Lake County Trust Company, Trust 4210, Trust 5061, and Alex Emmanoilidis v. Aox, Inc., and Brian Piunti

Jul 19 2013, 6:29 am
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.
ATTORNEYS FOR APPELLANTS: ATTORNEY FOR APPELLEES:
EDWARD P. GRIMMER WILLIAM H. TOBIN
DANIEL A. GOHDES South Holland, Illinois
Edward P. Grimmer, P.C.
Crown Point, Indiana
IN THE
COURT OF APPEALS OF INDIANA
LAKE COUNTY TRUST COMPANY, )
TRUST 4210, TRUST 5061, and )
ALEX EMMANOILIDIS, )
)
Appellants-Defendants, )
)
vs. ) No. 45A03-1207-PL-309
)
AOX, INC., and BRIAN PIUNTI, )
)
Appellees-Plaintiffs. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable John R. Pera, Judge
Cause No. 45D10-0808-PL-120
July 19, 2013
MEMORANDUM DECISION - NOT FOR PUBLICATION
SHEPARD, Senior Judge
A tenant moved its business into a commercial space, but quickly discovered the
property was not constructed as promised by the landlord. The landlord ignored the
tenant’s complaints and instead sued the tenant for various reasons. After years of
disputes, the tenant won a jury verdict against the landlord for breach of lease and
malicious prosecution. We affirm.
FACTS AND PROCEDURAL HISTORY
In August 1998, AOX, Inc., entered into a ten-year lease with Trust Number 4210
(“the Trust”) for property in Portage, Indiana, so that AOX could open a preventative
automotive maintenance center. Under the lease, the Trust was to complete construction
on the property and obtain an occupancy permit by the beginning of the lease term. The
lease was signed by Alex Emmanoilidis, as beneficiary of the Trust; Lake County Trust
Company, as trustee of the Trust (“the Trustee”); and Brian Piunti, as president of AOX.1
The lease term was supposed to start in November 1998, but AOX was unable to
take possession of the property because the building was not certified for occupancy until
January 15, 1999. This delay resulted in the lease term beginning February 1, 1999. See
Plaintiff’s Ex. 1, p. 2 (para. 4.1). However, on January 8, 1999, the Trust threatened to
evict AOX for failure to pay the first rental installment, see Plaintiff’s Ex. 14, even
though it was not yet due. Ten days later, Emmanoilidis directed the Trustee to convey
the leased property from Trust Number 4210 to Trust Number 5061, with no notice to
1
The signature of the Trustee’s representative does not appear on the lease provided in the record. The
location for her signature says, “See Attached Signature Page,” but no additional signature page is
attached. Plaintiff’s Ex. 1, p. 14. Nonetheless, the representative testified at trial that she signed a
separate signature page that was inadvertently not copied. Tr. pp. 426-27.
2
Piunti.2 About two months after that, the Trust demanded payment for utility bills and
for repairs made to damaged water pipes, again under the threat of eviction, see
Plaintiff’s Ex. 20, even though those expenses occurred prior to AOX’s occupancy.
Piunti noticed numerous defects in the property and deviations from the plans and
specifications as provided in the lease. He informed Emmanoilidis of these issues as
early as January 28, 1999, and onward through 2008. See Plaintiff’s Exs. 16, 18, 22, 23,
25, 27, 46, 55. Emmanoilidis did not correct any of these defects and even stated at one
point that he was “not going to fix shit.” Plaintiff’s Ex. 36; see also Tr. p. 191. Instead,
he subjected Piunti and AOX to several lawsuits over the years, for example:
In March 1999, Emmanoilidis and his wife alleged Piunti had stolen windows,
doors, and other building materials stored on the leased property and requested over
$25,000 in damages. More than ten years later, the trial court dismissed the case on
Piunti’s motion, noting that Emmanoilidis failed to respond to discovery requests and had
not taken any action since filing the complaint.
In May 2000, Emmanoilidis directed the Trust to seek eviction, damages, and
attorney’s fees from Piunti and AOX for allegedly defaulting on the lease. Along with
the complaint, Emmanoilidis’s son Arte Emmanoilidis filed an affidavit stating that
Piunti and AOX had failed to pay real estate taxes and rent. The parties later stipulated
that AOX was current in rent payments. In October 2001, the trial court found that the
real estate taxes the Trust demanded included taxes on land that was not part of the leased
2
It appears that Emmanoilidis continued to hold out Trust Number 4210 as the owner of the leased
property. Piunti testified that it was not until he instituted this lawsuit, around a decade after the
conveyance, that he learned Trust Number 4210 was no longer the owner.
3
property and thus declined to evict AOX. The parties could not agree on the amount of
taxes due, so the case proceeded to a bench trial. In December 2002, the court found
AOX owed precisely the amount Piunti had calculated and offered to pay before trial. It
thus withheld judgment to give AOX time to pay. AOX paid the same day, and the court
never entered a final judgment.
In October 2004, Emmanoilidis again directed the Trust to sue Piunti and AOX.
This time, the Trust accused AOX and its employees of criminal mischief for allegedly
spraying soap and water on the parking lot while the asphalt was being sealed and sought
damages and attorney’s fees of $6000. The case went to trial in December 2007, and
after no more than an hour of deliberations, the jury returned a verdict for Piunti and
AOX.
In the beginning of 2008, nearing the end of the ten-year lease term, Piunti asked
Emmanoilidis whether he would extend the lease to a new owner if Piunti decided to sell
his business. Emmanoilidis said no. Piunti notified Emmanoilidis in February 2008 that
AOX was exercising its option to extend the lease for another five years.
In August 2008, Piunti and AOX sued the Trust, the Trustee, Emmanoilidis, and
his son Arte, alleging: (1) the Trust had breached the lease and continued to do so despite
AOX’s repeated notices, and (2) the defendants abused the judicial process by
maliciously filing groundless suits to harass Piunti and AOX into terminating the lease.
Trust Number 5061 was later added by amendment. The defendants answered, asserted
the statute of limitation, and counterclaimed for damages and termination of the lease for
4
AOX’s alleged breaches. The defendants later moved for partial summary judgment,
which the court denied after a hearing.
The case was tried to a jury in June 2012. After the presentation of evidence, each
party moved for judgment on the evidence. The court denied the defendants’ motion
except to the extent it dismissed Arte as a defendant and prohibited the real estate tax
litigation from forming the basis of a malicious prosecution finding. The court granted
the plaintiffs’ motion, thereby directing out the defendants’ counterclaim. The jury
returned a verdict against the remaining defendants for breach of lease, assessing
$179,322 in damages, and against Emmanoilidis for malicious prosecution and/or abuse
of process, with $5950 in damages. The court entered judgment accordingly.
ISSUES
Emmanoilidis, the two trusts, and the Trustee (“the Landlord”) raise several issues
on appeal:
I. Whether Piunti and AOX (“the Tenant”) are barred from claiming breach of
lease.
II. Whether the trial court erred by denying the Landlord’s motion for
judgment on the evidence.
III. Whether the court wrongly granted the Tenant’s motion for judgment on
the evidence on the Landlord’s counterclaim.
DISCUSSION AND DECISION
I. IS TENANT’S BREACH OF LEASE CLAIM BARRED?
The Landlord contends the Tenant’s claim for breach is barred by: (1) the
applicable statute of limitation; (2) the limitation period provided in the lease; (3) the
5
Tenant’s extension of the lease; and (4) the Tenant’s failure to raise it as a compulsory
counterclaim in previous suits.
A. Statute of Limitation
“Statutes of limitation seek to provide security against stale claims, which in turn
promotes judicial efficiency and advances the peace and welfare of society.” Cooper
Indus., LLC v. City of South Bend, 899 N.E.2d 1274, 1279 (Ind. 2009). When two
statutes of limitation may apply, any doubt should be resolved by applying the longer
statute. Shaum v. McClure, 902 N.E.2d 853, 855 (Ind. Ct. App. 2009), trans. denied.
The Landlord argues the Tenant’s claim is barred by the six-year limitation period
for “[a]ctions for use, rents, and profits of real property” provided by Indiana Code
section 34-11-2-7(2) (1998). The Tenant responds that its action was timely under the
ten-year limitation for “contracts in writing” provided by Indiana Code section 34-11-2-
11 (2000).
The Landlord compares this case to Hellyer Communications, Inc. v. WRC
Properties, Inc., 888 F. Supp. 94 (S.D. Ind. 1995), in which the six-year period applied,
but that case involved an action to recover overpayments of rent and was thus an “action
for rent.” The Landlord says the Tenant’s claim is essentially for “deni[al of] use” when
improvements were not constructed according to the lease and that the denial resulted in
“excessive rent” and “loss of profits.” Appellants’ Br. p. 9.
The Landlord tries too hard to reformulate the Tenant’s claim. The Tenant did not
sue for use (indeed, it operated a business there for nearly ten years), nor did it seek to
recover rent or profits from the property.
6
Instead, the Tenant’s breach of lease claim sought to recover damages sustained as
a result of the Landlord’s failure to perform according to the written contract—that is, its
failure to deliver the property according to the plans and specifications of the lease. We
therefore conclude the claim is governed by the ten-year limitation period for contracts in
writing and that the complaint was filed within that time.
B. Limitation Period Provided in Lease
The Landlord next argues that the lease itself provides a one-year limitation period
for filing suit. It refers to paragraph 32.11, but that provision merely imposes upon the
Landlord a duty to repair or replace any defective workmanship or material discovered
within a year of completion:
Lessor guarantees all work performed in its construction of said store unit
and parking lot areas against defective workmanship and materials for a
period of one (1) years [sic] from the date of completion of such store unit
and parking lot areas and shall accordingly at its own expense repair or
replace any such defective workmanship and material evidenced with [sic]
such one (1) year period.
Plaintiff’s Ex. 1, p. 13. It provides no limitation period for filing suit for breach of
obligations under the lease.
C. Extension of Lease
The Landlord also claims the Tenant accepted the condition of the property by
extending the lease and thus waived its breach of lease claim. While the Landlord’s one-
paragraph argument without citations or analysis arguably waives the point, it is plain
enough the Tenant notified the Landlord of numerous defects in the property and
deviations from the lease a few days before the lease term even began and repeated its
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complaints up until this litigation began. The Tenant’s decision to extend the lease can
hardly be considered an acceptance of the defects where it had been demanding
performance throughout the term.
D. Compulsory Counterclaim
The Landlord further argues the breach of lease claim is barred for failure to raise
it as a compulsory counterclaim in the earlier suits over taxes and the parking lot.
A compulsory counterclaim is one that “arises out of the transaction or occurrence
that is the subject-matter of the opposing party’s claim and does not require for its
adjudication the presence of third parties of whom the court cannot acquire jurisdiction.”
Ind. Trial Rule 13(A). Two causes of action arise from the same transaction or
occurrence when there is a logical relationship between them, that is, when the
counterclaim arises from the same aggregate set of operative facts as the opposing party’s
claim. Hilliard v. Jacobs, 927 N.E.2d 393, 401 (Ind. Ct. App. 2010), trans. denied.
The Landlord appears to claim that since all these disputes involve their landlord-
tenant relationship, then they must arise out of the same set of operative facts. Other than
the bare fact of the contract between the parties, though, the disputes have nothing in
common. Each arose out of different events and required different facts to prove or
disprove. The Tenant’s breach of lease claim was not a compulsory counterclaim to the
earlier suits. See Reddick v. Carfield, 656 N.E.2d 518, 522-23 (Ind. Ct. App. 1995)
(tenant’s suit seeking pro rata share of farm program payments for 1986 and 1987 crop
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years was not a compulsory counterclaim to landlord’s earlier action testing whether
parties had valid agreement for 1988 crop year), trans. denied.3
II. LANDLORD’S MOTION FOR JUDGMENT ON THE EVIDENCE
The Landlord next contends it was entitled to judgment on the evidence on
grounds that: (1) the lease provided no plans and specifications from which the Tenant
could sue for breach; (2) Emmanoilidis could not be held personally liable under the
lease; and (3) there was no evidence that Emmanoilidis acted with malice or that he
lacked probable cause to file the earlier suits.4
A motion for judgment on the evidence should be granted only when there is a
complete failure of proof because there is no substantial evidence or reasonable inference
supporting an essential element of the claim. Raess v. Doescher, 883 N.E.2d 790, 793
(Ind. 2008). We review a trial court’s ruling by considering only the evidence and
reasonable inferences most favorable to the nonmoving party. Id.A. Plans and Specifications?
The Landlord argues the Tenant’s breach of lease claim fails because the lease
provided no plans and specifications on which the Tenant could sue.
The lease describes the property “as outlined in red on Site Plan dated 8-18-98,
attached hereto and marked Exhibit ‘A.’” Plaintiff’s Ex. 1, p. 1 (para. 1.1). Although the
3
Moreover, as to the real estate tax litigation, the court never entered a final judgment. See Ratcliff v.
Citizens Bank of W. Ind., 768 N.E.2d 964, 967 (Ind. Ct. App. 2002) (“When a party fails to file a
compulsory counterclaim in the initial action, that claim is forever barred if the initial action has
proceeded to judgment.”), trans. denied.
4
To the extent the Landlord argues the court erred in denying its motion for partial summary judgment, in
admitting evidence, and in its instruction of the jury, those claims are waived for failure to provide a
cogent argument and citations to authority.
9
actual page denoted as Exhibit A says “SITE PLAN” and is otherwise blank, the parties
agree that a document with a red-outlined area showing details such as the location of the
building, ingress and egress routes, and pavement on the leased property is Exhibit A.
The Landlord argues Exhibit A merely provides the location of the property and
does not promise anything else shown—like ingress and egress routes—and thus, the
Tenant cannot sue for failure to provide such items. We think whether Exhibit A was
part of the obligations under the contract was for the jury to decide. See Johnson v.
Johnson, 920 N.E.2d 253, 256 (Ind. 2010) (“When a contract’s terms are ambiguous or
uncertain and its interpretation requires extrinsic evidence, its construction is a matter for
the fact-finder.”).
The lease also provided that the Trust would construct certain improvements on
the property for AOX “in accordance with the plans and specifications thereof,”
Plaintiff’s Ex. 1, p. 1 (para. 3.1), and later referred to these plans and specifications as
“the items specifically enumerated in Exhibit ‘B,’” id. (para. 3.3). The actual page
denoted as Exhibit B of the lease says “LIST OF IMPROVEMENTS FOR LESSEE” and
is also otherwise blank. Several pages of oversized blueprints, however, show interior
and exterior plans and specifications for the property.
The Landlord argues that since Exhibit B is blank, no plans and specifications
were promised. The contract itself belies this claim, as another provision in the lease
refers to a retention pond shown on Exhibit B. See id. at 7 (para. 13.2). Further, Piunti
testified that Emmanoilidis provided him with the blueprints when they were negotiating
the lease and that they constituted Exhibit B. Tr. pp. 143-47, 154.
10
In effect, the Landlord says a jury should be barred from finding that this fairly
ordinary set of related documents constituted an enforceable contract. The court did not
err by denying the Landlord’s motion for judgment on the evidence on these grounds.
B. Liability of Emmanoilidis
The Landlord also claims it was entitled to judgment on the evidence to the extent
the Tenant sought to hold Emmanoilidis personally liable. The evidence suggests,
however, that Emmanoilidis took a number of steps that indicated personal involvement
inconsistent with the regular (and protective) boundaries of the trust form. These were
trusts in name only.
For example, the Trustee’s representative was not the only person who signed the
lease as the lessor. Above the representative’s signature, Emmanoilidis signed “as
Beneficiary of Trust No. 4210.” Plaintiff’s Ex. 1, p. 14.
Although the Landlord says Emmanoilidis signed only on behalf of the Trust, the
trust agreement clearly states that “[t]he beneficiaries are not the agents of the trustee for
any purpose and do not have any authority to contract or to execute leases or do any other
act for or in the name of the trustee” and instead “have the right to execute leases and
collect rents in their own name.” Plaintiff’s Ex. 12, p. 2.
Moreover, the trust agreement gives the beneficiaries “the sole possession,
management and control of the selling, renting, repairing, maintaining and handling of
the property” and gives the trustee “no right nor duty in respect to any such matters.” Id.
Indeed, the Trustee’s representative testified that the Trustee did not do anything with the
Trust absent a directive from the beneficiaries. Tr. pp. 423-24.
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Further, after the occupancy permit had been issued but before the lease term
began, Emmanoilidis surreptitiously directed the Trustee to transfer the leased property
from Trust Number 4210 to Trust Number 5061. This evidence raises an inference that
Emmanoilidis was shifting the property to avoid liability. The court did not err by
denying Emmanoilidis’s motion for judgment on the evidence as to personal liability.
C. Malicious Prosecution
To prove malicious prosecution, the Tenant had to show: (1) Emmanoilidis
instituted or caused to be instituted an action against the Tenant; (2) Emmanoilidis acted
with malice in doing so; (3) Emmanoilidis had no probable cause to institute the action;
and (4) the original action was terminated in the Tenant’s favor. See City of New Haven
v. Reichhart, 748 N.E.2d 374, 378 (Ind. 2001).
The Landlord argues there was no evidence of malice or lack of probable cause for
filing the 1999 and 2004 lawsuits. Throughout trial, however, the jury heard evidence
showing Emmanoilidis’s long history of spiteful interactions with Piunti. As to the
specific suits, Emmanoilidis sued Piunti for over $25,000 alleging he stole property but
then ignored discovery requests and let the case hang over Piunti’s head for over a decade
before it was finally dismissed by the court for failure to prosecute. At the trial here,
Emmanoilidis could only say, “I don’t remember at that time why I did it and what was
the reason for it. Okay. I don’t remember, but there had to be a reason.” Tr. p. 913.
Emmanoilidis also sued Piunti and AOX for allegedly spraying the parking lot while it
was being sealed, and although his son Arte testified at trial about the events leading up
to and including the alleged spraying, that evidence was dubious at best. Against this
12
evidence, Piunti testified that it had just rained and the lot was still wet when the
Landlord tried to seal it. Id. at 231.
The Landlord nonetheless claims the court was required to grant its motion for
judgment on the evidence since the Landlord provided some evidence of probable cause.
We do not agree. The jury did not have to, and apparently did not, believe the Landlord’s
evidence about probable cause. The court did not err by denying the Landlord’s motion
for judgment on the evidence on the malicious prosecution claim.5
III. TENANT’S MOTION FOR JUDGMENT ON THE EVIDENCE
The Landlord also contends the trial court erred by granting the Tenant’s motion
for judgment on the evidence as to the Landlord’s breach of lease claim.
To show the Tenant breached the lease, the Landlord had to prove the existence of
a lease, the Tenant’s breach thereof, and damages. See Corry v. Jahn, 972 N.E.2d 907,
913 (Ind. Ct. App. 2012), trans. denied.
The Landlord did not show any damages at all during trial. After the presentation
of evidence, as the court and the parties conferred on final instructions, the Landlord said
for the first time at trial that it was not seeking damages but only termination of the lease.
See Tr. p. 1083. As noted above, its counterclaim sought both damages and termination,
but the trial proceeded as if the only relief requested was damages. Id. (after Landlord
pointed out termination was sought in counterclaim, court said, “Well, but that’s not a
remedy that you sought here. That wasn’t part of the issues instruction that I read to the
5
The Landlord also argues the court should have granted its motion for judgment on the evidence on the
abuse of process claim. The Landlord correctly defines abuse of process but then reverts to its same
arguments about malicious prosecution. The issue is therefore waived.
13
jury.”). The Landlord told the court that it wanted the jury to find all the elements save
for damages and the court to award the equitable relief of termination. At that point, the
Tenant understandably moved for judgment on the evidence for failure to present any
evidence of damages.
The Landlord essentially sought a special verdict from the jury. A special verdict
is “[a] verdict in which the jury makes findings only on factual issues submitted to them
by the judge, who then decides the legal effect of the verdict.” Black’s Law Dictionary
1593 (8th ed. 2004). Special verdicts have been abolished in Indiana. Ind. Trial Rule 49.
The court therefore did not err by granting the Tenant’s motion for judgment on the
evidence.6
CONCLUSION
We therefore affirm the trial court.
NAJAM, J., and MATHIAS, J., concur.
6
In any event, we agree with the Tenant that the Landlord failed to show any breach, much less damages.
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