Circle Centre Development Co. v. Y/G INDIANA, LP

• Decision Date: 31 January 2002
• Docket Number: No. 49A05-0107-CV-308.,49A05-0107-CV-308.
• Citation: 762 N.E.2d 176
• Parties: CIRCLE CENTRE DEVELOPMENT COMPANY, Appellant, v. Y/G INDIANA, L.P. d/b/a Ybor's/Gibson's American Grill, Mark I. Gibson, and J. Guy Revelle, III, Appellees.
• Court: Indiana Appellate Court

762 N.E.2d 176

CIRCLE CENTRE DEVELOPMENT COMPANY, Appellant, v. Y/G INDIANA, L.P. d/b/a Ybor's/Gibson's American Grill, Mark I. Gibson, and J. Guy Revelle, III, Appellees.

No. 49A05-0107-CV-308.

Court of Appeals of Indiana.

January 31, 2002.

Donald D. Levenhagen, Hill, Fulwider, McDowell, Funk & Matthews, Indianapolis, IN, Attorney for Appellant.

Robert C. Rothkopf, Thomas L. Landwerlen, Landwerlen & Rothkopf, Indianapolis, IN, Attorneys for Appellees.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Circle Centre Development Company ("Circle Centre") brings this interlocutory appeal from the trial court's denial of its motion to dismiss the defendants' Y/G Indiana, L.P., Mark I. Gibson, and J. Guy Revelle, III (collectively "Y/G") counterclaim for fraud. The sole issue for our review is whether the trial court erred as a matter of law when it denied Circle Centre's motion to dismiss Y/G's counterclaim.

We reverse.

FACTS AND PROCEDURAL HISTORY

In October 1996, Circle Centre entered into a commercial lease with Y/G in which it agreed to lease Y/G retail space located at Circle Centre Mall in Indianapolis. As part of the lease agreement, the parties incorporated the following provision:

There are no representations, covenants, warranties, promises, agreements, conditions or undertakings, oral or written, between Landlord and Tenant other than herein set forth. Except as herein otherwise provided, no subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant unless in writing and signed by them. Tenant acknowledges that it has independently investigated the potential for the success of its operations in the Center and has not relied upon any inducements or representations on the part of Landlord or Landlord's representatives other than those contained in the Lease.

Appellant's App. at 64 (emphasis added).

In January 2000, Circle Center filed suit against Y/G to recover over $300,000 in unpaid rent. Y/G responded by filing a counterclaim in which it alleged that Circle Centre had induced Y/G to sign the lease using fraudulent representations. In particular, Y/G asserted that during negotiations, Circle Centre had verbally misrepresented the dollar amount of retail sales generated by other stores in the mall. In response to Y/G's counterclaim, Circle Centre filed a motion for judgment on the pleadings.¹ In June 2001, following a hearing, the trial court denied Circle Centre's motion and later certified its order for interlocutory appeal to this court. We granted Circle Centre's motion and accepted jurisdiction under Appellate Rule 14(B). This appeal followed.

DISCUSSION AND DECISION

Like a motion to dismiss for failure to state a claim pursuant to Trial Rule 12(B)6, a motion for judgment on the pleadings under Trial Rule 12(C) tests the sufficiency of the complaint to state a redressable claim, not the facts to support it. Book v. Hester, 695 N.E.2d 597, 599 (Ind. Ct.App.1998); National R.R. Passenger Corp. v. Everton by Everton, 655 N.E.2d 360, 363 (Ind.Ct.App.1995). A judgment on the pleadings is proper only when there are no genuine issues of material fact and when the facts shown by the pleadings clearly entitle the moving party to judgment. Bledsoe v. Fleming, 712 N.E.2d 1067, 1069 (Ind.Ct.App.1999). A trial court should grant such a motion only when it is clear from the pleadings that the non-moving party cannot in any way succeed under the facts and allegations therein. Id. at 1069-70. In reviewing a trial court's decision on a motion for judgment on the pleadings this court conducts a de novo review. Eskew v. Cornett, 744 N.E.2d 954, 956 (Ind.Ct.App.2001), trans. denied. We look only to the pleadings in making this assessment. Id. We will accept as true the well-pleaded material facts alleged. Id. The moving party is deemed to have admitted well-pleaded facts in favor of the nonmovant, and this court will draw all reasonable inferences in favor of the non-movant. Id.

Circle Centre contends that the trial court erred when it denied its motion for judgment on the pleadings as to Y/G's fraud counterclaim. Specifically, Circle Centre maintains that, as a matter of law, any oral representations made to Y/G during negotiations cannot be fraud in the inducement because the lease provision disclaiming reliance on such representations supersedes any prior oral representations. We agree.

To establish fraud, Y/G would have to prove that Circle Centre made (1) a material representation of past or existing fact (2) that was untrue and known to be untrue, or else recklessly made, and (3) Y/G did in fact rely on the representation, (4) which proximately caused it to suffer injury. See Prall v. Indiana Nat'l Bank, 627 N.E.2d 1374, 1378 (Ind.Ct.App.1994)

. But the parol evidence rule bars the admission of any evidence of oral representations that contradicts a written contract. See Ruff v. Charter Behavioral Health Sys. Of Northwest Indiana, 699 N.E.2d 1171, 1174 (Ind.Ct.App.1998),

trans. denied. An exception to the parol evidence rule applies, however, in the case of fraud in the inducement, where a party was "induced" through fraudulent representations to enter a contract. Id. Here, because Y/G alleged fraud in the inducement, the parol evidence rule will not bar the admission of extrinsic evidence concerning the circumstances surrounding the execution of the lease. Id.; see Paulson v. Centier Bank, 704 N.E.2d 482, 492 n. 9 (Ind.Ct.App.1998); see also CORBIN ON CONTRACTS § 580, p. 431 (1960).

That exception notwithstanding, Circle Centre maintains that Y/G cannot allege fraud where, as here, the alleged reliance on oral representations runs counter to an express "integration" clause in the lease. Our courts have addressed this issue sparingly and with varying results. In Jenkins v. Nebo Properties, Inc., 439 N.E.2d 686, 694 (Ind.Ct.App.1982), we held that despite the presence of a contract clause disclaiming reliance on any oral representations, when the issue is one of fraud, such language does not bind the alleged victim. Further support for this position is derived from general parole evidence rule principles, which state:

[F]raud in the inducement of assent ... may make the contract voidable without preventing its existence, and without showing that the writing was not agreed on as a complete integration of its terms. In such case the offered testimony may not vary or contradict the terms of the writing, although it would be admissible even if it did so; it merely proves the existence of collateral factors that have a legal operation of their own, one that prevents the written contract from having the full legal operation that it would otherwise have had. This is not varying or contradicting the written terms of agreement, although it does vary or nullify in part their legal effect.

CORBIN ON CONTRACTS, § 580, p. 438 (1960) (emphasis added).

On the other hand, in Prall we found that a mutual release, which stated that Prall had not relied on any representations by INB, prevented him from later claiming fraud based on such representations because he could not, as a matter of law, establish reliance on those representations. See Prall, 627 N.E.2d at 1378-79

; see also Urschel Farms, Inc. v. Dekalb Swine Breeders, Inc., 858 F.Supp. 831, 840-41 (N.D.Ind.1994). Y/G attempts to distinguish Prall because, in that case, the releasing party had full access to the information when he signed the release. But Prall, like Y/G, also stated that he was not relying upon the representations of the other party. Prall, 627 N.E.2d at 1378. And just as Prall represented, in effect, that he had investigated the information, Y/G expressly stated that it had performed its own independent investigation. It is too late for Y/G to renounce its unambiguous disclaimer and contend, as it now does, that it had a right to rely on Circle Centre's representations because it did not have other means of access to the information.

Quoting, in part, from an opinion written by then Judge Ruth Bader Ginsburg, the court in Urschel Farms explained its decision as follows:

Plaintiffs cannot overcome the written instrument

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