Hubbard Hill Estates, Inc. v. R. Wyatt Mick, Jr., individually and, as personal representative of the Estate of Harriet M. Seilon

• Court: Indiana Court of Appeals
• Decided: July 24, 2013
• Docket: 20A03-1301-SC-24
• Status: Unpublished

Opinion

Pursuant to Ind. Appellate Rule 65(D), Jul 24 2013, 6:29 am this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:

RANDY J. SPITAELS MICHAEL A. DERUCKI Kindig & Sloat, P.C. Bingham & Loughlin, P.C. Nappanee, Indiana Mishawaka, Indiana

IN THE COURT OF APPEALS OF INDIANA

HUBBARD HILL ESTATES, INC., ) ) Appellant-Defendant, ) ) vs. ) No. 20A03-1301-SC-24 ) R. WYATT MICK, JR., individually and, ) as personal representative of the Estate of ) Harriet M. Seilon, Deceased. ) ) Appellee-Plaintiff. )

APPEAL FROM THE ELKHART SUPERIOR COURT The Honorable Charles C. Wicks, Judge Cause No. 20D05-1205-SC-2932

July 24, 2013

MEMORANDUM DECISION – NOT FOR PUBLICATION

MATHIAS, Judge Hubbard Hill Estates, Inc. (“Hubbard Hill”) appeals a judgment in favor of R.

Wyatt Mick, Jr. (“Mick”), individually and as personal representative of the Estate of

Harriet M. Seilon (“the Estate”) for overpaid rent from Harriet M. Seilon’s (“Seilon”)

account at the Hubbard Hill retirement community. The Elkhart Superior Court issued a

total award of $3,150.00 plus costs, awarding $729.19 to Mick personally and $2,420.81

to the Estate. Hubbard Hill argues that the trial court’s award is not supported by the

evidence.

We agree and reverse.

Facts and Procedural History

On July 27, 1994, Seilon entered into a written lease agreement with Hubbard Hill

for a studio apartment home in the Hubbard Hill assisted living community. Rent at the

time of the original agreement was at $970 per calendar month, increasing over the

course of time to $2,005 per calendar month. Amenities in her monthly rent included use

of common areas, utilities, laundry, housekeeping, nursing care, nursing assessments,

meals, and transportation. The lease was terminable at will by the tenant at any time, for

any reason whatsoever, and keys were to be returned at the time that the tenant vacated

the apartment. Hubbard Hill could terminate a lease upon necessary transfer or discharge

of the tenant from the facility, or for health, safety or other reasonable purposes.

Hubbard Hill also provided more intensive nursing care in a separate section of its

facilities, specialized nursing care, medications, and other basic necessities at additional

costs.

Seilon continued to reside in Hubbard Hill’s assisted living section for the

majority of her remaining eighteen years. She handled her own financial affairs until

sometime in 2007, when she and her nephew, Mick, opened a joint account so he could

handle her finances.

On December 3, 2010, Seilon was transferred to the nursing section of Hubbard

Hill. Upon Seilon’s transfer, Mick paid $6,090.00 for the costs of care in that section of

the facility for the remaining twenty-nine days in the month of December. Seilon’s

regular assisted living apartment rent, in the amount of $2,005.00 was also paid early in

the month. Since Seilon was in the nursing home section for most of December, her

regular assisted living food credit of $290 was refunded, but Hubbard Hill received and

kept $1,715.00 of her rent payment for December. In total, Hubbard Hill received a sum

of $9,172.14 in payment on Seilon’s account in December 2010.

Seilon passed away on December 16, 2010. Hubbard Hill credited $3,150.00 to

Seilon’s account, as a refund for pre-paid nursing care for fifteen days at $210 per day.

Seilon’s furnishings, clothing, and other personal effects remained in her studio

apartment in the assisted living section until December 31, 2010. Mick agreed to have

the furniture and other items distributed to Hubbard Hill’s employees, but asked the head

nurse of the assisted living section if he could keep Seilon’s antique Hammond B3 organ

with Leslie speaker in Seilon’s apartment until the weather improved.1 The head nurse

1 The organ is valued between $3,500 and $6,000. Sherk’s Piano Company, in Mishawaka, Ind., had previously informed Mick that moving the organ in freezing temperatures might ruin it, and suggested that Mick wait to move the organ until inclement weather subsided. We note that Hammond organs, especially the Hammond B3, and the accompanying Leslie speakers were used by many popular music groups of the 1960s and 1970s. For instance, the B3 is prominent in such popular songs as “Gimme Some Lovin” by the Spencer Davis Group, “Smoke on the Water” by Deep Purple, and “Whipping Post” 3

apparently allowed Mick to keep the organ in Seilon’s apartment. Mick did not discuss

storage facilities or fees with the Hubbard Hill business office. Mick also testified that he

offered to have the organ moved out of the room to a different part of the facility, but was

told that with ongoing construction, such a move was not feasible.2 Hubbard Hill also

refused to rent the apartment to another tenant while the organ remained in the apartment

for fear of damaging it.

From January 1, 2011 until March 18, 2011, the organ was stored in the

apartment. 3 Mick retained the key to the apartment until March 18, and he

communicated periodically with Hubbard Hill regarding ongoing bills and removal of the

organ. Meanwhile, Hubbard Hill did not show the apartment, and charged the full rental

value ($2,005.00 per month) for the entire time that the apartment was used for storage.

Hubbard Hill did credit Seilon’s account with $840.41, since the apartment was vacated

on the eighteenth of March.

In total, less food costs, Hubbard Hill collected $5,233.99 after Seilon’s death.

Hubbard Hill received full payment for rent for the months of December 2010,4 January

2011, February 2011, and a pro-rated amount for March 2011. Including the $3,150.00

credited after Seilon’s death, Seilon’s account had sufficient funds to satisfy the majority

of the additional rent payments. However, Mick, as personal representative for the Estate

by the Allman Brothers Band, just to name a few. And the Leslie speaker was used by itself to impart its characteristic sound to the vocals of John Lennon on the Beatles’ psychedelic “Tomorrow Never Knows,” the closing track of the 1966 Revolver album. 2 The trial court concluded that Mick’s conversations with the head nurse did not constitute a meeting of the minds to form a storage agreement. 3 Mick’s son and two other men moved the organ on March 18. 4 Mick does not contest payment for the assisted living apartment during any part of the month of December 2010. 4

was billed for and sent two additional checks to Hubbard Hill: $336.25 on February 9,

2011, and $392.94 on May 11, 2011. Hubbard Hill deposited the entirety of this $729.19,

which it applied to continued payment of full rent of the apartment.

On May 24, 2012, Mick filed his small claims complaint in Elkhart Superior

Court. The complaint was classified as a refund of overpayment for nursing care. Mick

only claimed he was owed a refund of $3,150.00 for nursing home care, which is equal to

$210 per day for the fifteen days remaining in December after Seilon’s death. On

September 25, 2012, a bench trial was conducted, and the trial court took the matter

under advisement. Hubbard Hill argued at the trial that Mick was not entitled to the

refund since it had been applied to the full rental payments on the studio apartment for

January and February 2011. Mick argued that Hubbard Hill could have rented the

apartment and that he had discussed with a head nurse that the storage costs for the organ

would not be equal to the usual rental cost.

The trial court issued a judgment on November 1, 2012 in favor of Mick. The trial

court correctly noted that the dispute arose primarily from miscommunication between

the parties. Additionally, the trial court found that Hubbard Hill had placed undue weight

on the retention of keys in determining whether Seilon’s lease had been terminated, and

that it had options under law to remove the organ. Further, the trial court characterized

the amount of money collected by Hubbard Hill, even if the $3,150.00 were refunded to

Mick, as an amount that “would far exceed the amount of storage charges normally

charged in the community even for a climate controlled facility.” Appellant’s App. p. 12.

As a result, the trial court concluded that Hubbard Hill had been adequately compensated

for its storage of the organ, and that allowing Hubbard Hill to retain the $3,150.00 refund

would constitute unjust enrichment. The trial court thereafter ordered that Mick,

individually, be awarded $729.19, and as personal representative of the Estate, Mick also

received a money judgment of $2,420.81. In total, the trial court awarded Mick and the

Estate $3,150.00.

Hubbard Hill filed its motion to correct error on December 4, 2012 and argued that

Mick had failed to meet his burden to present evidence as to a reasonable charge for

storage and that the trial court had taken improper judicial notice of the fair market value

of storage facility use. The trial court denied Hubbard Hill’s motion, stating that Mick

had no burden to show reasonable storage charge, that the trial court did not take judicial

notice of typical storage costs, that the parties had stipulated the amount of the award,

and that since Hubbard Hill had previously credited Seilon’s account with the $3,150.00,

it could not complain that the amount should not be refunded.

On December 31, 2012, Hubbard Hill filed a motion to reconsider the denial of the

motion to correct error. On January 16, 2012, the trial court affirmed its denial of

Hubbard Hill’s motion to correct error. Hubbard Hill now appeals.

Standard of Review

Our standard of review of small claims judgments is well settled.

Judgments in small claims actions are subject to review as prescribed by relevant Indiana rules and statutes. Under Indiana Trial Rule 52(A), the clearly erroneous standard applies to appellate review of facts determined in a bench trial with due regard given to the opportunity of the trial court to assess witness credibility. This deferential standard of review is particularly important in small claims actions, where trials are informal, with the sole objective of dispensing speedy justice between the parties according to the rules of substantive law. But this deferential standard does

not apply to the substantive rules of law, which are reviewed de novo just as they are in appeals from a court of general jurisdiction.

Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1067-68 (Ind. 2006) (internal quotations

and citations omitted).

Discussion and Decision

Hubbard Hill appeals the award of $3,150.00 to Mick and the Estate, on the

grounds that Mick failed to provide evidence of the fair market value for storage, and the

trial court’s damage award was not supported by probative evidence. We restate this

issue in two parts: (1) whether the trial court properly applied the doctrine of unjust

enrichment to support its judgment; and (2) whether the trial court’s damage award was

supported by probative evidence.

The trial court relied on the doctrine of unjust enrichment to support its judgment.

As application of the doctrine is a matter of substantive law, we review this application

de novo. See Trinity Homes, LLC, 848 N.E.2d at 1068. Unjust enrichment allows a

party to recover when a court applies the legal fiction of constructive contract. A

constructive contract (also known as a quasi-contract or a contract implied at law) refers

to a situation where no contract exists, but “justice nevertheless warrants a recovery

under the circumstances as though there had been a promise.” Ahuja v. Lynco Ltd. Med.

Research, 675 N.E.2d 704, 709 (Ind. Ct. App. 1996), trans. denied. Thus, unjust

enrichment operates where there is no governing contract. DiMizio v. Romo, 756 N.E.2d

1018, 1024-25 (Ind. Ct. App. 2001), trans. denied. In order “to prevail on a claim of

unjust enrichment, a plaintiff must establish that a measurable benefit has been conferred

on the defendant under such circumstances that the defendant’s retention of the benefit

without payment would be unjust.” Bayh v. Sonnenburg, 573 N.E.2d 398, 408 (Ind.

1991). The doctrine is typically applied against someone who receives the benefit of

some service when the individual providing the service goes unpaid.

Hubbard Hill had a written lease agreement with Seilon and, as the personal

representative of her estate, Mick chose and continued to pay rent under the terms of that

contract.5 While Mick argues that Seilon’s death terminated the contract,6 it is well

settled under Indiana case law that the death of a party to a contract does not ordinarily

extinguish a contract. See, e.g., Miller v. Ready, 59 Ind. App. 195, 108 N.E. 605, 608

(Ind. Ct. App. 1915). And here, Mick clearly chose to make continued use of the leased

premises in order to protect Seilon’s valuable antique organ from the winter weather.

Under these facts and circumstances, absent a modification to the lease agreement

negotiated with Hubbard Hill’s business office, Mick as personal representative, and

Seilon’s Estate remained bound by the at-will lease agreement between Seilon and

Hubbard Hill until the lease was officially terminated.

Further, Mick’s conduct regarding Hubbard Hill’s periodic billings and the

allegations in Mick’s small claims complaint indicate his implied agreement to abide by

the terms of Seilon’s lease agreement. In December 2010, Mick paid both the full

amount of rent for Seilon’s studio apartment and the full monthly nursing home charge to

Hubbard Hill. Hubbard Hill appropriately refunded $3150 of the nursing home charge to

Seilon’s account, which amount represented the fifteen remaining days in December after

5 The lease agreement does not contain a provision governing the terms of the contract upon the death of the tenant, but Mick clearly sought to make continued use of the leased apartment after Seilon’s death. 6 In his brief, Mick states that Seilon’s death constituted notice to Hubbard Hill that Seilon would no longer be in need of the apartment unit. Appellee’s Br. at 3. 8

her death. Hubbard Hill, believing that it could continue to charge rent because Seilon’s

organ remained in her apartment, applied these funds toward the January and February

2011 rent on the studio apartment per their contract with Seilon.

In his small claims complaint, Mick did not claim overpayment of rent on Seilon’s

apartment for January, February or March 2011. In fact, Mick was billed for the full

amount of rent on the apartment and paid the balance owed. See Ex. Vol, Defendant’s

Ex. I. Mick never negotiated a modification to the lease agreement or a new contract for

storage with Hubbard Hill. Therefore, Hubbard Hill could have reasonably concluded

that Mick agreed to continue to pay full rent under Seilon’s lease until the organ was

removed from the apartment. See, e.g., Int’l Creative Mgmt., Inc. v. D & R Entm’t Co.,

Inc., 670 N.E.2d 1305, 1312 (Ind. Ct. App. 1996), trans. denied (holding that actions

taken pursuant to a contract’s terms may be sufficient to establish assent to the contract,

even in the absence of express assent).

The trial court in this case characterized the receipt of full rent in exchange for the

storage of an organ in an otherwise unoccupied room as unjust enrichment. However, the

doctrine of unjust enrichment is inapplicable to the circumstances presented in this

appeal. Mick did not provide a measurable benefit to Hubbard Hill for which he remains

unpaid. As we noted above, in his complaint, Mick claimed only a refund for nursing

care that Hubbard Hill had already been refunded to Seilon’s account. Mick first raised

the issue of an agreement for storage fees at the small claims hearing. However, the trial

court appropriately found that Mick and Hubbard Hill did not have any agreement for

storage of Seilon’s organ.

Despite the lack of agreement, the trial court concluded that if Mick was awarded

a judgment of $3150, after subtracting that amount from the total funds paid on Seilon’s

account, Hubbard Hill would receive “$2083.99 in storage charges for an approximate

three month period which is almost $700 a month for storage.” Appellant’s App. p. 12.

The court then concluded that $700 per month “would far exceed the amount of storage

charges normally charged in the community even for a climate controlled facility.” Id.

However, there is simply no evidence in the record establishing reasonable monthly

storage fees for Seilon’s antique organ.

Without such evidence, we are unable to affirm the trial court’s judgment. Under

the facts and circumstances of this case, we can conclude that paying $2,005 per month

for a vacant studio apartment simply to store an organ is excessive.7 However, Mick

failed to submit any evidence to establish reasonable storage fees for Seilon’s organ.

Hubbard Hill’s refusal to refund a portion of Mick’s payments is certainly bad business

practice and unreasonable, but Mick cannot prevail where he failed to properly prove his

claim. We are sympathetic to the trial court’s attempt to reach an equitable result, but

there is no proper legal rationale for its judgment and no evidence to support the amount

of the award.

Conclusion

For all these reasons, we hold that the trial court improperly applied the doctrine

of unjust enrichment in this case. Further, Mick failed to introduce evidence to support

7 This is particularly true in this case where a certain percentage of the rental fee included charges for basic nursing care, housekeeping, utilities, and other amenities.

10 the trial court’s findings with respect to reasonable storage fees. Therefore, the trial

court’s award is not supported by probative evidence. Accordingly, we reverse.

Reversed.

MAY, J., concurs.

BAKER, J., dissents with opinion.

HUBBARD HILL ESTATES, INC., ) ) Appellant-Defendant, ) ) vs. ) No. 20A03-1301-SC-24 ) R. WYATT MICK, JR., individually and, as ) personal representative of the Estate of Harriet M. ) Seilon, Deceased, ) ) Appellee-Plaintiff. )

BAKER, Judge, dissenting.

Because I do not believe that the lease survived Seilon’s death and that no contract was

formed for the storage of the organ, I cannot agree that the trial court erred in awarding Mick and

the Estate the $3,150 refund. Thus, I must part ways with the majority.

While the majority is correct that generally, the death of party to a contract does not

terminate the contract, there are a few exceptions to this rule. Miller v. Ready, 59 Ind. 195, 108

N.E. 605, 608 (Ind. App. 1915). A nonexhaustive list includes contracts of authors to write

books, attorneys for professional services, doctors to cure particular ailments, teachers, and

masters to instruct apprentices. Id. These “contracts are sometimes denominated contracts for

personal services.” Id. Here, I think that Seilon’s lease with Hubbard Hill was more analogous

to a contract for personal services insofar as it was assisted living care, which is something that is

a personal service to Seilon. Thus, I believe that Seilon’s death terminated her contract with

12 Hubbard Hill. Moreover, I believe that placing undue emphasis on Mick’s failure to return the

key to Seilon’s apartment is missing the proverbial forest for the trees.

Moving forward to the storage of the organ, I agree with the majority that Mick and

Hubbard Hill did not have a storage agreement for the organ. First, although Mick “contends”

that the head nurse told him that he could store the organ for $300 per month, the trial court

noted this testimony and specifically concluded that “[t]here was never a meeting of the minds

between the parties as to any contract for storage charges.” Appellant’s App. p. 9, 11.

Likewise, I agree that the trial court improperly applied the doctrine of unjust enrichment

insofar as Mick did not provide Hubbard Hill with some measurable benefit for which he

remains unpaid. Indeed, it seems that Hubbard Hill is responsible for recovering in quantum

meruit for any storage fees it believes it is owed in the absence of a formal contract. See Carr. v.

Pearman, 860 N.E.2d 863, 870 (Ind. Ct. App. 2007) (quoting Galanis v. Lyons & Truitt, 715

N.E.2d 858, 861 (Ind. 1999)) (stating that “‘[q]uantum meruit is an equitable doctrine that

prevents unjust enrichment by permitting one to recover the value of work performed or material

furnished if used by another and if valuable’”) (emphasis added).

That said, it should be noted that Hubbard Hill has already received $2,005 in rent for

the studio apartment from December 2010 and $6,090 for a semi-private room in the nursing

facility to which Seilon was admitted on December 3, 2010. Seilon died on December 16, 2010,

and Mick made no claim for a refund for the studio apartment for the period between December

3 and December 31, during which the apartment was used for storage. Perhaps, Hubbard Hills

has already recovered what was equitable in the absence of a contract. For these reasons, I

would affirm the trial court.

Accordingly I dissent.