Kohl's Indiana, L.P. and Kohl's Dept. Store, Inc. v. Dennis Owens

FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE
BOARD OF COMMISSIONERS
MARK D. GERTH OF VANDERBURGH COUNTY:
Kightlinger & Gray, LLP
Indianapolis, Indiana KEITH W. VONDERAHE
ROBERT L. BURKART
Ziemer Stayman Weitzel & Shoulders, LLP
Evansville, Indiana
ATTORNEY FOR APPELLEE
EVANSVILLE-VANDERBURGH
COUNTY AREA PLAN COMMISSION:
JOSEPH H. HARRISON, JR.
Massey Law Offices
Evansville, Indiana
FILED
Nov 16 2012, 9:19 am
IN THE
COURT OF APPEALS OF INDIANA CLERK
of the supreme court,
court of appeals and
tax court
KOHL’S INDIANA, L.P., and )
KOHL’S DEPARTMENT STORE, INC., )
)
Appellant-Plaintiff, )
)
vs. ) No. 82A05-1203-PL-103
)
DENNIS OWENS, ET AL., )
)
Appellees-Defendants. )
)
APPEAL FROM THE VANDERBURGH CIRCUIT COURT
The Honorable Carl A. Heldt, Judge
Cause No. 82C01-0602-PL-86
November 16, 2012
OPINION - FOR PUBLICATION
VAIDIK, Judge
Case Summary
Kohl’s Indiana, L.P., and Kohl’s Department Stores, Inc., (collectively “Kohl’s”)
appeal the trial court’s grant of summary judgment in favor of the Evansville-
Vanderburgh County Area Plan Commission (“Plan Commission”) and the Board of
Commissioners of Vanderburgh County (“Board of Commissioners”) on Kohl’s equitable
claims for contribution and unjust enrichment for expenses that Kohl’s incurred when its
developer failed to complete construction of a new Kohl’s Department Store on the west
side of Evansville. We conclude that the trial court properly entered summary judgment
in favor of the Plan Commission for both claims because the Commission never accepted
a common obligation to complete the project, never entered into any sort of agreement
with Kohl’s concerning the project, and there is no evidence that a benefit was conferred
upon the Plan Commission at the Commission’s express or implied consent. We also
conclude that the trial court properly entered summary judgment in favor of the Board of
Commissioners for both claims because Kohl’s and the Board entered into an agreement
which required Kohl’s to complete the public-infrastructure improvements at Kohl’s
expense, and when the rights of the parties are controlled by an express contract, recovery
cannot be based on a theory implied in law. Finally, we conclude that the Board of
Commissioners is not entitled to appellate attorney’s fees. We therefore affirm the trial
court.
Facts and Procedural History
In May 2004, the Plan Commission approved a primary plat application
concerning the proposed construction of a Kohl’s Department Store in the Carpentier
2
Creek Pavilion Subdivision on the west side of Evansville. The approval of the project
was conditioned upon the developer, Dennis Owens, posting a letter of credit to ensure
the proper and complete development of roads, culverts, sanitary sewer work, and other
infrastructure improvements required within the subdivision pursuant to Section
16.08.070 of the Vanderburgh County Subdivision Code, Appellant’s App. p. 315-16,
and Indiana Code section 36-7-4-709.
In January 2005, Owens obtained four letters of credit from Fifth Third Bank
naming the Plan Commission as beneficiary. The letters of credit totaled $538,454.78:
1. Letter of Credit #CIS403248
$47,284.65
Off-Site Road and Drainage Improvements within City of Evansville
2. Letter of Credit #CIS403249
$230,245.31
Off-Site Road and Drainage Improvements in Vanderburgh County
3. Letter of Credit #CIS403250
$206,762.46
City of Evansville Sanitary Sewer Extension
4. Letter of Credit #CIS403251
$54,162.36
City of Evansville Waterline Extension
Id. at 332.
Thereafter, in February 2005, Kohl’s and Owens entered into an Operation and
Easement Agreement whereby Owens agreed to build the Kohl’s Department Store in
Carpentier Creek Pavilion. Kohl’s and Owens also entered into a Site Development
Agreement, which provided that Kohl’s had the right to complete Owens’ work if he
failed to do so and charge Owens all expenses incurred.
3
In September 2005, Kohl’s and the Board of Commissioners entered into an
agreement (“road-improvement agreement”) whereby the Board of Commissioners
agreed to the closure of Rosenberger Avenue, which was a busy road, for a limited time
in order to allow Kohl’s to improve and reconstruct it. Id. at 144-45. In the agreement,
Kohl’s agreed to complete the project in accordance with all plans and specifications
approved by various governmental entities. Id. at 144. The agreement provides that
should Kohl’s fail to complete the project in accordance with all approved plans and
specifications, the Board of Commissioners will take all necessary legal actions to recoup
its expenses in completing the project, including drawing on the funds in the letters of
credit and filing a lawsuit against Kohl’s. Id. Kohl’s and the Board of Commissioners
also entered into an indemnity agreement whereby Kohl’s agreed to defend, indemnify,
and hold the Board of Commissioners harmless against claims relating to the
improvement and reconstruction of Rosenberger Avenue, and Kohl’s named
Vanderburgh County as an additional insured under a commercial general liability policy.
Id. at 146-47. Notably, the Plan Commission was not a party to these agreements.
Owens failed to complete the project, so Kohl’s completed the project, which
included improvements to storm sewers and septic sewers under Rosenberger Avenue
and Hogue Road as well as road work to Rosenberger Avenue and Hogue Road.
In February 2006, Kohl’s filed a complaint against numerous defendants,
including Owens, the Plan Commission, and Fifth Third Bank in which it sought
reimbursement for the expenses it incurred in completing Owens’ work. Id. at 1. Kohl’s
made three claims against the Plan Commission. In Count VI, Kohl’s asked the trial
4
court to order the Plan Commission to draw on the letters of credit and to assign the
proceeds from the letters of credit to Kohl’s. In Count VII, Kohl’s asserted a claim based
on the doctrine of contribution. And in Count VIII, Kohl’s sought payment of the
proceeds of the letters of credit based upon the doctrine of implied contract and/or unjust
enrichment.
Fifth Third Bank intervened as a defendant in the counts against the Plan
Commission and sought summary judgment. Although the trial court entered summary
judgment in favor of Kohl’s, finding that the letters of credit should be treated as
performance bonds and that Kohl’s was entitled to make a claim against the proceeds of
the letters of credit as a third-party beneficiary, we reversed on appeal. Specifically, we
found that the letters of credit were not performance bonds and that Kohl’s was not a
third-party beneficiary of the letters of credit issued by Fifth Third Bank. Fifth Third
Bank v. Kohl’s Indiana, L.P., 918 N.E.2d 371, 376, 378 (Ind. Ct. App. 2009).
In May 2010, Kohl’s filed an amended complaint in which it added the Board of
Commissioners as a defendant to Counts VII (contribution) and VIII (implied contract
and/or unjust enrichment). Kohl’s then dismissed, with prejudice, Count VI against the
Plan Commission based upon this Court’s opinion.
All of the public-infrastructure improvements that were required as a condition of
approval by the Plan Commission for the project were completed, and the Plan
Commission released the four letters of credit posted by Owens between July and
October 2010.1 Appellant’s App. p. 332-33. Because the public-infrastructure
1
According to the Plan Commission, it released letter of credit #CIS403251 on July 20, 2010,
“due to the completion and acceptance by the Evansville Water & Sewer Utility concerning the water line
5
improvements were completed and accepted, there was no need for the Plan Commission
to draft upon the letters of credit posted by Owens. Id. at 333.
In August 2010, the Board of Commissioners and the Plan Commission
individually moved for summary judgment on Counts VII and VIII of Kohl’s amended
complaint. Kohl’s filed a cross motion for summary judgment. Following a hearing, the
trial court entered summary judgment in favor of the Board of Commissioners and the
Plan Commission and denied Kohl’s cross motion for summary judgment. Id. at 593,
594.
Kohl’s now appeals.
Discussion and Decision
Kohl’s argues that the trial court erred in entering summary judgment in favor of
the Board of Commissioners and the Plan Commission on its equitable claims for
contribution and implied contract/unjust enrichment.
In reviewing an appeal of a motion-for-summary-judgment ruling, we apply the
same standard applicable to the trial court. Presbytery of Ohio Valley, Inc. v. OPC, Inc.,
973 N.E.2d 1099, 1110 (Ind. 2012), reh’g denied. Summary judgment is appropriate
where the designated evidence “shows that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a matter of law.” Ind. Trial
extension for the Project.” Appellant’s App. p. 332. It released letter of credit #CIS403250 on August 2,
2010, “due to the completion and acceptance by the Evansville Water & Sewer Utility concerning the
sanitary sewer extension for the project.” Id. It released letter of credit #CIS403248 on August 31, 2010,
“due to the completion and acceptance by the City of Evansville of the off-site road and drainage
improvement located with the City of Evansville with respect to the Project.” Id. at 333. Finally, it
released letter of credit #CIS403249 on October 12, 2010, “due to the completion and acceptance by
Vanderburgh County of the off-site road and drainage improvements located within Vanderburgh County
concerning the Project.” Id.
6
Rule 56(C). Review is limited to those facts designated to the trial court, T.R. 56(H), and
“[a]ll facts and reasonable inferences drawn from those facts are construed in favor of the
non-moving party.” Presbytery of Ohio Valley, 973 N.E.2d at 1110 (quotation omitted).
The fact that each party sought summary judgment does not alter our analysis. Id.
Rather, we consider each motion separately construing the facts most favorably to the
non-moving party in each instance. Id.
I. Contribution
Kohl’s first contends that the trial court erred in entering summary judgment in
favor of the Board of Commissioners and the Plan Commission on Count VII, its claim
for contribution. Kohl’s argues that when Owens failed to complete the public-
infrastructure improvements to the project, it had no obligation to complete them, but it
did so to ensure that it could open its new store. Nevertheless, Kohl’s argues that both
the Board of Commissioners and the Plan Commission were obligated by statute and
local ordinance to step in and complete the public-infrastructure improvements.
Accordingly, Kohl’s seeks contribution from both the Board of Commissioners and the
Plan Commission for these expenses.
Contribution involves the partial reimbursement of one who has discharged a
common liability. Balvich v. Spicer, 894 N.E.2d 235, 243 (Ind. Ct. App. 2008). The
“‘doctrine of contribution rests on the principle that where parties stand in equal right,
equality of burden becomes equity.’” Id. at 245 (quoting Cook v. Cook, 92 Ind. 398, 399
(1884)). The right of contribution is based upon natural justice, and “it applies to any
relation, including that of joint contractors, where equity between the parties is equality
7
of burden, and one of them discharges more than his share of the common obligation.”
Id. (quotation omitted).
According to Williston on Contracts, the rule is that
[U]nless otherwise agreed, a person who has discharged more than his
proportionate share of a duty owed by himself and another as to which,
between the two, neither had a prior duty of performance, is entitled to
contribution from the other, except where the payor is barred by the
wrongful nature of his conduct.
12 Richard A. Lord, Williston on Contracts § 36.14 (4th ed. 1999) (citing Restatement
(First) of Restitution § 81 (1937)). The doctrine of contribution rests on principles of
equity and natural justice, not contract. Id. “It is an attempt by equity to distribute
equally among those who have a common obligation, the burden of performing that
obligation.” Id.
A. Plan Commission
Kohl’s points out that pursuant to statute and local ordinance, the Plan
Commission required Owens to post letters of credit to ensure the proper and complete
development of roads, culverts, sanitary sewer work, and other infrastructure
improvements related to the construction of the new Kohl’s Department Store in
Evansville. Kohl’s claims that the purpose of allowing plan commissions to require
letters of credit to cover infrastructure costs from developers requesting plat approval is
to ensure that in the event a developer fails to complete the infrastructure, the amount
secured by the letter of credit can be used to complete the work. Kohl’s asserts that the
legislature did not intend for a plan commission to sit idly by if a developer fails to
complete the work.
8
But that is not what happened here. When Owens failed to complete the project,
Kohl’s stepped in and completed the project so that it could open the store. Although the
Plan Commission was the beneficiary of the letters of credit taken out by Owens and
could have drawn on the letters of credit if the public-infrastructure improvements were
not completed (the public-infrastructure improvements were in fact completed, and the
Plan Commission released the letters of credit in 2010),2 the Plan Commission never
accepted a common obligation to complete the project, which the doctrine of contribution
requires. In fact, the Plan Commission did not enter into any sort of agreement with
Kohl’s concerning the project and did not ask Kohl’s to complete the project when
Owens failed to do so. Because the Plan Commission did not have a common duty to
complete the project, the trial court properly entered summary judgment in favor of the
Plan Commission on Kohl’s contribution claim.
B. Board of Commissioners
Kohl’s next argues that the Board of Commissioners, “as the executive for
Vanderburgh County, had a duty to construct, design, repair and maintain . . . road and
sewer improvements.” Appellant’s Br. p. 8 (footnote omitted). The Board of
Commissioners responds that while it may have a duty to public users to repair and
maintain the completed public-infrastructure improvements, it agreed with Kohl’s that
Kohl’s would be liable for completing and paying for all public-infrastructure
2
As Kohl’s explains in its brief, “the Board [of Commissioners] does not itself draw upon the
letters of credit to complete infrastructure. Instead, it requests that the [Plan Commission] do so and turn
over the proceeds to the Board [of Commissioners].” Appellant’s Br. p. 9 n.2. As we explained in the
prior appeal in this case, “each letter of credit requires the [Plan] Commission to present to Fifth Third a
signed statement that Dennis Owens has failed to meet statutory and ordinance requirements and/or the
stipulations of primary approval with regard to basic improvements.” Fifth Third Bank, 918 N.E.2d at
376 (quotation omitted).
9
improvements associated with building the new Kohl’s Department Store in Evansville.
As support, the Board of Commissioners identifies the road-improvement agreement,3
which provides as follows:
WHEREAS, [Kohl’s] is required to improve and reconstruct Rosenberger
Avenue, hereinafter referred to as the “Project”, as a part of its obligations
in conjunction with the development of Carpentier Creek Pavilion
commercial subdivision; and
WHEREAS, for [Kohl’s] to perform and complete the Project, the [Board
of Commissioners] must approve [Kohl’s] doing work in the right of way
for Rosenberger Avenue and the closure of Rosenberger as necessary to
complete the Project; and
WHEREAS, due to high traffic volumes on Rosenberger Avenue, the
[Board of Commissioners] is unwilling to approve such work and such
closure except for a limited period of time; and
WHEREAS, the [Board of Commissioners] wishes to establish a penalty to
help insure that such work and such closure will only be for a limited
period of time.
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements of the parties hereto, one unto the other, the parties
hereto do hereby agree as follows:
1. To allow [Kohl’s] to complete the Project, the [Board of
Commissioners] will permit [Kohl’s] to work in the right of way for
Rosenberger Avenue and to close Rosenberger Avenue for a time period
that will not exceed twenty-one (21) consecutive calendar days (“Road
Closure Period”) without written approval by the [Board of
Commissioners] to extend the Road Closure Period.
3
The parties also discuss their indemnity agreement, Appellant’s App. p. 146, and argue whether
it is a defense to Kohl’s claims. We, however, do not find it necessary to reach this issue because the
road-improvement agreement provides that if Kohl’s fails to complete the project, the Board of
Commissioners will take all necessary legal action to recoup all costs it might incur in completing the
project, including filing a lawsuit against Kohl’s. Because the road-improvement agreement authorizes
the Board of Commissioners to recoup any costs from Kohl’s, we do not need to address the indemnity
agreement or Indianapolis City Market Corp. v. MAV, Inc., 915 N.E.2d 1013 (Ind. Ct. App. 2009), which
Kohl’s relies upon.
10
2. If [Kohl’s] fails to complete the Project during the Road Closure Period
then [Kohl’s] agrees that it shall pay a fine of $2,500.00 per day for each
day beyond the Road Closure Period that is required for completion of the
Project.
3. [Kohl’s] will complete the Project in accordance with all plans and
specifications that have been approved by the [Board of Commissioners],
the Vanderburgh County Drainage Board, and all applicable state and
federal review agencies.
4. [Kohl’s] acknowledges that its amended plans for the Project have been
submitted to the Indiana Department of Environmental Management
(“IDEM”) and U.S. Army Corps of Engineers (“Corps”), but written
approval of the amended plans has not been received as of the date of this
Agreement. The lack of such written approval does not release [Kohl’s]
from any of its obligations to complete the Project within the Road
Closure Period in conformance with all conditions of the final written
approval of the amended plans. The [Board of Commissioners] assumes
no responsibility or liability associated with allowing [Kohl’s] to proceed
with the Project without the IDEM or Corps approval.
5. [Kohl’s] hereby acknowledges that if it fails to complete the Project in
accordance with all approved plans and specifications, the [Board of
Commissioners] will take all necessary legal actions needed to recoup all
costs the [Board of Commissioners] might incur in conjunction with the
[Board of Commissioner’s] completion of the Project. These actions may
include, but will not be limited to, drawing on the funds in the letter of
credit held by the Evansville Area Plan Commission for the Project, filing
lien(s) on property owned by [Kohl’s], and/or filing a lawsuit against
[Kohl’s].
Appellant’s App. p. 144 (emphases added).
Although Kohl’s argues that the road-improvement agreement addresses only
closing a public road and not its obligations to complete the public-infrastructure
improvements, we do not read the agreement so narrow. First, the agreement addresses
“improv[ing]” and “reconstruct[ing]” Rosenberger Avenue, not simply closing it. Id.
Second, the agreement says that the improvements and reconstruction must be “in
accordance with all plans and specifications that have been approved by the [Board of
11
Commissioners], the Vanderburgh County Drainage Board, and all applicable state and
federal review agencies.” Id. Third, the agreement provides that if Kohl’s fails to
complete the project in accordance with all approved plans and specifications, the Board
of Commissioners will take all necessary legal actions to recoup its expenses in
completing the project, including drawing on the funds in the letters of credit. Id. The
four letters of credit pertain to off-site road and drainage improvements, sanitary sewer
extension, and waterline extension.
Based on the above, we conclude that the road-improvement agreement addresses
more than simply closing Rosenberger Avenue; it addresses the reconstruction and
improvement of Rosenberger Avenue, which must be done in compliance with all plans
and specifications that have been approved by several governmental agencies, including
the Drainage Board. It is apparent that reconstructing and improving Rosenberger
Avenue involves more than simply repaving this busy road; it also involves drainage,
sewer, and water. Moreover, the agreement obligates Kohl’s to pay for these costs and
provides that if Kohl’s fails to complete the project, the Board of Commissioners can
complete the project and then file a lawsuit against Kohl’s to recoup its expenses.
Because there is an agreement between the parties concerning how to allocate the costs,
the doctrine of contribution does not apply to this scenario. See 12 Lord, § 36.14
(“[U]nless otherwise agreed, a person who has discharged more than his proportionate
share of a duty owed by himself and another as to which, between the two, neither had a
prior duty of performance, is entitled to contribution from the other, except where the
payor is barred by the wrongful nature of his conduct.” (Emphasis added)). Accordingly,
12
the trial court properly entered summary judgment in favor of the Board of
Commissioners on Kohl’s contribution claim.
II. Unjust Enrichment
Kohl’s next contends that the trial court erred in entering summary judgment in
favor of the Board of Commissioners and the Plan Commission on Count VIII, its claim
for unjust enrichment, which is also referred to as quantum meruit, contract implied in
law, constructive contract, or quasi contract. Coppolillo v. Cort, 947 N.E.2d 994, 997
(Ind. Ct. App. 2011).
A claim for unjust enrichment is a legal fiction invented by the common-law
courts in order to permit a recovery where the circumstances are such that under the law
of natural and immutable justice there should be a recovery. Zoeller v. E. Chi. Second
Century, Inc., 904 N.E.2d 213, 220 (Ind. 2009), reh’g denied. “‘A person who has been
unjustly enriched at the expense of another is required to make restitution to the other.’”
Id. (quoting Restatement (First) of Restitution § 1 (1937)). To prevail on a claim of
unjust enrichment, a plaintiff must establish that a measurable benefit has been conferred
on the defendant under such circumstances that the defendant’s retention of the benefit
without payment would be unjust. Zoeller, 904 N.E.2d at 220; Bayh v. Sonnenburg, 573
N.E.2d 398, 408 (Ind. 1991), reh’g denied. Indiana courts articulate three elements for
this claim: (1) a benefit conferred upon another at the express or implied consent of such
other party; (2) allowing the other party to retain the benefit without restitution would be
unjust; and (3) the plaintiff expected payment. Woodruff v. Ind. Family & Social Servs.
Admin., 964 N.E.2d 784, 791 (Ind. 2012), cert. denied.
13
When the rights of the parties are controlled by an express contract, recovery
cannot be based on a theory implied in law. Zoeller, 904 N.E.2d at 221. The existence of
an express contract precludes a claim for unjust enrichment because: (1) a contract
provides a remedy at law and (2) as a remnant of chancery procedure a plaintiff may not
pursue an equitable remedy when there is a remedy at law. Coppolillo, 947 N.E.2d at
998. However, there are exceptions to this rule. Id. That is, when an express contract
does not fully address a subject, a court of equity may impose a remedy to further the
ends of justice. Id.
A. Plan Commission
Kohl’s does not make a cogent separate argument as to the Plan Commission and
instead focuses its energy on the Board of Commissioners. In any event, there is no
evidence that a benefit was conferred upon the Plan Commission at the Commission’s
express or implied consent. The Plan Commission did not ask Kohl’s to complete the
public-infrastructure improvements nor did the Commission request that any
improvements be made for its benefit. Given the Plan Commission’s more limited role,
the trial court properly entered summary judgment in favor of the Plan Commission on
Kohl’s unjust-enrichment claim.
B. Board of Commissioners
Kohl’s argues that the Board of Commissioners’ interaction with it warrants the
imposition of an implied contract for the value of the work it completed on the public-
14
infrastructure improvements.4 The Board of Commissioners responds that the road-
improvement agreement forecloses Kohl’s claim for unjust enrichment.
We agree with the Board of Commissioners that because the rights of the parties
were controlled by an express contract, recovery cannot be based on a theory implied in
law. See Zoeller, 904 N.E.2d at 221. The road-improvement agreement imposes
responsibility on Kohl’s to improve and reconstruct Rosenberger Avenue as part of its
obligations in conjunction with the development of Carpentier Creek Pavilion and
specifies that the Board of Commissioners was to have no financial responsibility for
these costs. And to the extent that Kohl’s failed to complete the project, the Board of
Commissioners could complete the project and pursue all legal actions, including a
lawsuit against Kohl’s, to recoup its expenses.5 Accordingly, the trial court properly
entered summary judgment in favor of the Board of Commissioners on Kohl’s unjust-
enrichment claim.
III. Appellate Attorney’s Fees
As a final matter, the Board of Commissioners, but not the Plan Commission,
requests appellate attorney’s fees according to Indiana Appellate Rule 66(E), which
provides that “[t]he Court may assess damages if an appeal . . . is frivolous or in bad
faith. Damages shall be in the Court’s discretion and may include attorneys’ fees. The
4
Kohl’s argues that the Board of Commissioners, in similar circumstances, has drawn on letters
of credit and used those proceeds to complete public-infrastructure improvements. However, the fact that
the Board may have drawn on letters of credit in the past is irrelevant because here there is a written
agreement defining the parties’ obligations.
5
Kohl’s argues that the road-improvement agreement does not address payment for Kohl’s work;
to the contrary, the agreement specifies that the Board of Commissioners has no payment obligation to
Kohl’s and that Kohl’s was completing the work as part of its obligations in conjunction with the
development of Carpentier Creek Pavilion.
15
Court shall remand the case for execution.” Our discretion to award attorney’s fees is
limited to instances when an appeal is permeated with meritlessness, bad faith, frivolity,
harassment, vexatiousness, or purpose of delay. Thacker v. Wentzel, 797 N.E.2d 342,
346 (Ind. Ct. App. 2003). While Appellate Rule 66(E) permits us to award damages on
appeal, we must act with extreme restraint due to the potential chilling effect on the
exercise of the right to appeal. Harness v. Schmitt, 924 N.E.2d 162, 168 (Ind. Ct. App.
2010).
While we ultimately find no merit to any of Kohl’s arguments, we do not find that
its appeal is permeated with meritlessness or any of the other factors that would warrant
an award of appellate attorney’s fees. We therefore deny the Board of Commissioners’
request for appellate attorney’s fees.
Affirmed.
MATHIAS, J., and BARNES, J., concur.
16