ATTORNEY FOR APPELLANT
David W. Stone IV
Anderson, Indiana
ATTORNEY FOR APPELLEES
Terry O’Maley
Richmond, Indiana
__________________________________________________________________
IN THE
SUPREME COURT OF INDIANA
__________________________________________________________________
G. CLARK HARRISON, )
)
Appellant (Plaintiff Below), ) Indiana Supreme Court
) Cause No. 89S05-0108-CV-379
v. )
) Indiana Court of Appeals
CARL E. THOMAS and ) Cause No. 89A05-0006-CV-237
LOIS L. THOMAS, )
)
Appellees (Defendants Below). )
__________________________________________________________________
APPEAL FROM THE WAYNE SUPERIOR COURT
The Honorable Gregory A. Horn, Special Judge
Cause No. 89D01-9905-CP-049
__________________________________________________________________
ON PETITION FOR TRANSFER
__________________________________________________________________
January 29, 2002
BOEHM, Justice.
Plaintiff G. Clark Harrison planned to construct an office complex in Richmond, Indiana
to be leased to the United States General Services Administration (“GSA”) as a
Social Security Administration office. To that end, on May 8, 1998, Harrison
entered into a purchase agreement with defendants Carl and Lois Thomas calling for
Harrison to buy the property where the Thomases operated a vintage car lot.
The agreement was contingent upon Harrison’s obtaining title to a nearby vacant
lot. It also contained a preprinted provision stating that “Time is of
the essence of this Contract,” and a second provision that closing was to
occur “on or before July 30, 1998, or within 15 days after Tenant
approval, whichever is later.”
The deal did not close by July 30, 1998. On September 11,
1998, John Christian, a broker representing Harrison, called the Thomases to report that
Harrison was preparing to close, and Lois Thomas responded that the Thomases no
longer wished to sell. In March 1999, Harrison obtained a lease from
the GSA, and on March 23, 1999, Full House, LLC, owned 50% by
Harrison, closed on the vacant lot.
On May 10, 1999, Harrison filed a complaint for specific performance, alleging that
the Thomases refused to proceed with the sale and that monetary damages were
inadequate. The Thomases counterclaimed, asserting that the purchase had not been closed
by the date set in the purchase agreement and seeking damages and attorney’s
fees provided in the contract to a “prevailing party” in any litigation.
After a bench trial, the trial court denied Harrison’s request for specific performance
and entered judgment for the Thomases, including attorney’s fees in the amount of
$5,390. No specific findings were requested by either party. The trial
court entered a memorandum in which the court found that the terms of
the purchase agreement required the transaction to be closed by July 30, 1998,
and that condition was not met. The court also noted that the
agreement was conditioned on Harrison’s obtaining title to the vacant lot and concluded
that purchase by Full House did not fulfill that condition. The Court
of Appeals affirmed, holding that the agreement required closing by July 30 and
that any effort to waive the condition relating to the vacant lot was
required to be communicated to the Thomases. Harrison now seeks transfer to
this Court.
I. Time for Performance
The Thomases contend that under the provision that closing was to occur “on
or before July 30, 1998, or within 15 days after Tenant approval, whichever
is later,” July 30, 1998 was the deadline for completion of the contract,
although closing could have been required at an earlier date if tenant approval
had been obtained sooner. Harrison responds that this provision demonstrated the desire
of the parties to close by July 30, 1998, but also reflected their
realization that closing might have to be delayed pending tenant approval. Both
the trial court and the Court of Appeals agreed with the interpretation advanced
by the Thomases. We do not.
As the Court of Appeals correctly noted, construction of the terms of a
written contract is a pure question of law for the court, reviewed de
novo. Harrison v. Thomas, 744 N.E.2d 977, 981 (Ind. Ct. App. 2001).
We think this provision is not ambiguous. “Whichever is later” is
a phrase found in innumerable agreements. It refers to the event occurring
last in time, not first. It does not mean “whichever is earlier,”
which is the result the Thomases urge.
The Thomases point out that construing the phrase to permit fulfillment of the
condition after July 30 could tie up their property indefinitely because the contract
contains no drop-dead date for obtaining tenant approval. This is an ancient
and often encountered problem, and the law has long ago addressed it.
When the parties to an agreement do not fix a concrete time for
performance, the law implies a reasonable time. Epperly v. Johnson, 734 N.E.2d
1066, 1072 (Ind. Ct. App. 2000). What constitutes a reasonable time depends
on the subject matter of the contract, the circumstances attending performance of the
contract, and the situation of the parties to the contract. Id.
It is an issue of fact. In re Estate of Moore, 714
N.E.2d 675, 677 (Ind. Ct. App. 1999). Here, although the trial court
characterized Harrison’s explanation for his inability to close by July 30, 1998 as
“unpersuasive,” the court made no specific findings as to the reasonableness of the
delay in obtaining tenant approval.
In this case, according to Christian, until September 8, 1998 there was no
effort to close on the property. Harrison testified that he was not
delayed in closing by any action of the Thomases until September 11, when
the Thomases refused to proceed. Lois Thomas testified that closing by July
30 was important to the Thomases because their business was strongest during the
summer months and it would be difficult to continue purchasing vintage cars if
they did not close the deal and make plans to relocate their car
lot by that date. She also testified that she told Christian she
did not want to wait six or nine months to close, again for
business reasons. Finally, she testified that Christian told the Thomases they would
have their money by July 30.
Assuming the trial court’s memorandum should be treated as special findings, special findings
entered by the trial court sua sponte control only as to the issues
they cover. Moore v. Moore, 695 N.E.2d 1004, 1008 (Ind. Ct. App.
1998). Because it provided for closing at the “later” of two events,
by its terms the agreement entered into on May 8 contemplated some delay
beyond July 30, 1998. Harrison communicated his desire to close less than
two months after July 30. Whether that delay and the additional time
required to effect a closing was reasonable is unaddressed by the trial court.
As to issues on which the trial court has not made findings,
or on which the findings are inadequate, we treat the judgment as a
general one and we examine the record and affirm the judgment if it
can be sustained upon any legal theory the evidence supports. Id.
In the review, we neither weigh the evidence nor judge witness credibility.
Id. We believe this evidence, if credited, is sufficient to support a
finding of unreasonable delay by Harrison in closing the deal, and accordingly affirm
the judgment of the trial court.
II. The Condition Precedent
Although this case is controlled by the resolution of the issue discussed in
Part I, we also address the effect of the condition precedent because we
do not agree with the Court of Appeals’ resolution of that issue.
Paragraph 5 of the purchase agreement provided that the contract was “[s]ubject to
Buyer obtaining and closing of vacant lot.” In the trial court, the
Thomases contended that this provision created a condition precedent that must be met
before Harrison could seek enforcement of the agreement. Harrison argued that because
he was Full House’s 50% owner and Chief Operating Officer, the condition precedent
was satisfied when Full House obtained title to the lot. He also
contended that the condition in the contract was for his sole benefit and
was waived even if not fulfilled.
The trial court held that Full House was a separate legal entity from
Harrison, and as a result the condition precedent had not been satisfied.
The Court of Appeals affirmed, but for a different reason. The Court
of Appeals correctly noted that the purchaser of real property to whom the
benefit of a contractual condition precedent inures may waive that condition and demand
that the seller perform the contract. Harrison, 744 N.E.2d at 982; Barrington
Mgt. Co. v. Draper Family Ltd., 695 N.E.2d 135, 140-41 (Ind. Ct. App.
1998). In this case, the condition precedent that Harrison obtain title to
the vacant lot was solely for Harrison’s benefit. His development scheme hinged
upon his ability to deliver title to both lots to the GSA, and
it was a matter of complete indifference to the Thomases whether Harrison obtained
the vacant lot, as long as he closed their sale. Accordingly, the
condition precedent was waivable by Harrison. Although it recognized that Harrison could
waive the condition, the Court of Appeals held that waiver of a condition
precedent would have to be express and found no evidence Harrison had communicated
to the Thomases “either orally or in writing, an express waiver of the
vacant lot condition prior to the termination of the contract on July 30,
1998.” Harrison, 744 N.E.2d at 983.
We think acquisition by Full House, Harrison’s affiliate, was likely substantial compliance with
the condition. But even if not, we think Christian’s contacting the Thomases
and stating Harrison was preparing to close is, in practical terms, a communication
that the condition would be waived. To reach its conclusion that the
waiver was not communicated, the Court of Appeals relied heavily upon Dvorak v.
Christ, 692 N.E.2d 920, 924 (Ind. Ct. App. 1998), trans. denied, which held
that where a purchaser had not communicated, either orally or in writing, an
express waiver of a condition precedent before the expiration of the contract, the
contract terminated and the seller was not required to close. In Dvorak,
the condition precedent was that the purchaser obtain a first mortgage loan for
$451,600, and the contract provided that it would terminate and the rights of
both parties would dissolve if the purchaser did not satisfy the condition precedent
by March 29, 1995. Id. The purchaser failed to obtain the
financing, so the contract terminated by its own terms on March 30, 1995.
Id. Only then did the purchaser attempt to waive the condition
precedent. Id.
As already noted, the contract clearly contemplated the possibility of a closing after
July 30. Here the agreement survived July 30 for a reasonable time
and, if the September 11 conversation had not taken place after an unreasonable
delay, a trier of fact could easily have found it to be a
timely waiver. To the extent that the Court of Appeals read Dvorak
to create a rigid requirement that every waiver of a condition precedent must
be expressly made, either orally or in writing, we do not agree.
It has long been the law in this state that “[t]he performance of
a condition precedent may be waived in many ways.” Johnson v. Bucklen,
9 Ind. App. 154, 157, 36 N.E. 176, 177 (1894). One such
way is by the conduct of one of the parties to the contract.
Penmanta Corp. v. Hollis, 520 N.E.2d 120, 122 (Ind. Ct. App. 1988),
trans. denied.
In sum, whether there has been a waiver of a contract provision is
ordinarily a question of fact. van de Leuv v. Methodist Hosp., 642
N.E.2d 531, 533 (Ind. Ct. App. 1994). We would think that obtaining
control of the vacant lot through an affiliate was substantial compliance with the
condition in this contract. We would also suppose that contacting the Thomases
and telling them Harrison was prepared to close is evidence of waiver, but
once again we are confronted with a factual issue and no finding.
For the reasons given in Part I, this fact issue is not controlling,
and we need not remand for its resolution.
III. Attorney’s Fees
The trial court awarded the Thomases attorney’s fees in the amount of $5,390.
The Court of Appeals upheld the award because (1) the fees were
foreseeable and (2) the purchase agreement provided for attorney’s fees to a prevailing
party. We agree that the contract supports the trial court’s award.
Paragraph 16 of the purchase agreement provided for “court costs and reasonable attorney’s
fees” for any signatory party that prevailed “in any legal or equitable proceeding
against any other signatory brought under or with relation to the Contract or
transaction.” In Indiana, a contract that allows for the recovery of reasonable
attorney’s fees will be enforced according to its terms unless it is violative
of public policy. Willie’s Const. Co., Inc. v. Baker, 596 N.E.2d 958,
963 (Ind. Ct. App. 1992), trans. denied. Solely for that reason, the
trial court’s award was appropriate. We do not agree with the first
part of the Court of Appeals’ analysis. In this case, the foreseeability
of the fees is irrelevant and the only issue is the reasonableness of
the award.
Conclusion
The judgment of the trial court is affirmed.
SHEPARD, C.J., and DICKSON, SULLIVAN, and RUCKER, JJ., concur.