Dennis Larson, Rose Real Estate, Inc., and Diversified Commercial Real Estate v. Peter N. Karagan

FOR PUBLICATION
ATTORNEY FOR APPELLANTS: ATTORNEY FOR APPELLEE:
BRYAN LEE CIYOU JOSPEH G. BOMBAGETTI
Ciyou & Dixon, P.C. Kelly Law Office
Indianapolis, Indiana Crown Point, Indiana
IN THE
COURT OF APPEALS OF INDIANA
DENNIS LARSON, ROSE REAL ESTATE, INC., )
and DIVERSIFIED COMMERCIAL REAL )
FILED
Nov 07 2012, 9:23 am
ESTATE, )
) CLERK
of the supreme court,
Appellants-Defendants, ) court of appeals and
tax court
)
vs. ) No. 45A04-1112-CC-656
)
PETER N. KARAGAN, )
)
Appellee-Plaintiff. )
)
__________________________________________
ROSE REAL ESTATE, )
)
Appellant/Counter-Plaintiff, )
)
vs. )
)
PETER N. KARAGAN, )
)
Appellee/Counter-Defendant. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Elizabeth F. Tavitas, Judge
The Honorable Thomas P. Hallett, Magistrate
Cause No. 45D03-0812-CC-1585
November 7, 2012
OPINION - FOR PUBLICATION
MAY, Judge
Peter Karagan sued Dennis Larson, Rose Real Estate, and Diversified Commercial
Real Estate (collectively, “Larson”) for breach of contract and conversion. Karagan moved
for summary judgment and, after Larson did not respond to the motion, the court granted
summary judgment for Karagan. On appeal, Larson argues genuine issues of fact precluded
summary judgment and Karagan was not entitled to treble damages. On cross-appeal,
Karagan argues he was entitled to prejudgment interest. We affirm in part, reverse in part,
and remand.
FACTS AND PROCEDURAL HISTORY
Karagan went to work for Dennis Larson’s real estate companies in September 2005.
There was no written employment agreement, but the parties orally agreed Karagan would be
paid seventy-five percent of the gross commissions Larson received for transactions Karagan
procured.1 Karagan left employment with Larson on December 26, 2007. Larson did not pay
Karagan the remaining commissions owed him, and Karagan sued for breach of contract. He
moved for summary judgment, and Larson did not respond to his motion. The trial court
granted summary judgment for Karagan. It denied Larson’s motion to correct error.
Karagan then submitted two Requests for Admission of Fact, neither of which Larson
answered. The trial court granted Karagan’s motions that the requests be deemed admitted.
The trial court held a damages hearing, where Larson filed a motion to permit withdrawal of
1
The trial court so found. Karagan refers in his affidavit to “an oral compensation agreement wherein I
received 75% of the gross commissions generated on all transactions in which I was listed as the associate
broker, sales agent, leasing agent, or listing agent.” (App. at 77.) Larson, in an interrogatory, said in reference
to the “rate of compensation [Karagan] was to receive” that he and Karagan “verbally agreed to 75% of real
estate commission earned and collected on behalf of the company while he was licensed here.” (Id. at 65.)
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admissions. The trial court permitted withdrawal of Larson’s second admission number ten.2
After a subsequent damages hearing, the trial court found Karagan was entitled to treble
damages and awarded him $177,612.50 plus costs and future commissions Larson would
receive on certain transactions. It denied Karagan’s request for prejudgment interest.
DISCUSSION AND DECISION
The standard of appellate review of a summary judgment motion is the same as that
used in the trial court. Hardy v. Hardy, 963 N.E.2d 470, 473 (Ind. 2012). Summary
judgment is appropriate only “if the designated evidentiary matter 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.” Id. (quoting Ind. Trial Rule 56(C)). We construe all facts and reasonable
inferences drawn from those facts in favor of the non-moving party, and our review is limited
to the materials designated to the trial court. Id. We carefully review a decision on a
summary judgment motion to ensure that the losing party was not improperly denied his day
in court. Id.When a nonmoving party does not respond to a summary judgment motion within
thirty days -- by filing a response, requesting a continuance under T.R. 56(I), or filing an
affidavit under T.R. 56(F) -- the trial court cannot consider summary judgment filings that
2
That admission was:
That with regard to the Hickory Plaza transaction, Peter Karagan fulfilled all requirements or
conditions precedent, including procuring, if necessary, a ready, willing, and able purchaser or
lessee, for him to be paid pursuant to the 75%/25% compensation agreement.
(App. at 310.) The trial court found Karagan was not entitled to a commission from that transaction.
3
party subsequently makes. Miller v. Yedlowski, 916 N.E.2d 246, 247 (Ind. Ct. App. 2009),
trans. denied.
A party who moves for summary judgment bears the risk that the court will enter
summary judgment in favor of the non-moving party, even when the non-moving party has
not filed a cross-motion for summary judgment or otherwise responded to the summary
judgment motion. Murphy v. Curtis, 930 N.E.2d 1228, 1233 (Ind. Ct. App. 2010), trans.
denied. A trial court is not required to grant an unopposed motion for summary judgment;
summary judgment is awarded on the merits of the motion, not on technicalities. Id. See
T.R. 56(C) (“[s]ummary judgment shall not be granted as of course because the opposing
party fails to offer opposing affidavits of evidence, but the court shall make its determination
from the evidentiary matter designated to the court”). While a party who does not respond to
a motion for summary judgment may be limited to the facts established by the movant’s
submissions, such failure to respond does not preclude argument of the relevant law on
appeal. Murphy, 930 N.E.2d at 1234.
We must therefore determine whether Karagan’s own designated evidence gives rise
to a genuine issue of material fact that precludes summary judgment. It does not.
1. Genuine Issue of Fact
Larson argues Karagan’s own designated evidence gives rise to a factual dispute about
the terms of Karagan’s oral contract:
At the time of his departure, the parties disagreed as to when and how
commissions were to be paid. . . . Stated different, [sic] the payments owed by
[Larson] may end on the day he left employment or some time later based on
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work in process, which would be days, weeks, or months after Karagan
separated from employment.
(Appellant’s Br. at 16-17.) As Larson’s admissions indicate there was no such factual
dispute, summary judgment was appropriate.
Under T.R. 36, the failure to respond in a timely manner to a request for admissions
causes those matters to be admitted and conclusively established by operation of law. City of
Muncie v. Peters, 709 N.E.2d 50, 54 (Ind. Ct. App. 1999), reh’g denied, trans. denied.
Requests for admissions under T.R. 36 may, in addition to addressing evidentiary matters,
ask for admissions as to legal issues, contentions, and conclusions, if related to the facts of
the case. Id. Matters admitted under the rule are deemed conclusively established,
eliminating the need to prove them at trial. Id.However, a party who made admissions by failing to respond may move to withdraw
those admissions pursuant to T.R. 36(B). Id. The trial court may grant a motion to withdraw
admissions if it determines: (1) withdrawal or amendment will subserve the presentation of
the merits, and (2) prejudice in maintaining the action or defense will not result to the party
that obtained the admission. Id. The party seeking withdrawal has the burden of
demonstrating the presentation of the merits will be subserved by withdrawal, and the party
who obtained the admissions has the burden of demonstrating it will be prejudiced if the trial
court permits withdrawal. Id.; T.R. 36(B). Even if both of these conditions are satisfied, the
rule does not compel the trial court to grant a request to withdraw admissions; rather, the
court may, in its discretion, permit withdrawal. Peters, 709 N.E.2d at 54-55. We will
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reverse the grant or denial of a motion to withdraw admissions only for an abuse of
discretion. Id. at 55.
Karagan’s first request for admissions listed ten transactions for which Larson had
received or was due to receive commissions. The second set of admissions indicated
Karagan “fulfilled all the requirements . . . to be paid “pursuant to the 75%/25%
compensation agreement” for those transactions. (App. at 299-301.) Larson did not respond
and the requests were deemed admitted.3 In light of those admissions we cannot find error to
the extent the trial court determined there was no genuine issue of fact as to the interpretation
of the parties’ oral agreement. Summary judgment for Karagan was not error.
2. Treble Damages
Larson next argues there was no evidence of criminal intent to support the application
of the criminal conversion statute that was the basis of the award of treble damages to
Karagan. There was ample evidence to permit treble damages pursuant to the statute.
Ind. Code § 34-24-3-1 provides in pertinent part:
3
As noted above, Larson moved to withdraw the admissions. The motion was denied except as to admission
number ten, which addressed a transaction where Larson alleged Karagan “had nothing whatsoever to do with
the transaction in question, and thus [Larson] should have no liability whatsoever to [Karagan] on that
particular count.” (App. at 317.) That evidence does not reflect there is a genuine issue of fact as to the
interpretation of the compensation agreement, which is the only issue of fact Larson asserts on appeal. Nor did
the trial court find Karagan entitled to a commission on that transaction.
6
If a person has an unpaid claim on a liability that is covered by IC 24-4.6-5 or suffers
a pecuniary loss as a result of a violation of IC 35-43,4 IC 35-42-3-3, IC 35-42-3-4, or
IC 35-45-9, the person may bring a civil action against the person who caused the loss
for the following:
(1) An amount not to exceed three (3) times:
(A) the actual damages of the person suffering the loss, in the case of a
liability that is not covered by IC 24-4.6-5; or
(B) the total pump price of the motor fuel received, in the case of a
liability that is covered by IC 24-4.6-5.
(2) The costs of the action.
(3) A reasonable attorney’s fee.
(Footnote added.) This statute is sometimes referred to as the “Indiana crime victim’s relief
act.” Gilliana v. Paniaguas, 708 N.E.2d 895, 899 (Ind. Ct. App. 1999), reh’g denied, trans.
denied. It permits a person who has suffered a pecuniary loss as a result of a criminal
conversion to bring a civil action to recover the loss. Sam & Mac, Inc. v. Treat, 783 N.E.2d
760, 766 (Ind. Ct. App. 2003). Unlike in a criminal trial, a claimant need prove by only a
preponderance of the evidence that the defendant committed the criminal act. Id. A
conviction of conversion is not a condition precedent to recovery in a civil action brought
under the crime victim’s relief act, id., but the claimant must prove all the elements of the
criminal act. Id.In any criminal conversion action, criminal intent must be proven. Id. It is this mens
rea requirement that differentiates criminal conversion from the more innocent breach of
4
It appears Karagan was awarded treble damages pursuant to Ind. Code § 35-43-4-3: “A person who
knowingly or intentionally exerts unauthorized control over property of another person commits criminal
conversion, a Class A misdemeanor.” The trial court noted in its judgment that Karagan’s complaint alleged
breach of contract and conversion.
Larson states “[t]he criminal act that Karagan utilized for treble damages and an attorney fee award,”
(Appellants’ Br. at 13) was “Ind. Code § 31-43-4-3(a).” (Id. at 14.) There does not appear to be any such
statute in the Indiana Code. Nor does the page of the appendix to which Larson directs us include a reference
to any such statute.
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contract or failure to pay a debt -- situations the criminal conversion statute was not intended
to cover. Id.Karagan had to prove by a preponderance of the evidence Larson acted knowingly or
intentionally. Ind. Code § 35-43-4-3. “A person engages in conduct ‘intentionally’ if, when
he engages in the conduct, it is his conscious objective to do so.” Ind. Code § 35-41-2-2. “A
person engages in conduct ‘knowingly’ if, when he engages in the conduct, he is aware of a
high probability that he is doing so.” Id. In the case of conversion, the claimant must prove
the control exercised over the property was unauthorized, Midland–Guardian Co. v. United
Consumers Club, Inc., 499 N.E.2d 792, 797 (Ind. Ct. App. 1986), reh’g denied, trans.
denied, and the accused was aware of a high probability the control was unauthorized. Id. at
798.
Karagan did so prove. In White v. Indiana Realty Associates II, 555 N.E.2d 454, 458
(Ind. 1990), our Indiana Supreme Court addressed “the rare situation in which criminal intent
may be found in a civil action through summary judgment.” In a landlord-tenant civil
dispute, the Court found White, Indiana Realty’s tenant, violated “the criminal provisions of
Ind. Code § [sic] 35-43.”5 Id. at 455. Indiana Realty sought treble damages in its action
against White and moved for summary judgment. White, like Larson in the case before us,
did not file affidavits or even respond to the complaint. The trial court granted summary
judgment for White and we affirmed.
Our Supreme Court first noted it will be a rare landlord-tenant dispute that “presents
5
That article addresses criminal conversion and trespass. Trespass was the issue in White.
8
sufficient evidence of criminal intent to warrant treble damages and fees under Ind. Code §
34-4-30-1. Moreover, it is even less likely that the proof of criminal intent will be so strong
that there is no genuine issue of material fact, warranting summary judgment.” Id. at 456. It
further noted “all the alleged criminal acts include the element of mens rea or criminal intent,
and Indiana Realty must carry the burden of proving it.” Id. at 457.
But Indiana Realty was able to prove criminal intent. It presented:
the following uncontroverted facts which we conclude were adequate to
establish White’s criminal intent in violation of one of the criminal acts alleged
in the complaint:
1) On December 4, 1985, the trial court entered a final judgment for damages
and possession in favor of Indiana Realty.
2) Two days after White was directed by the court to transfer possession to
Indiana Realty, she initiated a federal bankruptcy action which arguably lacked
any substantive legal merit. White voluntarily moved to dismiss the suit. She
continues to assert however, that the suit stayed any municipal court
proceeding.
3) White retained possession until April 10, 1986, more than four months after
the date set by the trial court for transfer of possession.
4) Throughout this four-month period, White both refused to vacate the
apartment, and refused to pay any rent. As White’s attorney admits, “Nancy
White does not dispute her owing rental from December 8, 1986 through April
9, 1986.”
Id. at 457-58 (footnotes omitted). The Court determined:
[T]he extremely aggravated action by the tenant and her approach to the
litigation persuade us that summary judgment was appropriate. In the face of
two affidavits supplied by Indiana Realty which outlined White’s lengthy
holdover beyond the trial court’s order to vacate in December 1985 and her
effort to use the bankruptcy system to retain possession of what was Indiana
Realty’s property, White neither supplied counter-affidavits nor even an
answer. In a sense, she did even less than “rest upon the mere allegations or
denials of her pleadings.” Ind. Trial Rule 56(C). The facts of this case present
the rare situation in which criminal intent may be found in a civil action
through summary judgment.
9
Id. at 458.
The case before us is similar. Karagan moved for summary judgment and Larson did
not respond. Karagan requested admissions, twice, and Larson did not respond. The
statements that were accordingly deemed admitted show Larson had or was due the
commissions for the listed transactions, and that Karagan had fulfilled all the conditions to be
paid the commissions pursuant to the parties’ agreement. At the damages hearing Larson
testified he had between $40,000 and $45,000 that was due Karagan. Larson’s principal
broker testified that in her experience, if transactions were not yet closed when an agent left,
the agent was still entitled to receive the commissions. But Karagan’s commissions were
withheld and he testified he had gone without the money for “over two years . . . more like
three years.” (Tr. at 100.) As Karagan demonstrated Larson was aware of a high probability
its control over Karagan’s property was unauthorized, we cannot say the trial court erred in
determining Karagan was entitled to treble damages.
3. Prejudgment Interest
On cross-appeal, Karagan argues the trial court should have awarded him prejudgment
interest. We review Karagan’s claim for prima facie error, as Larson did not file a reply brief
to address this issue. See Reid v. State, 883 N.E.2d 872, 873 (Ind. Ct. App. 2008) (noting the
defendant did not respond to the State’s allegation on cross-appeal and accordingly we would
review for prima facie error).
The trial court determined Karagan was not entitled to prejudgment interest because
“[t]he damages were not sufficiently fixed and ascertainable to support the assessment of
10
prejudgment interest.” (App. at 19.) An award of prejudgment interest is founded on the
theory that there has been a deprivation of the plaintiff's use of money or its equivalent and
unless interest is added, the plaintiff cannot be fully compensated for his loss. Id.Prejudgment interest is recoverable not as interest but as additional damages to accomplish
full compensation. Id.Damages in the form of prejudgment interest are warranted in a contract case if the
terms of the contract make the claim ascertainable and the amount of the claim rests on mere
computation. Id. Prejudgment interest may be trebled. See Midland-Guardian Co., 499
N.E.2d at 800 (“[s]ince prejudgment interest was properly an element of the actual damages
in this case, and since [the crime victim’s statute in effect when Midland-Guardian was
decided] mandates trebling actual damages, there was no error in trebling the interest”).
Karagan has made a prima facie case prejudgment interest should have been awarded.
An award of prejudgment interest is proper when the trier of fact does not have to exercise
judgment in order to assess the amount of damages. Kummerer v. Marshall, 971 N.E.2d 198,
201 (Ind. Ct. App. 2012). Examples of cases where prejudgment interest is appropriate
include those for breach of contract when the damages were principal payments made under a
promissory note, the amount of a mechanics’ lien for a contractor’s unpaid bills for a
remodeling project, and an amount stipulated to at a damages hearing. In such cases the
amount of damages is clear and does not require any interpretation or judgment on the part of
the trier of fact.
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The same is true when, as in the case before us, the amount of unpaid commissions is
clear. In Kopka, Landau & Pinkus v. Hansen, 874 N.E.2d 1065, 1074 (Ind. Ct. App. 2007),
the damages were complete and ascertainable when Hansen sought the amount of business
development commissions he was owed when he resigned. “The trial court did not have to
exercise its judgment to assess the amount of damages. Consequently, prejudgment interest
is proper as a matter of law and we remand this matter to the trial court for a calculation of
the amount of prejudgment interest to which Hansen is entitled.” Id.In the case before us the evidence, including Larson’s admissions, established what
Karagan’s commission agreement was, the transactions for which he was entitled to
commissions, and the amount of the commissions. The trial court therefore should have
awarded Karagan prejudgment interest, see, e.g., Noble Roman’s, Inc. v. Ward, 760 N.E.2d
1132, 1140-41 (Ind. Ct. App. 2002) (Ward entitled to prejudgment interest when undisputed
evidence showed “Noble Roman’s stipulated to the amounts of the majority of the damages
the Wards requested” such that court was not required to exercise any discretion to determine
stipulated amount). We remand for it to do so.
CONCLUSION
The trial court properly granted summary judgment for Karagan, and its award of
treble damages was not error. However, it should have awarded Karagan prejudgment
interest. We accordingly affirm in part, reverse in part, and remand for calculation of the
amount of prejudgment interest to which Karagan is entitled.
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Affirmed in part, reversed in part, and remanded.
NAJAM, J., and KIRSCH, J., concur.
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