John DeWeese, Sr. and John DeWeese, Jr., Individually and d/b/a John & John Associates, Inc. v. Karen J. Pribyla , 114 N.E.3d 501 ( 2018 )

FILED
Nov 14 2018, 5:54 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEE
John K. McDavid Eric D. Somheil
Hostetter & Associates Katherine S. Brown
Brownsburg, Indiana Brown & Somheil
Brazil, Indiana
IN THE
COURT OF APPEALS OF INDIANA
John DeWeese, Sr. and John November 14, 2018
DeWeese, Jr., Individually and Court of Appeals Case No.
d/b/a John & John Associates, 18A-PL-1505
Inc., Appeal from the Clay Circuit
Appellants/Cross-Appellees- Court
Defendants/Counter-Plaintiffs, The Honorable Joseph D. Trout,
Judge
v. Trial Court Cause No.
11C01-1410-PL-620
Karen J. Pribyla,
Appellee/Cross-Appellant-
Plaintiff/Counter-Defendant.
Najam, Judge.
Court of Appeals of Indiana | Opinion 18A-PL-1505 | November 14, 2018 Page 1 of 10
Statement of the Case
[1] John & John Associates, Inc. (“John & John”), a real property improvement
supplier under Indiana Code Section 24-5-11-6 (2018),1 agreed to improve the
residential property of Karen J. Pribyla, a senior consumer under Indiana Code
Section 24-5-0.5-2(a)(9). However, John & John never provided Pribyla with a
written real property improvement contract, which failure was contrary to
Indiana Code Sections 24-5-11-10, -11, and -12. As a matter of law, John &
John’s failure to provide Pribyla with a written contract in conformity with
Sections 24-5-11-10, -11, and -12 was a deceptive act, see I.C. § 24-5-11-14,
subject to the remedies and penalties of Indiana’s Deceptive Consumer Sales
Act, I.C. §§ 24-5-0.5-0.1 to -12 (“the DCSA”). And the DCSA authorizes the
award of treble damages for uncured deceptive acts against senior consumers.
I.C. § 24-5-0.5-4(i). For those and other reasons, the trial court entered an
award of treble damages for Pribyla based on John & John’s uncured deceptive
acts.
[2] John & John raises several issues on appeal, but we need only address the
following dispositive issue:
1. Whether the trial court erred when it ordered John & John
to pay treble damages under the DCSA for John & John’s
failure to provide a senior consumer with a written
1
Although technical changes have been made to all of the relevant statutes between November of 2013 and
this appeal, there is no dispute that those technical changes are irrelevant to our consideration of the merits of
this appeal.
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contract in conformity with Indiana Code Sections 24-5-
11-10, -11, and -12.
On cross-appeal,2 Pribyla raises the following issue3 for our review:
2. Whether the trial court erred when it concluded that John
DeWeese, Sr. (“DeWeese, Sr.”) and John DeWeese, Jr.
(“DeWeese, Jr.”), the only shareholders of John & John,
were not personally liable to Pribyla.
[3] We affirm.
Facts and Procedural History
[4] In November of 2013, Pribyla, who was sixty-nine years old at the time, hired
John & John to remodel the kitchen at her residence in Brazil. John & John
never provided Pribyla with a written contract for the work to be done. Pribyla
later directed John & John to do additional work around her home, for which,
again, John & John did not provide a written contract.
[5] Pribyla believed that the home improvement work would be done by the end of
2013 and paid invoices as John & John sent them to her. However, in January
of 2014, Pribyla approached John & John about the rising costs of the still-
2
Pribyla has not denominated her assertions of trial court error as cross-appeals under Indiana Appellate
Rule 46(D). But John & John does not suggest that Pribyla’s failure to strictly comply with our Appellate
Rules prohibits our recognition or consideration of the merits of her cross-appeal, and, indeed, John & John
has responded to Pribyla’s cross-appeal arguments in its Reply Brief. See Ind. Appellate Rule 46(D)(3); cf.
N.R. v. K.G. (In re Adoption of O.R.), 16 N.E.3d 965, 970-72 (Ind. 2012).
3
In her brief on appeal, Pribyla also requests that we order John & John to pay her appellate attorneys’ fees.
We decline her request.
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uncompleted work, and John & John, for the first time, gave Pribyla a written
estimate for the work. The estimate was hand-written and stated that more
than $38,000 would be required to complete the remainder of the work. Pribyla
and John & John reached an impasse shortly thereafter, and, in May, Pribyla
asked John & John to finish the work within thirty days and within 5% of the
January estimate. Instead, John & John filed for a mechanic’s lien.
[6] In September, Pribyla, through counsel, informed John & John that it had
engaged in numerous deceptive acts under Indiana law and requested John &
John to cure those acts. John & John declined to accept Pribyla’s certified letter
and did not take any steps to cure the alleged deceptive acts. Pribyla thereafter
filed a complaint against John & John as well as against DeWeese, Sr. and
DeWeese, Jr., the only two shareholders of John & John.
[7] On September 1, 2016, and March 17, 2017, the court held a bench trial on
Pribyla’s complaint. In February of 2018, the court entered judgment for
Pribyla on her claim against John & John but found against her on her claim
that DeWeese, Sr. and DeWeese, Jr. were personally liable. The court
supported its judgment with extensive findings of fact and conclusions thereon.
In particular, aside from finding that DeWeese, Sr. and DeWeese, Jr. were
shielded from personal liability, the court also found that John & John had
engaged in numerous deceptive acts under the DCSA, which acts the court also
found to demonstrate home improvement fraud under Indiana Code Chapter
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35-43-6. The court then ordered John & John to pay Pribyla treble damages
under the DCSA “and/or” the home improvement fraud statutes.4 Appellant’s
App. Vol. II at 22. The court’s judgment for Pribyla and against John & John
totaled $56,647.73. This appeal ensued.
Discussion and Decision
Standard of Review
[8] The parties appeal the trial court’s findings of fact and conclusions thereon,
which the court entered following a bench trial. As our Supreme Court has
made clear, in such cases
[w]e may not set aside the findings or judgment unless they are
clearly erroneous. In our review, we first consider whether the
evidence supports the factual findings. Second, we consider
whether the findings support the judgment. Findings are clearly
erroneous only when the record contains no facts to support
them either directly or by inference. A judgment is clearly
erroneous if it relies on an incorrect legal standard. We give due
regard to the trial court’s ability to assess the credibility of
witnesses. While we defer substantially to findings of fact, we do
not defer to conclusions of law. We do not reweigh the evidence;
rather we consider the evidence most favorable to the judgment
with all reasonable inferences drawn in favor of the judgment.
State v. Int’l Bus. Machs. Corp., 51 N.E.3d 150, 158 (Ind. 2016) (citations and
quotation marks omitted).
4
As we affirm the trial court’s award of treble damages under the DCSA, we need not consider the court’s
alternative basis for treble damages under the home improvement fraud statutes.
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Issue One: Award of Treble Damages
[9] On appeal, John & John first asserts that the trial court’s award of treble
damages under the DCSA is clearly erroneous. In particular, John & John
asserts that the evidence does not show that it possessed the requisite intent to
defraud necessary to prove an “incurable” deceptive act, and, thus, its “mere
violation” of the DCSA does not support an award of treble damages.
Appellant’s Br. at 15. Under the DCSA, an “[i]ncurable deceptive act” requires
an “intent to defraud or mislead.” I.C. § 24-5-0.5-2(a)(8).
[10] However, the trial court did not support its judgment on treble damages under
the DCSA on the basis that John & John had engaged in an “incurable”
deceptive act. Instead, the court found that John & John had left a curable act
“uncured.” See Appellant’s App. Vol. II at 18. The DCSA permits treble
damages in some circumstances when the deceptive act is not incurable but,
rather, simply uncured. See, e.g., I.C. 24-5-0.5-4(i). An “[u]ncured deceptive
act” is an act “with respect to which a consumer who has been damaged by
such act has given notice to the supplier” under the DCSA and either “(i) no
offer to cure has been made to such consumer within thirty (30) days after such
notice; or (ii) the act has not been cured as to such consumer within a
reasonable time after the consumer’s acceptance of the offer to cure.” I.C. § 24-
5-0.5-2(a)(7). Thus, while “a consumer must show intent to defraud on the part
of the supplier of services” in order to show an incurable deceptive act, “[t]he
same showing is not required to establish the existence of an uncured act.”
Mullis v. Brennan, 716 N.E.2d 58, 65 n.3 (Ind. Ct. App. 1999).
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[11] As relevant here, the trial court awarded Pribyla treble damages because John
& John did not cure its deceptive acts and because she was a senior consumer.
There is no dispute in this appeal that John & John failed to provide Pribyla
with a written contract in conformity with the Indiana Code Sections 24-5-11-
10, -11, and -12, which, as a matter of law, was a deceptive act subject to the
remedies and penalties of the DCSA. I.C. §§ 24-5-11-14, -0.5-3(b)(24); see also
Mullis, 716 N.E.2d at 65 (“Through the [Home Improvement Contracts Act,
I.C. §§ 24-5-11-1 to -14], the legislature sought to protect consumers by placing
specific minimum requirements on the contents of home improvement
contracts. Accordingly, we will hold the contractor to a strict standard.”). And
there is no dispute that at all times relevant to this matter Pribyla was a senior
consumer. I.C. § 24-5-0.5-2(a)(9). The DCSA expressly provides that “[a]
senior consumer relying upon an uncured or incurable deceptive act . . . may
bring an action to recover treble damages . . . .” I.C. § 24-5-0.5-4(i) (emphasis
added).
[12] The trial court expressly found, and the evidence supports the court’s findings,
that Pribyla, through counsel, informed John & John in September of 2014 of
its deceptive acts and offered John & John the opportunity to cure those acts.
Instead of curing its deceptive acts, John & John refused Pribyla’s certified
letter. John & John does not challenge the trial court’s findings in this regard
other than to baldly state that John & John had quit the job, which somehow
converted curable deceptive acts into “incurable” deceptive acts and, as such,
would deprive Pribyla of her claim for treble damages. We reject John &
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John’s argument, which is not supported with either cogent reasoning or
citations to authority. See Ind. Appellate Rule 46(A)(8)(a).
[13] John & John additionally asserts that the trial court erred when it awarded
Pribyla treble damages because all of the legal theories underlying the court’s
award of treble damages required Pribyla to demonstrate that the structure at
issue was Pribyla’s “dwelling.” See, e.g., I.C. § 24-5-11-7.5(a). But the evidence
most favorable to the trial court’s judgment, which evidence John & John
simply disregards on appeal, readily demonstrates that the structure at issue was
Pribyla’s dwelling. In her testimony, Pribyla stated that she “reside[s]” at that
residence, that it is her “home,” that it is her “primary residence,” and that she
has a homestead exemption on the property. Tr. Vol. II at 5-7. The trial court’s
judgment is not clearly erroneous on this issue. Thus, we affirm the trial court’s
decision to award treble damages to Pribyla under the DCSA.
Issue Two: DeWeese, Sr. and DeWeese, Jr.
[14] On cross-appeal, Pribyla asserts that the trial court erred when it concluded that
DeWeese, Sr. and DeWeese, Jr. were shielded from personal liability by the
corporate nature of John & John. On this issue, Pribyla appeals from a
negative judgment. See Branham Corp. v. Newland Res., LLC, 44 N.E.3d 1263,
1278 (Ind. Ct. App. 2015). “A negative judgment will be reversed on appeal
only where it is contrary to law.” Id.
[15] In particular, Pribyla asserts that DeWeese, Sr. and DeWeese, Jr. were the
principal actors for John & John, which the trial court found to have engaged in
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criminal and deceptive acts. However, on this issue of personal liability, the
trial court found, as a matter of fact, that “[c]learly the evidence . . . shows that
[Pribyla’s] business dealings were with John & John Associates, Inc.” and that
DeWeese, Sr. and DeWeese, Jr. “personally had very little, if anything, in
regard to the personal responsibility for the actual work done or not done.”
Appellant’s App. Vol. II at 11-12.
[16] We cannot say that the trial court’s judgment on this issue is clearly erroneous.
“As a general rule, shareholders are not personally liable for the acts of a
corporation . . . .” Reed v. Reed, 980 N.E.2d 277, 301 (Ind. 2012). However:
courts may invoke the equitable doctrine of piercing the
corporate veil in order to protect innocent third parties from
fraud or injustice. When a corporation is functioning as an alter
ego or a mere instrumentality of an individual or another
corporation, it may be appropriate to disregard the corporate
form and pierce the veil. The propriety of piercing the corporate
veil is highly dependent of the equities of the situation, and the
inquiry tends to be highly fact-driven. The burden is on the party
seeking to pierce the corporate veil to prove that the corporate
form was so ignored, controlled or manipulated that it was
merely the instrumentality of another and that the misuse of the
corporate form would constitute a fraud or promote injustice.
Id. (citations, alteration, and quotation marks omitted). The trial court found
that the facts did not support Pribyla’s claim to pierce the corporate veil, and we
cannot say as a matter of law that the court’s findings are erroneous. At best,
Pribyla’s argument on appeal is simply a request for this Court to reweigh the
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evidence, which we will not do. The trial court’s findings are supported by the
evidence, and the findings support the judgment. We affirm on this issue.
Conclusion
[17] In sum, we affirm the trial court’s decision to award Pribyla treble damages.
We also affirm the court’s conclusion that DeWeese, Sr. and DeWeese, Jr. are
not personally liable for the acts of John & John. Thus, we affirm the trial
court’s judgment.
[18] Affirmed.
Crone, J., and Pyle, J., concur.
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