John S. Paniaguas, Kathy R. Paniaguas, Woodrow Cornett, III, and Kristine E. Cornett v. Endor, Inc. ( 2013 )

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
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEYS FOR APPELLANTS: ATTORNEYS FOR APPELLEES:
J. MICHAEL KATZ KEVIN E. WERNER
LISA M. ROSS Merrillville, Indiana
Goodman Katz & Scheele
Highland, Indiana SCOTT PYLE Nov 20 2013, 10:06 am
Calumet City, Illinois
ADAM J. SEDIA
Rubino Ruman Crosmer & Polen
Dyer, Indiana
IN THE
COURT OF APPEALS OF INDIANA
JOHN S. PANIAGUAS, KATHY R. )
PANIAGUAS, WOODROW CORNETT, III, )
and KRISTINE E. CORNETT, )
)
Appellants-Plaintiffs, )
)
vs. ) No. 45A03-1205-PL-244
)
ENDOR, INC. et al.,1 )
)
Appellees-Defendants. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable John R. Pera, Judge
Cause No. 45D10-0310-PL-122
November 20, 2013
MEMORANDUM DECISION - NOT FOR PUBLICATION
KIRSCH, Judge
1
We note that the trial court entered a default judgment against Endor, Inc. on all issues of
causation and liability due to failure to cooperate and provide discovery. However, “[u]nder Indiana
Appellate Rule 17(A), ‘[a] party of record in the trial court or Administrative Agency shall be a party on
appeal.’” Hoosier Outdoor Adver. Corp. v. RBL Mgmt., Inc., 844 N.E.2d 157, 162 (Ind. Ct. App. 2006)
(quoting Ind. Appellate Rule 17(A)). This appeal only concerns the claims against the homeowners in
both Units 1 and 2 who purchased homes from Endor Inc., but due to the lengthy number of appellees
involved and to conserve space in the caption, we only list Endor, Inc. as it is the first party named in the
caption.
This case arises from a dispute between two groups of homeowners of homes in
the same subdivision in Crown Point, Indiana. John S. Paniaguas, Kathy R. Paniaguas,
Woodrow Cornett, III, and Kristine E. Cornett (collectively, “the Paniaguas parties”) own
homes in Unit 1 of the subdivision that were built by the initial developer of the
subdivision, Aldon Companies, Inc. (“Aldon”). The Appellee Homeowners subsequently
purchased homes in the same subdivision, some of which were in Unit 1 and some of
which were in Unit 2, that were built by a second developer, Endor, Inc. (“Endor”). The
Paniaguas parties appeal the trial court’s order that determined that the Appellee
Homeowners’ homes were in compliance with the Restrictive Covenants of the
subdivision, raising the following consolidated and restated issues:
I. Whether the trial court erred in determining that the Paniaguas
parties lacked standing to enforce the Restrictive Covenants against
the homeowners in Unit 2 of the subdivision based on the trial
court’s finding that the Restrictive Covenants only applied to Unit 1
of the subdivision;
II. Whether the trial court abused its discretion in admitting the minutes
of the Endor Architectural Control Committee under the business
records exception to the hearsay rule; and
III. Whether the evidence presented failed to support the trial court’s
finding that all of the homes built by Endor complied with the
Restrictive Covenants.
The Appellee Homeowners cross-appeal and raise the following restated issue:
IV. Whether the trial court erred in not granting them attorney fees
because the Paniaguas parties’ claims were frivolous.
We affirm.
2
FACTS AND PROCEDURAL HISTORY2
Fieldstone Crossing is a single-family residence subdivision located in Crown
Point, Indiana. Aldon was the initial developer for Units 1 and 2 of the subdivision. Unit
1 of Fieldstone Crossing consists of nineteen single-family residences, and its plat was
properly recorded with the Lake County Recorder on October 7, 1992. Unit 2 consists of
eighteen single-family residences, and its plat was properly recorded with the Lake
County Recorder on May 13, 1997. Aldon had initially created four “ABCD” home
models, the Applewood, the Birchwood, the Cherrywood, and the Dogwood, each with
four different elevations for Fieldstone Crossing. Tr. at 339.
Aldon, through its president, Alfred Gomez, Jr., and its secretary, Brad Gomez
(“Gomez”), executed a document titled, “Declaration of Restrictive Subdivision
Covenants of Fieldstone Crossing Subdivision, City of Crown Point, Lake County,
Indiana” (“the Restrictive Covenants”). The Restrictive Covenants were subsequently
recorded with the Lake County Recorder on March 30, 1993 and re-recorded on July 8,
1993 to reflect an amendment. At the time the Restrictive Covenants were recorded, Unit
2 had not been platted, and the language of the Restrictive Covenants stated that the “land
affected by these restrictions and covenants, is annexed hereto and made a part hereof as
Exhibit A,” which is the legal description of Unit 1. Pls.’ Ex. 8, Ex. Vol. 7 at 1053, 1057-
2
Oral argument was heard on this case on August 28, 2013 in Indianapolis. We commend
counsel on the quality of their written and oral advocacy.
3
58.3 Nowhere in the language of the Restrictive Covenants did it state that they applied to
both Units 1 and 2 of Fieldstone Crossing, and Gomez testified that he was under the
belief that the Restrictive Covenants were only meant to apply to Unit 1. Tr. at 290.
One of the provisions contained in the Restrictive Covenants states in pertinent
part:
2. ARCHITECTURAL CONTROL
No home or structure shall be erected, placed or altered on any lot
until construction plans and specifications and the plans showing the
location of the structure have been approved by the Architectural Control
Committee as to quality of workmanship and materials, harmony of
external design with existing structures, and as to location with respect to
topography and finish grade elevation. No fence or wall shall be erected,
placed or altered on any lot unless similarly approved. All buildings such
as recreational buildings, storage sheds, pools, decks, etc. must have written
approval of [the] Committee.
Pls.’ Ex. 8, Ex. Vol. 7 at 1051. The Restrictive Covenants further state that the
Architectural Control Committee (“the ACC”) “reserves the right to enforce compliance
with these covenants.” Id. at 1053. During the time that Aldon owned and developed
Fieldstone Crossing, the ACC consisted of Alfred Gomez, Jr., Gomez, and Aldon, by
Brad Gomez.
In mid-1993, John S. Paniaguas and Kathy R. Paniaguas (together “Paniaguas”)
contacted Aldon’s sales representative regarding building a home in Fieldstone Crossing.
After deciding to build their home in Fieldstone Crossing, they completed a contract for
purchase of a lot in Unit 1 and for Aldon to construct a home on the lot, and Aldon
3
We note that this case contains a voluminous record, consisting of eighteen volumes of exhibits, which are
consecutively paginated. As such, we will refer to exhibits with their exhibit number and with their corresponding
exhibit volume and page number.
4
conveyed the title to the lot to Paniaguas. During the planning stage of building their
home, Paniaguas declined to have their home constructed strictly according to one of the
ABCD model home designs that Aldon had created for the subdivision, and instead,
requested a model that incorporated features used by another developer that were over
and above the standard features offered by Aldon for Fieldstone Crossing. Paniaguas’s
requests, which were approved by Gomez, resulted in Paniaguas having a semi-custom
built home that cost more than any of the other homes that would later be built in Units 1
or 2 of Fieldstone Crossing. Because Paniaguas’s home was to be the first one
constructed in Fieldstone Crossing, Paniaguas wanted to ensure that subsequently built
homes would maintain the aesthetic standards and compliment the value of their home.
Paniaguas believed that the Restrictive Covenants would ensure this since any new
construction would have to be approved by the ACC.
On May 21, 2001, Woodrow Cornett, III and Kristine E. Cornett (together “the
Cornetts”) purchased a nearly completed Aldon home in Fieldstone Crossing. The design
of the Cornetts’ home did not come from the basic Aldon ABCD models, but instead,
came from an Aldon portfolio of twenty-one different home designs. The Cornetts first
viewed and purchased their home after it had been substantially completed by Aldon, and
the Cornetts were limited to selecting options for carpeting, light fixtures, and door
knobs.
Between 1993 and 2002, Aldon constructed, sold, and conveyed its interest in a
total of nine homes in Fieldstone Crossing, including Paniaguas’s and the Cornetts’
homes. On December 11, 2002, Aldon entered into an agreement to sell its development
5
and ownership rights in the remaining twenty-eight, then undeveloped, properties spread
between Units 1 and 2 of Fieldstone Crossing to Endor, Inc. (“Endor”). Pursuant to the
agreement, Endor was to assume responsibility for enforcing the Restrictive Covenants
and to assume control of the ACC. In February 2003, Aldon conveyed its ownership and
development rights to Endor by way of a trustee’s deed. Between 2003 and 2007, Endor
constructed, sold, and conveyed its interest in a total of twenty-eight homes in Fieldstone
Crossing. All twenty-eight of these homes were built upon the lots Endor had acquired
from Aldon.
After completion of the first Endor-built home, the Paniaguas parties and several
other Aldon homeowners, filed a complaint on October 15, 2003 for preliminary
injunction, permanent injunctive relief, and monetary damages against Endor, seeking to
enjoin Endor from constructing additional homes in Fieldstone Crossing and for damages
resulting from the construction of homes in violation of the Restrictive Covenants. On
November 14, 2003, and on January 21, 2004, the trial court held a hearing on the
Paniaguas parties’ request for a preliminary injunction and denied the request on June 16,
2004, finding that the Paniaguas parties failed to demonstrate that an inadequate remedy
at law existed. Appellants’ App. at 411-20. On July 14, 2004, the Paniaguas parties filed
a “Notice of Lis Pendens” on all of the Endor-purchased properties to provide notice of
the pending lawsuit regarding the applicability of the Restrictive Covenants. Id. at 101,
421-35. On October 15, 2004, the Paniaguas parties filed an amended complaint to add
defendants, including Aldon, officers of both Endor and Aldon, and unknown
homeowners who had, at that time, purchased Endor-constructed homes. On January 21,
6
2005, Aldon and its officers, filed a motion to dismiss the claims against them, which the
trial court granted. The Paniaguas parties appealed this order, and on May 18, 2006, this
court affirmed the trial court in a published opinion, Paniaguas v. Endor, Inc., 847
N.E.2d 967 (Ind. Ct. App. 2006), trans. denied.
Over the course of these proceedings, the Paniaguas parties amended their
complaint eight times to add the names of parties they believed were necessary for the
just adjudication of their claims, including successive homeowners who either purchased
their home directly from Endor or from an Endor homeowner (collectively, “the Appellee
Homeowners”) and the members of the Endor ACC. On December 21, 2007, the
Paniaguas parties served a request for the production of documents on counsel for Endor
and the Endor ACC (together, “the Endor Defendants”), and on June 11, 2008, the
Paniaguas parties filed a motion to compel discovery because the Endor Defendants
failed to respond to the request for production of documents. After a hearing, the trial
court issued an order compelling the Endor Defendants to respond to the request for
production of documents. The Endor Defendants responded to the Paniaguas parties’
request with objections to numerous requests as overbroad and unduly burdensome. The
Paniaguas parties filed a second motion to compel discovery, and the trial court again
issued an order compelling discovery from the Endor Defendants. On May 28, 2010, the
Paniaguas parties moved for default judgment against the Endor Defendants, and on July
12, 2010, the trial court entered a judgment of default against the Endor Defendants on all
issues of causation and liability as the sanction imposed for failure to cooperate with and
provide discovery. On August 5, 2011, the Appellee Homeowners filed a motion
7
requesting written findings of fact and conclusions of law pursuant to Indiana Trial Rule
52, which was granted by the trial court. A five-day bench trial was held from August 8
through 12, 2011, and on May 10, 2012, the trial court issued its judgment in favor of the
Appellee Homeowners. The Paniaguas parties now appeal. Additional facts will be
provided as necessary.
DISCUSSION AND DECISION
The Paniaguas parties are appealing from a negative judgment following a bench
trial. Our standard of review in such cases is well settled. We will set aside the judgment
only upon a showing that the judgment is clearly erroneous. Ream v. Yankee Park
Homeowner’s Ass’n, Inc., 915 N.E.2d 536, 540 (Ind. Ct. App. 2009), trans. denied. In
addressing whether a negative judgment is clearly erroneous, we consider only the
evidence most favorable to the prevailing party and do not reweigh the evidence or judge
the credibility of witnesses. Id. However, when a question of law is dispositive, we owe
no deference to the trial court and review the issue de novo. Id. Where, as here, the trial
court enters findings of fact and conclusions based thereon, we apply a two-tiered
standard of review. Troutwine Estates Dev. Co., LLC v. Comsub Design & Eng’g, Inc.,
854 N.E.2d 890, 896 (Ind. Ct. App. 2006), trans. denied. First, we determine whether the
evidence supports the findings, and then we determine whether the findings support the
judgment. Id. We will set aside the trial court’s findings and conclusions only if they are
clearly erroneous. Id. Findings are clearly erroneous if the record contains no facts or
inferences supporting them, whereas a judgment is clearly erroneous when a review of
the record leaves us with a firm conviction that a mistake has been made. Indianapolis
8
City Market Corp. v. MAV, Inc., 915 N.E.2d 1013, 1021 (Ind. Ct. App. 2009) (citing
Garling v. Ind. Dep’t of Natural Res., 756 N.E.2d 1029, 1032 (Ind. Ct. App. 2001), trans.
denied).
I. Standing to Enforce Restrictive Covenants
The judicial doctrine of standing focuses on whether the complaining party is the
proper party to invoke the court’s power. Founds. of E. Chicago, Inc. v. City of E.
Chicago, 927 N.E.2d 900, 903 (Ind. 2010) (citing State ex rel. Cittadine v. Ind. Dep’t of
Transp., 790 N.E.2d 978, 979 (Ind. 2003)), clarified on reh’g. Courts seek to assure that
litigation will be actively and vigorously contested. Id. (citing Schloss v. City of
Indianapolis, 553 N.E.2d 1204, 1206 (Ind. 1990)). “It is generally insufficient that a
plaintiff merely has a general interest common to all members of the public.” Id. (citing
Terre Haute Gas Corp. v. Johnson, 221 Ind. 499, 45 N.E.2d 484 (1942)). “Standing
requires that a party have ‘a personal stake in the outcome of the lawsuit and must show
that he or she has sustained or was in immediate danger of sustaining, some direct injury
as a result of the conduct at issue.’” Id. (quoting Higgins v. Hale, 476 N.E.2d 95, 101
(Ind. 1985)).
Normally, “one not a party to a contract has no standing to enforce it.” City of
Indianapolis v. Kahlo, 938 N.E.2d 734, 741-42 (Ind. Ct. App. 2010) (citing Gregory &
Appel Ins. Agency v. Philadelphia Indem. Ins. Co., 835 N.E.2d 1053, 1058 n.7 (Ind. Ct.
App. 2005), trans. denied), trans. denied. But a third party beneficiary of a contract has
standing to enforce it. Id. For a contract to be enforceable by a third party,
9
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. It is not enough that performance of the contract would be of benefit
to the third party. It must appear that it was the intention of one of the
parties to require performance of some part of it 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. The intent of the contracting parties to
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)).
The Paniaguas parties argue that the trial court’s conclusion that they lacked
standing to enforce the Restrictive Covenants against the Appellee Homeowners from
Unit 2 because the Restrictive Covenants only applied to the homes in Unit 1 is erroneous
because it runs contrary to Indiana law and is not supported by the evidence presented.
They contend that the plain language of the Restrictive Covenants shows that they were
intended to apply to both Unit 1 and Unit 2. The Paniaguas parties point to the language
of the title of the Restrictive Covenants, which states, “Declaration of Restrictive
Covenants of Fieldstone Crossing Subdivision, City of Crown Point, Lake County,
Indiana,” as evidence of this. Pls.’ Ex. 8, Ex. Vol. 7 at 1051. They likewise cite to the
preamble of the Restrictive Covenants, which states in pertinent part: “We the
undersigned, being each and all of the owners and developers of Fieldstone Crossing
Subdivision . . . do hereby make, impose, and declare the following restrictions and
covenants pertaining to the use, occupancy, construction, and development of the lands,
lots, and improvements within said subdivision[.]” Pls.’ Ex. 8, Ex. Vol. 7 at 1051. The
Paniaguas parties further assert that the Restrictive Covenants use the phrase “all lots”
throughout the document without any reference to either Unit 1 or Unit 2 and that no
10
reasonable person would differ as to the meaning of such a phrase. The Paniaguas
parties, therefore, allege that the trial court erroneously found an ambiguity where none
existed and improperly considered extrinsic evidence of intent.
A restrictive covenant is an express contract between grantor and grantee that
restrains the grantee’s use of his land. Villas W. II of Willowridge Homeowners Ass’n,
Inc. v. McGlothin, 885 N.E.2d 1274, 1278 (Ind. 2008) (citing Holliday v. Crooked Creek
Vills. Homeowners Ass’n, Inc., 759 N.E.2d 1088, 1092 (Ind. Ct. App. 2001)), cert.
denied, 555 U.S. 1213 (2009). Restrictive covenants are used to maintain or enhance the
value of land by reciprocal undertakings that restrain or regulate groups of properties. Id.Because covenants are a form of express contract, we apply the same rules of
construction. Drenter v. Duitz, 883 N.E.2d 1194, 1199 (Ind. Ct. App. 2008).
Construction of the terms of a written contract is a pure question of law for the court, and
we conduct a de novo review of the trial court’s conclusions in that regard. Id.Indiana law permits restrictive covenants, but finds them disfavored and justified
only to the extent they are unambiguous and enforcement is not adverse to public policy.
Id. When courts are called upon to interpret restrictive covenants, they are to be strictly
construed, and all doubts should be resolved in favor of the free use of property and
against restrictions. Id. The covenanting parties’ intent must be determined from the
specific language used and from the situation of the parties when the covenant was made.
Id. Specific words and phrases cannot be read exclusive of other contractual provisions.
Id. In addition, the parties’ intentions must be determined from the contract read in its
entirety. Id. We attempt to construe contractual provisions so as to harmonize the
11
agreement and so as not to render any terms ineffective or meaningless. Id. However,
where the intent of the parties cannot be determined within the four corners of the
document, a factual determination is necessary to give effect to the parties’ reasonable
expectations. Renfro v. McGuyer, 799 N.E.2d 544, 547 (Ind. Ct. App. 2003), trans.
denied.
In the present case, the Restrictive Covenants state, in the preamble, that they
pertain to the use, occupancy, construction, and development of the lots within the
Fieldstone Crossing subdivision, and are entitled “Declaration of Restrictive Covenants
of Fieldstone Crossing Subdivision . . . .” Pls.’ Ex. 8, Ex. Vol. 7 at 1051. However, they
specifically provide, “The metes and bounds legal description of the Fieldstone Crossing
Subdivision, and the land affected by these restrictions and covenants, is annexed hereto
and made a part hereof as Exhibit ‘A.’” Pls.’ Ex. 8, Ex. Vol. 7 at 1053. Exhibit A to the
Restrictive Covenants contains the legal description of Unit 1 and the plat drawing
depicting Unit 1. Pls.’ Ex. 8, Ex. Vol. 7 at 1057-58. The Restrictive Covenants do not
state that they apply to Unit 2 or reference Unit 2 at all. In fact, at the time that the
Restrictive Covenants were filed, in 1993, Unit 2 had not even been platted. The
language of the Restrictive Covenants clearly states they only apply to Unit 1 of
Fieldstone Crossing.
We likewise do not find the Paniaguas parties’ arguments regarding the title and
the use of the words “all lots” to be persuasive because the Restrictive Covenants state
that Exhibit A is the “metes and bounds legal description of the Fieldstone Crossing
Subdivision,” and therefore, “all lots” refers only to the lots in Unit 1. Pls.’ Ex. 8, Ex.
12
Vol. 7 at 1053. We conclude that the language in the Restrictive Covenants clearly and
unambiguously states that they only apply to Unit 1 and not to Unit 2. The trial court was
correct in concluding that the Restrictive Covenants only applied to Unit 1 of Fieldstone
Crossing and, therefore, the Paniaguas parties had no standing to enforce the Restrictive
Covenants against the homeowners in Unit 2.4
II. Admission of Exhibits QQ through LLL
The standard of review for admissibility of evidence issues is abuse of discretion.
Fairfield Dev., Inc. v. Georgetown Woods Senior Apartments Ltd. P’ship, 768 N.E.2d
463, 466 (Ind. Ct. App. 2002), trans. denied. An abuse of discretion occurs only when
the trial court’s action is clearly erroneous and against the logic and effect of the facts and
circumstances before the court. Id. Even if a trial court errs in a ruling on the
admissibility of evidence, this court will only reverse if the error is inconsistent with
substantial justice. Id. at 466-67.
During the trial, the Appellee Homeowners offered into evidence Defendants’
Exhibits QQ through LLL, which were minutes from the ACC while under the control of
Endor that approved the construction of twenty-two Endor homes in Fieldstone Crossing.
These exhibits were offered through the testimony of Dan Clark, Jr. (“Clark”), a
homeowner who, along with others, formed a subsequent ACC after the last of the Endor
homes had been built. The Paniaguas parties objected to these exhibits, and the trial
4
The Paniaguas parties also contend that, if the language of the Restrictive Covenants is found to
be ambiguous, they still had standing to enforce them against the homeowners in Unit 2 because the
evidence showed that Aldon had a common scheme of development for Fieldstone Crossing that all of the
properties would be subject to the same restrictions. Because we have not concluded that the language of
the Restrictive Covenants is ambiguous, we do not reach this argument.
13
court ultimately admitted the exhibits under the business records exception to the hearsay
rule. The trial court found that the exhibits were a record of a regularly conducted
business activity, meeting minutes of the ACC, were properly authenticated, and were
properly admitted through Clark, who was found to be qualified as a witness to
authenticate the exhibits. Appellants’ App. at 848-49.
The Paniaguas parties argue that the trial court abused its discretion when it
admitted Defendants’ Exhibits QQ through LLL under the business records exception to
the hearsay rule because the documents lacked a proper foundation and were inherently
untrustworthy. Without these documents, the Paniaguas parties assert that there was no
evidence that the ACC properly approved construction of the Endor homes. The
Paniaguas parties contend that Clark was not a proper witness to authenticate these
exhibits because he was not a part of the ACC that approved the construction of the
Endor homes, and his subsequently-formed ACC was not a continuation of the previous
ACC as the current ACC did not include all thirty-seven properties as members.
Under Indiana Evidence Rule 803(6), evidence that is determined to be hearsay is
not excluded by the hearsay rule if it is:
A memorandum, report, record, or data compilation, in any form, of acts,
events, conditions, opinions, or diagnoses, made at or near the time by, or
from information transmitted by, a person with knowledge, if kept in the
course of a regularly conducted business activity, and if it was the regular
practice of that business activity to make the memorandum, report, record,
or data compilation, all as shown by the testimony or affidavit of the
custodian or other qualified witness, unless the source of information or the
method or circumstances of preparation indicate a lack of trustworthiness.
The term “business” as used in this Rule includes business, institution,
association, profession, occupation, and calling of every kind, whether or
not conducted for profit.
14
Ind. Evidence Rule 803(6). To admit business records pursuant to this exception, the
proponent of the exhibit may authenticate it by calling a witness who has a functional
understanding of the record keeping process of the business with respect to the specific
entry, transaction, or declaration contained in the document. Rolland v. State, 851 N.E.2d
1042, 1045 (Ind. Ct. App. 2006). The witness need not have personally made or filed the
record or have firsthand knowledge of the transaction represented by it in order to
sponsor the exhibit. Id. Rather, such person need only show that the exhibit was part of
certain records kept in the routine course of business and placed in the records by one
who was authorized to do so and who had personal knowledge of the transaction
represented at the time of entry. Id.In the present case, Clark testified that he was a member of the current ACC,
which was a continuation of the Endor ACC, and the current ACC assumed control after
the Endor lots were sold and developed. Tr. at 976-77. Evidence was presented that
Exhibits QQ through LLL originated from Endor when they were still a part of the
litigation in response to a request for production from the Paniaguas parties. Id. at 986.
Clark stated that, as a member of the ACC, he was familiar with how the records for the
ACC are kept and that he believed that they were kept in the same fashion when the ACC
was controlled by Endor. Id. at 979, 981. He further testified that it was the practice of
the ACC to keep records for the approval of building homes, such as Exhibits QQ
through LLL, in its regular course of business. Id. at 994. Clark also stated that the
records appeared to be made by one with knowledge of the transactions contained in the
15
records and by someone who had the responsibility to do so and that they were created at,
or around, the time of the transactions represented. Id. Although Clark did not
personally make or file the records or have firsthand knowledge of the transaction
represented in Exhibits QQ through LLL, this is not necessary to sponsor an exhibit and
admit documents under the business records exception. Rolland, 851 N.E.2d at 1045.
Based on the evidence presented, we conclude that the trial court did not abuse its
discretion in admitting Exhibits QQ through LLL under the business records exception to
the hearsay rule.
III. Compliance with Restrictive Covenants
The Paniaguas parties argue that the evidence presented at trial did not support the
trial court’s finding that the ACC acted reasonably in deciding that the Endor-constructed
homes complied with the Restrictive Covenants. They contend that, even if the ACC
minutes are deemed to have been properly admitted, they only show that the ACC acted
arbitrarily and unreasonably in approving the construction of the Endor homes. The
Paniaguas parties further argue that the Restrictive Covenants clearly state that homes
may not be built without the ACC’s approval based on the “quality of workmanship and
materials” and the “harmony of the proposed design with existing structures.” Pls.’ Ex.
8, Ex. Vol. 7 at 1051. They maintain that, because the agreement is to be read as a whole
and viewed in light of the circumstances at the time the Restrictive Covenants were
executed, the standard of quality of workmanship and materials and harmony of design
that should have guided the ACC was that present in the existing structures at the time of
construction of the first Endor home. The Paniaguas parties assert that, at that time, the
16
only structures existing were the Aldon homes, which all had common features of
materials and design that are not present in the Endor homes.
We initially note that, consistent with our previous determination that the
Restrictive Covenants did not apply to the homes in Unit 2, the Paniaguas parties’
argument on this issue is confined to only the homes in Unit 1. In its judgment, the trial
court stated the following:
[T]he terms of the Restrictive Covenants are highly subjective, allowing for
reasonable minds to differ on [what] will comply with them. Again, beauty
is in the eye of the beholder, and the Restrictive Covenants make clear that
the ACC is the only beholder whose opinion matters. The Court finds it to
be of critical importance that the ACC took the time to review and approve
the plans to build each of the Endor homes prior to their actually being
built.
Appellants’ App. at 118. The pertinent part of the Restrictive Covenants in the present
case states:
No home or structure shall be erected, placed or altered on any lot until
construction plans and specifications and the plans showing the location of
the structure have been approved by the Architectural Control Committee
as to quality of workmanship and materials, harmony of external design
with existing structures, and as to location with respect to topography and
finish grade elevation.
Pls.’ Ex. 8, Ex. Vol. 7 at 1051. Therefore, under the Restrictive Covenants, any proposed
construction plans and specifications must be presented and the ACC must approve the
proposed construction plans and specifications. In making the decision as to whether to
approve the proposed construction and specifications, the Restrictive Covenants state that
the ACC is to make its determination based on the “quality of workmanship and
materials” as well as the “harmony of external design with existing structures.” Id.17
Although this is a subjective standard, the language of the Restrictive Covenants
establishes that the determination of whether proposed construction and specifications
meet this standard and whether to approve the proposed construction is solely the
province of the ACC.
The evidence admitted at trial showed that the plans for the construction of the
Endor homes in Unit 1 were presented to the ACC and that the ACC subsequently
reviewed and approved the plans as evidenced in Exhibits QQ through LLL. At the time
that the first proposed Endor home was presented to the ACC for approval, there were a
total of nine homes existing in Fieldstone Crossing, including the homes of Paniaguas
and the Cornetts. The ACC therefore had to take these nine pre-existing houses into
consideration before deciding to approve the first Endor home; however, both the homes
of Paniaguas and the Cornetts should not have been factored into the consideration as
neither of their homes were built from the ABCD home models for Fieldstone Crossing.
As approval was sought for subsequent Endor homes, the ACC would have necessarily
taken into account all of the previous Endor homes as well as the Aldon homes. The
evidence presented showed that the ACC took the time to review and approve the plans
for the construction of the Endor homes prior to them being built, and we conclude that
the evidence supported the trial court’s finding that all of the homes built by Endor
complied with the Restrictive Covenants.
IV. Cross-Appeal
The Appellee Homeowners argue that the trial court abused its discretion in
denying their request for attorney fees. The award of attorney fees is committed to the
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sound discretion of the trial court, and we will reverse an award of attorney fees only
upon a showing of an abuse of that discretion. Thacker v. Wentzel, 797 N.E.2d 342, 346
(Ind. Ct. App. 2003). An abuse of discretion occurs if the trial court’s decision is clearly
against the logic and effect of the facts and circumstances before the court. Id.The Appellee Homeowners contend that the trial court should have granted their
request for attorney fees because John Paniaguas, who is an accomplished patent attorney
and a professional engineer, has continued to pursue this case against the Appellee
Homeowners for “reasons other than to enforce the vague and ambiguous [Restrictive
Covenants] on the neighborhood.” Appellees’ Br. at 40. They assert that, in light of the
circumstances of this case, particularly John Paniaguas’s legal knowledge, he should
have known that this case was unreasonable, groundless, and frivolous, especially by the
time it reached trial. They further claim that in light of the facts and circumstances, it can
be reasonably concluded that Paniaguas has continued to litigate this matter in bad faith
and for reasons beyond their prayer of relief. Therefore, the Appellee Homeowners argue
that the trial court abused its discretion in denying them trial attorney fees, and they
contend that this court should award appellate attorney fees. We disagree.
The Appellee Homeowners have not shown that the Paniaguas parties intended the
filing of this case to be anything but an effort to vindicate their legal rights and, therefore,
have not shown an abuse of process. We also conclude that the Appellee Homeowners
have failed to present any evidence to show that the Paniaguas parties’ claims were
frivolous, unreasonable, or groundless. We therefore conclude that the Appellee
Homeowners have not shown that the trial court abused its discretion in not awarding
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attorney fees in their favor at trial. We likewise decline to award appellate attorney fees
in favor of the Appellee Homeowners.
Affirmed.
VAIDIK, J., and PYLE, J., concur.
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