Boonville Convalescent Center, Inc. v. Chs
| Citation | 834 N.E.2d 1116 |
| Decision Date | 30 September 2005 |
| Docket Number | No. 32A05-0501-CV-9.,32A05-0501-CV-9. |
| Parties | BOONVILLE CONVALESCENT CENTER, INC., Appellant-Plaintiff, v. CLOVERLEAF HEALTHCARE SERVICES, INC., Cloverleaf Healthcare of Boonville, Theodore E. Bruzas, Charline Bruzas, George A. Smith, Trela C. Smith, James L. Smith, Sharon K. Smith, William T. Rees, Helen L. Rees, Paul S. Hulse, Mihoko Hulse, Tim J. Shrout, Kimberly Shrout, Paul C. Ade, Ruth Ade, and Sherwood Healthcare Corp., Appellees-Defendants. Cloverleaf Healthcare of Boonville, Appellee/Third-Party Plaintiff, v. Bruce H. Whitehead, Appellee/Third-Party Defendant. |
| Court | Supreme Court of Indiana |
J. Gordon Gibbs, Jr., Hinkle & Gibbs, Danville, IN, Gene R. Leeuw, John M. Mead, Leeuw, Oberlies & Campbell, P.C., Indianapolis, IN, Attorneys for Appellant.
Thomas J. Costakis, Brian C. Fritts, Greg A. Small, Krieg DeVault, LLP, Indianapolis, IN, Robert A. Wood, Kendall, Wood, Lowry & Kessinger, Danville, IN, Morris C. Gore, Glast, Phillips & Murray, P.C., Dallas, TX, William O. Harrington, William O. Harrington, P.C., Danville, IN, Attorneys for Appellees.
Appellant-Plaintiff, Boonville Convalescent Center, Inc. (Boonville), appeals the trial court's findings of fact and conclusions of law granting damages against Appellees-Defendants/Appellees-Third-Party Plaintiff, Cloverleaf Healthcare Services, Inc. (CHS) and Cloverleaf Healthcare of Boonville (CHB) (collectively, Cloverleaf) and Appellee/Third-Party Defendant, Bruce H. Whitehead (Whitehead).1
We affirm in part, reverse in part, and remand with instructions.
Boonville raises four issues on appeal, which we restate as follows:
(1) Whether the trial court erred in concluding that rental adjustments under a twenty-year lease are governed by the paragraph fixing the term of the lease rather than the paragraph setting the rent;
(2) Whether the trial court erred by crediting Cloverleaf with rental charges never paid while at the same time not assessing Cloverleaf with the cost of utility and insurance expenses;
(3) Whether the trial court erred by concluding that the twenty-year lease, which had commenced on February 28, 1986, terminated on October 31, 2004; and
(4) Whether the trial court erred in its determination of attorney fees.
On cross-appeal, Cloverleaf raises one issue which we restate as follows: Whether the trial court erred in concluding that Cloverleaf is liable for maintenance costs under the lease agreement with Boonville.
The Appellee/Third-Party Defendant, Whitehead, raises six issues on appeal, which we consolidate and restate as the following two issues:
(1) Whether the trial court erred in concluding in its May 29, 2002 bifurcation Order that Whitehead would be bound by the trial court's findings of fact and conclusions of law even though Whitehead had timely filed a request for a jury trial; and
(2) Whether the trial court erred in concluding that our opinion in Boonville Convalescent Center v. Cloverleaf Healthcare Services, 790 N.E.2d 549 (Ind.Ct.App.2003), reh'g granted, trans. denied (Boonville I) is applicable to Whitehead even though Whitehead was not a party on appeal.
On February 28, 1986, Boonville CEO, Charles J. Ludwyck (Ludwyck) leased the Boonville Convalescent Center (the nursing home) to CHS, and its personal guarantors. The lease called for CHS, its co-signers, and its assignees/sublessees to pay monthly rent, real estate taxes, and insurance, to repair any damages, and to maintain the structural integrity of the premises for twenty years. The nursing home was in good condition in 1986.
On March 31, 1986, CHS assigned the lease to CHB, a newly organized corporation, which had the same officers, directors and shareholders as CHS. Thereafter, on August 1, 1991, CHB subleased the premises to Sherwood Healthcare Corp., which subsequently assigned its lease and sublease to BritWill Healthcare Company, which later changed its name to Raintree Healthcare Corporation (Raintree). Upon assignation of the lease to Raintree, Raintree's obligations pursuant to the lease were guaranteed by Whitehead, an experienced financier, owner, and operator of nursing homes.
Sometime in February of 2000, Boonville was notified by a representative from Raintree that they would be filing for bankruptcy on February 29, 2000. James Fields from Raintree informed Boonville that unless Boonville took control of the nursing home, Raintree would reject the lease and immediately notify the Indiana Department of Health to close the nursing home and relocate the patients. After receiving the notice, Ludwyck called upon CHS and its personal guarantors to honor their assumption obligations under the lease agreement and to commence operating the nursing home. Even though CHS could operate the nursing home, it refused to do so.
When the nursing home was abandoned in the Winter of 2000, CHS' assignee left the home in an extreme state of disrepair with 67 patients in residence. The nursing home had holes in the ceiling, flooring, and foundation. Water damage and mold permeated the building. Air conditioning units and showers leaked water into the crawl space. This situation was exacerbated by the neglected drainage system which directed surface and rain water into the same crawl space. Neglected roof leaks, downspouts, and patio drains resulted in rainwater seeping into the dining room, damaging its floor and joists, ceiling, and walls. In an effort to mitigate the damage, Ludwyck operated the facility as Southwind Healthcare, Inc. (Southwind) on a purely temporary basis while continuing to look for a permanent tenant or buyer. To that end, Southwind and Raintree executed an agreement regarding the transfer of the nursing home. Ludwyck had formed Southwind with his wife, and they were the sole shareholders of that corporation. He advised CHS, its co-signers and their legal counsel of his actions and intentions. Based on the condition of the nursing home, Ludwyck encountered difficulties in finding a new tenant. Therefore, in order to make the facility more attractive to potential lessees, Ludwyck invested substantial sums, as money was available, in repairing and restoring the building.
On August 22, 2000, Boonville filed its complaint against Cloverleaf, claiming that they were liable for payments under the lease because they had acted as guarantors under the 1986 lease agreement. On November 21, 2000, Cloverleaf filed a third-party complaint against Whitehead. On December 12, 2002, the trial court granted summary judgment in favor of Cloverleaf. On June 24, 2003, this court reversed the trial court's grant of summary judgment and remanded this cause to the trial court with instructions that it enter judgment for Boonville on the issue of liability under the lease and to hold a hearing for a determination of damages.
Over a seven-day period in November of 2004, the trial court conducted a bench trial hearing evidence on the issue of damages. Thereafter, on December 27, 2004, the trial court entered findings of fact and conclusions of law against Cloverleaf in the amount of $1,797,192.65. This total damage award consists of $823,853.62 for maintenance and repair costs, $173,472.00 for taxes, $640,000.00 for attorney fees, and $159,867.03 for rent and interest.
Boonville filed its notice of appeal on January 4, 2005. On January 8, 2005, Dominion Realty, Inc. tendered the judgment amount on behalf of Cloverleaf to the Hendricks County Clerk. Boonville did not accept payment or release the judgment. On January 25, 2005, after Dominion Realty, Inc. had paid the judgment for Cloverleaf, Cloverleaf moved to dismiss the appeal, arguing that the judgment was not final and appealable. On February 18, 2005, the trial court amended its judgment pursuant to Trial Rule 54(B), and consequently we denied Cloverleaf's motion to dismiss on March 2, 2005.
Additional facts will be provided as necessary.
In the instant case, the trial court entered special findings of fact and conclusions of law pursuant to Ind. Trial Rule 52(A). Therefore, our standard of review is two-tiered: we first determine whether the evidence supports the trial court's findings, and second, we determine whether the findings support the judgment. Infinity Products, Inc. v. Quandt, 810 N.E.2d 1028, 1031 (Ind.2004), reh'g denied. Findings of fact are clearly erroneous when the record lacks any reasonable inference from the evidence to support them, and the trial court's judgment is clearly erroneous if it is unsupported by the findings and the conclusions which rely upon those findings. Id. In determining whether the findings or the judgment are clearly erroneous, we consider only the evidence favorable to the judgment and all reasonable inferences to be drawn therefrom. Id.
In conducting our review, we cannot reweigh the evidence or judge the credibility of any witness, and must affirm the trial court's decision if the record contains any supporting evidence or inferences. Id. However, while we defer substantially to findings of fact, we do not do so to conclusions of law. Carmichael v. Siegel, 754 N.E.2d 619, 625 (Ind.Ct.App.2001). We evaluate questions of law de novo and owe no deference to a trial court's determination of such questions. Id.
Boonville first contends that the trial court erred as a matter of law in construing the lease agreement. Specifically, Boonville argues that, despite the express language of the lease, the fourteen-year payment history by the tenants, and the trial court's own findings of fact, the trial court nevertheless concluded that the rent must be adjusted in accordance with paragraph 2(D) of the lease, instead of paragraph 3, rental payments.
As we have previously held, the construction of a written contract is a question of law. Eskew v....
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