Timothy Colby & Holly Colby v. T.H. Construction, Inc. ( 2012 )

FILED
Pursuant to Ind.Appellate Rule 65(D),
this Memorandum Decision shall not
be regarded as precedent or cited
Mar 14 2012, 9:19 am
before any court except for the purpose
of establishing the defense of res
judicata, collateral estoppel, or the law CLERK
of the supreme court,
court of appeals and
of the case. tax court
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
MICHAEL L. MUENICH T. EDWARD PAGE
Highland, Indiana Thiros and Stracci, P.C.
Merrillville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
TIMOTHY COLBY & HOLLY COLBY, )
)
Appellants-Defendants, )
)
vs. ) No. 45A03-1110-PL-472
)
T.H. CONSTRUCTION, INC., )
)
Appellee-Defendant. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Jeffery J. Dywan, Judge
Cause No. 45D11-0905-PL-60
March 14, 2012
MEMORANDUM DECISION – NOT FOR PUBLICATION
BARNES, Judge
Case Summary
Timothy Colby and Holly Colby appeal various orders and the entry of judgment
against them on their complaint for breach of contract and deception filed against T.H.
Construction, Inc. (“T.H.”). We affirm.
Issues
The Colbys raise six issues, which we consolidate and restate as:
I. whether the trial court properly permitted T.H. to
withdraw admissions;
II. whether the trial court properly denied their motion for
partial summary judgment; and
III. whether the trial court‟s findings support its
conclusions that the Colbys were not entitled to
recover on their breach of contract claim.
Facts
Terry Hovanec is the sole proprietor of T.H. In 2007, Hovanec met with the
Colbys regarding the construction of a new dental office in Highland. In April 2007, the
Colbys entered into an agreement with T.H. to develop the plan, design, and
specifications for the dental office building. In September 2007, the Colbys entered into
a detailed construction contract, which T.H. had drafted, that called for the project to be
completed for $683,916. The contract listed the price of forty-one project details and
“specs,” including $20,000 for contingencies. App. p. 80. It also provided:
Payment
Payment will consist of draws during the project
construction period. The size of the project and total dollar
amount will dictate if draws will be every 30 (thirty) days
2
apart or consist of a defined amount of draws over the period
of construction. A sworn statement document will be used to
detail payment schedule. Original amount of contract, items
to be paid, items previously paid, and balance to complete
will be clearly itemized. Each progress payment will have a
partial waiver of lien for the requested amount. On
completion all final waivers will be submitted. No occupancy
will be allowed until final payment is satisfied to T.H.
Construction Inc. . . .
Liens
T.H. Construction Inc. reserves all lien rights for its
and all third party affiliation. In the event of non-payment
T.H. Construction Inc. reserves the right to charge a fair
market interest rate for carrying charges. . . . This notice is
informing the parties accepting this contract that T.H. Const.
Inc. is reserving the lien rights of any and all suppliers and
sub-contractors supplied or hired by T.H. Construction Inc.
for (60) sixty days from last executed work and or delivery,
through completion of said project. Signature of acceptance
makes this document a fully binding contract, resulting in
owners responsibility of all collection and attorney fees if
should [sic] they occur.
Id. at 86 (capitalization modified). The contract further provided:
Allowance
When a line item has a allowance heading, a dollar
amount has been set as a general area the customer has
specified for budget. A allowance allows the customer the
ability to shop at suppliers of their choice. This also requires
the customer to have all of these items selected and ordered in
a timely manor [sic] to avoid any delays. A cost overrun of a
allowance amount will be the customers obligation to pay the
extra charge. Any amounts under a listed cost will be a credit
to the customer.
*****
Change Orders
3
Any change orders during construction will be in
writeing [sic] and signed by both customer and T.H.
Construction Inc. before execution. The order will be a
description of work with a itemized list of materials and
labor. All change orders will be satisfied in a thirty day
period, from time of completion of such order.
Id. at 88 (capitalization modified).
Throughout construction various changes were discussed and agreed on by the
parties, including a $24,757 addition to the parking lot, which the Colbys requested and
which required the Colbys to increase the construction loan in that amount.
Notwithstanding the various changes, written change orders were not executed pursuant
to the terms of the contract.
In August 2008, after a seventh draw was made on the construction loan but
before the final payment was made and the loan was closed, T.H. permitted the Colbys to
occupy the building. Within a week of occupancy, Timothy contacted Hovanec with
concerns about low water pressure. Hovanec and the Colbys disagreed as to the cause of
the problem and the resolution. Eventually, Hovanec agreed to replace the water main at
no charge. Timothy declined Hovanec‟s offer and, instead, had someone else replace the
main.
On October 24, 2008, Hovanec filed mechanic‟s liens for the amounts still owed
by the Colbys. Hovanec then provided the Colbys‟ lender with a final sworn construction
statement and detailed change orders describing the changes made during construction.
When the lender presented these documents to the Colbys, they informed their bank that
they needed to discuss the matter further. In December 2008, the Colbys expressed an
4
intention not to pay Hovanec, and the bank suggested placing the money in escrow with
the title company so that the subcontractors could get paid. In January 2009, the bank
informed the Colbys by letter that financing had already been extended once to give them
an opportunity to resolve their differences with T.H. and that the bank was growing
impatient. On March 20, 2009, the Colbys closed on the loan, all liens were released,
T.H. and the subcontractors were paid in full, and no money was escrowed.
On May 28, 2009, the Colbys filed a complaint against T.H. alleging breach of
contract and deception. The Colbys claimed that T.H. charged more than the stated
contract price, failed to deliver goods and services specified under the contract, and
forced them to pay the overages as a condition of releasing improper liens. The Colbys
claimed damages of at least $60,000 for the breach of contract and requested treble
damages and attorney fees based on their deception claim.
Before T.H. answered, an issue arose regarding arbitration. In a September 2,
2009 order, the trial court denied a request to compel mediation or arbitration and granted
T.H. twenty-one days to file an answer. That same day, the Colbys sent T.H. a request
for admissions. The deadline to answer the request for admissions was October 5, 2009.
On October 23, 2009, T.H.‟s counsel discovered that the request for admissions
and the September 2, 2009 order had been inadvertently placed in T.H.‟s file without
calendaring. T.H.‟s counsel met with Hovanec the following day, a Saturday, drafted an
answer to the complaint and answers to the request for admissions, and sent the
documents by fax and mail to the Colbys‟ attorney. T.H. filed the answer with the trial
court on October 26, 2009. On October 28, 2009, T.H. filed a verified motion to
5
withdraw and amend admissions explaining these circumstances along with T.H.‟s
answers to the request for admissions. On November 4, 2009, the Colbys filed a response
in opposition to T.H.‟s motion to withdraw and amend admissions, and T.H. replied.
On March 10, 2010, while the issue of the admissions was still pending, the
Colbys filed a motion for partial summary judgment arguing that they were entitled to
summary judgment on their breach of contract claim because there were no written
change orders and because of the low water pressure. On March 30, 2010, following a
hearing, the trial court granted T.H.‟s motion to withdraw admissions. On April 30,
2010, T.H. filed a response to the Colbys‟ motion for partial summary judgment. On
May 18, 2010, the Colbys filed a reply and a motion to strike allegedly improper
summary judgment designations. On June 1, 2010, the trial court held a hearing on the
Colbys‟ motion for partial summary judgment. On July 29, 2010, the trial court issued an
order setting out the undisputed facts, concluding that the Colbys were entitled to $7,200
in damages for the water pressure issue and denying the Colbys‟ motion for partial
summary judgment regarding the change orders because there were factual disputes
regarding whether the Colbys verbally authorized the changes to the work and the
amount, if any, due pursuant to the change orders.
On August 30, 2010, T.H. filed a motion to reconsider the ruling on the water
pressure issue. On October 19, 2010, the trial court granted the motion to reconsider and
concluded there were questions of fact regarding the water pressure issue. On September
19, 2011, after a multi-day bench trial, the trial court issued extensive findings and
conclusions in a forty-page order. The trial court concluded that T.H. did not breach the
6
contract or commit deception and that “with the exception of the $883.36 credit owed by
T.H. to the Colbys for funds left over from design and development, the court finds
against the plaintiffs and for the defendant.” Id. at 563. The Colbys now appeal.1
Analysis
I. Admissions
The Colbys contend that the trial court improperly permitted T.H. to withdraw and
amend its admissions. Pursuant to Indiana Trial Rule 36(A), a party may serve upon any
other party a written request for the admission of the truth of any matters within the scope
of Indiana Trial Rule 26(B), which governs the scope of discovery. “The matter is
admitted unless, within a period designated in the request . . . the party to whom the
request is directed serves upon the party requesting the admission a written answer or
objection addressed to the matter, signed by the party or by his attorney.” Ind. Trial Rule
36(A).
Indiana Trial Rule 36(B) provides:
Any matter admitted under this rule is conclusively
established unless the court on motion permits withdrawal or
amendment of the admission. Subject to the provisions of
Rule 16 governing amendment of a pre-trial order, the court
may permit withdrawal or amendment when the presentation
of the merits of the action will be subserved thereby and the
party who obtained the admission fails to satisfy the court that
withdrawal or amendment will prejudice him in maintaining
his action or defense on the merits. Any admission made by a
party under this rule is for the purpose of the pending action
only and is not an admission by him for any other purpose nor
may it be used against him in any other proceeding.
1
The Colbys did not provide transcripts of any of the hearings or the trial as part of the record on appeal.
7
Thus, “matters admitted are deemed „conclusively established‟ unless the trial court
permits withdrawal or amendment of the admission.” General Motors Corp., Chevrolet
Motor Div. v. Aetna Cas. & Sur. Co., 573 N.E.2d 885, 888-89 (Ind. 1991).
Our supreme court has observed that the rule authorizing withdrawal or
amendment is intended to avoid the binding effect of inadvertent admissions and that an
admission should ordinarily be binding unless the admission is no longer true because of
changed circumstances or a party has made an improvident admission through an honest
error. Id. at 889. Further, the court recognized that, unless the party securing an
admission can depend on its binding effect, he or she cannot safely avoid the expense of
preparing to prove the matter admitted and the purpose of the rule is defeated. Id.In determining whether a trial court may grant a party‟s request to withdraw an
admission, our supreme court explained:
Thus the rule itself limits the discretion of a trial court in
ruling on a motion to withdraw admissions under T.R. 36(B).
The court cannot grant such motion unless it determines both
(1) that withdrawal or amendment will subserve the
presentation of the merits and (2) that prejudice in
maintaining the action or defense will not result to the party
obtaining the admission. Even if both of these conditions are
satisfied, the rule does not compel the trial court to grant
withdrawal or amendment. Rather, the rule states that the
court “may” then grant such request.
Id.We have stated that the party seeking withdrawal has the burden of demonstrating
that the presentation on the merits will be subserved by the withdrawal and the party who
has obtained the admissions has the burden of demonstrating prejudice if the trial court
8
permits the withdrawal. Corby v. Swank, 670 N.E.2d 1322, 1326 (Ind. Ct. App. 1996).
In this context, prejudice does not mean the loss of the benefit of the admission; rather, it
means that the party has suffered a detriment in the preparation of the case. Id.In their opening brief, the Colbys assert that T.H. failed to meet its burden of
showing that the withdrawal of the admissions would subserve the presentation on the
merits because the motion failed to identify the admitted matters or explain how it
planned to contest those issues. In response, T.H. argues that the Colbys‟ failure to
provide us with a transcript of the hearing on this issue results in waiver of the issue. In
their reply brief, the Colbys frame the issue as whether “[t]he trial court failed to
acknowledge or apply applicable standards to set aside admission and thus committed
error of law.” Appellants‟ Reply Br. p. 5.
To the extent the Colbys‟ argument that T.H. did not demonstrate that the
presentation on the merits will be subserved by the withdrawal is not waived, in its reply
in support of its motion to withdraw and amend admissions, T.H. set forth seven specific
allegations that were at issue in the case. T.H. also asserted that, if it was not permitted to
withdraw its admissions, “this case would not be decided on its merits and justice would
not be done.” App. p. 187. Based on the record before us, the Colbys have not
established that T.H. failed to meet its burden.
Regarding the Colbys‟ assertion that the trial court failed to acknowledge the
applicable standards, they cite to no authority requiring a trial court to acknowledge the
applicable standard or to issue findings when granting a motion to withdraw admissions.
Accordingly, this allegation of error is waived. See Ind. Appellate Rule 46(A)(8).
9
As for the Colbys‟ claim that the trial court applied an incorrect standard when it
granted T.H.‟s motion to withdraw admissions, “We presume that the trial court applied
the law correctly and the burden is on the appellant to show reversible error.” Babinchak
v. Town of Chesterton, 598 N.E.2d 1099, 1102 (Ind. Ct. App. 1992). T.H.‟s motion to
withdraw admissions, the Colbys‟ response, and T.H.‟s reply all contained a discussion of
Indiana Trial Rule 36 and the applicable legal standard for withdrawing admissions. The
issue was extensively briefed by the parties and an order was issued after a hearing was
conducted. Without more, the Colbys have not established that the trial court committed
an error of law when it granted T.H.‟s motion to withdraw admissions.
II. Summary Judgment
A. Motion to Strike
On May 18, 2010, the Colbys filed a motion to strike portions of the evidence
designated by T.H. in its response to the Colbys‟ motion for partial summary judgment.
The Colbys claimed that portions of the designated affidavits contained inadmissible
hearsay or were not property verified or authenticated. They also claimed that T.H.‟s
designation of evidence did not specifically identify the relevant portions of the
documents upon which it relied. It does not appear that the trial court issued a written
order expressly addressing this issue.
On appeal, the Colbys argue that the trial court erred in refusing to strike T.H.‟s
designated evidence. T.H. asserts that the Colbys‟ failure to include a transcript of the
summary judgment hearing “makes it difficult if not impossible for the appellate court to
decide without guessing exactly what took place at that hearing” and that by failing to
10
provide us with a transcript, “the Colbys invite the appellate court to rule on the
objections raised in their motion to strike without regard to any evidentiary rulings the
trial court may have made at the hearing.” Appellee‟s Br. p. 16. T.H. contends that the
Colbys‟ failure to provide us with a transcript of the hearing waives any specification of
error that depends on a review of the trial court‟s rulings at that hearing.
“It is a cardinal rule of appellate review that the appellant bears the burden of
showing reversible error by the record, as all presumptions are in favor of the trial court‟s
judgment.” Marion-Adams School Corp. v. Boone, 840 N.E.2d 462, 468 (Ind. Ct. App.
2006). “The party claiming the error has the burden to establish a complete and accurate
record.” Smith v. Convenience Store Distributing Co., 583 N.E.2d 735, 739 (Ind. 1992).
Without a transcript of the hearing, we are unable to review what, if any, arguments and
rulings were made on this issue. Thus, based on the limited record before us, the Colbys
have not met their burden of showing reversible error on this issue.
B. Motion to Reconsider
On August 30, 2010, T.H. asked the trial court to reconsider the summary
judgment order on the water pressure issue. That portion of the summary judgment order
provided:
Shortly after occupying the building, the Colbys
informed T.H. Construction, Inc. of insufficient water
pressure. The insufficient pressure resulted because T.H.
Construction, Inc. caused the building‟s one-inch water line
to be connected to the old ¾-inch water tap, though the
contract called for a one-inch water meter. This is not
standard practice or workmanlike performance in the
plumbing industry and was the cause of the insufficient water
pressure in the building.
11
T.H. Construction, Inc. did not remedy this problem
when requested. The Colbys hired an independent contract
who replaced the old ¾-inch pipe at an additional cost of
$7,200.00 to the Colbys. The Colbys are entitled to recover
this amount from T.H. Construction.
App. p. 515. On October 29, 2010, the trial court granted T.H.‟s motion to reconsider
based on its review of the motion to reconsider as well as the original summary judgment
pleadings. The trial court‟s order granting the motion to reconsider provided in part:
The Court finds that there are issues of fact as to
whether the problems with the building‟s water supply were
the result of the manner in which T.H. Construction, Inc.
connected the building‟s water supply to the city water main.
Further, there is a question of fact as to whether T.H.
Construction was given a reasonable opportunity to correct
the problem. Finally, there is an issue of fact as to whether
the Plaintiffs, in taking corrective action, varied from the
original contract specifications and therefore whether the
charges they claim are reasonable.
Id. at 522.
The Colbys argue that pursuant to Indiana Trial Rule 53.4, which provides that a
repetitive motion or motion to reconsider shall be deemed denied if it is not ruled on
within five days, the motion to reconsider was deemed denied on September 4, 2010.
The Colbys contend that, by granting T.H.‟s motion to reconsider after it had been
deemed denied, they had no opportunity to respond to the trial court‟s “inappropriate
consideration of untimely and unsworn summary judgment designations in the Motion to
Reconsider.”2 Appellants‟ Br. p. 26.
2
In their reply brief, the Colbys concede that the trial court retained the power to modify any of its
rulings sua sponte. See Appellants‟ Reply Br. p. 7. Relying on Lake County Local Rule 4(A), which
12
In making this argument, the Colbys suggest that T.H. submitted additional
designated evidence in its motion to reconsider. We disagree with this characterization.
T.H.‟s motion to reconsider contained arguments based on the evidence originally
designated by the parties. T.H. did not designate any additional evidence in support of its
motion to reconsider. As such, we cannot say that the trial court improperly considered
untimely designated evidence when it granted T.H.‟s motion to reconsider.3
C. Denial of Summary Judgment
“[S]ummary judgment is appropriate only where the evidence shows there is no
genuine issue of material fact and the moving party is entitled to judgment as a matter of
law.” Sheehan Const. Co. v. Continental Cas. Co., 938 N.E.2d 685, 688 (Ind. 2010)
(citing Ind. Trial Rule 56(C). All facts and reasonable inferences drawn from those facts
are construed in favor of the non-moving party, and review of a summary judgment
motion is limited to those materials designated to the trial court. Id. “Only after the
moving party satisfies its burden to show the absence of any genuine issue of material
fact and entitlement to judgment as a matter of law does the burden shift to the non-
moving party to demonstrate the existence of a genuine determinative factual issue.”
Ashby v. Bar Plan Mut. Ins. Co., 949 N.E.2d 307, 310 (Ind. 2011).
addresses the time for responding and replying to various motions, the Colbys also argue that they were
denied the opportunity to respond “because they were on notice by operation of Trial Rule 53.4 that the
Motion to Reconsider had already been denied.” Appellants‟ Reply Br. p. 8. This argument is waived
because it was not timely raised. See Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 977
(Ind. 2005) (“The law is well settled that grounds for error may only be framed in an appellant‟s initial
brief and if addressed for the first time in the reply brief, they are waived.”).
3
We consider the Colbys‟ challenge to the merits of trial court‟s ruling on the motion to reconsider as
part of our analysis of the propriety of the denial of summary judgment.
13
1. Modification
In its summary judgment order, the trial court concluded that summary judgment
was not appropriate because it was a question of fact as to whether the parties modified
the contract verbally or by their conduct. Indeed, “[p]arties to a contract may mutually
modify their contractual undertakings, and it is not always necessary to prove a written or
oral modification of a contract because modification of a contract can be implied from the
conduct of the parties.” City of Indianapolis v. Twin Lakes Enterprises, Inc., 568 N.E.2d
1073, 1084 (Ind. Ct. App. 1991), trans. denied. “Even a contract providing that any
modification thereof must be in writing may nevertheless be modified orally.” Id. The
modification of a contract, because it is also a contract, requires all of the elements of a
contract. Id.In their motion for summary judgment, the Colbys claimed that T.H. was not
entitled to payments for the unsigned change orders. It was undisputed that the parties
did not execute written change orders prior to the completion of the work, and the Colbys
claimed that they did not assent to the modification of the contract to allow change orders
to be approved orally. In support of this assertion, they relied on their affidavits in which
they stated, “Contractor never mentioned modifying the Contract to allow change orders
to be approved orally and we never discussed any such modification with him. We did
not agree to change the Contract to allow change orders to be approved orally.” App. pp.
239, 242.
In response, T.H. asserted and the designated evidence showed that changes were
discussed between the parties before, during, and after they were made and that the
14
changes were agreed to orally. T.H. also pointed out that the Colbys had to modify their
loan to finance a $24,757 change to the parking lot and that the Colbys approved payment
for the changes after reviewing sworn construction statements as each draw was made
and at closing.
We agree with the trial court that the designated evidence showed a genuine issue
of material fact regarding whether the parties impliedly modified the contract.
Accordingly, the trial court properly denied the Colbys‟ motion for partial summary
judgment.
2. Water Pressure
Although the trial court initially granted summary judgment in favor of the Colbys
on this issue, the trial court later granted T.H.‟s motion to reconsider and concluded there
was an issue of fact regarding whether the problems were the result of the manner in
which T.H. connected the building‟s water supply to the city water main, whether T.H.
was given an opportunity to correct the problem, and whether the charges claimed by the
Colbys were reasonable. The Colbys argue the trial court improperly concluded that
there were questions of fact for trial on this issue.
In support of their motion for summary judgment, the Colbys relied on the
affidavit of James Zack, a licensed plumber, who stated that the contractor who had
performed the plumbing work did not replace the old water tap, that the newly installed
one-inch water line connected to an existing ¾-inch tap, and that this was not standard
practice or workmanlike performance in the plumbing industry and was the cause of the
water pressure problem. Zack explained that to correct the problem, he installed a 1½-
15
inch tap and a 1½-inch line from the tap to the building that connected to the one-inch
line in the building.
The Colbys claim that Zack‟s affidavit was “[t]he only summary judgment proof
on this issue . . . .” Appellants‟ Br. p. 27. Referring to the contract and Hovanec‟s
affidavit, however, T.H. established genuine issues of material fact for trial. T.H.
asserted that there were questions of fact as to whether the contract covered the tap,
whether the tap had anything to do with the water pressure issue, and whether the
replacement of the tap made a significant change to the water pressure issue. Based on
our review of the contract and affidavit, we believe there were genuine issues of material
fact regarding whether T.H. breached the contract by connecting the one-inch line to the
¾-inch tap. Thus, regardless of whether the Colbys were required to give T.H. an
opportunity to cure the problem or whether the corrective action was reasonable, because
there were genuine issues of material fact on the issue of breach, the trial court properly
denied the Colbys‟ request for summary judgment.
III. Findings and Conclusions
Finally, the Colbys argue that the findings of fact issued by the trial court after
trial do not support its conclusions. A trial court‟s “findings or judgment are not to be set
aside unless clearly erroneous, and due regard is to be given to the trial court‟s ability to
assess the credibility of witnesses.” Menard, Inc. v. Dage-MTI, Inc., 726 N.E.2d 1206,
1210 (Ind. 2000) (citing Ind. Trial Rule 52(A)). We first consider whether the evidence
supports the factual findings, and then we consider whether the findings support the
judgment. Id. Although we defer substantially to findings of fact, we do not defer to
16
conclusions of law. Id. “A judgment is clearly erroneous if it relies on an incorrect legal
standard.” Id.The Colbys did not include a transcript of the trial as part of the record on appeal
and do not dispute any of the trial court‟s 106 findings of fact. Therefore, our review is
limited to whether the trial court‟s findings support its conclusions.
A. Change Orders
The Colbys argue, “There was no finding that could reasonably lead to the
conclusion that the Colbys assented to allow Contractor to charge for extras without
signed change orders.” Appellants‟ Br. p. 31. According to the Colbys, although “they
may have agreed to construction changes, they did not agree to dispense with the
requirement of written change orders for changes that would increase the contract price.”
Id. at 30. They assert that they believed at all times the change orders provision remained
a part of the contract, protecting them from extra charges. Although the Colbys do not
cite any specific findings that support their argument, they refer to their “four-month
protest against closing” and claim that “[t]hey eventually closed due to pressure from
their lender . . . .” Id. at 31.
Simply put, the Colbys have not shown that the trial court‟s findings do not
support its conclusions. The trial court‟s findings referenced detailed discussions
between Hovanec and either Timothy or Holly or both regarding various changes to the
project. The trial court also found in part:
53. Well before this stage of the process, Terry Hovanec
and the Colbys had developed a good working relationship on
the construction process. Timothy Colby would come by
17
from time to time and Holly Colby was regularly at the
construction site. Holly Colby was much more involved in
the construction process than Timothy Colby and was usually
the one who met with Chicago Title Company to authorize
the construction draws. . . .
*****
60. The numerous changes listed above show the
involvement of the Colbys in the details of the construction
while it was in progress. Each of these changes were
approved by one or both of the Colbys at different stages of
the construction project after discussions with Terry Hovanec.
These discussions included the costs of the additions, the
savings from deletions, and whether the changes kept the
project overall within the contract amount of $683,816 [sic].
Neither Terry Hovanec nor the Colbys demanded that any of
the changes listed above were to be in writing before they
were made by T.H. Construction or its subcontractors during
construction. Terry Hovanec believed that his working
relationship with the Colbys was such that he did not feel he
needed the protection of signed written change orders. Holly
Colby did not think written change orders were necessary
unless the cost of the construction project went over the
contract amount of $683,916.
*****
74. The Colbys approached Terry Hovanec with a request
that additional parking be added across the south side of the
building across the area onto which the rental units would
have extended. Douglas Homeier of SH Engineers and
Surveyors engineered a plan that would add ten additional
parking places on the south side of the building and, as
required by John Phipps, would enlarge the detention pond at
the far south end of the lot to account for the added
impervious parking area. These plans were completed on
June 5, 2008, and a copy of the plans was provided to the
Colbys. These plans were admitted at trial as Defendant‟s
Exhibit 12.
75. After the engineering was completed, Terry Hovanec
obtained quotes for the added parking area and enlarged
18
detention pond. The total cost of additional parking came to
$24,757. Because the added cost of the parking lot would
increase the cost of the construction beyond $683,916, the
Colbys would be required to increase their construction loan
with Centier Bank. Terry Hovanec prepared a detailed
change order in writing that was submitted to Centier Bank at
Jack Esala‟s request. This change order was admitted into
evidence at trial as Plaintiff‟s Exhibit 43.
76. The Colbys sought and obtained a modification of
their construction loan that reflected the increase of the cost
of the construction by $24,757 from $683,916 to $708,673.
*****
95. The Colbys made no complaints about Terry Hovanec
to Jack Esala, their loan officer, or to Mary Zarnecki, a close
personal friend of Holly Colby who recommended Terry
Hovanec to the Colbys, until after the water pressure became
an issue.
96. Sometime after November 3, 2008, Jack Esala
provided the Colbys with copies of the October 20, 2008,
sworn construction statement and the “change orders”
provided by Terry Hovanec. At this meeting, the Colbys
indicated that they needed to discuss the matter further.
97. By the end of December, 2008, the Colbys had still not
moved forward to close on the construction loan or to resolve
any issues with T.H. Construction. As shown in Plaintiff‟s
Exhibit 57, the Colbys had expressed an intention on not
paying Terry Hovanec but the bank was suggesting a way that
the subcontractors could get paid. This would involve
placing monies in escrow with the title company.
98. By January 16, 2009, Jack Esala sent a letter to the
Colbys on behalf of Centier Bank indicating that the
financing had already been extended once to give the Colbys
an opportunity to resolve their differences with T.H.
Construction, but the bank was growing impatient. This letter
was introduced at trial as Plaintiff‟s Exhibit 58. The letter
suggested to the Colbys again that escrowing the funds at
closing would permit closing to move forward.
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99. Not until March 2009, was a final closing arranged by
the Colbys.
*****
102. At the closing on March 20, 2009, Star Lugar of
Chicago Title went over the March 18, 2009, sworn
construction statement line by line with the Colbys. In
response to the observation that the total cost of the project
had gone up from its original number, the only response came
from Holly Colby who said that changes were made. The
Colbys signed all closing documents, all liens were released,
and T.H. Construction and all the subcontractors were paid in
full. No monies were escrowed.
App. pp. 540-59.
The trial court concluded in part:
107. The contract called for changes in construction to be put
into writing and signed by all parties. This was not done for
any of the changes with the exception of the additional
parking added in the summer of 2008. Modification of a
written contract can be implied from the actual conduct of the
parties. Even a contract providing that any modification must
be in writing may be modified orally. City of Indianapolis v.
Twin lakes Enter, Inc., 568 N.E.2d 1073 (Ind. Ct. App. 1991),
trans. denied. By their conduct, the parties clearly had an
understanding that written change orders were not required
for agreed upon changes to be made. Only the bank required
a detailed change order for the additional parking, and even
then it was not signed by all the parties until the seventh draw
on August 15, 2008. Therefore T.H. Construction may justly
claim payments for additions to the contract that were agreed
upon by the Colbys, even if an agreement for the changes was
not put in writing by the parties as required by the contract.
108. All of the changes set forth in the findings of facts
above were discussed with, and agreed upon, by one or both
of the Colbys before they were implemented with the
exception of the increased size of the slab footing and the
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additional steel posts required for the vinyl fence. Even then,
Timothy Colby approved the change in the footings after the
fact and the additional steel posts were required by the town.
109. Prior to any payments being made to T.H.
Construction or its subcontractors, the sworn construction
statements provided to the Colbys from October 20, 2007,
through August 11, 2008, showed the differences in any line
items and were consistent with the changes and the time line
established by the testimony and evidence at trial. Some of
the items, such as landscaping, flooring and cabinetry were
items over which Holly Colby particularly exercised primary
if not sole control. Before any payments were made to T.H.
Construction or its subcontractors based on these sworn
statements, one or both of the Colbys were required to sign
their approval for disbursements. The failure of the Colbys to
raise a complaint prior to payment constituted a waiver.
110. The contract price established at the time the contract
was signed was $683,916. This price did not increase until
the Colbys requested additional parking at a cost of $24,757.
This increase was at the request of the Colbys and was the
result of their free and voluntary act. This took the total cost
of construction up to $708,919 with the full knowledge and
consent of the Colbys. It was not the result of deception by
T.H. Construction.
111. T.H. Construction did not breach the contract by failing
to deliver goods and services specified under the contract.
All goods and services promised under the contract were
delivered except those omitted or substituted by the
agreement of the Colbys.
*****
113. T.H. Construction did not breach the contract with the
Colbys and the Colbys have not been damaged in the amount
of $60,000 as claimed. The Colbys received the full benefit
of their bargain and received all of the goods and service for
which they paid. The Colbys would be unjustly enriched if,
after not relying on the signed written change order language
of the contract which construction was pending, they now
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claimed reimbursement for things they agreed to omit or add
to the construction.
Id. at 559-61.
Based on the limited record before us, it is not entirely clear which charges, other
than the parking lot, raised the cost beyond the fixed contract price.4 Regardless, the
Colbys have not shown that the the trial court‟s findings do not support the conclusion
that the Colbys, based on their conduct during construction, modified the change orders
provision of the contract. This claim is unavailing.5
B. Water Pressure
The Colbys also argue that the trial court‟s findings “compel the conclusion that
Contractor breached its contract to design and build the building with proper
specifications for adequate water supply and to follow those specifications.” 6 Appellants‟
Br. p. 33. In support of this argument, the Colbys claim that the one-inch water line
4
In their brief in support of partial summary judgment, the Colbys requested damages for the change
orders totaling $72,507. See App. p. 268. On appeal, the Colbys assert that they should have been
awarded $31,899.00 in damages for improper overcharges. See Appellants‟ Reply Br. p. 11. In support
of this calculation, the Colbys direct us to an exhibit attached to an affidavit designated by T.H. in its
response to the Colbys‟ motion for partial summary judgment. Even if we were to consider this summary
judgment evidence to determine whether the evidence admitted at trial supports the Colbys‟ most-recent
calculation of charges, that document shows a final loan amount of $715,815. The contract price of
$683,916 taken with $24,757 for the increased cost of the parking lot equals $708,673, leaving only
$7,142 in additional charges.
5
The Colbys make arguments regarding unjust enrichment, waiver, quasi-contract, and unjust
enrichment throughout their brief. However, because the trial court‟s decisions were based on the
modification of the contract, we need not address these issues.
6
To the extent the Colbys argue breach of warranty, this issue is waived for failure to support the
argument with cogent argument. See Ind. Appellate R. 46(8)(a) (requiring arguments to be supported by
cogent reasoning and citations to authorities, statutes, and the Appendix or parts of the record on appeal
relied on).
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could have been a problem if the ¾-inch tap was restricted by corrosion and that T.H.
offered to install a new tap at a cost of $7,200.
Based on the trial court‟s findings, however, it is clear that T.H. offered to install
the tap to satisfy the Colbys, not as a concession that the design or construction was so
deficient as to amount to a breach of the contract. The trial court‟s findings on this issue
provide:
83. Within one week after occupying the building,
Timothy Colby called Terry Hovanec with a concern about
the water pressure to the building‟s exterior hose bibs. The
specific issue was that two hoses to water the grass could not
run well at the same time. In response Terry Hovanec went to
the site with a pressure gauge to check the water pressure.
The reading was 32 to 35 pounds.
84. Because Terry Hovanec considered this water pressure
to be low, he called the plumber who worked on the
construction project, Tom Fistrovich at Rhodes Plumbing.
Tom Fistrovich suggested that a booster pump be installed in
the building to increase the pressure. Terry Hovanec then met
personally with Timothy Colby and offered to install the
pump at no cost. Timothy Colby declined this offer and
indicated that he did not want a booster pump. At this
meeting, Timothy Colby indicated to Terry Hovanec that he
had talked to an unidentified town employee who purportedly
told Timothy Colby that the building‟s new one-inch water
line from the town water system must have been installed
with a kink in it.
85. After the meeting with Timothy Colby ended, Terry
Hovanec went to the office of Tim Gembala, supervisor of the
water and sewer department at the Town of Highland
Department of Public Works. . . . The question was asked as
to whether the building‟s one-inch water line connection to
the existing ¾” tap at the town‟s water system could
contribute to lower water pressure. Tim Gembala indicated
that such a connection should only be a problem if the tap
was restricted by corrosion. . . .
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86. After the meeting with Tim Gembala, Terry Hovanec
again met personally with Timothy Colby to explain what he
had learned about the town‟s water pressure. . . . When the
subject of the ¾” water tap was discussed, Timothy Colby
asked why a new water tap had not been installed. Terry
Hovanec told Timothy Colby that it was not necessary to
install a new water tap at added costs because the existing tap
should have been more than sufficient for the building.
*****
88. In an effort to satisfy the client, Terry Hovanec
suggested the possibility of splitting the cost for a new one-
inch water tap to be installed. Timothy Colby verbally agreed
with this proposal while they were together. The next
morning, however, Terry Hovanec received a telephone call
from Timothy Colby during which Timothy Colby indicated
to Terry Hovanec that he did not believe that he should have
to pay for a new water tap to be installed. Terry Hovanec
responded by offering to install a new [] 1” water tap at no
cost to the Colbys if Timothy Colby believed that would
solve the problem.
App. pp. 552-54.
Based on these findings, we are not convinced that the trial court was compelled to
conclude that T.H. breached the contract when it connected the one-inch water line to the
¾-inch tap. Without more, the Colbys have not established that the trial court‟s findings
do not support its conclusions on this issue.
Conclusion
The Colbys have not established that the trial court improperly granted T.H.‟s
motion to withdraw and amend admissions. The Colbys have not shown that the trial
court improperly refused to strike portions of T.H.‟s designated evidence or improperly
granted T.H.‟s motion to reconsider. The Colbys have not established that the trial
24
court‟s denial of summary judgment was improper. Finally, the Colbys have not shown
that the trial court‟s findings do not support its conclusions. We affirm.
Affirmed.
KIRSCH, J., and BRADFORD, J., concur.
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