Randy Faulkner & Associates, Inc. and Randall W. Faulkner v. The Restoration Church, Inc. , 2016 Ind. App. LEXIS 390 ( 2016 )

FILED
Oct 25 2016, 8:50 am
OPINION ON REHEARING
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEY FOR APPELLEE
Jenny R. Buchheit David W. Stone IV
Seth M. Thomas Stone Law Office & Legal Research
Ice Miller LLP Anderson, Indiana
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Randy Faulkner & Associates, October 25, 2016
Inc. and Randall W. Faulkner, Court of Appeals Case No.
Appellants-Defendants, 41A01-1506-PL-706
Appeal from the Johnson Superior
v. Court
The Honorable Kevin M. Barton,
The Restoration Church, Inc., Judge
Appellee-Plaintiff. Trial Court Cause No.
41D01-1305-PL-68
Robb, Judge.
[1] In Randy Faulkner & Assoc., Inc. v. Restoration Church, 2016 WL 3755926 (Ind.
Ct. App. Jul. 14, 2016), we held, in part, that Randy Faulkner and Associates,
Inc. (“RFA”) had not by its conduct waived its right to receive timely written
notice of The Restoration Church’s (the “Church”) intent to renew its lease on
property owned by RFA. We therefore reversed the trial court’s judgment in
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favor of the Church on its breach of contract claim against RFA. The Church
has now filed a petition for rehearing.
[2] The parties’ lease agreement provided the Church had to give timely notice of
its intent to renew the lease each year. The Church failed to give the required
notice each year, although it continued to pay rent and occupy the premises.
Eventually, RFA gave the Church notice to vacate the premises and cancelled
the lease. The Church then sued RFA for breach of contract, among other
things. With respect to the breach of contract claim, the trial court determined
RFA had waived its right under the lease agreement to receive timely notice of
the Church’s intent to renew when it accepted untimely notices and annual rent
payments.
[3] Based on several specific provisions in the lease agreement, we concluded that
holding over and paying rent is not sufficient notice of intent to renew when the
lease specifically provided for written notice of intent to renew in advance of a
lease term ending. Therefore, we held RFA had not waived the condition
precedent to an additional lease term by accepting the Church’s rent payments.
Id. at *8. In its petition for rehearing, the Church alleges this court failed to
consider Section Forty-One of the lease in its analysis. Section Forty-One
states: “Lessor and Lessee expressly covenant one to another that this Lease
agreement shall be interpreted and construed consistently with the principles of
good faith and fair dealing.” Appendix of Appellants at 135. The Church
asserts this general “good faith” provision imposes a duty on the parties to the
lease and RFA breached this duty when it “lulled” the Church into believing
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the specific notice of renewal provision would not be enforced. Appellee’s
Petition for Rehearing at 8. This, despite a specific non-waiver provision in the
lease providing that RFA’s failure to insist on strict performance of a term in
one instance “shall not be deemed a waiver of any subsequent breach or default
. . . .” Appendix at 130. In essence, the Church would have a single, general
provision of the lease supersede the several specific and express provisions
applicable here. At most, Section Forty-One imposes a duty on both parties to
act in accordance with the provisions of the lease. Cf. Casa D’Angelo, Inc. v. A&R
Realty Co., 553 N.E.2d 515, 519 (Ind. Ct. App. 1990) (stating the allegation “not
in good faith” means nothing more than that a party has acted in violation of
implied obligations of a contract), trans. denied. It does not impose a specific
duty on RFA to explicitly state it has waived a provision this time but will not
do so again, especially in light of a specific provision in the lease which says
exactly that.
[4] We grant rehearing for the purpose of addressing the Church’s argument about
this additional provision of the lease, but for the reasons stated above, reaffirm
our decision in all respects.
Crone, J., concurs.
Riley, J., dissents without separate opinion.
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