goodrich-quality-theaters-inc-and-roncelli-inc-v-fostcorp-heating-and ( 2014 )

FOR PUBLICATION
ATTORNEY FOR APPELLANTS: ATTORNEY FOR APPELLEE,
Fostcorp Heating and Cooling, Inc.:
CHARLES P. RICE
Boveri Murphy Rice, LLP THOMAS L. KIRSCH
South Bend, Indiana Thomas L. Kirsch & Associates, P.C.
Munster, Indiana
ATTORNEYS FOR APPELLEE,
Wilson Iron Works, Inc.:
PAULA E. NEFF
CHRISTINA J. MILLER
Lucas, Holcomb & Medrea
Merrillville, Indiana
ATTORNEY FOR APPELLEE,
Johnson Carpet, Inc.,
d/b/a Johnson Commercial Interiors:
TIMOTHY W. WITHERS
Philip D. Burroughs & Associates, LLC
Indianapolis, Indiana
IN THE Aug 20 2014, 9:31 am
COURT OF APPEALS OF INDIANA
GOODRICH QUALITY THEATERS, INC. and )
RONCELLI, INC. )
)
Appellants-Defendants, )
)
vs. ) No. 64A03-1308-PL-318
)
FOSTCORP HEATING AND COOLING, INC., )
WILSON IRON WORKS, INC., )
JOHNSON CARPET, INC., d/b/a JOHNSON )
COMMERCIAL INTERIORS, )
)
Appellees-Plaintiffs. )
APPEAL FROM THE PORTER SUPERIOR COURT
The Honorable William Alexa, Judge
Cause No. 64D02-0705-PL-4298
August 20, 2014
OPINION - FOR PUBLICATION
ROBB, Judge
Case Summary and Issues
Goodrich Quality Theaters, Inc. (“Goodrich”) and Roncelli, Inc. (“Roncelli”)
(collectively, “Roncelli”) appeal the trial court’s judgment in favor of Fostcorp Heating
and Cooling, Inc. (“Fostcorp”), Wilson Iron Works, Inc. (“Wilson Iron”), and Johnson
Carpet, Inc. d/b/a Johnson Commercial Interiors (“Johnson Carpet”) (collectively, “the
appellees”) on various breach of contract claims, foreclosure of mechanics’ liens, and the
award of attorney fees that all stem from construction of the Portage 16 IMAX movie
theater (“the theater”). Roncelli raises the following issues, which we consolidate and
restate as: (1) whether the trial court’s retroactive decree that its May 1, 2012 order was a
final judgment renders Roncelli’s appeal untimely; (2) whether the trial court erred in
interpreting Roncelli’s contract with Wilson Iron; (3) whether the trial court erred in
interpreting Roncelli’s contract with Johnson Carpet; and (4) whether the trial court erred
in awarding attorney fees to the appellees. Concluding the appeal was timely filed and the
2
judgments are supported by the findings, but it was an abuse of discretion for the trial court
to award attorney fees, we affirm in part and reverse in part.
Facts and Procedural History
Goodrich leased a property in Portage, Indiana, from Spirit Master Funding III, LLC
(“Spirit Master”) with permission to construct the theater upon the land. Goodrich hired
the architectural firm Paradigm Design, Inc. (“Paradigm”) to create design drawings for
the theater. Roncelli was hired as the general contractor. Roncelli engaged Wilson Iron,
Fostcorp, and Johnson Carpet as contractors. Wilson Iron was to provide the work,
materials, and labor for the structural steel of the theater; it contracted Falpeg Capital, LLC,
d/b/a Gooder-Henrichsen, Inc. (“Gooder”) and Gateway Construction as subcontractors.
Fostcorp was to provide and install all necessary elements of the heating, ventilation, and
air conditioning systems (“HVAC”); Fostcorp engaged Sheet Metal Werks, Inc. and Air
Temp Mechanical as subcontractors. Johnson Carpet was contracted for the carpet
installation in the theater. Construction on the theater began in the summer of 2006, with
an anticipated completion date of November 2006. Due to delays in construction and poor
weather, the theater did not open until January 12, 2007.
Roncelli and Wilson Iron
In July 2006, Roncelli and Wilson Iron executed a contract in the amount of
$1,095,000 for Wilson Iron’s portion of building the theater. Wilson Iron was responsible
for all of the structural steel and roof decking for the project, including joists and joist
girders. The contract documents included a Purchase Order Contract, a Project Manual,
Paradigm’s Design Drawings, and the Steel Joist Institute Manual (“the SJI”). Two of the
3
particular drawings that contributed to construction delays were structural drawings S105
and S106, depicting roof framing plans. These plans were “top down” drawings, drawn
from the perspective of one looking down on the roof of the theater. The plans show the
joist girders and roof deck, among other things. Paradigm’s intent in designing the building
was to have the HVAC pass through openings in the joist girders.1 Paradigm used a broken
or dashed line in the shape of an hourglass on top of the joist girder with the word “opening”
and a dimension to indicate where the HVAC ductwork would pass through (the “hourglass
mark”). This marking was not standard for the industry and did not appear in the SJI, in
the legend of the diagram, or anywhere else in the contract materials. Per the SJI, the
industry standard, “SP” is supposed to mark any joist girder that is not standard on a
structural drawing and the drawing should include a designation, note, or additional
drawing to describe what makes the joist girder non-standard or special.
The hourglass mark was meaningless to Wilson Iron as it related to the structural
steel, so Wilson Iron ignored it. Wilson Iron and its subcontractors generated shop
drawings and erection or placement drawings for all of the structural steel work. The shop
and erection drawings approved by Roncelli and Paradigm called only for standard joist
girders. These drawings were submitted to, and approved by, Roncelli and Paradigm.
Gooder then created the joists and joist girders in accordance with those drawings. On
August 28, 2006, Wilson Iron delivered the first set of joist girders to the theater site, and
1
A joist girder is “a primary structural load-carrying member with an open web system designed as a simple
span supporting equally spaced concentrated loads of a floor or roof system acting at the panel points of the member
and utilizing hot-rolled or cold-formed steel.” Appendix of Wilson Iron at 455. A standard girder has diagonal and
vertical web members. Id. at 76. A non-standard, or “Vierendeel panel” or “Vierendeel opening,” is a rectangular
opening that requires some of the webbed members to be removed. Id.
4
at that time, an employee from Paradigm told Wilson Iron the girders were to have non-
standard openings. Wilson Iron wanted to shut the project down while the joist girder
situation was resolved, but both Roncelli and Paradigm insisted the erection continue using
the standard joist girders. The next day, Wilson Iron submitted a concept sketch to Roncelli
and Paradigm to modify the joist girders that would cost an additional $28,000 for Wilson
Iron to make the changes. Roncelli did not respond to this sketched proposal. Wilson Iron
sent a fax to Gooder, placing Gooder on notice of a claim for non-conforming work;
Roncelli, though, did not issue a notice of non-conforming work to Wilson Iron.
On October 3, Roncelli requested a meeting with Gooder and Wilson Iron and asked
if a fix could be done in place. The structural steel had been fully installed at this point,
and Gooder responded that the fix could not be done as proposed. The work was eventually
completed and Roncelli paid Wilson Iron’s invoices for the joist girder work; in February
2007 Roncelli refused to make further payments to Wilson Iron for work performed after
the joist girder installation. Wilson Iron timely filed its Sworn Statement and Notice of
Intention to Hold Mechanic’s Lien on April 14, 2007 for $275,475.
Roncelli and Fostcorp
In July 2006, Roncelli executed a contract with Fostcorp in the amount of $760,000
for Fostcorp to install the HVAC system in the theater. The installation of the HVAC
system was delayed due to the confusion surrounding the joist girders. Fostcorp eventually
received three proposed modifications for how to adjust the HVAC to accommodate the
standard joist girder openings. Fostcorp prepared cost estimates for the three changes,
totaling $277,799.42. Roncelli approved these estimates. Due to the changes, Fostcorp
5
did not have sufficient manpower to complete the modifications in Roncelli’s timeframe,
so Roncelli contracted Area Sheet Metal to assist Fostcorp. Roncelli approved changes to
Fostcorp’s initial contract by an additional $283,896 to cover the expense of the
modifications and extra labor. Roncelli paid Fostcorp a total of $552,000. Fostcorp then
recorded a Mechanic’s Lien on April 4, 2007 in the amount of $379,985.56, the amount
unpaid under the contract. Fostcorp also served upon Goodrich a Notice to Hold Owner
Personally Liable, plus interest and services for the work performed on the theater.
Roncelli and Johnson Carpet
In October 2006, Roncelli asked Johnson Carpet to quote a price to install carpet in
the theater. Roncelli informed Johnson Carpet that Milliken was the carpet manufacturer,
and Johnson Carpet received specifications from Milliken. Johnson Carpet determined that
the specifications from Milliken did not match Paradigm’s drawings and alerted Roncelli
of the apparent calculations error. Roncelli directed Johnson Carpet to use Milliken’s
specifications. Johnson Carpet’s proposal on October 10 specified it would install 4970
square yards of Milliken carpet for $41,808.55, subject to the following conditions:
1. Price for installation of owner supplied carpet.
2. Price includes the cost of carpet adhesive.
3. Price does not include any trims, vinyl base, transitions or other flooring
types.
4. Price includes minor floor prep based on an estimate of 20 total man hours.
If additional time or materials are required approval by the GC will be
obtained in the form of an AWA.
Appendix of Appellee Johnson Carpet, Inc. d/b/a Johnson Commercial Interiors at 6. On
November 23, Johnson Carpet submitted a revised proposal to Roncelli (“November 23
Contract”) in the amount of $42,297.20 which added “cut-ins,” reduced installation costs,
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and added a fifth qualification: “5. Price does not include CTP-2 @ IMAX studio entry. If
IMAX entry is to have CPT-2 as shown on print add $580.00.” Id. at 1. Roncelli accepted
this proposal then later tendered to Johnson Carpet a Purchase Order Contract dated
December 22, 2006 (“Purchase Order Contract”). The Purchase Order Contract varied
from the November 23 Contract in several ways: it required Johnson Carpet to complete
the carpet installation work for the theater (not just 4970 square feet as in the November
23 Contract) and it added the terms of the Roncelli Project Requirements, Project Insurance
Requirements, Emergency Numbers, and Project Schedule as part of the contract.
Appendix of Appellants Goodrich Quality Theaters, Inc. and Roncelli, Inc. at 486. The
Purchase Order Contract also added in the terms of two additional attachments, and
decreased the value of the contract to $42,297.00. Id. On January 11, Johnson Carpet made
another proposal to Roncelli, this time in the amount of $62,156 (“January 11 Proposal”).
This included the original $42,297.20, plus additional costs for walk-off carpet in the entry,
floor prep costs for work in excess of twenty hours, travel, and down-time during a union
discrepancy. On January 15, Roncelli and Johnson Carpet spoke again about the carpet
material calculations and the supply shortage. Roncelli ordered an additional 900 square
yards of carpet to complete the theater. After making the January 11 Proposal, Johnson
Carpet signed the Purchase Order Contract on January 19, 2007. Id.
On January 24, Johnson Carpet submitted a Contractor’s Application for Payment
and Change Order Request to Roncelli. In March 2007, Roncelli issued a check to Johnson
in the amount of $35,340.30 (the same amount listed as due on the Application for
Payment) but stopped payment on the check before it was negotiated. Johnson Carpet
7
timely recorded its Sworn Statement and Notice of Intention to Hold Mechanic’s Lien for
the sum of $55,420.00 on May 27, 2009.
Trial Court Proceedings
On May 14, 2007, Fostcorp filed a complaint to foreclose its mechanic’s lien, be
awarded costs and attorney fees, be declared to have priority over all other claimants, and
demanding judgment against Roncelli for $379,985.56, plus interest, and demanding
judgment against Spirit Master as owner. Spirit Master, Goodrich, Roncelli, Wilson Iron,
and others were all named as defendants in the suit as they had interests in the property.2
Wilson Iron filed a cross-claim and counterclaim to foreclose its mechanic’s lien and
recover costs and attorney fees, and be declared to have priority over other lienholders.
Wilson Iron also sought to recover money from Spirit Master, Goodrich, and Roncelli
jointly and severally under theories of quantum meruit and unjust enrichment, and against
Roncelli for breach of contract. Roncelli then cross-claimed against Wilson Iron for breach
of contract. Johnson Carpet was allowed to join the suit as an intervening plaintiff and,
like the others, sought to foreclose its mechanic’s lien against the property. Johnson Carpet
also asserted claims of breach of contract, fraud, and dishonor of check against Roncelli.
Roncelli counter-claimed against Johnson Carpet, alleging breach of contract.
The trial court held a bench trial across fourteen days in August 2009, November
2009, May 2010, and July 2010. On May 1, 2012, the court issued an “Order from Long-
Going Bench Trial” (“May 1 Order”). The trial court found in favor of Fostcorp and against
2
Johnson Carpet was not added at this stage because it had yet to file its mechanic’s lien against the property
and had no recorded interest. There were also other parties who filed claims and cross-claims who are not relevant to
the appeal.
8
Roncelli and Goodrich in the principal amount of $369,783.33, plus pre-judgment interest
in the amount of $120,179.48, compounded at a rate of eight percent (8%) per annum. The
court also found in favor of Wilson Iron and against Roncelli in the principal amount of
$77,795.01, plus pre-judgment interest in the amount of $25,283.38, compounded at a rate
of eight percent (8%) per annum. The court made no judgment or determination as to the
claims involving Johnson Carpet at that time. The order also specifically stated that the
claims for attorney fees would be heard in a separate proceeding.
Then, on July 18, 2013, the trial court issued “Order from Long-Going Bench Trial
Johnson Carpet, Inc.” (“July 18 Order”). That order read in part:
Upon the completion of a long-going bench trial where witness testimony
was given, exhibits were produced, and evidence taken, this Court entered its
Judgment our [sic] May 1, 2012, “Order From Long-Going Bench Trial.”
That Order disposed of most all claims properly presented by the parties to
this litigation and was a final judgment. Yet, disputes between Intervening
Plaintiff JOHNSON CARPET, INC. d/b/a/ JOHNSON COMMERICAL
INTERIORS, (hereinafter “Johnson Carpet”), and RONCELLI, INC.,
(hereinafter “Roncelli”), went unresolved. Specifically, in the May 1st,
2012, Order, this Court stated as follows:
This Court makes no judgment, determination or order with
regard to JOHNSON CARPET . . . since it did not participate
in the submission of their proposed findings of fact and
conclusions. Roncelli did include JOHNSON CARPET . . . in
its filing but was not sufficient for this court to act at this time.
Further proceedings will need to be had to determine their
claims.
Since that time when judgment was entered, this Court has been made aware
of the certainty that Johnson Carpet did indeed file stamp copies of its own
Proposed Findings of Fact and Conclusions of Law . . . on January 31, 2011.
Because judgment and determination regarding the issues between Johnson
Carpet and Roncelli were withheld without judgment, determination or order
. . . the Court now attends to those claims. . . .
9
Brief of Appellants Goodrich Quality Theaters, Inc. and Roncelli, Inc. at 97-98. With
respect to Johnson Carpet, the trial court found it was entitled to recover against Roncelli
in the amount of $55,420.20 plus pre-judgment interest for breach of contract. The court
found for Roncelli on Johnson Carpet’s fraud and dishonor of check claims. On July 19,
the trial court entered an award of attorney fees in favor of Fostcorp, against Roncelli. The
court amended its May 1 Order and entered the following judgments on August 9, 2013:
“Fostcorp against Roncelli is amended from $489,962.81 to $539,139.11, plus attorney
fees . . . for a total of $636,312.24; Fostcorp against Goodrich is amended from $489,962.81
to $539,139.11; Wilson Iron against Roncelli is amended from $373,888.22 to
$412,751.84, plus attorney fees . . . for a total of $723,928.74.” App. of Appellants
Goodrich Quality Theaters, Inc. and Roncelli, Inc. at 641. Roncelli and Goodrich filed
their Notice of Appeal of the May 1 and July 18 Orders on August 12, 2013. Additional
facts will be provided as necessary.
Discussion and Decision
I. Timeliness of Appeal
A. Standard of Review
A timely notice of appeal is a jurisdictional prerequisite. Neu v. Gibson, 968 N.E.2d
262, 269 (Ind. Ct. App. 2012) trans. denied. Unless the appellants file an appeal within
thirty days after entry of judgment, the right to appeal shall be forfeited. Id., Ind. Appellate
Rule 9(A)(5).
B. Roncelli’s Notice of Appeal
10
As a preliminary matter, we must address whether Roncelli’s notice of appeal was
timely filed. Wilson Iron asserts the May 1 Order was a final judgment from which
Roncelli should have appealed, and because Roncelli did not file the notice of appeal until
August 2013, this appeal is not timely.3 We disagree.
A party initiates an appeal by filing a notice of appeal within thirty days after the
entry of a final judgment in the Chronological Case Summary. App. R. 9(A)(1). A
judgment is final if it disposes of all claims as to all parties. App. R. 2(H)(1). A judgment
may also be final when the trial court in writing expressly determines that there is no just
reason for delay and in writing expressly directs the entry of judgment as to at least one,
but not all, claims or parties, and that the parties may take an appeal upon the issue resolved
by the judgment. Id., T.R. 54(B). Here, the May 1 Order did not resolve issues between
all the parties (the claims involving Johnson Carpet had yet to be resolved), nor did it
include the express, written language as required by Rule 2 to make the judgment final.
Despite the trial court’s statement in the July 18 Order that the May 1 Order was final,
simply referring to it as such later without including the requisite language in the original
order is not enough to make it so. Therefore, it was not a final judgment from which
Roncelli could have appealed. Roncelli’s present appeal is timely.
II. Breach of Contract
A. Standard of Review
3
Johnson Carpet does not take a position on this issue; Fostcorp agrees with Roncelli that the May 1 order
was not a final judgment, and therefore, this appeal is timely.
11
The trial court entered extensive findings and conclusions in its order, so our
standard of review is two-tiered.
[W]e determine whether the evidence supports the trial court’s findings, and
we determine whether the findings support the judgment. We will not disturb
the trial court’s findings or judgment unless they are clearly erroneous.
Findings of fact are clearly erroneous when the record lacks any reasonable
inference from the evidence to support them, and the trial court’s judgment
is clearly erroneous if it is unsupported by the findings and the conclusions
which rely upon those findings. In determining whether the findings or
judgment are clearly erroneous, we consider only the evidence favorable to
the judgment and all reasonable inferences to be drawn therefrom.
Infinity Products, Inc. v. Quandt, 810 N.E.2d 1028, 1031 (Ind. 2004) (citation omitted).
We do not reweigh evidence or assess witness credibility. The Blakley Corp. v. EFCO
Corp., 853 N.E.2d 998, 1002 (Ind. Ct. App. 2006). While findings of fact are reviewed
under the clearly erroneous standard, appellate courts do not defer to conclusions of law,
which are reviewed de novo. Fraley v. Minger, 829 N.E.2d 476, 482 (Ind. 2005). “We
may affirm the trial court’s judgment on any legal theory supported by the trial court’s
factual findings, even if this theory is one different from that selected by the trial court.”
Lawyers Title Ins. Corp. v. Pokraka, 595 N.E.2d 244, 249 (Ind. 1992). Roncelli, as the
party appealing from a negative judgment, must show that the evidence, along with all
reasonable inferences, is without conflict and leads unerringly to a conclusion opposite that
reached by the trial court. Infinity Products, Inc., 810 N.E.2d at 1032.
Additionally, our standard of review for interpreting a contract is de novo.
Gerstbauer v. Styers, 898 N.E.2d 369, 379 (Ind. Ct. App. 2008). The goal of contract
interpretation is to ascertain and give effect to the parties’ intent as evidenced by the
language of the agreement. Reuille v. E.E. Brandenberger Constr., Inc., 888 N.E.2d 770,
12
771 (Ind. 2008). If the language is clear and unambiguous, it must be given its plain and
ordinary meaning. Id. A document is not ambiguous merely because parties disagree about
a term’s meaning; rather, language is ambiguous only if reasonable people could come to
different conclusions as to its meaning. Univ. of S. Indiana Found. v. Baker, 843 N.E.2d
528, 532 (Ind. 2006).
We interpret a written contract by reading the contract as a whole, and we
attempt to construe the language so as to not render any words, phrases, or
terms ineffective or meaningless. Thus, we must accept an interpretation of
the contract which harmonizes its provisions. If the language of the contract
is unambiguous and the intent of the parties is discernible from the written
contract, the court must give effect to the terms of the contract.
Hilbert v. Conseco Servs., L.L.C., 836 N.E.2d 1001, 1008 (Ind. Ct. App. 2005) (citations
omitted), trans. denied, cert. denied 549 U.S. 884, 127 S. Ct. 237, 166 L. Ed. 2d 147 (2006).
B. Breach of Contract as to Wilson Iron
Roncelli makes several arguments for how the trial court erred in interpreting its
contract with Wilson Iron: (1) the trial court’s construction of the contract rendered
symbols on the structural drawings meaningless; (2) the trial court did not enforce terms
requiring Wilson Iron to notify Roncelli of defects in the plans and improperly construed
ambiguities against Roncelli; and (3) the trial court applied tort law principles of fault in a
contract dispute.
1. Interpretation of Hourglass Mark
Roncelli first challenges the trial court’s conclusion that the hourglass mark used on
drawings S105 and S106 was meaningless. We interpret a contract de novo. Gerstbauer,
898 N.E.2d at 379. Roncelli argues that a court must attempt to construe language of a
13
contract so as not to render any words, phrases, or terms ineffective or meaningless, so any
interpretation that effectively “reads out” the hourglass mark is erroneous. Roncelli
maintains that the contract unambiguously shows the hourglass marks were openings in
the joist girders with the HVAC ductwork running through the openings. Wilson Iron, on
the other hand, believes the contract and drawings are unambiguous in the requirement that
all of the joist girders be standard.
We agree with Wilson Iron that the drawings unambiguously show the joist girders
were to be standard.4 The hourglass symbol is not an industry-standard mark relating to
joist girders as provided in the SJI, nor is it described in any of the other contract
documents, or in the legend on the drawings.5 Thus, the mark did not modify the type of
joist girder required on the project. We are mindful that we are to interpret the contract as
to not render any words, phrases, or terms ineffective or meaningless, and we are to accept
an interpretation that harmonizes its provisions, Hilbert, 836 N.E.2d at 1008; however, the
4
To be clear, structural drawings S105 and S106 are roof framing plans that contain information relating
not only to the joist girders, but also information relating to multiple other components of the structure for which
Wilson Iron was not responsible. This is not a case where the hourglass mark was overlaid only on a depiction of joist
girders; there were multiple components to these design drawings that conveyed a wide array of information to the
different trades working on the theater. Inherently, some of these markings were overlaid on top of the structural steel
and joist girder markings. While Wilson Iron had a duty to discovery ambiguities in the plans, Roncelli recognized
that Wilson Iron’s review was “made in the Contractor’s capacity as a contractor and not as a licensed design
professional unless specifically provided in the Contract Documents. The [C]ontractor is not required to ascertain that
the Contract [D]ocuments are in accordance with applicable laws, statutes, ordinances, building codes, and rules and
regulations.” Br. of Appellants Goodrich Quality Theaters, Inc. and Roncelli, Inc. at 13 (quoting Roncelli’s Project
Manual). It is for this reason that we find no ambiguity in the drawings: there was a clear manifestation of intent for
the joist girders to be standard. Any additional markings on the design drawings simply did not apply to those joist
girders and it was not Wilson Iron’s duty to question the work of other trades of which it had no knowledge.
5
Roncelli relies on PBI Elec. Corp. v. United States, 17 Cl.Ct. 128, 130 (1989). In PBI Elec. Corp., contract
drawings contained a “dot symbol” that was not industry standard; the legend listed a “dot symbol” with the term
“telephone device” beside it. Id. at 131. The dispute hinged on the meaning of the dot. The court found the dot
ambiguous, and determined that because the ambiguity was patent and the contractor did not inquire as to the meaning
of the dot, the ambiguity must be construed against the contractor. Id. at 132-33. However, this is easily
distinguishable from the present case, as there was no clarification in the legend or anywhere else to alert Wilson Iron
that the mark was subject to multiple, conflicting meanings.
14
construction that Roncelli urges is simply not supported by the language of the contract.
The contract documents specified a way to manifest the intent of having a special or non-
standard joist girder opening, and that marking was not used. Further, there were no
elevation drawings (which show a cross-section, or side view) in the contract documents
to show or describe any special joist girder. Reading the hourglass mark to represent a non-
standard joist girder opening thus explicitly conflicts with the contract requirements. We
therefore conclude Wilson Iron complied with the terms of the contract in supplying
standard joist girders.
2. Notice of Defects and Construing Ambiguities
Roncelli next argues that Wilson Iron had a duty to discover and bring ambiguities
in any of the plans to Roncelli’s attention. The Roncelli Project Manual included a
provision that all bidders were responsible to advise Roncelli of any conflicts or
ambiguities which might affect the work. Indiana law also supports this contract provision:
“a contractor has a duty to discover defects in plans or specifications, that are reasonably
discoverable or patent, and to warn the contractee or architect of the defects, even if the
plans and specifications are supplied by the contractee.” St. Paul Fire & Marine Ins. Co.
v. Pearson Constr. Co., 547 N.E.2d 853, 858 (Ind. Ct. App. 1989), trans. denied. It is a
question of fact whether a contractor knew or should have known plans were defective. Id.Wilson Iron and its subcontractors found no ambiguities in the plans of which to
notify Roncelli. After a full hearing, the trial court concluded that Wilson Iron and its
subcontractors did not know, nor should they have known, the meaning of the hourglass
mark. The evidence supports the trial court’s finding that Wilson Iron and Gooder did not
15
know, nor should they have known, that the plans were defective. Therefore, Wilson Iron
complied with its duty to alert Roncelli of any defects–there simply were none to report.6
3. Application of Tort Principles
Roncelli’s last contention regarding Wilson Iron is that the trial court applied
principles of tort in a breach of contract case, which was clearly erroneous. Specifically,
Roncelli challenges the following conclusions of law:
23. Thus, the initial mistake, the use of the “hourglass” or “bowtie” symbol
rather than the “SP” symbol to signify special steel joists and joist girders,
was caused by Paradigm, an agent of Goodrich, while acting in the ordinary
and usual scope of the business. A principal is bound by the acts of its agent
taken within the ordinary and usual scope of the business. Therefore, the
Court holds Goodrich responsible for the initial mistake that caused the
miscommunication in the IMAX project.
28. Both Paradigm and Roncelli were aware that they had intended special
joist girders, not standard joist girders. Both had the responsibility under the
SJI standards to review and approve shop drawings from Gooder. Both did
review and approve Gooder’s proposed Joist Placement Plans that called for
standard joists only. Thus, both Paradigm, as an agent of Goodrich, and
Roncelli, both independently and as an agent of Goodrich, are at fault for the
failure to correct any misunderstandings caused by their initial ambiguous
designs. Instead, Roncelli and Paradigm’s approval of Gooder’s Joist
Placement Plans, calling for standard joist girders only, created actual
authority so to act because it was reasonable for Gooder and Wilson Iron to
believe that the approval of the Joist Placement Plans meant that Roncelli
and Paradigm intended them to use standard joist girders rather than special
joist girders. Gallant Ins. Co. [v. Isaac, 751 N.E.2d 672, 675 (Ind. 2001)].
29. Therefore, this Court holds Goodrich, through its agents Paradigm and
Roncelli, and Roncelli, independently as general contractor, responsible and
at fault for the steel joist girder miscommunication and for all delays and
problems that occurred directly as a result of said miscommunication.
Wilson Iron and Gooder fulfilled the terms of their contracts and are due
payment for their service.
6
Because we find the contract was unambiguous, we need not address Roncelli’s argument that the
ambiguities should be construed against Wilson Iron.
16
Br. of Appellants Goodrich Quality Theaters, Inc. and Roncelli, Inc. at 97-98.
A “clearly erroneous” judgment can result from application of the wrong
legal standard to properly-found facts, and in that situation we do not defer
to the trial court. We are not bound by the trial court’s characterization of its
results as “findings of fact” or “conclusions of law.” Rather, we look past
these labels to the substance of the judgment and will review a legal
conclusion as such even if the judgment wrongly classifies it as a finding of
fact.
Fobar v. Vonderahe, 771 N.E.2d 57, 59 (Ind. 2002). “We may affirm the trial court’s
judgment on any legal theory supported by the trial court’s factual findings, even if this
theory is one different from that selected by the trial court.” Lawyers Title Ins. Corp, 595
N.E.2d at 249.
We agree that the trial court improperly based recovery for Wilson Iron on tort
principles. However, the findings support the judgment in favor of Wilson Iron based on
breach of contract. To prove breach of contract, a plaintiff (here, Wilson Iron) must show
the existence of a contract, the defendant’s breach of that contract, and damages. U.S. Fid.
& Guar. Ins. Co. v. Hartson-Kennedy Cabinet Top Co., Inc., 857 N.E.2d 1033, 1039 (Ind.
Ct. App. 2006). It is undisputed a contract existed between the two, and the trial court
found Wilson Iron completed its work per the contract, and Roncelli had yet to pay in full
for that work. These findings support the judgment in favor of Wilson Iron on the theory
of breach of contract.
C. Breach of Contract as to Johnson Carpet
Roncelli contends the trial court erred in several ways in interpreting its contract
with Johnson Carpet: (1) the trial court allowed Johnson Carpet to change theories after
trial; (2) some of the trial court’s conclusions of law were inconsistent; (3) the trial court
17
should have found the written contract, not the implied contract, as controlling; (4) the
court admitted and relied upon parol evidence; and (5) the court should have found the
contract was supported by consideration.7
1. Change of Trial Theory
Roncelli asserts the trial court erred by allowing Johnson Carpet to change its theory
of the case after trial, or allowing Johnson Carpet to “mend the hold.” Br. of Appellants
Goodrich Quality Theaters, Inc. and Roncelli, Inc. at 46. Roncelli’s premise is that Johnson
Carpet sued upon the written Purchase Order Contract, stipulated to its execution, and then
after trial argued for the first time that the Purchase Order Contract failed for lack of
consideration. The common-law principle of “mending the hold” limits the right of a party
to a contract suit to change his litigation position mid-case. The case Roncelli cites for
support is based on Illinois common law, as discussed by the Seventh Circuit in Harbor
Ins. Co. v. Continental Bank Corp., 922 F.2d 357 (7th Cir. 1990).8 Essentially, the doctrine
prohibits a party from changing positions during litigation9 not “on the basis of further
inquiry through pretrial discovery or otherwise but only because the . . . court threw cold
water on their argument. . . .” Id. at 365.
7
Roncelli also raises an argument for the first time in its reply brief that the trial court’s finding of fact 21
was unsupported by the evidence. Roncelli has forfeited this argument by raising it for the first time in the reply brief
without raising it in its principal brief. Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 977 (Ind. 2005);
App. Rule 46(C) (“No new issues shall be raised in the reply brief.”).
8
Though Roncelli also cites to Nat’l Hame & Chain Co. v. Robertson, 90 Ind. App. 556, 161 N.E. 851, 853
(1928), that case did not specifically address “mending the hold”; rather, it used the phrase only to quote the appellant’s
argument that was not accepted by the court. Id. at 853
9
This doctrine is related, but not identical to, judicial estoppel. Whereas judicial estoppel prohibits a party
from taking different positions in separate litigation, mending the hold prohibits the change during the same litigation.
Harbor Ins. Co. v. Cont’l Bank Corp., 922 F.2d 357, 364 (7th Cir. 1990).
18
Johnson Carpet counters that it did not change its litigation position or theory, and
that its breach of contract claim materially relied upon the November 23 Contract at the
time it was filed. It supports this position with the following evidence: Johnson Carpet
attached the November 23 Contract as an exhibit to its complaint; Johnson Carpet
contended in submissions to the trial court at least before March 4, 2009, that the Purchase
Order Contract “purported to append numerous new terms and conditions to the agreement
between Johnson and Roncelli,” App. at 571; that during depositions, opening statements,
and cross-examination, Johnson Carpet referred to the November 23 Contract and the fact
that the Purchase Order Contract was not the only contract. Roncelli has not shown that
the evidence leads unerringly to the conclusion that Johnson Carpet changed its litigation
theory post-trial. The evidence presented to the trial court shows Johnson Carpet was
relying not only on the Purchase Order Contract as evidence, but also the November 23
Contract (as the pleading explicitly refers to the Purchase Order Contract, the November
23 Contract, the January 11 proposal, and emails between Johnson Carpet and Roncelli
collectively as “the Contract”). See App. of Appellants Goodrich Quality Theaters, Inc.
and Roncelli, Inc. at 186-99. The trial court then did not err in allowing Johnson Carpet to
proceed on this theory.
2. Inconsistent Conclusions of Law
Roncelli next argues the trial court’s conclusion that Roncelli and Johnson Carpet
had an implied contract is inconsistent with the court’s conclusion that they were
bargaining up to January 31, 2007, and that implied contract finding is inconsistent with
written contracts on January 19 and February 1. We note that Roncelli has not specifically
19
identified the conclusions of law it deems inconsistent; rather, it generally describes the
conclusions it wishes to challenge and this encumbers our review of the issue. Nonetheless,
we reject Roncelli’s argument. We find no inherent inconsistencies in the fact that parties
entered into a contract and then later renegotiated as the need arose, and the trial court’s
findings of fact support these conclusions. The judgment is not clearly erroneous on this
point.
3. Implied vs. Written Contract
Next, Roncelli maintains that even if there was an implied contract with Johnson
Carpet, the written contract is conclusive as opposed to the implied contract and the trial
court failed to merge the contracts. “[A] written contract is presumed to embody the
parties’ entire agreement and merge within it all prior negotiations.” Keystone Square
Shopping Ctr. Co. v. Marsh Supermarkets, Inc., 459 N.E.2d 420, 422 (Ind. Ct. App. 1984).
Roncelli’s position though rests on the premise the Purchase Order Contract is a valid
contract into which the November 23 Contract could merge. The trial court found, and we
agree, as discussed further below, that the Purchase Order Contract was invalid for want of
consideration. Therefore, the November 23 Contract could not merge with it, and the terms
of the Purchase Order Contract cannot take priority over the implied contract. The
judgment is not clearly erroneous on this point.
4. Use of Parol Evidence
Roncelli insists the trial court should only have looked to the Purchase Order
Contract as the entire scope of the agreement, and erred by relying on parol evidence. The
parol evidence rule provides:
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[W]hen two parties have made a contract and have expressed it in a writing
to which they have both assented as the complete and accurate integration of
that contract, evidence . . . of antecedent understandings and negotiations will
not be admitted for the purpose of varying or contradicting the writing. This
rule effectuates a presumption that a subsequent written contract is of a
higher nature than earlier statements, negotiations, or oral agreements by
deeming those earlier expressions to be merged in to or superseded by the
written document.
Hinkel v. Sataria Distrib. & Packaging, Inc., 920 N.E.2d 766, 768-69 (Ind. Ct. App. 2010)
(citations and quotations omitted). There are instances when the use of parol evidence is
appropriate:
[P]arol evidence may be considered if it is not being offered to vary the terms
of the written contract, and to show that fraud, intentional misrepresentation,
or mistake entered into the formation of a contract. Moreover, our supreme
court has held that parol evidence may be considered to show the nature of
the consideration supporting a contract. In addition, parol evidence may be
considered to apply the terms of a contract to its subject matter and to shed
light upon the circumstances under which the parties entered into the written
contract.
Krieg v. Hieber, 802 N.E.2d 938, 944 (Ind. Ct. App. 2004) (citations omitted).
Here, the trial court did not err in admitting the parol evidence. The evidence was
properly used to show consideration, or lack thereof, in forming the contract. Johnson
Carpet also brought a claim of fraud against Roncelli; though it was ultimately
unsuccessful, the evidence was still admissible for that purpose. Id.
5. Consideration for the Purchase Order Contract
Finally, Roncelli contends that Johnson Carpet forfeited the issue of consideration
by failing to raise it as an affirmative defense.
Johnson Carpet concedes it failed to plead lack of consideration as an affirmative
defense, but maintains Roncelli was not prejudiced by this omission. Ordinarily, an
21
affirmative defense is waived if not specifically pled in the answer or raised at trial. JKL
Components Corp. v. Insul-Reps, Inc., 596 N.E.2d 945, 952 (Ind. Ct. App. 1992), trans.
denied. When a party fails to raise an affirmative defense, the critical inquiry on appeal is
“not whether the defendant could have raised his affirmative defense earlier but whether
the defendant’s failure to raise the affirmative defense earlier prejudiced the plaintiff.” City
of S. Bend v. Dollahan, 918 N.E.2d 343, 350 (Ind. Ct. App. 2009) (citation and quotation
omitted), trans. denied. Roncelli must show it will be deprived of or seriously hindered in
the pursuit of some legal right if the issue of lack of consideration is permitted. Id. Roncelli
has failed to meet this burden. Despite Roncelli’s contention that it was prejudiced because
it was unable to cross-examine Johnson Carpet’s witnesses on this issues or call its own,
Roncelli still had the burden of proving in its breach of contract claim that a valid contract
existed, with an offer, acceptance, and consideration, even if Johnson Carpet did not claim
lack of consideration. Further, Johnson Carpet maintained its own breach of contract claim
against Roncelli. Johnson Carpet’s claim was based on the several documents which it
referred to as “the contract”: the Purchase Order Contract, the November 23 Contract, the
January 11 proposal, and emails between Johnson Carpet and Roncelli. This pleading is
sufficient to put Roncelli on notice of Johnson Carpet’s position and not deprive it of legal
rights.
Forfeiture notwithstanding, Roncelli argues the trial court erred by concluding the
Purchase Order Contract was not supported by consideration. “The party urging the
validity of a contract bears the onus of proving its existence.” OVRS Acquisition Corp. v.
Cmty. Health Servs., Inc., 657 N.E.2d 117, 125 (Ind. Ct. App. 1995), trans. denied. Parties
22
may freely modify a contract just as they would enter a contract: modification requires an
offer, acceptance, and consideration (a bargained-for exchange). Henthorne v. Legacy
Healthcare, Inc., 764 N.E.2d 751, 759 (Ind. Ct. App. 2002). The trial court concluded there
was an offer, acceptance, and consideration for the November 23 Contract. It went on to
conclude there was no consideration for the modification. The burden is on Roncelli, who
is appealing the negative judgment, to prove that the evidence leads unerringly to a
conclusion opposite that reached by the trial court. Though Roncelli maintains there was
consideration for the Purchase Order Contract, it fails to point us to any such evidence.
Therefore, the trial court did not err in finding the Purchase Order Contract lacked
consideration.
III. Award of Attorney Fees
A. Standard of Review
Finally, we turn to the issue of whether the trial court abused its discretion in
awarding attorney fees to the appellees and against Roncelli pursuant to Indiana Code
section 32-28-3-14. The general rule in Indiana is each party to the litigation must pay his
or her own attorney fees. City of Jeffersonville v. Envtl. Mgmt. Corp., 954 N.E.2d 1000,
1013 (Ind. Ct. App. 2011). However, attorney fees may be authorized by some other
mechanism, such as rule, statute, or agreement, and under those circumstances, the trial
court is afforded broad discretion in awarding attorney fees. Id. at 1012. We will only
reverse an award of attorney fees on appeal if an abuse of discretion is apparent on the face
of the record. Hill v. Davis, 850 N.E.2d 993, 996 (Ind. Ct. App. 2006).
B. Award of Attorney Fees
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Wilson Iron, Johnson Carpet, and Fostcorp all base their claims for attorney fees
after recovering a judgment to enforce a mechanic’s lien on Indiana Code section 32-28-
3-14:
(a) Except as provided in subsection (b), in an action to enforce a lien under
this chapter, a plaintiff or lienholder who recovers a judgment in any sum is
entitled to recover reasonable attorney’s fees. The court shall enter the
attorney’s fees as a part of the judgment.
(b) A plaintiff may not recover attorney’s fees as part of the judgment against
a property owner in an action in which the contract consideration for the
labor, material, or machinery has been paid by the property owner or party
for whom the improvement has been constructed.
The purpose of mechanic’s lien statutes is “to make a property owner an involuntary
guarantor of payments for the reasonable value of improvements made to real estate by the
physical labor or materials furnished by laborers or materialmen.” Premier Inv. v. Suites
of Am., Inc., 644 N.E.2d 124, 130 (Ind. 1994) (emphasis added). The crux of Roncelli’s
argument is the mechanic’s lien statutes in Indiana Code chapter 32-28-3 only apply to the
property owners, and as it is not a property owner, the mechanic’s lien and subsequent
attorney fees cannot be enforced against it. We agree.
It is evident on the face of each of Wilson Iron’s, Johnson Carpet’s, and Fostcorp’s
Notice of Intention to Hold Mechanic’s Lien that the appellees intended to hold a lien
against the real estate and the rights, titles, and interests of the owner of the real estate.
App. of Appellants Goodrich Quality Theaters, Inc. and Roncelli, Inc. at 152, 193, 106. As
Roncelli is not the owner of the real estate or the structure, a mechanic’s lien cannot be
enforced against it and subsequent attorney fees under that code provision are inapplicable.
24
Therefore, each award of attorney fees based on Indiana Code section 32-28-3-14 against
Roncelli must reversed.
Conclusion
We conclude Roncelli’s Notice of Appeal was timely filed and the judgment is
supported by the findings, but it was an abuse of discretion for the trial court to award
attorney fees.
Affirmed in part and reversed in part.
RILEY, J., and BRADFORD, J., concur.
25