Four Seasons Mfg., Inc. v. 1001 Coliseum

• Decision Date: 20 July 2007
• Docket Number: No. 02A04-0606-CV-343.,02A04-0606-CV-343.
• Parties: FOUR SEASONS MANUFACTURING, INC., Appellant-Defendant, v. 1001 COLISEUM, LLC, Appellee-Plaintiff.
• Court: Indiana Appellate Court

870 N.E.2d 494

FOUR SEASONS MANUFACTURING, INC., Appellant-Defendant, v. 1001 COLISEUM, LLC, Appellee-Plaintiff.

No. 02A04-0606-CV-343.

Court of Appeals of Indiana.

July 20, 2007.

Timothy J. Abeska, Damon R. Leichty, Barnes & Thornburg LLP, South Bend, IN, Attorneys for Appellant.

Michael H. Michmerhuizen, Samuel J. Talarico, Jr., Barrett & McNagny LLP, Fort Wayne, IN, Attorneys for Appellee.

OPINION

BAKER, Chief Judge.

Appellant-defendant Four Seasons Manufacturing, Inc. (FSM), appeals the trial court's judgment in favor of appellee-plaintiff 1001 Coliseum, Inc. (Coliseum). FSM raises the following arguments: (1) the trial court erred by not granting summary judgment in favor of Four Seasons Housing Factory Outlet, LLC (FiSHFO), and (2) the trial court erred by piercing the corporate veil of Northern Indiana Housing Factory Outlet, LLC (NiHFO), to hold FSM liable for $136,053.10. Additionally, Coliseum cross-appeals the trial court's finding that FSM was not liable under the Indiana Uniform Fraudulent Transfer Act (UFTA). Concluding that FSM is a debtor pursuant to the UFTA but that the damages award was proper, and finding no other error, we affirm the judgment of the trial court.

FACTS

FSM manufactures homes. In May 2000, FSM and Michael Pesarchik organized FiSHFO as a retail outlet to sell manufactured homes, including homes built by FSM. FSM had a 75% membership interest in FiSHFO.

Music, Music, Inc. (MMI), was the owner of the commercial real estate located in Fort Wayne at issue herein (the Property). Mark Music was the sole shareholder of MMI at all times relevant to this action. Music was also the sole shareholder in Gallery Homes, Inc. (Gallery), a retailer of manufactured housing. MMI leased the Property to Gallery for the operation of an outlet store.

FiSHFO acquired Gallery on December 31, 2000, and Music became the Vice President of FiSHFO. Although FiSHFO had acquired Gallery, MMI still owned the Property, and on December 31, 2000, FiSHFO entered into a new five-year lease with MMI to occupy the Property. Read Morrison, FSM's Chief Financial Officer, drafted the "triple net lease," which provided that FiSHFO was responsible for the payment of rent, utilities, taxes and assessments, and maintenance of the Property. Appellant's App. p. 39.

In March 2001, Pesarchik left FiSHFO and Music assumed the position of President. Music remained the President for approximately one year until he resigned and surrendered his FiSHFO ownership interest in July 2002. As a result, FSM became the sole member of FiSHFO.

Patrick Tippmann and David Dumas were the members of Tippmann & Dumas, LLC, which was, in turn, the sole member of Coliseum. Coliseum was formed for the specific purpose of purchasing the Property. On June 28, 2002, Coliseum purchased the Property from MMI, rendering Coliseum FiSHFO's landlord with respect to the Property.

Shortly after the sale of the Property, Tippmann had a conversation with Austin Baidas—the President and CEO of FSM— about repairing the roof of the building on the Property. Tippmann and Baidas disagreed about whether Coliseum or FiSHFO was responsible for making the repairs. Baidas later told Music about the dispute with Coliseum and alerted him that, because of the dispute, FiSHFO was going to vacate the Property.

FiSHFO vacated the Property on August 31, 2002. That same day, FiSHFO entered into an asset purchase agreement with NiHFO. Pursuant to the agreement, NiHFO assumed the leases for two other properties that FiSHFO was leasing, but it did not assume the lease for the Property owned by Coliseum. Morrison—the CFO of FSM—drafted, negotiated, and signed the asset purchase agreement between FiSHFO and NiHFO. As a result of the agreement, FSM became the sole member of both FiSHFO and NiHFO. NiHFO completed FiSHFO's pending sales, and signs reading "Four Seasons Outlet" remained outside of NiHFO's stores for at least three years. Tr. p. at 177-78; Exs. 26, 27.

On October 17, 2002, Coliseum filed a complaint against FiSHFO, alleging that FiSHFO had breached its lease with Coliseum. On April 2, 2003, FiSHFO filed a motion for summary judgment, which the trial court denied on September 17, 2003. The trial court subsequently granted Coliseum's two motions to amend its complaint, and Coliseum filed its second amended complaint on May 14, 2004, naming FiSHFO, NiHFO, FSM, MMI, Music, Four Seasons Housing, Inc., and FSH, Inc., as defendants.

After various claims where dismissed, Coliseum, FSM, NiHFO, and FiSHFO¹ proceeded to a bench trial on October 31, 2005. After the bench trial, the trial court determined that FiSHFO had breached its lease with Coliseum and entered a judgment for $172,759.68 against FiSHFO and NiHFO, which included future rent, utilities, taxes, insurance, cleanup and repair costs, and attorney's fees.² The trial court also entered judgment against FSM in the amount of $136,053.10, finding

72. . . . that Coliseum has proven by a preponderance of the evidence that [FSM] ignored, controlled, or manipulated [NiHFO] in order to commit a fraud upon Coliseum, in that [FSM] formed [NiHFO] as a means of continuing the business of [FiSHFO] but without having to perform the obligations of the Lease with Coliseum.

73. [NiHFO] was formed and utilized by [FSM] to promote a fraud upon Coliseum, as a creditor of [FiSHFO]. [FSM] incorporated [NiHFO] just days before vacating the Property. Read Morrison, the Chief Financial Officer of [FSM], drafted and executed the Asset Purchase Agreement between [FiSHFO] and [NiHFO] on the same day that [FiSHFO] vacated the Property. [FSM], as the sole shareholder of both [FiSHFO] and [NiHFO], continued to operate [NiHFO] as the same type of business as [FiSHFO], at the same locations, and in fact, the business name displayed on the signs at two of the locations supposedly operated by [NiHFO] was Four Seasons Outlet.

74. The corporate entity of [NiHFO] should be disregarded with regards to the transfer of assets of [FiSHFO] to [NiHFO]. [FSM], as the sole shareholder of [FiSHFO], should [be] liable for the debt of [FiSHFO] to Coliseum in an amount no greater than the value of the assets of [FiSHFO] existing as of August 31, 2002, the date of the sale of the assets to [NiHFO], as a result of [FSM's] transfer of the assets of [FiSHFO] to [NiHFO].

* * *

79. With regards to Coliseum's claim that [FSM] violated I.C. 32-18-2 et. seq., the Uniform Fraudulent Transfer Act, the Court determines that as of August 31, 2002, the date of the transfer of the assets from [FiSHFO] to [NiHFO], [FSM] was not a "debtor" as that term is defined by I.C. 32-18-2-6 because [FSM] was not liable on the claim of Coliseum against [FiSHFO]. Therefore, [FSM] is not liable to Coliseum pursuant to the provisions of the Uniform Fraudulent Transfers [sic] Act.

Appellant's App. p. 45-46. FSM appeals the trial court's judgment awarding $136,053.10 in favor of Coliseum. Coliseum cross-appeals the trial court's finding that FSM was not liable under the UFTA.

DISCUSSION AND DECISION

This case turns on the interpretation of the lease between Coliseum³ and FiSHFO regarding the Property. The construction of a written contract is a pure question of law. S.C. Nestel, Inc. v. Future Constr., Inc., 836 N.E.2d 445, 449 (Ind.Ct.App.2005). The unambiguous language of a contract is conclusive and binding on the parties and the court, and the parties' intent is determined from the four corners of the document. Id. We will neither construe unambiguous provisions nor add provisions not agreed upon by the parties. Dick Corp. v. Geiger, 783 N.E.2d 368, 374 (Ind.Ct.App.2003).

A contract is ambiguous when it is susceptible to more than one interpretation and reasonably intelligent persons would honestly differ as to its meaning. First Fed. Sav. Bank v. Key Markets, Inc., 559 N.E.2d 600, 604 (Ind.1990). If a contract is ambiguous or uncertain and its meaning is to be determined by extrinsic evidence, its construction is a matter for the fact finder. Nestel, 836 N.E.2d at 449-50. An ambiguous contract will be construed against the party that drafted it. Dick Corp., 783 N.E.2d at 374. The terms of a contract are not ambiguous simply because a controversy exists between the parties concerning the proper interpretation of the language. Id.

The contract is to be read as a whole when trying to ascertain the parties' intent, and we will make all attempts to construe the language in a contract so as not to render any words, phrases, or terms ineffective or meaningless. Nestel, 836 N.E.2d at 450. The court must accept an interpretation of the contract that harmonizes its provisions, as opposed to one that causes the provisions to conflict. Id.

I. Summary Judgment

FSM argues that the trial court erred by denying FiSHFO's summary judgment motion. Specifically, FSM argues that the lease's plain language required the trial court to grant summary judgment in favor of FiSHFO as a matter of law.

We first note that a party that fails to bring an interlocutory appeal from the denial of a motion for summary judgment may still pursue appellate review after an entry of final judgment because the denial of the motion simply "places the parties' rights in abeyance pending ultimate determination by the trier of fact." Villas W. II of Willowridge v. McGlothin, 841 N.E.2d 584, 595-96 (Ind.Ct.App.2006). Consequently, although this case proceeded to trial and the trial court entered a final judgment on Coliseum's claims, we may still review the trial court's ruling on FiSHFO's motion for summary judgment. Id. Furthermore, although FSM challenges the trial court's adverse ruling on FiSHFO's motion for summary judgment—which FiSHFO filed before FSM was a party—FSM has standing to challenge that ruling because the ruling exposed FSM to liability. See Traveler's Indem. Co. v. P.R. Mallory & Co., 772 N.E.2d 479, 483-84 (Ind.Ct.App.2002) (holding that a nonparty can challenge a trial court's ruling on a...