Nathan Kluger and Laura Kluger v. J.J.P. Enterprises, Inc. d/b/a SERVPRO of North Lexington

FILED
Oct 30 2020, 11:57 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Robert L. Burkart J. Herbert Davis
Clifford R. Whitehead Evansville, Indiana
L. Katherine Boren
Evansville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Nathan Kluger and Laura October 30, 2020
Kluger, Court of Appeals Case No.
Appellant-Plaintiff, 20A-PL-235
Appeal from the Posey Circuit
v. Court
The Honorable Craig S. Goedde,
J.J.P. Enterprises, Inc. d/b/a/ Judge
SERVPRO of North Lexington Trial Court Cause No.
Appellee-Defendant. 65C01-1710-PL-371
Altice, Judge.
Case Summary
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[1] Nathan and Laura Kluger appeal the trial court’s grant of partial summary
judgment in favor of J.J.P. Enterprises, Inc. d/b/a Servpro of North Lexington
(Servpro). The Klugers argue that the trial court erred in granting summary
judgment for Servpro because the designated evidence established that the $150
threshold contract price for remediation and restoration to their residence
pursuant to Indiana’s Home Improvement Contracts Act (HICA) 1 had been
satisfied and, therefore, Servpro may not escape liability for damages and
penalties. Thus, the Klugers contend that partial summary judgment should
have been entered in their favor.
[2] Reversed and remanded.
Facts and Procedural History
[3] On February 28, 2017, a tornado tore the roof from the Klugers’ Posey County
residence that resulted in water damage to their home and personal property. 2
The next day, the Klugers filed a claim with their homeowner’s insurance
company, whereupon an adjuster referred them to Servpro, a company that
provides residential and commercial cleanup and restoration services. As a
result of the storm damage, the Klugers were forced to find temporary housing.
1
Ind. Code § 24-5-11-1, et seq. The parties agree that the version of HICA at issue herein is that which was
in effect on March 2017. Various nonsubstantive provisions of HICA were amended and became effective in
July 2017.
2
Although the house was titled in Nathan’s name only, both he and Laura owned personal property in the
home.
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[4] On March 2, a Servpro representative inspected the damage and photographed
the interior of the home. Nathan was advised that Servpro would provide
emergency services, including the placement of a temporary roof structure and
tarp to cover the home’s exposed interior that would prevent further water
damage.
[5] That same day, Servpro representative Landon Turner met Nathan at the
residence and presented him with an electronic “Authorization to Perform
Services and Direction of Payment” (the “Contract”). Appellant’s Appendix Vol.
3 at 71. Nathan electronically signed the Contract, which was a standard form
that Servpro’s corporate office provided. Turner directed Nathan where to sign
on an iPad because the document was not visible in the sunlight. The Contract
did not contain a detailed description of the services to be provided, estimated
starting and completion dates of the work, a notice of cancellation, or the
contract price. Because of Servpro’s business policies, Turner lacked authority
to provide the Klugers with an estimate for the cost of the services. Turner also
did not provide the Klugers with a copy of the Contract.
[6] While Servpro provided some cleanup services at the Klugers’ residence, it
failed to place a tarp on the roof before heavy rainfall occurred on March 6 and
7, 2017. Servpro did not provide any water extraction services to the residence
or to the Klugers’ personal property, and it was not until sometime on March 7
that a general contractor arrived at the Klugers’ residence to cover the roof with
a tarp.
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[7] Although Servpro’s standard practice is to send an invoice after the services are
completed, it never sent a bill to the Klugers. A Servpro representative
indicated that its sole reason for failing to invoice the Klugers was because the
project had “slipped through the cracks.” Appellants’ Appendix Vol. 4 at 74-75.
[8] On October 11, 2017, the Klugers filed a complaint against Servpro, alleging
that it had failed to perform the cleanup and restoration services in a timely and
proper manner. The Klugers claimed that Servpro’s failure to place a tarp on
their roof before the heavy rains resulted in water damage to their residence and
its contents. As a result, the Klugers alleged that their home and personal
property were not “salvageable” because of the extensive “structural damage”
that had resulted. Appellant’s Appendix Vol. 2 at 19. The Klugers further
maintained that Servpro violated the provisions of HICA because it failed to
provide them with a fully executed written contract setting forth a description of
the proposed work and improvements, the contract price, and the start and
completion dates of the work. Servpro denied the allegations and asserted a
counterclaim against the Klugers, claiming that they had breached the Contract
for refusing to pay for the cleaning and restoration services it had provided.
Servpro claimed that the Klugers owed them $8132.74 for the services provided,
plus attorney’s fees and costs.
[9] On June 5, 2018, the Klugers filed a motion for summary judgment claiming,
among other things, that they were entitled to judgment as a matter of law
because Servpro violated HICA for failing to provide them with an adequate
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written contract. Servpro responded that HICA did not apply to “temporary or
emergency services” and that HICA’s $150 contract-price threshold was not
satisfied because it never billed the Klugers for the work. Id. at 192-96.
[10] Following a hearing, the trial court denied the Klugers’ motion for summary
judgment as to their claims regarding assumption of duty, breach of an oral
contract, and negligence. The court concluded that while HICA applied to the
type of services that Servpro provided, the Klugers were not entitled to
summary judgment because the “designated, undisputed facts do not support all
of the elements of a cause of action under HICA.” Appellant’s Appendix Vol. 3 at
23.
[11] Thereafter, the Klugers filed an amended complaint alleging that Servpro’s
violation of HICA gave rise to a claim under the Indiana Deceptive Consumer
Sales Act (DCSA). 3 Specifically, the Klugers claimed that Servpro’s HICA
violations amounted to a “willful deceptive act” under DCSA and the Contract
was therefore void and unenforceable. Id. Thus, the Klugers alleged that
Servpro was barred from recovering compensation for any of the work it
performed at the residence. The Klugers also asserted that they were entitled to
treble damages, attorney’s fees, interest, and costs of the action under DCSA.
Finally, the amended complaint included an allegation that at the first summary
judgment hearing, Servpro conceded that if HICA applied to the services it
3
Ind. Code § 24-5-0.5-1, -10.
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rendered, the Contract did not comply with the statutory requirements. Servpro
admitted that allegation and did not reassert a counterclaim for payment for its
services. Id. at 55-56.
[12] On August 15, 2019, the Klugers filed a motion for partial summary judgment
as to liability on their HICA and DCSA claims. Servpro cross-claimed for
partial summary judgment asserting that HICA did not apply in this instance
because the $150 threshold price was not satisfied and it could not be liable
under DCSA.
[13] On December 18, 2019, the trial court denied the Klugers’ motion for partial
summary judgment and granted partial summary judgment in Servpro’s favor,
concluding that HICA did not apply to the Klugers’ claims because the $150
threshold contract amount had not been met. The trial court’s order provided
in relevant part that
11. I.C. § 24-5-11-5 defines ‘home improvement contract price’
as ‘the amount actually charged for’ . . . the work. Under its
clear and plain meaning, Servpro did not actually charge the
Klugers any sums for their work prior to this litigation.
12. Likewise, according to the Answer and Affirmative Defenses
to the Amended Complaint, Servpro claims no damages due and
owing from the Klugers.
13. The designated material does not substantiate that Servpro
actually charged the Klugers more than $150 for the work
performed.
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14. Thus, HICA cannot apply to the contract.
15. As such, the Klugers’ partial summary judgment motion on
that issue must be denied.
16. Partial summary judgment, however, is appropriate for
Servpro [regarding the Klugers’ claim for the HICA violation] for
the same reasons outlined above.
Appellant’s Appendix Vol. 2 at 13. We accepted this case for interlocutory appeal
on February 26, 2020.
Discussion and Decision
I. Standard of Review
[14] Our standard of review on summary judgment is well settled:
The party moving for summary judgment has the burden of
making a prima facie showing that there is no genuine issue of
material fact and that the moving party is entitled to judgment as
a matter of law. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012).
Once these two requirements are met by the moving party, the
burden then shifts to the non-moving party to show the existence
of a genuine issue by setting forth specifically designated facts.
Id. Any doubt as to any facts or inferences to be drawn therefrom
must be resolved in favor of the non-moving party. Id. Summary
judgment should be granted only if the evidence sanctioned by
Indiana Trial Rule 56(C) shows there is no genuine issue of
material fact and that the moving party deserves judgment as a
matter of law. Freidline v. Shelby Ins. Co., 774 N.E.2d 37 (Ind.
2002).
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A House Mechanics, Inc. v. Massey, 124 N.E.3d 1257, 1262 (Ind. Ct. App. 2019)
(quoting Goodwin v. Yeakle’s Sports Bar and Grill, Inc., 62 N.E.3d 384, 386 (Ind.
2016)). We may affirm an entry of summary judgment “if it can be sustained
on any theory or basis in the record.” DiMaggio v. Rosario, 52 N.E.3d 896, 904
(Ind. Ct. App. 2016), trans. denied.
[15] We further note that statutory interpretation presents a pure question of law for
which summary judgment is particularly appropriate. Sanders v. Bd. of Comm’rs,
892 N.E.2d 1249, 1252 (Ind. Ct. App. 2008), trans. denied. The legislature is
presumed to have intended the language used in the statute to be applied
logically and not to bring about an unjust or absurd result. Id. Finally, the fact
that the parties have filed cross-motions for summary judgment does not alter
our standard of review or change our analysis: the party that lost in the trial
court has the burden of persuading us that the trial court erred. Denson v. Estate
of Dillard, 116 N.E.3d 535, 539 (Ind. Ct. App. 2018).
II. HICA and DCSA
[16] The parties agree that the only issue before us is whether the Contract satisfied
HICA’s $150 contract price threshold. Hence, we first turn to the relevant
principles of statutory construction. In Anderson v. Gaudin, our Supreme Court
stated that
[S]tatutory interpretation is a question of law that we review de
novo. . . . In interpreting a statute, the first step is to determine
whether the Legislature has spoken clearly and unambiguously
on the point in question. When a statute is clear and
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unambiguous, we apply words and phrases in their plain,
ordinary, and usual sense. When a statute is susceptible to more
than one interpretation it is deemed ambiguous and thus open to
judicial construction. When faced with an ambiguous statute,
our primary goal is to determine, give effect to, and implement
the intent of the Legislature with well-established rules of
statutory construction. We examine the statute as a whole,
reading its sections together so that no part is rendered
meaningless if it can be harmonized with the remainder of the
statute. And we do not presume that the Legislature intended
language used in a statute to be applied illogically or to bring
about an unjust or absurd result. . . .
42 N.E.3d 82, 85 (Ind. 2015) (some citations omitted).
[17] When examining the provisions of HICA, we initially observe that its purpose
is to protect consumers by placing specific minimum
requirements on the contents 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.
[18] Imperial Ins. Restoration v. Costello, 965 N.E.2d 723, 727 (Ind. Ct. App. 2012)
(quoting Hayes v. Chapman, 894 N.E.2d 1047, 1052 (Ind. Ct. App. 2008), trans.
denied))
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[19] Under HICA, a “home improvement 4 contract” is defined as “an agreement,
oral or written, between a home improvement supplier and a consumer to make
a home improvement and for which the contract price exceeds . . . $150.” I.C.
§ 24-5-11-4. The “home improvement contract price” is “the amount actually
charged for the services, materials, and work to be performed under the . . .
contract. . . .” I.C. § 24-5-11-5. HICA “requires home improvement suppliers
performing any alteration, repair, or modification to the residential property of
a consumer for an amount greater than $150 to provide the consumer with a
written home improvement contract.” Imperial, 965 N.E.2d at 727-28 (citing
I.C. §§ 24-5-11-1, -3, -4, -10(a)).
[20] HICA further provides that the contract must contain certain information,
including a) a reasonably detailed description of the proposed improvements; b)
the approximate starting and completion dates of the improvements; c) a
statement of any contingencies that would materially change the approximate
completion date; and d) the contract price. I.C. § 24-5-11-10(a). HICA states
that “[a] real property improvement supplier who violates this chapter commits
a deceptive act” that is actionable under the DCSA and subject to the remedies
and penalties set forth therein. I.C. § 24-5-11-14.
[21] Along with HICA, DCSA’s purposes are to
4
The current version of HICA uses the terms “real property improvement supplier” rather than “home
improvement” supplier.
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(1) simplify, clarify, and modernize the law governing deceptive
and unconscionable consumer sales practices;
(2) protect consumers from suppliers who commit deceptive and
unconscionable sales acts;
and (3) encourage the development of fair consumer sales
practices.
I.C. § 24-5-0.5-1(b); McKinney v. State, 693 N.E.2d 65, 67 (Ind. 1998). In
accordance with DCSA, a supplier “may not commit an unfair, abusive, or
deceptive act, omission, or practice in connection with a consumer transaction”
and that such conduct “is a violation of [DCSA] whether it occurs before,
during, or after the transaction. I.C. § 24-5-0.5-3(a). A consumer may bring an
action under DCSA to recover actual damages and, when the act is willful, the
trial court may also award treble damages or a $1000 penalty, whichever is
greater, along with attorney’s fees. IC. § 24-5-0.5-4.
[22] In this case, the trial court concluded that the $150 contract price threshold
under HICA was not satisfied because Servpro did not invoice the Klugers for
the work and, therefore, never charged them for its services. The trial court
relied on the fact that Servpro withdrew its previously asserted counterclaim
against the Klugers in the amount of $8132.74 that represented the value of the
work it performed under the Contract.
[23] While this court has not previously addressed the definition of “contract price”
under HICA, Servpro and the trial court interpret those terms to mean the
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amount of the invoice, if any, that is sent by the supplier after the work is
completed. In our view, the HICA provisions do not support such an
interpretation. More specifically, I.C. §24-5-11-10 (a)(B)(4) and (5) under
HICA provide that there must be a “reasonably detailed description of the
proposed home improvements,” and “if the description . . . does not include the
specifications for the home improvement, . . . the specifications will be provided
to the consumer before commencing any work. . . .” The “to be performed”
language certainly contemplates an agreed-upon contract price prior to the
commencement of the work, i.e., at the time the contract is executed.
Moreover, as explained above, HICA directs the “improvement supplier” to
provide the consumer with a conforming written contract before commencing
work, and the contract must include certain information, including the contract
price, before the consumer signs. I. C. § 24-5-11-10(a)(8).
[24] When the HICA provisions are read and construed together, it is readily
apparent that a contract price must be provided to the consumer and agreed to
by the consumer before work begins on the project. See Sanders, 892 N.E.2d at
1252 (to determine legislative intent, we read the sections of an act together so
that no part is rendered meaningless if it can be harmonized with the remainder
of the statute). Thus, a HICA violation occurs upon the presentation and
execution of a nonconforming real property improvement contract and
commencement of the contracted work, both of which typically occur well
before the consumer is invoiced for the work. In short, the price of the work
was required in the Contract between Servpro and the Klugers.
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[25] We further note that Servpro initially intended to charge the Klugers for its
services, as shown by the advancement of its counterclaim against the Klugers
for $8132.74. The value of those contemplated services—cleanup, restoration,
and placement of the tarp on the roof—far exceeded HICA’s $150 threshold.
While Servpro omitted a price from the Contract and did not send the Klugers
an invoice after the work was completed, its responsibilities under HICA are
not excused merely because it inadvertently failed to bill the Klugers for the
work.
[26] Likewise, principles of judicial estoppel preclude Servpro from initially asserting
that the Klugers breached the Contract by failing to pay for services and
thereafter asserting that nothing is owed. See Ellis v. Keystone Constr. Corp., 82
N.E.3d 920, 924 (Ind. Ct. App. 2017) (observing that judicial estoppel seeks to
prevent a litigant from asserting a position that is inconsistent with one asserted
in the same or a previous proceeding), trans. denied; see also PSI Energy, Inc. v.
Roberts, 829 N.E.2d 943, 957 (Ind. 2005) (holding that while a party may
properly plead alternative and contradictory theories, judicial estoppel
precludes a party from repudiating assertions in the party’s own pleadings).
[27] In sum, to construe HICA’s contract price requirements as the trial court did,
would lead to unjust results and not hold improvement industry contractors
accountable to consumers. HICA was enacted in response to deceptive
practices that were occurring in the home improvement industry. See Imperial,
965 N.E.2d at 727. Because Servpro had already violated HICA when it
commenced work, it cannot evade potential liability by simply withdrawing its
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demand for payment during litigation. To do so would undermine HICA’s
broad remedial and deterrent purposes.
[28] For all these reasons, we conclude that HICA’S $150 contract-price threshold
has been satisfied as a matter of law in this instance, and the trial court erred in
granting Servpro’s motion for partial summary judgment. Thus, the grant of
partial summary judgment for Servpro is reversed and we remand this cause
with instructions that the trial court enter partial summary judgment in the
Klugers’ favor and to conduct further proceedings consistent with this opinion.
[29] Reversed and remanded.
Riley, J. and May, J., concur.
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