Lake County Trust Co. v. Wine

• Decision Date: 23 December 1998
• Docket Number: No. 64A03-9804-CV-174,64A03-9804-CV-174
• Citation: 704 N.E.2d 1035
• Parties: LAKE COUNTY TRUST COMPANY, as Trustee for Trust Number 4216 d/b/a Williamsburg Manor; Williamsburg Manor Associates, a General Partnership; and Richard J. Klarcheck, Appellants-Counter-Defendants, v. Terry WINE and Sandra Wine, and Ronald Niebauer and Carol Niebauer, for Themselves and or all Other Residents of Williamsburg Manor Mobile Home Park, Appellees-Counterclaimants.
• Court: Indiana Appellate Court

Page 1035

704 N.E.2d 1035

LAKE COUNTY TRUST COMPANY, as Trustee for Trust Number 4216

d/b/a Williamsburg Manor; Williamsburg Manor

Associates, a General Partnership; and Richard J. Klarcheck, Appellants-Counter-Defendants, v. Terry WINE and Sandra Wine, and Ronald Niebauer and Carol

Niebauer, for Themselves and or all Other

Residents of Williamsburg Manor Mobile

Home Park, Appellees-Counterclaimants.

No. 64A03-9804-CV-174.

Court of Appeals of Indiana.

Dec. 23, 1998.

Greg A. Bouwer, Spangler, Jennings & Dougherty, P.C., Merrillville, for Appellants-Counter-Defendants.

Gordon A. Etzler, Kevin G. Kerr, Hoeppner, Wagner & Evans, Valparaiso, for Appellees-Counterclaimants.

OPINION

ROBB, Judge.

Case Summary

Appellants, Lake County Trust Company, Williamsburg Manor Associates, and Richard J. Klarcheck (hereinafter collectively referred to as "Williamsburg"), appeal the trial court's order denying their motion for summary judgment and denying their motion to decertify the underlying class action. We affirm in part and reverse in part.

Issues

Williamsburg raises two issues for our review which we restate as:

I. Whether the trial court properly denied Williamsburg's motion for summary judgment on the Wines', the Niebauers', and the other tenants' four counterclaims; and,

II. Whether the trial court properly denied Williamsburg's motion to decertify the class action.

Facts and Procedural History

Williamsburg owns Williamsburg Manor, a residential community that provides mobile home lots for lease. The tenants of the park had executed written leases with Williamsburg which provided that the tenancies were month to month. In November 1993, Williamsburg increased the rent for the lots from $221 to $236 per month, constituting a 7% increase. Many of the tenants vehemently protested the increase. Appellees, Terry and Sandra Wine ("the Wines"), Ronald and Carol Niebauer (" the Niebauers"), and other tenants of Williamsburg, paid their rent minus the increase; as a result, Williamsburg returned their checks with Notices to Quit. Several tenants were permitted to pay the required rent plus a late fee; however, the Niebauers and other "ringleaders" of the rent protest were not permitted to remain at Williamsburg under any circumstances. Williamsburg sued to evict the Niebauers, the Wines, and other tenants. The Wines' and the Niebauers' eviction suits were consolidated. The Wines and the Niebauers counterclaimed on behalf of themselves and the other tenants of Williamsburg for breach of contract, abuse of process, a violation of civil rights under 42 U.S.C. § 1983, and equity. ¹ The trial court certified the action as a class action. Williamsburg moved for summary judgment on the Niebauer Class' counterclaims; additionally, Williamsburg moved the court to decertify the class action. The trial court denied both motions and certified the Interlocutory Order for appeal.

Discussion and Decision ²

I.

Williamsburg argues that the trial court erred when it denied its motion for summary judgment on the Niebauer Class' four counterclaims. We will address each counterclaim in turn.

Summary judgment is appropriate only when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). The burden is on the moving party to prove that there are no genuine issues of material fact and that he or she is entitled to judgment as a matter of law. Once the movant has sustained this burden, the opponent must respond by setting forth specific facts showing a genuine issue for trial; he may not simply rest on the allegations of his pleadings. Stephenson v. Ledbetter, 596 N.E.2d 1369, 1371 (Ind.1992). At the time of filing the motion or response, a party shall designate to the court all parts of pleadings, depositions, answers to interrogatories, admissions, matters of judicial notice, and any other matters on which it relies for purposes of the motion. T.R. 56(C).

When reviewing an entry of summary judgment, we stand in the shoes of the trial court. We do not weigh the evidence but will consider the facts in the light most favorable to the nonmoving party. Reed v. Luzny, 627 N.E.2d 1362, 1363 (Ind.Ct.App.1994), reh'g denied, trans. denied. We may sustain a summary judgment upon any theory supported by the designated materials. T.R. 56(C).

A. Good Faith in Contract Law

Williamsburg argues that the trial court erred when it denied its motion for summary judgment on the Niebauer Class' claim that a duty of good faith and fair dealing was expressly incorporated into the Williamsburg lease. Section 13 of the Williamsburg lease states that "the posted rules and regulations ... attached to this lease are a part of this lease at the time of execution." (R. 525). The preamble to the rules and regulations states:

Williamsburg Manor is conceived as a community of neighbors living in harmony ... not by rigid rules and regulations.... When these standards are fair, reasonable and logical ... when they are applied and complied with on an impartial basis ... each resident can be assured a maximum of freedom, privacy, safety and comfort.... [T]he spirit behind this statement is the Golden Rule: "Do unto others as you would have others do unto you."

(R. 527). The Niebauer Class argues that the language of the preamble to the rules and regulations imposes a duty of good faith which is expressly incorporated into the rental agreement. We disagree.

Rules of construction for contracts apply to leases. Whiteco Industries, Inc. v. Nickolick, 571 N.E.2d 1337, 1339 (Ind.Ct.App.1991), trans. denied. The construction of contracts is a question of law for which summary judgment is particularly appropriate. Id. In Indiana, the duty of good faith is applied in contract law only under limited circumstances such as those involving insurance contracts, First Federal Sav. Bank of Indiana v. Key Markets, Inc., 559 N.E.2d 600, 605 (Ind.1990) (citing Ford Motor Credit Co. v. Garner, 688 F.Supp. 435 (N.D.Ind.1988)); Liberty Mut. Ins. Co. v. Parkinson, 487 N.E.2d 162, 164 (Ind.Ct.App.1985), reh'g denied, trans. denied; however, a duty of good faith may apply to a contract where the terms of the contract are ambiguous or where the terms expressly apply such a duty. First Federal Sav. Bank of Indiana, 559 N.E.2d at 604 (holding that courts are bound to recognize and enforce contracts where the terms and the intentions of the parties can be readily determined from the language in the instrument, but when the intentions of the parties are not clear because of an ambiguity in the contract, the courts may be required to presume that the parties were acting in good faith when entering into the contract). Finally, a contract may incorporate another unsigned writing when the contract expressly incorporates the terms of the writing. See Stevens v. Flannagan, 131 Ind. 122, 30 N.E. 898, 899 (1892) (holding that a contract for the conveyance of land may describe said land by reference to descriptions in recorded deeds); see also Dickson v. Conde, 148 Ind. 279, 46 N.E. 998, 999 (1897) (holding that an unsigned provision of a written contract following the parties' signatures must be construed as a part of the contract where the signed portion of the contract refers to the unsigned provisions); see also 17A Am.Jur.2d Contracts § 400 (stating that when a written contract refers to another writing and makes the conditions of the writing a part of it, the two will be construed together as the same instrument).

The duty of "fairness" outlined in the rules and regulations does not apply to the lease; rather, this duty is expressly limited to the statement it precedes: the rules and regulations. The preamble to the rules and regulations states: "the spirit behind this statement is in the Golden Rule." (R. 527) (emphasis added). Thus, even assuming the language of the preamble implies a contractual duty of good faith, the preamble limits itself to the rules and regulations and therefore does not apply to the conditions of the lease. Although the language of the lease incorporates the terms and conditions of the rules and regulations, the terms of each document retain their original meaning and will only effectuate the intent clearly contemplated by the language of said instruments. Thus, a statement which limits the effect and scope of a clause will retain its meaning when incorporated into another document.

In the alternative, the Niebauer Class claims that the duty of good faith and fair dealing should apply to leases in general. In particular, it argues that a sophisticated landlord has undue influence in the execution of a lease. ³ Thus, they claim that without a duty of good faith Williamsburg can arbitrarily and unfairly raise the monthly rent. In general, however, contract law does not require such a duty:

It is not the province of courts to require a party acting pursuant to such a contract to be "reasonable," "fair," or show "good faith" cooperation. Such an assessment would go beyond the bounds of judicial duty and responsibility. It would be impossible for parties to rely on the written expressions of their duties and responsibilities.

First Federal Sav. Bank of Indiana, 559 N.E.2d at 604.

The Niebauer Class admits that Williamsburg had the right to raise rent; indeed, because the leases were month to month, Williamsburg and the tenants had the right to renegotiate the terms of the lease at the end of each successive tenancy. See 49 Am.Jur.2d Landlord and Tenant § 130 ("[E]ach new month of a month-to-month tenancy is a separate contract."). Williamsburg gave all of the tenants over one month's notice of the new monthly rent; therefore, the terms of the leases were clear and unambiguous. Under Indiana Law, a person is presumed to understand and assent to the terms of the contracts they sign. Walb Constr. Co. v. Chipman, 202 Ind. 434, 175 N.E. 132, 135 (1931). Aside from the fact that Williamsburg is a ...