McGehee v. Elliott
| Decision Date | 30 June 2006 |
| Docket Number | No. 88A05-0509-CV-559.,88A05-0509-CV-559. |
| Citation | 849 N.E.2d 1180 |
| Parties | Chris McGEHEE, Appellant-Defendant, v. Travis and Tamara ELLIOTT, Appellees-Plaintiffs. |
| Court | Indiana Appellate Court |
John A. Kraft, Young Lind Endres & Kraft, New Albany, IN, Attorney for Appellant.
Larry W. Medlock, Paoli, IN, Attorney for Appellees.
Chris McGehee appeals the trial court's judgment in favor of Travis and Tamara Elliott (the "Elliotts"). McGehee raises two issues, which we restate as:
I. Whether the trial court's findings that McGehee breached his contract to provide the Elliotts with a right of first refusal on McGehee's land is clearly erroneous; and
II. Whether the trial court's findings regarding damages are clearly erroneous.
We affirm in part, reverse in part, and remand.1
The relevant facts follow. On April 1, 2000, the Elliotts entered into a purchase agreement with McGehee to buy a 68.211-acre tract of land ("Tract 2") in Washington County, Indiana. The Purchase Agreement contained the following provision regarding the adjoining tract of land ("Tract 3"): Appellant's Appendix at 75. The real estate agency for the sale was Landmark Realty, and Alice McIntosh was the principal broker while Leonard McCracken was the agent dealing directly with the Elliotts.
On May 18, 2000, McGehee conveyed Tract 2 to the Elliotts by a deed that provided: "BUYER HAS INSPECTED PROPERTY AND UNDERSTANDS THAT IT IS SOLD `AS IS.'" Id. at 78. The deed also contained certain restrictive covenants, including a restriction that limited agricultural usage of the land to "only one animal per acre," excluding household pets. Id. at 79. Tract 3 was also subject to this restrictive covenant. The Elliotts, who raise sheep, desired to have more than one animal per acre, and McGehee issued a deed of correction without the restrictive covenants. A ditch or ravine splits the front twenty acres of Tract 2 from the back forty-eight acres. The Elliotts were aware of the ditch or ravine at the time they purchased Tract 2. According to Tamara, she was given permission to use a road on Tract 3 to access the back forty-eight acres of Tract 2 while Tract 3 remained in McGehee's ownership.
In late 2000 or early 2001, McGehee received an offer on Tract 3 from John Hasewinkel. An employee of McGehee communicated the offer to McIntosh, and McGehee also asked McIntosh whether the Elliotts would be exercising their right of first refusal. McIntosh told McGehee that the Elliotts would not be able to purchase Tract 3. However, the Elliotts did not receive notice of the offer on Tract 3. On January 23, 2001, McGehee sold Tract 3 to John Hasewinkel for $116,280.00 subject to the animal limitation restrictive covenant.
In the spring of 2001, the Elliotts became aware that Tract 3 had been sold. As a result, the Elliotts filed a complaint against McGehee on April 17, 2002, for breach of contract. The Elliotts requested damages for breach of contract, lost profits, court costs, and attorney fees. McGehee filed an answer and affirmative defenses claiming, in part, that the Elliotts' claim was barred by merger, waiver, and estoppel. The Elliotts later amended their complaint to add a claim against Landmark Realty.
After a bench trial, the trial court entered the following findings of fact and conclusions thereon:
* * * * *
15. The opportunity to purchase the adjoining 64.69 acres was critical to the Elliotts' decision to purchase the original 68.211 acre tract.
16. Mr. McGehee sold the 64.69 acre tract before the Elliotts' first right of refusal had expired.
17. The Elliotts were never provided notice, nor given the opportunity to purchase the land which was the subject of Clause 11.
18. Mr. McGehee's employee David Hardy had a purchaser (John Hasewinkel) for the adjacent 64.69 acres of real estate in late 2000, and Mr. McGehee claimed he contacted his agent, Mrs. McIntosh, to advise her of the purchase agreement with Mr. Hasewinkel.
19. Mr. McGehee stated he was advised by his agent, Mrs. McIntosh, now deceased, that the Elliotts could not then afford to purchase and did not want the 64.69 acre tract.
20. The Elliotts:
a. had no prior knowledge of the Hasewinkel purchase.
b. had the financial resources to purchase Hasewinkel Tract.
c. did not tell Mr. McGehee's agent, Mrs. McIntosh, that they did not want to purchase the Hasewinkel Tract.
d. made no contact or demand upon Mr. McGehee until they filed this lawsuit [on]April 17, 2002.
21. In the year 2000 Mr. Elliott observed others exiting the driveway on the adjacent 64.69 acres of Mr. McGehee's real estate.
22. In the spring of 2001 Mr. Elliott observed someone cutting hay on the adjacent 64.69 acres of real estate, and inquiry was made through Mr. McCracken, an agent of Landmark.
23. Mr. McCracken learned from his employer and Mr. McGehee's agent, Alice McIntosh that the 64.69 acre tract had been sold prior to expiration of the Elliotts' first right of refusal.
24. Mr. McCracken then advised the Elliotts that someone else had purchased the adjacent 64.69 acres of Mr. McGehee's real estate.
25. The Elliotts directed their inquiries concerning the use of the adjacent 64.69 acres of real estate to Mr. McGehee's agent.
26. According to the Auditor Disclosure (Stipulated Ex. 8), John Hasewinkel paid One Hundred Sixteen Thousand Two Hundred Eighty Dollars ($116,280.00) for the 64.69 acre tract.
27. Chris McGehee made One Thousand Two Hundred Eighty Dollars ($1,280.00) more by selling the property to Mr. Hasewinkel than by selling to the Elliotts at the purchase price set by the first right of refusal;
28. The seller's agent in the Elliotts' real estate transaction was Leonard McCracken.
29. Mr. McCracken was an agent with Landmark Realty.
30. Landmark Realty was the agent of Chris McGehee.
31. Landmark Realty, Chris McGehee's agent, was aware of the intended purpose of the purchase and the importance of Clause 11.
32. Chris McGehee is a real estate professional with multiple properties who has been involved in many real estate transactions and who has many parcels of land listed to sell.
33. The Elliotts:
a. Wanted to purchase Chris McGehee's land to produce sheep.
b. Were raising sheep prior to signing a purchase agreement with Chris McGehee.
c. Needed more land to expand their sheep producing operation.
d. Are livestock producers, who raise and sell sheep in a specialized market.
e. Told Leonard McCracken what type of land they were looking for and the purpose of the land.
34. It was understood by Landmark Realty, with notice to Chris McGehee, that the Elliotts intended to purchase the real estate for agriculture purposes and restrictive covenants were not acceptable.
35. The first deed drafted by Chris McGehee and delivered to the Elliotts at closing contained restrictions.
36. Chris McGehee provided an amended corrected deed which did not have deed restrictions.
37. The Elliotts also expected to purchase the 64.69 acres pursuant to Clause 11 without deed restrictions.
38. The restrictive covenants originally placed on the Elliotts' deed were generally assigned to platted subdivisions and are not applicable to the real estate purchased and intended to be purchased by the Elliotts.
39. Restrictive covenants on other parcels are not enforced by Chris McGehee.
40. The Elliotts are fully utilizing the accessible real estate they purchased from Chris McGehee to produce sheep.
41. Access to the back 48 acres of the Elliotts [sic] property is by a road that enters on and runs through the Hasewinkel property.
42. The 48 acre field which is accessible through the Hasewinkel property is not accessible by road from the Elliotts' property due to a waterway ravine that traverses the Elliotts' property.
43. The Elliotts never sought permission or consent directly from Mr. McGehee to traverse his real estate nor to cut hay.
44. To utilize the 48 acres for sheep production it must be accessible to tractors, trailers, and other equipment.
45. Trailers and other equipment need a hard surface roadway to operate efficiently.
46. A roadway and bridge are necessary to access and utilize the back 48 acres of the Elliotts' property for sheep farming purposes now that they are unable to purchase or use the adjacent 64.69 acre tract.
47. The total cost of the bridge and roadway is Forty Thousand Five Hundred Dollars ($40,500.00).
48. There is no bridge on the Elliotts' real estate.
49. The Elliotts
a. Cannot expand their sheep operation at their current site beyond the current inaccessible 48 acres.
b. Intended to use the adjacent 64.69 acres to raise sheep.
c. Have had their income is [sic] diminished by lack of access to the 48 acres and the lost opportunity to purchase the 64.69 acres.
50. The contract between the Elliotts and Mr. McGehee contained a clause which allowed attorney fees to be awarded to a non-breaching party;
51. The Elliotts have incurred reasonable attorney fees of Five Thousand Dollars ($5,000.00) as a result of Mr. McGehee's breach of contract.
52. The Elliotts claimed damages including lost profits from their sheep operation.
53. Agriculture and Sheep Expert James Brown testified that the yearly profit per acre on a meat producing sheep operation in the Washington County market ranges from Two Hundred Fifty Dollars ($250.00) to Five Hundred Dollars ($500.00). Although he was unfamiliar with all of the Elliotts' finances and business operation, he has visited the Elliotts on their real estate and the Elliotts' operation should fall within that range.
54. The Elliotts were generating a profit of approximately Five Hundred Dollars ($500.00) per acre annually from...
To continue reading
Request your trial
-
Mci, LLC v. Patriot Engineering and Environmental
...contrary to basic principles of Indiana law of damages. In Indiana, as elsewhere, "the law disfavors a windfall." McGehee v. Elliott, 849 N.E.2d 1180, 1191 (Ind.App.2006), quoting INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566, 577 (Ind.App.2003); Purcell v. Southern Hills Investmen......
-
Mdg Intern., Inc. v. Australian Gold, Inc.
...22. In addition, MDG's claimed damages are very speculative and unlikely to support a damages award. See McGehee v. Elliott, 849 N.E.2d 1180, 1190 n. 2 (Ind.Ct.App.2006) ("A trier of fact may not award damages on the mere basis of conjecture and speculation."). Mr. Lund testified numerous t......
-
Hempel v. Creek House Trust, A06-2473.
...of a right of first refusal are "not entitle[d] ... to take any action until they receive[] notice of the offer." McGehee v. Elliott, 849 N.E.2d 1180, 1189 (Ind.Ct.App.2006). But the McGehee court did not hold that plaintiffs are precluded from bringing a claim until they have notice. Rathe......
-
Advanced Recovery Sys., LLC v. Am. Agencies, LLC
...an asset is the difference between the market value of the asset and the purchase price of the asset. See McGehee v. Elliott, 849 N.E.2d 1180, 1190 (Ind. Ct. App. 2006). The Utah Supreme Court has similarly recognized that the measure of damages for breach of an option contract is the "loss......