Brodie v. Viking Development, LLC, 46A03-1311-CC-442

• Decision Date: 21 January 2015
• Docket Number: 46A03-1311-CC-442
• Parties: SALLY BRODIE, Appellant-Defendant, v. VIKING DEVELOPMENT, LLC, Appellee-Plaintiff.
• Court: Indiana Appellate Court

SALLY BRODIE, Appellant-Defendant,
v.
VIKING DEVELOPMENT, LLC, Appellee-Plaintiff.

No. 46A03-1311-CC-442

Court of Appeals of Indiana

January 21, 2015

NOT FOR PUBLICATION

APPEAL FROM THE LAPORTE SUPERIOR COURT The Honorable Jennifer L. Koethe, Judge Cause No. 46D03-1209-CC-1387.

ATTORNEYS FOR APPELLANT: MARK F. CRINITI PAUL EDGAR HAROLD LaDue Curran & Kuehn LLC South Bend, Indiana

ATTORNEY FOR APPELLEE: MATTHEW J. HAGENOW Newby, Lewis, Kaminski & Jones, LLP LaPorte, Indiana

MEMORANDUM DECISION

NAJAM, JUDGE

STATEMENT OF THE CASE

Sally Brodie appeals the trial court's grant of summary judgment to Viking Development, LLC ("Viking") on its claim against Brodie, as the guarantor of a contract, for specific performance. Brodie presents one issue for our review, which we restate as two issues:

1. Whether the trial court erred when it awarded summary judgment to Viking

2. Whether the trial court abused its discretion when it ordered Brodie to specifically perform the obligations that she guaranteed

In addition, Viking requests an award of appellate attorney's fees, which we treat as a separate issue.

We affirm the trial court's award of summary judgment to Viking and remand for a determination of reasonable appellate attorney's fees.

FACTS AND PROCEDURAL HISTORY

In 2004, Brodie and her husband formed International Melting and Manufacturing, LLC ("International") with an approximately $2 million initial investment. The two formed the company to implement a process, developed and patented by Brodie, that would convert steel waste into a useful byproduct for other manufacturing applications. To produce the byproduct, International needed a manufacturing facility, and Indiana Melting and Manufacturing, LLC ("IMM"), a wholly-owned subsidiary of International, acquired property in LaPorte, Indiana, for that purpose.

On July 28, 2005, IMM entered into a Build Lease Agreement^[1] ("the Agreement") with Viking. Under the Agreement's terms, Viking agreed to build a manufacturing facility ("the Building") on IMM's property and lease it back to IMM. The Agreement provided for a five-year lease term, which would begin on the completion of construction, ^[2] and it included a provision that set the price of rent. Moreover, IMM received an option to purchase the Building after the third year of the lease, but, in any event, the Agreement required that IMM purchase the Building before the expiration of the lease or an extension thereof. Specifically, the Agreement provided:

SECTION 5.2

MINIMUM RENTAL

For the initial five (5) year Term, [IMM] agrees to pay to [Viking] rental [sic] payable in advance in equal monthly installments on the first day of each calendar month which rent shall be in the sum of:

1. Ten and one-half (10.5) percent of the final cost of the building, site, improvements, and soft costs. An estimate of those costs are as follows:

BUILDING, SITE [sic] & SOFT COSTS

TOTAL COSTS: (currently estimated at $2, 250, 000)

The payment based on the estimated costs is:

2. Two Hundred Thirty-Six Thousand, [sic] Two Hundred and Fifty Dollars ($236, 250.00) per Lease year, payable in installments of Nineteen Thousand, Six Hundred and Eighty-Seven Dollars and Fifty Cents ($19, 687.50) per month for each month of the initial Term. The exact amount shall be determined after total cost [sic] have been established.

SECTION 14.3

REMEDIES CUMULATIVE-NO WAIVER.

The various rights and remedies herein contained and reserved to each of the parties shall not be considered as exclusive of any other right to [sic] remedy of such party, but shall be construed as cumulative and shall be in addition to every other remedy now or hereafter existing at law, in equity, or by statute, and said rights and remedies may be exercised and enforced concurrently and whenever and as often as occasion therefore arises. . . . SECTION 14.10

PURCHASE.

[IMM] is hereby granted an option to purchase the Premises which it may exercise at the end of the third (3rd) Lease Year . . . . This option may be exercised by [IMM] notifying [Viking] under this Lease at the time it exercises the option. This option may be exercised by [IMM] notifying [Viking] in writing of its exercise of this option by mailing a written notice to [Viking] . . . no later than ninety (90) days prior to the end of the third (3rd) Lease Year. The closing of the purchase of the Building will be held on the last day of the third (3rd) Lease Year or such other date as the parties shall agree.

Prior to the close of the term of the lease [sic] or any extension thereof, if [IMM] has not exercised its option, [IMM] shall purchase the Building. The purchase price of the building [sic] shall be the cost as set forth in Section 5.2 plus Five percent (5%). . . .

Appellant's App. at 27-28, 37, 39.

Also on July 28, Brodie signed an Absolute Guaranty ("Guaranty"), which provided:

In consideration of and as an inducement to [Viking] . . . to enter into a particular Build/Lease Agreement dated the 28th day of July, 2005, between Viking and [IMM] . . ., and Viking relies on this guaranty or agreement by Sally Brodie . . . .^[3]

Brodie unconditionally guarantees the due and punctual payment of all rents and other payments provided for under the agreement, and all other sums due, including interest and penalties, and to be paid to IMM [sic] pursuant to the agreement and performance by IMM of all the terms, covenants[, ] and agreements of the agreement, and Brodie agrees to pay all of Viking's costs, expenses[, ] and reasonable attorney's fees incurred in enforcing the covenants and agreements of IMM in the agreement[] or incurred by Viking in enforcing this guaranty.

Brodie waives notice of the acceptance of this agreement, presentment, protest, notice of protest[, ] and any and all demands for performance or any and all notices of non-performance that might otherwise be a condition precedent to the liability of Brodie under this guaranty[, ] and Brodie covenants and agrees that Viking may proceed directly against Brodie, without first proceeding or making claim [sic] or exhausting any remedy against IMM or pursuant any [sic] particular remedy or remedies available to Viking.

Brodie covenants and agrees that, without releasing, diminishing[, ] or otherwise affecting the liability or [sic] guarantor or the performance of any obligation contained in the guaranty and without affecting the rights of Viking, Viking may, at any time and from time to time, and without notice to or further consent of Brodie:

a) Make any agreement extending or reducing the term of the agreement otherwise [sic] altering the terms of payment of all or any part of the rent, or granting an indulgences [sic] with respect these [sic] matters, or modifying or otherwise dealing with the agreement[.]

Id. at 44. The Guaranty also waived the right to a jury trial, and it included a choice of law provision, which designated Indiana law as controlling.

Two years after execution of the Agreement and the Guaranty, in July 2007, engineering and design problems pushed the Building project over budget, and IMM lacked the capital to complete the venture. Thus, International partnered with Steel Dynamics, Inc. ("SDI") and formed Dynamic Abrasives, LLC ("Dynamic").^[4] SDI contributed a $4.5 million loan^[5] to Dynamic for operating expenses, and International contributed its interest in IMM, which included the LaPorte land and the Agreement with Viking. Dynamic assumed control of the manufacturing operations at the building. To account for this change and for the nearing completion of construction, on July 26, 2007, Viking and IMM modified the Agreement. The modification, titled Second Addendum to Build Lease Agreement^[6] ("Addendum"), sought to "clarify and modify the Agreement." Id. at 52. Accordingly, the Addendum stipulated:

NOW, THEREFORE, IN CONSIDERATION of the mutual promises contained herein, it is agreed as follows:

1. Costs and Adjustments.

a) Parties agree that the cost of project as of the date of this document is $2, 896, 961.00, and that said cost includes estimates for work not completed as of the date of this Agreement. That[, ] based on the cost[, ] the monthly installments shall be Twenty-Five Thousand Three Hundred and Forty-Eight Dollars ($25, 348.00)[.]

The estimated cost of the aforedescribed uncompleted work is Thirty-Nine Thousand Five Hundred Dollars ($39, 500.00).

b). [sic] Upon completion of the aforedescribed work, [Viking] shall provide [IMM] with evidence as to the actual cost of the building and breaking [sic] out separately the cost of the uncompleted work. In the event that the actual cost of the uncompleted work shall be less than the estimated cost, [IMM] shall receive a credit against the cost in an amount equal to the difference between the estimated cost and the actual cost. If the actual cost shall exceed the estimate[, ] there shall be no adjustment to the Agreement. There shall be no other adjustments in the actual cost.

2. Purchase.

Section 14.10 of the original Agreement provides the [sic] [IMM] to purchase the building. Said provisions are modified to add the following:

In the event that [IMM] should purchase the building within twenty-four (24) months of the date of this document, the purchase price of the building shall be the actual cost and shall not include the five percent (5%) as provided in the Agreement. Any purchase after twenty-four (24) months from the date of this document shall be cost plus five percent (5%) as provided in the original Agreement. 3. Structural Change. [International, t]he parent company of [IMM, ] has negotiated to transfer all its interest of [IMM] to newly [sic] created limited

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