Court Opinion

ID: 4111594
Source: CourtListenerOpinion
Date Created: 2016-12-28 16:07:33.20088+00
Date Added: 2024-06-11T07:45:44.558349
License: Public Domain

FILED
                                                                    Dec 28 2016, 8:49 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court

ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEES
Jeffrey S. Zipes                                          Andrew M. McNeil
Coots Henke & Wheeler, P.C.                               Philip R. Zimmerly
Carmel, Indiana                                           Bose McKinney & Evans LLP
                                                          Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Stardust Ventures, LLC,                                   December 28, 2016
Appellant-Defendant,                                      Court of Appeals Case No.
                                                          33A01-1603-PL-604
        v.                                                Appeal from the Henry Circuit
                                                          Court
Gary Roberts and Teresa                                   The Honorable Bob A. Witham,
Roberts,                                                  Judge
Appellees-Plaintiffs.                                     Trial Court Cause No.
                                                          33C03-1404-PL-18

Robb, Judge.

Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016                  Page 1 of 14
                                 Case Summary and Issue
[1]   Gary and Teresa Roberts (the “Robertses”) entered into an agreement

      (“Purchase Agreement”) with Stardust Ventures, LLC (“Stardust”) to purchase

      a houseboat. Thereafter, the Robertses cancelled the agreement and brought

      suit to recover $75,000 paid to Stardust. Stardust filed a motion to dismiss

      stating it elected to arbitrate the dispute, as agreed upon in the Purchase

      Agreement. The trial court denied Stardust’s motion to dismiss, and

      subsequently entered summary judgment in favor of the Robertses. Stardust

      appeals, raising several issues for our review, one of which we find dispositive:

      whether the trial court erred in denying its motion to dismiss. Concluding the

      trial court erred in denying Stardust’s motion to dismiss, we reverse and remand

      to the trial court for entry of an order directing the parties to proceed to

      arbitration.

                             Facts and Procedural History
[2]   Stardust is a custom houseboat builder located in Monticello, Kentucky. In late

      2013, the Robertses and Stardust began negotiating for the construction of a

      customized houseboat. In November 2013, Stardust and the Robertses reached

      an oral agreement on the price, time of delivery, floor plan, decorations, and

      specifications. Specifically, the parties agreed to a price of $775,000 and a

      delivery of the houseboat in the “midsummer [2014] timeframe.” Brief of

      Appellees at 8. In recognition of their oral agreement, Stardust provided the

      Robertses with a quote (“Quote”), dated November 3, 2013. The Quote

      Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016    Page 2 of 14
      outlined the general specifications of the houseboat and also stated the price

      and payment schedule. The Quote also stated Stardust required a non-

      refundable $10,000 deposit to secure a build slot in its facility and payment of

      twenty percent of the total purchase price before it would begin construction of

      the houseboat.1

[3]   On November 20, 2013, the Robertses paid $75,000 to Stardust. Although they

      had not paid twenty percent of the purchase price, the Robertses were under the

      impression their houseboat would be built directly after that of their friend’s,

      who had recently contracted with Stardust, and that their build would

      commence within six to eight weeks after Stardust received their $75,000

      payment. However, Stardust had an internal policy of not beginning a build

      until it received twenty percent of the total purchase price, and because it did

      not yet have the full $155,000 from the Robertses, Stardust’s management had

      an internal discussion “on what to do to get [the Robertses’ boat] started” in

      January 2014. Appellant’s Appendix at 76. Ultimately, Stardust decided to

      outsource the build of a different houseboat to create room in its facility for the

      construction of the Robertses’ houseboat, and on January 23, 2014, Stardust

      contracted with Sunstar Houseboats, Inc., to build the hull of a houseboat it

      was then constructing in order to create room for the Robertses’ houseboat.

      1
          Twenty percent of $775,000 is $155,000.

      Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016   Page 3 of 14
[4]   In late January 2014, without having commenced construction of the

      Robertses’ houseboat, Stardust sent an unsigned Purchase Agreement titled

      “Stardust Cruisers Purchase Agreement” to the Robertses. The Robertses

      signed the Purchase Agreement and returned it to Stardust on February 4, 2014.

      The Purchase Agreement also contains the signature of Jerry Harden, the

      president of Stardust, dated February 12, 2014. The Purchase Agreement

      signed by the parties includes the agreed upon price, $775,000, and a provision

      stating the Purchase Agreement incorporates the plans and specifications for the

      houseboat as provided by the Quote. In addition, the Purchase Agreement

      includes an arbitration clause. According to the Purchase Agreement, the

      option of arbitration belonged solely to Stardust, and if Stardust chose to

      proceed to arbitration, any dispute arising out of the Purchase Agreement

      would be decided in accordance with the American Arbitration Association,

      subject to several procedural limitations. The Purchase Agreement also

      includes an integration clause, which states, “The entire understanding between

      the parties is set forth in this Agreement. This agreement supersedes and voids

      all prior proposals, letters and agreements, oral and written, . . .” Id. at 31.

[5]   On March 4, 2014, the Robertses informed Harden they desired to cancel their

      agreement. The Robertses were frustrated Stardust had not yet commenced

      construction of their houseboat and concerned Stardust would be unable to

      complete construction by midsummer of 2014, as the parties had agreed.

      Harden requested the Robertses confirm their cancelation in writing, and on

      March 5, 2014, the Robertses emailed Harden to confirm their cancellation of

      Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016   Page 4 of 14
      the agreement. The following day, Harden replied to the Robertses’ email and

      stated, “I have advised our bookkeeping department. I will let you know when

      your check will be ready.” Id. at 19.

[6]   A few weeks later, when Stardust failed to send a check, the Robertses hired

      counsel to secure the return of their money. On March 24, 2014, Harden sent a

      letter to the Robertses stating Stardust was “in the process of collecting the costs

      related to your construction. The cost of that work will be deducted prior [to]

      considering a refund.” Id. at 21. Stardust never returned any of the $75,000

      and later stated its offer to return any of the $75,000 was a mistake and against

      policy because deposits are non-refundable.

[7]   On April 14, 2014, the Robertses filed a complaint seeking to recover the

      $75,000 paid to Stardust. The complaint alleged Stardust never returned a

      signed copy of the Purchase Agreement; therefore, the Robertses alleged they

      had validly revoked their offer to purchase a houseboat from Stardust, and

      Stardust was obligated to return the $75,000. On June 11, 2014, Stardust filed a

      motion to dismiss stating it elected to invoke its right to arbitrate the dispute in

      accordance with the Purchase Agreement. The trial court denied Stardust’s

      motion to dismiss on August 7, 2014.

[8]   On October 19, 2015, the Robertses filed their motion for summary judgment

      and supporting designated materials. Stardust responded on December 7, 2015,

      and the trial court held a hearing on the matter on January 15, 2016. The trial

      court granted the Robertses’ motion for summary judgment and entered a

      Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016   Page 5 of 14
       $75,000 judgment in favor of the Robertses. The Robertses filed a motion to

       correct error on February 24, 2016, alleging the trial court erred in failing to

       award prejudgment interest. Stardust filed a motion in opposition to the

       Robertses’ motion to correct error and a cross-motion to correct error. The trial

       court did not hold a hearing nor did it issue a ruling on any of the motions.

       Stardust now appeals; the Robertses cross-appeal arguing the trial court was

       obligated to award prejudgment interest as a matter of law.

                                  Discussion and Decision
[9]    Stardust contends the trial court erred in denying its motion to dismiss.

       Stardust based its motion to dismiss on the existence of an arbitration clause in

       the Purchase Agreement and stated it elected to proceed to arbitration. Where

       a motion to dismiss is based upon a contention that arbitration is required

       before litigation, it is, in essence, a motion to compel arbitration and is treated

       as such. See Roddie v. N. Am. Manufactured Homes, Inc., 851 N.E.2d 1281, 1284

       (Ind. Ct. App. 2006); Capitol Const. Services, Inc. v. Farah, LLC, 946 N.E.2d 624,

       628 (Ind. Ct. App. 2011). We apply a de novo standard of review to a trial

       court’s ruling on a motion to compel arbitration. Roddie, 851 N.E.2d at 1284.

[10]   Although the Robertses admit they signed and returned the Purchase

       Agreement, they dispute its validity and allege they revoked their offer to

       purchase a houseboat. Thus, as a threshold issue, we address whether the

       Purchase Agreement is a valid and enforceable agreement between the parties.

       See Safety Nat’l Cas. Co. v. Cinergy Corp., 829 N.E.2d 986, 1000 (Ind. Ct. App.

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016   Page 6 of 14
       2005) (stating a party seeking to arbitrate a dispute must first demonstrate the

       existence of an enforceable agreement to arbitrate), trans. denied.

                         I. Validity of the Purchase Agreement
[11]   Initially, we note the sale of a goods is governed by Indiana’s version of the

       Uniform Commercial Code (“UCC”). See Ind. Code § 26-1-2 et seq.2 “Goods”

       are defined as “all things (including specially manufactured goods) which are

       movable at the time of identification to the contract for sale.” Ind. Code § 26-1-

       2-105(1). A sale of goods also includes contracts for the sale of “future goods”

       that are “not both existing and identified.” Ind. Code § 26-1-2-105(2).

       Therefore, a contract to build a customized houseboat is the sale of a “good.”

       See Jones v. Abriani, 169 Ind. App. 556, 566, 350 N.E.2d 635, 642 (1976) (noting

       the sale of a mobile home is a sale of a good). We further note “[u]nless

       displaced by the particular provisions of [the UCC], the principles of law and

       equity . . . shall supplement the provisions of [the UCC].” Ind. Code § 26-1-1-

       103.

[12]   Moreover, whether a contract exists is a question of law. Kelly v. Levandoski,

       825 N.E.2d 850, 857 (Ind. Ct. App. 2005), trans. denied. The essential elements

       of a contract are an offer, an acceptance, and consideration. Indiana Dep’t of

       State Revenue v. Belterra Resort Indiana, LLC, 935 N.E.2d 174, 179 (Ind. 2010),

       2
        The parties cited to the UCC in their briefs before the trial court and to this court on appeal, and do not
       dispute that the UCC governs this transaction.

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016                         Page 7 of 14
       modified on reh’g, 942 N.E.2d 796 (Ind. 2011). Under the UCC, a “contract for

       sale of goods may be made in any manner sufficient to show agreement,

       including conduct by both parties which recognizes the existence of such a

       contract.” Ind. Code § 26-1-2-204(1). Further, unless otherwise indicated by

       the contract, “an offer to make a contract shall be construed as inviting

       acceptance in any manner and by any medium reasonable in the

       circumstances.” Ind. Code § 26-1-2-206(1)(a).

[13]   Here, Stardust drafted the Purchase Agreement and sent it to the Robertses.3

       The Robertses manifested their assent to the terms of Purchase Agreement by

       signing it and returning it to Stardust. Stardust’s actions constituted an offer to

       create a contract, which was subsequently accepted by the Robertses. See Ind.

       Bureau of Motor Vehicles v. Ash, Inc., 895 N.E.2d 359, 366 (Ind. Ct. App. 2008)

       (noting the defendant drafted the proposed contract and sent it to plaintiff,

       indicating the defendant assented to the terms of the proposed contract).

[14]   Moreover, Stardust produced a copy of the Purchase Agreement, signed by the

       president of Stardust, and attached it to its motion to dismiss. The signature of

       Stardust’s president is sufficient to manifest Stardust’s intent to be bound by the

       agreement. Although the Robertses contend the Purchase Agreement was only

       3
        We note the Purchase Agreement is essentially a modification of the parties’ oral agreement. The
       modification of a contract generally requires the same elements as a contract: offer, acceptance, and
       consideration. Henthorne v. Legacy Healthcare, Inc., 764 N.E.2d 751, 759 (Ind. Ct. App. 2002). However,
       under the UCC, an “agreement modifying a contract . . . needs no consideration to be binding.” Ind. Code §
       26-1-2-209(1).

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016                   Page 8 of 14
       signed and backdated when litigation commenced, they offer no evidence to

       support this suspicion. Regardless, we note Indiana courts have made clear that

       “the validity of a contract is not dependent upon the signature of the parties.”

       Ash, Inc., 895 N.E.2d at 366. Signatures of both parties would be required if

       “such [was] made a condition of the agreement,” Int’l Creative Mgmt., Inc. v. D &

       R Entm’t Co., Inc., 670 N.E.2d 1305, 1312 (Ind. Ct. App. 1996), trans. denied, but

       there is nothing in the plain language of the Purchase Agreement to suggest

       such a condition existed here.

[15]   Even if we assume the Robertses are correct that Stardust did not sign the

       Purchase Agreement, we still conclude a valid contract existed between the

       parties. As stated above, a “contract for sale of goods may be made in any

       manner sufficient to show agreement, including conduct by both parties which

       recognizes the existence of such a contract.” Ind. Code § 26-1-2-204(1) (emphasis

       added). First, the fact Stardust drafted the Purchase Agreement indicates it

       assented to the terms therein. See Ash, Inc., 895 N.E.2d at 366. Second,

       Stardust outsourced a current build in order to create space to build the

       Robertses’ houseboat. Specifically, Stardust contracted with Sunstar

       Houseboats, Inc., pursuant to which it would pay Sunstar $18,000 to build the

       hull of a current project to create room for the Robertses’ houseboat in its

       facility. Although the subcontracting occurred nearly two weeks before the

       Robertses signed the Purchase Agreement, it seems unlikely Stardust would

       make preparations to build the Robertses’ houseboat and incur substantial

       additional expenses to do so, and draft and tender a Purchase Agreement to the

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016   Page 9 of 14
       Robertses for their signature, if it did not intend to be bound by the Purchase

       Agreement.

[16]   We conclude the Purchase Agreement is a valid and enforceable agreement

       between the parties.4 Both parties manifested their assent to the Purchase

       Agreement by signing the document. Moreover, even if it was not signed as the

       Robertses suggest, Stardust manifested its assent to the agreement by its actions.

                                      II. Waiver of Arbitration
[17]   The Robertses also contend Stardust waived its right to arbitrate the dispute.

       Although Indiana recognizes a strong policy favoring enforcement of

       arbitration agreements, the right to require arbitration may nonetheless be

       waived. MPACT Const. Group, LLC v. Superior Concrete Constructors, Inc., 802
N.E.2d 901, 905, 910 (Ind. 2004). Whether a party has waived its right to

       arbitration is a question of fact that depends primarily upon whether that party

       has acted inconsistently with its right to arbitrate. Id. at 910. In determining if

       waiver has occurred, courts look at a variety of factors, including the timing of

       the arbitration request, if dispositive motions have been filed, and/or if a

       4
         The Robertses also argue their complaint assumes there is no written agreement between the parties, and
       since the trial court must take the allegations in their complaint as true, Kapoor v. Dybwad, 49 N.E.3d 108, 120
       (Ind. Ct. App. 2015), trans. denied, it did not err in denying Stardust’s motion to dismiss. However, a court
       should “not accept as true allegations that are contradicted by other allegations or exhibits attached to or
       incorporated in the pleading,” Brenner v. Powers, 584 N.E.2d 569, 573 (Ind. Ct. App. 1992), trans. denied, nor
       is a court bound to accept as true any legal conclusion asserted in the complaint, Ankeny v. Governor of Ind.,
       916 N.E.2d 678, 681 (Ind. Ct. App. 2009), trans. denied.

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016                       Page 10 of 14
       litigant is unfairly manipulating the judicial system. Capitol Const. Servs., Inc.,
946 N.E.2d at 628.

[18]   In support of their argument Stardust waived its right to arbitrate the dispute,

       the Robertses cite to JKL Components Corp. v. Insul-Reps, Inc., 596 N.E.2d 945

       (Ind. Ct. App. 1992), trans. denied. There, Insul-Reps sued JKL for breach of

       contract alleging JKL failed to pay commissions. JKL subsequently filed a

       motion to dismiss pursuant to Indiana Rule of Trial Procedure 12(B)(1), 5

       claiming Insul-Reps failed to arbitrate the agreement as required by their

       contract. The trial court denied the motion because it did, in fact, have subject

       matter jurisdiction over the claim. On appeal, this court faulted JKL for failing

       to formally request arbitration at any time before appeal, and for mistakenly

       filing a motion to dismiss for lack of subject matter jurisdiction. We

       summarized JKL’s motion to dismiss, stating, the “only arguments made in

       JKL’s motion were that 1) the parties had an arbitration agreement; 2)

       arbitration agreements are enforceable and favored under both Indiana and

       California law; and 3) because Insul-Reps failed to exhaust the arbitration

       procedures provided in the parties’ agreement, the trial court should dismiss

       Insul-Reps’ action.” Id. at 949. This court further stated that “[n]othing in the

       motion even hints that JKL desired a stay. Its only expressed intention was for

       the trial court to dismiss Insul-Reps’ action.” Id. at 950.

       5
         A party may file a motion pursuant to Indiana Rule of Trial Procedure 12(B)(1) when it alleges a trial court
       lacks subject matter jurisdiction.

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016                      Page 11 of 14
[19]   We find JKL Components Corp. to be inapplicable to the present case for several

       reasons. First, we faulted JKL for failing to formally request arbitration at any

       point before appeal. Here, Stardust has clearly requested the dispute be

       arbitrated. Stardust’s motion to dismiss states, “Pursuant to the applicable

       contract, [Stardust] has notified [the Robertses] of its election to have this

       matter decided by arbitration,” Appellant’s App. at 29, and requested the

       matter be dismissed so the parties could proceed to arbitration. Unlike in JKL

       Components Corp., Stardust has done more than simply ask the court to dismiss

       the complaint for lack of subject matter jurisdiction. Stardust stated it has

       elected to invoke its right to arbitration, and has properly notified the Robertses

       of that election.

[20]   Second, to the extent the Robertses allege a motion to dismiss is improper and

       Stardust should have formally requested a stay of litigation, we note that a

       dismissal is preferred in some situations. See Koors v. Steffen, 916 N.E.2d 212,

       218 (Ind. Ct. App. 2009) (noting a stay, rather than a dismissal, is perhaps

       favorable where certain claims remain that are not subject to arbitration, but

       dismissal is proper where all issues raised must be submitted to arbitration).

       Here, the Robertses brought a one-count complaint seeking to recover their

       monies paid to Stardust. In response, Stardust elected to arbitrate the dispute.

       Therefore, the only issue raised by the Robertses would have to be submitted to

       arbitration.

[21]   Finally, there is no indication Stardust is unfairly manipulating the judicial

       system. See Aetna Cas. & Sur. Co. v. Dalson, 421 N.E.2d 691, 692-93 (Ind. Ct.

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016   Page 12 of 14
Ohio App. 1981) (holding plaintiffs had waived their right to arbitrate where they had

       consistently resisted arbitration and only when an unfavorable judgment was

       entered against them at trial did they seek to compel arbitration); Shahan v.

       Brinegar, 181 Ind. App. 39, 45, 390 N.E.2d 1036, 1041 (1979) (finding waiver

       where neither party formally requested the trial court to order arbitration until

       after the trial court had already construed the underlying agreement and made

       its award). After the Robertses filed their complaint with the trial court,

       Stardust filed a motion to dismiss to proceed to arbitration as its first

       substantive pleading. Clearly, Stardust decided early on in litigation that it

       would rather have the dispute decided by arbitration and did not wait until an

       adverse final judgment to request arbitration.

[22]   The Robertses also offer a litany of procedural steps they assert Stardust should

       have taken to preserve the issue for appeal. They assert Stardust should have

       filed a motion to reconsider or a motion to clarify, it should have filed an

       immediate appeal of the trial court’s denial of its motion to dismiss,6 or it

       should have renewed its motion to dismiss at the summary judgment stage.

       However, the Robertses do not point to any Indiana authority requiring a party

       to file any of the above-mentioned motions to preserve this issue for appeal.

       6
        A party may appeal a trial court’s order denying a motion to compel arbitration as a matter of right. Ind.
       Code § 34-57-2-19(a)(1). However, a “claimed error in an interlocutory order is not waived for failure to take
       an interlocutory appeal but may be raised on appeal from the final judgment.” Bojrab v. Bojrab, 810 N.E.2d
1008, 1014 (Ind. 2004).

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016                     Page 13 of 14
[23]   Based on the foregoing, we conclude Stardust did not waive its right to arbitrate

       the dispute, nor did it fail to preserve the issue for appeal.

                                                Conclusion
[24]   We conclude the Purchase Agreement is a valid and binding contract between

       the parties, and that Stardust did not waive its right to request arbitration.

       Accordingly, we reverse the trial court’s order denying Stardust’s motion to

       dismiss and remand to the trial court to enter an order compelling arbitration.

[25]   Reversed and remanded.

       Mathias, J., and Brown, J., concur.

       Court of Appeals of Indiana | Opinion 33A01-1603-PL-604 | December 28, 2016   Page 14 of 14