Pecan Shoppe of Whitestown, Inc. v. SJC, Inc. (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: January 14, 2016
• Docket: 06A05-1504-PL-177
• Status: Published

Opinion

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any Jan 14 2016, 8:00 am court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE Kelleigh I. Fagan John J. Moore Bruce M. Bittner DONINGER TUOHY & BAILEY LLP CHURCH CHURCH HITTLE & ANTRIM Indianapolis, Indiana Noblesville, Indiana

Brent R. Borg CHURCH CHURCH HITTLE & ANTRIM Fishers, Indiana

IN THE COURT OF APPEALS OF INDIANA

Pecan Shoppe of Whitestown, January 14, 2016 Inc., Court of Appeals Case No. Appellant-Plaintiff, 06A05-1504-PL-177 Appeal from the Boone County v. Superior Court 1 The Honorable Matthew C. SJC, Inc., Kincaid, Judge Appellee-Defendant Trial Court Cause No. 06D01-1305-PL-287

Altice, Judge.

Case Summary

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 1 of 10 [1] Pecan Shoppe of Whitestown, Inc. (Pecan Shoppe) appeals the trial court’s

entry of summary judgment in favor of SJC, Inc. (SJC) on Pecan Shoppe’s

claim for breach of contract. Pecan Shoppe argues that the trial court

improperly determined that its complaint was filed outside the applicable

statute of limitations.

[2] We affirm.

Facts & Procedural History

[3] On November 11, 1999, Pecan Shoppe and SJC entered into an Asset Purchase

Agreement (Purchase Agreement), whereby SJC agreed to purchase certain

assets, including Pecan Shoppe’s interest in a lease of real estate located at the

southeast corner of I-65 and Whitestown Parkway in Zionsville (the Property).

The Purchase Agreement was closed on December 1, 1999, and provided that

SJC would pay Pecan Shoppe a purchase price of $850,000. In addition to the

purchase price, the Purchase Agreement contained two provisions for

additional consideration to be paid to Pecan Shoppe if SJC developed

additional uses on the Property (Use Premiums). Specifically, Section 2.5(d)

(the Second-Use Premium) of the Purchase Agreement provided:

[SJC] shall, in addition, and only in the event that [SJC] obtains all necessary legal authority and no judicial action precludes [SJC]’s implementation of the authorized development of the Real Property for two (2) uses, pay to [Pecan Shoppe] an addition to the Purchase Price in the sum of One Hundred Fifty Thousand Dollars, with interest at the rate of Seven Percent (7%) per annum accruing from the date of approval of the second use

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 2 of 10 is final and unappealable, which addition to the Purchase price (the “Second Use Premium”) shall be due and payable on the first day of the first full month following the fifth (5 th) anniversary of the Closing Date.

Appellant’s Appendix at 32. Section 2.5(e) (the Third-Use Premium) of the

Contract provided:

[SJC] shall, in addition, and only in the event that [SJC] obtains all necessary legal authority and no judicial action precludes [SJC]’s implementation of the authorized development of the Real Property for three (3) uses, or if [SJC]’s development of the Real Property renders a third use impossible, pay to [Pecan Shoppe] an addition to the Purchase Price in the sum of One Hundred Fifty Thousand Dollars, with interest at the rate of Seven Percent (7%) per annum accruing from the date that approval of the third use is final and unappealable, which addition to the Purchase Price (the “Third Use Premium”) shall be due and payable on the first day of the first full month following the fifth (5th) anniversary of the Closing Date.

Id. at 32-33. The parties agree that January 1, 2005 was the first day of the first

full month following the fifth anniversary of the closing date of the Contract.

[4] Prior to the Purchase Agreement with SJC, Pecan Shoppe operated a gas

station, a convenience store, and a restaurant out of a single-tenant building

located on the Property. SJC subsequently tore down the single-tenant building

and replaced it with a three-tenant building, out of which SJC operated a gas

station and a convenience store. A Starbucks opened in one of the tenant

spaces in July 2003. In October 2007, a single-bay drive through carwash

opened in the commercial space at the end of the building opposite the

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 3 of 10 Starbucks. On January 31, 2011, a Cracker Barrel restaurant opened on vacant

ground located on the Property.

[5] On May 13, 2013, Pecan Shoppe filed a complaint against SJC seeking

damages for breach of contract based upon SJC’s failure to pay the Use

Premiums set forth in Sections 2.5(d) and (e) of the Purchase Agreement.1 In

an amended answer, SJC raised a statute of limitation defense, asserting that

more than six years had passed since the Use Premiums were due and payable

under the terms of the Purchase Agreement.2 SJC filed a motion for summary

judgment on December 19, 2014. Pecan Shoppe filed its response in opposition

to summary judgment on January 28, 2015. The trial court held a hearing on

SJC’s summary judgment motion on April 10, 2015. That same day, the trial

court entered a written order, including findings of fact and conclusions of law,

granting summary judgment in favor of SJC. Specifically, the court found as

follows:

39. The Purchase Agreement unambiguously provides that the use premiums were due on January 1, 2005. With this clear language as to the due date, there is no need for the Court, as Plaintiff’s affidavit invites, to delve into a consideration of testimony concerning intent, other extraneous documents, or to

1 In its complaint, Pecan Shoppe alleged that uses of the Property had “expanded to include the operation of a Cracker Barrel, a Starbucks, and a car wash.” Appellant’s Appendix at 59. 2 The parties do not dispute that a six-year statute of limitation applies to the matter at hand. See Ind. Code § 34-11-2-9 (“[a]n action upon . . . written contracts for the payment of money executed after August 31, 1982, must be commenced within six (6) years after the cause of action accrues”). The parties dispute concerns when the cause of action, if any, accrued.

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 4 of 10 hear what some signatory to the contract thinks it means or now wishes it means.

***

40. If Pecan Shoppes of Whitestown thought SJC breached the contractual provisions to pay the use premiums – maybe it did – the unambiguous deadline to file suit considering the six (6) year statute of limitations was January 1, 2011. Pecan Shoppes [sic] of Whitestown’s Complaint was not timely filed and Plaintiff is thereby entitled to take nothing by way of its Complaint.

Appellant’s Appendix at 9. Pecan Shoppe now appeals.

Discussion & Decision

[6] Pecan Shoppe argues the trial court erred in concluding that the language

employed in the Use Premium provisions unambiguously provided that the

deadline for payment thereof was January 1, 2005.3 Pecan Shoppes asserts that

while the language of Sections 2.5(d) and (e) is not itself ambiguous, a latent

ambiguity becomes evident in applying the terms of the Purchase Agreement to

the circumstances herein. According to Pecan Shoppe, the uses for which it

seeks payment of the Use Premiums4 came into existence after the January 1,

3 The implication of this conclusion is that the six-year statute of limitations began to run at that point in time, regardless of whether the Property had been put to a second or third use such that SJC’s obligation to pay the Use Premiums was triggered. 4 As noted in Footnote 1, supra, Pecan Shoppe alleged in its Complaint that the Property had been put to three additional uses, including operation of a Starbucks, a Cracker Barrel, and a car wash. In responding to SJC’s motion for summary judgment, Pecan Shoppe asserted that it is not claiming that operation of the Starbucks triggered SJC’s obligation to pay a Use Premium.

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 5 of 10 2005 payment deadline set forth in the Purchase Agreement. Pecan Shoppe

therefore asserts that because the Purchase Agreement is silent as to a deadline

for Use Payments triggered after the anniversary date, SJC’s obligation to pay

the Use Premiums would have been triggered when those uses, i.e., the car

wash in 2007 and the Cracker Barrel in 2011, were approved and became “final

and unappealable.” Id. at 32, 33. Under Pecan Shoppe’s interpretation of the

Purchase Agreement, its cause of action did not accrue until SJC’s obligation to

pay the Use Premiums was triggered, and therefore, summary judgment was

inappropriate as its Complaint was timely filed.

[7] We review summary judgment de novo, applying the same standard as the trial

court: “Drawing all reasonable inferences in favor of . . . the non-moving

parties, summary judgment is appropriate ‘if the designated evidentiary matter

shows that there is no genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law.’” Williams v. Tharp, 914 N.E.2d

756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A fact is ‘material’ if its resolution

would affect the outcome of the case, and an issue is ‘genuine’ if a trier of fact is

required to resolve the parties’ differing accounts of the truth, or if the

undisputed material facts support conflicting reasonable inferences.” Id.

(internal citations omitted).

[8] The initial burden is on the summary-judgment movant to “demonstrate [ ] the

absence of any genuine issue of fact as to a determinative issue,” at which point

the burden shifts to the non-movant to “come forward with contrary evidence”

showing an issue for the trier of fact. Id. at 761-62 (internal quotation marks

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 6 of 10 and substitution omitted). And “[a]lthough the non-moving party has the

burden on appeal of persuading us that the grant of summary judgment was

erroneous, we carefully assess the trial court’s decision to ensure that he was

not improperly denied his day in court.” McSwane v. Bloomington Hosp. &

Healthcare Sys., 916 N.E.2d 906, 909-10 (Ind. 2009) (internal quotation marks

omitted).

[9] The goal of contract interpretation is to determine the intent of the parties when

the agreement was made. Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 813

(Ind. 2012). To the extent that this case requires that we interpret the terms of

the Purchase Agreement, we note that “[i]nterpretation of a contract is a pure

question of law and is reviewed de novo.” Cmty. Anesthesia & Pain Treatment,

L.L.C. v. St. Mary Med. Ctr., Inc., 26 N.E.3d 70, 76 (Ind. Ct. App. 2015) (citation

omitted). “If a contract’s terms are clear and unambiguous, courts must give

those terms their clear and ordinary meaning.” Id. “‘We will make all attempts

to construe the language of a contract so as not to render any words, phrases, or

terms ineffective or meaningless.’” Id. (quoting Rogers v. Lockard, 767 N.E.2d

982, 992 (Ind. Ct. App. 2002)).

[10] “A contract is ambiguous if a reasonable person would find the contract subject

to more than one interpretation.” Citimortgage, 975 N.E.2d at 813; see also

Tender Loving Care Mgmt., Inc. v. Sherls, 14 N.E.3d 67, 72 (Ind. Ct. App. 2014).

“When a contract’s terms are ambiguous or uncertain and its interpretation

requires extrinsic evidence, its construction is a matter for the factfinder.”

Cmty. Anesthesia & Pain Treatment, 26 N.E.3d at 76-7. “An ambiguous contract

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 7 of 10 will be construed against the party who drafted it.” Id. at 77. If the language is

unambiguous, however, we may not look to extrinsic evidence to expand, vary,

or explain the instrument but must determine the parties’ intent from the four

corners of the instrument.” Id. “A contract is not ambiguous merely because

the parties disagree as to its proper construction.” Beazer Homes Ind., LLP v.

Carriage Courts Homeowners Ass’n, Inc., 905 N.E.2d 20, 23 (Ind. Ct. App. 2009),

trans. denied.

[11] As noted above, Pecan Shoppe concedes that in and of itself the language of

Sections 2.5(d) and (e) “does not create an ambiguity.” Appellant’s Brief at 7.

Pecan Shoppe nevertheless asserts that a latent ambiguity 5 becomes evident

when the language setting out the Use Premiums is applied to the

circumstances herein. Specifically, Pecan Shoppe notes that Sections 2.5(d) and

(e) are silent as to payment of Use Premiums for uses that arise after the fifth

anniversary and characterizes this silence as a latent ambiguity. In further

support of its position, Pecan Shoppe designated evidence in opposition to

summary judgment suggesting the parties contemplated payment of Use

Premiums even if the uses triggering such payment obligation came into being

after the fifth anniversary. Such extrinsic evidence may be considered only if

5 Ambiguity in a contract may be one of two types: patent or latent. A patent ambiguity is “‘apparent on the face of the instrument and arises from an inconsistency or inherent uncertainty of language used so that it either conveys no definite meaning or a confused meaning.’” Simon Prop. Group, L.P. v. Mich. Sporting Goods Distrib., Inc., 837 N.E.2d 1058, 1070-71 (Ind. Ct. App. 2005) (quoting Oxford Fin. Group, Ltd. v. Evans, 795 N.E.2d 1135, 1143 (Ind. Ct. App. 2003)), trans. denied. A latent ambiguity “‘arises only upon attempting to implement the contract.’” Id. at 1071 (quoting Oxford Fin. Group, 795 N.E.2d at 1144).

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 8 of 10 the Purchase Agreement is deemed to have a latent ambiguity. See Simon Prop.

Group, 837 N.E.2d at 1071.

[12] We disagree with Pecan Shoppe’s interpretation of the Purchase Agreement.

First, the Purchase Agreement clearly sets out that the Use Premiums “shall be

due and payable on the first day of the first full month following the fifth (5 th)

anniversary of the Closing Date.” Appellant’s Appendix at 32, 33. Finding this

provision to be unambiguous as to the deadline for payment of the Use

Premiums, we need only look within the four corners of the instrument and are

not at liberty to consider extrinsic evidence. See Simon Prop. Group, 837 N.E.2d

at 1071. There is nothing in the Purchase Agreement that provides for payment

of Use Premiums after the five-year anniversary of the closing date.

[13] Second, Pecan Shoppe’s interpretation would require this court to interpret the

Purchase Agreement so as to provide for an open-ended and undefined date on

which the second and third Use Premiums were due and payable. We reject

Pecan Shoppe’s suggestion that we need only impose a reasonable time for

performance. In Harrison v. Thomas, 761 N.E.2d 816 (Ind. 2002), relied upon by

Pecan Shoppe, the Court concluded that a contract provision setting the time

for closing on a real estate contract was unambiguous. In responding to a

contrary argument, the court noted that “[w]hen the parties to an agreement do

not fix a concrete time for performance, the law implies a reasonable time.” Id.

at 819 (emphasis supplied). Here, the parties did set a fixed deadline for the

payment of the Use Premiums. There is therefore no need to imply a

reasonable time limit for the payment of the Use Premiums.

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 9 of 10 [14] Having concluded that the Purchase Agreement clearly and unambiguously

provides that the Use Premiums were due and payable on January 1, 2005, it

follows that Pecan Shoppe’s cause of action accrued and the statute of

limitations began to run on that date. The limitations period for Pecan Shoppe

to bring a claim against SJC for the payment of the Use Premiums expired on

or about January 1, 2011. Pecan Shoppe waited more than two years after the

limitations period expired before it pursued its claim for breach of contract.

Accordingly, Pecan Shoppe’s complaint was untimely. The trial court properly

granted summary judgment in favor of SJC.

[15] Judgment affirmed.

Riley, J., and Brown, J., concur.

Court of Appeals of Indiana | Memorandum Decision 06A05-1504-PL-177 | January 14, 2016 Page 10 of 10