Carpenter Realtors and Susan Hodges v. John Watkin and Susan Watkin (mem. dec.)

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be FILED regarded as precedent or cited before any Jan 31 2018, 8:47 am

court except for the purpose of establishing CLERK the defense of res judicata, collateral Indiana Supreme Court Court of Appeals and Tax Court estoppel, or the law of the case.

ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEES James N. Scahill Thomas W. Vander Luitgaren Indianapolis, Indiana Emily M. Gettum Van Valer Law Firm, LLP Greenwood, Indiana

IN THE COURT OF APPEALS OF INDIANA

Carpenter Realtors and Susan January 31, 2018 Hodges, Court of Appeals Case No. Appellants-Defendants, 41A05-1706-PL-1286 Appeal from the Johnson Superior v. Court The Honorable Kevin M. Barton, John Watkin and Susan Watkin, Judge Appellees-Plaintiffs Trial Court Cause No. 41D01-1308-PL-103

Vaidik, Chief Judge. Court of Appeals of Indiana | Memorandum Decision 41A05-1706-PL-1286 | January 31, 2018 Page 1 of 7

Case Summary [1] Carpenter Realtors (“Carpenter”) and its agent, Susan Hodges, appeal the trial

court’s judgment holding Carpenter liable to John and Susan Watkin for breach

of contract. Finding no error, we affirm.

Facts and Procedural History [2] In April 2012, Carpenter, through Hodges, agreed to represent the Watkins in

their search for a new home. Hodges had the Watkins sign Carpenter’s Agency

Policy for Buyers. Among other things, the policy required Carpenter to

“advise” the Watkins during closing. Appellants’ App. Vol. II p. 14. The

Watkins eventually reached an agreement to buy a house in Indianapolis from

Roger and Judy French. Hodges prepared a purchase agreement that provided,

in part, that “prior to closing” the Watkins would receive a “SURVEYOR

LOCATION REPORT” that is “reasonably satisfactory” to them. Id. at 16. [3] The Frenches ordered title insurance through Royal Title, which in turn

ordered a surveyor location report. The surveyor did not prepare the report

until the day of closing, and the Watkins did not receive a copy until they

arrived at closing. The report showed an encroachment onto the vacant lot to

the north. When the Watkins noted their concern during closing, the closing

agent for Royal Title told them that the report was only approximate, and

Roger French said that it was not accurate. Hodges did not look at the report

Court of Appeals of Indiana | Memorandum Decision 41A05-1706-PL-1286 | January 31, 2018 Page 2 of 7

or offer any response to any of the comments being made about it, and the

closing proceeded. [4] Several months after closing, the lot to the north was sold, and it was

determined that there was, in fact, an encroachment. The Watkins eventually

spent more than $25,000 remedying the situation. [5] In August 2013, the Watkins filed two lawsuits: one against Carpenter and

Hodges in Johnson County (this case), and one against the Frenches in Marion

County. In 2014, the Watkins settled their claims against the Frenches and

dismissed the Marion County suit (the terms of the settlement were not entered

into evidence and are not included in the record on appeal). The Watkins then

filed a motion for summary judgment in the Johnson County case. The trial

court granted the motion in part, treating the Watkins’ claim against Carpenter

and Hodges as one for negligence. In its order, the trial court ruled that (1) the

defendants and the Watkins themselves had acted negligently with regard to the

encroachment and (2) allocation of fault (including any fault of non-parties,

such as the Frenches and Royal Title) and damages would be determined later. [6] At a bench trial held in July 2016, the Watkins presented their claim as one for

breach of contract rather than negligence, without objection from Carpenter

and Hodges. See Ind. Trial Rule 15(B) (allowing issues to be “tried by express

or implied consent of the parties”). The trial court agreed that the Watkins’

claim must be treated as such under the Indiana Supreme Court’s decision in

Greg Allen Construction Co. v. Allen, 798 N.E.2d 171 (Ind. 2003), reh’g denied. The

Court of Appeals of Indiana | Memorandum Decision 41A05-1706-PL-1286 | January 31, 2018 Page 3 of 7

court concluded that “[t]he failure of [Carpenter] to render advice” regarding

the surveyor location report “is a breach of the contract existing between

[Carpenter] and [the Watkins],” Appellants’ App. Vol. II p. 37, and it ordered

Carpenter to pay $33,314.33 in damages and interest. [7] Carpenter and Hodges now appeal.

Discussion and Decision [8] Carpenter and Hodges contend that the trial court should have treated the

Watkins’ claim as one for negligence instead of breach of contract and awarded

damages accordingly. Carpenter seeks this result because negligence claims,

unlike breach-of-contract claims, are subject to allocation of fault pursuant to

the Indiana Comparative Fault Act, Ind. Code ch. 34-51-2, and if fault were

allocated to the Watkins, the Frenches, and/or the title company, the damages

award against Carpenter could be reduced. The relevant facts are undisputed,

so the issue of whether the trial court properly treated the Watkins’ claim as one

for breach of contract is a pure question of law that we review de novo.

Lumbard v. Farmers State Bank, 812 N.E.2d 196, 200 (Ind. Ct. App. 2004). [9] Carpenter relies on our decision in INS Investigations Bureau, Inc. v. Lee, where

we vacated a $2.3 million verdict for breach of contract because the plaintiff’s

claim “more closely resemble[d] a claim for negligence.” 784 N.E.2d 566, 578

(Ind. Ct. App. 2003), trans. denied. But the plaintiff in that case had also won a

$2.5 million verdict for negligence against the same defendant based on “the

Court of Appeals of Indiana | Memorandum Decision 41A05-1706-PL-1286 | January 31, 2018 Page 4 of 7

same facts and the same damages,” id. at 576, and we had to vacate one of the

verdicts in order to avoid an obvious double recovery against that defendant. In

this case, however, there is no double-recovery issue relating to Carpenter—the

Watkins were awarded damages for breach of contract but not for negligence. [10] In any event, the trial court correctly concluded that our Supreme Court’s

decision in Greg Allen Construction Co. required that the Watkins’ claim against

Carpenter be treated as one for breach of contract. In that case, homeowners

contracted with a construction company to renovate their home. The

homeowners alleged that the defendants had performed substandard work, and

they brought claims for both breach of contract and negligence. The Court first

noted that the “claimed wrong” was the construction company’s “failure to

satisfy its part of the agreement—a quintessential contract claim.” Greg Allen

Constr. Co., 798 N.E.2d at 172. The Court then explained that the negligence

claim was based solely on the construction company’s actions in carrying out its

obligations under the contract and that nothing the construction company did

“constituted an independent tort if there were no contract.” Id. at 173. As

such, the homeowners “should be remitted to their contract claim,” and they

“should not be permitted to expand that breach of contract into a tort claim . . .

by claiming negligence as the basis of the breach.” Id. This is so because,

“[w]hen the parties have, by contract, arranged their respective risks of loss . . .

the tort law should not interfere.” Id. at 175. The rule ultimately adopted by

the Court is that a party to a contract “may be liable in tort to the other party

Court of Appeals of Indiana | Memorandum Decision 41A05-1706-PL-1286 | January 31, 2018 Page 5 of 7

for damages from negligence that would be actionable if there were no contract,

but not otherwise.” Id. [11] Here, the Watkins’ complaint against Carpenter focused on Carpenter’s failure

to advise them at closing. See Appellants’ App. Vol. II p. 71 (alleging that

Hodges “failed to indicate the survey presented any problems and did nothing

to caution the [Watkins] against proceeding with the closing”). Carpenter’s

duty to advise the Watkins during closing existed solely by virtue of the contract

between the parties. Therefore, under Greg Allen Construction Co., the Watkins

were “remitted to their contract claim” and were not “permitted to expand that

breach of contract into a tort claim . . . by claiming negligence as the basis of

the breach.” 798 N.E.2d at 173. Carpenter does not attempt to distinguish this

case from Greg Allen Construction Co. In fact, despite the trial court’s and the

Watkins’ reliance on it, Carpenter makes no mention of the decision in either

its opening brief or its reply brief. [12] Alternatively, Carpenter contends that treating the Watkins’ claim as one for

breach of contract resulted in a “double recovery” because no fault could be

allocated to the Frenches, with whom the Watkins had already settled in the

Marion County case. Appellant’s Br. p. 18; see also Wiese-GMC, Inc. v. Wells,

626 N.E.2d 595, 597 (Ind. Ct. App. 1993) (“While an aggrieved party must be

compensated, he should not be placed in any better position.”), reh’g denied,

trans. denied. It may very well be true that the damages the Watkins are paid by

Carpenter will overlap, at least to some extent, with the damages they were paid

by the Frenches, but there is no evidence to support such a finding. Carpenter

Court of Appeals of Indiana | Memorandum Decision 41A05-1706-PL-1286 | January 31, 2018 Page 6 of 7

did not present any evidence regarding the French settlement beyond the fact

that there was a settlement. As such, the trial court did not know the amount of

the settlement, let alone the legal basis for that amount, so there was simply no

way for it to say whether the Watkins won a “double recovery” in this respect. [13] Affirmed.

Mathias, J., and Crone, J., concur.

Court of Appeals of Indiana | Memorandum Decision 41A05-1706-PL-1286 | January 31, 2018 Page 7 of 7