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Riley v. AAA Automotive, LLC

Court of Appeals of Indiana

January 12, 2017

Paul and Michelle Riley, Appellants-Defendants,
AAA Automotive, LLC, d/b/a 3A Automotive, Appellee-Plaintiff.

         Appeal from the Lake Superior Court The Honorable John R. Pera, Judge Trial Court Cause No. 45D10-1405-PL-55

          ATTORNEY FOR APPELLANT Gordon A. Etzler Gordon A. Etzler & Associates, LLP Valparaiso, Indiana

          ATTORNEY FOR APPELLEE William J. Obermeyer Obermeyer Law Valparaiso, Indiana

          Bailey, Judge.

         Case Summary

         [¶1] Paul and Michelle Riley ("the Rileys") appeal a judgment entered upon an arbitrator's award in favor of AAA Automotive, LLC d/b/a 3A Automotive ("3A Automotive"). The Rileys present the sole, restated issue of whether the trial court erred in refusing to vacate the award, which consisted almost entirely of attorney's fees, apparently itemized in an ex parte document submitted to the arbitrator but not provided to the Rileys in accordance with Alternative Dispute Resolution Rule 3.4(B)[1] or provided to the trial court. We reverse.

         Facts and Procedural History

         [¶2] In the absence of an evidentiary hearing, we take the facts to be those undisputed by the parties. Some factual record was established in the deposition testimony of Willie Crosby Wright, Jr. ("Wright"), a shareholder together with Larry Brown of 3A Automotive, operating a car dealership in Highland, Indiana.

         [¶3] According to Wright's deposition testimony, 3A Automotive purchased a 2006 Dodge Durango from an auto auction in Indianapolis. 3A Automotive agreed to sell the Durango to the Rileys for $15, 095.00 (including sales tax), subject to the procurement of financing. The Rileys tendered a $500.00 down payment and took possession of the Durango on December 12, 2013. However, financing was not readily forthcoming, and 3A Automotive soon contacted the Rileys to request that they make a larger down payment or trade in another vehicle.[2] The Rileys did not provide an additional down payment or trade-in and retained the Durango after 3A Automotive demanded its return.

         [¶4] On May 16, 2014, 3A Automotive filed a complaint for breach of contract and conversion. The complaint sought judgment in the sum of $14, 000.00, or, alternatively, the return of the Durango with compensation for diminished value, interest at the rate of 19.95%, "damages in time and money properly expended in pursuit of said converted property, " attorney's fees, and punitive damages. (App. at 13.) The final prayer for relief included a request for treble damages. The complaint did not include a demand for arbitration. Separately, 3A Automotive filed its "Motion for Declaratory and Injunctive Relief and Replevin, " alleging that the Durango had a retail value of $14, 000.00 and 3A Automotive was entitled to its possession. (App. at 16.) On June 17, 2014, 3A Automotive filed a motion for a temporary restraining order. On that same date, 3A Automotive filed an affidavit "for Preliminary Injunction and Order for Replevin." (App. at 38.)

         [¶5] The trial court set a hearing to address the motion for a temporary restraining order. At the conclusion of that hearing on June 24, 2014, the trial court entered an order that 3A Automotive deposit the $500.00 down payment with the Court Clerk and that the Rileys return the Durango by 5:00 p.m. on July 9, 2014. Additionally, the Rileys were to answer the complaint by July 25, 2014. The Durango was returned on July 10, 2014 and 3A Automotive deposited the $500.00 as ordered.

         [¶6] On July 24, 2014, the Rileys filed their answer and counterclaim. The Rileys admitted that they had signed a document in acceptance of an offer by 3A Automotive, but alleged that the procurement of financing was part of the consideration to be provided by the seller. Accordingly, the Rileys denied the existence of a "legal contract pursuant to a Retail Installment Contract and Security Agreement" as alleged by 3A Automotive in paragraph 20 of its complaint. (App. at 12.) In addition to raising an affirmative defense that financing for the Durango was not properly secured, the Rileys raised an affirmative defense that 3A Automotive lacked marketable title:

3A did not have the right, authority or power to sell the 2006 Dodge Durango in question. 3A did not possess marketable title to the Durango as it had a lien on it held by Next Gear Capital. Also, 3A's Exhibits in its Complaint further bolster [the] Rileys' defense that it did not possession [sic] marketable title as the information on the exhibited Title clearly reads "Non-Transferable." Therefore 3A knew or should have known that the transaction as structured by 3A would be in violation of I.C. 9-32-4-1(a)(1), (2) at time of the sale, thus breaching the contract immediately and causing it to be null and void. . . . After inspection of the Durango it was discovered that at one point it had suffered damage making it necessary to rebuild the Durango in order for it to be operational. 3A knew ...

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