Mueller v. Karns

• Decision Date: 17 September 2007
• Docket Number: No. 29A02-0702-CV-196.,29A02-0702-CV-196.
• Citation: 873 N.E.2d 652
• Parties: Estate of Helen Moffitt MUELLER, Appellant-Respondent, v. William KARNS, Appellee-Claimant.
• Court: Indiana Appellate Court

873 N.E.2d 652

Estate of Helen Moffitt MUELLER, Appellant-Respondent, v. William KARNS, Appellee-Claimant.

No. 29A02-0702-CV-196.

Court of Appeals of Indiana.

September 17, 2007.

Jack G. Hittle, Church, Church, Hittle & Antrim, Noblesville, IN, Attorney for Appellant.

E. Davis Coots, Elizabeth I. Van Tassel, Carmel, IN, Attorneys for Appellee.

OPINION

BAKER, Chief Judge.

Appellant-respondent Estate of Helen Moffitt Mueller (the Estate) appeals the trial court's judgment in favor of appellee-claimant William Karns on his claim against the Estate seeking payment for services he provided prior to Mueller's death. Specifically, the Estate argues that the trial court erroneously found that the parties executed a binding contract regarding Karns's compensation.

Finding that Karns's offer was never accepted, that even if there was a contract its enforcement is barred by the Statute of Frauds, and that Karns is entitled to quantum meruit compensation but failed to provide evidence supporting the valuation of his services apart from evidence that he has received between $2500 and $10,000 on past projects, we reverse the judgment of the trial court and remand with instructions to hold a hearing on the amount of compensation to which Karns is entitled, with a minimum of $2500 and a maximum of $25,000.

FACTS

In 1998, the Conservatorship of Mueller (Conservatorship) entered into lease negotiations with Martin Marietta Materials (Martin) for the mining of sand, gravel, and other material on land owned by the Conservatorship. Lease negotiations were handled by Michael Antrim, the attorney for the Conservatorship. Sometime in 1998, Martin sent Antrim a proposed lease, which provided for a 4% royalty to be paid to the Conservatorship. Antrim sought advice from four different sources to help him determine the amount of royalties to which the Conservatorship was entitled.

Among the experts enlisted by Antrim was Karns, a consultant who had twenty-five years of relevant experience, was a family friend to Mueller, and was familiar with the property. Sometime in or around October 1998, Antrim and Karns reviewed Martin's proposed lease, and both men made handwritten notations on the draft. With Karns's advice and consultation, Antrim continued negotiating the terms of the lease with Robert Furlong, Martin's representative. Ultimately, on May 27, 1999, the royalty negotiations concluded when Antrim and Furlong agreed that the Conservatorship would receive a 6% royalty, which would increase to 6.5% after ten years. Negotiations on other terms of the lease continued. Although Karns had assisted Antrim with multiple portions of the lease, his primary responsibility had been to determine the amount of royalties to which the Conservatorship was entitled.

On November 8, 1999, the co-conservators signed a proposed draft of the lease, which Antrim then sent to Furlong. Antrim's cover letter indicated that the lease was subject to "final review and approval by consultant, Bill Karns, satisfactory to the Co-Conservators in their sole discretion." Appellant's App. p. 291. Subsequently, the parties added a force majeure clause to the lease, which was executed with an effective date of January 1, 2000.

Antrim and Karns had never agreed upon a fee for Karns's services. It is unclear precisely when they first discussed the issue, but Antrim documented a telephone call with Karns on December 15, 1998, and his memo stated that Karns wanted a scholarship fund established in his wife's name

rather than payment to him. [Karns] suggested that on another matter he was paid $10,000 for a consultation. It's not so much on a time basis as much as for his experience . . . . He said something very small such as one-quarter of a cent per ton would be a long-term contribution to that scholarship fund.

Id. at 286. And in fact, Karns testified that "early on," he told Antrim that he "didn't expect anything" in the way of payment and that "it could be whatever [Antrim] thought was reasonable . . . ." Tr. p. 95. At trial, when asked, "would you still be willing to leave it up to Mr. Antrim to come up with a reasonable fee," Karns replied, "Certainly. Because he's a reasonable person." Id. Antrim testified that he continually asked Karns to keep track of the time he spent working for the Conservatorship, but Karns did not and cannot make a rough estimate of the amount of time he spent on the job. Id. at 93-94, 149.

After receiving the executed draft of the lease in November 1999, Karns sent a letter to the Conservatorship on December 16, 1999 (the Letter), which states, in relevant part, as follows:

My consulting fee for the Mueller property is one cent ($.01) per ton for all minerals, clay, and topsoil extracted and sold from the Mueller farm. The term of this agreement will be for twenty (20) years starting January 1, 2000.

If minerals are still extracted and sold after 20 years the same rate per ton will prevail as long as minerals are extracted and sold.

The minimum annual fee will be $7500.00 per year.

* * *

Upon my death the payments will be divided equally between my children . . . .

Appellant's App. p. 259. Given Karns's estimate that there are 77.1 million tons of material to be excavated from the property, this fee proposal means that Karns would receive approximately $771,000 over the next two or more decades, without regard to how long he lives. Appellant's Br. p. 10. In mid-January 2000, within three weeks of the receipt of the Letter, Antrim told Karns during a telephone call that the fee proposal was rejected. Neither party took further action until July 31, 2001, when Antrim sent Karns a letter stating, "Enclosed please find a check made payable to you in the amount of $25,000 which represents payment in full for all consultation services rendered to date in regard to the [Martin]/Mueller Lease negotiations." Appellant's App. p. 267. Karns did not cash the check.

Karns took no further action for four years. On April 28, 2005, Mueller died, and on June 7, 2005, Karns filed a claim against her Estate. Karns's claim states, in its entirety, that the Estate is indebted to him as follows:

Consulting fee for lease negotiations on behalf of Deceased's conservatorship currently due in the amount of Thirty-Seven Thousand Dollars ($37,000), plus interest. Claimant is also entitled to annual payments based on production of aggregate product with a minimum of Seven Thousand Five Hundred Dollars ($7,500) per year.

Appellant's App. p. 10. Karns argued that the Letter constitutes a binding contract because Antrim failed to successfully reject Karns's offer; consequently, the Estate is bound to the Letter's terms. The trial court agreed. Following an October 17, 2006, bench trial, on January 9, 2006, the trial court found in Karns's favor. The Estate had requested that the trial court enter findings of fact and conclusions of law, and the relevant findings and conclusions are as follows:

9. Antrim requested and Karns provided his fee for consulting services by Karns'[s] letter dated December 16, 1999 . . . .

* * *

12. No written response was ever made to [the Letter]. The Conservatorship on January 10, 2000[,] petitioned this Court, and obtained this Court's Order, "authorizing the payment of a reasonable commission to William R. Karns[.]"

* * *

15. The Court approved a percentage royalty fee for counsel for the Conservatorship . . . in the amount of Twenty-Five (25%) Percent of the royalty payments to be received that are in excess of the original amount of royalty payments offered by [Martin], i.e., Four (4%) Percent versus Six (6%) Percent of average net selling price . . . .

CONCLUSIONS OF LAW

* * *

B. . . . [T]he Court concludes a contract existed based upon the December 16, 1999[,] letter and its terms because the Conservatorship, after the date of the letter, had the opportunity to reject the services up until January 1, 2000[,] when the Lease Agreement was signed, and because the Conservatorship placed in Karns the final review and approval of the Lease Agreement which was to be satisfactory to the Co-Conservators in their sole discretion. The Conservatorship continues to accept the benefit of Karns'[s] work after receipt of the December 16, 1999 letter.

C. The amount of consulting fees due Karns presently, pursuant to the Agreement, is $52,500.00, which is the contract minimum of $7,500.00 per year for calendar years 2000 through 2006.

D. Karns is entitled to the legal rate of interest at Eight (8%) Percent on the liquidated sum such interest in the total amount of $13,100.00.

E. From and after the date of the Court's judgment, Karns is entitled to a payment of consulting fees in the amount of One Cent (.01) per ton of all materials removed from the real estate for the remaining term of the Lease Agreement, or $7,500.00 per year, whichever sum is greater.

F. Should the Lease Agreement be renewed or extended, Karns is entitled to payment in the amount of One Cent (.01) per ton throughout the term of any renewal or lease extension.

G. Costs are assessed against the Estate.

Id. at 6-9 (internal citations omitted). The Estate now appeals.

DISCUSSION AND DECISION

I. Standard of Review

When, as here, a trial court has entered findings of fact and conclusions of law pursuant to a party's request, we engage in a two-tiered standard of review. We must first determine whether the evidence supports the findings of fact and then whether the findings support the judgment. We will not reverse the trial court's findings and judgment unless they are clearly erroneous. Findings of fact are clearly erroneous when the record lacks any facts or reasonable inferences from the evidence to support them. The judgment is clearly erroneous when it is unsupported by the findings of fact and conclusions entered on the findings. In making these determinations, we will neither reweigh the evidence nor judge witness credibility, considering only the...