First Bank of Whiting v. Schuyler
| Decision Date | 26 March 1998 |
| Docket Number | No. 56A03-9705-CV-142,56A03-9705-CV-142 |
| Citation | 692 N.E.2d 1370 |
| Parties | The FIRST BANK OF WHITING n/k/a Centier Bank, Appellant-Cross-Appellee-Defendant, v. Thomas SCHUYLER, Appellee-Cross-Appellant-Plaintiff. |
| Court | Indiana Appellate Court |
Karl L. Mulvaney, Nana Quay-Smith, Candace L. Sage, Bingham Summers Welsh & Spilman, Indianapolis, David M. Austgen, Austgen & Decker, Crown Point, for Appellant-Cross-Appellee-Defendant.
Eugene M. Feingold, Steven P. Kennedy, Law Offices of Eugene M. Feingold, Munster, R. Steven Ryan, Barce & Ryan, Kentland, for Appellee-Cross-Appellant-Plaintiff.
Appellant/cross-appellee and defendant below, the First Bank of Whiting n/k/a Centier Bank (the "Bank"), appeals the jury verdict and judgment entered thereon in favor of appellee/cross-appellant and plaintiff below, Thomas Schuyler ("Schuyler"). The jury awarded Schuyler both compensatory and punitive damages for his claims. The trial court subsequently vacated the punitive damage award and granted a new trial solely on that issue. Schuyler cross-appeals the trial court's decision to vacate the punitive damage award and to grant a new trial.
The Bank was the primary lender which financed the 1978 initial construction and the development of a building located at 9245 Calumet Avenue in Munster (the "Building"). The primary tenant of the Building was the Dynasty Racquetball Club. In 1979 or 1980, while the Building was being operated as a racquetball club, the Building experienced moisture which came into the lower level through the seams between the concrete walls. The moisture caused relatively minor damage such as slippery floors, condensation, and small pools of water. The moisture problem was resolved by removing the earthen berms around the Building so that a tarry fibrous material could be applied to the seams of the foundation. After the problem was solved, the berms were replaced.
In June of 1981, the Munster area experienced a heavy rainfall which was so substantial as to cause the Little Calumet River to flood over its banks. The Building suffered substantial damage when its storm/sanitary sewers backed up through the floor drains and into the Building. Storm water also came in the Building through the north door, but management was able to stop that water after a very short period of time by using simple barriers. Because management was unable to stop the sewer backup, approximately 12 of the 15 racquetball courts were damaged and had to be replaced. After the flood, management discovered that during construction of the Building the architect had failed to install a check valve designed to prevent water backflow on the sewer line. A check valve was then installed and no other backups were experienced during the Building's operation as a racquetball club. In the years following the 1981 flood, racquetball club members recall viewing evidence of minor seepage and moisture in the Building, the origin of which was unknown. Aside from the minor seepage, the Building experienced no serious water problems after the 1981 flood.
In the Spring of 1985, the Bank foreclosed on the Building, the racquetball facility was closed, and the Building remained vacant until 1987. In 1987, Schuyler, a commercial real estate developer, arranged to tour the Building with the idea of buying the Building and converting it into office space. Before one of Schuyler's visits to the Building, bank employee Herb Southworth had discovered that the carpet in the lower level of the building had become wet and that several of the racquetball floors had become damaged. Southworth investigated the cause of the damage and discovered that a hot water heater had rusted and was leaking in the lower level. Southworth immediately contacted the water department and had the water shut off and had drying crews brought in to dry the carpet. Thereafter, Schuyler met with Southworth to tour the Building. At the time Schuyler toured the Building, he observed the damp carpeting and warped racquetball floors. When Schuyler inquired as to the cause of this visible water damage, Southworth explained to him that the damage was caused by the broken hot water heater. Schuyler made no further inquiries of Southworth about any water problems in the history of the Building. Prior to his purchase of the Building, Schuyler was given blue prints of the entire Building, inspected the Building, and viewed all sump pumps and drains.
In 1988, Schuyler purchased the Building for $550,000.00 and proceeded to remodel the Building for use as office space. Subsequent to its purchase by Schuyler, the Building experienced a number of externally-generated water problems whereby water either Thereafter, Schuyler filed his complaint against the Bank alleging that it had committed actual fraud when it sold the Building to him without disclosing the history of water problems experienced at the racquetball facility. Schuyler sought both compensatory and punitive damages for his alleged injuries. The Bank denied Schuyler's allegations and filed a Motion for Summary Judgment which was granted by the trial court. In response to a Motion to Correct Error filed by Schuyler, the trial court reversed its original entry of summary judgment and reinstated Schuyler's claims. The case proceeded to trial by jury. The jury found in Schuyler's favor and awarded Schuyler $223,000.00 in compensatory damages and $800,000.00 in punitive damages. Thereafter, in response to a Motion to Correct Error filed by the Bank, the trial court vacated the punitive damage award and ordered a new trial on that issue. This appeal and cross-appeal ensued.
flowed, seeped, or backed-up into the building. Schuyler suffered substantial expense in repairing the damages suffered to the Building and eventually lost the Building to foreclosure.
Both the Bank and Schuyler present several issues for our review; however, because the Bank presents reversible error on a dispositive issue, we need only address whether the Bank had a duty to disclose the "water history" of the Building to Schuyler.
The Bank moved for judgment on the evidence in its motion to correct error pursuant to Indiana Trial Rule 50(A)(4). The purpose of a motion for judgment on the evidence is to test the sufficiency of the evidence. Nesvig v. Town of Porter, 668 N.E.2d 1276, 1282-83 (Ind.Ct.App.1996). Where all or some of the issues in a case tried before a jury are not supported by sufficient evidence or a verdict thereon is clearly erroneous or contrary to the evidence because the evidence is insufficient to support it, the court shall withdraw such issues from the jury and enter judgment thereon or shall enter judgment thereon notwithstanding the verdict. Ind.Trial Rule 50(A). On appeal, we apply the same standard as the trial court. We consider the evidence in the light most favorable to the non-moving party and enter judgment on the evidence only if there is no substantial evidence or reasonable inference to be drawn therefrom to support an essential element of the claim. Town of Highland v. Zerkel, 659 N.E.2d 1113, 1120 (Ind.Ct.App.1995), trans. denied.
Schuyler brought his claim for compensatory and punitive damages against the Bank alleging that the Bank committed actual fraud when it failed to make a full disclosure of material facts regarding the "water history" of the Building. To sustain an action for fraud, the plaintiff must prove that the defendant made a material misrepresentation of a past or existing fact, which was false, was made with knowledge or in reckless ignorance of the falsity, was relied upon by the complaining party, and proximately caused the complaining party's injury. Strodtman v. Integrity Builders, Inc., 668 N.E.2d 279, 283 (Ind.Ct.App.1996). Moreover, the failure to disclose all material facts by one on whom the law...
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