                                                                                        FILED
                                                                                Oct 18 2017, 10:56 am

                                                                                        CLERK
                                                                                    Indiana Supreme Court
                                                                                       Court of Appeals
                                                                                         and Tax Court




      ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
      Tony H. Abbott                                             Donald E. Morgan
      Indianapolis, Indiana                                      Melissa Hayden Kramer
                                                                 Indianapolis, Indiana


                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Broad Ripple Property Group,                               October 18, 2017
      LLC,                                                       Court of Appeals Case No.
      Appellant-Defendant,                                       49A04-1608-OV-1773
                                                                 Appeal from the Marion Superior
              v.                                                 Court
                                                                 The Honorable Cynthia J. Ayers,
      City of Indianapolis,                                      Judge
      Appellee-Plaintiff                                         Trial Court Cause No.
                                                                 49D04-1509-OV-31862



      Altice, Judge.


                                                 Case Summary


[1]   Broad Ripple Property Group (BRPG) leased space in commercial real estate at

      5306 N. Keystone Avenue (the Property) in Indianapolis to Weihong Tan

      Kreiter, an individual doing business as Sunrise Therapy Spa (Tenant). From

      that location, Tenant operated an unlicensed massage establishment in


      Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                           Page 1 of 14
      violation of the Revised Code of the Consolidated City of Indianapolis and

      Marion County (Revised Code) § 912-2. BRPG had no knowledge that a

      license was required for such use of the Property and was unaware of any illegal

      or illicit activity occurring on the Property.


[2]   Two undercover IMPD officers made separate visits to Tenant’s unlicensed

      massage establishment and were offered genital touching in violation of

      Revised Code § 912-6(f). IMPD subsequently shut down Tenant’s business and

      notified BRPG, who in turn promptly terminated Tenant’s lease.


[3]   The City of Indianapolis (the City) filed a complaint against BRPG for damages

      and injunctive relief, alleging violations of Revised Code §§ 912-2 and 912-6(f).

      With respect to damages, the City sought an award of compensatory damages,

      punitive damages, and fines against BRPG. Shortly after the complaint was

      filed, the City and BRPG entered into an agreed preliminary injunction to

      ensure that the Property would not be used during the pending litigation as a

      massage establishment without a valid license and would not be used for illicit

      purposes. The parties then filed competing motions for summary judgment,

      and the trial court granted summary judgment in favor of the City on all counts.


[4]   BRPG appeals from the entry of summary judgment and argues that it was

      entitled to summary judgment. The City has filed a motion to dismiss the

      appeal, arguing that the issue is moot. Thus, we are presented in this appeal

      with the following issues:


              1) Should we dismiss the appeal as moot?

      Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017   Page 2 of 14
              2) Is BRPG, as owner/lessor of the Property, liable under the
              Revised Code for Tenant’s operation of an unlicensed massage
              establishment?


[5]   We reverse and remand.1


                                         Facts & Procedural History


[6]   The facts are not in dispute. On November 8, 2014, BRPG entered into a

      commercial lease agreement with Tenant, with an understanding that Tenant

      intended to operate a “therapy and spa business” at the Property. Appellant’s

      Appendix Vol. 2 at 202-03. Tenant was prohibited by the terms of the lease

      agreement from using the Property for any other purpose without prior written

      consent. BRPG was unaware that a license would be required for use of the

      Property as a massage establishment and did not require Tenant to produce a

      license prior to entering into the lease agreement.2 The lease agreement,

      however, required Tenant to comply with all rules, regulations, and laws in its

      use and occupancy of the premises. Aside from $1300 monthly rental

      payments, BRPG did not receive financial benefits from Tenant’s business.

      Further, BRPG did not exercise control over Tenant’s day-to-day operations

      and its only business relationship with Tenant was as landlord-tenant.




      1
        Oral argument was held in Indianapolis on September 26, 2017. We commend counsel for both parties for
      the quality of their written and oral advocacy.
      2
       BRPG never required its commercial tenants to present verification or copies of licenses and/or permits
      needed to operate businesses or commercial enterprises on properties owned by BRPG.

      Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                     Page 3 of 14
[7]   Tenant proceeded to operate an unlicensed massage establishment at the

      Property. On September 11, 2015, IMPD began to conduct an undercover

      investigation of Tenant’s business activities and operations at the Property. The

      investigation revealed that patrons were being offered genital touching in

      exchange for additional compensation. Thereafter, the City shut down

      Tenant’s unlicensed massage establishment. BRPG was unaware of any illicit

      activity occurring on the Property or of Tenant’s lack of a required license to

      operate the massage establishment. Upon learning of Tenant’s violations,

      BRPG promptly terminated the lease agreement.


[8]   On September 25, 2015, the City filed the instant action against BRPG. The

      complaint alleged the violation of two ordinances regulating massage

      establishments – Revised Code §§ 912-2 and 912-6(f). Specifically, the City

      alleged, among other things, that BRPG was “actively operating, conducting,

      maintaining, and/or allowing a massage establishment at the [Property]

      without a valid license therefor from the licensing administrator in violation of

      Section 912-2 of the Revised Code.” Appellant’s Appendix Vol. 2 at 14. The City

      also alleged that BRPG was “allowing, promoting, maintaining, conducting,

      managing, operating and facilitating acts that require the touching of a patron’s

      genitals in violation of Section 912-6(f) of the Revised Code.” Id. at 16. As a

      result of these alleged violations, the City sought preliminary and permanent

      injunctive relief and damages, including fines, compensatory damages, and

      punitive damages. The day that the complaint was filed, the trial court entered




      Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017   Page 4 of 14
       a temporary restraining order and set the cause for a preliminary injunction

       hearing for October 7, 2015.


[9]    In lieu of the hearing, the parties submitted an agreed preliminary injunction to

       the court, which enjoined BRPG and its tenants, while the cause was pending,

       from allowing the operation of an unlicensed massage establishment and from

       knowingly allowing activities that involve the touching of a patron’s genitals or

       any other illegal activity at the Property. The parties also requested that the

       matter be set for a pre-trial status hearing, at which they would notify the court

       regarding the status of the litigation, discovery efforts, early dispute resolution

       discussions, and the need for a formal case management order and trial setting.

       The trial court accepted the agreement and held a pretrial conference on

       December 7, 2015. Shortly thereafter, trial was set for June 24, 2016, and later

       continued on the court’s own motion to July 13, 2016.


[10]   On April 19, 2016, the City filed a motion for summary judgment. It argued

       that as the property owner BRPG was responsible for the violations of the

       Revised Code that occurred on the Property. BRPG filed a competing motion

       for summary judgment on May 2, 2016, arguing that because it did not have

       any ownership interest in or control over Tenant’s business, BRPG did not, as a

       matter of law, directly or indirectly operate, conduct, or maintain a massage

       establishment without a license.3 BRPG indicated in its summary judgment




       3
        In support of its motion for summary judgment, BRPG designated the affidavit of Richard Trimpe, an
       expert in the commercial real estate industry in Indiana. Trimpe indicated that it was not common practice

       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                     Page 5 of 14
       filings that while it did not oppose the temporary restraining order becoming

       permanent, it did oppose any finding that it had violated the ordinances as

       alleged in the complaint, as well as the assessment of damages or fines.


[11]   A brief summary judgment hearing was held on June 27, 2016, at which a joint

       stipulation of facts was submitted and arguments were made by the parties. On

       August 1, 2016, the court granted summary judgment in favor of the City on all

       claims. In its order, however, the court did not set a hearing regarding damages

       and fines that were requested in Count II of the complaint, nor did it set out the

       terms of the permanent injunction. BRPG sought clarification from the trial

       court regarding the finality of the order. As a result, the trial court entered an

       amended order on August 3, 2016, finding “no just reason for delay”, entering

       judgment in favor of the City on all counts of the complaint, and indicating that

       the order “constitutes a final judgment in the case.” Appellant’s Appendix Vol. 2

       at 8-9. Accordingly, BRPG initiated this appeal. BRPG contends that it, rather

       than the City, is entitled to summary judgment.


                                                      Discussion


                                                     1. Mootness


[12]   The City has filed a motion to dismiss the appeal as moot. It asserts that even

       though the trial court entered judgment for the City, the court awarded no




       for a commercial landlord to verify that a prospective or existing lessee has obtained or renewed the
       governmental licenses, permits, and approvals related to the lessee’s business.

       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                       Page 6 of 14
       damages nor did it convert the preliminary injunction into a permanent

       injunction. Accordingly, the City contends that this court is unable to provide

       effective relief on appeal. See Larkin v. State, 43 N.E.3d 1281, 1286 (Ind. Ct.

       App. 2015) (an issue will be deemed moot when we are unable to provide

       effective relief).


[13]   The City’s position is tenuous. The trial court expressly granted summary

       judgment in favor of the City on all counts of the complaint. The complaint

       sought a permanent injunction against BRPG, as well as fines, compensatory

       damages, and punitive damages. Indeed, the City was not satisfied with the

       agreed preliminary injunction and continued to pursue the matter.


[14]   After the trial court issued its summary judgment order in favor of the City on

       all counts, the amount of damages remained undetermined. Thus, the August

       1, 2016 order was not in fact final. See Georgos v. Jackson, 790 N.E.2d 448, 451

       (Ind. 2003) (observing that a final judgment disposes of all issues as to all

       parties and leaves nothing for future determination). We remind the City that

       “[a] judgment that fails to determine damages is not final.” Id. at 452.


[15]   The trial court’s use of the magic language of Ind. Trial Rules 54(B) and 56(C)

       in its amended order had the effect of making the otherwise interlocutory order

       final and appealable.4 See Georgos, 790 N.E.2d at 452 (the requirement that a




       4
        The trial court’s amended order provided in relevant part: “there being no just reason for delay, judgment is
       entered for [the City] on its Motion for Summary Judgment on all Counts of the Complaint.” Appellant’s
       Appendix Vol. 2 at 8-9.

       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                       Page 7 of 14
       court use the “magic language of the rule” is “intended to provide a bright line

       so there is no mistaking whether an interim order is or is not appealable”);

       Martin v. Amoco Oil Co., 696 N.E.2d 383, 385 (Ind. 1998) (“A judgment or order

       as to less than all of the issues…in an action may become final only by meeting

       the requirements of T.R. 54(B)”). The issue(s) not resolved by the judgment,

       however, remains ripe for determination by the trial court. In other words,

       BRPG remained subject, at a minimum, to a hearing on damages and fines.

       Because we are able to provide effective relief in this case, the issue presented in

       BRPG’s appeal is not moot.


                                            2. Summary Judgment


                                              Standard of Review


[16]   We review summary judgment de novo and apply the same standard as the trial

       court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). Summary judgment

       is appropriate where the designated evidence establishes that there is no genuine

       issue as to any material fact and that the moving party is entitled to judgment as

       a matter of law. Id. It is a desirable tool to allow courts to dispose of cases,

       like the instant case, where only legal issues exist. Id.


[17]   The facts in this case are undisputed and our consideration of this appeal entails

       the interpretation of provisions of the Revised Code. When construing

       ordinances, we apply the rules applicable to statutory construction. City of

       Indianapolis v. Campbell, 792 N.E.2d 620, 624 (Ind. Ct. App. 2003). The

       primary rule of statutory construction is to ascertain and give effect to the intent

       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017   Page 8 of 14
       of the drafters. FLM, LLC v. Metro. Dev. Comm’n of Marion Cty., 76 N.E.3d 952,

       957 (Ind. Ct. App. 2017), trans. denied. The best evidence of that intent is the

       language of the ordinance, and all words must be given their plain and ordinary

       meaning unless otherwise indicated by the ordinance. Id. We will attempt to

       harmonize statutory provisions, but when they necessarily conflict, the specific

       provision takes priority over the general provision. See Robinson v. Wroblewski,

       704 N.E.2d 467, 475 (Ind. 1998); Medical Disposal Servs., Inc. v. Ind. Dep’t of

       Envtl. Mgmt., 669 N.E.2d 1054, 1059 (Ind. Ct. App. 1996) (“[w]hen one statute

       covers a particular subject in general terms and another statute covers the same

       subject in a more detailed or specific manner, then we first attempt to

       harmonize the statutes, but if the statutes are irreconcilably conflicting the more

       detailed statute prevails”), trans. denied.


[18]   The City’s complaint alleged the violation of the following two ordinances

       under the umbrella of Title IV, Chapter 912 of the Revised Code, which

       specifically regulates massage establishments.5


                Sec. 912-2. – License required.

                It is unlawful for a person or firm to operate, conduct or maintain
                a massage establishment in the city without first having obtained
                a license therefor from the license administrator.




       5
        Title IV includes specific registration, permitting, and licensing provisions for a variety of other businesses,
       some of which include adult entertainment (Chapter 807), alarm businesses (Chapter 811), amusement
       machine locations (Chapter 831), kennel/pet shop/stables (Chapter 836), ticket brokers (Chapter 841),
       contractors/skilled trades (Chapter 875), and tobacco businesses (Chapter 988).

       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                          Page 9 of 14
               Sec. 912-6. – Operation

                                                         ***

               (f) No person in a massage establishment shall initiate or solicit,
               verbally or nonverbally, sexual activity with a client.


[19]   At oral argument, the City candidly conceded that there was no basis for

       holding BRPG liable for Tenant’s violation of § 912-6. The City has also

       acknowledged that when read in isolation § 912-2 “does not lead inexorably to

       the conclusion that a commercial landlord is liable when its tenant operates an

       unlicensed massage business.” Appellee’s Brief at 10. The City asserts, however,

       that when § 912-2 is read in harmony with § 801-301(a), it becomes clear that

       property owners such as BRPG are liable for violations occurring on their

       property.


[20]   The general licensing provisions of Title IV are set out in Chapter 801 of the

       Revised Code. Section 801-102 indicates that the “provisions of this chapter

       shall apply to all businesses that are required under the following chapters of

       this title to be licensed by the license administrator”. Additionally, the City

       directs us to two other general provisions:


               Sec. 801-101. – Purpose of Title IV of the Code.

               It is the purpose of Title IV of the Code to license certain
               businesses for the protection of the public welfare. The
               provisions of this title should be liberally construed to that end.



       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017   Page 10 of 14
               Sec. 801-301 – License required; evidence of doing business;
               applicability to nonresidents.


               (a) It shall be unlawful for a person, either directly or indirectly,
                   to conduct or maintain any business or premises for which a
                   license is required by this Code, unless a valid license has
                   been obtained therefor from the license administrator and kept
                   in effect at all times….


[21]   The City argues that § 801-301 extends liability to a property owner even where

       the owner’s only connection to the unlicensed business is as landlord and the

       owner has no knowledge of its tenant’s violations of the licensing ordinances.

       Specifically, the City contends that the undisputed facts establish that BRPG

       indirectly maintained Tenant’s business6 and directly maintained the premises.

       Thus, according to the City, BRPG is liable for the violations of § 912-2.


[22]   We reject the City’s overly-broad interpretation of the relevant ordinances and

       agree with BRPG that the City’s proposed interpretation and application of the

       ordinances essentially make a commercial landlord strictly liable for its tenant’s

       violation of the various licensing ordinances. Nothing in Title IV requires a

       property owner to verify that applicable permits and licenses have been

       obtained before leasing property to a regulated business. Moreover, the City’s

       interpretation would require a commercial landlord, big or small, to constantly




       6
         With respect to indirectly maintaining Tenant’s business, the City notes that the lease agreement required
       Tenant to keep the business open during normal business hours and not cease operations without express
       written consent of BRPG. Further, the agreement provided the Property would be used solely by Tenant for
       the operation of Tenant’s therapy and spa business.

       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                    Page 11 of 14
       monitor its tenants to ensure that all permits and licenses are kept current. As

       Trimpe’s expert affidavit indicates, the custom within the local commercial

       leasing industry is that tenants are required by the lease terms (as in this case) to

       comply with all laws and regulations for the operation of their businesses but

       that landlords do not verify or monitor tenant’s business permits and licenses.


[23]   In the instant case, BRPG did not “operate, conduct, or maintain a massage

       establishment” within the common and ordinary meaning of those words.

       Indeed, the undisputed facts establish that BRPG was not in a business

       relationship with Tenant, except that of landlord. BRPG had no knowledge of

       the ordinance violations being committed by Tenant.7 Moreover, the duty to

       apply for the license was clearly Tenant’s, not BRPG’s. Recognizing these

       realities, the City asks us to interpret § 912-2 in light of § 801-301.


[24]   We do not find that these two provisions are in conflict with one another. Like

       § 912-2, § 801-301(a) speaks in terms of “conduct” or “maintain” the business

       or premises for which a license is required (i.e., the massage establishment).

       Unlike § 912-2, the provision references “directly or indirectly” conducting or

       maintaining but that addition cannot reasonably be read to impose liability on a

       commercial landlord with no financial ties to the regulated business.8




       7
         Even if Tenant’s actions rose to the level of a nuisance, BRPG would be liable under the common law only
       if it had actual knowledge. See Neal v. Cure, 937 N.E.2d 1227, 1232-33 (Ind. Ct. App. 2010), trans. denied.
       8
           Revised Code § 801-102 (b) defines “financial interest” to mean:

                (1) Any of the legal rights of ownership or beneficial interest in the profits of a business; or

       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                            Page 12 of 14
[25]   The purpose of Title IV of the Revised Code is to “license certain businesses for

       the protection of the public welfare.” Revised Code § 801-101. Further, the

       general provisions regarding licenses found in Chapter 801 “apply to all

       businesses that are required under the following chapters of this title to be

       licensed”. Revised Code § 801-102(a) (emphasis supplied). Section 801-102

       defines “business” to include “any kind of vocation, occupation, profession,

       enterprise or any kind of activity (together with any equipment, vehicles or

       other personal property, and any premises used therein) that is conducted,

       directly or indirectly in the city.” The same provision defines “premises” as “all

       real estate (including structures and fixtures affixed thereto) used in a business,

       together with all equipment, vehicles and other personal property used in that

       business.”


[26]   Following the purpose, applicability, and definitional provisions (Article I),

       Chapter 801 then sets out detailed licensing procedures (Article II) and licensing

       requirements and conditions (Article III). The focus throughout is on the

       licensee9 and the business being regulated. As set out above, one of these many

       provisions makes it “unlawful for a person, either directly or indirectly, to




             (2) Any portion of the legal rights of ownership in any partnership, corporation or other legal
                 entity having any portion of such rights or beneficial interest; equal to or greater than five
                 (5) percent of the whole. “Financial interest” includes, but is not limited to, the interest
                 held by stockholders and officers of corporations or similar business entities.
       9
          Revised Code § 801-304 provides that whenever an agent or employee of a licensee “commits an act or
       omission in violation of the provisions of this Code, the act or omission shall be deemed to be that of the
       license, and the licensee shall be subject to the same penalties and enforcement actions as if the act or
       omission had been committed personally by the licensee.”

       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017                        Page 13 of 14
       conduct or maintain any business or premises for which a license is required by

       this Code, unless a valid license has been obtained…and kept in effect at all

       times”. Revised Code § 801-803(a). We cannot agree with the City that this

       one provision clearly subjects commercial landlords such as BRPG to liability

       for licensing violations committed by their tenants, and when read in context

       with the entire regulatory scheme, the unreasonableness of the City’s

       interpretation is apparent.


[27]   Accordingly, we conclude that the trial court erred in granting summary

       judgment in favor of the City and in denying BRPG’s motion for summary

       judgment. The trial court is directed on remand to enter summary judgment in

       favor of BRPG.


[28]   Judgment reversed and remanded with instructions.


       Kirsch, J. and Mathias, J., concur.




       Court of Appeals of Indiana | Opinion 49A04-1608-OV-1773 | October 18, 2017   Page 14 of 14
