                                                        FILED
                                                      Oct 17 2012, 8:46 am

FOR PUBLICATION                                              CLERK
                                                           of the supreme court,
                                                           court of appeals and
                                                                  tax court




ATTORNEY FOR APPELLANT:                       ATTORNEYS FOR APPELLEES:

JONATHAN A. WATSON                            JAMIE C. WOODS
Wandling & Associates                         PHILLIP A. GARRETT
South Bend, Indiana                           Thorne • Grodnik, LLP
                                              Mishawaka, Indiana


                            IN THE
                  COURT OF APPEALS OF INDIANA

WIND WIRE, LLC,                               )
                                              )
     Appellant-Defendant,                     )
                                              )
            vs.                               )       No. 71A03-1202-PL-78
                                              )
ROGER FINNEY and                              )
PATRICIA FINNEY,                              )
                                              )
     Appellees-Plaintiffs.                    )


                  APPEAL FROM THE ST. JOSEPH SUPERIOR COURT
                       The Honorable Jenny Pitts Manier, Judge
                           Cause No. 71D05-1008-PL-151



                                   October 17, 2012


                             OPINION - FOR PUBLICATION


BRADFORD, Judge
      Appellant-Defendant Wind Wire LLC appeals the trial court’s judgment that it

fraudulently induced Appellees-Plaintiffs Roger and Patricia Finney to execute a contract

for the purchase and installation of a residential wind turbine and that it breached that

contract’s implied warranty of fitness for a particular purpose. We affirm.

                        FACTS AND PROCEDURAL HISTORY

      The trial court based its judgment on these specific findings of fact. At some point

prior to May 14, 2008, the Finneys received a copy of a Wind Wire advertising brochure

that had been left in their mailbox by a Wind Wire representative.            The brochure

described the cost savings to be realized through the use of energy producing wind

turbines and included the following representations:

      WIND-WIRE provides the average household the means to harness the
      wind at a feasible cost for a savings of approximately 75% to 100% of
      current electric service.

      With a savings of approximately $160 plus per month and a payoff span of
      3-4 years you would control 75% to 100% of your electric supply utilizing
      nature and doing your small part for the ecology? (sic)

      If you could invest in a system that would not only increase the value of
      your property but could generate an average of 700K wh [sic] per hour
      could you do it?

      WIND-WIRE will show how the homeowner can receive a substantial
      refund on their (sic) taxes for the installation of the system, saving the
      homeowner even more money.

Appellant’s App. p. 4

      Wind Wire produced the brochure as an advertising tool to induce people to

contract with Wind Wire for the purchase and installation of wind turbines, and it

conceded at trial that a reasonable person would rely on the information contained in the

                                            2
brochure. Intrigued by the brochure’s representations, the Finneys contacted Wind Wire

and later met with Wind Wire representatives to discuss the installation of a wind turbine

on the Finneys’ property.

       While meeting with Wind Wire, Mr. Finney declared that the Finneys wanted to

install a turbine to save money on their electric bill.     In response to Mr. Finney’s

statement, Wind Wire representative Glen Smith affirmed the cost savings

representations contained in Wind Wire’s brochure. At trial, however, Wind Wire could

not recall the name or location of the customer alleged in the brochure to have generated

an average of 700 kWh through the use of its wind turbine. Moreover, at the time Wind

Wire placed the brochure in the Finneys’ mailbox, it did not know the average wind

speed in the town where the Finneys’ property is located.

       Smith also told the Finneys that Wind Wire was highly qualified, had been in the

wind turbine business for awhile, and had installed two turbines at a bank in Mishawaka.

Based on these representations, the Finneys believed Wind Wire’s representatives to be

qualified and knowledgeable. However, the extent of Smith’s formal training was a one-

hour “webinar”; he had no experience with wind turbines prior to undertaking the

business of selling and installing them.

       Wind Wire also told the Finneys that the company supplying their electric service,

AEP, would purchase the excess energy produced by their wind turbine. As intended by

Wind Wire, Mr. Finney understood this to mean that AEP would issue him a check for

those periods in which his energy production exceeded his energy consumption. AEP,

however, does not issue checks to its customers for this reason. Moreover, Wind Wire

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failed to inform the Finneys that, in order to measure the production of excess energy,

their wind turbine would require a type of electrical meter other than the typical

residential meter with which their wind turbine was equipped.

       Wind Wire’s representatives further told the Finneys that installation of a wind

turbine would entitle them to a tax credit, the amount of which was described in terms of

a percentage of the purchase price. In fact, the credit was fixed at $900.00 for the

Finneys. Wind Wire created the impression that the amount of the Finneys’ tax credit

would be greater.

       On May 14, 2008, in reliance on the representations contained in the brochure and

the statements made by Wind Wire representatives during their meeting with the Finneys,

the Finneys executed a contract with Wind Wire for the purchase and installation of a

wind turbine. The wind turbine was not erected on the Finneys’ property until October

2008, and it did not begin producing electrical power until September 2009. Since that

time, the Finneys’ wind turbine has produced no excess power and has had no effect on

their electric bills. The wind turbine actually consumes energy while it sits idle. Based

on the cost of electricity from AEP, it would not be possible for the Finneys’ wind

turbine to pay for itself in three to four years. AEP represents that it typically takes

twenty-five years for a wind turbine to pay for itself. Moreover, in the approximately one

year since its installation on the Finneys’ property, the wind turbine has produced a total

of only 134.2 kWh.       According to AEP, even if the wind turbine were running

continuously at maximum capacity, it would create only 1100-1200 kWh and produce, at

most, a utility savings of $155 per month.

                                             4
       In July 2010 a Wind Wire representative met with representatives of Southwest

Wind Power (“SWP”), the manufacturer of the wind turbines Wind Wire installs, to

address problems with such installations.       SWP had received customer complaints

directed at Wind Wire and was concerned about customer expectations of energy

production associated with Wind Wire’s installation of SWP wind turbines.              SWP

questioned Wind Wire about its customers’ experiences, specifically inquiring as to how

Wind Wire arrived at the energy production data it was advertising. SWP was especially

concerned about Wind Wire’s marketing materials and its ability to service its customers

adequately.   Ultimately, SWP placed Wind Wire on a sixty-day suspension and

admonished Wind Wire not to “share extraordinary production levels of previous

customers with potential customers during the sales process.” Appellant’s App. p. 4.

SWP further placed Wind Wire on six months probation due to concerns with Wind

Wire’s marketing materials and customer satisfaction.

       On August 9, 2010, the Finneys filed a complaint in St. Joseph Superior Court,

alleging, among other things, breach of contract, breach of implied warranty of fitness for

a particular purpose, and fraud. Relevant to these claims, the Finneys’ contract with

Wind Wire contained the following integration clause:

       It is understood that this Agreement and any documents which are attached
       hereto or referenced herein constitute the intire [sic] agreement between the
       parties and all other agreements, represenstion [sic], promises,
       inducements, statements, and understandings, prior to and
       contemporaneous with this Agreement, written or oral, are suspended by
       this Agreement.




                                            5
Appellant’s App. p. 17. The contract also included the following paragraph regarding

warranties:

          IF PURCHASER MAKES ALL PAYMENTS WHEN DUE, SELLER
          AND THE MANUFACTURER OF CERTAIN OF THE MATERIAL
          BEING SUPPLIED BY SELLER WILL PROVIDE PURCHASER
          WITH SPECIFICATE [sic] WARRANTIES. SELLER MAKES NO
          OTHER   WARRANTIES,     EXPRESS   OR   IMPLIED, OR
          MERCHANTABILITY OR FITNESS FOR A PARTICULAR
          PURPOSE WITH RESEPCT TO THE GOODS COVERED BY THIS
          CONTRACT….

Appellant’s App. p. 18. On January 17, 2012, after a bench trial, the trial court entered

judgment in favor of the Finneys. Specifically, the trial court concluded:

          Wind Wire has breached [the contract] by failing to provide [the Finneys]
          the warranties referenced in paragraph 15.[1]

          [Wind Wire] has breached the implied warranty that the turbine at issue
          was fit for the particular purpose for which [the Finneys] purchased it.

          [Wind Wire] fraudulently induced [the Finneys] to execute the contract by
          knowingly and falsely misrepresenting its experience and expertise,
          knowingly and falsely misrepresenting the cost savings [the Finneys] would
          enjoy as a result of the installation of the wind turbine at issue, and by
          having made such representations, fully aware of their falsity, for the
          purpose of inducing [the Finneys] to contract with Wind Wire for the
          purchase and installation of a wind turbine.

Appellant’s App. p. 9. The trial court determined that the Finneys suffered damages “at

least in the amount of $14,500.00” and that they “are entitled to treble damages due to

[Wind Wire’s] fraudulent conduct.” Appellant’s App. p. 9. The court also awarded the

Finneys reasonable attorneys fees, for a total judgment of “$54,893.00 plus the costs of

this action.” Appellant’s App. p. 9.


1
    The warranties are actually referenced in paragraph 16.

                                                      6
                           DISCUSSION AND DECISION

                         I. Integration Clause and Disclaimer

      Wind Wire argues that the trial court erred in finding fraud in the inducement.

The elements of fraud are “(1) a material representation of […] facts which (2) was false,

(3) was made with knowledge or reckless ignorance of its falsity, (4) was made with the

intent to deceive, (5) was rightfully relied upon by the complaining party, and (6)

proximately caused injury to the complaining party.” Tru–Cal, Inc. v. Conrad Kacsik

Instrument Sys., Inc., 905 N.E.2d 44-45 (Ind. Ct. App. 2009). Wind Wire claims the

Finneys are precluded from satisfying the fifth element—justifiable reliance—because its

contract with the Finneys contained an integration clause that disclaimed reliance on any

prior representations. We restate this issue as whether the trial court committed clear

error by applying the wrong legal standard.

             In the appellate review of claims tried without a jury, the findings
      and judgment are not to be set aside unless clearly erroneous, and due
      regard is to be given to the trial court’s ability to assess the credibility of
      the witnesses. A judgment will be clearly erroneous when there is “no
      evidence supporting the findings or the findings fail to support the
      judgment,” and when the trial court applies the wrong legal standard to
      properly found facts. While findings of fact are reviewed under the clearly
      erroneous standard, appellate courts do not defer to conclusions of law,
      which are reviewed de novo.

Fraley v. Minger, 829 N.E.2d 476, 482 (Ind. 2005) (internal citations omitted).

      “An integration clause of a contract is to be considered as any other contract

provision to determine the intention of the parties and to determine if that which they

intended to contract is fully expressed in the four corners of the writing.” Prall v. Ind.

Nat’l Bank, 627 N.E.2d 1374, 1377-78 (Ind. Ct. App. 1994) (citing Franklin v. White 493

                                              7
N.E.2d 161, 166 (Ind. 1986)). “Generally, where parties have reduced an agreement to

writing and have stated in an integration clause that the written document embodies the

complete agreement between the parties, the parol evidence rule prohibits courts from

considering extrinsic evidence for the purpose of varying or adding to the terms of the

written contract.” Id. (citing I.C.C. Protective Coatings, Inc. v. A.E. Staley Mfg. Co., 695

N.E.2d 1030, 1035 (Ind. Ct. App. 1998)). “An exception to the parol evidence rule

applies, however, in the case of fraud in the inducement, where a party was ‘induced’

through fraudulent representations to enter a contract.” Circle Ctr. Dev. Co. v. Y/G Ind.,

L.P, 762 N.E.2d 176, 179 (Ind. Ct. App. 2002).

          Wind Wire contends the fraudulent inducement exception to the parol evidence

rule only applies if the alleged misrepresentation specifically “‘induced or produced the

execution of the … disclaimer,’” as opposed to the signing of the contract generally.

Appellant’s Br. p. 9 (quoting Circle Ctr. Dev. Co., 762 N.E.2d at 180). Although Wind

Wire accurately quotes our decision in Circle Ctr. Dev. Co., the proposition upon which

it relies has a broader application.              “In both Prall and Circle Ctr. Dev. Co. we

acknowledged that a party could overcome the effect of an integration clause if it could

show it had a right to rely on the alleged misrepresentations and did in fact rely on them

in executing the release and/or integration clause.”2 Tru-Cal, Inc., 905 N.E.2d at 45

(emphasis added) (citing Prall, 627 N.E.2d 1374; Circle Ctr. Dev. Co., 762 N.E.2d 176).

Moreover, our decision in Circle Ctr. Dev. Co. did not overrule the requirement that the

weight given to a contract’s integration clause be decided on a case-by-case basis. See id.

2
    “A release is a species of contract….” Prall, 627 N.E.2d at 1377.

                                                      8
at 46 (quoting Prall, 627 N.E.2d at 1379) (“‘Whether one has the right to rely depends

largely on the facts of the case.’”).

       We conclude that the trial court did not apply the wrong legal standard and,

therefore, that its judgment is not clearly erroneous. We note that Wind Wire makes no

claim in its Appellant’s Brief that the evidence does not support the trial court’s findings

of fact or that these findings fail to support the court’s conclusions of law. The trial

court’s judgment on this issue is affirmed.

                    II. Warranty of Fitness for a Particular Purpose

       Having affirmed the trial court’s judgment on fraud in the inducement, we need

not reach Wind Wire’s second argument that the court erred in finding breach of the

implied warranty of fitness for a particular purpose. As Wind Wire correctly highlights

in its reply brief, “the breach of warranty did not form the basis of [the trial court’s]

decision” or the resulting calculation of damages. Reply Br. p. 7. “Rather, the decision

was based entirely on the finding of fraud.” Reply Br. p. 7. Any error pertaining to this

issue is, therefore, harmless.

       The judgment of the trial court is affirmed.

ROBB, C.J., and BAKER, J., concur.




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