Court Opinion

ID: 4265040
Source: CourtListenerOpinion
Date Created: 2018-04-18 15:08:38.342669+00
Date Added: 2024-06-11T14:02:00.199194
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of establishing
                                                                             FILED
the defense of res judicata, collateral
estoppel, or the law of the case.                                       Apr 18 2018, 10:19 am

                                                                             CLERK
                                                                         Indiana Supreme Court
                                                                            Court of Appeals
                                                                              and Tax Court

ATTORNEY FOR APPELLANT                                    ATTORNEY FOR APPELLEE
Paul D. Ludwig                                            Robert S. McCrea
Redman Ludwig, P.C.                                       McCrea & McCrea
Indianapolis, Indiana                                     Bloomington, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Brenda A. Kyle,                                           April 18, 2018
Appellant-Plaintiff,                                      Court of Appeals Case No.
                                                          53A01-1710-SC-2481
        v.                                                Appeal from the Monroe Circuit
                                                          Court
Disque, Inc.,                                             The Honorable Douglas Van
Appellee-Defendant.                                       Winkle, Senior Judge
                                                          Trial Court Cause No.
                                                          53C08-1611-SC-2465

Bradford, Judge.

Court of Appeals of Indiana | Memorandum Decision 53A01-1710-SC-2481 | April 18, 2018            Page 1 of 8
                                           Case Summary
[1]   Appellant-Plaintiff Brenda Kyle entered into an agreement to purchase certain

      business assets from Appellee-Defendant Disque, Inc., for the purpose of

      operating a beauty salon in Bloomington. One term of the parties’ purchase

      agreement was that Disque would obtain its landlord’s approval of a sublease of

      the salon space to Kyle. A dispute arose after Kyle accused Disque of failing to

      acquire this approval.

[2]   Kyle subsequently filed a small claims court action against Disque arguing that

      Disque’s alleged failure to acquire the landlord’s approval of the sublease was a

      breach of the purchase agreement. In light of this alleged breach, Kyle sought a

      rescission of the parties’ purchase agreement and a monetary judgment against

      Disque. Following a bench trial, the small claims court found that, contrary to

      Kyle’s assertion, the evidence demonstrated that the landlord did approve of the

      sublease. Thus, the small claims court found that Kyle had failed to prove that

      she was entitled to recover a monetary judgment against Disque. On appeal,

      Kyle contends that judgment of the small claims court is clearly erroneous.

      Because we disagree, we affirm.

                            Facts and Procedural History
[3]   From 2004 to December 17, 2013, Disque owned and operated a hair salon spa

      in Bloomington called Les Champs Elysees and Spa. In the fall of 2013, Disque

      put the business up for sale. Kyle contacted Disque’s selling agent and

      Court of Appeals of Indiana | Memorandum Decision 53A01-1710-SC-2481 | April 18, 2018   Page 2 of 8
      expressed interest in purchasing the business. Kyle eventually agreed to

      purchase the business for $80,000.

[4]   On December 17, 2013, the parties entered into a purchase agreement and

      executed a bill of sale of the business.1 The purchase agreement included: (1) a

      promissory note; (2) Kyle’s personal guarantee for payment of the purchase

      price; (3) a Security Agreement for certain equipment, identifying Disque as the

      secured party; and (4) a sublease agreement for the rented space where the

      business was located.

[5]   Kyle took possession of both the business and the rented space on December

      17, 2013. For the first couple of months after executing the purchase agreement

      and taking possession of the subleased space, Kyle made payments pursuant to

      the terms of the purchase agreement and the sublease. At some point, however,

      Kyle stopped making these payments. Kyle abandoned the subleased space and

      equipment included in the purchase agreement sometime in March of 2014.

[6]   On November 21, 2016, Kyle filed two separate small claims actions against

      representatives of Disque. During a February 8, 2017 status conference,

      counsel for Disque expressed his intention to file a motion to dismiss and

      modify the caption to identify Disque as the real party in interest. On February

      24, 2017, the small claims court issued an order dismissing one of the actions

      1
        Coiffed Corporation was listed as the buyer in the purchase agreement. Kyle entered into the agreement as
      CEO of Coiffed Corporation. However, it does not appear that she brought the underlying lawsuit on behalf
      of Coiffed Corporation, but rather on her own behalf.

      Court of Appeals of Indiana | Memorandum Decision 53A01-1710-SC-2481 | April 18, 2018           Page 3 of 8
      filed by Kyle and modifying the caption of the other to identify Disque as the

      real party in interest to the lawsuit. In the intervening months, Kyle filed

      numerous documents styled as amended pleadings and Disque filed a

      counterclaim against Kyle.

[7]   On October 2, 2017, the small claims court conducted a bench trial during

      which both parties presented evidence and witness testimony. The next day, on

      October 3, 2017, the small claims court issued an order stating the following:

                Having considered the evidence and the arguments of counsel,
                the Court finds that neither party has demonstrated entitlement
                to recover a monetary judgment.

                IT IS THEREFORE ORDERED that the Claimant take nothing
                by way of her claim.

                IT IS FURTHER ORDERED that the counter claimant take
                nothing by way of its counterclaim.

      Appellant’s App. Vol. II, p. 8.2

                                    Discussion and Decision
[8]   Kyle contends that the small claims court erred in finding that she failed to

      demonstrate that she was entitled to receive a monetary judgment against

      Disque.

      2
          Disque does not appeal the small claims court’s order that it take nothing by way of its counterclaim.

      Court of Appeals of Indiana | Memorandum Decision 53A01-1710-SC-2481 | April 18, 2018                Page 4 of 8
              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. Trinity
              Homes, LLC v. Fang, 848 N.E.2d 1065, 1067 (Ind. 2006). 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. Id. at 1067–68. In determining whether
              a judgment is clearly erroneous, we do not reweigh the evidence
              or determine the credibility of witnesses but consider only the
              evidence that supports the judgment and the reasonable
              inferences to be drawn therefrom. Counceller v. Ecenbarger, Inc.,
              834 N.E.2d 1018, 1021 (Ind. Ct. App. 2005).

      Kalwitz v. Kalwitz, 934 N.E.2d 741, 748 (Ind. Ct. App. 2010). Further, the

      parties in a small claims court bear the same burdens of proof as they would in

      a regular civil action on the same issues. LTL Truck Serv., LLC v. Safeguard, Inc.,

      817 N.E.2d 664, 668 (Ind. Ct. App. 2004).

              While the method of proof may be informal, the relaxation of
              evidentiary rules is not the equivalent of relaxation of the burden
              of proof. It is incumbent upon the party who bears the burden of
              proof to demonstrate that it is entitled to the recovery sought.

      Id. (internal citations omitted). With respect to damages, the burden of proof

      “is with the plaintiff.” Id. A fact-finder may not award damages on the mere

      basis of conjecture or speculation. Id.

[9]   On appeal, Kyle argues that as a result of Disque’s failure to obtain the

      landlord’s approval of the sublease, she was constructively evicted from the

      leased space and that this constructive eviction amounted to a breach of

      Court of Appeals of Indiana | Memorandum Decision 53A01-1710-SC-2481 | April 18, 2018   Page 5 of 8
       contract sufficient to warrant a rescission of the purchase agreement. Kyle also

       argues that Disque unjustly received funds under false pretenses as the purchase

       agreement indicated that Disque would acquire the landlord’s approval of the

       sublease.

[10]   The crux of Kyle’s arguments seems to be that Disque breached the terms of the

       purchase agreement because it failed to acquire the landlord’s approval of the

       sublease agreed to by Kyle and Disque as part of the purchase agreement.

       Thus, Kyle argues that the purchase agreement should be rescinded because its

       terms could not be met. Contrary to Kyle’s argument, however, the facts most

       favorable to the judgment demonstrate that the landlord did agree to the

       sublease.

[11]   The record reveals that on March 18, 2014, a representative of the landlord

       emailed Kyle the following message:

                You have informed the Cederview Management office that you
                are no longer occupying the commercial salon space located at
                601 N. College Avenue.[3]

                Please note that we consider your Sublease to be in full effect and
                that you are responsible for all terms and conditions under this
                sublease. This would include keeping all utilities in your name.
                Please have the electric service placed back into your name for
                the duration of the Sublease term. Any utility bills our office

       3
         The evidence before the small claims court suggests that Kyle made the unilateral decision to vacate the
       property prior to the end of the lease term.

       Court of Appeals of Indiana | Memorandum Decision 53A01-1710-SC-2481 | April 18, 2018             Page 6 of 8
        pays on your behalf will be billed back to you along with any
        administration fees called for in the original Lease Agreement.

Appellee’s App. Vol. II, p. 24. Approximately two days later, the

representative of the landlord sent the following message to Kyle’s attorney:

        I hope to clear up any misconceptions regarding Cedarview
        Management (Landlord) and/or myself with this email.

                                                ****

        Myself and our Vice President of Finance attended the meeting
        with Ms. Kyle on March 4th.

        Ms. Kyle’s first question at the outset of the meeting was
        regarding extending her lease term when her sublease ended in
        August. I explained the Owner and I were meeting later that
        week or early the following week to discuss commercial leases, as
        there were a few coming up for renewal in the future months,
        including her sublease.…

        It was then that Ms. Kyle mentioned she could not get “her loan”
        due to fraudulent paperwork.… Ms. Kyle then said her Sublease
        was not valid due to the Sublease being based on a fraudulent
        Purchase Agreement. My response was that it was a valid
        Sublease.

                                                ****

        At no time did I ask Ms. Kyle to leave or tell her to vacate the
        premises, nor in any manner did I indicate Ms. Kyle’s continued
        tenancy as a sub-lessee would be interrupted.

        The Sublease was approved by the Landlord. Let me point out if

Court of Appeals of Indiana | Memorandum Decision 53A01-1710-SC-2481 | April 18, 2018   Page 7 of 8
               the Sublease had not been approved, Ms. Kyle would not have
               been given possession of the premises by Landlord, nor would
               the Landlord have collected rent from her, nor would she have
               been allowed to install signage on the building.…

       Appellee’s App. Vol. II, pp. 22–23. These emails demonstrate that the landlord

       did approve the sublease outlined in the purchase agreement. Kyle’s claim to

       the contrary is based solely on her own self-serving testimony and amounts to

       nothing more than an invitation for this court to reweigh the evidence, which

       we will not do. See Kalwitz, 934 N.E.2d at 748.

[12]   Kyle bore the burden to prove that she was entitled to recovery a monetary

       judgment against Disque. See LTL Truck Serv., 817 N.E.2d at 668. Again,

       Kyle’s claims against Disque stemmed from her belief that Disque failed to

       acquire the landlord’s approval of the sublease. Because this belief is not

       consistent with the evidence presented before the small claims court, we

       conclude that the small claims court’s determination that Kyle failed to prove

       that she was entitled to receive the requested relief was not clearly erroneous.

[13]   The judgment of the small claims court is affirmed.

       Baker, J., and Kirsch, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 53A01-1710-SC-2481 | April 18, 2018   Page 8 of 8