GKC Indiana Theatres, Inc. v. ELK RETAIL INVEST., LLC

• Decision Date: 21 February 2002
• Docket Number: No. 20A03-0108-CV-281.,20A03-0108-CV-281.
• Parties: GKC INDIANA THEATRES, INC., Appellant-Defendant, v. ELK RETAIL INVESTORS, LLC., Appellee-Plaintiff.
• Court: Indiana Appellate Court

764 N.E.2d 647

GKC INDIANA THEATRES, INC., Appellant-Defendant, v. ELK RETAIL INVESTORS, LLC., Appellee-Plaintiff.

No. 20A03-0108-CV-281.

Court of Appeals of Indiana.

February 21, 2002.

Paul E. Becher, Barnes & Thornburg, Elkhart, IN, Attorney for Appellant.

J. Richard Ransel, James R. Byron, Jacob S. Frost, Thorne & Grodnik, Elkhart, IN, Attorneys for Appellee.

OPINION

SHARPNACK, Judge.

GKC Indiana Theatres, Inc. ("GKC") brings this interlocutory appeal of the trial court's grant of a motion for preliminary injunction filed by Elk Retail Investors ("Elk Retail") to prohibit GKC from selling a piece of real estate. GKC raises three issues in this interlocutory appeal, which we restate as:

1. Whether the preliminary injunction must be reversed because the trial court failed to include the findings of fact required by Ind. Trial Rule 52 and Ind. Trial Rule 65(D) in the order granting the injunction;

2. Whether the trial court abused its discretion when it granted Elk Retail's motion for preliminary injunction; and

3. Whether GKC is entitled to reimbursement for attorney fees expended in resisting and appealing the preliminary injunction.

On cross-appeal, Elk Retail raises an additional argument, which we will address with each of GKC's first two issues and which we restate as whether GKC waived appellate review of the first two issues that it raises on appeal.¹ We affirm and remand.

The relevant facts follow. On June 11, 1996, GKC entered into a "Real Property Purchase Agreement" ("Contract") with Elk Retail under which GKC would purchase a piece of real estate ("Real Estate") located adjacent to the Concord Mall in Elkhart, Indiana, and would build a new movie theater upon the Real Estate. The Contract provided:

C. [GKC]'s Opening and Operating Covenant. The Covenants, Conditions and Restrictions which shall be incorporated into the Limited Warranty Deed shall include the following covenants of [GKC] with respect to its operations upon the Property: (a) a theatre complex (including parking and driveway facilities) in accordance with subclause (b) hereof shall open to the public within one (1) year of the Closing Date; and (b) [GKC] shall have a ten (10) year operating covenant for the operation of an eight to twelve screen first class/first run movie theatre....

Appellant's Appendix at 52.

On December 6, 1996, Elk Retail delivered the Limited Warranty Deed to GKC. The Limited Warranty Deed contained the following language:

The property shall be used only for an eight (8) to twelve (12) screen, first class, first run movie theatre complex (the "Movie Complex"), for a period commencing upon the date of recording of this Deed (the "Recording Date") and continuing through the expiration of the tenth (10) year following the date of opening to the public of the Movie Complex upon the Real Estate (the "Restricted Use Period"). [GKC] shall no later than March 1, 1998 commence construction of its building and no later than June 30, 1998, open for business or cause the Movie Complex to be opened for business on the Real Estate.... In the event [GKC] fails to open such facility for business by June 30, 1998, then at any time thereafter [Elk Retail] shall have the right to repurchase the Real Estate by giving written notice to [GKC] and the price to be paid for the Real Estate shall be the amount received by [Elk Retail] in connection with the sale by [Elk Retail] of the Real Estate to [GKC] under [the Contract].

Id. at 92. In addition, the Limited Warranty Deed contained the following language:

[GKC] acknowledges that [Elk Retail] is making this conveyance in reliance upon [GKC]'s strict compliance with the covenants, conditions and restrictions as herein contained. [GKC] further acknowledges that a violation of these covenants, conditions and restrictions will cause injury and damage to [Elk Retail] or its successors. To assure compliance herewith, [Elk Retail] or [Elk Retail's] successors or assigns shall have the right to institute and prosecute any proceedings at law or in equity and shall be entitled to relief by way of injunction, specific performance and damages against [GKC]....

Id. at 95.

GKC did not begin construction on the Movie Complex. Consequently, in 1998, Elk Retail sued GKC for breach of contract, seeking both specific performance of the contract and monetary damages. Both GKC and Elk Retail filed motions for summary judgment. The primary focus of the summary judgment proceedings was whether specific performance was available as a remedy for GKC's breach of contract. On February 23, 2000, the trial court granted Elk Retail's motion for summary judgment and denied GKC's cross-motion for summary judgment. The trial court's order provided:

Furthermore, the Court finds that [GKC] is liable to [Elk Retail] for any and all damages [Elk Retail] can establish by a preponderance of the evidence. The Court gives [GKC] the option under this judgment to post a bond to insure specific performance under the terms of the Agreements and compliance with the terms of the Contract in the sum of $1,000,000.00 or in the alternative, the Court will hear evidence on damages on 5/19/00 at 8:30 a.m.

Id. at 121. GKC did not post a bond, and the hearing on damages was postponed while the parties conducted discovery regarding the issue of damages.

On July 16, 2001, Elk Retail filed a motion for preliminary injunction requesting that the trial court prohibit GKC from selling the Real Estate. An attached newspaper article indicated that GKC planned to sell the Real Estate at an auction in Illinois on August 2, 2001. On July 19, 2001, GKC filed a response to Elk Retail's motion in which GKC claimed that a preliminary injunction should not be granted because specific performance was no longer an available remedy because of the trial court's order of February 23, 2000. The trial court held a hearing on the motion for preliminary injunction at which the parties presented only oral arguments. The only argument against injunction made by GKC was that the order of February 23, 2000, removed the availability of specific performance as a remedy for Elk Retail. On July 30, 2001, the trial court enjoined GKC from selling the Real Estate.

I.

The first issue that GKC raises is whether the preliminary injunction must be reversed because the trial court failed to include the findings of fact required by Ind. Trial Rule 52 and Ind. Trial Rule 65(D) in the order granting the preliminary injunction. Elk Retail argues on cross-appeal that GKC waived appellate review of this issue by failing to raise it in the trial court. Therefore, we address Elk Retail's waiver argument before addressing the merits of the issue raised by GKC.

As a general rule, a party may not present an argument or issue to an appellate court unless the party raised that argument or issue to the trial court. Pitman v. Pitman, 717 N.E.2d 627, 633 (Ind. Ct.App.1999). This rule exists because trial courts have the authority to hear and weigh the evidence, to judge the credibility of witnesses, to apply the law to the facts found, and to decide questions raised by the parties. See Whiteco Indus., Inc. v. Nickolick, 549 N.E.2d 396, 398 (Ind.Ct. App.1990)

. Appellate courts, on the other hand, have the authority to review questions of law and to judge the sufficiency of the evidence supporting a decision. Id. The rule of waiver in part protects the integrity of the trial court; it cannot be found to have erred as to an issue or argument that it never had an opportunity to consider. Conversely, an intermediate court of appeals, for the most part, is not the forum for the initial decisions in a case. Consequently, an argument or issue not presented to the trial court is generally waived for appellate review. Id. Here, Elk Retail argues that GKC waived appellate review of whether the trial court failed to include the findings of fact required by Ind. Trial Rule 52 and Ind. Trial Rule 65(D) in the order granting the preliminary injunction.

Ind. Trial Rule 65(D) provides that "[e]very order granting temporary injunction... shall include or be accompanied by findings as required by Rule 52...." Ind. Trial Rule 52 specifically provides that a trial court is required to make specific findings of fact when granting a preliminary injunction without request from any party. Consequently, GKC had no need to request the trial court to provide findings of fact in its order, and this issue was not waived. Cf. Neel v. I.U. Bd. of Trustees, 435 N.E.2d 607, 613 (Ind.Ct.App. 1982)

(holding that, because appellant did not bring an interlocutory appeal, appellant waived the right to claim that trial court erred when it failed to include findings in an order granting preliminary injunction). Consequently, we must address the merits of the issue raised by GKC.

Ind. Trial Rule 52 provides that "[t]he court shall make special findings of fact without request ... in granting or refusing preliminary injunctions...." Ind. Trial Rule 65(D) provides that "[e]very order granting temporary injunction and every restraining order shall include or be accompanied by findings as required by Rule 52." A trial court's failure to enter findings of fact and conclusions of law, as required by Ind. Trial Rule 52 and Ind. Trial Rule 65, in an order granting a preliminary injunction constitutes reversible error. Whiteco Indus., 549 N.E.2d at 399.

In this case, the trial court's order granting the preliminary injunction contained the following language:

THIS MATTER COMING BEFORE THE COURT on the motion of the Plaintiff, Elk Retail Investors, LLC, the Court hereby finds that the Defendant, GKC Indiana Theatres, Inc., should be and hereby is, ENJOINED from selling the real estate which is the subject of this litigation.

In 1996[GKC] entered a contract with [Elk Retail] in which [GKC] promised to construct and operate a multi-screen theater on the real estate which is the subject of this litigation. [GKC...