Steve Mitchell v. Dan R. Walker

Pursuant to Ind.Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before
any court except for the purpose of
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT: Nov 10 2014, 9:34 am
DAVID W. STONE IV
Stone Law Office & Legal Research
Anderson, Indiana
IN THE
COURT OF APPEALS OF INDIANA
STEVE MITCHELL, )
)
Appellant-Plaintiff, )
)
vs. ) No. 27A05-1405-CC-202
)
DAN R. WALKER, )
)
Appellee-Defendant. )
APPEAL FROM THE GRANT SUPERIOR COURT
The Honorable Jeffrey D. Todd, Judge
Cause No. 27D01-1302-CC-169
November 10, 2014
MEMORANDUM DECISION - NOT FOR PUBLICATION
NAJAM, Judge
STATEMENT OF THE CASE
Steve Mitchell appeals the trial court’s judgment in favor of Dan R. Walker
following a bench trial. Mitchell raises a single issue for our review, namely, whether the
trial court’s judgment is clearly erroneous. We affirm.
FACTS AND PROCEDURAL HISTORY
In June of 2010, Mitchell and Walker entered into a written contract for the sale of
certain real property in Gas City.1 According to their agreement, Mitchell purchased the
property for $102,000, which was to be paid with $7,000 down and $1,000 per month
thereafter. Mitchell was also responsible for real property tax payments on the property.
Mitchell had no other obligations under the contract.
The contract provided the following remedy to Walker in the event of Mitchell’s
breach:
If [Mitchell] fails to pay any installment of purchase price or taxes on the
real estate at the time they [sic] become due, and if such failure continues
for a period of thirty (30) days after receipt of written notice from [Walker]
to [Mitchell,] then, in such event, [Walker] may, at his option, cancel and
terminate this agreement and take full possession of the real estate and
remove [Mitchell].
Pl.’s Ex. A at 2.
In the spring of 2012, Walker learned that Mitchell had not paid the taxes due on
the property. On June 4, Walker sent to Mitchell a notice of this breach. However, after
that notice, Mitchell and Walker “had a discussion and reached an agreement” that
Mitchell “would continue to pay and catch up on the taxes . . . .” Tr. at 39.
1
Mitchell’s wife, Barbara, executed the contract, but the trial court found that Mitchell, at all
relevant times thereafter, has acted as Barbara’s agent. For clarity of discussion, we simply refer to
Mitchell.
2
Meanwhile, Mitchell leased the property to Bobby Trexler. Around November 1,
Mitchell informed Walker that Trexler wished to purchase the property. Accordingly,
Mitchell and Walker executed a purchase agreement for Trexler to sign. Pursuant to that
agreement, $65,000 of Trexler’s purchase price “will be for contract pay off to Dan R.
Walker [for the] balance [owed by] Steve Mitchell.” Pl.’s Ex. E at 1. But the attempt to
reach an agreement with Trexler did not come to fruition.
On December 6, Walker sent another notice to Mitchell. Pursuant to that notice,
Walker informed Mitchell that “the property taxes have not been paid on time” and that
“[t]his must be done as per our contract within 30 days.” Def.’s Ex. at 2. On December
8, Mitchell asked Walker to “give him through the weekend to see what he was go[ing] to
do.” Tr. at 45.
On Monday, December 10, Mitchell met with Walker and told Walker that he
“should actually take the property back.” Id. at 46. Mitchell stated that he had “no
income coming in because Trexler had pulled out,” and Mitchell was having health and
legal problems. Id. at 47. Mitchell further explained that “it would be in [Walker’s] best
interest to just go ahead and take the property back” because Mitchell’s legal problems
could result in “liens [being] placed against the property.” Id.
Walker “agreed to take the property back at the condition it was in” and further
agreed to relieve Mitchell of Mitchell’s obligation to pay the fall taxes, which were
overdue. Id. at 49. Mitchell agreed to immediately surrender the property in exchange.
The parties memorialized this agreement with a handwritten document that stated, in
relevant part: “Steve Mitchell will not be responsible for any taxes . . . or payments on
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property . . . from this date 12-10-12, including fall 2012.” Pl.’s Ex. F. The parties
signed this document on December 12, and Walker immediately repossessed the property
and paid the taxes due. Mitchell made no further payments to Walker either towards the
purchase price or for the taxes. At the time, Mitchell had paid to Walker $37,000
towards the $102,000 purchase price.
On January 11, 2013, Walker attempted to enter the property but could not
because Mitchell had changed the locks. Walker had the locks removed and installed his
own new locks. Mitchell then filed a lawsuit against Walker in which Mitchell alleged
that Walker repossessed the property in violation of the parties’ June 2010 agreement.
On December 19, 2013, the trial court held a bench trial on Mitchell’s complaint.
On February 3, 2014, the court entered findings of fact and conclusions thereon for
Walker on Mitchell’s complaint.2 In its order, the court expressly found that “[o]nly
Mitchell and Walker testified at trial, and the testimony of each completely contradicted
the testimony of the other. The Court found Walker to be the more credible witness.”
Appellant’s App. at 8. The court then concluded: “The written agreement dated
December 12, 2012, coupled with extrinsic evidence in the form of Walker’s testimony,
persuasively demonstrated that Mitchell forfeited any interest he had in the subject
property in exchange for being released from his obligation to pay in accordance with the
[June 2010] Contract”; and that “Mitchell’s decision to ‘walk away’ from the Contract
and forfeit any interest he had in the property, while questionable from a business
2
The court found for Mitchell on Walker’s counter-claim, but that is not relevant to this appeal.
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standpoint, was voluntary.” Id. at 9-10. Mitchell filed a motion to correct error, which
the court denied after a hearing. This appeal ensued.
DISCUSSION AND DECISION
Mitchell appeals the trial court’s judgment, which is based on findings of fact and
conclusions thereon pursuant to Indiana Trial Rule 52(A). In such appeals:
we shall not set aside the findings or judgment unless clearly erroneous,
and due regard shall be given to the opportunity of the trial court to judge
the credibility of the witnesses. Factual findings are only clearly erroneous
where there is no support for them in the record, either directly or by
inference; a judgment is only clearly erroneous when it applies an improper
legal standard to proper facts. In either case, we must be left with the firm
conviction that a mistake has been made.
Johnson v. Johnson, 999 N.E.2d 56, 59 (Ind. 2013) (citations and quotations omitted).
When a judgment is entered pursuant to Trial Rule 52(A), “the reviewing court may
affirm the judgment on any legal theory supported by the findings.” Mitchell v. Mitchell,
695 N.E.2d 920, 923 (Ind. 1998).
Further, despite Mitchell’s argument to the contrary he is appealing from a
negative judgment.3 As such, he must
demonstrate that the trial court’s judgment is contrary to law. A judgment
is contrary to law only if the evidence in the record, along with all
reasonable inferences, is without conflict and leads unerringly to a
conclusion opposite that reached by the trial court. In conducting our
review, we cannot reweigh the evidence or judge the credibility of any
witness, and must affirm the trial court’s decision if the record contains any
supporting evidence or inferences.
3
Mitchell asserts that the negative judgment standard does not apply here because “the issue [i]n
this appeal involves the trial court’s interpretation of the December 10th document signed by the parties,
and which Walker raised as an affirmative defense.” Appellant’s Br. at 7. As explained in more detail
below, we disagree. The trial court entered judgment against Mitchell on the grounds that Walker had not
breached the June 2010 contract because Mitchell had forfeited his rights under that contract. To be sure,
however, whether the negative judgment standard applies does not affect our disposition.
5
Infinity Prods., Inc. v. Quandt, 810 N.E.2d 1028, 1032 (Ind. 2004) (quotations omitted).
We also note that Walker has not filed an appellee’s brief.
When the Appellee fails to submit an answer brief we need not undertake
the burden of developing an argument on the Appellee’s behalf. Instead we
will reverse the trial court’s judgment if the appellant’s brief presents a case
of prima facie error. Prima facie error in this context is defined as, at first
sight, on first appearance, or on the face of it.
Front Row Motors, LLC v. Jones, 5 N.E.3d 753, 758 (Ind. 2014) (alteration, citations,
and quotations omitted).
Mitchell’s suit against Walker alleges in relevant part that Walker breached the
June 2010 contract when Walker repossessed the property in December of 2012. The
trial court rejected this argument. In particular, the court concluded that Mitchell
“forfeited any interest he had in the subject property in exchange for being released” from
his obligations under the June 2010 contract. Appellant’s App. at 9. On appeal, Mitchell
first asserts that the trial court erred as a matter of law when it concluded that the
December 2012 document was a freestanding contract that “rescinded” the June 2010
contract, and he maintains that the court erred when it used parole evidence to add
material terms to the December 2012 document, which does not expressly mention
“rescission.”4 Appellant’s Br. at 8-12.
4
Mitchell uses the term “rescission” incorrectly. For Walker to have alleged rescission of the
June 2010 contract, as Mitchell argues Walker did, Walker would have had to return to Mitchell the
payments Mitchell had made to Walker, less any reasonable value Mitchell had obtained from his use of
the property. See e.g., Hart v. Steel Prods., Inc., 666 N.E.2d 1270, 1275 (Ind. Ct. App. 1996), trans.
denied. But Walker never suggested that Mitchell was entitled to the $37,000 Mitchell had paid towards
the property. And the trial court did not find or conclude that a rescission occurred. Rather, again, the
court found that Mitchell had intentionally and voluntarily forfeited his rights under the June 2010
contract. That is not a rescission.
6
Mitchell’s attack on the trial court’s judgment misses the mark. Regardless of
whether the trial court determined that the December 2012 document was a freestanding
and enforceable agreement to “walk away from” the June 2010 contract, the fact remains
that the court found that Mitchell had intentionally and voluntarily “forfeited” his rights
to the property. Id. at 9-10. The trial court’s findings are supported not just by the
December 2012 document but also by Walker’s testimony.5
As we have explained:
Forfeiture provisions in a land sales contract are not per se to be deemed
unenforceable. Morris v. Weigle, 270 Ind. 121, 125, 383 N.E.2d 341, 344
(1978). But, under certain circumstances, they may become unenforceable
because of the equity underlying the contract at issue. Id. “The court, in
the exercise of its equitable powers, does not infringe upon the rights of
citizens to freely contract, but the court does refuse, upon equitable
grounds, to enforce the contract because of the actual circumstances at the
time the court is called upon to enforce it.” Id.More than thirty years ago, our supreme court addressed the equity
of forfeiture as a remedy in land contracts in Skendzel v. Marshall, 261 Ind.
226, 301 N.E.2d 641 (1973). The court initially observed that forfeitures
are generally disfavored by law because a significant injustice results where
the vendee has a substantial interest in the property. 261 Ind. at 233-34,
301 N.E.2d at 645-46. The court determined that a land sales contract is
akin to a mortgage and, therefore, the remedy of foreclosure is more
consonant with notions of fairness and justice:
[J]udicial foreclosure of a land sale contract is in consonance
with the notions of equity developed in American
jurisprudence. A forfeiture—like a strict foreclosure at
common law—is often offensive to our concepts of justice
and inimical to the principles of equity. . . . [A] court of
equity must always approach forfeitures with great caution,
being forever aware of the possibility of inequitable
dispossession of property and exorbitant monetary loss. We
are persuaded that forfeiture may only be appropriate under
5
Insofar as Mitchell argues that his testimony demonstrates that there was no meeting of the
minds between the parties in December of 2012, Mitchell ignores the fact that the trial court expressly
credited Walker’s testimony over his.
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circumstances in which it is found to be consonant with
notions of fairness and justice under the law.
261 Ind. at 240-41, 301 N.E.2d at 650.
Forfeiture may be considered an appropriate remedy only in the
limited circumstances of: (1) an abandoning or absconding vendee or (2)
where the vendee has paid a minimal amount and the vendor’s security
interest in the property has been jeopardized by the acts or omissions of the
vendee.
McLemore v. McLemore, 827 N.E.2d 1135, 1140 (Ind. Ct. App. 2005) (alterations and
omissions original; emphasis added).
“‘[F]or there to be an abandonment of a conditional land sales contract one must
actually and intentionally relinquish possession of the land and act in a manner which is
unequivocally inconsistent with the existence of a contract.” Id. at 1141 (quoting
McLendon v. Safe Realty Corp., 401 N.E.2d 80, 83 (Ind. Ct. App. 1980)) (emphasis and
alteration original to McLemore); see also Morris, 270 Ind. at 123-24, 383 N.E.2d at 343(“If the trial court found that the vendee remained in possession until repossession under
the contract, it would be entirely unreasonable and absurd for the trial court to conclude
that the property had been abandoned by the vendee.”) (quotations and alterations
omitted); U.S. Aircraft Fin., Inc. v. Jankovich, 407 N.E.2d 287, 294 (Ind. Ct. App. 1980)
(company remaining in possession of property and continuing to carry on business did
not abandon contract, despite its breach by committing waste and failing to pay insurance
and taxes).
Here, Walker testified that he sent a notice to Mitchell on December 6, 2012,
which stated that Mitchell had not paid the property taxes on time as required by the June
2010 contract. Mitchell asked Walker to “give him through the weekend to see what he
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was go[ing] to do,” and, the following Monday, Mitchell told Walker that Walker
“should . . . take the property back.” Tr. at 45-46. Mitchell then agreed to immediately
surrender the property to Walker, despite any rights Mitchell may have had to delay that
surrender, and in exchange Walker agreed to “take the property back at the condition it
was in” and to relieve Mitchell of all outstanding payment obligations, including back
taxes due. Tr. at 49. The parties expressed this intent in the December 2012 document
and in their subsequent course of conduct. As agreed, Walker immediately repossessed
the property and paid the taxes due on the property, and Mitchell made no further
payments to Walker under the June 2010 contract. About one month later, Mitchell
attempted to regain possession of the property, which led to this lawsuit.
Again, the question on appeal is not simply whether the December 2012 document
in itself rescinded or cancelled the June 2010 contract but whether the document, together
with other evidence, demonstrate that Mitchell forfeited his rights to the property in
December 2012. The evidence supports the trial court’s findings that he did so. In
particular, the evidence credited by the trial court demonstrates that Mitchell expressly
relinquished his possession of the land to Walker in December of 2012 and acted in a
manner inconsistent with the June 2010 contract. See McLemore, 827 N.E.2d at 1141.
Finally, we note Mitchell’s additional argument that the trial court’s judgment
erroneously deprives him of his equity in the property. This is neither here nor there in
light of the court’s findings that Mitchell intentionally relinquished his rights to the
property. Again: “Forfeiture may be considered an appropriate remedy only in the
limited circumstances of: (1) an abandoning or absconding vendee or (2) where the
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vendee has paid a minimal amount and the vendor’s security interest in the property has
been jeopardized by the acts or omissions of the vendee.” Id. at 1140. As the trial court
found against Mitchell on the first prong of this test, whether Mitchell would have
satisfied the alternative, second prong is irrelevant.
In sum, the evidence supports the trial court’s findings that Mitchell intentionally
relinquished his rights to the property in December of 2012, and the court’s findings
support its judgment. Thus, we cannot say that the trial court’s judgment for Walker on
Mitchell’s complaint is clearly erroneous.
Affirmed.
BAILEY, J., and PYLE, J., concur.
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