Court Opinion

ID: 2785701
Source: CourtListenerOpinion
Date Created: 2015-03-12 15:04:42.292751+00
Date Added: 2024-06-11T09:33:53.524811
License: Public Domain

Mar 12 2015, 9:59 am

ATTORNEYS FOR APPELLANTS                                   ATTORNEYS FOR APPELLEE
Richard M. Davis                                           Kevin W. Vanderground
Kevin G. Kerr                                              Church, Church, Hittle & Antrim
Hoeppner Wagner & Evans LLP                                Merrillville, Indiana
Valparaiso, Indiana
                                                           Rick C. Gikas
                                                           Merrillville, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

The County of Lake, Indiana;                              March 12, 2015
Board of Commissioners of the                             Court of Appeals Case No.
County of Lake (Indiana), in                              45A03-1401-CC-42
their official capacities; and The
Lake County Treasurer, in his                             Appeal from the Lake Superior
official capacity,                                        Court

Appellants-Defendants,                                    The Honorable Calvin P. Hawkins,
                                                          Judge
        v.                                                Cause No. 45D02-0805-CC-183

U.S. Research Consultants, Inc.,
an Indiana Corporation,
Appellee-Plaintiff.

Robb, Judge.

Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015                   Page 1 of 15
                                 Case Summary and Issue
[1]   U.S. Research Consultants, Inc. (“Consultant”) and The County of Lake,

      Indiana; the Board of Commissioners of the County of Lake, Indiana, in their

      official capacities; and the Lake County Treasurer, in his official capacity

      (collectively, the “County”), entered into a series of contracts (the “collection

      contracts”) for Consultant to be paid a commission for collecting delinquent

      real property taxes on behalf of the County. After the collection contracts were

      terminated, Consultant sued the County for breach of contract, alleging unpaid

      commissions under the collection contracts. The trial court granted

      Consultant’s motion for partial summary judgment and denied the County’s

      motion regarding the interpretation of the contract. Based upon that judgment,

      the trial court later granted final judgment in excess of one million dollars to

      Consultant on its complaint. The County raises several issues, of which we find

      the following dispositive: whether the trial court properly interpreted the

      collection contracts as a matter of law and therefore properly granted partial

      summary judgment to Consultant and denied partial summary judgment to the

      County. Concluding the trial court erred as a matter of law in interpreting the

      collection contracts and erroneously granted partial summary judgment and

      ultimately final judgment to Consultant, we reverse and remand.

                             Facts and Procedural History
[2]   In 2000, the County and Consultant entered into a contract by which the

      County assigned real property tax collection cases to Consultant for collection

      Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015   Page 2 of 15
and Consultant earned a commission on amounts collected. The initial

contract was for a two-year term beginning January 1, 2000, and provided, in

pertinent part:

        2. Scope of Service. The Consultant shall do, perform, and carry out in
        a good and professional manner the services for the County,
        specifically the Consultant shall:
        A. Consultant shall be assigned by the Lake County Treasurer 100%
        of the Real Property Tax Collection Cases.
        B. Consultant shall report directly to the Lake County Treasurer for
        all instructions if necessary to carry out its responsibilities.
        ***
        E. Collect the delinquent monies through an organized procedure to
        include filing lawsuits to collect if necessary.
        ***
        I. All payments made by defendants on lawsuits filed with the
        Court(s) shall be made to the Clerk of the Court. These funds will then
        be transferred by the Clerk of the Court to the County of Lake and its
        Treasurer for deposit as payments are made. Payments will be applied
        as follows:
                 1. First to the payment of Court costs until these are paid in
                 full.
                 2. The remaining funds will be split between real property
                 taxes and penalties owed to the County of Lake and
                 [Consultant’s] fees on a pro rata basis in accordance with the
                 judgment rendered.
        J. To obtain its fees [Consultant] will have to file a claim form with
        the County of Lake. [Consultant] will be paid out of the monies
        received from the Clerk.
        K. If monies are paid on accounts prior to filing suit, these funds will
        be paid directly to the Lake County Treasurer who will collect not only
        taxes, fines and penalties but any [Consultant’s] fees. The Treasurer
        will deposit these funds into separate accounts for taxes, interest,
        penalties and [Consultant’s] fees on a pro rata basis. [Consultant] will

Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015           Page 3 of 15
         then file a claim with the County of Lake for fees which should be paid
         from the funds established.
         ***
         [Consultant’s] fees to be received must be reasonable and will be
         established by the Court as part of the judicial proceedings or by the
         Treasurer . . . . Shall not exceed fee following [sic]:
                  1. If suit is filed, [Consultant] will accept the fees awarded by
                  the court as reasonable attorney’s fees.
                  2. If suit is not filed, [Consultant’s] fee will be twenty percent
                  (20%) of the taxes.
Appellants’ Appendix at 26-28. The same contract was renewed for a second

term in January 2002. See id. at 32-37. On June 4, 2003, the parties entered

into a third contract which changed the terms of Consultant’s compensation:

         4. Compensation. The County agrees to pay the Consultant a sum not
         to exceed the following:
                1. If suit is not filed, Consultant(s) [sic] fee will be fifteen
         percent (15%) of the taxes for all projects begun on or after the date
         this Agreement is approved by the County. Consultant’s fees for
         projects begun before this Agreement is approved by the County shall
         be twenty percent (20%) of the taxes.
               2. If suit is filed, Consultant(s) [sic] fee will be the amount
         determined by the Court.
Id. at 40. A fourth two-year contract was entered into on January 1, 2005 with

these same (altered) compensation terms. The County terminated Consultant’s

contract in November 2006.1

1
 The contract included a clause allowing either party to terminate the agreement by giving at least thirty days
written notice. See id. at 47.

Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015                           Page 4 of 15
[3]   The “organized procedure” for collecting delinquent monies was for the County

      to periodically send a disc to Consultant containing information about

      properties with delinquent taxes. However, the taxes were divided into “last

      year taxes,” or taxes delinquent for less than one year, and “prior year taxes,”

      or taxes delinquent for a year or more. See, e.g., id. at 420-23 (Deposition

      Exhibit of Treasurer’s records showing “Last Year Tax” and penalties and

      “Prior Year Tax” and penalties for the property). The Treasurer instructed

      Consultant to collect only on prior year taxes. Marsha DeMure, an employee

      of the Treasurer’s office, testified at a deposition that the County assessed a

      penalty on every tax that was not paid on its due date. However, Treasurer’s

      office practice was that “[e]ven though they had a penalty, they would not be

      considered delinquent taxes.” Id. at 98. Consultant “was not able to handle

      that because that’s present year” and the Treasurer did not “consider the

      present year as delinquent taxes for collection . . . .” Id. In other words, “the

      present year is not given to [Consultant] to collect on. . . . [It] cannot collect on

      those ‘cause that’s the year we’re in. [What it is] able to collect on are what we

      say delinquent[,]” which are more than one year past due. Id. at 101; see also id.

      at 220 (DeMure testifying that “[j]ust because you’re in the year that the 2001-

      2002 tax was due and it has a penalty on it, it is delinquent, but it’s not

      delinquent for who was commissioned to collect these taxes. They were not

      considered delinquent for them to collect on.”). Clara Castro, an employee of

      Consultant, testified similarly at her deposition:

              A: [The Treasurer’s Office] supplied us with a cutoff date. We could
              only collect from one date to this date. . . .

      Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015        Page 5 of 15
              Q: So how did you learn about this cutoff date?
              A: From Marcia [sic] Demure.
              ***
              Q. Okay. And would it be fair to say that was your working
              definition of a delinquent tax, was the prior year’s taxes?
              A. Right.
              ***
              A: We weren’t allowed to collect [last year taxes].
      Id. at 199, 203-04.

[4]   To initiate the collection process, Consultant sent a collection letter to taxpayers

      with delinquent prior year taxes. See id. at 190 (Castro, testifying that after she

      received a disc from the County, she would print out the “sheets that showed

      prior year taxes” and do research on those amounts before sending out

      collection letters). Consultant was not entitled to a commission on paid taxes

      unless a collection letter had first been sent. See id. at 196 (from Castro’s

      deposition: “Q. And then those would be the monies based on the prior year

      taxes that [Consultant] would be paid his commission? A: Yes.”). Every few

      months, Consultant would compare the letters it sent to the County’s tax

      payment records and submit a claim for commissions. After the claim was

      submitted, Castro and DeMure met and “went through each and every one of

      those parcels so that we agreed on the amounts that [Consultant] was

      collecting.” Id. at 463. Castro testified regarding Consultant’s commissions:

              Q: What was your understanding as to how [Consultant] was being
              paid on these taxes that he was collecting?
              A: Well, the only thing that I know is that when I generate the report
              [that was going to be submitted to the Treasurer for payment], he just
              said, “Make sure that everything is prior year taxes.”
      Id. at 193.
      Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015          Page 6 of 15
[5]   Consultant filed its complaint against the County for breach of contract in 2008

      alleging it was owed over $200,000 in unpaid commissions. The County filed

      an answer meeting the substantive allegations of the Complaint but asserting no

      affirmative defenses. In a pre-trial order entered June 12, 2012, the trial court

      summarized the parties’ contentions as follows:

              D. Plaintiffs [sic] Contentions:
              . . . [Consultant contends that], in violation of the express terms of the
              contracts, [the County] verbally and unilaterally changed the types of
              delinquent taxes upon which [Consultant] was entitled to receive
              commissions, and applied these changes in an inconsistent manner to
              the detriment of [Consultant]. As a result, [Consultant] contends that
              in excess of $1,000,000.00 in commissions are owed . . . .
              E. Defendants’ Contentions
              . . . [The County] contends that the term “delinquent taxes” had a very
              limited applicability pursuant to the course of conduct by the parties
              who all knew and understood how the contract was supposed to
              operate. [Consultant is] attempting to obtain unjust enrichment by
              receiving monies for taxes that they knew they were not entitled to
              collect, and conducted no activities in the actual collection process.
      Id. at 707-10.

[6]   Consultant filed a motion for partial summary judgment in December 2012

      seeking a determination as a matter of law

              that the contracts at issue in this matter are not vague, but their
              meaning can be determined from an examination of the contract
              language, that, [sic] parol or extrinsic evidence may not be used to add
              restrictions to the contracts’ language governing payment of
              commissions, and that the evidence at trial be limited to a
              determination of what taxes were collected, and what commissions are
              due.

      Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015              Page 7 of 15
      Id. at 77. The County filed a response and cross-motion for partial summary

      judgment “as the evidence shows that there is no genuine issue as to any

      material fact and that [the County is] entitled to partial summary judgment as a

      matter of law on all claims by [Consultant] seeking to recover for ‘last years

      taxes’.” Id. at 149.

[7]   The trial court held a hearing on the cross-motions for partial summary

      judgment in June 2013. Counsel for Consultant described the issue before the

      court as “whether [Consultant] was entitled to receive a commission on all of

      the delinquent taxes that it recovered or just a portion of the delinquent taxes.

      And really the key question in this case is the definition of delinquent.”

      Transcript at 4. Consultant argued:

              [O]nce a tax was more than one day past due, it was assigned a
              delinquent penalty. So there’s really no question here as to what a
              delinquent tax is. . . . What does it mean to be delinquent? It means it
              didn’t get paid on the day it was due.
              ***
              [L]ast year’s taxes were . . . a year past due. The prior year’s taxes
              were two years past due. So they were all delinquent.
              ***
              We’d ask the Court to enter partial summary judgment defining the
              term “delinquent,” and that’s all we’re asking for.
      Id. at 8-13. The County argued:

              [T]he issue here is not what the word “delinquent” means. There is no
              dispute about what a delinquent tax is or what process may be
              provided. The question is what process provides for when a
              delinquent tax becomes a tax collection case? And that’s the language
              of the contract that [Consultant] asked this Court to ignore.

      Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015        Page 8 of 15
              There is no provision in any of the agreements that have been
              designated to the Court which in any way say that [Consultant] is
              entitled to recover for every delinquent real estate property tax.
              What it says is that 100 percent of real estate collection cases will be
              assigned to [Consultant]. When a case – a delinquent tax becomes a
              collection case is not defined in the contract. And when it will be
              assigned to [Consultant] is not defined in the contract. And that is
              where the instruction clause comes in.
              ***
              [I]t’s very important to note in this case that throughout the years that
              these contracts were in force, [Consultant] expressly understood that it
              was only collecting on these prior year taxes. In fact, their testimony is
              that they took no steps to, and never sought to collect any of the last
              year taxes.
      Id. at 19-22. On June 18, 2013, the trial court entered an order granting

      Consultant’s motion for partial summary judgment “as it relates to the

      definition of ‘delinquent’” and denying the County’s motion. Id. at 19-20. At a

      hearing on August 30, 2013, the parties requested clarification of the court’s

      order for purposes of going forward. The trial court stated, “in the ruling on the

      18th, as I understood ‘delinquency,’ that basically dealt with everything except

      the amounts.” Id. at 320.

[8]   On September 20, 2013, the County filed a Motion for Leave to Amend its

      answer to assert the affirmative defenses of estoppel, waiver, accord and

      satisfaction, and laches. Consultant objected to the motion for leave to amend

      on grounds of undue delay and prejudice. In short order, Consultant also filed

      a motion for summary judgment, alleging it was entitled to judgment as a

      matter of law in its favor because:

              1. The parties entered into contracts regarding services provided by
              [Consultant] for [the County] whereby [Consultant] would be paid
      Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015         Page 9 of 15
              commissions.
              2. [The County has] breached said contracts.
              3. [The County has] alleged that it did not breach said contracts but
              this court has effectively ruled otherwise.
              4. [The County has] failed to produce any evidence supporting [its]
              denial of [Consultant’s] claims and should be prohibited from now
              adding to or changing to [sic] the body of evidence as discovery is now
              closed.
              5. . . . [A]s a result of [the County’s] breach, [Consultant] is owed
              $1,076,896.92, plus prejudgment interest and costs.
      Id. at 326-27. The County filed a response to the Motion for Summary

      Judgment and also filed a Motion to Strike portions of an affidavit and

      accompanying exhibits Consultant designated in support of its motion and

      request for damages.

[9]   The trial court held a hearing on the County’s Motion for Leave to Amend its

      answer, Consultant’s Motion for Summary Judgment, and the County’s motion

      to strike Consultant’s affidavit. At the conclusion of the hearing, the trial court

      ruled from the bench that the County’s motion for leave to amend its answer

      was denied, the County’s motion to strike the affidavit was denied, and

      Consultant’s motion for summary judgment was granted. In an order

      memorializing this ruling, the trial court entered final judgment against the

      County and for Consultant “in the amount of $1,076,896.92, together with pre-

      judgment interest in the amount of $393,000.00, together with its costs herein.”

      Id. at 22. The County now appeals.

      Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015      Page 10 of 15
                                    Discussion and Decision
                    I. Summary Judgment Standard of Review
[10]   We review a summary judgment order de novo. Neu v. Gibson, 928 N.E.2d 556,

       559 (Ind. 2010). A summary judgment order will be affirmed when there is no

       genuine issue of material fact and the moving party is entitled to summary

       judgment as a matter of law. Id. at 559-60; Ind. Trial Rule 56(C). The party

       appealing the trial court’s grant of summary judgment has the burden of

       persuading the court that the grant of summary judgment was erroneous.

       Diversified Invs., LLC v. U.S. Bank, NA, 838 N.E.2d 536, 539 (Ind. Ct. App.

       2005), trans. denied. The fact that the parties made cross-motions for summary

       judgment does not alter our standard of review; we will consider each motion

       separately to determine if the moving party was entitled to summary judgment

       as a matter of law. Id.

              II. Construction of the Collection Contracts
[11]   The County contends the trial court erred in granting Consultant’s motion for

       partial summary judgment and in denying its own motion for partial summary

       judgment regarding the interpretation of the collection contracts.

[12]   “Summary judgment is especially appropriate in the context of contract

       interpretation because the construction of a written contract is a question of

       law.” TW Gen. Contracting Servs., Inc. v. First Farmers Bank & Trust, 904 N.E.2d

       1285, 1287-88 (Ind. Ct. App. 2009). And because the construction of a written

       Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015   Page 11 of 15
       contract is a question of law, we review the trial court’s judgment de novo.

       Jenkins v. S. Bend Cmty. Sch. Corp., 982 N.E.2d 343, 347 (Ind. Ct. App. 2013),

       trans. denied. When a trial court has entered summary judgment in a contract

       dispute, it has implicitly determined either that the contract is not ambiguous as

       a matter of law and resolution requires only applying the terms of the contract

       or that any ambiguity may be resolved without the aid of factual

       determinations. Id. Here, the trial court made no specific finding regarding

       ambiguity, but the parties agree that the contract is unambiguous. See Brief of

       the Appellants at 22; Appellee’s Response Brief at 27-28.

[13]   “The ultimate goal of any contract interpretation is to determine the intent of

       the parties at the time that they made the agreement.” Citimortgage, Inc. v.

       Barabas, 975 N.E.2d 805, 813 (Ind. 2012). Where the terms of a contract are

       clear and unambiguous, we determine the parties’ intent from the four corners

       of the document. Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 532 (Ind.

       2006). We begin by reading the plain language of the contract in context,

       “construing it so as to render each word, phrase, and term meaningful,

       unambiguous, and harmonious with the whole” when possible. Citimortgage,

       Inc., 975 N.E.2d at 813. We should make every attempt to construe the

       language of the contract “so as not to render any words, phrases, or terms

       ineffective or meaningless.” Fischer v. Heymann, 943 N.E.2d 896, 900 (Ind. Ct.

       App. 2011), trans. denied. If necessary, the text of a disputed provision may be

       understood by referring to other provisions within the four corners of the

       Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015   Page 12 of 15
       document. Claire’s Boutiques, Inc. v. Brownsburg Station Partners LLC, 997 N.E.2d

       1093, 1098 (Ind. Ct. App. 2013).

[14]   The specific question presented by the cross motions for summary judgment

       was what Consultant was hired to collect pursuant to the contract provision

       that Consultant was to “[c]ollect the delinquent monies.” See, e.g., Appellants’

       App. at 26 (Section 2.E. of January 19, 2000 contract). Consultant took the

       position that it was to collect all delinquent taxes and was entitled to

       commissions on the total amount, whereas the County took the position that

       Consultant was only to collect the past year delinquent taxes as directed by the

       Treasurer and was only entitled to commissions on that amount even if

       additional delinquent taxes were paid.

[15]   The collection contracts do not define the scope of “delinquent monies”

       Consultant was hired to collect, and in fact, Section 2.E. of the contract is the

       only time the term “delinquent” is used. However, by the contracts’ express

       terms, the Consultant was assigned all of the County’s “Real Property Tax

       Collection Cases” and was to receive instruction from the Treasurer as to how

       to carry out its responsibilities under the contracts. Reading the collection

       contracts as Consultant urges focuses on the collection clause at the expense of

       the assignment and instruction clauses. Moreover, it misreads the collection

       clause as charging Consultant with collecting “delinquent taxes.” Id. All the

       clauses are given meaning when the contracts as a whole are construed to mean

       that Consultant is to collect “the delinquent monies” associated with the real

       property tax collection cases assigned to it at the Treasurer’s instruction and

       Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015    Page 13 of 15
       that Consultant earns commissions on those amounts. That the contracts

       require Consultant to be assigned one-hundred percent of the real property tax

       collection cases means only that no tax collection cases will be assigned to any

       other entity for collection, not that Consultant will be assigned all delinquent

       tax accounts. In other words, the contracts allow the Treasurer to decide which

       cases are tax collection cases, assign those to Consultant and instruct

       Consultant to carry out its collection responsibilities with respect to those cases.

       The contracts then require Consultant to attempt to collect the delinquent

       monies from those collection cases and file a claim for its commissions when

       those delinquent monies are paid to the County.

[16]   Although we may not look to extrinsic evidence to add to, vary, or explain the

       parties’ intent with regard to an unambiguous contract, Baker, 843 N.E.2d at

       532, we do note that the evidence designated in support of these cross-motions

       supports this interpretation of the collection contracts. County employee

       DeMure testified at her deposition that Consultant was not to collect on every

       past-due tax but only those specified by the Treasurer. And Castro,

       Consultant’s employee, gave testimony at her deposition consistent with

       DeMure’s, stating that Consultant was told by the County to collect only on

       prior year taxes and consistent with that instruction, it sent collection letters

       only on prior year taxes and submitted claims for commissions only on prior

       year taxes that were collected. The evidence is undisputed that in discharging

       its responsibilities under the contracts, Consultant was collecting only prior year

       taxes for the County. Although our resolution of this issue means we need not

       Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015    Page 14 of 15
       address the merits of the final judgment in Consultant’s favor, we also note that

       even if Consultant was correct that the terms of the contracts meant it could

       collect on every real property tax that was at least one day past due, it did not

       take the required steps to do so. Again, the undisputed evidence at this stage of

       the proceedings was that Consultant only sent collection letters on prior year

       taxes and acknowledged that it was only entitled to commissions on taxes

       collected after a collection letter was sent.

[17]   The trial court erred as a matter of law in determining that the collection

       contracts meant Consultant was entitled to collect all delinquent taxes and

       therefore erred in granting partial summary judgment to Consultant and

       denying summary judgment to the County on this issue. We reverse the trial

       court’s June 18, 2013 order granting partial summary judgment to Consultant,

       and remand with instructions for the trial court to enter partial summary

       judgment for the County on the issue of the interpretation of the collection

       contracts and to conduct further proceedings on Consultant’s complaint

       regarding whether Consultant is owed any unpaid commissions on prior year

       taxes collected and if so, the amount of those unpaid commissions.

       Reversed and remanded.

       Baker, J., and Kirsch, J., concur.

       Court of Appeals of Indiana | Opinion 45A03-1401-CC-42 | March 12, 2015   Page 15 of 15