Aaron and Stephanie Muir v. Matthew and Tara McWilliams (mem. dec.), 02A04-1605-PL-1247

In Aug. 2011 Aaron and Stephanie Muir sold their Fort Wayne home to Matthew and Tara McWilliams under a written Purchase Agreement that included a mutual attorney-fees clause for the "prevailing party."
Muirs filed Chapter 7 bankruptcy in April 2012 and received a discharge in July 2012; the McWilliamses sued the Muirs in state court (May 2013) alleging fraud based on the sellers' disclosure form.
The Muirs reopened their bankruptcy, added the McWilliamses as creditors, and counterclaimed that the state-court suit violated the discharge injunction and sought attorney fees under the Purchase Agreement.
The Bankruptcy Court originally declined to stay the state action but the federal district court reversed, holding the Bankruptcy Court had exclusive jurisdiction to determine dischargeability; the state-court claims were dismissed and the debt discharged in bankruptcy.
The Allen Superior Court later considered whether the Muirs were the "prevailing party" under the Purchase Agreement and thus entitled to contractual attorney fees; the trial court denied the Muirs’ summary judgment and held they were not prevailing parties.
On appeal, the Indiana Court of Appeals affirmed, reasoning that because the state-court claims were dismissed due to bankruptcy and no judgment on the merits was entered in favor of the Muirs, they did not qualify as a "prevailing party" under the contract.

Issue	Plaintiff's Argument (McWilliamses)	Defendant's Argument (Muirs)	Held
Whether the Muirs were the "prevailing party" under the Purchase Agreement and thus entitled to contractual attorney fees	The McWilliamses argued the attorney-fees clause applies only when a party obtains a favorable judgment on the merits; dismissal for reasons other than adjudication on the merits does not create a prevailing party	Muirs argued that dismissal of the McWilliamses' complaint (with prejudice) and the practical extinguishment of the claim via bankruptcy made them the prevailing party entitled to fees	Court held the Muirs were not prevailing parties because the claims were dismissed via bankruptcy without a merits judgment; no judgment rendered in favor of Muirs, so no entitlement to fees

Reuille v. Brandenberger, 888 N.E.2d 770 (Ind. 2008) (construing "prevailing party" in a contract as ordinarily requiring a favorable judgment on the merits)
FLM, LLC v. Cincinnati Ins. Co., 973 N.E.2d 1167 (Ind. Ct. App. 2012) (standard of review for summary judgment and appellate posture)
Robson v. Tex. E. Corp., 833 N.E.2d 461 (Ind. Ct. App. 2005) (limitations on appellate review of summary judgment materials)