Court Opinion

ID: 4328539
Source: CourtListenerOpinion
Date Created: 2018-11-07 16:09:10.213313+00
Date Added: 2024-06-11T14:48:06.061604
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),                                    FILED
this Memorandum Decision shall not be
regarded as precedent or cited before any                             Nov 07 2018, 7:57 am

court except for the purpose of establishing                              CLERK
                                                                      Indiana Supreme Court
the defense of res judicata, collateral                                  Court of Appeals
                                                                           and Tax Court
estoppel, or the law of the case.

APPELLANT PRO SE                                        ATTORNEYS FOR APPELLEES
Curtis Pearman                                          John R. Maley
Naples, Florida                                         Leah L. Seigel
                                                        Indianapolis, Indiana

                                          IN THE
    COURT OF APPEALS OF INDIANA

Curtis Pearman, d/b/a Forest                            November 7, 2018
Park-Pearman,                                           Court of Appeals Case No.
Appellant-Plaintiff,                                    18A-CC-239
                                                        Appeal from the Wayne Superior
        v.                                              Court
                                                        The Honorable Gregory A. Horn,
Rande Martin and R.L. Martin                            Judge
Associates, Inc. d/b/a                                  Trial Court Cause No.
Management Recruiters of                                89D02-1508-CC-524
Richmond,
Appellees-Plaintiffs

Altice, Judge.

                                         Case Summary

Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018               Page 1 of 16
[1]   Curtis Pearman d/b/a Forest Park-Pearman (Pearman) leased commercial

      property to Rande L. Martin and R.L. Martin Associates, Inc. d/b/a

      Management Recruiters of Richmond (collectively, Martin). Pearman, pro se,

      appeals from the trial court’s entry of summary judgment in favor of Martin.

      On appeal, Pearman presents nine issues, which we consolidate and restate as

      the following two:

               1.       Did the trial court err in concluding that Martin did not
                        exercise the option to extend the lease agreement between
                        the parties?

               2.       Did the trial court err in concluding that the status of
                        Martin’s holdover tenancy at the time of termination was
                        month-to-month and that therefore, Martin provided
                        sufficient notice for terminating his tenancy of the leased
                        premises?

[2]   We affirm in part, reverse in part, and remand with instructions.

                                         Facts & Procedural History1

[3]   In April of 2006 Martin was a commercial tenant in the Forest Park Building

      when it was purchased by Pearman. In January 2008, the parties entered into a

      1
        Pearman’s statement of facts consists of a list; it is not presented in narrative form as required by Ind.
      Appellate Rule 46(A)(6)(c). Spanning nearly fifteen pages, Pearman’s statement of the case is more akin to a
      statement of facts, albeit that it is not stated in accordance with the standard of review and it includes
      argument and facts not pertinent to the issues on appeal. Pearman also did not set out the course of
      proceedings, see App. R. 46(A)(5), nor did he include the chronological case summary in his appendix as
      required by Ind. Appellate Rule 50(A)(2)(a). We remind Pearman that pro se litigants are held to the same
      legal standards as licensed attorneys and are bound to follow the established rules of procedure. See Evans v.
      State, 809 N.E.2d 338, 344 (Ind. Ct. App. 2004), trans. denied.

      Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018                   Page 2 of 16
      written lease agreement (the Lease) whereby Martin leased office space located

      in the Forest Park Building from Pearman. The Lease was for a period of

      thirty-eight months, running from February 1, 2008 through March 31, 2011.

      The Lease also contained provisions to automatically adjust the base rent rate

      annually to account for inflation and cost of living changes. The parties agreed

      that annual increases in rent would be tied to the Non-Seasonally Adjusted

      Consumer Price Index for All Urban Consumers (CPI) and that, utilizing the

      November CPI number, an increase in rent for the upcoming year would take

      effect in January. Section 4 of the Lease provided that the Lease could be

      extended beyond the initial term:

              The Lessee shall have the option to extend the term of this lease
              for one (1) additional five (5) year period upon the same terms,
              conditions and provisions contained herein, including the
              payment of minimum annual rent indexed to the CPI[] base. …
              [Martin] must give [Pearman] written notice of its intention to
              exercise the option to extend the term of this lease one hundred
              eighty (180) days prior to the expiration of the initial term herein.

      Appellant’s Appendix Vol. 4 at 3. Martin did not provide the required 180-day

      notice to extend the lease term.

[4]   In February 2011, Pearman inquired as to whether Martin intended to remain

      as a tenant beyond the expiration of the Lease on March 31, 2011. Martin

      responded, “Our preference is to remain in our current space. However, we

      cannot sustain present cost levels and are exploring other options.” Appellant’s

      Appendix Vol. 5 at 27. Martin indicated that he desired a rent reduction, a

      Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 3 of 16
      reduction in other maintenance expenses, and a renewal term of three years

      rather than the five years provided for in Section 4 of the Lease.

[5]   Thereafter, the parties exchanged emails regarding possible changes to the

      Lease going forward or an entirely new lease. On March 28, 2011, Pearman

      sent a message to Martin offering to reduce the rent by $100.00 per month.

      Martin did not respond to Pearman’s reduced rent offer. After the Lease

      expired, Martin remained in the office space and continued paying rent under

      the terms of the Lease, including the annual increase based on the CPI.

[6]   The parties continued to negotiate lease terms through an exchange of emails.

      Martin continued to seek a reduction in rent and other expenses and a shorter

      extension period, and Pearman indicated that he would consider Martin’s

      requests, but that it would “be on an addendum.” Appellant’s Appendix Vol. 4 at

      41. Martin responded that he “would prefer a new lease agreement” but would

      accept the changes through an addendum if they could reach an agreement. Id.

      at 13. According to Martin, he and Pearman were close to an agreement in

      June 2011 that called for a rent reduction of $175 per month, but they could not

      agree on a renewal term.

[7]   On July 15, 2011, Pearman sent a message and attached for Martin’s signature

      an “Addendum” that provided for a reduction to Martin’s rent.2 Id. at 15. In a

      subsequent email to his property manager, Pearman indicated that he had not

      2
          The Addendum is not in the record, but Pearman summarized the contents in the body of his email.

      Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018                 Page 4 of 16
      yet provided “a new written Lease” to Martin. Id. at 16. On August 31, 2011,

      Pearman indicated in yet another email to his property manager that there was

      “not yet a new Lease” with Martin and that a “new agreement including his

      reduction in rent was offered contingent upon him being current” with his lease

      payments. Id. at 17.

[8]   On November 1, 2011, Pearman stated in an email to Martin, “I have finally

      found the time and energy to prepare the lease that I promised to get to you”.

      Id. at 18. In the body of the email, Pearman noted that the new lease

      agreement included a rent reduction and that, per Martin’s request, the term

      length had been “reduced”. Id. Martin did not sign the new proposed lease

      agreement because he wanted to further discuss some of the provisions with

      Pearman.

[9]   On January 4, 2012, Pearman sent an email to Martin, noting that the

      “proposed lease offer expired when [he] did not receive [Martin’s] timely

      acceptance of that proposal.” Id. at 40. Pearman further pointed out that he

      had “already temporarily both decreased [Martin’s] rent and waived . . . late

      payment fees, absorbed several costs such as HVAC service/repairs” and

      incurred additional building expenses, a portion of which Martin should have

      been responsible for as a tenant. Id. Pearman informed Martin that he would

      not consider “any further concessions to the terms of our existing lease

      agreement. So, the remaining approximate 4 years of the lease can stay as it is

      currently configured.” Id. No further discussions were had between the parties.

      Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 5 of 16
[10]   On January 24, 2012, Pearman’s property manager sent a letter to Martin

       advising him of the annual increase in rent as calculated in the same manner as

       prior years under the terms of the Lease. Thereafter, Martin paid the increased

       amount and remained in possession of the leased premises throughout 2012.

       On April 27, 2013, Martin sent a letter to Pearman in which he provided notice

       that he was going to vacate the premises as of May 31, 2013. Pearman was

       unsuccessful in finding a new tenant for the commercial space previously rented

       by Martin.

[11]   On August 12, 2015, Pearman filed suit against Martin. Both sides moved for

       summary judgment.3 The trial court held a hearing on the cross-motions for

       summary judgment on August 4, 2016. In an order dated November 14, 2016,

       the trial court granted partial summary judgment in favor of Martin, noting that

       “[t]here really is no dispute between the parties as to the relevant facts” and that

       Martin “did not exercise the option to renew the [Lease].” Appealed Orders at 5,

       9 (emphasis in original).4 Pearman filed a motion to correct error. After a

       hearing, the trial court issued an order in which it rejected Pearman’s argument

       that Martin exercised the option to extend the Lease by paying the annual

       increased rent.

       3
         Pearman did not include the parties’ competing motions for summary judgment and their respective
       responses, their designations of evidence, or any briefs in support of their positions in his appendix. See Ind.
       Appellate Rule 50(A)(2)(f) (“[t]he appellant’s Appendix shall contain . . . pleadings . . . that are necessary for
       resolution of the issues raised on appeal).
       4
         Pearman filed the trial court’s orders under separate cover, titled Appellant’s Appealed Orders, but did not
       sequentially number the pages within this volume. Where necessary, we cite to the electronic page number.

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018                       Page 6 of 16
[12]   The parties then filed cross-motions for summary judgment on the nature of

       Martin’s holdover tenancy. The trial court held a hearing to consider these

       motions on December 7, 2017. In an order dated December 21, 2017, the trial

       court granted Martin’s motion for summary judgment and denied Pearman’s

       motion for summary judgment. Specifically, the trial court determined that

       where a tenant holds over following a multi-year lease, the result is a fixed, one-

       year tenancy. Further, the court determined that any subsequent holdover after

       the one-year term creates a general, month-to-month tenancy that can be

       terminated with thirty days’ notice. The court therefore concluded that Martin

       gave adequate notice and that thereafter, “no further lease term existed and no

       further rent [was] due and owing” from Martin to Pearman. Appealed Orders at

       20. The court entered final judgment in favor of Martin. Pearman now

       appeals.

                                           Discussion & Decision

[13]   We review a grant of summary judgment de novo, in the same way as the trial

       court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). We will affirm such

       a ruling only if, after drawing all reasonable inferences in favor of the non-

       moving party, the designated evidence shows that there is no genuine issue as to

       any material fact and the moving party is entitled to judgment as a matter of

       law. Id. It is a desirable tool to allow courts to dispose of cases, like the instant

       case, where only legal issues exist. Id.

                                               Lease Extension

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 7 of 16
[14]   The relevant facts in this case are undisputed and our consideration of this

       appeal involves legal issues arising in the area of landlord-tenant law. We begin

       by noting that there is no dispute that Martin did not provide the 180-day

       written notice required by Section 4 of the Lease to extend the lease term.

       Relying upon Norris Ave. Prof’l Bldg. P’ship v. Coordinated Health, LLC, 28 N.E.3d

       296 (Ind. Ct. App. 2015), trans. denied, Pearman argues that the lease term was

       nevertheless extended for the five-year period when he accepted without

       reservation Martin’s continued rent payments. Martin asserts that he

       undertook no affirmative acts that could be viewed as an acceptance of the five-

       year extension; to the contrary, he maintains that he declined the option to do

       so and sought to negotiate new lease terms.

[15]   In Norris, the tenant agreed to lease certain real property for an initial term of

       two years. The lease agreement provided for two “option terms” of five years

       each. In order to exercise either of the option terms, tenant was to give written

       notice at least sixty days prior to the end of the term of its intent to exercise the

       option. Although the tenant did not provide such notice, the tenant remained

       in possession of the premises after the expiration of the initial lease term and

       continued to pay increased rent equivalent to the amounts specifically set forth

       in the terms governing the option.5 After the expiration of the first option, the

       5
         Rent for the original term was $2250 per month, increasing to $2300 per month for the first year of the 1st
       five (5) year option, $2350 per month for the 2nd year, $2400 for the 3rd year, $2450 for the 4th year, and
       $2500 for the fifth year. The lease agreement provided further monthly increases if the second five-year
       option was exercised.

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018                    Page 8 of 16
       tenant again stayed in possession of the leased premises and continued paying

       the increased rent. As a result, the tenant paid about $9000 more than it would

       have paid pursuant to the terms of the initial agreement.

[16]   This court held that where a lease agreement requires notice to the lessor of an

       intention to exercise an option and no notice is provided, the mere holding over

       and payment of rent is insufficient to establish that the lessee has exercised the

       option. Id. Rather, in lieu of the written notice, the lessor must accept another

       affirmative act by the lessee. Id. Applying this rule to the facts, the court

       concluded:

               [Tenant] demonstrated its intent to exercise the lease agreement’s
               option terms and, as such, [the tenant] is bound by those terms.
               Although [the tenant] did not satisfy the condition precedent of
               providing the contractual notice to exercise the option terms, it
               manifested its intent by its affirmative act of paying the option
               terms’ rent payments, which were materially different than the
               initial term’s rent payments. And Norris waived the condition
               precedent when it accepted those payments in lieu of the notices.

       Norris, 28 N.E.3d at 303.

[17]   In finding that Martin did not exercise the five-year extension, the trial court

       relied on Norris, but reached a conclusion contrary to that asserted by Pearman.

       The trial court explained:

               Here, unlike in Norris, no prior options to renew were ever
               exercised by [Martin]. [Martin] at no time indicated a
               willingness to pay a higher rent and, in fact, the contrary is true.
               [Martin] specifically made it clear that it did not want to or in

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 9 of 16
               any manner agree to pay a higher rental amount during the
               option period nor did it want to or in any manner agree to
               remain a tenant for five (5) more years as provided in the written
               option. Finally, and, perhaps, most importantly, the increased
               rent required under the option term was never paid by [Martin].
               None of the affirmative acts of [the tenant] in the Norris decision
               are present in the matter presently before this court. Importantly,
               Pearman cites this court to no affirmative acts within his
               designated evidence.

       Appealed Orders at 8.

[18]   In a motion to correct error, Pearman pointed to Martin’s continued payment

       of rent after the CPI adjustment as affirmative conduct by Martin evidencing his

       intent to exercise the option. The trial court rejected Pearman’s argument and

       clarified its summary judgment order as follows:

               It is true that under the terms of the lease agreement, a CPI
               increase in rent occurred on February 1, 2011 –that date being
               two (2) months prior to the end of the original lease term – which
               [Martin] did pay. To the extent the Court was unclear in its
               summary judgment order to this effect, such matter is corrected
               hereby. The rent did increase –not as a true increase in the base
               rental amount – but only because of a CPI increase that went into
               effect before the expiration of the lease agreement and not
               because of a renegotiated increase in the base rental amount after
               the lease had expired and during the renewal period.

               This CPI increase in rent – prior to the expiration of the lease
               term – is not the kind of increase in rent contemplated under
               Indiana law that gives rise to a finding that a tenant has, by such
               action, exercised an option to renew.

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 10 of 16
       Id. at 11-12. We agree with the trial court. The CPI adjustment was an annual,

       automatic increase in rent that was provided for in the Lease. Martin’s

       payment of the CPI-adjusted rent payments was not materially different than

       the rent paid over the course of the original lease term. Further, the increase in

       Martin’s rent was not brought about by Martin’s holding over. In short, Martin

       merely held over and paid rent in accordance with the terms of the Lease.

       Martin undertook no other affirmative conduct indicating his intent to exercise

       the five-year extension. To the contrary, the record is clear that Martin was

       unwilling to pay an increased rent to stay on the premises for the five-year

       period required by the option. The trial court did not err in granting partial

       summary judgment with regard to Martin’s exercise of the option.

                                               Holdover Period

[19]   The parties then filed cross-motions for summary judgment as to the nature of

       the tenancy created after expiration of the Lease and whether Martin provided

       sufficient notice to terminate such tenancy. As noted above, Martin paid rent

       to Pearman for more than two years after the original lease term expired, at

       which point, Martin gave Pearman one-month’s notice of termination.

[20]   Relying upon Walsh v. Soller, 191 N.E. 334 (Ind. 1934), opinion on reh’g, the trial

       court concluded that after the expiration of the original lease term, Martin’s

       holdover created one one-year tenancy and that any subsequent holdover

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 11 of 16
       created a general tenancy that could be terminated with one month’s notice.6

       The trial court also cited Ind. Code § 32-31-1-2, which relates to general

       tenancies, in support of its position. Having determined that the status of the

       tenancy was month-to-month and that Martin gave one month’s notice, the trial

       court concluded that “no further lease term existed and no further rent is due

       and owing.” Appealed Orders at 20. Pearman argues that the one-year tenancy

       created by holding over after the expiration of a multi-year lease could not

       “magically” transition into a month-to-month tenancy for the subsequent

       holdover. Appellant’s Brief at 38.

[21]   When a lessee under a lease for a definite term holds over after the expiration of

       that term, the lessor has the option of treating the lessee as a tenant or a

       trespasser. Mooney-Mueller-Ward, Inc. v. Woods, 371 N.E.2d 400, 403 n. 1 (Ind.

       Ct. App. 1978); Burdick Tire & Rubber Co. v. Heylmann, 138 N.E. 777, 778 (Ind.

       Ct. App. 1923). In the absence of an agreement to the contrary, when a tenant

       holds over beyond the expiration of the lease and continues to make rental

       payments, and the lessor does not treat the tenant as a trespasser by evicting

       him, the parties are deemed to have continued the tenancy under the terms of

       the expired lease. Marshall v. Hatfield, 631 N.E.2d 490, 492 (Ind. Ct. App.

       1994); City of Bloomington v. Kuruzovich, 517 N.E.2d 408, 411, (Ind. Ct. App.

       1987), trans. denied; Myers v. Maris, 326 N.E.2d 577, 581 (Ind. Ct. App. 1975).

       6
           Pearman does not dispute that a month-to-month tenancy can be terminated with a one-month notice.

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018              Page 12 of 16
       When the original lease was for a year or more, the renewal lease is for a year at

       a time. Marcus v. Calumet Breweries, 73 N.E.2d 351 (Ind. Ct. App. 1947); see also

       Houston v. Booher, 647 N.E.2d 16 (Ind. Ct. App. 1995).

[22]   In Walsh, supra, the parties entered into a multi-year lease agreement that

       terminated at the expiration of the term. The tenant held over for a number of

       years following the expiration of the original lease term with the consent of the

       landlord and without any change in the terms of occupancy. The Indiana

       Supreme Court recognized well-settled law that

               where the duration of the tenancy is definitely fixed by the terms
               of the agreement under which the tenant goes into possession of
               the premises which he is to occupy, and he continues to occupy
               after the close of the term without a new contract, the rights of
               the parties are controlled by the terms and conditions of the
               contract.

       Walsh, 191 N.E. 334 (citing Harry v. Harry, 26 N.E. 562 Ind. 1891)). The Court

       further noted that, “[t]he mere fact that a tenant holds over after the expiration

       of his lease does not create a tenancy from year to year.” Id. (quoting Habich v.

       Univ. Park Bldg. Co., 97 N.E. 539, 542 (Ind. 1912)). With this in mind, the

       Court held that “attendant conditions create a new tenancy, not general or from

       year to year, but certain in point of time—one year—so fixed by the agreed

       notice to quit.” Walsh, 191 N.E. at 335.

[23]   Here, the trial court interpreted Walsh to stand for the proposition that only a

       single one-year tenancy is created by holding over after the expiration of a

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 13 of 16
       multi-year lease and that any subsequent holding over beyond that one-year

       tenancy created a general tenancy. We read Walsh differently.

[24]   First, we note that the language quoted above is from the Court’s opinion on

       rehearing. In the original Walsh opinion, 190 N.E. 61, 63 (Ind. 1934), the Court

       noted that the tenant’s holding over after the expiration of the original term

       with the consent of the landlord created “in effect, a tenancy from year to year”

       that was subject to the same terms as the original lease agreement, including the

       provision that provided for termination of the tenancy upon expiration. The

       Court held that when the landlord gave notice to quit effective one month prior

       to the end of what would be a one-year tenancy, such notice “amounted to a

       mere reminder of the termination of the lease” as provided by the terms of the

       original lease that remained applicable to the subsequent one-year tenancies

       created by the holding over. Id. Further, in the opinion on rehearing, the Court

       noted that “each holding over was subject to the same terms as to occupancy

       and termination.” Walsh, 191 N.E.at 335.

[25]   We find nothing in the Walsh opinion that stands for the proposition that there

       can only be a single one-year tenancy created after a holding over following the

       expiration of a multi-year lease. To the contrary, the Court acknowledged that

       successive one-year tenancies were created. Id; see also Marcus, 73 N.E.2d at 604

       (citing Walsh for the general rule that “where the term is a definite one for a

       year or more and the tenant holds over after the expiration date and pays rent,

       the lease is extended for successive new terms of tenancy for a year at a time”

       (emphasis supplied)).

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 14 of 16
[26]   We also disagree that I.C. § 32-31-1-2 supports the trial court’s finding that

       holdovers that continue past a one-year term become general month-to-month

       tenancies. That provision provides that “[a] general tenancy in which the

       premises are occupied by the express or constructive consent of the landlord is

       considered to be a tenancy from month to month.” In Marcus, supra, the court

       specifically stated that the “statute (sec. 3-1615, Burns’ 1933)[7] relating to

       general tenancies does not apply.” 73 N.E.2d at 352 (emphasis supplied). The

       Houston court noted the same. 647 N.E.2d at 20.

[27]   Applied to the facts of this case, the original lease term expired on March 31,

       2011. Martin remained in possession of the premises and continued to make

       rent payments that Pearman accepted without reservation. This created a one-

       year tenancy. After the expiration of this one-year tenancy, Martin again

       remained in possession and paid rent that Pearman accepted without

       reservation, thereby creating another one-year tenancy. When Martin

       continued to pay the rent after this tenancy expired, a third one-year tenancy

       commenced. Martin terminated this tenancy and vacated the premises two

       months later and with ten months remaining. The trial court erred in finding

       that “no further lease term existed and no further rent is due and owing” from

       Martin to Pearman. Appealed Orders at 20. The trial court’s grant of summary

       judgment in favor of Martin on this issue is reversed. Because the trial court did

       7
        The statute relating to general tenancies was recodified at I.C. § 32-7-1-2 and then replaced by I.C. § 32-31-
       1-2 in 2002.

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018                   Page 15 of 16
       not reach the issue of damages, we remand to the court to make such

       determination.

[28]   Judgment affirmed in part, reversed in part and remanded.

       Brown, J. and Tavitas, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 18A-CC-239 | November 7, 2018   Page 16 of 16