Ashbaugh v. Horvath
| Decision Date | 17 January 2007 |
| Docket Number | No. 71A03-0604-CV-156.,71A03-0604-CV-156. |
| Citation | 859 N.E.2d 1260 |
| Parties | Roger & Shirley ASHBAUGH, Appellants-Defendants, v. Kathy HORVATH, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
Stephen L. Eslinger, South Bend, IN, Attorney for Appellants.
James A. Masters, Nemeth, Feeney & Masters, P.C., South Bend, IN, Attorney for Appellee.
Roger and Shirley Ashbaugh ("the Ashbaughs") appeal from the St. Joseph Superior Court's entry of summary judgment, awarding a $15,000 broker's commission to Kathy Horvath ("Horvath") on the sale of an apartment complex. On appeal, the parties raise two issues:
I. Whether the trial court erroneously granted Horvath's motion for summary judgment and erroneously denied the Ashbaughs' motion for summary judgment; and
II. Whether the Ashbaughs have waived their right to contest the trial court's award of attorney's fees to Horvath as the issue was not raised in their Appellants' brief.
Concluding that the Ashbaughs were entitled to summary judgment as a matter of law, we reverse and remand.
On October 2, 2001, the Ashbaughs entered into a one day listing contract for the sale of their apartment complex with Horvath, a realtor.1 The listing contract provided:
Broker's Fee: In the event the Broker finds a purchaser ready, willing and able to buy said real estate, or should said real estate be sold by or through Broker, the Seller or otherwise, during said time for the price upon the terms named herein, or for any other price or terms, or consideration acceptable to the Seller, the Seller agrees to pay the Broker as commission a sum equal to 5% percent of the sum for which said property is sold or exchanged ("Purchase Price") but not less than $25,000.
The listing contract also contained an extension clause, which provided:
In the event of any transfer of an interest in said real estate within 365 days after the expiration of this Listing Contract and its extensions, to any person, firm or corporation who had been introduced, interested or shown the property during the exclusive period of this listing by the Seller or by the Broker, [her] Representative, or by a Buyer-Broker, seller agrees to pay a[sic] Broker the commission as provided by this Listing Contract and its extensions.
Horvath introduced the Ashbaughs to Mary D. Moore and her son, Marian H. Moore, Jr. ("the Moores"), who were interested in buying the apartment complex. On October 2, 2001, the Ashbaughs also entered into a contract to sell their apartment complex to the Moores. The Moores agreed to buy the property for the listing price of $550,000; however, they subsequently had problems obtaining financing. The Moores were unable to secure financing by the end of the one-year extension period provided for in the listing contract.
Thereafter, the Ashbaughs and the Moores entered into another agreement extending the contract to purchase until April 3, 2002, a six-month extension. However, the Moores were not able to acquire financing by this deadline either. During this time, Horvath, the Ashbaughs, and the Moores began discussing the possibility of a lease with an option to purchase. On April 3, 2002, the Ashbaughs and Moores entered into a lease agreement with option to purchase the property for $520,000. On the same day, Horvath and the Ashbaughs entered into a contract titled "Addendum to Purchase Agreement Dated October 2, 2001." This addendum provided:
Roger L. & Shirley A. Ashbaugh Trust Dated 02-05-97 as seller, agrees to pay Kathy Horvath of Preferred Properties as realtor, the sum of $5,000 within 3 business days of the signing of the lease option for the property.
Roger L. & Shirley A. Ashbaugh Trust Dated 02-05-97 as seller, agrees to pay Kathy Horvath of Preferred Properties as realtor, the sum of $20,000 on the date of closing of the property in the event that the buyer exercises their [sic] right to purchase as specified in the Lease Option Agreement within the next 12 months.
In the event that the buyer does not exercise their [sic] right to purchase the property within the next 12 months, Kathy Horvath of Preferred Properties as realtor, accepts the $5,000.00 as payment in full for services rendered and shall have no claim to the $20,000.00 referenced above.
Id. at 59. After signing this addendum, the Ashbaughs paid Horvath $5,000.
Horvath continued working with the Moores to help them obtain financing, but she did not continue her contact with the Ashbaughs. In February 2003, the Moores told the Ashbaughs that their loan had fallen through. Roger Ashbaugh told the Moores that if they were not able to obtain financing soon, then they would have to take back possession of the apartment complex as the Moores had not made all of the lease payments during the year. In the same month, Progressive Land Title, a title insurance company, issued a preliminary title insurance commitment to Interbay Funding, a mortgage company through which the Moores, with Horvath's help, were attempting to secure funding to buy the apartment complex. The Ashbaughs were not notified that a preliminary title insurance commitment had been requested, and the Moores never gave the Ashbaughs a written notice that they were exercising their option to purchase.
The Moores were unable to secure financing for the full $550,000 purchase price before their lease agreement with option to purchase expired on April 4, 2003.2 The Moores then resumed negotiations directly with the Ashbaughs to purchase the property. Finally, the Moores and the Ashbaughs negotiated a sale under different terms. Under this new agreement, the purchase price was increased to $640,000, but the Ashbaughs were to take back a second mortgage. The property finally closed on May 9, 2003.
When Horvath discovered that a closing was scheduled, Horvath asked the Ashbaughs to pay her the $20,000 commission. When they refused, she offered to reduce the balance of her commission to $15,000. When the Ashbaughs again refused to pay her, Horvath contacted the title insurance company and requested that it hold $15,000 from the sale proceeds to pay her commission. She subsequently filed suit against the Ashbaughs for breach of contract.
The parties filed cross motions for summary judgment. On June 17, 2005, the trial court entered findings of fact and conclusions of law determining almost all of the facts to have been established but denying both parties' summary judgment motions because of one remaining issue: whether the Moores had exercised their option to purchase within the twelve-month period provided for in the addendum to the purchase agreement.
On March 10, 2006, the trial court held an evidentiary hearing on this remaining issue. The trial court subsequently found that the Moores had exercised their option to purchase within twelve months of the addendum and entered summary judgment in favor of Horvath in the amount of $15,000 plus interest. On May 18, 2006, the trial court ordered the Ashbaughs to pay Horvath's attorney's fees. The Ashbaughs now appeal. Additional facts will be provided as necessary.
When reviewing a grant or denial of summary judgment, we apply the same standard as the trial court: summary judgment is only appropriate when the designated evidence shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C) (2006); Jacobs v. Hilliard, 829 N.E.2d 629, 632 (Ind.Ct.App.2005), trans. denied. The burden is on the moving party to designate sufficient evidence to eliminate any genuine issues of material fact, and when this requirement is fulfilled, the burden shifts to the nonmoving party to come forth with contrary evidence. Jacobs, 829 N.E.2d at 632.
We consider only those facts that were designated to the trial court at the summary judgment stage. St. Joseph County Police Dept. v. Shumaker, 812 N.E.2d 1143, 1145 (Ind.Ct.App.2004), trans. denied. We construe all facts and reasonable inferences to be drawn from those facts in favor of the nonmoving party. Jacobs, 829 N.E.2d at 632. The entry of specific findings and conclusions offer insight into the reasons for the trial court's decision and facilitate appellate review, but are not binding on this court. Troxel Equip. Co. v. Limberlost Bancshares, 833 N.E.2d 36, 40 (Ind.Ct.App.2005), trans. denied.
Hartford Acc. & Indem. Co. v. Dana Corp., 690 N.E.2d 285, 291 (Ind.Ct.App. 1997), trans. denied.
The Ashbaughs contend that the trial court's order is erroneous as there was no evidence presented that the Moores had exercised their option to purchase within the twelve-month period provided for in the addendum to the purchase agreement. In essence, the Ashbaughs argue that the addendum was a substituted contract, or a novation, which replaced the terms of the listing contract under which Horvath could be paid.3 While the trial court concluded in its June 17, 2005 order that the addendum was not a novation, it nevertheless concluded that the terms of the addendum, i.e. whether the Moores exercised their option to purchase within twelve months after the addendum was signed, dictated whether Horvath was entitled to a commission. Therefore, we find it prudent to first clarify whether the addendum acted as a novation to the listing contract.
A novation is a new contract made with the intent to extinguish one already in existence. Rose Acre Farms, Inc. v. Cone, 492 N.E.2d 61, 68 (Ind.Ct. App.1986), trans. denied. Where a novation is found, it acts to extinguish any claims that existed under the original contract. Id. at 69. Where a...
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