MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any FILED
court except for the purpose of establishing Jun 03 2020, 8:13 am
the defense of res judicata, collateral CLERK
estoppel, or the law of the case. Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Patrick A. Schuster Laura S. Reed
Crown Point, Indiana Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Crystal Foods Corporation, June 3, 2020
Appellant-Plaintiff, Court of Appeals Case No.
19A-PL-2773
v. Appeal from the Lake Superior
Court
B & K Equipment Company, The Honorable Kristina Kantar,
Appellee-Defendant. Judge
Trial Court Cause No.
45D04-1506-PL-47
Tavitas, Judge.
Case Summary
[1] Crystal Foods Corporation (“Crystal”) appeals the trial court’s grant of
summary judgment to B&K Equipment Company (“B&K”). We affirm in part,
reverse in part, and remand.
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Issues
[2] Crystal raises two issues, which we consolidate and restate as whether the trial
court properly granted summary judgment to B&K for breach of warranty. On
cross-appeal, B&K also argues that the trial court erred by denying its motion
for summary judgment regarding its statute of limitation defense.
Facts
[3] Crystal operated a gas station in Merrillville on property owned by Nuch
Corporation (“Nuch”). In March 2007, Crystal entered into a contract with
B&K to remove and replace an underground storage tank located at Crystal’s
gas station. B&K provided Crystal with a four-page “Proposal,” which Crystal
signed (“Contract”). Appellant’s App. Vol. II p. 29. The first three pages of the
Contract itemized and detailed the work B&K was to perform for Crystal. The
Contract required B&K to “furnish material and labor to complete a tank
replacement project” that included, in part: “[e]xcavat[ion], remov[al],
clean[ing] and dispos[al] of the existing steel underground storage tanks”;
“[f]urnish[ing] and install[ation of] a Xerxes, 22,000 gallon single wall fiberglass
underground storage tank”; “[f]ill[ing] the excavation with compacted stone
backfill”; and replac[ing] the concrete curb and “excavated pavement under the
existing canopy with 6 [inch] thick fibermesh reinforced concrete.” Id. Each of
these three pages was signed by both B&K and Crystal. At the bottom of each
of the three pages, the following language was included: “SEE TERMS AND
CONDITIONS TO THIS PROPOSAL.” Id. The third page of the Contract
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included “TERMS”, which detailed payment provisions and Crystal’s failure to
comply with the terms of the Contract.
[4] The fourth page of the Contract was titled “TERMS AND CONDITIONS”
and was not signed by the parties. The page included the following boilerplate
language:
TITLE AND OWNERSHIP: Unless otherwise directed by
customer, if this contract includes installation, it is a construction
contract which is an agreement between this Contractor/Seller
and the Purchaser/Owner to alter, improve, repair, replace, or
erect real property. It is expressly agreed that title to and
ownership of the fixtures included in this construction contract
pass to the Purchaser/Owner upon permanent and complete
installation of the fixtures to real estate. . . .
If this contract does not include installation or if it is a contract
with a valid tax-exempt organization or if a valid resale certificate
has been issued, it is a sale of tangible personal property and it is
expressly agreed that title and ownership of the fixtures pass
upon delivery, prior to installation. . . .
*****
If for any reason this contract is not paid in full within 90 days of
completion of installation, it is agreed that in addition to
collecting all balances due, the contractor shall have the right to
remove the installed fixtures without written permission from or
prior notice to the Purchaser/Owner and thereafter the fixtures
shall become the personal property of Contractor and Contractor
shall not be responsible for any damage to purchaser/owners
property cause by such removal. . . .
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GRANT OF SECURITY INTEREST: For sales of tangible
personal property, Purchaser hereby grants and Seller retains a
purchase money security interest in said product/equipment,
including proceeds there from, for the purpose of securing
Purchaser’s obligation to make payment in full, until payment is
received in full in cash or collected funds, at which time the
security interest shall cease. . . . .
PAYMENT AND COLLECTION TERMS: It is expressly
understood and agreed that payment in full shall be due upon
completion of installation or delivery unless prior arrangements
have been made and agreed to. . . .
WARRANTIES: All equipment/Product(s) and components
carry a manufacturer’s warranty, which is passed onto the
purchaser according to the manufacturer’s policy. No other
warranties are either expressed or implied, including the
warranty of merchantability and fitness for a particular purpose.
Id. at 32.
[5] In 2008, the concrete in the area where B&K performed work settled and
cracked. An engineering study concluded that the “3-inch size rock [used by
B&K] was not a suitable backfill material.” Id. at 36. The study concluded that
the “settlement of old concrete pavement around the backfill area and
movement in the gasoline island No. 7 & 8 is caused by the improper
backfilling of the former [underground storage tank] area.” Id. at 37. Crystal
estimated its resulting damages at more than $312,000.00.
[6] In June 2015, Crystal and Nuch filed a complaint against B&K and alleged
breach of contract and negligence. Crystal’s complaint alleged, in part, that:
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B&K “owed a duty to [Crystal] to perform its work in a good and workmanlike
manner”; B&K was contracted to excavate, remove, and replace an
underground storage tank on the property; and there was “a deficiency in the
design, planning, supervision, construction, or observation of construction on
the improvement to the Property by B&K constituting a breach by B&K of the
Contract.” Appellant’s App. Vol. II p. 14.
[7] B&K filed a motion for summary judgment and claimed: (1) Crystal’s claim
was barred because it was subject to a six-year statute of limitation for damage
to real property pursuant to Indiana Code Section 34-11-2-7; (2) Crystal’s
claims were barred by the written disclaimer of implied warranties in the
Contract; and (3) Nuch was not a party to the Contract. Crystal filed a
response to B&K’s motion for summary judgment. Crystal argued that: (1) the
action was not barred by the statute of limitation because the ten-year statute of
limitation for a written contract action pursuant to Indiana Code Section 34-11-
2-11 applied; and (2) B&K’s two-paragraph warranty argument was “devoid of
substantive law and facts to support the argument.” Id. at 42.
[8] After a hearing, the trial court granted summary judgment to B&K. 1 The trial
court noted that Crystal did not dispute that Nuch was not a party to the
Contract and did not dispute B&K’s motion for summary judgment regarding
the negligence claim. The trial court concluded that B&K’s statute of limitation
1
We were not provided with the transcript of this hearing.
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argument failed because the ten-year statute of limitation for a breach of written
contract applied. The trial court, however, agreed with B&K’s warranty
argument and found:
Cited in the briefs before the Court is the case of Peltz Construction
Company v. Dunham, 436 N.E.2d 892 (Ind. [Ct.] App. 1982). In
Peltz, [t]he Court was asked to consider whether waterproofing
work on a basement constituted “goods” under UCC, and
whether a warranty existed, and if so, was breached, causing
damages. Id. at 893. The UCC as adopted by Indiana, conveys
additional rights and protections to a purchaser and “Indiana
recognizes implied warranties of fitness for a particular purpose
and implied warranties of merchantability,” under the act.
Hyundai Motor Am., Inc. v. Goodin, 822 N.E.2d 947, 951-52 (Ind.
2005) (citing Ind. Code §§ 26-1-2-314, 315 (2003)). The “implied
warranty of merchantability is imposed by operation of law for
the protection of the buyer and must be liberally construed in
favor of the buyer.” Frantz v. Cantrell, 711 N.E.2d [856, 859 (Ind.
Ct. App. 1999)].
The Court, however in Peltz rejected the existence of a UCC
claim or protection, stating such waterproofing work on a
basement did not constitute “goods” as contemplated by the act.
Id. The Court additionally stated that “in Indiana, a contract
action which alleges a breach of warranty requires proof of four
factors: 1) the existence of a warranty; 2) the breach of that
warranty; 3) causation and 4) resulting damage.” Id. at 894. The
Court further held that where a warranty provides that work will
be done in a workmanlike manner and with good materials, a
plaintiff need not prove the reason for failure, but only that it did
fail. Id. at 895 n.3.
The heart of the dispute in the case above centers around
Defendant’s denial of the existence of any warranty. The court
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must consider the language of the agreement and here the
Proposal between the parties called for [B&K to] “[f]ill the
excavation with compacted stone backfill,” without further
qualifications or limitation, and as to the evidence of a warranty
itself, the “terms and conditions” state:
WARRANTIES: All equipment/Product(s) and
components carry a manufacturer’s warranty; which is
passed on to the purchaser according to the manufacturer’s
policy. No other warranties are either expressed or
implied, including the warranty of merchantability and
fitness for a particular purpose.
In contracts, “modification of warranties and limitations of
remedy” are not per se unconscionable and any attempt to
exclude or modify an implied warranty of merchantability must
“mention merchantability” and any “limitation of the implied
warranty of fitness must be in writing.” Hahn v. Ford Motor Co.,
434 NE.2d 943, 948, 952 (Ind. Ct. App. 1982). In Indiana,
“unconscionability is a question of law” for a court and “the
party raising the issue bears the burden of proof.” Martin Rispens
& Sons v. Hall Farms, 621 N.E.2d 1078, 1086 (Ind. Ct. App.
1993).[ 2] In the present case, the Proposal between the parties
specifically disclaimed any warranty and did so using the
appropriate language for that purpose. Such exclusion is not
unconscionable and consequently Plaintiff’s claims under
contract are barred.
Appellant’s App. Vol. II pp. 10-12.
2
Abrogated by Hyundai Motor Am., Inc. v. Goodin, 822 N.E.2d 947, 951-52 (Ind. 2005).
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[9] Crystal filed a motion to correct error and argued: (1) B&K’s warranty
argument was “woefully lacking” and B&K failed to meet its summary
judgment burden; (2) the Uniform Commercial Code (“UCC”) does not apply
to this contract and “whether warranties under the UCC can be disclaimed is
immaterial in this case”; and (3) Crystal’s claim was for breach of contract, not
breach of warranty. Id. at 51-52. B&K filed a response and argued: (1) B&K
adequately argued in its motion for summary judgment that Crystal disclaimed
any implied warranties; and (2) Crystal waived any argument that the implied
warranty of workmanlike performance was different than other implied
warranties. The trial court denied Crystal’s motion to correct error. Crystal
now appeals.
Analysis
[10] Summary judgment is appropriate only when the moving party shows there are
no genuine issues of material fact for trial and the moving party is entitled to
judgment as a matter of law. Erie Indem. Co. for Subscribers at Erie Ins. Exch. v.
Estate of Harris by Harris, 99 N.E.3d 625, 629 (Ind. 2018), reh’g denied; see also
Ind. Trial Rule 56(C). Once that showing is made, the burden shifts to the
nonmoving party to designate appropriate evidence to demonstrate the actual
existence of a genuine issue of material fact. Schoettmer v. Wright, 992 N.E.2d
702, 705-06 (Ind. 2013). When ruling on the motion, the trial court construes
all evidence and resolves all doubts in favor of the non-moving party. Id. at
706. We review the trial court’s ruling on a motion for summary judgment de
novo, and we take “care to ensure that no party is denied his day in
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court.” Id. “We limit our review to the materials designated at the trial
level.” Gunderson v. State, Indiana Dep’t of Nat. Res., 90 N.E.3d 1171, 1175 (Ind.
2018), cert. denied, 139 S. Ct. 1167 (2019).
I. Breach of Contract
[11] Crystal argues that the trial court erred by granting B&K’s motion for summary
judgment regarding its breach of contract claim. 3 Crystal argues that the trial
court erred by failing to recognize B&K’s duty to perform its work in a
workmanlike manner and that the trial court erred by finding the contract
disclaimed B&K’s duty to perform its work in a workmanlike manner. 4 Crystal
argues that its claim is a breach of contract claim, not a breach of warranty
claim. B&K argues that Crystal’s breach of contract claim fails due to the
warranty disclaimer in the Contract.
[12] “To prevail on a claim for breach of contract, the plaintiff must prove the
existence of a contract, the defendant’s breach of that contract, and damages
resulting from the breach.” Haegert v. Univ. of Evansville, 977 N.E.2d 924, 937
3
Crystal makes no argument regarding Nuch or the negligence claim. Accordingly, we address only
Crystal’s breach of contract claim.
4
B&K argues that Crystal waived this argument by failing to raise it in its response to B&K’s motion for
summary judgment. B&K had the burden of demonstrating that it was entitled to summary judgment. B&K
very briefly argued that implied warranties were disclaimed by the Contract’s terms and conditions. Crystal
responded that B&K’s one-sentence argument related to the issue was waived and distinguished the cases
cited by B&K. We were not provided with the transcript of the summary judgment hearing. In its motion to
correct error, Crystal argued that this was a breach of contract claim, not a breach of warranty claim, and that
the implied duty to perform work in a workmanlike manner was not disclaimed. We conclude that Crystal
adequately argued to the trial court that the implied duty to perform work in a workmanlike manner was not
disclaimed and that Crystal did not waive the issue.
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(Ind. 2012). According to Crystal, its breach of contract claim is based on the
implied duty of B&K to perform the work skillfully, carefully, and in a
workmanlike manner. Our courts have held that[,] “[i]n a contract for work,
there is an implied duty to do the work skillfully, carefully, and in a
workmanlike manner.” INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566,
576 (Ind. Ct. App. 2003), trans. denied. The failure to do so may be a breach of
contract. Id.
[13] These arguments require that we interpret the parties’ Contract. The
interpretation of a contract “is particularly well-suited for de novo appellate
review, because it generally presents questions purely of law.” WellPoint, Inc. v.
Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 29 N.E.3d 716, 721 (Ind. 2015), opinion
modified on reh’g, 38 N.E.3d 981 (Ind. 2015). Our goal in contract interpretation
is “to determine the intent of the parties at the time that they made the
agreement.” Care Grp. Heart Hosp., LLC v. Sawyer, 93 N.E.3d 745, 752 (Ind.
2018). “We start with the contract language to determine whether it is
ambiguous.” Id. “If the language is unambiguous, we give it its plain and
ordinary meaning in view of the whole contract, without substitution or
addition.” Id. This court must examine the plain language of the contract, read
it in context and, whenever possible, construe it so as to render every word,
phrase, and term meaningful, unambiguous, and harmonious with the whole.
City of Plymouth v. Michael Kinder & Sons, Inc., 137 N.E.3d 312, 315 (Ind. Ct.
App. 2019).
[14] The warranty at issue here provided:
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WARRANTIES: All equipment/Product(s) and components
carry a manufacturer’s warranty, which is passed onto the
purchaser according to the manufacturer’s policy. No other
warranties are either expressed or implied, including the
warranty of merchantability and fitness for a particular purpose.
Appellant’s App. Vol. II p. 32. This provision was included at the end of the
“TERMS AND CONDITIONS” page of the Contract. In interpreting this
provision, we begin by noting that the parties’ Contract involved both the
supply of services (excavation, removal of the old underground storage tanks,
installation of the new tanks, construction of the new concrete pavement, etc.)
and the provision of goods (the underground storage tanks and accessories).
Accordingly, the Contract included language applicable to the sale of goods and
language applicable to the provision of services. 5
[15] The first sentence of the warranty discusses manufacturer’s warranties and is
clearly applicable to the sale of goods, such as the underground storage tanks.
5
The Sales chapter of the Indiana Uniform Commercial Code (“UCC”), Ind. Code Chapter 26-1-2, “applies
to transactions in goods,” unless the context otherwise requires. Ind. Code § 26-1-2-102. Our Supreme Court
has noted that “[m]any modern commercial transactions cannot be classified as transactions purely for goods
or for services, but are ‘mixed,’ involving both goods and services.” Insul-Mark Midwest, Inc. v. Modern
Materials, Inc., 612 N.E.2d 550, 553-54 (Ind. 1993). In Insul-Mark, our Supreme Court held that, where the
transaction is mixed, “courts look to the agreement between the parties to determine their understanding
about the predominant purpose of the contract.” Id. at 554. This analysis is typically required to determine
whether the UCC is applicable to a transaction. See id. at 556 (“Based upon the facts of this case as well as
the well-reasoned conclusions of other courts, we hold as a matter of law that the thrust of the coating
agreement between Kor-It and Modern Materials was predominantly for the performance of services. The
U.C.C. does not apply to the transaction, and the parties’ dispute is therefore governed by our common
law.”). Although the Contract contains many terms applicable to the sale of goods, neither party argues that
the UCC warranty provisions are applicable here. Accordingly, we do not address the predominant purpose
of the Contract.
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The second sentence of the warranty is the sentence at issue here. The last
portion of the second sentence specifically disclaims the warranty of
merchantability and fitness for a particular purpose. The warranty of
merchantability and the warranty of fitness for a particular purpose are UCC
concepts. See Ind. Code § 26-1-2-315(1) (“Where the seller at the time of
contracting has reason to know any particular purpose for which the goods are
required and that the buyer is relying on the seller’s skill or judgment to select
or furnish suitable goods, there is, unless excluded or modified under IC 26-1-2-
316, an implied warranty that the goods shall be fit for such purpose.”); Ind.
Code § 26-1-2-314 (“Unless excluded or modified (IC 26-1-2-316), a warranty
that the goods shall be merchantable is implied in a contract for their sale if the
seller is a merchant with respect to goods of that kind.”). Under the UCC, “to
exclude or modify the implied warranty of merchantability or any part of it the
language must mention merchantability and in case of a writing must be
conspicuous, and to exclude or modify any implied warranty of fitness the
exclusion must be by a writing and conspicuous.” Ind. Code § 26-1-2-316. The
second sentence of the warranty was clearly meant to disclaim the UCC
implied warranties of fitness and merchantability pursuant to Indiana Code
Section 26-1-2-316.
[16] B&K relies on the first portion of the second sentence— “[n]o other warranties
are either expressed or implied”—for the proposition that all warranties
associated with the Contract were disclaimed. This short phrase, however, is
contained in a paragraph that pertains only to UCC concepts. In fact, most of
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the “TERMS AND CONDITIONS” pages discusses B&K’s provision of
goods. Reading the Contract as a whole, we conclude that the warranty
paragraph was unambiguously meant to address UCC concerns, not to disclaim
all possible warranties of any kind.
[17] Accordingly, we conclude that B&K did not disclaim the implied duty of B&K
to perform the work skillfully, carefully, and in a workmanlike manner. The
designated evidence demonstrated genuine issues regarding whether B&K
properly compacted the stone, resulting in cracked and settled concrete. As
such, the trial court erred by granting B&K’s motion for summary judgment on
Crystal’s breach of contract claim.
II. Statute of Limitation
[18] On cross-appeal, B&K argues that the trial court erred by denying its motion for
summary judgment regarding its statute of limitation argument. “Statutes of
limitation ‘are practical and pragmatic devices to spare the courts from
litigation of stale claims, and the citizen from being put to his defense after
memories have faded, witnesses have died or disappeared, and evidence has
been lost.’” V. Ganz Builders & Dev. Co., Inc. v. Pioneer Lumber, Inc., 59 N.E.3d
1025, 1032 (Ind. Ct. App. 2016) (quoting Russo v. S. Developers, Inc., 868 N.E.2d
46, 48 (Ind. Ct. App. 2007)), trans. denied. “‘[I]t is the nature or substance of the
cause of action, rather than the form of the action, which determines the
applicability of the statute of limitations.’” Barrow v. City of Jeffersonville, 973
N.E.2d 1199, 1205 (Ind. Ct. App. 2012) (quoting Shideler v. Dwyer, 275 Ind.
270, 276, 417 N.E.2d 281, 285 (1981)), trans. denied. The determination of the
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applicable statute of limitation is a matter of statutory construction that is
“purely a question of law.” Januchowski v. N. Indiana Commuter Transp. Dist.,
905 N.E.2d 1041, 1045 (Ind. Ct. App. 2009), trans. denied.
[19] On appeal, B&K argues that Crystal’s cause of action accrued on June 3, 2008,
when Crystal received the report regarding the cause of the damaged concrete.
Crystal filed its complaint on June 26, 2015, more than seven years later. B&K
argues that the six-year statute of limitation for damage to real property applies.
See Ind. Code 34-11-2-7 (“The following actions must be commenced within six
(6) years after the cause of action accrues: . . . (3) Actions for injuries to
property other than personal property . . . .”). Crystal, however, argues that the
ten-year statute of limitation for breach of a written contract applies. See Ind.
Code 34-11-2-11 (“An action upon contracts in writing . . . must be commenced
within ten (10) years after the cause of action accrues.”). The trial court found
that the ten-year statute of limitation applied and that Crystal’s claim was not
barred by the statute of limitation.
[20] In support of its argument, B&K relies primarily on Habig v. Bruning, 613
N.E.2d 61 (Ind. Ct. App. 1993), trans. denied. In Habig, homeowners filed a
complaint against contractors for breach of contract, breach of warranty of
habitability, and breach of warranty of workmanship after the addition to their
house began leaking. There is no indication in the opinion that a written
contract between the contractors and the homeowners existed. The arguments
presented to the Court centered on when the statute of limitation began to run.
With no analysis or discussion regarding the proper statute of limitation, our
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Court noted that the statute of limitation “for damage to real property caused
by breach of contract and warranty” was applicable. Habig, 613 N.E.2d at 64.
[21] The trial court and Crystal rely upon Powers & Sons Constr. Co. v. Healthy East
Chicago, 919 N.E.2d 137 (Ind. Ct. App. 2009). There, a building owner entered
into a written contract with a construction manager for the construction of a
health service facility. The building owner filed a complaint against a
construction manager for breach of contract after its building developed cracks
in the floors, walls, and ceilings. The construction manager argued that a two-
year statute of limitation for injury to personal property pursuant to Indiana
Code Section 34-11-2-11 or the six-year statute of limitation under Indiana
Code Section 34-11-2-7 was applicable. The building owner argued that the
ten-year statute of limitation for breach of a written contract was applicable.
[22] We agreed with the building owner and held that the ten-year statute of
limitation for breach of a written contract was applicable because “[t]he
relationship between the parties and [the construction manager’s] duties and
responsibilities as general contractor arose from the contract rather than from a
standard of care imposed by law.” Powers & Sons, 919 N.E.2d at 143. The
building owner’s complaint sought “to recover damages sustained as a result of
[the construction manager’s] failure to perform according to the contract; that
is, to hire and supervise subcontractors and construct a building conforming to
the plans and specifications suitable for [the building owner’s] needs.” Id. at
143-44. Accordingly, we held that the complaint was governed by the ten-year
statute of limitation applicable to written contracts.
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[23] We do not find Habig persuasive here. Crystal entered into a written contract
with B&K for the removal and replacement of an underground storage tank.
The contract included filling the excavation with compacted stone backfill and
replacing the removed pavement with six-inch thick reinforced concrete. When
the concrete settled due to the improper backfill, Crystal filed a complaint
against B&K for breach of contract. The nature and substance of this action
pertains to B&K’s obligations under the written contract. Under these
circumstances, as in Powers & Sons, we conclude that the ten-year statute of
limitation for a breach of written contract action applies.
Conclusion
[24] The trial court properly denied B&K’s motion for summary judgment regarding
its statute of limitation defense. The trial court, however, erred by granting
B&K’s motion for summary judgment regarding Crystal’s breach of contract
claim. We affirm in part, reverse in part, and remand.
[25] Affirmed in part, reversed in part, and remanded.
Riley, J., and Mathias, J., concur.
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