Wolfe v Eagle Ridge Hold Co.

FOR PUBLICATION

ATTORNEY FOR APPELLANT:

IAN A.T. McLEAN
Crawfordsville, Indiana

ATTORNEY FOR APPELLEE:
LIBERTY L. ROBERTS
Collier-Magar & Roberts, P.C.
Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

JERRY WOLFE, D/B/A WOLFE
CONSTRUCTION,
Appellant-Plaintiff and Cross Appellee,
vs.
EAGLE RIDGE HOLDING COMPANY, LLC., Appellee-Defendant and Cross Appellant.
No. 61A01-0610-CV-453

APPEAL FROM THE PARKE CIRCUIT COURT
The Honorable Sam Swaim, Judge
Cause No. 61C01-0510-CT-357

July 13, 2007

OPINION – FOR PUBLICATION

BARNES, Judge

Case Summary

Jerry Wolfe d/b/a Wolfe Construction Company (“Wolfe”) appeals the trial court’s refusal to foreclose a mechanic’s lien on property owned by Eagle Ridge Holding Company, LLC (“Eagle Ridge”) and awarding of a judgment in favor of Eagle Ridge in the amount of $13,917.14.  Eagle Ridge cross-appeals the trial court’s refusal to require Wolfe to pay Eagle Ridge’s attorney fees.1 We affirm in part, reverse in part, and remand.

Issues

The issues before us are:

I. whether an accord and satisfaction occurred that fulfilled Eagle Ridge’s debt to Wolfe that formed the basis of the mechanic’s lien;

II. whether the trial court properly calculated the damages to which Eagle Ridge is entitled based on Wolfe’s failure to release the mechanic’s lien; and

III. whether the trial court properly concluded that Wolfe was not required to pay Eagle Ridge’s attorney fees.

Facts

In June 2004, Eagle Ridge contracted with Wolfe to construct a building on Eagle Ridge’s property, also known as Cox Ford Recreation Park.  On October 27, 2004, after completion of the work, Wolfe sent Eagle Ridge a final invoice for $27,031.75.  On October 30, 2004, Eagle Ridge sent Wolfe a check for $12,000.00 as partial payment on the final invoice, thus leaving slightly over $15,000.00 unpaid under the invoice.  On November 15, 2004, Eagle Ridge sent a check, number 1031, to Wolfe in the amount of $10,461.94.  Written on both the front and back of the check were the words, “Full & Final Payment.”  App. p. 372.  The check was accompanied by a “Debit Memorandum” labeled, “Corrections to Final Cox Ford Recreation Park Invoice, dated October 27, 2004.”  Id. at 381.  This document listed several areas in which Eagle Ridge believed the final invoice was inaccurate and overcharged Eagle Ridge in the amount of $4,569.81.

Wolfe did not immediately cash check 1031.  Instead, on December 10, 2004, Wolfe filed with the Parke County recorder a notice of intention to hold a mechanic’s lien against Eagle Ridge’s property.  On June 8, 2005, Wolfe attempted to cash check 1031.  Above Wolfe’s endorsement of the check was a stamp stating, “Deposited without prejudice & with full reservation of all rights to balance per IC 26-1-1-207.  It is not an accord or [sic] satisfaction. . . .”  Id. at 372.  Eagle Ridge’s bank, Fifth Third, refused to cash the check because it was more than six months old.  On June 15, 2005, Eagle Ridge sent Wolfe a second check, number 1071, in the amount of $10,461.94.  Like check 1031, this check was also marked on the front and back, “Full & Final Payment.”  Id. at 377.  This check was accompanied by a letter from Glen Pyle of Eagle Ridge, explaining that it was intended to replace check 1031 and also stating, “I am sending this via certified mail, with return receipt requested, so that I will know that you have received the replacement check, which you can cash and have your complete payment.”  Ex. 17.  Like check 1031, check 1071 also was accompanied by an itemized list reflecting Eagle Ridge’s position on how much Wolfe had overcharged Eagle Ridge, though it was slightly different from the earlier list.  On June 28, 2005, Wolfe endorsed and cashed check 1071.  Wolfe’s endorsement this time was not accompanied by any language purporting to reserve the right to collect additional amounts.

Also during June 2005, Eagle Ridge began attempts to obtain a mortgage on the property with Fifth Third, after its earlier construction loan matured.  Fifth Third locked in an interest rate of 6.99% for Eagle Ridge while the loan was being negotiated and processed.  However, because of the mechanic’s lien encumbrance on the property, which resulted in difficulties obtaining title insurance, Fifth Third refused to close on the mortgage.

On September 23, 2005, counsel for Eagle Ridge sent a letter to Wolfe, demanding that the mechanic’s lien be released.  No earlier demand for release of the lien appears in the record.  Wolfe refused to release the lien.  However, in October 2005, Eagle Ridge, Fifth Third, and the title insurance company worked out an agreement whereby Eagle Ridge deposited $6,200.00 in an escrow account and the title insurance policy was issued.  The mortgage was closed in November 2005, but since June 2005 the interest rate had increased to 7.5%, adjustable every five years.

On October 24, 2005, Wolfe filed a complaint to foreclose the mechanic’s lien.  On November 9, 2005, Eagle Ridge filed an answer to the complaint and also filed a counterclaim, alleging that it suffered damages because of Wolfe’s refusal to release the lien and because of Wolfe’s poor workmanship on the construction project.  On September 18, 2006, the trial court entered judgment of $13,917.14 in favor of Eagle Ridge, and against Wolfe on his foreclosure complaint.  The $13,917.14 included $1,415.00 on Eagle Ridge’s poor workmanship claim2 and $12,502.14 for Wolfe’s refusal to release the mechanic’s lien.  That amount included $11,622.30 representing the additional interest Eagle Ridge must pay for five years on the Fifth Third mortgage by reason of the interest rate being 7.5% instead of 6.99%, $750.00 in attorney fees Fifth Third charged Eagle Ridge because of being named a defendant in Wolfe’s foreclosure suit, and $129.84 representing interest on the $6,200.00 Eagle Ridge had to deposit in escrow in order to close the mortgage.  The trial court refused Eagle Ridge’s request, made at trial, to require Wolfe to pay its attorney fees because Wolfe’s lawsuit allegedly was frivolous.  Wolfe now appeals, and Eagle Ridge cross-appeals.

Analysis

Because no request for findings and conclusions from either party appears in the record, the trial court’s entry of such was sua sponte.  Under such circumstances, we will not set aside the findings and judgment unless clearly erroneous.  Piles v. Gosman, 851 N.E.2d 1009, 1012 (Ind. Ct. App. 2006). A judgment is clearly erroneous if there is no evidence supporting the findings, or the findings fail to support the judgment, or if the trial court applies the wrong legal standard to properly found facts.  Id. Although we review findings of fact under the clearly erroneous standard, we do not defer to conclusions of law, which are reviewed de novo.  Id. Because the findings and conclusions here were issued sua sponte, they control only the issues they cover, and we will apply a general judgment standard to any issues about which the court did not make findings.  Id.

I.  Accord and Satisfaction

Wolfe’s first argument is that the trial court erred in concluding that “an accord and satisfaction was made” when he cashed check 1071 from Eagle Ridge in the amount of $10,461.94, thus extinguishing the debt that had formed the basis for the mechanic’s lien.  App. p. 16.  “The term ‘accord’ denotes an express contract between two parties by means of which the parties agree to settle some dispute on terms other than those originally contemplated, and the term ‘satisfaction’ denotes performance of the contract.”  Mominee v. King, 629 N.E.2d 1280, 1282 (Ind. Ct. App. 1994). The question of whether the party claiming accord and satisfaction has met its burden is ordinarily a question of fact but becomes a question of law if the requisite controlling facts are undisputed and clear.  Id.

We begin by noting that Wolfe’s endorsement of check 1031, which Fifth Third refused to cash because it was over six months old, was accompanied by a stamp claiming that Wolfe was reserving his right to collect the remainder of any debt still owing from Eagle Ridge after cashing of the check, pursuant to Indiana Code Section 26-1-1-207.  That statute, however, does not govern claims of accord and satisfaction.  See Ind. Code § 26-1-1-207(2).  In fact, the official comment to this section of the Uniform Commercial Code (“UCC”) expressly states:

Section 3-311 of revised Article 3 governs if an accord and satisfaction is attempted by tender of a negotiable instrument as stated in that section.  If Section 3-311 does not apply, the issue of whether an accord and satisfaction has been effected is determined by the law of contract.  Whether or not Section 3-311 applies, Section 1-207 has no application to an accord and satisfaction.

I.C. § 26-1-1-207, cmt. 3.

Thus, although neither of the parties nor the trial court mentioned it, Section 3-311 of Article 3 of the UCC is the controlling statute in this case because Eagle Ridge attempted an accord and satisfaction by tender of a negotiable instrument, i.e. a check.  This provision is codified in Indiana at Indiana Code Section 26-1-3.1-311 and states:

(a) If a person against whom a claim is asserted proves that:

(1) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim;

(2) the amount of the claim was unliquidated or subject to a bona fide dispute;  and

(3) the claimant obtained payment of the instrument;

the following subsections apply.

(b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.

(c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies:

(1) The claimant, if an organization, proves that:

(A) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place;  and

(B) the instrument or accompanying communication was not received by that designated person, office, or place.

(2) The claimant, whether or not an organization, proves that within ninety (90) days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted.  This subdivision does not apply if the claimant is an organization that sent a statement complying with subdivision (1)(A).

(d) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.

We quote at length from the official comment to this provision of the UCC:

1. This section deals with an informal method of dispute resolution carried out by use of a negotiable instrument.  In the typical case there is a dispute concerning the amount that is owed on a claim.

Case #1. The claim is for the price of goods or services sold to a consumer who asserts that he or she is not obliged to pay the full price for which the consumer was billed because of a defect or breach of warranty with respect to the goods or services.

* * * * *

In either case the person against whom the claim is asserted may attempt an accord and satisfaction of the disputed claim by tendering a check to the claimant for some amount less than the full amount claimed by the claimant.  A statement will be included on the check or in a communication accompanying the check to the effect that the check is offered as full payment or full satisfaction of the claim. Frequently, there is also a statement to the effect that obtaining payment of the check is an agreement by the claimant to a settlement of the dispute for the amount tendered. . . .

2. Comment d. to Restatement of Contracts, Section 281 discusses the full satisfaction check and the applicable common law rule.  In a case like Case #1, the buyer can propose a settlement of the disputed bill by a clear notation on the check indicating that the check is tendered as full satisfaction of the bill.  Under the common law rule the seller, by obtaining payment of the check accepts the offer of compromise by the buyer.  The result is the same if the seller adds a notation to the check indicating that the check is accepted under protest or in only partial satisfaction of the claim.  Under the common law rule the seller can refuse the check or can accept it subject to the condition stated by the buyer, but the seller can’t accept the check and refuse to be bound by the condition.  The rule applies only to an unliquidated claim or a claim disputed in good faith by the buyer.  The dispute in the courts was whether Section 1-207 changed the common law rule.  The Restatement states that section “need not be read as changing this well-established rule.”

3. As part of the revision of Article 3, Section 1-207 has been amended to add subsection (2) stating that Section 1-207 “does not apply to an accord and satisfaction.”  Because of that amendment and revised Article 3, Section 3-311 governs full satisfaction checks.  Section 3-311 follows the common law rule with some minor variations to reflect modern business conditions.  In cases covered by Section 3-311 there will often be an individual on one side of the dispute and a business organization on the other.  This section is not designed to favor either the individual or the business organization. . . .  Section 3-311 is based on a belief that the common law rule produces a fair result and that informal dispute resolution by full satisfaction checks should be encouraged.

I.C. § 26-1-3.1-311, cmt. 1-3 (emphases added).

In the present case, the undisputed facts are that Eagle Ridge tendered a “full satisfaction check” to Wolfe that was conspicuously marked on the front and back as being for full and final payment of Eagle Ridge’s outstanding debt to Wolfe, and which was accompanied by other correspondence indicating that the check was intended as full and final payment.  There is no indication the check was not tendered in good faith.  There clearly was a bona fide dispute over the amount Eagle Ridge owed Wolfe.  Wolfe chose to cash this check.  Under the plain language of Indiana Code Section 26-1-3.1-311(b) and the accompanying official commentary, this constituted, as a matter of law, full discharge of Wolfe’s claim against Eagle Ridge.  Neither of the only exceptions against full discharge, found in subsection (c) of Section 311, applied here.  Even if Wolfe had been successful in cashing check 1031, Wolfe’s endorsement of which purported to reserve his rights against Eagle Ridge, instead of check 1071, the endorsement of which had no such language, Eagle Ridge’s debt to Wolfe would have been discharged fully.  Section 311 provides a bright-line rule in this regard, and Wolfe’s cashing of Eagle Ridge’s clearly marked “full satisfaction check” operated as an accord and satisfaction.3 After cashing of the check, there no longer was a debt to support a mechanic’s lien against Eagle Ridge’s property.  We affirm the judgment against Wolfe on its complaint to foreclose the mechanic’s lien.4

II.  Damages

Wolfe argues that even if there was an accord and satisfaction that extinguished the debt supporting the mechanic’s lien, the trial court erred in its calculation of damages stemming from Wolfe’s failure to release the lien.  Eagle Ridge sought and the trial court awarded damages under Indiana Code Section 32-28-6-1, which provides in part:

(a) If:

(1) a person owns or has an interest in real estate to which a mechanic’s lien has been attached;

(2) the debt secured by the lien has [been] satisfied or paid;  and

(3) the person who owns or has an interest in the encumbered real estate demands that the lien be released; the lienholder shall release the lien within fifteen (15) days after the demand.

(b) If the lienholder does not release the lien within fifteen (15) days after the demand, the lienholder is liable to the person who owns or has an interest in the real estate to which the mechanic’s lien has been attached for the greater of:

(1) actual damages;  or

(2) liquidated damages in the sum of ten dollars ($10) per day from the fifteenth day until the release or expiration of the lien. . . .

When interpreting a statute, our objective is to determine and effect the intent of the legislature.  Pabey v. Pastrick, 816 N.E.2d 1138, 1148 (Ind. 2004). We will not presume that statutory language “‘is meaningless and without a definite purpose’” but must seek to give effect “‘to every word and clause.’”  Id. (quoting Combs v. Cook, 238 Ind. 392, 397, 151 N.E.2d 144, 147 (1958)).  If a statute is clear and unambiguous, the words and phrases it contains must be taken in their plain, ordinary, and usual sense.  Sees v. Bank One, Indiana, N.A., 839 N.E.2d 154, 157 (Ind. 2005).

We conclude the language of this statute is clear, and requires that a demand for release of a mechanic’s lien must be made before damages, either actual or liquidated, may begin to accrue to the lienholder for refusal to release the lien.  Mere payment of the underlying debt by itself is not sufficient; otherwise, subsection (a)(3), explicitly requiring a demand for release, would be surplusage.  Interpreting a statute in such a way as to render some of it mere surplusage would violate standard principles of statutory construction.  See Corr v. American Family Ins., 767 N.E.2d 535, 540 (Ind. 2002).  Moreover, subsection (b) of the statute expressly provides a fifteen-day “grace period” for responding to a request to release a mechanic’s lien, and it is only after that period that damages for wrongfully refusing to release a lien begin to accrue.  If damages began to accrue from the moment the debt underlying a mechanic’s lien was paid in full, the statute’s demand requirement and “grace period” effectively would be rendered a nullity.  The legislature certainly could have drafted this statute differently and omitted the demand requirement, but it did not.

The earliest evidence in the record of a demand by Eagle Ridge to Wolfe that the mechanic’s lien be released, as found by the trial court, is a letter from Eagle’s Ridge’s attorney to Wolfe dated September 23, 2005.  Eagle Ridge does not direct us to any evidence or make any argument that it made a demand at an earlier time.  The correspondence accompanying check 1071, sent in June 2005 which we have held extinguished the debt supporting the mechanic’s lien, made no mention of the lien.  Thus, the earliest date that damages against Wolfe for failing to release the lien could have begun to accrue would have been on or about October 8, 2005, or fifteen days after September 23.  Eagle Ridge, however, sought and obtained damages based upon the failure to close the Fifth Third mortgage in June 2005 with the locked-in interest rate of 6.99%.  Under Indiana Code Section 32-28-6-1, this was clearly erroneous as a matter of law because no demand for release of the lien had been made at that time.5

We reverse the trial court’s judgment in Eagle Ridge’s favor to the extent of $11,622.30, which represents the additional interest payments on the Fifth Third mortgage because of the rate increase between June and October 2005.  We remand for recalculation of Eagle Ridge’s actual damages sustained after October 8, 2005, based on Wolfe’s refusal to release the mechanic’s lien, or to award liquidated damages in accordance with the statute.6

III.  Cross-Appeal:  Attorney Fees

We now address Eagle Ridge’s cross-appeal claim that Wolfe is required to pay its attorney fees in this matter.  Eagle Ridge contends it is entitled to attorney fees under Indiana Code Section 34-52-1-1(b), which provides:

In any civil action, the court may award attorney’s fees as part of the cost to the prevailing party, if the court finds that either party:

(1) brought the action or defense on a claim or defense that is frivolous, unreasonable, or groundless;

(2) continued to litigate the action or defense after the party’s claim or defense clearly became frivolous, unreasonable, or groundless;  or

(3) litigated the action in bad faith.

A three-tiered approach to reviewing a trial court’s decision under this statute has developed.  First, we review the trial court’s findings of fact, if any, under the clearly erroneous standard; second, we review de novo the trial court’s legal conclusions; and third, we review the trial court’s decision whether to award attorney’s fees and any amount thereof under an abuse of discretion standard.  Emergency Physicians of Indianapolis v. Pettit, 714 N.E.2d 1111, 1115 (Ind. Ct. App. 1999), adopted in relevant part, 718 N.E.2d 753, 757 (Ind. 1999).  This court specifically has reviewed de novo a trial court’s determination regarding whether a party has pursued frivolous, unreasonable, or groundless defenses or claims. See id.

Ultimately, however, a trial court has discretion to award, or not award, attorney fees under Indiana Code Section 34-52-1-1(b) See Nelson v. Marchand, 691 N.E.2d 1264, 1269 (Ind. Ct. App. 1998). It is axiomatic that use of the permissive word “may” in a statute indicates a trial court is not required to act, but may do so within its discretion.  See, e.g., Wenzel v. Hopper & Galliher, P.C., 830 N.E.2d 996, 1003 (Ind. Ct. App. 2005).  Thus, in the present case even if the trial court should have concluded that Wolfe’s claims and defenses were frivolous, it still would not have been required to award attorney fees to Eagle Ridge.  See Kahn v. Cundiff, 533 N.E.2d 164, 172 (Ind. Ct. App. 1989), adopted, 543 N.E.2d 627, 629 (Ind. 1989) (stating, after concluding that appellant had made frivolous, unreasonable, or groundless arguments, that “the trial court could have awarded attorney fees” under the predecessor to Indiana Code Section 34-52-1-1(b) (emphasis added)).

Eagle Ridge contends that Wolfe’s insistence that his cashing of check 1071 did not constitute an accord and satisfaction and his subsequent lawsuit seeking to foreclose the mechanic’s lien were and are “frivolous.”  It directs us to the following finding of the trial court:

54. Jerry Wolfe admitted that Wolfe Construction Company had accepted Check No. 1071, which was clearly marked as full and final payment.  He testified that despite having accepted the check, he pursued his claim for a Mechanic’s Lien because he did not believe the terms should apply to him, even though he cashed the check and knew that it was intended as full and final payment.  Wolfe’s attorney did not offer any legal argument as to why the terms of the check did not apply to Wolfe Construction or argue for an extension or modification of the existing laws regarding accord and satisfaction.

App. p. 15.  The record does not indicate that this finding is clearly erroneous.  Given this, Eagle Ridge contends that the findings do not support the trial court’s conclusion, “This lawsuit was not a frivolous lawsuit as contemplated by Indiana Code 34-52-1-1 and each party shall be responsible for their own attorney fees.”  Id. at 17.  Instead, Eagle Ridge contends finding 54 compels the opposite conclusion, that Wolfe’s lawsuit was frivolous.

As indicated, we review the trial court’s conclusion regarding frivolousness de novo.  See Pettit, 714 N.E.2d at 1115.  A claim or defense is “frivolous” (a) if it is made primarily for the purpose of harassing or maliciously injuring a person, or (b) if the lawyer does not make a good faith and rational argument on the merits of the action, or (c) if the lawyer does not support the action taken by a good faith and rational argument for an extension, modification, or reversal of existing law. Kahn, 533 N.E.2d at 170. Finding 54 seems to indicate that Wolfe’s claim regarding accord and satisfaction was “frivolous” under this definition because his attorney failed to present any legal argument for an extension or modification of existing law that would conclusively demonstrate that there was an accord and satisfaction when Wolfe cashed check 1071.  We note, however, that accord and satisfaction is not a frequently litigated issue in this state.  Neither of the parties nor the trial court cited to Indiana Code Section 26-1-3.1-311, which as we held earlier controls the outcome of this case.  That statute has been on the books for fourteen years and we believe this is the first Indiana appellate court opinion to cite it.

Even if we were to hold that Wolfe’s claim that there was no accord and satisfaction was frivolous, this would not require Wolfe to pay Eagle Ridge’s attorney fees in this matter.  Despite the lack of support for Wolfe’s accord and satisfaction argument as recognized by the trial court, it still believed this case did not call for Wolfe to pay Eagle Ridge’s attorney fees.  We review that ultimate decision for an abuse of discretion.  “A trial court abuses its discretion when its decision is against the logic and effect of the facts and circumstances before the court or is contrary to law.”  Van Wieren v. Van Wieren, 858 N.E.2d 216, 223 (Ind. Ct. App. 2006).  We also note that we may affirm the trial court’s decision regarding attorney fees on any legal theory supported by the findings, if we are confident that affirmance is consistent with all of the trial court’s findings and inferences drawn from them.  See E & L Rental Equip., Inc. v. Wade Constr., Inc., 752 N.E.2d 655, 658 (Ind. Ct. App. 2001).  The rule regarding affirmance based on any legal theory should apply with additional force where the trial court entered findings sua sponte and was not required to do so.

The accord and satisfaction issue was only one of several issues that was litigated in this case.  There also was the question of the amount of damages to which Eagle Ridge was entitled if there was an accord and satisfaction, based on Wolfe’s failure to release the mechanic’s lien.  Eagle Ridge does not claim that Wolfe’s arguments in that regard were frivolous, and indeed Wolfe has substantially prevailed on that issue on appeal.  Additionally, Eagle Ridge sought and obtained damages based on its claim that it suffered damages because of Wolfe’s substandard work; Eagle Ridge does not claim that Wolfe’s defenses on that point were frivolous.  Wolfe did not challenge that award on appeal.

In other words, Eagle Ridge incurred attorney fees in litigating a variety of issues, only one of which might be classified as frivolous and would permit it to recover attorney fees.  However, the itemized bills from Eagle Ridge’s attorney do not differentiate between time spent on the allegedly frivolous claim and the non-frivolous claims or defenses of Wolfe.  Eagle Ridge has not attempted to make such a differentiation, and it is not clear how simple it would be to make it.  Under the circumstances, we cannot say that the failure to award attorney fees to Eagle Ridge was clearly against the logic and effect of the facts and circumstances before the trial court.  We affirm the denial of Eagle Ridge’s attorney fees request.

Conclusion

The trial court properly concluded there was an accord and satisfaction when Wolfe cashed Eagle Ridge’s check 1071. However, it erred in calculating the damages to which Eagle Ridge is entitled based on Wolfe’s failure to release the mechanic’s lien and we remand for recalculation of those damages. We also cannot say the trial court’s denial of Eagle Ridge’s attorney fees request constituted an abuse of discretion. We affirm in part, reverse in part, and remand.

Affirmed in part, reversed in part, and remanded.

NAJAM, J., and RILEY, J., concur.

1 There were other named parties in this action but the trial court’s judgment only affected Wolfe and Eagle Ridge.

2 Wolfe does not challenge this award on appeal.

3 Both of the parties discuss this court’s decision in Mominee at length.  Mominee does not cite or discuss Section 311 of Article 3 of the UCC, which was adopted in Indiana after the events of that case.  Nevertheless, its analysis is consistent with that statute and, indeed, would appear to reflect the common law rule mentioned in the official UCC commentary to the statute, namely that checks clearly tendered in good faith as full satisfaction of a claim work an accord and satisfaction if the creditor cashes the check, regardless of whether the creditor attempts to reserve rights to collect more than the amount of the check.  See Mominee, 629 N.E.2d at 1284.

4 It does not appear from the trial court’s order that it directed release of the mechanic’s lien, although Eagle Ridge sought such affirmative relief.  On remand, the trial court may wish to enter such an order.

5 Eagle Ridge seems to claim Wolfe waived any argument that he cannot be held liable for the increase in interest rates between June and October 2005 because he did not object when Eagle Ridge introduced a document indicating its increased mortgage payments due to the higher rate.  Wolfe does not claim error in the introduction of this exhibit, however; he only challenges the propriety of the damages award as a matter of law.  He did not waive that argument by not objecting to the exhibit.

6 Wolfe does not argue that the $129.84 awarded Eagle Ridge, representing interest on the $6,200.00 it had to place in escrow to close the mortgage, was improperly assessed.  It also appears to us that the $750.00 Fifth Third charged Eagle Ridge for being named a defendant in Wolfe’s foreclosure suit also constitutes “actual damages” resulting from Wolfe’s failure to release the mechanic’s lien after being demanded to do so.  Eagle Ridge is not entitled to those amounts, however, if the total amount of liquidated damages exceeds the total amount of properly calculated actual damages.  See I.C. § 32-28-6-1(b).

POSTED: 01/27/10

Weiss. Cincinnati Insurance v Harper.Harper.

FOR PUBLICATION

ATTORNEYS FOR APPELLANTS:

JEFFREY O. MEUNIER
Indianapolis, Indiana

RICHARD M. GIESEL
Gaston Cavanaugh & Giesel
Indianapolis, Indiana

ATTORNEYS FOR APPELLEES:

LIBERTY L. ROBERTS
KENNETH COLLIER-MAGAR

Collier-Magar & Roberts, P.C.
Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

MICHAEL WEISS d/b/a WEISS &
COMPANY, INC.,

Appellant-Defendant,

CINCINNATI INSURANCE COMPANY,Appellant/Intervenor-Defendant,
vs.
WARREN HARPER & MAUREEN HARPER, Appellees-Plaintiffs.
No. 49A02-0212-CV-1010

APPEAL FROM THE MARION CIRCUIT COURT
The Honorable William Lawrence, Judge
Cause No. 49C01-0001-CP-116

December 4, 2003

OPINION – FOR PUBLICATION
MAY, Judge

In 1991, Warren and Maureen Harper entered into a home improvement contract with Weiss & Company, Inc. (“Weiss”).1 Upon completion of the project, the Harpers experienced water leaks and damage to the interior of their home.  The Harpers filed a complaint against Weiss in Marion Circuit Court alleging in part they had suffered damages due to Weiss’ poor workmanship and home improvement fraud.  After a bench trial the trial court issued findings of fact and conclusions of law, in which it awarded to the Harpers compensatory damages in the amount of $157,651.04.  Weiss filed a motion to correct error, which was denied.

Weiss raises five issues on appeal, which we consolidate and restate as:

1.Whether the trial court’s findings are supported by the evidence and sufficiently specific to support the judgment;

2.Whether the trial court properly included in its award of costs items other than filing fees and statutory witness fees; and

3.Whether the award of attorneys fees to the Harpers was an abuse of discretion.

We affirm.2

FACTS AND PROCEDURAL HISTORY

In 1991, the Harpers contracted with Weiss to construct a two-story addition to the Harpers’ home.  Weiss began construction in the summer of 1991 and substantially completed the work in February 1992.  Shortly thereafter, water began to leak into the home in numerous areas as a result of a poorly constructed roof.  The leaks continued for several years.  The Harpers suffered damage to the interior of their home including wet and moldy drywall, peeling paint, water stains to the ceiling and walls, and an electrical fire in the breaker box.  The bathtub and shower in the master bath were also improperly installed, causing additional water damage to the nearby walls of the house.

Weiss made attempts over several years to repair the damage to the Harpers’ home, at times charging for those services and on other occasions making repairs free of charge.  Despite the repairs, water continued to leak into the home resulting in additional damage; therefore, Weiss eventually agreed to replace the roof.  During the roof replacement in the fall of 1998, more water damage occurred to the home during a storm because the roofers had not provided adequate coverage for the home.  Despite the roof replacement, there were more water leaks.

On September 30, 1999, the Harpers filed a complaint against Weiss alleging 1) the Harpers had suffered damages as a result of Weiss’ poor workmanship resulting in breach of contract; 2) Weiss had misrepresented the quality of the workmanship and materials used in constructing the additions, and thereby committed home improvement fraud; 3) as a result of the defects in the home, the Harpers’ insurance provider refused to renew their homeowners policy; and 4) the poor workmanship and damage had resulted in loss of value to the home in excess of $200,000.  A three-day bench trial commenced on December 4, 2001.3

Several witnesses in the fields of structural engineering and home building and remodeling testified regarding the quality of the addition Weiss constructed.  All experts agreed that both the original roof and the 1998 replacement roof on the Harpers’ home were of poor quality.  Even Weiss admitted the roof was poorly constructed.

Dave Adams, a sales representative and manager for Maxson Remodeling and Construction, testified regarding the repairs that should be made to correct the poor quality of the construction of the addition and the damages that resulted to the Harpers’ home.  In its report, Maxson Remodeling recommended the following repairs with an estimated total cost of $125,000 to $132,000:

1. Replace the insulation in the north and south attics, shim rafters where needed, add support members to ridge, and re-nail rafters to ridge;

2. Replace gutters with 6-inch gutters and 3-inch by 4-inch downspouts;

3. Replace trim, flashing, siding, drip edges, and guttering around the dormers, and prime and paint all dormers;

4. In the crawl space, install foundation vents, vapor barrier, foam board insulation around the perimeter, dig sump pit, install existing pit, and remove and replace one defective floor joist;

5. Replace exterior siding;

6. On the north end of the house, remove and replace roof over doors off family room, including the wood columns, replace all exterior trim around window, caulk and flash around window, install flashing on all windows on the north and south ends, install new siding around windows;

7. Throughout the house, repair or replace drywall, prime and paint drywall, repair ceilings, and paint as needed; and

8. Replace carpet in the master bedroom.4

Weiss presented the testimony of William Fox, a building code inspector with experience in home building and remodeling.  Fox disagreed there was a need for many of the repairs Maxson Remodeling recommended, proposed different methods to repair certain defects, and opined that Maxson’s budget estimate for the recommended repairs was too high.

The trial court issued its findings of fact and conclusions of law on October 4, 2002.  It determined the materials and workmanship employed in the construction of the addition to the Harpers’ home were of poor quality and Weiss was negligent in “performing all subsequent attempts to repair the damages caused” to the home.5 (Appellants App. at 25.)  The trial court awarded to the Harpers $125,000, which represented the “reasonable cost to repair the remaining defects” in the home, (id. at 23-24), and also awarded damages suffered by the Harpers in their attempts to assess and repair the damage to their home.  The total compensatory damage award was $157,651.04.  The trial court also determined that, pursuant to the home improvement contract, the Harpers as the prevailing party were entitled to costs and attorney fees.  Weiss filed a motion to correct error, which was denied.

STANDARD OF REVIEW

The Harpers requested special findings of fact and conclusions of law pursuant to Ind. Trial Rule 52(A).  Our standard of review is therefore two-tiered:  we determine whether the evidence supports the trial court’s findings, and whether the findings support the judgment.  Indianapolis Ind. Aamco Dealers Adver. Pool v. Anderson, 746 N.E.2d 383, 386 (Ind. Ct. App. 2001). We will not disturb the trial court’s findings or judgment unless they are clearly erroneous.  Id. Findings of fact are clearly erroneous when the record lacks any reasonable inference from the evidence to support them.  Culley v. McFadden Lake Corp., 674 N.E.2d 208, 211 (Ind. Ct. App. 1996).  A judgment is clearly erroneous when a review of the record leaves us with a firm conviction that a mistake has been made.  Carroll v. J.J.B. Hilliard, W.L. Lyons, Inc., 738 N.E.2d 1069, 1075 (Ind. Ct. App. 2000), trans. denied 761 N.E.2d 411 (Ind. 2001). We will neither reweigh evidence nor judge the credibility of witnesses, but will consider only the evidence favorable to the judgment and all reasonable inferences to be drawn therefrom.  Anderson, 746 N.E.2d at 386; Gunderson v. Rondinelli, 677 N.E.2d 601, 603 (Ind. Ct. App. 1997).

DISCUSSION AND DECISION

1. Adequacy of Findings of Fact

“Special findings are those which contain all facts necessary for recovery by a party in whose favor conclusions of law are found.”  Bowman v. Bowman, 686 N.E.2d 921, 925 (Ind. Ct. App. 1997). The findings are adequate if they are sufficient to support a valid legal basis for the trial court’s decision.  Id.  The purpose of special findings of fact is to provide reviewing courts with the theory on which the judge decided the case, so they should contain a statement of the ultimate facts from which the trial court determined the legal rights of the parties.  Id.  “On appeal, we construe the trial court’s findings together liberally in support of the judgment; however, we may not add anything to the special findings of fact by way of presumption, inference, or intendment.”  Baltimore & Ohio R.R. Co. v. Taylor, 589 N.E.2d 267, 271 (Ind. Ct. App. 1992), trans. denied 600 N.E.2d 543 (Ind. 1992) (citation omitted).  Where, as here, the issue on review relates to the award of damages, the damage award should not be reversed if it is within the scope of the evidence before the trial court.  Smith v. Washington, 734 N.E.2d 548, 550 (Ind. 2000), reh’g denied.

In its finding of fact number 87, the trial court determined “[i]n addition to the amount in Finding 88,6 [the Harpers] have sustained additional damages in the amount of $125,000, which represents the reasonable cost to repair the remaining defects in [the Harpers’] home caused by [Weiss’] breach of contract.”  (Appellant’s App. at 23-24) (footnote added).

Sufficiency of Findings

Weiss contends the trial court failed to issue findings sufficient to support its award of $125,000 to the Harpers.7 Weiss notes that in finding number 86, the trial court set out a specific amount of damages for each repair the Harpers had previously made.  “However, an equivalent finding was not made to support the award of $125,000 in damages under Finding nos. 87 and 88.”  (Appellant’s Br. at 6.)

In most of its first 85 findings, the trial court described in great detail Weiss’ inadequate workmanship and use of poor quality materials.  In finding number 86, it determined the damages due the Harpers for the repairs they had already made.  Finding number 87 addressed damages representing the “reasonable cost to repair the remaining defects” (Appellant’s App. at 23-24) (emphasis supplied) in the Harpers’ home caused by Weiss’ breach.  We decline to hold the trial court was obliged to restate in finding number 87 all the defects that had not yet been repaired and were therefore not itemized in finding number 86.

Furthermore, the finding that repair of the remaining defects would cost $125,000 was within the scope of the evidence.  The trial court had before it the report by Maxson Remodeling and Construction referred to above, which listed in detail the repairs that remained necessary and estimated the cost of those repairs to be in the range of $125,000 to $132,000.  It heard testimony to the same effect.  We acknowledge the “sharp conflict in the evidence in the record as to whether there are defects, the extent of the defects, and the cost to repair them,” (Appellant’s Br. at 7), but we must decline Weiss’ invitation to reweigh that evidence.  The damage award to the Harpers was well within the scope of the evidence before the trial court.  The findings of fact therefore are sufficient to support the award.

Specificity of Findings

Weiss argues finding number 87 lacks the specificity8 required to enable the parties and reviewing court to understand the trial court’s reasoning.9 Specifically, Weiss argues that although there was conflicting evidence with regard to the necessary repairs and their cost,

the trial court made no findings as to what comprised the other “remaining defects” and what is the “reasonable cost to repair” [] necessary to correct each individual item.  The trial court merely stated a total amount for all remaining defects.  Identification by the trial court of what constitutes the other “remaining defects” and what is the “reasonable cost to repair” to correct each is vital to permit this Court to give a meaningful review of the findings and judgment.

(Id. at 9.)

As explained above, a review of the findings as a whole leaves no doubt as to which were the “remaining” defects referred to in finding no. 87.  “A special finding of fact, as opposed to a general finding, contains all facts necessary for recovery by a party in whose favor conclusions of law are found and should contain a statement of the ultimate facts from which the trial court determines legal rights of the parties to the action.”  Willett v. Clark, 542 N.E.2d 1354, 1357 (Ind. Ct. App. 1989).  In an action for money damages the facts “necessary for recovery” are facts that indicate there was damage and that support the amount of the award.10 The trial court explained in great detail in its 88 findings of fact the problems that gave rise to the damages it ultimately awarded.  Its findings were sufficiently specific.

2. Award of Costs

The trial court awarded the Harpers costs in the amount of $7,150.91.  It included as costs such items as expert witness fees, travel expenses, deposition expenses, and photocopies.  Weiss asserts the award was error because the term “costs” in Ind. Code § 34-52-1-1 and T.R. 54(D) “is strictly interpreted to include only filing fees and statutory witness fees.”  (Appellant’s Br. at 15.)  Even assuming for purposes of argument Weiss’ interpretation of the term “costs” is correct, see, e.g., Van Winkle v. Nash, 761 N.E.2d 856 (Ind. Ct. App. 2002), we find no error as the “costs” were awarded pursuant to the contract between the Harpers and Weiss and not the code provision or trial rule.

The parties’ contract, which appears to have been drafted by Weiss, provides that the “costs of litigation” are an element of damages that may be recovered by the prevailing party.  (Ex. 1 at 13.)  The contract does not define “costs of litigation,” but the parties must have intended that the “costs of litigation” would include more than statutory “costs” as the contractual provision explicitly includes attorneys fees, which are not included in the category of “filing fees and statutory witness fees.”  We cannot say the trial court erred in awarding such items as expert witness fees, travel expenses, deposition expenses, and photocopies as “costs of litigation” pursuant to the parties’ contract.

3. Excessiveness of Attorneys Fees

The trial court awarded the Harpers attorneys fees in the amount of $55,000.  Weiss argues the fees were excessive.11

In reviewing a trial court’s award of attorneys fees, we apply an abuse of discretion standard.  Mason v. Mason, 775 N.E.2d 706, 711 (Ind. Ct. App. 2002), trans. denied 792 N.E.2d 34 (Ind. 2003).  A trial court has wide discretion in awarding attorneys fees, and we will reverse such an award only if it is clearly against the logic and effect of the facts and circumstances before the court.  Id. The trial court may look at the responsibility of the parties in incurring the attorneys fees. Id.  The trial judge has personal expertise he or she may use when determining reasonable attorneys fees.  Id.

The factors to be considered in determining the reasonableness of a fee include:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;  and

(8) whether the fee is fixed or contingent.

Ind. Professional Conduct Rule 1.5(a).

The Harpers filed an affidavit indicating the case spanned over four years and involved four expert witnesses, a number of lay witnesses, extensive discovery and three full days of testimony.  The affidavit indicates the Harpers’ counsel spent 462 hours working on the case and sought $150 per hour for their services.  We acknowledge Weiss’ characterization of this case as “a simple contractual claim,” the pursuit of which required “no special skill or extraordinary knowledge.”  (Appellant’s Br. at 16.)  Still, in light of the time and effort spent in this litigation we cannot say the trial court abused its discretion in awarding $55,000 in attorneys fees.

CONCLUSION

The trial court’s finding number 87 was supported by the evidence and was within the scope of the evidence.  The trial court did not err in awarding to the Harpers costs of litigation pursuant to the contract and did not abuse its discretion in its award of attorneys fees.  We accordingly affirm.

Affirmed.

KIRSCH, J., concurs.
MATHIAS, J., dissents with separate opinion.
IN THE
COURT OF APPEALS OF INDIANA

MICHAEL WEISS d/b/a WEISS & COMPANY, INC.,
Appellant-Defendant,
CINCINNATI INSURANCE COMPANY,
Appellant/Intervenor-Defendant,
vs.
WARREN HARPER & MAUREEN HARPER,
Appellees-Plaintiffs.
No. 49A02-0212-CV-1010

MATHIAS, Judge, dissenting

I respectfully dissent.

The majority acknowledges that “[t]he purpose of special findings of fact is to provide reviewing courts with the theory upon which the judge decided the case, so they should contain a statement of the ultimate facts from which the trial court determines the legal rights of the parties.”  Bowman v. Bowman, 686 N.E.2d 921, 925 (Ind. Ct. App. 1997) (citing Willett v. Clark, 542 N.E.2d 1354, 1357 (Ind. Ct. App. 1989)).  Further, “[o]n appeal, we construe the trial court’s findings together liberally in support of the judgment; however, we may not add anything to the special findings of fact by way of presumption, inference, or intendment.”  Baltimore & Ohio R.R. Co. v. Taylor, 589 N.E.2d 267, 271 (Ind. Ct. App. 1992), trans. denied (citation omitted).

In finding number 87, the trial court awarded $125,000 to the Harpers, “which represents the reasonable cost to repair the remaining defects” in their home.  In response to Weiss’s argument that finding number 87 is not sufficiently specific to support the damage award, the majority concludes:

As explained above, a review of the findings as a whole leaves no doubt as to which were the “remaining” defects referred to in finding no. 87. . . .   In an action for money damages the facts “necessary for recovery” are facts that indicate there was damage and that support the amount of the award.  The trial court explained in great detail in its 88 findings of fact the problems that gave rise to the damages it ultimately awarded.  Its findings were sufficiently specific.

Slip op. at 9-10.  I disagree.

At trial, the contested issues were 1) what defects still remained in the Harpers’ home, which required repair; 2) the method by which those defects were to be repaired; and 3) the cost to repair the remaining defects.  The Harpers’ witness, Dave Adams of Maxon Construction, and Weiss’s witness, William Fox, gave conflicting testimony concerning those issues, particularly regarding which, among the alternative methods, was required to repair the siding and drywall in the house.  For example, Adams testified that the exterior siding needed to be replaced, but Fox stated that the siding could be repaired at a significantly lower cost by either scraping and repainting it or by placing shims under the siding to allow moisture to evaporate.  Tr. pp. 194, 439-41, 465-66.  Despite lengthy testimony on this issue, the trial court never addressed it in its findings.  The trial court simply found that the siding was not back-primed, and as a result, it absorbed water, which “caused the paint on the exterior of the home to blister with water pockets, and caused the paint to peel.”  Appellant’s App. p. 22.

Additionally, several recommended repairs listed in the Maxon Remodeling report discussed at trial were not specifically addressed by the trial court in its findings.  For example, Dave Adams testified that the insulation in the north and south attics was damaged and needed to be replaced, but Weiss’s expert disagreed.  Tr. pp. 187-88, 438.  The trial court made no finding with regard to whether the insulation was damaged or whether it should be replaced.  Adams also determined that repairs were needed to the ceilings in various rooms in the Harpers’ home.  See Ex. Vol., Plaintiff’s Ex. 25; Tr. pp. 179-258 (testimony of Dave Adams).  Once again, the trial court failed to make any findings concerning whether the ceilings required repair.

Given the trial court’s $125,000 judgment, although the trial court never referenced the Maxon Remodeling report in its findings, I must presume that the trial court relied heavily on the report in issuing that damage award.  The trial court was clearly entitled to choose whom to believe among the experts.  However, as noted above, when our court reviews special findings of fact and conclusions of law, we may not add anything to those findings “by way of presumption, inference, or intendment.”   Therefore, under these circumstances, I reluctantly conclude that the trial court did not issue sufficiently specific findings to support its $125,000 judgment and would remand this case for a new trial limited to the issue of damages.12

1 When the Harpers entered into the contract, the company was known as Weiss & Curise, Inc., but after Curise left the company, it became Weiss & Company, Inc.

2 The Harpers’ request for oral argument is denied.

3 On November 13, 2001, Cincinnati Insurance Company intervened in the lawsuit.

4 This list is a summary of the repairs Maxson Remodeling recommended. Maxson’s report itemized the repairs by stating the room or area of the house where the defects were located.

5 Weiss does not challenge that determination in this appeal.

6 Finding number 88 states “Plaintiffs have sustained compensatory damages in the amount of $157,651.04.” (Appellant’s App. at 24.) It therefore appears the trial court meant to refer in finding number 87 to damages in addition to the amount in finding number 86, and not finding number 88.

7 Weiss also argues the $125,000 award was excessive, but premises that allegation of error only on the lack of evidentiary support for finding number 87. We therefore do not address the “excessive” nature of the verdict separately from the question whether the findings were sufficient to support the award.

8 Weiss premises this allegation of error on a statement from a workers compensation case, Outlaw v. Erbrich Products Co., Inc., 758 N.E.2d 65 (Ind. Ct. App. 2001). There we stated that “findings must be specific enough to provide the reader, whether it be the claimant, the employer, or this court, with an understanding of the Board’s reasons, based on the evidence, for its finding of ultimate fact.” Id. at 68.

Weiss acknowledges Outlaw was a workers compensation case but asserts, without explanation or citation to authority, that “the court’s analysis of the specificity required for findings of fact applies equally to finds [sic] of fact made by a trial court.” (Appellants’ Br. at 11.) We decline to so hold.

The Outlaw statement on which Weiss relies in this civil action for damages was based on Perez v. U.S. Steel Corp., 426 N.E.2d 29, 30 (Ind. 1981). There our supreme court determined a finding of the workers compensation board was inadequate to support its conclusion that Perez was totally disabled: “It does not reveal the factual basis for the Board’s ultimate determination of Perez’s claim, which is the quintessential purpose of the requirement that administrative agencies enter specific findings of fact as part of their orders.” (Emphasis supplied.) Our supreme court noted “as the General Assembly undoubtedly recognized in establishing the fact-finding requirement, specific findings of fact are essential to an effective system of administrative law.” Id. (emphasis supplied). The reasons for the fact-finding requirement “have to do with facilitating judicial review, avoiding judicial usurpation of administrative functions, assuring more careful administrative consideration, helping parties plan their cases for rehearings and judicial review, and keeping agencies within their jurisdiction.” Id. (emphasis supplied) (quoting Kenneth Davis, 2 Administrative Law Treatise § 16.05 (1958)). The Perez court relied also on statutory requirements for “specific” findings in the version of the Administrative Procedure Act in effect at that time.

The legal standard on which Weiss relies in this civil lawsuit thus appears applicable only to administrative fact-finding. We choose instead to apply the more useful standard of whether the damage award was within the scope of the evidence before the trial court. Under that standard, the trial court provided findings adequate to support the judgment.

9 Weiss also argues finding number 87 is actually a conclusion of law, which cannot be accepted as a finding of fact. However, in Hughes v. City of Gary, 741 N.E.2d 1168 (Ind. 2001), our supreme court noted that “where a trial court has made special findings pursuant to a party’s request under Trial Rule 52(A), the reviewing court may affirm the judgment on any legal theory supported by the findings. Any debate over the classification of each trial court finding as one of fact versus law does not, therefore, affect our analysis.” Id. at 1172 n.6. We acknowledge the Harpers’ position that finding number 87 is not a legal conclusion, but a factual determination as to the cost to repair the defects in their home.

10 Weiss also asserts, without explanation or citation to authority, that “[t]his additional specificity should include identification of . . . what ‘repairs’ are necessary to correct those defects.” (Appellant’s Br. at 13.) We decline to impose on the trial court an obligation to so micromanage the remediation of the defects in the Harper home. As the Harpers correctly note, this is an action for damages for Weiss’ breach, and not an action for specific performance. The trial court was not obliged in this action for damages to explain how to repair each problem, just as a trial court in a medical malpractice case would not be obliged to advise a physician or physical therapist how he or she might treat a plaintiff’s medical problems resulting from the malpractice.

11 Weiss also argues the award was improper because the Harpers failed to raise in the pleadings its request for attorneys fees and failed to present evidence at trial regarding a contractual claim for attorneys fees. The Harpers explicitly requested in their complaint “reasonable attorney’s fees.” (Appellant’s App. at 60.) The contract, which explicitly provided for recovery of attorneys fees by the prevailing party, was admitted into evidence. We therefore decline to address that allegation of error.

12 Under most circumstances, remanding this case to the trial court to make specific findings of fact concerning the defects to be repaired would be an appropriate resolution. See Willet, 542 N.E.2d at 1358-59. However, Judge Lawrence, who presided over the bench trial, has since retired from the Marion Circuit Court, and now serves as a magistrate in the United States District Court for the Southern District of Indiana.

POSTED: 01/27/10

Tuffendsam v Dearborn City Board of Health

385 F.3d 1124
(Cite as: 385 F.3d 1124)

United States Court of Appeals,
Seventh Circuit.
Barbara TUFFENDSAM, Plaintiff-Appellant,
v.
DEARBORN COUNTY BOARD OF HEALTH, et al., Defendants-Appellees.
No. 04-1486.

Argued Sept. 20, 2004.
Decided Oct. 15, 2004.

Background: Homeowner brought §1983 Fourteenth Amendment action against county health board and individual board members, alleging that board’s legal proceedings to force homeowner to correct septic tank problem constituted due process and equal protection violations. The United States District Court for the Southern District of Indiana, 2004 WL 256442,Hamilton, J., granted defendants’ summary judgment motion, and homeowner appealed.

Holdings: The Court of Appeals, Posner, Circuit Judge, held that:

(1) board’s laxity in failing to require previous owner to correct septic tank problem, together with board’s initiation of legal proceedings to force homeowner to correct same problem, was not cognizable as due process violation, and

(2) board’s uneven enforcement of sanitation laws did not amount to “class of one” equal protection violation.

Affirmed.

West Headnotes

[1] Constitutional Law 92 4326

92 Constitutional Law
92XXVII Due Process
92XXVII(G) Particular Issues and Applications
92XXVII(G)14 Environment and Health
92k4326 k. Waste Disposal and Management. Most Cited Cases (Formerly 92k278.1)

Health 198H 392

198H Health
198HII Public Health
198Hk390 Unsafe or Unhealthful Premises
198Hk392 k. Buildings, Structures, and Building Components. Most Cited Cases

County health board’s laxity in failing to require previous owner of house to correct septic tank problem, together with board’s initiation of legal proceedings to force current owner to correct same problem, was not cognizable under §1983 as due process violation against current owner; courts’ review of board’s enforcement actions was infeasible. U.S.C.A. Const.Amend. 14; 42 U.S.C.A. § 1983.

[2] Constitutional Law 92 3532

92 Constitutional Law
92XXVI Equal Protection
92XXVI(E) Particular Issues and Applications
92XXVI(E)4 Government Property, Facilities, and Funds
92k3530 Public Services
92k3532 k. Sewer, Water, and Drains. Most Cited Cases (Formerly 92k250.5)

Health 198H 392

198H Health
198HII Public Health
198Hk390 Unsafe or Unhealthful Premises
198Hk392 k. Buildings, Structures, and Building Components. Most Cited Cases.

County board’s uneven enforcement of sanitation laws, i.e. its initiation of legal proceedings against homeowner to force her to correct septic tank problem while not initiating such proceedings against previous owner, or against homeowner’s neighbors until homeowner objected, did not amount to “class of one” equal protection violation; there was no evidence that board intentionally treated homeowner worse in sense that it wanted her to be made worse off than neighbors, as opposed to merely knowing that its pattern of enforcement was uneven. U.S.C.A. Const.Amend. 14.

[3] Constitutional Law 92 3042

92 Constitutional Law
92XXVI Equal Protection
92XXVI(A) In General
92XXVI(A)5 Scope of Doctrine in General
92k3038 Discrimination and Classification
92k3042 k. “Class of One” Claims. Most Cited Cases (Formerly 92k211(1))

To make out prima facie case of “class of one” denial of equal protection, plaintiff must present evidence that defendant deliberately sought to deprive him of equal protection of the laws for reasons of personal nature unrelated to duties of defendant’s position. U.S.C.A. Const.Amend. 14.

[4] Constitutional Law 92 3045

92 Constitutional Law
92XXVI Equal Protection
92XXVI(A) In General
92XXVI(A)5 Scope of Doctrine in General
92k3045 k. Enforcement, Application, or Administration in General. Most Cited Cases (Formerly 92k211(3))

“Class of one” equal protection claim cannot be based solely on failure to prosecute at plaintiff’s behest. U.S.C.A. Const.Amend. 14.

*1125 C. Ed Massey (argued), Erlanger, KY, for Plaintiff-Appellant.

Liberty L. Roberts (argued), Collier-Magar & Roberts, Indianapolis, IN, for Defendants-Appellees.

Before POSNER, KANNE, and EVANS, Circuit Judges.

POSNER, Circuit Judge.

The plaintiff in this civil rights suit against a county health board and its members bought a house that had a septic tank rather than being connected to the municipal sewer system. Concerned that the septic tank might no longer be working properly, she negotiated a reduction in the price of the house that would help her defray the expense of her share of the cost of building a line that would connect her and her neighbors’ houses to the municipal sewer system.

Unbeknownst to her, more than two years earlier the county health board had discovered that the septic tank was indeed not working properly-that sewage was leaking from it-and had ordered the then-owner of the house to abate the sewage*1126 discharge within 90 days. He failed to do so and the board issued another, similar order, giving him another 30 days to comply. He failed to comply and the board failed to follow up. But after the plaintiff bought the house, the board finally woke up, and it began legal proceedings against her to get the problem corrected. Her neighbors refused to contribute to the cost of a sewer line and the plaintiff was unwilling to pay the entire cost ($40,000) herself. To place pressure on the neighbors, she complained to the board that their septic tanks were doubtless also leaking. The board investigated, agreed, and brought proceedings against them as well. Before waiting to see whether these proceedings would induce them to join with her in paying for a sewer line, she brought this suit against the board. The suit charges that by failing to get the previous owner to correct the problem and by failing to pursue the neighbors with the same vigor that it was pursuing her, the board deprived her of property without due process of law and also denied her the equal protection of the laws, all in violation of the Fourteenth Amendment. She seeks damages plus an order that the board buy her house from her and, presumably in the alternative, enforce the sanitation laws against the neighbors so that they’ll be induced to contribute to the cost of building a sewer line. There are many objections to her suit, but we can limit our discussion to two.

[1] The Constitution is, with immaterial exceptions, a charter of negative rather than positive liberties.
DeShaney v. Winnebago County Dept. of Social Services, 489 U.S. 189, 109 S.Ct. 998, 103 L.Ed.2d 249 (1989). It limits the powers of government but does not give people legally enforceable rights to demand public services and to obtain damages or other legal relief if the government fails to provide them. The value of the plaintiff’s house has been impaired for want of an adequate system for disposing of wastes. Had the county health board been on its toes the problem might have been corrected without cost, or at less cost, to the plaintiff, so she has been injured by laxity in law enforcement. But such laxity does not give rise to a constitutional claim.

DeShaney might seem distinguishable on the ground that the board caused in a direct sense, rather than merely failed to prevent (and thus “caused” in only an attenuated sense), the loss of value by bringing legal proceedings against Tuffendsam to abate the discharge-that were it not for laws against the open discharge of sewage, she could live in peace with her defective sewer system, spewing sewage into the surrounding land. And it is true that a government agency that places a person in peril cannot avoid responsibility if it fails to protect the person against the peril. Estate of Allen v. City of Rockford, 349 F.3d 1015, 1019 (7th Cir.2003); Reed v. Gardner, 986 F.2d 1122, 1125 (7th Cir.1993); Morse v. Lower Merion School District, 132 F.3d 902, 907 (3d Cir.1997); Uhlrig v. Harder, 64 F.3d 567, 572 (10th Cir.1995). But the fact that public health laws forbid discharging sewage into land and groundwater does not make the public health authorities responsible for the consequences of a homeowner’s having a defective septic tank. The health board was not the author of the sewage discharge.

But the root objection to cases of this kind, as noted by the district judge, is simply the infeasibility of judicial review of law enforcement. To evaluate the gravity, the unreasonableness, the gratuitousness of the county health board’s failure to cause a previous owner of the plaintiff’s house to abate the discharge of sewage, or of the board’s failure to induce through prompt and vigorous legal action the neighbors to contribute to the expense of building a sewer line, would place the federal courts in control of sanitation in Dearborn*1127 County, Indiana, responsible for telling the County’s public health officers how to allocate their limited time and money among the various public health problems clamoring for their attention. Judge Hamilton would be the Dearborn County health board.

[2][3] This point also dooms the plaintiff’s equal-protection claim. She contends and for purposes of this appeal we accept that the county health board is enforcing the public health laws more zealously against her than against either the previous owners of her house or their (now her) neighbors. There is no suggestion that the board is acting so for some invidious reason, such as the plaintiff’s race, and she is thus perforce appealing to the “class of one” cases, an area of increasing activity and concern in the wake of the Supreme Court’s decision in Village of Willowbrook v. Olech, 528 U.S. 562, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (2000) (per curiam). The Court held that an individual who has not been singled out because of race or some other trigger of invidious discrimination can still obtain a remedy under the equal protection clause for “irrational and wholly arbitrary” adverse treatment by government. Id. at 565, 120 S.Ct. 1073. Breathtaking vistas of liability are opened up by that formulation, leading us to hold in Hilton v. City of Wheeling, 209 F.3d 1005, 1008 (7th Cir.2000), “that to make out a prima facie case [of a ‘class of one’ denial of equal protection] the plaintiff must present evidence that the defendant deliberately sought to deprive him of the equal protection of the laws for reasons of a personal nature unrelated to the duties of the defendant’s position.” See also Purze v. Village of Winthrop Harbor, 286 F.3d 452, 455 (7th Cir.2002); Cruz v. Town of Cicero, 275 F.3d 579, 587 (7th Cir.2001); Bartell v. Aurora Public Schools, 263 F.3d 1143, 1149 (10th Cir.2001); Bell v. Duperrault, 367 F.3d 703, 709-13 (7th Cir.2004) (concurring opinion). There is no evidence of that here.

But as we noted recently in Indiana Land Co. v. City of Greenwood, 378 F.3d 705, 713 (7th Cir.2004), in two cases subsequent to Hilton-Nevel v. Village of Schaumburg, 297 F.3d 673, 681 (7th Cir.2002), and Albiero v. City of Kankakee, 246 F.3d 927, 932 (7th Cir.2001)-panels of this court stated, without citing Hilton, that as an alternative to the application of the standard laid down in that case, a class-of-one case could be proved simply by showing that the defendant had intentionally treated the plaintiff differently from others similarly situated and had had no rational basis for doing so. These divergent strands in the case law can, however, be woven together by noting that intentionality is an ambiguous concept, shading at one end into mere knowledge of likely consequences and at the other into a desire for those consequences. The county health board “intentionally” treated the plaintiff worse than it treated her predecessors and neighbors in the sense that it knew-it had to know-that its pattern of enforcement was uneven. But it did not “intentionally” treat the plaintiff worse in the sense of wanting her to be made worse off than those others. And it is the latter sense in which a “class of one” case requires a showing that government “intentionally” treated the plaintiff worse than others. In other words, we don’t think the Supreme Court in Olech intended to overrule Personnel Administrator of Massachusetts v. Feeney, 442 U.S. 256, 99 S.Ct. 2282, 60 L.Ed.2d 870 (1979), which holds that an official “intends” a consequence when he acts because rather than in spite of it.

[4] Whatever the outer bounds of the “class of one” concept, moreover, cases such as United States v. Armstrong, 517 U.S. 456, 464-65, 116 S.Ct. 1480, 134 L.Ed.2d 687 (1996), which hold that selective*1128 enforcement of the laws is not actionable as a violation of equal protection unless the selection is based on an invidious criterion such as race, and cases such as Heckler v. Chaney, 470 U.S. 821, 831-32, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985), which hold that the decision not to prosecute is generally unreviewable, preclude, we believe, a “class of one” claim based solely on a failure to prosecute at the plaintiff’s behest. See also Linda R.S. v. Richard D., 410 U.S. 614, 617-19, 93 S.Ct. 1146, 35 L.Ed.2d 536 (1973). The plaintiff in this case is a victim of uneven enforcement, nothing more, and as we said in Hameetman v. City of Chicago, 776 F.2d 636, 641 (7th Cir.1985), “The Constitution does not require states to enforce their laws (or cities their ordinances) with Prussian thoroughness as the price of being allowed to enforce them at all. Otherwise few speeders would have to pay traffic tickets. Selective, incomplete enforcement of the law is the norm in this country.”

AFFIRMED.

C.A.7 (Ind.),2004. Tuffendsam v. Dearborn County Bd. of Health 385 F.3d 1124

END OF DOCUMENT

POSTED: 01/26/10