Bobb Auto Group, LLC v. John Zembillas (mem. dec.) ( 2019 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
FILED
regarded as precedent or cited before any Nov 27 2019, 10:00 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 APPELLANT ATTORNEY FOR APPELLEE
John E. Hughes Rick C. Gikas
Andrew T. Shupp Merrillville, Indiana
Hoeppner Wagner & Evans, LLP
Valparaiso, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Bobb Auto Group, LLC, November 27, 2019
Appellant-Defendant, Court of Appeals Case No.
19A-PL-1511
v. Appeal from the Lake Superior
Court
John Zembillas, The Honorable John R. Pera,
Appellee-Plaintiff Judge
Trial Court Cause No.
45D10-1608-PL-80
Baker, Judge.
Court of Appeals of Indiana | Memorandum Decision 19A-PL-1511 | November 27, 2019 Page 1 of 12
[1] In August 2015, Bobb Auto Group, LLC (Bobb Auto), offered John Zembillas
an Employment Agreement (the Agreement) to sign, promising that Zembillas
would not be terminated without just cause and ensuring that, if Zembillas were
terminated without just cause, he would receive a severance package. After new
management fired Zembillas in March 2016, Bobb Auto failed to pay Zembillas
his severance package. During the ensuing litigation, the trial court granted
Zembillas’s motion for summary judgment for breach of contract. Now, Bobb
Auto appeals that order, arguing that there are genuine issues of material fact
regarding consideration and mutuality of obligation. Finding no error, we
affirm.
Facts
[2] Bobb Auto operates as a Chrysler dealership in Lake County. Art Georgion,
Bobb Auto’s president and general manager, hired Zembillas to be the
dealership’s advertising designer on March 11, 2013. Zembillas worked for
Bobb Auto for two years before Georgion offered several of his key employees,
including Zembillas, the Agreement to sign in August 2015.
[3] The pertinent sections of the Agreement are as follows:
WHEREAS – [Zembillas] is bound by all Bobb Auto Group, LLC
Human Resources policies and procedures.
WHEREAS – [Zembillas] has contributed to the success, growth,
and profitability of the Company.
WHEREAS – Company and [Zembillas] have determined that it
is in their respective best interest to enter into this Agreement on
the terms and conditions as set forth herein.
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WHEREAS – Company recognizes that [Zembillas] (through
his/her past and present efforts) has added substantial worth to the
company.
WHEREAS – Company wishes to provide continued employment
for [Zembillas], however, if for any reason other than those cited
in Section 6, the Company chooses to terminate employment with
[Zembillas], [Zembillas] shall receive compensation as outlined in
Section 5.
***
1[.] EMPLOYMENT – [Bobb Auto] . . . does hereby employ
[Zembillas] in the position of Advertising Designer. [Zembillas]
has served in such capacity since March 11, 2013.
2. DUTIES – [Zembillas] performs all the duties of a[n] . . .
Advertising Designer and agrees to be subject to the general
supervision, orders, advice and direction of the President of the
Company.
3. EXTENT OF SERVICES. Employee shall devote his/her
energy and efforts to the performance of his/her duties and the
furtherance of the interests of the Company for a minimum of 40
hours per week.
4. TERM – Subject to the provisions for termination . . . the initial
term of employment of [Zembillas] under this Agreement shall be
TWO (2) years from and after the Effective Date . . . and it shall
then renew annually at the discretion of the COMPANY.
5. PAYMENT – In consideration of the services rendered to the
Company hereunder by [Zembillas] and if the Company no longer
wishes to employ [Zembillas] for any reason other than as
described in Section 6, the Company shall pay [Zembillas] a lump
sum amount equal to $48,600, less statutory deductions and
withholdings, payable in accordance with the Company’s regular
payroll practices.
6. TERMINATION – This Agreement (except as otherwise
provided hereunder) shall terminate upon the occurrence of any of
the following at the time set forth therefore . . . :
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6.1 DEATH OR DISABILITY – Immediately upon the
death of [Zembillas] or a determination by the Social
Security Administration that Employee has become totally
and permanently disabled.
6.2 TERMINATION FOR CONDUCT – Employee is
charged and convicted of a criminal activity in a court of
law or for Willful and Wanton Gross Negligence in
performing his/her duties.
6.3 MUTUAL AGREEMENT – [Zembillas] and Company
mutually agree to terminate this agreement.
6.4 EMPLOYEE RESIGNATION. [Zembillas] voluntarily
resigns his/her employment with the Company.
Appellant’s App. Vol. II p. 78-79 (some emphases omitted). Georgion and
Zembillas signed the Agreement on September 1, 2015.
[4] For the next six months, Zembillas worked for Bobb Auto, logging fifty to fifty-
five hours of work per week. It is undisputed that during this time, Zembillas
performed his duties as advertising designer at or above the level required of
him. There is no indication that Zembillas’s performance was in any way
deficient. Then suddenly, without authorization from Chrysler to do so, Bobb
Auto fired Georgion. A few days later, on March 4, 2016, Bobb Auto fired
Zembillas without explanation. Despite receiving unemployment benefits,
Zembillas never received the severance package outlined in Section 5 of the
Agreement.
[5] On August 4, 2016, Zembillas filed a complaint against Bobb Auto for breach
of contract. Bobb Auto responded to Zembillas’s complaint on October 6, 2016,
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without any affirmative defenses. On February 6, 2017, Zembillas filed his first
discovery requests for information from Bobb Auto, to which Bobb Auto never
responded. After repeated extensions, Zembillas filed a motion to compel
discovery on July 20, 2017. Still, Bobb Auto did not respond. Zembillas then
filed a second motion to compel and a separate motion for contempt and
discovery sanctions on August 15, 2017. Following a September 25, 2017,
hearing, the trial court granted all of Zembillas’s motions and ordered that Bobb
Auto respond to the discovery requests by October 5, 2017. Eventually, Bobb
Auto complied with the trial court’s order.
[6] Starting October 26, 2017, Zembillas attempted to depose numerous individuals
associated with Bobb Auto. The parties agreed to have the depositions take
place sometime in January 2018. On December 27, 2017, Bobb Auto informed
Zembillas that it could not “confirm that anybody would be available that last
week of January that we were hoping for.” Id. at 124. Therefore, the parties
rescheduled the depositions for May 22-23, 2018.
[7] However, on March 12, 2018, Bobb Auto filed a counterclaim against
Zembillas and then on May 15, 2018, filed a motion for summary judgment,
arguing that Georgion did not have the initial authority to enter into the
Agreement with Zembillas and that the Agreement was not supported by
consideration and lacked mutuality of obligation. Bobb Auto did not designate
any evidence in support of its motion for summary judgment. On May 22,
2018, neither Bobb Auto’s counsel nor any representative from Bobb Auto
appeared for the scheduled depositions.
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[8] On June 14, 2018, Zembillas filed a motion to strike or dismiss Bobb Auto’s
counterclaim, a motion to bar Bobb Auto’s witnesses, a response to Bobb
Auto’s original motion for summary judgment, and a countermotion for
summary judgment along with supporting memoranda and designated
evidence. In his countermotion for summary judgment, Zembillas argued that
he and Georgion had entered into a valid, enforceable contract supported by
consideration and that he had not received his severance package, despite being
terminated without just cause.
[9] Bobb Auto never responded to Zembillas’s countermotion for summary
judgment. Instead, on July 30, 2018, Bobb Auto’s counsel withdrew from
representation and new counsel appeared. On January 7, 2019, the trial court
held a hearing on the pending motions, during which Bobb Auto failed to raise
any of the issues contained in its initial motion for summary judgment. Indeed,
Bobb Auto even conceded that its arguments in that motion were not valid. See
generally Tr. Vol. II p. 19.
[10] The next day, January 8, 2019, the trial court issued an order denying Bobb
Auto’s original motion for summary judgment, granting Zembillas’s motion to
dismiss Bobb Auto’s counterclaim, ruling that Zembillas’s motion to bar Bobb
Auto’s witnesses was moot, and granting Zembillas’s countermotion for
summary judgment. The trial court ordered that Bobb Auto pay Zembillas
$60,303.84—$48,600 for the severance package, $11,003.84 in pre-judgment
interest, and $700 in discovery sanctions. On February 6, 2019, Bobb Auto filed
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a motion to correct errors and a Trial Rule 62 motion to stay judgment; the trial
court ultimately denied both motions. Bobb Auto now appeals.
Discussion and Decision
[11] Bobb Auto’s sole argument on appeal is that the trial court erred when it
granted summary judgment in favor of Zembillas.1 Specifically, Bobb Auto
contends that there are genuine issues of material fact regarding whether the
Agreement lacked consideration and mutuality of obligation, and thus, an entry
of summary judgment was improper.
Waiver and Delay
[12] First, there is the issue of waiver. The record shows that at the January 7, 2019,
hearing, Bobb Auto raised none of the issues before the trial court that it raises
now on appeal. See WorldCom Network Servs., Inc. v. Thompson, 698 N.E.2d 1233,
1242 (Ind. Ct. App. 1998) (holding that a party “should not be permitted to
maintain one position before the trial court and a contrary position on appeal”).
We find it difficult to accept Bobb Auto’s argument on appeal as germane and
genuine given that we are the first tribunal to address its substance. Dunaway v.
Allstate Ins. Co., 813 N.E.2d 376, 387 (Ind. Ct. App. 2004) (finding that “[i]ssues
not raised before the trial court on summary judgment cannot be argued for the
first time on appeal and are waived”); see also Poulard v. Lauth, 793 N.E.2d 1120,
1
Additionally, Bobb Auto raises a separate argument that the trial court erred in denying its motion to
correct errors, which we decline to address since the substance of that argument is virtually the same as that
comprising our analysis for the summary judgment discussion.
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1123 (Ind. Ct. App. 2003) (holding that “[a] summary judgment is a decision on
the merits[]” and that “[m]ore specifically, matters not designated as genuine
issues of material fact cannot be relied upon on appeal”). Accordingly, Bobb
Auto has waived its argument.
[13] Moreover, we are deeply concerned with Bobb Auto’s contumacious behavior
throughout the litigation. The prolonged discovery process was caused
primarily by Bobb Auto’s repeated failures to respond to Zembillas’s discovery
requests and make witnesses available for scheduled depositions. And, in fact,
the trial court sanctioned Bobb Auto by levying a fine that it has yet to pay.
There was no reasonable explanation for Bobb Auto’s dilatory actions, and
Bobb Auto’s behavior raises serious questions about whether we should even
address its argument. Waiver notwithstanding, we choose to analyze Bobb
Auto’s argument on its merits.
Standard of Review
[14] Our standard of review for summary judgment decisions is well established:
When reviewing a grant or denial of a motion for summary
judgment our standard of review is the same as it is for the trial
court. The moving party bears the initial burden of making a
prima facie showing that there are no genuine issues of material
fact and that it is entitled to judgment as a matter of law.
Summary judgment is improper if the movant fails to carry its
burden, but if it succeeds, then the nonmoving party must come
forward with evidence establishing the existence of a genuine issue
of material fact. In determining whether summary judgment is proper,
the reviewing court considers only the evidentiary matter the parties have
specifically designated to the trial court. We construe all factual
inference sin the non-moving party’s favor and resolve all doubts
as to the existing of a material issue against the moving party. The
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fact that the parties have filed cross-motions for summary
judgment does not alter our standard for review, as we consider
each motion separately to determine whether the moving party is
entitled to judgment as a matter of law.
Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012) (internal citations and quotations
omitted) (emphasis added). Here, Bobb Auto argues that there are genuine
issues of material fact as to whether the Agreement contained adequate
consideration or mutuality of obligation.
Consideration
[15] “To constitute consideration, there must be a benefit accruing to the promisor
or a detriment to the promisee.” Hamlin v. Steward, 622 N.E.2d 535, 539 (Ind.
Ct. App. 1993). Consideration, in other words, is a bargained-for exchange. Id.
[16] The designated evidence demonstrates that the Agreement was the only written
expression of the contractual employer/employee relationship between Bobb
Auto and Zembillas. And the Agreement included a clause regarding the
disputed severance package. That clause reads as follows:
5. PAYMENT – In consideration of the services rendered to the
Company hereunder by [Zembillas] and if the Company no longer
wishes to employ [Zembillas] for any reason other than as
described in Section 6, the Company shall pay [Zembillas] a lump
sum equal to $48,600, less statutory deductions and withholdings,
payable in accordance with the Company’s regular payroll
practices.
Appellant’s App. Vol. II p. 79 (emphases added and omitted).
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[17] Thus, the only designated evidence we have of consideration as it pertains to
the employment relationship between Bobb Auto and Zembillas is the
aforementioned Agreement. Because Bobb Auto failed to designate evidence in
opposition to Zembillas’s motion for summary judgment and instead raised
unrelated claims about the Agreement’s enforceability, we can only rely on the
Agreement in rendering a decision about whether there was adequate
consideration. And the Agreement expressly states that it was made:
in consideration of the foregoing and the mutual covenants and
promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged . . . .
Id. at 78 (emphases added).
[18] Accordingly, based on the language contained in the Agreement, there was
adequate consideration. Georgion and Zembillas formalized the terms and
conditions of Zembillas’s employment and expressly stated that there was
consideration sufficient to create a binding contract. See City of New Albany v.
Cotner, 919 N.E.2d 125, 131 (Ind. Ct. App. 2009) (holding that “[w]hen a trial
court has entered summary judgment based upon the construction of a written
contract, it has determined either that: (1) the contract is not ambiguous or
uncertain as a matter of law and the trial court need only apply the terms of the
contract or (2) the contract is ambiguous, but the ambiguity may be resolved
without the aid of factual determinations”). Further, there is undisputed
evidence that Zembillas worked as advertising designer for the next six months
Court of Appeals of Indiana | Memorandum Decision 19A-PL-1511 | November 27, 2019 Page 10 of 12
for fifty to fifty-five hours per week and that his work was nothing less than
satisfactory. As such, when new management at Bobb Auto fired Zembillas
without just cause, Zembillas should have received his severance package
pursuant to the terms of the Agreement.
Mutality of Obligation
[19] Our understanding of mutuality of obligation is well established:
Mutuality of obligation is essential to the validity of an executory
bilateral contract which is based solely on mutual promises or
covenants and unless both parties are legally bound, so that each
may hold the other liable for its breach, the contract lacks
mutuality and neither party [is] bound. Thus, mutuality is absent
when only one of the contracting parties is bound to perform, and
the other party remains entirely free to choose whether or not to
perform, and the rights of the parties exist at the option of one
only.
Sec. Bank & Trust Co. v. Bogard, 494 N.E.2d 965, 968 (Ind. Ct. App. 1986).
“When construing a contract, Indiana courts will not find lack of mutality or
uncertainty where a reasonable and logical interpretation will render the
contract valid and enforceable.” Kokomo Veterans, Inc. v. Schick, 439 N.E.2d 639,
645 (Ind. Ct. App. 1982)
[20] Once again, the only designated evidence we have of an employer/employee
relationship between Bobb Auto and Zembillas is the Agreement. And in the
Agreement, Zembillas would only receive a severance package if two events
occurred: (1) Zembillas performed his duties for at least forty hours per week at
a level of performance required of him; and (2) Bobb Auto terminated
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Zembillas without just cause. In other words, Zembillas was obliged to work,
and Bobb Auto was obligated to continue employing and paying Zembillas,
unless it decided to terminate him without just cause and subsequently pay out
a severance package. See, e.g., Eck & Assocs., Inc. v. Alusuisse Flexible Packaging,
Inc., 700 N.E.2d 1163, 1168-69 (Ind. Ct. App. 1998). Thus, there is clear
mutuality of obligation for both parties, as is evidenced by the terms and
conditions of the Agreement. See Schick, 439 N.E.2d at 645 (holding that
mutuality is present when there are “correlative enforceable obligations
imposed on the parties to a contract so that both are bound by the terms of the
contract”).
[21] Therefore, we find that the trial court did not err when it granted summary
judgment in Zembillas’s favor. Because we may rely only on the evidence
designated for the summary judgment motion, we conclude that there is no
genuine issue of material fact as to whether the Agreement contained adequate
consideration or mutality of obligation. Bobb Auto provided no evidence to
oppose or contradict the express terms of the contract—namely, that the
consideration was good and valuable and that mutuality of obligation was
present. Thus, the contract is valid, there was a breach of that contract, and
Zembillas is entitled to his severance package as a matter of law.
[22] The judgment of the trial court is affirmed.
Kirsch, J., and Crone, J., concur.
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