Court Opinion

ID: 4399907
Source: CourtListenerOpinion
Date Created: 2019-05-23 16:04:03.10379+00
Date Added: 2024-06-11T07:49:53.347235
License: Public Domain

FILED
                                                                       May 23 2019, 8:46 am

                                                                              CLERK
                                                                          Indiana Supreme Court
                                                                             Court of Appeals
                                                                               and Tax Court

ATTORNEY FOR APPELLANT                                     ATTORNEY FOR APPELLEE
Clinton E. Blanck                                          Scott D. Pankow
Blanck & Rubenstein, P.C.                                  Indianapolis, Indiana
Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

A House Mechanics, Inc.,                                   May 23, 2019
Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                           18A-PL-2814
        v.                                                 Appeal from the Marion Superior
                                                           Court
Michael Massey,                                            The Honorable Timothy W.
Appellee-Defendant                                         Oakes, Judge
                                                           Trial Court Cause No.
                                                           49D02-1609-PL-33823

Baker, Judge.

Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019                                  Page 1 of 16
[1]   A House Mechanics, Inc. (AHM), appeals the trial court’s order granting

      summary judgment in favor of Michael Massey on AHM’s complaint. AHM

      argues that there are genuine issues of material fact related to its claims for

      breach of contract and foreclosure on a mechanic’s lien rendering summary

      judgment improper. Finding no error, we affirm.

                                                      Facts
[2]   Massey owns a residence and other structures on Sloan Avenue in Indianapolis.

      On June 6, 2016, Massey and AHM entered into a contract, pursuant to which

      AHM would remove and replace the roofs on all of Massey’s buildings and

      install new siding and gutters on some. On June 15, 2016, Massey made a

      down payment of $12,000 and AHM began work. The contract required that

      AHM would “comply with all applicable building codes.” Appellant’s App.

      Vol. II p. 23.

[3]   Massey began to notice multiple problems with the work being performed by

      AHM. He met repeatedly with Richard Hathaway, AHM’s president, to

      express concerns and point out things that needed to be repaired.

[4]   On June 18, 2016, Massey confronted Hathaway with more issues, explaining

      that simply covering up the problem areas with shingles would not solve the

      underlying defects and noting that the defects could not be repaired once

      covered with shingles. Hathaway denied that there were any problems and

      refused to make repairs. Massey asked to see Hathaway’s insurance policy and

      bond information; Hathaway refused, said he was done working on that job,

      Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019           Page 2 of 16
      and stated he intended to take the building materials and leave. Massey

      responded that Hathaway could not take the materials because Massey had

      already made a $12,000 down payment. Hathaway then threatened to harm

      Massey physically and take his family’s home. Massey told Hathaway to leave;

      Hathaway called the police.

[5]   Officers arrived and threatened to arrest Hathaway unless he calmed down.

      Massey and the officers tried to convince Hathaway to make the needed repairs,

      finish the job, and move on, but Hathaway refused. The officers told Hathaway

      to leave. On his way out, Hathaway told Massey to call the City Inspector,

      commenting that “‘when it passes the inspection, I will take your house.’” Id.

      at 129.

[6]   On June 23, 2016, the City of Indianapolis Department of Code Enforcement

      issued a Notice of Violation listing multiple violations related to the

      construction work on Massey’s property. The next day, the same department

      issued an Order to Stop Work, demanding that all work on that site stop

      because AHM had failed to notify the Bureau of Construction Services before

      starting construction and had failed to post a contractor form at the work site.

[7]   On June 24, 2016, Massey, via counsel, demanded that AHM return the

      $12,000 down payment. On June 27, 2016, AHM responded by sending

      Massey an invoice for $6,197.94, which AHM claimed was the remaining

      amount owed by Massey after applying the down payment. On June 29, 2016,

      AHM recorded a mechanic’s lien on Massey’s property.

      Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019          Page 3 of 16
[8]   On August 13, 2016, AHM filed a complaint against Massey, seeking damages

      for breach of contract and/or to foreclose on the mechanic’s lien. On

      November 4, 2016, Massey filed an answer denying that he had breached the

      contract and denying that the work done by AHM had added any value to

      Massey’s property. He also filed a counterclaim, alleging that AHM had

      slandered his title, abused the legal process by filing and seeking to foreclose on

      a mechanic’s lien, violated the Indiana Home Improvement Contracts Act

      (HICA), and breached statutory home improvement warranties.1

[9]   On September 7, 2018, Massey moved for summary judgment, alleging that

      (1) there was no genuine issue of material fact that AHM had committed the

      first material breach of the parties’ contract, meaning that AHM is not entitled

      to enforce the contract against Massey; and (2) AHM had failed to prove that

      its work added any value to Massey’s property as required under the mechanic’s

      lien statute. The trial court granted summary judgment in Massey’s favor on

      October 29, 2018. In pertinent part, it found and held as follows:

                                                Findings of Fact

                                                        ***

              4.       Massey paid [AHM] a $12,000.00 down payment on June
                       15, 2016. [AHM], after taking the above-referenced down
                       payment, walked off the job on June 18, 2016 when

      1
       Massey also later filed a third-party complaint against Western Surety Company, which was AHM’s
      commercial liability insurer. Western Surety Company is not part of this appeal.

      Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019                           Page 4 of 16
                 confronted about the defective quality of the work to that
                 date.

        5.       [AHM] refused to correct the defective work and called the
                 police. The police arrived and attempted to convince both
                 parties to agree to allow [AHM] to complete the job and
                 make needed repairs. Massey agreed to allow the repair
                 attempt but [AHM] refused to do any further work,
                 refused to return any portion of the down payment, and
                 refused to leave any of the materials for the job with
                 Massey, taking them with him when he walked off the job.

        6.       The home improvement repair job promised by [AHM]
                 was inspected by the City of Indianapolis Code
                 Enforcement on June 24, 2016 and a Notice of Violation
                 and Order to Stop Work . . . were issued and posted on
                 Massey’s property detailing the many code violations
                 found in [AHM’s] work by the city inspector.

                                                  ***

        9.       [AHM] recorded the mechanic’s lien notice . . . on or
                 about June 29, 2016 despite the fact that none of the
                 materials or services provided by [AHM] added any value
                 to Massey’s property and in fact damaged or reduced the
                 value of Massey’s property.

        10.      [AHM] breached its contract to provide home
                 improvement repairs by, among other things, failing, as
                 specifically promised in [its] contract, to comply with
                 applicable building and housing code requirements as
                 evidenced by the Notice of Violation and Order to Stop
                 Work . . . .

Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019              Page 5 of 16
        11.      Prior to walking off the job, [AHM] threatened to record a
                 mechanic’s lien and bring this legal claim in an attempt to
                 coerce Massey to pay additional amounts to which [AHM]
                 had no legitimate legal claim.

                                                  ***

        13.      The Court finds that [AHM’s] labor and/or materials
                 added no value or improvement to Massey’s property and
                 in fact damaged or reduced the value of Massey’s
                 property, that the mechanic’s lien filed by [AHM] is
                 invalid and should be vacated and released of record.

                                        Conclusions of Law

                                                  ***

        2.       In order to pursue a claim for breach of contract or right to
                 payment for construction services, [AHM] cannot have
                 first breached the contract itself.

        3.       [AHM] has failed in this regard as a matter of law as the
                 Notice of Violation and Order to Stop Work . . . detailing
                 the many code violations found in [AHM’s] work by the
                 city inspector establish[] that [AHM] failed to comply with
                 the specific promise in its contract that it would “comply
                 with all applicable building codes.”

        4.       In regard to the action to foreclose the mechanic’s lien that
                 [AHM] recorded against Massey’s property, [AHM] has
                 failed to show that [its] “work” added any value to the
                 property as required under the mechanic’s lien statute.

Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019             Page 6 of 16
       Appealed Order p. 2-4 (internal citations and emphases omitted). The trial

       court granted summary judgment in Massey’s favor, noting that it found in

       Massey’s favor on the claims in AHM’s complaint and on Massey’s

       counterclaims. The trial court found that Massey’s damages totaled the amount

       of the down payment—$12,000—and entered judgment against AHM in that

       amount. It also found that the mechanic’s lien is invalid. AHM now appeals.

                                     Discussion and Decision
[10]   AHM argues that there are genuine issues of material fact with respect to

       whether AHM breached the contract first and whether AHM’s work added any

       value to Massey’s property. Therefore, AHM maintains that summary

       judgment should not have been entered in Massey’s favor.

[11]   Our standard of review on summary judgment is well settled:

               The party moving for summary judgment has the burden of
               making a prima facie showing that there is no genuine issue of
               material fact and that the moving party is entitled to judgment as
               a matter of law. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012).
               Once these two requirements are met by the moving party, the
               burden then shifts to the non-moving party to show the existence
               of a genuine issue by setting forth specifically designated
               facts. Id. Any doubt as to any facts or inferences to be drawn
               therefrom must be resolved in favor of the non-moving
               party. Id. Summary judgment should be granted only if the
               evidence sanctioned by Indiana Trial Rule 56(C) shows there is
               no genuine issue of material fact and that the moving party
               deserves judgment as a matter of law. Freidline v. Shelby Ins.
               Co., 774 N.E.2d 37, 39 (Ind. 2002).

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019         Page 7 of 16
       Goodwin v. Yeakle’s Sports Bar and Grill, Inc., 62 N.E.3d 384, 386 (Ind. 2016).

                                        I. Breach of Contract
[12]   It is well established that “[w]hen one party to a contract commits the first

       material breach of that contract, it cannot seek to enforce the provisions of the

       contract against the other party if that other party breaches the contract at a

       later date.” Coates v. Heat Wagons, Inc., 942 N.E.2d 905, 917 (Ind. Ct. App.

       2011).

[13]   Here, it is undisputed that the parties’ contract required AHM to “comply with

       all applicable building codes.” Appellant’s App. Vol. II p. 23. It is also

       undisputed that significant portions of AHM’s work on Massey’s property did

       not comply with applicable building codes. Massey designated evidence

       establishing that he repeatedly noticed problems with AHM’s work and brought

       them to Hathaway’s attention; that other people, including two contractors who

       submitted affidavits in Massey’s support, noticed a very long list of violations

       and problems; and that the city inspector issued a notice of violation, including

       a long list of defects on site that did not comply with building codes, and a stop

       work order. This evidence readily shows that from the start of its work on

       Massey’s property, AHM repeatedly and continually breached its contract with

       Massey.

[14]   AHM has not designated any evidence that tends to dispute the above evidence.

       Instead, it makes two arguments. First, it points out that the trial court did not

       consider whether AHM’s breach was material. See Frazier v. Mellowitz, 804

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019          Page 8 of 16
N.E.2d 796, 804-05 (Ind. Ct. App. 2004) (holding that to award summary

judgment, trial court must determine that the undisputed facts establish as a

matter of law that the breach was material and it was too late to cure the failure

to perform). Whether a party has materially breached depends on a variety of

factors:

        “(1)     The extent to which the injured party will obtain the
                 substantial benefit which he could have reasonably
                 anticipated;

        (2)      The extent to which the injured party may be adequately
                 compensated in damages for lack of complete
                 performance;

        (3)      The extent to which the party failing to perform has
                 already partly performed or made preparations for
                 performance;

        (4)      The greater or less hardship on the party failing to perform
                 in terminating the contract;

        (5)      The willful, negligent or innocent behavior of the party
                 failing to perform; and

        (6)      The greater or less uncertainty that the party failing to
                 perform will perform the remainder of the contracts.”

Id. at 802 (quoting Tomahawk Village Apartments v. Farren, 571 N.E.2d 1286,

1293 (Ind. Ct. App. 1991)).

Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019             Page 9 of 16
[15]   In addition to the evidence described above, Massey designated evidence that

       Hathaway became unwilling to admit that there were defects; Hathaway

       refused to fix the remaining defects and became combative, going so far as to

       call the police and threaten Massey; and the work that AHM had performed on

       Massey’s property actually decreased its value. Initially, we note that it is readily

       apparent that the toxic breakdown of the relationship between Massey and

       Hathaway establishes that it was too late for AHM to cure the defects.

       Moreover, we find that the designated evidence establishes that all of the above

       factors weigh in Massey’s favor. Under these circumstances, we have little

       trouble concluding as a matter of law that AHM’s breaches were material. See

       Simpson v. OP Prop. Mgmt., LLC, 939 N.E.2d 1098, 1102 (Ind. Ct. App. 2010)

       (noting that we may affirm a trial court’s ruling on summary judgment on any

       basis supported by the designated evidence).

[16]   Second, AHM argues that the contract does not say when the work must be in

       compliance with applicable building codes. In other words, AHM contends

       that even though its work was defective, and even though it intended to cover

       up some of the defects with shingles, it had the length of the contract to fix the

       issues and bring the construction into compliance. It notes that when Massey

       asked Hathaway and AHM to leave his property on June 18, 2016, no building

       code enforcement citations or orders had been issued—that occurred several

       days later.

[17]   At the outset, it is irrelevant that the notice of code violations was issued after

       Massey asked AHM to leave his property. Given that AHM did no work

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019           Page 10 of 16
       between June 18 and June 23, when the notice of violations was issued, it is

       obvious that all the violations existed on June 18. The fact that the actual

       notice was issued five days later is immaterial.

[18]   Furthermore, we will not interpret a contract in a fashion that achieves an

       absurd result. E.g., Champlain Capital Partners, L.P. v. Elway Co., 58 N.E.3d 180,

       190 (Ind. Ct. App. 2016). The term of the contract requiring that the work

       comply with applicable building codes can only have meant that it must always

       be in compliance. Obviously, if part of a project were in progress but not yet

       finished, and it was merely the lack of completion that caused it to be non-

       compliant, there would be no issue. But that situation is not what we have

       here. Instead, there were many parts of this construction work that were simply

       wrong, defective, and/or non-compliant from the outset. To say that this

       contractual term would permit AHM to do shoddy, defective work until the end

       of the project, when it then corrected the defects, would be an absurd result.

[19]   In the end, we are left with evidence designated by Massey that conclusively

       establishes that AHM’s work was rife with building code violations. The

       evidence also shows that Hathaway refused to continue working on Massey’s

       property, refused Massey’s repeated offers to fix the defects and finish the job,

       threatened Massey, and became so combative that police officers directed him

       to leave the property. AHM has not designated any evidence tending to

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019         Page 11 of 16
       counter these facts.2 Therefore, we find that the trial court did not err by finding

       as a matter of law that AHM breached the contract first and, consequently, was

       not entitled to enforce the contract against Massey. In other words, the trial

       court did not err by granting summary judgment in Massey’s favor on this issue.

                                          II. Mechanic’s Lien
[20]   AHM next argues that the trial court erred by finding that the mechanic’s lien

       was invalid, thereby vacating it. Mechanic’s liens are in derogation of common

       law and we must strictly construe the statutes regulating them. E.g., Premier

       Invs. v. Suites of Am., Inc., 644 N.E.2d 124, 127 (Ind. 1994). The central purpose

       of mechanic’s lien laws “is to prevent the inequity of a property owner enjoying

       the benefits of the labor and materials furnished by others without

       recompense.” Ford v. Culp Custom Homes, Inc., 731 N.E.2d 468, 472 (Ind. Ct.

       App. 2000). The lien exists “to the extent of the value of any labor done or the

       materials furnished, or both . . . .” Ind. Code § 32-28-3-1(b).

[21]   Here, Massey offered two affidavits in support of his contention that the work

       that AHM performed on his property did not increase the value thereof. Perry

       Allen, who is the owner of a contracting business, and Paul Palmer, who is the

       owner of a roofing business, examined the work performed by AHM and

       2
         AHM points to the fact that Massey asked Hathaway to leave his property first, arguing that this establishes
       that Massey breached the contract first. We disagree. It was only after Hathaway refused to correct the
       defects or show Massey AHM’s insurance policy and bond information that Massey asked him to leave the
       property. This evidence does not counter any of the other undisputed evidence regarding the incident.

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019                                 Page 12 of 16
       attested that they were “competent to testify to the matters asserted in this

       affidavit and have personal knowledge of the matters asserted in this affidavit.”

       Appellant’s App. Vol. II p. 60, 63. Both men found that AHM’s work was

       “negligently and carelessly performed and contained many defects;” the

       affidavits each include a lengthy list enumerating those defects. Id. at 60-61, 63-

       64. They each attested that AHM’s work “had no value and added no value to

       the property. It had to be torn out and made the proper repairs more expensive

       so that it actually detracted from the value of the property.” Id. at 61, 64.

       Massey also provided his own affidavit, attesting that “none of the materials or

       services provided by [AHM] added any value to Massey’s property and in fact

       damaged or reduced the value of Massey’s property.” Id. at 67.

[22]   AHM argues on appeal that the Allen and Palmer affidavits are inadmissible

       because neither attested that he had knowledge, skill, or experience in

       evaluating contract work performed by others. Moreover, they did not explain

       how they arrived at the conclusion that AHM’s work added no value to

       Massey’s property.

[23]   Initially, we note that AHM did not move to strike or otherwise object to the

       affidavits. To avoid waiver, a party in summary judgment proceedings who

       believes that the opposing party has filed a problematic affidavit has a duty to

       direct the trial court’s attention to the allegedly defective affidavit. E.g., Avco

       Fin. Servs. of Indianapolis, Inc. v. Metro Holding Co., 563 N.E.2d 1323, 1327 (Ind.

       Ct. App. 1990). “An affidavit which does not satisfy the requirements of T.R.

       56(E) is subject to a motion to strike, and formal defects are waived in the

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019            Page 13 of 16
       absence of a motion to strike or other objection.” Id. AHM notes that in its

       response to Massey’s summary judgment motion, it argued that the affidavits

       were insufficient to support the motion. It maintains that this argument is

       sufficient to preserve the issue on appeal. We disagree. Making an argument in

       a brief about the general sufficiency of evidence on summary judgment is not

       the same thing as moving to strike the affidavit or otherwise raising a specific

       objection about a defective affidavit. As AHM did not move to strike these

       affidavits, it has waived the argument on appeal.

[24]   Waiver notwithstanding, we note that Trial Rule 56(E) requires that an affidavit

       “shall be made on personal knowledge, shall set forth such facts as would be

       admissible in evidence, and shall show affirmatively that the affiant is

       competent to testify to the matters stated therein.” Here, the affidavits establish

       that Allen and Palmer based their opinions on personal knowledge and that

       they are competent to testify. AHM insists, however, that the affidavits are

       inadmissible because they do not lay a foundation for the two men to be found

       to be expert witnesses. AHM is correct regarding their qualifications as experts,

       but it does not matter.

[25]   Evidence Rule 701 allows for the admission of opinion testimony by lay

       witnesses. The opinion must be rationally based on the witness’s perception

       and helpful to a clear understanding of the witness’s testimony or to a

       determination of a fact in issue. Ind. Evidence Rule 701. The requirement that

       the opinion be “rationally based” on perception “simply means that the opinion

       must be one that a reasonable person could normally form from the perceived

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019           Page 14 of 16
       facts.” Davis v. State, 791 N.E.2d 266, 268 (Ind. Ct. App. 2003). We find that

       Allen and Palmer would have qualified as “skilled” lay witnesses, meaning “a

       person with a degree of knowledge short of that sufficient to be declared an

       expert under [Ind. Evid.] Rule 702, but somewhat beyond that possessed by the

       ordinary jurors.” O’Neal v. State, 716 N.E.2d 82, 89 (Ind. Ct. App. 1999)

       (internal quotation marks omitted); see also Satterfield v. State, 33 N.E.3d 344,

       353 (Ind. 2015) (noting that “skilled witness testimony is helpful because it

       involves conclusions that escape the average observer”).

[26]   These affidavits show that Allen and Palmer inspected Massey’s property after

       AHM had begun, and prematurely ended, its work. The affidavits also show

       that both men own businesses in the construction industry. Both men, having

       inspected the property, concluded that the following defects existed in AHM’s

       work:

           •   nails sticking through the underlayment;
           •   the underlayment was not covering the roof completely;
           •   cuts had been made to the underlayment;
           •   ice and water shields were improperly installed;
           •   ice and water shields had been cut, torn, and wrinkled;
           •   no drip edge on eaves;
           •   nails blown through shingles;
           •   nails driven at an angle through shingles;
           •   improperly flashed dormer walls;
           •   double layer of shingles;
           •   improperly nailed flashings;
           •   improper use of old flashing that had holes;
           •   shingles were cut;
           •   decking was blown apart by air gun;

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019          Page 15 of 16
           •   shingles hanging over too far on eaves;
           •   shingles nailed in wrong location;
           •   siding damage on north side of house;
           •   drive way dammed; and
           •   failure to follow installation instructions of all roofing materials.

       Appellant’s App. Vol. II p. 60-61, 63-64. The men noted that the code

       violations found by the city inspector were consistent with their observations of

       the property. We find that these facts are sufficient to form a rational basis for

       the ultimate opinion that AHM’s work did not add value to Massey’s property.

       And obviously, their opinions are helpful to a determination of a fact in issue,

       namely, whether AHM’s work added any value to Massey’s property.

       Therefore, even if AHM had moved to strike these affidavits, the trial court

       would have properly denied the motion and the affidavits would have remained

       in evidence.

[27]   Thus, we are left with Massey’s designated evidence, consisting of his own

       affidavit as well as the affidavits of Allen and Palmer, which shows that AHM’s

       work did not add any value to his property—and may have even decreased its

       value. AHM did not designate any evidence to the contrary. Therefore, there

       is no genuine issue of material fact and we can only conclude that the trial court

       did not err by granting summary judgment in Massey’s favor on AHM’s

       mechanic’s lien claim.

[28]   The judgment of the trial court is affirmed.

       May, J., and Tavitas, J., concur.

       Court of Appeals of Indiana | Opinion 18A-PL-2814 | May 23, 2019            Page 16 of 16