Opinion
24A-PL-55
07-15-2024
Donald White and Celia White, Appellants-Defendants v. Kenneth Gordon and Linda Gordon, Appellees-Plaintiffs and Donald White, Appellant-Plaintiff-Counterclaim Defendant and Kenneth Gordon, Appellee-Defendant-Counterclaim Plaintiff and AAA Affordable Housing, LLC, Appellee-Defendant
ATTORNEY FOR APPELLANTS Cynthia P. Helfrich Helfrich Law Offices Greenfield, Indiana ATTORNEY FOR APPELLEES Scott D. Pankow Indianapolis, Indiana
Appeal from the Marion Superior Court The Honorable John M. T. Chavis II, Judge Trial Court Cause Nos. 49D05-1609-PL-31602 49D05-1609-PL-33082
ATTORNEY FOR APPELLANTS Cynthia P. Helfrich Helfrich Law Offices Greenfield, Indiana
ATTORNEY FOR APPELLEES Scott D. Pankow Indianapolis, Indiana
MEMORANDUM DECISION
Bradford, Judge.
[¶1] At some point before 2014, Donald White and Kenneth Gordon entered into a business arrangement, forming AAA Affordable Housing, LLC ("AAA"), to purchase homes for resale or rent, splitting the proceeds. In 2014, White and his wife, Celia White, contracted with Gordon and his wife, Linda Gordon, to purchase a house in Indianapolis. When the Whites failed to make payments as agreed, the Gordons sued them for breach of contract and possession of the property ("the Real Estate Claim"). Ten days later, White sued Gordon and AAA for breach of contract ("the LLC Claim"), alleging that Gordon had, inter alia, improperly titled homes purchased by AAA in his and/or Linda's names and used company funds for personal expenses. The two lawsuits were eventually consolidated. In 2023, the Gordons moved for summary judgment on the Real Estate Claim, the LLC Claim, and Gordon's counterclaim against White in the Real Estate Claim. The trial court entered summary judgment in favor of Gordon and AAA on the LLC Claim and in favor of Gordon on his counterclaim to the Real Estate Claim. The Whites contend that the trial court erred in entering summary judgment in favor of Gordon and/or AAA on both claims, and, because we agree, we reverse and remand with instructions.
Facts and Procedural History
[¶2] All seem to agree that, at some point, White and Gordon were business partners who planned to purchase and resell houses. Regarding this business arrangement, White has alleged the following: Around 2007 or 2008, White and Gordon entered into a business arrangement to purchase houses at auction, which would be resold or rented, and formed AAA to this end. At some point before 2014, White allegedly became aware that some properties that were supposed to be in AAA's name were in Gordon's and/or Linda's names and he had not received proceeds of sales to which he had been entitled.
[¶3] On September 22, 2014, the Whites executed a contract ("the Sales Contract") with the Gordons to purchase real estate located at 6620 Blackthorn Drive in Indianapolis. The Sales Contract contained an addendum that indicated that the sale price of 6620 Blackthorn had been reduced by $20,500.00 to reflect "concessions" from the sale of two properties (including 6620 Blackthorn) that, as alleged by White, were supposed to have been purchased and sold by AAA but had not been. Appellant's App. Vol. II p. 44. The Whites made some, but not all, payments to the Gordons under the Sales Contract in 2014 and 2015.
[¶4] On September 6, 2016, the Gordons filed what would eventually become the Real Estate Claim. On September 16, 2016, White filed the LLC Claim, alleging that (1) he and Gordon had been partners in AAA, (2) AAA had been formed for the purpose of purchasing properties for resale or rental and sharing the income equally, (3) Gordon had failed to divide rents collected from AAA properties, (4) Gordon had improperly purchased properties and put them in his and/or Linda's names instead of AAA's and (5) Gordon had improperly used funds from AAA's account for personal expenses. On November 7, 2016, Gordon and AAA answered White's complaint and Gordon counterclaimed, essentially reiterating the Real Estate Claim. On December 19, 2016, the trial court granted the Whites' motion to consolidate the Real Estate and LLC Claims.
[¶5] At a hearing on prejudgment possession held on February 16, 2017, White testified that he had deeded two houses into AAA, he had been a 50% owner of AAA, he and Gordon had purchased other houses that were supposed to have been titled in the name of AAA (including 6620 Blackthorn), and he had learned in 2013 that houses had been wrongly titled in Gordon's and/or Linda's names rather than being titled in AAA. Gordon testified that he and White had only purchased one house together. White's brother, Danny White, testified that Gordon had told him that he was in partnership with White in AAA, 6620 Blackthorn was a house that he and White had purchased together in the partnership, and they had dissolved their business relationship in 2014. According to Danny, the Sales Contract was part of the dissolution of AAA.
[¶6] On February 17, 2017, the trial court granted the Gordons' petition for prejudgment possession of 6620 Blackthorn, after which little happened until September of 2022, when the trial court set both cases for dismissal hearings. On August 2, 2023, the Gordons moved for summary judgment in the Real Estate Claim, the LLC Claim, and Gordon's counterclaim against White in the Real Estate Claim. On December 6, 2023, the trial court entered summary judgment in favor of Gordon and AAA in the LLC Claim and in favor of Gordon on his counterclaim against White.
Discussion and Decision
[¶7] The Whites contend that the trial court erred in entering summary judgment in favor of Gordon and AAA on the LLC Claim and in favor of Gordon on Gordon's counterclaim against White in the Real Estate Claim. When reviewing the grant or denial of a summary judgment motion, we apply the same standard as the trial court. Merchs. Nat'l Bank v. Simrell's Sports Bar &Grill, Inc., 741 N.E.2d 383, 386 (Ind.Ct.App. 2000). "Summary judgment is appropriate only where the evidence shows that there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law." Id. (citing Ind. Trial Rule 56(C)). To prevail on a motion for summary judgment, a party must demonstrate that the undisputed material facts negate at least one element of the other party's claim. Merchs. Nat'l Bank, 741 N.E.2d at 386. "Once the moving party has met this burden with a prima facie showing, the burden shifts to the nonmoving party to establish that a genuine issue does in fact exist." Id. The party appealing the summary judgment bears the burden of persuading us that the trial court erred. Id.
[¶8] "A fact is material for purposes of ruling on a motion for summary judgment when its existence facilitates resolution of any of the issues involved." Havert v. Caldwell, 452 N.E.2d 154, 157 (Ind. 1983). "A factual issue is genuine if it cannot be resolved by reference to undisputed facts. Thus a genuine factual issue requires a judge or jury to resolve the parties' conflicting versions of the truth." Madison Cnty. Bank &Trust Co. v. Kreegar, 514 N.E.2d 279, 281 (Ind. 1987).
To determine whether such issues exist, the court must accept as true those facts alleged by the nonmoving party and resolve all doubts against the moving party. The granting of a motion for summary judgment is not appropriate if the trial court must weigh conflicting evidence to reach a decision, or even if there are conflicting inferences which may be drawn from undisputed facts.Raymundo v. Hammond Clinic Ass'n, 449 N.E.2d 276, 280 (Ind. 1983) (citing Barndv. Borst, 431 N.E.2d 161, 164-65 (Ind.Ct.App. 1982)).
I. The LLC Claim
[¶9] The Whites contend that the trial court erred in entering summary judgment in favor of the Gordons on the LLC Claim, pointing to designated evidence that Donald and Kenneth started and were 50/50 owners of AAA, the purpose of which was to purchase houses at auction that would then be rented or sold; the sales proceeds and/or rents were to be divided evenly; Kenneth wrongfully caused houses to be titled in his and/or Linda's names; and Kenneth wrongfully spent AAA's income on personal expenses. Donald also designated his affidavit, in which he averred that, on or about September 22, 2014, he had entered into a global-settlement agreement to resolve the disputes concerning AAA, one part of which had been the execution of the Sales Contract; Gordon had failed to comply with other terms of the global-settlement agreement; and White would not have entered into the Sales Contract if Gordon had not made other promises to him regarding the assets and income for AAA.
[¶10] The Gordons do not argue that this designated evidence fails to generate genuine issues of material fact with respect to the LLC Claim. The Gordons do contend, however, that these claims cannot be advanced due to Indiana's Statute of Frauds. Indiana Code section 32-21-1-1 provides, in relevant part, as follows:
A person may not bring any of the following actions unless the promise, contract, or agreement on which the action is based, or a memorandum or note describing the promise, contract, or agreement on which the action is based, is in writing and signed by the party against whom the action is brought or by the party's authorized agent: [_] An action involving any contract for the sale of land.Ind. Code § 32-21-1-1. It is well-settled that "'any contract which seeks to convey an interest in land is required to be in writing.'" Brown v. Branch, 758 N.E.2d 48, 51 (Ind. 2001) (quoting Guckenberger v. Shank, 110 Ind.App. 442, 456, 37 N.E.2d 708, 713 (1941); emphasis in Brown omitted). That said, we have little trouble concluding that the alleged agreement at the heart of the LLC Claim is not an action "involving a contract for the sale of land" as that phrase is used in the Statute of Frauds. The alleged agreement at issue in this case was not to convey an interest in land, it was to form a partnership. While the alleged purpose of AAA was, in part, to buy and sell real estate, any agreement to form it did not convey any interest in any particular parcel of land from one party to the other. Because the agreement to form AAA did not have to be in writing to be enforceable, the Gordons are not entitled to summary judgment in the LLC Claim on the basis that it is unenforceable pursuant to the Statute of Frauds.
[¶11] The Gordons also contend that, even if operation of the Statute of Frauds does not support entry of summary judgment in their favor, an integration clause in the Sales Contract does. The Sales Contract includes the following provision: "This Agreement constitutes the sole and only agreement of the parties and supersedes any prior understandings or written or oral agreements between the parties' respecting the transaction and cannot be changed except by their written consent." Appellant's App. Vol. II p. 13. The plain language of the integration clause, however, limits its scope to "the transaction[,]" i.e., the sale of 6620 Blackthorn, and it would therefore have no effect on a separate agreement concerning AAA. The Whites have established that the trial court erred in entering summary judgment in favor of the Gordons on the LLC Claim.
II. The Real Estate Claim
[¶12] As mentioned, the trial court also entered summary judgment in favor of Gordon on his counterclaim against White, in which Gordon essentially reiterated the claim he had made in the Real Estate Claim, i.e., that the Whites had breached the Sales Contract by failing to make the payments, resulting in damages. The Whites do not dispute that they failed to make the required payments on the Sales Contract but argue that genuine issues of material fact exist regarding whether their failure should be excused due to other, unkept promises by the Gordons regarding AAA. The Gordons do not respond directly to the Whites' argument, contending that the trial court's order on prejudgment possession of 6620 Blackstone definitively resolved the Real Estate Claim in their favor and is res judicata.
A. The Whites' Claim
[¶13] White designated evidence that (1) on or about September 22, 2014, he had entered into a global agreement with Gordon to resolve the disputes concerning the management of AAA, only one component of which had been the execution of the Sales Contact; (2) Gordon had failed to comply with the other terms of the verbal agreement reached on September 22, 2014; and (3) White would not have entered into the Sales Contract if Gordon had not made other promises to him that day regarding the assets and income for AAA. This evidence is sufficient to generate genuine issues of material fact regarding whether the Sales Contract was part of a larger agreement between Gordon and White and whether Gordon breached that agreement by failing to perform as promised.
The Gordons also contend that the law-of-the-case doctrine entitles them to summary judgment on the Real Estate Claim. "In general, facts established at one stage of a proceeding, which were part of an issue on which judgment was entered and appeal taken, are unalterably and finally established as part of the law of the case and may not be relitigated at a subsequent stage." Certain Ne. Annexation Area Landowners v. City of Fort Wayne, 622 N.E.2d 548, 549 (Ind.Ct.App. 1993) (citation omitted), trans. denied. Because there has been no previous appeal in this case, the law-of-the-case doctrine is not applicable.
[¶14] The principles of res judicata are divided into two branches: claim preclusion and issue preclusion, the latter also referred to as collateral estoppel. In re L.B., 889 N.E.2d 326, 333 (Ind.Ct.App. 2008). Collateral estoppel bars the subsequent re-litigation of the same fact or issue where the fact or issue was necessarily adjudicated in a former suit and the same fact or issue is presented in a subsequent action. Id.
[¶15] The Whites contend that the trial court's order on prejudgment possession did not decide that they had defaulted on the Sales Contract, and we agree. First and foremost, there is nothing in the trial court's order finding a breach of the Sales Contract or that the Gordons were entitled to damages. This is hardly surprising, as the record makes it clear (and clear that it was understood by all) that litigation of the prejudgment possession issue was just that and would not result in judgment on the underlying merits of the litigation:
[The Gordons' Counsel]: The only issue before the Court today is in terms of who has a right to possession of the property as of this point.
[....]
[The Whites' Counsel]: Your Honor, we're here about possession.
[...]
THE COURT: So, um, we're here on just prejudgment possession-who should be entitled to the property only during the pendency of this litigation while we head towards a more permanent resolution. [_] It's prejudgment possession. That's the only thing that we're here for today.
[...]
[T]his is a preliminary determination that at some point down the road we'll have a full-blown hearing. Um, we'll get this order out. You guys get back to me. I assume that the discovery process will begin. And then you come back to me on when you want to tee this issue back up so we can finish it up.Tr. Vol. II pp. 66, 67, 74, 119. We conclude that the trial court's order on prejudgment possession is not res judicata as to the Real Estate Claim. Because the Whites have designed evidence that generates genuine issues of material fact regarding a claim that is not barred by res judicata, we reverse the trial court's entry of summary judgment in favor of Gordon on his counterclaim against White.
Conclusion
[¶16] We reverse the trial court's entry of summary judgment in favor of the Gordon and AAA in the LLC Claim and in favor of Gordon in his counterclaim to the Real Estate Claim. We remand for further proceedings consistent with this memorandum decision.
[¶17] We reverse the judgment of the trial court and remand with instructions.
Crone, J., and Tavitas, J., concur.