Carpenter Realtors and Susan Hodges v. John Watkin and Susan Watkin (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Jan 31 2018, 8:47 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEES
James N. Scahill Thomas W. Vander Luitgaren
Indianapolis, Indiana Emily M. Gettum
Van Valer Law Firm, LLP
Greenwood, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Carpenter Realtors and Susan January 31, 2018
Hodges, Court of Appeals Case No.
Appellants-Defendants, 41A05-1706-PL-1286
Appeal from the Johnson Superior
v. Court
The Honorable Kevin M. Barton,
John Watkin and Susan Watkin, Judge
Appellees-Plaintiffs Trial Court Cause No.
41D01-1308-PL-103
Vaidik, Chief Judge.
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Case Summary
[1] Carpenter Realtors (“Carpenter”) and its agent, Susan Hodges, appeal the trial
court’s judgment holding Carpenter liable to John and Susan Watkin for breach
of contract. Finding no error, we affirm.
Facts and Procedural History
[2] In April 2012, Carpenter, through Hodges, agreed to represent the Watkins in
their search for a new home. Hodges had the Watkins sign Carpenter’s Agency
Policy for Buyers. Among other things, the policy required Carpenter to
“advise” the Watkins during closing. Appellants’ App. Vol. II p. 14. The
Watkins eventually reached an agreement to buy a house in Indianapolis from
Roger and Judy French. Hodges prepared a purchase agreement that provided,
in part, that “prior to closing” the Watkins would receive a “SURVEYOR
LOCATION REPORT” that is “reasonably satisfactory” to them. Id. at 16.
[3] The Frenches ordered title insurance through Royal Title, which in turn
ordered a surveyor location report. The surveyor did not prepare the report
until the day of closing, and the Watkins did not receive a copy until they
arrived at closing. The report showed an encroachment onto the vacant lot to
the north. When the Watkins noted their concern during closing, the closing
agent for Royal Title told them that the report was only approximate, and
Roger French said that it was not accurate. Hodges did not look at the report
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or offer any response to any of the comments being made about it, and the
closing proceeded.
[4] Several months after closing, the lot to the north was sold, and it was
determined that there was, in fact, an encroachment. The Watkins eventually
spent more than $25,000 remedying the situation.
[5] In August 2013, the Watkins filed two lawsuits: one against Carpenter and
Hodges in Johnson County (this case), and one against the Frenches in Marion
County. In 2014, the Watkins settled their claims against the Frenches and
dismissed the Marion County suit (the terms of the settlement were not entered
into evidence and are not included in the record on appeal). The Watkins then
filed a motion for summary judgment in the Johnson County case. The trial
court granted the motion in part, treating the Watkins’ claim against Carpenter
and Hodges as one for negligence. In its order, the trial court ruled that (1) the
defendants and the Watkins themselves had acted negligently with regard to the
encroachment and (2) allocation of fault (including any fault of non-parties,
such as the Frenches and Royal Title) and damages would be determined later.
[6] At a bench trial held in July 2016, the Watkins presented their claim as one for
breach of contract rather than negligence, without objection from Carpenter
and Hodges. See Ind. Trial Rule 15(B) (allowing issues to be “tried by express
or implied consent of the parties”). The trial court agreed that the Watkins’
claim must be treated as such under the Indiana Supreme Court’s decision in
Greg Allen Construction Co. v. Allen, 798 N.E.2d 171 (Ind. 2003), reh’g denied. The
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court concluded that “[t]he failure of [Carpenter] to render advice” regarding
the surveyor location report “is a breach of the contract existing between
[Carpenter] and [the Watkins],” Appellants’ App. Vol. II p. 37, and it ordered
Carpenter to pay $33,314.33 in damages and interest.
[7] Carpenter and Hodges now appeal.
Discussion and Decision
[8] Carpenter and Hodges contend that the trial court should have treated the
Watkins’ claim as one for negligence instead of breach of contract and awarded
damages accordingly. Carpenter seeks this result because negligence claims,
unlike breach-of-contract claims, are subject to allocation of fault pursuant to
the Indiana Comparative Fault Act, Ind. Code ch. 34-51-2, and if fault were
allocated to the Watkins, the Frenches, and/or the title company, the damages
award against Carpenter could be reduced. The relevant facts are undisputed,
so the issue of whether the trial court properly treated the Watkins’ claim as one
for breach of contract is a pure question of law that we review de novo.
Lumbard v. Farmers State Bank, 812 N.E.2d 196, 200 (Ind. Ct. App. 2004).
[9] Carpenter relies on our decision in INS Investigations Bureau, Inc. v. Lee, where
we vacated a $2.3 million verdict for breach of contract because the plaintiff’s
claim “more closely resemble[d] a claim for negligence.” 784 N.E.2d 566, 578
(Ind. Ct. App. 2003), trans. denied. But the plaintiff in that case had also won a
$2.5 million verdict for negligence against the same defendant based on “the
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same facts and the same damages,” id. at 576, and we had to vacate one of the
verdicts in order to avoid an obvious double recovery against that defendant. In
this case, however, there is no double-recovery issue relating to Carpenter—the
Watkins were awarded damages for breach of contract but not for negligence.
[10] In any event, the trial court correctly concluded that our Supreme Court’s
decision in Greg Allen Construction Co. required that the Watkins’ claim against
Carpenter be treated as one for breach of contract. In that case, homeowners
contracted with a construction company to renovate their home. The
homeowners alleged that the defendants had performed substandard work, and
they brought claims for both breach of contract and negligence. The Court first
noted that the “claimed wrong” was the construction company’s “failure to
satisfy its part of the agreement—a quintessential contract claim.” Greg Allen
Constr. Co., 798 N.E.2d at 172. The Court then explained that the negligence
claim was based solely on the construction company’s actions in carrying out its
obligations under the contract and that nothing the construction company did
“constituted an independent tort if there were no contract.” Id. at 173. As
such, the homeowners “should be remitted to their contract claim,” and they
“should not be permitted to expand that breach of contract into a tort claim . . .
by claiming negligence as the basis of the breach.” Id. This is so because,
“[w]hen the parties have, by contract, arranged their respective risks of loss . . .
the tort law should not interfere.” Id. at 175. The rule ultimately adopted by
the Court is that a party to a contract “may be liable in tort to the other party
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for damages from negligence that would be actionable if there were no contract,
but not otherwise.” Id.
[11] Here, the Watkins’ complaint against Carpenter focused on Carpenter’s failure
to advise them at closing. See Appellants’ App. Vol. II p. 71 (alleging that
Hodges “failed to indicate the survey presented any problems and did nothing
to caution the [Watkins] against proceeding with the closing”). Carpenter’s
duty to advise the Watkins during closing existed solely by virtue of the contract
between the parties. Therefore, under Greg Allen Construction Co., the Watkins
were “remitted to their contract claim” and were not “permitted to expand that
breach of contract into a tort claim . . . by claiming negligence as the basis of
the breach.” 798 N.E.2d at 173. Carpenter does not attempt to distinguish this
case from Greg Allen Construction Co. In fact, despite the trial court’s and the
Watkins’ reliance on it, Carpenter makes no mention of the decision in either
its opening brief or its reply brief.
[12] Alternatively, Carpenter contends that treating the Watkins’ claim as one for
breach of contract resulted in a “double recovery” because no fault could be
allocated to the Frenches, with whom the Watkins had already settled in the
Marion County case. Appellant’s Br. p. 18; see also Wiese-GMC, Inc. v. Wells,
626 N.E.2d 595, 597 (Ind. Ct. App. 1993) (“While an aggrieved party must be
compensated, he should not be placed in any better position.”), reh’g denied,
trans. denied. It may very well be true that the damages the Watkins are paid by
Carpenter will overlap, at least to some extent, with the damages they were paid
by the Frenches, but there is no evidence to support such a finding. Carpenter
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did not present any evidence regarding the French settlement beyond the fact
that there was a settlement. As such, the trial court did not know the amount of
the settlement, let alone the legal basis for that amount, so there was simply no
way for it to say whether the Watkins won a “double recovery” in this respect.
[13] Affirmed.
Mathias, J., and Crone, J., concur.
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