Stephen Turner v. KLS Services, LLC

• Court: Indiana Court of Appeals
• Decided: February 28, 2025
• Docket: 24A-PL-01512
• Status: Published

Opinion

FILED Feb 28 2025, 9:21 am

CLERK Indiana Supreme Court Court of Appeals and Tax Court

IN THE

Court of Appeals of Indiana Stephen Turner, Appellant-Defendant

v.

KLS Services, LLC, Appellee-Plaintiff

February 28, 2025 Court of Appeals Case No. 24A-PL-1512 Appeal from the Hancock Circuit Court The Honorable R. Scott Sirk, Judge Trial Court Cause No. 30C01-2205-PL-706

Opinion by Judge Bradford Judges Bailey and Foley concur.

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 1 of 13 Bradford, Judge.

Case Summary [1] In early 2020, Stephen Turner contacted KLS Services, LLC (“KLS”), through

its principal Kenneth Shepherd, about building a house for Turner on the lot he

owned in Greenfield (“the House”). Shepherd made it clear to Turner that the

amount due to KLS would be its actual costs to build the House plus ten

percent. Three versions of a written construction contract were prepared and

approved by the parties, with the last version listing the price for construction at

$180,000.00 and omitting the term regarding the ten percent in order to secure a

loan to Turner in that amount from which KLS could draw to cover

construction costs.

[2] Construction began in mid-2020 and was completed in August of 2021, and,

while KLS received the entirety of the $180,000.00 loan, its total costs ended up

being $246,388.76, attributable mostly to a pandemic-related, dramatic increase

in the cost of building materials. KLS billed Turner for $264,000.00, and

Turner refused to pay. KLS sued Turner for, inter alia, breach of contract, and

the trial court entered judgment in favor of KLS for $66,388.76 and denied

Turner’s motion to correct error. Turner contends that the trial court abused its

discretion in admitting certain evidence, erred in failing to conclude that KLS

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 2 of 13 had waived all claims against Turner by executing a lien waiver, and erred in

entering judgment in favor of KLS. We affirm.

Facts and Procedural History [3] In February of 2020, Turner contacted KLS about building him the House.

Three versions of a written construction agreement were prepared, with the

second version a modified version of the first, and the third version a further

modified version of the second. The first version (executed on April 2, 2020)

listed the price to build the House as $150,000.00 plus a fee of ten percent of the

cost of building the House. The second version changed the $150,000 to

$180,000.00, included the same cost-plus language, and detailed changes to the

foundation, septic, drywall, and overall square footage of the House. The third

version (the “Third Contract”) provided that “[t]he total price of [the House] is

to be paid by the Owner to the Contractor for the completed [House] is

$180,000” but did not contain any cost-plus language, which was removed at

the urging of a credit-union representative to secure a loan to Turner to finance

construction. Appellant’s App. Vol. II p. 62. While Shepherd signed only the

first version on behalf of KLS, he acknowledged initialing the second version

and the Third Contract. It was understood by all concerned, however, that the

price listed in all three versions was an estimate subject to change during

construction.

[4] The Third Contract has a clause providing that “[t]his Agreement supersedes

and all [sic] previous agreements, either oral or in writing, between the parties

hereto with respect to the subject matter of this Agreement.” Appellant’s App.

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 3 of 13 Vol. II p. 70. The Third Contract, however, does not contain an integration

clause stating that it represents the entirety of the agreement between the

parties. After executing the Third Contract, Turner secured a loan in the

amount of $180,000.00, from which KLS could draw to pay for construction of

the House.

[5] Between January of 2020 and June of 2020 (when construction began), the cost

of building materials increased between thirty-five and forty percent. Prior to

the start of construction, Turner had indicated to Shepherd that the price he

wanted to pay for the House was KLS’s costs plus ten percent. Throughout the

construction process, KLS would provide Turner with invoices, and Shepherd

would discuss the costs with Turner before the work detailed in the invoices

was done. Turner and Shepherd frequently met at the construction site to

discuss what was being done, the costs of materials, and how construction costs

were aligning with Turner’s budget.

[6] Turner moved into the House on August 7, 2021. Pursuant to the draw

schedule of Turner’s loan, KLS received the full amount of the loan in August

of 2021, and KLS executed a lien waiver as to the House. Construction on the

House was completed in September or October of 2021, and, all told, KLS’s

costs to build the House came to $246,388.76. On or about November 17,

2021, KLS sent Turner a bill for $264,000.00 (presumably to be offset by the

$180,000.00 that KLS had already received), which Turner refused to pay,

indicating that he would pay no more than $180,000.00.

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 4 of 13 [7] On June 1, 2022, KLS filed suit against Turner, alleging breach of contract,

unjust enrichment, and quantum meruit. On June 17, 2022, Turner responded

and counterclaimed, alleging claims of frivolous claims, breach of contract, and

unjust enrichment. A bench trial was conducted over several days beginning in

July of 2023 and ending in January of 2024. During trial, Shepherd testified,

without objection, that KLS’s total costs to build the House had been

$246,388.76. Both parties submitted proposed findings and conclusions, and,

on March 28, 2024, the trial court entered judgment in favor of KLS for

$66,388.76. On April 15, 2024, Turner moved to correct error, which motion

the trial court denied on June 25, 2024.

Discussion and Decision [8] Turner contends that the trial court abused its discretion in denying his motion

to correct error because the judgment it had entered in favor of KLS was clearly

erroneous. “[G]enerally, a trial court has wide discretion to correct errors, and

we will reverse only for an abuse of that discretion.” Paulsen v. Malone, 880

N.E.2d 312, 313 (Ind. Ct. App. 2008). “An abuse of discretion occurs when the

trial court’s action is against the logic and effect of the facts and circumstances

before it and the inferences that may be drawn therefrom, or is based on

impermissible reasons or considerations.” Id. The alleged error in this case, of

course, is the entry of an allegedly erroneous judgment.

[9] Where, as here, both parties submitted proposed findings and conclusions, we

cannot affirm the judgment on any legal basis; rather, this Court must determine whether the trial court’s findings are sufficient to support the judgment. Vanderburgh Co. Bd. of Commissioners v.

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 5 of 13 Rittenhouse, 575 N.E.2d 663, 665 (Ind. Ct. App. 1991), trans. denied. In reviewing the judgment, we must first determine whether the evidence supports the findings and second, whether the findings support the judgment. Id. The judgment will be reversed only when clearly erroneous, i.e., when the judgment is unsupported by the findings of fact and conclusions entered on the findings. DeHaan v. DeHaan, 572 N.E.2d 1315, 1320 (Ind. Ct. App. 1991), trans. denied. Findings of fact are clearly erroneous when the record lacks any evidence or reasonable inferences from the evidence to support them. Id. To determine whether the findings or judgment are clearly erroneous, we consider only the evidence favorable to the judgment and all reasonable inferences flowing therefrom, and we will not reweigh the evidence or assess witness credibility. Id. Nelson v. Marchand, 691 N.E.2d 1264, 1267 (Ind. Ct. App. 1998).

I. Admission of Evidence [10] Turner contends that the trial court abused its discretion in admitting evidence

regarding several invoices issued by KLS to Turner.

The admission and exclusion of evidences rests within the sound discretion of the trial court, and we review the exclusion of evidence only for an abuse of discretion. Wilson v. State, 765 N.E.2d 1265, 1272 (Ind. 2002) (citations omitted). Even if a trial court errs in its evidentiary ruling, “we will not overturn the conviction if the error is harmless.” Appleton v. State, 740 N.E.2d 122, 124 (Ind. 2001) (citing Ind. Trial Rule 61; Cooley v. State, 682 N.E.2d 1277, 1282 (Ind. 1997)). An error is harmless if “the probable impact of the evidence upon the jury is sufficiently minor so as not to affect a party’s substantial rights.” Appleton, 740 N.E.2d at 124 (citing Fleener v. State, 656 N.E.2d 1140, 1141–42 (Ind. 1995)). Griffith v. State, 31 N.E.3d 965, 969 (Ind. 2015). It is well-settled that “reversible

error cannot be predicated upon the erroneous admission of evidence that is

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 6 of 13 merely cumulative of other evidence that has already been properly admitted.”

Matter of N.E., 228 N.E.3d 457, 473 (Ind. Ct. App. 2024) (citation and quotation

marks omitted). While Turner did object to the admission of several invoices

offered by KLS, the only purpose of the invoices was to establish KLS’s total

costs in building the House, and Turner did not object to Shepherd’s testimony

that KLS’s total costs had been $246,388.76. Because the invoices were merely

cumulative of Shepherd’s testimony on this point, any error the trial court

might have made in their admission can only be considered harmless. See id.

II. Whether KLS Waived any Claim Against Turner [11] Turner also contends that KLS waived any claim it might have had against him

when it executed a lien waiver upon receiving the proceeds from Turner’s loan.

The lien waiver provides, in part, as follows:

The Contractor, for and in consideration of the sum of [] $180,000.00, and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby waives and releases any and all liens, claims, or rights to lien of whatsoever kind or character on or against the Premises or the improvements located thereon, on account of labor, design, services, supplies, equipment and/or materials, furnished by the undersigned to or on account of the said Owner for the above described Premises. Ex. Vol. IV p. 159. By its own terms, however, KLS waived liens, claims, or

rights against the House and/or improvements located thereon, not Turner.

“The common definition of ‘lien’ is a claim which one person holds on

another’s property as a security for an indebtedness or charge.” Hubble v. Berry,

180 Ind. 513, 519, 103 N.E. 328, 330 (1913). KLS, therefore, did nothing more

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 7 of 13 than waive any security interest in the House, something it is not seeking to

enforce in this action.

III. Whether the Judgment was Clearly Erroneous [12] Turner contends that the trial court erred in considering parol evidence to

determine the nature of his agreement with KLS because the written agreement

between the parties, as embodied by the Third Contract, was not ambiguous,

limiting his obligation to $180,000.00. “The construction of the terms of a

written contract is a pure question of law[.]” S.C. Nestel, Inc. v. Future Constr.,

Inc., 836 N.E.2d 445, 449 (Ind. Ct. App. 2005). “When interpreting a contract,

a court is to determine and give effect to the parties’ intent through the language

they use to express their rights and duties under the contract.” Gold v. Cedarview

Mgmt. Corp., 950 N.E. 2d 739, 742–43 (Ind. Ct. App. 2011).

Where terms of a contract are clear and unambiguous, we will apply the plain and ordinary meaning of the terms and enforce the contract according to its terms. Claire’s Boutiques, Inc. v. Brownsburg Station Partners LLC, 997 N.E.2d 1093, 1098 (Ind. Ct. App. 2013). If necessary, the text of a disputed provision may be understood by referring to other provisions within the four corners of the document. Id. The four corners rule states that where the language of a contract is unambiguous, the parties’ intent is to be determined by reviewing the language contained within the “four corners” of the contract, and “parol or extrinsic evidence is inadmissible to expand, vary, or explain the instrument unless there has been a showing of fraud, mistake, ambiguity, illegality, duress or undue influence.” Adams v. Reinaker, 808 N.E.2d 192, 196 (Ind. Ct. App. 2004). John M. Abbott, LLC v. Lake City Bank, 14 N.E.3d 53, 56 (Ind. Ct. App. 2014).

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 8 of 13 [13] As an initial matter, we agree with Turner that the Third Contract applies, at

least as far as it goes. Like the previous two versions of the contract, the Third

Contract provides, in part, that “[t]his Agreement supersedes and all [sic]

previous agreements, either oral or in writing, between the parties hereto with

respect to the subject matter of this Agreement.” Ex. Vol. IV p. 32. This is

clear and means that the first and second agreements between Turner and KLS

may as well have never existed as soon as the Third Contract was executed.1

[14] Having established that the Third Contract governs, we address the rationale

underlying the trial court’s judgment. While the trial court concluded that no

meeting of the minds had occurred between KLS and Turner and relied on

principles of unjust enrichment, the trial court also seems to have concluded (in

the alternative) that the Third Contract, while not necessarily ambiguous, did

not represent the entirety of the agreement between the parties, thereby

justifying the consideration of parol evidence to work out the actual and

complete terms of the agreement. While we disagree with the trial court’s

1 To the extent that KLS argues that “only one document was signed by both appellant and appellee[,]” i.e., the first version of the contract, we are not persuaded that this is significant. Appellee’s Br. p. 4. While a signature frequently indicates and party’s assent to the terms of a contract, there is nothing magical about signatures: The validity of a contract is not dependent upon the signature of the parties, unless such is made a condition of the agreement. 6 I.L.E. Contracts Sec. 53 (1958); see Parrish v. Terre Haute Savings Bank, (1982) Ind. App., 431 N.E.2d 132; Seco Chemicals, Inc. v. Stewart, (1976) 169 Ind. App. 624, 349 N.E.2d 733. […] However, some form of assent to the terms is necessary. See generally Hess v. Lackey, (1921) 191 Ind. 107, 132 N.E. 257. Assent may be expressed by acts which manifest acceptance. Herald Telephone v. Fatouros, (1982) Ind. App., 431 N.E.2d 171. State v. Daily Exp., Inc., 465 N.E.2d 764, 767 (Ind. Ct. App. 1984). Shepherd conceded during his trial testimony that he had initialed the Third Contract after the final alterations had been made, which, under the circumstances, was sufficient to indicate assent.

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 9 of 13 conclusion that no meeting of the minds occurred, we do agree that its reliance

of parol evidence was appropriate in this case.

[15] Parol evidence may be used to fill in the gaps in cases where the written

contract does not clearly indicate that it embodies the entire agreement between

the parties.

[T]he parol evidence rule recited in Corbin on Contracts, Sec. 573, restated in 13 I.L.E. Evidence § 181, […] reads as follows:

“When two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing.”

However the rule does not apply when the writing shows upon its face that it does not embrace the entire contract, and additional facts are necessary to show its nature and extent. Burton v. Morrow, (1892) 133 Ind. 221, 32 N.E. 921; 13 I.L.E. Evidence § 185.

Continuing the reading of Corbin on Contracts, (One Volume Edition 1952) Sec. 573, pp. 535–537, […] we find that:

“Whether any specific written document has been assented to by the parties as the complete and accurate ‘integration’ of the terms of their contract is an ordinary question of fact. In determining this question, no relevant evidence is excluded on the mere ground that it is offered in the form of oral testimony.

In innumerable cases, only a part of the terms of an agreement are reduced to writing; and the writing is not assented to as accurate and complete. This is often a

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 10 of 13 difficult question of fact; in other cases there is no substantial dispute. It is upon the determination of this issue that the correctness of decisions giving or refusing effect to additional promises, warranties, and conditions must depend. Many documents, executed in the course of performance of an agreement, are not intended by either party as complete expressions of the terms of that agreement.

[T]he ‘parol evidence rule’ does not […] apply if a contract has been made and a writing has been signed but has not been assented to as the complete and accurate ‘integration.’” (Emphasis added.) Citizens Progress Co. v. James O. Held & Co., 438 N.E.2d 1016, 1021 (Ind. Ct. App.

1982) (emphasis in original). As mentioned, the Third Contract does not

contain an integration clause clearly indicating that the contract embodies the

entire agreement between the parties. Consequently, the trial court was

permitted to receive and evaluate parol evidence to determine if the parties

intended the Third Contract to be the complete agreement and, if not, the

nature of the additional terms.

[16] We conclude that the record supports the trial court’s finding that the actual

agreement between the parties was for the House to be constructed on a cost-

plus basis, with Turner’s final obligation being KLS’s actual costs plus ten

percent. The parol evidence includes Shepherd’s testimony tending to establish

that this was the intent of the parties from the beginning:

[W]hen I sit down with customers and we talk about doing the costs plus 10% you still want to give them an estimated number to try to stick with because that’s where they wanted to be at. So we do a flat number that gives us a range that he knows where or the

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 11 of 13 customer knows where they’ve got stay at to stay in their price range. Tr. Vol. II p. 29. Shepherd clarified that this “flat number” put into his cost-

plus contracts is not a “hard number” but, rather, an “estimate.” Tr. Vol. II p.

29. The parol evidence also includes Shepherd’s testimonial affirmation that he

had “clearly and repeatedly communicated to Mr. Turner that the cost of the

home would be it’s [sic] actual costs as expended plus 10%[.]” Tr. Vol. II p.

127. When asked how often he had discussed with Turner the fact that the

arrangement was to build the House for costs plus ten percent, Shepherd replied

that it had been “[i]f not every week [then] every other week when we met on

site and was talking about bills and this and that[.]” Tr. Vol. II p. 126.

Shepherd testified that that he had never agreed with Turner to “waive [his]

intention to recover the total costs for the home[.]” Tr. Vol. II p. 125.

[17] Evidence regarding the parties’ conduct is consistent with this understanding.

Shepherd testified that invoices for work to be performed by subcontractors or

materials had been provided to Turner on an “ongoing or rolling basis” and

that Turner had never questioned any of them or asked Shepherd what they

were for. Tr. Vol. II p. 122. Shepherd testified that Turner had never said

anything when costs had exceeded $180,000.00, asked KLS to stop work, or

asked KLS to explore lower-cost materials. One may reasonably infer from

Turner’s actions that he approved of expenditures exceeding $180,000.00. We

conclude that this evidence is sufficient to establish that the actual contractual

agreement between Turner and KLS was—and had always been understood by

both parties to be—that Turner would be obligated to pay KLS an amount

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 12 of 13 equal to KLS’s costs plus ten percent of those costs. Turner’s failure to pay

KLS for the actual costs of constructing the House was a breach of that

contract. Consequently, we affirm the trial court’s judgment in favor of KLS in

the amount of $66,388.76.

[18] We affirm the judgment of the trial court.

Bailey, J., and Foley, J., concur.

ATTORNEY FOR APPELLANT Julie A. Camden Camden & Meridew, P.C. Fishers, Indiana ATTORNEY FOR APPELLEE Briane M. House Pritzke & Davis, LLP Greenfield, Indiana

Court of Appeals of Indiana | Opinion 24A-PL-1512 | February 28, 2025 Page 13 of 13