A House Mechanics, Inc. v. Michael Massey ( 2019 )

FILED
May 23 2019, 8:46 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Clinton E. Blanck Scott D. Pankow
Blanck & Rubenstein, P.C. Indianapolis, Indiana
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
A House Mechanics, Inc., May 23, 2019
Appellant-Plaintiff, Court of Appeals Case No.
18A-PL-2814
v. Appeal from the Marion Superior
Court
Michael Massey, The Honorable Timothy W.
Appellee-Defendant Oakes, Judge
Trial Court Cause No.
49D02-1609-PL-33823
Baker, Judge.
Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019 Page 1 of 16
[1] A House Mechanics, Inc. (AHM), appeals the trial court’s order granting
summary judgment in favor of Michael Massey on AHM’s complaint. AHM
argues that there are genuine issues of material fact related to its claims for
breach of contract and foreclosure on a mechanic’s lien rendering summary
judgment improper. Finding no error, we affirm.
Facts
[2] Massey owns a residence and other structures on Sloan Avenue in Indianapolis.
On June 6, 2016, Massey and AHM entered into a contract, pursuant to which
AHM would remove and replace the roofs on all of Massey’s buildings and
install new siding and gutters on some. On June 15, 2016, Massey made a
down payment of $12,000 and AHM began work. The contract required that
AHM would “comply with all applicable building codes.” Appellant’s App.
Vol. II p. 23.
[3] Massey began to notice multiple problems with the work being performed by
AHM. He met repeatedly with Richard Hathaway, AHM’s president, to
express concerns and point out things that needed to be repaired.
[4] On June 18, 2016, Massey confronted Hathaway with more issues, explaining
that simply covering up the problem areas with shingles would not solve the
underlying defects and noting that the defects could not be repaired once
covered with shingles. Hathaway denied that there were any problems and
refused to make repairs. Massey asked to see Hathaway’s insurance policy and
bond information; Hathaway refused, said he was done working on that job,
Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019 Page 2 of 16
and stated he intended to take the building materials and leave. Massey
responded that Hathaway could not take the materials because Massey had
already made a $12,000 down payment. Hathaway then threatened to harm
Massey physically and take his family’s home. Massey told Hathaway to leave;
Hathaway called the police.
[5] Officers arrived and threatened to arrest Hathaway unless he calmed down.
Massey and the officers tried to convince Hathaway to make the needed repairs,
finish the job, and move on, but Hathaway refused. The officers told Hathaway
to leave. On his way out, Hathaway told Massey to call the City Inspector,
commenting that “‘when it passes the inspection, I will take your house.’” Id.
at 129.
[6] On June 23, 2016, the City of Indianapolis Department of Code Enforcement
issued a Notice of Violation listing multiple violations related to the
construction work on Massey’s property. The next day, the same department
issued an Order to Stop Work, demanding that all work on that site stop
because AHM had failed to notify the Bureau of Construction Services before
starting construction and had failed to post a contractor form at the work site.
[7] On June 24, 2016, Massey, via counsel, demanded that AHM return the
$12,000 down payment. On June 27, 2016, AHM responded by sending
Massey an invoice for $6,197.94, which AHM claimed was the remaining
amount owed by Massey after applying the down payment. On June 29, 2016,
AHM recorded a mechanic’s lien on Massey’s property.
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[8] On August 13, 2016, AHM filed a complaint against Massey, seeking damages
for breach of contract and/or to foreclose on the mechanic’s lien. On
November 4, 2016, Massey filed an answer denying that he had breached the
contract and denying that the work done by AHM had added any value to
Massey’s property. He also filed a counterclaim, alleging that AHM had
slandered his title, abused the legal process by filing and seeking to foreclose on
a mechanic’s lien, violated the Indiana Home Improvement Contracts Act
(HICA), and breached statutory home improvement warranties.1
[9] On September 7, 2018, Massey moved for summary judgment, alleging that
(1) there was no genuine issue of material fact that AHM had committed the
first material breach of the parties’ contract, meaning that AHM is not entitled
to enforce the contract against Massey; and (2) AHM had failed to prove that
its work added any value to Massey’s property as required under the mechanic’s
lien statute. The trial court granted summary judgment in Massey’s favor on
October 29, 2018. In pertinent part, it found and held as follows:
Findings of Fact
***
4. Massey paid [AHM] a $12,000.00 down payment on June
15, 2016. [AHM], after taking the above-referenced down
payment, walked off the job on June 18, 2016 when
1
Massey also later filed a third-party complaint against Western Surety Company, which was AHM’s
commercial liability insurer. Western Surety Company is not part of this appeal.
Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019 Page 4 of 16
confronted about the defective quality of the work to that
date.
5. [AHM] refused to correct the defective work and called the
police. The police arrived and attempted to convince both
parties to agree to allow [AHM] to complete the job and
make needed repairs. Massey agreed to allow the repair
attempt but [AHM] refused to do any further work,
refused to return any portion of the down payment, and
refused to leave any of the materials for the job with
Massey, taking them with him when he walked off the job.
6. The home improvement repair job promised by [AHM]
was inspected by the City of Indianapolis Code
Enforcement on June 24, 2016 and a Notice of Violation
and Order to Stop Work . . . were issued and posted on
Massey’s property detailing the many code violations
found in [AHM’s] work by the city inspector.
***
9. [AHM] recorded the mechanic’s lien notice . . . on or
about June 29, 2016 despite the fact that none of the
materials or services provided by [AHM] added any value
to Massey’s property and in fact damaged or reduced the
value of Massey’s property.
10. [AHM] breached its contract to provide home
improvement repairs by, among other things, failing, as
specifically promised in [its] contract, to comply with
applicable building and housing code requirements as
evidenced by the Notice of Violation and Order to Stop
Work . . . .
Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019 Page 5 of 16
11. Prior to walking off the job, [AHM] threatened to record a
mechanic’s lien and bring this legal claim in an attempt to
coerce Massey to pay additional amounts to which [AHM]
had no legitimate legal claim.
***
13. The Court finds that [AHM’s] labor and/or materials
added no value or improvement to Massey’s property and
in fact damaged or reduced the value of Massey’s
property, that the mechanic’s lien filed by [AHM] is
invalid and should be vacated and released of record.
Conclusions of Law
***
2. In order to pursue a claim for breach of contract or right to
payment for construction services, [AHM] cannot have
first breached the contract itself.
3. [AHM] has failed in this regard as a matter of law as the
Notice of Violation and Order to Stop Work . . . detailing
the many code violations found in [AHM’s] work by the
city inspector establish[] that [AHM] failed to comply with
the specific promise in its contract that it would “comply
with all applicable building codes.”
4. In regard to the action to foreclose the mechanic’s lien that
[AHM] recorded against Massey’s property, [AHM] has
failed to show that [its] “work” added any value to the
property as required under the mechanic’s lien statute.
Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019 Page 6 of 16
Appealed Order p. 2-4 (internal citations and emphases omitted). The trial
court granted summary judgment in Massey’s favor, noting that it found in
Massey’s favor on the claims in AHM’s complaint and on Massey’s
counterclaims. The trial court found that Massey’s damages totaled the amount
of the down payment—$12,000—and entered judgment against AHM in that
amount. It also found that the mechanic’s lien is invalid. AHM now appeals.
Discussion and Decision
[10] AHM argues that there are genuine issues of material fact with respect to
whether AHM breached the contract first and whether AHM’s work added any
value to Massey’s property. Therefore, AHM maintains that summary
judgment should not have been entered in Massey’s favor.
[11] Our standard of review on summary judgment is well settled:
The party moving for summary judgment has the burden of
making a prima facie showing that there is no genuine issue of
material fact and that the moving party is entitled to judgment as
a matter of law. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012).
Once these two requirements are met by the moving party, the
burden then shifts to the non-moving party to show the existence
of a genuine issue by setting forth specifically designated
facts. Id. Any doubt as to any facts or inferences to be drawn
therefrom must be resolved in favor of the non-moving
party. Id. Summary judgment should be granted only if the
evidence sanctioned by Indiana Trial Rule 56(C) shows there is
no genuine issue of material fact and that the moving party
deserves judgment as a matter of law. Freidline v. Shelby Ins.
Co., 774 N.E.2d 37, 39 (Ind. 2002).
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Goodwin v. Yeakle’s Sports Bar and Grill, Inc., 62 N.E.3d 384, 386 (Ind. 2016).
I. Breach of Contract
[12] It is well established that “[w]hen one party to a contract commits the first
material breach of that contract, it cannot seek to enforce the provisions of the
contract against the other party if that other party breaches the contract at a
later date.” Coates v. Heat Wagons, Inc., 942 N.E.2d 905, 917 (Ind. Ct. App.
2011).
[13] Here, it is undisputed that the parties’ contract required AHM to “comply with
all applicable building codes.” Appellant’s App. Vol. II p. 23. It is also
undisputed that significant portions of AHM’s work on Massey’s property did
not comply with applicable building codes. Massey designated evidence
establishing that he repeatedly noticed problems with AHM’s work and brought
them to Hathaway’s attention; that other people, including two contractors who
submitted affidavits in Massey’s support, noticed a very long list of violations
and problems; and that the city inspector issued a notice of violation, including
a long list of defects on site that did not comply with building codes, and a stop
work order. This evidence readily shows that from the start of its work on
Massey’s property, AHM repeatedly and continually breached its contract with
Massey.
[14] AHM has not designated any evidence that tends to dispute the above evidence.
Instead, it makes two arguments. First, it points out that the trial court did not
consider whether AHM’s breach was material. See Frazier v. Mellowitz, 804
Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019 Page 8 of 16
N.E.2d 796, 804-05 (Ind. Ct. App. 2004) (holding that to award summary
judgment, trial court must determine that the undisputed facts establish as a
matter of law that the breach was material and it was too late to cure the failure
to perform). Whether a party has materially breached depends on a variety of
factors:
“(1) The extent to which the injured party will obtain the
substantial benefit which he could have reasonably
anticipated;
(2) The extent to which the injured party may be adequately
compensated in damages for lack of complete
performance;
(3) The extent to which the party failing to perform has
already partly performed or made preparations for
performance;
(4) The greater or less hardship on the party failing to perform
in terminating the contract;
(5) The willful, negligent or innocent behavior of the party
failing to perform; and
(6) The greater or less uncertainty that the party failing to
perform will perform the remainder of the contracts.”
Id. at 802 (quoting Tomahawk Village Apartments v. Farren, 571 N.E.2d 1286,
1293 (Ind. Ct. App. 1991)).
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[15] In addition to the evidence described above, Massey designated evidence that
Hathaway became unwilling to admit that there were defects; Hathaway
refused to fix the remaining defects and became combative, going so far as to
call the police and threaten Massey; and the work that AHM had performed on
Massey’s property actually decreased its value. Initially, we note that it is readily
apparent that the toxic breakdown of the relationship between Massey and
Hathaway establishes that it was too late for AHM to cure the defects.
Moreover, we find that the designated evidence establishes that all of the above
factors weigh in Massey’s favor. Under these circumstances, we have little
trouble concluding as a matter of law that AHM’s breaches were material. See
Simpson v. OP Prop. Mgmt., LLC, 939 N.E.2d 1098, 1102 (Ind. Ct. App. 2010)
(noting that we may affirm a trial court’s ruling on summary judgment on any
basis supported by the designated evidence).
[16] Second, AHM argues that the contract does not say when the work must be in
compliance with applicable building codes. In other words, AHM contends
that even though its work was defective, and even though it intended to cover
up some of the defects with shingles, it had the length of the contract to fix the
issues and bring the construction into compliance. It notes that when Massey
asked Hathaway and AHM to leave his property on June 18, 2016, no building
code enforcement citations or orders had been issued—that occurred several
days later.
[17] At the outset, it is irrelevant that the notice of code violations was issued after
Massey asked AHM to leave his property. Given that AHM did no work
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between June 18 and June 23, when the notice of violations was issued, it is
obvious that all the violations existed on June 18. The fact that the actual
notice was issued five days later is immaterial.
[18] Furthermore, we will not interpret a contract in a fashion that achieves an
absurd result. E.g., Champlain Capital Partners, L.P. v. Elway Co., 58 N.E.3d 180,
190 (Ind. Ct. App. 2016). The term of the contract requiring that the work
comply with applicable building codes can only have meant that it must always
be in compliance. Obviously, if part of a project were in progress but not yet
finished, and it was merely the lack of completion that caused it to be non-
compliant, there would be no issue. But that situation is not what we have
here. Instead, there were many parts of this construction work that were simply
wrong, defective, and/or non-compliant from the outset. To say that this
contractual term would permit AHM to do shoddy, defective work until the end
of the project, when it then corrected the defects, would be an absurd result.
[19] In the end, we are left with evidence designated by Massey that conclusively
establishes that AHM’s work was rife with building code violations. The
evidence also shows that Hathaway refused to continue working on Massey’s
property, refused Massey’s repeated offers to fix the defects and finish the job,
threatened Massey, and became so combative that police officers directed him
to leave the property. AHM has not designated any evidence tending to
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counter these facts.2 Therefore, we find that the trial court did not err by finding
as a matter of law that AHM breached the contract first and, consequently, was
not entitled to enforce the contract against Massey. In other words, the trial
court did not err by granting summary judgment in Massey’s favor on this issue.
II. Mechanic’s Lien
[20] AHM next argues that the trial court erred by finding that the mechanic’s lien
was invalid, thereby vacating it. Mechanic’s liens are in derogation of common
law and we must strictly construe the statutes regulating them. E.g., Premier
Invs. v. Suites of Am., Inc., 644 N.E.2d 124, 127 (Ind. 1994). The central purpose
of mechanic’s lien laws “is to prevent the inequity of a property owner enjoying
the benefits of the labor and materials furnished by others without
recompense.” Ford v. Culp Custom Homes, Inc., 731 N.E.2d 468, 472 (Ind. Ct.
App. 2000). The lien exists “to the extent of the value of any labor done or the
materials furnished, or both . . . .” Ind. Code § 32-28-3-1(b).
[21] Here, Massey offered two affidavits in support of his contention that the work
that AHM performed on his property did not increase the value thereof. Perry
Allen, who is the owner of a contracting business, and Paul Palmer, who is the
owner of a roofing business, examined the work performed by AHM and
2
AHM points to the fact that Massey asked Hathaway to leave his property first, arguing that this establishes
that Massey breached the contract first. We disagree. It was only after Hathaway refused to correct the
defects or show Massey AHM’s insurance policy and bond information that Massey asked him to leave the
property. This evidence does not counter any of the other undisputed evidence regarding the incident.
Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019 Page 12 of 16
attested that they were “competent to testify to the matters asserted in this
affidavit and have personal knowledge of the matters asserted in this affidavit.”
Appellant’s App. Vol. II p. 60, 63. Both men found that AHM’s work was
“negligently and carelessly performed and contained many defects;” the
affidavits each include a lengthy list enumerating those defects. Id. at 60-61, 63-
64. They each attested that AHM’s work “had no value and added no value to
the property. It had to be torn out and made the proper repairs more expensive
so that it actually detracted from the value of the property.” Id. at 61, 64.
Massey also provided his own affidavit, attesting that “none of the materials or
services provided by [AHM] added any value to Massey’s property and in fact
damaged or reduced the value of Massey’s property.” Id. at 67.
[22] AHM argues on appeal that the Allen and Palmer affidavits are inadmissible
because neither attested that he had knowledge, skill, or experience in
evaluating contract work performed by others. Moreover, they did not explain
how they arrived at the conclusion that AHM’s work added no value to
Massey’s property.
[23] Initially, we note that AHM did not move to strike or otherwise object to the
affidavits. To avoid waiver, a party in summary judgment proceedings who
believes that the opposing party has filed a problematic affidavit has a duty to
direct the trial court’s attention to the allegedly defective affidavit. E.g., Avco
Fin. Servs. of Indianapolis, Inc. v. Metro Holding Co., 563 N.E.2d 1323, 1327 (Ind.
Ct. App. 1990). “An affidavit which does not satisfy the requirements of T.R.
56(E) is subject to a motion to strike, and formal defects are waived in the
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absence of a motion to strike or other objection.” Id. AHM notes that in its
response to Massey’s summary judgment motion, it argued that the affidavits
were insufficient to support the motion. It maintains that this argument is
sufficient to preserve the issue on appeal. We disagree. Making an argument in
a brief about the general sufficiency of evidence on summary judgment is not
the same thing as moving to strike the affidavit or otherwise raising a specific
objection about a defective affidavit. As AHM did not move to strike these
affidavits, it has waived the argument on appeal.
[24] Waiver notwithstanding, we note that Trial Rule 56(E) requires that an affidavit
“shall be made on personal knowledge, shall set forth such facts as would be
admissible in evidence, and shall show affirmatively that the affiant is
competent to testify to the matters stated therein.” Here, the affidavits establish
that Allen and Palmer based their opinions on personal knowledge and that
they are competent to testify. AHM insists, however, that the affidavits are
inadmissible because they do not lay a foundation for the two men to be found
to be expert witnesses. AHM is correct regarding their qualifications as experts,
but it does not matter.
[25] Evidence Rule 701 allows for the admission of opinion testimony by lay
witnesses. The opinion must be rationally based on the witness’s perception
and helpful to a clear understanding of the witness’s testimony or to a
determination of a fact in issue. Ind. Evidence Rule 701. The requirement that
the opinion be “rationally based” on perception “simply means that the opinion
must be one that a reasonable person could normally form from the perceived
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facts.” Davis v. State, 791 N.E.2d 266, 268 (Ind. Ct. App. 2003). We find that
Allen and Palmer would have qualified as “skilled” lay witnesses, meaning “a
person with a degree of knowledge short of that sufficient to be declared an
expert under [Ind. Evid.] Rule 702, but somewhat beyond that possessed by the
ordinary jurors.” O’Neal v. State, 716 N.E.2d 82, 89 (Ind. Ct. App. 1999)
(internal quotation marks omitted); see also Satterfield v. State, 33 N.E.3d 344,
353 (Ind. 2015) (noting that “skilled witness testimony is helpful because it
involves conclusions that escape the average observer”).
[26] These affidavits show that Allen and Palmer inspected Massey’s property after
AHM had begun, and prematurely ended, its work. The affidavits also show
that both men own businesses in the construction industry. Both men, having
inspected the property, concluded that the following defects existed in AHM’s
work:
• nails sticking through the underlayment;
• the underlayment was not covering the roof completely;
• cuts had been made to the underlayment;
• ice and water shields were improperly installed;
• ice and water shields had been cut, torn, and wrinkled;
• no drip edge on eaves;
• nails blown through shingles;
• nails driven at an angle through shingles;
• improperly flashed dormer walls;
• double layer of shingles;
• improperly nailed flashings;
• improper use of old flashing that had holes;
• shingles were cut;
• decking was blown apart by air gun;
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• shingles hanging over too far on eaves;
• shingles nailed in wrong location;
• siding damage on north side of house;
• drive way dammed; and
• failure to follow installation instructions of all roofing materials.
Appellant’s App. Vol. II p. 60-61, 63-64. The men noted that the code
violations found by the city inspector were consistent with their observations of
the property. We find that these facts are sufficient to form a rational basis for
the ultimate opinion that AHM’s work did not add value to Massey’s property.
And obviously, their opinions are helpful to a determination of a fact in issue,
namely, whether AHM’s work added any value to Massey’s property.
Therefore, even if AHM had moved to strike these affidavits, the trial court
would have properly denied the motion and the affidavits would have remained
in evidence.
[27] Thus, we are left with Massey’s designated evidence, consisting of his own
affidavit as well as the affidavits of Allen and Palmer, which shows that AHM’s
work did not add any value to his property—and may have even decreased its
value. AHM did not designate any evidence to the contrary. Therefore, there
is no genuine issue of material fact and we can only conclude that the trial court
did not err by granting summary judgment in Massey’s favor on AHM’s
mechanic’s lien claim.
[28] The judgment of the trial court is affirmed.
May, J., and Tavitas, J., concur.
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