                                                                         FILED
                                                                    Sep 27 2018, 9:08 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court




ATTORNEYS FOR APPELLANTS                             ATTORNEYS FOR APPELLEES
Karl L. Mulvaney                                     John E. Brengle
Nana Quay-Smith                                      Indiana Legal Services, Inc.
Bingham Greenebaum Doll LLP                          New Albany, Indiana
Indianapolis, Indiana                                Jon Laramore
                                                     Cheryl Koch-Martinez
                                                     Adam Mueller
                                                     Indiana Legal Services, Inc.
                                                     Indianapolis, Indiana
                                                     ATTORNEYS FOR AMICUS CURIAE
                                                     STATE OF INDIANA
                                                     Curtis T. Hill, Jr.
                                                     Attorney General of Indiana
                                                     Thomas M. Fisher
                                                     Solicitor General of Indiana
                                                     Indianapolis, Indiana
                                                     Justin G. Hazlett
                                                     Section Chief, Consumer Litigation
                                                     Indianapolis, Indiana
                                                     Steven P. Frank
                                                     Michelle Alyea
                                                     Amanda Lee
                                                     Julia C. Payne
                                                     Deputy Attorneys General
                                                     Indianapolis, Indiana
                                                     ATTORNEYS FOR AMICUS CURIAE
                                                     CONSOLIDATED CITY OF
                                                     INDIANAPOLIS AND MARION COUNTY
                                                     Maggie L. Smith
                                                     Darren A. Craig
                                                     Frost Brown Todd LLC
                                                     Indianapolis, Indiana




Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018                Page 1 of 21
                                                     Donald E. Morgan
                                                     Office of Corporation Counsel
                                                     Indianapolis, Indiana
                                                     ATTORNEYS FOR AMICUS CURIAE
                                                     INDIANA ASSOCIATION FOR
                                                     COMMUNITY ECONOMIC
                                                     DEVELOPMENT INC. D/B/A
                                                     PROSPERITY INDIANA
                                                     Maggie L. Smith
                                                     Darren A. Craig
                                                     Frost Brown Todd LLC
                                                     Indianapolis, Indiana
                                                     ATTORNEYS FOR AMICUS CURIAE
                                                     NEIGHBORHOOD CHRISTIAN LEGAL
                                                     CLINIC
                                                     Maggie L. Smith
                                                     Darren A. Craig
                                                     Frost Brown Todd LLC
                                                     Indianapolis, Indiana
                                                     Chase M. Haller
                                                     Neighborhood Christian Legal Clinic
                                                     Indianapolis, Indiana
                                                     ATTORNEY FOR AMICI CURIAE
                                                     ECONOMIC JUSTICE PROJECT OF
                                                     NOTRE DAME CLINICAL LAW CENTER
                                                     AND NATIONAL CONSUMER LAW
                                                     CENTER
                                                     Judith Fox
                                                     Notre Dame Clinical Law Center
                                                     South Bend, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

Rainbow Realty Group, Inc.,                                September 27, 2018
and/or Cress Trust,


Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018        Page 2 of 21
      Appellants/Cross-Appellees/Plaintiffs,                     Court of Appeals Case No.
                                                                 49A02-1707-CC-1473
              v.                                                 Appeal from the Marion Superior
                                                                 Court
      Katrina Carter and                                         The Honorable Marshelle
      Quentin Lintner,                                           Dawkins Broadwell, Magistrate
      Appellees/Cross-                                           The Honorable James B. Osborn,
      Appellants/Defendants.                                     Judge
                                                                 Trial Court Cause No.
                                                                 49D14-1505-CC-16629



      Bradford, Judge.



                                           Case Summary                    1




[1]   In May of 2013, Appellees-Defendants Katrina Carter and Quentin Lintner

      (collectively, “the Lintners”) signed a contract with Appellants-Plaintiffs

      Rainbow Realty Group, Inc., and/or Cress Trust (collectively, “Rainbow”)

      styled as a rent-to-buy contract (“the Agreement”) for an uninhabitable house in

      Indianapolis (“the Property”). The Agreement provided that the Lintners were

      purchasing the house, were responsible for all repairs, could retain all profits if

      they sold the house for more than their contractual payoff, would be subject to

      eviction if they defaulted, and would have their payments applied to the




      1
        We heard oral argument in this case on August 28, 2018, in the Indiana Supreme Court Courtroom in the
      Indiana Statehouse in Indianapolis. We commend counsel (Mr. Mulvaney for the Appellants and Mr.
      Laramore for the Appellees) for the high quality of their presentations and thank the staff of the Indiana
      Supreme Court for its assistance in conducting this argument.

      Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018                  Page 3 of 21
      purchase price if timely made for two years. The Agreement did not require

      that it would end with a reversion of the Property to Rainbow.


[2]   Almost from the beginning, the Lintners failed to make consistent payments

      pursuant to the Agreement, and, in June of 2015, Rainbow filed suit to

      terminate it, seeking immediate possession, damages, and attorney’s fees. The

      Lintners moved for partial summary judgment on the basis that the Agreement

      was actually a lease and that Rainbow had violated Indiana’s warranty of

      habitability that applies to residential leases pursuant to Indiana Code article

      32-31, chapters 3 through 9 (“the Landlord-Tenant Act”).2 The trial court

      entered summary judgment in the Lintners’ favor on the question of whether

      Rainbow had violated provisions of the Landlord-Tenant Act. Following a trial

      on remaining issues, the trial court entered judgment in favor of the Lintners,

      awarding them $4000 for what it concluded were Rainbow’s fraudulently

      deceptive statements as well as $3000 in attorney’s fees. Rainbow contends that

      the trial court erred in concluding that the Agreement was actually a lease and

      that it committed fraud by misrepresenting its true character to them. The

      Lintners contend that the trial court’s judgment was correct but that its award of

      $3000 in attorney’s fees (when approximately $35,000 was requested)

      constituted an abuse of discretion.




      2
        Indiana Code section 32-31-2.9-2 provides that the term “residential landlord-tenant statute” refers to any
      of these chapters. For convenience, they will be referred to, collectively, as “the Landlord-Tenant Act.”

      Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018                     Page 4 of 21
[3]   We conclude that the Agreement is not a lease subject to the Landlord-Tenant

      Act. We do so pursuant to a long line of Indiana precedent requiring all leases

      to have a definite term and a reversion to the lessor, provisions the Agreement

      lacks. Our conclusion leads to the further conclusion that there is no basis on

      which to find that Rainbow committed fraud as a matter of law. Finally,

      because the Lintners did not prevail in the trial court, they are not entitled to

      recover any of their attorney’s fees. We reverse and remand with instructions

      to enter judgment in favor of Rainbow on their claim for eviction and

      immediate possession of the Property. We also vacate the trial court’s

      judgment that Rainbow committed fraud and its award of attorney’s fees to the

      Lintners.



                             Facts and Procedural History
[4]   Rainbow was founded in 1974 by James Hotka and buys and sells homes in

      inner-city Indianapolis. Rainbow buys vacant, abandoned, or distressed homes

      in need of rehabilitation and sells or leases them through various programs to

      interested parties. Rainbow sells structures that have not yet been renovated to

      purchasers, primarily through its rent-to-buy program, which it began in 1992.


[5]   On April 24, 2013, Carter called Rainbow to inquire about home ownership

      through the rent-to-buy program. On April 30, 2013, the Lintners returned to

      Rainbow’s office to fill out their application after choosing the Property, located

      at 910 North Oakland Avenue in Indianapolis. When the Lintners arrived,



      Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 5 of 21
      they were given a document which listed the homes available on that date,

      including the Property. The document given to the Lintners stated, in part:


              THE SELLER(S) OF THE ABOVE PROPERTY HAVE
              NEVER LIVED IN THIS PROPERTY. THE PROPERTY,
              INCLUDING THE CONTENTS (IF ANY) ARE BEING
              SOLD “AS-IS” IN THEIR PRESENT CONDITION. THE
              SELLER(S) NOR RAINBOW REALTY GROUP INC. MAKE
              NO WARRANTIES NOR GUARANTIES AS TO THE
              CONDITION, HABITABILITY AND/OR LAWFUL
              ZONING USE OF THE PROPERTY.
      Plaintiffs’ Ex. 2.


[6]   The Lintners completed an application to purchase the Property and put $100

      down to hold it. Another document given to the Lintners provided that they

      would pay $449 when they signed the Agreement (the first month’s payment

      minus the $100 deposit), and that their regular monthly payments thereafter

      would be $549. Carter signed this document, and placed her initials beside the

      paragraph which stated, “I HEREBY ACKNOWLEDGE AND

      UNDERSTAND THAT ALL PROPERTIES ARE BEING SOLD AS-IS

      WITHOUT ANY WARRANTY OF HABITABILITY.” Plaintiffs’ Ex. 6.


[7]   After they were approved, the Lintners returned to Rainbow’s office on May 3,

      2013, to sign the Agreement, which provided, in part, as follows:


              B. METHOD OF PAYMENT: “Rent to Buy” The Buyer shall
              pay $.00 down payment plus make rental payments to the
              Landlord that are equal to the [principal, interest, taxes, and
              insurance] Payment stated below. The 1st rental payment shall
              be due upon the execution of this agreement. Said payment shall

      Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 6 of 21
              apply to the current month. The Buyer shall make like
              payments, as rent, on the first of each month. Once the Buyer
              has made twenty-four (24) or more rental payments, the parties
              hereto shall execute a “Conditional Sales Contract” (Land
              Contract) form embodying the terms contained herein.
      Plaintiffs’ Ex. 7 at 1.


[8]   The financial terms included a fixed interest rate of 16.30%, thirty years of

      monthly payments of $514, and estimated monthly property taxes of $35 for a

      total monthly payment of $549. Paragraph E of the Agreement provided that


              The Buyer acknowledges and understands that the property is
              owned by a Land Trust and the owner must provide the Buyer
              with a ‘Seller’s Residential Real Estate Disclosure’ under Indiana
              law (IC 24-4.6-2). The Buyer hereby acknowledges the receipt
              of said disclosure form. The Buyer also understands the Seller
              has never lived in the property and has little or no knowledge of
              the properties [sic] condition, and therefore makes no warranties
              of condition and/or habitability. The Buyer has been made
              aware that independent inspections disclosing the condition of
              the property are available, and has been afforded the opportunity
              prior to the execution of this agreement to acquire said
              inspections. The Buyer agrees to purchase the property as “AS-
              IS” (THE OWNER WILL MAKE NO REPAIRS) condition
              and hereby releases the Seller, Landlord and/or Property
              Manager, it’s [sic] agents and/or employees, of any and all
              liability relating to any defect or deficiency affecting the property.
      Plaintiffs’ Ex. 7 at 1 (emphases in original). Paragraph C of the Agreement

      required the Lintners to make their payment on the first day of each month and

      provided that failure to timely make these payments subjected them to the risk

      of eviction.



      Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 7 of 21
[9]    Along with the Agreement, the Lintners also signed a “Purchase Agreement

       Declaration” (“the Declaration”), which was explicitly made part of the

       Agreement. The Declaration provides as follows:


               PURCHASE AGREEMENT INTENT: Purchase Agreement is
               not a “rent with an option to purchase”, buyer is required to
               purchase and seller is required to sell under the agreed purchase
               price, down payment and monthly payment. Because the
               Purchase Agreement mentions the word “rent” [Rainbow]
               wishes to prevent misunderstandings and/or confusion about the
               intent of this agreement. At the time of signing, the buyer has the
               exclusive right to declare his/her intent in this agreement.
       Plaintiffs’ Ex. 8.


[10]   The Lintners checked and initialed the “buying” option on the Declaration:


               My intent is to purchase the property at 910 N. Oakland Av.,
               Indianapolis, IN 46201. I am not renting the property. All
               payments shall apply to the principal and interest shown on the
               amortization schedule provided at closing. If I decide to sell the
               property during the term of our agreement I shall be entitled to
               all profits above my payoff. In Addition [sic], I wish to save
               money by repairing and maintaining the property myself. I do
               not expect the property owner to make any repairs to the
               property and fully understand that I am buying the property “as-
               is” with out [sic] any warranty of habitability.
       Plaintiffs’ Ex. 8. Neither the Agreement nor the Declaration contained any

       provision requiring reversion of the Property to Rainbow.


[11]   The Lintners began arranging for repairs to the Property after signing the

       Agreement, finally agreeing to use Rainbow’s contractors, with the costs of the

       repairs to be spread out in interest-free amounts added to the monthly

       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 8 of 21
       payments. The Lintners agreed to make increased payments of $649 per month

       beginning in June of 2013. The repair work was completed on July 22, 2013,

       and the Lintners moved into the Property on or about August 1, 2013.


[12]   Meanwhile, the Lintners had not made the May, June, or July of 2013

       payments. In July of 2013, Rainbow began eviction proceedings but dismissed

       the complaint and agreed to a payment plan for the arrearage. After more

       arrearages and being given more chances to cure the delinquency, the Lintners

       made their final payment on February 16, 2015. On March 25, 2015, Rainbow

       again filed for eviction in Marion Small-Claims Court, and the Lintners

       appealed the matter to Marion Superior Court.


[13]   On June 8, 2015, Rainbow filed a complaint in Marion Superior Court to

       terminate the Agreement and for immediate possession of the Property. On

       July 29, 2015, the Lintners answered Rainbow’s complaint, raising defenses

       and counterclaims, including allegations of fraud and misrepresentation,

       deceptive acts pursuant to Indiana Code section 24-9-3-7, and failure to meet

       (and misstatement of) its obligations as a landlord pursuant to Indiana Code

       chapters 32-31-1 and 32-31-8.


[14]   On May 17, 2016, the Lintners filed for partial summary judgment on their

       claims that the Agreement was a lease and that Rainbow breached the warranty

       of habitability and made false or deceptive statements regarding its ability to

       disclaim the warranty. On August 11, 2016, the trial court granted the

       Lintners’ motion for partial summary judgment, ruling that (1) for the first two


       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 9 of 21
       years the Agreement was a lease; (2) the Landlord-Tenant Act therefore

       governed the Agreement; (3) Rainbow was liable for breaching the warranty of

       habitability; and (4) Rainbow made false or deceptive statements.


[15]   A bench trial was held on remaining issues on December 6, 2016, and January

       10 and March 22, 2017. On June 8, 2017, the trial court entered its judgment,

       sustaining its earlier entry of partial summary judgment in favor of the Lintners.

       As for damages, the trial court concluded that while Rainbow had breached the

       warranty of habitability, the Lintners had not paid an unconscionable amount

       pursuant to the Agreement, were not entitled to the return of their payments,

       and were not entitled to damages for unjust enrichment. The trial court

       awarded the Lintners $1000 in compensatory and $3000 in punitive damages

       for what it found were Rainbow’s fraudulent misrepresentations regarding the

       nature of the Agreement and also awarded $3000 in attorney’s fees. Rainbow

       contends that the trial court erred in concluding that the Agreement was a lease

       and that Rainbow committed actual fraud. The Lintners cross-appeal,

       contending that the trial court abused its discretion in awarding them only

       $3000 in attorney’s fees.


                                  Discussion and Decision
                                              Direct Appeal Issues

                         I. Whether the Agreement Is a Lease
[16]   Rainbow challenges the trial court’s grant of partial summary judgment to the

       Lintners, specifically its determination that the Agreement was a lease subject

       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 10 of 21
       to the Landlord-Tenant Act. In Indiana, pretrial summary judgment rulings are

       reviewable after trial. Keith v. Mendus, 661 N.E.2d 26, 35 (Ind. Ct. App. 1996),

       trans. denied. As the moving party on summary judgment, the burden was on

       the Lintners to make a prima facie showing that there were no genuine issues of

       material fact and that they were entitled to judgment as a matter of law. Morris

       v. Crain, 71 N.E.3d 871, 879 (Ind. Ct. App. 2017). The trial court’s entry of

       partial summary judgment is reviewed under a de novo standard of review. Id.

       When reviewing an entry of summary judgment, this Court does not weigh the

       evidence but considers the facts in the light most favorable to the nonmoving

       party. Reed v. Luzny, 627 N.E.2d 1362, 1363 (Ind. Ct. App. 1994), trans. denied.

       Like the trial court, this Court must determine whether there is a genuine issue

       of material fact and whether the moving party is entitled to judgment as a

       matter of law. Freidline v. Shelby Ins. Co., 774 N.E.2d 37, 39 (Ind. 2002).


[17]   The central question of this case is whether the Agreement was a lease governed

       by the Landlord-Tenant Act, and to answer this question, we must examine the

       provisions of both the Landlord-Tenant Act and the Agreement. An issue of

       statutory construction presents a question of law which is reviewed de novo on

       appeal. See Chrysler Group, LLC v. Review Bd. of the Ind. Dep’t. of Workforce Dev.,

       960 N.E.2d 118, 124 (Ind. 2012); State v. Eichorst, 957 N.E.2d 1010, 1012 (Ind.

       Ct. App. 2011), trans. denied. We owe no deference to the trial court’s statutory

       interpretation. Art Country Squire, L.L.C. v. Inland Mortg. Corp., 745 N.E.2d 885,

       889 (Ind. Ct. App. 2001). Similarly, issues of contract interpretation are pure

       questions of law, which we also decide de novo. George S. May Int’l Co. v. King,

       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 11 of 21
       629 N.E.2d 257, 260 (Ind. Ct. App. 1994), trans. denied. We recognize that the

       unambiguous language of a contract is conclusive upon the contracting parties

       and the courts. Turnpaugh v. Wolf, 482 N.E.2d 506, 508 (Ind. Ct. App. 1985).


[18]   Indiana Code section 32-31-2.9-3 defines the scope of the Landlord-Tenant Act,

       providing that it “appl[ies] to rental agreements for dwelling units located in

       Indiana.” When the Landlord-Tenant Act applies, it requires a landlord to

       warrant a rental property’s habitability, providing that, inter alia, “[a] landlord

       shall [… d]eliver the rental premises to a tenant in compliance with the rental

       agreement, and in a safe, clean, and habitable condition.” Ind. Code § 32-31-8-

       5. There is no dispute that if the Landlord-Tenant Act applied to the

       Agreement, the Agreement violated the Act’s warranty of habitability for rental

       premises. The question is whether the Landlord-Tenant Act applied to the

       Agreement.


[19]   While the Landlord-Tenant Act does not define “lease,” it broadly defines a

       “rental agreement” as “an agreement together with any modifications,

       embodying the terms and conditions concerning the use and occupancy of a

       rental unit.”3 Ind. Code § 32-31-3-7(a). This limited guidance for determining

       whether a particular instrument is a lease is not quite sufficient to dispose of the




       3
        While the parties seem to assume, and we agree, that a lease would qualify as a “rental agreement,” the
       Landlord-Tenant Act seems to have been drafted to also cover rental agreements that are not in written form.

       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018                  Page 12 of 21
       question in this case. Fortunately, the Indiana Supreme Court has provided us

       with the additional guidance required.


[20]   In a line of cases, the Indiana Supreme Court has made it clear that a lease,

       among other requirements, lasts a definite term and ends with the reversion of

       the real property to the grantor. In 1845, the Court stated that


               [n]o particular form is necessary to make a good lease. Any
               words expressive of the intention of the parties, one to part with
               and the other to take the possession of premises for a definite time,
               whether in the form of “a license, covenant, or agreement,” will
               constitute a good demise for years.
       Munson v. Wray, 7 Blackf. 403, 404 (Ind. 1845) (citation omitted and emphasis

       added). In 1885, the Indiana Supreme Court reiterated that a lease must have

       an endpoint: “But it may be said, in general terms that where the conveyance

       of an estate in land, subordinate to that of the grantor, to a grantee, upon a valid

       consideration, and for a definite term, is made, the instrument making the

       conveyance is a lease.” New York, Chicago & St. Louis Ry. Co. v. Randall, 102 Ind.

       453, 457, 26 N.E. 122, 123 (1885) (emphasis added).


[21]   In the 1892 case of Haywood v. Fulmer, the Indiana Supreme Court adopted the

       following definition of “lease,” which now also explicitly required the

       previously-implied reversion to the original grantor: “‘A lease at the common

       law is a grant or assurance of a present or future interest for life, for years, or at

       will, in lands or other property of a demisable nature, a reversion being left in the

       party from whom the grant or assurance proceeds.’” 158 Ind. 658, 660, 32 N.E. 574,



       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 13 of 21
       575 (1892) (citation omitted and emphasis added). The Court was even more

       emphatic about the reversion requirement two decades later:


               The effect of a lease is to give the lessee the right to the
               possession of the property for a term of years, or at the pleasure
               of the parties. It is within the contemplation of every lease that the
               property shall at some time, definitely fixed, or to be determined later,
               revert to the lessor.
       Mendenhall v. 1st New Church Soc’y of Indpls., 177 Ind. 336, 342, 98 N.E. 57, 60

       (1912) (emphasis added).


[22]   Although the question has been revisited infrequently since Mendenhall, the

       results have been consistent with that case and its predecessors. In 1914, this

       court stated that “[a] lease of real estate is a contract by which, ordinarily the

       owner divests himself of the possession and use of his property, in favor of the

       lessee, upon a valid consideration, for a definite term.” Spiro v. Robertson, 57

       Ind. App. 229, 234, 106 N.E. 726, 728 (1914) (citations omitted). In 1932, we

       said, “‘it is one of the essentials of a lease, that it should contain a reversion in

       favor of the party from whom the grant or assurance proceeds.’” Indian Ref. Co.

       v. Roberts, 97 Ind. App. 615, 630, 181 N.E. 283, 288 (1932) (quoting Smiley v.

       Van Winkle, 6 Cal. 605, 606 (1856)). Most recently, we noted that “[i]t has long

       been the law in Indiana that ‘[a] lease of real estate is a contract by which,

       ordinarily[] the owner divests himself of the possession and use of his property,

       in favor of the lessee, upon a valid consideration, for a definite term.’”

       Smyrniotis v. Marshall, 744 N.E.2d 532, 535 (Ind. Ct. App. 2001) (quoting Spiro,

       57 Ind. App. at 234, 106 N.E. at 728), trans. denied. Finally, the Landlord-


       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018       Page 14 of 21
       Tenant Act itself recognizes that a defining characteristic of “rental agreements”

       is that they end at some point: “The term [rental agreement] includes an

       agreement, regardless of what the agreement is called, that satisfies the

       following: […] (2) The agreement provides for a rental period, explicitly or

       implicitly, regardless of the term of the rental period.” Ind. Code § 32-31-3-

       7(b). Our research has revealed no indication that the propositions for which

       the cited authority stands have been overturned, abrogated, limited, or even

       questioned, either judicially or legislatively.


[23]   In light of the above authority, the requirement that a lease contemplate a

       definite term and a reversion to the lessor remains good law and, insofar as it

       was issued by the Indiana Supreme Court, is absolutely binding on this court:


               We are bound by the decisions of our supreme court. See In re
               Petition to Transfer Appeals, 202 Ind. 365, 376, 174 N.E. 812, 817
               (1931). Supreme court precedent is binding upon us until it is
               changed either by that court or by legislative enactment. Id.
               While Indiana Appellate Rule 65(A) authorizes this Court to
               criticize existing law, it is not this court’s role to “reconsider”
               supreme court decisions.
       Dragon v. State, 774 N.E.2d 103, 107 (Ind. Ct. App. 2002), trans. denied.


[24]   Turning to the Agreement, it did not require that it would end after a definite

       term, much less end with reversion of the Property to Rainbow, which are

       necessary features of all leases in Indiana. We are therefore bound to conclude

       that the Agreement was not a lease and that the Landlord-Tenant Act’s

       provisions did not govern it.


       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 15 of 21
[25]   The Lintners nonetheless argue that the Agreement was actually a lease because

       it contained many features they characterize as lease-like: it (1) required them

       to make monthly payments which generated no immediate equity; (2) allowed

       them to be evicted, not foreclosed; (3) explicitly referred to the first twenty-four

       payments as “rent”; and (4) placed restrictions on their use of the Property,

       such as limitations on plaster and stud removal and forbidding pets and unused

       vehicles. The Lintners characterize the Agreement as a “contract which […]

       mingled [the] concepts of lease and purchase, selectively using them to

       exclusively benefit [Rainbow].” Appellees’/Cross-Appellants’ Brief p. 17.

       While we agree that many of the identified provisions are like those generally

       found in leases (as opposed to sales agreements), none of this makes the

       Agreement a lease if it did not also require reversion to Rainbow at some point.


[26]   This is not quite the end of our inquiry, however. In their Appellees’ brief, the

       Lintners argue that even if the Agreement is not a lease, it was created to avoid

       application of the Landlord-Tenant Act and is thereby subject to its provisions.

       “The [Landlord-Tenant Act does] not apply to [… o]ccupancy under a contract

       of sale of a rental unit […] if the occupant is the purchaser […] unless the

       arrangement was created to avoid application of [the Landlord-Tenant Act.]”

       Ind. Code § 32-31-2.9-4 (statutory provisions reordered for clarity).


[27]   Avoidance, however, was not advanced as a basis for relief by the Lintners in

       the trial court and is therefore waived for appellate consideration. “A party

       may not raise an issue for the first time […] on appeal that was not raised in the

       trial court.” Rodgers v. Rodgers, 503 N.E.2d 1255, 1257 (Ind. Ct. App. 1987),

       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 16 of 21
       trans. denied. That said, Rainbow began its rent-to-buy program in 1992, over

       ten years before the Landlord-Tenant Act was enacted, and the Lintners point

       to nothing specific in the record, other than the Agreement itself, as evidence

       that the Agreement was created to avoid application of the Landlord-Tenant

       Act. While the Lintners characterize the Agreement as “a tangled and

       confusing array of provisions [that impose] additional duties of ‘homeowners’

       but none of the benefits, in a high-risk rental contract with severe consequences

       for even a minor breach[,]” Appellees’/Cross-Appellants’ Br. p. 38, this does

       not constitute evidence that it was created to avoid application of the Landlord-

       Tenant Act. In fact, the Declaration explicitly provides that it “is not an

       attempt to waiver or avoid application of the residential landlord-tenant

       statutes; its purpose is to clarify the intent of the agreement and to spell out

       financial responsibilities for repair and maintenance.” Ex. 8. Even if the

       Linters had properly preserved this issue, our review of the record reveals

       nothing that would support a finding that the Agreement was created to avoid

       application of the Landlord-Tenant Act.


[28]   Finally, while the Lintners do not argue (and the trial court did not conclude)

       that the Agreement is unconscionable, it is fair to say that the Lintners have

       consistently emphasized what they characterize as the predatory nature of the

       Agreement and argue that a liberal construction of the Landlord-Tenant Act—

       and a narrow construction of its exceptions—is sound public policy. Even if we

       accept the proposition that a broad reading of the Landlord-Tenant Act is




       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 17 of 21
       sound public policy, it simply cannot be read broadly enough to make a lease

       out of something that lacks some of a lease’s most fundamental characteristics.4


                              II. Actual Fraud by Misrepresenting
                                  the Nature of the Agreement
[29]   Rainbow contends that the trial court erred in concluding that it had committed

       fraud by misrepresenting the true nature of the Agreement, namely that

       Rainbow was not required to warrant the Property’s habitability. Actual fraud

       consists of the following: “(1) a material representation of a past or existing fact

       by the party to be charged that; (2) was false; (3) was made with knowledge or

       reckless ignorance of its falsity; (4) was relied upon by the complaining party;

       and (5) proximately caused the complaining party’s injury.” Ruse v. Bleeke, 914

       N.E.2d 1, 10 (Ind. Ct. App. 2009). We have concluded that the Agreement was

       not a lease and therefore not subject to the provisions of the Landlord-Tenant

       Act and its warranty of habitability. Therefore, any representations to that

       effect were not, in fact, false, which by itself fatally undercuts any finding of

       actual fraud and requires reversal of the trial court’s judgment to that effect.




       4
         The various amici also argue, inter alia, that devices such as the Agreement are deceptive and predatory,
       shift all of the risk and cost of the transaction onto the buyer, and are used by companies to exploit persons
       who they know will be very unlikely to be able to make payments over time. Some amici provide background
       on attempts over the years to circumvent consumer-protection laws by real-estate speculators and note that
       several surrounding states have recently amended their laws to curb such practices. There is no attempt to
       characterize these arguments as based on anything other than public policy grounds, and it is well-settled that
       “public policy is a matter for the General Assembly subject only to constitutional limitations on legislative
       authority.” Murray v. Conseco, Inc., 795 N.E.2d 454, 457 (Ind. 2003).

       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018                    Page 18 of 21
                                               Cross-Appeal Issue

                                         III. Attorney’s Fees
[30]   Pursuant to the Landlord-Tenant Act,


               [i]f the tenant is the prevailing party in an action under this
               section, the tenant may obtain any of the following, if
               appropriate under the circumstances:
                    (1) Recovery of the following:
                        (A) Actual damages and consequential damages.
                        (B) Attorney’s fees and court costs.
       Ind. Code § 32-31-8-6(d).


[31]   The Lintners contend that the trial court abused its discretion in awarding them

       only $3000 in attorney’s fees after they submitted an affidavit of attorney’s fees

       in the amount of $35,475. Because we have concluded that the trial court

       erroneously entered judgment in favor of the Lintners in all respects, however,

       the Lintners are not the “prevailing party in an action” pursuant to the

       Landlord-Tenant Act and are not entitled to seek recovery of any of their

       attorney’s fees.



                                                Conclusion
[32]   The Agreement admittedly has some characteristics that are commonly

       associated with sales contracts and some commonly associated with leases. On

       the one hand, the Agreement requires buyers to pay for taxes, insurance, and

       necessary repairs; allows them to build equity (eventually); and provides that


       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 19 of 21
       they may sell the property and keep the profit, which are all provisions

       commonly associated with sales contracts and ownership. On the other hand,

       the Agreement does not provide for the immediate accumulation of equity,

       places somewhat severe restrictions on the use and alteration of the property,

       and allows Rainbow to evict in the event of default rather than resort to

       foreclosure. Devices such as the Agreement seem to be a sort of hybrid, and an

       argument could be made that neither the current law pertaining to sales

       contracts nor the current law pertaining to leases is adequate to address the

       issues such devices raise. The Lintners and the amici also argue that rent-to-

       own contracts such as the Agreement are against public policy, alleging that

       they are used to prey on ignorant and unsophisticated “buyers” lured by the

       dream of home ownership who almost invariably end up with neither the home

       nor their investment in it. This may happen in some cases. Such concerns,

       however, are beyond the scope of this opinion and are the province of the

       General Assembly.


[33]   That said, the central legal issue in this case is whether the Agreement was a

       lease, and we have concluded that it was not. Consequently, we reverse the

       trial court’s entry of summary judgment in favor of the Lintners based on the

       conclusion that Rainbow violated the Landlord-Tenant Act’s warranty of

       habitability. Moreover, we reverse the trial court’s judgment that Rainbow

       committed actual fraud by misrepresenting the nature of the Agreement.

       Finally, we reverse the award of attorney’s fees to the Lintners. We reverse the

       judgment of the trial court and remand with instructions to enter summary


       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 20 of 21
       judgment in favor of Rainbow on its action for eviction and immediate

       possession of the Property and for further proceedings, as necessary.


[34]   The judgment of the trial court is reversed and remanded with instructions.


       Baker, J., and Crone, J., concur.




       Court of Appeals of Indiana | Opinion 49A02-1707-CC-1473 | September 27, 2018   Page 21 of 21
