Ufg, LLC v. Southwest Corp., 71A03-0511-CV-568.

• Citation: 848 N.E.2d 353
• Decision Date: 02 June 2006
• Docket Number: No. 71A03-0511-CV-568.,71A03-0511-CV-568.
• Parties: UFG, LLC, David Henigan, Lavern C. Schramer, Jr., and Carol Schramer, Appellants-Plaintiffs, v. SOUTHWEST CORPORATION, Appellee-Defendant.
• Court: Court of Appeals of Indiana

848 N.E.2d 353

UFG, LLC, David Henigan, Lavern C. Schramer, Jr., and Carol Schramer, Appellants-Plaintiffs, v. SOUTHWEST CORPORATION, Appellee-Defendant.

No. 71A03-0511-CV-568.

Court of Appeals of Indiana.

June 2, 2006.

COPYRIGHT MATERIAL OMITTED

Timothy W. Woods, Colin J. Reilly, Jones Obenchain, LLP, South Bend, for Appellants UFG, LLC and David Henigan.

David B. Weisman, Weisman Associates, P.C., Mishawaka, IN, Michael T. Franz, Pro Hac Vice, Freeborn & Peters LLP, Chicago, IL, for Appellants Carol A. Schramer and Lavern C. Shramer, Jr.

Timothy J. Maher, D. Michael Anderson, Michael J. Hays, Barnes & Thornburg, LLP, South Bend, for Appellee.

OPINION

VAIDIK, Judge.

Case Summary

UFG, LLC ("UFG"), David Henigan ("Henigan"), LaVern Schramer, Jr., and Carol Schramer (collectively, "Buyers") appeal the trial court's judgment in favor of Southwest Corporation ("Seller") in Buyers' action for specific performance and legal damages. Specifically, Buyers argue that the trial court erred in finding that specific performance is no longer an available remedy and that Buyers abandoned any claim for legal damages by electing specific performance as their remedy. We affirm the trial court's ruling that specific performance is not an available remedy, but because Buyers never "elected" specific performance as their remedy, we reverse and remand with instructions for the trial court to hold a hearing on Buyers' alternate remedy of legal damages.

Facts and Procedural History

On April 14, 2000, Buyers¹ filed a Complaint for Specific Performance and for Damages ("Complaint") against Seller and its president, Donald B. Fisher, and a notice of lis pendens,² relating to the sale of the College Park Horizontal Regime located in St. Joseph County, Indiana ("Property"). Count I of the Complaint, labeled "Specific Performance," alleged that Seller had wrongfully refused to follow through on its promise to sell the Property to Buyers, that Buyers still desired to purchase the Property, and that Buyers "believe[d] money damages to be an inadequate remedy." Appellants' App. p. 23. Buyers asked the trial court to order Seller "to convey the [P]roperty in accordance with the terms and conditions of the contract of sale, for costs, and all other appropriate relief." Id.

Count II, labeled "Damages," incorporated the allegations in Count I and also provided:

14. As a result of [Seller's] breach of contract and refusal to sell the [Property] to [Buyers], [Buyers] have sustained economic and monetary loss in the amount of approximately $82,818.00, and other damages, including but not limited to the value of lost revenue from the property and the appreciation of the [P]roperty, which are of a continuing nature and subject to change. The lost net revenue from the [P]roperty is estimated to exceed $55,000.00 per year, and the estimated appreciation of the [P]roperty over the next fifteen years is estimated to be approximately $382,500.00.

15. [Seller] knew, or in the exercise of reasonable diligence could have foreseen, that [Buyers] would sustain economic and monetary loss, and other damages, as a result of [Seller's] breach of contract to sell the [Property].

Id. at 23. Buyers requested "judgment against [Seller] in the sum of $1,290,318.00 or otherwise as shown by the evidence, for costs, and all other appropriate relief." Id. at 24. In its answer, Seller contended that there was never an enforceable contract between the parties and that Buyers were not entitled to specific performance or any money damages.

On November 30, 2001, the parties filed a Stipulated Motion to Bifurcate Trial, which provided, in pertinent part:

Pursuant to Trial Rule 42(B), the parties jointly move to bifurcate for purposes of trial the issues of damages, attorney's fees, and other non-declaratory relief prayed for in the event that the contract issues are decided against the defendant.

In support of their motion, the parties state:

1. The primary issue to be decided in this action is the existence of a valid and enforceable contract for the sale of real estate for which specific performance may be ordered. The relief sought with respect to that issue involves only an order of specific performance; no damages issue is involved.

2. Damages are not allowed in an action for specific performance brought in Indiana. Bohlin et al. v. Jungbauer et al., 615 N.E.2d 438 (Ind.App.1993). While the court may award equitable compensation incident to a specific performance decree, no damage award is available at law. As such, they will be unable to adduce the necessary evidence to allow the court to conduct any equitable accounting, assuming one is necessary, until the order of specific performance has been entered and effected, as the parties will be unable to fix their relative rights and obligations until that time. Id.

Id. at 34-35. In an order issued the same day, the trial court stated: "Upon motion of the parties, the issues of damages, attorney's fees, and other non-declaratory relief are hereby bifurcated for purposes of trial in the event the contract issues are decided against the defendant." Id. at 37.

After a final pre-trial conference, the trial court entered its Final Pre-Trial Order, which provided, in pertinent part:

D. Admissions/Stipulations.

The parties have agreed to bifurcate the trial, separating the contract issue from the equitable accounting issues. Therefore, the issue before the Court at the trial scheduled for February 7 and 8, 2002 is whether there exists an enforceable contract, such that it allows the Plaintiffs to seek specific performance.

* * * * * *

F. Plaintiffs' Contentions.

* * * * * *

5. [Buyers] are entitled to specific performance of the terms of the contract for the sale of [the Property].

6. [Buyers] are entitled to monetary and consequential damages proximately caused by the defendant's breach, including, but not limited to, lost profits.

Id. at 39. A bench trial was held on February 7-8, 2002. On March 12, 2002, the trial court entered judgment in favor of Seller and against Buyers, having found that there was not an enforceable contract between the parties.

After judgment was entered, Seller filed a Motion to Discharge Lis Pendens, and Buyers filed a Notice of Appeal. After a hearing on April 18, 2002, the trial court granted Seller's Motion to Discharge Lis Pendens. The next day, April 19, 2002, Seller and Tycor Development ("Tycor") completed a State of Indiana Sales Disclosure Form, a document that evidences the sale of the Property from Seller to Tycor. See Appellant's Supp.App. p. 5. On April 23, 2002, one of Seller's attorneys faxed the following notice to the attorneys for Buyers: "Please be advised that Southwest Corporation has now sold the property which was the subject matter of this suit." Appellee's App. p. 68. Buyers filed another notice of lis pendens regarding the Property on July 18, 2002.

On March 7, 2003, this Court issued its opinion in Buyers' appeal from the trial court's judgment in favor of Seller on the contract issue and from the trial court's order discharging the lis pendens notice regarding the Property. UFG, LLC v. Southwest Corp., 784 N.E.2d 536 (Ind.Ct. App.2003), trans. denied. We held that the agreement between the parties was an enforceable contract for the sale of the Property. Id. at 545. We also held that the trial court did not err in discharging the lis pendens notice. Id. at 546. Specifically, we stated: "If [Buyers] wished to preserve the status quo pending their appeal, the proper course of action would have been to apply for a stay of execution of the trial court's judgment pursuant to Indiana Trial Rule 62." Id. We concluded:

Again, we reverse the judgment of the trial court regarding specific performance in accordance with the terms of the "acceptance letter," affirm the trial court's removal of the lis pendens notice, and remand for further proceedings consistent with this opinion and to determine the amount of damages, if any, due to [Buyers].

Id.

On remand, the trial court set a trial date of September 21, 2005. The parties filed motions to compel responses to interrogatories under Indiana Trial Rule 33 and requests for production under Indiana Trial Rule 34.³ On October 29, 2004, the trial court entered an order granting both motions. Specifically, the court addressed its reading of the final paragraph of this Court's opinion in Buyers' appeal (which is reproduced in the preceding paragraph). The court explained:

As this judge reads the Court's opinion, the question of whether the parties had a valid written contract has been judicially determined. They did. According to the February 2, 2002⁴ Final Pre-Trial Order [Buyers have] two claims for relief, the first equitable (specific performance) and the second legal (money damages). The pertinent Contentions are 5. and 6. found on page 2:

"5. [Buyers] are entitled to specific performance of the terms of the contract for the sale of [the Property].

6. [Buyers] are entitled to monetary and consequential damages proximately caused by [Seller's] breach, including, but not limited to, lost profits."

Trial Rule 18 permits joinder of such claims for relief. Footnote 2, on page 1179 of Hollars v. Randall (1990)⁵ provides a succinct explanation:

"Because the Hollars sought specific performance of the purchase agreement and `liquidated damages,' the trial court was faced with the prospect of giving both equitable and legal relief. At common law, the plaintiff was required to elect between seeking relief in equity and relief in law. See, Klingler v. Foster (1938) 106 Ind.App. 98, 13 N.E.2d 906. However, the modern state of the law is not as precise. Ind.Trial Rule 18 allows parties to join their legal and equitable claims. Furthermore, courts acting in equity are entitled to grant complete relief."

Given what this judge finds currently at issue, both [Buyers'] and [Seller's] T.R. 33 and T.R. 34 discovery...