Case Title: Trinity Homes, LLC v. Frank Y. Fang

Citation: 

Docket Number: 06S05-0503-CV-124

State: indiana

Court: Indiana Supreme Court

Date: 2006-06-13T00:00:00Z

Document:
ATTORNEYS FOR APPELLANT 
 
 
 
 
 
David E. Bostwick 
 
 
 
 
 
 
Easter & Cavosie  
 
 
 
 
 
Indianapolis, Indiana 
 
ATTORNEYS FOR AMICUS CURIAE 
BUILDERS ASSOCIATION OF GREATER 
INDIANAPOLIS, INC. AND THE INDIANA 
BUILDERS ASSOCIATION 
Jeffrey W. Scripture 
Paul C. Sweeney 
Harrison & Moberly, LLP 
Indianapolis, Indiana 
______________________________________________________________________________ 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 06S01-0503-CV-124 
 
TRINITY HOMES, LLC,  
 
 
 
 
 
 
 
 
Appellant (Defendant below), 
 
v. 
 
FRANK Y. FANG, 
 
 
 
 
 
 
 
 
Appellee (Plaintiff below). 
_________________________________ 
 
Appeal from the Boone Small Claims Court, No. 06D02-0310-SC-1357 
The Honorable Mark X. Sullivan, Small Claims Commissioner  
________________________________ 
 
On Petition To Transfer from the Indiana Court of Appeals, No. 06A01-0404-CV-167 
_________________________________ 
 
June 13, 2006 
 
Boehm, Justice. 
 
Property taxes assessed on a single tract of land which is later subdivided into individual 
lots, are due and payable with respect to the lots even if the lots were not assessed individually.  
 
Facts and Procedural History 
Trinity Homes, LLC owned a tract of real estate in Boone County which it intended to 
subdivide into individual lots for residential development as the Brittany Chase subdivision.  In 
July 1999, Frank Fang as “Purchaser” entered into a Home Purchase Agreement with Trinity as 
“Seller” to buy Lot 38 in the subdivision.  The Agreement included a “Tax Provision” that reads:  
“all real estate taxes and assessments, if any, including penalties and interest, which are due and 
payable with respect to the real estate will be paid by Seller at the closing.  Seller agrees to pay 
first real estate installment due after settlement.  Purchaser agrees to pay taxes and assessments 
thereafter.”   
Real estate in Indiana is assessed as of March 1 of each year for ad valorem property tax 
purposes, and the taxes for each year are due and payable in May and November of the following 
year.  The closing of Fang’s lot occurred on March 3, 2000.  Trinity Homes paid both the May 
and November 2000 property tax installments.  The May and November 2000 installments were 
taxes based on the March 1, 1999 assessment which had been conducted before the tract of land 
had been subdivided into separate lots.  By the spring of 2001 the taxing authorities had assessed 
the taxes for 2000 on the individual lots, and sent Fang a bill for $2,074.95, due in May 2001.  It 
is that May installment that is in dispute here.  Fang paid the May 2001 bill, but contended that 
under the Tax Provision it was Trinity’s responsibility and not his. 
After Trinity refused Fang’s request for reimbursement, Fang filed suit in the small 
claims division of the Boone Superior Court.  The parties relied solely on documents including 
the Home Purchase Agreement, and no testimony was offered at trial.  Fang contended that 
because Lot 38 was first assessed as a separate lot on March 1, 2000, and that assessment was 
not due and payable until May and November 2001, the first installment due and payable with 
respect to Lot 38 was the May 2001 installment, which he paid. 
 
The trial court determined that the Tax Provision in the Agreement was ambiguous and 
entered judgment in Fang’s favor in the amount of the May 2001 tax installment along with court 
costs, for a total award of $2,118.95.  The Court of Appeals agreed that the contract was 
ambiguous and affirmed the trial court in an unpublished memorandum decision.  Trinity 
 
2
Homes, LLC v. Fang, 817 N.E.2d 701 (Ind. Ct. App. 2004).  We granted transfer.  Trinity 
Homes, LLC v. Fang, 2005 Ind. LEXIS 259 (Ind. Mar. 24, 2005). 
Standard of Review 
 
Judgments in small claims actions are “subject to review as prescribed by relevant 
Indiana rules and statutes.”  Ind. Small Claims Rule 11(A).  Under Indiana Trial Rule 52(A), the 
clearly erroneous standard applies to appellate review of facts determined in a bench trial with 
due regard given to the opportunity of the trial court to assess witness credibility.  This 
“deferential standard of review is particularly important in small claims actions, where trials are 
‘informal, with the sole objective of dispensing speedy justice between the parties according to 
the rules of substantive law.’”  City of Dunkirk Water & Sewage Dep’t v. Hall, 657 N.E.2d 115, 
116 (Ind. 1995) (quoting S.C.R. 8(A)).  But this deferential standard does not apply to the 
substantive rules of law, which are reviewed de novo just as they are in appeals from a court of 
general jurisdiction.  Lae v. Householder, 789 N.E.2d 481, 483 (Ind. 2003).  Similarly, where a 
small claims case turns solely on documentary evidence, we review de novo, just as we review 
summary judgment rulings and other “paper records.”  See Harrison v. Thomas, 761 N.E.2d 816, 
818 (Ind. 2002) (reviewing the trial court’s decision de novo after a bench trial where the parties 
relied on documentary evidence); Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 531 (Ind. 
2006) (“To the extent the evidence the parties offered is admissible, it is documentary . . . .  our 
standard of review is de novo.”)  The only issue in this case turns on the meaning of the contract, 
which is a pure question of law and is reviewed de novo.  Dunn v. Meridian Mut. Ins. Co., 836 
N.E.2d 249, 251 (Ind. 2005). 
 
We observe that Fang has filed no brief.  When the appellee has failed to submit an 
answer brief we need not undertake the burden of developing an argument on the appellee’s 
behalf.  Rather, we will reverse the trial court’s judgment if the appellant’s brief presents a case 
of prima facia error.  Gibson v. City of Indianapolis, 242 Ind. 447, 448, 179 N.E.2d 291, 292 
(1962).  Prima facia error in this context is defined as, “at first sight, on first appearance, or on 
the face of it.”  Santana v. Santana, 708 N.E.2d 886, 887 (Ind. Ct. App. 1999).  Where an 
appellant is unable to meet this burden, we will affirm.  Id. 
 
 
3
When Property Taxes Become “Due and Payable With Respect to” a Parcel 
 
In this case the trial court determined that the Tax Provision was ambiguous as to 
whether Trinity was obligated to pay the first installment of taxes after the closing of the contract 
which was based on an assessment of the entire tract of land, or the first installment of taxes 
based on the first individual assessment of Lot 38.  The Court of Appeals agreed and construed 
the document against Trinity, the drafter.  We agree that it is generally appropriate to construe an 
ambiguous agreement against its drafter.  See MPACT Constr. Group, LLC v. Superior Concrete 
Constructors, Inc., 802 N.E.2d 901, 910 (Ind. 2004).  But we also agree with Trinity and the 
Amici Curiae, the Builders Association of Greater Indianapolis, Inc. and the Indiana Builder’s 
Association, that the Tax Provision is not ambiguous.   
Real property in Indiana is assessed for tax purposes on the first day of March of each 
year, but the taxes are not required to be paid until May 10 and November 10 of the following 
calendar year.  See Ind. Code §§ 6-1.1-1-2, 6-1.1-22-9 (2004).  Indiana Code section 6-1.1-2-4(a) 
also provides: 
The owner of any real property on the assessment date of a year is liable for the 
taxes imposed for that year on the property . . . . When a person other than the 
owner pays any property taxes, as required by this section, that person may 
recover the amount paid from the owner, unless the parties have agreed to other 
terms in a contract. 
Trinity argues that the Tax Provision unambiguously provided that Trinity would pay the first tax 
installment due and payable after the March 3, 2000 closing, and it did so by paying the 
installment due in May 2000.  The term “due and payable” is the conventional terminology to 
describe the date when the taxes must be paid.  As the Court of Appeals has observed: 
Barring any qualifying expression, in common usage the word “due” means that 
“the debt or claim in question is now (presently or immediately) matured and 
enforceable.”  When qualified by the expression “payable” the word “due” means 
that the debt or claim “is fixed and certain but the day appointed for its payment 
has not yet arrived.”  . . . [I]n the context of a real or personal property tax, the 
term has long been used to refer to the “day appointed for its payment.” 
Beiger Heritage Corp. v. Montandon, 691 N.E.2d 1334, 1337 (Ind. Ct. App. 1998) (internal 
citations omitted).  We think there is no serious question that the May 2000 installment was the 
 
4
first installment of any real estate tax that was due and payable after the March 3, 2000 closing 
on Fang’s lot.  The only issue is whether the installment was the first due and payable “with 
respect to the real estate,” i.e., on Fang’s Lot 38. 
 
If the 1999 assessment had been allocated among the lots in the Brittany Chase 
subdivision as of March 1, 1999, then the taxes due in May 2000 would indisputably have been 
the first installment on Lot 38 due and payable after Fang’s closing.  However, neither the taxing 
authorities nor Trinity Homes allocated Lot 38’s portion of the 1999 assessment on the entire 
tract of land.  There was no separate assessment of Fang’s lot until March 1, 2000, the 
assessment date for the taxes due and payable in May and November 2001.   
 
The taxes assessed in 1999, due and payable in 2000, were nevertheless taxes “with 
respect to the real estate,” i.e., taxes on the land that became Lot 38 and any improvement, if 
there was any construction at the time.  Otherwise stated, the fact that a separate assessment of 
Fang’s lot had not yet occurred did not relieve Lot 38 of its obligation for the taxes for the entire 
tract.  The State acquired a lien on the entire tract, including Lot 38, on March 1, 1999.  I.C. § 6-
1.1-22-13(a) (“The state acquires a lien . . . [which] attaches on the assessment date of the year 
for which the taxes are assessed.”).  If the taxes had not been paid, the entire tract, including Lot 
38, would have been subject to collection procedures.  Fang got a windfall by reason of the 
failure of Trinity (or the taxing authorities) to effect this allocation before the November 2000 
installment of the 1999 taxes became due and payable.  As a result, Trinity paid the November 
2000 installment which under the contract was Fang’s responsibility.  In short, the entire tract 
was subject to the taxes for the entire tract as of the date of Fang’s closing, and Fang’s bill for 
the May 2001 installment of the 2000 taxes was the third installment “with respect to” Lot 38 
due and payable after closing, and thus was Fang’s obligation.    
Conclusion 
 
The judgment of the trial court is reversed.  This case is remanded with instruction to 
enter judgment for Trinity. 
Shepard, C.J., and Dickson, and Sullivan, J.J. concur. 
Rucker, J., dissents with separate opinion. 
 
5
RUCKER, J., dissenting. 
 
I agree that the Home Purchase Agreement is not ambiguous.  But precisely because it is 
not ambiguous the homeowner here should prevail.  Therefore I respectfully dissent.  
 
This case involves a rather straightforward application of the rules of contract 
construction.  The majority declares, “Property taxes assessed on a single tract of land which is 
later subdivided into individual lots, are due and payable with respect to the lots even if the lots 
were not assessed individually.”  Slip op. at 1.  The majority cites no authority for this 
proposition, and I can find none.  However, even assuming this proposition is true as a general 
rule,1 the Agreement before us says something quite different.  The property taxes covered by 
the Tax Provision are those “with respect to the real estate.”  App. at 46 (emphasis added).  And 
the Tax Provision identifies “the real estate” as “LOT # 38.”  Id.  There is simply nothing in the 
Agreement declaring or even implying that the due and payable language applied to the entire 
undivided tract of land.  Instead, the Agreement itself makes clear that the language applies only 
to Mr. Fang’s individual lot.  “[W]e must leave to the individual parties the right to make the 
terms of their agreements as they deem fit and proper, and, as long as those terms are clear and 
unambiguous and are not unlawful, we can only enforce them as agreed upon.”  New Welton 
Homes v. Eckman, 830 N.E.2d 32, 35 (Ind. 2005) (citations omitted).  
 
 
The record is clear that Lot 38 did not exist as a separate taxable parcel on March 1, 
1999.  Tr. at 12.  As a consequence there obviously were no taxes due and payable on the lot at 
the time of the March 3, 2000 closing date.  Rather, the first installment of real estate taxes due 
and payable on this lot was May 10, 2001 based upon the March 1, 2000 assessment date.  Under 
the express terms of the parties’ Agreement these taxes were Trinity Homes’ responsibility.  The 
trial court reached the right conclusion, and its judgment should therefore be affirmed.  
                                                 
1 Indeed Amicus Curiae Builders Association of Greater Indianapolis, Inc., and the Indiana Builder’s 
Association make a very similar point.  “The industry standard in the residential real estate construction 
market is that the purchaser agrees to pay real estate taxes that were assessed against the real estate while 
the builder and/or developer owned the property, but became due and payable after the sale.”  Joint Br. of 
Amicus Curiae at 2.  
 
6