Orkin Exterminating Co., Inc. v. Walters

• Decision Date: 24 July 1984
• Docket Number: No. 3-583A160,3-583A160
• Citation: 466 N.E.2d 55
• Parties: ORKIN EXTERMINATING COMPANY, INC., Defendant-Appellant, v. Edna WALTERS, Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 55

466 N.E.2d 55

ORKIN EXTERMINATING COMPANY, INC., Defendant-Appellant, v. Edna WALTERS, Plaintiff-Appellee.

No. 3-583A160.

Court of Appeals of Indiana,

Third District.

July 24, 1984.

Anthony S. Benton, John C. Duffey, Stuart & Branigin, Lafayette, for defendant-appellant.

Patricia L. Engels, Lake Village, for plaintiff-appellee.

GARRARD, Judge.

In March 1976 Edna Walters noticed flying insects in her house and contacted Orkin Exterminating Co. (Orkin). Orkin's pest control department first inspected Walters' home. They discovered active infestations of cockroaches, silverfish, mice, carpet beetles and termites. They treated for the above pests except termites and suggested that Walters contact Orkin's termite department which she subsequently did. Upon subsequent inspection by Orkin's termite department and an explanation of Orkin's termite treatment, Walters signed a "Subterranean Termite Agreement" which provided for an initial treatment for $341 and Orkin's "Continuous Protection Guarantee" for an annual fee of $44.

On April 16, 1976 Orkin treated Walters' house for termites. On the same day Walters received the "Lifetime Re-treatment Guarantee" which guaranteed additional treatments at no cost if termites reappeared during the guarantee period, expressly limited Orkin's liability to re-treatment only, and contained an express waiver by the buyer for termite damage to the structure or its contents.

Later, Walters discovered termite damage and Orkin re-treated her house in 1979 and 1980. After termite damage continued, Walters brought this claim for negligent breach of contract against Orkin in November 1980. ¹ After a bench trial, the trial court entered judgment for Walters and against Orkin. The court awarded $40,000 for damage to the house, $6,000 for damage to personal property and $8,000 for "discomfort, inconvenience, mental stress and aggravation" for a total of $54,000. Orkin subsequently perfected this appeal.

Orkin requested special findings of fact under Indiana Rules of Procedure, Trial Rule 52(A). The scope of review for special findings is well settled: The appellate court may not affirm the trial court's judgment on any ground which the evidence supports but must determine if the specific findings are adequate to support the trial court's decision. Shrum v. Dalton (1982), Ind.App., 442 N.E.2d 366, 372.

The trial court made the following findings of fact and conclusions of law:

"FINDINGS OF FACT

"1. This Court has jurisdiction of the subject matter and the parties in this matter.

2. A contract was entered into between the parties on or about March 11, 1976, establishing duties and rights of the parties with regard to treatment and protection of plaintiff's house from said termites.

3. The Orkin Retail Installment Contract, Number 41-945-492, was attached to the inside back cover of a printed booklet.

4. Said contract between the parties was continuous through annual renewal from March 11, 1976 through December 31, 1980.

5. During such time, Plaintiff did substantially comply with the terms of said contract.

6. Plaintiff did understand that her house would be protected continuously through annual renewal from termite damage by Defendants.

7. Defendant completed initial treatment of the house on April 16, 1976. At that time, no assessment of termite damages was made, though Defendant did note such locations by "X" on inspection sheet.

8. Defendant retreated said house on June 9, 1979, and again on September 20, 1980.

9. Defendant did fail to comply with such duties to protect with regard to:

(a) Proper inspection to determine the most effective treatment method;

(b) proper treatment as directed by State of Indiana Termite Control Enforcement Policy;

(c) proper application of Orkin termiticide as directed by the label instructions for slab on ground construction.

10. Fire to said house occurred in December, 1980.

11. Inspection of said house and testimony disclosed extensive infestation of said house which resulted in damage to said house and the entire house is generally in bad condition, said fire permitting inspection of load bearing timber.

12. Defendant's failure to properly inspect and treat for protection from said termites did not eliminate termites from said property, and was the proximate cause of the damage to property sustained by Plaintiff from termite damage.

CONCLUSION OF LAW

1. Surrounding circumstances are here considered in determining the intention of the parties to the contract which will advance its beneficial purpose.

2. Ambiguous language in a contract shall be construed most strongly against the person who prepares it.

3. The Court shall consider the nature of the agreement, together with all the facts and circumstances leading to the execution of the contract, the relation of the parties, the nature and situation of the subject matter and the apparent purpose of making the contract.

4. Defendant exterminator who undertakes to accomplish such protection, has a duty to do everything according to custom of the trade requirements of State to accomplish that protection and in methods set forth as proper.

5. Where the damage results from breach of duty and would not have occurred but for Defendant's negligent performance, Defendant's negligence constitutes malfeasance and Plaintiff may sue in tort.

6. Where Defendant performs in such a defective way as to amount to tortious malfeasance, Plaintiff's damages are not limited to contract terms.

7. Defendant's performance being defective, amounts to tortious malfeasance, then Defendant is liable for damages in tort.

8. Where parties enter into a contract for termite control and protection whereby buyer Plaintiff agrees to pay money and seller Defendant agrees to control termites and prevent termite damage to property and where Defendant's defective performance under the contract amounts to tortious malfeasance, then Defendant is liable to Plaintiff for damage done to Plaintiff's property as a direct result of Defendant's malfeasance, namely damage to home and personalty.

9. Measure of damages for injury to real estate is the difference between the reasonable market value of the premises prior to and after the injury, as well as the reasonable cost of restoring the property to its former condition.

10. Time of such damage being sufficiently known, then interest is justified from date of such damage."

The trial court concluded that Orkin's breach of duty, i.e., its negligent performance under the contract, constituted "tortious malfeasance," thus allowing Walters to recover damages in tort to her house and personalty thereby avoiding the effect of the contract terms limiting Orkin's liability to re-treatment.

"Malfeasance" is defined in Black's Law Dictionary, 4th Ed. as:

"Evil doing: ill conduct; the commission of some act which is positively unlawful; the doing of an act which is wholly wrongful and unlawful; the doing of an act which person ought not to do at all or the unjust performance of some act which the party had no right or which he had contracted not to do."

It is clear from the record and the trial court's findings of fact that Orkin did not commit a wrongful or unlawful act in treating Walters' home. At most, the trial court found that Orkin negligently treated Walters' home. Negligence does not constitute malfeasance. More properly, the trial court should have concluded from its findings that Orkin's negligent performance constituted "misfeasance." ² Under the standard of review for special findings of fact, Shrum, supra, we must simply reverse the trial court's judgment due to inadequate findings to support a decision based on malfeasance. However, apart from the distinction between malfeasance and misfeasance, we find a reversal is mandated in this case.

Indiana law recognizes that Walters had an option of suing in tort or in contract for the negligent performance of a contractual duty. Flint & Walling Mfg. Co. v. Beckett (1906), 167 Ind. 491, 79 N.E. 503; Wilson v. Palmer (1983), Ind.App., 452 N.E.2d 426. Walters' suit based in tort does not change the fact that Orkin's duty to Walters is based on the contract. Moreover, bringing a suit in tort does not allow Walters to avoid the limitation of liability clause in the contract. In Orkin Exterminating Co. of South Florida, Inc. v. Clark (Fla.Dist.Ct.App.1971), 253 So.2d 884 the court rejected a similar approach in the context of a liquidated damages clause. It quoted with approval the court in Better Food Markets, Inc. v. American Dist. Tel. Co. (1953), 40 Cal.2d 170, 253 P.2d 10, 15-16, 42 A.L.R.2d 580 which stated:

"The plaintiff seeks to avoid the effect of the liquidation clause on the ground that it has no application to a tort action. However, the plaintiff makes no claim that a duty was owed to it outside of that created by the contract, and no breach of duty was alleged other than a failure to render the contracted for service. Although an action in tort may sometimes be brought for the negligent breach of a contractual duty, Jones v. Kelly, 208 Cal. 251, 280 P. 942, still the nature of the duty owed and the consequences of its breach must be determined by reference to the contract which created that duty. In the present case the duty created by the contract was one for which liability for a breach thereunder was fixed, and whether the action is brought in tort or in contract the nature of the duty remains the same. The plaintiff cites no authority and none has been discovered to the effect that where the breach of a duty created only by contract is a negligent one the application of a valid clause for liquidated damages may be avoided by bringing an action in tort."

In General Bargain Center v. American Alarm Co. (1982), Ind.App., 430 N.E.2d 407, the plaintiff claimed that the defendant negligently performed under a contract, thereby breaching it. The contract contained a limitation of liability...