Court Opinion

ID: 4192400
Source: CourtListenerOpinion
Date Created: 2017-08-03 15:09:18.431531+00
Date Added: 2024-06-11T07:47:12.227108
License: Public Domain

FILED
                                                                 Aug 03 2017, 6:15 am

                                                                     CLERK
                                                                 Indiana Supreme Court
                                                                    Court of Appeals
                                                                      and Tax Court

ATTORNEY FOR APPELLANTS                                   ATTORNEYS FOR APPELLEE
H. Curtis Johnson                                         TOM RAPER, INC.
Brown, DePrez & Johnson, P.A.                             John R. Maley
Shelbyville, Indiana                                      Todd A. Dixon
                                                          Barnes & Thornburg LLP
                                                          Indianapolis, Indiana
                                                          ATTORNEY FOR APPELLEE
                                                          CLARKE POWER SERVICES, INC.
                                                          Anthony J. Hornbach
                                                          Thompson Hine LLP
                                                          Cincinnati, Ohio

                                            IN THE
    COURT OF APPEALS OF INDIANA

Ardis W. Tucker, Sr. and                                  August 3, 2017
Sandra D. Tucker,                                         Court of Appeals Case No.
Appellants-Plaintiffs,                                    89A01-1702-CC-463
                                                          Appeal from the Wayne Circuit
        v.                                                Court
                                                          The Honorable David A. Kolger,
Tom Raper, Inc. and                                       Judge
Clarke Power Services, Inc.,                              Trial Court Cause No.
Appellees-Defendants.                                     89C01-1606-CC-310

Robb, Judge.

Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017                 Page 1 of 10
                                 Case Summary and Issue
[1]   Ardis and Sandra Tucker (the “Tuckers”) filed a complaint alleging breach of

      contract against Tom Raper, Inc. and Clarke Power Services, Inc. for failure to

      repair their damaged recreational vehicle (“RV”). The Tuckers’ complaint

      alleged they were third-party beneficiaries of two separate contracts: one

      between their RV’s insurer, American Family Insurance, and Raper; and one

      between American Family or Raper and Clarke. Thereafter, Raper and Clarke

      filed motions to dismiss alleging, among other things, that because the Tuckers

      asserted they were third-party beneficiaries, their status as such must be

      founded on a written contract; and because they failed to attach a written

      contract to their complaint as required by Indiana Rule of Trial Procedure

      9.2(A), dismissal of their complaint was required. The trial court agreed and

      dismissed the Tuckers’ complaint following their failure to remedy the alleged

      defect. The Tuckers now appeal, raising three issues for our review, one of

      which we find dispositive: whether the trial court erred in dismissing their

      complaint for failing to comply with Indiana Rule of Trial Procedure 9.2(A).

      Concluding the trial court erred in dismissing the Tuckers’ complaint, we

      reverse and remand for further proceedings.

                             Facts and Procedural History
[2]   The Tuckers complaint for damages alleges the following facts. The Tuckers

      owned an RV which they insured through American Family. On August 26,

      Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017   Page 2 of 10
      2012, their RV was struck by lightning and damaged. The Tuckers reported the

      damage to American Family.

[3]   In March of 2013, American Family contacted Raper to discuss repairs to the

      RV and arrangements were made to have the RV delivered to Raper’s facility.

      After inspecting the damage, Raper submitted a repair estimate to American

      Family, which accepted the offer.

[4]   In the fall of 2013, because the RV also sustained transmission damage, Raper

      delivered the RV to Clarke. Clarke also submitted a repair estimate to

      American Family. American Family also accepted Clarke’s offer to repair the

      transmission.

[5]   In early 2014, the RV was damaged in a vehicle collision while under Clarke’s

      care and control. Raper agreed to repair this damage and attempted to do so

      once Clarke returned the RV. Shortly thereafter, Raper advised American

      Family and the Tuckers that the repairs to the RV were complete. However,

      when the Tuckers attempted to drive the RV, they found electrical issues still

      persisted and returned the RV to Raper’s facility. Raper later advised the

      Tuckers the batteries of the RV had been hooked up backwards, causing further

      damage to the electrical system, which Raper agreed to fix. In July of 2015,

      Raper had yet to repair the electrical issues with the RV causing American

      Family to declare the RV a total loss due to the damage it sustained.

[6]   On June 10, 2016, the Tuckers filed their complaint against Raper and Clarke.

      The Tuckers alleged they were third-party beneficiaries of a contract between

      Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017   Page 3 of 10
      American Family and Raper, and that Raper breached the contract by failing to

      repair the RV. The Tuckers also alleged gross negligence against Raper. As to

      Clarke, the Tuckers alleged they were third-party beneficiaries of a contract

      between American Family and Clarke, and that Clarke breached that contract.

[7]   On July 8, 2016, Clarke filed its motion to dismiss and the trial court set the

      matter for hearing on September 13, 2016. On August 8, 2016, Raper filed its

      motion to dismiss. In their motions to dismiss, both Raper and Clarke asserted

      the Tuckers’ alleged status as third-party beneficiaries must be founded on a

      written contract. And because the Tuckers failed to attach a written contract

      with their complaint, Raper and Clarke alleged the Tuckers failed to comply

      with Indiana Rule of Trial Procedure 9.2(A).

[8]   Following a hearing on the matter, the trial court issued its order directing the

      Tuckers to comply with Indiana Rule of Trial Procedure 9.2(A). The trial court

      stated,

                It is therefore ordered that [the Tuckers] shall amend their
                Complaint previously filed in this cause to comply with Trial
                Rule 9.2. More specifically, [the Tuckers] shall amend such
                Complaint to include a copy of the alleged contract upon which
                they base their claims against the Defendants named in this cause
                ....

                In the event [the Tuckers] cannot so amend their Complaint as
                Ordered herein, Defendants’ Motions to Dismiss will be granted
                by the Court without the benefit of further hearing.

      Appellants’ Appendix, Volume 2 at 68.

      Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017   Page 4 of 10
[9]    On November 23, 2016, the Tuckers filed an amended complaint adding counts

       of bailment, breach of contract by agency, and conversion, but did not attach a

       written contract as ordered by the trial court. On December 7, 2016, the trial

       court issued its order dismissing the Tuckers’ lawsuit. On January 6, 2017, the

       Tuckers filed a motion to correct error, which the trial court denied. The

       Tuckers now appeal.

                                  Discussion and Decision
                                       I. Standard of Review
[10]   The Tuckers challenge the trial court’s dismissal of their complaint and the

       denial of their motion to correct error. Generally, we review a trial court’s

       ruling on a motion to correct error for an abuse of discretion. Ind. Bureau of

       Motor Vehicles v. Watson, 70 N.E.3d 380, 384 (Ind. Ct. App. 2017). An abuse of

       discretion occurs when the trial court’s decision is against the logic and effect of

       the facts and circumstances before the court or if the court has misinterpreted

       the law. Id. However, where the issues raised in the motion are questions of

       law, the standard of review is de novo. Id. The Tuckers’ motion to correct

       error asserted the trial court erred in determining a written contract was

       necessary to support the claim they were third-party beneficiaries and that they

       Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017   Page 5 of 10
       failed to satisfy Indiana Rule of Trial Procedure 9.2(A). As this is a question of

       law, our standard of review is de novo.1

                                     II. Third-Party Beneficiary
[11]   Raper and Clarke, in their motions to dismiss and briefs on appeal, attack the

       Tuckers’ allegation they are third-party beneficiaries of contracts between

       American Family and Raper, and American Family or Raper and Clarke.

       Specifically, both parties fault the Tuckers for failing to include a written

       contract with their complaint; a condition Raper and Clarke assert is necessary

       to establish third-party beneficiary status and to satisfy Indiana Rule of Trial

       Procedure 9.2(A).2 The trial court, agreeing with both Raper and Clarke,

       ordered the Tuckers to produce a written contract or face dismissal of their

       lawsuit. See Appellants’ App., Vol. 2 at 68. Following the Tuckers’ failure to

       attach a written contact to their amended complaint, the trial court dismissed

       their lawsuit.

[12]   Both Raper and Clarke assert “a third-party beneficiary claim requires a written

       contract with a specific provision conferring third-party beneficiary rights to the

       [Tuckers].” Brief of Appellee Tom Raper, Inc. at 15; see also Appellate Brief of

       1
         Likewise, we review de novo the trial court’s grant or denial a motion to dismiss pursuant to Indiana Rule
       of Trial Procedure 12(B)(6). Snyder v. Town of Yorktown, 20 N.E.3d 545, 550 (Ind. Ct. App. 2014), trans.
       denied. When evaluating the trial court’s grant or denial of a Trial Rule 12(B)(6) motion, we accept as true
       the facts alleged in the complaint, and only consider the pleadings in the light most favorable to the plaintiff,
       drawing every reasonable inference in favor of the non-moving party. Id.
       2
        Indiana Rule of Trial Procedure 9.2(A) states, “When any pleading allowed by these rules is founded on a
       written instrument, the original, or a copy thereof, must be included in or filed with the pleading.”

       Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017                             Page 6 of 10
       Appellee Clarke Power Services, Inc. at 13. To support their argument, both

       parties cite to language from our supreme court discussing the circumstances in

       which a third-party beneficiary may sue to enforce a contract. Our supreme

       court has stated,

               To be enforceable, it must clearly appear that it was the purpose
               or a purpose of the contract to impose an obligation on one of the
               contracting parties in favor of the third party. It is not enough
               that performance of the contract would be of benefit to the third
               party. It must appear that it was the intention of one of the
               parties to require performance of some part of it in favor of such
               third party and for his benefit, and that the other party to the
               agreement intended to assume the obligation thus imposed. The
               intent of the contracting parties to bestow rights upon a third
               party must affirmatively appear from the language of the instrument
               when properly interpreted and construed.

       Cain v. Griffin, 849 N.E.2d 507, 514 (Ind. 2006) (emphasis added) (quoting OEC-

       Diasonics, Inc. v. Major, 674 N.E.2d 1312, 1315 (Ind. 1996)). Raper and Clarke

       assert this language mandates a written contract to bestow rights upon a third

       party. We disagree.

[13]   The language from Cain cited by Raper and Clarke directs a court, where there

       is a written contract, to focus on the parties’ intent and whether the contract

       manifests a clear intent to impose an obligation on a contracting party for the

       benefit of a third party. And when a court is called upon to interpret or

       construe a written contract to determine the parties’ intent (as was our supreme

       court’s task in Cain), the intent to benefit a third party must be clear from the

       language of that contract. But nothing from Cain or this language, or other

       Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017   Page 7 of 10
       authorities cited by Raper or Clarke, forecloses the possibility that two or more

       parties may orally contract with the intent to benefit a third party. It is a well-

       established legal principle a contract may be oral as well as written. DiMaggio v.

       Rosario, 52 N.E.3d 896, 905 (Ind. Ct. App. 2016), trans. denied.

[14]   In F.W. Hempel & Co., Inc. v. Metal World, Inc., 721 F.2d 610 (7th Cir. 1983),

       Hempel, a business engaged in buying and selling metal commodities, entered

       into a written contract to purchase “Technical Grade Molybdic Oxide”

       (“TGMO”) from Metal World. This agreement conditioned payment by

       Hempel upon receipt of a certificate of approval from Ledoux and Company, a

       business engaged in sampling, analyzing, and reporting on its analysis of metal

       commodities on behalf of buyers and sellers. Thereafter, Ledoux entered into

       an oral contract with Metal World to sample, analyze, and report on certain

       materials from Metal World. Ledoux sampled the material and issued its

       certificate of approval. In reliance upon Ledoux’s testing, Hempel took

       delivery of the material and paid Metal World. Hempel then delivered its

       purchase to another buyer, who rejected the shipment alleging the material was

       not TGMO.

[15]   Hempel sued Ledoux and Metal World claiming it was a third-party beneficiary

       of the oral agreement between Metal World and Ledoux. Id. at 612. A jury

       found for Hempel, but the verdict was overturned when the district court

       granted Ledoux’s motion for judgment notwithstanding the verdict. Id. at 612-

       13. On appeal, the Seventh Circuit Court of Appeals noted the general rule in

       Illinois that “if a contract be entered into for a direct benefit of a third person

       Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017     Page 8 of 10
       not a party thereto, such third party may sue for breach thereof. The test is

       whether the benefit to the third person is direct to him arising from the

       contract.” Id. at 613. The Court further noted,

                [T]he right of a third party benefited by a contract to sue thereon
                rests upon the liability of the promisor, and this liability must
                affirmatively appear from the language of the instrument when
                properly interpreted and construed. The liability so appearing
                cannot be extended or enlarged on the ground alone that the
                situation and circumstances of the parties justify or demand
                further or other liability.

       Id. (citing Carson Pirie Scott & Co. v. Parrett, 346 Ill. 252, 258, 178 N.E. 498, 501

       (1931). Although the court ultimately ruled against Hempel, the court reviewed

       the oral contract to determine whether Hempel was a third-party beneficiary.

       Id. at 614.3

[16]   The Tuckers’ complaint alleged they were third-party beneficiaries of two

       separate contracts but did not specifically plead the existence of a written

       contract and their allegations can reasonably be construed as based on oral

       contracts. Further, as noted above, third-party beneficiary status is not solely

       dependent upon a written contact. Therefore, we conclude the trial court erred

       3
         Although the Seventh Circuit applied Illinois law, Illinois law regarding third-party beneficiaries is similar
       to our own. Indeed, our supreme court borrowed the phrase “affirmatively appear from the language of the
       instrument” from Carson Pirie Scott. See Freigy v. Gargaro Co., 223 Ind. 342, 349, 60 N.E.2d 288, 291 (1945)
       (noting Carson Pirie Scott stated the “more accurate” rule). Further, the cases to which Raper and Clarke cite
       in support of their arguments specifically involve written contracts. See, e.g., Anton Realty, LLC v. Fifth Third
       Bank, No. 1:15-cv-00199-RLY-TAB, 2015 WL 8675188, at *4-5 (S.D. Ind. Dec. 11 2015); Cain, 849 N.E.2d
       at 508-09; City of Indianapolis v. Kahlo, 938 N.E.2d 734, 738-39 (Ind. Ct. App. 2010), trans. denied.

       Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017                             Page 9 of 10
       in dismissing the Tuckers’ complaint for failure to comply with Indiana Rule of

       Trial Procedure 9.2(A).4

                                                  Conclusion
[17]   We conclude the trial court erred in dismissing the Tuckers’ complaint for

       failure to comply with Indiana Rule of Trial Procedure 9.2(A). Accordingly,

       we reverse and remand for further proceedings.

[18]   Reversed and remanded.

       Vaidik, C.J., and Bailey, J., concur.

       4
         The parties also dispute whether the additional claims in the Tuckers’ amended complaint sufficiently state
       a claim for which relief can be granted under Indiana law. However, the record is clear the trial court
       dismissed the Tuckers’ complaint for failure to comply with its order directing the Tuckers to satisfy Trial
       Rule 9.2(A). The trial court did not address or consider the merits of the new allegations in the amended
       complaint and we do not address them on this appeal. In addition, Raper’s request for attorney’s fees
       pursuant to Indiana Rule of Appellate Procedure 66(E) is denied.

       Court of Appeals of Indiana | Opinion 89A01-1702-CC-463 | August 3, 2017                        Page 10 of 10