River Ridge Development Authority discovered that Outfront Media had obtained permits to construct seven billboards along State Road 265, near the Authority’s Commerce Center. Hoping to prevent their construction, the Authority sued Outfront Media and the relevant landowners, as well as the Town of Utica and the Indiana Department of Transportation, who had issued the relevant permits. Over the course of the lawsuit, several different claims against these and other defendants were added, dropped, or otherwise amended. Three of the seven billboards were completed. At some point, however, a portion of State Road 265 was granted scenic-byway status, which would prevent Outfront from erecting the four remaining billboards. The Authority voluntarily dismissed its complaint with prejudice the same day.
Outfront Media and other defendants filed motions to recover attorney’s fees, claiming the Authority’s behavior during the lawsuit justified such an award. After a hearing, the trial court granted the motions in full. The court concluded that three independent bases permitted its $237,440.63 award: the common-law obdurate behavior exception to the American Rule, Indiana’s statutory General Recovery Rule, and the court’s inherent authority to sanction parties.
The Court of Appeal reversed, and, after that decision was vacated and the matter transferred to the Indiana Supreme Court, the fee award was again rejected.
“Both the common-law obdurate behavior exception and the statutory General Recovery Rule permit a court, in certain circumstances, to award attorney’s fees – but only to a ‘prevailing party’ …. There was never a favorable judgment on the merits due to RRDA voluntarily dismissing its claim. While a dismissal with prejudice is similar to a judgment on the merits in that it precludes relitigation of the merits, it is not a judgment in all respects, since it does not resolve issues of law and fact.”
With respect to the Court’s inherent authority, the Court initially noted that, before a court can invoke its inherent authority to order such an award, it must conclude that the party has acted in bad-faith and that the conduct was calculatedly oppressive, obdurate, or obstreperous. In this particular case, the Court found that the plaintiff: did not know that the lawsuit lacked merit; did not change its position; did not lack a basis for naming Watkins personally as a defendant or suggesting that the Town’s attorney should recuse himself; did not exploit the lawsuit in pursuit of a scenic-byway designation; and did not press its jurisdiction argument in bad faith. “A suit’s claims aren’t meritless merely because a party loses on the merits. Instead, we inquire whether there are no supporting facts. Here, the Defendants failed to show that no facts exist to support RRDA’s suit. It’s true that RRDA did not petition for judicial review within thirty days of the zoning decision. But RRDA presented, at the very least, a defensible argument that it could challenge the decision as ultra vires and void at any time. RRDA argued that the billboard permits were void because Utica’s town council president lacked the authority to issue them, and the record reveals that RRDA presented some facts in support of this claim. Specifically, Utica’s zoning ordinance requires the town building inspector – the town council president – to issue all permits. And it provides that the Utica BZA must approve all dynamic signs, including LED and EVMS signs, such as the ones that Outfront planned to construct. But that approval did not happen because the Utica BZA declined to review the permits’ validity, believing it lacked authority to do so. Further, RRDA also alleged facts in support of its private-nuisance claim. Although RRDA ultimately dismissed that claim, RRDA had asserted that the billboards harmed the Commerce Center’s reputation and marketability as well as RRDA’s significant investment in the Commerce Center and its new entrance. Given the facts that supported RRDA’s claims, it was clearly erroneous for the trial court to find that RRDA knew the suit was meritless.”
River Ridge Development Authority v. Outfront Media, 146 N.E.3d 906 (Ind. 2020).