Sanders Development Group, Inc. v. Willow Properties, LLC (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: March 17, 2017
• Docket: 06A04-1604-PL-941
• Status: Published

Opinion

MEMORANDUM DECISION

Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be FILED regarded as precedent or cited before any Mar 17 2017, 7:52 am court except for the purpose of establishing the defense of res judicata, collateral CLERK Indiana Supreme Court Court of Appeals estoppel, or the law of the case. and Tax Court

ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE George W. Hopper Paul D. Vink Michael W. McBride Bose McKinney & Evans LLP Cohen & Malad, LLP Indianapolis, Indiana Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

Sanders Development Group, March 17, 2017 Inc., Court of Appeals Case No. Appellant-Plaintiff, 06A04-1604-PL-941 Appeal from the Boone Circuit v. Court The Honorable J. Jeffrey Edens, Willow Properties, LLC, Judge Appellee-Defendant Trial Court Cause No. 06C01-1503-PL-184

Mathias, Judge.

[1] Sanders Development Group, Inc. (“Sanders Development”) appeals the Boone

Circuit Court’s entry of summary judgment in favor of Willow Properties, LLC

(“Willow Properties”). Sanders Development appeals and raises the following

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 1 of 9 dispositive issue: whether genuine issues of material fact concerning the parties’

intent in entering into the contract precludes the entry of summary judgment in

favor of Willow Properties.

[2] We reverse and remand for proceedings consistent with this opinion.

Facts and Procedural History

[3] Sanders Development is a property development company owned by Mark

Sanders. The company has developed approximately thirty residential

subdivisions since its formation in 1976. Sanders Development typically

performs the work necessary to convert vacant real estate into developed lots

ready for sale for home construction.

[4] In 2001, Mark Sanders, his now ex-wife Linda Sanders, Jeffrey Belskus, and

Debrorah Belskus formed Willow Properties, a member-managed limited

liability company. The company’s goal was to develop 168 acres of

undeveloped real estate located in Zionsville, Indiana, into a subdivision later

named Willow Ridge.

[5] Willow Properties and Sanders Development later entered into a contract that

states in its entirety:

The undersigned, being the Shareholder(s) and Director(s) of Willow Properties, LLC, agree to pay Sanders Development Group, Inc., a 7% management fee of the sales price on each Willow Properties lot sale, to be paid at the time of closing. This agreement is effective January 1, 2002.

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 2 of 9 Appellant’s App. p. 149. The agreement was signed by all four members of

Willow Properties.

[6] Thereafter, Sanders Development developed the real estate and received a 7%

management fee of the sales price of each lot sold. In January 2009, five unsold

lots remained.

[7] In early 2009, Mark Sanders and Linda Sanders dissolved their marriage. As a

result of the dissolution proceedings, Mark transferred his interest in Willow

Properties to Linda. Mark transferred all records in his possession relating to

Willow Properties to the remaining three members.

[8] On August 31, 2010, Lot 52 was sold. Sanders Development did not receive its

7% management fee at closing. On June 7, 2011, Jeffrey Belskus met with Mark

Sanders and informed him that Willow Properties was terminating the contract

between the company and Sanders Development. On that date, four unsold lots

remained in the subdivision. Between July 14, 2011, and April 10, 2015, the

remaining four lots were sold, but Sanders Development was not paid its 7%

management fee at the closings. The total sales price of the last five lots was

$1,571,000.

[9] On March 13, 2015, Sanders Development filed a complaint in Boone Circuit

Court against Willow Properties alleging breach of contract and unjust

enrichment. Sanders Development claimed that it was owed the 7%

management fee for the sale of the last five lots in the Willow Ridge

subdivision.

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 3 of 9 [10] Willow Properties filed a motion for summary judgment on October 30, 2015.

Sanders Development subsequently filed a response and cross-motion for

summary judgment. On January 26, 2016, the trial court issued an order

granting Willow Properties motion for summary judgment with respect to the

four lots that sold after Willow Properties terminated the contract. However,

the trial court ordered Willow Properties to pay the 7% management fee to

Sanders Development for the lot that sold on August 31, 2010. Thereafter,

Sanders Development filed a motion to correct error, which the trial court

denied. Sanders Development now appeals.

Standard of Review

[11] When reviewing a grant of summary judgment, we must draw all reasonable

inferences in favor of the non-moving party and affirm only “‘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.’” Siner v.

Kindred Hosp. Ltd. P’ship, 51 N.E.3d 1184, 1187 (Ind. 2016) (quoting Ind. Trial

Rule 56(C)). Careful scrutiny must be given to a grant of summary judgment to

ensure that the losing party was not improperly denied its day in court. Id.

“Indiana’s distinctive summary judgment standard imposes a heavy factual

burden on the movant to demonstrate the absence of any genuine issue of

material fact on at least one element of the claim.” Id. Our standard of review is

not altered by cross-motions for summary judgment. Huntington v. Riggs, 862

N.E.2d 1263, 1266 (Ind. Ct. App. 2007), trans. denied.

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 4 of 9 [12] Cases involving contract interpretation generally are particularly appropriate for

summary judgment. Rusnak v. Brent Wagner Architects, 55 N.E.3d 834, 840 (Ind.

Ct. App. 2016), trans. denied. “When the terms of a contract are ambiguous or

uncertain, however, and its interpretation requires extrinsic evidence, its

construction is left to the factfinder.” Id. “When summary judgment is granted

based on the construction of a written contract, the trial court has either

determined as a matter of law that the contract is not ambiguous or uncertain,

or that any contract ambiguity can be resolved without the aid of a factual

determination.” Id. at 840-41.

The Parties’ Intent

[13] “The goal of contract interpretation is to determine the intent of the parties

when they made the agreement.” Tender Loving Care Mgmt., Inc. v. Sherls, 14

N.E.3d 67, 72 (Ind. Ct. App. 2014). This court must examine the plain

language of the contract, read it in context and, whenever possible, construe it

so as to render every word, phrase, and term meaningful, unambiguous, and

harmonious with the whole. Id. Construction of the terms of a written contract

generally is a pure question of law. Id. If, however, a contract is ambiguous, the

parties may introduce extrinsic evidence of its meaning, and the interpretation

becomes a question of fact. Broadbent v. Fifth Third Bank, 59 N.E.3d 305, 311

(Ind. Ct. App. 2016), trans. denied. “A word or phrase is ambiguous if

reasonable people could differ as to its meaning.” Id. A term is not ambiguous

solely because the parties disagree about its meaning. Id.

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 5 of 9 [14] If contract language is unambiguous, this court 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. Tender Loving Care Mgmt.,

14 N.E.3d at 72. If the language is ambiguous, the contract terms must be

construed to determine and give effect to the intent of the parties when they

entered into the contract. Id. “Courts may properly consider all relevant

evidence to resolve an ambiguity.” Id. “‘Extrinsic evidence is evidence relating

to a contract but not appearing on the face of the contract because it comes

from other sources, such as statements between the parties or the circumstances

surrounding the agreement.’” Id. (quoting CWE Concrete Const., Inc. v. First Nat’l

Bank, 814 N.E.2d 720, 724 (Ind. Ct. App. 2004), trans. denied). An ambiguous

contract should be construed against the party who furnished and drafted the

agreement. Id.

[15] Willow Properties and Sanders Development reduced the following agreement

to writing:

The undersigned, being the Shareholder(s) and Director(s) of Willow Properties, LLC, agree to pay Sanders Development Group, Inc., a 7% management fee of the sales price on each Willow Properties lot sale, to be paid at the time of closing. This agreement is effective January 1, 2002.

Appellant’s App. p. 149. Willow Properties argues that the term “management”

is unambiguous and under the plain terms of the contract, Sanders

Development agreed to manage the subdivision. Sanders Development argues

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 6 of 9 that the term “management” is ambiguous, and therefore, the parties’ intent

must be established by extrinsic evidence.

[16] “Management” is defined as “the act or art of managing: the conducting or

supervising of something (as a business).”1 The Oxford English Dictionary

defines management as: “organization, supervision, or direction; the

application of skill or care in the manipulation, use, treatment, or control (of a

thing or person), or in the conduct of something.”2

[17] The plain meaning of the term “management” is generally easily understood.

However, the term, when considered within the four corners of the contract at

issue, is ambiguous.

[18] First, the plain language of the contract does not establish that Willow

Properties hired Sanders Development to manage the subdivision. The contract

language simply provides that Willow Properties agrees to pay Sanders

Development a 7% management fee of the sales price of each lot that sells and

the fee will be paid at closing. From this language, we can infer that Sanders

Development is required to manage something to receive the fee that Willow

Properties agreed to pay.

1 Merriam-Webster Online, www.merriam-webster.com/dictionary/managment (last visited Feb. 28, 2017). 2 Oxford English Dictionary Online, www.oed.com/view/Entry/113218?redircted/From=management#eid (last visited Feb. 28, 2017).

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 7 of 9 [19] However, it is not clear what Sanders Development was tasked with managing

under the contract. Was the company managing a subdivision? Was the

company simply managing lots within a subdivision? Was the company

managing Willow Properties’ real estate that was not yet developed into lots?

Also, what duties did Willow Properties intend for Sanders Development to

perform in exchange for payment of the management fee? The answer to this

last question depends at least in part on whether the lots pre-existed the contract

or were to be developed after the contract was executed.

[20] From extrinsic evidence, we know that Willow Properties owned real estate

that had not yet been developed into lots. We also know that Sanders

Development was hired to develop the property into lots that could be sold as

home sites.

[21] However, the parties disagree on the precise nature of Sanders Development’s

duties. Sanders Development claims it was hired only to prepare the real estate

for development, but Willow Properties argues that Sanders Development was

hired to manage the lots until all lots were sold. In support of these arguments,

the parties rely primarily on deposition testimony and affidavits, and therefore,

the credibility of the witnesses is crucial to resolving the fact questions posed in

this case.

[22] For these reasons, we conclude that the term “management” is ambiguous and

the duties that Sanders Development was required to perform in exchange for

its fee of 7% of the sales price of each lot is a fact question that must be resolved

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 8 of 9 by the fact-finder. Ultimately, it is within the fact-finder’s purview to determine

whether Sanders Development completed its management of Willow

Properties’ lots and whether Willow Properties breached the contract by

refusing to pay the 7% management fee for each lot sold.

[23] We reverse the entry of summary judgment in Willow Properties’ favor and

remand for proceedings consistent with this opinion.

Baker, J., and Pyle, J., concur.

Court of Appeals of Indiana | Memorandum Decision 06A04-1604-PL-941 | March 17, 2017 Page 9 of 9