INTERNATIONAL HEALTH & RACQUET v. Scott

• Decision Date: 29 May 2003
• Docket Number: No. 79A04-0211-CV-538.,79A04-0211-CV-538.
• Citation: 789 N.E.2d 62
• Parties: INTERNATIONAL HEALTH & RACQUET CLUB, INC., Appellant-Plaintiff, v. Jerry K. SCOTT and Marsha L. Scott, Appellees-Defendants.
• Court: Indiana Appellate Court

789 N.E.2d 62

INTERNATIONAL HEALTH & RACQUET CLUB, INC., Appellant-Plaintiff, v. Jerry K. SCOTT and Marsha L. Scott, Appellees-Defendants.

No. 79A04-0211-CV-538.

Court of Appeals of Indiana.

May 29, 2003.

David A. Rosenthal, Lafayette, IN, Attorney for Appellant.

Jason W. Bennett, James A. Gothard, Lafayette, IN, Attorneys for Appellees.

OPINION

MATHIAS, Judge.

Jerry and Marsha Scott ("the Scotts") filed a complaint against International Health & Racquet Club, Inc. ("International Health") in Tippecanoe Superior Court alleging breach of contract, defamation, and invasion of privacy. After a bench trial, the trial court found that International Health had breached its membership contract with the Scotts, and the court entered a judgment against International Health in the amount of $10,258.78. International Health appeals and argues that the trial court erred when it found that International Health breached its membership contract with the Scotts by accepting the Scotts' cancellation fee, but refusing to cancel the membership contract. Finding that International Health waived the condition in the cancellation provision of the membership contract requiring proof of relocation of more than thirty miles, we affirm.

Facts and Procedural History

On April 11, 1997, the Scotts entered into a two-year membership contract with International Health in which the Scotts agreed to pay a monthly membership fee in the amount of $59.60. However, the membership contract also contained the following cancellation provision:

MEMBER RELOCATION: Should a member permanently relocate to an area more than a thirty (30) mile radius from an affiliated Spa, the seller will consider a cancellation of membership. The following are required: (A) Verifiable documentation of member's new residence; (B) Member's membership card; (C) a $75.00 cancellation fee; and (D) all financed accounts for memberships must be current on payments. When the four (4) conditions are met, the seller will cause to be cancelled both the membership and any monies due the financing source on the original membership.

Ex. Vol., Defendant's Ex. A. Before they agreed to enter into the two-year membership contract, the Scotts inquired about a membership on a monthly basis because they were temporarily residing in Lafayette. Due to the expense of a monthly membership and International Health's assurance that they could cancel the membership if they moved more than thirty miles away, the Scotts agreed to purchase the two-year membership.

On September 19, 1997, the Scotts informed International Health that they had relocated to Attica, Indiana, and wanted to cancel the membership contract. They provided their new address and phone number to International Health in addition to a map, which was generated on-line, showing a driving distance of 35.3 miles from their home in Attica to International Health's nearest location. They also provided a copy of the land contract for their Attica property, which noted that the Scotts purchased the property in 1994, and their $75 cancellation fee.

At that time, the general manager of International Health, Paul Fortwendel ("Fortwendel") told the Scotts that the information they provided was not sufficient to comply with the cancellation provision and requested proof that the Scotts had terminated their lease on their Lafayette apartment. Tr. p. 43. Therefore, on September 23, 1997, the Scotts sent a letter to Fortwendel stating that their lease "was terminated on July 31, 1997," and a copy of the lease was enclosed. Ex. Vol., Plaintiff's Ex. 2. The letter also listed the Scotts' new address in Attica and their telephone number. International Health cashed the Scotts' $75 check, but did not apply it toward their account. Because they did not receive any further communication from International Health, the Scotts assumed that the membership contract was canceled.

In June 2001, the Scotts were attempting to purchase a boat, but were denied financing for the purchase because International Health had turned their account over to a collection agency. The Scotts contacted the collection agency and stated that their membership had been canceled. The collection agency then contacted International Health, which verified the debt. Until that time, the Scotts were unaware that the membership had not been canceled.

In October 2001, the Scotts met with a bank representative with regard to refinancing their home. The bank representative suggested that they contact International Health to resolve the collection matter. The Scotts contacted Fortwendel, who told them that he had requested further proof of their move to Attica by letter dated December 10, 1997, and that the Scotts failed to respond to that request. The Scotts denied receiving Fortwendel's letter, which was sent to their previous Lafayette address. Fortwendel also stated that he had decided not to accept the Scotts' cancellation, and that he applied the $75 check towards their account balance. Tr. pp. 47, 82.

Thereafter, on November 7, 2001, the Scotts filed a complaint against International Health alleging breach of contract, defamation, and invasion of privacy. A bench trial was held on August 21, 2002, and the trial court issued findings of fact and conclusions of law on September 13, 2002. The trial court found that 1) International Health cashed the Scotts' $75 check, but did not apply that amount to their account; 2) the Scotts' residence in Attica was more than thirty miles from International Health; 3) Fortwendel's claim that he sent the December 10, 1997 letter to the Scotts was not credible; 4) the Scotts suffered additional costs in refinancing their mortgage because of the open collection account on their credit report; and 5) the Scotts "did suffer and endure embarrassment due to the intentional actions of [International Health] in reporting the [Scotts] to a collection agency when in fact the account had been cancelled by the acceptance of the [Scotts'] $75.00 cancellation fee." Appellant's App., Ex. 3.¹

The trial court concluded that International Health had breached its contract with the Scotts "by accepting the cancellation fee, but refusing to cancel the membership contract," and when it reported the Scotts' account to a collection agency, the Scotts suffered economic and emotional harm. The trial court found the following damages as a result of the breach of contract:²

FHA fee that was amortized in the [Scotts'] refinanced mortgage: $2,687.46 Additional mortgage insurance premium that was required by the FHA 1,474.80 for a period of 5 years Termite inspection fee: 63.00 Additional interest paid by [the Scotts] prior to obtaining a new [m]ortgage 4,664.02 due to the false reporting by [International Health] on [the Scotts'] [c]redit report Attorney fees incurred by the [Scotts]: 1,369.50

Appellant's App., Ex. 3. Therefore, the trial court entered a judgment against International Health in the amount of $10,258.78. International Health now appeals. Additional facts will be provided as necessary.

Standard of Review

In its brief, International Health argues this case involves a question of law, i.e. the interpretation of a contract, and therefore, we should apply a de novo standard of review. Br. of Appellant at 1-2. However, the Scotts requested special findings of fact and conclusions of law pursuant to Indiana Trial Rule 52(A), and as the Scotts correctly assert, our standard of review is therefore two-tiered: we determine whether the evidence supports the trial court's findings, and whether the findings support the judgment. Indianapolis Ind. Aamco Dealers Adver. Pool v. Anderson, 746 N.E.2d 383, 386 (Ind.Ct. App.2001). We will not disturb the trial court's findings or judgment unless they are clearly erroneous. Id. Findings of fact are clearly erroneous when the record lacks any reasonable inference from the evidence to support them. Culley v. McFadden Lake Corp., 674 N.E.2d 208, 211 (Ind.Ct.App.1996). A judgment is clearly erroneous when a review of the record leaves us with a firm conviction that a mistake has been made. Carroll v. J.J.B. Hilliard, W.L. Lyons, Inc., 738 N.E.2d 1069, 1075 (Ind.Ct.App.2000),trans. denied. We will neither reweigh evidence nor judge the credibility of witnesses, but will consider only the evidence favorable to the judgment and all reasonable inferences to be drawn therefrom. Anderson, 746 N.E.2d at 386; Gunderson v. Rondinelli, 677 N.E.2d 601, 603 (Ind.Ct. App.1997).

Discussion and Decision

International Health argues that the trial court erred when it found that International Health breached its membership contract with the Scotts "by accepting the cancellation fee, but refusing to cancel the membership contract." Appellant's App., Ex. 3. International Health contends that when it accepted the Scotts' cancellation fee, it specifically requested proof of relocation and that it requested proof of relocation for a second time in Fortwendel's letter dated December 10, 1997. Specifically, International Health argues that to cancel the membership contract, the Scotts were required to provide proof of relocation and "[t]his provision is a condition precedent to the Scott's right of cancellation and was not waived." Br. of Appellant at 8. The Scotts contend that by accepting their $75 cancellation fee, International Health "waived strict compliance...