Mar 12 2015, 9:59 am
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE Richard M. Davis Kevin W. Vanderground Kevin G. Kerr Church, Church, Hittle & Antrim Hoeppner Wagner & Evans LLP Merrillville, Indiana Valparaiso, Indiana Rick C. Gikas Merrillville, Indiana
IN THE COURT OF APPEALS OF INDIANA
The County of Lake, Indiana; March 12, 2015 Board of Commissioners of the Court of Appeals Case No. County of Lake (Indiana), in 45A03-1401-CC-42 their official capacities; and The Lake County Treasurer, in his Appeal from the Lake Superior official capacity, Court
Appellants-Defendants, The Honorable Calvin P. Hawkins, Judge v. Cause No. 45D02-0805-CC-183
U.S. Research Consultants, Inc., an Indiana Corporation, Appellee-Plaintiff.
Robb, Judge.
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 1 of 15 Case Summary and Issue [1] U.S. Research Consultants, Inc. (“Consultant”) and The County of Lake,
Indiana; the Board of Commissioners of the County of Lake, Indiana, in their
official capacities; and the Lake County Treasurer, in his official capacity
(collectively, the “County”), entered into a series of contracts (the “collection
contracts”) for Consultant to be paid a commission for collecting delinquent
real property taxes on behalf of the County. After the collection contracts were
terminated, Consultant sued the County for breach of contract, alleging unpaid
commissions under the collection contracts. The trial court granted
Consultant’s motion for partial summary judgment and denied the County’s
motion regarding the interpretation of the contract. Based upon that judgment,
the trial court later granted final judgment in excess of one million dollars to
Consultant on its complaint. The County raises several issues, of which we find
the following dispositive: whether the trial court properly interpreted the
collection contracts as a matter of law and therefore properly granted partial
summary judgment to Consultant and denied partial summary judgment to the
County. Concluding the trial court erred as a matter of law in interpreting the
collection contracts and erroneously granted partial summary judgment and
ultimately final judgment to Consultant, we reverse and remand.
Facts and Procedural History [2] In 2000, the County and Consultant entered into a contract by which the
County assigned real property tax collection cases to Consultant for collection
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 2 of 15 and Consultant earned a commission on amounts collected. The initial
contract was for a two-year term beginning January 1, 2000, and provided, in
pertinent part:
2. Scope of Service. The Consultant shall do, perform, and carry out in a good and professional manner the services for the County, specifically the Consultant shall: A. Consultant shall be assigned by the Lake County Treasurer 100% of the Real Property Tax Collection Cases. B. Consultant shall report directly to the Lake County Treasurer for all instructions if necessary to carry out its responsibilities. *** E. Collect the delinquent monies through an organized procedure to include filing lawsuits to collect if necessary. *** I. All payments made by defendants on lawsuits filed with the Court(s) shall be made to the Clerk of the Court. These funds will then be transferred by the Clerk of the Court to the County of Lake and its Treasurer for deposit as payments are made. Payments will be applied as follows: 1. First to the payment of Court costs until these are paid in full. 2. The remaining funds will be split between real property taxes and penalties owed to the County of Lake and [Consultant’s] fees on a pro rata basis in accordance with the judgment rendered. J. To obtain its fees [Consultant] will have to file a claim form with the County of Lake. [Consultant] will be paid out of the monies received from the Clerk. K. If monies are paid on accounts prior to filing suit, these funds will be paid directly to the Lake County Treasurer who will collect not only taxes, fines and penalties but any [Consultant’s] fees. The Treasurer will deposit these funds into separate accounts for taxes, interest, penalties and [Consultant’s] fees on a pro rata basis. [Consultant] will
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 3 of 15 then file a claim with the County of Lake for fees which should be paid from the funds established. *** [Consultant’s] fees to be received must be reasonable and will be established by the Court as part of the judicial proceedings or by the Treasurer . . . . Shall not exceed fee following [sic]: 1. If suit is filed, [Consultant] will accept the fees awarded by the court as reasonable attorney’s fees. 2. If suit is not filed, [Consultant’s] fee will be twenty percent (20%) of the taxes. Appellants’ Appendix at 26-28. The same contract was renewed for a second
term in January 2002. See id. at 32-37. On June 4, 2003, the parties entered
into a third contract which changed the terms of Consultant’s compensation:
4. Compensation. The County agrees to pay the Consultant a sum not to exceed the following: 1. If suit is not filed, Consultant(s) [sic] fee will be fifteen percent (15%) of the taxes for all projects begun on or after the date this Agreement is approved by the County. Consultant’s fees for projects begun before this Agreement is approved by the County shall be twenty percent (20%) of the taxes. 2. If suit is filed, Consultant(s) [sic] fee will be the amount determined by the Court. Id. at 40. A fourth two-year contract was entered into on January 1, 2005 with
these same (altered) compensation terms. The County terminated Consultant’s
contract in November 2006.1
1 The contract included a clause allowing either party to terminate the agreement by giving at least thirty days written notice. See id. at 47.
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 4 of 15 [3] The “organized procedure” for collecting delinquent monies was for the County
to periodically send a disc to Consultant containing information about
properties with delinquent taxes. However, the taxes were divided into “last
year taxes,” or taxes delinquent for less than one year, and “prior year taxes,”
or taxes delinquent for a year or more. See, e.g., id. at 420-23 (Deposition
Exhibit of Treasurer’s records showing “Last Year Tax” and penalties and
“Prior Year Tax” and penalties for the property). The Treasurer instructed
Consultant to collect only on prior year taxes. Marsha DeMure, an employee
of the Treasurer’s office, testified at a deposition that the County assessed a
penalty on every tax that was not paid on its due date. However, Treasurer’s
office practice was that “[e]ven though they had a penalty, they would not be
considered delinquent taxes.” Id. at 98. Consultant “was not able to handle
that because that’s present year” and the Treasurer did not “consider the
present year as delinquent taxes for collection . . . .” Id. In other words, “the
present year is not given to [Consultant] to collect on. . . . [It] cannot collect on
those ‘cause that’s the year we’re in. [What it is] able to collect on are what we
say delinquent[,]” which are more than one year past due. Id. at 101; see also id.
at 220 (DeMure testifying that “[j]ust because you’re in the year that the 2001-
2002 tax was due and it has a penalty on it, it is delinquent, but it’s not
delinquent for who was commissioned to collect these taxes. They were not
considered delinquent for them to collect on.”). Clara Castro, an employee of
Consultant, testified similarly at her deposition:
A: [The Treasurer’s Office] supplied us with a cutoff date. We could only collect from one date to this date. . . .
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 5 of 15 Q: So how did you learn about this cutoff date? A: From Marcia [sic] Demure. *** Q. Okay. And would it be fair to say that was your working definition of a delinquent tax, was the prior year’s taxes? A. Right. *** A: We weren’t allowed to collect [last year taxes]. Id. at 199, 203-04.
[4] To initiate the collection process, Consultant sent a collection letter to taxpayers
with delinquent prior year taxes. See id. at 190 (Castro, testifying that after she
received a disc from the County, she would print out the “sheets that showed
prior year taxes” and do research on those amounts before sending out
collection letters). Consultant was not entitled to a commission on paid taxes
unless a collection letter had first been sent. See id. at 196 (from Castro’s
deposition: “Q. And then those would be the monies based on the prior year
taxes that [Consultant] would be paid his commission? A: Yes.”). Every few
months, Consultant would compare the letters it sent to the County’s tax
payment records and submit a claim for commissions. After the claim was
submitted, Castro and DeMure met and “went through each and every one of
those parcels so that we agreed on the amounts that [Consultant] was
collecting.” Id. at 463. Castro testified regarding Consultant’s commissions:
Q: What was your understanding as to how [Consultant] was being paid on these taxes that he was collecting? A: Well, the only thing that I know is that when I generate the report [that was going to be submitted to the Treasurer for payment], he just said, “Make sure that everything is prior year taxes.” Id. at 193. Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 6 of 15 [5] Consultant filed its complaint against the County for breach of contract in 2008
alleging it was owed over $200,000 in unpaid commissions. The County filed
an answer meeting the substantive allegations of the Complaint but asserting no
affirmative defenses. In a pre-trial order entered June 12, 2012, the trial court
summarized the parties’ contentions as follows:
D. Plaintiffs [sic] Contentions: . . . [Consultant contends that], in violation of the express terms of the contracts, [the County] verbally and unilaterally changed the types of delinquent taxes upon which [Consultant] was entitled to receive commissions, and applied these changes in an inconsistent manner to the detriment of [Consultant]. As a result, [Consultant] contends that in excess of $1,000,000.00 in commissions are owed . . . . E. Defendants’ Contentions . . . [The County] contends that the term “delinquent taxes” had a very limited applicability pursuant to the course of conduct by the parties who all knew and understood how the contract was supposed to operate. [Consultant is] attempting to obtain unjust enrichment by receiving monies for taxes that they knew they were not entitled to collect, and conducted no activities in the actual collection process. Id. at 707-10.
[6] Consultant filed a motion for partial summary judgment in December 2012
seeking a determination as a matter of law
that the contracts at issue in this matter are not vague, but their meaning can be determined from an examination of the contract language, that, [sic] parol or extrinsic evidence may not be used to add restrictions to the contracts’ language governing payment of commissions, and that the evidence at trial be limited to a determination of what taxes were collected, and what commissions are due.
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 7 of 15 Id. at 77. The County filed a response and cross-motion for partial summary
judgment “as the evidence shows that there is no genuine issue as to any
material fact and that [the County is] entitled to partial summary judgment as a
matter of law on all claims by [Consultant] seeking to recover for ‘last years
taxes’.” Id. at 149.
[7] The trial court held a hearing on the cross-motions for partial summary
judgment in June 2013. Counsel for Consultant described the issue before the
court as “whether [Consultant] was entitled to receive a commission on all of
the delinquent taxes that it recovered or just a portion of the delinquent taxes.
And really the key question in this case is the definition of delinquent.”
Transcript at 4. Consultant argued:
[O]nce a tax was more than one day past due, it was assigned a delinquent penalty. So there’s really no question here as to what a delinquent tax is. . . . What does it mean to be delinquent? It means it didn’t get paid on the day it was due. *** [L]ast year’s taxes were . . . a year past due. The prior year’s taxes were two years past due. So they were all delinquent. *** We’d ask the Court to enter partial summary judgment defining the term “delinquent,” and that’s all we’re asking for. Id. at 8-13. The County argued:
[T]he issue here is not what the word “delinquent” means. There is no dispute about what a delinquent tax is or what process may be provided. The question is what process provides for when a delinquent tax becomes a tax collection case? And that’s the language of the contract that [Consultant] asked this Court to ignore.
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 8 of 15 There is no provision in any of the agreements that have been designated to the Court which in any way say that [Consultant] is entitled to recover for every delinquent real estate property tax. What it says is that 100 percent of real estate collection cases will be assigned to [Consultant]. When a case – a delinquent tax becomes a collection case is not defined in the contract. And when it will be assigned to [Consultant] is not defined in the contract. And that is where the instruction clause comes in. *** [I]t’s very important to note in this case that throughout the years that these contracts were in force, [Consultant] expressly understood that it was only collecting on these prior year taxes. In fact, their testimony is that they took no steps to, and never sought to collect any of the last year taxes. Id. at 19-22. On June 18, 2013, the trial court entered an order granting
Consultant’s motion for partial summary judgment “as it relates to the
definition of ‘delinquent’” and denying the County’s motion. Id. at 19-20. At a
hearing on August 30, 2013, the parties requested clarification of the court’s
order for purposes of going forward. The trial court stated, “in the ruling on the
18th, as I understood ‘delinquency,’ that basically dealt with everything except
the amounts.” Id. at 320.
[8] On September 20, 2013, the County filed a Motion for Leave to Amend its
answer to assert the affirmative defenses of estoppel, waiver, accord and
satisfaction, and laches. Consultant objected to the motion for leave to amend
on grounds of undue delay and prejudice. In short order, Consultant also filed
a motion for summary judgment, alleging it was entitled to judgment as a
matter of law in its favor because:
1. The parties entered into contracts regarding services provided by [Consultant] for [the County] whereby [Consultant] would be paid Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 9 of 15 commissions. 2. [The County has] breached said contracts. 3. [The County has] alleged that it did not breach said contracts but this court has effectively ruled otherwise. 4. [The County has] failed to produce any evidence supporting [its] denial of [Consultant’s] claims and should be prohibited from now adding to or changing to [sic] the body of evidence as discovery is now closed. 5. . . . [A]s a result of [the County’s] breach, [Consultant] is owed $1,076,896.92, plus prejudgment interest and costs. Id. at 326-27. The County filed a response to the Motion for Summary
Judgment and also filed a Motion to Strike portions of an affidavit and
accompanying exhibits Consultant designated in support of its motion and
request for damages.
[9] The trial court held a hearing on the County’s Motion for Leave to Amend its
answer, Consultant’s Motion for Summary Judgment, and the County’s motion
to strike Consultant’s affidavit. At the conclusion of the hearing, the trial court
ruled from the bench that the County’s motion for leave to amend its answer
was denied, the County’s motion to strike the affidavit was denied, and
Consultant’s motion for summary judgment was granted. In an order
memorializing this ruling, the trial court entered final judgment against the
County and for Consultant “in the amount of $1,076,896.92, together with pre-
judgment interest in the amount of $393,000.00, together with its costs herein.”
Id. at 22. The County now appeals.
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 10 of 15 Discussion and Decision I. Summary Judgment Standard of Review [10] We review a summary judgment order de novo. Neu v. Gibson, 928 N.E.2d 556,
559 (Ind. 2010). A summary judgment order will be affirmed when there is no
genuine issue of material fact and the moving party is entitled to summary
judgment as a matter of law. Id. at 559-60; Ind. Trial Rule 56(C). The party
appealing the trial court’s grant of summary judgment has the burden of
persuading the court that the grant of summary judgment was erroneous.
Diversified Invs., LLC v. U.S. Bank, NA, 838 N.E.2d 536, 539 (Ind. Ct. App.
2005), trans. denied. The fact that the parties made cross-motions for summary
judgment does not alter our standard of review; we will consider each motion
separately to determine if the moving party was entitled to summary judgment
as a matter of law. Id.
II. Construction of the Collection Contracts [11] The County contends the trial court erred in granting Consultant’s motion for
partial summary judgment and in denying its own motion for partial summary
judgment regarding the interpretation of the collection contracts.
[12] “Summary judgment is especially appropriate in the context of contract
interpretation because the construction of a written contract is a question of
law.” TW Gen. Contracting Servs., Inc. v. First Farmers Bank & Trust, 904 N.E.2d
1285, 1287-88 (Ind. Ct. App. 2009). And because the construction of a written
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 11 of 15 contract is a question of law, we review the trial court’s judgment de novo.
Jenkins v. S. Bend Cmty. Sch. Corp., 982 N.E.2d 343, 347 (Ind. Ct. App. 2013),
trans. denied. When a trial court has entered summary judgment in a contract
dispute, it has implicitly determined either that the contract is not ambiguous as
a matter of law and resolution requires only applying the terms of the contract
or that any ambiguity may be resolved without the aid of factual
determinations. Id. Here, the trial court made no specific finding regarding
ambiguity, but the parties agree that the contract is unambiguous. See Brief of
the Appellants at 22; Appellee’s Response Brief at 27-28.
[13] “The ultimate goal of any contract interpretation is to determine the intent of
the parties at the time that they made the agreement.” Citimortgage, Inc. v.
Barabas, 975 N.E.2d 805, 813 (Ind. 2012). Where the terms of a contract are
clear and unambiguous, we determine the parties’ intent from the four corners
of the document. Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 532 (Ind.
2006). We begin by reading the plain language of the contract in context,
“construing it so as to render each word, phrase, and term meaningful,
unambiguous, and harmonious with the whole” when possible. Citimortgage,
Inc., 975 N.E.2d at 813. We should make every attempt to construe the
language of the contract “so as not to render any words, phrases, or terms
ineffective or meaningless.” Fischer v. Heymann, 943 N.E.2d 896, 900 (Ind. Ct.
App. 2011), trans. denied. If necessary, the text of a disputed provision may be
understood by referring to other provisions within the four corners of the
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 12 of 15 document. Claire’s Boutiques, Inc. v. Brownsburg Station Partners LLC, 997 N.E.2d
1093, 1098 (Ind. Ct. App. 2013).
[14] The specific question presented by the cross motions for summary judgment
was what Consultant was hired to collect pursuant to the contract provision
that Consultant was to “[c]ollect the delinquent monies.” See, e.g., Appellants’
App. at 26 (Section 2.E. of January 19, 2000 contract). Consultant took the
position that it was to collect all delinquent taxes and was entitled to
commissions on the total amount, whereas the County took the position that
Consultant was only to collect the past year delinquent taxes as directed by the
Treasurer and was only entitled to commissions on that amount even if
additional delinquent taxes were paid.
[15] The collection contracts do not define the scope of “delinquent monies”
Consultant was hired to collect, and in fact, Section 2.E. of the contract is the
only time the term “delinquent” is used. However, by the contracts’ express
terms, the Consultant was assigned all of the County’s “Real Property Tax
Collection Cases” and was to receive instruction from the Treasurer as to how
to carry out its responsibilities under the contracts. Reading the collection
contracts as Consultant urges focuses on the collection clause at the expense of
the assignment and instruction clauses. Moreover, it misreads the collection
clause as charging Consultant with collecting “delinquent taxes.” Id. All the
clauses are given meaning when the contracts as a whole are construed to mean
that Consultant is to collect “the delinquent monies” associated with the real
property tax collection cases assigned to it at the Treasurer’s instruction and
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 13 of 15 that Consultant earns commissions on those amounts. That the contracts
require Consultant to be assigned one-hundred percent of the real property tax
collection cases means only that no tax collection cases will be assigned to any
other entity for collection, not that Consultant will be assigned all delinquent
tax accounts. In other words, the contracts allow the Treasurer to decide which
cases are tax collection cases, assign those to Consultant and instruct
Consultant to carry out its collection responsibilities with respect to those cases.
The contracts then require Consultant to attempt to collect the delinquent
monies from those collection cases and file a claim for its commissions when
those delinquent monies are paid to the County.
[16] Although we may not look to extrinsic evidence to add to, vary, or explain the
parties’ intent with regard to an unambiguous contract, Baker, 843 N.E.2d at
532, we do note that the evidence designated in support of these cross-motions
supports this interpretation of the collection contracts. County employee
DeMure testified at her deposition that Consultant was not to collect on every
past-due tax but only those specified by the Treasurer. And Castro,
Consultant’s employee, gave testimony at her deposition consistent with
DeMure’s, stating that Consultant was told by the County to collect only on
prior year taxes and consistent with that instruction, it sent collection letters
only on prior year taxes and submitted claims for commissions only on prior
year taxes that were collected. The evidence is undisputed that in discharging
its responsibilities under the contracts, Consultant was collecting only prior year
taxes for the County. Although our resolution of this issue means we need not
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 14 of 15 address the merits of the final judgment in Consultant’s favor, we also note that
even if Consultant was correct that the terms of the contracts meant it could
collect on every real property tax that was at least one day past due, it did not
take the required steps to do so. Again, the undisputed evidence at this stage of
the proceedings was that Consultant only sent collection letters on prior year
taxes and acknowledged that it was only entitled to commissions on taxes
collected after a collection letter was sent.
[17] The trial court erred as a matter of law in determining that the collection
contracts meant Consultant was entitled to collect all delinquent taxes and
therefore erred in granting partial summary judgment to Consultant and
denying summary judgment to the County on this issue. We reverse the trial
court’s June 18, 2013 order granting partial summary judgment to Consultant,
and remand with instructions for the trial court to enter partial summary
judgment for the County on the issue of the interpretation of the collection
contracts and to conduct further proceedings on Consultant’s complaint
regarding whether Consultant is owed any unpaid commissions on prior year
taxes collected and if so, the amount of those unpaid commissions.
Reversed and remanded.
Baker, J., and Kirsch, J., concur.
Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015 Page 15 of 15