MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                  FILED
regarded as precedent or cited before any
                                                                  Aug 17 2017, 5:59 am
court except for the purpose of establishing
the defense of res judicata, collateral                                CLERK
                                                                   Indiana Supreme Court
estoppel, or the law of the case.                                     Court of Appeals
                                                                        and Tax Court




ATTORNEYS FOR APPELLANT                                  ATTORNEY FOR APPELLEE
Michael C. Cooley                                        Reynold T. Berry
Eric N. Allen                                            Rubin & Levin, P.C.
Allen Wellman McNew Harvey, LLP                          Indianapolis, Indiana
Greenfield, Indiana



                                           IN THE
    COURT OF APPEALS OF INDIANA

DSA Property, LLC,                                       August 17, 2017
Appellant-Defendant-Counterclaimant,                     Court of Appeals Case No.
                                                         41A01-1610-PL-2252
        and,                                             Appeal from the Johnson Superior
                                                         Court
HJA Property, LLC,
                                                         The Honorable K. Mark Loyd,
Appellant-Counterclaimant,                               Special Judge
                                                         Trial Court Cause No.
        v.                                               41D01-1110-PL-83
Old National Bank,

Appellee-Plaintiff-Counterdefendant.




Barnes, Judge.




Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017     Page 1 of 15
                                             Case Summary
[1]   DSA Property, LLC, (“DSA”) and HJA Property, LLC, (“HJA”) appeal the

      trial court’s grant of summary judgment to Old National Bank (“Bank”) on the

      Bank’s complaint and DSA and HJA’s counterclaim. We affirm in part,

      reverse in part, and remand.


                                                     Issue
[2]   DSA and HJA raise two issues, which we consolidate and restate as whether

      the trial court properly found that DSA and HJA were not entitled to funds that

      had been assigned to the Bank.


                                                     Facts
[3]   Daniel Alyea and Sandra Alyea owned 9.015 acres in Greenwood, and H. Joan

      Alyea owned another 9.015 acres in Greenwood. In March 2003, the Alyeas

      entered into a Development Agreement with Wilderness Development, Inc.

      (“Wilderness”) to sell the properties as lots in a commercial development.

      Under the Development Agreement, Wilderness agreed to provide development

      services and supervision of the development project in exchange for fifty-

      percent of the proceeds from the sale of lots on the property. The Development

      Agreement provided in part:


              Wilderness shall be solely responsible for the development of the
              Real Estate with all expenses and development costs being the
              sole responsibility of Wilderness. Wilderness agrees to
              indemnify and hold Alyea harmless for the payment of any real
              estate development expenses, including attorney fees, which are

      Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 2 of 15
        the responsibility of Wilderness under this Agreement.
        Wilderness agrees not to permit any Mechanic’s Liens to be filed
        against the Real Estate and, if any are filed, agrees to promptly
        resolve any dispute which resulted in the creation of the Lien.
        Wilderness further agrees to indemnify and hold Alyea harmless
        from the payment of any Mortgage Lien debt or any other debts
        which Wilderness may incur associated with the development of
        the Real Estate. Wilderness agrees to indemnify Alyea from any
        expenses that may be incurred as a result of the filing of any
        Liens against the Real Estate due to transactions of Wilderness.


Appellants’ App. Vol. II p. 54-55. The Development Agreement also provided:


        Wilderness will be required to incur debt to finance its operations
        for the development of the Real Estate, including but not limited
        to subdivision, infrastructure, zoning, and government approvals,
        and other improvements required to develop the Wilderness. No
        portion of this Agreement shall be interpreted so as to require
        Alyea to incur any personal liability on the debt so incurred. The
        real estate of J. Alyea, however, as indicated above, will be used
        as collateral to support the financing of the development. J.
        Alyea agrees, as required by Wilderness’s mortgage lender, to
        subordinate her interest and in the use of the Real Estate as
        collateral for the debt incurred by Wilderness for the purpose of
        development, as contemplated herein. Repayment of any
        mortgage debt incurred by Wilderness shall be pursuant to the
        terms of the applicable debt instruments, but the subordination
        and use of the Real Estate as collateral shall be maintained until
        the mortgage debt is paid in full.


                                             *****


        All development expenses . . . are the sole responsibility of
        Wilderness and shall be paid by Wilderness out of Wilderness’
        one-half of the gross proceeds without any reimbursement from

Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 3 of 15
              Alyea. All expenses, debts and Mechanic’s Liens incurred by the
              developer in improving the Real Estate shall be paid from
              Wilderness’s portion of the sale proceeds. . . . Wilderness will be
              entitled to receive a development fee of 50% of the gross sale
              price of each tract, after sales expenses . . . . All expenses, debts
              and Mechanic’s Liens incurred by the developer in improving the
              Real Estate shall be paid from Wilderness’s portion of the sales
              proceeds.


              Each party shall bear its own expenses incurred in the
              negotiation of or preparation of this Agreement, the formation of
              any limited liability companies or corporations, or any similar
              expenses incurred in the ongoing operation of the development.


      Id. at 55-56. Daniel Alyea and Sandra Alyea later assigned their interests in the

      Development Agreement to DSA, and H. Joan Alyea transferred her interest in

      the Development Agreement to HJA.


[4]   In May 2007, Wilderness executed a promissory note with an original principal

      balance of over $1,400,000.00 in favor of the Bank.1 Pursuant to the

      Development Agreement, to secure the note, HJA executed a mortgage on its

      real estate. Additionally, Wilderness executed an “Additional Obligations

      Under and Assignment of Rights Under Development Agreement and Interests

      in Purchase Agreements” (“Assignment”). Id. at 39. The Assignment

      provided: “[Wilderness] hereby assigns and transfers over to [Bank], its

      successors and assigns, all of its right, title and interest in and to any payments,



      1
       The note was issued by Indiana Bank and Trust Company, which was acquired by the Bank in September
      2012.

      Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 4 of 15
      proceeds or compensation to be paid under the Development Agreement . . .

      and the rights to receive payments under purchase agreements . . . .” Id. In the

      event of a default by Wilderness on the note, the Bank had “the right to possess

      and use and the right to enforce and enjoy the benefits of the Development

      Agreement and Purchaser Contracts” and “full power and authority to request,

      demand, collect, receive and receipt for performance under the Development

      Agreement and any proceeds thereof . . . .” Id. Additionally, DSA and HJA

      executed a consent (“Consent Agreement”) that provided: “The undersigned, as

      the Sellers, and the parties to whom the Premises has been transferred hereby

      consent to the foregoing Assignment and acknowledge the rights of [the Bank]

      in and to the proceeds from the sale of the Premises.” Id. at 48.


[5]   Wilderness failed to pay the note and, in May 2010, the Bank filed a complaint

      for money judgment and foreclosure against Wilderness and HJA. In October

      2011, the trial court entered judgment in favor of the Bank and foreclosed the

      HJA property. However, after the foreclosure of the property, the Bank is still

      owed more than $500,000.


[6]   In October 2011, the Bank filed a complaint against DSA. The Bank alleged

      that it was entitled to receive Wilderness’s fifty-percent of the proceeds of the

      sale of the remaining DSA real estate. The Bank sought a declaratory

      judgment, including a judgment that the “Assignment is enforceable against

      DSA and DSA must render performance under the Assignment in favor of [the

      Bank] as if [the Bank] were Wilderness until the debt owed by Wilderness to

      [the Bank] is paid in full.” Id. at 27.

      Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 5 of 15
[7]   DSA filed an answer to the complaint, and DSA and HJA filed a counterclaim

      against the Bank. In the counterclaim, DSA and HJA contended that the

      Development Agreement was void and/or voidable because Wilderness had

      breached the agreement. They also alleged that they had “incurred substantial

      damages by reason of the default” and that they were entitled to “[a] judgment

      for setoff against [the Bank] for any amounts that DSA might owe to [the Bank]

      in the future.” Id. at 65. In 2013, DSA acquired HJA and its claim for damages

      against Wilderness.


[8]   The Bank filed a motion for summary judgment on its complaint and on the

      counterclaim.2 The Bank argued that, under Indiana Code Section 26-1-9.1-

      404,3 it could not be held liable to DSA or HJA for Wilderness’s breach. The




      2
        In 2009, Wilderness sold to DSA its interest in one-half of the proceeds from the sale of Lot 10. The parties
      stipulated that DSA owned Lot 10 “free and clear” of any claim by the Bank and that “DSA may retain
      100% of the proceeds from DSA’s sale of ‘Lot 10.’” Appellants’ App. Vol. II p. 178. The Bank makes no
      claim to any proceeds from the sale of Lot 10.
      3
       Indiana Code Section 26-1-9.1-404 is part of the Uniform Commercial Code and addresses rights acquired
      by an assignee and claims and defenses against an assignee. It provides:
               (a)      Unless an account debtor has made an enforceable agreement not to assert
                        defenses or claims, and subject to subsections (b) through (e), the rights of an
                        assignee are subject to:
                        (1)      all terms of the agreement between the account debtor and assignor and
                                 any defense or claim in recoupment arising from the transaction that
                                 gave rise to the contract; and
                        (2)      any other defense or claim of the account debtor against the assignor
                                 which accrues before the account debtor receives a notification of the
                                 assignment authenticated by the assignor or the assignee.
               (b)      Subject to subsection (c) and except as otherwise provided in subsection (d), the
                        claim of an account debtor against an assignor may be asserted against an assignee
                        under subsection (a) only to reduce the amount the account debtor owes.

      Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017               Page 6 of 15
      Bank also argued that DSA had consented to Wilderness’s assignment to the

      Bank, that the Bank was entitled to Wilderness’s fifty-percent share of the

      proceeds, and that DSA was not damaged by Wilderness’s breach. The parties

      stipulated that Wilderness’s only breach of the Development Agreement was its

      failure to pay its loan from the Bank.


[9]   In response, DSA and HJA argued that Wilderness’s default on the note was a

      breach of the Development Agreement. They argued that the Bank was only

      entitled to proceeds to which Wilderness would be entitled to receive and that

      “if Wilderness is not entitled to receive any proceeds from the sale of the DSA

      real estate pursuant to the terms of the Development Agreement (and

      Wilderness’s breach thereof), then neither is [the Bank].” Id. at 154. DSA

      alleged that it “incurred legal costs and attorney fees as a direct result of

      Wilderness’s breach” and that HJA “incurred both legal costs and attorney fees,

      and the loss of its investment and real estate as a direct result of Wilderness’s

      breach of the Development Agreement.” Id. at 155. According to DSA and




              (c)     This section is subject to law other than IC 26-1-9.1 that establishes a different rule
                      for an account debtor who is an individual and who incurred the obligation
                      primarily for personal, family, or household purposes.
              (d)     In a consumer transaction, if a record evidences the account debtor’s obligation,
                      law other than IC 26-1-9.1 requires that the record include a statement to the effect
                      that the account debtor’s recovery against an assignee with respect to claims and
                      defenses against the assignor may not exceed amounts paid by the account debtor
                      under the record, and the record does not include such a statement, the extent to
                      which a claim of an account debtor against the assignor may be asserted against
                      an assignee is determined as if the record included such a statement.
              (e)     This section does not apply to an assignment of a health-care-insurance receivable.



      Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017             Page 7 of 15
       HJA, they are entitled to an “appropriate amount of Wilderness’s portion of the

       sale proceeds . . . to compensate them for the damages caused and debts

       incurred by Wilderness.” Id. DSA and HJA argued that, pursuant to their

       counterclaim, their damages are recoverable in the “form of set off against any

       sums . . . owed to Wilderness under the Development Agreement.” Id. at 158.


[10]   After a hearing, the trial court granted the Bank’s motion for summary

       judgment regarding its complaint and the counterclaim. The trial court found:


               There is no genuine dispute that Old National is entitled to
               proceeds from the sale of the subject realty which would be
               owing to Wilderness. However, the Defendants argue that a
               portion owning to Wilderness is subject to their indemnity claims
               for their alleged damages arising from the mortgage foreclosure.


       Id. at 13. The trial court concluded that, under Indiana Code Section 26-1-9.1-

       404, “as an assignee of Wilderness, Old National is not obligated to DSA and

       HJA for the amount of damages owed to them by Wilderness.” Id. at 15. The

       trial court determined that “Old National is entitled to the amounts due

       Wilderness under the Development Agreement, which are fifty percent (50%) of

       the Net Sale Proceeds from the sale of the subject realty owed by DSA after

       deducting sales expenses, as defined by the Development Agreement.” Id.

       DSA filed a motion to correct error arguing that the trial court misinterpreted

       Indiana Code Section 26-1-9.1-404, and the trial court denied the motion to

       correct error. DSA and HJA now appeal.




       Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 8 of 15
                                                   Analysis
[11]   DSA and HJA challenge the trial court’s grant of summary judgment to the

       Bank on the Bank’s complaint and on DSA’s and HJA’s counterclaim.

       Summary judgment is appropriate only when the moving party shows there are

       no genuine issues of material fact for trial and the moving party is entitled to

       judgment as a matter of law. Schoettmer v. Wright, 992 N.E.2d 702, 705 (Ind.

       2013); see also Ind. Trial Rule 56(C). Once that showing is made, the burden

       shifts to the non-moving party to rebut. Schoettmer, 992 N.E.2d at 705-06.

       When ruling on the motion, the trial court construes all evidence and resolves

       all doubts in favor of the non-moving party. Id. at 706. We review the trial

       court’s grant of summary judgment de novo, and we take “care to ensure that

       no party is denied his day in court.” Id.


[12]   This litigation concerns the Bank’s right to receive Wilderness’s fifty-percent of

       the proceeds of lot sales from DSA’s portion of the development. The Bank is

       not claiming that it is entitled to any of DSA’s portion of the lot sale proceeds.

       Rather, DSA and HJA are claiming that they are entitled to at least a portion of

       Wilderness’s fifty-percent, which was assigned to the Bank, because, as a result

       of Wilderness’s default on the note, DSA and HJA incurred attorney fees and

       HJA lost its property. Resolution of this issue requires that we interpret the

       Development Agreement, the Assignment, and the Consent Agreement.


[13]   “‘The construction of a written contract is a pure question of law.’” The

       Winterton, LLC v. Winterton Inv’rs, LLC, 900 N.E.2d 754, 759 (Ind. Ct. App.


       Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 9 of 15
       2009) (quoting Four Seasons Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d 494,

       501 (Ind. Ct. App. 2007)), trans. denied. Our duty is to interpret a contract to

       ascertain the intent of the parties. Id. “When interpreting a contract, we

       attempt to determine the intent of the parties at the time the contract was made

       by examining the language used in the instrument to express their rights and

       duties.” Id. Where the language of the contract is unambiguous, we determine

       the parties’ intent from the four corners of the document. Id. The unambiguous

       language of a contract is conclusive upon the parties to the contract as well as

       upon the court. Id. We will neither construe unambiguous provisions nor add

       provisions not agreed upon by the parties. Id.


[14]   A contract is ambiguous when a reasonable person could find its terms

       susceptible to more than one interpretation. Id. If a contract is ambiguous, its

       meaning is to be determined by extrinsic evidence and its construction is a

       matter for the fact finder. Id. When trying to ascertain the intent of the parties,

       we will read the contract as a whole. Id. Additionally, we will make all

       attempts to construe the language in a contract so as not to render any words,

       phrases, or terms ineffective or meaningless. Id. We must accept an

       interpretation of the contract that harmonizes its provisions rather than one that

       causes the provisions to conflict. Id.


[15]   In its motion for summary judgment, the Bank argued that Wilderness had

       assigned its right to the fifty-percent of the proceeds to the Bank in the event of

       default, that DSA consented to the Assignment, that DSA was entitled to only

       fifty-percent of the proceeds under the Development Agreement, and that
       Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 10 of 15
       Indiana Code Section 26-1-9.1-404 prevented DSA from asserting a claim

       against Wilderness’s fifty-percent proceeds assigned to the Bank. DSA and

       HJA responded that, under the Development Agreement, they were entitled to

       compensation for their damages caused by Wilderness, that Indiana Code

       Section 26-1-9.1-404 was inapplicable, and that they were entitled to a set off

       from the fifty-percent proceeds assigned to the Bank.


[16]   On appeal, DSA and HJA contend that they are entitled to compensation for

       legal costs and attorney fees sustained as a result of this litigation and “related

       to ancillary legal issues related to Wilderness’s breach” and HJA’s loss of its

       proceeds from lot sales by the foreclosure of its property. Appellants’ App. Vol.

       II p. 170. We begin by noting that the Development Agreement specifically

       provided: “The real estate of [HJA] . . . will be used as collateral to support the

       financing of the development. [HJA] agrees, as required by Wilderness’s

       mortgage lender, to subordinate her interest and in the use of the Real Estate as

       collateral for the debt incurred by Wilderness for the purpose of development,

       as contemplated herein.” Id. at 55. HJA then entered into a mortgage, which

       was later foreclosed. HJA knowingly used its property as collateral in

       developing the property and subordinated its interest to the Bank. HJA cannot

       now try to recover its lost investment from the Bank by claiming funds that

       were also assigned to the Bank as collateral.


[17]   Moreover, we note that, in support of their arguments, DSA and HJA rely on

       the following portions of the Development Agreement:



       Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 11 of 15
        Wilderness further agrees to indemnify and hold [DSA and HJA]
        harmless from the payment of any Mortgage Lien debt or any
        other debts which Wilderness may incur associated with the
        development of the Real Estate. Wilderness agrees to indemnify
        [DSA and HJA] from any expenses that may be incurred as a
        result of the filing of any Liens against the Real Estate due to
        transactions of Wilderness.


Id. at 54-55. The first sentence relied upon by DSA and HJA pertains to

Wilderness’s agreement to indemnify DSA and HJA for debts “which

Wilderness may incur.” Id. at 55. DSA and HJA’s attorney fees are debts

incurred by DSA and HJA, not Wilderness, and the foreclosure of HJA’s

property is not a debt incurred by Wilderness. Consequently, the first sentence

is inapplicable here. Even if we were to assume that the second sentence can be

construed to require Wilderness to indemnify DSA and HJA for attorney fees

and the foreclosure related to Wilderness’s breach, we find the following

portions of the Development Agreement relevant:

        All development expenses . . . are the sole responsibility of
        Wilderness and shall be paid by Wilderness out of Wilderness’
        one-half of the gross proceeds without any reimbursement from
        Alyea. All expenses, debts and Mechanic’s Liens incurred by the
        developer in improving the Real Estate shall be paid from
        Wilderness’s portion of the sale proceeds. . . . Wilderness will be
        entitled to receive a development fee of 50% of the gross sale
        price of each tract, after sales expenses . . . . All expenses, debts
        and Mechanic’s Liens incurred by the developer in improving the
        Real Estate shall be paid from Wilderness’s portion of the sales
        proceeds.




Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 12 of 15
               Each party shall bear its own expenses incurred in the
               negotiation of or preparation of this Agreement, the formation of
               any limited liability companies or corporations, or any similar
               expenses incurred in the ongoing operation of the development.


       Id. at 55-56. This provision requires that expenses incurred by Wilderness will be

       paid out of its fifty-percent of the proceeds. Nothing in this provision allows

       attorney fees incurred by DSA and HJA or the loss of HJA’s property to be

       reimbursed from Wilderness’s portion of the sale proceeds, which were

       assigned to the Bank.


[18]   Finally, we note that DSA and HJA signed a Consent Agreement that

       provided: “The undersigned, as the Sellers, and the parties to whom the

       Premises has been transferred hereby consent to the foregoing Assignment and

       acknowledge the rights of [the Bank] in and to the proceeds from the sale of the

       Premises.” Id. at 48. As with the Development Agreement, nothing in the

       Consent Agreement allowed DSA and HJA to withhold monies from

       Wilderness’s fifty-percent of the proceeds, which was assigned to the Bank. If

       DSA and HJA wanted to be paid the funds indemnified by Wilderness through

       the fifty-percent proceeds, they could have included such a provision in the

       Development Agreement and negotiated such a provision with the Bank in the

       Assignment and Consent Agreement. However, they did not do so, and we

       will not rewrite their agreements to include such provisions.


[19]   Because the Agreements did not allow DSA and HJA to claim Wilderness’s

       portion of the fifty-percent proceeds as reimbursement for their alleged


       Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 13 of 15
       indemnity damages, we need not address the parties’ arguments regarding

       Indiana Code Section 26-1-9.1-404.4 The trial court properly granted the Bank’s

       motion for summary judgment on its claim and on the counterclaim filed by

       DSA and HJA.


[20]   The Bank, however, points out the calculation of amounts still owed to the

       Bank by Wilderness is incorrect. See Appellee’s Br. p. 8 n.4; Appellant’s App.

       Vol. II p. 12. The Bank notes that it “may be proper to remand solely for the

       purpose of correcting the total contained in ¶2(W) of the trial court’s August 3,

       2016 Order granting [the Bank’s] Summary Judgment Motion and to determine

       additional fees incurred by [the Bank] since that entry.” Appellee’s Br. p. 8 n.4.

       Consequently, although we affirm the trial court’s grant of summary judgment

       to the Bank in all other respects, we reverse and remand for a recalculation of

       the amount owed to the Bank.


                                                    Conclusion
[21]   The trial court properly granted the Bank’s motion for summary judgment, but

       we reverse and remand for a recalculation of the amount owed to the Bank.

       We affirm in part, reverse in part, and remand with instructions.




       4
        To the extent that DSA and HJA argue recoupment, we conclude that this issue is waived. DSA and HJA
       did not raise recoupment until they filed their Appellant’s Brief. Troxel v. Troxel, 737 N.E.2d 745, 752 (Ind.
       2000) (“A party may not raise an issue for the first time in a motion to correct error or on appeal.”).




       Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017           Page 14 of 15
[22]   Affirmed in part, reversed in part, and remanded.


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




       Court of Appeals of Indiana | Memorandum Decision 41A01-1610-PL-2252 | August 17, 2017   Page 15 of 15
