Court Opinion

ID: 9740378
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:34:00.009518+00
Date Added: 2024-06-11T07:24:17.873308
License: Public Domain

BROWN, Judge,
concurring in result.
I concur in the result reached by Judge Baker and note initially that it is the duty of this court to not enter upon the consideration of a constitutional question where the court can perceive another ground on which it may properly rest its decision. City of New Haven v. Reichhart, 748 N.E.2d 374, 378 (Ind.2001).
I do not believe Foundations to be a third party beneficiary of the letter agreements, but even assuming arguendo that it is, it cannot enforce the agreements.
A third party beneficiary contract exists when: (1) the parties intend to benefit a third party; (2) the contract imposes a duty on one of the parties in favor of the third party; and (3) the performance of the terms of the contract render a direct benefit to the third party intended by the parties to the contract. R.R. Donnelley & Sons Co. v. North Texas Steel Co., Inc., 752 N.E.2d 112, 122 (Ind.Ct.App.2001), reh'g demied, trams. denied. The intent of the parties to benefit the third party is the controlling factor and this may be shown by naming the third party or by other evidence. Id. 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. OEC-Diasonics, Inc. v. Major, 674 N.E.2d 1312, 1315 (Ind.1996). However, it is not necessary that the intent to benefit a third party be demonstrated any more clearly than the parties' intent regarding any other terms of the contract. Id. "Whether a third party will be viewed as 'intended' or 'incidental' is necessarily a fact sensitive issue," and "[the line between protected and unprotected beneficiaries in a given situation may require a particularly careful analysis of the purposes, motives and intentions of the parties." 9 A. Corbin, Corbin on Contracts § 44.9 (2007).
Here, the letter agreements mention two nonprofit corporations, TCEF, and East Chicago Community Foundation, Inc. ("ECCF"). The letter agreements provide details for the creation of TCEF and ECCF and the constitution of their boards of trustees. Specifically, the letter agreements provide:
2. Showboat proposes that its Contribution be distributed as follows:
* x * #s * tk
b. One (1%) percent to the Twin City Education Foundation, Inc., ("TCEF"), an Indiana nonprofit corporation. TCEF will be independent of Showboat. Members of a seven member Board of Trustees of TCEF will be selected from or by the following entities or individuals:
Two representatives of two largest employers Mayor Common Council Board of Trustees of the School City Chamber of Commerce
East Chicago Education Foundation In addition, at Showboat's option, Showboat shall be permitted to name an individual to the Board of Trustees of TCEF.
TCEF will focus on funding training programs that prepare workers for the 21st century. Training for riverboat related jobs will not be funded by TCEF.
TCEF will administer as one of its programs a scholarship program (funded initially with a minimum of $50,000) for *37post-secondary education for residents of East Chicago. Showboat agrees that at least $25,000 shall be set aside annually from this scholarship fund for the benefit of qualifying eighth graders entering high school. Such funds will be placed in individual interest bearing trust accounts for the benefit of such qualifying students and will be made available to them as college scholarships upon their graduation from high school and enrollment in institutions of higher education; provided that they have complied with the requirements of the scholarship program during their high school tenure.
Showboat further agrees that the balance of TCEF's funds will be dedicated to educational programs (both academic and vocational) in and around the City, with priority being given to programs in the City and for City residents.
e. One (1%) percent to the East Chicago Community Foundation, Inc. ("ECCF"), an Indiana nonprofit corporation. ECCF will be independent of Showboat. ECCF will receive, evaluate and select for funding proposals from individuals or entities within the City, and will fund community development projects within the City. A fifteen-to-twenty-one member Board of Trustees will be selected by or from the following individuals or entities:
Various Neighborhood Leaders Mayor Common Council Chamber of Commerce Board of Trustees of the School City
In addition, at Showboat's option, Showboat shall be permitted to name an individual to the Board of Trustees of ECCF. The majority of Board members will represent neighborhoods.
Appellant's Appendix at 1634-1635.
In contrast to the provisions of the letter agreements, the Articles of Incorporation for Foundations do not provide any requirements that certain entities be able to select the trustees. Specifically, the Arti-eles of Incorporation for Foundations provide:
ARTICLE IX
Board of Directors
Section 9.01. Number and Term of Office. The Board of Directors shall consist of no more than nine (9) Directors. The term of office of a Director shall be as specified in the Bylaws; provided, however, that the term of an elected Director shall not exceed three (8) years. Directors may be elected for no more than three (8) successive terms. Terms of office of Directors may be staggered as specified in the Bylaws.
Section 9.02. Qualifications.
(a) Qualifications. Each member of the Board of Directors must meet the following qualifications upon election and thereafter in order to qualify to serve as a Director ("Individual Qualifications"):
(i) Residency: Members of the Board of Directors shall be residents of the City of East Chicago at all times; provided, however, this qualification may be waived for a limited time in accordance with Section 9.02(b) below;
(ii) No Elected Official: No member of the Board of Directors shall be an elected official at any time during service on the Board of Directors, and election to a public office shall automatically disqualify a person from serving or continuing to serve as a Director immediately upon certification of election with no further action being necessary *38by the Corporation for the removal of the Director;
(ii) Execution of a Confidentiality Agreement: The business of the Board of Directors requires a Director to receive and evaluate confidential financial and other information. In order to qualify to serve and remain qualified to serve, each Director must execute certain confidentiality and disclosure policy statements and agreements in substantially the form required of and executed by all the Directors as approved by the Board of Directors; and
(iv) Submission of Annual Conflict Report: In order to qualify to serve and remain qualified to serve, each Director must verify and complete a Conflict of Interest form annually, in substantially the form required of and executed by all the Directors as approved by the Board of Directors.
(b) Failure to Meet the Individual Qualifications During Entire Term. Any Director who fails to meet the Individual Qualifications at any time during the Director's term as reasonably determined by the Chairman shall be deemed to have resigned from the Board of Directors automatically and without further action on the part of the non-qualifying Director or the Corporation, effective as of the time the Director fails to qualify, except that upon notice of a change in a current Director's qualifications, the Board of Directors may, by majority vote, waive the qualification of Residency (in Section 9.02(a)(i) above) for the remainder of the non-qualifying Director's then-current term. The other qualifications may not be waived.
(c) Other. Each Director shall have such additional qualifications as may be specified from time to time in the Bylaws of the Corporation as required by law.
Appellee's Addendum at 15-16.
Based upon the different qualifications set forth in the letter agreements and the Articles of Incorporation for Foundations and in light of the purposes, motives, and intentions of the parties, I conclude that East Chicago and Showboat did not intend to benefit an organization like Foundations by entering into the letter agreements.
The dissent references Hast Chicago I. However, the Court of Appeals in East Chicago I did not review whether Foundations had standing as a third party benefi-ciliary. Rather, the court addressed whether East Chicago Community Development Foundation ("ECCDF") and the Twin City Education Foundation ("TCEF") were third party beneficiaries. See Hast Chicago I, 878 N.E.2d at 374-376. The conclusion in Hast Chicago I that ECCDF and TCEF were third party beneficiaries does not affect whether Foundations is a third party beneficiary because of the differences between Foundations and ECCDF and TCEF as expressed above.
Further, Judge Bradford's ruling in East Chicago I granting Foundations' motion to substitute itself for ECCDF and TCEF did not address the merits of whether Foundations has standing in this case. Rather, his ruling determined only that Foundations could be substituted for ECCDF and TCEF and not that Foundations had rights under the letter agreements. Thus, his ruling does not prevent this court from addressing whether Foundations is a third party beneficiary in this case.
Attempts to regard Foundations as a third party beneficiary also appear to be *39contrary to the Supreme Court's opinion in Zoeller v. Fast Chicago Second Century, Inc., 904 N.E.2d 213 (Ind.2009), in which the Supreme Court stated that the terms of the agreement between Showboat and East Chicago "were not intended to control the rights of any non-parties." Since a third party beneficiary contract exists only if (1) the parties intend to benefit a third party; (2) the contract imposes a duty on one of the parties in favor of the third party; and (3) the performance of the terms of the contract render a direct benefit to the third party intended by the parties to the contract, R.R. Donnelley & Sons, supra, 752 N.E.2d at 122, Foundations could not be a third party beneficiary.
Furthermore, even if Foundations was a third party beneficiary of the letter agreements, I would conclude that Foundations cannot enforce the letter agreements as they were of indefinite duration and therefore are terminable at will by either East Chicago or the license holder.
Most recently, Resorts was granted the license on the condition that Resorts would make the payments in question to TCEF and ECCF. No one had expected Showboat to have the license forever, and no one expected Showboat to make the payments forever, Cireumstances change and everyone understood this when the license was granted to Showboat and Showboat agreed to make the payments. If Showboat had stopped making the payments, the conditions for receiving the license would not have been met and Showboat would have lost its license. East Chicago is not any more bound to the letter agreements than Resorts, the current license holder, and could have decided to terminate the license, which would have meant that Resorts would no longer have had to make the payments.
In January 2005, East Chicago decided to terminate the original letter agreements, as it had a legal right to do by setting forth new conditions to the continuation of the license. The new conditions were that Resorts would have to pay the same amount of money but to different entities. Apparently Resorts had no problem with these new conditions or the termination or modification of the original letter agreements, probably because the amount it had to pay did not change.
The Indiana Supreme Court addressed the letter agreements in a related case and held that the agreements constituted an express contract but that:
the agreement is not like an ordinary commercial contract at all. This agreement was a mode of implementing the casino's obligation to contribute to local economic development. Its terms were intended to control the rights and duties of East Chicago and the casino licensee in relation to each other; they were not intended to control the rights of any non-parties.
Zoeller v. East Chicago Second Century, Inc., 904 N.E.2d 213, 221 (Ind.2009) (emphasis supplied). Based upon Zoeller, I conclude that the agreements were enforceable and binding between East Chicago and Resorts for as long as the agreements lasted, but the agreements were still terminable by either party. See Rogier v. American Testing and Eng'g Corp., 734 N.E.2d 606, 616 (Ind.Ct.App.2000), holding that "[a] contract providing for continuing performance and which has no termination date, or which provides that it will last indefinitely, is terminable at will by either party," and that "[sluch a contract would thus be enforceable until terminated," reh'g denied, trans. denied.
As East Chicago had the right to terminate or modify the letter agreements, I *40concur in the result of affirming the trial court.