Carroll Creek Development Company, Inc. v. Town of Huntertown, Indiana ( 2014 )

May 09 2014, 6:26 am
FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:
KAREN T. MOSES JEFFREY P. SMITH
KEVIN J. MITCHELL DAVID K. HAWK
Faegre Baker Daniels LLP MICHAEL D. HAWK
Fort Wayne, Indiana Hawk Haynie Kammeyer & Chickedantz
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
CARROLL CREEK DEVELOPMENT )
COMPANY, INC. )
)
Appellant/Plaintiff, )
)
vs. ) No. 02A03-1307-PL-282
)
TOWN OF HUNTERTOWN, INDIANA, )
)
Appellee/Defendant. )
APPEAL FROM THE ALLEN SUPERIOR COURT
The Honorable Stanley A. Levine, Judge
Cause No. 02D01-1010-PL-337
May 9, 2014
OPINION – FOR PUBLICATION
PYLE, Judge
STATEMENT OF THE CASE
Carroll Creek Development Company, Inc. (“Carroll Creek”) appeals the trial
court’s order granting partial summary judgment to the Town of Huntertown, Indiana
(“Huntertown”).
We reverse.
ISSUE
Whether the trial court erred by granting partial summary judgment to
Huntertown on one part of Carroll Creek’s breach of contract claim.
FACTS
Huntertown is a municipal corporation located in Allen County, Indiana. Carroll
Creek is an Indiana corporation engaged in the business of real estate development.
On October 2, 2000, Carroll Creek and Huntertown entered into an Agreement for
Water Main Extension and Interconnection (“Water Agreement”), wherein Carroll Creek
agreed to construct and pay for the cost of constructing a water main that would be
“connected to [Huntertown’s] water service facility” and would “serve not only real
estate in which [Carroll Creek] ha[d] an interest, but also other real estate[.]” (App. 87). 1
The Water Agreement provided that the estimated cost of the water main was
$617,198.00. It also provided that Carroll Creek could recoup up to $464,309.00 of its
construction costs via a water connection charge from certain owners of real estate who
connected to the water main.
1
The parties also entered into an Agreement for Sewer Extension and Interconnection (“Sewer
Agreement”) on that same day.
2
In regard to the areas to be served by the water main and the people who would be
subject to payment of the connection charge, the Water Agreement provided:
3. Area of Developer [Carroll Creek]
3.1 The Water Main, when constructed and accepted by
[Huntertown], will serve the real estate of [Carroll Creek]; all as reflected in
Exhibit “B” attached hereto.[2] [Carroll Creek], and those under contract
with [Carroll Creek], will pay for the cost of construction of lateral lines
within area described on Exhibit “B”.
3.2 Once any improvement or facility on the real estate described
in Exhibit “B” is connected to the Water Main, said improvement or facility
cannot be withdrawn from the Water Main without the written consent of
[Huntertown].
4. Charge Against Excess Area
4.1 The Water Main, when constructed and accepted by
[Huntertown], will also serve additional real estate in the excess area: see
Exhibit “C” attached hereto.[3] In the event any present or future owners of
real estate within the excess areas shall, at any time within fifteen (15)
years after the date of this Agreement, desire to connect into the Water
Main, whether by direct tap or through the extension or connection of
lateral lines to service the real estate situated in the excess area or adjacent
to the excess area,[4] to the extent permitted by law, [Huntertown] shall
require that such owner pay an “area connection charge” to [Carroll Creek]
and further pay [Huntertown] the standard tap-in, inspection and
administrative fees.
4.2 [Huntertown] may refuse to approve an excess area
connection if the connection would use any part of the water service
2
Exhibit B consists of three separate metes and bounds legal descriptions for various sections of land in
Allen County.
3
Exhibit C does not contain metes and bounds descriptions; instead, it consists of one page generally
listing sections of land in Allen County.
4
The copy of the Water Agreement contained in the record on appeal contains markings on some of the
words in Section 4.1, such as underlining and circling of words. One of the markings seems to be
obscuring a comma. We have included this comma because both parties included it in their summary
judgment motions when they quoted Section 4.1 of the Water Agreement. We note, however, that Carroll
Creek has omitted the comma when it quoted Section 4.1 in its Appellant’s Brief.
3
capacity reserved by [Huntertown] for [Carroll Creek’s] Area or if the
owner in the excess area refuses to:
a) Enter into an agreement with [Huntertown] for water
main extension and interconnection;
b) Waive remonstrance to annexation; and
c) Submit and have approved a plan for development.
4.3 The excess area connection charge payable to [Carroll Creek]
shall be according to the following formula:
a) in the event that the excess area has minimal or no
linear footage adjacent to the Water Main, then the
excess area charge for residential use shall be $503.00
per acre of land to be serviced by the area connected to
the Water Main. All other connections shall pay a per
acre charge in accordance with the Residential
Equivalent Connection Fee, as published by the State
of Indiana from time to time; and
b) if the excess area has frontage adjacent to the Water
Main as shown in Exhibit A, the connection charge
shall be at $35.50 per linear foot based on the total
adjacent footage as well as the charge per acre set forth
in Section 4.3(a); and
c) simple interest at a rate of 8% per annum calculated
from the contract effective date of April 30, 2000 to
the date the tap is made to the Water Main.
The connection charge shall be paid to [Carroll Creek] at the time
the connection is made to Water Main. The total excess area connection
charge fees paid to [Carroll Creek] cannot exceed $464,309.00 plus interest,
as referenced in this agreement.
4.4 [Carroll Creek] waives any claim or right of compensation
arising from [Huntertown’s] erroneous calculations of the interest portion
of the excess area connection charge.
4
(App. 90-91; Appellee’s Addendum 4-5).5
On October 1, 2010, just shy of ten years after the parties entered into the Water
Agreement, Carroll Creek filed a complaint against Huntertown. Carroll Creek alleged a
breach of contract claim in regard to the Water Agreement and an alternative claim of
unjust enrichment.6 Additionally, Carroll Creek sought an accounting. In regard to the
breach of contract claim, Carroll Creek alleged that Huntertown had failed to comply
with its obligations under the Water Agreement by failing to “collect the fees and costs
required by the Water Agreement and fail[ing] to pay fees owed to Carroll Creek.” (App.
31). In other words, Carroll Creek alleged that it was entitled to recover money from
Huntertown for the area connection charges that Huntertown should have assessed to
certain owners of real estate that had connected to the water main. In its complaint,
Carroll Creek did not specify which owners of real estate should have been subjected to
the area connection charge. Instead, Carroll Creek sought an accounting from
Huntertown of all owners of real estate that were allowed to connect to the water main, as
well as a list of the amount of fees and assessments charged to those land owners. During
the course of discovery, Carroll Creek specified that Huntertown owed it money for the
5
Aside from Carroll Creek’s Addendum, it also tendered an Appellee’s Appendix; however, our Clerk’s
office did not file it and marked it as received because Carroll Creek’s certificate of service was not dated
and did not indicate that the appendix had been served.
6
Carroll Creek also alleged that Huntertown had breached the Sewer Agreement. However, that part of
Carroll Creek’s breach of contract claim is not at issue in this appeal.
5
owners of real estate who had connected to the water main such as the Ravenswood
subdivision7 and “whatever subdivision’s [sic] on the Ruth Nobis farm[.]” (App. 108).
On January 8, 2013, Huntertown filed a first motion for partial summary
judgment, in which it asked the trial court to interpret Section 4.1 of the Water
Agreement.8 In this partial summary judgment motion, Huntertown argued that the
owners of real estate located outside of the contractually defined “excess area” who
connected to the water main were not subject to the area connection charge. As part of its
summary judgment motion, Huntertown submitted designated evidence to show that the
tracts of real estate in Sections I and II of Ravenswood and in the Nobis Farm deed were
not included in the “excess area” as defined in the Water Agreement. Huntertown argued
that Carroll Creek was not entitled to area connection charges from the owners of real
estate in these areas because the Water Agreement provided that Carroll Creek was
entitled to area connection charges from owners of real estate located only in the excess
area and not in an area adjacent to the excess area. Huntertown asserted that Section
4.1’s clause “whether by direct tap or through the extension or connection of lateral lines
to service the real estate situated in the excess area or adjacent to the excess area” should
be interpreted to mean that owners of real estate in the excess area would be subject to an
area connection charge whether they connected to the water main directly or whether
they connected to the water main indirectly via a lateral line that served real estate
7
Ravenswood Section I was developed by Springmill Woods Development, and Ravenswood Section II
was developed by PT Development Corporation.
8
Huntertown also filed a second motion for partial summary judgment on June 4, 2013. This second
motion is not at issue in this appeal.
6
adjacent to the excess area. Huntertown asked the trial court to grant it partial summary
judgment on the general issue of whether Carroll Creek could seek payment for area
connection charges for water main connections by owners of real estate located outside of
the “excess area” and on the specific issue of whether Carroll Creek could seek payment
for area connection charges for water main connections by owners of real estate located
in Ravenswood.
Thereafter, Carroll Creek filed a cross-motion for summary judgment. Carroll
Creek agreed that resolution of summary judgment was based on an interpretation of
Section 4.1 of the Water Agreement. Carroll Creek argued that the “unambiguous
language of the Water Agreement require[d] charges to be paid for any property owner
within the excess area connecting to the Water Main to serve property in or adjacent to
the excess area.” (App. 137). Thus, Carroll Creek’s interpretation of Section 4.1 was
that the owners of real estate in the excess area who connected to the water main would
be subject to the area connection charge when they used their water main connection to
service real estate that was in either the excess area or area adjacent to the excess area.
Carroll Creek argued that Huntertown was not entitled to summary judgment with respect
to Ravenswood because Huntertown had “fail[ed] to provide any evidence showing that
Ravenswood property owners [had] never owned property in the excess area.” (App.
138).
In February 2013, the trial court granted leave to P.T. Development Corporation,
to file an amicus curiae brief in support of Huntertown’s first partial summary judgment
7
motion. Thereafter, Springmill Woods Development Company, LLC, joined P.T.
Development’s amicus brief.
On May 1, 2013, the trial court held a summary judgment hearing. During the
hearing, Huntertown argued that Section 4.1 specifically identified the property owners
who were subject to the area connection charge as those owners of real estate within the
“excess area” and contended that the owners of real estate in areas adjacent to the excess
area were not required to pay a connection charge. Huntertown argued that the parties
did not intend to require the owners in adjacent areas to pay the area connection charge
because they did not include a specific legal description of the adjacent area as they had
done for Carroll Creek’s area and the excess area. Huntertown also argued that the
language in Section 4.1 should be interpreted when considering the remainder of the
language in the Water Agreement, which referred only to the excess area.
Carroll Creek argued that its position was that the area connection charge should
be assessed against owners of real estate located adjacent to the excess area if the owners
also owned real estate within the excess area. In other words, Carroll Creek argued that
Huntertown should assess an area connection charge against owners of real estate in
adjacent areas only if the owners also owned real estate in the excess area and connected
to the water main to service land adjacent to the excess area. When the trial court asked
how that position applied to the facts of this case and how many people were required to
pay the area connection charge, Carroll Creek replied that it had “no idea.” (Tr. 19).
8
On June 10, 2013, the trial court issued an order granting Huntertown’s motion for
partial summary judgment and denying Carroll Creek’s cross-motion. Specifically, the
trial court’s order provided, in relevant part:
2. Consistent with the title of Section 4 of the Water Agreement,
“Charge Against Excess Area,” Section 4.1 notes “The Water Main,
when constructed and accepted by [Huntertown], will also serve
additional real estate in the excess area. See Exhibit C attached
hereto;[”] and then talks about “In the event any present or future
owners of real estate within the excess areas desire to connect into
the water main . . . .” (emphasis added).
3. Each party has advanced its own interpretation of the language of
Section 4.1.
4. The drafters of Section 4.1 spoke of the charges to owners of real
estate [“]in the excess areas.” (emphasis added).
5. Section 4.1 states: “In the event any present or future owners of
real estate within the excess areas shall desire to connect into the
water main . . . whether by direct tap or through extension or
connection of lateral lines to service the real estate in the excess area
or adjacent to the excess area. (emphasis added).
6. The Court agrees with Huntertown that the “whether by” clause was
intended to clarify that excess area owners will be subject to area
connection charges even if they do not connect to the water main
directly.
7. The last sentence of Section 4.1 states: “Town shall require that
such owner pay an “an area connection charge” to Developer and
further pay the Town the standard tap-in, inspection and
administrative fees.” “Developer” refers to Carroll Creek Developer
Company, Inc. and the term “such owner” clearly refers back to
“present or future owners of real estate within the excess area” at the
beginning of such section.
8. There is no express intent in Section 4.1 to make the connection
charge apply to owners of real estate adjacent to the excess area.
The absence of a legal description for the “adjacent” real estate
supports that conclusion.
9
9. The Court finds from a reading of Section 4 in the context of the
entire Water Agreement that the parties’ intent expressed in that
section was to limit area connection charges to the excess area
property only.
10. Ravenswood is located outside the excess area.
11. The above analysis comports with Carroll Creek’s desire that the
plain language of the Water Agreement should be applied.
12. To the extent, however, that the difference of interpretation of
Section 4.1 by the parties may constitute an ambiguity, such
ambiguity is construed against the Carroll Creek Development
Company, Inc., whose Attorney, Timothy Claxton drafted the Water
Agreement.
(App. 27-28). Thereafter, the trial court entered final judgment under Indiana Trial Rule
54(B) on the issue in Huntertown’s first partial summary judgment motion. Carroll
Creek now appeals.
DECISION
Carroll Creek argues that the trial court erred by granting partial summary
judgment to Huntertown and incorrectly interpreted Section 4.1 of the Water Agreement.
Specifically, Carroll Creek argues that the trial court “erred in finding that Section 4.1 of
the Water Agreement did not apply to any land ‘adjacent to the excess area.’” (Carroll
Creek’s Br. 4).
When reviewing a trial court’s order granting summary judgment, we apply the
same standard as that used in the trial court. Kopczynski v. Barger, 887 N.E.2d 928, 930
(Ind. 2008). Summary judgment is appropriate only where the designated evidence
shows “that there is no genuine issue as to any material fact and that the moving party is
10
entitled to judgment as a matter of law.” Ind. Trial Rule 56(C). Our standard of review
is not altered by the fact that the parties made cross-motions for summary judgment. Ind.
Farmers Mut. Ins. Grp. v. Blaskie, 727 N.E.2d 13, 15 (Ind. Ct. App. 2000). Instead, we
consider each motion separately to determine whether the moving party is entitled to
judgment as a matter of law. Id.
Where a trial court enters conclusions of law in granting a motion for summary
judgment, as the trial court did in this case, the entry of specific conclusions does not
alter the nature of our review. Rice v. Strunk, 670 N.E.2d 1280, 1283 (Ind. 1996). We
are not bound by the trial court’s specific conclusions of law. Id. They merely aid our
review by providing us with a statement of reasons for the trial court’s actions. Id.
The issue in this partial summary judgment is contract interpretation, specifically
the meaning of Section 4.1 of the Water Agreement. “Summary judgment is especially
appropriate in the context of contract interpretation because the construction of a written
contract is a question of law.” TW Gen. Contracting Servs., Inc. v. First Farmers Bank &
Trust, 904 N.E.2d 1285, 1287–88 (Ind. Ct. App. 2009) (citing Colonial Penn Ins. Co v.
Guzorek, 690 N.E.2d 664, 667 (Ind. 1997)), reh’g denied. “The ultimate goal of any
contract interpretation is to determine the intent of the parties when they made the
agreement.” Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 813 (Ind. 2012), reh’g
denied. To do so, “we begin with the plain language of the contract, reading it in context
and, whenever possible, construing it so as to render each word, phrase, and term
meaningful, unambiguous, and harmonious with the whole.” Id. A court should construe
11
the language of a contract so as not to render any words, phrases, or terms ineffective or
meaningless. Hammerstone v. Ind. Ins. Co., 986 N.E.2d 841, 846 (Ind. Ct. App. 2013).
Here, the trial court found, and the parties agree, that the language of the Water
Agreement was unambiguous. When the language of a contract is unambiguous, we may
not look to extrinsic evidence to add to, vary, or explain the instrument but must
determine the parties’ intent from the four corners of the instrument. Univ. of S. Ind.
Found. v. Baker, 843 N.E.2d 528, 532 (Ind. 2006). “[C]onstruction of the terms of a
written contract is a pure question of law for the court, reviewed de novo.” Harrison v.
Thomas, 761 N.E.2d 816, 818 (Ind. 2002). “We will reverse a summary judgment based
on the interpretation of a contract if the trial court misapplies the law.” Bhd. Mut. Ins.
Co. v. Michiana Contracting, Inc., 971 N.E.2d 127, 131 (Ind. Ct. App. 2012), reh’g
denied, trans. denied.
It is undisputed that Carroll Creek is entitled, pursuant to the Water Agreement, to
an area connection charge from certain owners of real estate who have connected to the
water main within fifteen years of the Water Agreement. The parties, however, dispute
exactly which land owners are subject to the area connection charge under the Water
Agreement. Section 4.1 of the Water Agreement, which discusses who is subject to
payment of the area connection charge, provides:
4.1 The Water Main, when constructed and accepted by
[Huntertown], will also serve additional real estate in the excess area: see
Exhibit “C” attached hereto. In the event any present or future owners of
real estate within the excess areas shall, at any time within fifteen (15)
years after the date of this Agreement, desire to connect into the Water
Main, whether by direct tap or through the extension or connection of
lateral lines to service the real estate situated in the excess area or
12
adjacent to the excess area, to the extent permitted by law, [Huntertown]
shall require that such owner pay an “area connection charge” to [Carroll
Creek] and further pay [Huntertown] the standard tap-in, inspection and
administrative fees.
(App. 90; Appellee’s Addendum 4) (emphasis added).
The parties do not dispute that owners of real estate in the excess area are subject
to the area connection charge. The parties also do not dispute that owners of real estate
located only in an area adjacent to the excess area are not subject to the area connection
charge. Instead, the meaning of the italicized portion of Section 4.1 above is disputed by
the parties, who disagree about whether the owners of real estate in the excess area are
subject to an area connection charge if they connect to the water main to service land
adjacent to the excess area.
On summary judgment, Huntertown asserted that Section 4.1’s “whether by”
clause should be interpreted to mean that owners of real estate in the excess area would
be subject to an area connection charge whether they connected to the water main directly
or whether they connected to the water main indirectly via a lateral line that served real
estate adjacent to the excess area. The trial court adopted Huntertown’s argument and
concluded that “the ‘whether by’ clause was intended to clarify that excess area owners
will be subject to area connection charges even if they do not connect to the water main
directly.” (App. 27).
On appeal, Carroll Creek agrees with the trial court’s interpretation that the
“whether by” clause was intended to clarify that excess area owners would be subject to
the area connection charge even if they did not directly connect to the water main.
13
However, Carroll Creek argues that the plain meaning of the language used in Section 4.1
of the Water Agreement reveals that the “intent was to require Huntertown to collect area
connection charges from any present or future owner of real estate located within the
excess area who connected in to the Water Main for the benefit of land in the excess area
or adjacent to the excess area.” (Carroll Creek’s Br. 4) (emphasis added). Carroll Creek
asserts that the language of Section 4.1 shows that there are two circumstances under
which an owner would be subject to the area connection charge: (1) excess area
landowners who connect to the water main, either directly or indirectly, to service
property located in the excess area; and (2) excess area landowners who connect to the
water main, either directly or indirectly, to service property located adjacent to the excess
area. Carroll Creek argues that the trial court’s interpretation of Section 4.1 renders the
phrase “adjacent to the excess area” meaningless, and it contends that that language must
be given effect.
In response, Huntertown contends that Section 4.1 “clearly and unequivocally”
provides that Carroll Creek is entitled to an area connection charge from owners of real
estate within the excess areas. Huntertown argues that
[w]hile excess area owners who connect to the Water Main are required to
pay the charge even if they connect to the Water Main indirectly by way of
lateral lines that serve areas adjacent to the excess area, Section 4.1 does
not contain language that requires owners of adjacent real estate to pay area
connection charges.
(Huntertown’s Br. 4) (emphasis added).
As we review the trial court’s interpretation of the Water Agreement de novo, we
conclude that the trial court erred as a matter of law in its interpretation of Section 4.1
14
regarding who would be subject to the area connection charge. The plain language of
Section 4.1 unambiguously provides that “present or future owners of real estate within
the excess areas [who]. . . desire to connect into the Water Main, whether by direct tap or
through the extension or connection of lateral lines to service the real estate situated in
the excess area or adjacent to the excess area” would be subjected to the area connection
charge. (App. 90; Appellee’s Addendum 4) (emphasis added). Thus, the area connection
charge would be assessed against owners of real estate in the excess area if that owner
connected, directly or indirectly, to the water main “to service” real estate adjacent to the
excess area. The trial court’s interpretation of the “whether by” clause changes the “to
service the real estate situated in the excess area or adjacent to the excess area” language
to “that service the real estate situated in the excess area or adjacent to the excess area[.]”
In doing so, the trial court disregarded the plain language of the Water Agreement.
However, we must look to the plain language of the agreement and cannot change or vary
the language used. See Citimortgage, 975 N.E.2d at 813; Univ. of S. Ind. Found., 843
N.E.2d at 532. See also Singleton v. Fifth Third Bank, 977 N.E.2d 958, 967 (Ind. Ct.
App. 2012) (“The unambiguous language of a contract is conclusive and binding on the
parties and the court, and the parties’ intent is determined from the four corners of the
document.”).
We acknowledge that, outside of Section 4.1, the Water Agreement does not
mention real estate situated adjacent to the excess area and that it refers only to excess
area owners. The lack of further reference to the area adjacent to the excess area is of no
moment because the plain language of the Water Agreement reveals that the parties did
15
not intend all adjacent owners of real estate to be subjected to the area connection charge.
Instead, the plain language in Section 4.1 of the Water Agreement provides that owners
of real estate in the excess area are subject to the area connection charge if they connect,
directly or indirectly, to the water main “to service the real estate situated in the excess
area or adjacent to the excess area[.]” (App. 90; Appellee’s Addendum 4) (emphasis
added). Thus, the language of Section 4.1, agreed upon by the parties, shows that the
intent of the parties was that the area connection charge would be assessed against excess
area owners in two specified situations.
Because the trial court erroneously interpreted the contract as a matter of law, we
reverse the trial court’s grant of Huntertown’s partial summary judgment motion and
denial of Carroll Creek’s cross-motion for summary judgment and remand for further
proceedings. See, e.g., Bhd. Mut. Ins. Co., 971 N.E.2d at 132-33 (holding that “we are
not at liberty to rewrite [a] contract” and reversing a trial court’s grant of summary
judgment where the court erred in interpreting the contract). See also Singleton, 977
N.E.2d at 968 (explaining that “[t]his court cannot make a contract for the parties, nor are
we at liberty to revise a contract, or supply omitted terms while professing to construe
it.”).
Reversed and remanded.9
MATHIAS, J., and BRADFORD, J., concur.
9
Carroll Creek also argues that the trial court erred by alternatively concluding that any potential
ambiguity in the Water Agreement would be construed against Carroll Creek. Given our holding in this
case, we need not address this issue.
16