FILED
May 10 2017, 10:10 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Robert A. Welsh Benjamen W. Murphy
Connor H. Nolan Law Office of Ben Murphy
Harris Welsh & Lukmann Griffith, Indiana
Chesterton, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Cheng Song, May 10, 2017
Appellant-Cross-Appellee, Court of Appeals Case No.
64A03-1609-PL-2094
v. Appeal from the Porter Superior
Court
Thomas Iatarola and The Honorable William E. Alexa,
Theresa Iatarola, Judge
Appellees-Cross-Appellants Trial Court Cause No.
64D02-1109-PL-9151
Baker, Judge.
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[1] Cheng Song planned to purchase land from Thomas and Theresa Iatarola until
he discovered that the land was zoned for agricultural use, rather than for
industrial use, as had been represented to him. After terminating the purchase
agreement, Song sued the Iatarolas for the $150,000 he had placed in escrow.
A jury verdict awarded him the return of his money. He now appeals the trial
court’s denial of his petition for attorney fees and prejudgment interest. The
Iatarolas cross-appeal, arguing that the trial court erred in denying their motion
for summary judgment and motion to correct errors. Finding that the trial
court did not err in denying the Iatarolas’ motions, but that it did err in denying
Song’s motions, we affirm in part, reverse in part, and remand.
Facts
[2] In 1998, the Iatarolas purchased thirty-four acres of land that was zoned for
agricultural use. Thomas built several structures on the property to warehouse
equipment and inventory from his telecommunications and classic car sales
business.
[3] The land, which was adjacent to the Porter County Airport, was mortgaged.
The Iatarolas decided to try to sell ten acres of their land to reduce or repay
their debt to the bank. Thomas and Theresa agreed between themselves that
Thomas would take charge of arranging for the sale of their land, and he acted
as an agent on behalf of his wife from September 2010 through September 2011.
On September 14, 2010, Thomas retained Robert Macmahon as their exclusive
real estate agent for the sale of the ten acres.
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[4] On September 14, 2010, Macmahon showed Thomas a listing agreement for
the real estate sale. The form was entitled “Listing Contract (Exclusive Right to
Sell) Commercial-Industrial Real Estate”; under the section entitled “Seller’s
Representations,” the property is stated to be zoned I-2 Industrial. Appellant’s
App. Vol. II p. 90-91. Macmahon asked Thomas to review the listing to ensure
its accuracy and asked both Thomas and Theresa to initial each page of the
listing agreement to verify that they read it and that it was accurate. Thomas
did so, but Theresa refused to sign her initials because the listing inaccurately
stated that the zoning was I-2 Industrial rather than Agricultural. Theresa told
Thomas that her reason for not initialing the listing and told him to have
Macmahon correct the listing error.
[5] A few days later, Thomas told Theresa that he had spoken with Macmahon and
that the listing had been corrected. Theresa did not see or initial a corrected
listing. On or around September 14, 2010, Macmahon began advertising the
real estate online. The advertisements stated that the land was zoned I-2
Industrial and that it was suitable for warehousing and other light industrial
uses.
[6] In December 2010, Song saw online the advertisement for the sale of the ten
acres of land. At this time, Song was a New Jersey resident who wanted to buy
industrial real estate in northwest Indiana to use for an imported tool business
he wanted to start. Song arranged a meeting with Macmahon to take place on
December 31, 2010, to visit two industrially zoned properties, one of which was
the Iatarolas’ land. During their meeting, Song told Macmahon that he wanted
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to buy property that had buildings suitable for warehousing for an imported tool
business, and they discussed Song’s ability to expand and build additional
industrial warehousing on the property. In an internet advertisement that has
Macmahon’s handwriting on it, the property’s type is described as “Industrial
For Sale”; the property overview states that the land is “in an established
industrial area.” Appellant’s App. Vol II p. 87.
[7] Also on December 31, 2010, Song told the Iatarolas of his intended use of the
property he wanted to purchase. That same day, Song signed a purchase
agreement with the Iatarolas to buy their ten acres for $600,000. The contract
was entitled “Purchase Agreement Commercial-Industrial Real Estate.”
Appellees’ App. Vol. II p. 97.
[8] Sometime before the signing, the Porter County Airport had stated that it might
impose a runway protection zone in this property to comply with Federal
Aviation Administration (“FAA”) requirements. The purchase agreement
included a contingency clause that stated, “This agreement is contingent upon
the Buyer’s agreement with the final approval of FAA regarding land use.” Id.
After reviewing the airport’s proposal, Song worried that the runway protection
zone could lead to a governmental taking of part of the property that he was
purchasing, the removal of some of the warehousing buildings, or a restriction
on the height of future construction. On January 6, 2011, he exercised his
contingency right and terminated the purchase agreement.
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[9] For the next two and one-half months, Song and Thomas negotiated a new sale
of a different part of the Iatarolas’ land. On March 21, 2011, they signed a
second purchase agreement for sixteen acres, which included most of the
original ten acres with the warehousing buildings plus additional acres of land
outside the potential runway protection zone. This second purchase agreement
was entitled “Purchase Agreement Commercial-Industrial Real Estate.”
Appellant’s App. Vol. II p. 35. It required $150,000 in earnest money and
included a provision for liquidated damages of $150,000 if either party breached
the contract. Song and Thomas signed an addendum to the second purchase
agreement that provided:
Closing date will be predicated on the Seller’s ability to vacate
and exit the subject property. A maximum of 180 days (“Due
Diligence Period”) from the day of acceptance of this contract,
has been agreed by both parties. When the seller advises the
Buyer in writing, that the exit is complete, the Buyer will have 30
days, from that date, to close.
Id. at 40. Song deposited the $150,000 earnest money in the bank.
[10] In early June 2011, Thomas called Macmahon to say that while reviewing the
transaction paperwork, he saw that the September 14, 2010, listing inaccurately
stated that the property for sale was zoned I-2 Industrial instead of Agricultural.
Macmahon acknowledged the error and made a note to his file of the date and
subject of their phone call. That same day, Macmahon corrected the zoning
represented in his advertisements online so that they showed the property to be
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zoned Agricultural. Neither Macmahon nor Thomas told Song about this
error.
[11] On August 7, 2011, Thomas and Song met on the property for a final
inspection, and Thomas told Song that the property was zoned Agricultural.
Thomas told Song that Agricultural zoning was preferred over Industrial zoning
because the tax rate was lower; he also stated that Agricultural zoning allowed
for the land to be used for the industrial warehousing and import tool business
that Song wanted to start. Song told Thomas that he needed to consult an
attorney to determine whether the Agricultural zoning would suit his needs.
Later that day, Song saw that the online listing for the property had been
updated to show that it was zoned Agricultural.
[12] On August 12, 2011, Lee Lane, Song’s attorney, wrote to Macmahon to advise
him that the Porter County zoning regulations did not permit the use of
warehousing for industrial purposes on agriculturally-zoned property. Lane
stated that Song would not continue with his purchase unless the Iatarolas
secured I-2 Industrial zoning and demanded a price reduction in order to
compensate Song for the increase in real estate tax that would result from the
change from agricultural to industrial zoning.
[13] The Iatarolas refused to obtain the I-2 Industrial zoning or consider a price
reduction. Song subsequently exercised his due diligence contingency rights
under the contract, terminated the purchase agreement within the 180-day due
diligence period provided in the addendum, and demanded the return of his
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$150,000 earnest money deposit, which was being held in escrow at Horizon
Bank. The Iatarolas refused to return Song’s escrow deposit.
[14] On September 19, 2011, Song filed a complaint against the Iatarolas, alleging
actual fraud, constructive fraud, breach of contract, and contract rescission.
The Iatarolas filed a counterclaim, also alleging actual and constructive fraud.
On January 22, 2014, both parties filed motions for summary judgment; the
trial court denied both. A jury trial took place from May 16-19, 2016. On May
19, 2016, Song filed a motion for judgment on the evidence, which the trial
court denied. The jury returned a verdict for Song, and the trial court entered
judgment on the jury’s verdict in Song’s favor for $150,000. On June 20, 2016,
the Iatarolas filed a motion to correct errors. On June 23, 2016, Song filed a
motion for an award of attorney fees, prejudgment interest, and postjudgment
interest. On August 12, 2016, Song filed a motion for an award of his post-trial
attorney fees.
[15] On August 12, 2016, the trial court held a joint hearing for the Iatarolas’ motion
to correct errors and Song’s motions for attorney fees, prejudgment interest, and
postjudgment interest. The trial court denied all motions. Song now appeals,
and the Iatarolas cross-appeal.
Discussion and Decision
I. Summary Judgment
[16] On cross-appeal, the Iatarolas argue that the trial court erred when it denied
their motion for summary judgment. In their motion for summary judgment,
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the Iatarolas argued that there were no genuine issues of material fact regarding
Song’s breach of the purchase agreement because nothing in the four corners of
the contract allowed him to terminate it for zoning and because any
representations regarding zoning could not establish the defenses or claims of
fraud, constructive fraud, or mutual mistake.
[17] Our standard of review on summary judgment is well established:
We review summary judgment de novo, applying the same
standard as the trial court: “Drawing all reasonable inferences in
favor of . . . the non-moving parties, summary judgment is
appropriate ‘if the designated evidentiary matter shows that there
is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.’” Williams v.
Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A
fact is ‘material’ if its resolution would affect the outcome of the
case, and an issue is ‘genuine’ if a trier of fact is required to
resolve the parties' differing accounts of the truth, or if the
undisputed material facts support conflicting reasonable
inferences.” Id. (internal citations omitted).
Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014).
A. Contract Interpretation
[18] The construction of a written contract is generally a question of law. The
Winterton, LLC v. Winterton Investors, LLC, 900 N.E.2d 754, 759 (Ind. Ct. App.
2009). When interpreting a contract, we attempt to determine the intent of the
parties at the time the contract was made. Id. When the language of the
contract is unambiguous, the parties’ intent is determined from the four corners
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of the document. Id. “The unambiguous language of a contract is conclusive
upon the parties to the contract as well as upon the court.” Id. A contract is
ambiguous when a reasonable person could find its terms susceptible to more
than one interpretation. Id. If a contract is ambiguous, the court may consider
extrinsic evidence, and the construction of the contract becomes a matter for the
trier of fact. Id.
[19] The Iatarolas argue that the second purchase agreement did not permit Song to
terminate the agreement because the land was zoned differently than what he
expected. Song replies that the Iatarolas waived this argument because they
failed to raise it before the trial court on summary judgment. We agree that the
Iatarolas failed to present a cogent argument on this issue to the trial court and
therefore also agree that they have waived it.
[20] Waiver notwithstanding, at issue is paragraph nine of the addendum to the
second purchase agreement, which reads
Closing date will be predicated on the Seller’s ability to vacate
and exit the subject property. A maximum of 180 days (“Due
Diligence Period”) from the day of acceptance of this contract,
has been agreed by both parties. When the seller advises the
Buyer in writing, that the exit is complete, the Buyer will have 30
days, from that date, to close.
Appellant’s App. Vol. II p. 40. The Iatarolas read this paragraph to mean that
they had to use due diligence to vacate the premises within 180 days; Song
contends that a due diligence period exists for the benefit of the buyer to
investigate facts regarding the suitability of the property for the buyer’s purpose.
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[21] Generally, in real estate transactions, the term “due diligence” refers to the
parties’ obligations to “investigate facts rather than make assumptions about
them.” Hartig v. Stratman, 760 N.E.2d 668, 671 (Ind. Ct. App. 2002). In Metro
Holdings One, LLC v. Flynn Creek Partner, LLC, 25 N.E.3d 141, 158-59 (Ind. Ct.
App. 2014), this Court considered the role of the due diligence period in a real
estate transaction. The purchase agreement provided:
“4. Conditions of Performance. All of the items in this Section
4 shall be completed and/or satisfied on or before [April 15,]
2007 (the “Due Diligence Period”), and Purchaser’s obligations
under this Agreement shall be contingent upon the timely and
complete satisfaction of the following conditions precedent or
waiver thereof by Purchaser, in writing:
*****
“(e) Wetlands Delineation Study. Purchaser, at its cost and
expense, may conduct or have conducted any wetland
delineation study of the Real Estate, to determine whether there
are any wetlands on the Real Estate under the jurisdiction of the
Army Corps of Engineers. In the event that wetlands are
discovered on the Real Estate, at Purchaser's election, this
agreement shall terminate and Purchaser shall receive an
immediate refund of the earnest money, together with any
interest earned thereon, or Purchaser may proceed with the
purchase and receive a reduction of the per acre price to the
extent of any delineated wetlands located on the [Phase 2
Property].”
Id. This Court found that the plain language of this section of the purchase
agreement required the buyer to complete the study and provide written notice
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of termination prior to the end of the due diligence period. Because the buyer
failed to do so, this Court found that the buyer breached its contract.
[22] Unlike the purchase agreement in Metro Holdings, which specified actions that
the buyer could take during the due diligence period and the effect of those
actions, here, the purchase agreement does not state the purpose of the due
diligence period. The provision supports both parties’ arguments, and because
of the context in which the term “Due Diligence Period” is found, a reasonable
person could find its terms susceptible to more than one interpretation, making
it ambiguous. Its placement in a paragraph about the Iatarolas’ ability to vacate
the property and the timing of the closing date implies that the due diligence
period is related to their ability to actually vacate the property. And yet, as
Song contends, such an interpretation is at odds with the law and how the term
is generally applied in real estate transactions. When there is ambiguity in a
contract, it is construed against its drafter. MPACT Const. Grp., LLC v. Superior
Concrete Constructors, Inc., 802 N.E.2d 901, 910 (Ind. 2004). Therefore, the
phrase should be construed against the Iatarolas. Accordingly, we find that the
trial court did not err when it denied the Iatarolas’ motion for summary
judgment based on this issue.
B. Representations Regarding Zoning
a. Actual Fraud
[23] In his complaint, Song alleged that the Iatarolas committed actual fraud against
him based on the misrepresentation of the zoning of the property. In their
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motion for summary judgment, the Iatarolas contended that they made no
representations to Song about the zoning of the property; on cross-appeal, they
argue that the addendum’s integration clause should foreclose Song’s fraud
claim and that a fraud action regarding zoning representations must fail when
the zoning laws are public record.
[24] The elements of actual fraud are: (i) material misrepresentation of past or
existing facts by the party to be charged, (ii) which was false, (iii) which was
made with knowledge or reckless ignorance of the falseness, (iv) which was
relied upon by the complaining party, and (v) proximately caused the
complaining party injury. Rice v. Strunk, 670 N.E.2d 1280, 1289 (Ind. 1996).
[25] In their motion for summary judgment, the Iatarolas contend that they made no
representations of any kind to Song about the zoning of the property, but “[a]t
the one and only occasion Song inquired about the zoning—long after the
contract was signed and after Iatarola had vacated the property, Iatarola spoke
truthfully of the zoning status.” Appellees’ App. Vol. VI p. 78-79. In Craig v.
ERA Mark Five Realtors, 509 N.E.2d 1144, 1147 (Ind. Ct. App. 1987), this Court
found that the defendants did not commit actual fraud because the “mere fact
that the defendants represented the property as an apartment building does not
rise to the level of an affirmative representation that the use of the property [as a
multiple-family dwelling] was permissible under the applicable zoning
ordinance.” We find Craig distinguishable from the present case. In Craig, this
Court noted that the term “multi-family” used in listing documents had nothing
to do with zoning, but was merely used by realtors to distinguish such property
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from other kinds of residential property. Id. Here, however, the listing
document specifically stated that the property was zoned I-2 Industrial.
Moreover, in Craig, there was no representation to the buyer about the specific
zoning classification. Here, a reasonable factfinder could find that the fact that
Song viewed information that described the property as “Industrial” and stated
that the property is “in an established industrial area,” Appellant’s App. Vol. II
p. 87, constitutes a false material misrepresentation. The trial court did not err
in finding a genuine issue of material fact or in denying the Iatarolas’ motion
for summary judgment on this issue.
[26] Regarding the Iatarolas’ arguments on cross-appeal, we note again that they
have waived these arguments because they did not make them to the trial court
in their motion for summary judgment. Waiver notwithstanding, we will
address their arguments.
[27] The Iatarolas argue that the inclusion of an integration clause precludes Song’s
actual fraud claim. An integration clause serves “to determine the intention of
the parties and to determine if that which they intended to contract is fully
expressed in the four corners of the writing.” Prall v. Ind. Nat’l Bank, 627
N.E.2d 1374, 1377–78 (Ind. Ct. App. 1994) (citing Franklin v. White, 493
N.E.2d 161, 166 (Ind. 1986)). “Generally, where parties have reduced an
agreement to writing and have stated in an integration clause that the written
document embodies the complete agreement between the parties, the parol
evidence rule prohibits courts from considering extrinsic evidence for the
purpose of varying or adding to the terms of the written contract.” Id. (citing
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I.C.C. Protective Coatings, Inc. v. A.E. Staley Mfg. Co., 695 N.E.2d 1030, 1035 (Ind.
Ct. App. 1998)). An exception applies “in the case of fraud in the inducement,
where a party was ‘induced’ through fraudulent representations to enter a
contract.” Circle Ctr. Dev. Co. v. Y/G Ind., L.P., 762 N.E.2d 176, 179 (Ind. Ct.
App. 2002).
[28] The Iatarolas state that Song is a sophisticated and well-educated person who
had “plenty of time to investigate the zoning and taxes from public record.”
Appellee’s Br. p. 27. Song’s level of education, however, does not negate the
fact that “a party [can] overcome the effect of an integration clause if it [can]
show it had a right to rely on the alleged misrepresentations and did in fact rely
on them in executing . . . [an] integration clause.” Tru-Cal, Inc. v. Conrad Kacsik
Instrument Systems, Inc., 905 N.E.2d 40, 45 (Ind. Ct. App. 2009). We do not
find that the mere inclusion of an integration clause defeats Song’s fraud claim
because he had a right to rely on the Iatarolas’ representations regarding the
zoning of the property and did, in fact, rely on them. Therefore, we find that
the trial court did not err in finding that genuine issues of material fact exist or
in denying the Iatarolas’ motion for summary judgment.
[29] The Iatarolas also contend that a fraud action regarding zoning representation
must fail because how real estate is zoned is public record, and therefore any
representation does not constitute a past or existing fact that a party can claim
to have relied on. Initially, we note that the Iatarolas cite legal authority from
other jurisdictions, which is not binding in our state. In Indiana, it is well
established that “[a] false statement made for a fraudulent purpose . . . can be
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justifiably relied upon even though the fact misrepresented is of public record.”
Shuee v. Gedert, 182 Ind. App. 432, 438, 395 N.E.2d 804, 808 n.3 (1979); see also
Carrell v. Ellingwood, 423 N.E.2d 630, 635 (Ind. Ct. App. 1981) (“It is further the
law in Indiana that a false and fraudulent representation may be relied upon by
a person having no actual knowledge, even though the fact in question is a
matter of public record”); Jenkins v. Nebo Props., Inc., 439 N.E.2d 686, 694 (Ind.
Ct. App. 1982) (“A party can justifiably rely on statements which are a matter
of public record”). Consequently, the trial court did not err in denying the
Iatarolas’ motion for summary judgment on this issue.
b. Constructive Fraud
[30] In his complaint, Song alleged that the Iatarolas also committed constructive
fraud against him based on the misrepresentation of the zoning of the property.
In their motion for summary judgment, the Iatarolas contended that Song’s
constructive fraud claim must fail because any representation about the zoning
of the property did not constitute a past fact upon which Song could rely
because zoning is public information; on cross-appeal, they argue for the first
time that his claim must fail because no fiduciary relationship existed between
the parties.
[31] Constructive fraud arises by operation of law from a course of conduct, which,
if sanctioned by law, would secure an unconscionable advantage, irrespective of
the actual intent to defraud. Strong v. Jackson, 777 N.E.2d 1141, 1146 (Ind. Ct.
App. 2002), on reh'g, 781 N.E.2d 770 (Ind. Ct. App. 2003). The elements of
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constructive fraud are: (i) a duty owing by the party to be charged to the
complaining party due to their relationship; (ii) violation of that duty by the
making of deceptive material misrepresentations of past or existing facts or
remaining silent when a duty to speak exists; (iii) reliance thereon by the
complaining party; (iv) injury to the complaining party as a proximate result
thereof; and (v) the gaining of an advantage by the party to be charged at the
expense of the complaining party. Rice, 670 N.E.2d at 1284.
[32] First, the Iatarolas allege that Song’s constructive fraud claim must fail because
zoning information is a matter of public record, but as discussed above, Indiana
law permits a fraud claim even when the misrepresented fact is of public record.
The Iatarolas again rely on Craig, but again, we find that case distinguishable.
In Craig, this Court found that a constructive fraud claim must fail because the
information at issue was in the public record and the buyer had easy access to
it. 509 N.E.2d at 1148. The buyer had prior experience purchasing real estate;
he managed his properties full-time; he was licensed to sell real estate for at
least several years before the transaction at the heart of the lawsuit took place;
and he had at one time owned and operated a real estate school. Id. For these
reasons, this Court found that the buyer was not an “inexperienced amateur” in
the real estate business, but rather that he possessed the knowledge and skill to
ascertain the zoning of the purchased property. Id. Although Song is well-
educated, his degrees are not related to real estate; he was not an Indiana
resident, and the record does not show whether he was familiar with Indiana
public records; the record does not indicate that he is not an “inexperienced
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amateur” in the real estate business like the buyer in Craig; and the record does
not reveal whether Song had previous experience buying any kind of real estate,
let alone the kind of land that he was seeking for his new business. That
information is a matter of public record is not, in and of itself, sufficient to
preclude a constructive fraud claim.
[33] Second, once again, we note that the Iatarolas present an argument on cross-
appeal that was not made in their motion for summary judgment to the trial
court—namely, that Song’s constructive fraud claim must fail because no
fiduciary relationship existed between the parties. Further, on cross-appeal, the
Iatarolas do not present a cogent argument regarding the existence or lack
thereof of a fiduciary relationship. Nonetheless, we will briefly address this
argument. A constructive fraud claim need not involve a fiduciary relationship;
the duty required for the claim may exist “where there is a buyer and a seller,
where one party may possess knowledge not possessed by the other and may
thereby enjoy a position of superiority over the other.” Strong, 777 N.E.2d at
1147. The Iatarolas contend that they were not acting from a position of
superiority because Song has multiple advanced degrees. They fail to recognize
that under a constructive fraud claim, a position of superiority does not depend
on a party’s education level but on the level of knowledge that a party may
possess. We find that the Iatarolas did not present evidence that would negate
an element of Song’s constructive fraud claim and that the trial court did not err
in denying their motion for summary judgment on this issue.
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C. Contract Rescission
[34] In his complaint, Song asked for a judgment of contractual rescission, alleging
that no contract was formed because there was mutual mistake on the zoning
classification. The Iatarolas did not address this claim in their motion for
summary judgment, making this issue waived, though they raise it in their
cross-appeal. We note that the trial court did not grant Song’s request to
rescind the contract. Consequently, the Iatarolas can make no claim of error on
this issue.
D. Contract Breach
[35] In his complaint, Song alleged that the Iatarolas breached the purchase
agreement, for, among other things, failing to provide an I-2 Industrial zoned
property for purchase as represented and promised. In their motion for
summary judgment and on cross-appeal, the Iatarolas contend that Song
breached the contract when he refused to close on the transaction. The
Iatarolas do not present a cogent argument or legal authority to support the
position that Song caused the breach. Consequently, the trial court did not err
in finding that a genuine issue of material fact existed as to which party
breached the contract, and it appropriately allowed the jury to act as factfinder
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on this issue. Therefore, the trial court did not err in denying the Iatarolas’
motion for summary judgment on this issue.1
II. Attorney Fees
[36] On appeal, Song argues that, pursuant to the purchase agreement, he should
receive an award for his attorney fees. The Iatarolas argue that because Song
repudiated the purchase agreement, he cannot seek to have the agreement’s
attorney fees provision enforced.
[37] Indiana adheres to the American rule that, in general, a party must pay his own
attorney fees absent an agreement between the parties, a statute, or other rule to
the contrary. R.L. Turner Corp. v. Town of Brownsburg, 963 N.E.2d 453, 458 (Ind.
2012). When an agreement allows one party to request attorney fees from
another party, it is standard procedure for that party to petition the trial court
for those fees after the jury has reached its decision in its case. Storch v. Provision
Living, LLC, 47 N.E.3d 1270, 1275 (Ind. Ct. App. 2015) (citing R.L. Turner
Corp., 963 N.E.2d at 459-60). A petition for attorney fees presents an issue
separate from the merits of a case because the inquiry cannot commence until a
party has prevailed. Id. A request for attorney fees is not ripe for consideration
until a judgment has been reached. Id. Outside of stipulations or contracts that
1
In their cross-appeal, the Iatarolas also argue that the trial court erred when it denied their motion to correct
errors after trial. Their arguments are the same as their arguments regarding their motion for summary
judgment. We apply the same reasoning and findings to their argument regarding their motion to correct
errors as we did for their motion for summary judgment.
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call for a jury’s decision on attorney fees, “parties do not have the right to have
a jury determine a reasonable amount of fees.” Id. The trial judge is considered
to be an expert on the question of attorney fees and may judicially know what
constitutes a reasonable fee. Id.
[38] The purchase agreement provided the following provision:
Any party who is the prevailing party against any other party in
any legal or equitable proceeding relating to this Agreement shall
be entitled to recover court costs and reasonable attorney fees
from the non-prevailing party.
Appellant’s App. Vol. II p. 97. Following the jury’s verdict in his favor, Song
filed a motion for attorney fees, prejudgment interest, and postjudgment
interest. His motion included an affidavit from his attorney and an itemization
of fees incurred. In a post-trial hearing regarding Song’s motion for attorney
fees and interest, the trial court stated:
With regard to the amount for the attorney’s fees, I’m reading the
exact verdict from the jury. Said the jury returned into open
court with the following verdict: Verdict for plaintiff. “We, the
jury, decide in favor of the plaintiff and against the defendants
that the plaintiff is entitled to and shall have the return of his
earnest money in the amount of $150,000.” After they returned
with that, I entered judgment on the verdict. At that point, the
plaintiff was entitled to those funds.
There was no request before the jury that I can recall with regard
to attorney’s fees and interest either post or pre for the trier of fact
to deal with. They didn’t have that. And I certainly am not
going to be the trier of fact at this point in this proceedings. I
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think that the most that can be said, that the plaintiff is entitled to
judgment interest from and after . . . the 19th of May of this year.
Bench Hearing Tr. Vol. III p. 37-38.
[39] Song was not required to submit to the jury a request for attorney fees. In this
case, because the jury had already fulfilled its role, the trial court was the
appropriate trier of fact in determining whether attorney fees should have been
awarded. Further, Song was not required to submit a petition for attorney fees
before the jury returned its verdict; indeed, doing so would have been
premature. The appropriate time for Song to petition the trial court for attorney
fees was after the jury returned a verdict in his favor—which is what Song did.
The trial court erred when, instead of ruling on the issue, it simply declined to
consider it. Accordingly, the judgment of the trial court is reversed and
remanded so that the trial court may consider the issue of attorney fees as
provided for in the parties’ purchase agreement.
III. Prejudgment Interest
[40] On appeal, Song also argues that he should receive prejudgment interest. The
Iatarolas contend that Song should not receive prejudgment interest because the
jury verdict did not constitute a money judgment and because the $150,000
Song placed in escrow already earned interest while in the escrow account.
[41] Indiana Code section 24-4.6-1-101 provides for “interest on judgments for
money whenever rendered.” A judgment for money is “any order that requires
the payment of a sum of money and states the specific amount due, whether labeled as
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a mandate or a civil money judgment.” Hilliard v. Jacobs, 916 N.E.2d 689, 694
(Ind. Ct. App. 2009) (emphasis original). Prejudgment interest is awarded to
fully compensate an injured party for the lost use of money. Fackler v. Powell,
923 N.E.2d 973, 977 (Ind. Ct. App. 2010). It is computed from the time the
principal amount was demanded or due and is allowable at the permissible
statutory rate when no contractual provision specifies the interest rate. Id.; see
also Ind. Code § 24-4.6-1-103(b). The current interest rate is 8% when there is
no contract by the parties specifying a different interest rate. Ind. Code § 24-
4.6-1-101.
[42] It is well-settled that an award of prejudgment interest in a breach of contract
action is warranted if the amount of the claim rests upon a simple calculation
and the terms of the contract make such a claim ascertainable. Fackler, 923
N.E.2d at 979. The test for determining whether an award of prejudgment
interest is appropriate is whether the damages are complete and may be
ascertained as of a particular time. Id. The award is considered proper when
the trier of fact does not have to exercise its judgment to assess the amount of
damages. Id. Importantly for purposes of our review, an award of prejudgment
interest is generally not considered a matter of discretion. Id.
[43] When Song’s attorney asked the trial court whether it ruled on its motion for
prejudgment interest and postjudgment interest, the trial court stated:
I said it wasn’t presented to the jury, they had nothing in front of
them to do. You told me the fact finder was the one to do it, so
there is none for prejudgment interest. Post judgment interest,
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the judgment was entered on May 19th for the return of the
money. It wasn’t a money judgment. It was an order to turn
over in effect. It’s there. It’s available. Go get it.
***
You have 30 days to decide when you’re going to appeal it, this
rather, or that. And at that point interest will be accruing on that
at least from that May 19th date. At least. There you go.
Bench Hearing Tr. Vol. III p. 39-40.
[44] The Iatarolas latch onto the trial court’s statement that the jury’s verdict
awarding Song the return of his $150,000 was not a money judgment that can
receive prejudgment interest under the statute. They contend that the judgment
was not a general money judgment but “rather the return of a specific item of
property.” Appellee’s Br. p. 42. We disagree. Following the jury’s verdict, the
trial court ordered the Iatarolas to pay a sum of money to Song and stated the
specific amount due—this order is the very definition of a money judgment. See
Hilliard, 916 N.E.2d at 694. Because Song was awarded a money judgment,
and because the amount could be ascertained as of a particular time,
prejudgment interest was warranted.
[45] Although Song could have presented his claim for prejudgment interest to the
jury, not doing so did not preclude his claim. In Board of Works of City of Lake
Station v. I.A.E., Inc., 956 N.E.2d 86, 96 (Ind. Ct. App. 2011), this Court found
that the trial court did not err when it allowed the jury to determine the amount
of prejudgment interest owed because the jury only had to make a simple
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mathematical computation of the statutory rate from the time of the demand for
damages. But in other cases, this Court has taken no issue with the fact that a
trial court, rather than a jury, has determined a prejudgment interest award.
See, e.g., WESCO Distrib., Inc. v. ArcelorMittal Ind. Harbor LLC, 23 N.E.3d 682,
714-15 (Ind. Ct. App. 2014) (discussing the trial court’s award of prejudgment
interest following a jury trial). Here, the trial court was not required to defer to
the jury on Song’s motion for prejudgment interest, and it erred by doing so.
[46] The Iatarolas contend that because the parties entered into an escrow
agreement, which provided the terms for the holding and release of earnest
money deposited into an interest-bearing account, Song is not entitled to any
prejudgment interest on the $150,000 above and beyond the interest received on
the escrowed money. The Iatarolas do not provide any legal authority to
support their contention that because funds are earning interest in an interest-
bearing account that a prevailing party should not also receive prejudgment
interest, nor do we find any legal authority to support this argument.
[47] Nor do we find compelling the Iatarolas’ suggestion that the escrow agreement
should control the prejudgment interest rate. The Iatarolas state that because
the “interest rate was previously defined, the Indiana prejudgment interest
statute does not supersede that agreement.” Appellee’s Br. p. 43. The Iatarolas
do not state what this interest rate is, nor do we find it defined in the escrow
agreement. But even if the escrow agreement did specify an interest rate for the
funds while they were held in escrow, we cannot say that that interest rate
would also apply to the rate for prejudgment interest. This Court considered a
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similar contention in Bank One, Nat. Ass’n v. Surber, 899 N.E.2d 693 (Ind. Ct.
App. 2009). Following a successful breach of contract claim against it, the bank
argued that the trial court erred when it awarded prejudgment interest at the
statutory rate of 8%, rather than at the interest rate specified for the savings
account at issue, which was 1.5%. Id. at 705-06. This Court found that the
contract governing the savings account did not detail the interest rate that
should be applied to prejudgment interest, that the parties had not agreed upon
an interest rate, and that, therefore, the interest should be calculated at the
statutory rate of 8%. Id. at 706. Similarly, here, neither the purchase agreement
nor the escrow agreement states an interest rate for prejudgment interest. The
Iatarolas’ argument is unavailing.
[48] Accordingly, we reverse and remand the trial court’s denial of Song’s request
for prejudgment interest, and remand so that the trial court may calculate, using
the statutory rate, the amount of prejudgment interest Song is owed. On
remand, the trial court should also calculate the postjudgment interest at the
statutory rate.
[49] The judgment of the trial court is affirmed in part, reversed in part, and
remanded with instructions to consider Song’s motions for attorney fees and
prejudgment interest.
Barnes, J., and Crone, J., concur.
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