French-Tex Cleaners, Inc. v. Cafaro Co.

• Decision Date: 30 September 2008
• Docket Number: No. 18A05-0712-CV-699.,18A05-0712-CV-699.
• Citation: 893 N.E.2d 1156
• Parties: FRENCH-TEX CLEANERS, INC., Appellant-Plaintiff, v. CAFARO COMPANY and Towne Management Company, Appellees-Defendants.
• Court: Indiana Appellate Court

893 N.E.2d 1156

FRENCH-TEX CLEANERS, INC., Appellant-Plaintiff, v. CAFARO COMPANY and Towne Management Company, Appellees-Defendants.

No. 18A05-0712-CV-699.

Court of Appeals of Indiana.

September 30, 2008.

William T. Rosenbaum, Hyatt & Rosenbaum, P.A., Indianapolis, IN, Attorney for Appellant.

Kevin R. Knight, Brian J. Paul, Ice Miller LLP, Indianapolis, IN, Attorneys for Appellees.

OPINION

KIRSCH, Judge.

French-Tex Cleaners, Inc. ("French-Tex") brings this interlocutory appeal of the trial court's grant of summary judgment: (1) in favor of Cafaro Company ("Cafaro") on French-Tex's breach of contract and conversion claims; and (2) in favor of Towne Management Company ("Towne") on French-Tex's conversion claim. Towne brings an interlocutory cross-appeal on the trial court's grant of summary judgment in favor of French-Tex on French-Tex's breach of contract claim. The parties raise the following restated issues:

I. Whether the trial court erred in granting summary judgment in favor of French-Tex on its breach of contract claim against Towne.

II. Whether the trial court erred in granting summary judgment in favor of Towne on French-Tex's conversion claim.

III. Whether the trial court erred in granting summary judgment in favor of Cafaro on French-Tex's claims for breach of contract and conversion.

We affirm in part, reverse in part, and remand.¹

FACTS AND PROCEDURAL HISTORY

French-Tex is an Indiana corporation that, from 1962 to 2002, ran a dry cleaning and laundry business out of two units of commercial space located in the Northwest Plaza Shopping Center in Muncie, Indiana (the "Plaza"). French-Tex, as tenant, entered into a separate lease agreement with Towne, as landlord, to rent Unit 9 and Unit 14 in the Plaza. The leases at issue were executed on January 7, 1995, amended twice (once on March 14, 1998 and again on January 7, 2000), and expired on March 31, 2002. Appellant's App. at 37, 86, 90, 95, 137, 141. The contract language pertinent to this appeal was identical in both leases and was not changed by the 1998 or 2000 amendments. Therefore, we refer to the two leases collectively as the "Lease."

Under the terms of the Lease, French-Tex agreed to pay its pro rata share of the "Real Estate Tax Expense." Clause 10 of the Lease ("Clause 10") defined this term to mean, "all real estate taxes and assessments ... imposed" on the Plaza. Id. at 47, 104. The term included "the gross amount of real estate taxes," but could not be increased by additional penalties or charges incurred by the Landlord or decreased by any reduction or abatement received by Landlord due to early payment of real estate taxes or otherwise. Id.

Twice a year, Towne received from Delaware County, Indiana, a tax statement setting forth the real estate taxes due for the Plaza. The tax statement included the following information: (1) parcel number; (2) tax rate; (3) assessed valuation of the land and improvements; (4) exemptions; (5) net valuation (assessed valuation minus exemptions); (6) current taxes² (the product of the net valuation times the tax rate); (7) property tax replacement credit ("PTRC");³ (8) net current taxes⁴ (the difference between the current taxes minus the replacement credit); (9) the ditch assessment; and (10) the amount to pay (net current tax plus ditch assessment). Id. at 423-29. While Towne paid the Delaware County Treasurer the sum listed as "amount to pay," Towne billed French-Tex for a pro rata share of the sum of the "current taxes" plus the ditch assessment. Stated differently, Towne calculated the taxes of the Plaza by adding the ditch assessment to the product of "the assessed value [of the land and improvements] times the tax rate, without deducting for the [PTRC]." Appellant's Br. at vi.

Towne did not send French-Tex a copy of the tax statement it received; instead, it sent French-Tex an invoice setting forth the taxes French-Tex owed. Appellant's App. 394-422. French-Tex assumed it was paying only its pro rata share of the taxes Towne actually had to pay. French-Tex learned, after the Lease expired, that it had not received credit for the PTRC. Thereafter, on January 29, 2003, French-Tex filed a Class Action Complaint claiming that Towne and Cafaro, who as explained more fully below appeared to have an ownership interest or business relationship with Towne, had overcharged French-Tex and other commercial tenants of multiple shopping centers for their respective shares of property tax. Id. at 23-36.

While not a party to the Lease, Cafaro was named as a party to the suit based on the following relationship with Towne: (1) Towne and Cafaro leased office space in the same Youngstown, Ohio building and shared computer and telephone systems; (2) Towne and Cafaro shared some officers; (3) the invoices sent to French-Tex by Towne were actually prepared by employees of Cafaro; (4) Cafaro paid the Plaza's real estate taxes to the Delaware County Treasurer every six months from a Cafaro checking account; (5) Cafaro paid the Plaza's tax advisory fees to Warner Management; and (6) Cafaro handled other significant management issues, including sending three lease-related letters to French-Tex. Id. at 327-28, 368-70, 373-92.

In its complaint, French-Tex asserted four claims-breach of contract, conversion, unjust enrichment, and fraud. Id. at 23-36. Towne and Cafaro filed separate answers to the complaint. Id. at 150, 159. Additionally, Towne counterclaimed against French-Tex for breach of contract, seeking reimbursement for certain repair and clean-up costs incurred by Towne during French-Tex's lease of Units 9 and 14. Id. at 166-71. The trial court has yet to make a ruling on Towne's counterclaim, which must be decided on remand.

On February 26, 2003, Towne and Cafaro filed a motion to dismiss, which the trial court denied four months later. Appellees' App. at 1-19, 20-24. During the ensuing years, the parties filed various motions; however, the trial court took no significant action until February 2007, when it denied French-Tex's petition for class certification.

On June 13, 2007, Towne and Cafaro moved for summary judgment on all four of French-Tex's claims. In response, French-Tex filed a motion for partial summary judgment on its contract and conversion claims and voluntarily dismissed, without prejudice, its claims for unjust enrichment and fraud. On November 15, 2007, the trial court entered its order and granted summary judgment: (1) in favor of Towne on French-Tex's claim of conversion; (2) in favor of Cafaro on French-Tex's breach of contract and conversion claims; and (3) in favor of French-Tex and against Towne on French-Tex's breach of contract claim. Appellant's App. at 19-22. Both sides moved to certify the order for interlocutory appeal, and the trial court granted both motions. The parties now appeal.

DISCUSSION AND DECISION

When reviewing a summary judgment ruling, this court stands in the shoes of the trial court and does not weigh the evidence, but merely construes the pleadings and designated materials in a light most favorable to the non-movant. Tobin v. Ruman, 819 N.E.2d 78, 83-84 (Ind.Ct.App. 2004), trans. denied (2005). Summary judgment is appropriate when the pleadings, affidavits, testimony, and products of discovery demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). A factual issue is genuine if it cannot be foreclosed by reference to undisputed facts. Jones v. City of Logansport, 436 N.E.2d 1138, 1143 (Ind.Ct.App.1982). A fact is material if it affects the outcome of the litigation. Costello v. Mut. Hosp. Ins. Inc., 441 N.E.2d 506, 508 (Ind.Ct.App. 1982). The party appealing from a summary judgment decision bears the burden of persuading the appellate court that the grant or denial of summary judgment was erroneous. Simon Prop. Group, L.P. v. Acton Enters., Inc., 827 N.E.2d 1235, 1238 (Ind.Ct.App.2005), trans. denied. "`If there is any doubt as to what conclusion a jury could reach, then summary judgment is improper.'" Starks v. Vill. Green Apartments, 854 N.E.2d 411, 415 (Ind.Ct. App.2006) (quoting Simon Prop., 827 N.E.2d at 1240).

I. Breach of Contract

Towne contends that the trial court erred in granting summary judgment in favor of French-Tex on its breach of contract claim. The parties agree that under the terms of the Lease, Ohio law applies to the contract claim. Appellees' App. at 22. "Ohio courts have recognized the inherent contractual nature of lease agreements." Timber Ridge Invs. Ltd. v. Marcus, 107 Ohio App.3d 174, 178, 667 N.E.2d 1283, 1285 (Ohio Ct.App.1995). The construction of written contracts is a question of law. Long Beach Ass'n, Inc. v. Jones, 82 Ohio St.3d 574, 576, 697 N.E.2d 208, 209 (1998). In interpreting lease provisions, Ohio courts have applied traditional contract principles. Marcus, 667 N.E.2d at 1285.

Under a de novo review, an appellate court may interpret the language of the contract substituting its interpretation for that of the trial court. Children's Med. Ctr. v. Ward, 87 Ohio App.3d 504, 508, 622 N.E.2d 692, 695 (Ohio Ct.App.1993). "Common words in a written contract will be given their ordinary meaning unless manifest absurdity results or unless some other meaning is clearly evidenced from the face or overall content of the contract." Kellie Auto Sales, Inc. v. Rahbars & Ritters Enters., L.L.C., 172 Ohio App.3d 675, 682, 876 N.E.2d 1014, 1019 (Ohio Ct.App. 2007) (citing Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 245-46, 374 N.E.2d 146, 150 (Ohio 1978)). Where terms of a contract are clear and unambiguous, then there is no question of fact to be determined. Kellie Auto, 172 Ohio App.3d at 682, 876 N.E.2d at 1019. However, if a term cannot be determined from the four corners of a contract, the meaning of the ambiguous language is a question of fact. Id. at 683, 876 N.E.2d at 1019.

"In general, parties of...