Court Opinion

ID: 4579588
Source: CourtListenerOpinion
Date Created: 2020-10-22 16:03:46.23478+00
Date Added: 2024-06-11T13:38:18.975614
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of establishing                                          FILED
the defense of res judicata, collateral                                           Oct 22 2020, 8:16 am
estoppel, or the law of the case.                                                     CLERK
                                                                                  Indiana Supreme Court
                                                                                     Court of Appeals
                                                                                       and Tax Court

APPELLANT PRO SE                                         ATTORNEYS FOR APPELLEE
Curtis Pearman                                           John C. Trimble
Lake Placid, Indiana                                     Michael R. Giordano
                                                         Lewis Wagner, LLP
                                                         Indianapolis, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Curtis Pearman,                                          October 22, 2020
Appellant-Plaintiff,                                     Court of Appeals Case No.
                                                         20A-PL-733
        v.                                               Appeal from the Shelby Circuit
                                                         Court
Hale Abstract Company, Inc.,                             The Honorable Trent E. Meltzer,
Appellee-Defendant.                                      Judge
                                                         Trial Court Cause No.
                                                         73C01-1406-PL-18

Bradford, Chief Judge.

Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020                Page 1 of 12
                                          Case Summary
[1]   This case involves Curtis Pearman’s attempt to purchase certain real estate in

      Shelbyville, Indiana, known as the Tippecanoe Press Building complex (“the

      Tippecanoe Press complex”). Pearman agreed to pay the Federal Deposit

      Insurance Corporation (“FDIC”) $5000 for a package that he believed included

      three parcels of land. Pearman, however, actually only purchased two parcels

      as the FDIC only held title to two of the three parcels. Pearman subsequently

      filed suit against Hale Abstract Company, Inc. (“Hale”), arguing that in

      completing title work regarding the Tippecanoe Press complex prior to his

      purchase of the property, Hale negligently misrepresented that the FDIC held

      title to all three parcels.

[2]   The trial court determined that Hale, in the course of its business, supplied false

      information to Pearman and that Pearman justifiably relied upon the

      information supplied by Hale. However, the trial court determined that

      Pearman did not suffer a pecuniary loss as a result of the misrepresentation.

      The trial court alternatively determined that even if Pearman had suffered a

      pecuniary loss, any loss suffered by Pearman was no greater than $16,692.00

      and Pearman was not entitled to any additional recovery because he had been

      made whole by insurance proceeds he received from Stewart Title Guaranty

      Company (“STGC”). Pearman contends on appeal that the trial court erred in

      determining that he was not entitled to additional recovery. We affirm.

                            Facts and Procedural History
      Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 2 of 12
[3]   This is the second appeal relating to issues that arose from Pearman’s purchase

      of the Tippecanoe Press complex. The underlying facts relating to the sale and

      the issues that arose therefrom were set forth in our opinion in the prior appeal:

              Originally, the Wickizer Family Trust owned the real estate,
              which consisted of four separate parcels. Shelby County Bank
              subsequently obtained title to three of these parcels. The first
              parcel was a thirty-thousand-square-foot commercial complex;
              the second parcel was a private alley; and the third parcel
              (“Parcel 3”), which is at issue here, contained a garage and
              parking spaces. Shelby County Bank was later placed in
              receivership, with the [FDIC] acting as receiver.

              In 2013, Pearman sought to purchase the three parcels owned by
              FDIC. On August 28, 2013, [Hale] procured a title commitment
              from STGC regarding the three parcels. However, Parcel 3 had
              been sold to a nearby church by Shelby County Bank prior to its
              being placed in receivership. Pearman eventually paid FDIC
              $5,000 for a quitclaim deed to what he believed contained all
              three parcels. And STGC issued a title policy on October 16,
              2013, for all three parcels.

              When Pearman learned that he did not have title to Parcel 3, he
              submitted a claim under the policy for Parcel 3 to STGC on
              January 10, 2014. On January 14, 2014, STGC sent Pearman
              notice that it had appointed a claims counsel to review his claim.
              On June 24, 2014, STGC’s claims counsel offered to settle the
              matter for $8,000 in exchange for a release from liability
              regarding Parcel 3.

              Pearman did not accept the offer but filed a complaint against
              Hale and STGC on June 27, 2014. The complaint sought a
              declaratory judgment that STGC had a duty to indemnify
              Pearman under the Policy and that STGC negligently
              misrepresented the status of the title to Parcel 3. The complaint

      Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 3 of 12
              also included a claim for breach of contract based on the Policy,
              a claim of damages as a result of the defendants’ negligent
              misrepresentation, and a claim for attorney fees.

              STGC and Hale obtained an appraisal of Parcel 3, which
              determined that the value of the other parcels without Parcel 3
              was diminished by $30,000. The defendants then offered to settle
              the case for this amount, but Pearman again declined the offer.
              Eventually, STGC made a litigation decision to file a
              counterclaim for a declaratory judgment, asking the trial court to
              approve the tender of the $70,000 policy limits to Pearman and
              end any further litigation, effectively interpleading the policy
              limits.

              On December 19, 2016, Pearman filed a motion for summary
              judgment, and on January 17, 2017, STGC filed a response and a
              cross-motion for summary judgment. The trial court held a
              hearing on both motions on January 18, 2017. On March 22,
              2017, the trial court entered findings of fact and conclusions of
              law granting STGC’s motion for summary judgment, thereby
              entering an award of the $70,000 policy limits to Pearman. The
              court’s summary judgment order otherwise denied Pearman’s
              motion for summary judgment as to its claims against STGC.

      Pearman v. Stewart Title Guar. Co., 108 N.E.3d 342, 345–46 (Ind. Ct. App. 2018),

      trans. denied.

[4]   As it related to Hale, the trial court found that Pearman had established that (1)

      “Hale, in the course of its business, supplied false information for the guidance

      of [Pearman] in his business transaction;” (2) “Hale failed to exercise

      reasonable care or competence in obtaining or communicating the information

      to” Pearman; and (3) Pearman “justifiably relied upon the information supplied

      by” Hale. Appellant’s App. Vol. II p. 36. The trial court further found that
      Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 4 of 12
      “[t]he issues of the type of damages, if any, recoverable by [Pearman] and

      against [Hale] shall be determined at a later date.” Appellant’s App. Vol. II p.

      37.

[5]   Pearman appealed the trial court’s order pertaining to STGC. We affirmed the

      trial court’s order concluding as follows:

                The trial court did not err in granting summary judgment in favor
                of STGC on Pearman’s claim of negligent misrepresentation
                because Pearman is in contractual privity with STGC, and a
                claim of negligent misrepresentation is therefore unavailable to
                him. Nor did the trial court err in granting summary judgment in
                favor of STGC on Pearman’s claim of insurer bad faith because
                Pearman did not present a claim of bad faith in his complaint.
                The trial court did not err in declining Pearman’s request for
                attorney fees, and Pearman’s claim for punitive damages cannot
                be presented for the first time on appeal.

      Pearman, 108 N.E.3d at 350–51.

[6]   Pearman and Hale subsequently filed briefs in the trial court arguing the issue of

      damages.1 On January 22, 2020,2 the trial court issued an order, in which it

      incorporated its previous March 22, 2017 order by reference, and found as

      follows:

      1
        Pearman claims that he was not served with a copy of Hale’s submission to the trial court. However, the
      certificate of service attached to Hale’s submission indicates that Pearman was served “electronically by using
      the Court’s IEFS System and U.S. Postal Service, pre-paid delivery for those parties not yet registered.”
      Appellee’s App. Vol. II p. 181.
      2
          While the trial court’s order was dated January 21, 2020, it was not marked as filed until January 22, 2020.

      Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020                     Page 5 of 12
              4. This Court has previously found that [Pearman] is only
              entitled to his out-of-pocket loss and is not entitled to benefit-of-
              the-bargain damages.

              5. This Court has previously found that [Pearman] incurred
              $16,692.00 in expenses and received property worth $250,000.00.

              6. The Court now finds that [Pearman] did not suffer a
              pecuniary loss.

              7. [Pearman] has been paid $70,000.00 by Co-Defendant
              [STGC].

              8. The Court further finds in the alternative that if [Pearman] did
              suffer a pecuniary loss, said loss is no greater than $16,692.00,
              and [Pearman] has been made whole, and is not entitled to any
              additional recovery.

      Appellee’s App. Vol. II pp. 204–05. On February 21, 2020, Pearman filed a

      combined motion to (1) vacate and reverse the trial court’s January 22, 2020

      order and (2) strike Hale’s allegedly defective summary response. The trial

      court denied both of these motions on February 26, 2020.

                                 Discussion and Decision
[7]   Pearman contends that the trial court erred in determining that he was not

      entitled to additional compensation from Hale. In doing so, he relies on his

      claim that Hale negligently represented that the FDIC owned Parcel 3 and that

      he justifiably relied on Hale’s negligent representation. For its part, Hale

      acknowledges that the trial court found that that (1) “Hale, in the course of its

      business, supplied false information for the guidance of [Pearman] in his
      Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 6 of 12
      business transaction;” (2) “Hale failed to exercise reasonable care or

      competence in obtaining or communicating the information to” Pearman; and

      (3) Pearman “justifiably relied upon the information supplied by” Hale.

      Appellant’s App. Vol. II p. 36. Hale argues, however, that the trial court

      correctly determined that Pearman was not entitled to any additional

      compensation because the designated evidence establishes that Pearman did not

      suffer a pecuniary loss.

                              I. Negligent Misrepresentation
[8]   “Indiana has recognized liability for the tort of negligent misrepresentation,

      where there is a direct relationship between the plaintiff and the defendant.”

      Passmore v. Multi-Mgmt. Servs., Inc., 810 N.E.2d 1022, 1025 (Ind. 2004). The

      Indiana Supreme Court has held that

              One who, in the course of his business, profession or
              employment, or in any other transaction in which he has a
              pecuniary interest, supplies false information for the guidance of
              others in their business transactions, is subject to liability for
              pecuniary loss caused to them by their justifiable reliance upon the
              information, if he fails to exercise reasonable care or competence
              in obtaining or communicating the information.

      U.S. Bank, N.A. v. Integrity Land Title Corp., 929 N.E.2d 742, 747 (Ind. 2010)

      (quoting Restatement (Second) of Torts § 552 (1977)) (emphasis added). In

      Integrity, the Indiana Supreme Court concluded that a title company has “a duty

      under Restatement § 552 to communicate the state of a title accurately when

      issuing its preliminary commitment.” 929 N.E.2d at 749.

      Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 7 of 12
[9]    It is undisputed that Hale violated this duty when it inaccurately informed

       Pearman that the FDIC held title to Parcel 3. However, in order to recover

       from Hale under a theory of negligent misrepresentation, Pearman must also

       prove that he suffered a pecuniary loss as a result of his reliance on Hale’s

       inaccurate statement. A pecuniary loss is “[a] loss of money or something

       having monetary value.” BLACK’S LAW DICTIONARY 1088 (10th ed. 2014); see

       also Americar Leasing, Inc. v. Maple, 406 N.E.2d 333, 335 (Ind. Ct. App. 1980)

       (“A pecuniary loss has been described as a loss of money, or of something by

       which money, or something of money value may be acquired.”).

[10]   Pearman argues that Hale is liable “for all the damages proximately caused by”

       its errors. Appellant’s Br. p. 30 (emphasis omitted). Pearman, however, has

       pointed to, and we are aware of, no authority in support of this argument. For

       its part, Hale argues that “[t]he measure of damages for … negligent

       misrepresentation is ‘out-of-pocket expenses[.]’” Appellee’s Br. p. 17. Hale

       further argues that because “Pearman incurred $16,692 in out-of-pocket

       expenses to complete his purchase of the Real Estate, which was worth

       $250,000 even without Parcel III[,] Pearman suffered no pecuniary loss because

       the Real Estate he received (Parcels I and II) is worth nearly 15 times more than

       the amount he incurred to purchase it.” Appellee’s Br. p. 17.

[11]   As the Seventh Circuit Court of Appeals has noted, “the Restatement adopts

       the ‘out-of-pocket’ rule as the appropriate measure of damages for negligent

       misrepresentation and specifically excludes ‘benefit-of-the-bargain’ damages.…

       The out-of-pocket rule looks to the loss which the plaintiff has suffered in the

       Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 8 of 12
transaction, and gives him the difference between the value of what he has

parted with and the value of what he has received.” Trytko v. Hubbell, Inc., 28

F.3d 715, 722 (7th Cir. 1994) (internal quotation omitted). The Court of

Appeals of Washington applied the rule adopted by the Restatement in Janda v.

Brier Reality, 984 P.2d 412, 415 (Was. Ct. App. 1999), concluding that a real

estate investor’s claim for negligent misrepresentation failed because he suffered

no pecuniary loss as a result of another realtor’s misrepresentation as the

properties in question were worth more than the amount the investor paid for

them. Specifically, the Washington Court concluded:

        Assuming [the realtor] negligently misrepresented the cost to
        subdivide, the evidence does not establish that [the investor]
        suffered any damages that are recoverable under [the
        Restatement]. [The investor] paid $133,000 for the 27th Avenue
        West property. According to [the investor’s] own declaration,
        the value of the property, based on a cost to subdivide of $55,000,
        was $143,000. Thus, there is no damage for which the
        Restatement permits recovery. Moreover, [the investor]
        subdivided this property and sold both lots without incurring any
        of the cost of subdividing.

        Similarly, [the investor] paid $132,000 for the Allview Way
        property. [The investor] claims the value of the property, based
        on a $35,000 cost to subdivide, was $162,000. He sold it for
        $141,000. Again, he suffered no recoverable damage. The
        Restatement, adopted in Washington, does not permit [the
        investor] to recover, as he seeks to do, the greater profit he claims
        he would have realized had [the realtor] properly represented the
        cost of subdividing the two properties.

Id. We find the Washington Court’s conclusion to be persuasive.

Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 9 of 12
[12]   In this case, the trial court found that Pearman incurred a total of $16,692 in

       out-of-pocket expenses in connection to his purchase of the Tippecanoe Press

       complex. Pearman does not dispute this number and concedes that he

       purchased the Tippecanoe Press complex for “much less than its true value.”

       Appellant’s Br. p. 5. The undisputed evidence also indicates that Parcels I and

       II were worth $250,000. Thus, the undisputed evidence demonstrates that

       Parcels I and II were worth $233,308 more than the $16,692 out-of-pocket

       expenses paid by Pearman in purchasing the Tippecanoe Press complex. We

       therefore conclude that, like the investor in Janda, Pearman did not suffer a

       pecuniary loss as a result of his reliance on Hale’s title search.

                  II. Breach of Contract & Constructive Fraud
[13]   Pearman also argues that Hale committed breach of contract and constructive

       fraud. However, Pearman did not include either of these claims in his

       complaint against Hale. “[A] party may not present an argument or issue to an

       appellate court unless the party raised that argument or issue to the trial court.

       Sedona Dev. Grp., Inc. v. Merrillville Rd., 801 N.E.2d 1274, 1280 (Ind. Ct. App.

       2004) (citing GKC Ind. Theatres, Inc. v. Elk Retail Inv’rs, LLC, 764 N.E.2d 647,

       651 (Ind. Ct. App. 2002)). The only claim Pearman raised against Hale in the

       trial court was a claim of negligent misrepresentation. He has therefore waived

       his claims of breach of contract and constructive fraud.

       Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 10 of 12
              III. Hale’s Request for Appellate Attorney’s Fees
[14]   Hale seeks to recover attorney’s fees for funds expended responding to what it

       characterizes as a frivolous, bad-faith appeal.

               Indiana Appellate Rule 66(E) provides, in pertinent part, “[t]he
               Court may assess damages if an appeal ... is frivolous or in bad
               faith. Damages shall be in the Court’s discretion and may include
               attorney’s fees.” Our discretion to award attorney fees under
               Indiana Appellate Rule 66(E) is limited, however, to instances
               when an appeal is permeated with meritlessness, bad faith,
               frivolity, harassment, vexatiousness, or purpose of delay. Orr v.
               Turco Mfg. Co., Inc., 512 N.E.2d 151, 152 (Ind. 1987).
               Additionally, while Indiana Appellate Rule 66(E) provides this
               Court with discretionary authority to award damages on appeal,
               we must use extreme restraint when exercising this power
               because of the potential chilling effect upon the exercise of the
               right to appeal. Tioga Pines Living Ctr., Inc. v. Indiana Family and
               Social Svcs. Admin., 760 N.E.2d 1080, 1087 (Ind. Ct. App. 2001),
               trans. denied.

       Thacker v. Wentzel, 797 N.E.2d 342, 346 (Ind. Ct. App. 2003).

[15]   In requesting appellate attorney’s fees, Hale argues that Pearman’s appellate

       brief and appendix do not comply with the Appellate Rules of Procedure.

       Specifically, Hale argues that (1) Pearman’s appellate brief lacks cogent

       arguments and citation to the record and relevant authority, (2) Pearman

       misstated and omitted material facts, (3) Pearman’s appendix is “inexcusably

       deficient,” and (4) Pearman’s brief contains numerous false accusations about

       Hale and its counsel. Appellee’s Br. p. 32. While we acknowledge that

       Pearman’s appellate brief may, in some respects, fail to comply with the

       Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 11 of 12
       Appellate Rules of Procedure, we are reluctant to characterize Pearman’s

       arguments on appeal as frivolous or made in bad faith. As such, we deny

       Hale’s request for appellate attorney’s fees.

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

       Najam, J., and Mathias, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 20A-PL-733 | October 22, 2020   Page 12 of 12