Faye E. Warfield and Keyotta Warfield a/k/a Nicole Warfield v. Jim Dorey d/b/a JRD Construction Services and JRD Enterprises, LLC

FILED
May 31 2016, 9:54 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEES
Sandy L. Bryant Fred Pfenninger
Indianapolis, Indiana Pfenninger & Associates
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Faye E. Warfield and Keyotta May 31, 2016
Warfield a/k/a Nicole Warfield, Court of Appeals Case No.
Appellants-Defendants, 49A02-1503-PL-164
Appeal from the Marion Superior
v. Court
The Honorable Robert R. Altice,
Jim Dorey d/b/a JRD Judge
Construction Services and JRD Trial Court Cause No.
Enterprises, LLC, 49D05-1310-PL-37241
Appellees-Plaintiffs.
Riley, Judge.
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STATEMENT OF THE CASE
[1] Appellants-Defendants/Counterclaim Plaintiffs, Faye E. Warfield (Faye) and
Keyotta Warfield A/K/A Nicole Warfield (Keyotta) (collectively, the
Warfields), appeal the trial court’s Judgment in favor of Appellee-
Plaintiff/Counterclaim Defendant, Jim Dorey D/B/A JRD Construction
Services and JRD Enterprises, LLC (Dorey), on Dorey’s breach of contract
claim and unjust enrichment allegation. 1
[2] We reverse and remand.
ISSUE
[3] The Warfields raise six issues on appeal, which we consolidate and restate as
the following single issue: Whether the contract between Faye and Dorey is
void under the Home Improvement Contracts Act (HICA).
FACTS AND PROCEDURAL HISTORY
[4] In 2012, Faye, Faye’s daughter Keyotta, and Keyotta’s husband and daughter
lived together in Faye’s residence, located in Indianapolis, Indiana. When the
house sustained hail damage to the roof, Faye filed a claim against her home
owner’s insurance policy with Liberty Mutual Insurance Company (Liberty
Mutual) to pay for the damage to the roof. Eric Albright (Albright), a Liberty
1
We held oral argument in this case on April 28, 2016, at Wabash College, in Crawfordsville, Indiana. We
thank the College for its hospitality and counsel for their advocacy.
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Mutual adjuster, requested Dorey to contact the Warfields about the roof
damage. Dorey was an independent insurance adjuster and had worked with
insurance companies for many years. Dorey applied for a general contractor’s
license on December 12, 2012, which he received on March 1, 2013. As part of
the licensing application, Dorey provided evidence that he was bonded and
insured. At the time of Albright’s phone call, Dorey was on Liberty Mutual’s
list of preferred contractors. Albright instructed Dorey to contact Faye’s
daughter, Keyotta, because Faye “was older and [Keyotta] was going to
represent her.” (Transcript p. 34).
[5] On December 16, 2012, Dorey met with Keyotta and Keyotta’s husband at
Faye’s residence. Faye was not present. Keyotta texted her mother that Dorey
had arrived but Faye “said she could not get there right now and [Keyotta]
could get the information.” (Tr. p. 176). During the meeting, Keyotta and
Dorey discussed the work to be performed, and they picked out the colors for
the shingles and the gutters. Dorey presented Keyotta with the roofing contract
(Contract) from JRD Construction Services, 2 owned by Dorey. The Contract
identified Faye as the customer, specified the roofing work to be done and
2
Dorey started JRD Enterprise, LLC, a remodeling business, in February of 2006 and the business expanded
to roofing work in 2013. JRD Enterprise is an “S-Corporation and that’s filed with the Secretary of State.”
(Tr. p. 29). JRD Construction Services is the name used “to show people that we do – we don’t just do one
thing, we do a combination of different things.” (Tr. p. 29). As such, “JRD Construction Services and JRD
Roofing are not separate legal entities,” rather, the “wording [is] used for advertising purposes.” (Tr. p. 29).
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materials to be used, the price for the work, and was signed by Keyotta and
Dorey. Keyotta provided Faye with a copy of the Contract later that day.
[6] Keyotta also mentioned that the fireplace was in bad condition and inquired
about rebuilding it. Dorey informed her that he could do the work but that
rebuilding the fireplace would have to be completed prior to the roof work as
otherwise the new shingles could be damaged. He explained that while Liberty
Mutual would pay for the roofing work, the work on the fireplace would not be
covered by the insurance company and would have to be paid for separately.
Keyotta verbally agreed to pay the price for the fireplace rebuild. Subsequent to
the meeting, Dorey dropped off brick samples for the work on the fireplace and
Keyotta picked out a color. Dorey added the fireplace rebuild to the Contract,
but did not ask Keyotta to initial or sign the Contract modification. Keyotta
later confirmed that Faye was “fine” with the chosen colors for the shingles and
gutters. (Tr. p. 182).
[7] Because of bad weather, Dorey did not commence the roofing work until July
of 2013. He did not obtain a permit for the work, but did provide a notification
to be posted on the Warfields’ front door. While tearing off the old shingles,
Dorey discovered that the decking on the roof was in bad shape and needed to
be replaced. After contacting Liberty Mutual, the insurance company
authorized the replacement of the decking. Again, Dorey added the additional
work to the Contract but did not ask Keyotta to initial or sign the addition.
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[8] At the end of a job, Dorey typically meets with the customer to finalize the
contract and to endorse any checks from the insurance company, if needed.
Despite Dorey’s attempts to schedule a meeting, the Warfields did not meet
with him, nor did they notify him about any defective work that needed to be
cured. Although Liberty Mutual paid for the work with checks made out to
Faye, Faye never endorsed the checks nor did the Warfields pay for any of the
work to the roof or fireplace.
[9] On October 4, 2013, Dorey filed his Complaint, asserting breach of contract
and unjust enrichment. The Warfields filed a pro se Answer. On December 31,
2013, Dorey filed a motion for summary judgment, designation of evidence,
and memorandum in support of his motion. On March 13, 2014, the trial court
conducted a hearing on Dorey’s motion for summary judgment and
subsequently granted the motion the following day. On April 10, 2014, the
Warfields filed a notice of appeal with the Indiana court of appeals. Four days
later, the Warfields, represented by counsel, filed a motion to correct error,
contending that Dorey had failed to provide the trial court with a contract
signed by Nicole Warfield or Faye Warfield. On May 28, 2014, during the
hearing on the Warfields’ motion to correct error, it was established that Faye’s
daughter is legally known as Keyotta Nicole Warfield. The trial court denied
the motion to correct error.
[10] Nonetheless, on July 23, 2014, the trial court vacated the summary judgment
and granted Dorey ten days to amend his Complaint. Dorey timely filed an
Amended Complaint and the Warfields subsequently dismissed their appeal.
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On October 20, 2014, the Warfields filed their Answer and Counterclaims,
alleging various violations of Indiana’s HICA and asserting that Dorey’s
lawsuit was frivolous. On January 29, 2015, the trial court conducted a bench
trial and entered judgment in favor of Dorey on February 19, 2015, concluding
in pertinent part:
The [c]ourt finds for [Dorey] on his [b]reach of [c]ontract claim.
The [c]ourt finds that [Keyotta] was acting as an agent on behalf
of [Faye]. . . .
It is clear from the testimony that the parties[’] intent was to
increase the scope of the contract by replacing the decking and
rebuilding the fireplace. The contract does not contain a
provision requiring modifications to be in writing and signed by
the parties. These two (2) modifications amended the parties[’]
contract by increasing the scope of work and the cost associated
with the contract. . . .
While the [c]ourt is aware that there are some deficiencies in the
signed contract in this case; that written notice of the right to
cancel was not provided (although there are some cancellation
provisions in the [C]ontract); and that [Dorey] may not have
obtained the proper permits (although he did post a
“notification” on the Warfields’ door); [the Warfields] certainly
received the benefits of [Dorey’s] services. They received a new
roof with new decking and a rebuilt fireplace. [The Warfields]
never made any complaints regarding the condition of the work.
In fact, both of the Warfields testified that they still have no
complaints about the workmanship. To void the contract would
be unequitable at this point in time. [The Warfields] have not
been damaged by any failures of [Dorey] to comply with any of
the provisions of the [HICA].
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(Appellants’ App. pp. 65-67).
[11] The Warfields now appeal. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
[12] In entering its judgment in favor of Dorey, the trial court issued findings of fact
and conclusions of law. When the trial court issues findings of fact and
conclusions thereon, we employ a two-tiered standard of review. Cyr v. J. Yoder,
Inc., 762 N.E.2d 148, 149-50 (Ind. Ct. App. 2002). We first determine whether
the evidence supports the findings and then we determine whether the findings
support the judgment. Id. at 150. We will not disturb the trial court’s findings
or judgment unless they are clearly erroneous. Infinity Prods., Inc. v. Quandt, 810
N.E.2d 1028, 1031 (Ind. 2004). We will consider only the evidence favorable to
the findings and judgment and all reasonable inferences drawn therefrom. Id.We will not reweigh the evidence or assess the credibility of the witnesses. Id.
at 1032. Questions of law will be reviewed under a de novo standard. Hayes v.
Chapman, 894 N.E.2d 1047, 1052 (Ind. Ct. App. 2008).
II. Analysis
1. Home Improvement Contracts Act
[13] In essence, the Warfields contend that the Contract with Dorey is void as it
failed to comply with several requirements of the HICA. They maintain that
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the Contract failed to include a start and end date for the work; Faye, as
consumer, did not sign the Contract; and Dorey’s business address is not
included. In addition to these missing requirements, the Warfields also contend
that Dorey did not have a contractor’s license, did not pull the required permits,
and unilaterally altered the Contract by annotating it with the work on the
fireplace and the decking on the roof. Dorey does not dispute that the Contract
failed to strictly comply with the HICA.
[14] Initially, we note that, when interpreting statutes, “[c]ourts must consider the
goals of the statute and the reasons and policy underlying the statute’s
enactment.” Bowyer v. Ind. Dep’t. of Natural Res., 944 N.E.2d 972, 988 (Ind. Ct.
App. 2011), reh’g denied. Additionally, we must consider the effects of our
interpretation. Kitchell v. Franklin, 997 N.E.2d 1020, 1026 (Ind. 2013). We
have previously observed that the purpose of HICA
is to protect consumers by placing specific minimum
requirements on the contracts of home improvement contracts . .
. [because] few consumers are knowledgeable about the home
improvement industry or of the techniques that must be
employed to produce a sound structure. The consumer’s reliance
on the contractor coupled with well-known abuses found in the
home improvement industry, served as an impetus for the
passage of [HICA], and contractors are therefore held to a strict
standard.
Hayes v. Chapman, 894 N.E.2d 1047, 1052 (Ind. Ct. App. 2008) (quoting Benge v.
Miller, 855 N.E.2d 716, 720 (Ind. Ct. App. 2006)), trans. denied. HICA therefore
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requires home improvement suppliers 3 performing any alteration, repair, or
modification to the residential property of a consumer 4 for an amount greater
than $150 to provide the consumer with a written home improvement contract,
containing the nine elements listed in I.C. § 24-5-11-10. See I.C. §§ 24-5-11-1; -
3; -4; -10(a).
[15] Violations of HICA are labeled “deceptive acts” and are actionable by the
attorney general or by the consumer. I.C. § 24-5-11-14. The Act provides
victims of deceptive acts with the same remedies and penalties granted to
victims of deceptive consumer sales under the Indiana Deceptive Consumer
Sales Act (DCSA). I.C. § 24-5-11-14. Specifically, “[a] person relying upon an
uncured or incurable deceptive act may bring an action for the damages actually
suffered as a consumer as a result of the deceptive act or five hundred dollars
($500), whichever is greater.” I.C. § 24-5-0.5-4(a). An “uncured deceptive act”
means a deceptive act of which the consumer gave proper notice to the supplier
and either the supplier made no offer to cure within thirty days of the notice or
the act was not cured within a reasonable time. I.C. § 24-5-0.5-2(a)(7). An
“incurable deceptive act” means “a deceptive act done by a supplier as part of a
3
A “home improvement supplier” is a “person who engages in or solicits home improvement contracts[.]”
I.C. § 24-5-11-6. The parties do not dispute that Dorey is a home improvement supplier subject to HICA.
4
A “consumer” for purposes of HICA is an individual who owns, leases, or rents the residential property
that is subject of a home improvement contract. I.C. § 24-5-11-2. The parties do not dispute that Faye is a
consumer under HICA.
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scheme, artifice, or device with intent to defraud or mislead.” I.C. § 24-5-0.5-
2(a)(8).
[16] Thus, to establish entitlement to the remedies under HICA, the consumer must
show that the deceptive act was either uncured—meaning that notice was given
and the deceptive act was not cured—or incurable—meaning that the supplier
acted with an intent to defraud or mislead the consumer. I.C. § 24-5-0.5-4(a).
The Warfields do not contest that they failed to provide notice; nonetheless,
they posit that because Dorey failed to strictly comply with HICA, the trial
court was required to void the Contract.
[17] HICA does not include a provision mandating that contracts violating HICA’s
requirements be declared void. See Imperial Restoration & Remodeling, Inc. v.
Costello, 965 N.E.2d 723, 728 (Ind. Ct. App. 2012) (“[B]ecause we value
freedom of contract so highly,” we will not void a contract for contravening a
statute unless the statute dictates unambiguously that such contravention
renders a contract void.). Rather, HICA creates a cause of action for which
voiding the contract is one possible remedy. Id. at 729; I.C. § 24-5-0.5-4(d)
(“[T]he court may void or limit the application of contracts or clauses resulting
from deceptive acts and order restitution to be paid to aggrieved customers.”)
(emphasis added). We have previously elaborated:
We must [] conclude from . . . the legislature’s failure to use
words like “void” or “voidable” in HICA to describe contracts
made in violation thereof, as well as the inclusion of remedial
provisions to be invoked in the event of a violation, one of which
is voiding the contract, that the General Assembly did not intend
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[] every contract made in violation of HICA to automatically be
void.
Id. Thus, the statute leaves it to the trial court to determine whether voiding the
contract is an appropriate remedy.
[18] In making this decision, the trial court must apply a balancing approach and
examine certain factors to determine if the contract violates public policy. Paul
v. Stone Artisans, Ltd., 20 N.E.3d 883, 888 (Ind. Ct. App. 2014). The court
should consider (1) the nature of the subject matter of the contract, (2) the
strength of the public policy underlying the statute, (3) the likelihood that
refusal to enforce the bargain or term will further that policy, (4) how serious or
deserved the forfeiture suffered by the party attempting to enforce the bargain
would be, and (5) the parties’ relative bargaining power and freedom to
contract. Id.[19] On December 16, 2012, Dorey and Keyotta signed the Contract for roofing
work on Faye’s residence. Our review of the document reveals several
violations with HICA’s requirements. Besides an internet link and a telephone
number, the Contract does not include the “address of the home improvement
supplier.” I.C. § 24-5-11-10(a)(2). It fails to specify the “approximate starting
and completion dates of the home improvements.” I.C. § 24-5-11-10(a)(6). The
Contract also does not provide signature lines “with a legible printed or typed
version of that person’s name placed directly after or below the signature.” I.C.
§ 24-5-11-10(a)(9). In addition to lacking these requirements, the Contract fails
to include the “notice of cancellation.” I.C. § 24-5-11-10(c)(6). While Faye is
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identified as the consumer of the Contract, she never signed the document. I.C.
§ 24-5-11-4. Instead, Faye’s daughter, Keyotta, signed the contract as Faye’s
agent, without identifying herself as such. 5
[20] HICA mandates that “[w]here a license or permit is necessary for any part of a
home improvement, the home improvement contract shall be subject to
obtaining the necessary licenses or permits prior to any work commencing.”
I.C. § 24-5-11-9. Specifically, “[a] supplier commits a deceptive act if the
supplier . . . solicits to engage in a consumer transaction without a permit or
other license[.]” I.C. § 24-5-0.5-10. At trial, Sarah Pastor (Pastor), licensing
supervisor with the department of code enforcement at the City of Indianapolis,
testified that to perform the work, Dorey “must be a listed contractor.”
(Transcript p. 110). The evidence reflects that Dorey filed his application to
become a licensed contractor on December 12, 2012, and received his
contractor’s license on March 1, 2013. Accordingly, even though Dorey was a
licensed contractor at the time the roofing work commenced on July 13, 2013,
he was yet to be approved as a licensed contractor in Marion County at the time
he solicited Faye’s business. Furthermore, while the decking work required a
5
Although not a determinative issue, we find that Keyotta acted as Faye’s agent during the Contract
negotiations and thereafter. Here, all communications to Dorey were made by Keyotta, and not by the
principal, Faye. When a party places an agent in the position of sole negotiator on his or her behalf, it may
be reasonable for the third person to believe that the agent possesses authority to act for the principal. Scott v.
Randle, 697 N.E.2d 66, 67 (Ind. Ct. App. 1998), trans. denied. Keyotta’s sole negotiating position in the
transaction between Faye and Dorey resulted in an indirect manifestation by Faye which could reasonably be
relied upon by Dorey. Even if Keyotta acted as an unauthorized agent, we have also previously held that
“[w]hen a principal, with full knowledge of the facts, appropriates the fruits of an agent’s unauthorized act,
the principal may not complain later that the agent acted without authority.” Blairex Laboratories, Inc. v.
Clobes, 599 N.E.2d 233, 236 (Ind. Ct. App. 1992), trans. denied.
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permit, Dorey admitted to never having applied for one even though the permit
requirement was listed in the “Gold Book” 6 which he received during the
mandatory orientation class he attended prior to becoming licensed. (Tr. p.
104). Instead, Dorey merely provided Faye with a signed notification to be
posted on her front door, stating
I am a Contractor currently listed/licensed to perform the above
mentioned construction activity in the Consolidated City of
Indianapolis. I am submitting this notification indicating all
work listed above will be accomplished in conformity to all
building standards and procedures. I AFFIRM, UNDER
PENALTIES FOR PERJURY, THAT THE FOREGOING
REPRESENTATIONS ARE TRUE.
(Defendant’s Exh. A). At trial, Dorey admitted that this was an untrue
statement.
[21] Because Dorey was yet to be licensed at the time he solicited the roofing work
and failed to apply for the required permit, we conclude that he committed an
incurable deceptive act as he intended to mislead Faye that he was a licensed
contractor providing work in compliance with the statutory requirements and
local ordinances. See I.C. § 24-5-0.5-2(a)(8). While we acknowledge that “the
General Assembly did not intend that every contract made in violation of
HICA to automatically be void;” the violation before us is precisely one of the
6
The Gold Book “is the building standards and procedures of the consolidated City of Indianapolis.” (Tr. p.
104).
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“well-known abuses found in the home improvement industry” which the
HICA intended to protect the consumer against. Imperial Ins. Restoration &
Remodeling, Inc. v. Costello, 965 N.E.2d 723, 729 (Ind. Ct. App. 2013); Benge, 855
N.E.2d at 720. Therefore, we declare the Contract between Dorey and Faye
void. 7, 8
2. Quantum Meruit
[22] It is generally acknowledged that in the absence of an express contract, “a party
may recover under the theory of unjust enrichment, or quantum meruit.”
Troutwine Estates Dev. Co., LLC v. Comsub Design & Eng’g., Inc., 854 N.E.2d 890,
897 (Ind. Ct. App. 2006), trans. denied. To recover in quantum meruit, “the party
must establish that a benefit was rendered to the other party at the express or
implied request of that party, that allowing the other party to retain the benefit
without paying for it would be unjust, and that the party seeking recovery
expected payment for his services.” Mueller v. Karns, 873 N.E.2d 652, 659 (Ind.
Ct. App. 2007), reh’g denied.
[23] The evidence establishes that Dorey installed new decking, a new roof, and
rebuilt the fireplace at Faye’s request and without any complaints. Dorey
expected payment for his work. Accordingly, Dorey is entitled to recover in
7
Even if the Contract would not have been void, the decking and fireplace rebuild are not enforceable against
Faye, as these modifications to the original Contract were not signed by the consumer. I.C. § 24-5-11-10(d).
8
Because we declare the Contract void, Dorey is also no longer entitled to attorney fees.
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quantum meruit as the home improvement work is a valuable benefit Faye would
retain unjustly in the absence of making payment.
[24] In general, the measure of quantum meruit recovery is the “fair market value of
services rendered,” or the “reasonable value” thereof. In Re Estate of Carroll, 436
N.E.2d 864, 866 (Ind. Ct. App. 1982); Mueller, 873 N.E.2d at 659. We find the
fair market value of the work performed by Dorey to be the amounts charged by
the voided Contract and undisputed by Faye, i.e., $8,548.68 for the roof,
$3,677.10 for the decking, and $1,700.00 for the fireplace rebuild.
[25] Furthermore, an award of prejudgment interest may be proper when the
underlying judgment rests on a theory of quantum meruit rather than the terms
of a contract. Troutwine, 854 N.E.2d at 904. Such an award is warranted if the
amount of the claim, like here, rests upon a simple calculation to be made,
namely the addition of the amounts invoiced by Dorey. See id. Accordingly,
we remand to the trial court with instructions to calculate the amount of
prejudgment interest at eight percent per annum.
CONCLUSION
[26] Based on the foregoing, we conclude that the trial court abused its discretion
affirming the Contract between Faye and Dorey. Declaring the Contract void
under HICA, we hold that Dorey can recover the invoiced amounts under the
theory of quantum meruit and we remand to the trial court to calculate the
prejudgment interest at eight percent per annum.
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[27] Reversed and remanded.
[28] Kirsch, J. and Robb, J. concur
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