KSM, LLC v. Lighthouse Storage, LLC
| Decision Date | 15 March 2012 |
| Docket Number | No. 02A03-1106-PL-00232,02A03-1106-PL-00232 |
| Parties | KSM, LLC, Appellant, v. LIGHTHOUSE STORAGE, LLC, LAWYERS TITLE INSURANCE CORPORATION, INC., and KEVIN AND STEPHEN CORP., Appellees. |
| Court | Indiana Appellate Court |
Pursuant to Ind.Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT:
ROBERT W. EHERENMAN
Haller & Colvin, P.C.
CRAIG D. DOYLE
Doyle Legal Corporation, P.C.
WENDY K. WALKER-DYES
Baker & Daniels LLP
South Bend, Indiana
Baker & Daniels, LLP
Fort Wayne, Indiana
APPEAL FROM THE ALLEN CIRCUIT COURT
The Honorable Thomas J. Felts, Judge
KSM, LLC ("KSM") appeals from the trial court's orders granting summary judgment in favor of Lighthouse Storage, LLC ("Lighthouse") and Lawyers Title Insurance Corporation ("Lawyers Title"). KSM raises two issues, which we restate as:
Lighthouse cross-appeals and argues that the trial court erred in granting summary judgment in favor of Barry Sturges ("Sturges"), a manager of KSM, on Lighthouse's fraud claim. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.
Prior to 1993, KSM's predecessor1 owned a tract of real estate along Lima Road in Fort Wayne, Indiana, which it developed as a shopping center known as the Cross CreekShopping Center ("the Shopping Center"). In 1993, KSM sold a parcel of land in the northeast corner of the Shopping Center to Laurel Associates III Limited Partnership ("Laurel") for the purpose of constructing a Builder's Square store. The purchase agreement between KSM and Laurel provided that, at closing, KSM and Laurel would execute an "Easement Agreement" applicable to the land within the Shopping Center retained by KSM and the parcel purchased by Laurel ("the Builder's Square Parcel"), which would "provide for no buildings or improvements to be located on [KSM's] property ahead of or East of the Builder's Square building front wall[.]" Appellant's App. p. 423. According to representatives of Laurel and KSM, the intent of the agreement was to maintain an unobstructed view of the front of the Builder's Square store from Lima Road. Id. at 520, 556.
In accordance with the purchase agreement, and contemporaneously with the 1993 closing on the Builder's Square Parcel, KSM and Laurel entered into a "Reciprocal Easements, Covenants and Restrictions Agreement" ("the 1993 Agreement"). Appellant's App. p. 369. The 1993 Agreement applied to the Builder's Square Parcel as well as the tract of land within the shopping center retained by KSM. The 1993 Agreement identified a specific "Building Area" within the Shopping Center and provided "KSM and Laurel and their respective successors and assigns hereby agree that all structures constructed or to be constructed on the Tracts shall be located within the Building Areas." Appellant's App. p. 369. The Building Area identified within the 1993 Agreement included the portion of the Builder's Square Parcel on which the store was tobe built, as well as an adjacent parcel to the south, but not an unimproved parcel to the west of, or behind, the planned Builder's Square store. Appellant's App. p. 383. The 1993 Agreement also established a utility easement across KSM's land to the west of the Builder's Square Parcel. Sturges executed the 1993 Agreement on behalf of one of the general partners of KSM's predecessor, and the document was recorded on December 28, 1993.2
The parcel to the south of the Builder's Square Parcel was eventually sold to Kevin and Stephen Corp. ("KS Corp.") and developed as a Gander Mountain retail store ("the Gander Mountain Parcel"). Then, in August 2007, KSM and Lighthouse entered into an agreement for Lighthouse to purchase the parcel located behind the Builder's Square Parcel ("the Lighthouse Parcel"), on which Lighthouse intended to construct a self-service storage facility and unrelated office building.3 Although KSM was aware of this intent, it failed to disclose the existence of the 1993 Agreement, which would prevent construction of any kind on the Lighthouse Parcel. KSM asserts that the Lighthouse Parcel was erroneously omitted from the Building Area identified in the 1993 Agreement as a result of a drafting error, and that KSM was unaware that the 1993 Agreement prevented construction on the Lighthouse Parcel because neither Laurel nor KSM ever intended such a result.
As part of the purchase agreement, KSM was required to provide Lighthouse, at KSM's expense, with a title commitment issued by a title company acceptable to Lighthouse. To that end, KSM asked Lawyers Title to prepare a title commitment and issue a title insurance policy to Lighthouse for the Lighthouse Parcel. None of the title commitment documents prepared by Lawyers Title and provided to Lighthouse and KSM identified the 1993 Agreement as a title exception.
As required by the purchase agreement between KSM and Lighthouse, at the June 24, 2008 closing, KSM provided Lighthouse with a vendor's affidavit. The document, entitled "Vendor Closing Affidavit, Warranties, and Representations," ("Vendor's Affidavit"), was executed by Sturges in his capacity as a member of KSM, and provided that the final title commitment issued by Lawyers Title, dated April 22, 2008, "fully discloses, as of the date thereof, the complete and true condition of title to the Real Estate." Appellant's App. p. 127. The affidavit provided further that "the Real Estate is free and clear of all taxes, liens, encumbrances, easements, charges, or leases of whatsoever kind or nature, except those shown in the Title Commitment, and matters affecting the Real Estate disclosed in the Deed." Id. The warranty deed drafted and signed by KSM conveying the Lighthouse Parcel to Lighthouse stated that the conveyance was "subject to all easements, restrictions, and limitations of record, as well as all applicable zoning ordinances." Id. at 207.
Shortly after closing, in September 2008, Lighthouse discovered the existence of the 1993 Agreement. Concluding that the restrictive covenants set forth thereinprevented the development of the Lighthouse Parcel, Lighthouse informed KSM that the only practical options were for KSM to either remove the Lighthouse Parcel from the 1993 Agreement or repurchase the land. KSM immediately contacted the owners of the Builder's Square and Gander Mountain Parcels in order to obtain consents to amend the 1993 Agreement to allow construction on the Lighthouse Parcel. The owner of the Builder's Square Parcel executed a consent document on October 6, 2008, but KSM was initially unable to obtain consent from KS Corp., the owner of the Gander Mountain Parcel. After waiting more than two months, on December 5, 2008, while the issue remained unresolved, Lighthouse made a demand on KSM for rescission of the purchase.4
On December 10, 2008, KSM filed a complaint seeking declaratory judgment that the 1993 Agreement was unenforceable as to the Lighthouse Parcel and that Lighthouse was not entitled to rescission of the purchase contract and deed. The complaint also sought reformation of the 1993 Agreement to expressly allow Lighthouse to develop the Lighthouse Parcel as planned, and declaratory judgment that Lawyers Title had negligently prepared the title commitment and title insurance policy that were "hired and paid for by KSM and also upon which Lawyers Title knew that KSM would reasonably rely . . . in executing the Vendor's Affidavit[.]" Appellant's App. p. 36. On December 30, 2008, Lighthouse filed a counterclaim seeking rescission and damages against KSM, and also against Sturges in his individual capacity. Thereafter, Lighthouse, LawyersTitle, KSM, and Sturges all filed motions for summary judgment. The trial court denied KSM's motion, entered summary judgment in favor of Lighthouse, and ordered rescission of the purchase contract and deed. The trial court also granted summary judgment in favor of Lawyers Title and Sturges. After the trial court denied KSM's motion to correct error on May 2, 2011, this appeal ensued.
Both KSM and Lighthouse appeal from granted motions for summary judgment. Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). In reviewing a trial court's summary judgment ruling, we stand in the shoes of the trial court, applying the same standards in deciding whether to affirm or reverse summary judgment. First Farmers Bank & Trust Co. v. Whorley, 891 N.E.2d 604, 607 (Ind. Ct. App. 2008), trans. denied. Thus, on appeal, we must determine whether there is a genuine issue of material fact and whether the trial court has correctly applied the law. Id. at 607-08. In doing so, we consider all of the designated evidence in the light most favorable to the non-moving party. Id. at 608.
A trial court's grant of summary judgment is clothed with a presumption of validity, and the party that lost in the trial court has the burden of demonstrating that summary judgment was improper. Haegert v. McMullan, 953 N.E.2d 1223, 1229 (Ind. Ct. App. 2011). Our standard of review is not altered where, as here, the parties have filed cross-motions for summary judgment; rather, we consider each motion separately to...
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