Ronald A. Schwartz v. Shanna L. Wyatt (mem. dec.)
19A01-1610-PL-2355
| Ind. Ct. App. | Sep 20, 2017Background
- Wyatt lent Schwartz large sums starting 2010, received powers of attorney, and helped manage his finances and business; Schwartz executed promissory notes and deeds as security.
- Wyatt paid mortgages, funded substantial home renovations (~$158,557), and advanced about $153,098.33; Schwartz repaid about $74,984.19.
- In 2013 parties executed new deeds purporting to make them tenants in common (Wyatt 75%, Schwartz 25%); relationship later deteriorated and a protective order gave Wyatt possession of the residence and shop.
- Wyatt sued for partition and payment on promissory notes; Schwartz counterclaimed (including allegations of fraud and breach of fiduciary duty). Bench trial produced findings largely adopting Wyatt’s proposed findings.
- Trial court awarded partition (ordered sale), allowed Wyatt to remain in possession pending sale, and ordered Schwartz to reimburse Wyatt from his share for improvements, note balance, and attorney’s fees. The court said the 2013 deeds played no role in its decision.
- On appeal, the court affirmed some holdings, reversed the partition, remanded to account for prior repayments in damage calculations, left Wyatt in possession, and directed the trial court to declare the 2013 deeds void.
Issues
| Issue | Plaintiff's Argument (Wyatt) | Defendant's Argument (Schwartz) | Held |
|---|---|---|---|
| Existence/breach of fiduciary duty | Wyatt: transactions were fair, arm’s-length, no undue influence | Schwartz: power of attorney created fiduciary duty and Wyatt breached it | Court: fiduciary relationship existed as matter of law but no breach proven; trial findings that transactions were fair not clearly erroneous (Wyatt prevails) |
| Calculation of damages / accounting for repayments | Wyatt: entitled to amounts awarded for loans, improvements, fees | Schwartz: court failed to account for $74,984.19 repayment in judgment | Court: remanded to ensure Schwartz’s repayments are considered in calculating Wyatt’s damages |
| Right to partition vs. mortgagee status | Wyatt: entitled to partition as holder of deeded interest / or equitable relief | Schwartz: Wyatt is effectively a mortgagee securing loans and cannot compel partition | Court: trial court erred; Wyatt was acting as mortgagee for some deeds and cannot force partition — partition reversed and remanded |
| Possession of residence pending relief | Wyatt: protective order and investments justify remaining in possession | Schwartz: as longtime owner and for business access he should regain possession | Court: leaving Wyatt in possession was permissible and not clearly erroneous (possession upheld) |
Key Cases Cited
- Scribner v. Gibbs, 953 N.E.2d 475 (Ind. Ct. App. 2011) (presumption of undue influence arises when a fiduciary benefits from a transaction and may be rebutted by clear and convincing evidence)
- McKibben v. Hughes, 23 N.E.3d 819 (Ind. Ct. App. 2014) (recognizing fiduciary relationship between principal and agent)
- Patterson v. Grace, 661 N.E.2d 580 (Ind. Ct. App. 1996) (deed absolute on its face may be treated as mortgage depending on parties’ intent)
- Scottish Rite of Indpls. Found., Inc. v. Adams, 834 N.E.2d 1024 (Ind. Ct. App. 2005) (equitable limits on partition where party seeks to convey greater interest than owned)
- Ind. Dep’t of Ins. v. Everhart, 960 N.E.2d 129 (Ind. 2012) (discussing court practice of adopting a party’s proposed findings and appellate scrutiny)