MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), FILED this Memorandum Decision shall not be regarded as precedent or cited before any Dec 29 2017, 10:55 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 APPELLANTS ATTORNEYS FOR APPELLEES Jacob R. Cox W. Brent Gill Indianapolis, Indiana Jason M. Smith Seymour, Indiana
IN THE COURT OF APPEALS OF INDIANA
Ed Wayt and Tex A. Wayt, December 29, 2017 Appellants-Defendants, Court of Appeals Case No. 36A05-1702-CC-335 v. Appeal from the Jackson Superior Court Phyllis I. Maschino, et al., The Honorable Bruce Markel III, Appellees-Plaintiffs Judge The Honorable Bruce A. MacTavish, Special Judge Trial Court Cause No. 36D01-1208-CC-177
Altice, Judge.
Case Summary
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 1 of 14 [1] Ed and Tex Wayt (collectively, the Wayts) appeal from the trial court’s entry of
judgment against them and in favor of Phyllis Maschino in the amount of
$83,000. The Wayts raise a number of arguments, all of which boil down to a
broader assertion that the trial court’s judgment was clearly erroneous.
[2] We affirm in part and remanded with instructions.
Facts & Procedural History
[3] This case can be added to an unfortunately long list of cautionary tales
concerning the perils of going into business with family members. At all times
relevant to this appeal, Maschino has been the owner of a parcel of real estate
on Blish Street in Seymour, Indiana.1 Prior to the events at issue in this case,
Maschino’s son, Fred, operated a metal fabricating business called High Value
Metal on the Blish Street property. After Fred’s death, Maschino’s daughter
and son-in-law, Rebecca and Johnny Brassington, continued to operate High
Value Metal.
[4] In the late 1990s, Ed Wayt—another of Maschino’s sons-in-law—was running
a sandblasting business in Brownstown, Indiana. Ed was interested in moving
his business to a new location because the facilities were inadequate and he was
having problems with his landlord. Ed and his wife, Tex, eventually came to an
1 To be more precise, the Blish Street property is currently owned by 101 Blish Street A, LLC, of which Maschino is the sole owner. Maschino transferred ownership of the property to the LLC by quitclaim deed in 2011. For purposes of clarity, we will refer to both Maschino and the LLC as Maschino.
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 2 of 14 agreement with Maschino, Tex’s mother, to run a blasting facility that would be
built on Maschino’s Blish Street property next to High Value Metal. The
parties believed the arrangement would be mutually beneficial, as it would
provide Ed with superior facilities and equipment and the addition of an on-site
blasting business would create more business opportunities for High Value
Metal.
[5] Thereafter, Maschino sought and was granted a variance to allow the
construction of the new blasting facility on the Blish Street property. Maschino
made a $27,000 down payment toward the purchase of blasting equipment, and
she took out loans in the amount of $80,000 and $120,000 to finance the
construction of the building and to complete the purchase of the necessary
equipment. Maschino also guaranteed an additional $50,000 loan to cover
operating expenses. The Wayts began operating the blasting business in 1999
under the name “The Blast Shop.” Maschino did not participate in The Blast
Shop’s operations, and she did not have a key to the building.
[6] Maschino did not charge the Wayts rent or take any of The Blast Shop’s profits,
but it was agreed that the Wayts would make the payments on the outstanding
loans. There was no discussion of whether the Wayts would pay interest, and
because the parties were family and trusted each other, they did not seek the
advice of counsel or reduce their agreement to writing.
[7] Over the next several years, Maschino made numerous loan payments for the
Wayts when they were unable to do so, and she refinanced the loans on at least
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 3 of 14 two occasions. Maschino also made a number of cash loans to cover The Blast
Shop’s operating expenses over the years. By 2012, the Wayts had made loan
payments totaling $201,000, and Maschino still owed approximately $133,000
on the refinanced loans.
[8] In 2012, the Wayts entered into negotiations with Crane Hill Machine and
Fabrication, Inc. (Crane Hill), and its owner, Marshall Royalty. Without
Maschino’s knowledge or consent, the Wayts entered into an agreement to sell
The Blast Shop and its equipment to Crane Hill and/or Royalty for $70,000.2
The agreement did not contain a provision for the repayment of Maschino’s
outstanding loan balance. When Maschino learned of the attempted sale, she
locked the Wayts and Royalty out of The Blast Shop facility and claimed
ownership of the business and its equipment.
[9] On August 31, 2012, two competing lawsuits were filed contesting the
ownership of The Blast Shop’s equipment. Maschino filed a complaint against
Royalty, Crane Hill, and the Wayts for trespass, criminal conversion,
constructive fraud, unjust enrichment, and breach of contract. On the same
day, Royalty filed a complaint against Maschino for replevin and conversion
and against the Wayts for fraud and breach of contract. On April 4, 2013,
Maschino filed a motion for summary judgment, in which she argued that she
2 The agreement provided further that the Wayts would sell their separate powder coating business to Crane Hill and that Ed would go to work for Crane Hill. These portions of the agreement were fulfilled and are not at issue in this case.
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 4 of 14 was entitled to summary judgment in her favor on all of Royalty’s claims
against her. Maschino’s arguments were based on designated evidence that
although Royalty claimed in his complaint that he had purchased certain
equipment from the Wayts, he admitted in a subsequent deposition that he had
“walked away” from the purchase prior to filing his complaint. Cross-Appellee’s
Appendix Vol. 2 at 16. Royalty filed a response to Maschino’s motion, but the
Wayts did not. On July 29, 2013, the trial court entered an order granting
Maschino partial summary judgment against Royalty. Maschino and Royalty
ultimately reached a settlement and stipulated to the dismissal of their
remaining claims against each other. Royalty also stipulated to the dismissal
without prejudice of his claims against the Wayts.
[10] On August 9, 2013, the Wayts filed an amended answer, in which they claimed
ownership of The Blast Shop equipment and alleged that Maschino had
interfered with the sale of the equipment to Crane Hill. They also asserted
counterclaims of conversion, replevin, and negligence regarding the equipment.
The Wayts subsequently added claims for unjust enrichment and unlawful
eviction.
[11] Maschino filed a second motion for summary judgment on October 3, 2014, in
which she argued that the trial court had already found in its July 29, 2013
summary judgment order that Maschino owned the relevant equipment and
that the Wayts were precluded from presenting evidence to challenge that
finding due to their failure to respond to her first motion for summary
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 5 of 14 judgment. The Wayts filed a cross-motion for summary judgment on October
30, 2015. Both motions were denied on September 27, 2016.
[12] A bench trial was held on October 27, 2016, at the conclusion of which the trial
court entered judgment in Maschino’s favor in the amount of $83,000.
Specifically, the court found that Maschino had loaned the Wayts a total of
$354,000 and that the Wayts had repaid a total of $201,000, leaving a balance
of $153,000. The court found further that the Wayts had been the owners of the
blasting equipment Maschino had retained, and that Maschino consequently
owed the Wayts a $70,000 offset for the value of the equipment, 3 resulting in a
net judgment of $83,000. Maschino was also ordered to return certain personal
property belonging to Ed within fifteen days of the court’s order. The Wayts
now appeal.
Discussion & Decision
[13] The trial court in this case entered special findings and conclusions thereon
pursuant to Ind. Trial Rule 52(A). Our standard of review is well settled:
[W]e apply a two-tiered standard of review for clear error; that is, first, we determine whether the evidence supports the findings, and second, whether the findings support the judgment. Mysliwy v. Mysliwy, 953 N.E.2d 1072, 1075-76 (Ind. Ct. App. 2011) (citations omitted), trans. denied. We do not reweigh the evidence
3 Neither party takes issue with the court’s decision to award an offset for the value of the equipment rather than order the equipment returned to the Wayts. There was testimony presented at trial that the removal of the equipment would cause significant damage to the building.
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 6 of 14 but consider the evidence favorable to the judgment. Id. Findings of fact are clearly erroneous when the record contains no facts to support them, and a judgment is clearly erroneous if no evidence supports the findings, the findings fail to support the judgment, or if the trial court applies an incorrect legal standard. Bowyer v. Ind. Dep’t of Natural Res., 944 N.E.2d 972, 983-84 (Ind. Ct. App. 2011). Although we review findings under the clearly erroneous standard, we review conclusions of law de novo. Id. at 983.
Carmer v. Carmer, 45 N.E.3d 512, 516-17 (Ind. Ct. App. 2015).
[14] Moreover, this court has noted that the purpose of such findings and
conclusions is to provide the parties and reviewing court with the legal theory
upon which the trial court relied. Estate of Kappel v. Kappel, 979 N.E.2d 642, 652
(Ind. Ct. App. 2012). “We may affirm a judgment on any legal theory, whether
or not relied upon by the trial court, so long as the trial court’s findings are not
clearly erroneous and support the theory adopted.” Id. Furthermore, where the
trial court’s findings are adequate to support its judgment on one legal theory,
findings on another legal theory are mere surplusage and cannot support
reversal even if erroneous. Id.
[15] Before reaching the Wayts’ claims, we must first address Maschino’s arguments
concerning the ownership of The Blast Shop equipment. Maschino argues that
the trial court “implicitly” found that she owned the equipment or,
alternatively, erred in failing to find that the issue of the ownership of the
equipment had previously been resolved in her favor in the trial court’s July 29,
2013 order on her first motion for summary judgment, to which the Wayts did
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 7 of 14 not respond.4 Appellees’ Brief at 15. Our review of the trial court’s order reveals
that it concluded that the Wayts had used loans from Maschino to purchase the
equipment, and were consequently the owners of said equipment at the time it
was purchased. The trial court went on to conclude, however, that Maschino
was the entitled to keep equipment, perhaps because it had been affixed to her
real property and could not be removed without damaging the building, but that
she owed the Wayts the value of the property. In any event, because neither
party challenges the trial court’s decision to award the equipment to Maschino
and an offset to the Wayts, Maschino’s arguments with respect to the trial
court’s disposition of the equipment are of no consequence. 5
[16] We now turn our attention to the Wayts’ appellate arguments. The Wayts first
argue that the trial court erred by entering judgment on claims not raised in
Maschino’s complaint. Specifically, the Wayts note that Maschino’s complaint
asserted a breach of contract claim for the Wayts’ failure to repay loans in the
amount of “approximately $200,000[.]” Appellant’s Appendix Vol. 2 at 50.
According to the Wayts, this claim referred only to the $120,000 and $80,000
4 In a footnote, Maschino refers to the latter argument as a cross-appeal. We note, however, that Maschino asks us to affirm the trial court in all respects. 5 Nevertheless, we note that Maschino overstates the scope of the July 29, 2013 summary judgment order. That order did not, as Maschino claims, settle the issue of who owned the Blast Shop equipment; rather, it simply ruled that Royalty and Crane Hill were not the owners. Indeed, in the motion for summary judgment giving rise to the July 29, 2013 order, Maschino’s sole argument was that she was entitled to summary judgment on Royalty’s claims of conversion and replevin because Royalty had disclaimed ownership of the equipment. Because Maschino did not seek summary judgment against the Wayts on any issue, it is unsurprising that the Wayts did not file a response. Our conclusion is further supported by the trial court’s denial of Maschino’s second motion for summary judgment, in which she unsuccessfully raised this precise argument. In sum, Maschino’s arguments in this regard are unconvincing.
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 8 of 14 loans Maschino obtained to build and outfit The Blast Shop, and that the trial
court therefore erred in entering judgment for amounts relating to the loan
payments Maschino made on the Wayts’ behalf and the cash loans Maschino
made to the Wayts over the years. We note, however, that Maschino’s
complaint alleged that, aside from the $120,000 and $80,000 loans, “from 1999
through 2012, Ms. Maschino loaned approximately $200,000 to Tex and Ed
Wayt to finance the operations of The Blast Shop, Inc.” Id. at 3. Moreover, the
complaint did not characterize the $120,000 and $80,000 loans Maschino
obtained as loans to the Wayts, because it was Maschino’s position that she was
the owner of the Blast Shop and its equipment. It is therefore apparent from the
face of the complaint that the various loans Maschino made to the Wayts
between 1999 and 2012 were the basis of the breach of contract claim she
asserted.6 There is no question that the Wayts were on notice that those loans
could be at issue at trial.7
6 The Wayts also direct our attention to Maschino’s answer to an interrogatory wherein she was asked to identify all loans forming the basis of her breach of contract claim. After objecting on the basis that the question was vague, ambiguous, and confusing, as well as on the basis that discovery was ongoing, Maschino answered, “[i]n the spirit of discovery,” by listing the $80,000 and $120,000 loans. Exhibit Volume 2 at 142. Although this answer was certainly incomplete, it was made over a year before trial, while discovery was ongoing and before the parties’ theories of recovery had fully solidified. In any event, the Wayts have not directed us to any authority supporting a conclusion that Maschino’s incomplete answer to the interrogatory must result in forfeiture of the claims she raised in her complaint. We note further that the Wayts make no argument that evidence relating to the loans made between 1999 and 2012 was not disclosed in discovery or that they were in any way surprised by Maschino’s arguments concerning those loans. 7 The Wayts also take issue with the trial court’s finding that Maschino’s claims were supported under a theory of unjust enrichment, noting that Maschino’s unjust enrichment claim had been asserted against Royalty only. We note, however, that the trial court found that Maschino’s claims were valid under either a theory of unjust enrichment or breach of contract. Because we affirm the trial court’s judgment on the basis of breach of contract, we need not address the Wayts’ argument concerning unjust enrichment.
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 9 of 14 [17] The Wayts next argue that Maschino’s claims regarding the loan payments she
made on the Wayts’ behalf and her cash loans to the Wayts between 1999 and
2012 are barred by the statute of frauds. Because the Wayts did not plead the
statute of frauds as an affirmative defense in their answer or raise the argument
at trial, this issue is waived. See Jernas v. Gumz, 53 N.E.3d 434, 447-48 (Ind. Ct.
App. 2016) (explaining that the statute of frauds is an affirmative defense that
must be specifically pled pursuant to Ind. Trial Rule 8(C)), trans. denied; Lawshe
v. Glen Park Lumber Co., Inc., 375 N.E.2d 275, 347 (Ind. Ct. App. 1978)
(explaining that in order to preserve the statute of frauds as an affirmative
defense, the party with the burden of proof must either have set forth the
defense in a responsive pleading or show the defense was litigated by the
parties).
[18] Waiver notwithstanding, the Wayts have not established that the statute of
frauds applies. The Wayts argue that the agreement in this case falls under Ind.
Code § 32-21-1-1(b)(5), which requires “any agreement that is not to be
performed within one (1) year from the making of the agreement” to be in
writing to be enforceable. As this court has explained, the one-year clause of
the statute of frauds applies “only to contracts which, by the express stipulations
of the parties, were not to be performed within a year, and not to those which
might or might not upon a contingency, be performed within a year.” Tobin v.
Ruman, 819 N.E.2d 78, 85 (Ind. Ct. App. 2004) (quoting Wallem v. CLS Indus.,
Inc., 725 N.E.2d 880, 887 (Ind. Ct. App. 2000)), trans. denied. In other words,
“it is apparent that only if it is impossible for an oral contract to be completed
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 10 of 14 within one year does it fall within the Statute of Frauds.” Id. (emphasis in
original).
[19] Although the Wayts admit that the parties did not discuss a term for repayment
of the loans, they assert that “it is clear that Maschino did not expect or
anticipate the Wayts repaying them in less than a year[.]” Appellants’ Brief at 17.
Although we do not doubt the Wayts’ assertion in this regard, such an
expectation is insufficient to bring the agreement within the statute of frauds’
one-year clause.
[20] Next, the Wayts argue that the trial court erred in finding that the $50,000 loan
Maschino guaranteed constitutes a loan from her to the Wayts. According to
the Wayts, the evidence presented regarding these funds establishes that they
were not a loan at all, but a revolving line of credit. Furthermore, the Wayts
argue that the borrower was The Blast Shop, Inc., not Maschino. The Wayts
do not dispute that Maschino guaranteed the line of credit, but they argue that
no evidence was produced as to whether or how much of this line of credit was
used, what the balance was on any given day, or that Maschino was ever called
upon to act in her capacity as guarantor.
[21] Whether we call the $50,000 a loan or a line of credit, the evidence presented at
trial establishes that the funds were placed into a checking account Tex used to
pay operating expenses. Indeed, both Maschino and Tex testified to that effect.
Furthermore, although the funds were originally obtained in the name of The
Blast Shop, the loan/line of credit was refinanced into Maschino’s sole name in
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 11 of 14 2003 and its balance at that time was $41,343.26. Although the Wayts appear
to have made some payments toward the loan/line of credit, the Wayts have
not established that these payments were not included in the $201,000 total the
trial court found the Wayts had paid toward the loans and deducted from the
amount they still owed.8
[22] Next, the Wayts argue that the trial court erred in finding that Maschino made
a total of $77,000 in additional loans to the Wayts, consisting of “$27,000 while
the business was operating and for payments on the second mortgage and
$50,000 in additional funds to help operate the business.” Appellants’ Appendix
Vol. 2 at 36. The Wayts note that Maschino presented evidence that she had
made cash loans and loan payments on the Wayts’ behalf over the years, but
the amounts she claimed do not equal $77,000. We observe, however, that
Maschino presented evidence that her total additional loans to the Wayts far
exceeded that amount. Indeed, Maschino presented evidence that she had
made over $47,000 in loan payments for the Wayts and nearly $90,000 in
additional cash loans. The trial court apparently found only some of
Maschino’s evidence in this regard to be worthy of credit. Although the trial
court did not elaborate on the reasoning behind this decision, it was not
8 The exhibits in this case are voluminous, spanning a total of sixteen volumes. They include numerous bank statements, cancelled checks, and other financial documents, the significance of which are not always immediately apparent. It is not our duty to scour the record in search of support for a litigant’s claims, and we have not done so here. See Legacy Healthcare, Inc. v. Barnes & Thornburg, 837 N.E.2d 619, 639 n.29 (Ind. Ct. App. 2005), trans. denied.
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 12 of 14 required to do so. The trial court’s finding that Maschino made additional
loans totaling $77,000 was well within the scope of the evidence presented. 9
[23] Finally, the Wayts argue that the trial court erred when it ordered Maschino to
return only three of the several items of personal property belonging to the
Wayts that had been left at The Blast Shop when Maschino locked them out.
The trial court’s order provided in relevant part as follows: “The Court further
orders Mashino [sic] to return the items of personal property Mr. Wayt owned
that Mashino [sic] converted 1. Wood Furnace, 2. Fan, and 3. Air Compressor
within 15 days of this order.” Appellants’ Appendix Vol. 2 at 37. On appeal, the
Wayts argue that they were also entitled to the return of other personal
property, including, among other things, various furniture and tools, a brass
bell, and the spare tire to Ed’s truck. Maschino did not dispute having these
items or that they belonged to the Wayts, and in closing argument, her attorney
stated that Maschino was willing to return them. Transcript Vol. 3 at 6. On
appeal, however, Maschino argues that the trial court may have treated the
unreturned personal property as an additional offset, which might account for
the discrepancy between the amount of cash loans and loan payments
9 The Wayts also argue, briefly and without citation to the record or authority, that Maschino made these loans not to the Wayts, but to The Blast Shop, Inc., a separate corporate entity that Maschino did not add as a party to this litigation, and that the Wayts therefore cannot be held personally liable for such loans. This argument is doubly waived, both for failure to raise it before the trial court and failure to make a cogent argument. See K.S. v. D.S., 64 N.E.3d 1209, 1212 (Ind. Ct. App. 2016) (explaining that a party waives any issue for which it fails to develop cogent argument or provide adequate citation to authority); Mid-States Gen. & Mech. Contracting Corp. v. Town of Goodland, 811 N.E.2d 425, 436 (Ind. Ct. App. 2004) (explaining that “[a]n appellant who presents an issue for the first time on appeal waives the issue for purposes of appellate review”).
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 13 of 14 Maschino claimed to have made and the $77,000 the trial court awarded for
those expenditures.
[24] As an initial matter, it is not entirely clear to us that the three items listed in the
trial court’s order were intended to constitute an exhaustive list. Further, we
find Maschino’s argument concerning a possible offset to be unconvincing.
There was no evidence presented concerning the value of the unreturned
personal property, and many of the items would appear to have very little
monetary value. Moreover, given that the trial court made the manner in
which it calculated damages quite clear, it seems unlikely that it would have
awarded an offset without expressly stating that it had done so. Because it
seems likely to us that the trial court’s failure to mention the unreturned
personal property was an oversight rather than an intentional decision to award
such property to Maschino, we remand with instructions to clarify its order
with respect to the ownership of such property.
[25] Judgment affirmed in part and remanded with instructions.
[26] Baker, J. and Bailey, J., concur.
Court of Appeals of Indiana | Memorandum Decision 36A05-1702-CC-335 | December 29, 2017 Page 14 of 14