Bradley J. Vossberg, and Diana Jachimiak v. Glen A. Gray, Kimberly L. Gray, and Kevin Hardie, d/b/a The Hardie Group ( 2012 )

Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of
FILED
Aug 29 2012, 9:45 am
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
ALAN D. WILSON DAVID A. COX
Kokomo, Indiana Bayliff, Harrigan, Cord, Maugans & Cox, P.C
Kokomo, Indiana
IN THE
COURT OF APPEALS OF INDIANA
BRADLEY J. VOSSBERG, and )
DIANA JACHIMIAK )
)
Appellants-Defendants, )
)
vs. ) No. 34A04-1110-PL-546
)
GLEN A. GRAY, KIMBERLY L. GRAY, and )
KEVIN HARDIE, d/b/a THE HARDIE GROUP )
)
Appellees-Plaintiffs. )
APPEAL FROM THE HOWARD SUPERIOR COURT 2
The Honorable Brant J. Parry, Judge
Cause No. 34D02-0907-PL-846
August 29, 2012
MEMORANDUM DECISION – NOT FOR PUBLICATION
MATHIAS, Judge
The Howard Superior Court entered judgment against Bradley Vossberg
(“Vossberg”) and Diana Jachimiak (“Jachimiak”) (collectively “the Buyers”) and in favor
of Glen Gray, Kimberly Gray (collectively “the Grays”), and Kevin Hardie d/b/a the
Hardie Group (“Hardie”), after the Buyers failed to purchase the Grays’ home pursuant to
a purchase agreement. The Buyers appeal and present two issues, which we renumber
and restate as:
I. Whether the trial court erred in concluding that the Buyers breached the
purchase agreement;
II. Whether the trial court erred in determining the amount of damages
awarded to the Grays; and
III. Whether the trial court erred in concluding that Hardie was a third party
beneficiary of the purchase agreement and therefore entitled to damages
and attorney fees.
We affirm the trial court’s award of damages to the Grays because there was evidence to
support the trial court’s finding that the Buyers breached the terms of the purchase
agreement, but we reverse with regard to the award of damages to Hardie because the
trial court erred in determining that Hardie was a third party beneficiary of the purchase
agreement.
Facts and Procedural History
The facts most favorable to the trial court’s judgment reveal that the Grays listed
their home in Kokomo, Indiana for sale on October 21, 2008 and contracted with Hardie
and Jenny Beals, a broker employed by Hardie, to act as their real estate brokers.
Pursuant to the listing agreement entered into by the Grays and Hardie, the latter was to
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receive a commission of six percent of the sale price of the home, which commission
would be split with any buyer’s agent.
On February 11, 2009, the Buyers signed a purchase agreement (“the Agreement”)
to purchase the Grays’ home for the price of $228,250 and paid $1,000 in earnest money.
Pursuant to the Agreement, purchase of the Grays’ home was contingent on the Buyers
obtaining a mortgage loan for eighty percent of the purchase price of the home. The
Agreement contained the following language regarding the time the Buyers had to obtain
financing:
Buyer agrees to make written application for any financing necessary to
complete this transaction or for approval to assume the unpaid balance of
the existing mortgage within 7 days after the acceptance of this Agreement
and to make a diligent effort to meet the lender’s requirements and to
obtain financing in cooperation with the Broker and Seller. No more than
30 days after acceptance of the Agreement shall be allowed for obtaining
favorable written commitment(s) or mortgage assumption approval. If a
commitment or approval is not obtained within the time specified above,
this Agreement shall terminate unless an extension of time for this purpose
is mutually agreed to in writing.
Appellant’s App. p. 28.
More than two months earlier, however, in November 2008, the Buyers had been
pre-approved for a mortgage loan in the price range of the Grays’ house with First
Republic Mortgage Corp. (“FRMC”). This pre-approval did not reference any particular
purchase, and the loan was not yet final. After entering into the Agreement, the Buyers
applied for a mortgage loan to purchase the Grays’ house. FRMC then hired an appraiser
to assess the value of the house, and this appraiser ultimately determined that the house
was valued at $230,000.
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Closing was scheduled for April 3, 2009, and was to be facilitated through
Metropolitan Title. Prior to the closing, FRMC sent various documents to Metropolitan
Title via email. These documents included closing instructions, a payoff statement, and a
homeowner’s insurance policy binder. Also prior to closing, FRMC approved the Buyers
for the loan and wired the closing funds to Metropolitan Title in anticipation of the
closing.
On April 3, 2009, the Buyers contacted their agent and instructed her to prepare an
addendum to the Agreement that would modify the sale price of the home from $228,250
to $185,000. This addendum was sent to the Grays’ agent on that day. The Grays
rejected the reduced price in the addendum and went to closing as scheduled. The Buyers
did not go to the scheduled closing, and Metropolitan Title eventually returned the
closing funds that it had received from FRMC. FRMC later informed Metropolitan Title
that the Buyers had elected not to close on the Agreement.
After the Buyers failed to close on the property, the Grays instructed their agent to
re-list the property for sale. Mr. Gray was already living and working in California while
his wife and children remained in Indiana. Thus, the Grays were under pressure to sell
their house in Indiana in order to reunite their family. The Grays lowered the price on
their house, and eventually sold the house to another party for $185,000—$43,250 less
than the price called for in the Agreement with the Buyers. Hardie received a 6%
commission of the $185,000.
On July 8, 2009, the Grays and Hardie filed suit against the Buyers, alleging that
they had breached the Agreement by not following through on the purchase of the Grays’
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house. A bench trial was held on August 8, 2011, and the trial court entered findings of
fact and conclusions of law in favor of the Grays and Hardie on September 28, 2011.
The trial court determined that the Grays had breached the Agreement and were liable for
the difference between the contracted price and the price at which the Grays eventually
sold their house, less the $1,000 in earnest money already submitted by the Buyers, i.e.
$42,250. The trial court also held the Buyers liable for consequential damages in the
amount of $1,717.03. The trial court further determined that Hardie was entitled to
$1,297.50, the difference in his commission between the sale price in the Agreement and
the price the house was ultimately sold for. The Agreement also provided that the
prevailing party was entitled to recover attorney fees, and the trial court ordered the
Buyers to pay the Grays’ attorney fees in the amount of $9,500 and Hardie’s attorney fees
in the amount of $1,000. The Buyers now appeal.
Standard of Review
When, as here, issues are tried by the court without a jury, Indiana Trial Rule 52
provides that a trial court “shall find the facts specially and state its conclusions thereon”
either “[u]pon its own motion” or upon “the written request of any party filed with the
court prior to the admission of evidence.” We apply the following two-tier standard of
review to sua sponte findings and conclusions: whether the evidence supports the
findings, and whether the findings support the judgment. Argonaut Ins. Co. v. Jones, 953
N.E.2d 608, 614 (Ind. Ct. App. 2011), trans. denied.1 Findings and conclusions will be
1
Our standard of review of findings of fact and conclusions of law entered pursuant to Trial Rule 52 differs slightly
depending upon whether the entry of findings and conclusions were entered upon the trial court’s motion or upon a
written request of the parties. Jones, 953 N.E.2d at 614. Here, it appears that neither party filed a written request for
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set aside only if they are clearly erroneous, that is, when the record contains no facts or
inferences supporting them. Id. A judgment is clearly erroneous when a review of the
record leaves us with a firm conviction that a mistake has been made. Id. We consider
only the evidence favorable to the judgment and all reasonable inferences flowing
therefrom, and we will neither reweigh the evidence nor assess witness credibility. Id.
Although we defer to the trial court’s factual findings, we evaluate questions of law de
novo. McCauley v. Harris, 928 N.E.2d 309, 313 (Ind. Ct. App. 2010).
I. Breach of the Agreement
The Buyers first claim that they did not breach the Agreement because the
Agreement conditioned the sale of the house on the Buyers receiving a written loan
commitment, which they insist they never received. The relevant portion of the
Agreement provided:
No more than 30 days after acceptance of the Agreement shall be allowed
for obtaining favorable written commitment(s) or mortgage assumption
approval. If a commitment or approval is not obtained within the time
specified above, this Agreement shall terminate unless an extension of time
for this purpose is mutually agreed to in writing.
Appellant’s App. p. 28. The Buyers insist that they never received a written loan
approval and that the Agreement therefore terminated pursuant to his provision.2
findings of fact and conclusions thereon and that the trial court’s findings and conclusions were entered sua sponte.
In such situations, the specific findings control our review and the judgment only as to the issues those specific
findings cover. Id. Where there are no specific findings, a general judgment standard applies and we may affirm on
any legal theory supported by the evidence adduced at trial. Id.2
We note that the failure to perform a condition precedent is an affirmative defense that must be specifically and
particularly asserted in a responsive pleading. Ind. Trial Rule 9(C); Dave’s Excavating, Inc. v. City of New Castle,
959 N.E.2d 369, 383 (Ind. Ct. App. 2012), trans. denied. Here, the Buyers’ responsive pleading contained no
assertion of any affirmative defenses to the Plaintiffs’ breach of contract claim. Appellees’ App. pp. 18-21. Thus, it
would appear that the Buyers waived their argument regarding the failure to fulfill the condition precedent that they
obtain a loan commitment letter. However, because we prefer to consider issues on their merits, we address the
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The Grays note, however, that the termination provision does not require a written
loan commitment. It states simply that “if a commitment . . . is not obtained” within the
given time period, then the “Agreement shall terminate . . . .” Id.And there is evidence that such a commitment was in fact obtained. First, the
Buyers obtained from FMRC a document titled “Mortgage Loan Commitment,” which
informed them that “their application for a first mortgage loan has been approved subject
to the following matters set forth below.” Appellant’s App. p. 25. Furthermore, an
employee of FRMC emailed the Buyers on April 10, 2009, and informed them:
Just so you know we sent the money to closing because as we were
proceeding with the loan, we have to make sure that it is handled as we
expected to get the approval. We did get the approval but in anticipation of
the approval we sent the funds to closing as the closing had been set by the
realtors and we had you approved, just needed to get the appraisal
approved. The appraiser addressed the concerns and had verbally stated
that the support data was on it[s] way and again in anticipation of that we
sent our funds to closing.
If we would not have approved the loan, all conditions, then the title
company would not have been given a “clear to close” signal from us to
proceed to close the file and use our funds.
Appellees’ App. p. 109 (emphasis added). Thus, there was evidence before the trial court
indicating that the Buyers did, in fact, obtain a loan commitment. Indeed, as noted in the
email, if the loan had not been approved, FRMC would not have given its approval to
proceed to closing and wire the funds to the title company.
Moreover, even if the Agreement required that the Buyers obtain a “written”
commitment, in this age of technology, receiving an email or other electronic
Buyers’ claims infra. See Omni Ins. Group v. Poage, 966 N.E.2d 750, 753 (Ind. Ct. App. 2012) (noting that this
court prefers to decide a case on the merits when possible).
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communication would satisfy the requirement that the commitment be “written.” The
fact that an email is not necessarily printed onto paper does not mean that it is not
“written.” See, e.g., Lamle v. Mattel, Inc., 394 F.3d 1355, 1362 (Fed. Cir. 2005) (holding
that emails, like telegrams, may be sufficient to satisfy writing requirement of the statute
of frauds); Cloud Corp. v. Hasbro Inc., 314 F.3d 289, 295-96 (7th Cir. 2002) (concluding
that emails from the defendant’s agent to the plaintiff, in combination with an additional
document, satisfied the statute of frauds requirement of written contract).
The Buyers’ reliance on Keliher v. Cure, 534 N.E.2d 1133 (Ind. Ct. App. 1989), is
misplaced. In that case, the purchase agreement required the buyer to obtain a favorable
loan commitment, but the commitment they actually received was conditional. The court
therefore held that a favorable commitment was not timely obtained. Id. at 1136. In
contrast, here the loan commitment was obviously not conditional; the mortgage
company actually approved the loan and forwarded the funds to the title company for
closing.
The Buyers also claim that the Grays prevented them from being able to obtain a
loan commitment at the time of closing by moving the closing date to April 3, 2009. An
addendum to the Agreement provided that the closing was to occur on or before April 9,
2009. Appellant’s App. p. 35. The Buyers claimed, and the trial court found, that they
were unaware that the closing had been scheduled for April 3, 2009. But even if the
Buyers were unaware of the scheduled closing date, this does not mean that the Grays
prevented the Buyers from obtaining the loan commitment on or before April 9. There is
no indication that the April 3 closing date caused the Buyers to be unable to obtain a loan
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commitment. Indeed, the Buyers were able to contact their broker on April 3 and have
her draft a proposed addendum lowering the purchase price of the house considerably.
More importantly, as stated above, the Buyers were in fact able to obtain a loan
commitment as indicated by the fact that the mortgage company forwarded the funds to
the title company for the closing.
II. Damages
The Buyers also argue that the reduced price the Grays eventually accepted for the
sale of their house was not caused by any breach on part of the Buyers. Instead, the
Buyers allege that the lower sale price was the result of the Grays desire to sell the house
quickly so that the family could be reunited in California. Although there was evidence
that the Grays were “motivated” sellers, the Grays had also spent a substantial amount of
time dealing with the Buyers. And while the sale to the Buyers was pending, the Grays’
home was effectively off the market. After the Buyers declined to follow through with
the Agreement, the Grays had to relist the house for sale, and it still took several months
for them to find another buyer.
It is well settled that “[t]he proper measure of damages is the difference between
the sale price of the property to be sold and the fair market value of that property at the
time of the buyer’s breach. Showalter, Inc. v. Smith, 629 N.E.2d 272, 275-76 (Ind. Ct.
App. 1994), trans. denied, abrogated on other grounds by Mitchell v. Mitchell, 695
N.E.2d 920 (Ind. 1998); see also Rogers v. Lockard, 767 N.E.2d 982, 990 (Ind. Ct. App.
2002). Here, the Buyers cannot complain that the $185,000 the Grays ultimately sold
their house for was not a fair market value. The Buyers themselves offered to pay
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$185,000 after backing out of the initial agreement to pay $228,250. Their offer belies
their current argument that $185,000 was an unfairly low price for the Grays’ house. See
Showalter, 629 N.E.2d at 276 (noting that the price voluntarily paid by a purchaser is
admissible as evidence of the property’s fair market value).
III. Third Party Beneficiary
The Buyers last argue that the trial court erred in awarding damages to Hardie,
who owned the real estate agency used by the Grays to sell their house. The Buyers first
claim that Hardie was the owner of a corporation, the Hardie Group, and that Jenny
Beals, not Hardie, was their agent. The Buyers therefore argue that Hardie, as the
individual owner of the corporation had no standing to sue for a breach of contract on
behalf of the corporation. The trial court concluded, however, that Hardie was a third-
party beneficiary of the Agreement.
Normally, one who is not a party to a contract has no standing to enforce it. City
of Indianapolis v. Kahlo, 938 N.E.2d 734, 742 (Ind. Ct. App. 2010), trans. denied. But a
third party beneficiary of a contract does have standing to enforce it. Id. However, for a
contract to be enforceable by a third party beneficiary, it must clearly appear that it was
the purpose or a purpose of the contract to impose an obligation on one of the contracting
parties in favor of the third party. Id. It is not enough that performance of the contract
would simply be of benefit to the third party; instead, it must appear that it was the
intention of one of the parties to require performance of some part of the contract in favor
of such third party and for his benefit and that the other party to the agreement intended
to assume the obligation thus imposed. Id. The intent of the contracting parties to
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bestow rights upon a third party must affirmatively appear from the language of the
instrument when properly interpreted and construed. Id. (citing Cain v. Griffin, 849
N.E.2d 507, 514 (Ind. 2006)).
Here, the Agreement lists Hardie and Beals as the listing broker, and paragraph 25
of the agreement states in pertinent part:
Buyer and Seller acknowledge that each has received agency office policy
disclosures, has had agency explained, and now confirms all agency
relationships. Buyer and Seller further acknowledge that they understand
and accept agency relationships involved in this transaction.
Appellant’s App. p. 32. This simply indicates that the parties accepted and understood
the agency relationships involved in the transaction. There is no mention of any
commission to be paid to the brokers. Nor is there any affirmative language bestowing
upon the brokers any affirmative right to a commission. Although, the Grays did enter
into a listing agreement with Hardie and Beals, this was an agreement solely between the
Grays, Beals, and Hardie. Accordingly, the trial court’s conclusion that Hardie was a
third party beneficiary of the Agreement was clearly erroneous, and the award of
damages to Hardie was therefore improper. And because the award of damages to Hardie
was improper, he was not a prevailing party entitled to attorney fees.
Conclusion
The trial court did not clearly err in concluding that the Buyers breached the
Agreement and in awarding damages to the Grays. However, because Hardie was not a
third party beneficiary of the Agreement, the award of damages and attorney fees to him
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was improper. Accordingly, the judgment of the trial court is affirmed in part, reversed
in part, and remanded with instructions to vacate the award of damages to Hardie.
Affirmed in part, reversed in part, and remanded.
VAIDIK, J., and BARNES, J., concur.
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