Thomas Bunger as Personal Representative of the Estate of Kenneth K. Kinney, and Cheryl Underwood, Appellants-Defendants,
Sheree Demming, Appellee-Plaintiff
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Appeal from the Monroe County Circuit Court; the Honorable Erik Allen, Special Judge; 53C06-0704-PL-873, 53C01-0704-PL-873.
Attorneys for Cheryl Underwood, APPELLANT: Arend J. Abel, Michael W. McBride, Cohen & Malad, LLP, Indianapolis, Indiana.
Attorney for Thomas Bunger as Personal, Representative of the Estate of Kenneth, K. Kinney, APPELLANT: Scott D. Pankow, Indianapolis, Indiana.
ATTORNEYS FOR APPELLEE: E. Paige Freitag, Jones, McGlasson & Freitag, P.C., Bloomington, Indiana; Thomas E. Densford, Bauer & Densford, Bloomington, Indiana.
[¶1] Cheryl Underwood, a real estate broker, and the estate of her business partner Kenneth Kinney appeal a judgment for Sheree Demming. We affirm in part, reverse in part, and remand.
Facts and Procedural History
[¶2] We summarized the facts of this case in Demming v. Underwood, where we reversed summary judgment for Underwood and Kinney and remanded for further proceedings:
[¶3] Demming is a real estate investor in the business of acquiring properties in the Bloomington, Indiana area for remodeling, renovation, leasing, and sale. Demming, who has never held a realtor's license, engaged Underwood's professional services as a realtor to buy and sell properties on multiple occasions between July 2002 and April 2007. During this time, Demming routinely discussed her real estate investment strategy with Underwood, including her plans to acquire multiple properties within a " target zone" near the Indiana University campus.
[¶4] In 2002, Demming became particularly interested in purchasing two properties located within her target zone at 424 and 426 East Sixth Street (" the Properties" ). The Properties were owned by Marion and Frances Morris (" the Morrises" ), who lived out of state. Realtor Julie Costley (" Costley" ) managed the Properties, which were not listed for sale. After discussing Demming's interest in acquiring the Properties, Demming and Underwood agreed that
the best strategy would be for Underwood to approach Costley with an offer on behalf of Demming, because as a realtor, Costley would be obligated to relay an offer presented by another realtor to the Morrises.
[¶5] Underwood first presented an offer to Costley on Demming's behalf in the fall of 2002. After the offer was declined, Demming and Underwood " strategized" together on how Demming could acquire the Properties, and Underwood offered to contact Costley every few months to inquire about the Properties' availability. Over the next few years, up until early 2007, Underwood contacted Costley on Demming's behalf regarding the Properties " every four of [sic] five months." Additionally, in May, August, and October 2006, Underwood contacted Costley to inquire into the availability of the Properties after Demming specifically instructed her to do so. While Underwood was not compensated for these services, " it was discussed and understood that . . . Underwood would be paid a real estate commission, at closing, in the customary amount of seven percent (7%) of the sales price." However, unbeknownst to Demming, Underwood became interested in purchasing the Properties for herself after she acquired a neighboring property in May 2006.
[¶6] In February 2007, Demming again instructed Underwood to call Costley and inquire into the availability of the Properties for purchase. Underwood responded, " Sheree, she's just not going to sell." Demming nevertheless insisted that Underwood contact Costley, and said that if Underwood refused, she would contact Costley herself. Underwood then agreed to call Costley, and when she did so, she asked Costley to contact Mrs. Morris, whose husband had recently passed away, to find out if she would be interested in selling. Costley responded that she would contact Mrs. Morris, but she expressed doubt as to whether Mrs. Morris would be willing to sell. The next day, Underwood told Demming that the Properties were not for sale. Demming instructed Underwood to " stay on it" because she believed that Mrs. Morris would be willing to sell in the near future.
[¶7] A few days later, Costley contacted Mrs. Morris, who instructed her to request that anyone interested in purchasing the Properties tender a written offer. When Costley informed Underwood that Mrs. Morris was willing to entertain an offer, Underwood did not relay this information to Demming. Instead, on March 9, 2007, Underwood and Kinney, acting as partners, tendered their own written offer to purchase the Properties. A counteroffer was tendered and accepted, pursuant to which Underwood and Kinney agreed to purchase the Properties for $650,000. Underwood and Kinney closed on the transaction on March 30, 2007.
On April 14, 2007, Demming contacted Underwood after noticing one of Underwood's " For Rent" signs in front of the Properties. Underwood and Demming met the next day, and Underwood informed Demming that she and Kinney had purchased the Properties.
On April 19, 2007, Demming filed suit against Underwood asserting claims for breach of fiduciary duty and constructive fraud. Demming also requested the imposition of a constructive trust compelling Underwood and Kinney to convey title of the Properties to her.
943 N.E.2d 878, 882-83 (Ind.Ct.App. 2011) (citations omitted), reh'g ...