Court Opinion

ID: 4419128
Source: CourtListenerOpinion
Date Created: 2019-07-23 15:04:27.391099+00
Date Added: 2024-06-11T12:33:05.812566
License: Public Domain

FILED
                                                                            Jul 23 2019, 7:43 am

                                                                                CLERK
                                                                            Indiana Supreme Court
                                                                               Court of Appeals
                                                                                 and Tax Court

      ATTORNEYS FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
      F. Joseph Jaskowiak                                         Patrick P. Devine
      Lauren K. Kroeger                                           John R. Terpstra
      Hoeppner Wagner & Evans LLP                                 Hinshaw & Culbertson LLP
      Merrillville, Indiana                                       Schererville, Indiana

                                                   IN THE
           COURT OF APPEALS OF INDIANA

      AOX, Inc. and Brian Piunti,                                 July 23, 2019
      Appellants-Plaintiffs,                                      Court of Appeals Case No.
                                                                  18A-PL-2383
              v.                                                  Appeal from the
                                                                  Lake Superior Court
      Lake County Trust Company,                                  The Honorable
      Trust 4210 and Trust 5061, and                              John M. Sedia, Judge
      Alex Emmanoilidis,                                          Trial Court Cause No.
      Appellees-Defendants                                        45D01-1301-PL-5

      Vaidik, Chief Judge.

                                            Case Summary
[1]   AOX, Inc. and Brian Piunti (collectively, “AOX”) appeal the trial court’s grant

      of summary judgment in favor of Lake County Trust Company, Trust 4210 and

      Trust 5061, and Alex Emmanoilidis (collectively, “the Landlords”) on AOX’s

      Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019                             Page 1 of 11
      claims of breach of contract and malicious prosecution. We affirm as to the

      breach-of-contract claim but reverse as to the malicious-prosecution claim.

                             Facts and Procedural History
[2]   We set forth the following facts in a previous appeal involving these parties:

              In August 1998, AOX, Inc., entered into a ten-year lease with
              Trust Number 4210 (“the Trust”) for property in Portage,
              Indiana, so that AOX could open a preventative automotive
              maintenance center. Under the lease, the Trust was to complete
              construction on the property and obtain an occupancy permit by
              the beginning of the lease term. The lease was signed by Alex
              Emmanoilidis, as beneficiary of the Trust; Lake County Trust
              Company, as trustee of the Trust (“the Trustee”); and Brian
              Piunti, as president of AOX.

              The lease term was supposed to start in November 1998, but
              AOX was unable to take possession of the property because the
              building was not certified for occupancy until January 15, 1999.
              This delay resulted in the lease term beginning February 1, 1999.
              However, on January 8, 1999, the Trust threatened to evict AOX
              for failure to pay the first rental installment, even though it was
              not yet due. Ten days later, Emmanoilidis directed the Trustee
              to convey the leased property from Trust Number 4210 to Trust
              Number 5061, with no notice to Piunti. About two months after
              that, the Trust demanded payment for utility bills and for repairs
              made to damaged water pipes, again under the threat of eviction,
              even though those expenses occurred prior to AOX’s occupancy.

              Piunti noticed numerous defects in the property and deviations
              from the plans and specifications as provided in the lease. He
              informed Emmanoilidis of these issues as early as January 28,
              1999, and onward through 2008. Emmanoilidis did not correct

      Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019         Page 2 of 11
        any of these defects and even stated at one point that he was “not
        going to fix shit.” Instead, he subjected Piunti and AOX to
        several lawsuits over the years, for example:

        In March 1999, Emmanoilidis and his wife alleged Piunti had
        stolen windows, doors, and other building materials stored on the
        leased property and requested over $25,000 in damages. More
        than ten years later, the trial court dismissed the case on Piunti’s
        motion, noting that Emmanoilidis failed to respond to discovery
        requests and had not taken any action since filing the complaint.

        In May 2000, Emmanoilidis directed the Trust to seek eviction,
        damages, and attorney’s fees from Piunti and AOX for allegedly
        defaulting on the lease. Along with the complaint,
        Emmanoilidis’s son Arte Emmanoilidis filed an affidavit stating
        that Piunti and AOX had failed to pay real estate taxes and rent.
        The parties later stipulated that AOX was current in rent
        payments. In October 2001, the trial court found that the real
        estate taxes the Trust demanded included taxes on land that was
        not part of the leased property and thus declined to evict AOX.
        The parties could not agree on the amount of taxes due, so the
        case proceeded to a bench trial. In December 2002, the court
        found AOX owed precisely the amount Piunti had calculated
        and offered to pay before trial. It thus withheld judgment to give
        AOX time to pay. AOX paid the same day, and the court never
        entered a final judgment.

        In October 2004, Emmanoilidis again directed the Trust to sue
        Piunti and AOX. This time, the Trust accused AOX and its
        employees of criminal mischief for allegedly spraying soap and
        water on the parking lot while the asphalt was being sealed and
        sought damages and attorney’s fees of $6000. The case went to
        trial in December 2007, and after no more than an hour of
        deliberations, the jury returned a verdict for Piunti and AOX.

Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019         Page 3 of 11
              In the beginning of 2008, nearing the end of the ten-year lease
              term, Piunti asked Emmanoilidis whether he would extend the
              lease to a new owner if Piunti decided to sell his business.
              Emmanoilidis said no. Piunti notified Emmanoilidis in February
              2008 that AOX was exercising its option to extend the lease for
              another five years.

      Lake County Trust Co. v. AOX, Inc., No. 45A03-1207-PL-309, 2013 WL 3816722

      *1-*2 (Ind. Ct. App. July 19, 2013) (citations and footnotes omitted).

[3]   In August 2008, AOX filed suit against the Landlords in Lake County. AOX

      alleged that the Landlords (1) “had breached the lease and continued to do so

      despite AOX’s repeated notices” (e.g., failure to provide access to Route 6,

      defective floor drains, lack of landscaping, inadequate/defective outdoor

      lighting, defective parking lot, and deficient painting) and (2) “abused the

      judicial process by maliciously filing groundless suits to harass [AOX] into

      terminating the lease.” Id. at *2. The Landlords filed a counterclaim against

      AOX, alleging that AOX itself had breached the lease by, among other things,

      failing to repair a broken window on the Property.

[4]   A jury trial was held in June 2012. The jury returned a verdict in favor of AOX

      on its breach-of-contract claim, awarding damages of $179,322, and on its

      malicious-prosecution claim, awarding damages of $5,950. The trial court

      rejected the Landlords’ counterclaim about the broken window, entering a

      directed verdict in favor of AOX.

[5]   Two months after the jury trial, on August 16, 2012, the Landlords filed a

      lawsuit against AOX in Porter County. The Landlords claimed that AOX had
      Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019        Page 4 of 11
      “failed to repair broken window glass” on the property. They requested, among

      other things, “termination of the lease and immediate possession of the

      Premises[.]” Appellants’ App. Vol. VI p. 80. AOX quickly moved for summary

      judgment, arguing in part that the Landlords’ claim was barred by the doctrines

      of res judicata and collateral estoppel because they made a counterclaim about

      the broken window in the Lake County litigation and lost via directed verdict.

      The Porter County court agreed and granted AOX’s motion based on its

      “review of the jury proceedings and verdict from Lake County Superior

      Court[.]” Id. at 117.

[6]   On September 12, 2012, AOX filed another lawsuit against the Landlords—the

      lawsuit underlying this appeal—in Lake County. AOX claimed that the

      Landlords’ breaches of contract had continued since the judgment three months

      earlier:

              All the defendants have breached the lease in numerous respects,
              and notwithstanding the repeated and continuing notices of
              breach, objections and complaints by plaintiffs, and despite a
              trial, verdict and judgment in prior litigation between the parties
              conclusively establishing their breaches of lease and other
              matters, they have failed and refused and continue to fail and
              refuse to cease, cure or otherwise correct their violations of the
              lease.

      Appellants’ App. Vol. II p. 20. AOX also claimed that the Landlords’ filing of

      the Porter County lawsuit constituted malicious prosecution, alleging that it

      “was legally and factually frivolous, unreasonable and groundless from its

      Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019         Page 5 of 11
      inception, manifested bad faith both substantively and procedurally, and was

      filed and prosecuted without probable cause and with malice.” Id. at 22.

[7]   The Landlords moved for summary judgment on a variety of grounds.

      Regarding AOX’s breach-of-contract claim, the Landlords argued, among other

      things, that the claim (1) was or could have been raised in the 2008 litigation

      and is therefore barred by the doctrine of res judicata and (2) is barred by the

      ten-year statutory limitation period for actions on written contracts. As for

      AOX’s malicious-prosecution claim, the Landlords asserted that “under no set

      of facts” can AOX establish that the Landlords’ Porter County lawsuit “was

      legally and factually frivolous, unreasonable or groundless, in bad faith or with

      malice, or lacked probable cause[.]” Id. at 182.

[8]   The trial court granted summary judgment for the Landlords. The court

      concluded that AOX’s breach-of-contract claim is barred by the doctrine of res

      judicata because

              all the potential damages which arose out of the conduct of [the
              Landlords] that gave rise to the June 11, 2012 verdict and
              judgment in favor of AOX, could have been litigated but were
              not sought in that litigation by AOX, even though they were
              readily ascertainable with reasonable certainty, particularly
              through expert testimony.

      Id. at 18. On AOX’s malicious-prosecution claim, the court concluded that the

      Landlords’ “primary object” in filing its Porter County lawsuit “was not to

      harass or maliciously injure” AOX, that the Landlords were “able to (and, in

      fact, did) present good faith and rational arguments on the merits” of its
      Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019          Page 6 of 11
       lawsuit, that “facts existed supporting the legal claims relied upon and

       presented by” the Landlords, and that “there is no evidence of [the Landlords]

       operating with furtive design or ill will[.]” Id.

[9]    AOX now appeals.

                                   Discussion and Decision
[10]   AOX contends that the trial court erred by granting the Landlords’ motion for

       summary judgment. We review such motions de novo, applying the same

       standard as the trial court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014).

       That is, “The judgment sought shall be rendered forthwith if the designated

       evidentiary matter shows that there is no genuine issue as to any material fact

       and that the moving party is entitled to a judgment as a matter of law.” Ind.

       Trial Rule 56(C).

                                         I. Breach of Contract
[11]   AOX first challenges the trial court’s grant of summary judgment to the

       Landlords on AOX’s breach-of-contract claim. The trial court concluded that

       the claim is barred by the doctrine of res judicata. AOX asserts that this was

       error. But we do not reach the issue of res judicata, because summary judgment

       is appropriate on an alternative ground advanced by the Landlords: the statute

       of limitation.

[12]   The applicable statute is Indiana Code section 34-11-2-11, which provides that

       an action on a written contract, with a few exceptions not applicable here,

       Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019          Page 7 of 11
       “must be commenced within ten (10) years after the cause of action accrues.”

       AOX does not dispute that the breaches underlying this case are the same that

       were at issue in the 2008 litigation (e.g., failure to provide access to Route 6,

       defective floor drains, lack of landscaping, inadequate/defective outdoor

       lighting, defective parking lot, and deficient painting) or that these breaches

       existed in 1999, thirteen years before AOX filed this lawsuit. However, AOX

       argues that the Landlords’ breaches are “continuing” and that the ten-year

       limitation period begins to run anew “with each new continuing breach after

       the jury verdict.” Appellants’ Br. p. 34.

[13]   As an initial matter, we agree with the Landlords that the phrase “new

       continuing breach” is a headscratcher—that is, “if a breach is ‘continuing’ it

       cannot at the same time be ‘new.’” Appellees’ Br. p. 32. More importantly, the

       only two cases AOX cites in support of its statute-of-limitation argument do not

       actually support that argument. In Block v. Ebner, our Supreme Court held that

       tenants who had successfully sued their landlord for breach of a covenant to

       repair could later bring another suit claiming that the breach was continuing,

       i.e., that the landlord had not cured the breach. 54 Ind. 544, 547-49. However,

       the opinion does not discuss a statute of limitation or otherwise address

       whether the tenants’ second claim was timely filed, and there is no indication

       that the landlord raised any such issue (as the Landlords have in this case).

[14]   In the other opinion cited by AOX, Snyder v. Town of Yorktown, this Court

       explained that where “the alleged injury-producing conduct was of a

       continuous nature,” the applicable limitations period “begins to run at the end

       Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019          Page 8 of 11
       of the continuing wrongful act.” 20 N.E.3d 545, 552 (Ind. Ct. App. 2014),

       trans. denied. This is known as the doctrine of “continuing wrong.” Id. Here,

       though, the Landlords’ “injury-producing conduct” was not of a “continuous

       nature.” The Landlords were required to deliver by a certain date premises that

       matched certain plans and specifications, and they failed to do so. AOX knew

       at that point—in 1999—that it had been injured. As we said in Snyder, “the

       doctrine of continuing wrong will not prevent the statute of limitations from

       beginning to run when the plaintiff learns of facts which should lead to the

       discovery of his cause of action even if his relationship with the tortfeasor

       continues beyond that point.” Id. (citations omitted); cf. Elkhart Foundry &

       Mach. Co. v. City of Elkhart Redev. Comm’n, 112 N.E.3d 1123, 1132 (Ind. Ct. App.

       2018) (rejecting claim of “continuing nuisance” where effects of alleged

       nuisance activity persisted but activity itself had ceased), trans. denied.

[15]   To the extent AOX contends that it could not have made a claim for future

       damages in the 2008 litigation because it had no way of knowing what its future

       damages would be, if any, it had a ready alternative: a demand for specific

       performance. In other words, if AOX was concerned that the Landlords would

       refuse to cure the breaches even if it lost in the 2008 litigation, it could have

       asked the trial court to order the Landlords to cure the breaches. For whatever

       reason, AOX did not make such a request. Instead, it waited until 2012 to file a

       new breach-of-contract claim based on the same breaches it was aware of in

       1999. That claim is plainly barred by the ten-year limitation period established

       Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019             Page 9 of 11
       by Section 34-11-2-11, and for that reason we affirm the trial court’s grant of

       summary judgment in favor of the Landlords on this issue.

                                      II. Malicious Prosecution
[16]   AOX also argues that the trial court erred by granting summary judgment to the

       Landlords on AOX’s malicious-prosecution claim. On this issue, we agree with

       AOX.

[17]   To prevail on a claim of malicious prosecution, the plaintiff must establish that:

       (1) the defendant instituted or caused to be instituted an action against the

       plaintiff; (2) the defendant acted with malice in doing so; (3) the defendant had

       no probable cause to institute the action; and (4) the action was terminated in

       the plaintiff’s favor. City of New Haven v. Reichhart, 748 N.E.2d 374, 378 (Ind.

       2001). Here, the Landlords made a counterclaim against AOX relating to a

       broken window in the 2008 litigation in Lake County, lost by directed verdict,

       and then went to Porter County and filed a new lawsuit regarding the same

       broken window. The Porter County court dismissed the new lawsuit “after

       review of the jury proceedings and verdict from Lake County Superior

       Court[.]” Appellants’ App. Vol. VI p. 117. The Porter County action was

       obviously res judicata and was destined to fail.1 Whether the Landlords acted

       1
         A claim is barred by the doctrine of res judicata if (1) a prior judgment was issued by a court of competent
       jurisdiction, (2) the prior judgment was rendered on the merits, (3) the matter now in issue was, or could have
       been, determined in the prior action, and (4) the controversy adjudicated in the former action was between
       the parties to the present suit or their privies. Hilliard v. Jacobs, 957 N.E.2d 1043, 1046 (Ind. Ct. App. 2011),
       reh’g denied, trans. denied.

       Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019                                  Page 10 of 11
       with malice when they filed that hopeless lawsuit is an issue that should be

       decided by the trier of fact, especially given the Landlords’ history of filing

       lawsuits to harass AOX. We therefore reverse the trial court’s grant of

       summary judgment in favor of the Landlords on AOX’s malicious-prosecution

       claim.

[18]   Affirmed in part and reversed in part.

       Mathias, J., and Crone, J., concur.

       Court of Appeals of Indiana | Opinion 18A-PL-2383 | July 23, 2019         Page 11 of 11