UFG, LLC v. Southwest Corp.

Decision Date07 March 2003
Docket NumberNo. 71A03-0205-CV-162.,71A03-0205-CV-162.
PartiesUFG, LLC, David Henigan, the Estate of LaVern C. Schramer, and LaVern C. Schramer, Jr., Appellants, v. SOUTHWEST CORPORATION, Appellee.
CourtIndiana Appellate Court

David B. Weisman, Weisman Associates, P.C., Mishawaka, IN, Michael T. Franz, Freeborn & Peters, Chicago, IL, Attorneys for Appellants.

Timothy J. Maher, D. Michael Anderson, Barnes & Thornburg, South Bend, IN, Attorneys for Appellee.


DARDEN, Judge.


UFG, LLC, David Henigan ("Henigan"), the Estate of LaVern C. Schramer Sr. ("Schramer Sr.")1, and LaVern Schramer Jr. ("Schramer Jr.") (collectively "the appellants") appeal the trial court's judgment against them on complaint seeking specific performance in the conveyance of a condominium complex from Southwest Corporation ("Southwest") and damages.

We reverse in part, affirm in part, and remand.


1. Whether there was a contract for the sale of land.

2. Whether the trial court erred in ordering removed the appellants' lis pendens notice.


Donald Fisher is the sole shareholder and owner of Southwest, an Indiana corporation that owns and operates four multiunit residential buildings in South Bend, Indiana, known as the College Park Horizontal Regime ("College Park"). On October 2, 1998, Henigan and the Schramers met with Fisher to discuss the sale of College Park. On January 26, 1999, the same parties participated in a telephone conference call during which they discussed the "terms and conditions of the sale,...." (Tr. 70).

Subsequently, in a letter dated February 1, 1999, Fisher outlined what he believed to be the terms of the proposed sale of College Park. Fisher wrote that two of the buildings (Phase I) would be sold for a total price of $1,275,000; five thousand dollars would be due at the time the parties signed the "sell/buy agreement" and a $250,000 down payment would be due at closing. Specifically, Fisher wrote that Phase I was to be financed through a fifteen-year mortgage at a rate of eight percent interest to Southwest. Fisher also mentioned that Henigan and the Schramers would be granted an option to buy the remaining two buildings (Phase II) for an additional $1,530,000, and that they would be responsible for paying a portion of the current property tax due; all current leases were to be assigned to Henigan and the Schramers. Fisher then asked the parties to review the letter and to add anything that might have been omitted. Fisher concluded, "I will then, at my expense, have an attorney prepare a sell/buy agreement for you and your advisor(s) to review, at your expense." (Pl. Ex. 5).

On February 2, 1999, Henigan faxed a letter to Fisher agreeing to certain proposals and offering alternatives to others. Specifically, Henigan stated that Fisher would have to pay for all property taxes "up to the closing dates, or the unpaid taxes" could be credited toward the purchase price. (Pl. Ex. 6). Henigan also asked Fisher to fax him a list of the existing leases, the rental rates, and the number of people in each unit for services. Fisher was asked for his thoughts on "these items...." Id.

After speaking to Fisher on February 11, 1999, Henigan sent Fisher another letter explaining that he and the Schramers could not proceed with the sale of College Park if they had to pay the unpaid balance of property taxes. Henigan asked Fisher to consider (1) paying the property taxes "up to the time" they took possession; (2) "[l]owering the interest rate on financing from 8% to 7% as originally discussed"; or (3) lowering the purchase price for College Park. (Pl. Ex. 7).

On February 26, 1999, the parties participated in another telephone conference. After the conference call, Henigan faxed the following self-styled "acceptance letter" to Fisher:

DATE: February 26, 1999
TO: Mr. Donald Fisher
FROM: David Henigan, Thomas Kenny, LaVern Schramer, and LaVern Schramer Jr. (Organizational name to be determined at a later date).
SUBJECT: College Park Horizontal Regime
PURPOSE: Acceptance letter in accordance with our discussions of 2/26/99
Property to be purchased: The property contemplated for purchase here in [sic] would be completed in two (2) phases. The purchase of Buildings 2 and 3 in Phase I: The phase I purchase is contemplated to close on or before May 31, 1999. Phase I would include the purchase of the 20 units enclosed within buildings 2 and 3.
The purchase of Buildings 4 and 5 in Phase II: The Phase II purchase is contemplated to close on or before May 31, 2000. Phase II would include the purchase of the 24 units enclosed within buildings 4 and 5.
Purchase Price Phase I: $62,500.00 per lower unit and $65,000.00 per upper unit. Total purchase for all 20 units will be $1,275,000.00.
Purchase Price Phase II: $62,500.00 per lower unit and $65,000.00 per upper unit. Total purchase price for all 24 units will be $1,530,000.00.
Down Payment Phase I: $250,000.00.
Financing Provided by Southwest: Southwest will provide financing for the balance of the property price of Phase I at a not to be adjusted annual interest rate of 7%.
Terms of Phase I financing: The terms of financing for Phase I shall provide for a payment of principle and interest, paid monthly, based on a 15-year amortization schedule with a balloon payment equal to the unpaid principle balance of the contract property price at the end of three (3) years.
Terms of Phase II financing: No financing required, Cash purchase.
Phase I Earnest Money: Not required.
Phase I Option Contract Price: No cost.
Phase II Option Contract Price: The cost of the option contract for Phase II shall be $10.00.
Notes: (1) Southwest will continue to pay Association Fees until Buyer takes possession of the property. (2) The cost of preparing the Option Contracts will be split evenly between Buyer and Seller. (3) Buyer will honor all current leases. (4) All property taxes assessed against and incurred by Seller on the property, up to the time of possession by Buyer, will be the responsibility of Seller. Seller will reimburse such tax amounts to Buyer at time of closing. (5) All appropriate advanced rental and deposit payments will be transferred to Buyer. This will include Security deposits on existing leases where Buyer will have to refund deposits or repair property damage caused by existing tenants.
Upon Southwest's agreement of these terms and conditions, please sign where indicated and fax to XXX-XXX-XXXX. Please mail the signed original to David Henigan at 326 Meadowrue Lane, Batavia, IL 60510. Upon acceptance, we will formalize the option and purchase contracts.2

Acceptance Date: 3-10-99 Signature of authorized person --------- Donald B. Fisher

Title -------- President

(Pl. Ex. 4). On March 10, 1999, Fisher signed and returned the letter to Henigan without making any changes to it. After receiving the "acceptance letter", Henigan responded by thanking Fisher for his acceptance and asked that Fisher not make any changes to "any of the terms and conditions" in the "acceptance letter." (Pl. Ex. 9). In addition, Henigan wrote that he and the Schramers "would like to have the contract from [Fisher's] attorney no later than April 30, 1999 so [they could] have sufficient time to" review it before the closing scheduled for May 29, 1999. (Pl. Ex. 9).

In April 1999, Henigan received a title commitment showing unpaid property taxes and a judgment of $8,960.88 against College Park. In addition, on May 6, 1999, Henigan received a draft of the final contract from Fisher. However, the draft framed the sale "as a conditional land contract, rather than the agreed upon mortgage contract."3 (Tr. 102). While Henigan also received an undated copy of a corporate resolution from Southwest granting Fisher authority to sell College Park, he did not receive an updated closing statement or legal description of both the buildings and the land prior to the closing scheduled for May 29, 1999. Further, certain roof and appliance repairs within College Park had not been completed. As a result, the closing did not occur.

On June 1, 1999, Edward Hardig ("Hardig"), Fisher's attorney, faxed a closing statement, "all computed as of 11:59 p.m. 5/31/99," stating that it was his understanding that "the closing was to take place" that day in his South Bend office at 1:15 p.m. (Def. Ex. J). On June 7, 1999, Solomon L. Lowenstein ("Lowenstein"), another attorney representing Fisher, faxed a letter to Henigan asking "whether or not closing on the College Park Condos [would] take place this week." (Def. Ex. L). On June 9, 1999, Lowenstein faxed another letter to Henigan. Lowenstein wrote that all repairs were either complete or in progress; proposed that a final inspection occur on June 10, 1999; that Fisher was willing to place $5,000 in escrow for minor repairs; and that the closing was set for June 11, 1999. In addition, Lowenstein noted that if the closing did not take place, "then [the] deal [would be] off." (Def. Ex. M). On June 10, 1999, Lowenstein wrote that the closing date would not be rescheduled, and that Fisher would require "certified funds to close this transaction." (Def. Ex. N). However, the closing did not take place.

Subsequently, the parties scheduled another closing for July 9, 1999. Prior to this date, Fisher obtained another title commitment, effective July 7, 1999, showing that the judgment against College Park had been released and the property taxes had been paid concurrent to May 1999. As a result, Schramer Sr. obtained a cashier's check from Old Second National Bank in the amount of $250,000, representing the down payment for Phase I. However, neither Henigan nor the Schramers had received a completed final contract, an updated closing statement, or appropriate legal description of College Park before their arrival for closing on July 9, 1999, at Fisher's College Park office. When Henigan and the Schramers arrived at Fisher's office on July 9, 1999, they...

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