Fred L. Froeschke and Judith A. Froeschke v. City of Vincennes ( 2013 )

Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any Jul 02 2013, 8:46 am
court except for the purpose of
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANTS: ATTORNEYS FOR APPELLEE:
DARLA S. BROWN DOUGLAS A. HOFFMAN
Kelley, Belcher & Brown JEREMY M. DILTS
Bloomington, Indiana Carson Boxberger LLP
Bloomington, Indiana
IN THE
COURT OF APPEALS OF INDIANA
FRED L. FROESCHKE and )
JUDITH A. FROESCHKE, )
)
Appellants-Plaintiffs, )
)
vs. ) No. 42A04-1301-PL-29
)
CITY OF VINCENNES, )
)
Appellee-Defendant. )
APPEAL FROM THE KNOX CIRCUIT COURT
The Honorable Sherry B. Gregg Gilmore, Judge
Cause No. 42C01-1105-PL-246
July 2, 2013
MEMORANDUM DECISION - NOT FOR PUBLICATION
KIRSCH, Judge
Fred L. Froeschke and Judith A. Froeschke (together, “the Froeschkes”) appeal the
trial court’s order granting summary judgment in favor of the City of Vincennes (“the
City”) and denying summary judgment to the Froeschkes. They raise two issues, which
we consolidate and restate as whether the trial court erred when it granted the City’s
summary judgment motion as to their claims for breach of contract and promissory
estoppel.
We affirm.
FACTS AND PROCEDURAL HISTORY
Al Baldwin (“Baldwin”) was the mayor of Vincennes from 2008 to 2011. During
his tenure as mayor, he worked on the Railroad Relocation and Sixth Street Overpass
Project (“the Overpass Project”). The City was awarded a sizeable federal grant to study
the issues it has with the railroad, and the study resulted in a recommendation that the
City build overpasses. The original plan for the Overpass Project was to build three
overpasses, which would require the acquisition of seven or eight pieces of property,
including the Froeschkes’ property located at 1025 North Sixth Street in Vincennes,
Indiana.
Included in the federal grant funding for the Overpass Project was $5,000,000, and
the City was to match twenty percent of that sum, giving the City a total of $6,000,000.
In order to take advantage of the grant funding, the City was required to submit bills for
the project to the Indiana Department of Transportation, which would then reimburse the
City for eighty percent of the Overpass Project with the remaining twenty percent to be
paid by the City. On March 12, 2007, the City of Vincennes Common Council (“the City
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Council”) appropriated funds for the Overpass Project through passage of Ordinance 2-
2007. This ordinance established Fund 90, which consisted of $1,000,000 for the
Overpass Project and Fund 91, which consisted of the $5,000,000 awarded by the federal
grants.
On or about January 12, 2009, Baldwin executed a contract with Beam, Longest,
and Neff, LLC (“BLN”) to provide various consulting services to the City with regard to
the Overpass Project. Among other things, BLN was to provide a route survey, an
environmental impact statement, a design plan, assistance in obtaining permits, and a
determination of all existing rights-of-way. In signing the contract, Baldwin
acknowledged that he was authorized by the City to execute the contract. On or about
May 5, 2009, Baldwin executed a second contract with BLN for engineering services for
the Overpass Project, under which BLN was to provide the City with the following
services:
1. Right-of-Way
1.1 Furnish personnel for right-of-way management, appraising, review
appraising and owner negotiations as needed for the acquisition of
right-of-way, easements or right-of-entry as required for the Project.
1.2 Furnish personnel for the recording of all transfer documents (if
required or requested).
1.3 Attend pre-trial meetings and provide courtroom testimony for the
Project.
1.4 Meet with the OWNER or its representatives, when requested or
necessary for consultation or conference.
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Appellants’ App. at 256. Additionally, as part of the second contract between BLN and
the City, the City was to:
Designate a representative to act on behalf of the OWNER with respect to
the Services to be performed under the Agreement with such person to have
complete authority to transmit instructions, receive information, interpret
and define OWNER’s policies and decisions pertinent to the Services
covered by the Agreement.
Id. at 257. Baldwin was that representative.
Mike Montague (“Montague”) was the acquisition agent for BLN with regard to
federal projects. Montague served as the City’s agent to acquire properties for the
Overpass Project. On September 24, 2010, Montague tendered a uniform property or
easement acquisition offer to the Froeschkes for the purchase of their property for the
amount of $327,000. The Froeschkes signed the acceptance portion of the offer on
October 18, 2010. The City Council did not approve or authorize the acquisition of the
Froeschkes’ property and did not approve any claims for monies to be paid to the
Froeschkes for the property. The contract for purchase of the property tendered to the
Froeschkes by Montague was not provided to the City Council before the offer was made
by BLN. The Froeschkes were never paid for the property, and because the transfer of
the property was contingent on payment of $327,000, the property was never transferred
to the City.
On May 13, 2011, the Froeschkes filed a complaint against the City for failing to
pay them the amount of $327,000 for the Froeschkes’ property. In their complaint, the
Froeschkes alleged breach of contract, unjust enrichment, and promissory estoppel
against the City. On May 18, 2012, the City filed a motion for summary judgment. On
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September 4, 2012, the Froeschkes filed their cross-motion for summary judgment. After
a hearing on the cross-motions for summary judgment, the trial court issued an order1 on
December 20, 2012, granting summary judgment in favor of the City as to the claims of
breach of contract and promissory estoppel and denied the Froeschkes’ motion for
summary judgment. On January 18, 2013, the parties filed a stipulation of dismissal,
whereby they dismissed the Froeschkes’ claim for unjust enrichment. The Froeschkes
now appeal.
DISCUSSION AND DECISION
Our standard of review of a summary judgment order is well-settled: summary
judgment is appropriate if the “designated evidentiary matter shows that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as
a matter of law.” Ind. Trial Rule 56(C). The purpose of summary judgment is to
terminate litigation about which there can be no factual dispute and which may be
determined as a matter of law. McGill v. Ling, 801 N.E.2d 678, 682 (Ind. Ct. App. 2004),
trans. denied. Relying on specifically designated evidence, the moving party bears the
burden of making a prima face showing that there are no genuine issues of material fact
and that the moving party is entitled to judgment as a matter of law. Haegert v.
McMullan, 953 N.E.2d 1223, 1229 (Ind. Ct. App. 2011). If the moving party meets these
two requirements, the burden shifts to the nonmovant to set forth specifically designated
facts showing that there is a genuine issue for trial. Id. A genuine issue of material fact
1
We commend the trial court for the thoroughness and clarity of its written order, which has
greatly aided this court in its appellate review.
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exists where facts concerning an issue that would dispose of the litigation are in dispute
or where the undisputed material facts are capable of supporting conflicting inferences on
such an issue. Id. (citing Gilman v. Hohman, 725 N.E.2d 425, 428 (Ind. Ct. App. 2000),
trans. denied).
A trial court’s grant of summary judgment is clothed with a presumption of
validity, and the party that lost in the trial court has the burden of demonstrating that the
grant of summary judgment was erroneous. Hair v. Schellenberger, 966 N.E.2d 693, 697
(Ind. Ct. App. 2012), trans. denied. On appeal, we are bound by the same standard as the
trial court, and we consider only those matters that were designated at the summary
judgment stage. Haegert, 953 N.E.2d at 1220. We do not reweigh the evidence, but we
liberally construe all designated evidentiary material in the light most favorable to the
nonmoving party to determine whether there is a genuine issue of material fact for trial.
Id. at 1229-30. A grant of summary judgment may be affirmed upon any theory
supported by the designated materials. Id. at 1230. Where, as here, parties have filed
cross-motions for summary judgment, we apply the same standard and consider each
motion separately to determine whether the moving party is entitled to judgment as a
matter of law. Hair, 966 N.E.2d at 697.
The Froeschkes argue that the trial court erred when it granted the City’s motion
for summary judgment and denied their motion for summary judgment. They contend
that the designated evidence showed that there was a contract between them and the City
to purchase their property for $327,000 and that the City breached that contract by failing
to pay them the agreed upon amount. The Froeschkes allege that Baldwin had
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“‘complete authority to transmit instructions’ to BLN regarding the acquisition of
property,” Appellants’ Br. at 19 (quoting Appellants’ App. at 257), and that the services to
be provided by BLN included “owner negotiations as needed for the acquisition of
right[s]-of-way, easements or right[s]-of-entry as required for the [Overpass Project].”
Id. (emphasis omitted). Therefore, they assert that Baldwin and BLN had the authority to
“settle on a price with the Froeschkes.” Id. at 20.
In their complaint, the Froeschkes claimed a breach of contract against the City;
therefore, the central issue in this case is whether there was a valid contract between the
City and the Froeschkes for the purchase of their property. Pursuant to Indiana Code
section 36-4-8-2, “[m]oney may be paid out of the city treasury only on warrant of the
city fiscal officer.” Ind. Code § 36-4-8-2 (emphasis added). The city fiscal officer may
only draw a warrant against a city fund if an appropriation has been made for that
purpose, the warrant is for a salary fixed by statute or ordinance, the warrant is for a
claim allowed by the city legislative body at a meeting, he is ordered to issue a warrant
by the city legislative body at a meeting, the warrant is for payment of a judgment that
the city must pay, or the warrant is for interest due on city bonds. Ind. Code § 36-4-8-2.
Any attempt to bind the City to a contract for which there was no appropriation is void.
Ind. Code § 36-4-8-12(b). A contract to pay money, made by city officials without prior
appropriation, is invalid. Hamer v. City of Huntington, 215 Ind. 594, 600, 21 N.E.2d 407,
410 (1939).
The designated evidence showed that there was a contract between the City,
entered into by Baldwin, and BLN. During the time that BLN rendered services to the
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City, claims had to be submitted to the City Council for payment, ordinances had to be
passed, and each claim had to be approved and ordered paid from the City’s accounts.
There is no dispute that Montague was not the City’s fiscal officer; there is also no
dispute that Baldwin was not the City’s fiscal officer. The ultimate authority to
determine whether the City could extend funds to purchase the land lay with the City
Council. See Ind. Code § 36-4-8-2. There was no evidence presented that the City
Council approved or authorized the payment of funds for the Froeschkes’ property.
When a city executive officer acts beyond the scope of his authority in making a
contract, that contract is void. In Fort Wayne Patrolman’s Benevolent Ass’n, Inc. v. City
of Fort Wayne, 408 N.E.2d 1295 (Ind. Ct. App. 1980), the mayor of the city of Fort
Wayne purported to enter into a collective bargaining agreement contract with the Fort
Wayne Patrolman’s Benevolent Association (“PBA”). However, that contract was never
approved by the common council of Fort Wayne, and the PBA sued to enforce the
contract. Id. at 1299. In affirming the grant of summary judgment in favor of the city of
Fort Wayne and finding the contract void, a panel of this court held:
The mayor had neither the statutory authority to bind the city to this
agreement nor the authority of the common council to act in their behalf
and enter into such an agreement. His actions were, therefore, an
usurpation of unwarranted power, not authorized by the common council’s
resolution or any legislative enactment of the State of Indiana. As a result,
the collective bargaining agreement was void, and the city had the right to
refuse compliance.
In general, a municipality is not estopped from denying the validity of a
contract made by its officers when there has been no authority for making
such a contract.
Id. at 1302 (internal citations and quotations omitted).
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Montague, who was not even an employee of the City, was not authorized by
statute, ordinance, or resolution to commit the City to pay $327,000 for the acquisition of
the Froeschkes’ property. No resolution was ever passed by the City Council to commit
to the expenditure of funds for such purpose. While Baldwin may have entered into a
contract with BLN, and the City Council may have approved previous claims for work
performed by BLN, neither Baldwin nor BLN had the authority to enter into contracts for
the purchase of real estate, including the purchase of the Froeschkes’ property, without
the approval of the City Council, there had been no prior agreement or written
authorization to do so, and no resolution or ordinance had been passed appropriating the
funds for the purchase of the Froeschkes’ property.
Although BLN, through Montague, was authorized to negotiate on behalf of the
City, there was no evidence that BLN was able to bind the City to an expenditure of
money without express authorization of the City Council. Even if Baldwin had directly
contracted with the Froeschkes, he would not have been able to bind the City as to the
purchase of the Froeschkes’ property. Although pursuant to Indiana Code section 36-4-
5-3(9), a mayor shall “sign all bonds, deeds, and contracts of the city and all licenses
issued by the city,” this authority does not authorize a mayor to sign contracts regarding
matters delegated to other governmental officials under other statutes. See Fort Wayne
Patrolman’s Benevolent Ass’n, 408 N.E.2d at 1302. Therefore, BLN, which derived its
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authority from its contract with Baldwin, could not enter into a contract on behalf of the
City if Baldwin could not enter into the same contract.2
Based on the evidence before the trial court, there was no valid contract between
the City and the Froeschkes to purchase the Froeschkes’ property. There was no
appropriation of funds by the City Council for the purchase of the property, and a
contract to pay money, made by city officials without prior appropriation, is invalid.
Hamer, 215 Ind. at 600, 21 N.E.2d at 410. As there was no valid contract, there could be
no breach of contract, and the trial court correctly granted summary judgment to the City
on the Froeschkes’ claim of breach of contract.
The Froeschkes further contend that their property was acquired pursuant to
Indiana’s eminent domain proceedings pursuant to the general eminent domain statutes.
The general eminent domain statute required the municipality to “make an effort to
purchase” the property at issue “before proceeding to condemn.” Ind. Code § 32-24-1-3.
The Froeschkes assert that the City, through Baldwin, delegated its ability to acquire
property through eminent domain proceedings to BLN, which made an effort to purchase
their property through the offer at issue. However, as we have previously concluded, the
City did not appropriate any money for the purchase of the Froeschkes’ property and,
2
The Froeschkes also argue that the contract to purchase the property was ratified by payment to
BLN for its services rendered to the City because BLN would have no reason to think that it could not
acquire property for the Overpass Project since its contracts to provide services to the City had been
ratified. All contracts made in violation of the statute prohibiting anybody from binding a city to any
agreement when no appropriation has been made are invalid, and a subsequent appropriation will not
validate the same. Miller v. City of Evansville, 244 Ind. 1, 5, 189 N.E.2d 823, 825 (1963). Therefore, the
Froeschkes’ argument fails.
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therefore, did not make an effort, pursuant to Indiana Code section 32-24-1-3, to purchase
the property.
The Froeschkes also argue that the trial court erred when it denied summary
judgment on their claim of promissory estoppel. However, estoppel is not generally
applicable against governmental entities for the actions of public officials. Biddle v. BAA
Indianapolis, LLC, 860 N.E.2d 570, 581 (Ind. 2007). In Cablevision of Chicago v. Colby
Cable Corp., 417 N.E.2d 348 (Ind. Ct. App. 1981), this court addressed this rule, stating
as follows:
We acknowledge that the general rule in Indiana is that the public, whether
it be a state or local governmental body, cannot be estopped by the
unlawful acts of public officials. The reason for this rule is said to be that if
laches, waiver or estoppel did apply against the public, a dishonest,
incompetent or negligent public official could wreck the interests of the
public. Our courts have been particularly unsolicitous of estoppel and
laches arguments in cases where the unauthorized acts of public officials
somehow implicate government spending powers.
For example, in Mazac v. City of Michigan City, Mazac entered into a
contract with the city to provide garbage collection, but the contract was
not submitted to the city council as required by law. Mazac alleged the city
was estopped from denying liability under the contract because it had been
acted upon and partly performed. Our court rejected the defense, reasoning
that since the contract was void, there could be no estoppel. In Hamer v.
City of Huntington, the court held a city was not contractually bound to pay
for a fire truck because funds for the purchase of the vehicle were not
appropriated until after the contract was entered into; Indiana law required
that funds be appropriated before the contract was made. The court rejected
the equitable doctrine of estoppel even though the fire truck had been
delivered to and accepted by the city: If one dealing with the city could
plead ignorance of the laws governing the city or of the appropriated
balance which the city has and thereby make valid a contract made by the
city contrary to [statute], the effect of such statute and our budget laws
would be destroyed.
....
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What is certain is that when our laws clearly limit the authority of
government officials to act, or when the law clearly prescribes a procedure
to be followed, private parties must carefully take note of that limitation or
procedure before dealing with a governmental entity.
Id. at 354-56 (internal citations and quotations omitted).
The Froeschkes acknowledge the general rule that estoppel is not applicable
against governmental entities, but cite to three cases where estoppel was applied against
governmental entities and argue that estoppel should apply here, as in those cases,
because the City Council was silent when it had a duty to speak and had ample
opportunity to object to the process Baldwin was employing to acquire property. In
Town of New Chicago v. City of Lake Station, 939 N.E.2d 638 (Ind. Ct. App. 2010),
trans. denied, estoppel was found to be applicable when Lake Station, which had a duty
to bill New Chicago the appropriate amount under an agreement for a sewer system,
remained silent for fifteen years when the sewer rates increased, allowing New Chicago
to pay the former rate, but later sought reimbursement when a judgment was entered
against Lake Station. Id. at 657. In Equicor Development, Inc. v. Westfield-Washington
Township Plan Commission, 758 N.E.2d 34 (Ind. 2001), estoppel was held to be
appropriate because Equicor detrimentally relied on the municipality’s silence and the
municipality had a duty to speak, where the municipality remained silent as to
insufficient parking in Equicor’s plat when it was initially submitted for approval, but
later denied approval after other changes recommended by the municipality had been
made. Id. at 40. In Brown County Indiana v. Booe, 789 N.E.2d 1 (Ind. Ct. App. 2003),
trans. denied, this court found that the governmental entity was estopped from
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challenging a saw mill operation, which constituted a zoning violation, because the
governmental entity’s affirmative acts of approving plats with industrial purposes and
continued silence as to the operation of the sawmill when the governmental entity,
through its representatives, had knowledge of the operation. Id. at 10.
We do not find these cases to be instructive in the determination of the present
case. None of the cases cited by the Froeschkes contained an issue of whether the person
or entity making the representations to the plaintiff had authority to bind the
governmental entity. None of the cases involved applying the doctrine of estoppel to a
situation involving an appropriation for the spending of the governmental entity’s money,
which is particularly disfavored. See Cablevision of Chicago, 417 N.E.2d at 354. These
cases, therefore, do not sway us from the general rule that the doctrine of promissory
estoppel is not applicable against governmental entities.
We thus conclude that the trial court did not err when it granted the City’s motion
for summary judgment and denied the Froeschkes’ motion for summary judgment.
Because the City Council did not make an appropriation for the purchase of the
Froeschkes’ property, the contract for that purchase was void as a matter of law and could
not later be ratified to make it valid. Additionally, pursuant to Indiana law, the doctrine
of promissory estoppel and other equitable doctrines are not applicable to governmental
entities, such as the City, to mandate that the entities expend money that has not been
appropriated or authorized.
Affirmed.
VAIDIK, J., and PYLE, J., concur.
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