Demming v. Underwood

• Decision Date: 02 May 2011
• Docket Number: No. 53A01–1005–PL–252.,53A01–1005–PL–252.
• Citation: 943 N.E.2d 878
• Parties: Sheree DEMMING, Appellant–Plaintiff,v.Cheryl UNDERWOOD and Kenneth Kinney, Appellees–Defendants.
• Court: Indiana Appellate Court

943 N.E.2d 878

Sheree DEMMING, Appellant–Plaintiff,

v.Cheryl UNDERWOOD and Kenneth Kinney, Appellees–Defendants.

No. 53A01–1005–PL–252.

Court of Appeals of Indiana.

Feb. 21, 2011.Rehearing Denied May 2, 2011.

E. Paige Freitag, Jones, McGlasson & Benckart, P.C., Thomas E. Densford, Bauer & Densford, Bloomington, IN, Attorneys for Appellant.Lonnie D. Johnson, Pamela J. Hensler, Clendening Johnson & Bohrer, P.C., Bloomington, IN, Attorneys for Appellees.

OPINION

MATHIAS, Judge.

Sheree Demming (“Demming”) appeals from the Monroe Circuit Court's entry of summary judgment in favor of Cheryl Underwood (“Underwood”) and Kenneth Kinney (“Kinney”) (collectively, “the Defendants”) on Demming's claims for breach of fiduciary duty and constructive fraud, as well as Demming's request for the imposition of a constructive trust. We reverse and remand for proceedings consistent with this opinion.

Facts and Procedural History

The facts most favorable to the non-moving party establish that Demming is a real estate investor in the business of acquiring properties in the Bloomington, Indiana area for remodeling, renovation, leasing, and sale. Demming, who has never held a realtor's license, engaged Underwood's professional services as a realtor to buy and sell properties on multiple occasions between July 2002 and April 2007. During this time, Demming routinely discussed her real estate investment strategy with Underwood, including her plans to acquire multiple properties within a “target zone” near the Indiana University campus. Appellant's App. pp. 135–36.

In 2002, Demming became particularly interested in purchasing two properties located within her target zone at 424 and 426 East Sixth Street (“the Properties”). The Properties were owned by Marion and Frances Morris (“the Morrises”), who lived out of state. Realtor Julie Costley (“Costley”) managed the Properties, which were not listed for sale. After discussing Demming's interest in acquiring the Properties, Demming and Underwood agreed that the best strategy would be for Underwood to approach Costley with an offer on behalf of Demming, because as a realtor, Costley would be obligated to relay an offer presented by another realtor to the Morrises.

Underwood first presented an offer to Costley on Demming's behalf in the fall of 2002. After the offer was declined, Demming and Underwood “strategized” together on how Demming could acquire the Properties, and Underwood offered to contact Costley every few months to inquire about the Properties' availability. Id. at 146. Over the next few years, up until early 2007, Underwood contacted Costley on Demming's behalf regarding the Properties “every four of five months.” Id. Additionally, in May, August, and October 2006, Underwood contacted Costley to inquire into the availability of the Properties after Demming specifically instructed her to do so. While Underwood was not compensated for these services, “it was discussed and understood that ... Underwood would be paid a real estate commission, at closing, in the customary amount of seven percent (7%) of the sales price.” Id. at 234. However, unbeknownst to Demming, Underwood became interested in purchasing the Properties for herself after she acquired a neighboring property in May 2006.

In February 2007, Demming again instructed Underwood to call Costley and inquire into the availability of the Properties for purchase. Underwood responded, “Sheree, she's just not going to sell.” Id. at 139. Demming nevertheless insisted that Underwood contact Costley, and said that if Underwood refused, she would contact Costley herself. Underwood then agreed to call Costley, and when she did so, she asked Costley to contact Mrs. Morris, whose husband had recently passed away, to find out if she would be interested in selling. Costley responded that she would contact Mrs. Morris, but she expressed doubt as to whether Mrs. Morris would be willing to sell. The next day, Underwood told Demming that the Properties were not for sale. Demming instructed Underwood to “stay on it” because she believed that Mrs. Morris would be willing to sell in the near future. Id.

A few days later, Costley contacted Mrs. Morris, who instructed her to request that anyone interested in purchasing the Properties tender a written offer. When Costley informed Underwood that Mrs. Morris was willing to entertain an offer, Underwood did not relay this information to Demming. Instead, on March 9, 2007, Underwood and Kinney, acting as partners, tendered their own written offer to purchase the Properties. A counteroffer was tendered and accepted, pursuant to which Underwood and Kinney agreed to purchase the Properties for $650,000. Underwood and Kinney closed on the transaction on March 30, 2007.

On April 14, 2007, Demming contacted Underwood after noticing one of Underwood's “For Rent” signs in front of the Properties. Underwood and Demming met the next day, and Underwood informed Demming that she and Kinney had purchased the Properties.

On April 19, 2007, Demming filed suit against Underwood asserting claims for breach of fiduciary duty and constructive fraud. Demming also requested the imposition of a constructive trust compelling Underwood and Kinney to convey title of the Properties to her. Underwood and Kinney moved for summary judgment on October 13, 2009, and Demming filed her response on November 13, 2009. The trial court conducted a hearing on the summary judgment motion on February 5, 2010, and thereafter took the matter under advisement. On May 7, 2010, the trial court issued its order granting summary judgment in favor of Underwood and Kinney on all claims. In so doing, the trial court entered specific findings and conclusions, in which it concluded that there were no genuine issues of material fact and that no agency relationship existed between Demming and Underwood as a matter of law. This appeal ensued. Additional facts will be provided as necessary.

Standard of Review

Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). Our standard of review is well settled:

Our analysis proceeds from the premise that summary judgment is a lethal weapon and that courts must be ever mindful of its aims and targets and beware of overkill in its use.... When reviewing an entry of summary judgment, we stand in the shoes of the trial court. We do not weigh the evidence but will consider the facts in the light most favorable to the nonmoving party. All doubts as to a factual issue must be resolved in the nonmovant's favor. A trial court's grant of summary judgment is “clothed with a presumption of validity,” and the appellant has the burden of demonstrating that the grant of summary judgment was erroneous. Nevertheless, we must carefully assess the trial court's decision to ensure the nonmovant was not improperly denied his day in court.

Rogier v. Am. Testing & Eng'g Corp., 734 N.E.2d 606, 613 (Ind.Ct.App.2000) (citations omitted).

Here, the trial court made findings and conclusions in support of its entry of summary judgment. While the entry of specific findings and conclusions offers insight into the reasons for the trial court's decision on summary judgment and facilitates appellate review, such findings are not binding on this court. Ashbaugh v. Horvath, 859 N.E.2d 1260, 1264–65 (Ind.Ct.App.2007).

I. Common Law Agency

Demming first argues that the trial court erred in granting summary judgment in favor of the Defendants on her breach of fiduciary duty claim because a genuine issue of material fact exists as to whether Underwood owed Demming a fiduciary duty under the common law of agency. “ ‘Agency is a relationship resulting from the manifestation of consent by one party to another that the latter will act as an agent for the former.’ ” Meridian Sec. Ins. Co. v. Hoffman Adjustment Co., 933 N.E.2d 7, 12 (Ind.Ct.App.2010) (quoting Smith v. Brown, 778 N.E.2d 490, 495 (Ind.Ct.App.2002)), trans. denied. To establish an actual agency relationship, three elements must be shown: (1) manifestation of consent by the principal, (2) acceptance of authority by the agent, and (3) control exerted by the principal over the agent. Douglas v. Monroe, 743 N.E.2d 1181, 1186 (Ind.Ct.App.2001). These elements may be proven by circumstantial evidence, and there is no requirement that the agent's authority to act be in writing. Dep't of Treasury v. Ice Serv., Inc., 220 Ind. 64, 67–68, 41 N.E.2d 201, 203 (1942). Whether an agency relationship exists is generally a question of fact, but if the evidence is undisputed, summary judgment may be appropriate. Douglas, 743 N.E.2d at 1187.

Here, the trial court concluded that no common law agency relationship existed between Demming and Underwood as a matter of law, in part because Underwood never agreed to act as Demming's agent.¹ Similarly, the Defendants claim that no agency relationship was established because Underwood simply “made a few telephone inquiries” regarding the Properties “as an act of customer service and not as an acceptance of any agency.” ² Appellee's Br. at 12. Demming, however, argues that the evidence establishing that Underwood made multiple inquiries into the availability of the Properties on her behalf over a period of more than four years supports an inference that Underwood agreed to act as her agent and creates a genuine issue of material fact precluding entry of summary judgment. We agree.

After first becoming interested in purchasing the Properties in 2002, Demming asked Underwood to approach Costley with an offer to purchase, and Underwood complied. After that offer was rejected, Demming and Underwood devised a plan for Demming to acquire the Properties. In accordance with this plan, Underwood approached Costley every few months to inquire into the Properties' availability for purchase. In May, August, and October 2006, and again in February...