F. D. Borkholder Co., Inc. v. Sandock
Decision Date | 12 December 1980 |
Docket Number | No. 1280S450,1280S450 |
Citation | 413 N.E.2d 567,274 Ind. 612 |
Parties | F. D. BORKHOLDER COMPANY, INC., Appellant (Defendant below), v. Melvin SANDOCK, Betty Sandock, Sam Sandock, Ruby Sandock and B. & S. Sandock, Inc., Appellees (Plaintiffs below). |
Court | Indiana Supreme Court |
Sam Mirkin, South Bend, for appellant.
Myron J. Hack, Myron J. Hack & Associates, South Bend, for appellees.
This case is before this Court upon the petition to transfer of plaintiffs-appellees B. & S. Sandock, Inc., et al. The trial court awarded the plaintiffs compensatory and punitive damages arising out of a breach of contract by the defendant-appellant F. D. Borkholder Company, Inc. The Court of Appeals, Third District, affirmed the award of compensatory damages but reversed the punitive damages award in an opinion authored by Judge Staton. Sandock v. F. D. Borkholder Co., (1979) Ind.App., 396 N.E.2d 955. Judge Garrard dissented from the majority's treatment of the punitive damages issue.
Transfer is now granted, and the decision and opinion of the Court of Appeals are hereby vacated. The relevant facts were summarized by Judge Staton as follows:
"
On appeal, Borkholder contended that:
1. The judgment was not supported by sufficient evidence;
2. The trial court erred in not granting Borkholder's motion for an involuntary dismissal; and
3. The trial court erred in awarding punitive damages.
We adopt the opinion of the Court of Appeals which affirms the trial court on the first two issues, as follows:
The Court of Appeals also determined that Borkholder's contention that the judgment was contrary to law was waived for failing to comply with Ind.R.Ap.P. 8.3(A)(7) and denied Sandock's request for an assessment of damages against Borkholder pursuant to Ind.R.Ap.P. 15(G) for bringing a frivolous appeal. We concur in those dispositions.
III.
The Court of Appeals cited our decision in Hibschman Pontiac, Inc. v. Batchelor, (1977) 266 Ind. 310, 362 N.E.2d 845, for the proposition that punitive damages are recoverable in breach of contract actions only when a separate tort accompanies the breach or tort-like conduct mingles in the breach. Here, prior to the execution of the contract, Sandock representatives expressed their concern about moisture on the walls. Under the terms of the contract, they were to pay $200 for plans to be drawn up by Borkholder's architect. The contract provided that all labor and material would be furnished in accordance with specifications. Sandock was given a copy of the plans. However, contrary to these plans, the top and bottom courses of block forming the one wall were not filled with concrete, thus constituting latent variances. Furthermore, the roofline was shortened which represented an additional deviation from the plans.
There was testimony that the cut-off roofline enabled water to leak down into the top of the block wall. Other evidence indicated that the wetness problem resulted from this water percolating down through the inside of the wall, collecting at the bottom, and then rising again by capillary action. Sandock made numerous complaints but was constantly reassured by several Borkholder representatives that the problem was caused by simple condensation, a theory ultimately disproved by an on-site test conducted by the Borkholder firm. Sam Sandock testified that Freeman Borkholder, president of the company, promised that the situation would be remedied whereupon Sandock tendered all but $1,000 of the contract price. The problem was never corrected. The Borkholder people knew, of course, that the blocks in the wall were not filled with concrete. Also, Borkholder himself conceded that the roofline adjustment increased the likelihood of water running down into the core of the wall.
We believe that there is cogent and convincing proof that the Borkholder firm engaged in intentional wrongful acts constituting fraud, misrepresentation, deceit, and gross negligence in its dealings with Sandock. Hibschman Pontiac, Inc., supra. Accordingly we agree with the Court of Appeals that the trial court could have concluded that separate torts accompanied the breach. Next, relying on Hibschman, the Court of Appeals attempted to identify the public interest to be served by imposing punitive damages. However, the majority could not perceive any such interest and refused to let the award stand. We disagree. As Ju...
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