Pines of Greenwood, LLC and Arbor Homes, LLC v. The Village Pines at the Pines of Greenwood Homeowners' Association, Inc. (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 Nov 10 2020, 8:44 am

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

ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
Thomas F. Bedsole Laura B. Conway
Jenai M. Brackett Steven C. Earnhart
Maggie L. Smith Indianapolis, Indiana
Darrian A. Smith
Indianapolis, Indiana

IN THE
COURT OF APPEALS OF INDIANA

Pines of Greenwood, LLC and November 10, 2020
Arbor Homes, LLC, Court of Appeals Case No.
Appellants-Defendants, 20A-PL-373
Appeal from the Johnson Superior
v. Court
The Honorable Marla K. Clark,
The Village Pines at the Pines of Judge
Greenwood Homeowners’ Trial Court Cause No.
Association, Inc., 41D04-1111-PL-86
Appellee-Plaintiff.

Altice, Judge.

Court of Appeals of Indiana | Memorandum Decision 20A-PL-373 | November 10, 2020 Page 1 of 26
 Case Summary
[1] This is an appeal after remand, stemming from long-running litigation between

plaintiff The Village Pines at the Pines of Greenwood Homeowners’

Association, Inc. (the HOA), a not-for-profit corporation, and defendants Pines

of Greenwood, LLC (Developer) and Arbor Homes, LLC (Builder). In 2011,

the HOA sued Developer and Builder for, as is relevant here, breach of contract

involving a dispute over the neighborhood’s covenants. The trial court entered

judgment for Developer and Builder, and the HOA appealed.

[2] This court reversed, finding that Developer and Builder had breached the

neighborhood’s covenants, and remanded for a hearing on the HOA’s damages.

Village Pines at the Pines of Greenwood Homeowners’ Assoc., Inc. v. Pines of

Greenwood, LLC, 123 N.E.3d 145 (Ind. Ct. App. 2019) (Village Pines I). On

remand, the trial court determined that the HOA incurred damages in excess of

$1 million, comprised of the following amounts: $225,524.50 for assessments;

$148,275.00 for late fees; $626,110.00 for interest on unpaid assessments; and

attorney’s fees, expenses, and costs of $87,683.01. Developer and Builder

appeal and raise the following restated issues:

I. Did the HOA have standing to recover damages?

II. Was the trial court’s determination of unpaid HOA
assessments supported by the evidence?

III. Was the interest rate used by the trial court and the
imposition of late fees erroneous?

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[3] We affirm in part, reverse in part, and remand. 1

Facts & Procedural History 2
Provisions of the Neighborhood Covenants

[4] In 2000, Developer and Builder began development of the neighborhood of

Village Pines at Pines of Greenwood (the Neighborhood). Developer and/or

Builder drafted The Declaration of Covenants, Conditions and Restrictions and

Grant and Reservation of Easements for The Village Pines at the Pines of

Greenwood (the Covenants or the Declaration) and recorded the Covenants in

the Johnson County Recorder’s Office in January 2000.

[5] The Covenants define a number of relevant terms: “Declarant” was defined as

the Developer and provided that the Builder has “the same rights as Declarant

hereunder”; “Owner” means “the Person or Persons, including Declarant,

holding fee simple interest to a Lot”; “Development Period” means “the period

of time during which the Declarant owns at least one [L]ot”; “Annual

Assessment” means “a charge against a particular Owner and his Lot,

representing a portion of Common Expenses which are to be levied among all

Owners and their Lots . . . in the manner and proportions provided herein”;

“Common Expenses” means, in part, “those expenses for which the [HOA] is

responsible under this Declaration, including the actual and estimated costs of:

1
We deny Developer and Builder’s motion for oral argument by separate order.
2
We borrow in part from our colleagues’ opinion in Village Pines I.

Court of Appeals of Indiana | Memorandum Decision 20A-PL-373 | November 10, 2020 Page 3 of 26
 maintenance, management, operation, repair and replacement of the Common

Areas . . . and any Improvements thereon, or unpaid Special Assessments”;

“Member” means “any Person holding a Membership in the [HOA]”, and

“Person” means a “natural individual or any other entity with the legal right to

hold title to real property.” Prior Exhibits 3 at 15-18.

[6] Article V of the Covenants sets forth relevant provisions regarding Assessments

and includes the following:

5.1 Personal Obligation of Assessments. Declarant, on behalf of
itself and all future Owners, hereby covenants and agrees to pay, . . .
to the Association, Annual Assessments and other amounts as required or
provided for in this Declaration. Amounts payable for Annual
Assessments and Special Assessments (as generally defined in
Sections 5.5 and 5.7, respectively) are generally referred to herein
as “Assessments.” Other amounts payable by an Owner to the
Association, (or payable with respect to an Owner’s Lot), including
late charges, fines, penalties, interest, attorneys fees and other costs and
expenses incurred by the Association in collecting unpaid amounts shall
be added to the Annual or Special Assessments, charged to his
Lot and shall be enforceable and collectible as Annual or Special
Assessments....

***

5.5 Annual Assessments/Commencement-Collection. Annual
Assessments, and any monthly installment related thereto, shall
commence on the first day of the first calendar month following

3
On April 6, 2020, this court ordered that the Record of Proceedings from Village Pines I be included in the
record in this appeal.

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 the Closing of the sale of the first Lot. Thereafter, the
Association is specifically authorized to enter into subsidy
contracts or contracts for “in kind” contribution of services,
materials, or a combination of services and materials with the
Declarant or other entities for payment of Common Expenses.

All Annual Assessments shall be assessed equally against the Members
and their Lots based upon the number of Lots owned by each Member.
Annual Assessments for fractions of any month involved shall be
prorated. Subject to the terms of any subsidy contract, Declarant
shall pay to the Association until the Applicable Date, an amount equal
to the difference, if any, between the expenditures of the Association made
pursuant to this Article V and the aggregate amount of the Annual
Assessments collected by the Association. . . .

***

5.8 Time for Payments. Each installment of the Annual Assessment
shall be due on the first day of the period covered by said installment.
The amount of any Assessment, late charge, fine, penalty or
other amount payable by an Owner or Resident with respect to
such Owner’s Lot shall become due and payable as specified
herein and if said payment is not received, then said Owner shall also be
responsible for any late charges, interest, fines, penalties or attorneys fees
related thereto.... Annual Assessments shall be paid and collected
on a quarterly basis or at such other frequency as may be adopted
by the Board.

Id. at 29, 31, 32-33 (emphases added).

[7] The Covenants also provide specific procedures for their amendment. Under

Section 12.2, notice of a proposed amendment must be provided to

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 homeowners, and adoption of a resolution requires consent of 67% of the

Members. However, the Covenants provide an exception to that required vote:

12.3 By Declarant. Notwithstanding anything herein to the
contrary, Declarant hereby reserves the right until the expiration of the
Development Period to make such amendments to this Declaration as
may be deemed necessary or appropriate by Declarant, without
the approval of any other person or entity, in order to bring Declarant
into compliance with the requirements of any statute, ordinance,
regulation or order of any public agency having jurisdiction
thereof, or to correct clerical or typographical errors in this Declaration
or any amendment or supplement hereto; provided that Declarant
shall not be entitled to make any amendment which has a materially
adverse effect on the rights of any Mortgagee, nor substantially
impairs the benefits of this Declaration to any Owner or substantially
increases the obligations imposed by this Declaration on any Owner.
Each amendment to the Declaration shall be executed by
Declarant only in any case where Declarant has the right to
amend this Declaration without any further consent or approval,
and otherwise by the Association. All amendments shall be
recorded in the Office of the Recorder of Marion County,
Indiana, and no amendment shall become effective until so
recorded.

Id. at 47-48 (emphases added).

Background

[8] During the Development Period, from January 2000 to November 2009,

Developer and Builder controlled the HOA and, among other things, appointed

the HOA’s Board of Directors (the Board). On May 18, 2006, the HOA held a

meeting, the minutes of which reflected that a discussion occurred regarding

whether Developer and Builder were required to pay Assessments on unsold

Court of Appeals of Indiana | Memorandum Decision 20A-PL-373 | November 10, 2020 Page 6 of 26
Lots. On July 2, 2008, Developer and Builder recorded a Second Amendment 4

to the Covenants (the Second Amendment) in the Recorder’s Office. It stated,

in part:

WHEREAS, Declarant’s intent at the time the Declaration was
prepared and recorded was to provide for Declarant to fund the
deficit of the Association’s Common Expenses, if any, prior to
the Applicable Date, and that Declarant would not otherwise be
responsible for payment of the Association’s Common Expenses; and

WHEREAS, the Declaration contains certain clerical and
typographical errors.

WHEREAS, such errors result in unintended ambiguities
regarding Declarant’s obligations to contribute toward the
Association’s Common Expenses;

WHEREAS, Declarant wishes to correct such errors in the
Declaration;

WHEREAS, pursuant to the terms of Section 12.3 of the
Declaration, Declarant has the right until the expiration of the
Development Period to make amendments to the Declaration as
may be deemed necessary or appropriate by Declarant, without
the approval of any other person or entity, to correct clerical
errors in the Declaration; and

4
In July 2007, Developer recorded a First Amendment to the Covenants, regarding parking, nuisances, and
trash containers, and followed Section 12.2’s required procedure for amendments.

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 WHEREAS, Declarant represents that the Development Period
has not terminated.

NOW THEREFORE, Declarant is hereby entering into this
Second Amendment as follows:

***

3. The first sentence of Section 5.1, Personal Obligation of
Assessments, shall be deleted and replaced with the following:

Each Owner (other than Declarant), by accepting title to a Lot or
any interest therein, whether or not it shall be expressed in the
deed or other instrument conveying title, shall be deemed to
covenant and agree to pay to the Association, Annual
Assessments and other amounts as required or provided for in
this Declaration.

4. The first sentence of Section 5.5 Annual
Assessments/Commencement-Collection, shall be deleted and
replaced with the following:

Annual Assessments, and any monthly installment related
thereto, shall commence on the first day of the first calendar
month following the Closing of the first sale of a Lot to a person
other than Declarant.

Id. at 61-64 (emphases added).

[9] On November 5, 2009, control of the HOA was turned over to the homeowners

of the Neighborhood. On November 4, 2011, the HOA filed a complaint

against Developer and Builder (sometimes collectively Defendants) asserting, as

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 is relevant here, breach of contract, 5 for purporting to amend the Covenants

without a vote of the Members and for failure to pay the Annual Assessments

on unsold Lots.

[10] A bench trial was held in May 2017. Board member Megan Judson testified

that Annual Assessments were calculated based on the annual budget. The

court admitted over objection Exhibit 10, a spreadsheet, which listed

addresses/Lot numbers, the transfer dates when the Lots were transferred from

Developer or Builder to third parties, and yearly Annual Assessment amounts

as follows: $32.50 per Lot per month for 2001-2001, $41.00 per Lot per month

for 2002-2004, and $45.00 per Lot per month for 2005-2009. Exhibit 10

reflected that Developer and Builder owed unpaid Assessments of $245,982.50

(a computation involving taking the number of months that listed Lots were

owned by Developer/Builder and multiplying by the appropriate monthly

Assessment amount) and late fees at $25.00 per month totaling $148,275.00.

Judson testified that the Second Amendment was never approved by the HOA.

[11] On October 2, 2017, the trial court entered judgment in favor of Developer and

Builder, finding that, while Developer and Builder did not pay Assessments to

the HOA as required by the Covenants from June 2000 to November 2009, they

did make Deficit Funding and in-kind contributions for the years 2000, 2001,

2002, 2003, and 2005. The trial court determined with regard to the HOA’s

5
The Village Pines I court noted that the complaint was not included in the record before it. We likewise do
not have the complaint and do not know the precise allegations.

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 alleged damages: (1) the HOA “did not suffer any actual damages because its

budget was fully funded every year” given that “the deficit Funding system . . .

satisfied all actual expenditures of the [HOA] on an annual basis[,]” and (2) the

HOA also “seeks to recover [] damages to its members,” namely having to pay

higher assessments due to Developer/Builder’s failure to pay assessments, and

that “[t]he [HOA] has standing to sue on certain issues, but does not have

standing to recover monetary damages arguably incurred by individual

members.” Judgment Order at 18. The HOA appealed.

First Appeal

[12] This court in Village Pines I determined, as is relevant to this appeal, that the

Second Amendment – which removed Developer and Builder from the

definition of Owners for purposes of Article V and the Annual Assessment

obligations – did not merely clarify clerical or typographical errors, but rather,

increased the obligations on other Member homeowners, and thus, pursuant to

Section 12.2, a vote of 67% of Members of the HOA was required. Therefore,

Developer and Builder, in recording the Second Amendment, which was not

approved by Members of the HOA, breached the Covenants’ amendment

procedure.

[13] The Village Pines I court rejected Developer and Builder’s argument that the

HOA had not shown that it suffered any damages since the HOA’s annual

budgets were fully funded (i.e., there were no unpaid or outstanding amounts).

The court reasoned that the Covenants required Annual Assessments to be

assessed equally against the Members and their Lots and that Builder and
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 Developer were Members or Owners under the Covenants. Therefore, the

court concluded

[a]fter due consideration of the stipulated exhibits, evidence, and
testimony presented at trial, and in light of the court’s finding
that [Developer] and [Builder] did not pay assessments to the
Association from June 2000 to November 2009, we are not
persuaded that the HOA did not suffer any damages.

Id. at 157 (citation to record omitted). The Village Pines I court reversed the trial

court’s breach of contract determination and remanded for a damages hearing.

[14] Developer and Builder filed a petition for rehearing, asserting that the court

remanded for a damages hearing “without addressing the trial court’s findings

and conclusions as to standing.” Pet. for Rehearing at 4. Developer and Builder

urged that damages “belong to individual Owners” who paid higher

Assessments than they otherwise would have, and such individualized proof of

damages by the Owners precluded the HOA from having associational

standing. Id. at 9.

[15] The HOA filed a response maintaining that, while its complaint had sought

damages on its own behalf and, alternatively, on behalf of its Members, it had

appealed only that portion of the trial court’s order finding that the HOA did not

suffer any damages and that the Village Pines I court agreed with the HOA that

it had been damaged by the breach of contract. The HOA argued that the

Village Pines I court did not need to address whether the HOA had associational

standing on behalf of its Members and, thus, rehearing was not needed. This

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 court denied the petition for rehearing without opinion. 6 Transfer was not

sought.

Damages Determination on Remand

[16] On October 22, 2019, the trial court held a hearing on damages. The HOA

argued that Developer and Builder were required under the Covenants to pay

Annual Assessments to the HOA, the amount of which was “determined by the

Board [] years ago.” Transcript at 24. In support of the amount of damages, the

HOA offered Exhibit 10 that was admitted during the prior trial as evidence of

the total amount owed for unpaid Assessments and late fees.

[17] The HOA also presented the testimony of Judson, a member of the Board and

the property manager for the Neighborhood. Judson testified that she was

familiar with the Covenants and stated that, in the past, the Board charged an

interest rate of 18% on unpaid Assessments and that the current late fee charged

by the Board was $25.00 per month. She explained that the process followed to

collect unpaid Assessments from Member homeowners was to send a statement

reflecting the balance owed and the late fee being assessed. If the Member still

did not pay, then they would receive additional letters, and eventually be sent to

an attorney for legal proceedings. The HOA asked the trial court to enter

6
Developer and Builder requested oral argument on the petition for rehearing, which was denied as not
permitted under the Appellate Rules.

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 judgment in the amount of $1,379,876.42, consisting of unpaid assessments,

late fees, and interest, plus attorney’s fees.

[18] Developer and Builder asserted that the HOA itself did not incur any damages

because the Assessments were based on the budget and the Common Expenses,

and all the Common Expenses for every year through 2009 were paid, since the

Developer and/or Builder paid any deficit. Rather, if anyone was damaged, it

was homeowners who overpaid Annual Assessments due to the fact that

Developer and Builder were not paying Assessments and any recovery “should

go back into the pockets of the people who overpaid,” not the HOA. Transcript

at 17. Counsel for Developer and Builder maintained that “any award here

would result in a windfall to the [HOA].” Id. at 18.

[19] In support of their position that the HOA did not suffer damages, Developer

and Builder offered several exhibits. One summarized the HOA’s actual

expenses for five years (2000, 2001, 2002, 2006, and 2008). Another was a table

that compared the amount charged to homeowners per Lot against “the

amounts that should have been charged to the homeowners had the [Developer

and Builder] … been paying monthly [] expenses[.]” Id. at 16. The HOA

objected to the exhibits, arguing that expenses incurred by the HOA were not

relevant to the damages hearing. The trial court admitted the exhibits over

objection.

[20] In response to Developer and Builder’s argument that the HOA suffered no

damages, the HOA argued that the court in Village Pines I already rejected that

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 argument and “clearly stated that the Defendants’ failure to pay assessments

was the damages[.]” Id. at 24. The HOA maintained that it was “allowed to

collect its annual assessments” and “[t]he [] actual expenses are not to be

considered.” Id. at 30. In response to the suggestion that an award to the HOA

would result in a “windfall,” the HOA argued that Developer and Builder were

“attempting to shoehorn an equitable argument into this breach of contract

case.” Id. at 24.

[21] With regard to late fees being sought by the HOA, Developer and Builder

argued that “there were no collection efforts that might justify late fees[,]” no

statements were sent and no late fees were ever assessed. Id. at 26. Therefore,

they argued, the fees being sought “bear no relation” to collection efforts and

constitute a penalty. Id. at 27. Further, with regard to interest being sought by

the HOA, they argued that, while Indiana courts have found an interest award

to be justified where the party had to pay the cost of borrowing money to fund

the budget, here all the expenses were paid and thus no interest should be

awarded as damages.

[22] The HOA offered two exhibits concerning attorney’s fees, an affidavit and

billing statement, that were admitted over objection, evidencing that they had

incurred attorney’s fees in the amount of $87,683.01. Counsel noted that the

case was first filed in 2011 and had been through various motions, including a

motion for summary judgment, a request for interlocutory appeal, mediation,

and an appeal.

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[23] The parties submitted proposed orders and, on January 17, 2020, the court

issued an Order on Damages, finding, in part: (1) Under the Covenants, the

Board determines the amount of the Annual Assessments; (2) Exhibit 10

reflects Developer and Builder’s dates of Lot ownership; (3) and Builder and

Developer did not pay Assessments to the HOA from June 2000 through

November 2009 but, in lieu of per-Lot Assessments, they paid the HOA

$53,428.00 in Deficit Funding and in-kind contributions for the years 2000,

2002, 2003, and 2005. Giving Builder and Developer credit for the $53,428.00

contributions, the trial court determined that Builder and Developer owed

$225,524.50 in unpaid Assessments.

[24] The court also expressly stated:

11. The Court rejects Defendants’ argument that awarding
damages to the [HOA] represents a windfall because the amounts
they owed under the Declaration were collected from other
Owners. The Board determined the amount of the annual
assessment and the members of the Board were appointed by
Defendants. Defendants cannot escape their contractual liability
because the Board which they appointed set the annual
assessment based on Defendants’ own erroneous interpretation of
the Declaration as not requiring them to pay assessments.

12. Defendants also argue that now that the common expenses
for the past years are known, the actual common expenses is [sic]
the relevant figure. However, the Declaration provides that the
Board sets the amount of the annual assessment and this is the
amount that each Owner must pay.

Appellant’s Appendix Vol. 2 at 23.

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[25] The court found that the HOA charged delinquent Owners 18% annual interest

and $25.00 per month in late fees. Using those figures, the court determined

damages as follows:

a. $225,524.50 for assessments,

b. $148,275.00 for late fees as allowed by the Declaration,

c. $626,110.22 for interest at the rate of 18% per annum as
allowed by the Declaration through October 22, 2019, plus

d. interest at a rate of $111.22 per day from October 22, 2019 to
the date of judgment.

Id. at 22. The court found that the $87,683.01 in attorney’s fees incurred by the

HOA was reasonable given the hourly rate, time spent, and complexity of the

case. Developer and Builder now appeal. Additional facts will be provided

below as needed.

Discussion & Decision
[26] Our review of a damages award is limited. Crider & Crider, Inc. v. Downen, 873

N.E.2d 1115, 1118 (Ind. Ct. App. 2007). We do not reweigh the evidence or

judge the credibility of witnesses, and we will consider only the evidence

favorable to the award. Id. A damage award must be supported by probative

evidence and cannot be based upon mere speculation, conjecture, or surmise.

Id. We will reverse an award of damages only when it is not within the scope

of the evidence before the finder of fact. Id.

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 I. HOA’s Standing to Recover Damages
[27] Developer and Builder assert that the HOA does not have standing to recover

damages and, consequently, the trial court’s damages order on remand was in

error. Their argument is this: Because all of the Neighborhood’s expenses were

funded during the years at issue, through deficit funding or otherwise, the HOA

did not suffer any of its own damages, and, rather, it is the homeowners, if anyone,

who suffered damages by having to pay higher assessments. Therefore, they

argue, the HOA can only recover if it has associational standing, which

Developer and Builder maintain the HOA does not have for various reasons but

primarily because individual homeowners would need to establish

particularized damages. We reject the premise on which the entire argument is

based, namely that the HOA did not suffer any damages because the

Neighborhood’s expenses were funded. Rather, we agree with the HOA that

this issue already has been raised and decided adversely to Developer and

Builder.

[28] Specifically, in Village Pines I the court stated:

To the extent that Pines and Arbor Homes . . . argue that
“because there were no unpaid, unbudgeted, or outstanding
amounts, the HOA had not shown that it could have suffered any
damages,” . . . we note that the articles of incorporation and
bylaws of a non-profit corporation constitute a contract between
the corporation and its members and among the members
themselves, . . . and that a party who fails to make payments as
required by a contract is guilty of a breach thereof. . . . [I]n light
of the court’s finding that [Developer] and [Builder] did not pay
assessments to the Association from June 2000 to November

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 2009, we are not persuaded that the HOA did not suffer any
damages.

123 N.E.3d at 157 (internal citations omitted). Developer and Builder

requested rehearing, arguing that the Village Pines I court failed to address the

standing issue. The HOA’s response confirmed that it was not seeking recovery

on an associational standing basis (i.e., recovery on behalf of its members), and

this court denied the petition for rehearing. Builder and Developer did not seek

transfer.

[29] It is well settled that, on remand, the trial court was required to apply the law of

the case. Learman v. Auto-Owners Ins. Co., 769 N.E.2d 1171, 1175 (Ind. Ct. App.

2002) (“Upon remand following an appellate decision, the law of the case

doctrine requires a trial court to ‘apply the law as laid down by the appellate

court.’”), trans. denied. The doctrine precludes reexamination of issues on

remand and subsequent appeal which were either expressly or by necessary

implication settled as a matter of law on prior review. Guarantee Trust Life Ins.

Co. v. Palsce, 641 N.E.2d 1266, 1268 (Ind. Ct. App. 1994), trans. denied.

[30] The cause of action, here, belongs to the HOA. 7 The HOA’s claim is not

whether and to what extent each individual homeowner was damaged. The

7
Section 5.11 of the Covenants provides that it is the duty of the Board “to enforce the collection of any
amounts due under this Declaration[.]” Prior Exhibits at 33-34.

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 dues are owed to the HOA, and the HOA is the party that has been damaged by

the Developer and Builder failing to pay Assessments on unsold Lots. 8

II. Damages Amount
[31] Developer and Builder argue that, if the HOA is permitted to recover damages,

the trial court’s calculation was not supported by the evidence and/or was

mathematically incorrect and remand is once again necessary.

[32] The HOA’s evidence of unpaid assessments at the damages hearing (and at

trial) was Exhibit 10, the spreadsheet that identified the Assessment amount for

the relevant years as determined by the Board (whose members were appointed

by Developer and Builder) and listed the Lots at issue and the number of

months that Developer and Builder should have but did not pay the

corresponding Assessment. All totaled, Exhibit 10 reflected an amount owing

of $245,982.50 in unpaid Assessments. 9

[33] The trial court’s order on damages, however, reflected that the amount due was

$278,952.50. It is not clear whether this was a mathematical error or whether

the trial court utilized the figures in Exhibit 10 to arrive at a different total

amount due. In either case, we find that remand is warranted to either clarify

8
Because we find that the HOA is not seeking damages on behalf of its members, we need not reach
Developer and Builder’s argument that the HOA does not have associational standing.
9
We note that the HOA’s Trial Exhibit 28, concerning an interest calculation, also utilizes $245,982.50 as
the amount owing in unpaid Assessments.

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 how the court arrived at $278,952.50 from Exhibit 10 or correct the amount due

for unpaid Assessments to $245,982.50.

[34] We note that the trial court made an adjustment to the total amount due by

crediting Developer and Builder with $53,428.00 that they paid in Deficit

Funding and/or in-kind contributions during the relevant time period. We

agree that making this adjustment was appropriate but note that the trial court

credited the $53,428.00 against $278,982.50, for a net owing of $225,524.50. If

the court should revise the unpaid Assessments to $245,982.50, then the net

amount owing should be reduced to $192,554.50.

III. Interest and Late Fees
[35] Developer and Builder assert that, even if we affirm an award of damages for

unpaid Assessments, we should reverse the trial court’s determination of

$626,110.22 in interest and $148,275.00 in late fees.10 Section 5.8 of the

Covenants provides that Annual Assessments are “paid and collected on a

quarterly basis” and “are due on the first day of the period covered by said

installment” and that, if payment is not received, then the Owner “shall also be

responsible for any late charges, interest, fines, penalties or attorneys fees

related thereto.” Prior Exhibits at 32-33. The Section continues, “Unless paid,

when due, any such amount shall bear interest at a rate specified by the Board, but

10
While Developer and Builder assert generally that the “additional awards” of interest, late fees, and
attorney’s fees were in error, Appellant’s Brief at 33, they make no separate argument regarding attorney’s fees.
Accordingly, any claimed error as to the attorney’s fee award is waived. Ind. Appellate Rule 46(A)(8).

Court of Appeals of Indiana | Memorandum Decision 20A-PL-373 | November 10, 2020 Page 20 of 26
 in no event greater than eighteen percent (18%) per annum from its original due

date until date of payment.” Id. at 33 (emphasis added). Section 5.9 of the

Covenants provides for late fees of $25.00 per month.

a. Interest

[36] Ind. Code § 24-4.6-1-101 provides for “interest on judgments for money

whenever rendered.” Prejudgment interest is awarded to fully compensate an

injured party for the lost use of money. Song v. Iatarola, 76 N.E.3d 926, 939

(Ind. Ct. App. 2017), aff’d on reh’g, 83 N.E.3d 80, trans. denied. 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 I.C. § 24-4.6-1-103(b). The current statutory interest

rate is 8% when there is no contract by the parties specifying a different interest

rate. Song, 76 N.E.3d at 939; see also I.C. § 24-4.6-1-101. Our court has stated:

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. 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. The award is considered proper when the trier of fact does
not have to exercise its judgment to assess the amount of
damages. Importantly for purposes of our review, an award of
prejudgment interest is generally not considered a matter of
discretion.

Song, 76 N.E.3d at 939 (internal citations omitted).

Court of Appeals of Indiana | Memorandum Decision 20A-PL-373 | November 10, 2020 Page 21 of 26
[37] Here, the trial court on remand found that “[a]t turnover and for a time

thereafter,” the interest charged to delinquent Owners by the HOA was 18% per

annum. Appellant’s Appendix at 20. Applying that rate, the court calculated

interest that accrued each year from 2001 to October 22, 2019 (the date of the

damages hearing), ordering Developer and Builder to pay “$626,110.22 for

interest at the rate of 18% per annum as allowed by the Declaration through

October 22, 2019, plus interest at a rate of $111.22 per day from October 22,

2019 to the day of judgment[.]” Id. at 23. Developer and Builder assert that

this was erroneous, arguing that there was no evidence showing that, during the

years at issue, the Board of Directors ever “specified” or set an interest rate at

18% per annum as required by the Covenants. Prior Exhibits at 33. They

continue, “the HOA offered no proof that the Board of Directors ever set any

rate[,]” and “[w]ithout such proof, interest cannot be recovered under the plain

language of the Covenants.” Appellant’s Brief at 34.

[38] We agree with Developer and Builder to the extent that, while the Covenants

allow up to 18% interest, there was no evidence at the damages hearing that

18% was set or “specified” by the Board as outlined in Section 5.8 or that the

Board was charging 18% interest on unpaid Assessments in 2001, which is the

starting year of the trial court’s interest calculation. That said, we disagree with

Developer and Builder that interest cannot be recovered at all. Sections 5.1 and

5.8 of the Covenants expressly provide for recovery of interest on unpaid

Assessments. The relevant question is: starting when and at what rate?

Court of Appeals of Indiana | Memorandum Decision 20A-PL-373 | November 10, 2020 Page 22 of 26
[39] Based on the record before us, we find that it is neither reasonable nor

appropriate to start the interest clock ticking in 2001. While the HOA suggests

that the Assessments were “due” starting in 2001, they were not “demanded”

until a later date, with discussions about it occurring in 2006 at a meeting and

the HOA’s complaint being filed in November 2011. Based on the record

before us, we find that prejudgment interest should begin no earlier than the

date the complaint was filed. While the Covenants allow for a rate up to 18%,

there is no evidence that the Board in fact “specified” that rate. Prior Exhibits at

33. As Developer and Builder observe, the only evidence presented regarding

the interest rate was Judson’s testimony that “in the past” – with no date or

years specified – the Board charged an interest rate of 18%. Transcript at 20.

Based on these facts and circumstances before us, and where the contract – here

the Covenants – did not specify a rate, we find that the statutory rate of 8%

should be used. I.C. § 24-4.6-1-101.

[40] We reverse the interest award and remand for the trial court to recalculate

interest and apply 8% interest rate starting in November 2011.

b. Late Fees

[41] As to late fees, Section 5.9 of the Covenants provides that “[a]ny installment of

an assessment provided for in this Declaration shall be delinquent if not paid

within fifteen (15) days of the due date as established by the Board[,]” and the

Board “shall assess” a $25.00 late charge for each thirty days “for any

delinquent payments[.]” Prior Exhibits at 33. Exhibit 10 calculated a monthly

$25.00 late fee per Lot on unpaid Assessments starting in 2000, totaling
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 $148,275.00, which amount the trial court ordered Developer and Builder to

pay.

[42] Developer and Builder argue that, for the years in which they failed to pay

Annual Assessments, the HOA never considered any assessments to be “due”

from Developer and Builder, and without a “due” date, the HOA cannot meet

the conditions precedent under the plain language of the Covenants for

imposition of late fees. Furthermore, they contend that, even if the Covenants

permitted the HOA to impose late fees, the late fees under the circumstances of

this case were excessive and, further, constitute an impermissible penalty in

light of the fact that Developer and Builder, through their deficit funding

obligation, ensured that the HOA had sufficient operating funds.

[43] In Gaddis v. Stardust Hills Owners Ass’n, Inc., 804 N.E.2d 231 (Ind. Ct. App.

2004), a homeowners’ association brought a small claims action against a

homeowner to collect $100 of unpaid dues and a $2.00 per day late fee. The

trial court entered judgment for the HOA, and on appeal the homeowner

asserted that the late fee was an unenforceable penalty, noting the HOA’s actual

loss was disproportionate to the amount of the late fee. This court affirmed,

and in upholding the late fee award, quoted from a landlord/tenant case for the

proposition that “the late fee is intended to compensate Landlord for the

administrative expense and inconvenience associated with untimely rent,

including late payment notices and additional bookkeeping, and for the loss of

use of rental income[,]” which “may affect a Landlord’s ability to meet its

operating expense.” Id. at 235 (quoting Gershin v. Demming, 685 N.E.2d 1125,

Court of Appeals of Indiana | Memorandum Decision 20A-PL-373 | November 10, 2020 Page 24 of 26
 1131 (Ind. Ct. App. 1997)). The Gaddis court found such reasoning “equally

applicable” to the case at hand, where the late fee charged by the HOA for late

payment of annual dues helped pay “for the maintenance of common areas and

other community services.” Id. Here, Developer and Builder urge that none of

the factors that justified the imposition of the late fees in Gaddis are present in

this case. We agree.

[44] Judson testified at the damages hearing that when a homeowner did not pay,

extra work was required on her or the Board’s part to collect. For instance, a

notice was generated and sent, indicating the overdue Assessment along with a

$25.00 late fee, which late fee would be imposed again the next month if the

Owner still failed to pay, until eventually it was turned over to an attorney for

collection. Here, over the years, no notice was ever sent, and no corresponding

work or effort was expended by the HOA to collect the Developer and Builder’s

unpaid Assessments. Also, the HOA’s obligations and expenses were fully paid

during the relevant period such that Developer and Builder’s failure to pay did

not disrupt the HOA’s ability to pay for maintenance of common areas. Based

on the facts and circumstances, we find that charging a repeating monthly late

fee per Lot, starting on some Lots in 2000, on over three hundred Lots

constitutes an impermissible penalty. Accordingly, we vacate the award of

$148,275.00 in late fees.

[45] Judgment affirmed in part, reversed in part, and remanded for proceedings

consistent with this decision.

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Riley, J. and May, J., concur.

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