Glenn P. Staller and Glenda W. Staller v. Chunae Gallagher (mem. dec.)

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), FILED this Memorandum Decision shall not be Jun 28 2018, 9:14 am regarded as precedent or cited before any CLERK court except for the purpose of establishing Indiana Supreme Court Court of Appeals the defense of res judicata, collateral and Tax Court

estoppel, or the law of the case.

ATTORNEYS FOR APPELLANTS ATTORNEY FOR APPELLEE William A. Ramsey Heidi K. Koeneman Mark H. Bains Beckman Lawson, LLP Barrett McNagny LLP Fort Wayne, Indiana Fort Wayne, Indiana

IN THE COURT OF APPEALS OF INDIANA

Glenn P. Staller and Glenda W. June 28, 2018 Staller, Court of Appeals Case No. Appellants-Defendants/Counterclaimants, 18A-PL-20 Appeal from the Allen Superior v. Court The Honorable David J. Avery, Chunae Gallagher, Judge Appellee-Plaintiff/Counterclaim Defendant Trial Court Cause No. 02D09-1606-PL-281

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Case Summary [1] Glenn P. Staller and Glenda W. Staller (“Sellers”) sold their home to Chunae

Gallagher (“Buyer”) pursuant to a real estate purchase agreement (“the

Purchase Agreement”). Two years later, Buyer sued Sellers for fraud alleging

that, at the time they signed a residential real estate sales disclosure form (“the

Disclosure Form”) which was provided to Buyer from Sellers as part of the sale

process, Sellers knowing and intentionally concealed the fact that the roof

system was defective and that the residence had major structural defects, mold,

moisture, and water problems. Sellers counterclaimed against Buyer asserting

their entitlement, pursuant to a contractual provision in the Purchase

Agreement, to recover attorney’s fees in the event they were the prevailing party

on Buyer’s fraud claim. Following a bench trial, the trial court entered

judgment in favor of Sellers on Buyer’s fraud claim but against Sellers on their

counterclaim for attorney’s fees. Sellers appeal only the trial court’s judgment

on their counterclaim arguing that the trial court erred in concluding that they

were not entitled to recover their attorney’s fees. Concluding that Sellers are

indeed entitled to recover attorney’s fees, we reverse and remand.

Facts and Procedural History [2] Sellers sold their home to Buyer on June 20, 2014, pursuant to the Purchase

Agreement. The Purchase Agreement includes a clause which states,

Any party to this Agreement who is the prevailing party in any legal or equitable proceeding against any other party brought under or with relation to the Agreement or transaction shall be

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additionally entitled to recover court costs and reasonable attorney’s fees from the non-prevailing party.

Defendants’ Ex. A at 5. As part of the sale process, Sellers provided Buyer with

the Disclosure Form. On the Disclosure Form, Sellers stated that to the best of

their then-current actual knowledge, the home had no mold problem. The

Sellers disclosed that the roof did leak, that there was roof damage, and that the

skylights leaked periodically. Buyer had an inspection performed and the

inspection revealed no mold. [3] During the summer of 2016, Buyer discovered mold in the home. On June 14,

2016, Buyer filed a complaint against Sellers alleging that they fraudulently

misrepresented the condition of the home they sold to Buyer with respect to the

roof condition, structural defects, mold, and water damage. Sellers filed their

answer, affirmative defenses, and counterclaim for attorney’s fees. A bench

trial was held on August 9, 2017. The trial court subsequently entered

judgment in favor of Sellers on Buyer’s fraud claim but denied Sellers’s

counterclaim for attorney’s fees. Sellers filed a motion to correct error alleging

that the trial court erred in denying their request for attorney’s fees and,

following a hearing, the trial court issued an order denying the motion to

correct error. This appeal ensued.

Discussion and Decision [4] Sellers’ claim for attorney’s fees is based on a provision contained in a contract

between the parties. While parties to litigation generally pay their own

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attorney’s fees, they may certainly agree by contract to do otherwise. Reuille v.

E.E. Brandenberger Constr., Inc., 888 N.E.2d 770, 771 (Ind. 2008). Indeed, “when

parties have executed a contractual provision agreeing to pay attorney fees,

such agreement is enforceable according to its terms unless the contract is

contrary to law or public policy.” Id. [5] Interpretation of a contract presents a question of law and is reviewed on appeal

de novo. King v. Conley, 87 N.E.3d 1146, 1152 (Ind. Ct. App. 2017), trans. denied

(2018). When interpreting a contract, our paramount goal is to ascertain and

effectuate the intent of the parties. Id. This requires the contract to be read as a

whole, and the language construed so as not to render any words, phrases, or

terms ineffective or meaningless. Id. When the terms of the contract are not

ambiguous, we will give them their plain and ordinary meaning. Shorter v.

Shorter, 851 N.E.2d 378, 383 (Ind. Ct. App. 2006). [6] As noted above, the Purchase Agreement between Buyer and Sellers includes a

clause which states,

Any party to this Agreement who is the prevailing party in any legal or equitable proceeding against any other party brought under or with relation to the Agreement or transaction shall be additionally entitled to recover court costs and reasonable attorney’s fees from the non-prevailing party.

[7] Defendants’ Ex. A at 5. Thus, this provision applies to “any legal or equitable

proceeding” between the parties “brought under or with relation to the

Agreement or transaction.” Id. (emphases added).

Court of Appeals of Indiana | Memorandum Decision 18A-PL-20 | June 28, 2018 Page 4 of 8 [8] In Storch v. Provision Living, LLC, 47 N.E.3d 1270, 1274, (Ind. Ct. App. 2015),

this Court considered the plain meaning of the word “relate” in the context of

an attorney fee provision in a residence agreement between an assisted living

facility and one of its residents.1 Consulting a modern dictionary, we stated that

“two things ‘relate’ if they simply ‘have relationship or connection.’” Id.

(citation omitted); see UFG, LLC v. Southwest Corp., 784 N.E.2d 536, 545 (Ind.

Ct. App. 2003) (courts may properly consult English language dictionaries to

determine plain and ordinary meaning of words), trans. denied. We

acknowledged that “this definition is clearly very broad, but parties have the

right to contract in broad terms if they wish.” Id. Looking to other states for

guidance, we observed that appellate courts in Colorado have had occasion to

define “relate” in the attorney fee context and have chosen to do so in a

similarly broad fashion, holding that such language “encompass[es] all issues

surrounding the underlying subject matter.” Id. at 1275 (quoting In re Estate of

Gattis, 318 P.3d 549, 558 (Colo. App. 2013)). [9] Accordingly, in this case, the plain meaning of the phrase “with relation to”

would seem to encompass all issues surrounding the underlying subject matter

of the Purchase Agreement, that being Sellers’ home. As for the word

“transaction,” it is broadly defined as “an exchange or transfer of goods,

services, or funds.” MERRIAM–WEBSTER ONLINE DICTIONARY,

https://www.merriam-webster.com/dictionary/transaction (last visited June

1 We note that the term “relation” used here is simply the noun form of the verb “relate.”

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13, 2018). In the present context, the transaction that occurred is the sale and

transfer of Sellers’ home to Buyer. [10] Despite the broad language used, the trial court concluded that Buyer’s fraud

claim was not a “legal or equitable proceeding against any other party brought

under or with relation to the Agreement or transaction” as contemplated by the

Purchase Agreement. Appellants’ App. Vol. 2 at 18. It appears that the court

essentially determined that Sellers could not recover attorney’s fees under the

terms of the Purchase Agreement because Buyer’s claim was one for fraud as

opposed to one for breach of contract. However, based on the plain meaning of

the language used, it is patently clear that the parties intended that the attorney

fee provision apply to much more than a breach of contract claim brought

under the Purchase Agreement. [11] Indeed, had the parties intended the attorney fee provision to apply only to

claims of breach of the Agreement itself, the contract could have provided fees

simply to the prevailing party “in any action brought to enforce this

[A]greement.” See Storch, 47 N.E.3d at 1273. 2 “Such language is commonly

2 On Sellers’ motion to correct error, the trial court considered our opinion in Storch but found it distinguishable and inapplicable because the residence agreement at issue in Storch was an executory contract as opposed to an executed contract, such as the Purchase Agreement in the present case. See generally 2625 Bldg. Corp. v. Deutsch, 179 Ind. App. 425, 428, 385 N.E.2d 1189, 1191 (1979) (noting that an executory contract is “one in which a party binds himself to do or not do a particular thing” and an executed contract is “one in which the object of the agreement is performed and everything that was to be done is done.”) (citation omitted). However, this Court made no mention of the executory or executed nature of the agreement in Storch, nor did we assign any relevance to that issue in our contract interpretation. We find the Storch reasoning applicable and instructive, and we disagree with the trial court that the fact that the Purchase Agreement here is an executed contract has any bearing on the rights or obligations bestowed to the parties pursuant to the plain meaning of the contract’s terms.

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found in attorney fee provisions.” Id. (citing Kuntz v. EVI, LLC, 999 N.E.2d 425,

433 (Ind. Ct. App. 2013). The attorney fee provision here goes much further,

covering not only actions brought “under the Agreement,” but also actions

brought “with relation to” the Agreement or the “transaction.” Defendants’ Ex.

A at 5. Were we to adopt the trial court’s narrow interpretation, these latter

terms and phrases would be rendered meaningless. As we are compelled to

avoid such outcomes, we must conclude that the plain language of the

provision contemplates more than actions for breach of the Purchase

Agreement. Buyer’s fraud claim was unquestionably brought “with relation to”

the sale “transaction,” and therefore, as the prevailing party, Sellers are entitled

to recover court costs and reasonable attorney’s fees from Buyer. [12] We are not persuaded by Buyer’s argument that the fraud claim is somehow

outside the purview of the attorney fee provision of the Purchase Agreement

simply because it was based on Sellers’ alleged misrepresentations on the

Disclosure Form, and the Disclosure Form expressly provides that it “is not

intended to be part of any contract between buyer and owner.” Plaintiff’s Ex.

1. Buyer argues that we are precluded from making any finding “that would

tie” a fraud claim based on the Disclosure Form to the “subsequently entered

into” Purchase Agreement. Appellee’s Br. at 10. However, it cannot

reasonably be argued that Sellers provided Buyer the Disclosure Form for any

purpose other than as part of the sale process. Although the Disclosure Form

was not made part of the Purchase Agreement itself, to say that the Disclosure

Form does not relate to the Agreement or the sale transaction is nonsensical.

Court of Appeals of Indiana | Memorandum Decision 18A-PL-20 | June 28, 2018 Page 7 of 8 [13] The trial court erred in concluding that Sellers were not entitled to recover their

attorney’s fees pursuant to the Purchase Agreement. Accordingly, we reverse

the trial court’s judgment on Sellers’ counterclaim and remand so that the trial

court may calculate reasonable attorney’s fees and award those fees to Sellers. [14] Reversed and remanded.

Bailey, J., and Brown, J., concur.

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