McGraw Property Solutions, LLC v. Jason Jenkins

FILED
Nov 18 2020, 8:52 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
John P. Higgins William K. Doss
Brooke Smith Carmel, Indiana
Katz Korin & Cunningham
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
McGraw Property Solutions, November 18, 2020
LLC, Court of Appeals Case No.
Appellant-Plaintiff, 20A-PL-630
Appeal from the Boone Superior
v. Court
The Honorable Bruce E. Petit,
Jason Jenkins, Judge
Appellee-Defendant. Trial Court Cause No.
06D02-1708-PL-1000
Riley, Judge.
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STATEMENT OF THE CASE
[1] Appellant-Plaintiff, McGraw Property Solutions, LLC (McGraw), on
interlocutory appeal, appeals the trial court’s summary judgment in favor of
Appellee-Defendant, Jason Jenkins (Jenkins), concluding that Jenkins timely
cancelled the contract within three days of acceptance.
[2] We affirm.
ISSUE
[3] McGraw presents this court with two issues on appeal, which we consolidate
and restate as the following single issue: Whether a genuine issue of material
fact exists that Jenkins did not timely cancel the contract when McGraw had
cured the deficiencies included in the original contract and back-dated the
replacement cure agreement to the effective date of the original agreement.
FACTS AND PROCEDURAL HISTORY
[4] In the spring of 2017, Jenkins’ property in Boone County was damaged during
a severe storm. McGraw is a general contractor focusing primarily on storm
remediation. On June 11, 2017, Jenkins and McGraw entered into an
agreement whereby McGraw promised to complete all storm remediation work
to the property for the price approved by Jenkins’ insurer. The contract
provided that “[i]f the insurance company does not approve your claim, this
agreement automatically terminates.” (Appellant’s App. Vol. II, p. 19). It also
required Jenkins to pay McGraw 20% of the replacement cost value as
liquidated damages if Jenkins refused to allow McGraw to finish the work.
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After the execution of the agreement, a representative of McGraw surveyed and
documented the storm damage. McGraw took comprehensive measurements
of the damage, generating a nine-page document detailing the materials, types,
quantities, and costs for every item needing replacement. McGraw’s estimate
indicated a total replacement cost value of $170,559.63. Approximately one
month later, on or about July 11, 2017, Jenkins decided that he would not
complete the repairs, but would sell his property and relocate to Florida. On
August 10, 2017, Jenkins’ insurer approved Jenkins’ claim with a replacement
cost value of $109,371.97 and issued a total payment to Jenkins in the amount
of $64,597.37.
[5] On August 15, 2017, McGraw filed its Complaint against Jenkins, raising
claims for breach of contract, unjust enrichment, and promissory estoppel. On
October 18, 2017, Jenkins responded with a Notice of Violations under the
Home Improvements Contracts Act (HICA), alleging, in pertinent part, that:
Pursuant to I.C. [§] 24-5-11-10(a), the [c]ontract lacked several
minimum statutory requirements. It did not include the date it
was submitted to my client or the time limitation on my client’s
acceptance of the [c]ontract, a violation of paragraph (3); the
[c]ontract did not include the approximate starting and
completion dates of the improvements, a violation of paragraph
(6); and it did not include a statement of any contingencies that
would materially change the approximate completion date, a
violation of paragraph (7).
Pursuant to I.C. [§] 24-5-11-10(c), the [c]ontract start and end
dates of ‘TBD’ are insufficient, and are violations of paragraphs
(1) and (3). Further, the [c]ontract failed to inform my client of
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his rights under section 10.5(b), as intentionally omitted proper
notice of cancellation language and form as required under
paragraph (6). My client was never informed of this right to
cancellation within three (3) days of notification from his
insurance company that all or part of the claim or contract was
not a covered loss as is required by I.C. [§] 24-5-11-10.5(b). Had
the notice been given, which is required under the law, my client
would have rescinded the contract that forms the basis for the
[C]omplaint.
Pursuant to I.C. [§] 24-5-11-10.5(b), a home improvement
supplier shall not act as a public adjuster. However, two full
paragraphs of the [c]ontract discuss McGraw’s experience and
expertise to assist with claims and work with insurance
representatives to get homeowners fair repair or replacement
allowances from their insurance company. In essence, McGraw
is claiming to do the actions of a public adjuster in all but name,
which further violates HICA.
Pursuant to I.C. [§] 24-5-11-11, the [c]ontract failed to include the
contractor’s written signature indicating the contractor’s
unequivocal agreement to the term of the [c]ontract. Further, as
there was no contractor signature, neither did my client’s copy of
the [c]ontract include the date of the contractor’s execution of the
[c]ontract, a violation of I.C. [§] 24-5-11-12.
(Appellant’s App. Vol. II, pp. 54-55). In accordance with HICA’s provision to
cure the deficiencies, Jenkins demanded that McGraw submit a replacement
cure contract.
[6] On August 24, 2017, McGraw issued a replacement cure contract which,
according to its terms, related back to June 11, 2017, i.e., the date of the original
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contract. With respect to the right to cancel, the replacement cure contract
provided:
You may cancel this contract at any time before midnight on the
third business day after:
(A) The date of this Agreement.
(B) You have received written notification from your insurance
company that all or any part of the claim or contract is not a
covered loss under the insurance policy.
(Appellant’s App. Vol. II, p. 140). After accepting the replacement cure
contract on August 27, 2017, Jenkins also submitted a notice to McGraw
cancelling the replacement cure contract that same day.
[7] On May 18, 2018, Jenkins filed his Answer, affirmative defenses, and
counterclaim sounding in breach of contract. On January 2, 2019, Jenkins filed
his motion for summary judgment on all Counts; while McGraw filed a motion
for partial summary judgment on its breach of contract claim only. On March
15, 2019, the trial court conducted a hearing on the cross-motions for summary
judgment. On September 19, 2019, the trial court issued its Order on the
parties’ cross-motions for summary judgment, entering judgment against
Jenkins on his counterclaim for breach of contract. The trial court also issued
judgment against McGraw on its breach of contract claim, concluding, in
pertinent part, that:
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The [c]ourt believes that McGraw’s request [i.e., accepting the
back-dated provision in the replacement cure contract] would, in
essence, require this [c]ourt to put form over substance. The
unambiguous language in the HICA is clearly intended to
provide a consumer with the option to rescind a contract under
certain circumstances. This protection can only be exercised by
the consumer if they have knowledge of that right. If the [c]ourt
were to adopt McGraw’s argument, then how could the original
error ever be cured? The required notice of cancellation when
accompanied by the relate back clause does not cure the
contractual error. It merely put Jenkins back in the exact
position he was in when the required language was omitted.
Jenkins cannot be expected to exercise his right to cancellation if
he was never given notice of that right before July of 2017.
McGraw asks that Jenkins be required to give notice of
cancellation months before he was advised of his right to give
that notice. Such a finding would fly in the face of HICA’s
intent. This [c]ourt believes that under these circumstances,
McGraw has not provided a cure which would allow the
consumer an opportunity to exercise his option of rescission.
The consumer is simply put in the untenable position of not
being provided with notice of his rights that HICA was enacted
to insure and protect.
(Appellant’s App. Vol. III, p. 132).
[8] On November 20, 2019, McGraw filed its motion to reconsider, or
alternatively, to certify for interlocutory appeal. On February 12, 2020, the trial
court issued its Order, concluding, in pertinent part, that:
In its [m]otion to [r]econsider, [McGraw] alleges that the [c]ourt
improperly voided the ‘cure contract’ which was executed by the
parties on October 27, 2017. However, [McGraw] misinterprets
this [c]ourt’s Order. To the contrary, the [c]ourt did not void the
‘cure contract’ but rather enforced it. As set out in paragraph 12
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of the [c]ourt’s original Order, the [c]ourt stated “the [c]ourt finds
that Jenkins did timely cancel the contract within three (3) days
of acceptance of the ‘cure contract’ on October 27, 2017.” The
original contract entered into between the parties improperly and
in violation of statute omitted the right to cancel within three (3)
days of receiving notice of insurance denial. That right was
contained within the ‘cure contract’ and [Jenkins] exercised that
right. The [c]ontract was not voided, it was cancelled pursuant
to its terms.
(Appellant’s App. Vol. III, p. 173). That same day, the trial court also certified
the September 19, 2019, and February 12, 2020 Orders for interlocutory appeal,
which we accepted. Additional facts will be provided if necessary.
DISCUSSION AND DECISION
I. Standard of Review
[9] In reviewing a trial court’s ruling on summary judgment, this court stands in the
shoes of the trial court, applying the same standards in deciding whether to
affirm or reverse summary judgment. First Farmers Bank & Trust Co. v. Whorley,
891 N.E.2d 604, 607 (Ind. Ct. App. 2008), trans. denied. Thus, on appeal, we
must determine whether there is a genuine issue of material fact and whether
the trial court has correctly applied the law. Id. at 607-08. In doing so, we
consider all of the designated evidence in the light most favorable to the non-
moving party. Id. at 608. A fact is ‘material’ for summary judgment purposes if
it helps to prove or disprove an essential element of the plaintiff’s cause of
action; a factual issue is ‘genuine’ if the trier of fact is required to resolve an
opposing party’s different version of the underlying facts. Ind. Farmers Mut. Ins.
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Group v. Blaskie, 727 N.E.2d 13, 15 (Ind. 2000). The party appealing the grant
of summary judgment has the burden of persuading this court that the trial
court’s ruling was improper. First Farmers Bank & Trust Co., 891 N.E.2d at 607.
[10] We observe that, in the present case, the trial court entered findings of fact and
conclusions of law thereon in support of its judgment. Generally, special
findings are not required in summary judgment proceedings and are not binding
on appeal. AutoXchange.com. Inc. v. Dreyer and Reinbold, Inc., 816 N.E.2d 40, 48
(Ind. Ct. App. 2004). However, such findings offer a court valuable insight into
the trial court’s rationale and facilitate appellate review. Id.II. Analysis
[11] McGraw contends that the trial court erred by not construing the cancellation
clause in the replacement cure contract to relate back to the execution date of
the original contract thereby erroneously allowing Jenkins “a springing right to
cancel in a manner that will lead to absurd results.” (Appellant’s Br. p. 12).
[12] 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,
containing the nine elements listed in I.C. § 24-5-11-10.” Warfield v. Dorey, 55
N.E.3d 887, 892 (Ind. Ct. App. 2016). Among other things, HICA requires that
these contracts include the name and address of the consumer, the name and
address of the contractor, a reasonably detailed description of the
improvements, the start and end date, a statement of any contingencies and
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what may affect these start and end dates, and in the event the contract price is
to be satisfied by the proceeds of an insurance policy, a statement informing the
consumer of his right to cancel the contract within three business days after
receiving written notification from the insurance company that all or part of the
claim is not covered under the policy. See I.C. § 24-5-11-10.
Violations of the HICA are labeled ‘deceptive acts’ and are
actionable by the attorney general or by the consumer. I.C. § 24-
5-11-14. The Act provides victims of deceptive acts with the
same remedies and penalties granted to victims of deceptive
consumer sales under the Indiana Deceptive Consumer Sales Act
(DCSA). I.C. § 24-5-11-14. Specifically, ‘[a] person relying upon
an uncured or incurable deceptive act may bring an action for the
damages actually suffered as a consumer as a result of the
deceptive act or five hundred dollars ($500), whichever is
greater.’ I.C. § 24-5-0.5-4(a). An ‘uncured deceptive act’ means
a deceptive act of which the consumer gave proper notice to the
supplier and either the supplier made no offer to cure within
thirty days of the notice or the act was not cured within a
reasonable time. I.C. § 24-5-0.5-2(a)(7). An ‘incurable deceptive
act’ means ‘a deceptive act done by a supplier as part of a
scheme, artifice, or device with intent to defraud or mislead.’
I.C. § 24-5-0.5-2(a)(8).
Thus, to establish entitlement to the remedies under HICA, the
consumer must show that the deceptive act was either uncured—
meaning that notice was given and the deceptive act was not
cured—or incurable—meaning that the supplier acted with an
intent to defraud or mislead the consumer. I.C. § 24-5-0.5-4(a).
Warfield, 55 N.E.3d at 892.
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[13] McGraw now contends that “[d]espite no evidence of any deception or damage
to the homeowner,” the trial court “chose not to enforce McGraw’s contract”
because “it originally failed to include immaterial boilerplate language required
by” the HICA. (Appellant’s Br. pp. 13, 14). McGraw mischaracterizes the
statute. It is irrelevant whether the language that was omitted from the contract
was boilerplate or important, as soon as one of the statutorily enumerated
requirements is not included in the contract, a deceptive act has occurred and
the contract is in violation of HICA, regardless of any intent by McGraw. See
I.C. §§ 24-5-11-10; -14. On October 18, 2017, Jenkins notified McGraw with a
Notice of Violations under HICA, which included the omitted right to cancel
within three days of the insurance company’s partial or complete denial of his
claim. On August 24, 2017, McGraw issued a replacement cure contract,
which according to its terms, related back to the June 11, 2017, the date of the
original contract. 1 The main issue now revolves around whether the
replacement cure contract can be backdated to the date of the original defective
contract in light of HICA’s intent.
1
HICA provides that a contractor’s failure to give a consumer a contract satisfying the HICA requirements is
a deceptive act and brings that deceptive act within the purview of the remedies and penalties of Indiana
Code chapter 24-5-0.5. Hayes v. Chapman, 894 N.E.2d 1047, 1053 (Ind. Ct. App. 2008). However, to
establish entitlement to those remedies, the consumer must show that the deceptive act was either uncured,
meaning that notice was given and the deceptive act was not cured, or incurable, meaning that the contractor
acted with intent to defraud or mislead the consumer. Id. As the defective original contract was cured by
McGraw, Jenkins no longer had any recourse under HICA and therefore, unlike McGraw’s contention,
could only pursue a breach of contract action and not an action sounding in HICA.
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[14] Initially we note that, when interpreting statutes, “[c]ourts must consider the
goals of the statute and the reasons and policy underlying the statute’s
enactment.” Paul v. Stone Artisans, 20 N.E.3d 883, 887 (Ind. Ct. App. 2014).
Additionally, we must consider the effects of our interpretation. Id. This court
has observed that the purpose of the HICA
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 the 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.
Benge v. Miller, 855 N.E.2d 716, 720 (Ind. Ct. App. 2006) (citations omitted).
We agree with the trial court’s sound reasoning that adopting McGraw’s
position would be meaningless and not cure the original contract. The main
focus of the right to cure was to remedy the deficiencies of the original contract
and to grant Jenkins the rights he was not awarded originally despite the
provisions enumerated in the HICA. These cured deficiencies only become
meaningful if a possibility to exercise these rights exists. By relating the
replacement cure contract back to the effective date of the original contract,
McGraw attempted to circumvent granting Jenkins an effective remedy. As the
HICA is instrumental in protecting consumers with contractors held to a strict
standard, the protection can only be effective if the consumer has knowledge of
the right. Jenkins received knowledge of his rights on October 27, 2017 when
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McGraw offered the replacement cure contract which included a dual right to
cancel the contract—either within three business days of the effective date of the
contract or within three business days of receiving notice from the insurance
company that the claim is partially or completely rejected. Therefore, we
conclude that the replacement cure contract is effective from the date of its
execution on October 27, 2017, and Jenkins timely exercised his right to cancel
the contract. 2
CONCLUSION
[15] Based on the foregoing, we hold that Jenkins timely cancelled the agreement
entered into with McGraw and affirm summary judgment in favor of Jenkins.
[16] Affirmed.
[17] May, J. and Altice, J. concur
2
Unlike McGraw’s contention, the trial court, by effectuating the replacement cure contract’s right to cancel
provision, did not void the contract but rather enforced it pursuant to its terms. This result does not offer a
windfall to Jenkins as McGraw’s unjust enrichment claim is still pending.
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