligence. Because the underlying litigation was
settled and there was no determination of liability or allocation of fault, Smarte
Carte argues that the Simon Parties could have been solely at fault, and thus,
the indemnification agreement should not apply. The Simon Parties respond
that Smarte Carte’s duty to defend is broader than its duty to indemnify.
[20] The Simon Parties point out that this issue has been addressed in Indiana courts
in the context of insurance law, which we find persuasive here.
In Indiana, an insurer’s duty to defend is broader than the duty to
indemnify. It is the nature of the claim, not its merit, that
establishes an insurer’s duty to defend. To determine whether an
insurer has a duty to defend, we compare the underlying factual
allegations of the complaint with the relevant provisions of the
insurance policy. The duty to defend is triggered when the
complaint alleges facts that might fall within the coverage of the
policy. “Only if there is no possible factual or legal basis on
which the insurer might be obligated to indemnify will the
insurer be excused from defending its insured.”
City of Gary v. Auto-Owners Ins. Co., 116 N.E.3d 1116, 1121 (Ind. Ct. App. 2018)
(internal citations omitted). We will, thus, compare the underlying factual
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 11 of 20
allegations of the Bushes’ amended complaint with the relevant provisions of
the Lease agreement to determine whether the amended complaint alleged facts
that “might fall within” the indemnity provision. Id.
[21] Smarte Carte points to the following provision of the Lease: “To the extent
permitted by applicable law, Tenant’s duty to indemnify Landlord under this
paragraph will apply regardless of and will extend to cover losses caused by
either Tenant’s or Landlord’s concurrent, comparative, or contributory
negligence.” Appellant’s App. Vol. II p. 144. Smarte Carte argues that the
Lease did not require Smarte Carte to indemnify the Simon Parties for the
Simon Parties’ sole negligence under the Lease.
[22] The indemnity provision of the Lease, however, also required Smarte Carte to
“assume liability for and [ ] indemnify, defend, and hold harmless” the Simon
Parties “against and from any and all liabilities, obligations, losses, penalties,
actions, suits, claims, damages, expenses, disbursements (including legal fees and
expenses), or costs of any kind and nature whatsoever in any way relating to or
arising out of; (i) any act or omission of [Smarte Carte], (ii) any occurrence
which takes place in or about the Space or, (iii) any damages to the Space.” Id.
at 143-44 (emphasis added). This provision of the Lease clearly and
unambiguously details Smarte Carte’s obligation to the Simon Parties under the
Lease.
[23] The Bushes’ amended complaint alleged that John Bush was injured by a
needle when he sat on Smarte Carte’s massage chair and that the defendants,
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 12 of 20
including Smarte Carte and the Simon Parties, “failed to maintain in a proper
and safe manner the equipment on which the Plaintiff was injured which
negligence cause[d] injury to the Plaintiff, John Bush.” Id. at 181. The
allegations in the Bushes’ amended complaint do not allege sole negligence of
the Simon Parties. Rather, the allegations relate to an “occurrence” that took
“place in or about” the area leased by Smarte Carte. Id. at 144. Accordingly,
Smarte Carte had a duty to defend the Simon Parties with respect to the Bushes’
amended complaint as clearly stated in the Lease. The trial court properly
granted summary judgment to the Simon Parties on this argument.
B. Independent Counsel
[24] Smarte Carte also argues that the Simon Parties did not have the right to
independent counsel. The parties rely on Rule 1.7(a) of the Indiana Rules of
Professional Conduct, which provides:
Except as provided in paragraph (b), a lawyer shall not represent
a client if the representation involves a concurrent conflict of
interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse
to another client; or
(2) there is a significant risk that the representation of one
or more clients will be materially limited by the lawyer’s
responsibilities to another client, a former client or a third
person or by a personal interest of the lawyer.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 13 of 20
[25] “[T]he mere possibility of adverse effect upon exercise of free judgment
prevents a lawyer from representing clients with opposing interests.” Robertson v.
Wittenmyer, 736 N.E.2d 804, 809 (Ind. Ct. App. 2000) (citing In re Gerde, 634
N.E.2d 494, 497 (Ind. 1994)). We have held, in the insurance context, that
where “the interests of the insured and the insurer were in partial conflict, . . .
the insurer should not defend, but, rather, as here, should reimburse the
insured’s personal counsel.” Snodgrass v. Baize, 405 N.E.2d 48, 51 (Ind. Ct.
App. 1980), reh’g denied.
[26] Both parties rely on Armstrong Cleaners, Inc. v. Erie Ins. Exch., 364 F. Supp. 2d
797 (S.D. Ind. 2005), which addressed a similar issue in the context of an
insurer’s potential conflict of interest. 5 Armstrong Cleaners held:
Whether the potential conflict of interest is sufficient to require
the insured’s consent is a question of degree that requires some
5
Armstrong Cleaners described the classic conflict of interest situation as follows:
The classic example in Indiana law is a lawsuit by a person who has been shot and injured by
the insured. The victim alleges in Count One that the insured shot him intentionally and in the
alternative in Count Two that the insured shot him negligently. Under a typical liability
insurance policy, coverage is available for negligent acts but not for intentional acts. The insurer
therefore would benefit from either a defense verdict or a finding of intentional wrongdoing.
The insured, on the other hand, would benefit from either a defense verdict or a finding of
negligence. Absent informed consent of both the insurer and the insured, an attorney trying to
represent both the insured and the insurer would face an insurmountable conflict of interest. See
Snodgrass v. Baize, 405 N.E.2d 48, 51 (Ind. App. 1980) (explaining that in such a case, insurer
should not defend but should reimburse the insured’s personal counsel), citing All-Star Ins. Corp.
v. Steel Bar, Inc., 324 F.Supp.160, 165 (N.D. Ind. 1971) (in such cases the insurer “must either
provide an independent attorney to represent the insured, or pay for the cost of defense incurred
by the insured hiring an attorney of his choice”); accord, Fireman’s Fund Ins. Co. v. Waste
Management of Wisconsin, Inc., 777 F.2d 366, 368-69 (7th Cir. 1985) (applying Wisconsin law,
reservation of rights created a conflict of interest where plaintiffs charged Waste Management
with contaminating groundwater through negligent or intentional acts, and that the equitable
solution was to allow insured to select counsel “subject to the approval and at the expense of”
the insurer).
Armstrong Cleaners, 364 F.Supp.2d at 806.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 14 of 20
predictions about the course of the representation. If there is a
reasonable possibility that the manner in which the insured is
defended could affect the outcome of the insurer’s coverage
dispute, then the conflict may be sufficient to require the insurer
to pay for counsel of the insured’s choice. Evaluating that risk
requires close attention to the details of the underlying litigation.
The court must then make a reasonable judgment about whether
there is a significant risk that the attorney selected by the
insurance company will have the representation of the insureds
significantly impaired by the attorney’s relationship with the
insurer.
Armstrong Cleaners., 364 F.Supp.2d at 808.
[27] Here, the trial court concluded that the Simon Parties were entitled to
independent counsel as a result of the conflict, and we agree. The incident at
issue here occurred on January 18, 2010, and in June 2010, Smarte Carte’s
insurer, Zurich, agreed to accept the tender of defense and indemnity of the
Simon Parties. When the Bushes filed a complaint against Smarte Carte,
Smarte Carte named the Simon Parties as non-parties at fault in the incident,
and the Bushes filed an amended complaint adding the Simon Parties as a
defendant. Smarte Carte squarely created a conflict by alleging the Simon
Parties were at fault. Although the Simon Parties again demanded that Smarte
Carte defend and indemnify the Simon Parties, the Simon Parties did not
receive a response to the demand. Instead, Smarte Carte filed an answer to the
amended complaint and alleged that it “did not have control over the area in
question.” Appellant’s App. Vol. II p. 56. In March 2012, the Simon Parties
then filed a cross-claim against Smarte Carte for indemnification.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 15 of 20
[28] In June 2012, Smarte Carte’s counsel sent a letter to the Simon Parties
regarding Smarte Carte’s counsel representing Simon Parties in the Bushes’
action. The letter noted a potential conflict of interest, however, and asked the
Simon Parties to execute a waiver of the conflict. 6 The Simon Parties refused to
waive the conflict and requested independent counsel, which Smarte Carte
refused. Smarte Carte’s answer to the cross-claim alleged that it was “not
responsible or liable for the negligence or willful conduct of” the Simon Parties.
Id. at 111. Even in contentions filed in July 2017, Smarte Carte continued to
deny that it had control over the area of the incident and attributed liability to
employees of the mall and/or security personnel.
[29] Despite the indemnification provisions here, Smarte Carte repeatedly blamed
the Simon Parties for the incident. Smarte Carte argues that its insurer agreed
to coverage and would be paying any judgment regardless of “whether or to the
extent that liability was attributed to Smarte Carte or the Simon Parties.”
Appellant’s Br. p. 22. This argument is hard to harmonize with Smarte Carte’s
demand of a waiver of conflict and Smarte Carte’s assertion that the Simon
6
Rule 1.7(b) of the Indiana Rules of Professional Conduct provides:
Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer
may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent
representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another
client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 16 of 20
Parties were solely negligent. Under these circumstances, we find Smarte
Carte’s position disingenuous and easily conclude that counsel’s representation
of Smarte Carte was “directly adverse” to the Simon Parties or that there was a
“significant risk” that counsel’s representation of the Simon Parties would have
been “materially limited by the lawyer’s responsibilities to” Smarte Carte.
[30] Accordingly, a clear conflict existed here pursuant to Rule 1.7 of the Indiana
Rules of Professional Conduct, and we find no authority that would have
required the Simon Parties to waive such a conflict. See, e.g., Bethlehem Steel
Corp. v. Sercon Corp., 654 N.E.2d 1163, 1170 (Ind. Ct. App. 1995) (“[A] conflict
of interest is not subject to a motion to compel its waiver.”), trans. denied. The
trial court properly concluded that the Simon Parties were entitled to
independent counsel at Smarte Carte’s expense. As such, the trial court
properly granted the Simon Parties’ motion for summary judgment.
II. Amount of Attorney Fees Awarded
[31] Next, Smarte Carte challenges the amount of attorney fees awarded by the trial
court. “We review a trial court’s award of attorney’s fees for an abuse of
discretion.” River Ridge Dev. Auth. v. Outfront Media, LLC, 146 N.E.3d 906, 912
(Ind. 2020). “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. “To make this determination, we review any
findings of fact for clear error and any legal conclusions de novo.” Id.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 17 of 20
A. Fees Incurred in Prosecution of the Cross-Claim
[32] Smarte Carte first argues that the fees awarded were excessive because the fees
improperly included fees for the prosecution of the cross-claim. The Lease,
however, provided: “If Landlord is required to bring or defend any litigation
arising out of this Lease, or to enforce or defend the provisions hereof,
Landlord shall recover from Tenant its reasonable attorney’s fees and costs.”
Appellant’s App. Vol. II p. 147. The Simon Parties were attempting to enforce
the indemnification provision of the Lease. Accordingly, the Simon Parties
were entitled to recover their reasonable attorney fees and costs for prosecution
of the cross-claim against Smarte Carte to enforce the indemnification
provision.
[33] Further, we noted in BioConvergence that: “An indemnitee, who incurs legal
expenses through defending an action against him for which he is entitled to
indemnification, is entitled to recover the expense of creating his defense,
including reasonable attorney fees.” BioConvergence, 103 N.E.3d at 1170
(quoting Zebrowski & Assocs., Inc. v. City of Indianapolis, By & Through its Bd. of
Directors for Utilities of its Dep’t of Pub. Utilities, 457 N.E.2d 259, 264 (Ind. Ct.
App. 1983)). “[T]he indemnitee may recover attorney fees from the indemnitor
incurred through an original action which is settled, and also for the cost of
prosecuting the indemnity clause.” Id. (emphasis added). The trial court’s award
of attorney fees to the Simon Parties for prosecution of the cross-claim was,
thus, not an abuse of discretion.
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 18 of 20
B. Reasonableness
[34] Smarte Carte also argues that the fees awarded were excessive because the
evidence failed to demonstrate that the fees were reasonable. “In assessing
what qualifies as a reasonable fee, trial courts have broad discretion in
determining a fee award and may consider several factors.” Rainbow Realty
Grp., Inc. v. Carter, 131 N.E.3d 168, 178 (Ind. 2019). “When evaluating the
reasonableness of an attorney fee award, the starting point is the hours worked
and the hourly rate charged.” Himsel v. Indiana Pork Producers Ass’n, 95 N.E.3d
101, 113 (Ind. Ct. App. 2018). “The trial court may consider a number of other
factors, including the responsibility of the parties in incurring the attorney fees
and the judge’s personal expertise and knowledge.” Id. “In addition, a court
may consider the factors listed in Indiana Professional Conduct Rule 1.5(a)
governing the reasonableness of a fee for disciplinary purposes, but it is not
required to expressly do so.” Id. at 113-14.
[35] Smarte Carte first argues that the fees incurred prior to July 2012, when the
“issue of separate counsel was apparently first asserted”; and the fees incurred
prior to December 2012, when Smarte Carte filed an answer to the cross-claim,
should have been excluded. Appellant’s Br. p. 32. The requested fees were first
incurred beginning in January 2012 after: (1) the Bushes filed their amended
complaint against the Simon Parties; (2) the Simon Parties again demanded a
defense and indemnification; and (3) Smarte Carte did not respond to the
demand. In March 2012, the Simon Parties filed an answer to the Bushes’
amended complaint and a cross-claim against Smarte Carte. The Lease clearly
Court of Appeals of Indiana | Memorandum Decision 20A-CT-975 | December 21, 2020 Page 19 of 20
required Smarte Carte to pay the Simon Parties’ attorney fees to enforce Lease
provisions, including the indemnification provision. That enforcement began in
January 2012, and the trial court, accordingly, properly awarded attorney fees
to the Simon Parties beginning in January 2012.
[36] Next, Smarte Carte argues that the Simon Parties’ attorney fees are
unreasonable because the initial hourly rate of $230.00 and later at a rate of
$280.00 per hour is excessive for an insurance case; and “block billing,” which
Smarte Carte describes as grouping “several tasks” together, is not allowed in
insurance defense actions. Appellant’s Br. p. 33. The Simon Parties respond
that “it is unfair to let a breaching insurer nit-pick costs later when it could
have—had it honored its duty to defend—initially directed the defense in any
reasonable way it wished.” Thomson Inc. v. Ins. Co. of N. Am., 11 N.E.3d 982,
1024 (Ind. Ct. App. 2014), trans. denied. We agree. The Simon Parties
submitted the affidavit of an expert demonstrating the reasonableness of the fees
submitted, and we cannot say that the trial court abused its discretion by
granting $45,113.08 in fees and costs.
Conclusion
[37] The trial court did not err by granting the Simon Parties’ motion for partial
summary judgment and awarding $45,113.08 in attorney fees. We affirm.
[38] Affirmed.
Kirsch, J., and Pyle, J., concur.
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