FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:
JOSEPH L. MULVEY JOHN S. MERLAU
Rubin & Levin, P.C. New Palestine, Indiana
Indianapolis, Indiana
May 22 2014, 10:45 am
IN THE
COURT OF APPEALS OF INDIANA
YELLOWBOOK INC. f/k/a YELLOW BOOK )
SALES AND DISTRIBUTION COMPANY, INC., )
)
Appellant-Plaintiff, )
)
vs. ) No. 30A05-1311-CC-561
)
CENTRAL INDIANA COOLING & HEATING, )
INC. and LAWRENCE E. STONE aka )
LARRY STONE, )
)
Appellees-Defendants. )
APPEAL FROM THE HANCOCK SUPERIOR COURT
The Honorable Terry K. Snow, Judge
Cause No. 30D01-1110-CC-2115
May 22, 2014
OPINION - FOR PUBLICATION
RILEY, Judge
STATEMENT OF THE CASE
Appellant-Plaintiff, Yellow Book Inc. f/k/a/ Yellow Book Sales and Distribution
Company, Inc. (Yellow Book), appeals the trial court’s findings of fact and conclusions
of law in favor of Appellee-Defendant, Central Indiana Cooling & Heating, Inc. (Central
Indiana) and Lawrence E. Stone (Stone), with respect to Central Indiana’s payments
made pursuant to several advertising contracts entered into with Yellow Book.
We affirm in part, reverse in part, and remand with instructions.
ISSUES
Yellow Book raises three issues on appeal, which we restate as follows:
(1) Whether the trial court erred by concluding that Yellow Book failed to credit
certain Central Indiana payments totaling $19,717.10;
(2) Whether the trial court erred by concluding that Stone properly cancelled an
advertising contract with Yellow Book; and
(3) Whether the trial court erred by concluding that Yellow Book is not entitled to
recover prejudgment interest and reasonable attorney’s fees.
FACTS AND PROCEDURAL HISTORY
Stone is the owner of Central Indiana, which is essentially a small, one-man
corporation, that installs commercial and residential cooling and heating systems. On
October 8, 2007, Stone entered into a contract with Yellow Book to advertise his business
throughout central Indiana (Contract 1). Pursuant to Contract 1, Stone agreed to pay
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Yellow Book $3,037.00 per month for twelve months to publicize his services in Yellow
Book’s Indianapolis, Shelby County, and Hancock County directories.
The following year, on October 27, 2008, Jill Herman, on behalf of Central
Indiana, executed a new advertising contract with Yellow Book (Contract 2). In
accordance with the terms of Contract 2, Central Indiana agreed to pay Yellow Book a
monthly amount of $553.00 for twelve months to promote Central Indiana’s business in
the Hamilton and Hancock County directories.
On February 20, 2009, Stone executed a contract with Yellow Book for
advertisements in central Indiana (Contract 3). Contract 3 provided that Stone was to pay
Yellow Book $2,542.00 per month for twelve months in exchange for advertising Central
Indiana in Yellow Book’s 2010 Indianapolis directory.
On August 3, 2011, Yellow Book filed its Complaint against Central Indiana in
the Marion County Circuit Court, seeking recovery of damages arising from Central
Indiana’s failure to pay for the advertising provided pursuant to the three Contracts and
Stone’s personal guarantee on two of the advertising contracts. The case was
subsequently transferred to Hancock County Superior Court. On July 22, 2013, a bench
trial was conducted. On August 28, 2013, the trial court entered its findings of fact and
conclusions of law, issuing judgment as follows:
[Central Indiana and Stone] entered into a contract with [Yellow Book] and
there was miscommunication between [Central Indiana and Stone] and
[Yellow Book]. The [c]ourt finds [Central Indiana and Stone] to be
appropriately credited for payments he testified he made to [Yellow Book]
which were not applied to the contract in the amount of $19,707.10 which
leaves [Yellow Book] with a judgment in the amount of $22,135.07 with
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interest in the amount of $3,984.31. There will be no award of attorney
fees in said matter.
(Appellant’s App. p. 25).
On September 12, 2013, Central Indiana and Stone filed their motion to correct
error, claiming that because Stone had cancelled Contract 3, Central Indiana did not owe
anything to Yellow Book after certain uncredited payments were applied to the
indebtedness owed on Contracts 1 and 2. On September 23, 2013, Yellow Book filed its
response to the motion to correct error, as well as a cross-motion to correct error. In its
cross-motion, Yellow Book requested the trial court to enter an amended judgment for
the full amount sought by Yellow Book because the evidence reflected that all payments
made by Central Indiana and Stone had been properly credited and Contract 3 had not
been cancelled. On October 4, 2013, the trial court conducted a hearing on the parties’
motions and on October 18, 2013, the trial court entered its Order on the Parties
[Motions] to Correct Error, finding that Contract 3 was properly cancelled and amending
the judgment “for [Central Indiana and Stone]” and “against [Yellow Book] cost paid.”
(Appellant’s App. p. 53).
Yellow Book now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
Where, as here, the trial court sua sponte enters specific findings of fact and
conclusions, we review its findings and conclusions to determine whether the evidence
supports the findings, and whether the findings support the judgment. Helm v. Helm, 873
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N.E.2d 83, 87 (Ind. Ct. App. 2007). We will set aside the trial court’s findings and
conclusions only if they are clearly erroneous. Id. A judgment is clearly erroneous when
a review of the record leaves us with a firm conviction that a mistake was made. Id. We
neither reweigh the evidence nor assess the witnesses’ credibility, and consider only the
evidence mist favorable to the judgment. Id. Further, “findings made sua sponte control
only . . . the issues they cover and a general judgment will control as to the issues upon
whether there are no findings. A general judgment entered with findings will be affirmed
if it can be sustained on any legal theory supported by the evidence.” Id.II. Crediting of Payments
Yellow Book contends that Central Indiana paid a total of $25,876.27 under
Contract 1, and incurred late fees in the amount of $845.93, leaving an unpaid balance to
Yellow Book on Contract 1 of $11,413.67. Contract 2 was executed for a total amount of
$6,636.00; Central Indiana did not make any payments under this Contract. However,
the trial court concluded that Central Indiana had made payments in the amount of
$19,717.10 which had not been properly credited by Yellow Book to Central Indiana’s
accounts, thereby entitling Yellow Book to no further debit. Yellow Book now disputes
the trial court’s conclusion.
At trial, Yellow Book’s corporate paralegal representative, Natalia Anderson
(Anderson), testified as to Central Indiana’s payments under the Contracts. Anderson
clarified the payments made and amounts owed by Central Heating to Yellow Book
under the Contracts. She explained that it is Yellow Book’s practice to apply the
payments to the older directories first and then “to the oldest balance outstanding on the
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directories.” (Transcript p. 20). As such, Anderson stated that all of Central Indiana’s
checks—which Central Indiana claimed to be uncredited—were divided up to be applied
to the oldest balance first.
During Stone’s cross-examination, Stone was asked to compare each of the
perceived uncredited payments with the payments as reflected on Yellow Book’s
Statement of Account. For example, Stone had previously testified that a payment made
on July 5, 2009 in the amount of $4,566 had not been credited. However, during
questioning, he conceded that this payment had been divided into four separate payments
of $200, $3,838.00, $353.00, and $179.00 and had been credited towards separate
balances or directories on July 13, 2009. At the conclusion of his interrogation, Stone
admitted that all payments, with the exception of two, “were credited” by Yellow Book to
the Contracts executed by Central Indiana. (Tr. p. 97). Unlike for the other payments,
Stone did not submit any evidence that the two missing payments that had not been
credited by Yellow Book had, in fact, been made by Stone in the first place.
In support of his argument that his payments had not been properly credited
towards his accounts, Stone focuses on a facsimile sent by Yellow Book sales
representative, Theresa Angleton (Angleton), to Stone on November 16, 2007. In her
facsimile, Angleton suggested to “reconcile the check #’s with the payment amounts.
Maybe there is a payment missing?” (Respondent’s Exh. B). In this facsimile, Angleton
did not admit—as asserted by Stone—that Yellow Book had not credited certain
payments. Furthermore, Angleton’s facsimile was sent eleven months before Central
Indiana made any of the perceived uncredited payments.
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Mindful of Stone’s admission at trial that all payments he had perceived as
omitted from Yellow Book’s account statement had in fact been credited towards his
unpaid balances, we conclude that Stone owes the remaining balance under Contracts 1
and 2. Therefore, the trial court improperly concluded that Stone was not indebted to
Yellow Book under Contracts 1 and 2.
III. Contract 3
Focusing on Contract 3, Yellow Book contends that the trial court erroneously
concluded that the Contract was properly cancelled. Although Central Indiana alleged
fraud in the inducement of the Contract, the trial court merely referenced a
“miscommunication” as the basis for its conclusion that Contract 3 was cancelled and
that Central Indiana did not owe Yellow Book any payments under this Contract.
(Appellant’s App. p. 25). In its findings, the trial court noted as follows:
3. On February 20, 2009, Stone executed a contract with Yellow Book on
behalf of [Central Indiana], whereby [Central Indiana] agreed to pay
Yellow Book $2,542.00 per month for twelve months ($30,504.00 total) in
exchange for advertising in Yellow Book’s 2010 Indianapolis directory.
Contract 3 contains language providing that, by executing it, Stone
personally guaranteed any indebtedness that [Central Indiana] incurred with
Yellow Book. . . . At trial, the sole defense of [Central Indiana] and Stone
for liability for amounts under Contract 3 was that Contract 3, according to
Stone, was only to be a placeholder in the Indianapolis directory, and that a
subsequent contract, reflecting a prize of only $500 per month (as opposed
to $2,542.00 per month) was to be provided by Yellow Book to Stone and
[Central Indiana], which would supersede the version of Contract 3 that
was actually executed.
...
13. [Central Indiana] made between eight and fifteen phone calls to various
representatives of [Yellow Book] located in various offices commencing
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the day after the signing of the third contract when no one brought him the
corrected contract for the agreed reduced amount.
14. Finally after receiving no response to his numerous phone calls
[Central Indiana] sent a fax to various representatives of [Yellow Book]
expressing his concern and demanding the signed contract be corrected or
cancelled as per the representations previously made and again expressing
the contract was executed only to reserve his advertising position in the
directory a[t] the request and direction of [Yellow Book’s] representative.
Said fax was sent four days after the contract in question was signed. Said
fax was also a timely cancellation notice as again [Central Indiana] relied
upon the representations of [Yellow Book’s] employees in the manner in
which said notices could be provided.
(Appellant’s App. pp. 22-23, 25) (internal references omitted) (emphasis added).
To establish fraud, Central Indiana would have to prove that Yellow Book made
(1) a material representation of a past or existing fact (2) that was untrue and known to be
untrue, or else recklessly made, and (3) that Central Indiana did in fact rely on the
representation, (4) which proximately caused it to suffer injury. Circle Ctr. Dev. Co. v.
Y/P Ind., L.P., 762 N.E.2d 176, 179 (Ind. Ct. App. 2002), trans. denied. Although the
trial court did not make an explicit conclusion of fraud, but merely alluded to a
‘miscommunication,’ the trial court’s findings clarify that this phrasing should be
interpreted and read as a misrepresentation.
Yellow Book now contends that even if the trial court’s conclusion should be
characterized as a fraud in the inducement, evidence of the oral misrepresentations is not
admissible due to the inclusion of an integration clause in Contract 3. Specifically,
paragraph 14F of Contract 3 provides:
This agreement supersedes any other verbal or written agreement between
Customer and Publisher. This agreement may not be changed except by a
writing signed by an authorized signatory of Customer and Publisher.
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(Plaintiff’s Exh. 5).
“An integration clause of a contract is to be considered as any other contract
provision to determine the intention of the parties and to determine if that which they
intended is fully expressed in the four corners of the writing.” Prall v. Ind. Nat’l Bank,
627 N.E.2d 1374, 1377-78 (Ind. Ct. App. 1994). “Generally, where parties have reduced
an agreement to writing and have stated in an integration clause that the written document
embodies the complete agreement between the parties, the parol evidence rule prohibits
courts from considering extrinsic evidence for the purpose of varying or adding to the
terms of the written contract.” Id. “An exception to the parol evidence rule applies,
however, in the case of fraud in the inducement, where a party was ‘induced’ through
fraudulent representations to enter a contract.” Circle Ctr. Dev. Co., 762 N.E.2d at 179.
A party can overcome the effect of an integration clause if it can show if it had a right to
rely on the alleged misrepresentations and did in fact rely on them in executing the
release and/or interpretation clause. Wind Wire, LLC v. Finney, 977 N.E.2d 401, 405
(Ind. Ct. App. 2012). Prall indicated that “[w]hether one has the right to rely depends
largely on the facts of the case.” Prall, 627 N.E.2d at 1379.
The evidence reflected, and the trial court found, that Stone entered into Contract
3 during a meeting with Yellow Book’s representative, Tina Dunn (Dunn). Stone
testified that, even though he had requested “a much smaller contract,” Dunn brought the
wrong contract and told him to “get this one signed and get it over with to hold [my]
placement [in the Yellow Book].” (Transcript p. 63). She told Stone that she “would get
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[him] the smaller contract” for five hundred dollars. (Tr. p. 64). Because Stone “felt
pressured” and “liked the placement,” he signed the contract. (Tr. pp. 63, 64). When he
did not receive the smaller contract the following day, Stone “tried to call [Dunn] several
times and continued to call the next couple of days.” (Tr. p. 64). As he was not
successful, Stone contacted Dunn’s supervisor, Brian Blake (Blake). Finally, Stone sent
a facsimile to Dunn and Blake, cancelling the contract. The evidence further indicates
that, at the time Stone executed the contract, Dunn knew that Yellow Book did not “have
lesser payments on signed contracts.” (Tr. p. 42). Dunn also testified that she never
mentioned that the executed contract could not serve as a place holder until a smaller
contract could be sent to Stone.
Mindful of the trial court’s credibility determination, we conclude that Stone had a
right to rely on Dunn’s representations. Dunn, a Yellow Book representative, assured
him a less costly contract was available and the current, signed contract would only serve
as a placeholder until the cheaper agreement could be executed. Dunn clearly made the
representation with the intent that Stone would sign the current contract. Stone took
Dunn’s statements at face value and did not independently investigate them. See contra
Prall, 627 N.E.2d at 1378-79 (Prall testified he had independently investigated Indiana
National Bank’s representations). Absent these representations, Stone would not have
entered into Contract 3 and consequently caused the execution of the integration clause.
Therefore, because fraud in the inducement caused Stone to enter Contract 3, Contract 3
is rescinded.
IV. Pre-Judgment Interest and Attorney’s Fees
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Finally, Yellow Book contends the trial court erred when it denied an award of
pre-judgment interest and attorney’s fees. Contract 1 and Contract 21 provide that
If Publisher does not receive the full amount invoiced by the due date on
the bill, Publisher may assess a late charge not to exceed 1.5% per month of
the overdue amount.
***
In the event Publisher refers Customer’s account to a collection agency or
attorney due to a non-payment, Customer will be liable for all of
Publisher’s reasonable costs and expenses incurred in connection with
Customer’s non-payment, including without limitation, court costs and
reasonable attorney’s fees up to 25% of the unpaid account balance (plus
interest accrued thereon).
(Plaintiff’s Exh. 3).
A. Pre-Judgment Interest
An award of pre-judgment interest in a breach of contract action is warranted if the
amount of the claim rests upon a simple calculation and the terms of the contract make
such a claim ascertainable. Noble Roman’s Inc. v. Ward, 760 N.E.2d 1132, 1140 (Ind.
Ct. App. 2002). “The test for determining whether an award of pre-judgment interest is
appropriate is whether the damages are complete and may be ascertained as of a
particular time.” Id. Importantly for purposes of our review, “an award of pre-judgment
interest is generally not considered a matter of discretion.” Id.Here, prejudgment interest on the amounts owed under Contracts 1 and 2 are
easily calculated and arose at a particular time. Therefore, because we reversed the trial
1
Because we concluded that Contract 3 was rescinded as it was induced by fraud, Yellow Book is not
entitled to pre-judgment interest and attorney’s fees on Contract 3.
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court with respect to Contracts 1 and 2, we now remand for a calculation of pre-judgment
interest on the amounts owed.
B. Attorney’s fees
During the hearing, counsel for Yellow Book noted that his law firm had
“expended 70.00 hours to date” and requested fees in the amount of “$ 17,375.00.”
(Plaintiff’s Exh. 14). He testified that this amount reflected the work incurred on the
three Contracts and he had not made a calculation with respect to each individual
Contract.
Because we hold that Yellow Book is only entitled to attorney’s fees with respect
to Contracts 1 and 2, we direct the trial court on remand to consider what would
constitute a reasonable attorney’s fees award for the two Contracts. “An excessive
attorney fee award can be avoided when fees are apportioned according to the
significance of the issues upon which a party prevails, balanced against those on which
the party does not avail.” Stepp v. Duffy, 686 N.E.2d 148, 153 (Ind. Ct. App. 1997),
trans. denied. Additionally, pursuant to the terms of Contract 1, Stone is personally
liable for the indebtedness incurred by Central Indiana under this Contract. (See Clause
15G—“By his/her execution of this agreement, the signer personally and individually
undertakes and assumes, jointly and severally with the Customer, the full performance of
this agreement, including payment of amounts due hereunder.”).2 Therefore, we remand
2
We do not reach a similar conclusion with respect to Contract 2 as Contract 2 was signed by Stone’s
employee who is not a party or involved in this cause.
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to the trial court for a calculation of the pre-judgment interest and reasonable attorney’s
fees pursuant to Contracts 1 and 2.
CONCLUSION
Based on the foregoing, we conclude that (1) the trial court erred when it
concluded that Yellow Book failed to credit certain Central Indiana payments under
Contracts 1 and 2; (2) Contract 3 was induced by fraud and is rescinded; and (3) Yellow
Book is entitled to pre-judgment interest and reasonable attorney’s fees for amounts owed
under Contracts 1 and 2.
Affirmed in part, reversed in part, and remanded with instructions.
ROBB, J. and BRADFORD, J. concur
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