Court Opinion

ID: 852672
Source: CourtListenerOpinion
Date Created: 2013-03-02 01:21:11.020027+00
Date Added: 2024-06-11T13:21:57.318554
License: Public Domain

ATTORNEYS FOR APPELLANT
David E. Bostwick
Easter & Cavosie
Indianapolis, Indiana

ATTORNEYS FOR AMICUS CURIAE
BUILDERS ASSOCIATION OF GREATER
INDIANAPOLIS, INC. AND THE INDIANA
BUILDERS ASSOCIATION
Jeffrey W. Scripture
Paul C. Sweeney
Harrison & Moberly, LLP
Indianapolis, Indiana
______________________________________________________________________________

                                              In the
                              Indiana Supreme Court
                              _________________________________

                                     No. 06S01-0503-CV-124

TRINITY HOMES, LLC,
                                                              Appellant (Defendant below),

                                                 v.

FRANK Y. FANG,
                                                        Appellee (Plaintiff below).
                              _________________________________

             Appeal from the Boone Small Claims Court, No. 06D02-0310-SC-1357
                The Honorable Mark X. Sullivan, Small Claims Commissioner
                            ________________________________

      On Petition To Transfer from the Indiana Court of Appeals, No. 06A01-0404-CV-167
                           _________________________________

                                           June 13, 2006

Boehm, Justice.

       Property taxes assessed on a single tract of land which is later subdivided into individual
lots, are due and payable with respect to the lots even if the lots were not assessed individually.
                                 Facts and Procedural History

       Trinity Homes, LLC owned a tract of real estate in Boone County which it intended to
subdivide into individual lots for residential development as the Brittany Chase subdivision. In
July 1999, Frank Fang as “Purchaser” entered into a Home Purchase Agreement with Trinity as
“Seller” to buy Lot 38 in the subdivision. The Agreement included a “Tax Provision” that reads:
“all real estate taxes and assessments, if any, including penalties and interest, which are due and
payable with respect to the real estate will be paid by Seller at the closing. Seller agrees to pay
first real estate installment due after settlement. Purchaser agrees to pay taxes and assessments
thereafter.”

       Real estate in Indiana is assessed as of March 1 of each year for ad valorem property tax
purposes, and the taxes for each year are due and payable in May and November of the following
year. The closing of Fang’s lot occurred on March 3, 2000. Trinity Homes paid both the May
and November 2000 property tax installments. The May and November 2000 installments were
taxes based on the March 1, 1999 assessment which had been conducted before the tract of land
had been subdivided into separate lots. By the spring of 2001 the taxing authorities had assessed
the taxes for 2000 on the individual lots, and sent Fang a bill for $2,074.95, due in May 2001. It
is that May installment that is in dispute here. Fang paid the May 2001 bill, but contended that
under the Tax Provision it was Trinity’s responsibility and not his.

       After Trinity refused Fang’s request for reimbursement, Fang filed suit in the small
claims division of the Boone Superior Court. The parties relied solely on documents including
the Home Purchase Agreement, and no testimony was offered at trial. Fang contended that
because Lot 38 was first assessed as a separate lot on March 1, 2000, and that assessment was
not due and payable until May and November 2001, the first installment due and payable with
respect to Lot 38 was the May 2001 installment, which he paid.

       The trial court determined that the Tax Provision in the Agreement was ambiguous and
entered judgment in Fang’s favor in the amount of the May 2001 tax installment along with court
costs, for a total award of $2,118.95. The Court of Appeals agreed that the contract was
ambiguous and affirmed the trial court in an unpublished memorandum decision.              Trinity

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Homes, LLC v. Fang, 817 N.E.2d 701 (Ind. Ct. App. 2004). We granted transfer. Trinity
Homes, LLC v. Fang, 2005 Ind. LEXIS 259 (Ind. Mar. 24, 2005).

                                       Standard of Review

       Judgments in small claims actions are “subject to review as prescribed by relevant
Indiana rules and statutes.” Ind. Small Claims Rule 11(A). 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.          This
“deferential standard of review is particularly important in small claims actions, where trials are
‘informal, with the sole objective of dispensing speedy justice between the parties according to
the rules of substantive law.’” City of Dunkirk Water & Sewage Dep’t v. Hall, 657 N.E.2d 115,
116 (Ind. 1995) (quoting S.C.R. 8(A)). But this deferential standard does not apply to the
substantive rules of law, which are reviewed de novo just as they are in appeals from a court of
general jurisdiction. Lae v. Householder, 789 N.E.2d 481, 483 (Ind. 2003). Similarly, where a
small claims case turns solely on documentary evidence, we review de novo, just as we review
summary judgment rulings and other “paper records.” See Harrison v. Thomas, 761 N.E.2d 816,
818 (Ind. 2002) (reviewing the trial court’s decision de novo after a bench trial where the parties
relied on documentary evidence); Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 531 (Ind.
2006) (“To the extent the evidence the parties offered is admissible, it is documentary . . . . our
standard of review is de novo.”) The only issue in this case turns on the meaning of the contract,
which is a pure question of law and is reviewed de novo. Dunn v. Meridian Mut. Ins. Co., 836
N.E.2d 249, 251 (Ind. 2005).

       We observe that Fang has filed no brief. When the appellee has failed to submit an
answer brief we need not undertake the burden of developing an argument on the appellee’s
behalf. Rather, we will reverse the trial court’s judgment if the appellant’s brief presents a case
of prima facia error. Gibson v. City of Indianapolis, 242 Ind. 447, 448, 179 N.E.2d 291, 292
(1962). Prima facia error in this context is defined as, “at first sight, on first appearance, or on
the face of it.” Santana v. Santana, 708 N.E.2d 886, 887 (Ind. Ct. App. 1999). Where an
appellant is unable to meet this burden, we will affirm. Id.

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        When Property Taxes Become “Due and Payable With Respect to” a Parcel

       In this case the trial court determined that the Tax Provision was ambiguous as to
whether Trinity was obligated to pay the first installment of taxes after the closing of the contract
which was based on an assessment of the entire tract of land, or the first installment of taxes
based on the first individual assessment of Lot 38. The Court of Appeals agreed and construed
the document against Trinity, the drafter. We agree that it is generally appropriate to construe an
ambiguous agreement against its drafter. See MPACT Constr. Group, LLC v. Superior Concrete
Constructors, Inc., 802 N.E.2d 901, 910 (Ind. 2004). But we also agree with Trinity and the
Amici Curiae, the Builders Association of Greater Indianapolis, Inc. and the Indiana Builder’s
Association, that the Tax Provision is not ambiguous.

       Real property in Indiana is assessed for tax purposes on the first day of March of each
year, but the taxes are not required to be paid until May 10 and November 10 of the following
calendar year. See Ind. Code §§ 6-1.1-1-2, 6-1.1-22-9 (2004). Indiana Code section 6-1.1-2-4(a)
also provides:

       The owner of any real property on the assessment date of a year is liable for the
       taxes imposed for that year on the property . . . . When a person other than the
       owner pays any property taxes, as required by this section, that person may
       recover the amount paid from the owner, unless the parties have agreed to other
       terms in a contract.

Trinity argues that the Tax Provision unambiguously provided that Trinity would pay the first tax
installment due and payable after the March 3, 2000 closing, and it did so by paying the
installment due in May 2000. The term “due and payable” is the conventional terminology to
describe the date when the taxes must be paid. As the Court of Appeals has observed:

       Barring any qualifying expression, in common usage the word “due” means that
       “the debt or claim in question is now (presently or immediately) matured and
       enforceable.” When qualified by the expression “payable” the word “due” means
       that the debt or claim “is fixed and certain but the day appointed for its payment
       has not yet arrived.” . . . [I]n the context of a real or personal property tax, the
       term has long been used to refer to the “day appointed for its payment.”

Beiger Heritage Corp. v. Montandon, 691 N.E.2d 1334, 1337 (Ind. Ct. App. 1998) (internal
citations omitted). We think there is no serious question that the May 2000 installment was the

                                                 4
first installment of any real estate tax that was due and payable after the March 3, 2000 closing
on Fang’s lot. The only issue is whether the installment was the first due and payable “with
respect to the real estate,” i.e., on Fang’s Lot 38.

        If the 1999 assessment had been allocated among the lots in the Brittany Chase
subdivision as of March 1, 1999, then the taxes due in May 2000 would indisputably have been
the first installment on Lot 38 due and payable after Fang’s closing. However, neither the taxing
authorities nor Trinity Homes allocated Lot 38’s portion of the 1999 assessment on the entire
tract of land.   There was no separate assessment of Fang’s lot until March 1, 2000, the
assessment date for the taxes due and payable in May and November 2001.

        The taxes assessed in 1999, due and payable in 2000, were nevertheless taxes “with
respect to the real estate,” i.e., taxes on the land that became Lot 38 and any improvement, if
there was any construction at the time. Otherwise stated, the fact that a separate assessment of
Fang’s lot had not yet occurred did not relieve Lot 38 of its obligation for the taxes for the entire
tract. The State acquired a lien on the entire tract, including Lot 38, on March 1, 1999. I.C. § 6-
1.1-22-13(a) (“The state acquires a lien . . . [which] attaches on the assessment date of the year
for which the taxes are assessed.”). If the taxes had not been paid, the entire tract, including Lot
38, would have been subject to collection procedures. Fang got a windfall by reason of the
failure of Trinity (or the taxing authorities) to effect this allocation before the November 2000
installment of the 1999 taxes became due and payable. As a result, Trinity paid the November
2000 installment which under the contract was Fang’s responsibility. In short, the entire tract
was subject to the taxes for the entire tract as of the date of Fang’s closing, and Fang’s bill for
the May 2001 installment of the 2000 taxes was the third installment “with respect to” Lot 38
due and payable after closing, and thus was Fang’s obligation.

                                              Conclusion

        The judgment of the trial court is reversed. This case is remanded with instruction to
enter judgment for Trinity.

Shepard, C.J., and Dickson, and Sullivan, J.J. concur.

Rucker, J., dissents with separate opinion.

                                                   5
RUCKER, J., dissenting.

        I agree that the Home Purchase Agreement is not ambiguous. But precisely because it is
not ambiguous the homeowner here should prevail. Therefore I respectfully dissent.

        This case involves a rather straightforward application of the rules of contract
construction. The majority declares, “Property taxes assessed on a single tract of land which is
later subdivided into individual lots, are due and payable with respect to the lots even if the lots
were not assessed individually.”         Slip op. at 1.     The majority cites no authority for this
proposition, and I can find none. However, even assuming this proposition is true as a general
rule, 1 the Agreement before us says something quite different. The property taxes covered by
the Tax Provision are those “with respect to the real estate.” App. at 46 (emphasis added). And
the Tax Provision identifies “the real estate” as “LOT # 38.” Id. There is simply nothing in the
Agreement declaring or even implying that the due and payable language applied to the entire
undivided tract of land. Instead, the Agreement itself makes clear that the language applies only
to Mr. Fang’s individual lot. “[W]e must leave to the individual parties the right to make the
terms of their agreements as they deem fit and proper, and, as long as those terms are clear and
unambiguous and are not unlawful, we can only enforce them as agreed upon.” New Welton
Homes v. Eckman, 830 N.E.2d 32, 35 (Ind. 2005) (citations omitted).

        The record is clear that Lot 38 did not exist as a separate taxable parcel on March 1,
1999. Tr. at 12. As a consequence there obviously were no taxes due and payable on the lot at
the time of the March 3, 2000 closing date. Rather, the first installment of real estate taxes due
and payable on this lot was May 10, 2001 based upon the March 1, 2000 assessment date. Under
the express terms of the parties’ Agreement these taxes were Trinity Homes’ responsibility. The
trial court reached the right conclusion, and its judgment should therefore be affirmed.

1
  Indeed Amicus Curiae Builders Association of Greater Indianapolis, Inc., and the Indiana Builder’s
Association make a very similar point. “The industry standard in the residential real estate construction
market is that the purchaser agrees to pay real estate taxes that were assessed against the real estate while
the builder and/or developer owned the property, but became due and payable after the sale.” Joint Br. of
Amicus Curiae at 2.

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