Geller v. Kurt P. Kinney, Holly Kinney, & A.M. Rentals, Inc.

• Decision Date: 07 December 2012
• Docket Number: No. 29A02–1111–PL–1202.,29A02–1111–PL–1202.
• Citation: 980 N.E.2d 390
• Parties: Robert GELLER and Judy Geller, Appellants–Plaintiffs, v. Kurt P. KINNEY, Holly Kinney, and A.M. Rentals, Inc., Appellees–Defendants.
• Court: Indiana Appellate Court

980 N.E.2d 390

Robert GELLER and Judy Geller, Appellants–Plaintiffs,

v.Kurt P. KINNEY, Holly Kinney, and A.M. Rentals, Inc., Appellees–Defendants.

No. 29A02–1111–PL–1202.

Court of Appeals of Indiana.

Dec. 7, 2012.

Steven Stoesz, Stoesz & Stoesz, Westfield, IN, Attorney for Appellants.

Donald D. Levenhagen, Landman & Beatty, Lawyers, LLP, Indianapolis, IN, Attorney for Appellees.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Robert and Judy Geller appeal the trial court's judgment in favor of A.M. Rentals, Inc. ("A.M.") and the court's calculation of damages for the Gellers against Kurt P. Kinney and Holly Kinney.¹ The Gellers raise two issues for our review, namely:

1. Whether the trial court erred in its interpretation of an exculpatory clause in the Gellers' contract with A.M.; and

2. Whether the trial court's calculation of damages against the Kinneys is clearly erroneous.

We affirm.

FACTS AND PROCEDURAL HISTORY

On March 23, 2011, the Gellers filed their amended complaint against the Kinneys and A.M. Under Count I, the Gellers alleged that the Kinneys had breached their lease agreement, causing the Gellers damages in excess of $70,000. Under Count II, the Gellers alleged that A.M., the Gellers' leasing agent, had failed "to properly investigate the Kinneys before recommending them as tenants," thereby breaching A.M.'s lease management agreement with the Gellers. Appellants' App. at 8. And under Count III, the Gellers alleged that A.M. had breached its duties under Indiana Code Chapter 25–34.1–10 when A.M. had failed to "exercise due diligence and care when investigating possible tenants, recommending tenants to the Gellers, and executing lease agreements on behalf of the Gellers." Id. at 9.

Following a bench trial, on October 11, 2011, the trial court entered judgment for the Gellers on their claim against the Kinneys but against the Gellers on both claims against A.M. In its order, the court found the following facts:

4. The Gellers ... lived [at 168 E. Columbine Lane, Westfield, Indiana,] until November 2006, at which time they moved to 15639 Buxton Court, Westfield, Indiana, another house [the] Gellers had purchased in September 2006. Because Mr. Geller was transferred by his employer to a position in Elmhurst, Illinois, effective on January 1st, 2007, the Gellers listed the Columbine Lane house for sale.... The house did not sell in the time the Gellers had it listed ... and they began to consider leasing the property....

5. The Gellers' initial awareness of [A.M.] came from a sign in a subdivision where [A.M.] had another client. They did not consider any other leasing agent and spoke only with [A.M.] about listing the Columbine Lane property for lease. By October 26, 2006, the Gellers had discussed the likelihood of leasing the Columbine Lane property with Decarius Spells, [A.M.'s] representative, entered into the Lease and Management Agreement, and authorized [A.M.] to enter the property into the multiple listing service to begin finding a tenant for the property. One reason for selecting [A.M.] was that the Gellers understood that [A.M.] was a corporate relocation company as well as a home rental company, and because the Gellers believed [A.M.] could attract the type of tenant the Gellers were looking for to place in their home.

* * *

7. Neither party signed the Lease and Management Agreement, but both the Gellers and [A.M.] accept its terms and agree that it is a legally-binding contract for them both. Although Mr. Geller was the one responsible for negotiating the agreement with [A.M.] ... he admits to not having read the agreement prior to the subsequent lease with the Kinneys but had merely "kind of previewed it." The evidence establishes that the contract was in effect prior to October 26, 2006.

8. It was not until around March 15, 2007, that Decarius Spells, the [A.M.] representative, contacted Mr. Geller and said that he had a party interested in leasing the house. This party was the Kinney family. Up until that time, Mr. Geller had limited contact with Mr. Spells because no other tenants had even previewed the house in the nearly five months it had been listed for lease. Mr. Geller had spoken with Mr. Spells only two other times, those being the original telephone call of introduction and to schedule a time to meet at the house, and the meeting that took place at the house so Mr. Spells could see it. In that time, the Gellers also dropped the requested monthly rental from $3,150 to $2,950, and then to $2,750. Meanwhile, the Gellers were paying mortgages and associated expenses on two houses totaling approximately $5,800 per month. While Mr. Geller's income was $175,000 per year, 22 percent of that amount ($38,500) came from a bonus that he did not receive until the year's end, and therefore[ ] his gross monthly income before bonus was of $11,375. The Gellers did have another rental property that was renting at a profit of $300 per month that off-set some expenses.

9. The next contact with Mr. Spells was on the day the Kinneys previewed the house, when Mr. Spells called to advise that they liked the house and wanted to submit an application. There was a final call, and in this call[ ] Mr. Spells discussed the Kinneys' application and sought the Gellers' decision on whether to enter into a lease with the Kinneys. Of note is that[,] in one of these final two telephone calls, the Gellers agreed to another reduction in the monthly lease amount to $2,495. This completed a 21 percent drop from the original monthly rate and was in response to what the Kinneys could afford to pay.

10. The content of this final telephone conversation between Mr. Spells and Mr. Geller forms the factual crux of the lawsuit. In this conversation, Mr. Spells went over the lease application ... and the Kinneys' credit report ... with Mr. Geller. Mr. Spells has no recollection of the Gellers, the transaction involving the Gellers and the Kinney lease and specifically has no recollection of his final conversation with Mr. Geller. He testified that he was "very process oriented" and that he would have done everything the same way in accordance with his procedure every time. He further testified that he would have gone over the application and credit report line by line starting at the top and reading down to the bottom. He demonstrated how he did this during his testimony.

11. Mr. Geller does have a specific recollection of this conversation from March of 2007. He recalls that Mr. Spells informed him that [A.M.] had investigated the party and that the employment checked out and the residential information checked out. Mr. Spells further advised Geller that [A.M.] had pulled a credit bureau report and that it revealed that the Kinneys filed bankruptcy several years before, but that since then[ ] the Kinneys were clean. Geller testified that he asked Mr. Spells to confirm the Kinneys were "clear" since their bankruptcy and [was] told by Mr. Spells that "I wouldn't mislead you."

12. Mr. Geller recalls that he requested to see the credit report and Mr. Spells stated he could not provide it[,] citing "confidentiality issues." Although Mr. Spells stated that he would not have denied such a request, the only evidence before the Court is that [A.M.] did not supply the report to the Gellers nor did they have it from any other source prior to committing to a lease with the Kinneys. Having now seen that report, Mr. Geller testified that there was information in it that was not conveyed to him by Mr. Spells. That information specifically was (a) the existence of a high fraud alert stating that the Social Security number used was for an individual between 16 and 18 years of age[. (]The Court finds that this is a misstatement of what [the credit report] reflects. The credit report says only that Kurt Kinney would have obtained his Social Security number between the ages of 16 and 18, and this is not inconsistent with his age at the time of the report.[) ]; (b) the current address provided for the Kinneys was a commercial and not a residential property; and (c) there were approximately $30,000 in delinquent debts incurred by the Kinneys since the filing of their bankruptcy, as well as delinquent car payments and other debts which were shown as current after the date of the bankruptcy.

13. In demonstrating how he would have gone over the credit report ... Mr. Spells came to the "Special Messages" section of the Kinneys' credit report, and testified, "And then going to any special messages. No special messages." In fact there were "special messages, including this notice: * * *HIGH RISK FRAUD ALERT: INPUT CURRENT ADDRESS IS COMMERCIAL* * * * AND * * * * SSN YEAR OF ISSUANCE: INPUT SSN ISSUED: 1985–86; STATE: MI FILE SSN ISSUED: 1985–1986; STATE: MI; (ESTIMATED AGE OBTAINED: 16 TO 18) * * *."

14. Mr. Geller also testified that there was additional information on the Kinneys' application to lease ... which was not disclosed ..., including (a) the application revealed the Kinneys were only in their previous home for nine months; (b) the Kinneys' prior rental history had not been investigated and verified, nor did it appear that any of the other information on the application appeared to be verified; and (c) there was a discrepancy between the income listed on the rental application and that given in the job verification letter.

15. Based on the information that was provided from Mr. Spells and an evaluation of their finances and other available options, the Gellers authorized [A.M.] to enter into the lease with Kinneys ... for a period of three years at a monthly rental of $2,495.

* * *

18. The lease took effect March 22, 2007, and was uneventful through August 2007. In September of 2007[,] however, the Kinneys tendered a non-sufficient funds check to pay their rent, and when this was not made good, [A.M.] filed suit on October 23, 2007, for eviction. The Kinneys, having already defaulted on the lease, paid no further rent and by court order were required to vacate the

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