ATTORNEY FOR APPELLANT
David W. Stone IV
Anderson, Indiana
ATTORNEY FOR APPELLEES
Terry O’Maley
Richmond, Indiana
__________________________________________________________________
IN THE
SUPREME COURT OF INDIANA
__________________________________________________________________
G. CLARK HARRISON, )
)
Appellant (Plaintiff Below), ) Indiana Supreme Court
) Cause No. 89S05-0108-CV-379
v. )
) Indiana Court of Appeals
CARL E. THOMAS and ) Cause No. 89A05-0006-CV-237
LOIS L. THOMAS, )
)
Appellees (Defendants Below). )
__________________________________________________________________
APPEAL FROM THE WAYNE SUPERIOR COURT
The Honorable Gregory A. Horn, Special Judge
Cause No. 89D01-9905-CP-049
__________________________________________________________________
ON PETITION FOR TRANSFER
__________________________________________________________________
January 29, 2002
BOEHM, Justice.
Plaintiff G. Clark Harrison planned to construct an office complex in
Richmond, Indiana to be leased to the United States General Services
Administration (“GSA”) as a Social Security Administration office. To that
end, on May 8, 1998, Harrison entered into a purchase agreement with
defendants Carl and Lois Thomas calling for Harrison to buy the property
where the Thomases operated a vintage car lot. The agreement was
contingent upon Harrison’s obtaining title to a nearby vacant lot. It also
contained a preprinted provision stating that “Time is of the essence of
this Contract,” and a second provision that closing was to occur “on or
before July 30, 1998, or within 15 days after Tenant approval, whichever is
later.”
The deal did not close by July 30, 1998. On September 11, 1998, John
Christian, a broker representing Harrison, called the Thomases to report
that Harrison was preparing to close, and Lois Thomas responded that the
Thomases no longer wished to sell. In March 1999, Harrison obtained a
lease from the GSA, and on March 23, 1999, Full House, LLC, owned 50% by
Harrison, closed on the vacant lot.
On May 10, 1999, Harrison filed a complaint for specific performance,
alleging that the Thomases refused to proceed with the sale and that
monetary damages were inadequate. The Thomases counterclaimed, asserting
that the purchase had not been closed by the date set in the purchase
agreement and seeking damages and attorney’s fees provided in the contract
to a “prevailing party” in any litigation. After a bench trial, the trial
court denied Harrison’s request for specific performance and entered
judgment for the Thomases, including attorney’s fees in the amount of
$5,390. No specific findings were requested by either party. The trial
court entered a memorandum in which the court found that the terms of the
purchase agreement required the transaction to be closed by July 30, 1998,
and that condition was not met. The court also noted that the agreement
was conditioned on Harrison’s obtaining title to the vacant lot and
concluded that purchase by Full House did not fulfill that condition. The
Court of Appeals affirmed, holding that the agreement required closing by
July 30 and that any effort to waive the condition relating to the vacant
lot was required to be communicated to the Thomases. Harrison now seeks
transfer to this Court.
I. Time for Performance
The Thomases contend that under the provision that closing was to
occur “on or before July 30, 1998, or within 15 days after Tenant approval,
whichever is later,” July 30, 1998 was the deadline for completion of the
contract, although closing could have been required at an earlier date if
tenant approval had been obtained sooner. Harrison responds that this
provision demonstrated the desire of the parties to close by July 30, 1998,
but also reflected their realization that closing might have to be delayed
pending tenant approval. Both the trial court and the Court of Appeals
agreed with the interpretation advanced by the Thomases. We do not.
As the Court of Appeals correctly noted, construction of the terms of
a written contract is a pure question of law for the court, reviewed de
novo. Harrison v. Thomas, 744 N.E.2d 977, 981 (Ind. Ct. App. 2001). We
think this provision is not ambiguous. “Whichever is later” is a phrase
found in innumerable agreements. It refers to the event occurring last in
time, not first. It does not mean “whichever is earlier,” which is the
result the Thomases urge.
The Thomases point out that construing the phrase to permit
fulfillment of the condition after July 30 could tie up their property
indefinitely because the contract contains no drop-dead date for obtaining
tenant approval. This is an ancient and often encountered problem, and the
law has long ago addressed it. When the parties to an agreement do not fix
a concrete time for performance, the law implies a reasonable time.
Epperly v. Johnson, 734 N.E.2d 1066, 1072 (Ind. Ct. App. 2000). What
constitutes a reasonable time depends on the subject matter of the
contract, the circumstances attending performance of the contract, and the
situation of the parties to the contract. Id. It is an issue of fact. In
re Estate of Moore, 714 N.E.2d 675, 677 (Ind. Ct. App. 1999). Here,
although the trial court characterized Harrison’s explanation for his
inability to close by July 30, 1998 as “unpersuasive,” the court made no
specific findings as to the reasonableness of the delay in obtaining tenant
approval.
In this case, according to Christian, until September 8, 1998 there
was no effort to close on the property. Harrison testified that he was not
delayed in closing by any action of the Thomases until September 11, when
the Thomases refused to proceed. Lois Thomas testified that closing by
July 30 was important to the Thomases because their business was strongest
during the summer months and it would be difficult to continue purchasing
vintage cars if they did not close the deal and make plans to relocate
their car lot by that date. She also testified that she told Christian she
did not want to wait six or nine months to close, again for business
reasons. Finally, she testified that Christian told the Thomases they
would have their money by July 30.
Assuming the trial court’s memorandum should be treated as special
findings, special findings entered by the trial court sua sponte control
only as to the issues they cover. Moore v. Moore, 695 N.E.2d 1004, 1008
(Ind. Ct. App. 1998). Because it provided for closing at the “later” of
two events, by its terms the agreement entered into on May 8 contemplated
some delay beyond July 30, 1998. Harrison communicated his desire to close
less than two months after July 30. Whether that delay and the additional
time required to effect a closing was reasonable is unaddressed by the
trial court. As to issues on which the trial court has not made findings,
or on which the findings are inadequate, we treat the judgment as a general
one and we examine the record and affirm the judgment if it can be
sustained upon any legal theory the evidence supports. Id. In the review,
we neither weigh the evidence nor judge witness credibility. Id. We
believe this evidence, if credited, is sufficient to support a finding of
unreasonable delay by Harrison in closing the deal, and accordingly affirm
the judgment of the trial court.
II. The Condition Precedent
Although this case is controlled by the resolution of the issue
discussed in Part I, we also address the effect of the condition precedent
because we do not agree with the Court of Appeals’ resolution of that
issue. Paragraph 5 of the purchase agreement provided that the contract
was “[s]ubject to Buyer obtaining and closing of vacant lot.” In the trial
court, the Thomases contended that this provision created a condition
precedent that must be met before Harrison could seek enforcement of the
agreement. Harrison argued that because he was Full House’s 50% owner and
Chief Operating Officer, the condition precedent was satisfied when Full
House obtained title to the lot. He also contended that the condition in
the contract was for his sole benefit and was waived even if not fulfilled.
The trial court held that Full House was a separate legal entity from
Harrison, and as a result the condition precedent had not been satisfied.
The Court of Appeals affirmed, but for a different reason. The Court of
Appeals correctly noted that the purchaser of real property to whom the
benefit of a contractual condition precedent inures may waive that
condition and demand that the seller perform the contract. Harrison, 744
N.E.2d at 982; Barrington Mgt. Co. v. Draper Family Ltd., 695 N.E.2d 135,
140-41 (Ind. Ct. App. 1998). In this case, the condition precedent that
Harrison obtain title to the vacant lot was solely for Harrison’s benefit.
His development scheme hinged upon his ability to deliver title to both
lots to the GSA, and it was a matter of complete indifference to the
Thomases whether Harrison obtained the vacant lot, as long as he closed
their sale. Accordingly, the condition precedent was waivable by Harrison.
Although it recognized that Harrison could waive the condition, the Court
of Appeals held that waiver of a condition precedent would have to be
express and found no evidence Harrison had communicated to the Thomases
“either orally or in writing, an express waiver of the vacant lot condition
prior to the termination of the contract on July 30, 1998.” Harrison, 744
N.E.2d at 983.
We think acquisition by Full House, Harrison’s affiliate, was likely
substantial compliance with the condition. But even if not, we think
Christian’s contacting the Thomases and stating Harrison was preparing to
close is, in practical terms, a communication that the condition would be
waived. To reach its conclusion that the waiver was not communicated, the
Court of Appeals relied heavily upon Dvorak v. Christ, 692 N.E.2d 920, 924
(Ind. Ct. App. 1998), trans. denied, which held that where a purchaser had
not communicated, either orally or in writing, an express waiver of a
condition precedent before the expiration of the contract, the contract
terminated and the seller was not required to close. In Dvorak, the
condition precedent was that the purchaser obtain a first mortgage loan for
$451,600, and the contract provided that it would terminate and the rights
of both parties would dissolve if the purchaser did not satisfy the
condition precedent by March 29, 1995. Id. The purchaser failed to obtain
the financing, so the contract terminated by its own terms on March 30,
1995. Id. Only then did the purchaser attempt to waive the condition
precedent. Id.
As already noted, the contract clearly contemplated the possibility of
a closing after July 30. Here the agreement survived July 30 for a
reasonable time and, if the September 11 conversation had not taken place
after an unreasonable delay, a trier of fact could easily have found it to
be a timely waiver. To the extent that the Court of Appeals read Dvorak to
create a rigid requirement that every waiver of a condition precedent must
be expressly made, either orally or in writing, we do not agree. It has
long been the law in this state that “[t]he performance of a condition
precedent may be waived in many ways.” Johnson v. Bucklen, 9 Ind. App.
154, 157, 36 N.E. 176, 177 (1894). One such way is by the conduct of one
of the parties to the contract. Penmanta Corp. v. Hollis, 520 N.E.2d 120,
122 (Ind. Ct. App. 1988), trans. denied.
In sum, whether there has been a waiver of a contract provision is
ordinarily a question of fact. van de Leuv v. Methodist Hosp., 642 N.E.2d
531, 533 (Ind. Ct. App. 1994). We would think that obtaining control of
the vacant lot through an affiliate was substantial compliance with the
condition in this contract. We would also suppose that contacting the
Thomases and telling them Harrison was prepared to close is evidence of
waiver, but once again we are confronted with a factual issue and no
finding. For the reasons given in Part I, this fact issue is not
controlling, and we need not remand for its resolution.
III. Attorney’s Fees
The trial court awarded the Thomases attorney’s fees in the amount of
$5,390. The Court of Appeals upheld the award because (1) the fees were
foreseeable and (2) the purchase agreement provided for attorney’s fees to
a prevailing party. We agree that the contract supports the trial court’s
award. Paragraph 16 of the purchase agreement provided for “court costs
and reasonable attorney’s fees” for any signatory party that prevailed “in
any legal or equitable proceeding against any other signatory brought under
or with relation to the Contract or transaction.” In Indiana, a contract
that allows for the recovery of reasonable attorney’s fees will be enforced
according to its terms unless it is violative of public policy. Willie’s
Const. Co., Inc. v. Baker, 596 N.E.2d 958, 963 (Ind. Ct. App. 1992), trans.
denied. Solely for that reason, the trial court’s award was appropriate.
We do not agree with the first part of the Court of Appeals’ analysis. In
this case, the foreseeability of the fees is irrelevant and the only issue
is the reasonableness of the award.
Conclusion
The judgment of the trial court is affirmed.
SHEPARD, C.J., and DICKSON, SULLIVAN, and RUCKER, JJ., concur.