Rainbow Realty Group, Inc. v. Katrina Carter and Quentin Lintner ( 2019 )

IN THE
Indiana Supreme Court
Supreme Court Case No. 19S-CC-38
FILED
Rainbow Realty Group, Inc., et al., Sep 13 2019, 11:08 am
Appellants/Cross-Appellees, CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
–v–
Katrina Carter and Quentin Lintner,
Appellees/Cross-Appellants.
Argued: March 7, 2019 | Decided: September 13, 2019
Appeal from the Marion Superior Court, No. 49D14-1505-CC-16629
The Honorable James B. Osborn, Judge
On Petition to Transfer from the Indiana Court of Appeals,
No. 49A02-1707-CC-1473
Opinion by Justice Slaughter
Chief Justice Rush and Justices David, Massa, and Goff concur.
Slaughter, Justice.
We hold that the parties’ “rent-to-buy” agreement is not a land-sale
contract but a rental agreement subject to Indiana’s residential landlord-
tenant statutes. Plaintiffs, which own and manage the properties held in
inventory, are “landlords” that violated the Statutes by delivering the
disputed property in an uninhabitable condition. We affirm the trial
court’s judgment for the tenants and against Plaintiffs on their claim
under the Statutes. On the other counts, we affirm in part, reverse in part,
and remand.
Factual and Procedural Background
A. Rent-to-buy agreement for uninhabitable house
Plaintiff Cress Trust owns houses in Marion County. Plaintiff Rainbow
Realty Group, Inc., sells, rents, and manages these properties for Cress.
The same individual serves both as president of Rainbow and as Cress’s
corporate trustee. Throughout this Opinion, we refer to “Plaintiffs” to
denote these related parties collectively and refer to Cress and Rainbow
separately as warranted to identify one party but not the other.
Plaintiffs offer four options to customers interested in their housing
stock:
• straight sale;
• straight rental;
• land contract; or
• rent-to-buy contract.
A straight sale requires payment of the full purchase price in exchange for
legal title. A straight rental offers a house in a habitable condition in
exchange for monthly payments. A land contract requires a large down
payment followed by monthly payments to finance the sale. And a rent-
to-buy is not currently habitable and involves a lesser monthly payment
than a straight rental.
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Katrina Carter and Quentin Lintner are a married couple living in
Marion County. In response to an ad, the Couple contacted Plaintiffs to
learn about housing options. Although Plaintiffs considered the Couple to
have a poor credit history and told them their rental stock was not
available, Plaintiffs concluded the Couple’s $4,000 monthly income could
qualify them for Plaintiffs’ rent-to-buy program. The Couple applied and
paid a $100 deposit to hold a single-family house on North Oakland
Avenue in Indianapolis with a purchase price of $37,546. In May 2013,
after their application was approved, the Couple signed a “Purchase
Agreement (Rent to Buy Agreement)”. Attachments to the Agreement
included a separate declaration, a truth-in-lending disclosure, and a
residential real-estate disclosure.
Under the Agreement, Plaintiffs and the Couple agreed that the House
“shall be used as a single-family private residence and for no other
purpose whatsoever”. The Couple agreed they were acquiring the House
“as is”, that it was not in livable condition, and that they would need to
make it habitable before they could live in it. In addition, the Agreement
said the House came with no warranties of condition or habitability, that
the Couple would have to make or pay for any repairs themselves, that
any improvements to the House would become a permanent part of the
property, that payment was due on the first of the month, and that
Plaintiffs could “evict” them for not paying on time.
When the Couple signed the Agreement, the House was missing toilets,
plumbing, electrical wiring, and door locks. All the windows were broken.
There was no security to prevent break-ins. The basement stairs were in
disrepair. The carpets were beyond repair. The property was strewn with
trash. And animals had infested the property.
The Agreement, which said the parties’ intent was to consummate a
sale of the House, required the Couple to make monthly payments of $549
for thirty years at an interest rate of 16.3 percent. Despite the stated intent
and thirty-year payment term, the Agreement said that the first twenty-
four payments were “rental payments”. If the Couple made those
payments, the parties would execute a separate “Conditional Sales
Contract (Land Sale)” for the remaining twenty-eight years.
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In a separate contract, Plaintiffs agreed to make electrical and plumbing
repairs for a charge. Yet by 2015, two years after the Couple entered the
Agreement with Plaintiffs, the House remained uninhabitable. Electrical
wiring remained exposed throughout the House. More than half of the
electrical outlets didn’t work. All but five exterior windows were broken,
and only two of the windows opened. Most of the House had no flooring,
only plywood, and broken tiles in the kitchen exposed rusty nails sticking
up through the floor. Walls in the kitchen and dining room had water
damage, as did the basement. The rotted backdoor was not secure.
Even after executing the Agreement, the Couple continued to live in a
motel for an unspecified period, during which they paid the motel bill and
made their monthly House payment. Despite the House’s unlivable
condition, the Couple used it as a home, residence, or sleeping unit during
part of the time relevant to this litigation.
B. Litigation
The House proved more costly than the Couple could afford. When
they fell behind in their payments, Plaintiffs tried to evict them. The
Plaintiffs first filed suit in small-claims court in July 2013. The Couple
avoided eviction by agreeing to raise their payments from $549 per month
to $200 per week until the arrearage was satisfied. Plaintiffs filed a second
eviction in November 2014. This time, the Couple avoided eviction by
agreeing to raise their payments to $250 per week until the arrearage was
erased. In March 2015, Plaintiffs filed a third eviction. This case resulted in
a small-claims-court order allowing Plaintiffs to retake possession, but the
Couple appealed that order to the Marion Superior Court.
In the trial court, Plaintiffs sought possession, damages, and attorney’s
fees, plus various costs to clean and “re-rent” the property—a total claim
of $19,727.30. The Couple answered and asserted various counterclaims,
including fraud, breach of contract, and failure to meet landlord
obligations under Indiana’s residential landlord-tenant statutes. While the
matter was pending, the Couple vacated the house, thus mooting
Plaintiffs’ possession claim. The court entered partial summary judgment
for the Couple, finding Plaintiffs liable on their counterclaims for breach
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of the warranty of habitability and for making false or deceptive
statements about Plaintiffs’ ability to disclaim the warranty and other
obligations. The trial court later held a bench trial on the remaining issues.
It reaffirmed its prior ruling that the Agreement was unlawful and
unenforceable. It awarded the Couple $1,000 in compensatory damages
for Plaintiffs’ willful deception and $3,000 in punitive damages. The court
rejected the Couple’s request for $35,000 in attorney’s fees, concluding that
amount was “unreasonable”, and reduced the fee award to $3,000.
Plaintiffs appealed the adverse judgment, and the Couple filed a cross-
appeal on the issue of attorney’s fees.
The court of appeals reversed, concluding the Agreement is not a
residential lease and thus not subject to the Statutes. For this reason, the
court also reversed the judgment below that Plaintiffs committed fraud
and reversed the trial court’s award of attorney’s fees because the Couple
was no longer a prevailing party. Rainbow Realty Group, Inc. v. Carter, 112
N.E.3d 716, 726 (Ind. Ct. App. 2018). We granted transfer, thus vacating
the appellate opinion, and now affirm in part, reverse in part, and
remand.
Discussion and Decision
A. Residential landlord-tenant statutes
We hold that the parties’ Agreement is subject to the protections
afforded by the residential landlord-tenant statutes. Ind. Code art. 32-31
(2012). First, their Agreement—a purported rent-to-buy contract—is a
residential lease and not a land-sale contract, so it is not exempt from the
Statutes’ coverage on this basis. Second, the Agreement is a rental
agreement for a “dwelling unit” under the Statutes, so Plaintiffs had to
deliver the House in a safe, clean, and habitable condition—which they
did not do.
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1. Not a land-sale contract
We begin by considering Plaintiffs’ threshold argument that the
Agreement qualifies as a “contract of sale” exempt from the Statutes. “The
residential landlord-tenant statutes do not apply to any of the following
arrangements … : [o]ccupancy under a contract of sale of a rental unit … if
the occupant is the purchaser”. I.C. § 32-31-2.9-4(2). According to
Plaintiffs, the Agreement is exempt from the Statutes because it is a
contract of sale, and the Couple occupied the House as purchasers in
interest.
Plaintiffs emphasize that the Agreement contains several indicia of a
purchase. The purchase-agreement declaration explains the difference
between renting and buying, and the Couple indicated they were buying:
“My intent is to the purchase the property at … N. Oakland Av.,
Indianapolis[.] I am not renting the property.” The Couple’s declaration
continues with each of them agreeing to the following terms: “I wish to
save money by repairing & maintaining the property myself. I do not
expect the property owner to make any repairs to the property and fully
understand that I am buying the property ‘as-is’ with out [sic] any
warranty of habitability.” In addition, the Agreement recites the sale price,
the interest rate, and the term, and the Agreement requires the Couple to
maintain the House, pay real-estate taxes, and obtain homeowners
insurance.
Although the Agreement describes the first twenty-four payments as
“rent”, Plaintiffs say those were not payments for using the House but
were “amortized payments of principal and interest which were credited
toward the purchase price in the land sales contract.” Again, Plaintiffs
point to the declaration, in which the Couple agreed, “I am not renting the
property. All payments shall apply to the principal and interest shown on
the amortization schedule provided at closing.” According to Plaintiffs,
this financing condition relieved the Couple of having to make an
immediate down payment, which they could not afford, and permitted
them instead to substitute its equivalent payable over twenty-four
months.
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We agree with Plaintiffs that most of the transaction’s terms and formal
structure suggest this was a sale—albeit unorthodox—necessitated by the
Couple’s inability to afford a down payment for the House. But the
transaction’s purported form and assigned label do not control its legal
status. For at least the first two years, the Agreement was a residential
lease with a contingent commitment to sell.
Plaintiffs’ designated evidence reflected the rent-to-buy program’s
structure as a lease and then (maybe) a sale. In an affidavit, Rainbow’s
president explained that the program consisted of “a lease for 2 years with
the right to convert the lease to a Land Contract after successful
completion of the 2 year lease.” If the purported rent-to-buy agreement
were really a purchase agreement, as Plaintiffs contend, the Couple would
have become homeowners with “all incidents of ownership” and with
“equitable title [vesting in the Couple] at the time the contract is
consummated”—and, in most cases, would not be subject to residential
eviction in a small-claims court. Skendzel v. Marshall, 261 Ind. 226, 234, 240-
41, 301 N.E.2d 641, 646, 650 (1973). Here, the Agreement required a
separate contract to effectuate a sale. No equity accrued or accumulated
during the first twenty-four months. If the Couple defaulted before
executing the subsequent “Land Contract”, or if they failed to make
payments or to close this latter transaction, they were subject to eviction
and forfeiture of all payments made. Of course, that is precisely what
happened.
During the Agreement’s twenty-four-month term, Plaintiffs reserved
for themselves a landlord’s prerogative to enter the premises, restricted
the Couple’s use of the land, and, upon the Couple’s default, evicted them
as if they were tenants and kept their “rental payments”. These features,
taken together, are particular to a residential lease. Thus, the parties’
Agreement—a purported rent-to-buy contract—is not a “contract of sale
of a rental unit” and thus is not exempt from the Statutes’ coverage under
Section 32-31-2.9-4(2).
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2. “Rental agreement” for a “dwelling unit”
Having held the Agreement was not a “contract for sale”, we next
consider whether it is subject to the residential landlord-tenant statutes.
The Statutes apply to “dwelling units that are let for rent under a rental
agreement”. I.C. § 32-31-8-1(a). Thus, the two issues here are (i) whether
the House is a “dwelling unit” and (ii) whether the parties’ Agreement is a
“rental agreement”. As discussed next, we hold that both statutory
requirements are satisfied, thus subjecting the parties’ relationship to the
residential landlord-tenant statutes, including the obligation to deliver the
premises in a “safe, clean, and habitable condition.” Id. § 32-31-8-5(1).
a. “Dwelling unit”
The term “dwelling unit” appears throughout Indiana Code article 32-
31, and at times as a term of art that the Code defines on three separate
occasions—in Chapters 5, 6 and 9. Id. §§ 32-31-5-3, 32-31-6-1, 32-31-9-5.
The term, however, is not defined in Chapter 8—the operative chapter—
which both imposes the requirement of habitability and instructs that a
purported waiver of this requirement is void. Id. §§ 32-31-8-4, 32-31-8-5.
We resist the temptation to import into Chapter 8 the definition of
“dwelling unit” that the legislature used elsewhere in Article 32-31. The
legislature knows how to apply a statutory definition broadly. Examples
abound of the legislature’s applying a definition throughout the entire
code, see id. § 1-1-4-5(a), as well as throughout a title, article, or chapter.
The legislature could likewise have done that here. But it did not. To the
contrary, Section 32-31-5-3 specifically limits the definition to “this
chapter”, referring to Chapter 5. It applies Chapter 5’s definition in
Chapter 6. Id. § 32-31-6-1. And it repeats the same definition in Chapter 9,
stating that “dwelling unit” there “has the meaning set forth in [Chapter
5].” Id. § 32-31-9-5. From the legislature’s noteworthy failure to adopt the
same definition for Chapter 8, we infer it did not intend that definition to
apply there—thus prompting the question: what does “dwelling unit”
mean in Chapter 8?
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The answer lies in the dictionary definition of the undefined statutory
term. As we explained in Town of Brownsburg v. Fight Against Brownsburg
Annexation, 124 N.E.3d 597 (Ind. 2019), when a statutory term is
undefined, the legislature directs us to interpret the term using its “plain,
or ordinary and usual, sense.” Id. at 605 (quoting I.C. § 1-1-4-1(1)). We
generally avoid legal or other specialized dictionaries for such purposes
and turn instead to general-language dictionaries. Merriam-Webster
defines a “dwelling” as “a shelter (such as a house) in which people live”.
Merriam-Webster, https://www.merriam-webster.com/dictionary/dwelling (last
visited Sept. 13, 2019). Similarly, the American Heritage defines “dwelling”
as “[a] place to live in; an abode”. The American Heritage Dictionary,
https://ahdictionary.com/word/search.html?q=dwelling (last visited Sept. 13,
2019).
Until the legislature tells us otherwise, we adopt these definitions of
“dwelling” and understand a Chapter 8 “dwelling unit” to refer to a place
to live, whether the structure is freestanding or an individual room,
apartment, or other unit within a larger structure consisting of multiple
units. Applying that definition here, we hold that the House is a “dwelling
unit” under Indiana Code chapter 32-31-8 because a single-family house is
quintessentially a place to live.
b. “Rental agreement”
Having concluded the House is a dwelling unit, we next consider
whether Chapter 8 applies to this dwelling unit. As mentioned, the
Statutes apply only to “dwelling units that are let for rent under a rental
agreement”. I.C. § 32-31-8-1. Unlike “dwelling unit”, Chapter 8 defines
“rental agreement”. It incorporates the definitions in Chapter 3. Id. § 32-
31-8-2. And Chapter 3 defines “rental agreement” as “an agreement
together with any modifications, embodying the terms and conditions
concerning the use and occupancy of a rental unit.” Id. § 32-31-3-7.
Whether the parties’ Agreement is a “rental agreement” turns on whether
the House is a “rental unit”.
We conclude that the Agreement was a rental agreement because
Plaintiffs and the Couple agreed that the House was promised for the
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Couple’s use as a single-family dwelling. Because the House is a
“dwelling unit” and the Agreement qualifies as a “rental agreement”,
Plaintiffs’ attempted waiver of their obligations as landlords is void.
i. “Rental unit”
“Rental unit”, also a defined term, means:
(1) a structure, or the part of a structure, that is used as a home,
residence, or sleeping unit by:
(A) one (1) individual who maintains a household; or
(B) two (2) or more individuals who maintain a common
household; or
(2) any grounds, facilities, or area promised for the use of a residential
tenant, including the following:
(A) An apartment unit.
(B) A boarding house.
(C) A rooming house.
(D) A mobile home space.
(E) A single or two (2) family dwelling.
Id. § 32-31-3-8. This definition from Chapter 3 likewise applies to Chapter
8. Id. § 32-31-8-2.
The parties devote considerable time debating the applicability of
Section 32-31-3-8(1) above. The Couple say they actually “used” the House
as a “home, residence, or sleeping unit”, regardless of whether it was
habitable or whether the Agreement authorized them to do so, thus
satisfying the definition of a “rental unit” under Subsection (1): “a
structure … that is used as a home, residence or sleeping unit by … two
(2) or more individuals who maintain a common household”. Id. § 32-31-
3-8(1)(B) (emphasis added).
Plaintiffs respond that how space is “used” should not dictate its legal
status under the Statutes. Otherwise, Plaintiffs say, a contract for space
intended for non-residential use—such as a storage unit, which often lacks
plumbing and heating and thus is uninhabitable by any measure—would
be transformed into a residential “rental unit”, and thus accorded the full
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panoply of legal rights accorded such premises, merely by the lessee’s
unauthorized, unilateral action of moving in and taking up residence.
There is much practical wisdom in Plaintiffs’ concern. For that reason, we
decline the Couple’s invitation to rely on Section 8(1) for the conclusion
that the House is a “rental unit” under the Statutes.
Section 8(2), however, resolves Plaintiffs’ concern. A unit’s legal status
is governed not by the unilateral action of its lessee but by its “promised”
use by the owner—“any grounds, facilities, or area promised for the use
of a residential tenant”. Id. § 32-31-3-8(2) (emphasis added). In other
words, a unit is not a “rental unit” under the Statutes unless the owner
contemplates—has “promised”—its use for a residential purpose. Thus,
what matters under Subsection (2) is not whether the contracted unit is
presently uninhabitable but whether the parties, including the owner,
intend the unit for a residential use. The House clearly fills that bill.
Unlike a storage unit, the House was promised for—and, in fact,
contractually limited to—use as “a single-family private residence and for
no other purpose whatsoever” in which only the Couple could live. But
this promised-for use does not end the inquiry. A “rental unit” under
Section 8(2) requires not only a residential use but the use of that unit by a
residential “tenant”.
ii. “Tenant”
The term “tenant” is defined in Chapter 3 as “an individual who
occupies a rental unit: (1) for residential purposes; (2) with the landlord’s
consent; and (3) for consideration that is agreed upon by both parties.” Id.
§ 32-31-3-10. And, relevant here, this definition applies to Chapter 8. Id. §
32-31-8-2. The Statutes do not define “occupy”, so again we turn to
general-language dictionaries. The American Heritage says “occupy”
means, among other things, “[t]o dwell or reside in (an apartment for
example)”. The American Heritage Dictionary, https://ahdictionary.com/word
/search.html?q=occupy (last visited Sept. 13, 2019). Merriam-Webster says the
definition of “occupy” includes “to take or hold possession or control of”
and “to reside in as an owner or tenant”. Merriam-Webster, https://www.
merriam-webster.com/dictionary/occupy (last visited Sept. 13, 2019). We adopt
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these definitions and interpret “occupy” here to mean possess, control,
dwell, or reside. Thus, the Couple “occupied” the House from day one
because they possessed it and had access to it, although they did not
initially live in it.
In addition, the Couple’s occupancy was with the consent of
Plaintiffs—each one a “landlord” under the statutory definition: Cress was
the “owner” of the House, id. § 32-31-3-3(1), and Rainbow was the
property manager that, among other things, collected the rent, id. § 32-31-
3-3(2). The Couple’s occupancy was for the monthly consideration
specified in the parties’ Agreement—and, later, after missing several
payments, the Couple agreed to increased payments to avoid being
evicted. The Agreement also required that the Couple use the House as a
single-family private residence—clearly contemplating an occupancy for
“residential purposes”.
3. Summary
Based on our conclusions above, we hold that the Couple are tenants of
a dwelling unit that is the subject of a rental agreement governed by the
residential landlord-tenant statutes. Under these Statutes, Plaintiffs were
required to deliver the House to the Couple in a habitable condition, id. §
32-31-8-5(1), which they did not do. The Statutes also render the
Agreement’s purported waiver of their obligation as void. Id. § 32-31-8-4.
Thus, the trial court was correct in finding that Plaintiffs breached the
statutory warranty of habitability.
* * *
If this case were simply about the parties’ freedom of contract, the
Couple would have no legal recourse. Plaintiffs disclaimed the warranty
of habitability, informed the Couple that the House required significant
renovation, and forbade them from taking up residence there before it was
habitable. The Couple agreed to these terms but soon thereafter violated
them. Were it not for the governing Statutes, Plaintiffs would be entitled
to relief against the Couple for having breached their Agreement. But the
Statutes are not about vindicating parties’ freely bargained agreements.
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They are, rather, about protecting people from their own choices when the
subject is residential property and their contract bears enough markers of
a residential lease. Unless a statute is unconstitutional, the legislature is
entitled to enact its policy choices. The disputed statutes at issue here
reflect those choices.
B. Deceptive consumer sales act
Next, we address the Couple’s claim under Indiana’s Deceptive
Consumer Sales Act. Ind. Code ch. 24-5-0.5 (2012). The trial court found
for the Couple, concluding that Plaintiffs “intentionally deceiv[ed] the
[Couple] as to the nature of the Purchase Agreement” by making “false or
deceptive statements about the ability to disclaim the warranty of
habitability and obligations associated with said warranty.” The court
awarded the Couple $1,000 in compensatory damages and $3,000 in
punitive damages. The court of appeals reversed the trial court on this
claim, based on its determination that the Agreement was not a lease and
thus wasn’t subject to the Statute, especially its warranty of habitability.
112 N.E.3d at 725. As discussed, we have vacated the court of appeals’
opinion and hold that the Agreement is subject to the residential landlord-
tenant statutes. But that does not mean we are reinstating the trial court’s
award for the Couple under the Act. We still find their claim to be without
merit, and thus reverse the trial court on this claim, for three reasons.
First, Plaintiffs did not know, or have reason to know, that their
allegedly deceptive act was false. The Couple premised their deception
claim on Section 3(a)(8) of the Act, which defines a deceptive act to
include a representation “[t]hat [a] consumer transaction involves or does
not involve a warranty, a disclaimer of warranties, or other rights,
remedies, or obligations, if the representation is false and if the supplier
knows or should reasonably know that the representation is false.” I.C. §
24-5-0.5-3(a)(8). The dispute here concerns Plaintiffs’ representation that
they had no legal obligation to warrant the House’s habitability. Whether
the parties were entitled to disclaim the warranty is a legal question that
we have now resolved in favor of the Couple and against Plaintiffs. But
just because Plaintiffs turned out to be wrong does not mean they knew or
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had reason to know they were wrong, thus rendering their representation
false and subjecting them to liability under the Act. Neither litigants nor
their lawyers are prescient. And neither, as we have seen, are appellate
judges. Recall that three respected judges on our court of appeals all
shared Plaintiffs’ view of this case and held the Statutes did not apply.
Just as we would not charge our appellate-court colleagues with
deception, neither is that an appropriate charge against Plaintiffs, which
made plausible, non-frivolous arguments in support of their view that the
Statutes did not apply. Though we ultimately disagree with that view, we
reject the trial court’s conclusion that Plaintiffs’ contrary position—and
their statements reflecting that position—were somehow deceptive. A
broader lesson is that statements of law—as opposed to statements of
fact—are seldom actionable, especially on matters for which the legal
question is unsettled or unresolved.
Second, even assuming for argument’s sake that Plaintiffs’ disclaimer of
the warranty qualified as a deceptive act that Plaintiffs knew or should
have known was false, the Couple still would not be entitled to damages
under the Act. A prerequisite for obtaining damages is that the claimant
relied on the deception. “A person relying upon an uncured or incurable
deceptive act may bring an action for the damages actually suffered as a
consumer as a result of the deceptive act or five hundred dollars ($500),
whichever is greater.” Id. § 24-5-0.5-4(a). On this record, the trial court did
not find that the Couple relied on Plaintiffs’ disclaimer of the warranty.
Thus, the trial court’s award of compensatory and punitive damages
under the Act cannot stand.
Third, a final reason for reversing the trial court’s award is that the Act
does not contemplate an aggrieved person suing for damages when the
alleged deception concerns real property. Subsection 4(a) of the Act,
which authorizes a person who relies on a deceptive act to sue for
damages, expressly “does not apply to a consumer transaction in real
property”. Id. § 24-5-0.5-4(a). This real-property limitation has two
exceptions—for time-share purchases and camping-club memberships—
that do not apply here. Id.
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C. Attorneys’ fees
Finally, we consider the trial court’s award of attorney’s fees. Prevailing
parties under the residential landlord-tenant statutes are eligible to recoup
their fees. An award of fees, however, is discretionary. “If the tenant is the
prevailing party in an action under this section, the tenant may obtain any
of the following, if appropriate under the circumstances: . . . Attorney’s
fees and court costs.” I.C. § 32-31-8-6(d)(1)(B) (emphasis added).
The Couple sought fees of $35,475, based on 129 hours of lawyer time
over two years at an hourly rate of $275. The trial court found that fees
were warranted but reduced the award to $3,000, concluding that the full
amount sought was “unreasonable” in light of “the typical rates charged
in Marion County, the complexity of this case, the amount of motions
practice involved and the amount of time spent in court and in
preparation of proposed findings.” The court did not specify what it
believed a reasonable hourly rate, or range of rates, would be in Marion
County. And neither did it say how many hours of lawyer time would be
reasonable for this lawsuit.
On this record, neither the Couple’s proposed hourly rate nor the
number of hours they expended strike us as so obviously excessive that
their unreasonableness speaks for itself. Thus, the trial court needed to
support its fee award with findings explaining its nearly ninety-two-
percent reduction in the fees requested. Its failure to do so requires that
we vacate the award and remand so the court can supply these omitted
details.
In assessing what qualifies as a reasonable fee, trial courts have broad
discretion in determining a fee award and may consider several factors.
See, e.g., Masters v. Masters, 43 N.E.3d 570, 576 (Ind. 2015). A court’s
exercise of discretion to award fees should be supported by appropriate
findings. On remand, the court may wish to consider the following
items—though we note this list is neither exhaustive nor required. The
Couple did not sue Plaintiffs; Plaintiffs sued them and sought to recover
$19,727.30 in damages, costs, and fees. The Couple succeeded in resisting
Plaintiffs’ claim for a monetary award. The Couple asserted their own
counterclaims, but not all of them succeeded; and not all of them would
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have entitled the Couple to a fee award even if they had succeeded. In
addition, it may be relevant to consider Plaintiffs’ fees. The Couple’s fees
of $35,000 would seem more reasonable if, for example, Plaintiffs had
spent $50,000 to litigate this case than if they had spent $5,000. But not
even that kind of disparity would necessarily be dispositive. Regardless of
each party’s fees, the fact remains that the Couple won the lawsuit’s main
event—a judicial determination that the Agreement’s purported waiver of
Plaintiffs’ obligation as landlords is void and unenforceable under the
Statutes—and Plaintiffs lost.
On remand, if the Couple elect to seek their appellate fees, the trial
court may elect to consider any such request using the same
reasonableness criteria we have outlined here in connection with their
request for fees incurred in the trial court.
Conclusion
For these reasons, we affirm the trial court’s judgment for the Couple
and against Plaintiffs under the residential landlord-tenant statutes. We
reverse the judgment awarding relief to the Couple under the deceptive
consumer sales act and remand with instructions to enter judgment for
Plaintiffs. We affirm the trial court’s resolution of the remaining claims
and counterclaims. And we remand with instructions to recalculate the
Couple’s award of reasonable attorney’s fees, including appellate fees
they may seek.
Rush, C.J., and David, Massa, and Goff, JJ., concur.
Indiana Supreme Court | Case No. 19S-CC-38 | September 13, 2019 Page 16 of 19
ATTORNEYS FOR APPELLANTS/CROSS-APPELLEES
Karl L. Mulvaney
Nana Quay-Smith
Bingham Greenebaum Doll LLP
Indianapolis, Indiana
ATTORNEYS FOR APPELLEES/CROSS-APPELLANTS
Jon Laramore
Cheryl Koch-Martinez
Adam Mueller
Indiana Legal Services, Inc.
Indianapolis, Indiana
John E. Brengle
Indiana Legal Services, Inc.
New Albany, Indiana
ATTORNEYS FOR AMICUS CURIAE STATE OF INDIANA
Curtis T. Hill, Jr.
Attorney General of Indiana
Thomas M. Fisher
Solicitor General of Indiana
Indianapolis, Indiana
Justin G. Hazlett
Section Chief, Consumer Litigation
Indianapolis, Indiana
Steven P. Frank
Michelle Alyea
Amanda Lee
Lara Langeneckert
Julia C. Payne
Deputy Attorneys General
Indianapolis, Indiana
Indiana Supreme Court | Case No. 19S-CC-38 | September 13, 2019 Page 17 of 19
ATTORNEYS FOR AMICI CURIAE CONSOLIDATED CITY OF
INDIANAPOLIS AND MARION COUNTY
Donald E. Morgan
Office of Corporation Counsel
Indianapolis, Indiana
Maggie L. Smith
Darren A. Craig
Frost Brown Todd LLC
Indianapolis, Indiana
ATTORNEYS FOR AMICUS CURIAE INDIANA ASSOCIATION FOR
COMMUNITY ECONOMIC DEVELOPMENT INC. d/b/a
PROSPERITY INDIANA
Maggie L. Smith
Darren A. Craig
Frost Brown Todd LLC
Indianapolis, Indiana
ATTORNEYS FOR AMICUS CURIAE NEIGHBORHOOD CHRISTIAN
LEGAL CLINIC
Maggie L. Smith
Darren A. Craig
Frost Brown Todd LLC
Indianapolis, Indiana
Chase M. Haller
Neighborhood Christian Legal Clinic
Indianapolis, Indiana
ATTORNEY FOR AMICI CURIAE NOTRE DAME CLINICA L LAW
CENTER, AND NATIONAL CONSUMER LAW CENTER
Judith Fox
Notre Dame Clinical Law Center
South Bend, Indiana
Indiana Supreme Court | Case No. 19S-CC-38 | September 13, 2019 Page 18 of 19
ATTORNEY FOR AMICUS CURIAE FAIR HOUSING CENTER OF
CENTRAL INDIANA
James Strenski
Cantrell, Strenski & Mehringer, LLP
Indianapolis, Indiana
Indiana Supreme Court | Case No. 19S-CC-38 | September 13, 2019 Page 19 of 19