Court Opinion

ID: 4508132
Source: CourtListenerOpinion
Date Created: 2020-02-18 16:03:17.804167+00
Date Added: 2024-06-11T09:37:40.518474
License: Public Domain

FILED
                                                                              Feb 18 2020, 7:33 am

                                                                                  CLERK
                                                                              Indiana Supreme Court
                                                                                 Court of Appeals
                                                                                   and Tax Court

      ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
      Jason M. Massaro                                           Jeffrey L. Beck
      The Massaro Legal Group, LLC                               Beck Rocker & Habig, P.C.
      Indianapolis, Indiana                                      Columbus, Indiana

                                                                 Matthew T. Albaugh
                                                                 Faegre Baker Daniels LLP
                                                                 Indianapolis, Indiana

                                                   IN THE
          COURT OF APPEALS OF INDIANA

      Vic’s Antiques and Uniques,                                February 18, 2020
      Inc.,                                                      Court of Appeals Case No.
      Appellant-Defendant,                                       19A-SC-1348
                                                                 Appeal from the Bartholomew
              v.                                                 Superior Court
                                                                 The Honorable James D. Worton,
      J. Elra Holdingz, LLC,                                     Special Judge
      Appellee-Plaintiff.                                        Trial Court Cause No.
                                                                 03D02-1902-SC-177

      Najam, Judge.

                                         Statement of the Case
[1]   Vic’s Antiques and Uniques, Inc. (“Vic’s”) appeals from an order of possession

      entered in a small claims eviction proceeding, which required that Vic’s vacate

      real estate owned by J. Elra Holdingz, LLC (“J. Elra”). Vic’s raises one
      Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020                           Page 1 of 19
      dispositive issue for our review, namely, whether the court erred when it held

      that an agreement between Vic’s and J. Elra is a lease subject to an eviction

      proceeding rather than a land sale contract. We hold that, in its operation and

      effect, the agreement between Vic’s and J. Elra is a land sale contract and that

      the claim asserted is not a possessory action between a landlord and a tenant.

      We also hold that the value of the property sought to be recovered exceeds the

      jurisdictional limit of a small claims court. Thus, the small claims court lacked

      jurisdiction over the agreement, and we vacate the order and remand with

      instructions to dismiss the claim. 1

                                  Facts and Procedural History
[2]   On March 22, 2018, J. Elra and Vic’s entered into a “Lease Agreement” (“the

      agreement”) for a building and 3.56 acres of property (“the real estate”).

      Appellant’s App. Vol. II at 9. Under the agreement, Vic’s agreed to pay J. Elra

      $1,265.30 per month for a term of twenty years. The agreement included a

      provision which granted Vic’s an option to purchase the real estate plus an

      additional six acres (collectively, the “option property”) for a purchase price of

      $1.00 upon the successful completion of the agreement.

[3]   In the alternative, Vic’s could purchase the option property before the end of the

      twenty-year term if J. Elra were to refinance the property, which was subject to

      1
        We held oral argument in this case on January 23, 2020, in Indianapolis. We thank counsel for their
      excellent advocacy.

      Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020                          Page 2 of 19
      a mortgage, or to sell any portion of the property, or if J. Elra’s mortgage were

      released. If Vic’s exercised the option prior to the end of the term, the

      remaining monthly payments would be accelerated and the purchase price

      would equal the total of the remaining monthly payments, plus $1.00. And the

      agreement provided that, if Vic’s exercised its option to purchase the option

      property, J. Elra would provide title insurance in the amount of $200,000 and a

      warranty deed. See id. at 11.

[4]   On January 21, 2019, J. Elra sent Vic’s a letter in which J. Elra asserted that

      Vic’s had breached various provisions of the agreement. And on February 15,

      J. Elra filed a small claim for an eviction based on unpaid rent, unpaid taxes,

      failure to maintain the leased premises, and failure to provide proof of

      insurance, as well as a claim for $6,000 in damages.

[5]   Thereafter, on May 24 and 29, the small claims court held a hearing on J. Elra’s

      claim for possession of the real estate. At the beginning of the hearing, J. Elra

      withdrew its claims that Vic’s had failed to make rent payments and to pay the

      real estate taxes. However, J. Elra proceeded with its claims that Vic’s had

      “unlawfully retained possession” of the real estate in that Vic’s had failed to

      provide proof of insurance and had failed to maintain the premises. Id. at 8. In

      addition, J. Elra sought to evict Vic’s based on alleged breaches that had

      occurred since the filing of the claim, namely, that Vic’s had placed a lock on J.

      Elra’s gate to an adjacent property occupied by J. Elra and that Vic’s had failed

      to comply with local zoning ordinances.

      Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020       Page 3 of 19
[6]   At the hearing, Aaron Ferguson, the president of J. Elra, testified. On cross-

      examination, Vic’s attempted to question Ferguson about the formation of the

      agreement. Specifically, Vic’s asked Ferguson if the agreement “actually arises

      out of a prior litigation between J. Elra and Vic’s[.]” Tr. Vol. II at 22. At that

      point, J. Elra objected to Vic’s question on the ground that it was “related to the

      prior litigation,” which litigation had been dismissed with prejudice. Id. at 22-

      23. The small claims court sustained J. Elra’s objection.

[7]   Vic’s then made an offer of proof in which it asserted that the court needed the

      “context and background” of the prior litigation in order to “understand” that

      the agreement is not a lease subject to an eviction proceeding but, instead, a

      land sale contract styled as a lease. Id. at 24. In particular, Vic’s stated that J.

      Elra and Vic’s had mediated a prior dispute and that “[t]hat’s where the lease

      came from.” Id. Vic’s further offered to prove that, at mediation, the parties

      “had to work around the fact that there was a lender involved” and as a result

      they “came to” a document that was a land sale contract “framed” as a lease

      with an option to purchase. Id. Following Vic’s offer of proof, the court

      “agree[d]” with J. Elra that the document was a lease and continued with the

      eviction proceeding. Id. at 25. After the hearing, the small claims court entered

      Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020       Page 4 of 19
      an order that Vic’s vacate the real estate and scheduled a hearing on J. Elra’s

      claim for damages. This interlocutory appeal ensued. 2

                                        Discussion and Decision
[8]   Vic’s appeals the small claims court order that Vic’s vacate the real estate. As

      this Court has recently stated:

               Pursuant to Trial Rule 52(A), the findings or judgments rendered
               by a small claims court are upheld unless they are clearly
               erroneous. Because small claims courts were designed to
               dispense justice efficiently by applying substantive law in an
               informal setting, this deferential standard of review is particularly
               appropriate. We consider the evidence most favorable to the
               judgment and all reasonable inferences to be drawn from that
               evidence. However, we still review issues of substantive law de
               novo.

      N. Ind. Pub. Serv. Co. v. Josh’s Lawn & Snow, LLC, 130 N.E.3d 1191, 1193 (Ind.

      Ct. App. 2019) (citations omitted).

[9]   This appeal presents an issue of substantive law, namely, whether the small

      claims court erred when it interpreted the agreement as a lease rather than a

      land sale contract. Further, in light of our holding on that issue, we must also

      2
        Vic’s brought this appeal pursuant to Indiana Appellate Rule 14(A)(4), which allows a party to bring an
      interlocutory appeal as a matter of right when the court issues an order for the delivery of the possession of
      real property.

      Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020                               Page 5 of 19
       address whether the small claims court had subject matter jurisdiction over the

       agreement.

                               Issue One: Interpretation of the Agreement

[10]   Vic’s contends that the small claims court erred when it evicted Vic’s.

       Specifically, Vic’s contends that the small claims court incorrectly deemed the

       agreement to be a lease subject to an eviction proceeding rather than a land sale

       contract. To resolve this issue on appeal, we must interpret the agreement. It is

       well settled that the

               [c]onstruction of the terms of a written contact generally is a pure
               question of law. The goal of contract interpretation is to
               determine the intent of the parties when they made the
               agreement. This court must examine the plain language of the
               contract, read it in context and, whenever possible, construe it so
               as to render every word, phrase, and term meaningful,
               unambiguous, and harmonious with the whole. If contract
               language is unambiguous, this court may not look to extrinsic
               evidence to expand, vary, or explain the instrument but must
               determine the parties’ intent from the four corners of the
               instrument.

       Layne v. Layne, 77 N.E.3d 1254, 1265 (Ind. Ct. App. 2017) (citations omitted).

[11]   Here, Vic’s contends that the agreement is unambiguously a land sale contract

       rather than a lease because it “provides for an amortized payment schedule,”

       requires that Vic’s pay real estate taxes on both the real estate and the

       additional six acres, and “provides for the payment of money to Vic’s in the

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020       Page 6 of 19
       event of a taking” by the State. Appellant’s Br. at 17. And Vic’s maintains that

       those provisions are “entirely consistent with a land contract[.]” Id. at 23.

[12]   But J. Elra asserts in its brief on appeal that the agreement is unambiguously a

       lease because it “is entitled ‘LEASE AGREEMENT’ in all capital letters, at the

       top center of the first page,” it identifies the parties as “Lessor” and “Lessee,”

       the “term of the lease” is twenty years, and it calls for monthly “rent

       payments.” Appellee’s Br. at 11. We note, however, that at oral argument, a

       different counsel for J. Elra readily acknowledged our Supreme Court’s holding

       in Rainbow Realty Group, Inc. v. Carter that “the transaction’s purported form and

       assigned label do not control its legal status.” 131 N.E.3d 168, 173 (Ind. 2019).

       In addition, the instrument itself includes a standard provision that the headings

       used by the parties “are for convenience only and do not define, limit, or

       construe the contents” of the agreement. Appellant’s App. Vol. II at 20. We do

       not hesitate to conclude that the agreement is not a lease simply because it is

       labeled a “lease”; because it includes terms such as “lessor,” “lessee,” and

       “rent”; or because it includes a paragraph heading entitled “demised premises.”

[13]   At oral argument, J. Elra correctly stated that, once executed, a land sale

       contract is a present sale and purchase. See Skendzel v. Marshall, 301 N.E.2d
641, 646 (Ind. 1973). And J. Elra also correctly noted that, in a land sale

       contract, all incidents of ownership are transferred to the purchaser. See id.

       Based on those premises, J. Elra argued that the agreement is unambiguously a

       lease because various provisions in the agreement indicate that J. Elra did not

       transfer all incidents of ownership to Vic’s and, thus, that the agreement created

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020      Page 7 of 19
       a landlord-tenant relationship between the parties. 3 Further, J. Elra maintained

       that there are “many similarities” between provisions in the agreement in this

       case and provisions in the agreement in Rainbow Realty Group that was found to

       be a residential lease. Oral Argument at 35:27-35:33.

[14]   Indeed, J. Elra contended, in effect, that certain clauses in the agreement are

       found only in leases. Specifically, J. Elra maintained that the agreement was a

       lease because it: (1) limited Vic’s use of the real estate to the operation of an

       antique store; (2) required Vic’s to obtain J. Elra’s written approval before it

       could construct any improvements on the real estate; (3) allowed J. Elra to enter

       the property upon the termination of the agreement; (4) required Vic’s to obtain

       written approval from J. Elra prior to constructing any signs; (5) provided that

       Vic’s could remove business fixtures at the expiration of the term; (6) allowed J.

       Elra to enter the real estate at any time in order to inspect the property; (7)

       required Vic’s to surrender the property at the expiration of the term; and (8)

       prohibited Vic’s from assigning or subletting the real estate without J. Elra’s

       prior written consent.

       3
         We observe that J. Elra did not reference our Supreme Court’s holding in Skendzel in its brief on appeal, nor
       did it advance any arguments based on that holding. For the first time at oral argument, J. Elra
       acknowledged Skendzel and stated that it was an excellent source for this Court to determine what is a land
       sale contract. See Oral Argument at 27:05-27:11.

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020                             Page 8 of 19
[15]   We acknowledge that such provisions are often included in lease agreements.

       See Rainbow Realty Group, Inc., 131 N.E.3d at 174. 4 However, those provisions

       are also not incompatible with a land sale contract. In Skendzel, our Supreme

       Court stated that, “in effect,” a land sale contract is “a sale with a security

       interest in the form of legal title reserved by the vendor” and that the “retention

       of the title by the vendor is the same as reserving a lien or mortgage.” 301
N.E.2d at 646. In other words, in a land sale contract, the vendor retains legal

       title to the real estate until the vendee pays the total contract price. See id. And

       the Skendzel Court expressly held that a land sale contract is “in the nature of a

       secured transaction.” Id. at 650.

[16]   Because the vendor retains a present interest in the real estate until the debt has

       been paid in full, as a secured creditor the vendor may require reasonable

       limitations on nonessential incidents of ownership to protect its security interest

       in the real estate. The agreement gave Vic’s the exclusive possession and use of

       the real estate, and the provisions that enabled J. Elra to protect its security

       interest—for example, the right to enter and inspect the real estate and the

       requirement of approval before improvements are made—did not deprive Vic’s

       of its possessory or beneficial interest. And both a landlord and a land sale

       vendor would have the same legitimate reason to be concerned about

       compliance with zoning and with maintenance of the property whether the

       4
         Neither party addressed the Supreme Court’s opinion in Rainbow Realty Group, Inc. in their briefs on appeal.
       However, in our order setting oral argument, we directed both parties to read and to be prepared to discuss
       that case.

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020                            Page 9 of 19
       property was leased or sold. The provisions in the agreement cited by J. Elra do

       not point unerringly to a lease. Rather, similar or equivalent provisions are also

       present in a typical land sale contract.

[17]   The agreement does require that Vic’s only use the property as an antiques store

       and that Vic’s not assign or “sublet” its interest without J. Elra’s prior written

       consent, but those are reasonable conditions where, as here, J. Elra’s own

       business is located next door and J. Elra is extending credit to Vic’s and to no

       one else. When one party extends credit to another, there are usually

       conditions attached. Indiana courts have long recognized and respected the

       freedom to contract. Eck & Associates, Inc. v. Alusuisse Flexible Packaging, Inc., 700
N.E.2d 1163, 1167 (Ind. 1998). And, as counsel for J. Elra acknowledged at

       oral argument, “[p]arties are free to contract however they want to fashion their

       contract.” Oral Argument at 24:09-24:13. Under the agreement, J. Elra

       reserved a present interest in the real estate equivalent to a lien or mortgage

       and, as such, was entitled to include reasonable terms and conditions to protect

       itself from waste or other impairment of its collateral.

[18]   As mentioned above, our Supreme Court has recently held that a “transaction’s

       purported form and assigned label do not control its legal status.” Rainbow

       Realty Group, Inc., 131 N.E.3d at 173. This is the very principle underlying the

       holding in Skendzel, where the Court declined “to pay homage to form over

       substance.” Skendzel, 301 N.E.2d. at 646. Thus, to determine whether the

       agreement is a lease or a land sale contract, we must look beneath the surface of

       the agreement and, instead, consider the substance of the agreement to

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020      Page 10 of 19
       determine the intent of the parties. We hold that, on the facts of this case, the

       agreement speaks for itself. As such, we need not look to extrinsic evidence to

       interpret the agreement. See Layne, 77 N.E.3d at 1265. Rather, the substance of

       the agreement is found in the economics of the transaction. And the economics

       of the transaction demonstrate that the agreement is unambiguous and is a land

       sale contract rather than a lease.

[19]   Here, J. Elra would retain legal title to the real estate until Vic’s had made all of

       the monthly payments, at which time Vic’s was granted an “option to

       purchase . . . for a purchase price of One Dollar ($1.00).” Appellant’s App.

       Vol. II at 10. Nevertheless, the agreement required J. Elra to obtain a title

       insurance policy in the amount of $200,000. Just as a loan policy of title

       insurance is issued in the amount of the mortgage, an owner’s policy of title

       insurance is issued in the amount of the purchase price. J. Elra has failed to

       reconcile the discrepancy between the purported “purchase price of One Dollar

       ($1.00)” and the actual purchase price of $200,000 as shown by the owner’s

       policy of title insurance the parties agreed would be issued.

[20]   In addition, in order to exercise its $1.00 “option to purchase,” Vic’s must first

       have paid a sum equal to 240 monthly payments of $1,265.30, or a total of

       $303,671.63, which is $103,671.63 more than the purchase price. J. Elra has

       failed to account for this additional payment. A simple calculation confirms

       that this amount represents interest on the $200,000 purchase price.

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020     Page 11 of 19
[21]   Amortization is the payment of a debt with interest over time. The agreement

       provides for the amortization of $200,000 in principal payable in 240 monthly

       payments of exactly $1,265.30. Solving for the interest rate yields a rate of

       4.5%. This amortization is the Rosetta Stone that unpacks and reveals the

       nature of the agreement. All four of these factors—the principal amount, the

       number of monthly payments, the amount of each monthly payment, and the

       interest rate—are integral to the amortization schedule, and each factor depends

       upon the others.

[22]   Interest represents the time value of money. Reese v. Reese, 696 N.E.2d 460, 463

       (Ind. Ct. App. 1998). And, it is well settled that “interest follows principal[.]”

       Indianapolis Pub. Hous. Agency v. Aegean Constr. Servs. Inc., 755 N.E.2d 237, 241

       (Ind. Ct. App. 2001). While contract purchasers pay interest on the unpaid

       principal balance of a land sale contract, lessees do not pay interest on future

       rent payments. Here, the four factors comprising the amortization show that

       the monthly payments were not “rent payments” but contract payments of

       principal and interest on a fully amortized land sale contract.

[23]   The $1.00 “purchase price” at the end of the 240 monthly payments also

       demonstrates that the agreement was a land sale contract rather than a lease.

       On this issue, we find a recent opinion from another jurisdiction to be

       instructive. In Enz v. Raelund, the Montana Supreme Court considered whether

       a real estate agreement was a contract of sale or a lease. 419 P.3d 674, 685

       (Mont. 2018). In concluding that the agreement was a lease, the Court relied in

       part on the fact that the lessee was required to pay a significant amount of

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020     Page 12 of 19
       money at the end of the term in order to own the property. The court

       distinguished the facts in Enz from the facts in an earlier case, Pollard v. City of

       Bozeman, 741 P.2d 776 (Mont. 1987), and held:

               In Pollard, we determined that an ambiguous real estate
               agreement was a contract for sale where, at the conclusion of the
               leased term, the tenant could purchase the property for the
               nominal consideration of $10.00. We noted that the ‘lease’
               required the lessee to pay as compensation for the lease ‘a sum
               substantially equivalent to or in excess of its value’ after which,
               for nominal consideration, it would own the property. Pollard,
228 Mont. at 181-82, 741 P.2d at 779-80. Here, at the end of the
               Lease, the Raelunds would not own the property for nominal
               additional consideration, but rather would either owe an
               additional $239,900, or assume the existing mortgage.

       Enz, 419 P.3d at 685. Here, as in Pollard, during the term of the agreement Vic’s

       was required to pay a sum in excess of the purchase price, after which Vic’s

       could purchase both the real estate and an additional parcel for nominal

       consideration. The $1.00 option payment is a token and insignificant

       consideration required only to trigger the issuance of a title insurance policy

       and a warranty deed.

[24]   Years earlier, this Court reached the same conclusion as the Montana Supreme

       Court in the analogous context of a lease of goods. In United Leaseshares, Inc. v.

       Citizens Bank & Trust Co., we considered whether a lease with an option to

       purchase clause was a lease “intended as security.” 470 N.E.2d 1383, 1387

       (Ind. Ct. App. 1984). In making that determination, the Court stated that the

       “primary issue” to be decided was whether the agreement was in effect a

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020       Page 13 of 19
       conditional sale in which the “lessor” retained an interest in the goods as

       security for the purchase price. Id. We noted that, by defining a “security

       interest” to include a lease intended as security, the drafters of the Uniform

       Commercial Code (“UCC”) intended such a “disguised security interest” to be

       governed by the same rules that apply to other security interests. Id. We

       further noted that, in that respect, the drafters of the UCC refused to recognize

       form over substance and concluded:

               In regard to the option to purchase, the courts have also stated that
               what is to be considered ‘nominal consideration’ depends upon the
               particular facts of each case. However, the courts are clear upon
               one thing, which is that where the terms of the lease and option
               [to] purchase are such that the only sensible course of action for the lessee
               at the end of the term is to exercise the option to purchase and become
               the owner of the goods, then the lease becomes one intended to
               create a security interest.

       Id. (emphasis added).

[25]   The same reasoning applies here. The agreement provides that, after Vic’s has

       paid $303,671.63, it will have the option to purchase both the real estate and an

       additional six acres for a nominal sum. At that point, at the end of the term,

       “the only sensible course of action” for Vic’s will be to exercise the option. Id.

       As such, the “lease” functioned as a security agreement and created a disguised

       security interest. See id.

[26]   Thus, essentially the same rules which distinguish a lease from a sale under the

       UCC apply here. And, under the UCC, “[w]hether a transaction creates a lease

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020             Page 14 of 19
       or security interest is determined by the facts of each case.” Ind. Code § 26-1-1-

       201(37) (2019). However, “a transaction creates a security interest if the

       consideration the lessee is to pay the lessor for the right to possession and use of

       the goods is an obligation for the term of the lease not subject to termination by

       the lessee” and “the lessee has an option to become the owner of the goods for

       no additional or nominal consideration upon compliance with the lease

       agreement.” I.C. § 26-1-1-201(37)(d). Here, Vic’s right to possession and use of

       the real estate is an obligation for the term of the “lease” not subject to

       termination by Vic’s, and Vic’s has an option to become the owner of the

       option property for the nominal consideration of $1.00.

[27]   There is no question that, after Vic’s will have paid 240 monthly payments and

       otherwise performed under the agreement, Vic’s would take title to both

       properties. No reasonable person would pay several hundred thousand dollars

       and then walk away without paying one additional dollar to complete the

       transaction. The financial factors revealed in the amortization and the structure

       of the transaction demonstrate that, if Vic’s performed the agreement according

       to its terms, the parties intended that Vic’s would become the owner of the

       record title to the option property, including both the real estate and the

       additional parcel.

[28]   The instant case can be distinguished on its facts from Rainbow Realty Group,

       Inc. where the parties entered into an initial two-year residential lease which

       contemplated the execution of a separate land sale contract for the remaining

       twenty-eight years. 131 N.E.3d at 171. Here, the parties entered into a single

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020     Page 15 of 19
       transaction, and the actual sale and purchase of commercial real estate was the

       only transaction within the contemplation of the parties at the inception of the

       agreement. There is no other plausible explanation for the transaction. While

       the agreement contains terms that are consistent with a lease, it is clear from the

       economics of the transaction that from the outset the parties intended for Vic’s

       to acquire the option property. Accordingly, we can say with confidence that

       the agreement between J. Elra and Vic’s is a land sale contract.

                                  Issue Two: Subject Matter Jurisdiction

[29]   Having concluded that the agreement is a land sale contract, we next address

       whether the small claims court had jurisdiction to enforce the agreement. As

       this Court has previously stated:

               Whether a court has the authority to hear a class of cases is a
               question of the court’s subject matter jurisdiction. To have
               subject matter jurisdiction, either the Indiana Constitution or a
               statute must confer authority upon a court. If a court does not
               have subject matter jurisdiction, any judgment it renders is void.
               Because void judgments may be attacked directly or collaterally
               at any time, the issue of subject matter jurisdiction cannot be
               waived and may be raised at any point by a party or by the court
               sua sponte.

       Hoang v. Jamestown Homes, Inc., 768 N.E.2d 1029, 1032 (Ind. Ct. App. 2002)

       (citations omitted). Because the authority granted by a statute is a question of

       law, we review the question of subject matter jurisdiction de novo. See id.

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020    Page 16 of 19
[30]   Indiana Code Section 33-29-2-4 defines the jurisdiction of the small claims

       docket of Indiana’s superior courts. 5 That statute grants small claims courts

       jurisdiction to hear the following cases:

                 (1) Civil actions in which the amount sought or value of the
                 property sought to be recovered is not more than six thousand dollars
                 ($6,000). . . .

                 (2) Possessory actions between landlord and tenant in which the rent
                 due at the time the action is filed does not exceed six thousand
                 dollars ($6,000).

                 (3) Emergency possessory actions between a landlord and tenant
                 under IC 32-31-6.

       Ind. Code § 33-29-2-4(b) (emphases added).

[31]   Here, J. Elra filed a complaint to evict Vic’s from the real estate. Having

       concluded that the agreement was a land sale contract, it follows that the value

       of the property sought to be recovered is substantially more than the $6,000

       small claims jurisdictional limit. Accordingly, the small claims court did not

       have jurisdiction to hear the action under Indiana Code Section 33-29-2-4(b)(1).

       And because the agreement was a land sale contract, it created a relationship

       between Vic’s and J. Elra that is “[r]ealistically” viewed as a “mortgagee-

       mortgagor” relationship. Skendzel, 301 N.E.2d at 646. The agreement did not

       5
           The small claims court at issue was part of the Bartholomew Superior Court.

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020             Page 17 of 19
       create a landlord-tenant relationship. As such, the action was not a possessory

       action between a landlord and a tenant, and the small claims court did not have

       jurisdiction to hear J. Elra’s claim under Indiana Code Section 33-29-2-4(b)(2)

       or (3). We hold, therefore, that under the plain language of Indiana Code 33-

       29-2-4(b), the small claims court did not have jurisdiction to adjudicate the

       claim, and the court’s order of possession is void. See Hoang, 768 N.E.2d at

       1032.

                                                     Conclusion

[32]   In sum, notwithstanding provisions in the agreement that are consistent with a

       lease, those provisions are not inconsistent with the interests of a secured

       creditor in a land sale contract and do not impinge upon the vendee’s

       possession and beneficial use of the real estate any more than would a

       conventional mortgage with similar restrictions. The financial provisions

       demonstrate that the underlying agreement is, in its operation and effect, a land

       sale contract. And because the claim asserted was not a possessory action

       between a landlord and a tenant and the value of the property sought to be

       recovered is greater than $6,000, the small claims court lacked subject matter

       jurisdiction to enforce the agreement, and the order is void. We therefore

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020    Page 18 of 19
       vacate the small claim’s court order and remand with instructions for the court

       to dismiss the claim. 6

[33]   Vacated and remanded with instructions.

       Vaidik, J., and Tavitas, J., concur.

       6
         Vic’s asserts that, because the agreement is a land sale contract, J. Elra must pursue a foreclosure action.
       While the general remedy for a breach of a land sale contract is foreclosure, there are situations where a
       forfeiture would be an appropriate remedy. On the record in this appeal, we need not consider or decide
       whether a breach has occurred or whether, if a breach has occurred, foreclosure or forfeiture would be the
       appropriate remedy.

       Court of Appeals of Indiana | Opinion 19A-SC-1348 | February 18, 2020                              Page 19 of 19