Lawyers Title Ins. Corp. v. Pokraka

Decision Date06 July 1992
Docket NumberNo. 56S03-9207-CV-529,56S03-9207-CV-529
Citation595 N.E.2d 244
PartiesLAWYERS TITLE INS. CORP. and Frank A. Antonovitz, Appellants, (Defendants below) v. Joseph POKRAKA and Joan Pokraka, Appellees, (Plaintiffs below).
CourtIndiana Supreme Court

Fred M. Cuppy, Kathryn D. Schmidt, Burke Murphy Costanza & Cuppy, Merrillville, for appellants.

Alan H. Lobley, Ice Miller Donadio & Ryan, Indianapolis, Nathaniel Ruff, Lesniak & Ruff, East Chicago, for appellees.

ON PETITION TO TRANSFER

KRAHULIK, Judge.

Joseph and Joan Pokraka (collectively "Pokraka") (Plaintiffs-Appellees below) seek transfer after the Court of Appeals, in a memorandum decision, reversed a trial court judgment in their favor and against Lawyers Title Insurance Corp. and Frank A. Antonovitz (collectively "Lawyers Title") (Defendants-Appellants below). Lawyers Title Ins. Corp. v. Pokraka (1990), 562 N.E.2d 1331 (table). Because we conclude that Pokraka is entitled to the judgment, we grant transfer.

FACTS

In 1981, Pokraka sold a two-flat apartment building to Dwaine Paradis. The trial court found the terms of the purchase agreement entered into by Paradis and Pokraka to be as follows. The total purchase price was $24,000 with a $3,000 down payment. The balance was to be carried by Pokraka as a second mortgage at nine per cent interest amortized over 30 years, with a balloon payment due after five years in an unspecified amount. Payments were $169 per month. Paradis planned to obtain financing in addition to the Pokraka mortgage in the amount of $3,000 for the down payment and $2,000 for repairs to the property. The purchase contract provided that the Pokrakas' mortgage would be secondary The closing was handled by employees of Lawyers Title, including Frank Antonovitz. The mortgage taken by Pokraka was not properly recorded for more than 90 days after the closing. During this period, Paradis obtained a mortgage from a commercial lender, in the principal amount of $15,000, which was recorded first. Pokraka was unaware of these events until several years later when Paradis stopped making payments on the commercial mortgage and the lender notified Pokraka that it would begin foreclosure proceedings. To avoid losing his interest in the property through foreclosure, Pokraka obtained a commercial mortgage to pay off the one taken by Paradis.

                to this $5,000, and that the $5,000 was to be paid to the buyer "immediately after closing."   The mortgage taken by the Pokrakas did not indicate it was a second mortgage.  Pokraka was told by the real estate agent that a second mortgage meant that at the end of the fifth year, Paradis would have to obtain another mortgage in order to make the large balloon payment that would be owed to Pokraka under the terms of the agreement
                

Pokraka filed this lawsuit and obtained a default judgment against Paradis. The remaining case was tried to the bench, with special findings of fact and conclusions of law entered pursuant to Ind. Trial Rule 52. The trial court entered judgment against Pokraka and in favor of Webb Schneider and Mary Ann Shurman, real estate agents involved in the transaction between Pokraka and Paradis. Additionally, the trial court entered judgment against Antonovitz and Lawyers Title, and awarded Pokraka $18,985.34 in compensatory damages and $50,000 in punitive damages. Lawyers Title and Antonovitz appealed. The Court of Appeals held that the trial court's judgment was clearly erroneous because (1) Lawyers Title made no misrepresentation of past or existing facts which amounted to fraud, (2) Pokraka had no right to rely on the misrepresentations identified by the trial court, and (3) Pokraka had agreed to take a second mortgage and, therefore, he sustained no damages as a result of any misrepresentations. The court did not reach the other trial errors assigned by Lawyers Title in its appeal.

On transfer, Pokraka asserts that the failure of Lawyers Title to record his purchase money mortgage as soon as practicable after the closing or to advise him that the recording would be delayed is sufficient to support the trial court's judgment on a breach of contract theory. Because we agree with Pokraka, we grant transfer. In so doing, we must also resolve the other issues raised by the parties that were not addressed in the memorandum decision of the Court of Appeals, which we restate as follows:

(1) Whether Pokraka's claim is barred by the statute of limitations;

(2) Whether the trial court's findings of fact are clearly erroneous;

(3) Whether the trial court's conclusions are contrary to law; and

(4) Whether punitive damages are proper.

I. Statute of Limitations

Lawyers Title asserts the trial court erred in denying its motion for summary judgment because Pokraka's claim was barred by the statute of limitations. Lawyers Title reasons that because Pokraka's interest in the property is a mortgage, and a mortgage is a security interest treated as personal property, any injury sustained by Pokraka is an injury to his personal property. The statute of limitations for injuries to personal property is two years. Ind.Code Sec. 34-1-2-2(1). Thus, concludes Lawyers Title, because the closing took place in 1981 but suit was not filed until 1987, Pokraka's claim was time barred. Lawyers Title relies on Whitehouse v. Quinn (1985), Ind., 477 N.E.2d 270, 274, for the proposition that in all instances "for limitations purposes the substance of a cause of action is ascertained by an inquiry into the nature of the alleged harm and not by reference to theories of recovery advanced in the complaint," and it argues that this language precludes application of any other limitation period to Pokraka's claim.

We do not read Whitehouse as compelling agreement with the position of Lawyers Title. Unlike actions for attorney malpractice with which we dealt in Whitehouse, a specific limitation period of six years for fraud and for breach of an oral contract is provided by statute. Ind.Code Sec. 34-1-2-1. Were we to accept the reasoning of Lawyers Title here, the portions of Ind.Code Sec. 34-1-2-1 relating to fraud and oral contracts would be unnecessary. Such an application would be tantamount to judicially repealing these six-year statutes of limitations because a recovery on theories of fraud or breach of an oral contract would always involve either personal injury or damage to property. We hold that actions for fraud and for breach of an oral contract are governed by Ind.Code Sec. 34-1-2-1 which provides for a six-year statute of limitations. Therefore, the claim was not barred by the statute of limitations.

II. Findings of Fact

Lawyers Title claims that the trial court's findings of fact are clearly erroneous. We find sufficient evidence in the record to support the findings.

In a bench trial where the trial court has heard the evidence and has had the opportunity to judge the credibility of witnesses, we will not set aside the findings unless they are clearly erroneous. Indpls. Convention & Visitors Ass'n. v. Indpls. Newpapers Inc. (1991), Ind., 577 N.E.2d 208, 211-12 (citations omitted). In determining whether findings of fact are clearly erroneous, we do not reweigh the evidence or determine the credibility of witnesses, but consider only the evidence that supports the judgment and the reasonable inferences to be drawn from the evidence. Id. Only where the record contains no facts or inferences supporting the findings are those findings clearly erroneous. Id. Uncontradicted evidence will sometimes support conflicting inferences and, when this is the case, the inferences drawn by the trier of fact will prevail. Id.

Lawyers Title attacks 17 of the trial court's 60 findings of fact. We have reviewed the relevant portions of the record and conclude that the findings of fact are not clearly erroneous. We find sufficient evidence to support each of the findings made by the trial court. Although in some instances the evidence is conflicting or could support differing inferences, it is for the trial court to resolve those conflicts and draw those inferences. We find no error.

III. Conclusions of Law

Lawyers Title next asserts that the conclusions of law are contrary to law because (a) neither the fraud nor contract theory were properly pleaded, (b) no duty owed to Pokraka was breached, and (c) Pokraka did not prove the elements of fraud or breach of contract.

In reviewing this assertion, we do not consider the credibility of witnesses or reweigh the evidence. Pepinsky v. Monroe County Council (1984), Ind., 461 N.E.2d 128, 135. We look solely to the evidence most favorable to the judgment together with all reasonable inferences therefrom. It is only when this evidence is without conflict, leading to but one conclusion, and the trial court reached a contrary conclusion, that we will reverse the decision as being contrary to law. Id.

A. Fraud and breach of contract were proper theories in the case. Lawyers Title argues that because Pokraka's complaint did not specifically allege fraud or breach of contract and Lawyers Title never consented to trying the case on those theories, the judgment was contrary to law for awarding damages based on either of those theories.

As to the theory of fraud, the record reveals that Lawyers Title moved for summary judgment on the grounds that the complaint alleged theories (negligence, injury to personal property or attorney malpractice) which were governed by a two-year statute of limitations. At the hearing, the trial court decided that, although the complaint was sufficient to allege fraud, Pokraka could make additional detailed allegations of fraud in the contentions which were made a part of the pre-trial order. When Lawyers Title objected to Pokraka presenting evidence on fraud at trial, the Issues raised in a pre-trial order are properly presented to the court for trial even if they were not raised in the pleadings. Ind.Trial Rule 16(J). Allegations of fraud...

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