Court Opinion

ID: 2746952
Source: CourtListenerOpinion
Date Created: 2014-10-31 02:07:22.086324+00
Date Added: 2024-06-11T11:26:34.326019
License: Public Domain

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 the defense of res
judicata, collateral estoppel, or the law
of the case.

ATTORNEY FOR APPELLANT:
                                                               Oct 30 2014, 9:54 am
DAVID W. STONE, IV
Stone Law Office & Legal Research
Anderson, Indiana

                               IN THE
                     COURT OF APPEALS OF INDIANA

LETITIA KURABARA,                                 )
                                                  )
        Appellant-Defendant,                      )
                                                  )
               vs.                                )       No. 48A02-1402-SC-83
                                                  )
CREATIVE REAL ESTATE PROPERTY                     )
MANAGEMENT,                                       )
                                                  )
        Appellee-Plaintiff.                       )

                      APPEAL FROM THE MADISON CIRCUIT COURT
                           The Honorable David A. Happe, Judge
                          The Honorable Stephen Clase, Magistrate
                              Cause No. 48C04-1212-SC-6039

                                       October 30, 2014

                 MEMORANDUM DECISION – NOT FOR PUBLICATION

BARNES, Judge
                                        Case Summary

       Letitia Kurabara1 appeals the small claims court’s judgment and award of damages

in favor of Creative Real Estate Property Management (“CRE”). We affirm in part,

reverse in part, and remand.

                                             Issues

       Kurabara raises two issues, which we restate as:

               I.     whether there was evidence of an agency relationship
                      between Kurabara and Gracie Suko; and

               II.    whether the award of damages is supported by the
                      evidence.

                                              Facts

       Kurabara lives in Canada but owns a house in Anderson.                   The house was

unoccupied, and Suko, a family friend, suggested Kurabara rent it out to generate income.

Suko knew Roger Shoot, who owns CRE, a property management company, from church

and had friends who had properties managed by CRE. Suko told Kurabara she was going

to talk to Shoot about managing Kurabara’s property. After several conversations, Suko

and Shoot agreed that CRE would manage the property and begin a “modest remodeling

project.” Tr. p. 7. In June 2012, Kurabara and Shoot spoke about renting the property

and advertising. No written agreement was entered into by CRE and Kurabara or Suko.

Suko acted as the “go between” for Kurabara and CRE, and the expenses incurred by

CRE were to be paid out of the rents that were collected. Id. at 48. In addition to

1
  In her brief and appendix, her name is spelled Karubara. In the transcript and small claims court
documents, her name is spelled Kurabara.
                                                2
updating the landscaping, Kurabara requested that the air conditioning system be topped

off with Freon and the boiler be de-winterized to “get the house rentable.” Id. at 118.

Kurabara understood that funds would be advanced for these three items. Ultimately,

CRE did some additional work and cleaning, and the air conditioning unit and boiler

needed additional repairs.

         CRE rented the house in early July 2012, but those tenants moved out shortly

thereafter because the air conditioning did not work. In October, CRE rented the house

again. Eventually Suko discovered that CRE had incurred more expenses than she

originally anticipated, and Kurabara terminated the management relationship with CRE

and hired another management company.

         In December 2012, CRE filed a notice of small claim to collect the outstanding

balance of remodeling costs, repair bills, and management fees. In July 2013, Kurabara

counterclaimed alleging that CRE damaged the home, that she incurred travel expenses in

an attempt to mitigate damages, and that she was owed $2,408.00.

         Over the course of several days in August 2013, the small claims court held a

hearing on the matter. On November 4, 2013 the small claims court issued an order and

found:

               1.     Plaintiff was employed by the Defendant in the Fall of
               2012. No written agreement was ever executed, however,
               both parties took actions which created a contractual, owner-
               property manager relationship. Despite her protestations,
               Gracie Suko did act as the agent of Defendant, absentee
               landlord and owner, as a matter of law.

               2.      Plaintiff did find tenants and did make improvements
               to the subject property . . . some of which are now objected to

                                             3
               by Defendant, but all of which are within the scope of the
               property management relationship.

               3.    Defendant decided to replace Defendant [sic] with
               Clark Management and Rentals in November, 2012. Lori
               Cleek of Clark Management walked through the subject
               house upon being hired and found “no major problems”.

               4.      This case should serve as an example of why parties in
               situations like this should always have a written contract.

App. p. 6. The small claims court entered judgment in favor of CRE in the amount of

$4,724.29 and denied Kurabara’s counterclaim. Kurabara filed a motion to correct error,

which the small claims court denied. She now appeals.

                                         Analysis

       As an initial matter, CRE has not filed an appellee’s brief. In that circumstance,

we do not undertake to develop arguments for CRE. See Morton v. Ivacic, 898 N.E.2d

1196, 1199 (Ind. 2008). Rather, we will reverse upon Kurabara’s prima facie showing of

reversible error. See id. Prima facie error means at first sight, on first appearance, or on

the face it. Id.

       “Under Indiana Trial Rule 52(A), the clearly erroneous standard applies to

appellate review of facts determined in a bench trial with due regard given to the

opportunity of the trial court to assess witness credibility.” Trinity Homes, LLC v. Fang,

848 N.E.2d 1065, 1067 (Ind. 2006).          Our supreme court has explained that this

deferential standard of review is particularly important in small claims actions, where the

sole objective is dispensing speedy justice according to the rules of substantive law. Id.

                                             4
at 1067-68. However, this deferential standard does not apply to the substantive rules of

law, which are reviewed de novo. Id. at 1068.

       Kurabara argues the small claims court’s finding that Suko was her agent was

clearly erroneous. She contends there was no evidence that Suko had the authority to

bind Kurabara as her agent. There are three types of authority: actual, apparent, and

inherent. See Gallant Ins. Co. v. Isaac, 751 N.E.2d 672, 675 (Ind. 2001). Actual

authority is created by written or spoken words or other conduct of the principal which,

reasonably interpreted, causes the agent to believe that the principal desires the agent to

act on the principal’s account. Id. Apparent authority refers to a third party’s reasonable

belief that the principal has authorized the agent’s acts and arises from the principal’s

indirect or direct manifestations to a third party, not from the representations or acts of

the agent. Id. Finally, inherent authority “is grounded in neither the principal’s conduct

toward the agent nor the principal’s representation to a third party, but rather in the very

status of the agent.” Id.

       Here, there is evidence of actual authority. At trial, Kurabara testified that she

talked to Suko about having Shoot get the house rentable, which included updating the

landscaping, topping off the air conditioner with Freon, and de-winterizing the boiler.

See Tr. pp. 117-18. Kurabara also expected that funds would be advanced for those three

items. Referring to the air conditioner repair, Kurabara stated, “This was one of the three

(3) things I said to Roger . . . or said to [Suko] to tell Roger, and repeated it in an email,

that that needed to be taken care of beforehand.”         Id. at 127 (ellipses in original).

Kurabara testified that Shoot emailed Suko about the progress and that Suko forwarded

                                              5
those emails to her. Kurabara explained that she kept asking Suko if she had received

estimates or had any idea how much the repairs were going to cost. Kurabara testified

that she spoke to Suko and Shoot about the terms of the lease with tenants. This evidence

supports the finding of an agency relationship between Kurabara and Suko. To the extent

Kurabara denied Suko was her agent, this is a request to reweigh the evidence, which we

cannot do. Kurabara has not established that the finding that an agency relationship

existed was clearly erroneous.

                                     II. Damages

      Kurabara argues that the award of $4,724.29 in damages is erroneous. Our review

of a damages award is limited, and we do not reweigh the evidence or judge the

credibility of witnesses. Four Seasons Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d

494, 507 (Ind. Ct. App. 2007). We will reverse an award only when it is not within the

scope of the evidence before the finder of fact. Id. An award of damages cannot be

based on speculation, conjecture, or surmise and must be supported by probative

evidence. Id.

      Kurabara argues that there was no agreement for CRE to perform anything other

than the landscaping work and that the additional expenses were unauthorized. At trial,

Kurabara herself testified that she authorized CRE to do more than just the landscaping,

including adding Freon to the air conditioner and de-winterizing the boiler to get the

house rentable. Kurabara also agreed that she owed a cleaning fee, at least a portion of

the utilities, and some advertising costs. Thus, we cannot agree with Kurabara that her

agreement with CRE was limited to landscaping work.

                                           6
         Kurabara also argues that, because CRE hired someone who was not licensed to

work on the fireplace gas line and install a pressure relief valve on the hot water heater,

she is not responsible for those costs. For this proposition, Kurabara relies on 53 C.J.S.

Licenses §117, which provides in part, “Unlicensed persons who contract to provide

services for which a license is required for the purpose of regulation and protection may

not recover on the contract.”            This section goes on to explain, however, “where

incompetency, inexperience, or fraud is not involved, a licensing statute may not be

invoked to avoid the payment of valid charges . . . .”                  53 C.J.S. Licenses § 117.

Assuming this provision applies in Indiana, on appeal, Kurabara does not allege fraud or

that the gas line or hot water heater valve were incorrectly installed. Thus, she has not

established that recovery for these repairs is barred.

         Kurabara also cites certain provisions of the Indiana Administrative Code

describing the licensing and education requirements of a property manager and contends

that, at most, she and CRE had an agreement to provide landscape work and that CRE

failed to disclose to her the additional work it was doing on the property.2 As we have

already discussed, Kurabara expressly agreed to at least some of the additional repairs.

Further, even if CRE failed to inform Kurabara of the additional work performed, she

cites no authority for the proposition that the failure to comply with administrative

licensing requirements bars the recovery of payment in a breach of contract action. This

is not a basis for reducing the damages award.

2
    Kurabara cites 876 IAC 2-8-13 and 876 IAC 2-85, which were repealed effective July 1, 2014.
                                                    7
       Finally, Kurabara argues that CRE’s exhibits did not support a damages award of

$4,724.29. At trial, Shoot testified that he had accrued $4,724.29 in “hard costs.” Tr. p.

13. He explained that, before the second tenant was secured, he had accrued $4,472.61 in

costs and that in November there was a plumbing leak that cost $251.68 to repair. These

expenses are reflected in Exhibit D. Thus, there is evidence to support the award of

$4,724.29 in damages.

       However, as Kurabara also points out, CRE’s Exhibit D also reflects payments of

$1,365.00, which CRE retained from rent it collected and put “toward remodel/repair

money owed.” This is consistent with Shoot’s testimony that they retained half of the

rent collected, a percentage of which was for CRE’s management fee and the remainder

of which was applied to the balance owed for the remodeling and repairs. The small

claims court’s order is silent regarding these payments. Accordingly, we must conclude

that Kurabara has a made a prima facie showing of error regarding the amount of

damages still owed. Thus, we remand for the small claims court to revise the damages

award to reflect the $1,365.00 in payments retained by CRE or to explain why it did not

include those payments in its order.

                                        Conclusion

       There is evidence of an agency relationship between Suko and Kurabara. There is

evidence to support damages in the amount of $4,724.29, but it is not clear that the small

claims court accounted for the $1,365.00 in payments retained by CRE. Thus, we affirm

in part, reverse in part, and remand.

                                            8
     Affirmed in part, reversed in part, and remanded.

BRADFORD, J., and BROWN, J., concur.

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