Court Opinion

ID: 2727417
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:16:10.311427+00
Date Added: 2024-06-11T09:28:36.413756
License: Public Domain

Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any
                                                             May 24 2013, 8:48 am
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEY FOR APPELLANTS:                         ATTORNEY FOR APPELLEE CIRCLE
                                                 R ELECTRIC, INC.:
MICHAEL L. MUENICH
Griffith, Indiana                                MATTHEW J. HAGENOW
                                                 Newby, Lewis, Kaminski & Jones, LLP
                                                 LaPorte, Indiana

                              IN THE
                    COURT OF APPEALS OF INDIANA

BRANT CONSTRUCTION, LLC; and                     )
DUNE HARBOR, LLC,                                )
                                                 )
       Appellants/Cross-Appellees/Defendants,    )
                                                 )
              vs.                                )     No. 64A03-1204-CC-159
                                                 )
CIRCLE R ELECTRIC, INC.; DeBOER                  )
EGOLF CORPORATION; AUDITOR,                      )
PORTER COUNTY, INDIANA; FIRST                    )
NATIONAL BANK OF ILLINOIS; and                   )
WACHOVIA FINANCIAL SERVICES, INC.,               )
                                                 )
       Appellees/Cross-Appellants/Plaintiffs.    )

                    APPEAL FROM THE PORTER SUPERIOR COURT
                         The Honorable Mary R. Harper, Judge
                           Cause No. 64D05-0907-CC-7800

                                        May 24, 2013

               MEMORANDUM DECISION - NOT FOR PUBLICATION

BRADFORD, Judge
       Appellee/Cross-Appellant/Plaintiff Circle R Electric, Inc. (“Circle R”) contracted

to do work on land owned by Appellant/Cross-Appellee/Defendant Dune Harbor, LLC

(“Dune Harbor”) on a project for which Appellant/Cross-Appellee/Defendant Brant

Construction, LLC (“Brant”) served as the general contractor. Circle R contracted with

both Dune Harbor (“the Dune Harbor Contract”) and Brant (“the Brant Contracts”) and

performed work pursuant to the contracts.        Dune Harbor subsequently experienced

financing problems and Circle R was not paid. Dune Harbor failed to pay Circle R

approximately $43,810 for work performed on the Project, and Brant failed to pay Circle

R approximately $26,350.

       Circle R filed suit against Dune Harbor and Brant, later amending its complaint to

include DeBoer Egolf Corporation, which had filed mechanic’s liens against Dune

Harbor’s property. Dune Harbor and Brant moved for summary judgment on the bases

that (1) Circle R had not sought arbitration as required by the contracts and (2) payment

to Circle R was not due pursuant to the Brant Contracts because Dune Harbor had never

paid Brant. The trial court entered summary judgment in favor of Circle R. Dune Harbor

and Brant now appeal, contending that the trial court erred in not enforcing the arbitration

clauses and the contingent payment clauses of the Brant Contracts. Concluding that the

trial court should have enforced the arbitration clauses of the Brant Contracts, we reverse

the trial court’s entry of summary judgment in favor of Circle R as against Brant. We

affirm the trial court’s entry of summary judgment in favor of Circle R as against Dune

Harbor and remand for the calculation of attorneys’ fees.

                       FACTS AND PROCEDURAL HISTORY

                                             2
       Dune Harbor owned and was developing the Dune Harbor Marina project (“the

Project”) in 2006 and 2007 before financing was withdrawn. Brant acted as general

contractor and construction manager for the Project. In February of 2006, Dune Harbor

entered into contracts with some subcontractors on the Project, including Circle R and

DeBoer Egolf. Dune Harbor is identified as “Owner” in the Dune Harbor Contract, and

Brant, although not a party, is identified as Dune Harbor’s “Construction Manager.” The

Dune Harbor Contract provides, in part, as follows:

       6. Contract Sum
          Owner shall pay Subcontractor for the performance of the work, subject
          to additions and deductions by change order as hereinafter provided, the
          Contract Sum as specified in Item 1.a.(6) above, upon the terms and
          conditions hereinafter set forth.
       7. Progress Payments (Also see Exhibit “A” – Billing Instructions,
          incorporated herein by reference)
          Owner agrees to pay Subcontractor, on account of the Contract Sum,
          progress payments for actual work performed to the satisfaction of the
          Construction Manager. Owner may, at his discretion, withhold from
          progress payments due Subcontractor; final payment to be made by
          Owner to Subcontractor upon acceptance by Owner.

Appellants’ App. p. 34.

       The Dune Harbor Contract also contains the following clauses:

       13. Disputes
           In case of any dispute between the Subcontractor and Construction
           Manager, Subcontractor agrees to be bound to Construction Manager to
           the same extent that Construction Manager is bound to Owner by the
           terms of the Contract Documents[1] and by any and all decisions,
           interpretations, or determinations made thereunder by the persons so
           authorized in the Contract Documents. Subcontractor further agrees to
           be bound to Construction Manager to the same extent the Construction

       1
           “The Contract Documents shall consist of this Agreement, the General Contract between
Construction Manager and Owner (identified in item 1.a. (4) and the general and Special Conditions of
the General Contract between Owner and Construction Manager (if any).” Appellants’ App. p. 34.

                                                 3
           Manager is bound to Owner by the final decision of a court of
           competent jurisdiction, whether or not Subcontractor is a party to such
           proceedings.
           ….
       14. Arbitration
           If at any time any controversy should arise between the Construction
           Manager and Subcontractor with respect to any matter or thing involved
           in the Contract Documents o[r] the performance thereof, which
           controversy is not controlled or determined by paragraph 13 hereof or
           other provisions of the Contract Documents, then the decision of the
           Construction Manager shall be followed by the Subcontractor, and said
           controversy shall be ultimately resolved as follows:
           a. The Subcontractor shall conclusively be bound by and abide by the
               Construction Manager’s decision, unless the Subcontractor shall
               commence arbitration proceedings as hereinafter provided within
               ninety (90) days following such decision.
           b. If the Subcontractor decided to appeal from the decision of the
               Construction Manager, then the controversy shall be decided by
               arbitration in accordance with the rules of the American Arbitration
               Association, and the decision of the Arbitrator shall be final and
               binding on both parties.

Appellants’ App. p. 36.

       Finally, the Dune Harbor Contract contains the following provision regarding

attorneys’ fees:

       31. Attorneys’ Fees
           In the event either party to this Agreement employs attorneys or incurs
           other expenses it may deem necessary to protect or enforce their rights
           under the Contract Documents, then the non-prevailing party in such
           dispute agrees to reimburse such expenses to the prevailing party,
           including, but not limited to, attorney’s [sic] fees incurred by the
           prevailing party.

Appellants’ App. p. 40.

       Between October 23, 2006, and May 7, 2007, and for certain specific work, Circle

R entered into the Brant Contracts, contracts to which Dune Harbor was not a party but in

which it is identified as the “Owner.” The contracts provided in part as follows:

                                            4
       6. Contract Sum
          Contractor shall pay Subcontractor for the performance of the work,
          subject to additions and deductions by change order as hereinafter
          provided, the Contract Sum as specified in Item 1.a.(6) above, upon the
          terms and conditions hereinafter set forth.
       7. Progress Payments (Also see Exhibit “A” – Billing Instructions,
          incorporated herein by reference)
          Contractor agrees to pay Subcontractor, on account of the Contract
          Sum, progress payments for actual work performed to the satisfaction of
          the Contractor. Said progress payments shall be made on the basis of,
          and only to the extent of, payments actually received by Contractor
          from the Owner, less a retainage as per Item 1.a.(7) above, which
          Contractor may, at his discretion, withhold from progress payments due
          Subcontractor; final payment to be made by Contractor to Subcontractor
          upon acceptance of work and payment by Owner.

Appellants’ App. pp. 48, 61, 74, 88.

       The Brant Contracts also contained the following clause:

       13. Disputes
           In case of any dispute between the Subcontractor and Contractor,
           Subcontractor agrees to be bound to Contractor to the same extent that
           Contractor is bound to Owner by the terms of the Contract
           Documents[2] and by any and all decisions, interpretations, or
           determinations made thereunder by the persons so authorized in the
           Contract Documents. Subcontractor further agrees to be bound to
           Contractor to the same extent the Contractor is bound to Owner by the
           final decision of a court of competent jurisdiction, whether or not
           Subcontractor is a party to such proceedings.
           ….
       14. Arbitration
           If at any time any controversy should arise between the Contractor and
           Subcontractor with respect to any matter or thing involved in the
           Contract Documents o[r] the performance thereof, which controversy is
           not controlled or determined by paragraph 13 hereof or other provisions
           of the Contract Documents, then the decision of the Contractor shall be
           followed by the Subcontractor, and said controversy shall be ultimately
           resolved as follows:

       2
           “The Contract Documents shall consist of this Agreement, the General Contract between
Contractor and Owner (identified in item 1.a. (4) and the general and Special Conditions of the General
Contract between Owner and Contractor (if any).” Appellants’ App. pp. 48, 61, 74, 88.

                                                  5
           a. The Subcontractor shall conclusively be bound by and abide by the
              Contractor’s decision, unless the Subcontractor shall commence
              arbitration proceedings as hereinafter provided within ninety (90)
              days following such decision.
           b. If the Subcontractor decided to appeal from the decision of the
              Contractor, then the controversy shall be decided by arbitration in
              accordance with the rules of the American Arbitration Association,
              and the decision of the Arbitrator shall be final and binding on both
              parties.

Appellants’ App. pp. 50, 63, 76, 90.

        Finally, the Brant Contracts contained the following clause regarding attorneys’

fees:

        32. Attorneys’ Fees
            In the event “either party” employs attorneys or incurs other expenses it
            may deem necessary to protect or enforce its rights under the Contract
            Documents (or in connection with any work done or agreed to be done
            by Subcontractor on this construction project), therefore “the non-
            prevailing party in any dispute shall reimburse the prevailing party for
            all attorneys [sic] fees and expenses incurred by the prevailing party.”

Appellants’ App. pp. 54, 67, 80, 94.

        Circle R performed work and provided materials pursuant to the Dune Harbor

Contract and Brant Contracts, and, after funding for the Project was withdrawn in

November of 2007, Dune Harbor ceased payments to Brant and its subcontractors. Brant

admits that it failed to pay Circle R $26,354.71 for work performed, and Dune Harbor

admits that it failed to pay Circle R $43,810. On February 13, 2009, Circle R recorded its

notice of intent to hold a mechanic’s lien in the Porter County Recorder’s Office. On

August 31, 2009, Brant informed Circle R that it would not be paid because Dune Harbor

had not paid Brant.

                                             6
        On August 31, 2009, Circle R filed suit against Dune Harbor and Brant, later

amending the complaint to add DeBoer Egolf, which had filed a mechanic’s lien against

the Property. On May 6, 2011, Dune Harbor and Brant moved for summary judgment

against Circle R on the ground that Circle R had not sought arbitration and that payment

was not due because Dune Harbor had not paid Brant. On December 21, 2011, the trial

court entered summary judgment in favor of Circle R. The trial court entered judgment

in favor of Circle R as against Brant in the amount of $43,8103 plus $13,000 in attorneys’

fees and $146 in costs for a total of $56,956. The trial court entered summary judgment

in favor of Circle R as against Dune Harbor in the amount of $26,354 plus $13,000 in

attorneys’ fees for a total of $39,354.

                                 DISCUSSION AND DECISION

                        I. Whether the Trial Court Erred in Granting
                           Summary Judgment in Favor of Circle R

        When reviewing the grant or denial of a summary judgment motion, we apply the

same standard as the trial court. Merchs. Nat’l Bank v. Simrell’s Sports Bar & Grill, Inc.,

741 N.E.2d 383, 386 (Ind. Ct. App. 2000). Summary judgment is appropriate only where

the evidence shows that there is no genuine issue of material fact and the moving party is

entitled to a judgment as a matter of law. Id.; Ind. Trial Rule 56(C). All facts and

reasonable inferences drawn from those facts are construed in favor of the nonmoving

party. Id. To prevail on a motion for summary judgment, a party must demonstrate that

        3
            As Circle R points out, the trial court, in an apparent scrivener’s error, switched the amounts
owed by Dune Harbor and Brant. Neither Dune Harbor nor Brant disputes this, so we shall proceed as if
the trial court had entered summary judgment against Brant in the amount of $39,500 and against Dune
Harbor in the amount of $56,810.

                                                    7
the undisputed material facts negate at least one element of the other party’s claim. Id.

Once the moving party has met this burden with a prima facie showing, the burden shifts

to the nonmoving party to establish that a genuine issue does in fact exist. Id. The party

appealing the summary judgment bears the burden of persuading us that the trial court

erred. Id.

       Appellants’ claims are based on provisions of the Dune Harbor Contract and Brant

Contracts. “The first rule in the interpretation of contracts is to give meaning and effect

to the intention of the parties as expressed in the language of the contract.” Stech v.

Panel Mart, Inc., 434 N.E.2d 97, 100 (Ind. Ct. App. 1982). “In ascertaining the intention

of the parties, a court must construe the instrument as a whole, giving effect to every

portion, if possible.” Id. “In interpreting an unambiguous contract, a court gives effect to

the parties’ intentions as expressed in the four corners of the instrument, and clear, plain,

and unambiguous terms are conclusive of that intent.” Oxford Fin. Group, Ltd. v. Evans,

795 N.E.2d 1135, 1142 (citing Hyperbaric Oxygen Therapy Sys., Inc. v. St. Joseph Med.

Ctr. of Ft. Wayne, Inc., 683 N.E.2d 243, 247 (Ind. Ct. App. 1997)). “Courts may not

construe clear and unambiguous provisions, nor may it add provisions not agreed upon by

the parties.” Id. (Ind. Ct. App. 2003) (citing Hyperbaric Oxygen Therapy Sys., 683
N.E.2d at 247-48). However, it is well-settled that “[i]f the terms of a written contract are

ambiguous, it is the responsibility of the trier-of-fact to ascertain the facts necessary to

construe the contract.” Newnam Mfg., Inc. v. Transcon. Ins. Co., 871 N.E.2d 396, 401

(Ind. Ct. App. 2007). “A contract is ambiguous only if reasonable persons would differ

                                             8
as to the meaning of its terms.” Oxford Fin. Group, 795 N.E.2d at 1142 (citing Beam v.

Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002)).

                                 A. Arbitration Clauses

              Whether the parties agreed to arbitrate any disputes is a matter of
       contract interpretation, and most importantly, a matter of the parties’ intent.
       AGCO Corp. v. Anglin, 216 F.3d 589, 593 (7th Cir.2000) (“As with any
       contract, the touchstone for interpreting an arbitration clause must be the
       intention of the parties.”). “Courts in Indiana have long recognized the
       freedom of parties to enter into contracts and have presumed that contracts
       represent the freely bargained agreement of the parties.” Trimble v.
       Ameritech Publ’g, Inc., 700 N.E.2d 1128, 1129 (Ind.1998); Cont’l
       Basketball Ass’n v. Ellenstein Enters., 669 N.E.2d 134, 140 (Ind.1996).

MPACT Const. Grp., LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901, 906

(Ind. 2004). “Moreover, ‘[w]hen construing arbitration agreements, every doubt is to be

resolved in favor of arbitration’ and the ‘parties are bound to arbitrate all matters, not

explicitly excluded, that reasonably fit within the language used.’” St. John Sanitary

Dist. v. Town of Schererville, 621 N.E.2d 1160, 1162 (Ind. Ct. App. 1993) (quoting

Ziegler v. Whale Secs. Co., L.P., 786 F. Supp. 739, 741 (N.D. Ind. 1992)).

       In both the Dune Harbor Contract and Brant Contracts, Circle R agreed to be

bound and abide by Brant’s decision regarding “any controversy” arising between it and

Brant “with respect to any matter or thing involved in the Contract Documents o[r] the

performance thereof” unless commencing arbitration within ninety days of the decision.

Appellants’ App. pp. 36, 63. Dune Harbor and Brant argue that Circle R’s only recourse

in the disputes at issue in this case was to submit the matters to arbitration, which it did

not do. Circle R argues that, for various reasons, it was not required to submit these

matters to arbitration.

                                             9
                                 1. Dune Harbor Contract

       Circle R argues that the arbitration clause in the Dune Harbor Contract does not

apply in this case because the controversy pursuant to that contract arose between it and

Dune Harbor, not Brant. We agree. The Dune Harbor Contract obligated Dune Harbor

to pay Circle R directly for its work on the Project, and it is undisputed that Dune Harbor

did not. This can only be fairly characterized as a controversy arising between Dune

Harbor and Circle R, and the arbitration clause in the Dune Harbor Contract applies only

to controversies arising between Brant and Circle R. The trial court correctly concluded

that the arbitration clause in the Dune Harbor Contract did not bar the entry of summary

judgment in favor of Circle R.

                                   2. Brant Contracts

       Circle R argues that the arbitration clauses in the Brant Contracts do not apply

because the clauses apply only to “controvers[ies] not controlled or determined by

paragraph 13 hereof or other provisions of the Contract Documents.” Appellants’ App.

pp. 50, 63, 76, 90.     Circle R reasons that because payment was addressed under

provisions of the Contract Documents, payment disputes are not covered by the

arbitration clause. We cannot accept that interpretation of the language cited above.

First, while other provisions of the Contract Documents do address payment, they do not

control or determine controversies regarding payment. Paragraph 13 serves to remove

some controversies from the scope of the arbitration clause, but Circle R points to no

similar provision that does the same to payment controversies.

                                            10
       Second, to accept Circle R’s argument on this point would be to render the

arbitration clause meaningless. Any controversy arising between Brant and Circle R

regarding the Brant Contracts will necessarily have arisen pursuant to some provision of

those contracts, so to accept Circle R’s argument on this point would mean that the

arbitration clause would never apply. “A court should construe the language of a contract

so as not to render any words, phrases, or terms ineffective or meaningless.” State Farm

Mut. Auto. Ins. Co. v. D’Angelo, 875 N.E.2d 789, 796 (Ind. Ct. App. 2007), trans. denied.

“Generally, the courts should presume that all provisions included in a contract are there

for a purpose[.]” Indpls.-Marion Cnty. Pub. Library v. Shook, LLC, 835 N.E.2d 533, 541

(Ind. Ct. App. 2005). We conclude that the trial court erred in concluding that the

arbitration clause did not apply to the controversy between Circle R and Brant. By

failing to seek arbitration within ninety days of Brant’s decision not to pay, that decision

became binding on Circle R. We therefore remand with instructions to enter summary

judgment in favor of Brant with regard to the Brant Contracts.4

                                     B. Payment Provisions

       As we have already concluded that the trial court should have entered summary

judgment in favor of Brant with regard to its contracts with Circle R, the only contract

left is the Dune Harbor Contract. Although Brant argues that it was not obligated to pay

Circle R because it was never paid by Dune Harbor (an argument we need not reach),

       4
          Circle R argues that Brant has waived the arbitration argument by failing to file a motion to
compel arbitration and because they have actively litigated the issue. We disagree. The arbitration
clauses clearly put the onus on Circle R to commence arbitration, and we will not punish Brant for
defending itself in litigation initiated, after all, by Circle R.

                                                  11
Dune Harbor does not, and cannot, make the same argument. The plain language of the

Dune Harbor Contract obligates Dune Harbor to pay Circle R directly, which it did not

do. In other words, Dune Harbor has effectively conceded that it owes Circle R $43,810

pursuant to the Dune Harbor Contract.        The trial court correctly entered summary

judgment in favor of Circle R as to Dune Harbor.

                                   II. Attorneys’ Fees

       Both the Dune Harbor Contract and the Brant Contracts provide that the non-

prevailing party is required to reimburse expenses incurred to enforce rights by the

prevailing party. We affirm the trial court’s award of $13,000 in attorneys’ fees to Circle

R pursuant to the Dune Harbor Contract. We remand, however, for the calculation and

award of (1) additional attorneys’ fees and expenses incurred by Circle R in this appeal

related to claims arising under the Dune Harbor Contract and (2) attorneys’ fees and

expenses incurred by Brant pursuant to Circle R’s claims pursuant to the Brant Contracts.

                                     CONCLUSION

       We affirm the trial court’s entry of summary judgment in favor of Circle R

pursuant to the Dune Harbor Contract in the amount of $56,810. We reverse the trial

court’s entry of summary judgment in favor of Circle R pursuant to the Brant Contracts

and remand with instructions to enter judgment in favor of Brant on those claims. We

also instruct the trial court to conduct further proceedings in order to calculate and award

attorneys’ fees and expenses incurred by Circle R and Brant.

       The judgment of the trial court is affirmed in part, reversed in part, and remanded

with instructions.

                                            12
RILEY, J., and BROWN, J., concur.

                                    13