Whitaker v. Brunner

• Citation: 814 N.E.2d 288
• Decision Date: 03 September 2004
• Docket Number: No. 69A01-0402-CV-67.,69A01-0402-CV-67.
• Parties: James WHITAKER and Karl Whitaker, Appellants-Plaintiffs, v. Martin C. BRUNNER, Appellee-Defendant.
• Court: Court of Appeals of Indiana

814 N.E.2d 288

James WHITAKER and Karl Whitaker, Appellants-Plaintiffs, v. Martin C. BRUNNER, Appellee-Defendant.

No. 69A01-0402-CV-67.

Court of Appeals of Indiana.

September 3, 2004.

David W. Stone, IV, Stone Law Office & Legal Research, Anderson, Michael L. Rogers, Rogers & Dove, North Vernon, IN, Attorneys for Appellants.

John L. Kellerman, II, Batesville, IN, Attorney for Appellee.

OPINION

FRIEDLANDER, Judge.

James and Karl Whitaker attempted to purchase an auto parts business from Martin C. Brunner, but the Whitakers failed to perform some of their obligations under the contract. The Whitakers sued Brunner for breach of contract. Brunner counter-sued the Whitakers on the same grounds. Brunner eventually prevailed in his lawsuit. The Whitakers appeal that judgment, presenting the following restated issues for review:

1. Did the trial court err in concluding that the Whitakers breached the contract by allowing the inventory to diminish?

2. Is the amount awarded by the court for breach of contract supported by the evidence?

3. Is the award of treble damages supported by the evidence?

We affirm in part, reverse in part, and remand with instructions.¹ The facts favorable to the judgment are that Brunner owned Indiana Auto Parts (the Store), a business he operated in Ripley County. On June 23, 2001, Brunner and the Whitakers entered into a contract (the Sales Contract) whereby the Whitakers would purchase the Store. Because it is critical to the resolution of this appeal, we reproduce the Sales Contract below:

This sales contract is a supporting document to the Bill of Sale of Stock issued by Martin C. Brunner, hereafter referred to as "seller" to James Whitaker and Karl Whitaker, herafter [sic] referred to as "buyers" stating condition of sale of the entire parts inventory of Indiana Auto Parts, 704 East Pearl Street, Batesville, Indiana detailed in document # 1 dated __________.

The sale of the entire inventory valued at jobber cost of $344,456.96 is to be sold to "buyers" for the sum of $166,000.00 A $50,000.00 down payment on the inventory is due at the time of this document signing. The balance of $116,000.00 on said inventory is due on or before August _____, 2001 (60 days after this document signing).

The equipment and fixtures of Indiana Auto Parts is hereby agreed to as having a value of $54,000.00. This sale of equipment and fixtures is to take place on the date of settlement of the balance due seller on the afore mentioned [sic] inventory.

"Buyers" will have full use of the entire inventory and fixtures including that portion to be paid for on or before the _____ day of August. The "buyers" do hereby take full responsibility for said inventory and will cause it to be kept in good salable order and condition, and "buyers" will be responsible for the balance due on this contract in the event of fire, theft, an act of God, or any other event.

The compensation to the "seller" for the use of the inventory and fixtures and equipment will be at the rate of $200.00 per week, payable by the last day of the month in which the bill was incurred. If the balance due on the parts inventory is paid before August _____ 2001, the compensation will be prorated to that date and due upon contract completion.

The inventory property taxes due November 10, 2001 and after are the sole responsibility of the "buyers".

From date of sale forward, "seller" has the right to purchase from the business now known as Indiana Auto Parts any products sold by said company at cost, so long as the products are not for resale.

The "seller" agrees to rent to "buyers" the real estate at 704 East Pearl Street, Batesville, Indiana, known as Indiana Auto Parts and Indiana Auto Parts Car Wash both located in the Rothschild parkway addition to the City of Batesville lots 21, 22, 23, and 24, beginning June _____, 2001 at a rate of $500.00 per week payable at the first of each month for that month. "Buyers" hereby guarantee to "Seller" that they will not devalue said real estate, will not make major renovations, or changes to the ... [sic] with an insurance certificate to demonstrate business liability on said premises. "Seller" retains the right to store equipment and personal property, now there, on the premises until real estate is sold.

James Whitaker and Karl Whitaker agree to purchase above described real estate from Martin C. Brunner for the price of $350,000.00. Said purchase shall be either a land contract with Martin C. Brunner, with 30% down, or a purchase using private lending institution or outside buyer. Said sale to be completed by 12/31/01.

Appellant's Appendix at 8-9. The Bill of Sale referred to in the first paragraph of the above Sales Contract provided as follows:

I, Martin C. Brunner have this 23rd day of June 2001 sold to James Whitaker and Karl Whitaker the entire parts inventory of Indiana Auto Parts, an automotive parts jobber, wholesaler and retailer located at 704 East Pearl Street, Batesville, Indiana. The jobber cost blue sheet value of this inventory is $344,456.96. This figure is supported by a recent inventory and is available for physical verification by legitimate interested parties anytime during business hours.

I, Martin C. Brunner hereby certify that I wholly own this stock, and that it is free and clear of any leins [sic], loans or encumbrances.

Id. at 10.

Pursuant to the terms of the Sales Contract, the Whitakers paid $50,000 to Brunner on June 23. The balance of the purchase price was due sixty days hence. On August 23, James Whitaker telephoned Brunner and told him they (the Whitakers) would not be able to meet the original balance payment deadline and asked for more time. Brunner extended the payment deadline by thirty days, to September 23. On September 23, James informed Brunner that they still did not have the money. On or about that day, Brunner was notified that the Store's insurance policy was being cancelled for nonpayment of the premium. When asked, James claimed that he had already paid the premium. After several weeks of attempting to resolve the insurance issue, Brunner went to the Store on October 12 and asked James to accompany him to the insurer's office to resolve the matter. James refused. Also on October 12, Brunner was advised by the bank through which the Whitakers sought to obtain a loan for the balance due that the Whitakers' application was going to be denied. Brunner had also observed that the inventory in the Store was depleted and not being restocked. Brunner spoke with a lawyer on October 12 about the possibility of obtaining an injunction against the Whitakers because he feared the inventory would be entirely depleted. Upon the lawyer's advice, Brunner went to the Store and asked James for the keys. Brunner described that scene as follows:

I said [to James] the insurance isn't in force and now the money is not coming. I said why don't you give me the keys and when you get the insurance back in force and you get the payments caught up you have until the first (1st) of the year, that's I think what the contract said, uh, come back in. I said I will not open the store again until the First (1st) of the year so you have that couple of months uh and that was, that was November Twelfth (12th) er October the Twelfth (12th) I'm sorry. Anyway, they got together some of their personal effects. It took them probably half an hour. They took their keys all of them they could find and they left.

Transcript at 74. Concerned that the Whitakers might enter the store without his permission, Brunner chained the door, and eventually changed the locks.

Brunner did not hear from the Whitakers again until October 22, when he received a "snotty letter" from their attorney claiming that Brunner's actions constituted a breach of the sales contract. Id. at 75. In late October and early November, Brunner began receiving mail addressed to the Store that revealed the Whitakers had made inventory purchases for which they did not pay. Also, the Whitakers had neglected to pay the refuse removal bill and the Store's dumpster was removed.

On January 16, 2002, the Whitakers filed a complaint for damages against Brunner alleging conversion, breach of contract, and breach of lease. In addition, the Whitakers sought an injunction compelling Brunner to allow them to re-open the Store for business. Brunner counter-claimed, also alleging breach of contract, breach of lease, and conversion. After a hearing, the trial court denied the petition for an injunction on March 25, 2002. The trial court ordered the parties to submit their disputes to mediation, which they did without success. A bench trial was conducted on October 5, 2003, after which the trial court rendered the following judgment:

1. The Plaintiff has failed to prove conversion as alleged in Count I in that there was no completed sale of inventory and therefore judgment for the defendant is entered.

2. The Plaintiff has failed to establish a breach of contract as alleged in Count II and therefore judgment for the defendant is entered.

3. The Plaintiff has failed to establish that breach of lease as alleged in Count III therefore [sic] judgment for the defendant is entered.

4. The defendant-counterclaimant has established a breach of the sales contract as alleged in Counter-count I in that only the $50,000.00 down payment was made.

5. The defendant-counterclaimant has established a breach of the lease contract as alleged in Counter-count II in that the plaintiff allowed deterioration of the inventory from a value of $344,456.96 to $303,845.76 and by failing to maintain business liability insurance of the leased premises.

6. The defendant-counterclaimant has established conversion as alleged in Counter-count III in that Plaintiff left unpaid bills to suppliers, in Brunner's name, totaling $21,366.54.

7. The Counterclaimant is entitled to $64,099.62 due to Whitaker's conversion ($21,366.54 × 3), and to $40,611.20 due to depletion of inventory,

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