Fort Wayne Lodge, LLC v. EBH CORP.

• Decision Date: 06 April 2004
• Docket Number: No. 02A05-0305-CV-241.,02A05-0305-CV-241.
• Citation: 805 N.E.2d 876
• Parties: FORT WAYNE LODGE, LLC, Appellant-Defendant, v. EBH CORPORATION and Edward A. White, Appellees-Plaintiffs.
• Court: Indiana Appellate Court

805 N.E.2d 876

FORT WAYNE LODGE, LLC, Appellant-Defendant, v. EBH CORPORATION and Edward A. White, Appellees-Plaintiffs.

No. 02A05-0305-CV-241.

Court of Appeals of Indiana.

April 6, 2004.

Samuel W. Jarjour, Fort Wayne, IN, Attorney for Appellant.

James D. Streit, Fort Wayne, IN, Attorney for Appellees.

OPINION

RILEY, Judge.

STATEMENT OF THE CASE

Appellant-Defendant, Fort Wayne Lodge, LLC (Fort Wayne), appeals the trial court's order granting Appellees-Plaintiffs', EBH Corporation and Edward A. White (White) (collectively EBH), Motion for Summary Judgment.

We affirm.

ISSUES

Fort Wayne raises five issues on appeal, which we restate as follows:

1. Whether the trial court erred when it, without a Motion to Strike, sua sponte, determined that it would not consider material filed in opposition to EBH's Motion for Summary Judgment;

2. Whether the trial court abused its discretion by failing to set aside the Motion for Summary Judgment upon a showing of excusable neglect;

3. Whether the trial court erroneously considered EBH's untimely attorney fee evidence, despite a timely motion to strike;

4. Whether EBH made a prima facie showing that they were entitled to summary judgment as a matter of law; and

5. Whether Indiana law permits the award of attorney fees in actions to enforce Indemnity Agreements.

FACTS AND PROCEDURAL HISTORY

On May 29, 1998, EBH sold to Fort Wayne substantially all of the assets of the business formerly known as the Fort Wayne Airport Holiday Inn (the Hotel), located at 3939 Ferguson Road, Fort Wayne, Indiana. The terms of the purchase and sale were set forth in a certain Real Estate Purchase Agreement (the Purchase Agreement), dated December 8, 1997. The Purchase Agreement provided, among other things, that EBH would sell and assign, and Fort Wayne would accept and assume, all of EBH's rights and obligations under certain equipment leases relating to the operation of the Hotel, many of which were personally guaranteed by White, EBH's sole shareholder.

At the closing of the purchase of the Hotel, Fort Wayne and EBH also entered into a certain Assignment and Assumption Agreement (the "Assumption Agreement"), dated May 29, 1998, pursuant to which EBH sold and assigned to Fort Wayne, and Fort Wayne accepted and assumed, all of EBH's liabilities and obligations under every contract, lease, and service contract pertaining to the operation of the Hotel. The Assumption Agreement included, as an exhibit, a list of the leases covered by the agreement and provided that Fort Wayne would indemnify and hold EBH and White harmless from and against any and all liability, damage, costs, or expenses arising out of such leases.

Included among the leases covered by the Assumption Agreement and set forth on the attached exhibit was a certain lease, the Liberty Lease, with the Liberty Leasing Company (Liberty), which involved heat pumps installed at the Hotel. The Liberty Lease was entered into between EBH and Liberty's predecessor, Triumphe Leasing Network, Inc., on September 7, 1995, and was personally guaranteed by White. After closing, Fort Wayne failed to make the payments under a number of the leases, including the Liberty Lease. As a result, on September 30, 1998, Liberty commenced an action (the Arizona Litigation) against EBH and White for breach of the lease in the Maricopa County, Arizona Superior Court, which is the county of White's residence.

Thereafter, EBH notified Fort Wayne that it had been sued by Liberty for breach of the Liberty Lease and that, in accordance with the terms of the Assumption Agreement, it would look to Fort Wayne for indemnification for all damages sustained and all costs and expenses incurred in connection with such lawsuit. Following the commencement of the suit, Liberty negotiated extensively with Fort Wayne regarding the rental obligation under the lease and, on or about June 1, 1999, Liberty and Fort Wayne entered into a settlement agreement pursuant to which Fort Wayne paid to Liberty the sum of $32,000 for the purchase of the heat pumps and the satisfaction of the rental obligation under the lease for the period of June 1, 1998, through May 31, 1999.

Following the settlement with Fort Wayne, Liberty pursued its remedies against EBH and White in the Arizona Litigation for the remaining balance due under the Liberty Lease, which Liberty contended was in excess of $45,000. On or about December 13, 1999, EBH, White and Liberty entered into a settlement agreement pursuant to which a Stipulated Judgment in favor of Liberty and against EBH and White in the sum of $38,500 was entered in the Arizona Litigation.

Thereafter, on January 3, 2000, EBH filed a Complaint in the Allen County Superior Court, alleging breach of contract against Fort Wayne. In its Complaint, EBH attempted to recover the $38,500 amount it paid in settlement with Liberty, attorney fees for defending the Liberty action, attorney fees for prosecuting the instant action, and prejudgment interest. On January 24, 2000, Fort Wayne filed its Answer, Affirmative Defenses, and Counterclaim.

On September 18, 2000, EBH served on Fort Wayne discovery requests consisting of Plaintiffs' First Set of Interrogatories and Plaintiffs' First Request for Production of Documents. On January 26, 2001, EBH filed a Motion to Compel Responses to Plaintiffs' Discovery Requests, due to Fort Wayne's failure to serve timely responses to EBH's discovery requests. On February 21, 2001, a hearing on EBH's motion to compel was held. At the hearing, the trial court granted EBH's motion and ordered Fort Wayne to provide its discovery responses not later than February 26, 2001. On February 26, 2001, Fort Wayne's then current attorney faxed to EBH their Defendant's Answers to Plaintiffs' Interrogatories which were not signed and which contained incomplete and inadequate responses to certain interrogatories.

As a result, on May 22, 2001, EBH filed a second Motion to Compel Responses to Plaintiffs' Discovery Requests, due to Fort Wayne's failure to comply with the trial court's order of February 21, 2001. On June 19, 2001, Fort Wayne's original attorney in this case, T. Dean Swihart (Attorney Swihart), filed a Motion to Withdraw Appearance as counsel for Fort Wayne on the ground that Fort Wayne had ceased to communicate with him, thereby preventing him from providing effective legal representation under the circumstances. Upon withdrawing as counsel, Attorney Swihart advised Fort Wayne's corporate counsel of their responsibilities of notifying the clerk of the court with the name, address, and telephone number of a person to receive notices concerning the case as required by Local Rule 3. Nonetheless, Fort Wayne failed to give the clerk of the court such information. As a result, all pleadings and orders served on Fort Wayne subsequent to Attorney Swihart's withdrawal on June 19, 2001, and entry of appearance by Fort Wayne's current attorney on May 28, 2002, were directed to Fort Wayne's statutory agent for service of process, CT Corporation.

On June 26, 2001, a hearing on EBH's second motion to compel was held. At the hearing, the trial court ordered Fort Wayne to serve proper discovery responses on EBH on or before July 26, 2001, or face a dismissal with prejudice of its counterclaim against EBH. Fort Wayne again failed to provide EBH with discovery responses within the time specified by the trial court. Accordingly, on July 31, 2001, EBH filed a Motion to Dismiss Fort Wayne's Counterclaim. On August 29, 2001, the trial court granted EBH's Motion to Dismiss Fort Wayne's Counterclaim. On April 4, 2002, EBH filed its Motion for Summary Judgment along with supporting materials and a hearing was set for May 31, 2002. On May 28, 2002, Fort Wayne appeared by new counsel who filed a Motion to Continue Hearing on Summary Judgment and to Extend the Deadlines in Which to Respond to Plaintiff's Motion for Summary Judgment. On May 31, 2002, a hearing on EBH's Motion for Summary Judgment was held. At the hearing, Fort Wayne, filed the following documents: 1) Affidavit of Jamal Garmo, 2) Affidavit of Samuel Jarjour, 3) Defendant's Reply to Plaintiff's Motion for Summary Judgment, and 4) Designation of Material Issues of Fact and Evidence Relevant Thereto. At the conclusion of the hearing, the trial court held the following:

Comes now [EBH], by counsel, James D. Streit. Comes now Fort Wayne [ ], LLC, by counsel, Samuel W. Jarjour. [Fort Wayne] request[s] a continuance of the Motion for Summary Judgment. The [c]ourt notes that there was no request for extension of time to file summary judgment response filed by [Fort Wayne] within the time period required by law. The [c]ourt notes that the June 15, 2001 letter from [Attorney] Swihart informs [Fort Wayne's] corporate counsel of the necessity of appearing and defending the case against the prospect of judgment. The [c]ourt has no discretion to extend the time period to respond inasmuch as [Fort Wayne] failed to request such extension of time within thirty (30) days of receipt of the Motion for Summary Judgment.

Therefore, the [c]ourt may only consider the motion and evidence designated by [EBH] in this cause of action. The [c]ourt request[s] that counsel for [EBH] prepare a proposed order on this matter. Counsel for [EBH] also informs the [c]ourt that he intends to ask for attorney fees, has submitted a brief on same, and will file an Affidavit for Attorney Fees. The [c]ourt request[s] that counsel for [EBH] file same and share same with opposing counsel. The [c]ourt now gives opposing counsel fourteen (14) days from the receipt of same in which to respond to the [c]ourt.

(Appellant's App. p. 121). Thereafter, EBH filed its proposed Order and Affidavit of Attorney Fees.

On June 19, 2002, Fort Wayne filed its Motion to Strike the Affidavit of Attorney Fees and Defendant's Response to Plaintiffs' Proposed Order. On June 25, 2002, EBH filed its Plaintiffs' Response to Defendant's ...