Mullis v. Brennan

• Court: Indiana Appellate Court
• Writing for the Court: RATLIFF, Senior
• Citation: Mullis v. Brennan, 716 N.E.2d 58 (Ind. App. 1999)
• Decision Date: 10 September 1999
• Docket Number: No. 32A01-9808-CV-315.,32A01-9808-CV-315.
• Parties: Richard MULLIS, Individually and d/b/a Mullis Building Corporation, Appellant-Plaintiff, v. Shawn A. BRENNAN, Karen S. Brennan, and Lincoln Service Mortgage, now Great Financial Bank, Appellees-Defendants.

716 N.E.2d 58

Richard MULLIS, Individually and d/b/a Mullis Building Corporation, Appellant-Plaintiff, v. Shawn A. BRENNAN, Karen S. Brennan, and Lincoln Service Mortgage, now Great Financial Bank, Appellees-Defendants.

No. 32A01-9808-CV-315.

Court of Appeals of Indiana.

September 10, 1999.

Bryan Lee Ciyou, Cannon & Ciyou, P.C., Indianapolis, Indiana, Attorney for Appellant.

Edward R. Hannon, Donna A. Heiser, Harrison & Moberly, Indianapolis, Indiana, Attorney for Appellee.

OPINION

RATLIFF, Senior Judge

STATEMENT OF THE CASE

Plaintiff-Appellant Richard Mullis ("Mullis"), Individually and d/b/a Mullis Building Corporation ("MBC") appeals the trial court's judgment in favor of Defendants-Appellees Shawn A. Brennan and Karen S. Brennan ("the Brennans").¹

We affirm.

ISSUES

Mullis raises six issues for our review, which we consolidate and restate as:

I. Whether the trial court erred in concluding that Mullis was individually liable for damages suffered by the Brennans.

II. Whether the trial court erred in dismissing the mechanic's lien on the basis that it was filed by the wrong party.

III. Whether the trial court erred in finding that Mullis breached the contract with the Brennans by not performing in a workmanlike manner.

IV. Whether the trial court erred in finding that Mullis violated the Home Improvement Contracts Act.

V. Whether the trial court erred in admitting a report which was prepared by the Brennans' expert on the night before the first day of trial and given to Mullis on the second day of trial.

The Brennans raise one issue, which we restate as:

VI. Whether the trial court's finding of a deceptive act supports an award of appellate attorney fees.

FACTS

In April of 1996, the Brennans contacted Mullis to obtain estimates from Mullis on the cost of building an addition onto the Brennans' house. After negotiations, Mullis, individually, tendered a contract to the Brennans. The contract provided that Mullis, individually, would build the 24' by 30' room addition for the Brennans, and that the Brennans would pay Mullis, individually, the total sum of $43,500.00. MBC was not a party to the contract.

Problems between the Brennans and Mullis regarding his workmanship and performance of the contract began to develop immediately after he began the construction. In August or early September of 1996, after several months of observing the poor quality work that was being done on the room addition, the Brennans demanded that Mullis correct the problems before any further payments or "draws" would be made to him. This demand came after the Brennans had paid Mullis $10,500.00 of the contract price and after they had asked, on numerous occasions, that Mullis correct the serious problems with the project. Mullis refused to do any further work until he was paid his "draws" under the contract. Mullis never completed the project.

After Mullis left the project, the Brennans, through their own labor and that of various subcontractors hired by them, worked on the room addition to correct the problems left by Mullis and to complete the work contemplated by the contract. The room addition was completed in July, 1998.

Subsequent to Mullis's departure from the project, MBC filed a mechanic's lien in the amount of $20,469.00 for "work and/or materials furnished by Claimant and consisting of remodel/addition for improvement of said real estate within the last sixty (60) days." (R. 72). The lien document was signed by Mullis as President of MBC.

Thereafter, Mullis d/b/a MBC, filed a "Complaint for Breach of Contract and to Foreclose Mechanic's Lien." The Brennans filed counterclaims alleging (1) a slander of title claim against both Mullis and MBC; (2) a claim of violation of the Home Improvement Contract Law by Mullis; (3) a claim of violation of the Home Improvement Contract Law by MBC; and (4) a claim of breach of contract and/or breach of implied warranty. After a two day bench trial, the trial court entered judgment for the Brennans on Mullis's complaint and on various counterclaims. The trial court entered a money judgment in favor of the Brennans and against Mullis, individually, in the amount of $10,786.74. The trial court sua sponte entered special findings of fact and conclusions of law in support of its judgment. Mullis now appeals.

DISCUSSION AND DECISION

STANDARD OF REVIEW

A review of findings of fact and conclusions of law that are issued sua sponte is based upon the same standard as a review of findings and conclusions issued upon a party's written request. We may affirm the judgment on any legal theory supported by the findings. Mitchell v. Mitchell, 695 N.E.2d 920, 923 (Ind.1998). In addition, before affirming on a legal theory supported by the findings but not espoused by the trial court, we should be confident that its affirmance is consistent with all of the trial court's findings of fact and inferences drawn from the findings. Id. In reviewing the judgment, we first must determine whether the evidence supports the findings and second, whether the findings support the judgment. Ahuja v. Lynco Ltd. Medical Research, 675 N.E.2d 704, 707 (Ind.Ct.App.1996), trans. denied. The judgment will be reversed only when clearly erroneous. Id. Findings of fact are clearly erroneous when the record lacks any evidence or reasonable inferences from the evidence to support them. Id. To determine whether the findings or judgment are clearly erroneous, we consider only the evidence favorable to the judgment and all reasonable inferences flowing therefrom, and we will not reweigh the evidence or assess witness credibility. Id. A judgment is clearly erroneous even though there is evidence to support it if the reviewing court's examination of the record leaves it with the firm conviction that a mistake has been made. Owensby v. Lepper, 666 N.E.2d 1251, 1256 (Ind.Ct. App.1996), reh'g denied. When findings or conclusions are entered sua sponte, however, the specific findings control only as to the issues they cover, while the general judgment standard applies to any issue upon which the court has not found. Indiana Farmers Mutual Insurance Co. v. Ellison, 679 N.E.2d 1378, 1380 (Ind.Ct. App.1997), trans. denied.

I. INDIVIDUAL LIABILITY

Mullis contends that the trial court erred in determining that he was individually liable for any damages suffered by the Brennans. He argues that the Brennans knew he was acting as an agent for MBC when he entered into the home improvement contract with them. In support of his argument, Mullis points to two faxes from the Brennans which were addressed to Mullis and MBC and to letters from Mullis and MBC.

The trial court found that the parties to the home improvement contract at issue were the Brennans and Mullis, as an individual. The trial court also found that the Brennans were directed to pay Mullis, as an individual. The trial court further found that MBC was not a party to the contract. From these facts, the trial court concluded that Mullis was individually liable. The record discloses that Mullis acknowledged at trial that the contract was not signed by him "for and on behalf of MBC. The record also discloses that the contract makes no reference to MBC and was signed by Mullis as "Contractor." The record further discloses that payments were made to Mullis, not MBC, and that the payments were deposited into Mullis's personal account, not into MBC's account in a separate bank. This evidence supports the trial court's findings and its ultimate conclusion that Mullis was individually liable for any damages suffered by the Brennans. If Mullis wanted to act as agent for MBC and bind the corporation to the contract, he should have signed the contract in his corporate capacity. This would have had the effect of insulating him from liability. See Winkler v. V.G. Reed & Sons, Inc., 619 N.E.2d 597, 599 (Ind.Ct. App.1993),aff'd,638 N.E.2d 1228 (Ind. 1994) (holding that a corporate officer signing a contract in his corporate capacity is generally not liable for damages under the contract).

Mullis, without any citation to authority, attempts to show that the trial court erroneously "pierced the corporate veil." A corporation is an independent legal entity, separate and distinct from its shareholders. McQuade v. Draw Tite, Inc., 659 N.E.2d 1016, 1020 (Ind.1995). Mullis fails to recognize that MBC, as an independent legal entity, did not enter into the contract with the Brennans. Because MBC was not a party to the contract, the trial court did not pierce the corporate veil to burden Mullis with individual liability.

II. VALIDITY OF THE MECHANIC'S LIEN

Mullis contends that the trial court erred in determining that the mechanic's lien filed by MBC against the Brennans was invalid. The trial court found that on October 16, 1996, MBC, not Mullis individually, filed the mechanic's lien. The trial court concluded that the lien was invalid because (1) MBC did not provide any work and/or materials for the project, and (2) Mullis, not MBC, was the party to the contract from which the claim against the Brennans arose.

As we discussed above, the record discloses that Mullis, not MBC, entered into the contract with the Brennans. Accordingly, the only party who possibly was entitled to the lien was Mullis, not MBC. However, it was MBC which filed the lien. Ind.Code § 32-8-3-3(a) requires that the sworn statement of intention to hold a lien "must specifically set forth: ... (2) the name and address of the claimant and the name of the owner." Because the mechanic's lien statute is in derogation of the common law, the provision of the statute "relating to the creation, existence or persons entitled to the lien have historically been strictly construed." Garage Doors of Indianapolis v. Morton, 682 N.E.2d 1296, 1302 (Ind.Ct.App.1997), trans. denied. Here, the designation of the wrong claimant must render the lien invalid.

Mullis also contends that, at the very least, MBC should be...