Cunningham v. Hiles
| Decision Date | 18 May 1982 |
| Docket Number | No. 3-977A234,3-977A234 |
| Citation | 435 N.E.2d 49 |
| Parties | James D. CUNNINGHAM, Fred M. Lutgen, Jr. and Ross Haller, Appellants (Plaintiffs Below), v. Doug HILES, Al Gomez, Jr., Arthur C. and Sarah Clouser, Town of Schererville Plan Commission and Town of Schererville, Indiana, A Municipal Corporation, Appellees (Defendants Below). |
| Court | Indiana Appellate Court |
William J. Muha, Daniel G. Hoebeke, Zandstra, Zandstra & Muha, Highland, for appellants.
Kenneth D. Reed, Abrahamson, Reed & Tanasijevich, Hammond, for appellees.
Plaintiffs-appellants James D. Cunningham, Fred M. Lutgen, Jr., and Ross Haller (adjacent landowners) appeal the trial court's denial of their Petition for Contempt Citation against Doug Hiles (hereinafter referred to as Hiles) arising out of the granting of an injunction enforcing a restrictive land covenant.
We reverse and remand with the instruction to cite Hiles for contempt.
This cause is before the Court of Appeals for the third time. Because of the contempt aspects involved, the Third District judges who decided the previous appeal have disqualified themselves, and this panel selected to render an opinion.
To fully comprehend the course of conduct engaged in by Hiles and his attorney Litigation was initiated by adjacent landowners on September 14, 1976, in an action requesting the Lake Circuit Court to enjoin Hiles from constructing a music store in violation of restrictive covenants on land owned by Hiles and his wife Kathy as tenants by the entireties. A hearing on the request for an injunction was held before Judge Felix Kaul of the Lake Circuit Court, at which Hiles stated facts which he later contradicted at a contempt hearing.
Kenneth D. Reed, it is necessary to recite in some detail the history of this dispute.
The facts as presented in the hearing on the injunction are these: Hiles testified to his present ownership of Sherwood Music Store as a sole proprietorship, with no partner "whatsoever." He held a full time job elsewhere, but did give lessons, etc. during evenings and Saturdays at the music store. Although the store had only been open for about three years, a new location was needed because of business growth.
A suitable location was found at 20 Lincolnway Drive, Schererville, the property which is the subject of the present dispute. Hiles and Kathy signed an agreement for the purchase of the real estate from Arthur and Sarah Clouser, which agreement was subject to rezoning of the property from residential to commercial. Hiles contacted an architect to render a drawing of a proposed music store, contracted with Al Gomez (Gomez) to construct a store which Hiles described as "my building," and appeared with Gomez before the Schererville town board and plan commission to have the property rezoned for commercial purposes.
The extent to which Hiles was involved in all phases of the proposed music store is evident from his testimony. He described the parking arrangements; type of materials for the walls, roof, and exterior; anticipated number of students per hour; number of instructors; type of instruments to be sold; and the type of lessons which would be given.
So Hiles's testimony at the hearing on the injunction left the unmistakable (and uncontradicted) impression that he was sole owner of the music store at the first location, that he would own the music store at the new location, and that Kathy would assist in conducting the business which was to be located on jointly held real estate. We reproduce a portion of Hiles's testimony to place his comments in context:
Q And how long have you owned this other business ?
A Three years in June.
Q And where is that located ?
A Route 30 and Cline.
Q And what do you have there at Route 30 and Cline ?
A Music studio.
Q And how large is that?
A Eleven Hundred square feet.
Q What corner is that located on Route 30?
A It is on the southeast corner.
Q And what type of business do you conduct there? What do you do there?
A We sell accessories and have a music studio.
Q Also do you give any instructions?
A Yes.
Q How many instructors do you have there?
A I believe like six during the day.
Q And how many hours a day could you spend there ?
A I spend the evening hours after work there, and on Saturdays.
Q Do you play a musical instrument?
A Yes.
Q And do you give instructions?
A Yes, I do.
Q What type of instructions do you give ?
A Guitar.
A Spanish.
Q Do you have a partner in there-
A No, sir.
Q None whatsoever ?
A No, sir.
Q Well, why did Mr. Gomez petition with you before the Schererville Town Board and Plan Commission Town Board ?
A Mr. Gomez is my builder.
Q So he proposes or, you have contracted with him to build this-
A Yes.
Q Is your contract with Mr. Clouser, is that conditioned, or was it conditioned on rezoning ?
A Yes, sir.
Q Have you purchased that property yet?
A No, sir.
Q At that time that you entered into this contract and you were aware of the residential zoning affecting this property-
A I am not sure if I am-
Q Well, the contract was subject to its being rezoned to a commercial use ?
A Yes, correct.
Record at B386-88 (emphasis supplied).
At the conclusion of the hearing, Judge Felix Kaul refused to enter an injunction on the ground that the restrictive covenant was unenforceable. The Third District of this Court reversed that decision of the Lake Circuit Court, however, and ordered it to issue a permanent injunction prohibiting construction of the music store. Cunningham v. Hiles, (1979) Ind.App., 395 N.E.2d 851.
In his Petition for Rehearing of that appellate decision, Hiles requested the Court of Appeals to vacate and set aside the decision on the basis of a material change in circumstances which had rendered the appeal moot, the change being that the music store was constructed during pendency of the appeal. Emphasizing that Hiles "built the music store at his own peril" and that "a Petition for Rehearing will not be granted on the basis of acts which occurred during the pendency of the appeal and which were not in any manner presented for this Court's consideration," Judge Staton writing for a unanimous Third District denied Hiles's request that the decision be vacated and set aside. Cunningham v. Hiles, (1980) Ind.App., 402 N.E.2d 17, 21-22. However, the Third District did modify its mandate due to the material change in condition during pendency of the appeal by directing the "Lake Circuit Court to issue a permanent injunction against the use of the structure for any purpose which violates the terms of the restrictive covenant." Id. at 22.
A second Petition for Rehearing was filed contemporaneously with a Petition to Transfer the cause to the Indiana Supreme Court. Both the Petition for Rehearing and Petition to Transfer were denied without opinion on July 24, 1980.
Learning that the decisions of the Court of Appeals and Supreme Court had been certified to the Lake Circuit Court, adjacent landowners filed on August 5, 1980 a motion requesting that a hearing be held for issuance of a permanent injunction in compliance with the Court of Appeals opinion. After Hiles and other defendants had filed a stream of motions and pleadings, and after adjacent landowners had filed a Verified Application for Writ of Mandate in Aid of Appellate Jurisdiction, Judge Kaul entered an injunction on November 20, 1980 which was subsequently amended on December 17, 1980 to read as follows, in pertinent part:
Adjacent landowners were disappointed to find that the music store remained open after December 17th. They consequently sought enforcement of the injunction by filing on December 19, 1980 a "Motion For Issuance of Show Cause Order in Contempt Proceedings For Violation Order." Judge Lorenzo Arredondo (successor to Judge Kaul as Judge of the Lake Circuit Court, who retired at the end of 1980) entered an Order to Show Cause and heard evidence on the Petition for Contempt Citation against Hiles.
Both Hiles and Kathy testified at the hearing, which was not held until May 21, 1981. Kathy stated that she had read the injunction and probably had discussed the injunction and the Rule to Show Cause with Hiles, but she nevertheless operated the music store after the injunction was entered. She further claimed that Hiles had no interest whatsoever in the music store except for his interest in the real estate itself; the music store was purchased with money she received as settlement for her injuries in an accident. The proceeds were placed in a joint savings account from which bonds were later purchased. How this money was eventually traced to the music store, Kathy was uncertain. She did admit, however, that Hiles had written and delivered a check to the Clousers for purchase of the real estate and that Hiles had co-signed the note and mortgage for construction for the music store building, a debt which is still outstanding.
Hiles's testimony at this contempt hearing directly contradicted his testimony at the hearing on the injunction. He claimed at this hearing that the Sherwood Music Store had been in operation for seven years, having begun on Cline Avenue, but that he never had any interest in the...
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